Labor Digest Midterms

7/29/2019 Labor Digest Midterms

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1. PHILIPPINE GLOBAL COMMUNICATIONS vs DE VERA[G.R. No. 157214. June 7, 2005]

PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO DE VERA, respondent.

FACTS: De Vera and petitioner company entered into a contract where respondent was toattend to the medical needs of petitioners employeeswhile being paid a retainer fee of P4,000

per month. Later, De Vera was informed y petitioner that the retainership will be discontinued.

Respondent filed a case for illegal dismissal.

ISSUE: Whether or not de Vera is an employee of PhilComm or an independent contractor.

HELD: Applying the four fold test, de Vera is not an employee. There are several indicators

apart from the fact that the power to terminate the arrangement lay on both parties:

from the time he started to work with petitioner, he never was included in its payroll;

was never deducted any contribution for remittance to the Social Security System (SSS);

he was subjected by petitioner to the ten (10%) percentwithholding tax for his

professional fee, in accordance with the National Internal Revenue Code, matters which are

simply inconsistent with an employer-employee relationship;

the records are replete with evidence showing that respondent had to bill petitioner for

his monthly professional fees. It simply runs against the grain of common experience to imagine

that an ordinary employee has yet to bill his employer to receive his salary.

Finally, the element of control s absent. Petition granted.

PHILIPPINE FUJI XEROX CORPORATION, JENNIFER A. BERNARDO,and ATTY. VICTORINO LUIS, petitioners, vs. NATIONAL LABORRELATIONS COMMISSION (First Division), PAMBANSANGKILUSAN NG PAGGAWA, (KILUSAN)-TUCP, PHILIPPINE XEROXEMPLOYEES UNION-KILUSAN and PEDROGARADO, respondents.

D E C I S I O N

MENDOZA,J :

This is a petition for certiorari to set aside the decision of the NLRC,finding petitioner Philippine Fuji Xerox Corporation (Fuji Xerox) guilty ofillegally dismissing private respondent Pedro Garado and ordering himreinstated. The NLRC decision reverses on appeal a decision of the Labor


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Arbiter finding private respondent to be an employee of another firm, theSkillpower, Inc., and not of petitioner Fuji Xerox.

The question raised in this case is whether private respondent is anemployee of ,Fuji Xerox (as the NLRC found) or of Skillpower, Inc. (as the

Labor Arbiter found). For reasons to be hereafter explained, we hold thatprivate respondent is an employee of Fuji Xerox and accordingly dismiss thepetition for certiorari of Fuji Xerox.

The following are the facts.

On May 6, 1977, petitioner Fuji Xerox entered into an agreement underwhich Skillpower, Inc. supplied workers to operate copier machines of FujiXerox as part of the latters Xerox Copier Project in its sales offices. Privaterespondent Pedro Garado was assigned as key operator at Fuji Xeroxsbranch at Buendia, Makati, Metro Manila, in February of 1980.

In February of 1983, Garado went on leave and his place was taken overby a substitute. Upon his return in March, he discovered that there was aspoilage of over 600 copies. Afraid that he might be blamed for the spoilage,he tried to talk to a service technician of Fuji Xerox into stopping the meter ofthe machine.

The technician refused Garados request, but this incident came to theknowledge of Fuji Xerox which, on May 31, 1983, reported the matter toSkillpower, Inc. The next day, Skillpower, Inc. wrote Garado, ordering him toexplain. In the meantime, it suspended him from work. Garado filed a

complaint for illegal dismissal.

The Labor Arbiter found that Garado applied for work to Skillpower, Inc.;that in 1980 he was employed and made to sign a contract; that although hereceived his salaries regularly from Fuji Xerox, it was Skillpower, Inc. whichexercised control and supervision over his work; that Skillpower, Inc. hadsubstantial capital and investments in machinery, equipment, and servicevehicles, and assets totalling P5,008,812.43. On the basis of these findingsthe Labor Arbiter held in a decision rendered on October 30, 1986 thatGarado was an employee of Skillpower, Inc., and that he had merely been

assigned by Skillpower, Inc. to Fuji Xerox. Hence, the Labor Arbiter dismissedGarados complaint.

On the other hand, the NLRC found Garado to be in fact an employee ofpetitioner Fuji Xerox and by it to have been illegally dismissed. The NLRCfound that although Garados request was wrongful, dismissal would be adisproportionate penalty. The NLRC held that although Skillpower, Inc. hadsubstantial capital assets, the fact was that the copier machines, which


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Garado operated, belonged to petitioner Fuji Xerox, and that although it wasSkillpower, Inc. which had suspended Garado, the latter merely acted at thebehest of Fuji Xerox. The NLRC found that Garado worked under the controland supervision of Fuji Xerox, which paid his salaries, and that Skilipower, Inc.merely acted as paymaster-agent of Fuji Xerox. The NLRC held that

Skilipower, Inc. was a labor-only contractor and Garado should be deemed tohave been directly employed by Fuji Xerox, regardless of the agreementbetween it and Skillpower, Inc. Accordingly, the NLRC ordered:

WHEREFORE, premises considered, the respondents are hereby ordered toimmediately reinstate complainant Pedro Garado to his former position as key

operator with three (3) years backwages, without qualification or reduction

whatsoever x x x. Except as herein above MODIFIED, the appealed decision is

hereby Affirmed.

Hence the present petition. Fuji Xerox argues that Skillpower, Inc. is anindependent contractor and that Garado is its employee for the followingreasons:

(1) Garado was recruited by Skillpower, Inc.;

(2) The work done by Garado was not necessary to the conduct of the business of FujiXerox;

(3) Garados salaries and benefits were paid directly by Skillpower, Inc.;

(4) Garado worked under the control of Skillpower, Inc.; and

(5) Skillpower, Inc. is a highly-capitalized business venture.

The contentions are without merit.

Fuji Xerox contends that Garado was actually recruited by Skillpower, Inc.as part of its personnel pool and later merely assigned to it (petitioner). It isundisputed, however, that since 1980,[1]when Garado was first assigned towork at Fuji Xerox, he had never been assigned to any other company somuch so that by 1984, he was already a member of the union which petitionedthe company for his regularization. [2]From 1980 to 1984 he worked exclusivelyfor petitioner. Indeed, he was recruited by Skillpower, Inc. solely for

assignment to Fuji Xerox to work in the latters Xerox Copier Project.[3]

Petitioners claim that Skillpower, Inc. has other clients to whom it provided

temporary services. That, however, is irrelevant. What is important is thatonce employed, Garado was never assigned to any other client of Skillpower,Inc. In fact, although under the agreement Skillpower, Inc. was supposed toprovide only temporary services, Skilipower, Inc. actually supplied Fuji Xerox
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the labor which the latter needed for its Xerox Copier Project for seven (7)years, from 1977 to 1984.

On January 1, 1983, private respondent signed a contract entitledAppointment as Contract Worker, in which it was stated that private

respondents status was that of a contract worker for a definite periodfrom January 1, 1983 to June 30, 1983. As such, private respondentsemployment was considered temporary, to terminate automatically six (6)months afterwards, without necessity of any notice and without entitlingprivate respondent to separation or termination pay. Private respondent wasmade to understand that he was an employee of Skillpower, Inc., and not ofthe client to which he was assigned. Therefore, the termination of the contractor any renewal or extension thereof did not entitle him to become anemployee of the client and the latter was not under any obligation to appointhim as such, notwithstanding the total duration of the contract or any

extension or renewal thereof.

This is nothing but a crude attempt to circumvent the law and underminethe security of tenure of private respondent by employing workers under six-month contracts which are later extended indefinitely through renewals. Asthis Court held in the Philippine Bank of Communications v. NLRC:[4]

It is not difficult to see that to uphold the contractual arrangement betweenthe bank and CESI would in effect be to permit employers to avoid thenecessity of hiring regular or permanent employees and to enable them tokeep their employees indefinitely on a temporary or casual status, thus to

deny them security of tenure in their jobs. Article 106 of the Labor Code isprecisely designed to prevent such a result.

