LABOR

employer- employee relationship still exist is now lodged with regional director. EO 111 must be
considered as a curative statue with retrospective application .
LABOR RELATION- statutes, regulations, jurisprudence governing the relations between capital and
labor, by providing for certain employment standards and a legal framework for negotiating, Bases for the enactment of Labor and Social Legislation
adjusting and administering those standards and other incidents of employment.
Section 3. The State shall afford full protection to labor, local and overseas, organized and
1. LABOR STANDARDS- terms and conditions of employment that employers must comply unorganized, and promote full employment and equality of employment opportunities for all.
with and to which employers are entitled as a matter of legal right, These are the minimum
requirements prescribed by existing laws, rules and regulations relating to wages, hours of It shall guarantee the rights of all workers to self-organization, collective bargaining and
work, cost of living allowance and other monetary and welfare benefits. negotiations, and peaceful concerted activities, including the right to strike in accordance with law.
2. LABOR RELATIONS- status, rights and duties and the institutional mechanisms They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall
whichgovern the individual and collective interactions of employer, employees and their also participate in policy and decision-making processes affecting their rights and benefits as may
reresentatives. be provided by law.
Objective, Philosophy and Rationale
The State shall promote the principle of shared responsibility between workers and employers and
Cases: the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
1. Frederico Ledesma vs NLRC their mutual compliance therewith to foster industrial peace.

Doctrine: The State shall regulate the relations between workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right of enterprises to reasonable returns to
As a general rule, the courts cannot delve in the merits of the case which are factual in investments, and to expansion and growth.
nature, the court is not a trier of facts and does not undertake the re-examination of the evidence
presented by the contending parties for the factual finding of the labor officials who have acquired
expertise are to be afforded great respect.
1. PASEI VS Drillon
However, when the findings of the Labor Arbiter contradict those of the NLRC, departure
from the general rule is warranted and this court must make infinitesimal scrutiny and examine the Doctrine : Sec 3 : The state shall afford full protection to the labor, local and overseas organized and
records all over again including the evidence presented by the opposing parties to determine which unorganized and promote full employment, equality of employment opportunities for all.
findings should be preferred as a more conformable with the evidentiary fact
“ Protection of labor” does not signify the promotion of employment alone. What concerns the
As a general rule ,in case of illegal dismissal , the burden of proof rest upon the employer, however, constitution more paramount is that such an employment be above all decent, just and humane.
before proving that the said dismissal is illegal, the employee must first prove that he was indeed Under this circumstances, the government is duty- bound to insure that our toiling expatriates have
dismissed. adequate protection, personally and economically while away at home.

2. Maternity Children’s Hospital vs Secretary of Labor Facts* the banning of female domestic workers, the assailed provision in this case is DO no 1-
guidelines governing the temporary suspension of the workers.( guidelines governing the temporary
Doctrine : Labor standards refer to the minimum requirement prescribed by existing laws , rules and suspension of the deployment of Filipino domestic and household workers)
regulations relating to wages, hours of work , cost of living allowance and other monetary and
welfare benefits including occupational safety and health standards. Under the present rule, the 2. Serrano vs Gallant
regional director exercises both visitorial power over labor standards case and therefore empowered
*facts – If the OFW works for more than a year- he is to be given the unexpired portion of the
to adjudicate money claims provided that there still exist an employee or employer relationship and
contract
the finding of the regional office is not contested by the employer concerned.
If the OFW works in less than a year- he is to be give a salary for three months. Petitioner was
*facts ; Prior to the enactment of EO 111, the power is within the labor arbiter, after the enactment
arguing that the same is unconstitutional because it directly violates the policy on labor under
the enforcement and visitorial power and the power to resolve uncontested money claims where an
section 3 article XIII of the constitution.
LABOR
7. To participate in policy and decision making procees affecting their rights and benefits as
to be provided by law ( merely participate it does not mean that they should be followed.)
DOCTRINE
The Secretary of labor is duly mandated to equally protect and respect not only the laborer or
The constitutional mandates of protection to the labor and the security of tenure may be worker’s side but also the management or the employer’s dside the following are the
deemed as self-executing in the sense that these are automatically acknowledged and observed fundamental management rights
without the need for any enabling legislation. However, to declare that the constitutional provisions
are enough to guarantee the full exercise of the rights embodied therein and the realization of the 1. Right to Return on Investment- the right to return of investment and to make profit.
ideals exposed, would be impractical if not unrealistic. Therefore, there is a need for subsequent 2. Right to prescribe rules – there is a right to make rules and regulation for the gobenrment
legislation to define the parameters of these guaranteed rights in order to ensure the protection and of their employees and when employees with knowledge of an established rule enter the
promotion not only the rights of the labor sector, but of the employer’s as well. Without specific and service the rule becomes a part of the contract of employment
pertinent legislation, judicial bodies would be at loss, formulating their own conclusion to 3. Right to select employees- the employer has the right to select his employees
approximate the aims of the constitution. 4. Right to transfer r discharge employees- the right to select, transfer or lay off personnel in
order to minimize expenses and to insure the stability of the business and even close the
The state affords the highest priority to social justice, that it aims to reduce social, economic, and business. This must be done in good faith
political inequality and those which diffuse wealth. 5. Restriction to management rights – LIMITS: (law, contract, general principles of fair play
Statutory basis and justice)

Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the Union of Filipino Employees vs Vivar
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor Doctrine:
of labor
This argument by Nestle cannot be warranted because the court argues that all doubts in
Construction in favor of the labor ( Article 4 of the Labor Code) the implementation and interpretation of the code including its implementation and
All doubts in the implementation and interpretation of the provisions of this code, including its interpretation shall be resolved in favor of the labor. However, the court later used the doctrine
implementing rules and regulations shall be resolved in favor of the labor. of operative fact and realizes that in declaring a law to be null and void, undue harshness
resulting unfairness must be avoided.
Ratio: The employer stands on a higher footing than the employee. Hence the construction must be
in favor of the labor. This provision can only apply in cases where there is doubt in the interpretation 8. Hongkong and Shanghai Banking Corporation vs NLRC
or application of laws it is presumed that the lawmaking body intended right and justice to prevail Doctrine :
Illegal dismissal, the employee presents evidence, the employer present evidence, if both parties To be lawful, the cause of termination must be a serious and grave malfeasance to justify the
was able to produce substantial evidence. Labor Code will rule infavor of the employee. – the deprivation of a means of livelihood. This mrely in keeping with the spirit of the constitution and
arbitrer will rule in favor of the employee. Only in cases of doubt article 4 will apply, if there is a laws which lean over backwards in favor of the working class and mandates that every doubt is
violation it will not apply ( those who have less in life should have more in law) to be resolved in favor of the labor.
What are the guaranteed basic rights of workers The employer’s prerogative and power to discipline and terminate an employee’s service may
1. To organize themselves not be exercised in an arbitrary and despotic manner as to erode or render meaning less the
2. To conduct collective bargaining or negotiation with the management constitutional guarantee of security of tenure and due process. Our labor laws both require
3. To engage in peaceful concerned activities including the right to strike in accordance with substantive and procedural due process before the employee is to be dismissed.
law 9. Colgate vs Palmolive vs OPLE
4. To enjoy security of ternure
5. To work under humane conditions Doctrine: The constitutional mandate that the state shall assure the rights of the workers to self-
6. To receive living wage organization work should be achieved under a system of law such as the aforementioned
provision of the pertinent statutes.
 LABOR
Under the law, the minister is duly mandated to equally protect and respect not only the labor   On June 20, 1975, IBBAEU, filed against the respondent bank for the payment of holiday
or workers but also the management of the employees side. Hence an employer cannot be before the Department of Labor, National Labor Relations Commission. Conciliation failed upon
legally compelled to continue with the employment of a person who was guilty of misfeasance the request of both parties and was certified for arbitration on July 7, 1975.
or misfeasance toweard is employer.
a. Every worker shall be paid holiday paid his regular wage during the holiday pay.
Implementing Rules and Regulations
  On August 25, 1975, Labor Arbiter Ricarte Soriano rendered a decision in the above-entitled
Art. 5. Rules and regulations. The Department of Labor and other government agencies charged case, granting petitioner's complaint for payment of holiday pay, citing Article 208 of Labor
with the administration and enforcement of this Code or any of its parts shall promulgate the Code.
necessary implementing rules and regulations. Such rules and regulations shall become effective
fifteen (15) days after announcement of their adoption in newspapers of general circulation. IBAA did not appeal from the decision and complied by paying holiday pay up to and including
January 1976.
The DOLE shall make rules and regulations to implement the code. These rules and
regulations made to interpret the law are entitled to great respect. A rule or regulation promulgated ·       On December 16, 1975, P.D. No 850 was promulgated amending the provisions of the
by an administrative body such as the department of labor to implement a law, in excess of its rule Labor Code on the right to holiday pay.
making authority is void.
·       Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the
Department of Labor (now Ministry of Labor) promulgated the rules and regulations for the
1. Shell Philippines vs Central Bank implementation of holidays with pay.
Facts:
· On April 23, 1976, Policy Instruction No. 9 was issued by then Secretary of Labor interpreting
Article 5: The 10 paid legal holidays law, to start with is intended to benefit principally daily
employees. In the case of monthly, only those whose monthly, only those whose monthly
salary did not yet include payment for the 10 paid legal holidays are entitled to the benefit.
In case of discrepancy between the basic law and a rule or regulation issued to implement said law, "Under the rules implementing PD 850, this policy has been fully clarified to eliminate
the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of controversies on the entitlement of maximum monthly minimum wage, and his monthly pray is
the basic law (People v. Lim, 108 Phil. 1091) The rule or regulation should be within the scope of the uniform from Jan-Dec he is already presumed to be already paid 10 legal holidays. However, if
statutory authority granted by the legislature to the administrative agency. (Davis, Administrative
deductions are made from his monthly salary on account of holidays in months where they
occur, then he is entitled to 10 paid legal holidays.
Law, p. 194, 197, cited in Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555,
·       Because of Policy Instruction No. 9, respondent bank filed an opposition to the motion for
558) a writ of execution, refusing to pay unworked holiday. They further stated that the award of
The Court decline to grant to the respondent an amount equivalent to the interest on the Labor Arbiter Soriano was repealed by PD 850. They argue that: 1.) their employees are paid
not less than the statutory minimum wage. 2.) their monthly pay is uniform from January-
prematurely collected tax because of the well entrenched rule that in the absence of a statutory
December. and 3.) no deduction is made from their monthly salary on account of holidays in
provision clearly or expressly directing or authorizing payment of interest on the amount to be
the months where they occur.
refunded to the taxpayer, the Government cannot be required to pay interest. Likewise, it is the rule  
that interest may be awarded only when the collection of tax sought to be refunded was attended
with arbitrariness (Atlas Fertilizer Corp. v. Commission on Internal Revenue, 100 SCRA 556). There ISSUES:
is no indication of arbitrariness in the questioned act of the appellant.
·       Whether Policy Instruction No. 9 issued by Sec. of Labor, Amado G. Inciong violates the
Labor Code and should be considered null and void.
2. IBAAEU VS Inchiong  
FACTS: RULING:

 
LABOR
·       Yes. Policy Instruction No. 9 issued by Sec. of Labor is null and void. It is elementary in membership. San Miguel refused to bargain with them on the ground that they are not members
the rules of statutory construction that when the language of the law is clear an unequivocal the thereof.
law must be taken to mean exactly what it means. The Policy Instruction by the Sec. of Labor
which categorically state that the benefit is principally intended only for daily paid employees is Doctrine: The existence of an employee- employer relationship the following are to be considered
a flagrant violation of the mandatory directive of Article 4 of the Labor Code which in turn states
that All doubts in the implementation and interpretation and the implementation and a. The selection and engagement of employee
interpretation of the provisions of the code including its Implementing Rules and Regulations b. The payment of wages
shall be resolved in the favor of the labor. c. The power of dismissal
T d. The employer’s power to control the employee with respect to the means, methods by
which work is to be accomplished- CONTROL test

II: Employer- employee relationship There was an argument on the part of san Miguel that these employees are employees of
guaranteed labor contractor an independent labor firm?
Article 82: The provisions of this title shall apply to all employees in establishments and
undertakings whether for profit or not, but not to all governmental employees, managerial Ans: The existence of an independent relationship is determined whether or not the contractor
employees, field personnel ,members of the family of the employer who are dependent upon him for is carrying on an independent business, the nature and extent of work, the skill required. The
support, domestic helpers, persons in personal service of another, and those which are paid by term and duration of the relationship, the right to assign the performance of specified piece of
results as determined by the secretary of labor. worl, the octnrol and supervision of work to another, the employer’s power with respect too
giring, and payment of the contractor’s worker.
Who is an employee?those who performs work under certain conditions in return for
renumeration. The records are replete of evidence to specify the performance of a specified work, the
nature and extent of the work and the term and duration of the relationship. The record failed to
Who is an employer? Those who engage the work or service of the employee then pays a show how a big company like san Miguel entered into a mere oral agreement of employment or
certain compensation labor contracting where the same would involve considerable expenses in dealing with a large
number of workers over al ong period of time.
Where is the labor code applicable?- all workers whether agricultural or non-agricultural( apply to all
workers regardless on whether the engaged in profit or non-profit) as to the regular status:
Example: I asked you to make a chair? What will establish employee employer They are now regular employees, each of them had worked continuously and exclusively
relationship? If I specify as to the hight, dimensions ( CONTROL TEST) for the respondent company for almost 7 years. Considering the length of thime that the petitioners
have worked with san Miguel, there is justification to conclude that they are engaged to perform
FOR THE LABOR CODE TO APPLY THERE MUST BE EMPOYEE EMPLOYER RELATIONSHIP activities necessary or desirable in the usual business or trade of the repsodent therefore they are to
Cases be considered as regulat employees.

