109795262 Labor Standards Case Digests

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Labor Standards Case

Digests

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On June 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids employed in Hong Kong, 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.

Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991, providing GUIDELINES on the Government processing and deployment of Filipino domestic helpers to Hong Kong and the accreditation of Hong Kong recruitment agencies intending to hire Filipino domestic helpers.

Pursuant to the previous issuances, the POEA Administrator also issued Memorandum Circular No. 37, Series of 1991, on the processing of employment contracts of domestic workers for Hong Kong.

Issues:

1. WON respondents acted with grave abuse of discretion and/or in excess of their rule-making authority in issuing said circulars?

2. WON that the assailed DOLE and POEA circulars are contrary to the Constitution, are unreasonable, unfair and oppressive?

Held: They are in accordance but legally invalid, defective and unenforceable for lack of power publication and filing in the Office of the National Administrative Register as required in Art 2 of CC, Art 5 of the Labor Code and Sec 3(1) and 4, Chap 2, Book VII of the Administrative Code of 1987.

1. Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate recruitment and placement activities. On the other hand, the scope of the regulatory authority of the POEA, which was created by Executive Order No. 797 on May 1, 1982 to take over the functions of the Overseas Employment Development Board, the National Seamen Board, and the overseas employment functions of the Bureau of Employment Services, is broad and far-ranging as provided by Articles 15, 17 and 20 of the Labor Code.

2. The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing complexity of the modern society" (Solid Homes, Inc. vs. Payawal). More and more administrative bodies are necessary to help in the regulation of society's ramified activities. It is noteworthy that the assailed circulars do not

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prohibit the petitioner from engaging in the recruitment and deployment of Filipino landbased workers for overseas employment. The power to "restrict and regulate conferred by Article 36 of the Labor Code involves a grant of police power. The questioned circulars are therefore a valid exercise of the police power as delegated to the executive branch of Government.

San Juan de Dios Hospital vs NLRC (1997) G.R. 126383 Facts:

Petitioners, rank-and-file employees and members of San Juan de Dios Hospital Employees Association sent a 4 page letter requesting and pleading for the expeditious implementation and payment by the respondent Hospital of the ’40 HOURS/5-DAY WORKWEEK’ with compensable weekly two (2) days off provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labor’s Policy Instructions No. 54 dated April 12, 1988.” Respondent hospital failed to give a favourable response; thus, petitioners filed a complaint regarding their “claims for statutory benefits under the above-cited law and policy issuance”. The Labor Arbiter dismissed the complaint which was also confirmed by NLRC, hence the petition under Rule 65 of the Rules of Court. Issue: WON Policy Instructions No. 54 issued by then Labor Secretary Franklin Drilon is valid?

Held: It is invalid.

The Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known as “An Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic Personnel”, but reliance to this RA is misplaced since it 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 may support Policy Instructions No. 54 on which the latter’s validity may be gauged.

What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. 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”.

Further, 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 provided in Sections 1,7, and 15 of the said Act.

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If petitioners are entitled to two days off with pay, then there appears to be no sense at all why Section 15 of the implementing rules 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” “[f]or work performed in excess of forty hours a week xxx. Policy Instructions No. 54 to our mind unduly extended the statute. The Secretary of Labor moreover erred in invoking the “spirit and intent” of Republic Act No. 5901 and Article 83 of the Labor Code for it is an elementary rule of statutory construction that when the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says.

Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225

Facts:

The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. The Labor Arbiter (LA) handling the consolidated cases, denied and dismissed the respective complaints.

Issue: WON the pay of the faculty members for teaching overloads should be included as basis in the computation of their 13th_{month pay?}

Held: Teaching overload may not be considered part of basic salary.

Under the Rules and Regulations Implementing PD 851, the following compensations are deemed not part of the basic salary: a) cost-of-living allowances granted pursuant to PD 525 and Letter of Instruction No. 174; b) profit sharing payments; c) all allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on Dec 16, 1975. Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th_{-month pay.}

The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th_{-month pay.}

As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional

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which such is categorically excluded from the definition of basic salary under the Supplementary Rules and Regulations Implementing PD 851.