Second. Petitioner contends that the service provided by Skillpower, Inc.,namely, operating petitioners xerox machine, is not directly related nornecessary to the business of selling and leasing copier machines of petitioner.Petitioners claim that their Xerox Copier Project is just for public service and ispurely incidental to its business. What petitioners earn from the project is noteven sufficient to defray their expenses, let alone bring profits to them. Assuch, the project is no different from other services which can legally be

contracted out, such as security and janitorial services. Petitioners contendthat the copier service can be considered as part of their housekeepingtasks which can be let to independent contractors. [5]

We disagree. As correctly held by the NLRC, at the very least, the XeroxCopier Project of petitioners promotes goodwill for the company. It may notgenerate income for the company but there are activities which a companymay find necessary to engage in because they ultimately redound to its
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benefit. Operating the companys copiers at its branches advertises the qualityof their products and promotes the companys reputation and public image. Italso advertises the utility and convenience of having a copier machine. It isnoteworthy that while not operated for profit the copying service is notintended either to be promotional, as, indeed, petitioner charged a fee for the

copies made.

It is wrong to say that if a task is not directly related to the employersbusiness, or it falls under what may be considered housekeeping activities,the one performing the task is a job contractor. The determination of theexistence of an employer-employee relationship is defined by law according tothe facts of each case, regardless of the nature of the activities involved.

Third. Petitioners contend that it never exercised control over the conductof private respondent. Petitioners allege that the salaries paid to Garado, aswell as his employment records, vouchers and loan checks from the SSSwere coursed through Skillpower, Inc. In addition private respondent appliedfor vacation leaves to Skilipower, Inc.

It is also contended that it was Skillpower, Inc. which twice required privaterespondent to explain why he should not be dismissed for the spoilage in FujiXeroxs Buendia branch and suspended him pending the result of theinvestigation. According to petitioners, although they conducted anadministrative investigation, the purpose was only to determine the complicityof their own employees in the incident, if any, and any criminal liability ofprivate respondent.

This claim is belied by two letters written by Atty. Victorino H. Luis, Legaland Industrial Relations Officer of the company, to the union president, NickMacaraig. The first letter, dated July 6, 1983, stated:

This has reference to your various letters dated today on administrative case

concerning Messrs. Crisostomo Cruz, Pedro Garado and Ms. Evelyn Abenes. Inconnection with the above and in the case likewise of Mr. Dionisio Guyala,please be

advised that the proceedings against them are being carried out under the terms, and

in accordance with the provisions of our Policy and Procedure on EmploymentTermination as well as Policy on Disciplinary Actions dated October 1, 1982, and not

under the Grievance Machinery under our CBA.

Your action apparently is premised on the assumption that we are now in the

Grievance Stage, which is premature. If we have allowed the Union to participate in

our Investigation and Administrative panels, it is only a concession on managements

part in accordance with No. IV, Section B, Paragraph 3 of the abovecited policy on


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the investigation, the Personnel/Administrative Department may consult

the Unionwhenever necessary.

We shall entertain grievances under our CBA Machinery only after decisions havebeen made on the foregoing cases and should you find the penalties imposed, if any,

as unjust, unduly harsh, discriminating otherwise fit subject for grievance bythe Union itself under the terms of our CBA.

Accordingly, we are proceeding with our investigations on the administrative

charges with or without your presence or that of the respondents if it is the latters

preference, as in the case of Crisostomo Cruz, to ignore the same. (Italics ours)

The second letter, dated July 13, 1983,[6]read:

You obviously persist in pursuing the misconception that our allowing your presence

in the administrative proceedings against Messrs. Guyala, Cruz, et al. has set theGrievance Machinery under our CBA into play. We can only reiterate our statementin our letter of July 6 that we were implementing Policy and Procedures on

Termination dated October 1, 1982 and that your presence in helping bolster the

defense for the respondents was only with our forbearance in the spirit of cooperation

in order to better ferret out the truth.

The power or authority to impose discipline and disciplinary measures upon

employees is a basic prerogative of Management, something that cannot be abdicated,

much less ceded to a CBA Grievance Committee which is limited to settling disputes

and misunderstanding as to interpretation, application, or violation of any provisionsof the CBA agreement x x x. As likewise pointed out in our letter of July 6 recourse

to Grievance may possibly be resorted to if in the Unions opinion a penalty imposedupon a respondent Union member is discriminating to the member or otherwise

illegal, unduly harsh, and the like. Ultimately, the remedy lies in appeal to the NLRC,

as in similar cases in the past. (Italics ours)

These letters reveal the role which Fuji Xerox played in the dismissal ofthe private respondent. They dispel any doubt that Fuji Xerox exerciseddisciplinary authority over Garado and that Skillpower, Inc. issued the order of

dismissal merely in obedience to the decision of petitioner.

Fourth. Petitioner avers that Skillpower, Inc. is a highly-capitalizedbusiness venture, registered as an independent employer with the Securitiesand Exchange Commission as well as the Department of Labor andEmployment. Skillpower, Inc. is a member of the Social Security System. In1984 it had assets exceeding P5 million pesos and at least 20 typewriters,
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office equipment and service vehicles. It had employees of its own and a poolof 25 clerks assigned to clients on a temporary basis.

Petitioners cite the case ofNeri v. NLRC,[7]in which it was held that theBuilding Care Corporation (BCC) was an independent contractor on the basis

of finding that it had substantial capital, although there was no evidence that ithad investments in the form of tools, equipment, machineries and workpremises. But the Court in that case considered not only the capitalization ofthe BCC but also the fact that BCC was providing specific special services(radio/telex operator and janitor) to the employer; that in another case[8]theCourt had already found that the BCC was an independent contractor; thatBCC retained control over the employees and the employer was actually justconcerned with the end-result; that BCC had the power to reassign theemployees and their deployment was not subject to the approval of theemployer; and that BCC was paid in lump sum for the services it rendered.

These features of that case make it distinguishable from the present one.

Here, the service being rendered by private respondent was not a specificor special skill that Skillpower, Inc. was in the business of providing. Althoughin the Neri case the telex machine operated by the employee belonged to theemployer, the service was deemed permissible because it was specific andtechnical. This cannot be said of the service rendered by private respondentGarado.

The Rules to Implement of the Labor Code, Book III, Rule VIII, 8, providethat there is job contracting when the following conditions are fulfilled:

(1) The contractor carries on an independent business and undertakes the contractwork on his own account under his own responsibility according to his own mannerand 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.

Otherwise, according to Art. 106 of the Labor Code,

There is labor-only contracting where the person supplying workers to an employerdoes not have substantial capital or investment in the form of tools, equipment,

machineries, work premises, among others, and the workers recruited and placed by

such persons are performing activities which are directly related to the principal
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business of such employer. In such cases, the person or intermediary shall be

considered merely as an agent of the employer who shall be responsible to the

workers in the same manner and extent as if the latter were directly employed by him.

Petitioner Fuji Xerox argues that Skillpower, Inc. had typewriters and

service vehicles for the conduct of its business independently of the petitioner.But typewriters and vehicles bear no direct relationship to the job for whichSkillpower, Inc. contracted its service of operating copier machines andoffering copying services to the public. The fact is that Skillpower, Inc. did nothave copying machines of its own. What it did was simply to supply manpowerto Fuji Xerox. The phrase substantial capital and investment in the form oftools, equipment, machineries, work premises, and other materials which arenecessary in the conduct of his business, in the Implementing Rules clearlycontemplates tools, equipment, etc., which are directly related to the service itis being contracted to render. One who does not have an independentbusiness for undertaking the job contracted for is just an agent of theemployer.

Fifth. The Agreement between petitioner Fuji Xerox and Skillpower, Inc.provides that Skillpower, Inc. is an independent contractor and that theworkers hired by it shall not, in any manner and under any circumstances, beconsidered employees of [the] Company, and that the Company has nocontrol or supervision whatsoever over the conduct of the Contractor or any ofits workers in respect to how they accomplish their work or perform theContractors obligations under this AGREEMENT.

