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 ABSCBN 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's President, Eugenio Lopez
III, where he irrevocably resigned in view of the recent events concerning his
program and career. The acts of the station are violative of the Agreement
and said letter will serve as notice of rescission of said contract. The letter
also contained the waiver and renunciation for recovery of the remaining
amount stipulated but reserves the right to seek recovery of the other benefits
under said Agreement.
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.
Labor Arbiter DECISION: The Labor Arbiter dismissed the complaint and
found that there is no employeeemployer relationship. The LA ruled that he
is not an employee by reason of his peculiar skill and talent
as a TV host and a radio broadcaster. Unlike an ordinary employee, he was
free to perform his services in accordance with his own style. NLRC and CA
affirmed the LA.
ISSUE: Whether or not there was employer-employee relationship between
the parties.
HELD: There is no employer-employee relationship between Sonza and
ABS-CBN. Sonza is an independent contractor.
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.
Selection and Engagement of Employee ABS-CBN engaged SONZA’s
services to co-host its television and radio programs because of
SONZA’s peculiar skills, talent and celebrity status. SONZA contends
that the “discretion used by respondent in specifically selecting and hiring
complainant over other broadcasters of possibly similar experience and
qualification as complainant belies respondent’s claim of independent
contractorship.†However, 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. If SONZA did not possess such unique
skills, talent and celebrity status, ABS-CBN would not have entered into the
Agreement with SONZA but would have hired him through its personnel
department just like any other employee.
Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his
fees going to MJMDC. SONZA asserts that this mode of fee payment shows
that he was an employee of ABS-CBN. SONZA also points out that ABS-
CBN granted him benefits and privileges “which he would not have
enjoyed if he were truly the subject of a valid job contract.―All the talent
fees and benefits paid to SONZA were the result of negotiations that led to
the Agreement. If SONZA were ABS-CBN’s employee, there would be
no need for the parties to stipulate on benefits such as “SSS, Medicare, x x
x and 13th month pay― which the law automatically incorporates
into every employer-employee contract. Whatever benefits SONZA enjoyed
arose from contract and not because of an employer-employee relationship.
In addition, SONZA’s talent fees are so huge and out of
the ordinary that they indicate more an independent contractual relationship
rather than an employeremployee relationship. ABS-CBN agreed to pay
SONZA such huge talent fees precisely because of SONZA’s unique
skills, talent and celebrity status not possessed by ordinary employees.
Power of Dismissal
For violation of any provision of the Agreement, either party may terminate
their relationship. SONZA failed to show that ABS-CBN could terminate his
services on grounds other than breach of contract, such as retrenchment to
prevent losses as provided under labor laws. During the life of the
Agreement, ABS-CBN agreed to pay SONZA’s talent fees as long as
“AGENT and Jay Sonza shall faithfully and completely perform each
condition of this Agreement.― Even if it suffered severe business losses,
ABS-CBN could not retrench SONZA because ABS CBN remained
obligated to pay SONZA’s talent fees during the life of the Agreement.
This circumstance indicates an independent contractual relationship between
SONZA and ABS-CBN. SONZA admits that even after ABS-CBN ceased
broadcasting his programs, ABS-CBN still paid him his
talent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement
to continue paying SONZA’s talent fees during the remaining life of the
Agreement even if ABS-CBN cancelled SONZA’s programs
through no fault of SONZA.
Power of Control
SONZA contends that ABS-CBN exercised control over the means and
methods of his work. SONZA’s argument is misplaced. ABS-CBN
engaged SONZA’s services specifically to co-host the “Mel & Jay―
programs. ABS-CBN did not assign any other work to SONZA. 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. SONZA did not have to render eight hours of work per
day. The Agreement required SONZA to attend only rehearsals and tapings
of the shows, as well as pre- and post-production staff meetings. ABS-CBN
could not dictate the contents of SONZA’s script. However, the
Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its
interests. The clear implication is that SONZA had a free hand on what to say
or discuss in his shows provided he did not attack ABS-CBN or
its interests.
Second, SONZA urges us to rule that he was ABS-CBN’s employee
because ABS-CBN subjected him to its rules and standards of performance.
SONZA claims that this indicates ABS-CBN’s control “not only
[over] his manner of work but also the quality of his work." The Agreement
stipulates that SONZA shall abide with the rules and standards of
performance “covering talents― of ABS-CBN. The Agreement does
not require SONZA to comply with the rules and standards of performance
prescribed for employees of ABS-CBN. The code of conduct imposed on
SONZA under the Agreement refers to the “Television and
Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which
has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics.―
The KBP code applies to broadcasters, not to employees of radio and
television stations. Broadcasters are not necessarily employees of radio and
television stations. Clearly, the rules and standards of performance referred
to in the Agreement are those applicable to talents and not to employees of
ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former. In this case, SONZA
failed to show that these rules controlled his performance. We find that these
general rules are merely guidelines towards the achievement of the mutually
desired result, which are top-rating television and radio programs that
comply with standards of the industry.
Lastly, SONZA insists that the “exclusivity clause― in the Agreement is
the most extreme form of control which ABS-CBN exercised over him. This
argument is futile. Being an exclusive talent does not by itself mean that
SONZA is an employee of ABS-CBN. Even an independent contractor can
validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control. The hiring of
exclusive talents is a widespread and accepted practice in the
entertainment industry. This practice is not designed to control the means and
methods of work of the talent, but simply to protect the investment of the
broadcast station. 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. Not every performance of services for a fee creates
an employer-employee relationship. 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. An individual
like an artist or talent has a right to render his services without any one
controlling the means and methods by which he performs his art or craft.
