11. DOLE Philippines Inc. vs.

Pawis ng Makabayang Obrero, 2003

Facts:
The petitioner and the respondent executed a CBA for the period starting
February 1996 to February 2001. Under the bonuses and allowances
section of the said CBA, a P10 meal allowance shall be given to
employees who render at least 2 hrs of overtime work and free meals
shall be given after 3 hours of actual overtime work.

Pursuant to this provision, some departments of granted free meals after

exactly 3 ours of work. However, other departments granted free meals
only after more than 3 hours of overtime work.

The respondent filed a complaint against Dole, saying that free meals
should be granted after exactly 3 hrs of overtime work, not after more
than 3 hrs. The parties agreed to settle the dispute to voluntary
arbitration. It was decided in favor of the respondent, directing the
petitioner to grant free meals after exactly 3 hrs of overtime work. CA
affirmed.

Issues:
(1) Whether or not free meals should be granted after exactly 3 hrs of
work

(2) Whether or not the petitioner has the right to determine when to
grant free meals and its conditions
Held:
(1) YES. The same meal allowance provision is found in their previous CBAs,
the 1985-1988 CBA and the 1990-1995 CBA. However, it was amended in the
1993-1995 CBA, by changing the phrase “after 3 hrs of overtime work” to “after
more than 3 hrs of overtime work”. In the 1996-2001 CBA, the parties had to
negotiate the deletion of the said phrase in order to revert to the old provision.
Clearly, both parties had intended that free meals should be given after exactly
3 hrs of overtime work.

The disputed provision is clear and unambiguous, hence the literal meaning
shall prevail. No amount of legal semantics can convince the Court that “after
more than” means the same as “after”.

(2) NO. The exercise of management prerogative is not unlimited. It is subject to

the limitations provided by law. In this case, there was a CBA, and compliance
therewith is mandated by the express policy of the law
 12.ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC.
AND MARLOW NAVIGATION CO., INC.
GR No. 167614 - March 24, 2009
En banc

FACTS:

Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services,

Inc. and Marlow Navigation Co., Inc., under a POEA-approved contract of
employment for 12 months, as Chief Officer, with the basic monthly salary of
US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per
month.

On March 19, 1998, the date of his departure, Serrano was constrained to
accept a downgraded employment contract for the position of Second Officer
with a monthly salary of US$1,000 upon the assurance and representation of
respondents that he would be Chief Officer by the end of April 1998.

Respondents did not deliver on their promise to make Serrano Chief Officer.
Hence, Serrano refused to stay on as second Officer and was repatriated to the
Philippines on May 26, 1998, serving only two (2) months and seven (7) days of
his contract, leaving an unexpired portion of nine (9) months and twenty-three
(23) days.

Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for
constructive dismissal and for payment of his money claims in the total amount
of US$26,442.73 (based on the computation of $2590/month from June 1998
to February 199, $413.90 for March 1998, and $1640 for March 1999) as well
as moral and exemplary damages.

The LA declared the petitioner's dismissal illegal and awarded him US$8,770,
representing his salaray for three (3) months of the unexpired portion of the
aforesaid contract of employment, plus $45 for salary differential and for
attorney's fees equivalent to 10% of the total amount; however, no
compensation for damages as prayed was awarded.

On appeal, the NLRC modified the LA decision and awarded Serrano $4669.50,
representing three (3) months salary at $1400/month, plus 445 salary
differential and 10% for attorney's fees. This decision was based on the
provision of RA 8042, which was made into law on July 15, 1995.

Serrano filed a Motion for Partial Reconsideration, but this time he questioned
the constitutionality of the last clause in the 5th paragraph of Section 10 of RA
8042, which reads:
Sec. 10. Money Claims. - x x x In case of termination of overseas
employment without just, valid or authorized cause as defined by
law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of
the unexpired term, whichever is less.

The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with
the Court of Appeals (CA), reiterating the constitutional challenge against the
subject clause. The CA affirmed the NLRC ruling on the reduction of the
applicable salary rate, but skirted the constitutional issue raised by herein
petitioner Serrano.

ISSUES:

1. Whether or not the subject clause violates Section 10, Article III of the
Constitution on non-impairment of contracts;
2. Whether or not the subject clause violate Section 1, Article III of the
Constitution, and Section 18, Article II and Section 3, Article XIII on labor as a
protected sector.

HELD:

On the first issue.

The answer is in the negative. Petitioner's claim that the subject clause unduly
interferes with the stipulations in his contract on the term of his employment
and the fixed salary package he will receive is not tenable.
Section 10, Article III of the Constitution
provides: No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted
have only a prospective operation, and cannot affect acts or contracts already
perfected; however, as to laws already in existence, their provisions are read
into contracts and deemed a part thereof. Thus, the non-impairment clause
under Section 10, Article II is limited in application to laws about to be enacted
that would in any way derogate from existing acts or contracts by enlarging,
abridging or in any manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995
preceded the execution of the employment contract between petitioner and
respondents in 1998.Hence, it cannot be argued that R.A. No. 8042,
particularly the subject clause, impaired the employment contract of the
parties. Rather, when the parties executed their 1998 employment contract,
they were deemed to have incorporated into it all the provisions of R.A. No.
8042.

But even if the Court were to disregard the timeline, the subject clause may not
be declared unconstitutional on the ground that it impinges on the impairment
clause, for the law was enacted in the exercise of the police power of the State to
regulate a business, profession or calling, particularly the recruitment and
deployment of OFWs, with the noble end in view of ensuring respect for the
dignity and well-being of OFWs wherever they may be employed. Police power
legislations adopted by the State to promote the health, morals, peace,
education, good order, safety, and general welfare of the people are generally
applicable not only to future contracts but even to those already in existence,
for all private contracts must yield to the superior and legitimate measures
taken by the State to promote public welfare.

On the second issue.

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees: No person shall be deprived

of life, liberty, or property without due process of law nor shall any person be
denied the equal protection of the law.

