LABOR STANDARDS DIGESTS
1. PHILIPPINE ASSOCIATION V. HON. TORRES Labor Arbiter – Dismissed; NLRC - affirmed LA decision; MR:
FACTS:
As a result of published stories regarding the abuses suffered by
Filipino housemaids employed in Hong Kong, then DOLE Secretary
Ruben Torres issued Department Order No.16, Series of 1991,
temporarily suspending the recruitment by private employment
agencies of Filipino domestic helpers going to Hong Kong. The DOLE
itself, through the POEA took over the business of deploying such
Hong Kong-bound workers. The POEA Administrator also issued
Memorandum Circular No. 37, Series of 1991, on the processing of
employment contracts of domestic workers for Hong Kong. PASEI
filed a petition for prohibition to annul the aforementioned DOLE and
POEA circulars and to prohibit their implementation on the grounds
that DOLE and POEA acted with grave abuse of discretion and/or in
excess of their rule-making authority in issuing said circulars; that the
assailed DOLE and POEA circulars are contrary to the Constitution,
are unreasonable, unfair and oppressive; and that the requirements
of publication and filing with the Office of the National Administrative
Register were not complied with.
ISSUES:
(1) whether or not respondents acted with grave abuse of discretion
and/or in excess of their rule-making authority in issuing said circulars;
(2) whether or not the assailed DOLE and POEA circulars are contrary
to the Constitution, are unreasonable, unfair and oppressive; and
(3) whether or not the requirements of publication and filing with the
Office of the National Administrative Register were not complied with.
RULING:
FIRST, the respondents acted well within in their authority and did not
commit grave abuse of discretion. This is because Article 36 (LC)
clearly grants the Labor Secretary to restrict and regulate recruitment
and placement activities, to wit: Art. 36. Regulatory Power. — The
Secretary of Labor shall have the power to restrict and regulate the
recruitment and placement activities of all agencies within the
coverage of this title [Regulation of Recruitment and Placement
Activities] and is hereby authorized to issue orders and promulgate
rules and regulations to carry out the objectives and implement the
provisions of this title.
SECOND, the vesture of quasi-legislative and quasi-judicial powers in
administrative bodies is constitutional. It is necessitated by the
growing complexities of the modern society.
THIRD, the orders and circulars issued are however, invalid and
unenforceable. The reason is the lack of proper publication and filing
in the Office of the National Administrative Registrar as required in
Article 2 of the Civil Code to wit: Art. 2. Laws shall take effect after
fifteen (15) days following the completion of their publication in the
Official Gazette, unless it is otherwise provided; Article 5 of the Labor
Code to wit:
Art. 5. Rules and Regulations. — The Department of Labor and other
government agencies charged with the administration and enforcement of
this Code or any of its parts shall promulgate the necessary implementing
rules and regulations. Such rules and regulations shall become effective
fifteen (15) days after announcement of their adoption in newspapers of
general circulation; and Sections 3(1) and 4, Chapter 2, Book VII of the
Administrative Code of 1987.
SC reiterated the ruling in Tanada v. Tuvera, that administrative rules
and regulations must also be published if their purpose is to enforce
or implement existing law pursuant to a valid delegation.
2. SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION
V. NLRC
Facts: Petitioners requested and pleaded for the implementation and
payment by private respondent Juan De Dios Hospital of the '40-
HOURS/5-DAY WORKWEEK' with compensable weekly two (2) days
off. (Under RA 5901, Policy Instructions No. 54)
Respondents acted in negative.
Petitioners filed a complaint for "claims for statutory benefits under the
above-cited law and policy issuance"
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Denied
Thus, petitioners filed for petition for certiorari ascribing grave
abuse of discretion on the part of NLRC in concluding that Policy
Instructions No. 54 proceeds from a wrong interpretation of RA 5901
and Article 83 of the Labor Code.
Issue: Whether or not Policy Instruction 54 is valid.
Ruling: INVALID. Policy Instructions No. 54 extended the statute -
RA 5901. Policy Instructions No. 54 being inconsistent with and
repugnant to the provision of Article 83 of the Labor Code, as well as
to Republic Act No. 5901. In addition, RA 5901 is already repealed.
Discussion
Policy Instruction No. 54 relies and purports to implement Republic
Act No. 5901, however, such reliance on the statute is misplaced for
the said statute has long been repealed with the passage of the Labor
Code. Accordingly, only Article 83 of the Labor Code which appears
to have substantially incorporated or reproduced the basic provisions
of Republic Act No. 5901.
“Art. 83. Normal Hours of Work. — The normal hours of work of any
employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least
one million (1,000,000) or in hospitals and clinics with a bed capacity of at
least one hundred (100) shall hold regular office hours for eight (8) hours
a day, for five (5) days a week, exclusive of time for meals, except where
the exigencies of the service require that such personnel work for six
(6) days or forty-eight (48) hours, in which case they shall be entitled
to an additional compensation of at least thirty per cent (30%) of their
regular wage for work on the sixth day. . .” - TN: This is the applicable
Law
In furtherance to RA 5901(HAD IT BEEN NOT REPEALED OR
AMENDED) TN: This is no longer the applicable law, this is only for
discussion in lieu with the statute.
FIRST POINT: There is nothing in the law that supports then
Secretary of Labor's assertion that "personnel in subject hospitals and
clinics are entitled to a full weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in any given workweek". - His
interpretation was erroneous and it is at best merely advisory,
which the Court will not hesitate to strike down an administrative
interpretation that deviates from the provision of the statute. In fact,
the Explanatory Note Republic Act No. 5901 when it was still a bill
explicitly states that the bill's sole purpose is to shorten the working
hours of health personnel and not to dole out a two days off with
pay.
SECOND POINT: petitioners' position is also negated by the very
rules and regulations promulgated by the Bureau of Labor Standards
which implement Republic Act No. 5901. Pertinent portions of the
implementing rules are provided in sections 1, 7 and 15 of the rules.
Wherein section 15 stipulates additional pay which makes no
sense that under this provision, it grants additional
compensation equivalent to the regular rate plus at least twenty-
five percent thereof for work performed on Sunday to health
personnel, or an additional straight-time pay which must be
equivalent at least to the regular rate for work performed in
excess of forty hours a week if petitioners are already entitled to
two days off with pay.
3. ASUNCION V. NLRC
FACTS:
Petitioner Assuncion was employed as an
accountant/bookkeeper by Mabini Medical Clinic(MMC). When the
officials of NCR-Industrial Relation Division of DOLE conducted a
routine inspection of MMC, they discovered upon the disclosure of
Assuncion the violation committed by MMC on the labor standards law
such as non-coverage from the SSS of the employees. As a
consequence, MMC was directed to correct such violations.
After which, petitioner got issued a memorandum charging
her with chronic absenteeism, habitual tardiness, loitering and wasting
company time, getting salary of an absent employee without
acknowledging or signing it, disobedience and insubordination.
Assuncion was required to to explain within 2 days but she was able
LABOR STANDARDS DIGESTS
to submit her response 3 days later. She got dismissed on the ground
of disobedience of lawful orders and for her failure to submit a reply
within the 2 day period. Thus, petitioner filed a case for illegal
termination.
LA’s RULING:
Ruled in favor of Assuncion. MMC failed to prove the
allegation of chronic absenteeism as it failed to present in evidence
the time cards, logbooks which complainant signed recording her time
in reporting for work. That such record book was mentioned in the
notice of termination and non-presentation of such gives rise to the
presumption that documents were intentionally suppressed.
Moreover, it ruled that petitioner’s absences were with the conformity
of MMC as both parties had agreed beforehand that petitioner would
not report to work on Saturdays.
NLRC’s RULING:
 Dismissed the complaint for illegal dismissal for
lack of merit. It ruled that petitioner had admitted the tardiness and
absences through offering justifications for the infractions.
ISSUE:
WON Assuncion was dismissed by MMC for a just or
authorized cause
SC’s RULING:
While it is true that factual findings of administrative bodies
are entitled to great weight and respect, in this case the court is
constrained to take a second look at the facts because of the diversity
in the opinions of the LA and NLRC.
An employee cannot be deprived of how work without due
process. For the dismissal to be valid, it must be based on just cause
supported by clear and convincing evidence and the opportunity of the
employee to be heard and defend himself. The burden of proving that
the dismissal was with just cause lies with the employer. MMC failed
to discharge this burden.
In the case at bar, the handwritten listing and unsigned
computer print-outs were unauthenticated and hence, unreliable. All
of which are self-serving evidence without any rational probative value
which should not be made the basis of order or decision of
administrative bodies. It was also very ironic when MMC referred to
the record book in charging the petitioner for alleged absenteeism and
tardiness yet they never presented it as an evidence when it could be
the best evidence available to substantiate their allegations. Thus, the
presumption naturally arises that the best evidence is withheld for
fraudulent purposes which its production would expose and defeat
and therefore would cast serious doubts on the factual basis of the
charges of absenteeism and tardiness against the petitioner.
It was also an error for the NLRC to rely upon the supposed
admission of the petitioner of her habitual absenteeism and chronic
tardiness when the petitioner explained that the absences she
incurred on Saturday were the result of the agreement she had with
MMC not requiring her to work on Saturdays. And again, MMC failed
to deny the existence of such arrangement. There was also no
competent evidence that petitioner was given any warning or
reprimanded for her alleged absences and tardiness. What’s even
worst is that considering she was being charged with several offenses
and infractions, she was only given two day period to explain and
answer the charges against her. What the law mandates is that every
opportunity and assistance must be accorded to the employee by the
management to enable him to prepare for an adequate defense.
From the foregoing, there are serious doubts in the
evidence on record as to the factual basis of the charges against the
petitioner. These doubts shall be resolved in her favor in line with the
policy under the Labor Code to afford protection to labor and construe
doubts in favor of labor. MMC not having satisfied its burden of proof,
the Court conclude that petitioner was dismissed without any just
cause. Assuncion to be entitled to reinstatement to her previous
position without loss of seniority and payment of backwages.
4. LETRAN CALAMBA FACULTY V. NLRC
[FACTS]
Petitioner filed with NLRC a complaint against Colegio de San Juan
de Letran for collection of various monetary claims due to its
members. They alleged that:
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• In the computation of the thirteenth month pay of its academic
personnel, respondent does not include as basis therefor their
compensation for overloads. It only takes into account the pay
the faculty members receive for their teaching loads not
exceeding eighteen (18) units. The teaching overloads are
rendered within eight (8) hours a day.
• Respondent has not paid the wage increases required by Wage
Order No. 5
• Respondent has not followed the formula prescribed by DECS
Memorandum Circular No. 2 dated March 10, 1989 in the
computation of the compensation per unit of excess load or
overload of faculty members. This has resulted in the diminution
of the compensation of faculty members.
• The salary increases due the non-academic personnel as a
result of job grading has not been given.
• Respondent has not paid to its employees the balances of
seventy (70%) percent of the tuition fee increases for the years
1990, 1991 and 1992.
• Respondent has not also paid its employees the holiday pay for
the ten (10) regular holidays as provided for in Article 94 of the
Labor Code.
Respondent denied all allegations of petitioner. Petitioners filed its
reply. Prior to the filing of the above-mentioned complaint, petitioner
filed a separate complaint against the respondent for money claims
with DOLE. On the other hand, respondent filed with RAB a petition
to declare as illegal a strike staged by petitioner in Jan. 1994.
[LOWER COURT’S RULING]
LA: dismissed the money claims cases for lack of merit. Also,
dismissed the petition to declare strike illegal.
Both parties appealed to the NLRC.
NLRC: dismissed both appeals. Petitioner filed a motion for
reconsideration but was denied. Petitioner filed a special civil action
for certiorari with CA.
CA: dismissed the petition. Petitioner filed a MR but was denied.
[ARGUMENTS]
Citing Agustilo v. Court of Appeals, petitioner contends that in a
special civil action for certiorari brought before the CA, the appellate
court can review the factual findings and the legal conclusions of the
NLRC.
Petitioner argues that under the Revised Guidelines on the
Implementation of the 13th-Month Pay Law, promulgated by the
Secretary of Labor on November 16, 1987, the basic pay of an
employee includes remunerations or earnings paid by his employer
for services rendered, and that excluded therefrom are the cash
equivalents of unused vacation and sick leave credits, overtime,
premium, night differential, holiday pay and cost-of-living allowances.
Petitioner claims that since the pay for excess loads or overloads does
not fall under any of the enumerated exclusions and considering that
the said overloads are being performed within the normal working
period of eight hours a day, it only follows that the overloads should
be included in the computation of the faculty members' 13th-month
pay.
Petitioner further contends that DOLE-DECS-CHED-TESDA Order
No. 02, Series of 1996 (DOLE Order) which was relied upon by the
LA and the NLRC in their respective Decisions cannot be applied to
the instant case because the DOLE Order was issued long after the
commencement of petitioner's complaints for monetary claims; that
the prevailing rule at the time of the commencement of petitioner's
complaints was to include compensations for overloads in determining
a faculty member's 13th-month pay; that to give retroactive application
to the DOLE Order issued in 1996 is to deprive workers of benefits
which have become vested and is a clear violation of the constitutional
mandate on protection of labor; and that, in any case, all doubts in the
implementation and interpretation of labor laws, including
implementing rules and regulations, should be resolved in favor of
labor.
Respondent contends that the ruling in Agustilo is an exception rather
than the general rule; that the general rule is that in a petition for
certiorari, judicial review by this Court or by the CA in labor cases does
not go so far as to evaluate the sufficiency of the evidence upon which
the proper labor officer or office based his or its determination but is
LABOR STANDARDS DIGESTS
limited only to issues of jurisdiction or grave abuse of discretion
amounting to lack of jurisdiction.
Agustilo is not applicable to the present case because in the former
case, the findings of fact of the LA and the NLRC are at variance with
each other; while in the present case, the findings of fact and
conclusions of law of the LA and the NLRC are the same. Respondent
avers that the DOLE Order is an administrative regulation which
interprets the 13th-Month Pay Law (P.D. No. 851) and, as such, it is
mandatory for the LA to apply the same to the present case.
Respondents contends that remunerations for teaching in excess of
the regular load, which includes overload pay for work performed
within an eight-hour work day, may not be included as part of the basic
salary in the computation of the 13th-month pay unless this has been
included by company practice or policy; that petitioner intentionally
omitted any reference to the above-mentioned opinion of the Legal
Services Office of the DOLE because it is fatal to its cause.
[ISSUE/S]
WON factual findings of the NLRC cannot be reviewed in
certiorari proceedings. YES.
WON teaching overloads should be included as basis in the
computation of their 13th month pay. NO.
[HELD]
1st issue: YES. In the instant case, the Court finds no error in the
ruling of the CA that since nowhere in the petition is there any
acceptable demonstration that the LA or the NLRC acted either with
grave abuse of discretion or without or in excess of its jurisdiction, the
appellate court has no reason to look into the correctness of the
evaluation of evidence which supports the labor tribunals' findings of
fact. Settled is the rule that the findings of the LA, when affirmed by
the NLRC and the CA, are binding on the Supreme Court, unless
patently erroneous.
2nd issue: NO. There are 2 conflicting opinions by the DOLE with
regards to the 2nd issue.
Opinion of the Bureau of Working Conditions of the DOLE (Dec. 9,
1991): if overload is performed within a teacher’s normal 8 hour work
per day, the remuneration that the teacher will get from the additional
teaching load will form part of the basic wage. Where a teacher is
required to perform such overload within the eight (8) hours normal
working day, such overload compensation shall be considered part of
the basic pay for the purpose of computing the teacher's 13th-month
pay.
Opinion of the Legal Services Department of the DOLE (March 4,
1992): remunerations for teaching in excess of the regular load shall
be excluded in the computation o the 13th month pay unless, by school
policy, the same are considered as part of the basic salary of the
qualified teachers. Any teaching load in excess of the normal or
regular teaching load shall be considered as overload. Overload
partakes of the nature of temporary extra assignment and
compensation therefore shall be considered as an overload
honorarium if performed within the 8-hour work period and does not
form part of the regular or basic pay.
Nevertheless, it is a settled rule that when an administrative or
executive agency renders an opinion or issues a statement of policy,
it merely interprets a pre-existing law and the administrative
interpretation is at best advisory for it is the courts that finally
determine what the law means.
So tungod kay conflicting siya, the court went to interpret the law itself
nalang since opinions by these agencies are interpretations of an
existing law.
Art. 87. Overtime work. Work may be performed beyond eight (8) hours a
day provided that the employee is paid for the overtime work, additional
compensation equivalent to his regular wage plus at least twenty-five
(25%) percent thereof."
It is clear that overtime pay is an additional compensation other than
and added to the regular wage or basic salary, for reason of which
such is categorically excluded from the definition of basic salary under
the Supplementary Rules and Regulations Implementing Presidential
Decree 851. Overload pay is not integrated with a teacher’s basic
salary for his or her regular teaching load. As such, it is not legally
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feasible to consider payments for such overload as part of a teacher's
regular or basic salary. Verily, overload pay may not be included as
basis for determining a teacher's 13th-month pay.
[DISPOSITION]
Petition is DENIED.
5. SINGER SEWING MACHINE V. NLRC
FACTS:
SIMACUB filed a petition for direct certification as the sole and
exclusive bargaining agent of all collectors of the Company ( Singer
Sewing Machine Company) on the ground that union members are
not employees but are independent contractors, with the collection
agency agreement(CAA) as evidence.
The med-arbiter granted the petition for certification election since it
found that there was an employee-employer relationship between the
union members and the company. The then DOLE Sec. Drilon
affirmed. Then the company alleged that the respondents acted in
excess of jurisdiction and/ or committed grave abuse of discretion(
that DOLE had no jurisdiction over the case since EE-ER was at issue,
disregarded the well-settled rule that commission agents are
independent contractors. )
ISSUE: Whether or not there was an employer-employee relationship
between the company and union members.
RULING:
No. Med-Arbiter’s order and DOLE’s resolution reversed and set
aside.
The Court found that the union members were not employees(under
At. 280 of the Labor Code) but independent contractors. Hence, they
are not entitled to the constitutional right to join or form a labor
organization for purposes of collective bargaining.
The last and most important element of Control Test( the power to
control employee’s conduct) is not satisfied by the terms and
conditions of the contracts. There is nothing in the agreement which
implies control by the Company not only over the end to be achieved
but also over the means and methods in achieving the end.
The plain language of the CAA reveals that the designation as
collection agent does not create an employment relationship and that
the applicant is to be considered an independent contractor at all
times. The CA does his work at his own time/ pleasure. Art. 280 is not
the yardstick for determining the existence of EE-ER relationship. It
merely distinguishes between regular employees and casual
employees.
6. MANILA GOLF CLUB V. IAC
C/O CANDANCE
7. ENCYCLOPEDIA BRITANNICA V. NLRC
Doctrine: Hiring > Four-Fold Test > Element of Control
Where a person who works for another does so more or less at his
own pleasure and is not subject to definite hours or conditions of work,
and in turn is compensated according to the result of his efforts and
not the amount thereof, we should not find that the relationship of
employer and employee exists.
FACTS
Private respondent Limjoco was a Sales Division Manager of
petitioner Britannica. As compensation, he received commissions
from the products sold by his agents.
• He was also allowed to use Britannica’s name, goodwill,
and logo.
• Office expenses, however, was deducted from Limjoco’s
commissions
• Limjoco informs Britannica of the appointments,
promotions, and transfers of employees in his district.
LABOR STANDARDS DIGESTS