This Court will not interpret the right of labor to security of tenure to compel
artists and talents to render their services only as employees. If radio and
television program hosts can render their services only as employees, the
station owners and managers can dictate to the radio and television hosts
what they say in their shows. This is not conducive to freedom of the press.
Makati Haberdashery vs NLRC
G.R. No. 83380-81 – 15 November 1989 Penned by Justice Fernan
Nature: Petition for certiorari to review the decision of the NLRC which
affirmed the decision of the Labor Arbiter who jointly heard and decided two
cases filed by the Union in behalf of the private respondents
MAIN FACTS: • Individual complainants are working for Makati
Haberdashery Inc as tailors, seamstress, sewers, basters, and
“plantsadoras― and are paid on a piece-rate basis (except two
petitioners who are paid on a monthly basis) • In addition, they are given a
daily allowance of P 3.00 provided they report before 9:30 a.m. everyday.
•Work schedule: 9:30-6 or 7 p.m., Mondays to Saturdays and even on
Sundays and holidays during peak periods. • The Sandigan ng
Manggagawang Pilipino filed a complaint for underpayment of the basic
wages, underpayment of living allowance, nonpayment of overtime work,
nonpayment of holiday pay, and other money claims. • The Labor Arbiter
rendered judgment in favor of complainants which the NLRC affirmed but
limited back wages to one year. • Petitioner urged that the NLRC erred in
concluding that an employer-employee relationship existed between the
petitioner and the workers.
Issue: 1. WON employees paid on piece-rate basis are entitled to service
incentive pay? 2. WON there is an Employer-Employee Relationship?
Held:
1. NO, fall under exceptions set forth in the implementing rules (this will be
reexamined under Article 101). 2. Yes, evident in a Memorandum issued by
the Assistant Manager. Ratio: 1. As to the service incentive leave pay: as
piece-rate workers being paid at a fixed amount for performing work
irrespective of time consumed in the performance thereof, they fall under the
exceptions stated in Sec1(d), Rule V, IRR, Book III, Labor Code. Service
Incentive Leave SECTION 1. Coverage. — This rule shall apply to all
employees except: (d) Field personnel and other employees whose
performance is unsupervised by the employer including those who are
engaged on task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time consumed
in the performance thereof; 2. Employer-Employee Relationship There is
such relationship because in the application of the four-fold test, it was found
that petitioners had control over the respondents not only as to the result but
also as to the means and method by which the same is to be accomplished.
Such control is proven by a memorandum
which enumerates procedures and instructions regarding job orders,
alterations, and their behavior inside the shop issued by the Assistant
Manager which reads in part: "Effective immediately, new procedures shall
be followed: a. To follow instruction and orders from the undersigned… b.
Before accepting the job orders, tailors must check the materials, job orders,
due dates, and other things to maximize efficiency… c. Effective
immediately all job orders, must be finished one day before the due date.
This can be done by proper scheduling of job order and if you will cooperate
with your supervisors. xxxx d. If there is any problem regarding supervisors
or co-tailor inside our shop, consult with me at once to settle the problem.
Fighting inside the shop is strictly prohibited. Any tailor violating this
memorandum will be subject to disciplinary action.―
WHEREFORE, the decision of the National Labor Relations Commission
dated March 30, 1988 and that of the Labor Arbiter dated June 10, 1986 are
hereby modified. The complaint filed by Pelobello and Zapata for illegal
dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack
of factual and legal bases. Award of service incentive leave pay to private
respondents is deleted. SO ORDERED.
______________________________________________________________
_______________
OTHER FACTS: (there are only two main issues, just in case this is going to
be asked) •While the first case was pending decision, Pelobello left an
open package containing a jusi barong tagalong with salesman Rivera. He
was caught and confronted about this and he explained that this was ordered
by Zapata, also a worker, for his (personal) customer. Zapata allegedly
admitted that he copied the design of the company but later denied ownership
of the same. •They were made to explain why no action should be taken
against them for accepting a job order which is prejudicial and in direct
competition with the business. However they did not submit and went on
AWOL until the period given for them to explain expired hence the
dismissal. •Illegal dismissal complaint on the second case filed before the
Labor Arbiter Diosana (THIS IS THE 3rd ISSUE IN THE FULL CASE).
•LA declared petitioners guilty of illegal dismissal and ordered to reinstate
Pelobello and Zapata and found petitioners violating decrees of Cost-Of-
Living Allowance (COLA), service incentive and 13th month pay.
Commission analyst was directed to compute the monetary awards which
retroacts to three years prior to filing of case.
Other issues discussed: •Minimum Wage Held: No dispute that entitled to
minimum wage but court dismissed case for lack of sufficient evidence to
support claim that there was in fact underpayment which was ruled by the
LAand which the private respondents did not appeal to in the NLRC nor in
the SC. Well-settled is the rule that “an appellee who has not himself
appealed cannot obtain from the appellate court any affirmative relief other
than the ones granted in the decision of the court below―. •COLA
(Cost-Of-Living Allowance) Held: Entitled. They are regular employees.
IRR of Wage No. 1, 2, and 5 provide that “all workers in the private
sector, regardless of their position, designation of status, and irrespective of
the method by which their wages are paid― are entitled to such allowance.
•13th Month pay Held: Entitled under Sec. 3(e) of the IRR of PD 851
which is an exception to the exception of such provision which states that
employers whose workers are paid on piece-rate basis in which are covered
by such issuance in so far as such workers are concerned. •Illegal
dismissal Held: Dismissed for justifiable ground based on Article 283 (a)and
(c). Inimical to the interest of the employer. Not dismissed just because of
union activities.