In Tabas v. California Manufacturing Company, Inc., [9]this Court held onfacts similar to those in the case at bar:

There is no doubt that in the case at bar, Livi performs manpower services, meaningto say, it contracts out labor in favor of clients. We hold that it is one notwithstanding

its vehement claims to the contrary, and notwithstanding the provision of the contract

that it is an independent contractor. The nature of ones business is not determinedby self-serving appellations one attaches thereto but by the tests provided by statute

and prevailing case law. The bare fact that Livi maintains a separate line of business

does not extinguish the equal fact that it has provided California with workers topursue the latters own business. In this connection, we do not agree that the

petitioners had been made toperform activities which are not directly related to the

general business of manufacturing,Californias purported principal operation

activity. The petitioners had been charged with merchandising [sic] promotion or

sale of the products of [California] in the different sales outlets in Metro Manila

including task and occasional [sic] price tagging, an activity that is doubtless, an

integral part of the manufacturing business. It is not, then, as if Livi had served as its
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(Californias) promotions or sales arm or agents, or otherwise, rendered a piece of

work it (California) could not have itself done; Livi as a placement agency, hadsimply supplied it with the manpower necessary to carry out its (Californias)

merchandising activities, using its (Californias) premises and equipment.

xxx xxx xxx

The fact that the petitioners have allegedly admitted being Livis direct employees

in their complaints is nothing conclusive. For one thing, the fact that the petitioners

were (are), will not absolve Californiasince liability has been imposed by legal

operation. For another, and as we indicated, the relations of parties must be judged

from case to case and the decree of law, and not by declaration of parties.

Skilipower, Inc. is, therefore, a labor-only contractor and Garado is not itsemployee. No grave abuse of discretion can thus be imputed to the NLRC for

declaring petitioner Fuji Xerox guilty of illegal dismissal of private respondent.

ACCORDINGLY, the petition for certiorari is DISMISSED for lack of merit.

SO ORDERED.

Regalado, J. (Chairman), Romero, and Puno, JJ., concur.

3. Sevilla vs. CA

FACTS:A contract by and between Noguera and Tourist World Service (TWS), represented by Canilao, wherein

TWSleased the premises belonging to Noguera as branch office of TWS. When the branch office

was opened, it was runby appellant Sevilla payable to TWS by any airline for any fare brought in

on the efforts of Mrs. Sevilla, 4% was togo to Sevilla and 3% was to be withheld by

the TWS.Later, TWS was informed that Sevilla was connected with rival firm, and since

the branch office was losing, TWS considered closing down its office.On January 3, 1962, the

contract with appellee for the use of the branch office premises was terminatedand while the

effectivity thereof was January 31, 1962, the appellees no longer used it. Because of this,

Canilao, thesecretary of TWS, went over to the branch office, and finding the

premises locked, he padlocked the premises.When neither appellant Sevilla nor

any of his empl oyees could e nter, a complaint was filed by the appellants against

the appellees. TWS insisted that Sevilla was a mere employee, being the branch manager of

its branch office and thatshe had no say on the lease executed with the private respondent,

Noguera.


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ISSUE:W/N ER-EE relationship exists between Sevilla and TWS

HELD:The records show that petitioner, Sevilla, was not subject to control by the private respondent

TWS. In thef ir st p lace , unde r t he cont ract of lease , s heha d bo un d he rs e lf in so li du m as an d f or re nt al pay me nt s, an arrangement that

would belie claims of a master-servant relationship. That does not make her an employee of TWS,since a

true employee cannot be made to part with his own money in pursuance of his

employers business, orotherwise, assume any liability thereof.In the second place, when

the branch office was opened, the same was run by the appellant Sevilla payableto TWS by any

airline for any fare brought in on the effort of Sevilla. Thus, it cannot be said that Sevilla was

underthe control of TWS. Sevilla in pursuing the business, relied on her own capabilities.It is further

admitted that Sevilla was not in the companys payroll. For her efforts, she

reta ined 4% in commissions from airline bookings, the remaining 3% going to TWS. Unlike an

employee, who earns a fixed salary,she earned compensation in fluctuating amount depending

on her booking successes. The fact that Sevilla had been designate d branch manager

does not make her a TWS e mployee. It appears that Sevilla is a bona fide travel agent

herself, and she acquired an interest in the business entrusted toher. She also had assumed

personal obligation for the operation thereof, holding herself solidary liable for

thepayment of rentals.Wherefore, TWS and Canilao are jointly and severally liable to indemnify the

petitioner, Sevilla.

4.MANILA GOLF CLUB INC vs IAC Case DigestMANILA GOLF CLUB, INC. VS. INTERMEDIATE APPELLATE COURT237 SCRA 207

Facts: This is originally filed with the Social Security Commission (SSC) viapetition of 17 personswho styled themselves as Caddies of Manila Golfand Country Club-PTCCEA for the coverage andavailment of benefits of the Social Security Act as amended, PTCCEA (Philippine Technical,Clerical, Commercial Employees Association) a labor organization where which they claim formembership.

The same time two other proceedings were filed and pending. These are certification election casefiled by PTCCEA on behalf of the same caddiesof Manila Golf and Country club which was in favorof the caddies and compulsory arbitration case involving PTCCEA and Manila Golf and CountryClub which was dismissed and ruled that there was no employer-employee relationship between

the caddies and the club.

Issue: Whether or not rendering caddying services for members of golfclubs and their guests in saidclubs courses or premises are the employees of such clubs and therefore within the compulsorycoverage of the Social Security System (SSS).

Ruling: The Court does not agree that the facts logically point to the employer-employeerelationship.


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In the very nature of things, caddies must submit to some supervision of their conduct while enjoyingthe privilege of pursuing their occupation withinthe premises and grounds of whatever club they dowork in. They work for the club to which they attach themselves on sufferance but, on the otherhand, also without having to observe any working hours, free to leave anytime they please, to stayaway for as long they like.

These considerations clash frontally with the concept of employment. It can happen that a caddywho has rendered services to a player on one day may still find sufficient time to work elsewhere.Under such circumstances, the caddy may leave the premises and to go to such other place of workthat he wishes. These are things beyond the control of the petitioner.

The caddy (LLamar) is not an employee of petitioner Manila Golf and Country Club and thepetitioner is under no obligation to report him for compulsory coverage of SSS.

5. FRANCISCO vs. NLRC Case DigestANGELINA FRANCISCO vs. NLRC

500 SCRA 690 (2006)

Facts: Petitoner was hired by Kasei Corporation during the incorporation stage. Shewas designated as accountant and corporate secretary and was assigned to handle all theaccounting needs of the company. She was also designated as Liason Officer to the City of Manilato secure permits for the operation of the company.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment ofall employees and perform managementadministration functions. In 2001, she was replaced by LizaFuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was untilSeptember. She asked for her salary but was informed that she was no longer connected to thecompany. She did not anymore report to work since she was not paid for her salary. She filed anaction forconstructive dismissal with the Labor Arbiter.

The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision whileCA reversed it.

Issue: Whether or not there was an employer-employee relationship.

Ruling: The court held that in this jurisdiction, there has been no uniform test to determine theexistence of an employer-employee relation. Generally, courts have relied on the so-called right ofcontrol test where the person for whom the services are performed reserves a right to control notonly the end to be achieved but also the means to be used in reaching such end. In addition to thestandard of right-of-control, the existing economic conditions prevailing between the parties, like theinclusion of the employee in the payrolls, can help in determining the existence of an employer-

employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putativeemployers power to control the employee with respect to the means and methods by which thework is to be accomplished; and (2) the underlying economic realities of the activity or relationship.

In Sevilla v. Court of Appeals, the court observed the need to consider the existing economicconditions prevailing between the parties, in addition to the standard of right-of-control like theinclusion of the employee in thepayrolls, to give a clearer picture in determining the existence of an


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employer-employee relationship based on an analysis of the totality of economic circumstances ofthe worker.

