Labor Eer Cases

7/24/2019 Labor Eer Cases

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C A S E S : L A B O R L A W I - E X I S T E N C E O F

E M P L O Y E R - E M PL O Y E E R E L A T I O N S H I P

TABLE OF CONTENTS

Grepalife vs Judico ................................................................................................................................................................... 2

Ruga vs NLRC ............................................................................................................................................................................ 6

Paguio vs NLRC ....................................................................................................................................................................... 13

Jo vs NLRC ................................................................................................................................................................................. 19

Besa vs Trajano ...................................................................................................................................................................... 24


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GREPALIFE VS JUDICO

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 73887 December 21, 1989

GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner,

vs.

HONORATO JUDICO and NATIONAL LABOR RELATIONS COMMISSION, respondents.

G.A. Fortun and Associates for petitioner.

Corsino B. Soco for private respondent.

PARAS J.:

Before us is a Petition for certiorarito review the decision of the National Labor Relations Commission (NLRC,

for brevity) dated September 9, 1985 reversing the decision of Labor Arbiter Vito J. Minoria, dated June 9,

1983, by 1) ordering petitioner insurance company, Great Pacific Life Assurance Corporation (Grepalife, for

brevity) to recognize private respondent Honorato Judico, as its regular employee as defined under Art. 281

of the Labor Code and 2) remanding the case to its origin for the determination of private respondent

Judico's money claims.

The records of the case show that Honorato Judico filed a complaint for illegal dismissal against Grepalife, a

duly organized insurance firm, before the NLRC Regional Arbitration Branch No. VII, Cebu City on August 27,

1982. Said complaint prayed for award of money claims consisting of separation pay, unpaid salary and 13th

month pay, refund of cash bond, moral and exemplary damages and attorney's fees.

Both parties appealed to the NLRC when a decision was rendered by the Labor Arbiter dismissing the

complaint on the ground that the employer-employee relations did not exist between the parties but ordered

Grepalife to pay complainant the sum of Pl,000.00 by reason of Christian Charity.

On appeal, said decision was reversed by the NLRC ruling that complainant is a regular employee as defined

under Art. 281 of the Labor Code and declaring the appeal of Grepalife questioning the legality of the

payment of Pl,000.00 to complainant moot and academic. Nevertheless, for the purpose of revoking the

supersedeas bond of said company it ruled that the Labor Arbiter erred in awarding Pl,000.00 to complainant

in the absence of any legal or factual basis to support its payment.

Petitioner company moved to reconsider, which was denied, hence this petition for review raising four legal

issues to wit:


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I. Whether the relationship between insurance agents and their principal, the insurance

company, is that of agent and principal to be governed by the Insurance Code and the Civil

Code provisions on agency, or one of employer-employee, to be governed by the Labor

Code.

II. Whether insurance agents are entitled to the employee benefits prescribed by the Labor

Code.

III. Whether the public respondent NLRC has jurisdiction to take cognizance of a controversy

between insurance agent and the insurance company, arising from their agency relations.

IV. Whether the public respondent acted correctly in setting aside the decision of Labor

Arbiter Vito J. Minoria and in ordering the case remanded to said Labor Arbiter for further

proceedings.(p. 159, Rollo)

The crux of these issues boil down to the question of whether or not employer-employee relationship existed

between petitioner and private respondent.

Petitioner admits that on June 9, 1976, private respondent Judico entered into an agreement of agency with

petitioner Grepalife to become a debit agent attached to the industrial life agency in Cebu City. Petitioner

defines a debit agent as "an insurance agent selling/servicing industrial life plans and policy holders.

Industrial life plans are those whose premiums are payable either daily, weekly or monthly and which are

collectible by the debit agents at the home or any place designated by the policy holder" (p. 156, Rollo). Such

admission is in line with the findings of public respondent that as such debit agent, private respondent Judico

had definite work assignments including but not limited to collection of premiums from policy holders and

selling insurance to prospective clients. Public respondent NLRC also found out that complainant was initially

paid P 200. 00 as allowance for thirteen (13) weeks regardless of production and later a certain percentage

denominated as sales reserve of his total collections but not lesser than P 200.00. Sometime in September

1981, complainant was promoted to the position of Zone Supervisor and was given additional (supervisor's)

allowance fixed at P110.00 per week. During the third week of November 1981, he was reverted to hisformer position as debit agent but, for unknown reasons, not paid so-called weekly sales reserve of at least P

200.00. Finally on June 28, 1982, complainant was dismissed by way of termination of his agency contract.

Petitioner assails the findings of the NLRC that private respondent is an employee of the former. Petitioner

argues that Judico's compensation was not based on any fixed number of hours he was required to devote to

the service of petitioner company but rather it was the production or result of his efforts or his work that was

being compensated and that the so-called allowance for the first thirteen weeks that Judico worked as debit

agent, cannot be construed as salary but as a subsidy or a way of assistance for transportation and meal

expenses of a new debit agent during the initial period of his training which was fixed for thirteen (13) weeks.

Stated otherwise, petitioner contends that Judico's compensation, in the form of commissions and bonuses,

was based on actual production, (insurance plans sold and premium collections).

Said contentions of petitioner are strongly rejected by private respondent. He maintains that he received a

definite amount as his Wage known as "sales reserve" the failure to maintain the same would bring him back

to a beginner's employment with a fixed weekly wage of P 200.00 regardless of production. He was assigned

a definite place in the office to work on when he is not in the field; and in addition to canvassing and making

regular reports, he was burdened with the job of collection and to make regular weekly report thereto for

which an anemic performance would mean dismissal. He earned out of his faithful and productive service, a

promotion to Zone Supervisor with additional supervisor's allowance, (a definite or fixed amount of P110.00)


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that he was dismissed primarily because of anemic performance and not because of the termination of the

contract of agency substantiate the fact that he was indeed an employee of the petitioner and not an

insurance agent in the ordinary meaning of the term.

That private respondent Judico was an agent of the petitioner is unquestionable. But, as We have held in

Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance company may have two classes of agents who

sell its insurance policies: (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. The agents

who belong to the second category are not required to report for work at anytime, they do not have to

devote their time exclusively to or work solely for the company since 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 report 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. One salient point in the

determination of employer-employee relationship which cannot be easily ignored is the fact that the

compensation that these agents on commission received is not paid by the insurance company but by the

investor (or the person insured). After determining the commission earned by an agent on his sales the agent

directly deducts it from the amount he received from the investor or the person insured and turns over to

the insurance company the amount invested after such deduction is made. The test therefore 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.

Applying the aforementioned test to the case at bar, We can readily see that the element of control by the

petitioner on Judico was very much present. The record shows that petitioner Judico received a definite

minimum amount per week as his wage known as "sales reserve" wherein the failure to maintain the same

would bring him back to a beginner's employment with a fixed weekly wage of P 200.00 for thirteen weeks

regardless of production. He was assigned a definite place in the office to work on when he is not in the field;

and in addition to his canvassing work he was burdened with the job of collection. In both cases he was

required to make regular report to the company regarding these duties, and for which an anemic

performance would mean a dismissal. Conversely faithful and productive service earned him a promotion to

Zone Supervisor with additional supervisor's allowance, a definite amount of P110.00 aside from the regular

P 200.00 weekly "allowance". Furthermore, his contract of services with petitioner is not for a piece of work

nor for a definite period.