Section 18, Article II and Section 3, Article XIII accord all members of the labor
sector, without distinction as to place of deployment, full protection of their
rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional

provisions translate to economic security and parity: all monetary benefits
should be equally enjoyed by workers of similar category, while all monetary
obligations should be borne by them in equal degree; none should be denied the
protection of the laws which is enjoyed by, or spared the burden imposed on,
others in like circumstances.
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation;
however, to be valid, the classification must comply with these requirements: 1)
it is based on substantial distinctions; 2) it is germane to the purposes of the
law; 3) it is not limited to existing conditions only; and 4) it applies equally to all
members of the class.

There are three levels of scrutiny at which the Court reviews the
constitutionality of a classification embodied in a law: a) the deferential or
rational basis scrutiny in which the challenged classification needs only be
shown to be rationally related to serving a legitimate state interest; b) the
middle-tier or intermediate scrutiny in which the government must show that
the challenged classification serves an important state interest and that the
classification is at least substantially related to serving that interest; and c)
strict judicial scrutiny in which a legislative classification which impermissibly
interferes with the exercise of a fundamental right or operates to the peculiar
disadvantage of a suspect class is presumed unconstitutional, and the burden
is upon the government to prove that the classification is necessary to achieve
a compelling state interest and that it is the least restrictive means to
protect such interest.

Upon cursory reading, the subject clause appears facially neutral, for it applies
to all OFWs. However, a closer examination reveals that the subject clause has
a discriminatory intent against, and an invidious impact on, OFWs at two
levels:
First, OFWs with employment contracts of less than one year vis-
à-vis OFWs with employment contracts of one year or more;
Second, among OFWs with employment contracts of more than
one year; and
Third, OFWs vis-à-vis local workers with fixed-period employment;

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term
employment who were illegally discharged were treated alike in terms of the
computation of their money claims: they were uniformly entitled to their salaries
for the entire unexpired portions of their contracts. But with the enactment of
R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed
OFWs with an unexpired portion of one year or more in their employment
contract have since been differently treated in that their money claims are
subject to a 3-month cap, whereas no such limitation is imposed on local
workers with fixed-term employment.

The Court concludes that the subject clause contains a suspect

classification in that, in the computation of the monetary benefits of
fixed-term employees who are illegally discharged, it imposes a 3-month
cap on the claim of OFWs with an unexpired portion of one year or more
in their contracts, but none on the claims of other OFWs or local workers
with fixed-term employment. The subject clause singles out one
classification of OFWs and burdens it with a peculiar disadvantage.

There being a suspect classification involving a vulnerable sector protected by

the Constitution, the Court now subjects the classification to a strict judicial
scrutiny, and determines whether it serves a compelling state interest through
the least restrictive means.

What constitutes compelling state interest is measured by the scale of rights

and powers arrayed in the Constitution and calibrated by history. It is akin to
the paramount interest of the state for which some individual liberties must
give way, such as the public interest in safeguarding health or maintaining
medical standards, or in maintaining access to information on matters of public
concern.

In the present case, the Court dug deep into the records but found no
compelling state interest that the subject clause may possibly serve.
In fine, the Government has failed to discharge its burden of proving the
existence of a compelling state interest that would justify the perpetuation of
the discrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is to
protect the employment of OFWs by mitigating the solidary liability of
placement agencies, such callous and cavalier rationale will have to be rejected.
There can never be a justification for any form of government action that
alleviates the burden of one sector, but imposes the same burden on another
sector, especially when the favored sector is composed of private businesses
such as placement agencies, while the disadvantaged sector is composed of
OFWs whose protection no less than the Constitution commands. The idea that
private business interest can be elevated to the level of a compelling state
interest is odious.

Moreover, even if the purpose of the subject clause is to lessen the solidary
liability of placement agencies vis-a-vis their foreign principals, there are
mechanisms already in place that can be
employed to achieve that purpose without infringing on the constitutional rights
of OFWs.

The POEA Rules and Regulations Governing the Recruitment and Employment
of Land-Based Overseas Workers, dated February 4, 2002, imposes
administrative disciplinary measures on erring foreign employers who default
on their contractual obligations to migrant workers and/or their Philippine
agents. These disciplinary measures range from temporary disqualification to
preventive suspension. The POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers, dated May 23, 2003, contains
similar administrative disciplinary measures against erring foreign employers.

Resort to these administrative measures is undoubtedly the less restrictive

means of aiding local placement agencies in enforcing the solidary liability of
their foreign principals.

Thus, the subject clause in the 5 th paragraph of Section 10 of R.A. No. 8042 is
violative of the right of petitioner and other OFWs to equal protection.

The subject clause “or for three months for every year of the unexpired term,
whichever is less” in the 5th paragraph of Section 10 of Republic Act No. 8042
is DECLAREDUNCONSTITUTIONAL

Note:

When the Court is called upon to exercise its power of judicial review of theacts
of its co-equals, such as the Congress, it does so only when these conditions
obtain: (1) that there is an actual case or controversy involving a conflict of
rights susceptible of judicial determination; (2) that the constitutional question
is raised by a proper party and at the earliest opportunity; and (3) that the
constitutional question is the very lis mota of the case, otherwise the Court will
dismiss the case or decide the same on some other ground.
----
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of
the monetary awards of illegally dismissed OFWs was in place. This uniform
system was applicable even to local workers with fixed-term employment.

Article 605 of the Code of Commerce provides:

Article 605. If the contracts of the captain and members of the
crew with the agent should be for a definite period or voyage, they
cannot be discharged until the fulfillment of their contracts,
except for reasons of insubordination in serious matters, robbery,
theft, habitual drunkenness, and damage caused to the vessel or
to its cargo by malice or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, in which
the Court held the shipping company liable for the salaries and subsistence
allowance of its illegally dismissed employees for the entire unexpired portion of
their employment contracts.