1. Brotherhood Labor Unity Movement vs ZAMORA( FOUR -FOLD TEST) 2. Angelina Francisco vs NLRC(two tiered approach, the economic dependence test)

Facts ( every 10 days on piece rate basis, the group leader will be noting it then to checker) Facts:

Petitioners were employed as painantes and cargadores at San Miguel Parola Glass since Kasei Corporation hired Francisco as accountant, corporate secretary and liaison officer.In
1961, it should be noted that they average at least 7 years of service at the time of their termination. the year 1996, she was replaced as accountant and was designated as acting manager, Later
They reported to work to Superintendent Camahort, and the equipment they are using is provided she was replaced as maanger and was designated as technical consultant, her pay was cut
by San Miguel. Workers are paid within a piece work basis, and that work in the glass factory does and reduced to P2,500 a month. Finally , she was later dismissed from the company.
not necessarily mean that a full eight hours a day for the petitioner. The petitioners worked Kasei Corporation argued that there is no employee- employer relationship, because as a
exclusively at the SMC plant never having been assigned to other companies or departments of technical consultant she performed her own work without control and supervision of Kasei
SMC where the volume of work is at its minimum. The union filed a notice to strike with the bureau Corporation. The petitioner has no daily time record and she came to the office anytime she
of labor relations in connection to those members who were allegedly dismissed due to the union wanted.
LABOR
ISSUE: IS SHE AN EMPLOYEE OF KASEI CORPORATION a. She has served the company for six years before her dismissal
b. Received check vouchers indicating salaries, wages and 13 month pay, bonuses and
DOCTRINE : allowances as well as deduction with the SSS.
There is no inform test to determine the existence of an employee- employer relationship.  with this being said, the employee is economically dependent on resident corporation for
Generally, courts have relied on the so called right of control test whereby the person for whom her continued employment in the latter’s line of business
the services are to be performed reserves a right to control not only the end to be achieved but
also the means used in reaching such end. In addition to this, employee and employer 3. ABS-CBN vs Nazareno( Regular Employee vs PROJECT BASED employees)
relationship may also be dependent upon economic activity.
Ruling : They are considered as regular employees, because after one year, they were employed by
2 TIER TEST- should be based on the totality of the circumstance of the party would give us a the petitioner, they are now considered as regular employees according to the law. The court also
framework of analysis which would take into consideration the totality of circumstances looked into the character of the activities performed in relation to the particular trade or business
surrounding the true nature of the relationship of the parties. taking into account all the circumstances and the length of time of the performance . They are also
not project employees because there was no evidence to show that the duration and scope of the
This is appropriate when there is no written agreement or terms to base the relationship due to project were determined or specified at the time of their engagement.
the complexity of the relationship based on various positon and responsibilities given to the
worker Petitioner has been working for almost 7 years, while length of time is not a determing
factor, it should be a strong indication to determine if the employee was hired due to a specific
1. Employer’s power to control the employee with respect to the means, method of forms by undertaking or in fct tasked to perform functions which are vital or necessary and indispensable to
which work is to be accomplished( control test- There is employee- employer relationship the usual trade and business.
when the person for whom the services are performed reserves the right to control not
only the end achieved but also the manner and means used to achieve that end) INDICATION OF EMPLOYER- EMPLOYEE RELATIONSHIP
2. The underlying economic realties of the activity or relationship.(economic dependency
1. In the selection and engagement of respondent, no peculiar or unique skill or celebrity
test) – whether the worker is dependent on the alleged employer for his continued
status was required because they were hired in the same way as to ordinary employee
employment in the line of business.
2. The so called talent -fee corresponds to wages given as a result of employer- employee
A. The extent to which the services performed are integral part of the employer’s
relationship just like an ordinary employee.
business
3. The petitioner can always discharge them when they find that the work done was
B. The extent of the workers investment in equipment and facilties
unsatisfactory.
C. The nature and degree of control exercised by the employer
4. The degree of control and supervision exercised by the petitioner over the respodnet
D. The worker’s opportunity for profit and loss
through its supervisor negares the allegation that the respondent are independent
E. The amount of initiative, skill , judgment or foresight required for the successo f
contractor.
the claimed independent enterprise
F. The degree of dependency of the employee upon the employer for his continued Doctrine : The primary standard of determining regular employment is the reasonable connection
employment in that line of business.( is the worker dependent upon the alleged between the particular activity performed by the employee in relation to the usual trade or business
employer in his line of business?) of the employer. The test is whether the employee is usually necessary or desirable in the usual
business or trade of the employer. Thi can be determined by considering the nature of the work
Ruling :
performed, and its relation to the scheme of particular business or trade in its entirety.
Yes. She is . There are instances when aside from the power of control of the employee
Kinds of Regular Employee under the law
with respect to the means and methods and forms by which the work is to be accomplished,
economic realties of the employment relations help provide a comprehensive analysis of the true 1. Those who are engaged to perform activities which are necessary and desirable in the
classification of the individual whether the employee, independent contractor corporate officer or usual trade of business of the employer- it is the character of the activities performed in
some other capacity. ( The court deemed it better to apply the two tiered approach) 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.
Under the economic dependence test, the petitioner can be said to be an employee of the
respondent corporation because
LABOR
2. Those causual employees who have rendered at least one year orf service whether cannot be held that the worker is an independent contractor when the terms of the agreement
continuous or broken with respect to the activities that they performed. clearly show otherwise.

To determine If they are project employees- The duration and scope of which were specified at The nature of one’s business is not determined by self serving allegations one attached thereto
the time the employees were engaged for the project. Independent contractors have unique but by test provided by the statue and the prevailing case law.
skills and expertise or talent to distinguish them for merely ordinary employees.
4 FOLD TEST
KINDS OF PROJECT EMPLOYEES
1. The manner of selection and engagement of the putative employee
1. A project may refer to a particular job or undertaking thati s within the regular or usual 2. The mode of payment of wages.
business of the employer but are distinct and separate and identifiable as such from other 3. The presence or absence of a power of dismissal
undertaking. ( the beginning and ending is determinable at a specified time 4. The presence or absence of the power of control the putative employee’s conduct-
2. The term project may also refer to a particular job or undertaking must also be identify CONTROL this is the decisive factor
separate and distinct from the ordinary or regular business operations of the employer.
The job or undertaking also begins and ends at the determinable or determinate time. jOb contacting rule ( exemption entities that are not covered by EO 174)

1. Does not apply to BPO

4. Danilo Tabas vs CMC( the nature of one’s business cannot be made to depend on self- 2. Job Contractor company
serving allegations or agreement between parties) 3. PCAB-
FACTS In cases of LABOR ONLY CONTRACTING- the labor only contractor is considered merely as an
Before going into their stint with California, employees of Livi Manpower Services were agent of the employer and that the liability must be shouldered by either one of them or both
assigned to work as promotional merchandiser for LIVI pursuant to a manpower supply 5. Lolita Lopez vs BODEGA( the employment by virtue of an concessionaire agreement)
agreement. The agreement was that California has no control or supervision whatsoever over
LIVI worker, and that LIVI is an independent contractor and nothing shall be construed as FACTS;
creating a principal agent relationship between LIVI and California.
Respondent Bodega City was, a corporation that is duly registered and existing under and
ISSUE: Are they considered as employee of CALIFORNIA despite the agreement by virtue of RP law, while petitioner Lopez is a lady keeper tasked with the manning its ladies
between California and LIVI that the former will be absolved from liability comfort room.

RULING: YES. The existence of the employer- employee relationship is a question of law and Yap( owner of bodega) , Lopez was asked to explain why the concessionaire agreement
cannot be made subject to an agreement. Hence, the manpower supply agreement between between her and the respondent should not be terminated due to the incident that happened on
LIVI and California were California is to be absolved from liability, will not prosper if there exist February 3, 1995 wherein petitioner was seen to have acted in a hostile manner against a lady
an employee and employer relationship between either firms. customer . Hence, Yap later argued that due to the incident, he is now terminating the
concessionaire agreement . Respondent Lopez later filed a case of illegal dismissal against the
Livi supplied workers to CALIFONIA, and that the petitioners in this case were performing petitioner .
activities which are directly related to the general business of manufacturing . The petitioner in
this case is charged with merchandizing promotion or sale of the products of California in the ISSUE: Is there illegal dismissal? Is the respondent an employee of the petitioner.
different sales outlet of Manila an activity that is integral to the business. Employers have
In the case of illegal dismissal,, the burden of proof rest upon the employer to prove that the
already attained REGULAR status because of the one year service.
dismissal of an employee was for a valid cause. However, in order to build a case for illegal
 LIVI IS AN INDEPENDENT CONTRACTOR- in providing for the temporary service to its dismissal, there is first a need to show employee- employer relationship.
client, it is as if such personnel has been directly hired by California itself.
RULING:
DOCTRINE : The existence of an employer-employee relationship is determined by law, it
cannot be negated simply by repudiating it in the management or employment contract,. It
LABOR
1. Presentation of Petty cash vouchers- NOT ENOUGH. If she was indeed na employee If Reinstatement is not possible then payment of separation pay may be ordered, hence the illegally
she should have shown salary voucher or pay slips not just a single petty cash dismissed employee may claim:
voucher
2. No control is present – though she was required to follow rules and regulations 1. Separation pay
prescribing appropriate conduct, this was imposed as a condition in the 2. Full Backwages
concessionaire agreement and not an element of control. When there is a valid or authorized caused for the dismissed of the employee, but the employer
3. ID- through the ID card stated Employees name, appear petitioner name, she failed faield to comply with statutory due process in effecting the same, the dismissal is not illegal.
to dispute this because other contractors and the signers and band performers were
aloso issued the same ID cards for thep urpsoe of entering the premise of Bodega 7. Goma vs Pampalona
City.
FACTS:
DOCTRINE: Not every form of control that the hiring party reserves to himself over the conduct of
Petitioner filed a suit for illegal dismissal underpayment of wage, non-payment of premium
the party hired in relation to the services rendered may be accorded the effect of establishing
pay for holiday and rest day five days incentive pay against the respondent. In this case, the
employer- employee relationship between them in the legal or technical sense of the term.
petitioner GOMA alleged that he was a regular employee, he alleged to have been illegally
If the rules merely serve as a guidelines towards the achievement of the mutually desired dismissed when the respondent refused to give him work assignment. Thus a prayer for backwage,
result without dictating the means and methods employed in attaining it- there is no employee- salary differential and service incentive leave and damages and atty fee.
employer relationship
Respondent ( Pampalona) denied that the petitioner was hired as a regular employee. It instead
If the rules control or fix the methodology and bind or restrict the party hired to use such argued that the petitioner was hired by a certain Atoy Canaveral, the manager of the hacienda that
means- there is an element of control used to establish employee employer relationship time. The respondent alleged that it was not obliged to absorb the employee of the former.