On the other hand, an ordinary commission insurance agent works at his own volition or at his own leisure

without fear of dismissal from the company and short of committing acts detrimental to the business interest

of the company or against the latter, whether he produces or not is of no moment as his salary is based on

his production, his anemic performance or even dead result does not become a ground for dismissal.

Whereas, in private respondent's case, the undisputed facts show that he was controlled by petitioner

insurance company not only as to the kind of work; the amount of results, the kind of performance but also

the power of dismissal. Undoubtedly, private respondent, by nature of his position and work, had been a

regular employee of petitioner and is therefore entitled to the protection of the law and could not just be

terminated without valid and justifiable cause.

Premises considered, the appealed decision is hereby AFFIRMED in toto.

SO ORDERED.

Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ ., concur.


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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, docketed as

Cases Nos. 1449-83 to 1456-83. 2They uniformly contended that they were arbitrarily dismissed without being

given ample time to look for a new job.

On October 24, 1983, private respondent, thru its operations manager, Conrado S. de Guzman, submitted its

position paper denying the employer-employee relationship between private respondent and petitioners on

the theory that private respondent and petitioners were engaged in a joint venture. 3

After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the case for joint

hearing furnishing the parties with notice and summons. On December 27, 1983, after two (2) previously

scheduled joint hearings were postponed due to the absence of private respondent, one of the petitioners

herein, Alipio Ruga, the pilot/captain of the 7/B Sandyman II, testified, among others, on the manner the

fishing operations were conducted, mode of payment of compensation for services rendered by the

fishermen-crew members, and the circumstances leading to their dismissal. 4

On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S. Coralde rendered a

joint decision 5dismissing all the complaints of petitioners on a finding that a "joint fishing venture" and not one

of employer-employee relationship existed between private respondent and petitioners.

From the adverse decision against them, petitioners appealed to the National Labor Relations Commission.

On May 30, 1985, the National Labor Relations Commission promulgated its resolution 6affirming the decision

of the labor arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners.

Hence, the instant petition.

Petitioners assail the ruling of the public respondent NLRC that what exists between private respondent and

petitioners is a joint venture arrangement and not an employer-employee relationship. To stress that there is

an employer-employee relationship between them and private respondent, petitioners invite attention to

the following: that they were directly hired by private respondent through its general manager, Arsenio de

Guzman, and its operations manager, Conrado de Guzman; that, except for Laurente Bautu, they had been

employed by private respondent from 8 to 15 years in various capacities; that private respondent, through itsoperations manager, supervised and controlled the conduct of their fishing operations as to the fixing of the

schedule of the fishing trips, the direction of the fishing vessel, the volume or number of tubes of the fish-

catch the time to return to the fishing port, which were communicated to the patron/pilot by radio (single

side band); that they were not allowed to join other outfits even the other vessels owned by private

respondent without the permission of the operations manager; that they were compensated on percentage

commission basis of the gross sales of the fish-catch which were delivered to them in cash by private


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respondent's cashier, Mrs. Pilar de Guzman; and that they have to follow company policies, rules and

regulations imposed on them by private respondent.

Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent

and petitioners, petitioners claim that public respondent exceeded its jurisdiction and/or abused its

discretion when it added facts not contained in the records when it stated that the pilot-crew members do

not receive compensation from the boat-owners except their share in the catch produced by their own

efforts; that public respondent ignored the evidence of petitioners that private respondent controlled the

fishing operations; that public respondent did not take into account established jurisprudence that the

relationship between the fishing boat operators and their crew is one of direct employer and employee.

Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is now

final and executory for failure of petitioners to file their appeal with the NLRC within 10 calendar days from

receipt of said decision pursuant to the doctrine laid down in Vir-Jen Shipping and Marine Services, Inc. vs.

NLRC, 115 SCRA 347 (1982), the Solicitor General claims that the ruling of public respondent that a "joint

fishing venture" exists between private respondent and petitioners rests on the resolution of the Social

Security System (SSS) in a 1968 case, Case No. 708 (De Guzman Fishing Enterprises vs. SSS), exempting De

Guzman Fishing Enterprises, private respondent herein, from compulsory coverage of the SSS on the ground

that there is no employer-employee relations between the boat-owner and the fishermen-crew members

following the doctrine laid down inPajarillo vs. SSS, 17 SCRA 1014 (1966). In applying to the case at bar the

doctrine in Pajarillo vs. SSS, supra, that there is no employer-employee relationship between the boat-owner

and the pilot and crew members when the boat-owner supplies the boat and equipment while the pilot and

crew members contribute the corresponding labor and the parties get specific shares in the catch for their

respective contribution to the venture, the Solicitor General pointed out that the boat-owners in

the Pajarillocase, as in the case at bar, did not control the conduct of the fishing operations and the pilot and

crew members shared in the catch.

We rule in favor of petitioners.

Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits ratherthan to dismiss it on a mere technicality. In so doing, we exercise the prerogative accorded to this Court

enunciated in Firestone Filipinas Employees Association,et al.vs.Firestone Tire and Rubber Co.of the

Philippines,Inc., 61 SCRA 340 (1974), thus "the well-settled doctrine is that in labor cases before this Tribunal,

no undue sympathy is to be accorded to any claim of a procedural misstep, the idea being that its power be

exercised according to justice and equity and substantial merits of the controversy."

Circumstances peculiar to some extent to fishermen-crew members of a fishing vessel regularly engaged in

trawl fishing, as in the case of petitioners herein, who spend one (1) whole week or more 7in the open sea

performing their job to earn a living to support their families, convince Us to adopt a more liberal attitude in

applying to petitioners the 10-calendar day rule in the filing of appeals with the NLRC from the decision of the

labor arbiter.

Records reveal that petitioners were informed of the labor arbiter's decision of March 31, 1984 only on July

3,1984 by their non-lawyer representative during the arbitration proceedings, Jose Dialogo who received the

decision eight (8) days earlier, or on June 25, 1984. As adverted to earlier, the circumstances peculiar to

petitioners' occupation as fishermen-crew members, who during the pendency of the case understandably

have to earn a living by seeking employment elsewhere, impress upon Us that in the ordinary course of

events, the information as to the adverse decision against them would not reach them within such time

frame as would allow them to faithfully abide by the 10-calendar day appeal period. This peculiar

circumstance and the fact that their representative is a non-lawyer provide equitable justification to conclude


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that there is substantial compliance with the ten-calendar day rule of filing of appeals with the NLRC when

petitioners filed on July 10, 1984, or seven (7) days after receipt of the decision, their appeal with the NLRC

through registered mail.

We have consistently ruled that in determining the existence of an employer-employee relationship, the

elements that are generally considered are the following (a) the selection and engagement of the employee;

(b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee

with respect to the means and methods by which the work is to be accomplished. 8The employment relation

arises from contract of hire, express or implied.9In 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 10where 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.11

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 light of control nor actual exercise of such right on the part of the boat-owners in

the Pajarillocase, where the Court found that the pilots therein are not under the order 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.