In the same manner that payment for overtime work and work performed during special holidays is considered as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is being paid for additional work performed in excess of the regular teaching load.

Asuncion vs NLRC (2001) G.R. 129329 Facts:

On Aug 1993, Asuncion was employed as an accountant/bookkeeper by the respondent (Mabini Medical Clinic). After the inspection conducted in the respondent’s company premises for a violation of the lbor standards for non-coverage, on Aug 1994, private respondent, Medical Director Wifrido Juco issued a memorandum to petitioner charging her with chronic absenteeism, habitual tardiness, loitering and wasting of company time, getting salary of an absent employee without acknowledging or signing for it, and disobedience and insubordination for continued refusal of signing memos given to her. Petitioner was then required to explain within 2 days why she will not be terminated. Three days later, petitioner submitted her response to the memo but was also dismissed on ground of disobedience of lawful orders and failure to submit her reply in 2 days. This prompted petitioner to file for a case of illegal termination which was judged by the Labor Arbiter to be true.

Issue: WON NLRC erred in finding that the petitioner was dismissed by the private respondent for a just or authorized cause?

Held: Petitioner has been illegally terminated; she is necessarily entitled to reinstatement to her former previous position without loss of seniority and the payment of backwages.

It bears stressing that a worker’s employment is property in the constitutional sense. He cannot be deprived of his work without due process. In order for the dismissal to be valid, not only must it be based on just cause supported by clear and convincing evidence, the employee must also be given an opportunity to be heard and defend

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himself. It is the employer who has the burden of proving that the dismissal was with just or authorized cause. The failure of the employer to discharge this burden means that the dismissal is not justified and that the employee is entitled to reinstatement and back wages.

In the case at bar, both the handwritten listing and computer print-outs being unsigned, the authenticity thereof is highly suspect and devoid of any rational probative value especially in the light of the existence of the official record book of the petitioner’s alleged absences and tardiness in the possession of the employer company. In the memorandum charging petitioner and notice of termination, private respondents referred to the record book as its basis for petitioner’s alleged absenteeism and tardiness. Interestingly, however, the record book was never presented in evidence. Private respondents had possession thereof and the opportunity to present the same. Thus, private respondents’ unexplained and unjustified non-presentation of the record book, which is the best evidence in its possession and control of the charges against the petitioner, casts serious doubts on the factual basis of the charges of absenteeism and tardiness. Private respondents claimed that they sent several notices to the petitioner warning her of her absences, however, petitioner refused to receive the same. The Court, likewise, takes note of the fact that the two-day period given to petitioner to explain and answer the charges against her was most unreasonable, considering that she was charged with several offenses and infractions (35 absences, 23 half-days and 108 tardiness), some of which were allegedly committed almost a year before, not to mention the fact that the charges levelled against her lacked particularity. The law mandates that every opportunity and assistance must be accorded to the employee by the management to enable him to prepare adequately for his defense. In

Ruffy v. NLRC, the Court held that what would qualify as sufficient or “ample

opportunity,” as required by law, would be “every kind of assistance that management must accord to the employee to enable him to prepare adequately for his defense.”

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Singer Sewing Machine vs NLRC () 193 SCRA 271 Facts:

Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of Singer Sewing Machine. The company opposed the petition mainly because the union members are not employees but independent contractors as evidenced by the collection agency agreement which they signed.

Med-Arbiter ruled that there exists an employee-employer relationship and granted the certification election which was affirmed by Sec. Drilon. The company files the present petition on the determination of the relationship. The union insist that the provisions of the Collection Agreement belie the company’s position that the union members are independent contractors.

Issue: WON there exists an employer-employee relationship between the parties. Held: Respondents are not employees of the company.

The present case calls for the application of the control test, which if not satisfied, would lead to the conclusion that no employee-employer relationship exists. If the union

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members are not employees, no right to organize for the purpose of bargaining or as a bargaining agent cannot be recognized.

The following elements are generally considered in the determination of the relationship: the selection and engagement of the employee, payment of wages, power of dismissal and the power to control the employee’s conduct which is the most important element.