June 14, 1974, Limjoco resigned from office to pursue his private sales. These independent agents hired their own sales
business to become a director of a Rural Bank. representatives, financed their own office expenses, and maintained
their own staff. Thus, there was a need for the petitioner to issue
October 30, 1975, Limjoco filed a complaint against Britannica with memoranda to private respondent so that the latter would be apprised
the DOLE, claiming for nonpayment of separation pay and other of the company policies and procedures. Private respondent Limjoco
benefits, and also illegal deduction from his sales commissions. and the other agents were free to conduct and promote their sales
operations, he had free rein n the means and methods for conducting
Limjoco alleged that: his marketing operations, which he admitted in his testimonies.

At the time he was connected with the petitioner company, private

• He was hired by the petitioner and assigned in the sales
department, and was earning an average of P4,000.00
monthly as his sales commission;
• He was under the supervision of the petitioner's officials
who issued to him and his other personnel, MEMORANDA,
guidelines on company policies, instructions and other
orders.
• He was dismissed by the petitioner when the Laurel-
Langley Agreement expired (not tackled by SC).
On the other hand, Britannica alleged that it had no control and
supervision as to the means and manner Limjoco conducted his
operations:
respondent was also a director and later the president of the Farmers'
Rural Bank. Had he been an employee of the company, he could not
be employed elsewhere and he would be required to devote full time
for petitioner.
As stated earlier, "the element of control is absent; where a person
who works for another does so more or less at his own pleasure and
is not subject to definite hours or conditions of work, and in turn is
compensated according to the result of his efforts and not the amount
thereof, we should not find that the relationship of employer and
employee exists.
Disposition: Petition is granted, the NLRC decision is reversed and
set aside.

• Limjoco was not its employee but an independent dealer

authorized to promote and sell its products and receive 8.CARUNGCONG V. SUN LIFE
commission therefrom. FACTS:
• Limjoco did not have any salary and his income from the Susan Carungcong began her career in the insurance industry as an
petitioner company was dependent on the volume of sales agent of Sun Life Assurance Company of Canada. She signed an
accomplished. “Agent’s Agreement” and signed another two new agreements
• He also had his own separate office, financed the business thereafter – the “Career Agent’s (or Unit Manager’s) Agreement” and
expenses, and maintained his own workforce. “MANAGER’S Supplementary Agreement”. The first contract set out
• Limjoco does not even report to the office of the petitioner in detail the terms and conditions – particularly those concerning the
and did not observe fixed office hour. commissions payable to her – under which her relationship with the
• The salaries of his secretary, utility man, and sales company would be governed. The second contract declared that the
representatives were chargeable to his commissions. “Agent shall be an independent contractor and none of the terms of
… (the) Agreement shall be construed as creating an employer-
employee relationship.” The third one contained provisions regarding
Labor Arbiter’s Ruling: remuneration, limitation of authority, and termination of the agreement
Limjoco was an employee of the petitioner company. Petitioner had inter alia by written notice “without cause”. Later on, another
control over Limjoco since the latter was required to make periodic agreement was executed, the New Business Manager with the
reports of his sales activities to the company. function of managing a new business office. It also stressed out that
she shall be considered an independent contractor and not an
NLRC: Affirmed the LA’s decision. employee of Sun Life and that her employees will not be considered
as an employee of Sun Life also.
ISSUE: W/N ISSUING A MEMORANDA SATISFIES THE ELEMENT
OF CONTROL IN THE FOUR-FOLD TEST, IN DETERMINING THE Meanwhile, anomalies have been reported in relation to the unit
EXISTENCE OF AN EE-ER RELATIONSHIP. managers and agents. In result to that, Sibayan, Manager of Sun
Life’s Internal Audit Dept, commenced an inquiry into the special fund
HELD: NO. NLRC’s decision is reversed. availments of Carungcong together with other new business
managers. It was later on resulted to the termination of Carungcong
In determining the existence of an employer-employee relationship by the Director, Marketing. Thereafter, Carungcong instated
the following elements must be present: proceedings in the Arbitration Branch of the NLRC.

1) selection and engagement of the employee; Arbitration Branch of NLRC:

Ruled in favor of Carungcong.

2) payment of wages; Labor Arbiter:

It held that there existed an employer-employee relationship
3) power of dismissal; and between her and Sun Life and that she was illegally dismissed.

4) the power to control the employee's conduct.
Of the above, control of employee's conduct is commonly regarded as
the most crucial and determinative indicator of the presence or
absence of an employer-employee relationship. Under the control
test, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only
the end to be achieved, but also the manner and means to be used in
reaching that end.
The fact that petitioner issued memoranda to private
respondents and to other division sales managers did not prove
that petitioner had actual control over them. The memoranda were
mere guidelines on company policies. Britannica’s business of selling
their products was done through dealership agreements. Its
operations were conducted by independent agents who does not
receive regular compensations but only commissions based on their
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NLRC:
It reversed its decision that there was an er-ee relationship
between Carungcong and Sun Life. Because of this, NLRC has no
jurisdiction or competence to make an award. There has been no
showing that the rules and regulations effectively and actually
controlled or restricted her choice of methods in performing her duties
as New Business Manager.
Carungcong’s contentions:
1. She was an employee subject to the control and
supervision of Sun Life like any other managerial employee.
2. In dismissing her, Sun Life failed to observe procedural due
process.
Sun Life’s contentions:
1. Invoked the familiar rule that the findings of administrative
agencies are accorded respect.
LABOR STANDARDS DIGESTS
2. Carungcong was duly informed of the charge of fraud and
dishonesty – supported by adequate proof.
ISSUE:
Is there an employer-employee relationship between
Carungcong and Sun Life?
Held:
No, Carungcong was not an ordinary run-of-the-mill employee, nor
even your average managerial employee or supervisor. This is in
consideration of her stated annual income “in excess of
P3,000,000.00” exclusive of overriding commissions making the court
to consider that she is an independent contractor, not an employee of
Sun Life.
It is not sufficient that there exist an agreements/contracts subject to
rules and regulations issued by Sun Life to prove the er-ee
relationship between them. This is so because insurance business is
not just any other business, it is imbued with public interest. The
controls adverted to by complainant are latent in the kind of business
she is into and do not necessarily create any er-ee relationships,
where the employer’s controls have to interfere in the methods and
means by which the employee would like to employ to arrive at the
desired results.
9. SPS. RAMOS V. CA
FACTS:
Plaintiff Erlinda Ramos was, until the afternoon of June 17, 1985 a 47-
year old robust woman. Except for occasional complaints of
discomfort due to pains allegedly caused by presence of a stone in
her gall bladder, she was as normal as any other woman. Married to
Rogelio Ramos, an executive of Philippine Long Distance Telephone
Company (PLDT), she has three children whose names are Rommel,
Roy Roderick, and Ron Raymond. Because of the discomforts
somehow interfered with her normal ways, she sought professional
advice. She was told to undergo an operation for the removal of a
stone in her gall bladder. She underwent series of examination which
revealed that she was fit for the said surgery. Through the intercession
of a mutual friend, she and her husband met Dr. Osaka for the first
time and she was advised by Dr. Osaka to go under the operation
called cholecystectomy and the same was agreed to be scheduled on
June 17,1985 at 9:00am at the Delos Santos Medical Center. Rogelio
asked Dr. Osaka to look for a good anesthesiologist to which the latter
agreed to. A day before the scheduled operation, she was admitted at
the hospital and on the day of the operation, Erlinda’s sister was with
her insider the operating room. Dr. Osaka arrived at the hospital late,
Dr. Guttierez, the anesthesiologist, started to intubate Erlina when
Herminda heard her say that intubating Erlinda is quite difficult and
there were complications. This prompt Dr. Osaka to order a call to
another anesthesiologist, Dr. Caldron who successfully intubated
Erlina. The patient’s nails became bluish and the patient was placed
in a trendelenburg position. After the operation, Erlina was diagnosed
to be suffering from diffuse cerebral parenchymal damage and that
the petitioner alleged that this was due to lack of oxygen supply to
Erlinda’s brain which resulted from the intubation.
Issue: Whether or not the doctors and the hospital are liable for
damages against petitioner for the result to Erlinda of the said
operation.
RULING:
Yes. The private respondents were unable to disprove the
presumption of negligence on their part in the care of Erlinda and their
negligence was the proximate case of her piteous condition.
Nevertheless, despite the fact that the scope of res ipsa loquitur has
been measurably enlarged, it does not automatically follow that it
applies to all cases of medical negligence as to mechanically shift the
burden of proof to the defendant to show that he is not guilty of the
ascribed negligence. Res ipsa liquitur is not a rigid or ordinary doctrine
Facts:
to be perfunctorily used but a rule to be cautiously applied, depending
In May 1994 respondent ABS-CBN Broadcasting Corporation signed
upon the circumstances of each case. It is generally restricted to
an agreement with the Mel and Jay Management and Development
situations in malpractice cases where a layman is able to say, as a
Corporation(hereinto referred as MJMDC). MJMDC agreed to provide
matter of common knowledge and observation, that the SONZA’s services exclusively to ABS-CBN as talent for radio and
consequences of professional care were not as such as would television. Note that Sonza is also the President and General Manager
ordinarily have followed if due care had been exercised. A distinction
of MJMDC
must be made between the failure to secure results, and the
On 1 April 1996, SONZA wrote a rescission letter for the May 1994
occurrence of something more unusual and not ordinarily found if the
Agreement to ABS-CBN’s President but reserves the right to seek
service or treatment rendered followed the usual procedure of those
recovery of the other benefits under said Agreement.
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skilled in that particular practice. It must be conceded that the doctrine
of res ipsa liquitor can have no application in a suit against a physician
or surgeon which involves the merits of a diagnosis or of a scientific
treatment.
Scientific studies point out that intubation problems are responsible
for 1/3 of deaths and serious injuries associated with anesthesia.
Nevertheless, 98% or the vast majority of difficult intubation may be
anticipated by performing a thorough evaluation of the patient’s airway
prior to the operation. As stated beforehand, respondent, Dra.
Guttierez failed to observe the proper pre-operative protocol which
could have prevented this unfortunate incident. Had appropriate
diligence and reasonable care been used in the pre-operative
evaluation, respondent physician could have been more prepared to
meet the contingency brought about by the perceived atomic
variations in the patient’s neck and oral area; defects which could
have been easily overcome by a prior knowledge of those variations
together with a change in technique. In other words, an experienced
anesthesiologist, adequately alerted by a thorough pre-operative
evaluation, would have had little difficulty going around the short neck
and potruding teeth. Having failed to observe common medical
standards in pre-operative management and intubation, respondent
Dra. Guttierez negligence resulted in cerebral anoxia and eventual
coma of Erlinda.
Hospitals exercise significant control in the hiring and firing of
consultants and in the conduct of their work within the hospital
premises. These requirements are carefully scrutinized by members
of the hospital administration or by a review committee set up by the
hospital who either accept or reject the application. This is particularly
true with respondent hospital. After a physician is accepted, either as
a visiting or attending consultant, he is normally required to attend
clinico-pathological conferences, conduct bedside rounds for clerks,
interns and residents, moderate grand rounds and patient audits and
perform other tasks and responsibilities, for the privilege of being able
to maintain a clinic in the hospital, and/or for the privilege of admitting
patients into the hospital.
While "consultants" are not, technically employees, a point which
respondent hospital asserts in denying all responsibility for the
patient's condition, the control exercised, the hiring, and the right to
terminate consultants all fulfill the important hallmarks of an employer-
employee relationship, with the exception of the payment of wages. In
assessing whether such a relationship in fact exists, the control test is
determining. Accordingly, on the basis of the foregoing, we rule that
for the purpose of allocating responsibility in medical negligence
cases, an employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians. DCTSEA
The basis for holding an employer solidarily responsible for the
negligence of its employee is found in Article 2180 of the Civil Code
which considers a person accountable not only for his own acts but
also for those of others based on the former's responsibility under a
relationship of patria potestas. Such responsibility ceases when the
persons or entity concerned prove that they have observed the
diligence of a good father of the family to prevent damage.
In the instant case, respondent hospital, apart from a general denial
of its responsibility over respondent physicians, failed to adduce
evidence showing that it exercised the diligence of a good father of a
family in the hiring and supervision of the latter. It failed to adduce
evidence with regard to the degree of supervision which it exercised
over its physicians. In neglecting to offer such proof, or proof of a
similar nature, respondent hospital thereby failed to discharge its
burden under the last paragraph of Article 2180. Having failed to do
this, respondent hospital is consequently solidarily responsible with its
physicians for Erlinda's condition.
10. SONZA V. ABS-CBN
LABOR STANDARDS DIGESTS

essential element of Contentions of Sonza SC further discussion on its rulings

an employer-
employee relationship

(d) the employer’s • First, SONZA contended that ABS-CBN
power to control the exercised control over the means and
employee on the means methods of his work. He claimed that
and methods by which ABS-CBN’s power not to broadcast his
the work is shows proves ABS-CBN’s power over
accomplished the means and methods of the
performance of his work.
• Second, SONZA urged 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."
• ABS-CBN’s right not to broadcast SONZA’s show, did
not amount to control over the means and methods of
the performance of SONZA’s work. ABS-CBN could not
terminate or discipline SONZA even if the means and
methods of performance of his work - how he delivered
his lines and appeared on television did not meet ABS-
CBN’s approval. This proves that ABS-CBN’s control
was limited only to the result of SONZA’s work, whether
to broadcast the final product or not.
-Thus, even if ABS-CBN was completely dissatisfied with the
means and methods of SONZA’s performance of his work, or even
with the quality or product of his work, ABS-CBN could not dismiss
or even discipline SONZA. All that ABS-CBN could do is not to
broadcast SONZA’s show but ABS-CBN must still pay his talent
fees in full.