The aforementioned circumstances obtaining in Pajarillocase do not exist in the instant case. The conduct of

the fishing operations was undisputably shown by the testimony of Alipio Ruga, the patron/pilot of 7/B

Sandyman II, to be under the control and supervision of private respondent's operations manager. Matters

dealing on the fixing of the schedule of the fishing trip and the time to return to the fishing port were shown

to be the prerogative of private respondent. 12While performing the fishing operations, petitioners received

instructions via a single-side band radio from private respondent's operations manager who called the patron/pilot

in the morning. They are told to report their activities, their position, and the number of tubes of fish-catch in one

day.13

Clearly thus, the conduct of the fishing operations was monitored by private respondent thru the

patron/pilot of 7/B Sandyman II who is responsible for disseminating the instructions to the crew members.

The conclusion of public respondent that there had been no change in the situation of the parties since 1968

when De Guzman Fishing Enterprises, private respondent herein, obtained a favorable judgment in Case No.

708 exempting it from compulsory coverage of the SSS law is not supported by evidence on record. It was

erroneous for public respondent to apply the factual situation of the parties in the 1968 case to the instant

case in the light of the changes in the conditions of employment agreed upon by the private respondent and

petitioners as discussed earlier.

Records show that in the instant case, as distinguished from the Pajarillocase where the crew members are

under no obligation to remain in the outfit for any definite period as one can be the crew member of an

outfit for one day and be the member of the crew of another vessel the next day, the herein petitioners, on

the other hand, were directly hired by private respondent, through its general manager, Arsenio de Guzman,

and its operations manager, Conrado de Guzman and have been under the employ of private respondent for

a period of 8-15 years in various capacities, except for Laurente Bautu who was hired on August 3, 1983 as

assistant engineer. Petitioner Alipio Ruga was hired on September 29, 1974 as patron/captain of the fishing


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vessel; Eladio Calderon started as a mechanic on April 16, 1968 until he was promoted as chief engineer of

the fishing vessel; Jose Parma was employed on September 29, 1974 as assistant engineer; Jaime Barbin

started as a pilot of the motor boat until he was transferred as a master fisherman to the fishing vessel 7/B

Sandyman II; Philip Cervantes was hired as winchman on August 1, 1972 while Eleuterio Barbin was hired as

winchman on April 15, 1976.

While tenure or length of employment is not considered as the test of employment, nevertheless the hiring

of petitioners to perform work which is necessary or desirable in the usual business or trade of private

respondent for a period of 8-15 years since 1968 qualify them as regular employees within the meaning of

Article 281 of the Labor Code as they were indeed engaged to perform activities usually necessary or

desirable in the usual fishing business or occupation of private respondent. 14

Aside from performing activities usually necessary and desirable in the business of private respondent, it

must be noted that petitioners received compensation on a percentage commission based on the gross sale

of the fish-catch i.e. 13% of the proceeds of the sale if the total proceeds exceeded the cost of the crude oil

consumed during the fishing trip, otherwise only 10% of the proceeds of the sale. Such compensation falls

within the scope and meaning of the term "wage" as defined under Article 97(f) of the Labor Code, thus:

(f) "Wage" paid to any employee shall mean the remuneration or earnings, however

designated, capable of being expressed in terms of money, whether fixed or ascertained on

a time, task, piece or commission basis, or other method of calculating the same, which is

payable by an employer to an employee under a written or unwritten contract of

employment for work done or to be done, or for services rendered or to be rendered, and

included the fair and reasonable value, as determined by the Secretary of Labor, of board,

lodging, or other facilities customarily furnished by the employer to the employee. . . .

The claim of private respondent, which was given credence by public respondent, that petitioners get paid in

the form of share in the fish-catch which the patron/pilot as head of the team distributes to his crew

members in accordance with their own understanding 15is not supported by recorded evidence. Except that

such claim appears as an allegation in private respondent's position paper, there is nothing in the records showingsuch a sharing scheme as preferred by private respondent.

Furthermore, the fact that on mere suspicion based on the reports that petitioners allegedly sold their fish-

catch at midsea without the knowledge and consent of private respondent, petitioners were unjustifiably not

allowed to board the fishing vessel on September 11, 1983 to resume their activities without giving them the

opportunity to air their side on the accusation against them unmistakably reveals the disciplinary power

exercised by private respondent over them and the corresponding sanction imposed in case of violation of

any of its rules and regulations. The virtual dismissal of petitioners from their employment was characterized

by undue haste when less extreme measures consistent with the requirements of due process should have

been first exhausted. In that sense, the dismissal of petitioners was tainted with illegality.

Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private respondentvirtually resulting in their dismissal evidently contradicts private respondent's theory of "joint fishing

venture" between the parties herein. A joint venture, including partnership, presupposes generally aparity of

standingbetween the joint co-venturers or partners, in which each party has an equal proprietary interest in

the capital or property contributed 16and where each party exercises equal lights in the conduct of the

business.17

It would be inconsistent with the principle of parity of standing between the joint co-venturers as

regards the conduct of business, if private respondent would outrightly exclude petitioners from the conduct of

the business without first resorting to other measures consistent with the nature of a joint venture undertaking,

Instead of arbitrary unilateral action, private respondent should have discussed with an open mind the advantages


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and disadvantages of petitioners' action with its joint co-venturers if indeed there is a "joint fishing venture"

between the parties. But this was not done in the instant case. Petitioners were arbitrarily dismissed

notwithstanding that no criminal complaints were filed against them. The lame excuse of private respondent that

the non-filing of the criminal complaints against petitioners was for humanitarian reasons will not help its cause

either.

We have examined the jurisprudence on the matter and find the same to be supportive of petitioners' stand.InNegre vs. WCC135 SCRA 653 (1985), we held that fishermen crew members who were recruited by one

master fisherman locally known as "maestro" in charge of recruiting others to complete the crew members

are considered employees, not industrial partners, of the boat-owners. In an earlier case ofAbong vs. WCC,

54 SCRA 379 (1973) where petitioner therein, Dr. Agustin Abong, owner of the fishing boat, claimed that he

was not the employer of the fishermen crew members because of an alleged partnership agreement

between him, as financier, and Simplicio Panganiban, as his team leader in charge of recruiting said

fishermen to work for him, we affirmed the finding of the WCC that there existed an employer-employee

relationship between the boat-owner and the fishermen crew members not only because they worked for

and in the interest of the business of the boat-owner but also because they were subject to the control,

supervision and dismissal of the boat-owner, thru its agent, Simplicio Panganiban, the alleged "partner" of Dr.

Abong; that while these fishermen crew members were paid in kind, or by "pakiao basis" still that fact did not

alter the character of their relationship with Dr. Abong as employees of the latter.

In Philippine Fishing Boat Officers and Engineers Union vs. Court of Industrial Relations, 112 SCRA 159 (1982),

we held that the employer-employee relationship between the crew members and the owners of the fishing

vessels engaged in deep sea fishing is merely suspended during the time the vessels are drydocked or

undergoing repairs or being loaded with the necessary provisions for the next fishing trip. The said ruling is

premised on the principle that all these activities i.e., drydock, repairs, loading of necessary provisions, form

part of the regular operation of the company fishing business.

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.

SO ORDERED.

Gutierrez, Jr., Bidin and Corts, JJ., concur.

Feliciano, J., concurs in the result.

Footnotes

1 p. 3, Joint Decision, Labor Arbiter, p. 40, Rollo.

2 pp. 1-8, Records.