6. Victory liner vs Pablo Race ( ARTICLE 284 DOES NOT APPLY) Pampalona was created for the operation of the tourist resort, hence petitioner rendered a
construction of the facilities in the PPLC. Respondent is engaged in the management of Pampalona
FACTS : Plantation as well as the operation of tourist, resort, hotel inn restraurants etc, petitioner was
Circumstances. engaged to perform carpentry work , his services were needed until after 2 years the respondent
1. Respondent wd been working for only 15 months, when the accident occurred, hence he decided not to give him work assignment anymore.
was only able to render actual service of a mere period of more than a little over a year. ISSUE:: Are The Petitioners were merely project employees?
2. Respondent went to the office of the petitioner he was still limping that time, he was told
that he is deemed resigned, but he also still did not prove that he can still perform the Ruling : No .Regular employees can only be terminated with just caust v They are not.In this case,
work the petitioner was not informed that he will be assigned to a specific project or undertaking, neither
3. Despite the inability of the respondent to render actual service, the petitioner still was it established that he was informed of the scope of such project or undertaking.
continued to pay him his salary and shoulder his medical expense.
The petitioner is a regular employee- his dismissal is illegal, and since reinstatement is
GOOD FAITH- no more reinstatement , the respondent failed to prove that he can still perform the not longer a feasible remedy, he is only to be awarded separation pay and backwages.
job and that he is only to be awarded SEPARATION AND FULL BACKWAGES BECAUSE
There are two kinds of regular employees
reinstatement is no longer possible.
1. Those who are engaged to perform activities that are usually necessary or desirable in the
DOCTRINE:
usual business or trade of the employer( regular employees by nature of their work) those
An illegally dismissed employee shall be entitled to employees who perform a particular activity which is necessary or desirable in the usual
business or trade of the employer regardless of the length of service
1. Reinstatement 2. Those who have rendered at least one year of service whether continuous or broken with
2. Full backwages respect to the activity which the are employed. ( regular employees by years of service)
employees who have been performing the job, regardless of the nature thereof for at least
LABOR
a year even if the performance is not continuous or merely intermittent the law deems the B. Exclusions.-( the following officials are still subject to the labor code exception is that they
repated and continuing need for its performance as sufficient evidence of the necessity if are not subjected to the WORKING CONDITIONS and REST Period.
not indispensability of the activity to the business.
1. Government employees- government employees are governed by the Civil Service Rules
PROJECT EMPLOYEES: The principal test used to determine whether employees are project and Regulations and not by the Labor Code, particularly he title on Employment condition.
employees as distinguished from regular employees Is whether or not the employees were assigned ( but this does not apply to employee and agencies which are incorporated under the
to carry out a specific project or undertaking the duration or scope of which was specified at the time corporation code- in that case LABOR CODE applies)
the employees were engaged in that project. A Project employee is assigned to carry out a specific
project or undertaking the duration and the scope of which are specified at the time the employee is 2. Managerial Employees and members of the managerial staff- managerial employee
engaged in the project. includes supervisor. Supervisors unlike manager are allowed to form and join union or assist
the labor union of fellow supervisor.
A project is a job or undertaking which is distinct separate and identifiable from the usual
or regular undertaking of the company. ( the project employee is assigned to a project which begins 3. Field personnel -non applicability of the overtime law ( 8 hours)
and end at the determinable time) 4. Employer’s family members who depend upon him for support- on working conditions and
As to illegal dismissal, regular employees enjoy a security of tenure and they can only be rest period
dismissed for just cause and with due process after notice and hearing. In cases involving an 5. domestic helpers-domestic servants and persons in the personal service of another if they
employee’s dismissal the burden is on the employer to prove tha the dismissal was legal. But in perform such service in the employer’s home which are usually necessary and desirable for
order to prove the same it is first necessary to prove that there exist an employee – employer the maintenance or the enjoyment thereof.
relationship
Exception: A house personnel hired by a ranking company official , a foreigner byt
paid for the company itself to maintain a staff house provided for the official and not the
latter’s domestic helper but regular employees of the company

6. person in the personal service of another

7. workers who are paid by results as determined under DOLE Regulations – workers are
paid by result

8. Diplomatic immunity ( See Elaso Case)

Juco vs NLRC

1. Original Charter- government owned and controlled corporation that are created by
special law( CSC)
2. Without Original Charter- this are those which are created under the corporation code.
( LABOR CODE)

RULING

In this case, Naseco is governed by the labor code, NASECO which has been organized
under the general incorporation statute, and a subsidiary of the National Investment Development
Corporation which in turn is a subsidiary of the PNB hence it is excluded from the pruview of the
CSC. The civil service law can only cover those who are GOCC incorporated through the original
charter, those organized through special law. In this case, NASECO is incorporated under the old
corporation code, hence it is the labor code who has jurisdiction over the same.
LABOR
PNOC VS nlrc( there is no distinction whether original charter or not) In this case, NPDC is a government agency, it was originally created as an executive
committee, despite an attempt to transfer it to the bureau of forestry, it still remains under the office
FACTS of the president. its employees are covered by the civil service rules and regulations. Its employees
Manuel Pineda was employed in PNOC-EDC , he then decided to run as a councilor upon are civil service employee, there is still no provision under the 1987 constitution which permits them
winnin the same , the legal departnemnt of PNOC filed a legal opinion to know whether or not he is the right to strike, but they may however form union if they desire.
deemed to have IPSO facto resigned form employment. Later, he was dismissed, he later filed a E. LASCO VS Un Revolving Fund( DIPLOMATIC IMMUNITY)
case of illegal dismissal against PNOC-EDC he argued that “” GOCC”” IN THE CASE OF section 66
only pertains to those GOCC organized with original charter. ( pnoc is an employee of a gocc Petitioners were dismissed from their employment with the private respondent
without an original charter) ( UNRFNRE) which a special fund and the subsidiary organ of the United NATION. The UNRFRE is
involved in a joint project of the Philippine Government and the United Nations for the exploration
ISSUE: Whether or not an employee in a GOCC WITHOUT An original charter falls under the scope work in Dinagat Island.
of Article 66 of the Omnibus Election Code.
Petitioner are complainant to illegal dismissal cases, the respondent filed a motion to
DOCTRINE dismiss alleging that the labor arbiter has no jurisdiction over its personality
The government owned or controlled corporation does not lose its character as such because not Argument of the petitioner:
possessed of an original charter but organized under the general law. If a corporation capital stock
is owned b y the government, or it is operated and managed by officers charged with the mission of 1. The mining exploration and exploitation are outside the official functions of an international
fulfilling the public objectives for which it has been organized it is a government owned and agency protected by diplomatic immunity. Even if respondent are entitled to diplomatic
controlled corporation even if organized under the corporation code and not under the special immunity, they allegedely waived it due to the contract they entered into with the
statute and employees thereof even if not covered by the CSC but the labor code, are nonetheless petitioner.
employees in the government owned and controlled corporation and come with the letter of Section 2. A constitutional mandate that the state affords full protection to labor and promote full
66 of the ELECTION CODE, ipso FACTO resigned from the filing of the certification employment and equality of employment opportunities for all.

Section 66: Candidates holding appointive office or position- any person holding a public Issue: Are they covered by diplomatic immunity?
appointive office or position including active members of the armed forces of the Philippines and
officers and employment in the GOCC shall be considered as ipso facto resigned from his office Ruling: Yes. There is no conflict between the constitutional duty of the state to protect the rights of
upon the filing of certificate of candidacy. the workers and to promote their welfare and grant of immunity to international organization.

Republic vs CA ( An GOVERNMENT AGENCY In this case, the diplomatic immunity of private respondent was sufficiently established by the letter
of the DFA recognizing and confirming the immunity of UNRFFNR in accordance with the 1946
Facts : NPDC was originally crated in 1963 under EO 30, as the executive committee for Convention on Privileges AND IMMUNITIES OF THE United Naitons. ( there is no waiver in this
the development of parks, it was later renamed as National Park Development Committee under EO case – hence the court cannot assume jurisdiction)
68 it was later registered in the SEC as a non-stock nonprofit corporation.
Instances where it is seen that there is no waiver :
Due to EO 120 the NDC was attached to the ministry of department of tourism and
provided with the separate budget subject to audit by the commissioner of audit. CSC later informed 1. What is present here is a joint project entered into by the Philippine Government and the
NPDC that all appointment as pursuant to EO 120 are to be approved by the CSC. United Nations for mineral exploration in dingAT island, its mission is not to exploit our
natural resources and gain benefit thereto but to help improve the quality of life of people
Meanwhile , the Rizal Park Supervisory employee, organized and it affiliated with the including that of the petitioner.
Trade UNION OF THE philippiens,. Later these unions staged a strike at the Rial Part, NPDC later
filed a complaint against the union to declare the strike illegal and to restrain it on the ground that NAWASA VS NWSA
strikers being governmental employees have no right to strike even though they may form a union. General Rule : There is no need to pay for the additional sum of 25 percent to workers working in
The civil service embraces all branches, subdivision instrumentalities and agencies of the the Saturday and legal holiday, it should pay the same because it is in the CBA.
government including government owned and controlled corporation with original charter.
LABOR
Doctrine: The NAWASA is a public utility. Although pursuant to Section 4 of Commonwealth Act d.) How should the collection bargaining agreement of December 28, 1956 and Resolution No. 29,
444  it is not obliged to pay an additional sum of 25% to its laborers for work done on Sundays and series of 1957 of the Grievance Committee be interpreted and construed insofar as the stipulations
legal holidays, yet it must pay said additional compensation by virtue of the contractual obligation it therein contained relative to "distress pay" is concerned.
assumed under the collective bargaining agreement. Since, there is a bargaining agreement
between the Petitioner and the Respondent, Petitioner will have to pay compensation on Sundays Ruling: a.) The court agrees with petitioner that the NAWASA is a public utility because its primary
and legal holidays, for the circumstance is also included in Article 93, paragraph d of the Labor function is to construct, maintain and operate water reservoirs and waterworks for the purpose of
Code. supplying water to the inhabitants, as well as consolidate and centralize all water supplies and
drainage systems in the Philippines.
Facts:
We likewise agree with petitioner that a public utility is exempt from paying additional compensation
Petitioner National Waterworks & Sewerage Authority is a government-owned and controlled for work on Sundays and legal holidays conformably to Section 4 of Commonwealth Act No. 444
corporation created under Republic Act No. 1383, while respondent NWSA Consolidated Unions are which provides that the prohibition, regarding employment of Sundays and holidays unless an
various labor organizations composed of laborers and employees of the NAWASA. The other additional sum of 25% of the employee's regular remuneration is paid shall not apply to public
respondents are intervenors Jesus Centeno, et al., hereinafter referred to as intervenors. utilities such as those supplying gas, electricity, power, water or providing means of transportation or
communication. In other words, the employees and laborers of NAWASA can be made to work on
Acting on a certification of the President of the Philippines, the Court of Industrial Relations Sundays and legal holidays without being required to pay them an additional compensation of 25%.
conducted a hearing on the controversy then existing between petitioner and respondent unions
which the latter embodied in a "Manifesto", namely: implementation of the 40-Hour Week Law In the collective bargaining agreement entered into between the NAWASA and respondent unions it
(Republic Act No. 1880); alleged violations of the collective bargaining agreement concerning was agreed that all existing benefits enjoyed by the employees and laborers prior to its effectivity
"distress pay"; minimum wage of P5.25; promotional appointments and filling of vacancies of newly shall remain in force and shall form part of the agreement, among which certainly is the 25%
created positions; additional compensation for night work; wage increases to some laborers and additional compensation for work on Sundays and legal holidays therefore enjoyed by said laborers
employees; and strike duration pay. and employees( PRIOR TO THE EFFECTIVITY OF COMMONWEALTH 44: There is n. It may,
therefore, be said that while under Commonwealth Act No. 444 a public utility is not required to pay
Respondent intervenors filed a petition in intervention on the issue for additional compensation for additional compensation to its employees and workers for work done on Sundays and legal
night work. Later, however, they amended their petition by including a new demand for overtime pay holidays, there is, however, no prohibition for it to pay such additional compensation if it voluntarily
in favor of Jesus Centeno, Cesar Cabrera, Feliciano Duiguan, Cecilio Remotigue, and other agrees to do so. The NAWASA committed itself to pay this additional compensation. It must pay not
employees receiving P4,200.00 per annum or more. because of compulsion of law but because of contractual obligation.
Respondent court rendered its decision stating that the NAWASA is an agency not performing b.) There is merit in the decision of respondent court that the method used by petitioner in offsetting
governmental functions and, therefore, is liable to pay additional compensation for work on Sundays the overtime with the undertime and at the same time charging said undertime to the accrued leave
and legal holidays conformably to Commonwealth Act No. 444, known as the Eight-Hour Labor Law, of the employee is unfair, for under such method the employee is made to pay twice for his
even if said days should be within the staggered five work days authorized by the President; the undertime because his leave is reduced to that extent while he was made to pay for it with work
intervenors do not fall within the category of "managerial employees" as contemplated in Republic beyond the regular working hours. The proper method should be to deduct the undertime from the
Act 2377 and so are not exempt from the coverage of the Eight-Hour Labor Law. accrued leave but pay the employee the overtime to which he is entitled. This method also obviates
Issue/s: a.) Whether or not NAWASA is a public utility and, therefore, exempted from paying the irregular schedule that would result if the overtime should be set off against the undertime for
additional compensation for work on Sundays and legal holidays. that would place the schedule for working hours dependent on the employee.