ALEJANDRO MARAGUINOT, JR. AND PAUILINO ENERO v.
NLRC, VIC DEL ROSARIO, VIVA FILMS
GR No. 120969
Facts:
Maraguinot and Enero were separately hired by Vic Del Rosario under Viva
Films as part of the filming crew. Sometime in May 1992, sought the
assistance of their supervisor to facilitate their request that their salary be
adjusted in accordance with the minimum wage law.
On June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del
Rosario would agree to their request only if they sign a blank employment
contract. Petitioners refused to sign such document. After which, the Mr.
Enero was forced to go on leave on the same month and refused to take him
back when he reported for work. Mr. Maraguinot on the other hand was
dropped from the payroll but was returned days after. He was again asked to
sign a blank employment contract but when he refused, he was terminated.
Consequently, the petitioners sued for illegal dismissal before the Labor
Arbiter. The private respondents claim the following: (a) that VIVA FILMS
is the trade name of VIVA PRODUCTIONS, INC. and that it was primarily
engaged in the distribution & exhibition of movies- but not then making of
movies; (b) That they hire contractors called “producers” who act as
independent contractors as that of Vic Del Rosario; and (c) As such, there is
no employee-employer relation between petitioners and private respondents.
The Labor Arbiter held that the complainants are employees of the private
respondents. That the producers are not independent contractor but should be
considered as labor-only contractors and as such act as mere agent of the real
employer. Thus, the said employees are illegally dismissed.
The private respondents appealed to the NLRC which reversed the decision
of the Labor Arbiter declaring that the complainants were project employees
due to the ff. reasons: (a) Complainants were hired for specific movie
projects and their employment was co-terminus with each movie project;
(b)The work is dependent on the availability of projects. As a result, the total
working hours logged extremely varied; (c) The extremely irregular working
days and hours of complainants work explains the lump sum payment for
their service; and (d) The respondents alleged that the complainants are not
prohibited from working with other movie companies whenever they are not
working for the independent movie producers engaged by the respondents.
A motion for reconsideration was filed by the complainants but was denied
by NLRC. In effect, they filed an instant petition claiming that NLRC
committed a grave abuse of discretion in: (a) Finding that petitioners were
project employees; (b) Ruling that petitioners were not illegally dismissed;
and (c) Reversing the decision of the Labor Arbiter.
In the instant case, the petitioners allege that the NLRC acted in total
disregard of evidence material or decisive of the controversy.
Issues:
(a) W/N there exist an employee- employer relationship between the
petitioners and the private respondents.
(b) W/N the private respondents are engaged in the business of making
movies.
(c) W/N the producer is a job contractor.
Held:
There exist an employee- employer relationship between the petitioners and
the private respondents because of the ff. reasons that nowhere in the
appointment slip does it appear that it was the producer who hired the crew
members. Moreover, it was VIVA’s corporate name appearing on heading of
the slip. It can likewise be said that it was VIVA who paid for the petitioners’
salaries.
Respondents also admit that the petitioners were part of a work pool wherein
they attained the status of regular employees because of the ff. requisites: (a)
There is a continuous rehiring of project employees even after cessation of a
project; (b) The tasks performed by the alleged “project employees” are vital,
necessary and indispensable to the usual business or trade of the employer;
and (c) However, the length of time which the employees are continually re-
hired is not controlling but merely serves as a badge of regular employment.
Since the producer and the crew members are employees of VIVA and that
these employees’ works deal with the making of movies. It can be said that
VIVA is engaged of making movies and not on the mere distribution of
such.
The producer is not a job contractor because of the ff. reasons: (Sec. Rule
VII, Book III of the Omnibus Rules Implementing the Labor Code.)
a. A contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to
his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the
work except as to the results thereof. The said producer has a fix time frame
and budget to make the movies.
b. The contractor should have substantial capital and materials necessary to
conduct his business. The said producer, Del Rosario, does not have his own
tools, equipment, machinery, work premises and other materials to make
motion pictures. Such materials were provided by VIVA.
It can be said that the producers are labor-only contractors. Under Article 106
of the Labor Code (reworded) where the contractor does not have the
requisites as that of the job contractors.
Francisco vs NLRC
FACTS: 1995, Petitioner was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and Corporate
Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati
to secure business permits, construction permits and other licenses for the
initial operation of the company.
Although she was designated as Corporate Secretary, she was not entrusted
with the corporate documents; neither did she attend any board meeting nor
required to do so. She never prepared any legal document and never
represented the company as its Corporate Secretary. 1996, petitioner was
designated Acting Manager. Petitioner was assigned to handle recruitment of
all employees and perform management administration functions; represent
the company in all dealings with government agencies, especially with the
BIR, SSS and in the city government of Makati; and to administer all other
matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei Corporation.
January 2001, petitioner was replaced by a certain Liza R. Fuentes as
Manager. Kasei Corporation reduced her salary, she was not paid her mid-
year bonus allegedly because the company was not earning well. On October
2001, petitioner did not receive her salary from the company. She made
repeated follow-ups with the company cashier but she was advised that the
company was not earning well. Eventually she was informed that she is no
longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work
and filed an action for constructive dismissal before the labor arbiter. Private
respondents averred that petitioner is not an employee of Kasei Corporation.