3 pp. 28-30, Ibid.

4 pp. 54-101, Ibid.


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5 Annex "D" Petition, pp. 40-46, Rollo.

6 pp. 61-65, Rollo.

7 p. 23, T.S.N., p. 78, Records.

8 Hydro-Resources Contractor Corporation vs. Labor Arbiter Pagalilauan G.R. No. 62909,

April 18, 1989; Tabas, et al. vs. California Mfg. Co. et. al., G.R. No. 80680, January 26, 1989;

Continental Marble Corporation vs. NLRC, 161 SCRA 151; Bautista vs. Inciong, 158 SCRA 665;

Broadway Motors, Inc. vs. NLRC, 156 SCRA 522; Besa vs. Trajano, 146 SCRA 501; Rosario

Brothers, Inc. vs. Ople, 131 SCRA 72; Shipside Inc. vs. NLRC, 118 SCRA 99; Mafinco Trading

Corporation vs. Ople, 70 SCRA 139.

9 Yu Chuck vs. Kong Li Po, 46 Phil. 608 (1924).

10 LVN Pictures, Inc. vs. Philippine Musicians Guild, l SCRA 132, 173 (1961), citingAlabama

Highway Express, Co. vs. Local, 612, 108 S. 2d. 350.

11 Dy Keh Beng vs. International Labor and Marine Union of the Philippines, 90 SCRA 161

(1979).

12 pp. 7-8, T.S.N., pp. 61-62, Records.

13 p. 7. T.S.N., p. 61, Records.

14 Ochoco vs. NLRC., 120 SCRA 774 (1983); Mansol vs. P.P. Gocheco Lumber Co., 96 Phil. 941

(1955).

15 p. 2, Private Respondent's Position Paper, p. 22, Records; p. 2, Memorandum for Private

Respondent, p. 131, Rollo.

16 Sevilla vs. Court of Appeals, 160 SCRA 171 (1988), citingBautista Treatise on Philippine

Partnership Law, p. 34.

17 Ibid. p. 37.


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PAGUIO VS NLRC


SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 147816 May 9, 2003

EFREN P. PAGUIO,petitioner,

vs.

NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION, ROBINA Y.

GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GO and ALDA

IGLESIA,respondents.

VITUG, J.:

On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement

with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm.1Again,

petitioner was to solicit advertisements for "The Manila Times," a newspaper of general circulation,

published by respondent company. Petitioner, for his efforts, was to receive compensation consisting of a

15% commission on direct advertisements less withholding tax and a 10% commission on agency

advertisements based on gross revenues less agency commission and the corresponding withholding tax. The

commissions, released every fifteen days of each month, were to be given to petitioner only after the clients

would have paid for the advertisements. Apart from commissions, petitioner was also entitled to a monthly

allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the contentious points

raised by the parties had something to do with the following stipulations of the agreement; viz:

"12. You are not an employee of the Metromedia Times Corporation nor does the company have any

obligations towards anyone you may employ, nor any responsibility for your operating expenses or

for any liability you may incur. The only rights and obligations between us are those set forth in this

agreement. This agreement cannot be amended or modified in any way except with the duly

authorized consent in writing of both parties.

"13. Either party may terminate this agreement at any time by giving written notice to the other,

thirty (30) days prior to effectivity of termination."2

On 15 August 1992, barely two months after the renewal of his contract, petitioner received the

following notice from respondent firm -

"Dear Mr. Paguio,

"Please be advised of our decision to terminate your services as Account Executive of Manila Times

effective September 30, 1992.

"This is in accordance with our contract signed last July 1, 1992."3


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Apart from vague allegations of misconduct on which he was not given the opportunity to defend

himself, i.e., pirating clients from his co-executives and failing to produce results, no definite cause for

petitioner's termination was given. Aggrieved, petitioner filed a case before the labor arbiter, asking that his

dismissal be declared unlawful and that his reinstatement, with entitlement to backwages without loss of

seniority rights, be ordered. Petitioner also prayed that respondent company officials be held accountable for

acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages.

In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any

agreement with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil Code

of the Philippines.4Asserting their right to terminate the contract with petitioner, respondents pointed to the

last provision thereof stating that both parties could opt to end the contract provided that either party would

serve, thirty days prior to the intended date of termination, the corresponding notice to the other.

The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent

Metromedia Times Corporation and its officers to reinstate petitioner to his former position, without loss of

seniority rights, and to pay him his commissions and other remuneration accruing from the date of dismissal

on 15 August 1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general manager

of respondent corporation, be held liable to petitioner for moral damages in the amount of P20,000.00.

On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and

declared the contractual relationship between the parties as being for a fixed-term employment. The NLRC

declared a fixed-term employment to be lawful as long as "it was agreed upon knowingly and voluntarily by

the parties, without any force, duress or improper pressure being brought to bear upon the worker and

absent any other circumstances vitiating his consent."5The finding of the NLRC was primarily hinged on the

assumption that petitioner, on account of his educated stature, having indeed personally prepared his

pleadings without the aid of counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of

petitioner that he was a regular employee, the NLRC held: "The decisive determinant would not be the

activities that the employee (was) called upon to perform but rather, the day certain agreed upon by the

parties for the commencement and termination of their employment relationship, a day certain being

understood to be that which (would) necessarily come, although it (might) not be known when."

6

Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in totothe findings of

the commission. In his petition for review on certiorari, petitioner raised the following issues for resolution:

"WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT'S COMPANY IS FOR A

FIXED PERIOD.

"WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.

"WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES."7

The crux of the matter would entail the determination of the nature of contractual relationship betweenpetitioner and respondent company - was it or was it not one of regular employment?

A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-

concurrence, of the following factors - a) the manner of selection and engagement of the putative employee,

b) the mode of payment of wages, c) the presence or absence of the power of dismissal; and d) the presence

or absence of the power to control the conduct of the putative employee or the power to control the

employee with respect to the means or methods by which his work is to be accomplished.8The "control test"


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assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is

performed or services are rendered under the control and supervision of the party contracting for the

service, not only as to the result of the work but also as to the manner and details of the performance

desired.9

An indicumof regular employment, rightly taken into account by the labor arbiter, was the reservation by

respondent Metromedia Times Corporation not only of the right to control the results to be achieved but

likewise the manner and the means used in reaching that end.10Metromedia Times Corporation exercised

such control by requiring petitioner, among other things, to submit a daily sales activity report and also a

monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei,

company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed

and monitored the sales activities of petitioner.

The Labor Code, in Article 280 thereof, provides:

"ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary

notwithstanding and regardless of the oral agreement of the parties, an employment shall be

deemed to be regular where the employee has been engaged to perform activities which are usually

necessary or desirable in the usual business or trade of the employer, except where the employment

has been fixed for a specific project or undertaking the completion or termination of which has been

determined at the time of the engagement of the employee or where the work or services to be

performed is seasonal in nature and the employment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the proceeding paragraph:

Provided, That, any employee who has rendered at least one year of service, whether such service is

continuous or broken, shall be considered a regular employee with respect to the activity in which he

is employed and his employment shall continue while such activity exists."