• Lastly, SONZA insisted that the
"exclusivity clause" in the Agreement is
the most extreme form of control which
ABS-CBN exercised over him.
• 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.

ABS-CBN did not comply with the letter, but still continued to remit
SONZA’s monthly talent fees amidst cancellation of his programs.
Thus, Petitioner filed a complaint against ABS-CBN before the
Department of Labor and Employment, for non-payment of benefits
under said agreement.
Respondent filed a Motion to Dismiss on the ground that no employer-
employee relationship existed between the parties.
Labor Arbiter - DISMISSED for lack of jurisdiction
NLRC - Petitioner appealed - AFFIRMED LA DECISION
MR: DENIED
CA - Special Civil Action for Certiorari - DISMISSED
SC - Thus, Petition for review on Certiorari (THE INSTANT CASE)
Issues:
Whether or not there exists an employer-employee relationship
between Sonza and ABS-CBN.
Ruling:
NO. No employer-employee relationship exist because Sonza was an
independent contractor, his claims are all based on the May 1994
Agreement and stock option plan, and not on the Labor Code. Clearly,
the present case does not call for an application of the Labor Code
provisions but an interpretation and implementation of the May 1994
Agreement. In effect, SONZA’s cause of action is for breach of
contract which is intrinsically a civil dispute cognizable by the regular
courts.
Bases of the conclusion that Sonza is an INDEPENDENT
CONTRACTOR
1. CONTROL TEST (DISCUSSED FURTHER IN THE TABLE
BELOW)
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.
2. MJMDC AS AGENT - SONZA insists that MJMDC is a
"labor-only" contractor and ABS-CBN is his employer. In a labor-only
contract, there are three parties involved:
1) the "labor-only" contractor;
2) the employee who is ostensibly under the employ of the "labor-only"
contractor
3) the principal who is deemed the real employer. Under this scheme,
the "labor-only" contractor is the agent of the principal.
The law makes the principal responsible to the employees of the
"labor-only contractor" as if the principal itself directly hired or
employed the employees. These circumstances are not present in this
case. There are essentially only two parties involved under the
Agreement
3. TALENT AS INDEPENDENT CONTRACTORS - Not every
performance of services for a fee creates an employer-employee
relationship. 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.
DISCUSSION ON CONTROL TEST
11. LAZARO V. SSC
FACTS:
Laudato filed a petition before the SSC for social security
coverage and remittance of unpaid monthly social security
contributions against her three employers. One of whom was
petitioner Lazaro, proprietor of Royal Star Marketing engaged in the
business of selling home appliances. Laudato alleged that despite her
employment as sales supervisor of the sales agents for Royal Star
from April of 1979 to March of 1986, lazaro had failed to report her to
SSC for compulsory coverage or remit her social security
contributions.

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LABOR STANDARDS DIGESTS
Lazaro denied that Laudato was a sales supervisor,
averring instead that she was a mere sales agent paid on commission
basis and maintained that she was not subjected to definite hours and
conditions of work. Thus, could not be deemed as an employee of
Royal Star.
SSC’s RULING:
 Applied the “control test” and held that Laudato
was an employee of Royal Star. It ordered the Royal Star to pay the
unremitted social security contributions of Laudato together with the
penalties and in addition liable to pay damages to the SSC for not
reporting laudato for social security coverage.
CA’s RULING:
Affirmed the finding that Laudato was an employee of Royal
Star and hence entitled to coverage under the Social Security Law.
ISSUE:
WON Laudato was an employee of Royal Star and thus
entitled for social security coverage.
SC’s RULING:
For the purposes of coverage under Social Security Act, the
determination employer-employee relationship warrants the
application of the “control test”, whether the employer controls or has
reserved the right to control the employee, not only as to the result of
the work done, but also as to the means and method by which the
same is accomplished. The SSC as sustained by CA, applying such
test found that Laudato was an employee of Royal Star. Theat factual
questions already passed upon twice. Settled is the rule that the SC
is not a trier of facts and accords great weight to the factual findings
of lower courts or agencies whose function is to resolve factual
matters thus no reversible error was committed.
It shall be emphasized the fact that Laudato was paid by
way of commission does not preclude the establishment of an
employer-employee relationship. The relevant factor remains whether
the "employer" controls or has reserved the right to control the
"employee" not only as to the result of the work to be done but also as
to the means and methods by which the same is to be accomplished.
It was found out by SSC and CA that Laudato was a sales supervisor
and not a mere agent. She oversaw and supervised the sales agents
of the company and was subject to the control of management as to
how she implements its policies and its end results.
Furthermore, the finding of the SSC that Laudatu was an
employee is supported by substantial evidence. SSC examined the
cash vouchers issued by Royal star, calling cards of Royal Star
denominating Laudato as Sales Supervisor and Certificate of
Appreciation in recognition of Laudato’s loyal efforts in promoting the
company. On the other hand, Lazaro has failed to present any
convincing contrary evidence. Lazaro invoked a 1987 decision of SC
in the case of SSC v CA however, it is odd to rely upon since SC
affirmed the employer-employee relationship between the parties and
later on he meant instead to cite the 1969 ruling which circumstances
are very different from those at bar.
Since substantial evidence as found by the SSC and the
Court of Appeals have established the element of control
determinative of an employer-employee relationship. We affirm
without hesitation.
12. PHILIPPINE GLOBAL COMMUNICATIONS V. DE VERA
[FACTS]
PhilCom is a corporation engaged in the business of communication
services and allied activities. De Vera is a physician by profession
whom petitioner enlisted to attend to the medical needs of its
employees.
De Vera offered his services to PhilCom, therein proposing his plan of
works required of a practitioner in industrial medicine. (basta sa
contract specific kaayo si De Vera on how he performs his job)
The parties agreed and formalized respondent’s proposal in a
document denominated as Retainership Contract. The retainership
arrangement went on from 1981 to 1994 with changes in the retainer's
fee. However, for the years 1995 and 1996, renewal of the contract
was only made verbally.
The turning point in the parties' relationship surfaced in December
1996 when Philcom, thru a letter bearing on the subject boldly written
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as "TERMINATION — RETAINERSHIP CONTRACT", informed De
Vera of its decision to discontinue the latter's "retainer's contract with
the Company effective at the close of business hours of December
31, 1996" because management has decided that it would be more
practical to provide medical services to its employees through
accredited hospitals near the company premises.
De Vera filed a complaint for illegal dismissal before the National
Labor Relations Commission (NLRC), alleging that that he had been
actually employed by Philcom as its company physician since 1981
and was dismissed without due process. He averred that he was
designated as a "company physician on retainer basis" for reasons
allegedly known only to Philcom.
[LOWER COURT’S RULING]
LA: dismissed De Vera’s complaint for lack of merit. The rationale
that as a "retained physician" under a valid contract mutually agreed
upon by the parties, De Vera was an "independent contractor" and
that he "was not dismissed but rather his contract with [PHILCOM]
ended when said contract was not renewed after December 31,
1996".
De Vera appealed to the NLRC.
NLRC: reversed the decision by the LA. Found that De Vera is
Philcom's "regular employee" and accordingly directed the company
to reinstate him to his former position without loss of seniority rights
and privileges and with full backwages from the date of his dismissal
until actual reinstatement.
Petitioner’s MR was denied by the NLRC. Hence, PhilCom then went
to the CA imputing grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the NLRC when it reversed the
findings of the labor arbiter and awarded thirteenth month pay and
traveling allowance to De Vera even as such award had no basis in
fact and in law.
CA: modified the decision of the NLRC. PhilCom filed a motion for
consideration but was denied.
[ISSUE/S]
WON an employer-employee relationship exists between
petitioner and respondent. NO.
[HELD]
NO. In determining the existence of an employer- employee
relationship, has invariably adhered to the four-fold test, to wit: [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.
Applying the four-fold test to this case, we initially find that it was
respondent himself who sets the parameters of what his duties would
be in offering his services to petitioner. The LA used the letter by De
Vera. (kato specific kaayo)
The tenor of this letter indicates that the complainant was proposing to
extend his time with the respondent and seeking additional compensation
for said extension. This shows that the respondent PHILCOM did not have
control over the schedule of the complainant as it [is] the complainant who
is proposing his own schedule and asking to be paid for the same. This is
proof that the complainant understood that his relationship with the
respondent PHILCOM was a retained physician and not as an employee.
If he were an employee he could not negotiate as to his hours of work.
We note, too, that the power to terminate the parties' relationship was
mutually vested on both. Either may terminate the arrangement at will,
with or without cause.
Finally, remarkably absent from the parties' arrangement is the
element of control, whereby the employer has reserved the right to
control the employee not only as to the result of the work done but
also as to the means and methods by which the same is to be
accomplished. He could even embark in the private practice of his
profession, not to mention the fact that respondent's work hours and
the additional compensation therefor were negotiated upon by the
parties.
[DISPOSITION]
LABOR STANDARDS DIGESTS

Petition is GRANTED. Estrada advised for 10mg valium to be administered immediately by