They alleged that petitioner was hired in 1995 as one of its technical
consultants on accounting matters and act concurrently as Corporate
Secretary. As technical consultant, petitioner performed her work at her own
discretion without control and supervision of Kasei Corporation. Petitioner
had no daily time record and she came to the office any time she wanted and
that her services were only temporary in nature and dependent on the needs
of the corporation.
The Labor Arbiter found that petitioner was illegally dismissed, NLRC
affirmed with modification the Decision of the Labor Arbiter. On appeal, CA
reversed the NLRC decision. CA denied petitioner’s MR, hence, the present
recourse.
ISSUES:
1. WON there was an employer-employee relationship between petitioner
and private respondent; and if in the affirmative,
2. Whether petitioner was illegally dismissed.
RULING:
1. Generally, courts have relied on the so-called right of control test where
the person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be used in
 reaching such end. In addition to the standard of right-of-control, the
existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the
existence of an employer-employee relationship.
There are instances when, aside from the employer’s power to control the
employee, economic realities of the employment relations help provide a
comprehensive analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other capacity.
It is better, therefore, to adopt a two-tiered test involving: (1) the employer’s
power to control; and (2) the economic realities of the activity or
relationship.
The control test means that there is an employer-employee relationship when
the person for whom the services are performed reserves the right to control
not only the end achieved but also the manner and means used to achieve that
end.
There has to be analysis of the totality of economic circumstances of the
worker. Thus, the determination of the relationship between employer and
employee depends upon the circumstances of the whole economic activity,
such as: (1) the extent to which the services performed are an integral part of
the employer’s business; (2) the extent of the worker’s investment in
equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the worker’s opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise; (6) the permanency and duration of the relationship
between the worker and the employer; and (7) the degree of dependency of
the worker upon the employer for his continued employment in that line of
business. The proper standard of economic dependence is whether the worker
is dependent on the alleged employer for his continued employment in that
line of business
By applying the control test, it can be said that petitioner is an employee of
Kasei Corporation because she was under the direct control and supervision
of Seiji Kamura, the corporation’s Technical Consultant. She reported for
work regularly and served in various capacities as Accountant, Liaison
Officer, Technical Consultant, Acting Manager and Corporate Secretary,
with substantially the same job functions, that is, rendering accounting and
tax services to the company and performing functions necessary and
desirable for the proper operation of the corporation such as securing
business permits and other licenses over an indefinite period of engagement.
Respondent corporation had the power to control petitioner with the means
and methods by which the work is to be accomplished.
Under the economic reality test, the petitioner can also be said to be an
employee of respondent corporation because she had served the company for
6 yrs. before her dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as
deductions and Social Security contributions from. When petitioner was
designated General Manager, respondent corporation made a report to the
SSS. Petitioner’s membership in the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent
corporation. The coverage of Social Security Law is predicated on the
existence of an employer-employee relationship.
2. The corporation constructively dismissed petitioner when it reduced her.
This amounts to an illegal termination of employment, where the
petitioner is entitled to full backwages
A diminution of pay is prejudicial to the employee and amounts to
constructive dismissal. Constructive dismissal is an involuntary resignation
resulting in cessation of work resorted to when continued employment
becomes impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to an employee. Petition is
GRANTED
San Miguel Brewery vs Ople
This is a petition for review of the Order dated February 28, 1980 of the
Minister of Labor in Labor Case No. AJML-069-79, approving the private
respondent's marketing scheme, known as the "Complementary Distribution
System" (CDS) and dismissing the petitioner labor union's complaint for
unfair labor practice.
On April 17, 1978, a collective bargaining agreement (effective on May 1,
1978 until January 31, 1981) was entered into by petitioner San Miguel
Corporation Sales Force Union (PTGWO), and the private respondent, San
Miguel Corporation, Section 1, of Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate
bargaining unit shall be entitled to a basic monthly
compensation plus commission based on their respective
sales. (p. 6, Annex A; p. 113, Rollo.)
In September 1979, the company introduced a marketing scheme known as
the "Complementary Distribution System" (CDS) whereby its beer products
were offered for sale directly to wholesalers through San Miguel's sales
offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice
in the Ministry of Labor, with a notice of strike on the ground that the CDS
was contrary to the existing marketing scheme whereby the Route Salesmen
were assigned specific territories within which to sell their stocks of beer,
and wholesalers had to buy beer products from them, not from the company.
It was alleged that the new marketing scheme violates Section 1, Article IV
of the collective bargaining agreement because the introduction of the CDS
would reduce the take-home pay of the salesmen and their truck helpers for
the company would be unfairly competing with them.
The complaint filed by the petitioner against the respondent company raised
two issues: (1) whether the CDS violates the collective bargaining
agreement, and (2) whether it is an indirect way of busting the union.
In its order of February 28, 1980, the Minister of Labor found:
... We see nothing in the record as to suggest that the
unilateral action of the employer in inaugurating the new
sales scheme was designed to discourage union organization
or diminish its influence, but rather it is undisputable that the
establishment of such scheme was part of its overall plan to
improve efficiency and economy and at the same time gain
profit to the highest. While it may be admitted that the
introduction of new sales plan somewhat disturbed the
present set-up, the change however was too insignificant as
to convince this Office to interpret that the innovation
interferred with the worker's right to self-organization.
Petitioner's conjecture that the new plan will sow
dissatisfaction from its ranks is already a prejudgment of the
plan's viability and effectiveness. It is like saying that the
plan will not work out to the workers' [benefit] and therefore
management must adopt a new system of marketing. But
what the petitioner failed to consider is the fact that corollary
to the adoption of the assailed marketing technique is the
effort of the company to compensate whatever loss the
workers may suffer because of the new plan over and above
than what has been provided in the collective bargaining
agreement. To us, this is one indication that the action of the
management is devoid of any anti-union hues. (pp. 24-25,
Rollo.)