b.) In determining whether one has worked in excess of eight hours, whether or not the undertime c.) The way to determine the daily rate of a monthly employee is to divide the monthly salary by the
for that day should be set off. actual number of working hours in the month. Thus, according to respondent court, Section 8 (g) of
Republic Act No. 1161, as amended by Republic Act 1792, provides that the daily rate of
c.) In computing the daily wage, whether or not the additional compensation for Sunday work should compensation is the total regular compensation for the customary number of hours worked each
be included. day. In other words, according to respondent court, the correct computation shall be (a) the monthly
salary divided by the actual of working hours in a month or (b) the regular monthly compensation
divided by the number of working days in a month.
LABOR
d.) Paragraph 3, Article VIII, of the collective bargaining agreement entered into between the They are managerial employees. (1) their primary duty consists of the performance of
employer and respondent unions, provides: work directly related to management policies of their employer; (2) they customarily and regularly
exercise discretion and independent judgment; (3) they regularly and directly assist the managerial
Because of the peculiar nature of the function of those employees and laborers of the Sewerage employee whose primary duty consist of the management of a department of the establishment in
Division who actually work in the sewerage chambers, causing "unusual distress" to them, they which they are employed (4) they execute, under general supervision, work along specialized or
shall receive extra compensation equivalent to twenty-five (25%) of their basic wage. technical lines requiring special training, experience, or knowledge; (5) they execute, under general
Petitioner contends that the distress pay should be given only to those who actually work inside the supervision, special assignments and tasks; and (6) they do not devote more than 20% of their
sewerage chambers while the union maintains that such pay should be given to all those whose hours worked in a work-week to activities which are not directly and clearly related to the
work have to do with the sewerage chambers, whether inside or outside. The Court of Industrial performance of their work hereinbefore described. regularly and directly assist them managerial
Relations sustained the latter view holding that the distress pay should be given to those who employee
actually work in and outside the sewerage chambers, and by sewerage chambers should be DOCTRINE
understood to mean as the surroundings where the work is actually done, not necessarily inside the
sewerage chambers. 1. Managerial – one who is vested with powers or prerogative to lay down and execute
management polices and or to hire, transfer , suspend ,lay off recall discharged assign or
It is clear then that all the laborers whether of the sewerage division or not assigned to work in and discipline employees
outside the sewerage chambers and suffer in unusual distress because of the nature of their work 2. Supervisory- are those who in the interest of the employer effectively recommend such
are entitled to the extra compensatory.  managerial action if the exercise of such authority not merely routinely or clerical in nature
National Sugar Refineries vs NLRC but requires the use of independent judgment .
 Those not falling within this definition are to be called as rank and file employee
FACTS
San Miguel Brewery vs Democratic Labor Union ( PAKYAWAN)
1. NASUREFCO- is a corporation that is fully owned and controlled by the government, it
operates three sugar refineries located in Bukidnon, Ilolilo and Batangas. FACTS
2. The Batangas refinery was privatized on April 11, 1992 pursuant to PN 50.
Democratic Labor Association filed a complaint against San Miguel Brewery embodying
3. The petitioner implemented a Job Evaluation program affecting all employees from rank
12 demands for the betterment of the condition of its members. The company asked for the
and file to department head. The JE program was designed to rationalize the duties and
dismissal of the complaint.
functions of all position ( necessary adjustments were made
4. Prior to the JE program, the members of respondent were treated in the same manner as During the hearing, the union manifested its desire to confine its claim to 1. Overtime, 2.
the rank and file employee. As such they used to be paid overtime, rest day and holiday Night shift differential 3. Atty Fee and overnight fee.
pay ( before the JE program they equal rank with the rank and file after the
implementation of the JE program, them embers were classified as managerial staff for ISSUE: Whether or not the Court of industrial relation are entitled to the benefits of Eight hour labor
thep purpose of compensation and benefits. law?
5. Two years after the implementation of the JE program, th members of the respodnet union RULING
filed a complaint with the labor arbiter for the non payment of OVERTIME rest day and
holiday pay allegedly in violation of article 100 of the labor code. No. They are not entitled. In this case, the employees leave the plant of the company to
go on their respective sales . They do not have daily time record, the company never require them
ISSUE: Whether or not the union members as supervisory employees are to be considered as to start their work earlier than 7 or 8. These employees receive monthly salaries and sales
officers or member so the managerial staff who are exempt from the coverage of ARTICLE 82 of the commission in variable amounts. The amount of compensation they receive is uncertain depending
labor code. . ( dati treated as the same level as rank and file, now they are treated as managerial , upon the individual efforts or industry. Besides the monthly salary, they are paid commissions.
they also failed to prove that the employer decided to consistently give them benefits out of pure
generosity). Overtime compensation is an additional pay for work or services rendered in excess of 8
hours a day by an employee and if the employee is already given extra compensation for labor
RULING
LABOR
performed in the excess of 8 hours a day he is not covered by the law. The pakyao basis employee Labor Only contracting is absolutely prohibited:
are not entitled to the operation of the 8 hour labor law.
Requisites :
DOCTRINE:
a. The contractor or subcontractor does not substantial capital OR
1. The eight hour labor law only has application where an employee or laborer is paid b. The contractor or subcontractor does not have investment in the form of tools,
on a monthly or daily basis in which case if he is made to work beyond the requisite equipment, machineries, work, premises among others AND the contractor or
period of 8 hours he should be paid additional compensation. subcontractor’s employee are recruited and placed are performing activities which
 This law does not have an application to piece-work , in pakyawan cases the earnings is are DIRECTLY related to the main business operation of the principal OR
in the form of compensation based on gross receipts for the day. His participation c. The contractor or subcontractor does not exercise the right to control over the
depends upon his industry so that the more hours he employ in his work the grater are his performance of the work of the employee.
gross return and the higher his commission. – they work individually , there are no
When is a principal deemed to be the direct employer of the contractor or subcontractor:
restrictions respecting the time they work and he can earn as much or as little within the
range of his ability. He works away from his employer and is not subject to the supervision 1. When it was found that the contractor or subcontractor is engaged in labor -only
of his employer, the employer has no way to know how many hours he work per day. contracting
 When the field man receives a regular salary, plus commission on percentage basis of the 2. When the contractor engages in other illicit forms of employment
sales, it is the policy of the office to consider his commission as payment for the extra time
he render in the excess of eight hours. Permissible Contracting Arrangements

LABOR ONLY COTNRACTING- INDEPENDENT CONTRACTING 1. The contractor or subcontractor is engaged in a distinct and independent business and
undertakes to perform the job or work on its own responsibility according to its own matter
What are the four features of legitiamate contracting and method
2. The contractor or subcontractor has substantial capital to carry out the job farmed out by
1. Parties- a principal enters into a contract with a contractor or if the principal himself
the principal on his account
is the contractor he enters into a contract with the subcontractor.
3. In performing the work, the contractor or subcontractor is free from the control and
2. Specific Job- the contract calls for the performance or completion of a specific job,
direction of the principal in all matters connected ith the performance of the work except
work or service
result( to pinakaimportante)
3. Period- such job work or service is to be performed or completed of a specific or
4. The t ensures compliance with the rights and benefits of all the employees of the
definite or predetermined period and
contractor or subcontractor under labor law.
4. LOCATION- the contracted job, work or service may be performed or completed
inside or outside the premises of the principal Trilateral Relationship
Tri-Lateral Relationship- 1. Principal
2. Contractor or subcontractor
1. Principal – which decides to farm out the job or service to a contractor or a
subcontractor Worker
2. Contractor or subcontractor- the capacity to indepdently undertake the performance
of the job, work or service and SOLIDARY LIABILITY

Workers- engaged by the contractor, subcontractor to accomplish the job, work or service. If in case there is a violation of any provision of the labor code, including the failure to pay
wages, there is a solidary liability on the part of the principal and the contractor for the purpose of
New Rules enforcing the provision of the labor code and other social legislation to the extent of the work
performed under the employment contract.
Definition : Substantial Capital- refers to the paid up capital stock/ shares at least five million Pesos
in the case of corporation, partnership and cooperatives, in the case of single proprietorship, a net
worth of at least 5 Million pesos.
LABOR
In this case, if it concerns the unpaid wages and other salaries ( as long as di siya punitive 5. Requiring contractor or subcontractor employee to sign as a precondition to
in character)- Article 106 states that the principal is liable thereto ( only upto the extent of the work employment or continued employment an antedated resignation letter, a blank
performed). payroll, a waiver of labor standards including minimum wage and social welfare
benefits, or a quitclaim releasing the principal or contractor from liability as to the
If the violation is any other – it is solely upon the contractor and not the principal payment of future claims or require the employee to become member of a
Required Contract under these Rules cooperative
6. Repeated hiring by the contractor or employees under an employment contract of
a. Employment contract between the contractor and the subcontractor and its employees short duration
a. The contract between the contractor and subcontractor and its employees shall 7. Requiring employees under the contracting or subcontracting agreement to sign a
be governed by provision of Article 294 and 295 of the Labor Code It shall contract fxing the period of employment to a term shorter than the term of the service
include the following agreement , unless the contract is divisible into phases for which substantially
i. The specific description of the job or work to be performed by the different skills re required and this is made knwn to the employee at the time of
employee AND engagement
ii. The place of work and terms and condtion of employment including a 8. Such other practices, scheme or employment arrangement designed to circumvent
settlement of wage rate applicable to the individual employees. the right of workers to secrurity of tenure
b. Service Agreement between the principal and the contractor.
a. The specific description of the job or work being subcontracted including its Mandatory Registration and registry of legitimate conntractors- it is mandatory or entitles acting as
terms or duration contractors to register with the Regional Office of DOLE where it principally operates. Failure to
b. The place or work and terms and conditions governing the contracting register shall give rise to the presumption that the contractor is engaged in labor-only contracting.
arrangement to include the agreed amount of the contracted job or work as well If in case the same is revoked, or the certificate of cancellation of registration is cancelled,
as the standard administrative fee of not less than 10 percent of the total order of cancellation shall divest the contractor of its legitimate status to engage in sch order of
contract cost and cancellation shall be ground to deny registration an application for the renewal of registration to
c. A provision on the insurance of the bonds as defined in section 3a renewable contractor under the Rules.
every year.
PAL VS ENRIQUE LIGAN
Other iilicit forms of Employment Arrangements
Doctrine:
1. When the principal farms out work for a CABO
2. Contracting out of job work through an in house agency
The statutory basis of legitimate contracting or subcontracting is provided in Article 106 of the Labor
3. Contracting out of job work through an in house cooperative which merely supplies
Code which reads:
the workers to the principal

Section 6 : Distinction and Authorized Activities ART. 106. CONTRACTOR OR SUBCONTRACTOR. - Whenever an employer enters into
a contract with another person for the performance of the former's work, the employees of
a. Labor Service Cooperative- the cooperate is engaged exclusively in job contracting and the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the
subcontracting services to the third party provisions of this Code.
b. Workers Cooperative- this principally consist of providing employment and business
opportunities to its embers and manages it in accordance with the cooperative principles. In the event that the contractor or subcontractor fails to pay the wages of his employees in
It cannot engage in contracting or subcontracting activity ( labor only) accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under
4. Contracting out of a job or work being performed by union members and such will the contract, in the same manner and extent that he is liable to employees directly
interfere with, restrain or coerce employees in the exercise of their rights to self employed by him.
organization
LABOR
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting "Substantial capital or investment" refers to capital stocks and subscribed capitalization in
out of labor to protect the rights of workers established under the Code. In so prohibiting the case of corporations, tools, equipment, implements, machineries and work premises,
or restricting, he may make appropriate distinctions between labor-only contracting and actually and directly used by the contractor or subcontractor in the performance or
job contracting as well as differentiations within these types of contracting and determine completion of the job, work or service contracted out.
who among the parties involved shall be considered the employer for purposes of this
Code, to prevent any violation or circumvention of any provision of this Code. The "right to control" shall refer to the right reserved to the person for whom the services
of the contractual workers are performed, to determine not only the end to be achieved,
There is "labor-only" contracting where the person supplying workers to an employer  does but also the manner and means to be used in reaching that end. (Emphasis and
not have substantial capital or investment in the form of tools, equipment, machineries, underscoring supplied)
work premises, among others, AND the workers recruited and placed by such person
are performing activities which are directly related to the principal business of such FACTS
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 PAL ( as an owner) and Synergy Service ( Contractor) entered into an
the same manner and extent as if the latter were directly employed by him. agreement on July 15, 1991 whereby Synergy undertook to provide loading, unloading, delivery of
baggage and cargo and other related services to and from the petitioner’s aircraft at Mactan Station.
Legitimate contracting and labor-only contracting are defined in Department Order (D.O.) No. 18-02,
Series of 2002 (Rules Implementing Articles 106 to 109 of the Labor Code, as amended) as follows: The agreement provides that the CONTRACTOR will be the one to furnish all the
necessary capital, workers, loading and unloading and delivery of materials, facilities, supplies ,
Section 3. Trilateral relationship in contracting arrangements.  In legitimate contracting, equipment and tools for satisfactory performance and execution of the following service. It is also
there exists a trilateral relationship under which there is a contract for a specific job, work provided therein the contract that there will be no employer, employee relationship between the
or service between the principal and the contractor or subcontractor, and a contract of contractor and or its employee on one hand and the owner on the other.
employment between the contractor or subcontractor and its workers. Hence, there are
three parties involved in these arrangements, the principal which decides to farm out a job The respondent filed complaints before the NLRC against the petitioner (PAL), Synergy
or service to a contractor or subcontractor, the contractor or subcontractor which has the and their respective officials for underpayment, non-payment of premium pay for holidays premium
capacity to independently undertake the performance of the job, work or service, and  the pay for rest days service incentive leave , 13 th month pay allowance and for the regularization of
contractual workers engaged by the contractor or subcontractor to accomplish the job, employment status. Respondents were arguing they are performing task which are directly related
work or service. (Emphasis and underscoring supplied) or connected with the business of the petitioner.