Thus defined, a regular employee is one who is engaged to perform activities which are necessary and

desirable in the usual business or trade of the employer as against those which are undertaken for a specificproject or are seasonal. Even in these latter cases, where such person has rendered at least one year of

service, regardless of the nature of the activity performed or of whether it is continuous or intermittent, the

employment is considered regular as long as the activity exists, it not being indispensable that he be first

issued a regular appointment or be formally declared as such before acquiring a regular status.11

That petitioner performed activities which were necessary and desirable to the business of the employer, and

that the same went on for more than a year, could hardly be denied. Petitioner was an account executive in

soliciting advertisements, clearly necessary and desirable, for the survival and continued operation of the

business of respondent corporation. Robina Gokongwei, its President, herself admitted that the income

generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly, respondent

corporation recognized petitioner's invaluable contribution to the business when it renewed, not just once

but five times, its contract with petitioner.

Respondent company cannot seek refuge under the terms of the agreement it has entered into with

petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the

terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been

called upon to perform.12The law affords protection to an employee, and it will not countenance any attempt

to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to

deprive the employee of his security of tenure.13The sheer inequality that characterizes employer-employee


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relations, where the scales generally tip against the employee, often scarcely provides him real and better

options.

The real question that should thus be posed is whether or not petitioner has been justly dismissed from

service. A lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal

must be for a just or authorized cause and must comply with the rudimentary due process of notice and

hearing. It is not shown that respondent company has fully bothered itself with either of these requirements

in terminating the services of petitioner. The notice of termination recites no valid or just cause for the

dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his defense.

The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on

the part of respondents, particularly by respondent Liberato I. Gomez, and the award of moral damages must

thus be deleted.

WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No.

527773 and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor

Arbiter is REINSTATED except with respect to the P20,000.00 moral damages adjudged against respondent

Liberato I. Gomez which award is deleted.

SO ORDERED.

Davide, Jr., C.J., Ynares-Santiago, Carpio, and Azcuna, JJ.,concur.

Footnotes

1The letter contract dated 22 June 1992 read -

Dear Mr. Paguio:

This letter is to appoint you as Account Executive for The Manila Times for a period of twelve

(12) months effective July 1, 1992 to June 30, 1993, and to set forth the terms and

conditions of your contract.

1. As account executive, you will use your best efforts to obtain advertisements exclusively

for us and for such projects that The Manila Times may decide to do from time to time.

2. You are authorized to solicit advertisements and quote advertising rates in accordance

with and subject to all the terms and conditions in our rate cards.

3. All advertisements are subject to acceptance by us and we reserve the right in our

absolute discretion to reject or omit any advertisements.

4. You will be paid fifteen (15) percent commission on direct advertisements less

corresponding withholding tax.


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5. You will be paid ten (10) percent commission on agency advertisements based on gross ad

revenues less agency commission and corresponding withholding tax.

6. Walk-in advertisements, not solicited by the Advertising staff, are not commissionable.

7. All payments must be paid direct to Metromedia Times Corporation. In no case, however,

will commission be paid until and unless the advertisements, whether agency or direct, have

been paid for, subject to the corresponding withholding taxes authorized by law.

8. Commissions earned on paid advertisements covering the period from the first (1st) to the

fifteenth (15) of every month shall be payable at the end of the same month; commissions

earned on paid advertisements covering the period from the sixteenth (16th) to the end of

the month shall be payable on the fifteenth (15) of the succeeding month.

9. You will be entitled to a monthly allowance of P2,000.00 provided that you meet a

monthly quota of P30,000.00 in advertising lineage. But should you fail to meet your quota,

your allowance shall be charged against your future account.

10 For all ex-deal arrangements, the barter agreement and your commission will be subject

to the written approval of the President and Treasurer on a case-to-case basis.

11. You will be paid your approved commission only after the payment for the liquidation

(sold and/or consumed) of the goods received from the advertiser has been completed.

12. You are not an employee of Metromedia Times Corporation nor does the Company have

any obligations towards anyone you may employ, nor any responsibility for your operating

expenses or for any liability you may incur. The only rights and obligations between us are

those set forth in this agreement. This agreement cannot be amended or modified in any

way except with the duly authorized consent in writing of both parties.

13. Either party may terminate this agreement at any time by giving written notice to the

other thirty (30) days prior to the effectivity of termination.

If these terms and conditions are acceptable to you, please indicate your conformity by

signing below. (Rollo, pp. 41-42.)

2Rollo, p. 42.

3Rollo, p. 43.

4Article 1642 of the Civil Code provides: "The contract of lease may be of things, or of work and

service."

Article 1644 provides: "In the lease of work or service, one of the parties binds himself to execute a

piece of work or to render to the other some service for a price certain, but the relation of principal

and agent does not exist between them."

5Rollo, NLRC Decision dated 15 December 1998, p. 82.


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6Rollo, p. 85.

7Rollo, p. 18.

8Hijos de F. Escano, Inc., vs. NLRCG.R. No. 59229, 22 August 1991, 201 SCRA 63; Ecal vs. NLRC, G.R.

Nos. 92777-78, 13 March 1991, 195 SCRA 224.

9Iloilo Chinese Commercial School vs. Fabrigar, L-16600, 27 December 1961, 3 SCRA 712.

10Cosmopolitan Funeral Homes, Inc., vs. Maalat, G.R. No. 86693, 02 July 1990, 187 SCRA 108.

11Article 280, Labor Code.

12A.M. Oreta and Co., Inc., vs. NLRC, et al., G.R. No. 74004, 10 August 1989, 176 SCRA 218.

13Cielo vs. NLRC, G.R. No. 78693, 28 January 1991, 193 SCRA 410.


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JO VS NLRC


SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 121605 February 2, 2000

PAZ MARTIN JO and CESAR JO,petitioners,

vs.

NATIONAL LABOR RELATIONS COMMISSION and PETER MEJILA,respondents.

QUISUMBING,J.:

This petition for certiorariseeks to set aside the Decision1of National Labor Relations Commission (Fifth

Division) promulgated on November 21, 1994, and its Resolution dated June 7, 1995, which denied

petitioners' motion for reconsideration.

Private respondent Peter Mejila worked as barber on a piece rate basis at Dina's Barber Shop. In 1970, the

owner, Dina Tan, sold the barbershop to petitioners Paz Martin Jo and Cesar Jo. All the employees, including

private respondent, were absorbed by the new owners. The name of the barbershop was changed to

Windfield Barber Shop.

The owners and the barbers shared in the earnings of the barber shop. The barbers got two-thirds (2/3) of

the fee paid for every haircut or shaving job done, while one-third (1/3) went to the owners of the shop.

In 1977, petitioners designated private respondent as caretaker of the shop because the former caretakerbecame physically unfit. Private respondent's duties as caretaker, in addition to his being a barber, were: (1)

to report to the owners of the barbershop whenever the airconditioning units malfunctioned and/or

whenever water or electric power supply was interrupted, (2) to call the laundry woman to wash dirty linen;

(3) to recommend applicants for interview and hiring; (4) to attend to other needs of the shop. For this

additional job, he was given an honorarium equivalent to one-third (1/3) of the net income of the shop.1wphi1.nt

When the building occupied by the shop was demolished in 1986, the barbershop closed. But soon a place

nearby was rented by petitioners and the barbershop resumed operations as Cesar's Palace Barbershop and

Massage Clinic. In this new location, private respondent continued to be a barber and caretaker, but with a

fixed monthly honorarium as caretaker, to wit: from February 1986 to 1990 P700; from February 1990 to

March 1991 P800; and from July 1992 P1,300.