intramuscular injection, he later ordered the start of intravenous
13. ABS-CBN V. NAZARENO administration of syntociron admixed with dextrose, 5% in lactated
ringer’s solution, at the rate of 8-10 micro-drops per minute. When
Facts:
asked if he needed the services of anesthesiologist, he refused.
ABS CBN employe resondents as production asistants. They were
Corazon’s bag of water ruptured spontaneously and her cervix was
assigned at the news public affairs, for various radio programs in the
fully dilated and she experienced convulsions. Dr. Estrada ordered the
Cebu Broadcasting Station, with monthly compensation of Php 4000.
injection of 10g of magnesium sulfate but his assisting Doctor, Dr.
They were issued identification cards and were required a minimum
Villaflor, only administered 2.5g. She also applied low forceps to
of eight hours a day, including Sundays and holidays. They were
extract Corazon’s baby. In the process, a 10 x 2.5cm piece of cervical
under the control and supervision of Assistant Station Manager and
tissue was allegedly torn. The baby came out in an apric, cyanatic
News Manager. On Dec. 19, 1996, petitioner and the ABS-CBN Rank-
weak and injured condition. Consequently the baby had to be
and-File Employees executed a Collective Bargaining agreement
intubated and resuscitated. Corazon had professed vaginal bleeding
(CBA). However, since petitioner refused to recognize PAs as part of
where a blood typing was ordered and she was supposed to undergo
the bargaining agreement unit, respondents were not included to the
hysterectomy, however, upon the arrival of the doctor, she was
CBA. Respondents then filed a Complaint for Recognition of Regular
already pronounced dead due to hemorrhage.
Employment Status and its respective benefits against petitioner
before the NLRC.
Petitioners filed for damages with the RTC Manila against CMC and
the doctors and a nurse. Petitioners mainly contended that defendant
ABS CBN argued that the PAs were program employees while
physicians and CMC personnel were negligent in the treatment and
Nazareno argued that the PAs were engaged by the corporation as
management of Corazon's condition. Petitioners charged CMC with
regular and full-time employees for a continuous period of more than
negligence in the selection and supervision of defendant physicians
5 years with a monthly salary rate of Php 4000 beginning 1995 until
and hospital staff.
the filing of the complaint.
Lower Court’s Rulings
ISSUE: Whether or not Nazareno, et al. are considered as regular
employees of ABS CBN Boradcasting Corp.
RTC: After more than 11 years of trial, the trial court rendered
judgment on 22 November 1993 finding Dr. Estrada solely liable for
RULING:
damages.
Yes. They are considered as regular employees of ABS CBN.
CA: Affirmed the decision of the RTC as against Dr. Estrada.
There are two kinds of employees: a.) those engaged to perform
activities which are necessary or desirable in the usual business or • stated that where there is no proof that defendant physician
trade of the employer, b.)Those casual employees who have rendered was an employee of defendant hospital or that defendant
at least one year of service , whether continuous or broken, with hospital had reason to know that any acts of malpractice
respect to the activities in which they are employed. would take place, defendant hospital could not be held
liable for its failure to intervene in the relationship of
Where a person has rendered at least one year of service, regardless physician-patient between defendant physician and
of the nature of the activity performed, or where the work is continuous plaintiff.
or intermittent, the employment is considered regular as long as the
activity exists, the reason being that a customary appointment , the • As for the liability of other respondents, the CA applied the
employment is considered regular as long as the activity exists, the “borrowed servant” doctrine which provides that once the
reason being that a customary appointment is not indispensable surgeon enters the operating room and takes charge of the
before one may formally declare as having attained regular status. proceedings, the acts or omissions of operating room
personnel, and any negligence associated with such acts or
Project employees and seasonal employees are not considered omissions, are imputable to the surgeon. 32 While the
regular employees. However, any employee who has rendered at assisting physicians and nurses may be employed by the
least one year of service, whether continuous or intermittent, is hospital, or engaged by the patient, they normally become
deemed regular with respect to the activity performed and while such the temporary servants or agents of the surgeon in charge
ctivity exists. Respondents cannot be considered “talents”. They are while the operation is in progress and liability may be
regular employees who performed several different duties under the imposed upon the surgeon for their negligent acts under the
control and direction of ABS CBN executives and supervisors. doctrine of respondeat superior.
In this case, the respondents continuously performed the same
activities for an average of five year. Their assigned tasks are Arguments
necessary/ desirable in the usual business or trade of the petitioner. Petitioners contend that CMC, in allowing Dr. Estrada to practice at
While length of time may not be a sole controlling test for project CMC, should be liable for Dr. Estrada’s malpractice. On the other
employment, it can be a strong factor to determine whether the hand, CMC alleges that Dr. Estrada is an independent contractor "for
employee was hired for a specific undertaking or in fact tasked to whose actuations CMC would be a total stranger." CMC maintains
peform functions which are vital, necessary and indispensable to the that it had no control or supervision over Dr. Estrada in the exercise
usual trade or business of the employee. There is an EE-ER of his medical profession.
relationship in this case.
ISSUE: W/N CMC IS VICARIOUSLY LIABLE FOR THE
NEGLIGENCE OF DR. ESTRADA
14. FRANCISCO V. NLRC
HELD: YES
C/O CANDANCE Petitioners maintain that CMC is vicariously liable for Dr. Estrada's
negligence based on Article 2180 in relation to Article 2176 of the
15. NOGALES V. CAPITOL MEDICAL CENTER Civil Code. Similarly, in the United States, a hospital which is the
FACTS employer, master, or principal of a physician employee, servant, or
Pregnant with her fourth child, Corazon Nogales, who was then 37 agent, may be held liable for the physician's negligence under the
years old, was under the exclusive prenatal care of Dr. Oscar Estrada. doctrine of respondeat superior.
While Corazon was on her last trimester of pregnancy, Dr. Estrada
noted an increase in her blood pressure and development of leg However, after examination of the records, the Court finds no single
edemas indicating preeclampsia which is a dangerous complication evidence pointing to CMC's exercise of control over Dr. Estrada's
of pregnancy. Around midnight Corazon started to experience mild treatment and management of Corazon's condition. It is undisputed
labor pains prompting Corazon and Rogelio Nogales to see Dr. that throughout Corazon's pregnancy, she was under the exclusive
Estrada at his home. prenatal care of Dr. Estrada. There was no showing that CMC had a
part in diagnosing Corazon's condition. While Dr. Estrada enjoyed
After examining Corazon, Dr. Estrada advised her immediate staff privileges at CMC, such fact alone did not make him an employee
admission to herein respondent Capitol Medical Center (CMC). Upon of CMC. CMC merely allowed Dr. Estrada to use its facilities when
her admission, an internal examination was conducted upon her by a Corazon was about to give birth, which CMC considered an
resident-physician. Based on the doctor’s sheet, around 3am, Dr. emergency. Considering these circumstances, the Court initially found
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LABOR STANDARDS DIGESTS
that Dr. Estrada is not an employee of CMC, but an independent
contractor.
But is CMC automatically exempt from liability? N O
In general, a hospital is not liable for the negligence of an independent
contractor-physician. There is, however an exception to this principle.
The hospital may be liable if the physician is the “ostensible agent” of
the hospital. This exception is also known as the doctrine of apparent
authority.
Under the doctrine of apparent authority a hospital can be held
vicariously liable for the negligent acts of a physician providing
care at the hospital, regardless of whether the physician is an
independent contractor, unless the patient knows, or should have
known, that the physician is an independent contractor.
For a hospital to be liable under the doctrine of apparent authority, a
plaintiff must show that
1.) the hospital, or its agent, acted in a manner that would lead a
reasonable person to conclude that the individual who was alleged to
be negligent was an employee or agent of the hospital;
2.) Where the acts of the agent create the appearance of authority,
the plaintiff must also prove that the hospital had knowledge of and
acquired in them; and
3.) the plaintiff acted in reliance upon the conduct of the hospital or its
agent, consistent with ordinary care and prudence.
In the instant case, CMC impliedly held out Dr. Estrada as a member
of its medical staff. Through CMC’s acts, CMC clothed Dr. Estrada
with apparent authority thereby leading the Spouses Nogales to
believe that Dr. Estrada was an employee or agent of CMC. CMC
cannot now repudiate such authority.
The records show that the Spouses Nogales relied upon a
perceived employment relationship with CMC in accepting Dr.
Estrada’s services. Rogelio testified that he and his wife specifically
chose Dr. Estrada to handle Corazon’s delivery not only because of
their friend’s recommendation, but more importantly because of Dr.
Estrada’s “connection with a reputable hospital, the [CMC].” In other
words, Dr. Estrada’s relationship with CMC played a significant role in
the Spouses Nogales’ decision in accepting Dr. Estrada’s services as
the obstetrician-gynecologist for Corazon’s delivery. Moreover, as
earlier stated, there is no showing that before and during Corazon’s
confinement at CMC, the Spouses Nogales knew or should have
known that Dr. Estrada was not an employee of CMC. CMC’s defense
that all it did was “to extend to [Corazon] its facilities” is untenable.
The Court cannot close its eyes to the reality that hospitals, such as
CMC, are in the business of treatment.
Disposition: There was partial grant of the petition. The other
respondents were absolved from liability. The Court finds
respondent Capitol Medical Center vicariously liable for the
negligence of Dr. Oscar Estrada.
16. COCA-COLA BOTTLERS V. DR. DEAN CLIMACO
FACTS:
Dr. Climaco is a medical doctor who was hired by Coca Cola Bottlers
by virtue of a Retainer Agreement. The agreement started on Jan.
1988 and to be renewed annually and the last one expired on Dec.
31, 1993. Despite the non-renewal , Dr. Climaco continued to perform
his functions as company doctor until he recievd a letter concluding
the retainership agreement effective 30 days from receipt thereof. Dr.
Cimaco wrote a letter addressed to DR. Sy, the Acting President and
Chairperson of the Committee on Membership, Philippine College of
Occupational Medicine. In response, Dry. Sy wrote a letter to Coca
Cola stating that Dr. Climaco should be considered as a regular part-
time physician, having served the company for 4 years already and
that he must be entitled of all the benefits and privileges of an
employee under Art. 157 (b) of LC. However, Coca Cola did not take
any action. Hence, Dr, Climaco made another inquiry to the DOLE. In
response, they stated in advisory tone that an er-ee relationship exited
between Coca Cola and Dr. Climaco based on the Retainer
Agreement and the Comprehensive Medical Plan, and the application
of “four-fold test”. Meanwhile, another inquiry was also sent to SSS. It
informed Coca Cola that the Dr. Climaco’s job partake of the natyre of
work of a regular company doctor and that he was subject to a social
security coverage.Dr, Climaco even inquired from the management of
Coca Cola to recognize him as a regular employee but to no avail.
Hence, Dr. Climaco filed a complaint before the NLRC. While the case
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is pending, Dr. Climaco received a letter from Coca Cola concluding
their retainership. This prompted him to file an illegal dismissal case
against Coca Cola.
Labor Arbiter:
It dismissed the complaint because Coca Cola lacked the power of
control over Dr. Climaco’s performance of his duties.
NLRC:
It dismissed the appeal for lack of merit. It declared that there was no
er-ee relationship between them based on the provisions of the
Retainer Agreement.
CA:
It ruled that there was an ee-er relationship between them after it
applied the four-fold test.
1. The power to hire ee
2. The payment of wages
3. The power of dismissal
4. 4. The er’s power to control the ee with respect to the
means and methods by which the work is to be
accomplished.
It also classified Dr. Climaco as a regular part-time employee based
on Art. 280 of LC hence, he should be accorded all the proportionate
benefits and the dismissal was an act oppressive to labor.
ISSUE:
Is there an existing er-ee relationship between Coca Cola and Dr.
Climaco?
Held:
No, there was no er-ee relationship existing between them because
Coca Cola lacked the power of control over the performance by Dr.
Climaco of his duties. In addition, the Comprehensive Medical Plan
does not tell Dr. Climaco on how to conduct his physical examination,
how to immunize, or how to diagnose and treat his patients. It merely
ensured that the end result was achieved, but it did not control the
means and methods by which he performed his assigned tasks. The
Retainership Agreement granted to both parties the power to
terminate their relationship hence, Coca Cola did not wield the sole
power of dismissal or termination. To conclude, the dismissal was not
illegal.
17. CALAMBA MEDICAL CENTER V. NLRC
FACTS
The respondents, doctors-spouses Dr. Ronaldo and Dr. Merceditha
Lanzanas are engaged as resident physicians by the petitioner,
Calamba Medical Center. They report to the hospital twice-a-week on
twenty-four-hour shifts. They were paid a monthly "retainer" of
P4,800.00 each and were also given a percentage share out of fees
charged for out-patient treatments, operating room assistance and
discharge billings.
The work schedules of the resident physicians were fixed by the
petitioner's Medical Director Dr. Desipeda, and they were issued ID,
enrolled in the SSS and income taxes were withheld from them.
Dr. Trinidad, also a resident physician, overheard a phone
conversation between Dr. Ronaldo and a fellow em- ployee Diosdado
Miscala. Apparently, Dr. Ronaldo and Miscala were discussing about
the low "census" or admis- sion of patients to the hospital. Because of
which, the former was given a preventive suspension and his wife Dr.
Merceditha was not given any schedule after sending the
Memorandum. On March 1998, Dr. Ronaldo filed a com- plaint for
illegal suspension and Dr. Merceditha for illegal dismissal.
ISSUE
Whether or not an employer-employee relationship exists
between petitioner and spouses respondents.
RULING
The petition for review is denied.
RULE
To determine the existence of employer-employee relationship, one
can apply the four-fold test which has the following elements: a)
selection and engagement of the employee; b) payment of wages
LABOR STANDARDS DIGESTS
or salaries; c) exercise of the power of dismissal; and d) exercise of
the power to control the employee's conduct.
Under the "control test", an employment relationship exists between a
physician and a hospital if the hospital controls both the means and
the details of the process by which the physician is to accomplish
his task (Nogales v. Capitol Medical Center, G.R. No. 142625,
December 19, 2006, 511 SCRA 204, 221 citing
Diggs v. Novant Health, Inc., 628 S.E.2d 851 (2006))
Further, in countering the contention of the respondent hospital of
respondents' sharing in hospital fees, Su- preme Court used Article
97 (f) of the Labor Code as the basis, which states that, “Wage paid
to any employee shall mean the remuneration or earning, however
designated, capable of being expressed in terms of money,
whetherfixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same…”
APPLICATION
The petitioner exercised control over respondents since it is
undisputed that respondents' work is monitored through its nursing
supervisors, charge nurses and orderlies in the emergency room,
the operating room, or any department or ward for that matter.
Without the approval or consent of petitioner or its Medical Direc-
tor, no operations can be undertaken in those areas. For control test
to apply, it is not essential for the employer to actually supervise the
performance of duties of the employee, it being enough that it
has the right to wield the power.
Respondents were in fact made subject to petitioner-hospital's Code
of Ethics, the provisions of which cover administrative and
disciplinary measures on negligence of duties, personnel conduct and
behavior, and offenses against persons, property and the hospital's
interest.
With respect to respondents' sharing in some hospital fees, this
scheme does not sever the employment tie between them and
petitioner as this merely mirrors additional form or another form of
compensation or incentive similar to what commission-based
employees receiveas contemplated in Article 97 (f) of the Labor
Code.
Conclusion
Thus, employer-employee relationship exists between Calamba
Medical Center and the doctors-spouses
18. ESCASINAS V. SHANGRI-LA
FACTS
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco
(petitioners) were engaged in 1999 and 1996, respectively, by Dr.
Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at
respondent Shangri-la’s Mactan Island Resort (Shangri-la) in Cebu of
which she was a retained physician.
Petitioners filed with the National Labor Relations Commission
(NLRC) Regional Arbitration Branch No. VII (NLRC-RAB No. VII) a
complaint1 for regularization, underpayment of wages, non-payment
of holiday pay, night shift differential and 13th month pay differential
against respondents, claiming that they are regular employees of
Shangri-la.
Shangri-la claimed, however, that petitioners were not its employees
but of respondent doctor whom it retained via Memorandum of
Agreement (MOA)
Labor Arbiter Ernesto F. Carreon declared petitioners to be regular
employees of Shangri-la. In finding petitioners to be regular
employees of Shangri-la, the Arbiter noted that they usually perform
work which is necessary and desirable to Shangri-la’s business; that
they observe clinic hours and render services only to Shangri-la’s
guests and employees; that payment for their salaries were
recommended to Shangri-la’s Human Resource Department (HRD);
that respondent doctor was Shangri-la’s "in-house" physician, hence,
also an employee; and that the MOA between Shangri-la and
respondent doctor was an "insidious mechanism in order to
circumvent [the doctor’s] tenurial security and that of the employees
under her."
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Shangri-la and respondent doctor appealed to the NLRC.
NLRC granted Shangri-la’s and respondent doctor’s appeal and
dismissed petitioners’ complaint for lack of merit, it finding that no
employer-employee relationship exists between petitioner and
Shangri-la. In so deciding, the NLRC held that the Arbiter erred in
interpreting Article 157 in relation to Article 280 of the Labor Code, as
what is required under Article 157 is that the employer should provide
the services of medical personnel to its employees, but nowhere in
said article is a provision that nurses are required to be employed; that
contrary to the finding of the Arbiter, even if Article 280 states that if a
worker performs work usually necessary or desirable in the business