LA-: they are to be considered as independent contractors

Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby
declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement NLRC: they are to be considered as labor only contractor
where the contractor or subcontractor merely recruits, supplies or places workers to
perform a job, work or service for a principal, and any of the following elements are Effects:
present:
a. If synergy is found to be a mere job only contractor- respondents are to be
(i) The contractor or subcontractor does not have substantial capital or investment which considered as regular employees of the petitioner since synergy would be considered
relates to the job, work or service to be performed and the employees recruited, supplied as a mere agent
or placed by such contractor or subcontractor are performing activities which are directly b. if Synergy is found to be a legitimate contractor, respondents' claims against
related to the main business of the principal; OR petitioner must fail as they would then be considered employees of Synergy.

(ii) The contractor does not exercise the right to control over the performance of the Issue :1. Whether or not Synergy is a labor only contractor
work of the contractual employee. (Emphasis, underscoring and capitalization supplied)
2. Whether or not the express provision as stated in the employee contract should hold
water to prove that PAL is not the employer of the respondent
"Substantial capital or investment" and the "right to control" are defined in the same Section 5 of the
Department Order as follows:
LABOR
RULING : Yes. It is. In this case, the work performed by almost all of the respodents are directly Facts
related to the main business of the petitioner and the equipment used by the respondent as station
loaders are likewise owned y the petitioner. Petitioner San Miguel Corporation ( rep by Titular) and Sunflower Multi Purpose ( ASONG)
entered into a one-year contract of service to begin from J\\anuary 1, 1993.
Substantial capital is not enough to prove that labor-only contracting does not exist.There
is still a need to prove that the employees recruited, supplied or place by such contractor or 2. To carry out the undertaking specified in the immediately preceding paragraph, the
subcontractor are performing activities that are directly related to the main business of the principal. cooperative shall employ the necessary personnel and provide adequate equipment,
As provided under Section 5 of D.O NO. 18-02 there are two elements for labor-only contracting to materials, tools and apparatus, to efficiently, fully and speedily accomplish the work and
exist. services undertaken by the cooperative. xxx
`
The cooperative shall have the entire charge, control and supervision of the work and
First(1) , the contractor or subcontractor does not have substantial capital or investment which services herein agreed upon. xxx
relates to the job, work, or service to be performed AND the employees recruited, s\supplied or
placed by such contractor or subcontractor are performing activities which are directly related to the 4. There is no employer-employee relationship between the company and the cooperative,
main business of the principal, or the cooperative and any of its members, or the company and any members of the
cooperative. undertakings, will depend on how efficiently it deploys and fields its members
OR and how they perform the work and manage its operations.

(ii) The contractor does not exercise the right to control over the performance of the work 6. The cooperative shall have exclusive discretion in the selection, engagement and
of the contractual employee. The right of control in this case, pertains to ( he must contract discharge of its member-workers or otherwise in the direction and control thereof. The
to do the work according to his own methods, and without being subject to the employer’s determination of the wages, salaries and compensation of the member-workers of the
control except only as to the results)- to ng apply sa case na to
Pursuant to the contract, Sunflower engaged private respondents to, as they did, render services at
In this case, Petitioner in fact admitted that it fixes the work schedule of respondents as their work SMC’s Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed
was dependent on the frequency of plane arrivals. And as the NLRC found, petitioner's managers renewed by the parties every month after its expiration on January 1, 1994 and private respondents
and supervisors approved respondents' weekly work assignments and respondents and other continued to perform their tasks until September 11, 1995.
regular PAL employees were all referred to as "station attendants" of the cargo operation and
airfreight services of petitioner. Therefore, since the respondent have performed task which are In July 1995, private respondents filed a complaint before the NLRC, Regional Arbitration Branch
usually necessary and desirable in the air transportation business of the petitioner, they are deemed No. VI, Bacolod City, praying to be declared as regular employees of SMC, with claims for recovery
to be its regular employees and Synergy to be a labor only contractor. of all benefits and privileges enjoyed by SMC rank and file employees. A complaint for illegal
dismissal was also filed following the closure of SMC of its Bacolod Shrimp Processing plant that
2Should the express agreement have an effect in the relationship?.No. The express provision in the resulted in their termination.
Agreement that Synergy was an independent contractor and there would be "no employer-employee
relationship between [Synergy] and/or its employees on one hand, and [petitioner] on the other ISSUE: Whether or not SUNFLOWER IS a labor only contractor? YES
hand" is not legally binding and conclusive as contractual provisions are not valid determinants of
the existence of such relationship. For it is the totality of the facts and surrounding circumstances of The test to determine the existence of independent contractorship is whether one claiming to be an
the case which is determinative of the parties' relationship. independent contractor has contracted to do the work according to his own methods and without
being subject to the control of the employer, except only as to the results of the work.49
* PAL IS LIABLE, BECAUSE THE CASE IS A LABOR ONLY CONTRACTING WHEREIN THE
EMPLOYEES OF THE LABOR ONY CONTRACTING WILL BE TREATED AS EMPLOYEES OF In legitimate labor contracting, the law creates an employer-employee relationship for a limited
THE PRINCIPAL. purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes
jointly and severally liable with the job contractor, only for the payment of the employees’ wages
San Miguel vs Aballa whenever the contractor fails to pay the same. Other than that, the principal employer is not
responsible for any claim made by the employees.50
LABOR
In labor-only contracting, the statute creates an employer-employee relationship for a Thus, it is gathered from the evidence adduced by private respondents before the labor arbiter that
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered their daily time records were signed by SMC supervisors Ike Puentebella, Joemel Haro, Joemari
merely an agent of the principal employer and the latter is responsible to the employees of the labor- Raca, Erwin Tumonong, Edison Arguello, and Stephen Palabrica, which fact shows that SMC
only contractor as if such employees had been directly employed by the principal employer. 51 exercised the power of control and supervision over its employees. And control of the premises in
which private respondents worked was by SMC. These tend to disprove the independence of the
The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the contractor
existence of an employer-employee relationship between SMC and private respondents. The
language of a contract is not, however, determinative of the parties’ relationship; rather it is the More. Private respondents had been working in the aqua processing plant inside the SMC
totality of the facts and surrounding circumstances of the case. A party cannot dictate, by the mere compound alongside regular SMC shrimp processing workers performing identical jobs under the
expedient of a unilateral declaration in a contract, the character of its business,  i.e., whether as same SMC supervisors.61 This circumstance is another indicium of the existence of a labor-only
labor-only contractor or job contractor, it being crucial that its character be measured in terms of and contractor ship
determined by the criteria set by statute
MERALCO VS NLRC
SMC argues that Sunflower could not have been issued a certificate of registration as a cooperative
if it had no substantial capital. Doctrine:

There was no substantial capital: on the part of SUNFLOWER While the court ruled that the independent employer can ercover whatever amount it had paid to the
employees, the said ruling cannot be applied in reverse as to allow the independent contractor to
While indeed Sunflower was issued Certificate of Registration No. IL0-875 on February 10, 1992 by recover from the petitioner( The employer)
the Cooperative Development Authority, this merely shows that it had at least ₱2,000.00 in paid-up
share capital as mandated by Section 5 of Article 1456 of Republic Act No. 6938, otherwise known as FACTS
the Cooperative Code, which amount cannot be considered substantial capitalization.It also does
not have substantial capitalization in the form of tools, equipment, machineries, work premises and Parties
other materials to qualify it as an independent contractor. In this case, the machineries, and all other
working tools utilized by the private respondent in carrying out their task were owned and provided
by SMC. 1. Meralco- the principal
2. Contractor- Ofelia Inc
3. Agent of Contractor- Ofelia
The JOB DESCIPTION PROVIDED BY SMC is directly related to the aquaculture operations of
SMC
Petitioner ( Meralco) is a corporation that is duly organized and existing undre the laws of
the Philippines and a client of private respondent Ofelia Landrito. Private respondent is a firm which
And from the job description provided by SMC itself, the work assigned to private respondents is engaged in providing general service such as janitorial and maintenance work to its clients, while
was directly related to the aquaculture operations of SMC. Undoubtedly, the nature of the work Ofelia P Landrito is the general manager of OPLGS.
performed by private respondents in shrimp harvesting, receiving, and packing formed an integral
part of the shrimp processing operations of SMC. As for janitorial and messengerial services, that
they are considered directly related to the principal business of the employer has been On November 7, 1984, petitioner and private respondent executed a contract ordre
jurisprudentially recognized. whereby the respondent would be the one tasked to supply the petitioner janitorial services which
include labor, material tools and equipment as well as the supervision of its assigned employees in
the rockwell branch.
SUNFLOWER DID NOT CARRY ON AN INDEPENDENT BUSINESS OR UNDERTAKE THE
PERFORMACE OT ITS SERVICE CONTRACT FREE FROM CONTROL AND SUPERVISION OF
ITS PRINCIPAL( San Miguel) The 49 employees lodged a complaint for illegal deduction, underpyayment, non payment
of overtime pay, legal holiday pay and other pays. In view of the enactment of RA 6727, the contract
between the petitioner and private respondent was amended for the 10 th time on Nobember 1989 to
Furthermore, Sunflower did not carry on an independent business or undertake the performance of increase the minimum daily wage per employee , petitioner then decided to terminate the contract,
its service contract according to its own manner and method, free from the control and supervision hence the complainants were terminated from their work ( pulled out of rockwell plant). Hence,
of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC. petitioner amended their complaint to include the petitioner MERALCO.
LABOR
The labor arbitrer later dismissed the case against the petitioner.The court of appeals later FACTS
ruled that the petitioner is solidarily liable with the private respondent for the payment of separation
pay. An appeal later was instituted Respondent – licensed security guards

ISSUE: No. Meralco is not solidarily liable with the private respondent PSI – FIRST EMPLOYER

RULING Asdai – 2nd employer

No. They are not. An indirect employer “any person, partnership association or corporation AFISI- terminated the security agreement- dismiss the respondent ( 3 rd employer of the respondent)
which not being an employer contracts with an independent contractor for the performance of any
work, task job or project. To ensure that they are to be paid their appropriate wages, if in case the The respondents in this case are licensed security guards which are formerly employed by
contractor or subcontractor fails to pay the wages of his employee, the employer shall be held jointly PSI and deployed in the Meralco office. In this cae the security agreement between PSI and
and severally liable with his contractor or subcontractor to such employees to the extent of the work MERALCO was later terminated. Later a new agreement was instituted , this time it was between
performed. ASDAI and MERALCO, ASDAI is to be considered as agency while MERALCO was designated as
the company. Respodents who were dismissed by PSI were later absorbed by ASDAI.
An indirect employer can be held solidarily liable with the independent contractor or
subcontractor in the event that the latter fails to pay, however this is merely limited to the purpose of Later, a security agreement between MERALCO and AFISI took effect which terminated
unpaid wages. the previous security agreement with ASDAI, this in effect dismissed the respondent.