Thus, the determination of the relationship between employer and employee depends upon thecircumstances of the whole economic activity, such as: (1) the extent to which the servicesperformed are an integral part of the employers business; (2) the extent of the workers investment

in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) theworkers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresightrequired for the success of the claimed independent enterprise; (6) the permanency and duration ofthe relationship between the worker and the employer; and (7) the degree of dependency of theworker upon the employer for his continued employment in that line of business. The properstandard of economic dependence is whether the worker is dependent on the alleged employer forhis continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporationbecause she was under the direct controland supervision of Seiji Kamura, the corporationsTechnical Consultant. It is therefore apparent that petitioner is economically dependent onrespondent corporation for her continued employment in the latters line of business.

There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation.She was selected and engaged by the company for compensation, and is economically dependentupon respondent for her continued employment in that line of business. Her main job functioninvolved accounting and tax services rendered to Respondent Corporation on a regular basis overan indefinite period of engagement. Respondent Corporation hired and engaged petitioner forcompensation, with the power to dismiss her for cause. More importantly, Respondent Corporationhad the power to control petitioner with the means and methods by which the work is to beaccomplished.

6.OPULENCIA ICE PLANT AND STORAGE AND/OR DR. MELCHOR

OPULENCIA, petitioners, vs.

NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), LABORARBITER NUMERIANO VILLENA AND MANUEL P. ESITA, respondents.

Facts:

MANUEL P. ESITA was for twenty (20) years a compressor operator of Tiongson Ice Plant in San

Pablo City. In 1980 he was hired as compressor operator-mechanic for the ice plants of

petitioner Dr. Melchor Opulencia located in Tanauan, Batangas, and Calamba, Laguna. Initially

assigned at the ice plant in Tanauan, Esita would work from seven o'clock in the morning to five

o'clock in the afternoon receiving a daily wage of P35.00.

In 1986, Esita was transferred to the ice plant in Calamba, which was then undergoing

overhauling, taking the place of compressor operator Lorenzo Eseta, who was relieved because

he was already old and weak. For less than a month, Esita helped in the construction-

remodeling of Dr. Opulencia's house.

In February 1989, for demanding the correct amount of wages due him, Esita was dismissed


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from service. Consequently, he filed with Sub-Regional Arbitration in San Pablo City, a

complaint for illegal dismissal, underpayment, non-payment for overtime, legal holiday,

premium for holiday and rest day, 13th month, separation/retirement pay and allowances

against petitioners.

Petitioners deny that Esita is an employee. They claim that Esita could not have been employedin 1980 because the Tanauan ice plant was not in operation due to low voltage of electricity

and that Esita was merely a helper/peon of one of the contractors they had engaged to do

major repairs and renovation of the Tanauan ice plant in 1986. Petitioners further allege that

when they had the Calamba ice plant repaired and expanded, Esita likewise rendered services

in a similar capacity, and thus admitting that he worked as a helper/peon in the repair or

remodeling of Dr. Opulencia's residence in Tanauan.

In December 1989, Labor Arbiter Villena rendered a decision 1 finding the existence of an

employer-employee relationship between petitioners and Esita and accordingly directed them

to pay him separation pay, underpayment of wages, allowances, 13th month, holiday, premium

for holiday, and rest day pays. Almost a year after, NLRC affirmed the decision of Labor Arbiter

Villena but reduced the monetary award as it was not proven that Esita worked every day

including rest days and on the days before the legal holidays. In March 1991, petitioners'

motion for reconsideration was denied.

Issue:

W/N there was an employee-employer relationship between Opulencia and Esita.

Ruling:

Yes.

Ratio:

No particular form of evidence is required to prove the existence of an employer-employee

relationship. Any competent and relevant evidence to prove the relationship may be admitted.

For, if only documentary evidence would be required to show that relationship, no scheming

employer would ever be brought before the bar of justice, as no employer would wish to come

out with any trace of the illegality he has authored considering that it should take much

weightier proof to invalidate a written instrument.

On the claim that Esita's construction work could not ripen into a regular employment in the ice

plant because the construction work was only temporary and unrelated to the ice-making

business, needless to say, the one month spent by Esita in construction is insignificant

compared to his nine-year service as compressor operator in determining the status of his

employment as such, and considering further that it was Dr. Opulencia who requested Esita to

work in the construction of his house.


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In allowing Esita to stay in the premises of the ice plant and permitting him to cultivate crops to

augment his income, there is no doubt that petitioners should be commended; however, in

view of the existence of an employer-employee relationship as found by public respondents,

we cannot treat humanitarian reasons as justification for emasculating or taking away the rights

and privileges of employees granted by law. Benevolence, it is said, does not operate as alicense to circumvent labor laws. If petitioners were genuinely altruistic in extending to their

employees privileges that are not even required by law, then there is no reason why they

should not be required to give their employees what they are entitled to receive.

Moreover, as found by public respondents, Esita was enjoying the same privileges granted to

the other employees of petitioners, so that in thus treating Esita, he cannot be considered any

less than a legitimate employee of petitioners.

8. PAGUIO V NLRC

Q. Melchor, a taxi driver under the boundary system, met a vehicular accident. After filing a

report to the office of respondents, he was allegedly advised to stop working and have a

rest. He thus filed a complaint for illegal dismissal. The company maintains that Melchor

was not illegally dismissed, there being in the first place no employer-employee relationship

between them. Is there an employer-employee relationship under the boundary system?

A. The employer-employee relationship was deemed to exist. (Martinez v. NLRC)

The relationship of taxi owners and taxi drivers is the same as that between jeepney ownersand jeepney drivers under the boundary system. The taxi operator exercises control over the

driver. In Martinez v NLRC this court already ruled that the relationship of taxi owners and taxi

drivers is the same as that between jeepney owners and jeepney drivers under the boundary

system. In both cases the employer-employee relationship was deemed to exist, viz: The

relationship between jeepney owners/operators on one hand and jeepney drivers on the other

under the boundary system is that of employer-employee and not of lessor-lessee.xxx Thus,

private respondent were employees xxx because they had been engaged to perform activities

which were usually necessary or desirable in the usual trade or business of the employer.

G.R. No. 147816 May 9, 2003

EFREN P. PAGUIO, petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION,


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ROBINA Y. GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GOand ALDA IGLESIA,respondents.

VITUG,J .:

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

agreement with petitioner Efren P. Paguio, appointing the latter to be an account executive of thefirm.1 Again, petitioner was to solicit advertisements for "The Manila Times," a newspaper of generalcirculation, published by respondent company. Petitioner, for his efforts, was to receivecompensation consisting of a 15% commission on direct advertisements less withholding tax and a10% commission on agency advertisements based on gross revenues less agency commission andthe corresponding withholding tax. The commissions, released every fifteen days of each month,were to be given to petitioner only after the clients would have paid for the advertisements. Apartfrom commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as hemet the P30,000.00-monthly quota. Basically, the contentious points raised by the parties hadsomething to do with the following stipulations of the agreement; viz:

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

have any obligations towards anyone you may employ, nor any responsibility for youroperating expenses or for any liability you may incur. The only rights and obligationsbetween us are those set forth in this agreement. This agreement cannot be amended ormodified in any way except with the duly authorized consent in writing of both parties.

"13. Either party may terminate this agreement at any time by giving written notice to theother, thirty (30) days prior to effectivity of termination."2

On 15 August 1992, barely two months after the renewal of his contract, petitioner receivedthe following notice from respondent firm -

"Dear Mr. Paguio,

"Please be advised of our decision to terminate your services as Account Executive ofManila Times effective September 30, 1992.

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

Apart from vague allegations of misconduct on which he was not given the opportunity to defendhimself, i.e., pirating clients from his co-executives and failing to produce results, no definite causefor petitioner's termination was given. Aggrieved, petitioner filed a case before the labor arbiter,asking that his dismissal be declared unlawful and that his reinstatement, with entitlement tobackwages without loss of seniority rights, be ordered. Petitioner also prayed that respondentcompany officials be held accountable for acts of unfair labor practice, for P500,000.00 moraldamages and for P200,000.00 exemplary damages.