While Article 605 has remained good law up to the present, Article 299 of the
Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and
other laborers hired for a certain time and for a certain
work cannot leave or be dismissed without sufficient cause, before
the fulfillment of the contract.

13.Millares vs. National Labor Relations Commission, 305 SCRA

500 (1999)
Posted by Pius Morados on November 15, 2011

(Labor Standards – wages, customary facilities)

Facts: Article 97, par. (f), of the Labor Code defined “wage” as 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 includes 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.
116 employees of Paper Industries Corporation of the Philippines (PICOP) in
Bislig, Surigao del Sur were terminated under a retrenchment program as a
solution to a major financial setback. Aside from their one month basic pay,
petitioners believe that the allowances they allegedly regularly received on a
monthly basis should have also been included in the computation of their
separation.

PICOP grants the following allowances:

1. Staff allowance/managers allowance to those who live in rented houses

near the mill site which ceases whenever a vacancy occurs in the company’s
free housing facilities.
2. Transportation allowance in the form of advances for actual
transportation expenses subject to liquidation is given to key officers and
managers who use their own vehicles in the performance of their duties. This
privilege is discontinued when the conditions no longer obtain.
3. Bislig allowance is given to managers and officers on account of the
hostile environment prevailing therein. Once the recipient is transferred
elsewhere, the allowance ceases.
Applying Art. 97, par (f) of the Labor Code which defines “wage”, the Executive
Labor Arbiter opined that the subject allowances, being customarily furnished
by respondent PICOP and regularly received by petitioners, formed part of the
latter’s wage.

However, the NLRC decreed that the allowances did not form part of the salary
base used in computing separation pay since the same were contingency-based.

Issue: Whether or not the allowances in question are considered facilities

customarily furnished.
Held: No. “Customary” is founded on long established and constant practice
connoting regularity. The receipt of allowance on a monthly basis does not ipso
facto characterize it as regular and forming part of salary because the nature of
the grant is a factor worth considering.
The subject allowances were temporarily, not regularly received by petitioners
because once the conditions for the availment ceased to exist, the allowance
reached the cutoff point. The petitioners’ continuous enjoyment of the disputed
allowances was based on contingencies the occurrence of which wrote finis to
such enjoyment.

14.Pacific Consultants International Asia, Inc. and Jens Peter

Henrichsen v. Klaus Schonfeld G.R. 166920

Facts:

Klaus Schonfeld is a Canadian citizen and resident of New Westminster,

British Columbia, Canada. He had been a consultant in the field of
environmental engineering and water supply and sanitation.

PaciCon Philippines, Inc. (PPI) herein petitioner, is a corporation duly

established and incorporated in accordance with the laws of the Philippines.
The primary purpose of PPI is to engage in the business of providing specialty
and technical services both in and out of the Philippines. It is also a subsidiary
of Pacific Consultants International of Japan.

Jens Peter Henrichsen, director of PCIJ, is based in Tokyo, Japan.

Henrichsen commuted from Japan to Manila and vice versa, as well as in other
countries where PCIJ had business.

PCIJ decided to engage in consultancy services for water and sanitation

in the Philippines. In 1997, Schonfeld is employed by PCIJ through Henrichsen,
as Sector Manager of PPI in its Water and Sanitation Department. However,
PCIJ assigned him as PPI sector manager in the Philippines. His salary is to be
paid partly by PPI and PCIJ.

Respondent Schonfeld however received a letter from Henrichsen

informing him that his employment has been terminated for the reason that
PCIJ and PPI has not been successful in the water and sanitation sector in the
Philippines. By electronic mail however, Henrichsen subsequently informed him
to stay put in his job after August 5, 1999 until such time that he would be able
to report on certain projects and discuss all the opportunities he had developed.

Schonfeld then eventually filed money claims, unpaid salary, leave pay
air fare from Manila to Canada and cost of shipment of goods to Canada. PPI
partially settled the money claims but refused to pay the rest.

This prompted Schonfeld to file a complaint for illegal dismissal against

petitioners PPI and Henrichsen with the Labor Arbiter. In his complaint, he
alleges that PPI failed to notify DOLE of its decision to close one of its
departments which resulted in his dismissal, and that they failed to notify him
that his employment was terminated after August 4, 1999.

PPI moved to dismiss on the following grounds: 1. The LA had no

jurisdiction over the subject matter, 2. the venue was improperly laid. Further,
it averred that respondent Schonfeld was a Canadian citizen, a transient
expatriate who had left the Philippines. He was also employed and dismissed by
PCIJ, a foreign corporation with principal office in Tokyo, Japan. Under lex loci
contractus, the complaint should have been filed in Tokyo. Lastly, under
Section 12 of the General Conditions of Employment attached to his letter of
employment, any employment-related dispute should be brought before London
Court of Arbitration.

Issue: Does the NLRC have jurisdiction over this case?

Court Ruling:

First--one of the issues raised in this case is the employer-employee

relationship between Schonfeld and petitioner Pacific Consultants. In this case,
the Court ruled that there exists an employer-employee relationship exists
between them.

To determine the existence of an employer-employee relationship, these

four-fold test must be applied: 1. the selection of employees 2. the payment of
wages, 3. the power to dismiss and 4. the power of control, being the most
important determining factor. As with control, the Court has consistently ruled
that control in this case means the right to control not only the end to be
achieved, but the manner and method by which to perform such work.

With the approval of the Supreme Court, it noted the factual evidences
upheld by Court of Appeals where in this case, it ruled that the power to control
petitioner's performance delved upon PPI. Likewise, the power to terminate
delved upon PPI.

Second--with respect to the jurisdictional issue--the Court ruled that the

settled stipulations regarding venue, as held by this Court in the vintage case of
Philippine Banking Corporation v. Tensuan is that while they are considered
valid and enforceable, venue stipulations in a contract do not as a rule,
supersede the general rules set forth in Rule 4 of the Rules of Court, in the
absence of any qualifying words. In this case, they should merely be considered
an agreement on national forum, not as limiting venue to the specified place.
They are not exclusive but rather, permissive.