The dispositive part of the Minister's Order reads:
WHEREFORE, premises considered, the notice of strike
filed by the petitioner, San Miguel Brewery Sales Force
Union-PTGWO is hereby dismissed. Management however
is hereby ordered to pay an additional three (3) months back
adjustment commissions over and above the adjusted
commission under the complementary distribution system.
(p. 26, Rollo.)
The petition has no merit.
Public respondent was correct in holding that the CDS is a valid exercise of
management prerogatives:
Except as limited by special laws, an employer is free to
regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to
be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal
and recall of work. ... (NLU vs. Insular La Yebana Co., 2
SCRA 924; Republic Savings Bank vs. CIR 21 SCRA 226,
235.) (Perfecto V. Hernandez, Labor Relations Law, 1985
Ed., p. 44.) (Emphasis ours.)
Every business enterprise endeavors to increase its profits. In the process, it
may adopt or devise means designed towards that goal. In Abbott
Laboratories vs. NLRC, 154 SCRA 713, We ruled:
... Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free
will of management to conduct its own business affairs to
achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good faith
for the advancement of the employer's interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold them (LVN Pictures Workers
vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery and
Garment Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA
110). San Miguel Corporation's offer to compensate the members of its sales
force who will be adversely affected by the implementation of the CDS by
paying them a so-called "back adjustment commission" to make up for the
commissions they might lose as a result of the CDS proves the company's
good faith and lack of intention to bust their union.
WHEREFORE, the petition for certiorari is dismissed for lack of merit
Sime Darby Pilipinas, Inc. petitioner,
vs NLRC and Sime Darby Salaried Employees Assoc., respondents
Facts:
Sime Darby is engaged in the manufacture of automotive tires, tubes and
other rubber products. Private respondent is an association of the monthly
salaried employees of the Sime Darby factory workers in Marikina. Prior to
the controversy, all employees of Sime Darby worked from 7:45am to
3:45pm with a 30-minute paid "on call" lunch break.
On August 14, 1992, the company issued a memorandum to all factory
employees advising all its monthly salaried employees in Marikina Tire plant
except those in the warehouse and Quality Assurance Dept., of a change in
work schedules. (M-F, 7:45am-4:45pm and Sat 7:45am-11:45am) with cofee
break of 10 minutes between 9:30am-10:30am and 2:30pm-3:30pm and
lunch break between 12nn-1pm(M-F).
Because of this memorandum, the association filed a complaint in behalf of
its members a complaint with labor Arbiter for unfair labor practice,
discrimination and evasion of liability. However, the labor arbiter dismissed
the complaint on the grounds that the elimination of the 30 minute paid lunch
break constituted a valid exercise of management prerogative and that the
new work schedule did not have the effect of dimishing the benefits for the
work did not exceed 8 hours.
Labor arbiter added that it would be unjust if they continue to be paid during
their lunch break even if they are no longer on call or required to work during
the break.
The association appealed to the NLRC but NLRC has affirmed the labor
arbiter's decision and dismissed the appeal. However, in the motion for
reconsideration, NLRC having two new commissioners has reversed the
earlier decision. Stating that,the public respondent declared that the new
work schedule deprived the employees of the benefits of a time-honored
company practice of providing its employees a 30-minute paid lunch break
resulting in an unjust diminution of company privileges prohibited by Art.
100 of the Labor Code, as amended.
Issue: Is the act of management in revising the work schedule of its
employees and discarding their paid lunch break constitutive of unfair labor
practice?
Ruling:
The Office of the Solicitor General filed in a lieu of comment a manifestation
and motion recommending that the petitioner be granted, alleging that the 14
August 1992 memorandum which contained the new work schedule was not
discriminatory of the union members nor did it constitute unfair labor
practice on the part of petitioner.
We agree, hence, we sustain petitioner. The right to fix the work schedules of
the employees rests principally on their employer. In the instant case
petitioner, as the employer, cites as reason for the adjustment the efficient
conduct of its business operations and its improved production.
The case before us does not pertain to any controversy involving
discrimination of employees but only the issue of whether the change of
work schedule, which management deems necessary to increase production,
constitutes unfair labor practice. As shown by the records, the change
effected by management with regard to working time is made to apply to all
factory employees engaged in the same line of work whether or not they are
members of private respondent union. Hence, it cannot be said that the new
scheme adopted by management prejudices the right of private respondent to
self-organization.
Management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, processes to be followed,
supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of
workers. Further, management retains the prerogative, whenever exigencies
of the service so require, to change the working hours of its employees. So
long as such prerogative is exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid agreements, this
Court will uphold such exercise.
Petition granted.
De Leon vs NLRC
This petition for certiorari seeks to annul and set aside: (1) the majority decision
dated January 28, 1985 of the National Labor Relations Commission First Division
in Case No. NCR- 83566-83, which reversed the Order dated April 6,1984 of Labor
Arbiter Bienvenido S. Hernandez directing the reinstatement of petitioner Moises de
Leon by private respondent La Tondeñ;a Inc. with payment of backwages and other
benefits due a regular employee; and, (2) the Resolution dated March 21, 1985
denying petitioner's motion for reconsideration.