of the employer, he cannot be automatically deemed a regular
employee; and that the MOA amply shows that respondent doctor was
in fact engaged by Shangri-la on a retainer basis, under which she
could hire her own nurses and other clinic personnel.
Petitioners thereupon brought the case to the Court of Appeals which
affirmed the NLRC Decision that no employer-employee relationship
exists between Shangri-la and petitioners.
ISSUES:
Whether or not petitioner nurses are employees of Shangri-la.
RULING:
NO. The Court holds that, contrary to petitioners’
postulation, Art. 157 does not require the engagement of full-
time nurses as regular employees of a company employing not
less than 50 workers
In cases of hazardous workplaces, no employer shall engage the
services of a physician or dentist who cannot stay in the premises of
the establishment for at least two (2) hours, in the case of those
engaged on part-time basis, and not less than eight (8) hours in the
case of those employed on full-time basis. Where the undertaking is
nonhazardous in nature, the physician and dentist may be engaged
on retained basis, subject to such regulations as the Secretary of
Labor may prescribe to insure immediate availability of medical and
dental treatment and attendance in case of emergency.
Mao ning pinakaanswer sa tanang yaw2 sa SC
while it is true that the provision requires employers to engage the
services of medical practitioners in certain establishments depending
on the number of their employees, nothing is there in the law which
says that medical practitioners so engaged be actually hired as
employees, adding that the law, as written, only requires the employer
"to retain", not employ, a part-time physician who needed to stay in
the premises of the non-hazardous workplace for two (2) hours.
Under the foregoing provision, Shangri-la, which employs more than
200 workers, is mandated to "furnish" its employees with the services
of a full-time registered nurse, a part-time physician and dentist, and
an emergency clinic which means that it should provide or make
available such medical and allied services to its employees, not
necessarily to hire or employ a service provider. As held in Philippine
Global Communications vs. De Vera
The existence of an independent and permissible contractor
relationship is generally established by considering the following
determinants: whether the contractor is carrying on an independent
business; the nature and extent of the work; the skill required; the term
and duration of the relationship; the right to assign the performance of
a specified piece of work; the control and supervision of the work to
another; the employer’s power with respect to the hiring, firing and
payment of the contractor’s workers; the control of the premises; the
duty to supply the premises, tools, appliances, materials and labor;
and the mode, manner and terms of payment.
On the other hand, existence of an employer- employee relationship
is established by the presence of the following determinants: (1) the
selection and engagement of the workers; (2) power of dismissal; (3)
the payment of wages by whatever means; and (4) the power to
control the worker’s conduct, with the latter assuming primacy in the
overall consideration.
Basin mangutana about si Atty. Regarding sa Doctors
LABOR STANDARDS DIGESTS
As to whether respondent doctor can be considered a legitimate
independent contractor, the pertinent sections of DOLE Department
Order No. 10, series of 1997, illuminate:
Sec. 8. Job contracting. – There is job contracting permissible under
the Code if the following conditions are met:
(1) The 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; and
(2) The contractor has substantial capital or investment in the form of
tools, equipment, machineries, work premises, and other materials
which are necessary in the conduct of his business.
Sec. 9. Labor-only contracting. – (a) Any person who undertakes to
supply workers to an employer shall be deemed to be engaged in
labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing
activities which are directly related to the principal business or
operations of the employer in which workers are habitually employed.
Against the above-listed determinants, the Court holds that
respondent doctor is a legitimate independent contractor. That
Shangri-la provides the clinic premises and medical supplies for use
of its employees and guests does not necessarily prove that
respondent doctor lacks substantial capital and investment. As to
payment of wages, respondent doctor is the one who underwrites the
salaries, SSS contributions and other benefits of the staff as well as
value added taxes and withholding taxes. It is unlikely that respondent
doctor would report petitioners as workers, pay their SSS premium as
well as their wages if they were not indeed her employees.
With respect to the supervision and control of the nurses and clinic
staff, it is not disputed that manual prepared by respondent doctor and
not the employee manual being followed by Shangri-la‘s regular
workers, governs how they perform their respective tasks and
responsibilities.
19. TONGKO V. MANUFACTURERS LIFE INSURANCE
FACTS:(This is already a MR filed by Manulife on the decision of SC)
Such a long case :(
The contractual relationship between Tongko and Manulife had two
basic phases. The first or initial phase began on July 1, 1977, under
a Career Agent’s Agreement (Agreement) that provided: (1) When he
was an agent and it is understood that an agent is an independent
contractor and nothing in the agreement shall be construed or
interpreted as creating an employer-employee ralationship between
the Company and the Agent. In said agreement, the Company may
terminate in cases of breach or violation of any provision by giving
written notice to the agent within 15 days from the time of the
discovery of the breach. Tongko additionally agreed to comply with
the regulations and requirements of Manulife and maintain standard
of knowledge and competency in the sale of Mnulife’s products…; (2)
It was in 1983 when Tongko was named Unit Manager in Manulife’s
Sales Agency Organization. He became a Branch Manager and six
years after he became a Regional Sales Manager. Tongkos gross
earnings consisted of commissions, persistency income and
management overrides. Since the beginning, he declared himself as
self-employed in his income returns. Thus, under oath, he declared
his gross business income and deducted his business expenses to
arrive at his taxable business income
Manulife instituted a manpower development programs at the regional
sales management level where De Dios wrote Tongko a letter on
concerns that were brought during the Metro North Sales Manager
Meeting.(The letter concerns more of the issues raised by Tongko and
he handles his routine tasks and the changes to which Tongko will
now oversee the remaining groups under Metro North and the rest of
the Sales Manager in Metro North since De Dios will be handling the
North Star Branch.)
De Dios wrote another letter to Tongko but this time is for termination provision that "In the execution of the agency, the agent shall act in
of Tongko’s services which the management exercised its prerogative
under Section 14 of the Agents Contract as it issued the notice of
termination of the Agency Agreement effective 15 days from the date
of the letter. Tongko responded by filing an illegal dismissal complaint area where the instructions can intrude into the labor law concept of
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with the NLRC.He essentially alleged that despite the clear terms of
the letter terminating his Agency Agreement – that he was Manulife’s
employee before he was illegally dismissed.
Petitioner’s Argument:
That he was a Unit Manager. He was paid annual over-rider
regardless of the production levels attained and exclusive of
commissions and bonuses. That he was assigned a definite place in
Manulife offices when he was not in the field for which he never paid
any rental. Manulife provided the office equipment he used. He was
also required to follow at least 3 codes of conduct.
Respondent’s Argument:
Manulife argues that Tongko had no fixed wage or salary.
Under the Agreement, Tongko was paid commissions of varying
amounts, computed based on the premium paid in full and actually
received by Manulife on policies obtained through an agent. As sales
manager, Tongko was paid overriding sales commission derived from
sales made by agents under his unit/structure/branch/region. Manulife
also points out that it deducted and withheld a 10% tax from all
commissions Tongko received; Tongko even declared himself to be
self-employed and consistently paid taxes as such. Also asserts that
the labor tribunals have no jurisdiction over Tongko’s claim as he was
not its employee as characterized in the four-fold test.
LA’s Ruling:
Decreed that no employer-employee relationship existed
between the parties.
NLRC’s Ruling:
Found the existence of an employer-employee relationship
and concluded that Tongko had been illegally dismissed.
CA’s Ruling:
Found that the NLRC gravely abused its discretion in its
ruling and reverted to the labor arbiter’s decision that no employer-
employee relationship existed between Tongko and Manulife.
SC’s Ruling:
Reversed CA’s ruling and found that an employment
relationship existed between Tongko and Manulife. That Manulife had
the power of control over Tongko, sufficient to characterize him as an
employee. (Manulife disagreed with the SC’s decision hence, the
present MR)
ISSUE:
WON an employer-employee relationship exist between
Tongko and Manulife
SC’s RULING:
Here, the court said that this does not concern only the law
on labor Code but also the Insurance Code and the Civil Code as well
as the Agreement that the parties adopted to govern theirrelationsaip
for purposes of selling the insurance the company offers.
(1) The laws on Insurance and Agency
Under the Insurance Code, the agent must, as a matter of
qualification, be licensed and must also act within the parameters of
the authority granted under the license and under the contract with the
principal. Other than the need for a license, the agent is limited in the
way he offers and negotiates for the sale of the company’s insurance
products, in his collection activities, and in the delivery of the
insurance contract or policy. Rules regarding the desired results (e.g.,
the required volume to continue to qualify as a company agent, rules
to check on the parameters on the authority given to the agent, and
rules to ensure that industry, legal and ethical rules are followed) are
built-in elements of control specific to an insurance agency and should
not and cannot be read as elements of control that attend an
employment relationship governed by the Labor Code.
On the other hand, Civil Code defines an agent as a "person
[who] binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority
of the latter.” With particular relevance to the present case is the
accordance with the instructions of the principal.” This provision is
pertinent for purposes of the necessary control that the principal
exercises over the agent in undertaking the assigned task, and is an
control so that minute consideration of the facts is necessary. A
LABOR STANDARDS DIGESTS
related article is Article 1891 of the Civil Code which binds the agent
to render an account of his transactions to the principal.
(2) The Cited Cases
On arriving at the first decision of the SC, it cited
Carungcong, Grepalife and the second Insular Life Case. In stark
contrast with the Carungcong, the Grepalife, and the second Insular
Life cases, the only contract or document extant and submitted as
evidence in the present case is the Agreement – a pure agency
agreement in the Civil Code context similar to the original contract in
the first Insular Life case and the contract in the AFPMBAI case. And
while Tongko was later on designated unit manager in 1983, Branch
Manager in 1990, and Regional Sales Manager in 1996, no formal
contract regarding these undertakings appears in the records of the
case. Any such contract or agreement, had there been any, could
have at the very least provided the bases for properly ascertaining the
juridical relationship established between the parties.(In case Atty. will
ask this part)
(3) Analysis of the Evidence
The Agreement:
The primary evidence in the present case is the July 1, 1977
Agreement that governed and defined the parties’ relations until the
Agreement’s termination in 2001. This Agreement stood for more than
two decades and, based on the records of the case, was never
modified or novated. It assumes primacy because it directly dealt with
the nature of the parties’ relationship up to the very end; moreover,
both parties never disputed its authenticity or the accuracy of its terms.
By the Agreement’s express terms, Tongko served as an
"insurance agent" for Manulife, not as an employee. To be sure, the
Agreement’s legal characterization of the nature of the relationship
cannot be conclusive and binding on the courts; the characterization
of the juridical relationship the Agreement embodied is a matter of law
that is for the courts to determine. The parties’ legal characterization
of their intent, although not conclusive, is critical in this case because
this intent is not illegal or outside the contemplation of law, particularly
of the Insurance and the Civil Codes. From this perspective, the
provisions of the Insurance Code cannot be disregarded as this Code
expressly envisions a principal-agent relationship between the
insurance company and the insurance agent in the sale of insurance
to the public.1awFor this reason, we can take judicial notice that as a
matter of Insurance Code-based business practice, an agency
relationship prevails in the insurance industry for the purpose of selling
insurance.
Significantly, evidence shows that Tongko’s role as an
insurance agent never changed during his relationship with Manulife.
If changes occurred at all, the changes did not appear to be in the
nature of their core relationship. Tongko essentially remained an
agent, but moved up in this role through Manulife’s recognition that he
could use other agents approved by Manulife, but operating under his
guidance and in whose commissions he had a share. For want of a
better term, Tongko perhaps could be labeled as a "lead agent" who
guided under his wing other Manulife agents similarly tasked with the
selling of Manulife insurance.
That Tongko assumed a leadership role but nevertheless
wholly remained an agent is the inevitable conclusion that results from
the reading of the Agreement (the only agreement on record in this
case) and his continuing role thereunder as sales agent, from the
perspective of the Insurance and the Civil Codes and in light of what
Tongko himself attested to as his role as Regional Sales Manager. To
be sure, this interpretation could have been contradicted if other
agreements had been submitted as evidence of the relationship
between Manulife and Tongko on the latter’s expanded undertakings.
In the absence of any such evidence, however, this reading – based
on the available evidence and the applicable insurance and civil law
provisions – must stand, subject only to objective and evidentiary
Labor Code tests on the existence of an employer-employee
relationship.
Evidence indicates that Tongko consistently clung to the
view that he was an independent agent selling Manulife insurance
products since he invariably declared himself a business or self- Respondent manifested that petitioners were not dismissed and that
employed person in his income tax returns. This consistency with, they could drive his jeepneys once they paid their arrears. Petitioners,
and action made pursuant to the Agreement were pieces of however, refused to do so.
evidence that were never mentioned nor considered in the
court’s Decision of November 7, 2008. Strictly speaking, Tongko’s
tax returns cannot but be legally significant because he certified under
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oath the amount he earned as gross business income, claimed
business deductions, leading to his net taxable income. This should
be evidence of the first order that cannot be brushed aside by a mere
denial. Even on a layman’s view that is devoid of legal considerations,
the extent of his annual income alone renders his claimed
employment status doubtful. In addition, with respect to the
Agreement is its conclusion that the Agreement negated any
employment relationship between Tongko and Manulife so that the
commissions he earned as a sales agent should not be considered in
the determination of the backwages and separation pay that should
be given to him. The conclusion with respect to Tongko’s employment
as a manager is, of course, unacceptable for the legal, factual and
practical reasons discussed in this Resolution.
Other Evidence of Alleged Control:
A glaring evidentiary gap for Tongko in this case is the lack
of evidence on record showing that Manulife ever exercised means-
and-manner control, even to a limited extent, over Tongko during his
ascent in Manulife’s sales ladder. What, to Tongko, serve as evidence
of labor law control are the codes of conduct that Manulife imposes
on its agents in the sale of insurance. The mere presentation of codes
or of rules and regulations, however, is not per se indicative of labor
law control as the law and jurisprudence teach us.
From jurisprudence, an important lesson that the first
Insular Life case teaches us is that a commitment to abide by the rules
and regulations of an insurance company does not ipso facto make
the insurance agent an employee. Neither do guidelines somehow
restrictive of the insurance agent’s conduct necessarily indicate
"control" as this term is defined in jurisprudence. Guidelines
indicative of labor law "control," as the first Insular Life case tells
us, should not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the
nature of dictating the means or methods to be employed in attaining
the result, or of fixing the methodology and of binding or restricting the
party hired to the use of these means.
As shown in the Manulife’s Code of Conduct, all of which
do not intrude into the insurance agents’ means and manner of
conducting their sales and only control them as to the desired results
and Insurance Code norms, cannot be used as basis for a finding that
the labor law concept of control existed between Manulife and
Tongko. Even de Dios’ letter is not determinative of control as it
indicates the least amount of intrusion into Tongko’s exercise of his
role as manager in guiding the sales agents. Strictly viewed, de Dios’
directives are merely operational guidelines on how Tongko could
align his operations with Manulife’s re-directed goal of being a "big
league player.”
The only conclusion that can be made is that the absence
of evidence showing Manulife’s control over Tongko’s contractual
duties points to the absence of any employer-employee relationship
between Tongko and Manulife. In the context of the established
evidence, Tongko remained an agent all along; although his
subsequent duties made him a lead agent with leadership role, he was
nevertheless only an agent whose basic contract yields no evidence
of means-and-manner control.
In light of these conclusions, the sufficiency of Tongko’s
failure to comply with the guidelines of de Dios’ letter, as a ground for
termination of Tongko’s agency, is a matter that the labor tribunals
cannot rule upon in the absence of an employer-employee
relationship. Jurisdiction over the matter belongs to the courts
applying the laws of insurance, agency and contracts. MR granted and
dismiss Tongko’s petition.
20. CAONG V. REGUALOS
[FACTS]
Caong, Tresquio, and Daluyon were employed by respondent
Regualos under a boundary agreement, as drivers of his jeepneys.
They filed separate complaints for illegal dismissal against respondent
who barred them from driving the vehicles due to deficiencies in their
boundary payments.
LABOR STANDARDS DIGESTS