The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors. The agreement confirms the status of the collecting agents as independent contractor. The requirement that collection agents utilize only receipt forms and report forms issued by the company and that reports shall be submitted at least once a week is not necessarily an indication of control over the means by which the job collection is to be performed. Even if report requirements are to be called control measures, any control is only with respect to the end result of the collection since the requirements regulate the things to be done after the performance of the collection job or the rendition of service.

The plain language of the agreement reveals that the designation as collection agent does not create an employment relationship and that the applicant is to be considered at all times as an independent contractor.

The court finds that since private respondents are not employees of the company, they are not entitled to the constitutional right to form or join a labor organization for the purposes of collective bargaining. There is no constitutional and legal basis for their union to be granted their petition for direct certification.

Manila Golf & Country Club, Inc., vs IAC and Fermin Llamar (1994) G.R. 64948 Facts:

Respondents were caddies and employees of Manila Golf & Country Club who originally filed a petition with the Social Security Commission (SSC) for coverage and availment of benefits under the Social Security Act. They alleged that although the petitioners were employees of the Manila Golf and Country Club, a domestic corporation, the latter had not registered them as such with the SSS.

In the case before the SSC, the respondent Club alleged that the petitioners, caddies by occupation, were allowed into the Club premises to render services as such to the individual members and guests playing the Club's golf course and who themselves paid for such services; that as such caddies, the petitioners were not subject to the direction

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and control of the Club as regards the manner in which they performed their work; and hence, they were not the Club's employees.

Issue: WON there exist an employer-employee relationship between the cadies and the Golf Club?

Held: No existence of employer-employee relationship.

In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufferance but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment.

The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another indication of the latter's status as employees. It seems to the Court, however, that the intendment of such fact is to the contrary, showing that the Club has not the measure of control over the incidents of the caddies' work and compensation that an employer would possess. Court agree that the group rotation system so-called, is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to serve and being assigned instead the last number for the day. Moreover, as pointed out by petitioner which was never refuted that: has no means of compelling the presence of a caddy. A caddy is not required to exercise his occupation in the premises of petitioner. He may work with any other golf club or he may seek employment a caddy or otherwise with any entity or individual without restriction by petitioner.

Encyclopaedia Britannica (Phil) Inc., vs NLRC (1996) G.R. 87098 Facts:

Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannica and was in charge of selling petitioner’s products through some sales representatives. As compensation, private respondent received commissions from the products sold by his agents. He was also allowed to use

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petitioner’s name, goodwill and logo. It was, however, agreed upon that office expenses would be deducted from private respondent’s commissions. Petitioner would also be informed about appointments, promotions, and transfers of employees in private respondent’s district.

On June 1974, Limjoco resigned from office to pursue his private business. He then filed a complaint against petitioner Encyclopaedia Britannica with DOLE, claiming for non-payment of separation pay and other benefits, and also illegal deduction from his sales commissions.

Petitioner alleged that Limjoco was not its employee but an independent dealer authorized to promote and sell its products and in return, received commissions there from. Limjoco did not have any salary and his income from the company was dependent on the volume of sales accomplished. He also had his own separate office, financed the business expenses, and maintained his own workforce. The salaries of his secretary, utility man, and sales representatives were chargeable to his commissions. Thus, petitioner argued that it had no control and supervision over the complainant as to the manner and means he conducted his business operations, moreover, the latter did not even report to the office of the petitioner and did not observe fixed office hours

Issue: WON there exist an employer-employee relationship and necessarily entitles Limjoco of his claims?

Held: Private respondent was merely an agent or an independent dealer of the petitioner.

In ascertaining whether the relationship is that of employer-employee or one of independent contractor, each case must be determined by its own facts and all features of the relationship are to be considered.

Respondent was free to conduct his work and he was free to engage in other means of livelihood. At the time he was connected with the petitioner company, private 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. If private respondent was indeed an employee, it was rather unusual for him to wait for more than a year from his separation from work before he decided to file his claims. As he pointed out in his resignation letter, Limjoco was aware of “conflict with other interests which xxx have increasingly required my personal attention”. At the very least, it would indicate that petitioner has no effective control over the personal activities of Limjoco, who as admitted by the latter had other “conflict of interest” requiring his personal attention.