It appears that petitioner was employed by private respondent La Tondeñ;a Inc. on
December 11, 1981, at the Maintenance Section of its Engineering Department in
Tondo, Manila. 1 His work consisted mainly of painting company building and
equipment, and other odd jobs relating to maintenance. He was paid on a daily basis
through petty cash vouchers.
In the early part of January, 1983, after a service of more than one (1) year, petitioner
requested from respondent company that lie be included in the payroll of regular
workers, instead of being paid through petty cash vouchers. Private respondent's
response to this request was to dismiss petitioner from his employment on January
16, 1983. Having been refused reinstatement despite repeated demands, petitioner
filed a complaint for illegal dismissal, reinstatement and payment of backwages
before the Office of the Labor Arbiter of the then Ministry now Department of Labor
and Employment.
Petitioner alleged that he was dismissed following his request to be treated as a
regular employee; that his work consisted of painting company buildings and
maintenance chores like cleaning and operating company equipment, assisting
Emiliano Tanque Jr., a regular maintenance man; and that weeks after his dismissal,
he was re-hired by the respondent company indirectly through the Vitas-Magsaysay
Village Livelihood Council, a labor agency of respondent company, and was made to
perform the tasks which he used to do. Emiliano Tanque Jr. corroborated these
averments of petitioner in his affidavit. 2
On the other hand, private respondent claimed that petitioner was not a regular
employee but only a casual worker hired allegedly only to paint a certain building in
the company premises, and that his work as a painter terminated upon the completion
of the painting job.
On April 6, 1984, Labor Arbiter Bienvenido S. Hernandez rendered a
decision 3 finding the complaint meritorious and the dismissal illegal; and ordering
the respondent company to reinstate petitioner with full backwages and other
benefits. Labor Arbiter Hernandez ruled that petitioner was not a mere casual
employee as asserted by private respondent but a regular employee. He concluded
that the dismissal of petitioner from the service was prompted by his request to be
included in the list of regular employees and to be paid through the payroll and is,
therefore, an attempt to circumvent the legal obligations of an employer towards a
regular employee
On appeal, however, the above decision of the Labor Arbiter was reversed by the
First Division of the National Labor Relations Commission by virtue of the votes of
two members 5 which constituted a majority. Commissioner Geronimo Q. Quadra
dissented, voting "for the affirmation of the well-reasoned decision of the Labor
Arbiter below." 6 The motion for reconsideration was denied. Hence, this recourse.
Petitioner asserts that the respondent Commission erred and gravely abuse its
discretion in reversing the Order of the Labor Arbiter in view of the uncontroverted
fact that the tasks he performed included not only painting but also other
maintenance work which are usually necessary or desirable in the usual business of
private respondent: hence, the reversal violates the Constitutional and statutory
provisions for the protection of labor.
The private respondent, as expected, maintains the opposite view and argues that
petitioner was hired only as a painter to repaint specifically the Mama Rosa building
at its Tondo compound, which painting work is not part of their main business; that
at the time of his engagement, it was made clear to him that he would be so engaged
on a casual basis, so much so that he was not required to accomplish an application
form or to comply with the usual requisites for employment; and that, in fact,
petitioner was never paid his salary through the regular payroll but always through
petty cash vouchers. 7
The Solicitor General, in his Comment, recommends that the petition be given due
course in view of the evidence on record supporting petitioner's contention that his
work was regular in nature. In his view, the dismissal of petitioner after he demanded
to be regularized was a subterfuge to circumvent the law on regular employment. He
further recommends that the questioned decision and resolution of respondent
Commission be annulled and the Order of the Labor Arbiter directing the
reinstatement of petitioner with payment of backwages and other benefits be
upheld. 8
After a careful review of the records of this case, the Court finds merit in the petition
as We sustain the position of the Solicitor General that the reversal of the decision of
the Labor Arbiter by the respondent Commission was erroneous
This provision reinforces the Constitutional mandate to protect the interest of labor.
Its language evidently manifests the intent to safeguard the tenurial interest of the
worker who may be denied the rights and benefits due a regular employee by virtue
of lopsided agreements with the economically powerful employer who can maneuver
to keep an employee on a casual status for as long as convenient. Thus, contrary
agreements notwithstanding, an employment is deemed regular when the activities
performed by the employee are usually necessary or desirable in the usual business
or trade of the employer. Not considered regular are the so-called "project
employment" the completion or termination of which is more or less determinable at
the time of employment, such as those employed in connection with a particular
construction project 9 and seasonal employment which by its nature is only desirable
for a limited period of time. However, any employee who has rendered at least one
year of service, whether continuous or intermittent, is deemed regular with respect to
the activity he performed and while such activity actually exists.
The primary standard, therefore, of determining a regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and
its relation to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the performance
is not continuous or merely intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability
of that activity to the business. Hence, the employment is also considered regular,
but only with respect to such activity and while such activity exists.
In the case at bar, the respondent company, which is engaged in the business of
manufacture and distillery of wines and liquors, claims that petitioner was contracted
on a casual basis specifically to paint a certain company building and that its
completion rendered petitioner's employment terminated. This may have been true at
the beginning, and had it been shown that petitioner's activity was exclusively
limited to painting that certain building, respondent company's theory of casual
employment would have been worthy of consideration.
However, during petitioner's period of employment, the records reveal that the tasks
assigned to him included not only painting of company buildings, equipment and
tools but also cleaning and oiling machines, even operating a drilling machine, and
other odd jobs assigned to him when he had no painting job. A regular employee of
respondent company, Emiliano Tanque Jr., attested in his affidavit that petitioner
worked with him as a maintenance man when there was no painting job.