In November 1992, private respondent had an altercation with his co-barber, Jorge Tinoy. The bickerings,

characterized by constant exchange of personal insults during working hours, became serious so that private

respondent reported the matter to Atty. Allan Macaraya of the labor department. The labor official

immediately summoned private respondent and petitioners to a conference. Upon investigation, it was found

out that the dispute was not between private respondent and petitioners; rather, it was between the former

and his fellow barber. Accordingly, Atty. Macaraya directed petitioners' counsel, Atty. Prudencio Abragan, to

thresh out the problem.


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During the mediation meeting held at Atty. Abragan's office a new twist was added. Despite the assurance

that he was not being driven out as caretaker-barber, private respondent demanded payment for several

thousand pesos as his separation pay and other monetary benefits. In order to give the parties enough time

to cool off, Atty. Abragan set another conference but private respondent did not appear in such meeting

anymore.

Meanwhile, private respondent continued reporting for work at the barbershop. But, on January 2, 1993, he

turned over the duplicate keys of the shop to the cashier and took away all his belongings therefrom. On

January 8, 1993, he began working as a regular barber at the newly opened Goldilocks Barbershop also in

Iligan City.

On January 12, 1993, private respondent filed a complaint2for illegal dismissal with prayer for payment of

separation pay, other monetary benefits, attorney's fees and damages. Significantly, the complaint did not

seek reinstatement as a positive relief.

In a Decision dated June 15, 1993, the Labor Arbiter found that private respondent was an employee of

petitioners, and that private respondent was not dismissed but had left his job voluntarily because of his

misunderstanding with his co-worker.3The Labor Arbiter dismissed the complaint, but ordered petitioners to

pay private respondent his 13th month pay and attorney's fees.

Both parties appealed to the NLRC. In a Decision dated November 21, 1994, it set aside the labor arbiter's

judgment. The NLRC sustained the labor arbiter's finding as to the existence of employer-employee

relationship between petitioners and private respondent, but it ruled that private respondent was illegally

dismissed. Hence, the petitioners were ordered to reinstate private respondent and pay the latter's

backwages, 13th month pay, separation pay and attorney's fees, thus:

For failure of respondents to observe due process before dismissing the complainant, We rule and

hold that he was illegally terminated. Consequently, he should be reinstated and paid his backwages

starting from January 1, 1993 up , the time of his reinstatement and payment of separation pay,

should reinstatement not be feasible on account of a strained employer-employee relationship.

As complainant's income was mixed, (commission and caretaker), he becomes entitled to 13th

month pay only in his capacity as caretaker at the last rate pay given to him.

With respect to separation pay, even workers paid on commission are given separation pay as they

are considered employees of the company. Complainant should be adjudged entitled to separation

pay reckoned from 1970 up to the time he was dismissed on December 31, 1992 at one-half month

pay of his earnings as a barbers; and as a caretaker the same should be reckoned from 1977 up to

December 31, 1992.

As complainant has been assisted by counsel not only in the preparation of the complaint, position

paper but in hearings before the Labor Arbiter a quoattorney's fees equivalent to 10% of the moneyawards should likewise be paid to complainant.

WHEREFORE, the decision appealed from is Vacatedand Set Asideand a new one entered in

accordance with the above-findings and awards.

SO ORDERED.4


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Its motion for reconsideration having been denied in a Resolution dated June 7, 1995, petitioners filed the

instant petition.

The issues for resolution are as follows:

1. Whether or not there exists an employee-employee relationship between petitioners and private

respondent.

2. Whether or not private respondent was dismissed from or had abandoned his employment.

Petitioners contend that public respondent gravely erred in declaring that private respondent was their

employee. They claim that private respondent was their "partner in trade" whose compensation was based

on a sharing arrangement per haircut or shaving job done. They argue that private respondent's task as

caretaker could be considered an employment because the chores are very minimal.

At the outset, we reiterate the doctrine that the existence of an employer-employee relationship is ultimately

a question of fact and that the findings thereon by the labor arbiter and the NLRC shall be accorded not only

respect but even finality when supported by ample evidence.

5

In determining the existence of an employer-employee relationship, the following elements are considered:

(1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by

whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the

overall consideration. The power of control refers to the existence of the power and not necessarily to the

actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of

the employee; it is enough that the employer has the right to wield that power.6

Absent a clear showing that petitioners and private respondent had intended to pursue a relationship of

industrial partnership, we entertain no doubt that private respondent was employed by petitioners as

caretaker-barber. Initially, petitioners, as new owners of the barbershop, hired private respondent as barber

by absorbing the latter in their employ. Undoubtedly, the services performed by private respondent asbarber is related to, and in the pursuit of the principal business activity of petitioners. Later on, petitioners

tapped private respondent to serve concurrently as caretaker of the shop. Certainly, petitioners had the

power to dismiss private respondent being the ones who engaged the services of the latter. In fact, private

respondent sued petitioners for illegal dismissal, albeit contested by the latter. As a caretaker, private

respondent was paid by petitioners wages in the form of honorarium, originally, at the rate of one-third (1/3)

of the shop's net income but subsequently pegged at a fixed amount per month. As a barber, private

respondent earned two-thirds (2/3) of the fee paid per haircut or shaving job done. Furthermore, the

following facts indubitably reveal that petitioners controlled private respondent's work performance, in that:

(1) private respondent had to inform petitioners of the things needed in the shop; (2) he could only

recommend the hiring of barbers and masseuses, with petitioners having the final decision; (3) he had to be

at the shop at 9:00 a.m. and could leave only at 9:00 p.m. because he was the one who opened and closed it,

being the one entrusted with the key.7These duties were complied with by the private respondent uponinstructions of petitioners. Moreover, such task was far from being negligible as claimed by petitioners. On

the contrary, it was crucial to the business operation of petitioners as shown in the preceding discussion.

Hence, there was enough basis to declare private respondent an employee of petitioners. Accordingly, there

is no cogent reason to disturb the findings of the labor arbiter and NLRC on the existence of employer-

employee relationship between herein private parties.


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With regard to the second issue, jurisprudence has laid out the rules and valid ground for termination of

employment. To constitute abandonment, there must be concurrence of the intention to abandon and some

overt acts from which it may be inferred that the employee concerned has no more interest in working.8In

other words, there must be a clear, deliberate and unjustified refusal to resume employment and a clear

intention to sever the employer-employee relationship on the part of the employee.9

In the case at bar, the labor arbiter was convinced that private respondent was not dismissed but left his

work on his own volition because he could no longer bear the incessant squabbles with his co-worker.

Nevertheless, public respondent did not give credence to petitioners' claim that private respondent

abandoned his job. On this score, public respondent gravely erred as hereunder discussed.

At the outset, we must stress that where the findings of the NLRC contradict those of the labor arbiter, the

Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the

questioned findings.10

In this case, the following circumstances clearly manifest private respondent's intention to sever his ties with

petitioners. First, private respondent even bragged to his co-workers his plan to quit his job at Cesar's Palace

Barbershop and Massage Clinic as borne out by the affidavit executed by his former co-workers.11Second, he

surrendered the shop's keys and took away all his things from the shop. Third, he did not report anymore to

the shop without giving any valid and justifiable reason for his absence. Fourth, he immediately sought a

regular employment in another barbershop, despite previous assurance that he could remain in petitioners'

employ. Fifth, he filed a complaint for illegal dismissal without praying for reinstatement.