As pointed out “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.”

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Carungcong vs NLRC, Sun Life Assurance Co. of Canada (1997) G.R. 118086 Facts:

Susan Carungcong began as an agent of Sun Life in 1974, she signed an “Agent’s Agreement” and was designated to solicit applications for insurance and annuity services. The contract set out in detail the terms and conditions — particularly those concerning the commissions payable to her — under which her relationship with the company would be governed. Five years later, said contract was superseded by 2 new agreements: first, is the "Career Agent's (or Unit Manager's) Agreement," dealt with such matters as the agent's commissions, his obligations, limitations on his authority, and termination of the agreement by death, or by written notice "with or without cause." It declared that the "Agent shall be an independent contractor and none of the terms of agreement shall be construed as creating an employer-employee relationship; second, was titled, "MANAGER'S Supplementary Agreement." Making explicit reference to the first agreement "which became effective on the 1st day of July, 1979" said second contract — explicitly described as a "further agreement" — contained provisions regarding remuneration (overriding commissions in accordance with a fixed schedule), limitation of authority, and termination of the agreement inter alia by written notice "without cause."

Subsequently, Carungcong and Sun Life executed another Agreement - by which the former was named New Business Manager with the function generally "to manage a New Business Office established by her and to obtain applications for life insurance policies and other products offered by or distributed through Sun Life and to perform such other duties in connection therewith as Sun Life may require from time to time." This latest Agreement stressed that the "New Business Manager in performance of his duties defined herein, shall be considered an independent contractor and not . . an employee of Sun Life," and that "under no circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life."

After receiving reports of anomalies in relation thereto from unit managers and agents by the company’s VP, the Manager of Sun Life's Internal Audit Department, commenced an inquiry into the special fund availments of Carungcong and other New Business Managers which later prompted the petitioner’s termination. She then instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations Commission where she succeeded in obtaining a favorable judgment finding that there existed an employer-employee relationship between her and Sun Life; ruled that she had been illegally dismissed, thus entitled to reinstatement without loss of seniority rights and other benefits.

Issue: WON there existed an employer-employee relationship between Caruncong and Sunlife?

Held: Carungcong was an independent contractor and not an employee of Sun Life. The contracts she had willingly and knowingly signed with Sun Life repeatedly and clearly provided that said agreements were terminable by either party by written notice with or without cause.

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Noteworthy is that this last agreement, it was emphasized, like the "Career Agent's (or

Unit Manager's) Agreement" first signed by her, that in the performance of her duties

defined herein. Carungcong would be considered an independent contractor and not . . an employee of Sun Life," and that "(u)nder no circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life."

Ramos vs Court of Appeals () 380 SCRA 467 Facts:

Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in the gall bladder. She was referred to Dr. Hosaka, a surgeon, who agreed to do the operation. The operation was scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda was admitted to the medical center the day before the operation. On the following day, she was ready for operation as early as 7:30 am. Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull out his wife from the operating room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours of the scheduled operation.

Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in her left hand. At 3 pm, Erlinda was being wheeled to the Intensive care Unit and stayed there for a month. Since the ill-fated operation, Erlinda remained in comatose condition until she died.

The family of Ramos sued them for damages.

Issue: WON there was an employee-employer relationship that existed between the Medical Center and Drs. Hosaka and Guiterrez.

Held: No employer-employee between the doctors and hospital.

Private Hospitals hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not technically employees, the control exercised, the hiring and the right to terminate consultants fulfill the hallmarks of an employer-employee relationship with the exception of payment of wages. The control test is determining.

In applying the four fold test, DLSMC cannot be considered an employer of the respondent doctors. It has been consistently held that in determining whether an employer-employee relationship exists between the parties, the following elements must be present: (1) selection and engagement of services; (2) payment of wages; (3) the power to hire and fire; and (4) the power to control not only the end to be achieved, but the means to be used in reaching such an end.

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The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a clinic and/or admitting patients. It is the patient who pays the consultants. The hospital cannot dismiss the consultant but he may lose his privileges granted by the hospital. The hospital’s obligation is limited to providing the patient with the preferred room accommodation and other things that will ensure that the doctor’s orders are carried out.