In their defense, respondent Metromedia Times Corporation asserted that it did not enter into anyagreement with petitioner outside of the contract of services under Articles 1642 and 1644 of theCivil Code of the Philippines.4Asserting their right to terminate the contract with petitioner,respondents pointed to the last provision thereof stating that both parties could opt to end thecontract provided that either party would serve, thirty days prior to the intended date of termination,the corresponding notice to the other.


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The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter orderedrespondent Metromedia Times Corporation and its officers to reinstate petitioner to his formerposition, without loss of seniority rights, and to pay him his commissions and other remunerationaccruing from the date of dismissal on 15 August 1992 up until his reinstatement. He likewiseadjudged that Liberato I. Gomez, general manager of respondent corporation, be held liable topetitioner for moral damages in the amount of P20,000.00.

On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiterand declared the contractual relationship between the parties as being for a fixed-term employment.The NLRC declared a fixed-term employment to be lawful as long as "it was agreed upon knowinglyand voluntarily by the parties, without any force, duress or improper pressure being brought to bearupon the worker and absent any other circumstances vitiating his consent."5 The finding of the NLRCwas primarily hinged on the assumption that petitioner, on account of his educated stature, havingindeed personally prepared his pleadings without the aid of counsel, was an unlikely victim of alopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRCheld: "The decisive determinant would not be the activities that the employee (was) called upon toperform but rather, the day certain agreed upon by the parties for the commencement andtermination of their employment relationship, a day certain being understood to be that which (would)necessarily come, although it (might) not be known when."6

Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto thefindings of the commission. In his petition for review on certiorari, petitioner raised the followingissues for resolution:

"WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT'SCOMPANY IS FOR A FIXED PERIOD.

"WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.

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

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

A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of the following factors - a) the manner of selection and engagement of the putativeemployee, b) the mode of payment of wages, c) the presence or absence of the power of dismissal;and d) the presence or absence of the power to control the conduct of the putative employee or thepower to control the employee with respect to the means or methods by which his work is to beaccomplished.8 The "control test" assumes primacy in the overall consideration. Under this test, anemployment relation obtains where work is performed or services are rendered under the controland supervision of the party contracting for the service, not only as to the result of the work but also

as to the manner and details of the performance desired.9

An indicum of regular employment, rightly taken into account by the labor arbiter, was thereservation by respondent Metromedia Times Corporation not only of the right to control the resultsto be achieved but likewise the manner and the means used in reaching that end. 10 MetromediaTimes Corporation exercised such control by requiring petitioner, among other things, to submit adaily sales activity report and also a monthly sales report as well. Various solicitation letters wouldindeed show that Robina Gokongwei, company president, Alda Iglesia, the advertising manager, andFrederick Go, the advertising director, directed and monitored the sales activities of petitioner.


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The Labor Code, in Article 280 thereof, provides:

"ART. 280. Regular and Casual Employment. The provisions of written agreement to thecontrary notwithstanding and regardless of the oral agreement of the parties, an employmentshall be deemed to be regular where the employee has been engaged to perform activitieswhich are usually necessary or desirable in the usual business or trade of the employer,

except where the employment has been fixed for a specific project or undertaking thecompletion or termination of which has been determined at the time of the engagement ofthe employee or where the work or services to be performed is seasonal in nature and theemployment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the proceedingparagraph: Provided, That, any employee who has rendered at least one year of service,whether such service is continuous or broken, shall be considered a regular employee withrespect to the activity in which he is employed and his employment shall continue while suchactivity exists."

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

and desirable in the usual business or trade of the employer as against those which are undertakenfor a specific project or are seasonal. Even in these latter cases, where such person has rendered atleast one year of service, regardless of the nature of the activity performed or of whether it iscontinuous or intermittent, the employment is considered regular as long as the activity exists, it notbeing indispensable that he be first issued a regular appointment or be formally declared as suchbefore acquiring a regular status.11

That petitioner performed activities which were necessary and desirable to the business of theemployer, and that the same went on for more than a year, could hardly be denied. Petitioner wasan account executive in soliciting advertisements, clearly necessary and desirable, for the survivaland continued operation of the business of respondent corporation. Robina Gokongwei, itsPresident, herself admitted that the income generated from paid advertisements was the lifeblood ofthe newspaper's existence. Implicitly, respondent corporation recognized petitioner's invaluable

contribution to the business when it renewed, not just once but five times, its contract with petitioner.

Respondent company cannot seek refuge under the terms of the agreement it has entered into withpetitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusivelyupon the terms of their written or oral contract, but also on the basis of the nature of the workpetitioner has been called upon to perform.12 The law affords protection to an employee, and it willnot countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can beignored as and when it is utilized to deprive the employee of his security of tenure. 13 The sheerinequality that characterizes employer-employee relations, where the scales generally tip against theemployee, often scarcely provides him real and better options.

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

from service. A lawful dismissal must meet both substantive and procedural requirements; in fine,the dismissal must be for a just or authorized cause and must comply with the rudimentary dueprocess of notice and hearing. It is not shown that respondent company has fully bothered itself witheither of these requirements in terminating the services of petitioner. The notice of terminationrecites no valid or just cause for the dismissal of petitioner nor does it appear that he has been givenan opportunity to be heard in his defense.


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The evidence, however, found by the appellate court is wanting that would indicate bad faith ormalice on the part of respondents, particularly by respondent Liberato I. Gomez, and the award ofmoral damages must thus be deleted.

WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R.SP No. 527773 and that of the National Labor Relations Commission are hereby SET ASIDE and

that of the Labor Arbiter is REINSTATED except with respect to the P20,000.00 moral damagesadjudged against respondent Liberato I. Gomez which award is deleted.

SO ORDERED.

8.Pan American World Airways System Vs. Pan AmericanEmployees Association

G.R. No. L-16275 February 23, 1961

Facts:The employees of Pan American World Airways System alleges that the company does not provide them

of a one-hour break period. The employees were asked to wait in case of any emergencies while having

their break or they will be reprimanded, thus the petition of the employees to ask the court for a proper

compensation from the employers. The employees allege that the said one-hour break actually

constitutes working over time.

Issue:

Whether or not the time given to the employees for break is considered an over time?

Held:

The Industrial Court's order for permanent adoption of a straight 8-hour shift including the meal period

was but a consequence of its finding that the meal hour was not one of complete rest, but was actually a

work hour, since for its duration, the laborers had to be on ready call. Of course, if the Company practices

in this regard should be modified to afford the mechanics a real rest during that hour (f. ex., by installing

an entirely different emergency crew, or any similar arrangement), then the modification of this part of the

decision may be sought from the Court below. As things now stand, we see no warrant for altering the

decision.

The judgment appealed from is affirmed. Costs against appellant.


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FACTS:Petitioner herein claims that the one hour meal period should not be considered as overtime work, because the

evidence showed that complainants could rest completely, and were not in any manner under the control of the

company during that period. The court below found, on the contrary, that during the so-called meal period, the

mechanics were required to stand by for emergency work; that if they happened not to be available when called,

they were reprimanded by the lead man; that as in fact it happened on many occasions, the mechanics had beencalled from their meals or told to hurry up eating to perform work during this period.

ISSUE:Whether or not the 1 hour meal period of the mechanics is considered working time.

HELD:

Yes. The Industrial Courts order for permanent adoption of a straight 8-hour shift including the meal period was but

a consequence of its finding that the meal hour was not one of complete rest but was actually a work hour, since for

its duration, the laborers had to be on ready call.

9.G.R. No. 82797 February 27, 1991

GOOD EARTH EMPORIUM INC., and LIM KAPING, petitioners,vs.HONORABLE COURT OF APPEALS and ROCES-REYESREALTY INC., respondents.

PARAS,J .:p

This is a petition for review on certiorariof the December 29, 1987 decision * of the Court of Appealsin CA-G.R. No. 11960 entitled "ROCES-REYES REALTY, INC. vs. HONORABLE JUDGEREGIONAL TRIAL COURT OF MANILA, BRANCH 44, GOOD EARTH EMPORIUM, INC. and LIMKA PING" reversing the decision of respondent Judge ** of the Regional Trial Court of Manila,Branch 44 in Civil Case No. 85-30484, which reversed the resolution of the Metropolitan Trial CourtOf Manila, Branch 28 in Civil Case No. 09639, ***denying herein petitioners' motion to quashthe alias writ of execution issued against them.