In this case, there is no question that private respondent were operating as an The respondent were alleging that MERALCO and ASDAI never paid their overtime pay,
independent contactor and that complainants were their employees. There was no employee service incentive leave pay, premium pay for Sundays and holdiays. They also alleged that when
employer relationship between Meralco and the dismissed employees and thus the former could not the service agreement of ASDAI was terminated, AFISI terminated them because the latter learned
have dismissed the latter from employment. It is only the private respondent who can terminate their that they had a pending case against PSI.
service, and should be held liable thereto.
DEFENSES
In this case, the only instance where MERALCO is to be held liable with the independent
contractor or subcontractor for backwages and separation pay of the latter’s employee is when there
is proof that the principal conspired with the independent contractor or subcontractor in the illegal 1. Meralco- denial of liability on the ground that thee was no employee employer relationship
dismissal of its employees. 2. AFSIS- it is not liable for illegal dismissal since it did not absorb or hire the individual
respondent the latter were merely hold over guards from ASDAI
3. ASDAI – they had given everything due
In the present case, the respondent cannot be allowed to recover from the petitioner. The
respondent had already posted a surety bond in the amount of the judgment awars, with this it can
be said the purpose of the Labor Code pertainting to solidary liability has already been ISSUE: Whether or not Meralco is the employer
accomplished since the interest of the complanants are already protected. Hence, it is futile to even
hold Meralco liable pa. RULING

While the court ruled that the independent employer can recover whatever amount it had No .Meralco is not the employer the employer is ASDAI
paid to the employees, the said ruling cannot be applied in reverse as to allow the independent
contractor to recover from the petitioner With regard to the salary, the guards and the watchman receive their compensation from
ASDAI and not from the companies or establishment to whom they are guarding. The fees paid by
MANILA ELECTRIC COMPANY VS ROGELIO BENAMIRA ET AL the client is not equal to the salary of the guard and watchman.Since MERALCO needed to pay an
additional fee to ASDAI. The salary is therefore beyond the power of the petitioner to determine.
DOCTRINE
LABOR
These watchman needs to be accepted first as by the agency before they can perform RULING
services for the petitioner. The petitioner also needs to deal with the agency and not individual
watchman on matters pertaining to the contracted task, the petitioner did not exercise any power Yes. The existence of an independent and permissible contractor relationship is generally
over the watchman’s conduct. established with the following criteria

The contract specifically states that ASDAI is the employer of the respondent : 1. Select and There is labor only contracting where the person supplying workers to an employee does
engaged and hired security guard, 2, Assigned them to Meralco according to the agreement, 3. not have substantial capital or investment n the forms of tools, equipment, machineries, work
They provide uniform firearms and ammunition, 4 paid salary and wages, 5. Discipline them premises among others and that the employees are performing activities which are directly related
to the principal business of the employer. In such cases, the person of the intermediary shall be
DOLE PHILIPPINES VS ESTEVA considered as merely as agent of the employer who shall be responsible to the workers in the same
manner and extent as if the employees are directly employed by him.
Principal : DOLE
1. Whether or not the contractor is carrying on an independent business the nature and the
CAMPO - AGENT extent of the work , the skill required and the term and duration of the relationship
2. The right of control and supervision of the work to another the employers power with
respect to the hiring, firing and payment of the contractor’s worker the control of the
DOCTRINE
premises, the duty to supply the tools , materials and labor
FACTS
Rules to prove that CAMPCO is a labor only contracting
Pursuant to the service contract, CAMPCO members rendered service to the petitioner ,
a. The multi million peso were amassed prior to the establishment, at the time CAMPCO
the number of CAMPCO members that report to work and the type of the service they perform
entered int o a service contact it merely has P6,600 paid up capital which can hardly be
depends upon the needs of the petitioner DOLE.Although the service contract specifically stated
considered as substantial CAPITAL.
that it shall be for a period of 6 months, the parties apparently extended or renewed the same for the
b. There is no independent business from the petitioner, it was precisely established to
succeeding years, without executing a contract.
render services to the petioner to augment its workforce during peak season. Petitioner is
its only client
In this case, a resolution was passed, addressed to the secretary of labor calling her c. Petitioner exercised control over CAMPCO members, the mere presence within the
attention to the worsening working condition of petitioners workers an the organization of premises of the supervisor from the cooperative did not necessarily mean that CAMPCO
contractual workers into several cooperatives to replace individual labor only cotnractors that used ti has control over its members.
supply workers to the petitioner.
DOLE DID EXERCISE A CERTAIN EXTENT OF CONTROL
A task force was instituted to investigate the alleged labor only contracting activites in the
cooperatives in Polomolok. The task force later determined and identified six cooperatives that were
1. They had to undergo instruction and pass the training provided by the petitioner
engaged in labor only contracting, one of which was CAMPCO. It was later found that six
2. It was the petitioner who determined and prepared work assignment of CAMPCO
cooperatives were found to be engaging in different activities with the DOLE a company engaged in
d. They were not engaged to perform a specific or special job or service
the production of pineapple and export of pineapple products. These three cooperatives appealed to
e. They perform acts directly related to the principal business of the petition. They worked as
the office of the DOLE secretary raising the issue that it committed serious error in law when it
can processing attendant, feeder of canned pineapple, which acts are not only directly
directed the cooperative to cease and esist from engaging in labor only cotnracitng.
related to the business of the petitioner but vital thereto
All the six cooperative involved appealed to the Order to the Office of the DOLE secretary,
raising the SOLE issue that DOLE regional director committed serious error of law in directing the
cooperative to cease and desist from labor only contracting.

ISSUE : Whether or not CAMPCO is engaged in labor only contracting

ALVIADO VS PROCTOR AND GAMBLE
LABOR
DOCTRINE PromGemm supplied its complainant workers with the relevant materials with relevant
materials such as markers, tapes and liners and cutters necessary for them to perform their work.
Labor- Alviado Promm-Gemm also was the one who issued unifroms to them. It is also relevant to mention that
PROMGEMM already considered the complainants working uunder it as regular not merely
contractual empoyees. This then negatives the existence of control.
Employer – P and G

Promm-Genn has substantial capital which relates to work to be performed. It has an

Promm Gem or SAPS- agency
authorized capital stock of P 1 Millin and a paid in capital or also capital available for business ,
it also had under its name three registered vehicles which were used for its promotional
FACT merchandising business. Promm- Gem supplied its complainant workers with relevant
materials. Prom-Gemm also considered the complainants working under it as regular and not
Petitioner worked as merchandisers of P&G they all individually signed employment merely contractual employees.
contracts with either Promm-Gem or Saps for period not less than five months a time. They were
assigned to different outlets, and that they were tasked to handle the products of PNG they received SAPS ON THE OTHER HAND IS ENGAGED IN LABOR ONLY CONTRACTING : It does not have
their wages either from Png or SAPS. Saps and Promm-gem were the ones which are tasked to substantial capital
impose disciplinary measures on erring merchandisers for reason of habitual absenteeism,
dishonesty, changing day off without notice.( less than 5 months at a time)
SAPS on the other hand issued that it has a paid up capital of P31, 250. There is no other
evidence resented to show how much the working cpatial and assets are. There is no showing
P&G is principally engaged in the manufacture and production of different consumer that there is substantial investment in tools, equipment and other assets. Also, petitioner have
health products which it sells in a wholesale basis. Hence, in order to enhance consumer been charged with the merchandising and the promotion of the products of P and G an activity
awareness, and acceptance it enterd into a contract with PROM-GEM and Saps for the promotion that has already been considered by the corut as directly related to the manufacturing business
and merchandising of its products.. later there was a problem decided to end the agreement which is the principal busines of P and G
because PROM-GEN and SAPS because it allgedely interfered with the operation of P and G.
Since the petitioner have been charged with the merchandizing and promotion of the
Petitioner later filed a complaint against P and G for regularization, service incentive leave products of P and G an activity that has already been directly related to the manufacturing
pay and other benefits with damages. business of the employer which is P and G. Since SAPS has no capital or investment and the
workers it recruited are performing activates which are related to the principal of P and G.
ISSUE: Whether or not P&G are to be considered as the employer of the petitioner and hence, they
are liable to pay the following THOUGH THE DISMISSAl here is a valid cause, it failed to comply with substantial due
process, does not constitute serious misconduct
RULING

For labor only contracting to exist any of the following should be present
TEMIC AUTOMATIVE VS TEMIC
1. The contractor or subcontractor does not have substantial capital or investment which
relates to the job, work or service to be performed AND the employees recruited, supplied TEMIC- Principal
or placed by such contractor or subcontractor are performing activites which are directly
related to the main business of the principal OR
The principal would contract employees from independent service providers, and then after that
2. The contractor does not exercise the right of control of the perfroance of the work of the
the forwarders will hire another person.
contractual employee.

The union- exclusive bargaining agent of the petitioner rank and file employee
No it is not labor only contracting

Facts
LABOR
The petitioner is a corporation engaged in the manufacture of the electronic brake Therei s a difference between the forwarders employee and the rank and file
systems and comfort body electronics for automative vehicles. Respodnet Temic Automative employee. In the rank and file employee, they merely perform jobs such as typing and paper
Philippines Employees Union is the exclusive bargaining agent of the petitioners rank and file pushing activities and may be done on the same company products that the forwarder’s
employees. On May 6, 2005 the petitioner and the union executed a collective bargaining employees and company employees may work on. The regular company employees work for
agreement for the perio of January 1, 2005 to December 31, 2009. the company under its supervision and control, but the forwarder’s employee work for the
forwarder I the forwarder’s own operation tha it itself a contracted work form the company. The
The petitioner is composed of several departments one of which is the warehouse company controls its employers in the means, methods and results f their work in the same
department consisting of two warehouse. These warehouse are composed of four section, manner that the forwarder controls its own employees in the means, manner and results of
receiving section, raw material section, indirect warehouse and finished goods section. The their work. Complication and confusion result because the company at the same time controls
union members are regular rank and file employees that are working in these sections as the forwarder in the results of the latters work, without controlling however the means and
clerks, material handlers system encoders and general clerks. ‘ manner of the forawfere employee;s work. Tihsi interaction is best exampled by the adduced
evidence presented.
By practice, petitioner would contract out some of the work in the warehouse to
independent service providers. The regular employees of the petitioner and those of the At the time the CBA was signed the union had accepted the foearding arrangement , when it
forwarders share the same work area and to use the same equipment, tools and computers all signed the CBA with the company. Thereby the nion agreed again by irs silence that the jobs
belonging to the petitioner. related to the contracted forwarding activities are not regular company activities and are not
within the scope of the bargaining agreement. Thus,, the skills, requirements and job content
and bargaining unit kobs may be the same and they may even work on the same company
This outsourcing agreement gave rise to the union grievance on the issue of the scope
products but their wrorks are for different purpose of entity completey sdistinct from other
and coverage of the CBA. Specifically the issue is whether or not the functions of the
forwarder’s employees are the function performed by the regular employees of the rank and file
employees covered by the bargaiinig unit; The union thus demanded that the forwarder’s
employees be absorved into the petitioners regular employee force and be given positon within
the bargaining unit.

The petitioner on the other hand on the premise that the contracting arrangement with the SMART COMMUNICAITONS VS ASTOGRA
fowarders is a valid exercise of its management prerogative posited that the uninions position is
a violation of its management prerogative to detmerine who to hire and hat to contract out and Joint venture- the division of astorga, the company is to be reorganized by virtue of the joint
that the regular rank and file employee and their forwatrer’s employees do not have the same venture.
function. (the petitioner was arguing that the contracting out of the independent workers are
considered as a management prerogative) DOCTRINE

Issue: Whether or nor the contracting out is valid FACTS

Ruling Regina Astorga was employed by SMART as the district sales manager. Smart later
launched an organizational realignment in order to achieve a more efficient operation .This was
Yes. There is no evidence that the contracting agreement is a violation of Section 106 of made known to the employees, part of the reorgamziatino was an outsoruching of them
the labor code making the arrangement illegal.The forwarding arrangement has been I place arketing and sales force. Hence, SMART entered into a joint venture with NTTo f Japan and
since 1998 and no evidence has been presented showing that any regular employee has been formed SMART- NTT Multimeida. Since SNMI was formed to do the sales and marketing work,
dismissed or displaced by the forwarder’s employees ince then, No evidence likewise stands there is now abolishment of CSMG/FSD Astorga’s division.
before us showing that the outsourcing has resulted in a reduction of work hours or the splitting
of the bargaining unit effects that under the implementing rules of Article 106 of the Labor Code SNMI later agreed to absorb the CSMG personnel, however this was subjected to a
can make a contracting arrangement illegal. The other requiremenents of article 106 are not performance evaluation of CSMG personnel. In this case, Astorga ranked the last in the
material in tih cae. performance ranking hence, she was dismissed.
LABOR
Astorgas later filed a case of illegal dismissal, non-paynemnt of slaaires and other benefits Petitioner is a domestic corporation duly registered with the SEC and engaged in the
with prayer for moral and exemplary damages against Smart and Santiago. She claimed that in manufacturing, bottling and distributing of soft drink beverages and other allied products.
Abolishiong CSMG and consequently terminating her employment is illegal for it violated her
security of ternure She also argued that it was illegal for an employer like smart to contract Later, respondent field a case against the petitioner and interseve they alleged that they
outsourcing services which will displace the employees , escpecillay if the contractor is an are sales man assigned at the LARGO sales office of the petitioner. They have been employed
inhouse agency. Smart later argued that the dismissal of astorga was by virue of redundancy. by the petitioner for years, but where not regularized. Their employment was terminated on 08
April 2020 without due cause and due process.
ISSUE : Whether or not the reorganization of the organization of SMART is an honest effort to
make Smart sales and marketing more efficient and competitive Petitioner later filed a position paper, where it averred that the respondents were
employees f Interserve who were tasked to perform contracted service in accordance with the
RULING provision of the cotnracto f service between the petitioner and itnerserve. The said contract
between the petitioner and interserve constituted a legitimate job contracting given that the
YES. The move undertaken by SMART is for purpose other than its declared objective as latter was investment n the form of tools, equipment and machinery necessary in the conduct of
a labor and loss ssaving device, there was no fault on the part of smart in outsourcing. the business.