The court finds that there is no employer-employee relationship between the doctors and the hospital.

Sonza vs ABS-CBN (2004) G.R. 138051 Facts:

In May 1994, ABS-CBN signed an agreement with Mel & Jay Management and Development Corp for a radio and television program. ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.

On April 1996, Sonza wrote a letter to ABS-CBN President Eugenio Lopez III about a recent event concerning his programs and career, and that the said violation of the company has breached the agreement, thus, the notice of rescission of Agreement was sent.

At the end of the same month, Sonza filed a complaint against ABS-CBN before the DOLE for non-payment of salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP) which was opposed by ABS-CBN on the ground there was no employer-employee relationship existed between the parties.

Issue: WON Sonza was an employee or independent contractor?

Held: There was no employer-employee relationship that existed, but that of an independent contractor.

Case law has consistently held that the elements of an employer-employee relationship are:

(a) The selection and engagement of the employee - ABS-CBN engaged SONZA’s services to co-host its television and radio programs because of SONZA’s peculiar skills, talent and celebrity status. The specific selection and hiring of SONZA,

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because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an

independent contractual relationship.

(b) The payment of wages - ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBN’s employee, there would be no need for the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay" which the law automatically incorporates into every employer-employee contract.

(c) The power of dismissal - For violation of any provision of the Agreement, either party may terminate their relationship. During the life of the Agreement, ABS-CBN agreed to pay SONZA’s talent fees as long as "AGENT and Jay Sonza shall faithfully and completely perform each condition of this Agreement." Even if it suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZA’s talent fees during the life of the Agreement. (d) The employer’s power to control the employee on the means and methods

by which the work is accomplished - The control test is the most important test. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well – the less control the hirer exercises, the more likely the worker is considered an independent contractor.

First, ABS-CBN engaged SONZA’s services specifically to co-host the "Mel & Jay" programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN’s control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of SONZA’s script. However, the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests.

Second, The Agreement stipulates that SONZA shall abide with the rules and standards of performance "covering talents" of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreement refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics." The KBP code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and standards of performance referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN. Lastly, being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. The hiring of exclusive talents is a widespread and

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accepted practice in the entertainment industry. This practice is not designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The broadcast station normally spends substantial amounts of money, time and effort "in building up its talents as well as the programs they appear in and thus expects that said talents remain exclusive with the station for a commensurate period of time." Normally, a much higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent fees partially compensates for exclusivity.

Lazaro vs Social Security Commission (2004) G.R. 138254 Facts:

Rosalina Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three (3) employers. Among them was Angelito Lazaro, proprietor of Royal Star, which is 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 during the said period, to report her to the SSC for compulsory coverage or remit Laudato’s social security contributions.

Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato was not subjected to definite hours and conditions of work. As such, she could not be deemed an employee of Royal Star.

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Issue: WON Laudato is considered employee of Royal Star Marketing?

Held: Laudato is an employee of Royal Star and as such is entitled to the coverage of Social Security Law.

It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the “control test,” that is, 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 methods by which the same is accomplished.

The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. In Grepalife v. Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the person insured. The relevant factor remains, as stated earlier, 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 should also be emphasized that the SSC, also as upheld by the Court of Appeals, found that Laudato was a sales supervisor and not a mere agent. As such, Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results.

The finding of the SSC that Laudato was an

employee of Royal Star is supported by substantial evidence. The SSC examined the cash vouchers issued by Royal Star to Laudato, calling cards of Royal Star denominating Laudato as a “Sales Supervisor” of the company, and Certificates of Appreciation issued by Royal Star to Laudato in recognition of her unselfish and loyal efforts in promoting the company.

A piece of documentary evidence appreciated by the SSC is Memorandum dated 3 May 1980 of Teresita Lazaro, General Manager of Royal Star, directing that no commissions were to be given on all “main office” sales from walk-in customers and enjoining salesmen and sales supervisors to observe this new policy. The Memorandum evinces the fact that Royal Star exercised control over its sales supervisors or agents such as Laudato as to the means and methods through which these personnel performed their work.