In this case, no restrictive words are provided such as "solely", "only",

"exclusively in this court".

Further, petitioners' insistence on the application of the principle of

forum non conveniens must be rejected. The bare fact that respondent is a
Canadian citizen and was a repatriate does not warrant the application of the
principle for the following reasons: (1) the Labor Code does not involve forum
non conveniens as a ground for the dismissal of the complaint, (2) the propriety
of dismissing a case based on this principle requires a factual determination,
hence, it is properly considered as defense. (3) In Bank of America v. NT & SA
Bank of America International, Ltd. v. Court of Appeals, this Court held that the
Philippine Court may assume jurisdiction over the case if it chooses to do so,
provided that the following requisites are met: 1. that the Philippine Court is the
one to which the parties may conveniently resort to, 2. that the Philippine Court
is in a position to make intelligent decision as to the law and the facts, and 3.
that the Philippine Court has or is likely to have power to enforce its decision

15.SONZA vs. ABS-CBN Case Digest

JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION
G.R. No. 138051
June 10, 2004

Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was represented by Sonza,
as President and general manager, and Tiangco as its EVP and treasurer.
Referred to in the agreement as agent, MJMDC agreed to provide Sonza’s
services exclusively to ABS-CBN as talent for radio and television. ABS-CBN
agreed to pay Sonza a monthly talent fee of P310, 000 for the first year and
P317, 000 for the second and third year.

On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned

in view of the recent events concerning his program and career. After the said
letter, Sonza filed with the Department of Labor and Employment a complaint
alleging that ABS-CBN did not pay his salaries, separation pay, service
incentive pay,13th month pay, signing bonus, travel allowance and amounts
under the Employees Stock Option Plan (ESOP). ABS-CBN contended that no
employee-employer relationship existed between the parties. However, ABS-CBN
continued to remit Sonza’s monthly talent fees but opened another account for
the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no
employee-employer relationship. NLRC affirmed the decision of the Labor
Arbiter. CA also affirmed the decision of NLRC.

Issue: Whether or not there was employer-employee relationship between the

parties.

Ruling: Case law has consistently held that the elements of an employee-
employer relationship are selection and engagement of the employee, the
payment of wages, the power of dismissal and the employer’s power to control
the employee on the means and methods by which the work is accomplished.
The last element, the so-called "control test", is the most important element.

Sonza’s services to co-host its television and radio programs are because of his
peculiar talents, skills and celebrity status. Independent contractors often
present themselves to possess unique skills, expertise or talent to distinguish
them from ordinary employees. The specific selection and hiring of SONZA,
because of his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. All the talent fees and benefits paid to
SONZA were the result of negotiations that led to the Agreement. For violation
of any provision of the Agreement, either party may terminate their relationship.
Applying the control test to the present case, we find that SONZA is not an
employee but an independent contractor.

The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor. This test is based on the extent of
control the hirer exercises over a worker. The greater the supervision and
control the hirer exercises, the more likely the worker is deemed an employee.
The converse holds true as well – the less control the hirer exercises, the more
likely the worker is considered an independent contractor. To perform his work,
SONZA only needed his skills and talent. How SONZA delivered his lines,
appeared on television, and sounded on radio were outside ABS-CBN’s control.
ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely
reserved the right to modify the program format and airtime schedule "for more
effective programming." ABS-CBN’s sole concern was the quality of the shows
and their standing in the ratings.

Clearly, ABS-CBN did not exercise control over the means and methods of
performance of Sonza’s work. A radio broadcast specialist who works under
minimal supervision is an independent contractor. Sonza’s work as television
and radio program host required special skills and talent, which SONZA
admittedly possesses.

ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like Sonza as independent contractors.
The right of labor to security of tenure as guaranteed in the Constitution arises
only if there is an employer-employee relationship under labor laws. Individuals
with special skills, expertise or talent enjoy the freedom to offer their services as
independent contractors. The right to life and livelihood guarantees this
freedom to contract as independent contractors. The right of labor to security of
tenure cannot operate to deprive an individual, possessed with special skills,
expertise and talent, of his right to contract as an independent contractor.

16.Zanotte Shoes v. NLRC ZANOTTE SHOES V. NLRC 241 SCRA 261

VITUG, J.

FACTS

1. Private respondents Joseph Lluz, et. al averred that they started to

work for petitioners Zanotte Shoes/ Leonardo Lorenzo between 1975 to
1987. They alleged that they worked for a minimum of 12 hours daily,
including Sundays and holidays when needed and that they were paid on
piece-work basis.
 2. Private respondents claimed that it angered petitioner Lorenzo when
they requested to be made members of the SSS and that when they
demanded an increase in their pay rates, they were prevented from
entering the work premises. Private respondents filed a complaint for
illegal discharge against petitioners.

3. Petitioners, in their Answer, claim that their business operations were

only seasonal, normally twice a year- one in June and another in
December, when heavy job orders would come in. They contend that
private respondents were engaged on purely contractual basis and paid
the rates conformably with their respective agreements.

4. The Labor Arbiter rendered judgment in favor of private respondents.

He declared that there was an employer-employee relationship between
petitioners and private respondents and that the latter were regular
employees of the former. The Labor Arbiter concluded that there is
neither dismissal nor abandonment, but ordered petitioners to pay the
private respondents their separation pay.

5. The NLRC, on appeal, affirmed the Labor Arbiter’s decision

ISSUE: Whether or not there is an employer-employee relationship

between petitioners and private respondents.