It is noteworthy that, as wisely observed by the Labor Arbiter, the respondent
company did not even attempt to negate the above averments of petitioner and his
co- employee. Indeed, the respondent company did not only fail to dispute this vital
point, it even went further and confirmed its veracity when it expressly admitted in
its comment that, "The main bulk of work and/or activities assigned to petitioner was
painting and other related activities. Occasionally, he was instructed to do other odd
things in connection with maintenance while he was waiting for materials he would
need in his job or when he had finished early one assigned to him. 10
The respondent Commission, in reversing the findings of the Labor Arbiter reasoned
that petitioner's job cannot be considered as necessary or desirable in the usual
business or trade of the employer because, "Painting the business or factory building
is not a part of the respondent's manufacturing or distilling process of wines and
liquors. 11
The fallacy of the reasoning is readily apparent in view of the admitted fact that
petitioner's activities included not only painting but other maintenance work as well,
a fact which even the respondent Commission, like the private respondent, also
expressly recognized when it stated in its decision that, 'Although complainant's
(petitioner) work was mainly painting, he was occasionally asked to do other odd
jobs in connection with maintenance work. 12 It misleadingly assumed that all the
petitioner did during his more than one year of employment was to paint a certain
building of the respondent company, whereas it is admitted that he was given other
assignments relating to maintenance work besides painting company building and
equipment.
It is self-serving, to say the least, to isolate petitioner's painting job to justify the
proposition of casual employment and conveniently disregard the other maintenance
activities of petitioner which were assigned by the respondent company when he was
not painting. The law demands that the nature and entirety of the activities performed
by the employee be considered. In the case of petitioner, the painting and
maintenance work given him manifest a treatment consistent with a maintenance
man and not just a painter, for if his job was truly only to paint a building there
would have been no basis for giving him other work assignments In between
painting activities.
It is not tenable to argue that the painting and maintenance work of petitioner are not
necessary in respondent's business of manufacturing liquors and wines, just as it
cannot be said that only those who are directly involved in the process of producing
wines and liquors may be considered as necessary employees. Otherwise, there
would have been no need for the regular Maintenance Section of respondent
company's Engineering Department, manned by regular employees like Emiliano
Tanque Jr., whom petitioner often worked with.
Furthermore, the petitioner performed his work of painting and maintenance
activities during his employment in respondent's business which lasted for more than
one year, until early January, 1983 when he demanded to be regularized and was
subsequently dismissed. Certainly, by this fact alone he is entitled by law to be
considered a regular employee. And considering further that weeks after his
dismissal, petitioner was rehired by the company through a labor agency and was
returned to his post in the Maintenance Section and made to perform the same
activities that he used to do, it cannot be denied that as activities as a regular painter
and maintenance man still exist.
It is of no moment that petitioner was told when he was hired that his employment
would only be casual, that he was paid through cash vouchers, and that he did not
comply with regular employment procedure. Precisely, the law overrides such
conditions which are prejudicial to the interest of the worker whose weak bargaining
position needs the support of the State. That determines whether a certain
employment is regular or casual is not the will and word of the employer, to which
the desperate worker often accedes, much less the procedure of hiring the employee
or the manner of paying his salary. It is the nature of the activities performed in
relation to the particular business or trade considering all circumstances, and in some
cases the length of time of its performance and its continued existence.
Finally, considering its task to give life and spirit to the Constitutional mandate for
the protection of labor, to enforce and uphold our labor laws which must be
interpreted liberally in favor of the worker in case of doubt, the Court cannot
understand the failure of the respondent Commission to perceive the obvious attempt
on the part of the respondent company to evade its obligations to petitioner by
dismissing the latter days after he asked to be treated as a regular worker on the
flimsy pretext that his painting work was suddenly finished only to rehire him
indirectly weeks after his dismissal and assign him to perform the same tasks he used
to perform. The devious dismissal is too obvious to escape notice. The inexplicable
disregard of established and decisive facts which the Commission itself admitted to
be so, in justifying a conclusion adverse to the aggrieved laborer clearly spells a
grave abuse of discretion amounting to lack of jurisdiction.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of
the National Labor Relations Commission are hereby annulled and set aside. The
Order of Labor arbiter Bienvenido S. Hernandez dated April 6, 1984 is reinstated.
Private respondent is ordered to reinstate petitioner as a regular maintenance man
and to pay petitioner 1) backwages equivalent to three years from January 16,1983,
in accordance with the Aluminum Wage Orders in effect for the period covered, 2)
ECOLA 3) 13th Month Pay, 4) and other benefits under pertinent Collective
Bargaining Agreements, if any
Philippine Geothermal vs NLRC
Petitioner Philippine Geothermal, Inc. is a U.S. corporation engaged in the
exploration and development of geothermal energy resources as an alternative
source of energy. It is duly authorized to engage in business in the Philippines
and at present is the prime contractor of the National Power Corporation at the
latter's operation of the Tiwi, Albay and the Makiling-Banahaw Geothermal
Projects. 1
Private respondents, on the other hand, are employees of herein petitioner
occupying various positions ranging from carpenter to Clerk II who had worked
with petitioner company under individual contracts, categorized as contractual
employment, for a period ranging from fifteen (15) days to three (3) months.