Moreover, public respondent's assertion that the institution of the complaint for illegal dismissal manifests

private respondent's lack of intention to abandon his job12is untenable. The rule that abandonment of work

is inconsistent with the filing of a complainant for illegal dismissal is not applicable in this case. Such rule

applies where the complainant seeks reinstatement as a relief. Corollarily, it has no application where the

complainant does not pray for reinstatement and just asks for separation pay instead13as in the present case.

It goes without saying that the prayer for separation pay, being the alternative remedy to

reinstatement,

14

contradicts private respondent's stance. That he was illegally dismissed is belied by his ownpleadings as well as contemporaneous conduct.

We are, therefore, constrained to agree with the findings of the Labor Arbiter that private respondent left his

job voluntarily for reasons not attributable to petitioners. It was error and grave abuse of discretion for the

NLRC to hold petitioners liable for illegal dismissal of private respondent.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of public respondent NLRC are

reversed and set aside. The decision of the Labor Arbiter dated June 15, 1993, is hereby reinstated. No costs.

SO ORDERED.1wphi1.nt

Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

Footnotes


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1Penned by Commissioner Oscar M. Abella, and concurred by Presiding Commissioner Musib M.

Buat and Commissioner Leon G. Gonzaga Jr.

2Rollo, pp. 34-37.

3Id. at 60-61.

4Id. at 84.

5AFP Mutual Benefit Association Inc., NLRC, 267 SCRA 47, 56 (1997); North Davao Mining Corp. v.

NLRC, 254 SCRA 721, 731 (1996); Inter-Orient Maritime Enterprises Inc. v. NLRC, 235 SCRA 268, 277

(1994); Loadstar Shipping Co. Inc. v. Gallo, 229 SCRA 654, 660 (1994); Great Pacific Life Assurance

Corp. v. NLRC, 187 SCRA 694, 699 (1990).

6Equitable Banking Corporation v. NLRC, 273 SCRA 352, 371 (1997); MAM Realty Development

Corporation v. NLRC, 244 SCRA 797, 800-801 (1995); Zanotte Shoes v. NLRC, 241 SCRA 261, 265

(1995).

7Id. at 56-38.

8A Prime Security Services Inc. v. NLRC, 220 SCRA 142, 145 (1993); Dagupan Bus Co. Inc., v. NLRC,

191 SCRA 328, 331 (1990).

9Tan v. NLRC, 271 SCRA 216, 221 (1997); Caete v. NLRC, 250 SCRA 259, 267 (1995); Reno Foods Inc.

v. NLRC, 249 SCRA 379, 386 (1995); Labor v. NLRC, 248 SCRA 183, 198 (1995); International School of

Speech v. NLRC. 242 SCRA 382, 389 (1995); Santos v. NLRC, 166 SCRA 759, 764 (1988); Velasco v.

Inciong, 164 SCRA 67, 74 (1988).

10Industrial Timber Corporation v. NLRC, 273 SCRA 200, 209 (1997); Magcalas v. NLRC, 269 SCRA 453,

463 (1997).

11Rollo, p. 61.

12Id. at 83.

13A' Prime Security Services Inc. v. NLRC, supra, p. 145.

14Bombase v. NLRC, 245 SCRA 496, 500 (1995).


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BESA VS TRAJANO


SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 72409 December 29, 1986

MAMERTO S. BESA, doing business under the name and style of BESA'S CUSTOMBUILT SHOES, petitioner,

vs.

THE HONORABLE CRESENCIANO B. TRAJANO, DIRECTOR OF THE BUREAU OF LABOR RELATIONS, MINISTRY

OF LABOR AND EMPLOYMENT, AND KAISAHAN NG MANGGAGAWANG PILIPINO (KAMPIL-

KATIPUNAN), respondents.

De Asis and Hernando Law Office for petitioner.

Estebal M. Mendoza for private respondent.

PARAS, J.:

This petition questions the decision of the Director of the Bureau of Labor Relations in BLR Case No. A-8-165-

85, which affirmed the appealed order of the Med-Arbiter, Labor Relations Division, NCR in NCR-LRD-M-1-

044-85, a certification election case. More specifically, petitioner seeks the resolution of the question as to

whether or not an employer-employee relationship exists between herein petitioner and the seventeen (17)

shoeshiners-members of the respondent union, who, if the relationship does exist, should be entitled to therights, privileges and benefits of an employee as provided in the Labor Code.

Sometime in January, 1985, private respondent Kaisahan ng Mangagawang Pilipino KAMPIL for short) a

legitimate labor union duly registered with the Ministry of Labor and Employment (MOLE, for short), filed a

Petition for Certification Election, docketed as NCR-LRD-M-1-044-85 in the National Labor Relations Division

of the National Capital Region. Petitioner opposed it alleging that

1. There is no employer-employee relationship between Besa's and the petitioners-signatories to the

petition;

2. The subject of the present petition had previously been decided by the defunct Court of Industrial

Relations, and is therefore barred under the principle of res judicata;

3. The petition fails to comply with the mandatory formal requirements under Sec. 2, Book V, of the

Omnibus Rules Implementing the Labor Code; and

4. This Hon. Commission has no jurisdiction over the subject matter and parties to the petition.


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Acting on the Petition, the Opposition thereto, and the Reply to the Opposition, the Med-Arbiter on June 27,

1985, issued an order declaring that there was an employer-employee relationship between the parties and

directed that an election be conducted.

Petitioner appealed the order to the Director of BLR citing among others the following reasons

1. That the subject of the present petition has previously been decided by the defunct Court of

Industrial Relations, and is therefore barred under the principle of res judicata (CIR Case Nos. 2783,

2751 and 2949 ULP December 21, 1965);

2. That on May 28, 1985, Director Severo Pucan of the Ministry of Labor and Employment, in

dismissing the case for underpayment of commissions and non-payment of ECOLA, filed by the

shoeshiners against Besas Custombuilt Shoes, for lack of jurisdiction petition, declared that there

was no employer-employee relationship between the shoeshiners and petitioner Besas (Order in

NCR-LSED1-020-85);

Director Pucan's findings were based on a letter-opinion of the Director of the Bureau of Working

Conditions of the MOLE (Annex "B-2", Petition for Certiorari). The legal ground therein cited was resjudicata.

xxx xxx xxx

Appeal was dismissed by the Director of BLR as contained in his decision dated Sept. 27, 1985 upholding the

finding of the Med-Arbiter that supervisors were appointed to oversee the bootblacks' performance. It

declared that such is a finding of fact that is entitled to respect and that res judicata does not he as the

parties and the causes of action in the certification election case are different from the parties and causes of

action in CIR Cases Nos. 2783-ULP 2751-ULP and 2949 ULP

Thus the Petition of the Union (KAMPIL) before the Med-Arbiter for the holding of the certification election

was granted. While the pre-election conference was in progress, petitioner herein BESAS filed with Us withpetition for certiorari with Prohibition and simultaneously filed with the Med-Arbiter a motion to suspend the

pre-election conference. The petition filed before Us was dismissed for lack of merit but was reconsidered

upon Motion of petitioner. In its Motion for Reconsideration, petitioner raised the following grounds:

I

THE INSTANT PETITION PRESENTS QUESTIONS OF LAW AND SUBSTANCE TO MERIT THE

CONSIDERATION OF THIS HONORABLE COURT.