Petitioners averred that they were illegally dismissed by respondent even finality, and are deemed binding upon this Court so long as they
without just cause. They maintained that respondent did not comply are supported by substantial evidence.
with due process requirements before terminating their employment,
as they were not furnished notice apprising them of their infractions We have no reason to deviate from such findings. Indeed, petitioners'
and another informing them of their dismissal. Petitioners claimed that suspension cannot be categorized as dismissal, considering that
respondent's offer during the mandatory conference to reinstate them there was no intent on the part of respondent to sever the employer-
was an insincere afterthought as shown by the warning given by employee relationship between him and petitioners.
respondent that, if they fail to remit the full amount of the boundary yet
again, they will be barred from driving the jeepneys. Petitioners Petitioners argue that the policy is unsound as it does not consider the
questioned respondent's policy of automatically dismissing the drivers times when passengers are scarce and the drivers are not able to
who fail to remit the full amount of the boundary as it allegedly (a) raise the amount of the boundary.
violates their right to due process; (b) does not constitute a just cause
for dismissal; (c) disregards the reality that there are days when they In the present case, petitioners merely alleged that there were only
could not raise the full amount of the boundary because of the scarcity few passengers during the dates in question. Such excuse is not
of passengers. acceptable without any proof or, at least, an explanation as to why
passengers were scarce at that time. It is simply a bare allegation, not
In his Position Paper, respondent alleged that petitioners were worthy of belief. We also find the excuse unbelievable considering that
lessees of his vehicles and not his employees; hence, the Labor petitioners incurred the shortages on separate days, and it appears
Arbiter had no jurisdiction. He claimed that he noticed that some of his that only petitioners failed to remit the full boundary payment on said
lessees, including petitioners, were not fully paying the daily rental of dates.
his jeepneys. He made inquiries and discovered that his lessees
contracted loans with third parties and used the income of the [DISPOSITION]
jeepneys in paying the loans. Thus, on November 4, 2001, he Petition is DENIED.
gathered all the lessees in a meeting and informed them that, effective
November 5, 2001, those who would fail to fully pay the daily rental 21. ATOK BIG WEDGE COMPANY V. GISON
would not be allowed to rent a jeepney on the following day. He
FACTS:
explained to them that the jeepneys were acquired on installment
Jesus P. Gison was engaged as parttime consultant on retainer basis
basis, and that he was paying the monthly amortizations through the
by petitioner Atok Big Wedge Company, Inc.As a consultant on
lease income. Most of the lessees allegedly accepted the condition
retainer basis, respondent assisted petitioner's retained legal counsel
and paid their arrears.
with matters pertaining to the prosecution of cases against illegal
surface occupants within the area covered by the company's mineral
Petitioners, however, did not settle their arrears. Worse, their
claims. Respondent was likewise tasked to perform liaison work with
remittances were again short of the required boundary fee.
several government agencies, which he said was his expertise. He
Respondent stressed that, during the mandatory conference, he
was not required to report on a regular basis but only when
manifested that he would renew his lease with petitioners if they would
occasionally requested by the management to discuss matters
pay the arrears they incurred during the said dates.
needing his expertise as a consultant. For that, he’s paid a retainer
fee of Php 3,000/ month. The parties executed a retainer agreement,
[LOWER COURT’S RULING]
but such agreement was misplaced and can no longer be found. The
LA: decided in favor of respondent for lack of merit. An employer-
said arrangement continued for the next eleven years.
employee relationship existed between respondent and petitioners.
The latter were not dismissed considering that they could go back to
Gison got old and he requested for the petitioner to register him with
work once they have paid their arrears. The Labor Arbiter opined that,
SSS but his request was ignored. Hence, he filed a complaint with the
as a disciplinary measure, it is proper to impose a reasonable sanction
SSS against the petitioner. Cera, in his capacity as resident manager
on drivers who cannot pay their boundary payments. He emphasized
of petitioner, issued a Memorandum 5 advising respondent that within
that respondent acquired the jeepneys on loan or installment basis
30 days from receipt thereof, petitioner is terminating his retainer
and relied on the boundary payments to comply with his monthly
contract with the company since his services are no longer necessary.
amortizations.
Gison, the respondent then filed a Complaint 6 for illegal dismissal,
unfair labor practice, underpayment of wages, non-payment of 13th
Petitioners appealed the decision to the NLRC.
month pay, vacation pay, and sick leave pay with the National Labor
Relations Commission (NLRC), Regional Arbitration Branch (RAB),
NLRC: agreed with LA and dismissed the appeal. They also denied
Cordillera Administrative Region, against petitioner.
petitioners’ MR. Petitioners appealed to the CA.
Finding no employer-employee relationship between petitioner and
CA: found no grave abuse of discretion on the part of the NLRC.
respondent, the Labor Arbiter dismissed the complaint for lack of
The employer-employee relationship of the parties has not been
merit. Respondent then appealed the decision to the NLRC, which
severed, but merely suspended when respondent refused to allow
also affirmed the LA’s decision. Gison then filed before the CA via
petitioners to drive the jeepneys while there were unpaid boundary
petition for review under Rule 64 of the RoC. CA annulled the
obligations. The CA pointed out that the fact that it was within the
resolution of the NLRC and granted his petition.
power of petitioners to return to work is proof that there was no
termination of employment.
Petitioner insists that respondent is not a regular employee and not
entitled to reinstatement. Respondent maintains that he is an
CA denied petitioners’ MR. Hence, this petition.
employee of the petitioner and that the CA did not err in ruling in his
favour.
[ISSUE/S]
WON petitioners were illegally dismissed by respondent. NO!
ISSUE:
Whether or not an employer-employee relationship exists
[HELD]
between petitioner and respondent.
NO. It is already settled that the relationship between jeepney owners
Whether or not there was an illegal dismissal warranting
and jeepney drivers under the boundary system is that of employer-
reinstatement
employee and not of lessor-lessee. The fact that the drivers do not
receive fixed wages but only get the amount in excess of the so-called
RULING
"boundary" that they pay to the owner/operator is not sufficient to
1. NO. Applying the four-fold test, an employer-employee
negate the relationship between them as employer and employee.
relationship is apparently absent in the case at bar. Among
other things, respondent was not required to report
The Labor Arbiter, the NLRC, and the CA uniformly declared that
everyday during regular oDce hours of petitioner.
petitioners were not dismissed from employment but merely
Respondent's monthly retainer fees were paid to him either
suspended pending payment of their arrears. Findings of fact of the
at his residence or a local restaurant. More importantly,
CA, particularly where they are in absolute agreement with those of
petitioner did not prescribe the manner in which respondent
the NLRC and the Labor Arbiter, are accorded not only respect but
would accomplish any of the tasks in which his expertise as