These contracts were regularly renewed to the extent that individual private
respondents had rendered service from three (3) to five (5) years until 1983 and
1984 when petitioner started terminating their employment by not renewing their
individual contracts. Subsequently petitioner entered into job contracting
agreement with Dra. Generosa Gonzales who supplies it with skilled
manpower. 2
Sometime in July 1983, herein private respondents organized a separate labor
union in view of their exclusion in the bargaining unit of the regular rank and file
employees represented by the Federation of Free Workers. In August 1983, they
filed a petition for certification election with the Ministry of Labor and
Employment, NCR, docketed as Case No. NCD-LRD-8-242-84. Because of this,
herein petitioner allegedly started harassing them and replaced them with so
called "contract workers". Thus, complainant union and herein respondent
employees filed a case for illegal lock-out and unfair labor practice, docketed as
Case No. 1420-83 and the instant consolidated cases RAB Case Nos. 0403-85 to
427-85 and RAB Cases Nos. 0392-85 to 0393-85, involving 26 workers, for
unfair labor practice and/or illegal dismissal, reinstatement backwages and
service incentive. 3
On March 3, 1987, Labor Arbiter Voltaire A. Balitaan rendered a decision in
favor of the respondents the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the
petitioners and they are hereby declared regular and permanent
employees of the respondent and finding their dismissal from
the service illegal, respondent is ordered to reinstate them to
 their former positions without loss of seniority rights and with
one year backwages without qualification or deduction in the
amount of P590,021.76.
SO ORDERED. 4
On Appeal, the National Labor Relations Commission on November 9, 1987
rendered a decision dismissing the appeal and affirming the decision of the
Labor Arbiter. 5 A motion for reconsideration was denied on March 9, 1988 for
lack of merit. 6
Hence, this petition which was filed on April 22, 1988.
In the meantime, a writ of execution was issued by Executive Arbiter Gelacio L.
Rivera, Jr. on April 11, 1988 on the ground that no appeal was interposed hence
the decision of the Labor Arbiter had become final and executory. 7
On April 20, 1988, petitioner filed a motion for the issuance of a Temporary
Restraining Order as the Sheriff tried to enforce the Writ of Execution dated
April 11, 1988 against petitioner on April 18, 1988. They further alleged that
they are ready, willing and able to post a supersedeas bond to answer for
damages which respondents may suffer. 8
On June 29, 1988, this Court issued a Temporary Restraining Order enjoining
respondents from enforcing the Resolution dated November 9, 1987, any writ of
execution or notice of garnishment issued in RAB Cases Nos. 0403-85 to 427-85
and RAB Cases Nos. 0392-85 to 393-85 of the National Labor Relations
Commission, Department of Labor and Employment. 9
On April 17, 1989, this Court resolved to dismiss the petition for failure to
sufficiently show that the respondent commission had committed grave abuse of
discretion in rendering the questioned judgment and lifted the Temporary
Restraining Order issued on June 29, 1988. 10 A motion for reconsideration was
filed by petitioner on May 25, 1989. 11
On June 5, 1989, this Court granted the motion; and set aside the resolution
dated April 17, 1989; gave due course to the petition and required the patties to
submit simultaneously, their respective memoranda. 12
Private respondents filed their memorandum on August 8, 1989 13 while public
respondent filed its memorandum on September 1, 1989. 14 Petitioner filed its
memorandum on September 8, 1989. 15
The main issue in the case at bar is whether or not private respondents may be
considered regular and permanent employees due to their length of service in the
company despite the fact that their employment is on contractual basis.
Petitioner alleges that it engaged the services of private respondents on a
monthly basis to ensure that manpower would be available when and where
needed. Private respondents were fully aware of the nature of their employment
as this was clearly spelled out in the employment contracts. What happened to
them was not a case of unwarranted dismissal but simply one of expiration of the
tenure of employment contracts and the completion of the phase of the project
for which their services were hired. 16
In the recent case of Kimberly Independent Labor Union for Solidarity, Activism,
and Nationalism-Olalia vs. Hon. Franklin M. Drilon, G.R. Nos. 77629 and
78791 promulgated last May 9, 1990, this Court classified the two kinds of
regular employees, as: 1) those who are engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer; and
2) those who have rendered at least one (1) year of service, whether continuous
or broken with respect to the activity in which they are employed. While the
actual regularization of these employees entails the mechanical act of issuing
regular appointment papers and compliance with such other operating
procedures, as may be adopted by the employer, it is more in keeping with the
intent and spirit of the law to rule that the status of regular employment attaches
to the casual employee on the day immediately after the end of his first year of
service.
Assuming therefore, that an employee could properly be regarded as a casual (as
distinguished from a regular employee) he becomes entitled to be regarded as a
regular employee of the employer as soon as he has completed one year of
service. Under the circumstances, employers may not terminate the service of a
regular employee except for a just cause or when authorized under the Labor
Code. It is not difficult to see that to uphold the contractual arrangement between
the employer and the employee would in effect be to permit employers to avoid
the necessity of hiring regular or permanent employees indefinitely on a
temporary or casual status, thus to deny them security of tenure in their jobs.
Article 106 of the Labor Code is precisely designed to prevent such result. 17
It is the policy of the state to assure the right of workers to "security of
tenure." 18 The guarantee is an act of social justice. When a person has no
property, his job may possibly be his only possession or means of livelihood.
Therefore, he should be protected against any arbitrary deprivation of his job.
Article 280 of the Labor Code has construed "security of tenure" as meaning that
"the employer shall not terminate the services of the employee except for a just
cause or when authorized by the Code." 19
PREMISES CONSIDERED, the decision of the National Labor Relations
Commission is hereby AFFIRMED and the Temporary Restraining Order issued
on June 29, 1988 is hereby LIFTED permanently.
.