II

THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR WAS NOT SUPPORTED BY SUBSTANTIAL

EVIDENCE AND THE SAME IS PURELY BASED ON SPECULATIONS, SURMISES AND CONJECTURES.

III

THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR IS CONTRARY TO LAW AND APPLICABLE

DECI SIONS OF THE SUPREME COURT ON THE MATTER.


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IV

THE PETITION FOR CERTIFICATION ELECTION FILED BY RESPONDENT UNION WITH THE MINISTRY OF

LABOR AND EMPLOYMENT FAILED TO COMPLY WITH THE MANDATORY REQUIREMENTS UNDER

ARTICLE 258 OF THE LABOR CODE, AS AMENDED, AND ITS IMPLEMENTING RULES.

V

THE RESPONDENT DIRECTOR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION IN DECIDING THAT THERE EXISTS AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN

THE PETITIONER AND THE SHOESHINER-MEMBERS OF THE RESPONDENT UNION,

VI

THE RESPONDENT DIRECTOR ACTED WITHOUT JURISDICTION IN TAKING COGNIZANCE OF THE BASIC

PETITION CONSIDERING THAT THE SUBJECT MATTER AND THE PARTIES THEREOF HAVE BEEN

DECIDED BY THE DEFUNCT COURT OF INDUSTRIAL RELATIONS AND IS THEREFORE BABRED BY THE

PRINCIPLE OF RES ADJUDICATA.

The main thrust of the instant petition is the question of employer-employee relationship between petitioner

BESAS and 17 of the members of the herein respondent Union who are designated as shoeshiners. During the

certification election held on Nov. 26, 1985 at BESAS of the 53 eligible voters, 49 cast their votes. 33 voted for

the union while 16 voted for no union. Among the 33 voters who opted for a union 17 persons are

shoeshiners while 16 persons are non-shoeshiners.

The question of employer-employee relationship became a primodial consideration in resolving whether or

not the subject shoeshiners have the juridical personality and standing to present a petition for certification

election as well as to vote i therein. It is the position of petitioner that if the shoeshiners are not considered

as employees of Besa's the basic petition for certification election must necessarily be dismissed for failure to

comply with the mandatory requirements of the Labor Code, as amended, that at least thirty (30%) percentof the employees must support the petition for certification election and that in order to be certified as the

sole and exclusive bargaining agent, the union must be obtained a majority of the valid votes cast by eligible

voters. In the instant case, if the 17 shoeshiners are declared ineligible and their votes are consequently

nullified the result of the certification election would be 16 "Yes" votes (33 minus 17) and 16 "No" votes,

which is a tie. Since the respondent union did not obtain a clear majority for the "Yes" votes as required

under Rule IV Sec. 8(f) of the Omnibus Rules of the Labor Code, it necessarily follows that the respondent

union cannot be certified as the sole and exclusive bargaining agent of the workers of Besa's.

The present petition merits Our consideration. The records of the case reveal that an employer-employee

relationship does not exist between the 17 shoeshiners and petitioner.

Be it noted that the defunct CIR in dismissing the cases for unfair labor practice filed by the shoeshiners

against herein petitioner BESA declared in its Decision dated December 21, 1965 that:

The shoe shiner is distinct from a piece worker because while the latter is paid for work

accomplished, he does not, however, contribute anything to the capital of the employer other than

his service. It is the employer of the piece worker who pays his wages, while the shoe shiner in this

instance is paid directly by his customer. The piece worker is paid for work accomplished without

regard or concern to the profit as derived by his employer, but in the case of the shoe shiners, the


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27

proceeds derived from the trade are always divided share and share alike with respondent BESA. The

shoe shiner can take his share of the proceeds everyday if he wanted to or weekly as is the practice

of qqqBesas The employer of the piece worker supervises and controls his work, but in the case of

the shoe shiner, respondent BESA does not exercise any degree of control or supervision over their

person and their work. All these are not obtaining in the case of a piece worker as he is in fact an

employee in contemplation of law, distinct from the shoe shiner in this instance who, in relation to

respondent MAMERTO B. BESA, is a partner in the trade. Consequently, employer-employeerelationship between members of the Petitioning union and respondent MAMERTO B. BESA being

absent the latter could not be held guilty of the unfair tabor practice acts imputed against him. (p. 6,

Annex "B1 " of said Decision).

Then too on Dec. 27, 1983, then Director Augusto Sanchez of the Bureau of Working Conditions, MOLE, in

response to a letter of petitioner relative to the implementation of wage Order No. 2 which provided for an

increase both in minimum wage and cost of living allowance, opined as follows:

Entitlement of the minimum requirements of the law particularly on wages and allowances

presupposes the existence of employer-employee relationship which is determined by the

concurrence of the following conditions:

1. right to hire

2. payment of wages

3. right to fire; and

4. control and supervision

The most important condition to be considered is the exercise of control and supervision over the

employees, per our conversation, the persons concerned under your query are the shoe shiners and

based on the decision rendered by Associate Judge Emiliano Tabigne of the defunct Court ofIndustrial Relations, these shoe shiners are not employees of the company, but are partners instead.

This is due to the fact that the owner/manager does not exercise control and supervision over the

shoe shiners. That the shiners have their own customers from whom they charge the fee and divide

the proceeds equally with the owner, which make the owner categorized them as on purely

commission basis. The attendant circumstances clearly show that there is no employer-employee

relationship existing, and such the owner/manager is not by law, under obligation to extend to those

on purely commission basis the benefit of Wage Order No. 2. However, the law does not preclude

the employer in giving such benefit to all its employees including those which may not be covered by

the mandate of the law.

(Letter dated December 27, 1985 addressed to petitioner Annex B-2, Petition)

The Office of the Solicitor General as counsel for public respondent agrees that in the present case, no

employer-employee relationship exists.

The Supreme Court in the Rosario Brothers case ruled that;

A basic factor underlying the exercise of rights under the Labor Code is the status of employment. It

is important in the determination of who shall be included in a proposed bargaining unit because it


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is sinequa non. The fundamental and essential condition that a bargaining unit be composed of

employees. Failure to establish this juridical relationship between the union members and the

employer affects the legality of the union itself. It means the ineligibility of the union members to

present a petition for certification election as well as to vote therein.

Existence of employer-employee relationship is determined by the following elements, namely, a]

selection and engagement of the employee; b] payment of wages; c] powers of dismissal; and d]

power to control the employee's conduct although the latter is the most important element (Rosario

Brothers Inc, vs. Ople, 131 SCRA 72, 1984)

WHEREFORE, judgment is hereby rendered giving due course to the Petition and declaring VOID the decision

of the Director of the Bureau of Labor Relations dated September 27, 1985. The Petition in BLR Case No. A-8-

165-85 (NCR-LRD-M1-044-85) is therefore hereby DISMISSED.

SO ORDERED.

Feria (Chairman), Fernan, Alampay, Gutierrez, Jr., JJ., concur.

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