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LABOR STANDARDS DIGESTS
a liaison oDcer was needed; respondent was left alone and
given the freedom to accomplish the tasks using his own
means and method. Respondent was assigned tasks to
perform, but petitioner did not control the manner and
methods by which respondent performed these tasks.
Verily, the absence of the element of control on the part of
the petitioner engenders a conclusion that he is not an
employee of the petitioner.
Contrary to the conclusion of the CA, respondent is not an employee,
much more a regular employee of petitioner. The appellate court's
premise that regular employees are those who perform activities
which are desirable and necessary for the business of the employer
is not determinative in this case. In fact, any agreement may provide
that one party shall render services for and in behalf of another, no
matter how necessary for the latter's business, even without being
hired as an employee. 23 Hence, respondent's length of service and
petitioner's repeated act of assigning respondent some tasks to be
performed did not result to respondent's entitlement to the rights and
privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services
of respondent for eleven years, he still cannot be considered as a
regular employee of petitioner. Article 280 of the Labor Code, in which
the lower court used to buttress its Fndings that respondent became
a regular employee of the petitioner, is not applicable in the case at
bar.
2. NO. Considering that there is no employer-employee
relationship between the parties, the termination of
respondent's services by the petitioner after due notice did
not constitute illegal dismissal warranting his reinstatement
and the payment of full backwages, allowances and other
benefits.
22. SEMBLANTE V. CA
C/O CANDANCE
23. BERNARTE V. PBA
Doctrine
Hiring > Independent Contractorship
A basketball referee is an independent contractor, and not an
employee of a basketball association. The very nature of referee’s job
of officiating a professional basketball game undoubtedly calls for
freedom of control by the employer.
Facts
Complainants Bernante and Guevarra aver that they were invited to
join the PBA as referees. They were made to sign contracts on a year-
to-year basis. On January 15, 2004, Bernarte received a letter from
the Office of the Commissioner advising him that his contract would
not be renewed citing his unsatisfactory performance on and off the
court. It was a total shock for Bernarte who was awarded Referee of
the year in 2003. On the other hand, Guevarra alleges he was invited
to join the PBA pool of referees in February 2001. But on 2003, PBA
issued a memorandum to Guevarra expressing dissatisfaction over
his questioning on the assignment of referees officiating out-of-town
games, and he (Guevarra) was no longer made to sign a contract.
Respondents aver that complainants Bernante and Guevarra were
not illegally dismissed because they were not employees of the PBA.
Their respective contracts of retainer were simply not renewed. PBA
had the prerogative of whether or not to renew their contracts, which
they knew were fixed.
Labor Arbiter: Declared petitioners Bernante and Guevarra as
employees of PBA. The former’s dismissal was illegal. Ordered their
reinstatement and payment of backwages and damages.
NLRC: Affirmed LA’s judgment.
CA: OVERTURNED LA and NLRC decision.
• Bernante and Guevarra were not an employee of PBA.
They were independent contractors since PBA did not
exercise any form of control over the means and methods
by which petitioner performed his work as a basketball
referee.
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ISSUE: W/N PETITIONERS WERE ILLEGALLY DISMISSED BY
PBA
HELD: NO. The petition is bereft of merit. CA decision is
affirmed.
To determine the existence of an employer-employee relationship,
case law has consistently applied the four-fold test, to wit:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the employee on the means and
methods by which the work is accomplished.
The so-called "control test" is the most important indicator of the
presence or absence of an employer-employee relationship.
In this case, PBA admits repeatedly engaging petitioner's services,
and admitted its power to terminate the retainer contract for
Bernante's violation of its terms and conditions. PBA, however, argues
that the all-important element of control is lacking in this case, making
petitioner an independent contractor and not an employee of
respondents. On the other hand, petitioner Bernante asserts that he
is an employee of respondents since the latter exercise control over
the performance of his work, citing several stipulations allegedly
evidencing the PBA’s exercise of control over his work.
However, the SC ruled that those stipulations hardly demonstrate
control over the means and methods by which petitioner
performs his work as a referee officiating a PBA basketball game.
Apparently, they merely serve as rules of conduct or guidelines in
order to maintain the integrity of the professional basketball league.
In Sonza, the Court has held that, not all rules imposed by the hiring
party on the hired party indicate that the latter is an employee of the
former.
The Court thus agrees with respondents that once in the playing court,
the referees exercise their own independent judgment, based on the
rules of the game, as to when and how a call or decision is to be made.
The referees decide whether an infraction was committed, and the
PBA cannot overrule them once the decision is made on the playing
court. The PBA cannot and do not determine which calls to make or
not to make and cannot control the referee when he blows the whistle
because such authority exclusively belongs to the referees. The very
nature of petitioner's job of officiating a professional basketball
game undoubtedly calls for freedom of control by respondents.
Other indications that Bernante was an independent contractor:
(1) The referees are required to report for work only when PBA games
are scheduled;
Unlike regular employees who ordinarily report for work eight hours
per day for five days a week, petitioner is required to report for work
only when PBA games are scheduled or three times a week at two
hours per game.
2. There are no deductions for contributions to the Social Security
System, PhilHealth or Pag-Ibig, which are the usual deductions from
employees' salaries.
ISSUE: W/N BERNANTE WAS AN EMPLOYEE BECAUSE OF
PBA’S REPEAT-HIRING OF HIM
HELD: NO.
PBA repeatedly hiring Bernante does not by itself prove that petitioner
is an employee of the former. For a hired party to be considered an
employee, the hiring party must have control over the means and
methods by which the hired party is to perform his work, which is
absent in this case.
The continuous rehiring by PBA of petitioner simply signifies the
renewal of the contract between PBA and petitioner, and highlights
the satisfactory services rendered by petitioner warranting such
contract renewal. Conversely, if PBA decides to discontinue
petitioner's services at the end of the term fixed in the contract,
whether for unsatisfactory services, or violation of the terms and
conditions of the contract, or for whatever other reason, the same
merely results in the non-renewal of the contract, as in the present
case. The nonrenewal of the contract between the parties does
not constitute illegal dismissal of petitioner by respondents.
LABOR STANDARDS DIGESTS
Disposition:
Petition is denied; CA decision is affirmed.
24. LIRIO V. GENOVIA
FACTS:
Genovia was hired as studio manager by Lirio, owner of Celkor Ad
Sonicmix Recording Studio (Celkor). He was employed to manage
and operate Celkor and to promote and sell the recording studio’s
services. Lilio asked Genovia to compose and arrange songs for her
daughter and promised Genovia a compensation. Genovia fulfilled
what he was asked to do and so he asked the compensation he
deserved. However, Lirio told Genovia that he did not deserve the
compensation because he was practically a nobody in the music
industry. Later on, Genovia was illegaly dismissed and no hearing was
conducted before he was terminated. According to Lirio, they only
arrived with the sharing of profits based on mutual understanding and
that their relationship was informal partnership under Art. 1767 of
NCC.
Labor Arbiter:
There was an er-ee relationship between them hence, Genovia was
illegaly dismissed.
NLRC:
It reversed and set aside the decision. Genovia failed to prove that he
was selected and engaged by Lirio, that the latter had the power to
control him as to the result of his work, but also as to the means and
methods of his work.
CA:
It set aside and reversed NLRC’s decision and reinstated LA’s
decision.
ISSUE:
Is there an existing er-ee relationship between Lirio and Genovia?
Held:
Yes, there is no particular form of evidence is required to prove the
existence of such. Any competent and relevant evidence to prove may
be admitted. The documentary evidence such as payroll and copy of
petty cash are enough. It showed that he was hired and was paid
monthly. The power of control refers merely to the existence of the
power. It is not essential for the er to actually supervise the
performance of duties of the ee, as it is sufficient that the former has
a right to wield the power.
25. JAO V. BCC PRODUCTS SALES INC.
FACTS:
The main issue in this case is whether or not there existan employer-
employee relationship. The issue arose that on October 19, 1995, the
security guards of BCC barred petitioner Jao from entering the
premises of BCC upon in- struction of Ty. that his attempts to report
to work in November and December 12, 1995 were frustrated because
he continued to be barred from entering the premises of BCC; and
that he filed a complaint dated December 28, 1995 for illegal
dismissal, reinstatement with full backwages, non-payment of wages,
damages and attorney's fees.
a) Petitioner’s Arguments
Petitioner maintained that respondent BCC Product Sales, Inc. (BCC)
and its President, respondent Terrance Ty (Ty), employed him as
comptroller starting from September 1995 with a monthly salary of
P20,000.00 to handle the financial aspect of BCC's business;
b) Respondent’s Argument’s
Respondents countered that petitioner was not their employee but the
employee of Sobien Food Corporation (SFC), the major creditor and
supplier of BCC; and that SFC had posted him as its comptroller in
BCC to oversee BCC's finances and business operations and to look
after SFC's interests or investments in BCC.
Although Labor Arbiter Felipe Pati ruled in favor of petitioner on June
24, 1996, the NLRC vacated the ruling and remanded the case for
further proceedings. Thereafter, Labor Arbiter Jovencio Ll. Mayor
rendered a new decision on September 20, 2001, dismissing
petitioner's complaint for want of an employer-employee relationship
between the parties. On July 31, 2002, the NLRC rendered a decision
reversing Labor Arbiter Mayor's decision, and declaring that petitioner
had been illegally dismissed. It ordered the payment of unpaid
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salaries, backwages and 13th month pay, separation pay and
attorney's fees.
On February 27, 2004, the CA promulgated its assailed decision
holdingthat no employer-employee relationship existed between
petitioner BCC and the private respondent. Hence, the instant petition.
ISSUE:
Whether or not an employer-employee relationship existed between
petitioner and BCC which will automatically warrant a finding of illegal
dismissal
RULING:
There was no employer-employee relationship
Rule:
The petition lacks merit.
In determining the presence or absence of an employer-employee
relationship, the Court has consistently looked for the following
incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee on the means and methods
by which the work is accomplished. The last element, the so-called
control test, is the most important element.
Hereunder are some of the circumstances and incidents occurring
while petitioner was supposedly employed by BCC that debunked his
claim against respondents. It can be deduced that respondents did
not exercise the power of control over him, because he acted for the
benefit and in the interest of SFC more than of BCC. In addition,
petitioner presented no document setting forth the terms of his
employment by BCC. The failure to present such agreement on terms
of employment may be understandable and expected if he was a
common or ordinary laborer who would not jeopardize his
employment by demanding such document from the employer, but
may not square well with his actual status as a highly educated
professional.
Petitioner's admission that he did not receive his salary for the three
months of his employment by BCC, as his complaint for illegal
dismissal and non-payment of wages and the criminal case for estafa
he later filed against the respondents for non-payment of wages
indicated, further raised grave doubts about his assertion of
employment by BCC. If the assertion was true, we are puzzled how
he could have remained in BCC's employ in that period of time despite
not being paid the first salary of P20,000.00/month. Moreover, his
name did not appear in the payroll of BCC despite him having
approved the payroll as comptroller.
With all the grave doubts thus raised against petitioner's claim, we
need not dwell at length on the other proofs he presented, like the
affidavits of some of the employees of BCC, the ID, and the signed
checks, bills and receipts. Suffice it to be stated that such other proofs
were easily explainable by respondents and by the aforestated
circumstances showing him to be the employee of SFC, not of BCC.
APPLICATION:
In order to determine if an employer-employee exist, you have to
consider the four (4) standards in determining the existence of an
employer-employee relationship, namely, (a) the manner of selection
and engagement of the put- ative employee; (b) the mode of payment
of wages; (c) the presence or absence of power of dismissal; and, (d)
the presence or absence of control of the putative employee's
conduct." Of these powers the power of control over the employee's
conduct is generally regarded as determinative of the existence of the
relationship.
CONCLUSION:
Thus, Jao was not an employee in BCC company First, there is no
proof that the services of the private respon- dent were engaged to
perform the duties of a comptroller in the petitioner company. There is
no proof that the pri- vate respondent has undergone a selection
procedure as a standard requisite for employment, especially with
such a delicate position in the company. Neither is there any proof of
his appointment nor is there any showing that the parties entered into
an employment contract, stipulating thereof that he will receive
P20,000.00/month salary as comptroller, before the private
respondent commenced with his work as such. Second, as clearly
established on record, the private respondent was not included in the
LABOR STANDARDS DIGESTS
petitioner company's payroll during the time of his alleged
employment with the former.
26. OLLENDORF V. ABRAHAMSON
FACTS:
The record discloses that plaintiff is and for a long time past has been
engaged in the city of Manila and elsewhere in the Philippine Islands
in the business of manufacturing ladies embroidered underwear for
export.
On September 10, 1915, plaintiff and defendant entered into a
contract.
Mao ni ang part sa contract nga gilalisan “The said party of
the second part hereby further binds and obligates himself, his heirs,
successors and assigns, that he will not enter into or engage himself
directly or indirectly, nor permit any other person under his control to
enter in or engage in a similar or competitive business to that of the
said party of the first part anywhere within the Philippine Islands for a
period of five years from this date.”
Under the terms of this agreement defendant entered the employ of
plaintiff and worked for him until April, 1916, when defendant, on
account of ill health, left plaintiff's employ and went to the United
States. While in plaintiff's establishment, and had full opportunity to
acquaint himself with plaintiff's business method and business
connection.
Some months after his departure for the United States, defendant
returned to Manila as the manager of the Philippine Underwear
Company (PUC), a corporation. This corporation does not maintain a
factory in the Philippine Islands, but send material and embroidery
designs from New York to its local representative here who employs
Filipino needle workers to embroider the designs and make up the
garments in their homes.
Kung mangutana si Atty if same ba ang business sa plaintiff ug PUC
The only difference between plaintiff's business and that of the firm by
which the defendant is employed, is the method of doing the finishing
work -- the manufacture of the embroidered material into finished
garments.
It also clearly appears from the evidence that defendant has employed
to work his form some of the same workers employed by the plaintiff.
after defendant's return to Manila and the commencement by him of
the discharge of the duties of his position as local manager of the
Philippine Embroidery Company. plaintiff commenced this action, the
principal purpose of which is to prevent by injunction, any further
breach of that part of defendant's contract of employment by plaintiff,
by which he agreed that he would not "enter into or engage himself
directly or indirectly . . . in a similar or competitive business to that of
(plaintiff) anywhere within the Philippine Islands for a period of five
years . . ." from the date of the agreement. The lower court granted a
preliminary injunction, and upon trial the injunction was made
perpetual.
ISSUES:
Defendant argues that even assuming that there has been a breach
of the agreement, the judgment of the court below is nevertheless
erroneous, contending that
(1) the contract is void for lack of mutuality;
(2) that the contract is void as constituting an unreasonable restraint
of trade;
Di ni apil sa Labor pero issue ghapon sa case
(3) that plaintiff has failed to show that he has suffered any estimable
pecuniary damage; and
(4) that even assuming that such damage as to warrant the court in
restraining by injunction its continuance.
RULING
LOWER COURT
The court below found from the evidence that the business was "very
similar." We have examined the evidence and rare of the opinion that
the business in which defendant is engaged is not only very similar to
that of plaintiff, but that it is conducted in open competition with that
business within the meaning of the contract in question. Defendant
himself expressly admitted, on cross-examination, that the firm by
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which he is now employed puts out the same class of foods as that
which plaintiff is engaged in producing.
SC RULING
1. The contention that the contract is void for lack of mutuality is based
upon that part of the agreement which authorizes plaintiff to discharge
the defendant before the expiration of the stipulated term, should
defendant fail to comply with its conditions to plaintiff's satisfaction. It
is admitted that defendant left plaintiff's employ at his own request
before the expiration of the stipulated terms of the contract.
2. We are of the opinion that the contract was not void as constituting
an unreasonable restraint of trade. The rule in this jurisdiction is that
the obligations created by contracts have the force of law between the
contracting parties and must be enforce in accordance with their tenor.
The only limitation upon the freedom of contractual agreement is that
the pacts established shall not be contrary to "law, morals or public
order."
The SC adopt the modern rule that the validity of restraints upon trade
or employment is to be determined by the intrinsinc reasonableness
of restriction in each case, rather than by any fixed rule, and that such
restrictions may be upheld when not contrary to afford a fair and
reasonable protection to the party in whose favor it is imposed.
Basin mangutana si Atty. Regarding sa public policy for entering an
employment with certain terms and conditions
The public policy which allows a person to obtain employment on
certain terms understood by and agreed to by him, and to repudiate
his contract, conflicts with, and must, to avail the defendant, for some
sufficient reason, prevail over, the manifest public policy, which, as a
rule holds him to his bond.
Wala nani apil sa labor pero incase lang mangutana si atty. Answer
sa Issue #3 and #4
3. Where by the terms of a contract imposing a positive obligation the
obligor is entitled to a specific performance, it will not avail the
defendant to show that plaintiff will suffer no pecuniary damage if the
contract is not performed. Upon like reasons, when the undertaking is
negative in character and defendant is violating the obligation
imposed upon him the court may interfere without requiring proof of
actual damage.
The admitted fact that plaintiff has failed to establish proof of
pecuniary damage by reason of the breach of the contract by
defendant by the acts committed prior to the issuance of the
preliminary injunction is, of course, a bar or nay money judgment for
damages for the breach of the contract, but will not justify us in
permitting defendant to continue to break his contract over plaintiff's
objection. The injury is a continuous one. The fact that the court may
not be able to give damages for that part of the breach of the contract
which had already taken place when its aid was invoked is no reason
why it should countenance a continuance of such disregard of
plaintiff's rights.
4. With respect to the contention that an injunction may only be
granted to prevent irreparable injury, the answer is that any continuing
breach of a valid negative covenant is irreparable by the ordinary
process of courts of law. As stated by High, (vol. 2, p. 906) injunctive
relief is granted in cases like this "upon the ground that the parties
cannot be placed in statu quo, and that damages at law can afford no
adequate compensation, the injury being a continuous one irreparable
by the ordinary process of courts of law.
27. DEL CASTILLO V. RICHMOND
FACTS:
Castillo and Richmond executed a “Contract for Rendering
Services” which was acknowledged before a notary on the same day
of its execution. However, Castillo sought to have the contract
declared null and void for it constitute an illegal and unreasonable
restriction upon his liberty to contract. Richmond, on the other hand,
alleges that during the plaintiff was in the defendant's employ he
obtained knowledge of his trade and professional secrets and came
to know and became acquainted and established friendly relations
with his customers so that to now annul the contract and permit
plaintiff to establish a competing drugstore in the town of Legaspi, as
LABOR STANDARDS DIGESTS
Castillo has announced his intention to do, would be extremely
prejudicial to her interest.
RTC and CA’s RULING:
Both ruled that the contract the annulment of which is
sought by the plaintiff is neither oppressive to him, nor unreasonably
necessary to protect the defendant's business, nor prejudicial to the
public interest.Hence, the appeal in SC.
ISSUE:
WON the contract is illegal, unreasonable and contrary to
public policy.
SC’s RULING:
From a reading of paragraph 3 of the contract above
quoted, it will be seen that the only restriction placed upon the right of
the plaintiff is, that he shall "not open, nor own, nor have any interest
directly or indirectly in any other drugstore either in his own name or
in the name of another; nor have any connection with or be employed
by any other drugstore as pharmacist or in any capacity in any
drugstore situated within a radius of four miles from the district of
Legaspi, municipality and Province of Albay, while the said Shannon
Richmond or his heirs may own or have open a drugstore, or to have
an interest in any other one within the limits of the districts of Legaspi,
Albay, and Daraga of the municipality of Albay, Province of Albay." It
will be noted that the restrictions placed upon the plaintiff are strictly
limited (a) to a limited district or districts, and (b) during the time while
the defendant or his heirs may own or have open a drugstore, or have
an interest in any other one within said limited district.
The rule is now well established that a contract in restraint
of trade is valid providing there is a limitation upon either time or place.
A contract, however, which restrains a man from entering into a
business or trade without either a limitation as to time or place, will be
held invalid. The court held that a contract by which an employee
agrees to refrain for a given lenght of time, after the expiration of the
term of his employment, from engaging in a business, competitive with
that of his employer, is not void as being in restraint of trade if the
restraint imposed is not greater than that which is necessary to afford
a reasonable protection. In all cases like the present, the question is
whether, under the particular circumstances of the case and the
nature of the particular contract involved in it, the contract is, or is not,
unreasonable. Of course in establishing whether the contract is a
reasonable or unreasonable one, the nature of the business must also
be considered. What would be a reasonable restriction as to time and
place upon the manufacture of railway locomotive engines might be a
very unreasonable restriction when imposed upon the employment of
a day laborer.
Considering the nature of the business in which the
defendant is engaged, in relation with the limitation placed upon the
plaintiff both as to time and place, the Court is of the opinion, and so
decide, that such limitation is legal and reasonable and not contrary
to public policy.
28. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY V.
NLRC
[FACTS]
PT&T invokes the alleged concealment of civil status and defalcation
of company funds as grounds to terminate the services of an
employee. Respondent Grace de Guzman, contrarily argues that what
really motivated PT&T to terminate her services was her having
contracted marriage during her employment, which is prohibited by
petitioner in its company policies.
Grace de Guzman was initially hired by petitioner as a
“Supernumerary Project Worker,” vice one Tenorio who went on
maternity leave. Under the Reliever Agreement which she signed with
petitioner company, her employment was to be immediately
terminated upon expiration of the agreed period. Private respondent'
s services as reliever were again engaged by petitioner, this time in
replacement of one Erlinda F. Dizon who went on leave during both
periods. Private respondent was once more asked to join petitioner
company as a probationary employee, the probationary period to
cover 150 days. In the job application form that was furnished her to
be filled up for the purpose, she indicated in the portion for civil status
therein that she was single although she had contracted marriage a
few months earlier.
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Petitioner then sent to respondent a memorandum requiring her to
explain the discrepancy. In the memorandum, she was reminded
about the company’s policy of not accepting married women for
employment.
In her reply, private respondent stated that she was not aware of
PT&T's policy regarding married women at the time, and that all along
she had not deliberately hidden her true civil status. Petitioner
nonetheless remained unconvinced by her explanations. Private
respondent was dismissed from the company which she readily