HELD :

YES. There is an employer-employee relationship between

petitioners and private respondents. The work of private respondents is
clearly related to and in the pursuit of the principal activity of the
petitioners. The indicia used for determining the existence of an
employer-employee relationship, all extant in the case at bench, include:
(1) the selection and engagement of the employee, (2) the payment of
wages, (3)the power of dismissal, and (4)the employer’s power to control
the employee with respect to the result of the work to be done and to the
means and methods by which the work is to be accomplished. The last
requirement, so herein posed as an issue, refers to the existence of the
right to control and not necessarily to the actual exercise of the right.
The Court, however, finds the award of separation pay to be
unwarranted.. The Labor Arbiter, sustained by the NLRC, concluded that
there was neither dismissal nor abandonment. The fact of the matter is
that petitioners have repeatedly indicated their willingness to accept the
private respondents, but the latter have steadfastly refused the offer. For
being without any clear legal basis, the award of separation pay must
thus be set aside. There is nothing, however, that prevents petitioners
from voluntarily giving private respondents some amounts on ex gratia
basis.

17.COCA COLA VS. CLIMACO DIGEST

G.R. No. 146881 February 5, 2007
COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA,
Manager, Petitioners,
vs.
DR. DEAN N. CLIMACO, Respondent.
FACTS:
Respondent Dr. Dean N. Climaco is a medical doctor The Retainer
Agreement, which began on January 1, 1988, was renewed annually
(original contract was only good for one year). The last one expired on
December 31, 1993. Despite the non-renewal of the Retainer Agreement,
 respondent continued to perform his functions as company doctor to
Coca-Cola until he received a letter4 dated March 9, 1995 from petitioner
company concluding their retainership agreement effective 30 days from
receipt thereof.
It is noted that as early as September 1992, petitioner was already
making inquiries regarding his status with petitioner company. Petitioner
company, however, did not take any action. Hence, respondent made
another inquiry with the DOLE and SSS. Thereafter, respondent inquired
from the management of petitioner company whether it was agreeable to
recognizing him as a regular employee. The management refused to do
so.
FILED TWO COMPLAINTS IN THE NLRC: (1) 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; (2) a complaint for illegal dismissal against petitioner company
with the NLRC, Bacolod City.
LABOR ARBITER’S DECISION: Case (1) Dismissed, found that petitioner
company lacked the power of control over respondent’s performance of
his duties, and recognized as valid the Retainer Agreement between the
parties; (2) dismissed the case for illegal dismissal in view of the previous
finding of Labor Arbiter that complainant therein, respondent is not an
employee of Coca-Cola Bottlers Phils., Inc.
Respondent appealed both decisions to the NLRC, Fourth Division, Cebu
City; Dismissed for lack of merit. MR denied.
APPEAL WITH THE CA: that an employer-employee relationship existed
between petitioner company and respondent after applying the four-fold
test.
MR BY PETITONER: The Court of Appeals clarified that respondent was a
“regular part-time employee and should be accorded all the proportionate
benefits due to this category of employees of [petitioner] Corporation
under the CBA.” It sustained its decision on all other matters sought to
be reconsidered. Hence, this petition.
ISSUE:
whether or not there exists an employer-employee relationship between
the parties; The resolution of the main issue will determine whether the
termination of respondent’s employment is illegal.
HELD:
NO employer-employee relationship.
Four-fold test: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control
the employee’s conduct, or the so-called “control test,” considered to be
the most important element.
The Court agrees with the finding of the Labor Arbiter and the NLRC that
the circumstances of this case show that no employer-employee
relationship exists between the parties. The Labor Arbiter and the NLRC
correctly found that petitioner company lacked the power of control over
the performance by respondent of his duties. The Labor Arbiter
reasoned that the Comprehensive Medical Plan, which contains the
respondent’s objectives, duties and obligations, does not tell
respondent “how to conduct his physical examination, how to
immunize, or how to diagnose and treat his patients, employees of
[petitioner] company, in each case.”
petitioner company, through the Comprehensive Medical Plan, provided
guidelines merely to ensure that the end result was achieved, but
did not control the means and methods by which respondent
performed his assigned tasks.
Because the company lacks the power of control that the contract
provides that 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.
Respondent is not at all further required to just sit around in the
premises and wait for an emergency to occur so as to enable him from
using such hours for his own benefit and advantage. In fact, complainant
maintains his own private clinic attending to his private practice in the
city, where he services his patients, bills them accordingly — and if it is
an employee of respondent company who is attended to by him for
special treatment that needs hospitalization or operation, this is subject
to a special billing.
An employee is required to stay in the employer’s workplace or
proximately close thereto that he cannot utilize his time effectively
and gainfully for his own purpose. Such is not the prevailing
situation here.1awphi1. Court 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.
Considering that there is no employer-employee relationship between the
parties, the termination of the Retainership Agreement, which is in
 accordance with the provisions of the Agreement, does not constitute
illegal dismissal of respondent.
PETITION GRANTED.

18.Insular Life v. NLRC (Nov. 15, 1989)

FACTS:

Insular Life (company) and Basiao entered into a contract by which

Basiao was authorized to solicit for insurance in accordance with the
rules of the company. He would also receive compensation, in the form of
commissions. The contract also contained the relations of the parties,
duties of the agent and the acts prohibited to him including the modes of
termination.

After 4 years, the parties entered into another contract – an Agency

Manager’s Contact – and to implement his end of it, Basiao organized an
agency while concurrently fulfilling his commitment under the first
contract.

The company terminated the Agency Manager’s Contract. Basiao sued

the company in a civil action. Thus, the company terminated Basiao’s
engagement under the first contract and stopped payment of his
commissions.

ISSUE:

W/N Basiao had become the company’s employee by virtue of the

contract, thereby placing his claim for unpaid commissions

HELD: No.

Rules and regulations governing the conduct of the business are

provided for in the Insurance Code. These rules merely serve as
guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in attaining it.
Its aim is only to promote the result, thereby creating no employer-
employee relationship. It is usual and expected for an insurance
company to promulgate a set of rules to guide its commission agents in
selling its policies which prescribe the qualifications of persons who may
be insured. None of these really invades the agent’s contractual
prerogative to adopt his own selling methods or to sell insurance at his
own time and convenience, hence cannot justifiable be said to establish
an employer-employee relationship between Basiao and the company.