ABS-CBN vs Nazareno (2006) G.R. 164156 Facts:

ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees’ identification

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cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. They were made to: a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints; e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based control radio.

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.

Due to a memorandum assigning PA’s to non-drama programs, and that the DYAB studio operations would be handled by the studio technician. There was a revision of the schedule and assignments and that respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa.

On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th_{Month Pay with Damages against the petitioner before the}

NLRC.

Issue: WON the respondents are regular employees?

Held: Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted to all regular employees.

Where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists. The reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status. Article 280 of the Labor Code provides:

REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

Any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity performed and while such activity actually exists. The fact that respondents received pre-agreed “talent fees”

instead of salaries, that they did not observe the required office hours, and that they were permitted to join other productions during their free time are not conclusive of the nature of their employment. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors.

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There are two kinds of regular employees under the law: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed.

What determines whether a certain employment is regular or otherwise is the character

of the activities performed in relation to the particular trade or business taking into account all the circumstances, and in some cases the length of time of its performance and its continued existence.

The employer-employee relationship between petitioner and respondents has been proven by the ff:

First. In the selection and engagement of respondents, no peculiar or unique skill,

talent or celebrity status was required from them because they were merely hired through petitioner’s personnel department just like any ordinary employee.

Second. The so-called “talent fees” of respondents correspond to wages given as

a result of an employer-employee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work

unsatisfactory, and respondents are highly dependent on the petitioner for continued work.

Fourth. The degree of control and supervision exercised by petitioner over

respondents through its supervisors negates the allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor.

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Francisco vs NLRC (2006) 500 SCRA 690 Facts:

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

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all employees and perform management administration functions. In 2001, she was replaced by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was until September. She asked for her salary but was informed that she was no longer connected to the company. She did not anymore report to work since she was not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter.

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

Issue: WON there was an employer-employee relationship. Held: Petitioner is an employee of Kasei Corporation.

The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer’s power to control the employee with respect to the means and methods by which the work 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 economic conditions prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the worker.

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Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant. It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latter’s 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 dependent upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to Respondent Corporation on a regular basis over an indefinite period of engagement. Respondent Corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, Respondent Corporation had the power to control petitioner with the means and methods by which the work is to be accomplished.

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Nogales et al., vs Capitol Medical Center (2006) G.R. 142625 Facts:

Corazon was under the exclusive care of Dr Oscar Estrada beginning the fourth month of her pregnancy. While on her last trimester of pregnancy, Dr Estrada noted an increase of her blood pressure and development of leg edema indicating preeclampsia which is a dangerous complication of pregnancy.

Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting Spouses Nogales to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission to the Capitol Medical Center. Eventually, Corazon died after giving birth to the child, which prompted the petitioners to file a complaint for damages against CMC, Dr. Estrada and other physicians and a certain nurse for Corazon’s death. Petitioners mainly contended that defendant physicians and CMC personnel were negligent in the treatment and management of Corazon's condition. Petitioners charged CMC with negligence in the selection and supervision of defendant physicians and hospital staff.

Issue: WON CMC is vicariously liable for the negligence of Dr. Estrada? Held: CMC is vicariously liable.

In Ramos v. Court of Appeals, Court had the occasion to determine the relationship between a hospital and a consultant or visiting physician and the liability of such hospital for that physician's negligence:

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

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responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians.

While the Court in Ramos did not expound on the control test, such test essentially determines whether an employment relationship exists between a physician and a hospital based on the exercise of control over the physician as to details. Specifically, the employer (or the hospital) must have the right to control both the means and the details of the process by which the employee (or the physician) is to accomplish his task In the present case, the Court finds no single evidence pointing to CMC's exercise of control over Dr. Estrada's treatment and management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was under the exclusive prenatal care of Dr. Estrada. At the time of Corazon's admission at CMC and during her delivery, it was Dr. Estrada, assisted by Dr. Villaflor, who attended to Corazon. There was no showing that CMC had a part in diagnosing Corazon's condition. While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not make him an employee of CMC. CMC merely allowed Dr. Estrada to use its facilities when Corazon was about to give birth, which CMC considered an emergency. Considering these circumstances, Dr. Estrada is not an employee of CMC, but an independent contractor.