As gathered from the records, the antecedent facts of this case, are as follows:

A Lease Contract, dated October 16, 1981, was entered into by and between ROCES-REYESREALTY, INC., as lessor, and GOOD EARTH EMPORIUM, INC., as lessee, for a term of three yearsbeginning November 1, 1981 and ending October 31, 1984 at a monthly rental of P65,000.00 (Rollo,p. 32; Annex "C" of Petition). The building which was the subject of the contract of lease is a five-

storey building located at the corner of Rizal Avenue and Bustos Street in Sta. Cruz, Manila.

From March 1983, up to the time the complaint was filed, the lessee had defaulted in the payment ofrentals, as a consequence of which, private respondent ROCES-REYES REALTY, INC., (hereinafterdesignated as ROCES for brevity) filed on October 14, 1984, an ejectment case (Unlawful Detainer)against herein petitioners, GOOD EARTH EMPORIUM, INC. and LIM KA PING, hereinafterdesignated as GEE, (Rollo, p. 21; Annex "B" of the Petition). After the latter had tendered theirresponsive pleading, the lower court (MTC, Manila) on motion of Roces rendered judgment on thepleadings dated April 17, 1984, the dispositive portion of which states:
http://www.blogger.com/share-post.g?blogID=2304724677716165004&postID=1729628156330450057&target=email


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Judgment is hereby rendered ordering defendants (herein petitioners) and allpersons claiming title under him to vacate the premises and surrender the same tothe plaintiffs (herein respondents); ordering the defendants to pay the plaintiffs therental of P65,000.00 a month beginning March 1983 up to the time defendantsactually vacate the premises and deliver possession to the plaintiff; to pay attorney'sfees in the amount of P5,000.00 and to pay the costs of this suit. (Rollo, p. 111;

Memorandum of Respondents)

On May 16, 1984, Roces filed a motion for execution which was opposed by GEE on May 28, 1984simultaneous with the latter's filing of a Notice of Appeal (Rollo, p. 112, Ibid.). On June 13, 1984, thetrial court resolved such motion ruling:

After considering the motion for the issuance of a writ of execution filed by counselfor the plaintiff (herein respondents) and the opposition filed in relation thereto andfinding that the defendant failed to file the necessary supersedeas bond, this courtresolved to grant the same for being meritorious. (Rollo, p. 112)

On June 14, 1984, a writ of execution was issued by the lower court. Meanwhile, the appeal was

assigned to the Regional Trial Court (Manila) Branch XLVI. However, on August 15, 1984, GEE thrucounsel filed with the Regional Trial Court of Manila, a motion to withdraw appeal citingas reasonthat they are satisfied with the decision of the Metropolitan Trial Court of Manila, Branch XXVIII,which said court granted in its Order of August 27, 1984 and the records were remanded to the trialcourt (Rollo, p. 32; CA Decision). Upon an ex-parte Motion of ROCES, the trial court issuedanAlias Writ of Execution dated February 25, 1985 (Rollo, p. 104; Annex "D" of Petitioner'sMemorandum), which was implemented on February 27, 1985. GEE thru counsel filed a motion toquash the writ of execution and notice of levy and an urgent Ex-parte Supplemental Motion for theissuance of a restraining order, on March 7, and 20, 1985, respectively. On March 21, 1985, thelower court issued a restraining order to the sheriff to hold the execution of the judgment pendinghearing on the motion to quash the writ of execution (Rollo, p. 22; RTC Decision). While said motionwas pending resolution, GEE filed a Petition for Relief from judgment before another court, RegionalTrial Court of Manila, Branch IX, which petition was docketed as Civil Case No. 80-30019, but the

petition was dismissed and the injunctive writ issued in connection therewith set aside. Both partiesappealed to the Court of Appeals; GEE on the order of dismissal and Roces on denial of his motionfor indemnity, both docketed as CA-G.R. No. 15873-CV. Going back to the original case, theMetropolitan Trial Court after hearing and disposing some other incidents, promulgated thequestioned Resolution, dated April 8, 1985, the dispositive portion of which reads as follows:

Premises considered, the motion to quash the writ is hereby denied for lack of merit.

The restraining orders issued on March 11 and 23, 1985 are hereby recalled, liftedand set aside. (Rollo, p. 20, MTC Decision)

GEE appealed and by coincidence. was raffled to the same Court, RTC Branch IX. Roces moved to

dismiss the appeal but the Court denied the motion. On certiorari, the Court of Appeals dismissedRoces' petition and remanded the case to the RTC. Meantime, Branch IX became vacant and thecase was re-raffled to Branch XLIV.

On April 6, 1987, the Regional Trial Court of Manila, finding that the amount of P1 million evidencedby Exhibit "I" and another P1 million evidenced by the pacto de retro sale instrument (Exhibit "2")were in full satisfaction of the judgment obligation, reversed the decision of the Municipal Trial Court,the dispositive portion of which reads:


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Premises considered, judgment is hereby rendered reversing the Resolutionappealed from quashing the writ of execution and ordering the cancellation of thenotice of levy and declaring the judgment debt as having been fully paid and/orLiquidated. (Rollo, p. 29).

On further appeal, the Court of Appeals reversed the decision of the Regional Trial Court and

reinstated the Resolution of the Metropolitan Trial Court of Manila, the dispositive portion of which isas follows:

WHEREFORE, the judgment appealed from is hereby REVERSED and theResolution dated April 8, 1985, of the Metropolitan Trial Court of Manila BranchXXXIII is hereby REINSTATED. No pronouncement as to costs. (Rollo, p. 40).

GEE's Motion for Reconsideration of April 5, 1988 was denied (Rollo, p. 43). Hence, this petition.

The main issue in this case is whether or not there was full satisfaction of the judgment debt in favorof respondent corporation which would justify the quashing of the Writ of Execution.

A careful study of the common exhibits (Exhibits 1/A and 2/B) shows that nowhere in any of saidexhibits was there any writing alluding to or referring to any settlement between the parties ofpetitioners' judgment obligation (Rollo, pp. 45-48).

Moreover, there is no indication in the receipt, Exhibit "1", that it was in payment, full or partial, of thejudgment obligation. Likewise, there is no indication in the pacto de retro sale which was drawn infavor of Jesus Marcos Roces and Marcos V. Roces and not the respondent corporation, that theobligation embodied therein had something to do with petitioners' judgment obligation withrespondent corporation.

Finding that the common exhibit, Exhibit 1/A had been signed by persons other than judgmentcreditors (Roces-Reyes Realty, Inc.) coupled with the fact that said exhibit was not even alleged by

GEE and Lim Ka Ping in their original motion to quash the alias writ of execution (Rollo, p. 37) butproduced only during the hearing (Ibid.) which production resulted in petitioners having toclaim belatedlythat there was an "overpayment" of about half a million pesos ( Rollo, pp. 25-27) andremarking on the utter absence of any writing in Exhibits "1/A" and "2/B" to indicate payment of the

judgment debt, respondent Appellate Court correctly concluded that there was in fact no payment ofthe judgment debt. As aptly observed by the said court:

What immediately catches one's attention is the total absence of any writing alludingto or referring to any settlement between the parties of private respondents'(petitioners') judgment obligation. In moving for the dismissal of the appeal Lim KaPing who was then assisted by counsel simply stated that defendants (hereinpetitioners) are satisfied with the decision of the Metropolitan Trial Court (Records ofCA, p. 54).

Notably, in private respondents' (petitioners') Motion to Quash the Writ of Executionand Notice of Levy dated March 7, 1985, there is absolutely no reference to thealleged payment of one million pesos as evidenced by Exhibit 1 dated September 20,1984. As pointed out by petitioner (respondent corporation) this was brought out byLinda Panutat, Manager of Good Earth only in the course of the latter's testimony.(Rollo, p. 37)

Article 1240 of the Civil Code of the Philippines provides that:


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Payment shall be made to the person in whose favor the obligation has beenconstituted, or his successor in interest, or any person authorized to receive it.