The respondents limit themselves to pointing out that Basiao’s contract

with the company bound him to observe and conform to such rules. No
showing that such rules were in fact promulgated which effectively
controlled or restricted his choice of methods of selling insurance.

Therefore, Basiao was not an employee of the petitioner, but a

commission agent, an independent contract whose claim for unpaid
commissions should have been litigated in an ordinary civil action.

Wherefore, the complain of Basiao is dismissed.

 19.JUSTA G. GUIDO, petitioner,
vs.
RURAL PROGRESS ADMINISTRATION, c/o FAUSTINO AGUILAR,
Manager, Rural Progress Administration, respondent.

Guillermo B. Guevara for petitioner.

Luis M. Kasilag and Lorenzo B. Vizconde for respondent.

TUASON, J.:

This a petition for prohibition to prevent the Rural Progress

Administration and Judge Oscar Castelo of the Court of First Instance of Rizal
from proceeding with the expropriation of the petitioner Justa G. Guido's land,
two adjoining lots, part commercial, with a combined area of 22,655 square
meters, situated in Maypajo, Caloocan, Rizal, just outside the north Manila
boundary, on the main street running from this city to the north. Four grounds
are adduced in support of the petition, to wit:

(1) That the respondent RPA (Rural Progress Administration) acted

without jurisdiction or corporate power in filling the expropriation
complaint and has no authority to negotiate with the RFC a loan of
P100,000 to be used as part payment of the value of the land.

(2) That the land sought to be expropriated is commercial and therefore

excluded within the purview of the provisions of Act 539.

(3) That majority of the tenants have entered with the petitioner valid
contracts for lease, or option to buy at an agreed price, and expropriation
would impair those existing obligation of contract.

(4) That respondent Judge erred in fixing the provisional value of the
land at P118,780 only and in ordering its delivery to the respondent RPA.

We will take up only ground No. 2. Our conclusion on this branch of the
case will make superfluous a decision on the other questions raised.

Sections 1 and 2 of Commonwealth Act No. 539, copied verbatim, are as

follows:

SECTION 1. The President of the Philippines is authorized to

acquire private lands or any interest therein, through purchaser or farms
for resale at reasonable prices and under such conditions as he may fix
to their bona fide tenants or occupants or to private individuals who will
work the lands themselves and who are qualified to acquire and own
lands in the Philippines.

SEC. 2. The President may designated any department, bureau,

office, or instrumentality of the National Government, or he may organize
a new agency to carry out the objectives of this Act. For this purpose, the
agency so created or designated shall be considered a public corporation.

The National Assembly approved this enactment on the authority of

section 4 of Article XIII of the Constitution which, copied verbatim, is as follows:

The Congress may authorize, upon payment of just compensation,

the expropriation of lands to be subdivided into small lots and conveyed
at cost to individuals.

What lands does this provision have in view? Does it comprehend all
lands regardless of their location, nature and area? The answer is to be found
in the explanatory statement of Delegate Miguel Cuaderno, member of the
Constitutional Convention who was the author or sponsor of the above-quoted
provision. In this speech, which was entitled "Large Estates and Trust in
Perpetuity" and is transcribed in full in Aruego's "The Framing of the Philippine
Constitution," Mr. Cuaderno said:

There has been an impairment of public tranquility, and to be sure

a continuous of it, because of the existence of these conflicts. In our
folklore the oppression and exploitation of the tenants are vividly referred
to; their sufferings at the hand of the landlords are emotionally pictured
in our drama; and even in the native movies and talkies of today, this
theme of economic slavery has been touched upon. In official documents
these same conflicts are narrated and exhaustively explained as a threat
to social order and stability.

But we should go to Rizal inspiration and illumination in this

problem of this conflicts between landlords and tenants. The national
hero and his family were persecuted because of these same conflicts in
Calamba, and Rizal himself met a martyr's death because of his exposal
of the cause of the tenant class, because he would not close his eyes to
oppression and persecution with his own people as
victims.lawphi1.n�t

I ask you, gentlemen of the Convention, knowing this as you do

and feeling deeply as you must feel a regret over the immolation of the
hero's life, would you not write in the Constitution the provision on large
estates and trust in perpetuity, so that you would be the very instrument
of Providence to complete the labors of Rizal to insure domestic
tranquility for the masses of our people?

If we are to be true to our trust, if it is our purpose in drafting our

constitution to insure domestic tranquility and to provide for the well-
being of our people, we cannot, we must fail to prohibit the ownership of
large estates, to make it the duty of the government to break up existing
large estates, and to provide for their acquisition by purchase or through
expropriation and sale to their occupants, as has been provided in the
Constitutions of Mexico and Jugoslavia.

No amendment was offered and there was no debate. According to Dean

Aruego, Mr. Cuaderno's resolution was readily and totally approved by the
Convention. Mr. Cuaderno's speech therefore may be taken as embodying the
intention of the framers of the organic law, and Act No. 539 should be
construed in a manner consonant with that intention. It is to be presumed that
the National Assembly did not intend to go beyond the constitutional scope of
its powers.

There are indeed powerful considerations, aside from the intrinsic

meaning of section 4 of Article XIII of the Constitution, for interpreting Act No.
539 in a restrictive sense. Carried to extremes, this Act would be subversive of
the Philippine political and social structure. It would be in derogation of
individual rights and the time-honored constitutional guarantee that no private
property of law. The protection against deprivation of property without due
process for public use without just compensation occupies the forefront
positions (paragraph 1 and 2) in the Bill for private use relieves the owner of his
property without due process of law; and the prohibition that "private property
should not be taken for public use without just compensation" (Section 1 [par.
2], Article III, of the Constitution) forbids necessary implication the
appropriation of private property for private uses (29 C.J.S., 819). It has been
truly said that the assertion of the right on the part of the legislature to take the
property of and citizen and transfer it to another, even for a full compensation,
when the public interest is not promoted thereby, is claiming a despotic power,
and one inconsistent with very just principle and fundamental maxim of a free
government. (29 C.J.S., 820.)