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." In Gilbert v. Sycamore Municipal Hospital, the Illinois Supreme Court explained the doctrine of apparent authority in this wise:

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. The elements of the action have been set out as follows:

"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 acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence." The element of "holding out" on the part of the hospital does not require an express representation by the hospital that the person alleged to be negligent is an employee. Rather, the element is satisfied if the hospital holds itself out as a provider of emergency room care without informing the patient that the care is provided by independent contractors.

The doctrine of apparent authority essentially involves two factors to determine the liability of an independent-contractor physician.

The first factor focuses on the hospital's manifestations and is sometimes described as an inquiry whether the hospital acted in a manner which would lead a

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an employee or agent of the hospital. In this regard, the hospital need not make express representations to the patient that the treating physician is an employee of the hospital; rather a representation may be general and implied. 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 second factor focuses on the patient's reliance. It is sometimes characterized as an inquiry on whether the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence.

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.

Even simple negligence is not subject to blanket release in favor of establishments like hospitals but may only mitigate liability depending on the circumstances. When a person needing urgent medical attention rushes to a hospital, he cannot bargain on equal footing with the hospital on the terms of admission and operation. Such a person is literally at the mercy of the hospital. There can be no clearer example of a contract of adhesion than one arising from such a dire situation. Thus, the release forms of CMC cannot relieve CMC from liability for the negligent medical treatment of Corazon.

Coca-Cola Bottlers Phils., vs Dr. Climaco (2007) G.R. 146881 Facts:

Dr. Dean Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement for a period of 1 year with a monthly salary of Three Thousand Eight Hundred (P3,800.00).

The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform his functions as company doctor to Coca-Cola until he received a letter from petitioner company concluding their retainership agreement effective 30 days from receipt thereof.

Petitioner was already making inquiries regarding his status with the company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership, Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letter to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be considered as a regular part-time physician, having

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served the company continuously for four (4) years. He likewise stated that respondent must receive all the benefits and privileges of an employee under Article 157 (b) of the Labor Code.

Issue: WON there exists an employer-employee relationship between Coca-Cola and Dr. Climaco?

Held: No employer-employee relationship exists between the parties.

The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the so-called "control test," considered to be the most important element.

The Labor Arbiter and the NLRC correctly found that Coca-Cola lacked the power of control over the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which contains the respondent’s objectives, duties and obligations, does not tell respondent "how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients, employees of Coca-Cola, in each case."

The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks. It is precisely because the company lacks the power of control that the contract provides that respondent shall be directly responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence or other valid causes of action.

Complainant does not dispute the fact that outside of the two (2) hours that he is required to be at respondent company’s premises, he is not at all further required to just sit around in the premises and wait for an emergency to occur so as to enable him from using such hours for his own benefit and advantage. In fact, complainant maintains his own private clinic attending to his private practice in the city, where he services his patients, bills them accordingly -- and if it is an employee of respondent company who is attended to by him for special treatment that needs hospitalization or operation, this is subject to a special billing. More often than not, an employee is required to stay in the employer’s workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose.

Calamba Medical Center vs NLRC (2008) G.R. 176484 Facts:

Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Also resident physicians were also given a percentage share out of fees charged for out-patient treatments, operating room assistance and discharge billings, in addition to their fixed monthly retainer.

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The work schedules of the members of the team of resident physicians were fixed by petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them.

After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow employee Diosdado Miscala, 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 complaint for illegal suspension and Dr. Merceditha for illegal dismissal.

Issue: WON there exists an employer-employee relationship between petitioner and the spouses-respondents?

Held: Drs. Lanzanas are declared employee by the petitioner hospital.

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.

That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any department or ward for that matter, respondents' work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its medical director, 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.

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 receive as contemplated in Article 97 (f) of the Labor Code.

Moreover, respondents were 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.

More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents, namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316) Forms which reflect their status as employees, and the classification as "salary" of their remuneration. Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under the SSS Law is premised on the existence of an employer-employee relationship, except in cases of compulsory coverage of the self-employed.

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