In the case at bar, the supposed payments were not made to Roces-Reyes Realty, Inc. or to itssuccessor in interest nor is there positive evidence that the payment was made to a personauthorized to receive it. No such proof was submitted but merely inferred by the Regional Trial Court

(Rollo, p. 25) from Marcos Roces having signed the Lease Contract as President which waswitnessed by Jesus Marcos Roces. The latter, however, was no longer President or even an officerof Roces-Reyes Realty, Inc. at the time he received the money (Exhibit "1") and signed the salewith pacto de retro (Exhibit "2"). He, in fact, denied being in possession of authority to receivepayment for the respondent corporation nor does the receipt show that he signed in the samecapacity as he did in the Lease Contract at a time when he was President for respondent corporation(Rollo, p. 20, MTC decision).

On the other hand, Jesus Marcos Roces testified that the amount of P1 million evidenced by thereceipt (Exhibit "1") is the payment for a loan extended by him and Marcos Roces in favor of Lim KaPing. The assertion is home by the receipt itself whereby they acknowledged payment of the loan intheir names and in no other capacity.

A corporation has a personality distinct and separate from its individual stockholders or members.Being an officer or stockholder of a corporation does not make one's property also of thecorporation, and vice-versa, for they are separate entities (Traders Royal Bank v. CA-G.R. No.78412, September 26, 1989; Cruz v. Dalisay, 152 SCRA 482). Shareowners are in no legal sensethe owners of corporate property (or credits) which is owned by the corporation as a distinct legalperson (Concepcion Magsaysay-Labrador v. CA-G.R. No. 58168, December 19, 1989). As aconsequence of the separate juridical personality of a corporation, the corporate debt or credit is notthe debt or credit of the stockholder, nor is the stockholder's debt or credit that of the corporation(Prof. Jose Nolledo's "The Corporation Code of the Philippines, p. 5, 1988 Edition, citingProfessorBallantine).

The absence of a note to evidence the loan is explained by Jesus Marcos Roces who testified that

the IOU was subsequently delivered to private respondents (Rollo, pp. 97-98). Contrary to theRegional Trial Court's premise that it was incumbent upon respondent corporation to prove that theamount was delivered to the Roces brothers in the payment of the loan in the latter's favor, thedelivery of the amount to and the receipt thereof by the Roces brothers in their names raises thepresumption that the said amount was due to them. There is a disputable presumption that moneypaid by one to the other was due to the latter (Sec. 5(f) Rule 131, Rules of Court). It is for GEE andLim Ka Ping to prove otherwise. In other words, it is for the latter to prove that the payments madewere for the satisfaction of their judgment debt and not vice versa.

The fact that at the time payment was made to the two Roces brothers, GEE was also indebted torespondent corporation for a larger amount, is not supportive of the Regional Trial Court'sconclusions that the payment was in favor of the latter, especially in the case at bar where the

amount was not receipted for by respondent corporation and there is absolutely no indication in thereceipt from which it can be reasonably inferred, that said payment was in satisfaction of thejudgment debt. Likewise, no such inference can be made from the execution of the pacto deretro sale which was not made in favor of respondent corporation but in favor of the two Rocesbrothers in their individual capacities without any reference to the judgment obligation in favor ofrespondent corporation.

In addition, the totality of the amount covered by the receipt (Exhibit "1/A") and that of the salewith pacto de retro(Exhibit "2/B") all in the sum of P2 million, far exceeds petitioners' judgment


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obligation in favor of respondent corporation in the sum of P1,560,000.00 by P440,000.00, whichmilitates against the claim of petitioner that the aforesaid amount (P2M) was in full payment of the

judgment obligation.

Petitioners' explanation that the excess is interest and advance rentals for an extension of the leasecontract (Rollo, pp. 25-28) is belied by the absence of any interest awarded in the case and of any

agreement as to the extension of the lease nor was there any such pretense in the Motion to QuashtheAlias Writ of Execution.

Petitioners' averments that the respondent court had gravely abused its discretion in arriving at theassailed factual findings as contrary to the evidence and applicable decisions of this HonorableCourt are therefore, patently unfounded. Respondent court was correct in stating that it "cannot gobeyond what appears in the documents submitted by petitioners themselves (Exhibits "1" and "2") inthe absence of clear and convincing evidence" that would support its claim that the judgmentobligation has indeed been fully satisfied which would warrant the quashal of theAlias Writ ofExecution.

It has been an established rule that when the existence of a debt is fully established by the evidence

(which has been done in this case), the burden of proving that it has been extinguished by paymentdevolves upon the debtor who offers such a defense to the claim of the plaintiff creditor (hereinrespondent corporation) (Chua Chienco v. Vargas, 11 Phil. 219; Ramos v. Ledesma, 12 Phil. 656;Pinon v. De Osorio, 30 Phil. 365). For indeed, it is well-entrenched in Our jurisprudence that eachparty in a case must prove his own affirmative allegations by the degree of evidence required by law(Stronghold Insurance Co. v. CA, G.R. No. 83376, May 29,1989; Tai Tong Chuache & Co. v.Insurance Commission, 158 SCRA 366).

The appellate court cannot, therefore, be said to have gravely abused its discretion in finding lack ofconvincing and reliable evidence to establish payment of the judgment obligation as claimed bypetitioner. The burden of evidence resting on the petitioners to establish the facts upon which theiraction is premised has not been satisfactorily discharged and therefore, they have to bear theconsequences.

PREMISES CONSIDERED, the petition is hereby DENIED and the Decision of the Respondentcourt is hereby AFFIRMED, reinstating the April 8, 1985 Resolution of the Metropolitan Trial Court ofManila.

SO ORDERED.

1o.EN BANC

G.R. No. L-13806 May 23, 1960

PRICE STABILIZATION CORPORATION, petitioner,vs.COURT OF INDUSTRIAL RELATIONS and PRISCO WORKER'S UNION, ET AL., respondents.


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Govt. Corp. Counsel Simeon M. Gopengco and Lorenzo R. Mosqueda for petitioner.Ezer R. Yutuc for the respondent CIR.Vicente T. Ocampo for respondent Union.

BARRERA,J .:

This is a petition for review by certioraritaken by the Price Stabilization Corporation (PRISCO) fromthe decision of the Court of Industrial Relations (in Case No. 840-V [6]) of December 27, 1957.

It appears that under date of February 15, 1955, respondent PRISCO Worker's Union, a labororganization duly registered with the Department of Labor, filed with respondent court, a petitionpraying that herein petitioner-employer PRISCO be ordered to pay its present employees, claimants-members of the said Union, their basic pay and at least 25 per cent additional compensation for onehour overtime work they had previously rendered as security guards of petitioner, from April 17,1953 to January 13, 1954, and the additional compensation of at least 25 per cent for the work theyhave been rendering on Sundays and legal holidays, from March 7, 1954 and on.

On March 15, 1955, the petitioner filed an answer denying respondent Union's claim for payment of

one hour overtime work, asserting that such overtime, if rendered, not having been authorized;although some of the said claimants had rendered work in Sundays and legal holidays, the samehad already been paid from March 6, 1954; and finally alleging that the same claim for work onSundays and legal holidays had already been withdrawn.

The case was thereafter heard and, after hearing, respondent court, on December 27, 1957, issuedan order requiring petitioner to pay the said claimants, members of respondent Union, their basicpay and 25 per cent additional compensation for the one hour overtime work they had rendered from

April 16, 1953 to January 13, 1954. However, for lack of evidence and in view of a petition signed by59 of the 131 claimants withdrawing their claim for pay for work performed on Sundays and legalholidays, the court dismissed the second claim.