Hand in hand with the announced principle, herein invoked, that "the
promotion of social justice to insure the well-being and economic security of all
the people should be the concern of the state," is a declaration, with which the
former should be reconciled, that "the Philippines is a Republican state" created
to secure to the Filipino people "the blessings of independence under a regime
of justice, liberty and democracy." Democracy, as a way of life enshrined in the
Constitution, embraces as its necessary components freedom of conscience,
freedom of expression, and freedom in the pursuit of happiness. Along with
these freedoms are included economic freedom and freedom of enterprise within
reasonable bounds and under proper control. In paving the way for the
breaking up of existing large estates, trust in perpetuity, feudalism, and their
concomitant evils, the Constitution did not propose to destroy or undermine the
property right or to advocate equal distribution of wealth or to authorize of what
is in excess of one's personal needs and the giving of it to another. Evincing
much concern for the protection of property, the Constitution distinctly
recognize the preferred position which real estate has occupied in law for ages.
Property is bound up with every aspects of social life in a democracy as
democracy is conceived in the Constitution. The Constitution owned in
reasonable quantities and used legitimately, plays in the stimulation to
economic effort and the formation and growth of a social middle class that is
said to be the bulwark of democracy and the backbone of every progressive and
happy country.

The promotion of social justice ordained by the Constitution does not

supply paramount basis for untrammeled expropriation of private land by the
Rural Progress Administration or any other government instrumentality. Social
justice does not champion division of property or equality of economic status;
what it and the Constitution do guaranty are equality of opportunity, equality of
political rights, equality before the law, equality between values given and
received on the basis of efforts exerted in their production. As applied to
metropolitan centers, especially Manila, in relation to housing problems, it is a
command to devise, among other social measures, ways and means for the
elimination of slums, shambles, shacks, and house that are dilapidated,
overcrowded, without ventilation. light and sanitation facilities, and for the
construction in their place of decent dwellings for the poor and the destitute. As
will presently be shown, condemnation of blighted urban areas bears direct
relation to public safety health, and/or morals, and is legal.

In reality, section 4 of Article XIII of the Constitution is in harmony with

the Bill of Rights. Without that provision the right of eminent domain, inherent
in the government, may be exercised to acquire large tracts of land as a means
reasonably calculated to solve serious economic and social problem. As Mr.
Aruego says "the primary reason" for Mr. Cuaderno's recommendation was "to
remove all doubts as to the power of the government to expropriation the then
existing landed estates to be distributed at costs to the tenant-dwellers thereof
in the event that in the future it would seem such expropriation necessary to
the solution of agrarian problems therein."

In a broad sense, expropriation of large estates, trusts in perpetuity, and

land that embraces a whole town, or a large section of a town or city, bears
direct relation to the public welfare. The size of the land expropriated, the large
number of people benefited, and the extent of social and economic reform
secured by the condemnation, clothes the expropriation with public interest
and public use. The expropriation in such cases tends to abolish economic
slavery, feudalistic practices, and other evils inimical to community prosperity
and contentment and public peace and order. Although courts are not in
agreement as to the tests to be applied in determining whether the use is public
or not, some go far in the direction of a liberal construction as to hold that
public advantage, and to authorize the exercise of the power of eminent domain
to promote such public benefit, etc., especially where the interest involved are
considerable magnitude. (29 C.J.S., 823, 824. See also People of Puerto Rico vs.
Eastern Sugar Associates, 156 Fed. [2nd], 316.) In some instances, slumsites
have been acquired by condemnation. The highest court of New York States has
ruled that slum clearance and reaction of houses for low-income families were
public purposes for which New York City Housing authorities could exercise the
power of condemnation. And this decision was followed by similar ones in other
states. The underlying reasons for these decisions are that the destruction of
congested areas and insanitary dwellings diminishes the potentialities of
epidemic, crime and waste, prevents the spread of crime and diseases to
unaffected areas, enhances the physical and moral value of the surrounding
communities, and promotes the safety and welfare of the public in general.
(Murray vs. La Guardia, 52 N.E. [2nd], 884; General Development Coop. vs. City
of Detroit, 33 N.W. [2ND], 919; Weizner vs. Stichman, 64 N.Y.S. [2nd], 50.) But
it will be noted that in all these case and others of similar nature extensive
areas were involved and numerous people and the general public benefited by
the action taken.

The condemnation of a small property in behalf of 10, 20 or 50 persons

and their families does not inure to the benefit of the public to a degree
sufficient to give the use public character. The expropriation proceedings at bar
have been instituted for the economic relief of a few families devoid of any
consideration of public health, public peace and order, or other public
advantage. What is proposed to be done is to take plaintiff's property, which for
all we know she acquired by sweat and sacrifice for her and her family's
security, and sell it at cost to a few lessees who refuse to pay the stipulated rent
or leave the premises.

No fixed line of demarcation between what taking is for public use and
what is not can be made; each case has to be judge according to its peculiar
circumstances. It suffices to say for the purpose of this decision that the case
under consideration is far wanting in those elements which make for public
convenience or public use. It is patterned upon an ideology far removed from
that consecrated in our system of government and embraced by the majority of
the citizens of this country. If upheld, this case would open the gates to more
oppressive expropriations. If this expropriation be constitutional, we see no
reason why a 10-, 15-, or 25-hectare farm land might not be expropriated and
subdivided, and sold to those who want to own a portion of it. To make the
analogy closer, we find no reason why the Rural Progress Administration could
not take by condemnation an urban lot containing an area of 1,000 or 2,000
square meters for subdivision into tiny lots for resale to its occupants or those
who want to build thereon.