contested by initiating a complaint for illegal dismissal, coupled with a
claim for non-payment of cost of living allowances (COLA), before the
Regional Arbitration Branch.
At the preliminary conference, respondent volunteered the information
that she had failed to remit the amount of P2,380.75 of her collections.
She then executed a promissory note for that amount in favor of
petitioner.
[LOWER COURT’S RULING]
LA: declared that respondent was illegally dismissed by
petitioner. The ground relied upon by petitioner in dismissing private
respondent was clearly insufficient, and that it was apparent that she
had been discriminated against on account of her having contracted
marriage in violation of company rules.
NLRC: upheld the LA. It ruled that private respondent had indeed
been the subject of an unjust and unlawful discrimination by her
employer, PT&T. However, the decision of the labor arbiter was
modified with the qualification that Grace de Guzman deserved to be
suspended for three months in view of the dishonest nature of her acts
which should not be condoned.
The subsequent MR filed by petitioner was rebuffed by NLRC.
Hence this special civil action assailing the aforestated decisions.
[ISSUE/S]
WON private respondent Grace de Guzman was illegally
dismissed by PT&T. YES buang kay tungod lang kay minyo and
babae siya amaw.
[HELD]
YES. An employer is required, as a condition sine qua non prior to
severance of the employment ties of an individual under his employ,
to convincingly establish, through substantial evidence, the existence
of a valid and just cause in dispensing with the services of such
employee, one' s labor being regarded as constitutionally protected
property.
In the case at bar, petitioner's policy of not accepting or considering
as disqualified from work any woman worker who contracts marriage
runs afoul of the test of, and the right against, discrimination, afforded
all women workers by our labor laws and by no less than the
Constitution. Contrary to petitioner's assertion that it dismissed private
respondent from employment on account of her dishonesty, the
record discloses clearly that her ties with the company were dissolved
principally because of the company's policy that married women are
not qualified for employment in PT&T, and not merely because of her
supposed acts of dishonesty.
Verily, private respondent's act of concealing the true nature of her
status from PT&T could not be properly characterized as willful or in
bad faith as she was moved to act the way she did mainly because
she wanted to retain a permanent job in a stable company. In other
words, she was practically forced by that very same illegal company
policy into misrepresenting her civil status for fear of being disqualified
from work. While loss of confidence is a just cause for termination of
employment, it should not be simulated. It must rest on an actual
breach of duty committed by the employee and not on the employer's
caprices. Furthermore, it should never be used as a subterfuge for
causes which are improper, illegal, or unjustified.
As an employee who had therefore gained regular status, and as she
had been dismissed without just cause, she is entitled to
reinstatement without loss of seniority rights and other privileges and
to full back wages, inclusive of allowances and other benefits or their
monetary equivalent.
LABOR STANDARDS DIGESTS
Petitioner's policy is not only in derogation of the provisions of Article
136 of the Labor Code on the right of a woman to be free from any
kind of stipulation against marriage in connection with her
employment, but it likewise assaults good morals and public policy,
tending as it does to deprive a woman of the freedom to choose her
status, a privilege that by all accounts inheres in the individual as an
intangible and inalienable right.
[DISPOSITION]
Petition is DISMISSED.
29. DUNCAN ASSOCIATION V. GLAXO PHILS.
FACTS:
Petitioner Tecson was hired by respondent Glaxo Wellcome
Philppines, Inc. as medical representative, after training and
orientation. Petitioner signed a contract of employment which laid
down that he needed to disclose to the management any existing or
future relationship by consanguinity or affinity with co-employees or
employees of competing drug companies and should management
find that such relationship poses a possible conflict of interest, to
resign from the company. The Employee Code of Conduct of Glaxo
similarly provides that an employee is expected to inform
management of any existing or future relationship. If management
perceives a conflict of interest or a potential conflict between such
relationship and the employee’s employment with the company, the
management and the employee will explore the possibility of a
“transfer to another department in a non-counterchecking position” or
preparation for employment outside the company after six months.
He was initially assigned to market Glaxo’s products in Camarines
Sur-Camarines Norte Area.He then entered a romantic relationship
with Bettsy, Astra’s Branch Coordinator in Albay. Astra is Glaxo’s
competitor. Before they got married, Tecson received several
reminders from hus manager regarding conflict of interest. Still, love
prevailed and they got married. His supervisors then made them
decide which among them should resign. Tecson requested time,
more time for compliance, until sometime in September 1999, he
applied for a transfer in Glaxo’s milk division thinking that Astra did not
have a milk division , to eliminate the conflict of interest. His
application was denied. He then raised the issue to the Grievance
Committee but the parties failed to resolve the issue. He was offered
instead with a separation pay of ½ month pay for every year of service
or Php 50,000 in total.
National Conciliation and Mediation Board decalred Glaxo’s policy on
relationships between their employees and employees of competitors,
and affirmed Glaxo’s right to transfer Tecson to another sales territory.
Tecson then filed a petition for review before the CA and CA affirmed
NCMB’s decision. He filed for reconsideration but it was denied.
Hence this petition for certiorari.
ISSUE: Whether or not Glaxo’s policy on romantic relationships with
competitor companies’ employees is violative of the constitutional
right to equal protection.
Whether or not there was constructive dismissal
RULING
No. Petition denied.
Prohibiting an employee from having a relationship with an employee
of a competitor company is a valid exercise of management
prerogative. Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential
programs and information from competitors.
Glaxo has the right to protect its economic interests. It does not also
absolutely prohibit relationships, it only seeks to avoid conflict of
interests.
There was also no constructive dismissal in the case when he was
transferred from the Camarines SalesArea to the Butuan Sales Area,
since such thing means quitting, demotion, or undue discrimination.
There’s no such thing in his transfer.
30. CITY OF MANILA V. LAGUIO
C/O CANDANCE
Case law has instructed us that the requirement of reasonableness
31. STAR PAPER CORPORATION V. SIMBOL must be clearly established to uphold the questioned employment
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FACTS
Petitioner Star Paper Corporation employed Ronaldo Simbol, Wilfreda
Comia, and Lorna Estrella as regular employees of the company.
The disputed company policy:
1. New applicants will not be allowed to be hired if in case he/she has
[a] relative, up to [the] 3rd degree of relationship, already employed
by the
company.
2. In case of two of our employees (both singles [sic], one male and
another female) developed a friendly relationship during the course of
their
employment and then decided to get married, one of them should
resign to
preserve the policy stated above.
The Love affairs:
1. Simbol met Alma Dayrit, also an employee of the company,
whom he married.
o Before their marriage, the Manager, Ongsitco
advised the couple that should they decide to get
married, one of them should resign pursuant to a
company policy to which Simbol complied.
2. Wilfreda met Howard Comia, a co-employee, whom she
married on June 1, 2000.
o Ongsitco likewise reminded them the company
policy, Comia resigned on June 30, 2000.
3. Estrella met Luisito Zuñiga also a co-worker. Petitioners
stated that Zuñiga, a married man, got Estrella pregnant.
o The company allegedly could have terminated
her services due to immorality but she opted to
resign on December 21, 1999.
It was alleged that the respondents each signed a Release and
Confirmation Agreement. They stated therein that they have no
money and property accountabilities in the company and that they
release the company of any claim or demand of whatever nature.
However, the respondents offered a different version of their
dismissal. Simbol and Comia alleged that they did they did not resign
voluntarily; they were compelled to resign in view of an illegal
company policy. Estrella alleges that she had a relationship with the
man who she thought was a separated man. Thus, she severed her
relationship with him to avoid dismissal due to the company policy.
Respondents later filed a complaint for unfair labor practice,
constructive dismissal, separation pay and attorney's fees. They
averred that the aforementioned company policy is illegal and
contravenes Article 136 of the Labor Code.
Lower Court’s Rulings
LA: Dismissed the complaint and states that the company policy was
decreed pursuant to what the respondent corporation perceived as
management prerogative.
NLRC: Affirmed the decision of the LA.
CA: Reversed the NLRC decision.
ISSUE: W/N the policy of the employer banning spouses from
working in the same company violates the rights of the employee
under the Constitution and the Labor Code or is a valid exercise
of management prerogative.
HELD: YES. The Court ruled on the side of the respondents.
Article 136 of the Labor Code which provides:
“Article 136
It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee
shall not get married, or to stipulate expressly or tacitly that upon
getting married a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her marriage.”
LABOR STANDARDS DIGESTS
policy. In the case at bar, the SC did not find any reasonable business
necessity.
It is significant to note that respondents were hired after they were
found fit for the job, but were asked to resign when they married a co-
employee. Petitioners failed to show how the marriage of Simbol to
Alma Dayrit could be detrimental to its business operations. It must be
reasonable under the circumstances to qualify as a valid exercise of
management prerogative. The questioned policy may not facially
violate Article 136 of the Labor Code but it creates a disproportionate
effect. The failure of petitioners to prove a legitimate business concern
in imposing the questioned policy cannot prejudice the employee’s
right to be free from arbitrary discrimination based upon stereotypes
of married persons working together in one company.
For failure to present undisputed proof of a reasonable business
necessity, the questioned policy is an invalid exercise of management
prerogative. However, since Comia and Simbol already voluntarily
resigned, the issue has become moot and academic. As for Estrella,
the petitioner company contends that Estrella was pressured to resign
because she got impregnated by a married man, and that her
resignation was voluntary. The SC however, disagrees, because as
per examination of the records, the SC ruled here that given the lack
of sufficient evidence on the part of petitioners that the resignation
was voluntary, Estrella's dismissal is declared illegal.
32. DEL MONTE PHILIPPINES V. VELASCO
FACTS:
Velasco is a seasonal employee in Del Monte Philippines and was
later on regularized. Her latest assignment was as Field Laborer. The
issue revolves on her excessive absences without permission which
caused her termination. She filed a case for illegal dismissal against
Del Monte because she was actually suffering from rinary tract
infection, a pregnancy-borne, at that time she committed the alleged
absences. Later on, it was found out that she sent an application for
leave to her supervisor and even went to the company hospital for
check-up and was advised to take a few days rest. Still not feeling
well, she failed to go to work and when it got worse she went to see
an outside doctor and was advised to take another 5 days of rest. She
claimed that she did not file her leave of absence because a medical
certificate was already sufficient per company policy. Few days later,
she failed to report to work again but this time, she already sent an
application for leave of absence to her supervisor which was not
anymore accepted.
Labor Arbiter:
It dismissed the Complaint for lack of merit because Velasco was an
incorrigible absentee.
NLRC:
Velasco’s dismissal was illegal. She made a justification of her
absenteeism. Del Monte even admitted the fact that they knew her
pregnancy which negates their assertion that Velasco failed to give
any explanation of her absences.
CA:
It affirmed NLRC’s decision. It held that the absences due to justified
cause cannot be a ground for dismissal. Under Article 137 (2) of LC,
Del Monte committed a prohibited act in discharging a woman on
account of her pregnancy.
ISSUE:
Can Del Monte validly terminate or dismiss Velasco’s employment on
the ground of excessive absences on account of her pregnancy?
Held:
No, because it is a prohibited act under par 2 Art. 137 of LC, “To
discharge such women on account of her pregnancy, while on leave
or in confinement due to her pregnancy”. Hence, it is covered by the
prohibition under the Labor Code. Since her last string of absence is
justifiable and had been subsequently explained, Del Monte had no
legal basis in considering these absences together with her prior
infractions as gross and habitual neglect.
33. YRASUEGUI V. PAL
FACTS:
Petitioner Armando G. Yrasuegui was a former international flight
steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight
inches (5’8") with a large body frame. The proper weight for a man of
Rule/s: SC upheld the legality of dismissal.
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his height and body structure is from 147 to 166 pounds, the ideal
weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual of PAL.
In 1984, the weight problem started, which prompted PAL to send him
to an extended vacation until November 1985. He was allowed to
return to work once he lost all the excess weight. But the problem
recurred. He again went on leave without pay from October 17, 1988
to February 1989.
Despite the lapse of a ninety-day period given him to reach his ideal
weight, petitioner remained overweight. On January 3, 1990, he was
informed of the PAL decision for him to remain grounded until such
time that he satis- factorily complies with the weight standards. Again,
he was directed to report every two weeks for weight checks, which
he failed to comply with.
On April 17, 1990, petitioner was formally warned that a repeated
refusal to report for weight check would be dealt with accordingly. He
was given another set of weight check dates, which he did not report
to. Thus on Novem- ber 13, 1992, PAL finally served petitioner a
Notice of Administrative Charge for violation of company stan- dards
on weight requirements.
Petitioner’s Contention (Yrasegui):
He did not deny being overweight. What he claimed, instead, is that
his violation, if any, had already been condoned by PAL since no
action has been taken by the company regarding his case since 1988.
He also claimed that PAL discriminated against him because the
company has not been fair in treating the cabin crew members who
are similarly situated.On December 8, 1992, a clarificatory hearing
was held where petitioner manifested that he was undergoing a weight
reduction program to lose at least two (2) pounds per week so as to
attain his ideal weight. Petitioner also advanced that obesity is a
"physical abnormality and/or illness thus, should not be a ground for
dismissal.
Respondent’s Contention (Philippine Airlines, Inc.):
Due to his inability to attain his ideal weight as a continuing cabin crew
requirementand considering the “utmost leniency” extended to the
petitioner “which spanned a period covering a total of almost five (5)
years,” his ser- vices were considered terminated “effective
immediately.”
LABOR ARBITER:Petitioner was illegally dismissed. The weight
standards of PAL are reasonable in view of the nature of the job of
petitioner.However, the weight standards need not be complied with
under pain of dismissal since his weight did not hamper the
performance of his duties.Assuming it did, petitioner could be
transferred to other positions where his weight would not be a
negative factor.
NLRC: Affirmed illegal dismissal. Obesity, or the tendency to gain
weight uncontrollably regardless of the amount of food intake, is a
disease in itself. As a consequence, there can be no intentional
defiance or serious miscon- duct by petitioner to the lawful order of
PAL for him to lose weight.
CA: Reversed NLRC ruling. Weight standards of PAL are meant to be
a continuing qualification for an employee’s position. Failure to adhere
is an analogous causefor the dismissal of an employee under Article
282(e) [now 297(e)] of the Labor Code in relation to Article 282(a)
[now 297(a)].It is a bona fide occupational qualifica- tionwhich, in case
of violation, "justifies an employee’s separation from the
service."Thus, petitioner was legal- ly dismissed because he
repeatedly failed to meet the prescribed weight standards. It is
obvious that the issue of discrimination was only invoked by petitioner
for purposes of escaping the result of his dismissal for being
overweight.
ISSUE:
Whether or not petitioner was validly dismissed?
RULING:
Court of Appealsis AFFIRMED but MODIFIED in that petitioner
Armando G. Yrasuegui is entitled to separation pay in an amount
equivalent to one-half (1/2) month’s pay for every year of service,
which should include his regu- lar allowances.
LABOR STANDARDS DIGESTS
• Obesity of petitioner is a ground for dismissal under
Article 282(e)[now 297e] of the Labor Code.(Article
297. (282) Termination by Employer - An employer may terminate an
employee under the following cases: (e) Other causes analogous to
the foregoing.)
The standards violated in this case were not mere “orders” of the
employer but were the "prescribed weights" that a cabin crew must
maintain in order to qualify for and keep his or her position in the
company. They were stan- dards that establish continuing
qualificationsfor an employee’s position. In this sense, the failure to
maintain these standards does not fall under Article 282(a) whose
express terms require the element of willfulness in order to be a
ground for dismissal. The failure to meet the employer’s qualifying
standardsis in fact a ground that does not squarely fall under grounds
(a) to (d) and is therefore one that falls under Article 282(e) – the
"other causes analog- ous to the foregoing."
By its nature, these "qualifying standards" are norms that apply prior
to and afteran employee is hired. They applyprior to
employmentbecause these are the standards a job applicant must
initially meet in order to be hired. They apply after hiringbecause an
employee must continue to meet these standards while on the job in
order to keep his job.
Application: The obesity of petitioner, when placed in the context of
his work as flight attendant, becomes an analogous cause under
Article 282(e) of the Labor Code.
His obesitywas not a disease. He was able to reduce his weight from
1984 to 1992 clearly showing that it is possible for him to lose weight
given the proper attitude, determination, and self-discipline. Thus, his
fluctuating weight indicates absence of willpower rather than an
illness.His obesity may not be unintended, but is nonetheless
voluntary. “Voluntariness” basically means that the just cause is solely
attributable to the employee without any external force influencing or
controlling his actions. This element runs through all just causes under
Article 282 9now Article 297), whether they be in the nature of a
wrongful action or omission. Gross and habitual neglect, a recognized
just cause, is considered voluntary although it lacks the element of
intent found in Article 282(a), (c), and
(d) (now Artcile 297(a-d).”
• Dismissal of petitioner can be predicated on thebona fide
occupational qualification defense.
Employment in particular jobs may not be limited to persons of a
particular sex, religion, or national origin u n- less the employer can
show that sex, religion, or national origin is an actual qualification for
performing the job. The qualification is called a bona fide occupational
qualification (BFOQ). In the United States, there are a few federal and
many state job discrimination laws that contain an exception allowing
an employer to engage in an otherwise unlawful form of prohibited
discrimination when the action is based on a BFOQ necessary to the
normal operation of a business or enterprise.
As petitioner contends that BFOQ is a statutory defense, that does not
exist if there is no statute providing for it and that there is no existing
BFOQ statute that could justify his dismissal , SC held that the
Constitution,the Labor Code, and RA No. 7277or the Magna Carta for
Disabled Persons contain provisions similar to BFOQ.
TheMeiorin Test (US jurisprudence) in determining whether an
employment policy is justified.
(1) the employer must show that it adopted the standard for a
purpose rationally connected to the performance of the job;
(2) the employer must establish that the standard is reasonably
necessary to the accomplishment of that work -related
purpose; and
(3) the employer must establish that the standard is reasonably
necessary in order to accomplish the legitimate work - related
purpose.
In Star Paper Corporation v. Simbol, the Court held that in order to
justify a BFOQ, the employer must prove:
(1) the employment qualification is reasonably related to the
essential operation of the job involved; and
(2) that there is factual basis for believing that all or substantially
all persons meeting the qualification would be unable to
properly perform the duties of the job.
In short, the test of reasonableness of the company policy is used
because it is parallel to BFOQ. BFOQ is valid “provided it reflects an
inherent quality reasonably necessary for satisfactory job
performance.”
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Application: The weight standards of PAL are reasonable under the
BFOQ.
A common carrier, from the nature of its business and for reasons of
public policy, is bound to observe extraor- dinary diligence for the
safety of the passengers it transports. It is bound to carry its
passengers safely as far as h u- man care and foresight can provide,
using the utmost diligence of very cautious persons, with due regard
for all the circumstances. In order to achieve this, it must necessarily
rely on its employees, most particularly the cabin flight deck crew who
are on board the aircraft. The law leaves no room for mistake or
oversight on the part of a common carrier. Thus, it is only logical to
hold that the weight standards of PAL show its effort to comply with
the exacting obligations imposed upon it by law by virtue of being a
common carrier.
The primary objective of PAL in the imposition of the weight standards
for cabin crew is flight safety. The big- gest problem with an
overweight cabin attendant is the possibility of impeding passengers
from evacuating the air- craft, should the occasion call for it. The job
of a cabin attendant during emergencies is to speedily get the pa
ssen- gers out of the aircraft safely.Being overweight necessarily
impedes mobility. Three lost seconds can translate into three lost
lives. Evacuation might slow down just because a wide-bodied cabin
attendant is blocking the narrow aisles. These possibilities are not
remote.
Petitioner is also in estoppel. He does not dispute that the weight
standards of PAL were made known to him prior to his employment.
He is presumed to know the weight limit that he must maintain at all
times. Never did he question the authority of PAL when he was
repeatedly asked to trim down his weight. Good faith demands that
what is agreed upon shall be done.The weight standards of PAL
provide for separate weight limitations based on height and body
frame for both male and female cabin attendants. A progressive
discipline is imposed to allow non- compliant cabin attendants
sufficient opportunity to meet the weight standards. Thus, the clear-
cut rules obviate any possibility for the commission of abuse or
arbitrary action on the part of PAL.
• Petitioner failed to substantiate his claim that he was
discriminated against by PAL. Burden of proof lies on the
party alleging discrimination.
Application: Petitioner cannot establish discrimination by simply
naming the supposed cabin attendants who are allegedly similarly
situated with him. Substantial proof must be shown as to how and why
they are similarly situated and the differential treatment petitioner got
from PAL despite the similarity of his situation with other e m-
ployees.Petitioner failed to indicate their respective ideal weights;
weights over their ideal weights; the periods they were allowed to fly
despite their being overweight; the particular flights assigned to them;
the discriminating trea t- ment they got from PAL; and other relevant
data that could have adequately established a case of discriminatory
treatment by PAL. In the words of the CA, "PAL really had no
substantial case of discrimination to meet."
Agreeing with CA, the element of discrimination came into play in this
case only as a secondary position for the private respondent in order
to escape the consequence of dismissal that being overweight
entailed. It is a confession - and-avoidance position that impliedly
admitted the cause of dismissal, including the reasonableness of the
applicable standard and the private respondent’s failure to comply.
• Entitled to separation pay, even if terminated for just
cause
Normally, a legally dismissed employee is not entitled to separation
pay. This may be deduced from the lan- guage of Article 279 [now
Article 294] of the Labor Code that "an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, i n-
clusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensa- tion was withheld
from him up to the time of his actual reinstatement."
Exceptionally, separation pay is granted to a legally dismissed
employee as an act “social justice,” or based on “equity.” Provided the
dismissal: (1) was not for serious misconduct; and (2) does not reflect
on the moral character of the employee.
Application: Supreme Court granted petitioner separation pay
equivalent to one-half (1/2) month’s pay for every year of service
including regular allowances which he might have been receiving.We
are not blind to the fact that he was not dismissed for any serious
misconduct or to any act which would reflect on his moral character.
LABOR STANDARDS DIGESTS

We also recognize that his employment with PAL lasted for more or
less a decade

Conclusion:
Therefore, the weight standard of PAL for its cabin crew is reasonable
under the bona fide occupational qualifi- cation and constitutes a
continuing qualification for them to keep their job. Petitioner’s
dismissal was held to be of just cause and valid falling under Article
282(e) now Article 297(e) of the Labor Code of the Philippines and as
an exception he is entitled to a separation pay in this case.

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