On January 8, 1958, petitioner corporation filed a motion for reconsideration of said order, whichmotion was resolved by respondent court, en banc, as follows: 2 judges voting for straight denial; 2

judges voting for the setting aside of the order as null and void on the ground of lack of jurisdiction;and 1 judge concurring in the denial of the motion for reconsideration, on the ground that thequestion of lack of jurisdiction has not been raised in the pleading. As a result; petitioner corporationhas filed this present petition.

There are two questions of law to be determined in this case, to wit: (1) whether respondent courthad jurisdiction over the present claim for overtime pay filed by respondent Union; and (2) whetherthe same court correctly applied Articles 1393 and 1396 to the new Civil Code to the case.

As to the first question, there still seems to be some lack of clear and definite understanding of thejurisdiction of the Court of Industrial Relations, with regards to money claims of laborers or

employees against their employers. The fact that in the present case the judges themselves of theCourt of Industrial Relations are divided on this matter, attests to the existence of suchmisapprehension. It is well therefore to review some of the leading decided cases touching on thispoint, for the purpose of clarifying this fundamental question.

In the PAFLU vs. Tan Case,1 we held that the Court of Industrial Relations has jurisdiction overcases (1) when the labor dispute affects an industry which is indispensable in the national interestand is so certified by the President to the industrial court (Sec. 10, Rep. Act No. 875); (2) when thecontroversy refers to the minimum wage under the Minimum Wage Law (Rep. Act No. 602); (3)


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when it involves hours of employment under the Eight-Hour Labor Law (Com. Act No. 444); and (4)when it involves an unfair labor practice (Sec. 5-a, Rep. Act No. 875).

Later, in the case ofDetective and Protective Bureau Incorporated vs. Felipe Guevarra, etal.,2 involving claims for refunds of deductions from respondents' salaries, payment of additionalcompensation for work performed on Sundays and holidays, and for night work, and grant of

vacation and sick leave pay, this Court held that the Court of Industrial Relations had jurisdiction,inasmuch as the claimants were all employees of the Detective and Protective Bureau, Inc., at thetime of filing of their claims in Case No. 764-V in the Court of Industrial Relations. To the same effectis the case of Isaac Peral Bowling Alley vs. United Employees Welfare Association, et al., (102 Phil.,219).

Subsequently, in the case ofSantiago Aguilar vs. Jose Salumbides (G.R. No. L-10124, prom,December 28, 1957), this Court declared that the Court of Industrial Relations had no longer

jurisdiction to hear and determine claims of ex-employees against their former employer forovertime, wage differential, and separation pays.

Again, in the case ofRoman Catholic Archbishop of Manila vs. Yanson, et al.,(G.R. No. L-12341)

and Elizalde and Co. Inc., vs. Yanson et al., (G.R. No. L-12345) jointly decide on April 30, 1958, thisCourt, in a unanimous opinion, declared:

In the present case, it is apparent that the petition below is simply for the collection of unpaidsalaries and wages alleged to be due for the services rendered years ago. No labor disputeappears to be presently involved since the petition itself indicates that the employment haslong terminated and petitioners are not asking that they be reinstated. Clearly, the petitiondoes not fall under any of the cases enumerated in the law as coming within the jurisdictionof the Industrial Court, so that it was error for that court not to have ordered its dismissal.

Indeed, even under Commonwealth Act No. 103, as amended by Com. Act No. 559, thecourt below could not have taken cognizance of the present case. For in order for that courtto acquire jurisdiction under that law, the requisites mentioned in section 4 thereof must all

be present, one of them being that there must be an industrial or agricultural dispute which iscausing of likely to cause a strike or lockout. With the employment already terminated yearsago, this last mentioned requisite cannot be supposed to still exist.

Then came the decision in the NASSCO vs. Almin, et al., case (104 Phil., 835;56 Off. Gaz. [9] 1879)in which this Court upheld again the jurisdiction of the Court of Industrial Relations to hear anddetermine the claim of respondents at the time presently and actually in the employ of the petitioner for overtime compensation for work they were then rendering since 1950 on Sundays andholidays and even at night.

On the same theory, this Tribunal and the Chua Workers' Union (NLU) vs. City AutomotiveCompany, et al., case3were the claimants for differential and overtime pays were former employees

of the respondent company, ruled that the Court of Industrial Relations had no jurisdiction.

The latest case is that ofMonares vs. CNS Enterprises, et al., (G.R. No. L-11749, prom. May 29,1959) in which this Court, speaking through the Chief Justice, held that the Court of IndustrialRelations and not the Court of First Instance, has jurisdiction where the claimant, although no longerin the service of the employer, seeks in his petition the payment of differential and overtime pay andhis reinstatement.


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Analyzing these cases, the underlying principle, it will be noted in all of them, though not stated inexpress terms, is that where the employer-employee relationship is still existing or is sought to bereestablished because of its wrongful severance (as where the employee seeks reinstatement), theCourt of Industrial Relations has jurisdiction over all claims arising out of, or in connection withemployment, such as those related to the Minimum Wage Law and the Eight-Hour Labor Law. Afterthe termination of the relationship and no reinstatement is sought, such claims becomes mere

money claims, and come within the jurisdiction of the regular courts.

We are aware that in 2 cases,4 some statements implying a different view have been made, but wenow hold and declare the principle set forth in the preceding paragraph as the one governing allcases of this nature.

It appearing that in the present case, the respondents-claimants are, or at least were, at the time ofpresenting their claims, actually in the employ of herein petitioner, the Court of Industrial Relationscorrectly took cognizance of the case.

In respect of the second issue, it appears that claimants-security guards have been employed andrequired to observe a 24-hour guard duty divided into 3 shifts of 8 hours each. On April 15, 1953, the

Assistant Chief Security Officer of petitioner corporation, acting for the Chief Security Officer, issueda Memorandum (Annex A), directing the Security guards to report for duty 2 hours in advance of theusual time for guard work. Pursuant thereto, claimants had been rendering such overtime work untilJanuary 13, 1954 when the order was revoked after a change of management.

Petitioner, however, contends that said memorandum of the Assistant Chief Security Officer wasissued without authority and, therefore, it is not bound to pay for the alleged overtime. But, as foundby respondent court, shortly after the enforcement of the aforementioned memorandum, the securityguards protested to the management of petitioner corporation, more particularly to Mr. Santiago dela Cruz, General Manager, Atty. Graciano Borja, Director, and Mr. Espiritu, Director. Instead ofrevoking said memorandum on the ground that it was unauthorized by the management, GeneralManager De la Cruz told the security guards that the reason why it was being enforced, was todiscipline them and that their work was only light and that 1 hour was of no importance. This, the

lower court held, amounted to a tacit ratification of the memorandum, on the part of the said officialwho, as claimed by petitioner itself, had the power to validly act for it. (See also Sec. 6, Exec. OrderNo. 350, series of 1950.) Hence, the lower court concluded, applying the provisions of Articles 1393and 13965 of the new Civil Code, that any defect, if any which said memorandum of the AssistantChief Security Officer may have at the time it was constituted, was, therefore, corrected.

But petitioner urges that Articles 1393 and 1396 refer to voidable contracts and the questionedmemorandum is not such a contract but an order issued by one not authorized and, therefore, isillegal and cannot be ratified tacitly.

This view is without merit. There is no question that a contract of employment exists betweenpetitioner and claimants-respondents, and that pursuant to the terms thereof, the latter are to render

8 hours labor. When petitioner's official required respondents to render an additional hour work, andthe respondents had to comply (as non-compliance was punishable and actually punished withdisciplinary action), a supplemental contractual obligation was created both under the terms of theoriginal contract of employment and of the Eight-hour Labor Law, that such additional work was tobe compensated. That the memorandum giving rise to this situation was originally authorized, didnot make it illegal to the extent of not being capable of ratification by the duly authorized official, theGeneral Manager of petitioner corporation. Hence, the lower court correctly applied Articles 1393and 1396, upon the facts found by it in this case and amply supported by the record. Wherefore,


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finding no error in the decision appealed from and the resolution upholding it, the same are herebyaffirmed, with costs against the petitioner. So ordered.

Paras, C.J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, and Gutierrez David,JJ., concur.

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