The petition is granted without special findings as to costs.

20. MASTER IRON LABOR UNION vs. NLRC GR No. 92009 February
17, 1993 Digest by: Angelo Lopez Ponente: J. Melo Topic: Union
Concerted Activities, Types and Conversion; ULP Defenses –
Good Faith

FACTS:

1. The Master Iron Works Construction Corporation (Corporation for brevity) is

a duly organized corporate entity engaged in steel fabrication and other related
business activities. Sometime in February 1987, the Master Iron Labor Union
(MILU) entered into a collective barganing agreement (CBA) with the
Corporation for the three-year period. Right after the signing of the CBA, the
Corporation subcontracted outside workers to do the usual jobs done by its
regular workers including those done outside of the company plant. As a result,
the regular workers were scheduled by the management to work on a rotation
basis allegedly to prevent financial losses thereby allowing the workers only ten
(10) working days a month. Thus, MILU requested implementation of the
grievance procedure which had also been agreed upon in the CBA, but the
Corporation ignored the request.

2. MILU filed a notice of strike with the Department of Labor and Employment.
The Corporation and MILU reached an agreement whereby the Corporation
acceded to give back the usual work to its regular employees who are members
of MILU. 3. Notwithstanding said agreement, the Corporation continued the
practice of hiring outside workers. When the MILU president, Wilfredo
Abulencia, insisted in doing his regular work of cutting steel bars which was
being done by casual workers, a supervisor reprimanded him, charged him with
insubordination and suspended him for three (3) days. Upon the request of
MILU, Francisco Jose of the DOLE called for conciliation conferences. The
Corporation, however, insisted that the hiring of casual workers was a
management prerogative. It later ignored subsequent scheduled conciliation
conferences.

4. MILU filed a notice of strike on the following grounds: (a) violation of CBA;
(b) discrimination; (c) unreasonable suspension of union officials; and (d)
unreasonable refusal to entertain grievance.

5. MILU staged the strike, maintaining picket lines on the road leading to the
Corporation's plant entrance and premises. Then, in the morning of July 28,
1987, CAPCOM soldiers, who had been summoned by the Corporation's
counsel, came and arrested the picketers. Consequently, the Corporation filed a
petition for injunction before the NLRC which, on September 24, 1987, issued
an order directing the workers to remove the barricades and other obstructions
which prevented ingress to and egress from the company premises.

6. MILU filed a position paper with counter-complaint before the NLRC. In said
counter-complaint, the workers charged the Corporation with unfair labor
practice for subcontracting work that was normally done by its regular workers
thereby causing the reduction of the latter's workdays; illegal suspension of
Abulencia without any investigation; discrimination for hiring casual workers in
violation of the CBA, and illegal dispersal of the picket lines by CAPCOM agents.

7. LA declared strike illegal. NLRC affirmed.

8. Petitioners contend that notwithstanding the non-strike provision in the

CBA, the strike they staged was legal because the reasons therefor are non-
economic in nature. They assert that the NLRC abused its discretion in holding
that there was "failure to exhaust the provision on grievance procedure" in view
of the fact that they themselves sought grievance meetings but the Corporation
ignored such requests.

ISSUE/S: WON the strike was illegal because of the no-strike clause

RULING:

No, it is non-economic in nature. Much more than an economic issue, the said
practice of the Corporation was a blatant violation of the CBA — and unfair
labor practice on the part of the employer under Article 248(i) of the Labor
Code. Although the end result, should the Corporation be required to observe
the CBA, may be economic in nature because the workers would then be given
their regular working hours and therefore their just pay, not one of the said
grounds is an economic demand within the meaning of the law on labor strikes.
Professor Perfecto Fernandez, in his book Law on Strikes, Picketing and
Lockouts, states that an economic strike involves issues relating to demands for
higher wages, higher pension or overtime rates, pensions, profit sharing,
shorter working hours, fewer work days for the same pay, elimination of night
work, lower retirement age, more healthful working conditions, better health
services, better sanitation and more safety appliances.

The demands of the petitioners, being covered by the CBA, are definitely within
the power of the Corporation to grant and therefore the strike was not an
economic strike. The other grounds, i.e., discrimination, unreasonable
suspension of union officials and unreasonable refusal to entertain grievance,
had been ventilated before the Labor Arbiter. They are clearly unfair labor
practices as defined in Article 248 of the Labor Code. The subsequent
withdrawal of petitioners' complaint for unfair labor practice which was granted
by Labor Arbiter Ceferina Diosana who also considered the case closed and
terminated may not, therefore, be considered as having converted their other
grievance into economic demands. (For the topic of Good Faith) All told, the
strike staged by the petitioners was a legal one even though it may have been
called to offset what the strikers believed in good faith to be unfair labor
practices on the part of the employer (Ferrer, et al. vs. Court of Industrial
Relations, et al., 17 SCRA 352 [1966]). Verily, such presumption of legality
prevails even if the allegations of unfair labor practices are subsequently found
out to be untrue (People's Industrial and Commercial Employees and Workers
Org. [FFW] vs. People's Industrial and Commercial Corporation). Consonant
with these jurisprudential pronouncements is Article 263 of the Labor Code
which clearly states "the policy of the State to encourage free trade unionism
and free collective bargaining". Paragraph (b) of the same article guarantees the
workers' "right to engage in concerted activities for purposes of collective
bargaining or for their mutual benefit and protection" and recognizes the "right
of legitimate labor organizations to strike and picket and of employers to
lockout" so long as these actions are "consistent with the national interest" and
the grounds therefor do not involve inter-union and intra-union disputes.
DISPOSITIVE: The strike being legal, the NLRC gravely abused its discretion in
terminating the employment of the individual petitioners, who, by operation of
law, are entitled to reinstatement with three years backwages. DOCTRINE: See
Ruling