In this case, the dismissal of astorga is legal, but SMART failed to comply with the procedural Petitioner then asked for the dismissal of the same o the ground that it is engaged in the
requirement. As sated by the court, SMART failed to comply with the mandated one month legitimate job contracting . Petitioner presented evidence that the real employer was
notice prior to termination The record is clear that Astorgas received then toie of termination Interserve . 1. Articles of Incorpratino of Interserve. 2. Certoofcate pf Regsotratopn. 3. Itr.
only on March 16, 1993 or less than a month prior to April 3, 1996. Likewise the department of Cetificate thet itnerserve is a indepdnet job cotnractor
labor and employment was notified of the reducnancy program only on march 6, 1998. The
argument of SMART that the employees were already notified as early as February 1998 ISSUE
cannot prosper, because the law requires a written notice
RULING LABOR ONLY COTNRACTING
Smart failed to comply with the mandated one month notice prior to termination. The record is
clear that Astorga received the notice of termination only on March 16 or less than a month The law clearly establishes an employer- employee relationship between the principal employer and
prior to its effectivity. ( the law requires that the notice should be one month before the intended the contractor’s employee upon a finding that the contractor is engaged in labor-only contracting.
date thereof. There is labor-only contracting where: (1) the person supplying workers to an employee does not
have substantial capital or investment in the form of tools, equipment, machineries, work premises,
The dismissal is valid and for authorized caused even if the employer failed to comply with among others, and the (2) workers recruited and placed by such persons are performing activities
the notice requirement under Article 283 of the Labor Code, the court upheld the dismissal, but which are directly related to the principal business of such employer.
the employer are to be held liable for the non-compliance with the procedural requirements.
In this case, both indicators are present. First, although there is no absolute figure for what is
Coca Bottlers vs PAA considered a substantial capital, the court measures the same against the type of work which the
contractor obligated to perform for the principal. In this case, the Contract does not specify the work
or project to be performed by the respondents. Further, in Interserve’s Articles of Incorporation, its
Principal- COCA COLA
primary purpose is in the business of janitorial and allied services. Yet, the respondents were hired
as salesmen and leadman of Coke. 
INTERSERVE- AGENCY
The contractor, not the employee, has the burden of proof that it has the substantial capital,
EMPLOYEE- complainant investment, and tool to engage in job contracting. Having failed to establish the substantial capital of
Interserve, the Court will not presume that Interserve had sufficient investment in service vehicles
FACTS and equipment, especially since respondents’ allegation·that they were using equipment. Petitioner
failed to submit evidence to establish the service vehicles and equipment of Interserve valued at
P510,0000 and P200,000 respectively were sufficient to carry out its service with contract with the
petitioner. Petitioner did not show that the deliveries were undertaken byInterserve for the largo
LABOR
area, the type and number of equuipemnt necessary for such tasl, and the valuation of sch The LA rendered a decision dismissing the complaint for lack of employer-employee relationship.
equipment. Respondent bill collectors filed an appeal to the NLRC but the same was denied. Respondents filed
a petition for certiorari to the CA which reversed the decision of the NLRC. Petitioners filed a motion
for reconsideration but the same was denied. Hence, this petition.
• Manila Water v. Dalumpines, October 4, 2010 – JUNE
]Ung super principal dito si Manila Water. ( one of the two concessionaries) Issue:

Manila Water- principal, contrate the services of FCCI ( pero FCCI is an independent contractor) Is there employer-employee relationship between respondent bill collectors and petitioner Manila
Water?

FACTS:  

Petitioner Manila Water Company, Inc. (Manila Water) was one of two private concessionaires Ruling:
contracted by the MWSS to manage the water distribution system in the east zone of Metro Manila.
Yes.
Under the concession agreement, Manila Water undertook to absorb the regular employees of
MWSS listed by the latter effective August 1, 1997. Individual respondents, with the exception of Job contracting is permissible only if the following conditions are met:
Moises Zapatero (Zapatero) and Edgar Pamoraga (Pamoraga), were among the one hundred
twenty-one (121) employees not included in the list of employees to be absorbed by Manila Water.  
Nevertheless, Manila Water engaged their services without written contract from August 1, 1997 to
August 31, 1997. On September 1, 1997, individual respondents signed a three (3)-month contract [1] The contractor carries on an independent business and undertakes the contract work on his own
to perform collection services on commission basis for Manila Waters branches in the east zone. account under his own responsibility according to his own manner and method, free from the control
and direction of his employer or principal in all matters connected with the performance of the work
Before the expiration of the contract of services, the 121 bill collectors formed a corporation duly except as to the results thereof; and,
registered with the Securities and Exchange Commission (SEC) as the "Association Collectors
Group, Inc." (ACGI). ACGI was one of the entities engaged by Manila Water for its courier service. [2] The contractor has substantial capital or investment in the form of tools, equipment, machineries,
Manila Water entered into a service agreement with respondent First Classic Courier Services, Inc. work premises, and other materials which are necessary in the conduct of the business.
(FCCSI) also for its courier needs. The service agreements between Manila Water and FCCSI
covered the periods 1997 to 1999 and 2000 to 2002. FCCSI gave a deadline for the bill collectors  
who were members of ACGI to submit applications and letters of intent to transfer to FCCSI. The
individual respondents in this case were among the bill collectors who joined FCCSI and were hired Article 106 of the Code provides that there is labor-only contracting where the person supplying
effective December 1, 1997.( nagging part na ng FCCSI ung employees ng MWSS) workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and placed by
At first they contracted the help of courier service- acgi such person are performing activities which are directly related to the principal business of the
employer. In such cases, the person or intermediary shall be considered merely as an agent of the
Then after the same, they entered into a service agreement with First Classifc Courier Serivice for employer who shall be responsible to the workers in the same manner and to the same extent as if
its courier needs? the latter were directly employed by him.

On various dates between May and October 2002, individual respondents were terminated from  FCCIS- does not have substantial capital or investment to qualify as independent contractor ( THEY
employment. Manila Water no longer renewed its contract with FCCSI because it decided to ARE TO BE CONSIDERED AS LABOR ONLY CONTRACTOR)
implement a "collectorless" scheme whereby Manila Water customers would instead remit payments
through "Bayad Centers." Thus, aggrieved bill collectors individually filed complaints for illegal In the instant case, the CA found that FCCSI is a labor-only contractor. Based on the factual findings
dismissal, unfair labor practice, damages, and attorneys fees, with prayer for reinstatement and of the CA, FCCSI does not have substantial capital or investment to qualify as an independent
backwages against petitioner Manila Water and respondent FCCSI. contractor. FCCSI was incorporated on November 14, 1995, with an authorized capital stock

 
LABOR
ofP400,000.00, of which onlyP100,000.00 is actually paid-in. Going by the pronouncement in Pe, What will BMSI do?
such capitalization can hardly be considered substantial.
1. To Provide maintenance and repair service to LSC container vans, heavy equipment,
As correctly ruled by the CA, FCCSI’s capitalization may not be considered substantial considering trailer chassis and generator sets.
that it had close to a hundred collectors covering the east zone service area of Manila Water 2. They are to provide checkers to inspect all containers received for unloading and loading
customers. The allegation in the position paper of FCCSI that it serves other companies’ courier of the vessel.
needs does not "cure" the fact that it has insufficient capitalization to qualify as independent
contractor. Neither did FCCSI prove its allegation by substantial evidence other than by their self- What will LSC ( Principal) do
serving declarations. What is evident is that it was Manila Water that provided the equipment and
service vehicles needed in the performance of the contracted service, even if the contract between 1. Lease of the equipment, tools and tractors to BMSI
FCCSI and Manila Water stated that it was the Contractor which shall furnish at its own expense all 2. The period of the lease was co terminous with the agreement.
materials, tools, and equipment needed to perform the tasks of collectors.
Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the
Based on the four-fold test of employer-employee relationship, Manila Water emerges as the shipping industry; it owns several equipment necessary for its business. LSC entered into an
employer of respondent collectors. The elements to determine the existence of an employment Agreement with Best Manpower Services, Inc. (BMSI). Under the Agreement, BMSI undertook to
relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) provide maintenance and repair services to LSCs container vans, heavy equipment, trailer chassis,
the power of dismissal; and (d) the employer's power to control the employee's conduct. The most and generator sets. BMSI further undertook to provide checkers to inspect all containers received
important of these elements is the employer's control of the employee's conduct, not only as to the for loading to and/or unloading from its vessels. Simultaneous with the execution of the Agreement,
result of the work to be done, but also as to the means and methods to accomplish it. LSC leased its equipment, tools, and tractors to BMSI. The period of lease was coterminous with the
Agreement.
It should be remembered that the control test merely calls for the existence of the right to control,
and not necessarily the exercise thereof. It is not essential that the employer actually supervises the BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men,
performance of duties of the employee. It is enough that the former has a right to wield the power. clerks, forklift operators, motor pool and machine shop workers, technicians, trailer drivers, and
mechanics. Years later, LSC entered into another contract with BMSI, this time, a service contract.
Respondent bill collectors are, therefore, employees of petitioner Manila Water. It cannot be denied
that the tasks performed by respondent bill collectors are directly related to the principal business or In September 2003, petitioners filed with the Labor Arbiter a complaint for regularization against
trade of Manila Water. Payments made by the subscribers are the lifeblood of the company, and the LSC and BMSI. LSC terminated the Agreement. Consequently, petitioners lost their employment.
respondent bill collectors are the ones who collect these payments.
LA dismissed the complaint finding that petitioners were employees of BMSI. It was BMSI which
The primary standard of determining regular employment is the reasonable connection between the hired petitioners, paid their wages, and exercised control over them. On appeal, NLRC reversed the
particular activity performed by the employee in relation to the usual business or trade of the decision. The CA reversed the NLRC ruling holding the BMSI is an independent contractor.
employer. In this case, the connection is obvious when we consider the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. Finally, the Issue:
repeated and continuing need for the performance of the job is sufficient evidence of the necessity,
if not indispensability of the activity to the business.  Whether or not BMSI was engaged in labor-only contracting only.

• Ruling:

They are engage in labor job contracting

Babas v. Lorenzo Shipping, December 15, 2010 -JUNE
De Los Santos v. NLRC instructed us that the character of the business, i.e., whether as labor-only
1. LSC- Principal contractor or as job contractor, should e measured in terms of, and determined by, the criteria set by
2. Best Manpowder ( BMSI)- agent statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract
the character of their business.
Facts:
LABOR
Thus, in distinguishing between prohibited labor-only contracting and permissible job contracting, Lastly, as found by the NLRC, BMSI had no other client except for LSC, and neither BMSI nor LSC
the totality of the facts and the surrounding circumstances of the case are to be considered. refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor.

Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor  Indubitably, BMSI can only be classified as a labor-only contractor. Consequently, the workers that
merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In BMSI supplied to LSC became regular employees of the latter. Having gained regular status,
labor-only contracting, the following elements are present: (a) the contractor or subcontractor does petitioners were entitled to security of tenure and could only be dismissed for just or authorized
not have substantial capital or investment to actually perform the job, work, or service under its own causes and after they had been accorded due process.
account and responsibility; and (b) the employees recruited, supplied, or placed by such contractor
or subcontractor perform activities which are directly related to the main business of the principal. Petitioners lost their employment when LSC terminated its Agreement with BMSI. However, the
termination of LSC’s Agreement with BMSI cannot be considered a just or an authorized cause for
On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby petitioners’ dismissal.
a principal agrees to put out or farm out with the contractor or subcontractor the performance or
completion of a specific job, work, or service within a definite or predetermined period, regardless of Herein petitioners, having been unjustly dismissed from work, are entitled to reinstatement without
whether such job, work, or service is to be performed or completed within or outside the premises of loss of seniority rights and other privileges and to full back wages, inclusive of allowances, and to
the principal. other benefits or their monetary equivalents computed from the time compensation was withheld up
to the time of actual reinstatement. Their earnings elsewhere during the periods of their illegal
A person is considered engaged in legitimate job contracting or subcontracting if the following dismissal shall not be deducted therefrom.
conditions concur:

  Teng vs Pahagac

(a) The contractor carries on a distinct and independent business and undertakes the contract work Teng- principal
on his account under his own responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected with the performance of his Maestro-
work except as to the results thereof;
Facts
(b) The contractor has substantial capital or investment; and
Teng Fish Trading engaged in a deep sea fishing and for this purpose, owns boars,
(c) The agreement between the principal and the contractor or subcontractor assures the equipmements and other fishing paraphernalia. As the owner of the business, Teng claims that he
contractual employees' entitlement to all labor and occupational safety and health standards, free customarily entered into a joint venture agreements with master fisherman ( maestro) who are
exercise of the right to self-organization, security of tenure, and social welfare benefits.22 skilled and are experts in deep sea fishing ,they then take charge of the management of each
fishing venture. Teng argues that the maestro that he hired was the one who hired the respondent
 Given the above standards, we sustain the petitioners’ contention that BMSI is engaged in labor- as checkers to determine the volume of the dishes caught, his role was merely limited to provision of
only contracting. the necessary capital, toos and equipment consisting of basing , gears, fuel and food and other
supplies.
 First, petitioners worked at LSC’s premises, and nowhere else. Other than the provisions of the
Agreement, there was no showing that it was BMSI which established petitioners’ working Later, respodnet filed a case of illegal dismissal against Albert Teng Fishing, Teng and
procedure and methods, which supervised petitioners in their work, or which evaluated the same. Chua before the NCMB in Zambanga. They argued that teng hired them without any written
There was absolute lack of evidence that BMSI( the contractor exercised control over them or their employment to serve as his eyes and ears abroad the fishing boat and to classify the fish caught by
work, except for the fact that petitioners were hired by BMSI. banera to report to teng via radio communication the classes and volume of each catch and to
receive instruction from him as to where and when to unload the catch
Second, LSC was unable to present proof that BMSI had substantial capital. The record before us is
bereft of any proof pertaining to the contractor’s capitalization, nor to its investment in tools, They asserted that sometime in 2002, Teng expressed his doubts on the correct volume
equipment, or implements actually used in the performance or completion of the job, work, or of the fish caught in every fishing voyage, hence Teng later dismissed them.
service that it was contracted to render. What is clear was that the equipment used by BMSI were
owned by, and merely rented from, LSC.
LABOR
Issue: Whether or not there exist an employee employer relationship between Teng and the 1996, DARBMUPCO entered into a Banana Production and Purchase Agreement ("BPPA") with
employee. DFI. Under the BPPA, DARBMUPCO and its members as owners of the awarded plantation, agreed
to grow and cultivate only high grade quality exportable bananas to be sold exclusively to DPI .
Ruling Effective for 10 years.
Supplemental to Memorandum Agreement" ("SMA"). DFI shall take care of the labor cost arising
YES. They were paid regular wages on a regular basis in addition to their shares I the fish from the packaging operation, cable maintenance, irrigation pump and irrigation maintenance that
caught. The worksheet showed that the respondent workers received uniform amounts within a the workers of DARBMUPCO shall conduct for DFI's account under the BPPA.
given year, until they were terminated. More importantly , the element of control is present, there is a From the start, DARBMUPCO was hampered by lack of manpower to undertake the agricultural
strong indicator of employer, employee relationship. operation under the BPPA because some of its members were not willing to work.
DFI, hired the Southern Philippines Federation of Labor ("SPFL")—a legitimate labor organization
Teng is the employer because with a local chapter in the awarded plantation.
SPFL(respondent contractor):filed a petition for certification election in the Office of the Med-Arbiter
1. Teng not only owned the tools and equipment in Davao City SPFL filed the petition on behalf of some 400 workers (the respondent-workers in this
2. He directed the respondent to perform their jobs as checker petition) "jointly employed by DFI and DARBMUPCO" working in the awarded plantation.
3. They acted as eyes and ears of the respondent MA(med-arbiter) 1997: granted the petition for certification election. And declared that
4. Their main task were to classify the fish caught and resport the number of to teng, they DARBMUPCO was the employer of the respondent-workers. The Order stated that "whether the
are to pefrom task which are necessary to the business said workers/employees were hired by independent contractors is of no moment. What is material is
that they were hired purposely to work on the 689.88 hectares banana plantation [the awarded
  plantation] now owned and operated by DARBMUPCO."
• Diamond Farms v. Farms Agrarian Reform Beneficiaries Multi-purpose Cooperative, January 13, Secretary of Labor and Employment (SOLE) 1997: Modified that DFI, through its manager and
2016 – personnel, supervised and directed the performance of the work of the respondent-contractors.
Facts : Thus declared DFI as the employer of the respondent-workers.
DFI owns an 800 hectare of banana plant in Davao, hence by virtue of RA 6657 or the CA 2006: Affirmed SOLE, that DFI is the statutory employer.
CARL commercial farms are to be subject to compulsory acquisition and distribution. DAR granted DFI admitted that the respondent-contractors worked under the direction and supervision of DFI's
DFI a deferment privilege to continue agricultural operation til 1998. However, due to adverse managers and personnel. DFI also paid for the respondent-contractors' services. The CA said that
business lossess, DFI closed some areas of some operation and laid off the employees. the fact that the respondent-workers worked in the land owned by DARBMUPCO is immaterial.
These employees petitioned to the DAR for the cancellation of DFI deferment prvileges "Ownership of the land is not one of the four (4) elements generally considered to establish
resuting in the original plantation automatic compulsory acquisition and distribution under CARL. employer-employee relationship." -
“(a) the selection and engagement of the employee;
   
➔     DFI (petitioner-employer) owned 800 hectares, banana plantation in Davao. (b) the payment of wages;
 
➔     DAR- Compulsory Acquisition of Farmers according to CARL RA. 6657
(c) the power of dismissal; and
➔     DFI asked for deferment, granted by DAR, during deferment DFI ceased operations and  
layed-off beneficiaries. (d) the employer's power to control the employee with respect to the means and methods by which
➔     The beneficiaries petitioned the cancellation of deferment, granted by DAR Regional the work is to be accomplished.”
Director. Ordered the compulsory acquisition.  
➔     DFI appealed, saying that they would voluntarily offer to sell. Accepted by DAR- 690 hec ISSUE: W/N DFI the employer of respondent-workers (SPFL), w/n SPFL a LOC.(Labor Only
to beneficiaries and remaining to DFI. Contractor.
➔     Due to lack of manpower of DFI & DARBMUPCO (multi-purpose cooperative/ awardee of  
land, and they could not meet the quota of the BPPA), DFI hired Southern Philippines SC 2016: Yes, DFI is the employer of the contractor SPFL. Yes SPFL is a LOC. Thus DFI is Liable
Federation of Labor(SPFL). and the SPFL is merely an agent of DFI.
➔   SPFL Employees, started to file labor disputes against both, DFI and DARBMUPCO for;  
underpayment of wages, nonpayment of 13th month pay and service incentive leave pay Under Article 106 of the Labor Code, a principal or employer refers to the person who enters into an
and attorney's fees etc. agreement with a job contractor, either for the performance of a specified work or for the supply of
manpower.
LABOR
  Does not have substantial capital or investment in the form of tools, equipment,
In contrast, job contracting shall be deemed as labor-only contracting, an arrangement prohibited by machinjob contracting shall be deemed as labor-only contracting, an
law, if a person who undertakes to supply workers to an employer: arrangement prohibited by law, if a person who undertakes to supply workers to
an employer:
 
(1 Does not have substantial capital or investment in the form of tools, equipment,
(1)Does not have substantial capital or investment in the form of tools, equipment,
) machineries, work premises and other materials; and
machineries, work premises and other materials; and
 
  (2)The workers recruited and placed by such person are performing activities which are
directly related to the principal business or operations of the employer in which workers
are habitually employed.
(2 The workers recruited and placed by such person are performing activities which are
) directly related to the principal business or operations of the employer in which workers are
habitually employed.75 Manila Memorial Park Cemetery v. Luiz, February 3, 2016 - JOSH
 
➔ 2006, petitioner Manila Memorial Park Cemetery, Inc. (petitioner-employer) entered into a
Contract of Services with respondent Ward Trading and Services (contractor).
As a general rule, a contractor is presumed to be a labor-only contractor, unless such contractor
overcomes the burden of proving that it has the substantial capital, investment, tools and the like. ➔ The Contract of Services provided that Ward Trading, as an independent contractor, will
  render interment and exhumation services and other related work to Manila Memorial in
Based on the conditions for permissible job contracting, we rule that respondent-contractors are order to supplement operations at Manila Memorial Park, Paranaque City.
labor-only contractors. ➔ Lluz et al(respondent). employed by Ward Trading, worked six days a week for eight
There is no evidence showing that respondent-contractors are independent contractors. The hours daily and were paid P250 per day. ( the contractor Ward then hired the respondent
respondent-contractors, DFI, and DARBMUPCO did not offer any proof that respondent-contractors LLUZ)
were not engaged in labor-only contracting.
 Inasmuch as it is the law that forms the employment ties, the stipulation in the BPPA that  
respondent-workers are not employees of DFI is not controlling, as the proven facts show otherwise. Respondents 2007: filed a Complaint for regularization and Collective Bargaining Agreement
The law prevails over the stipulations of the parties. Thus, in Tabas v. California Manufacturing Co., benefits against Manila Memorial filed an amended complaint to include illegal dismissal,
Inc.,104 we held that: underpayment of 13th month pay, and payment of attorney's fees.
The existence of an employer-employees relation is a question of law and being  
such, it cannot be made the subject of agreement. Petitioner: Manila Memorial refused the request since respondents were employed by Ward
  Trading, an independent labor contractor. Thereafter, respondents joined the MMP Union. The MMP
DOCTRINES: Union, on behalf of respondents, sought their regularization which Manila Memorial again declined.
●        As a general rule, a contractor is presumed to be a labor-only contractor, unless such Respondents then filed the complaint. Subsequently, respondents were dismissed by Manila
contractor overcomes the burden of proving that it has the substantial capital, investment, Memorial. Thus, respondents amended the complaint to include the prayer for their reinstatement
tools and the like. and payment of back wages.
   
●        Tabas v. California Manufacturing Co., Inc., we held that: ISSUE: W/N Ward Trade, a Labor Only Contractor (LOC)
The existence of an employer-employees relation is a question of law and being  SC 2013: Affirmed CA, denied petition. Yes Ward is a LOC. Ordered Manila Memorial to pay
such, it cannot be made the subject of agreement. (In this case the backwages and benefits as respondents are there regular
("BPPA")Banana Production and Purchase Agreement not controlling)
  Manila Memorial entered into a contact of service with Ward trading, a single
●        Job contracting shall be deemed as labor-only contracting, an arrangement prohibited by proprietorship owned by Mayor Wad. In the contract of service it provided that Ward trading as the
law, if a person who undertakes to supply workers to an employer: contractor had adequate workers and substantial capital or investment in the forms of tools,
  equipment and machinery and work premises and other materials among others which were
necessary for the conduct of the business.
LABOR
However, looking at the contract of service, it revealed the WARD trading does not have ISSUE: W/N (1) Whether or not an ER-EE relationship exists between the petitioners and
substantial capital or investment in the form of tools, equipment and machinery and work premises respondent.
and other materials since it is in Manila Memorial which owns the equipment used in the (2) Whether the manpower agencies are labor-only contractors.
performance of work needed for interment and exhumation service. HELD: YES.YES.CA decision set aside.
 RATIO: The Court held that petitioners still enjoyed an ER-EE"
"The Court held that petitioners still enjoyed an ER-EE relationship with respondent since becoming
Though there was an alleged sale which Manila Memorial sold to WARD an equipment employees of manpower agencies.
worth 1.4 million , there was no proof that this sale actually took place. The company reserves the To determine whether an employment should be considered regular or casual, the applicable test is
right to rent all or any of the contractors equipment in the event the company requires the use of the the reasonable connection between the particular activity performed by the employee in relation to
said equipment. In this case, WARD does not have absolute right to use the subject equipment the usual business or trade of the employer.
since his right is subject to MCPI use.  
It has been established in jurisprudence that Route Helpers are regular employees of respondent.
As to the power of control, records show that Manila Mmeorial and Enrique Lagdameo The repeated rehiring of respondent workers and the continuing need for their services clearly attest
admitted that various intermittent service at Sucat, which were directly related to Manila Mmeorial to the necessity or desirability of their services in the regular conduct of the business or trade of
business of developing, selling and maintaining memorial parks and interment function. Manila petitioner company.
memorial even retained the right to control the performance of the work of the employees. ( they  Furthermore, it has already been established in jurisprudence that the manpower services were a
were performing activities which are directly related to the principal business of the corporation) labor-only contractor since the work performed by the “supplied” employees were indispensable to
the principal business of respondent. In fact, the manpower agencies were found to not have
The registration of the contractors and subcontractors shall be necessary for the purpose substantial capital or investment or tool to engage in job contracting.
of establishing an effective labor market information and monitoring. Failure to register shall give There was also no substantial capital, the petitioner failed to submit evidence to establish
rise to the presumption that the contractor is engaged in labor only contractimg. In this case, WARD that the service vehicles and equipment of interserve valued at P510,000 and P200,000 respectively
business documents fell short of sound business practice reveal that they failed to register the sam were sufficient to carry out its service contract with the petitioner.
Also , even though the court issued interserve a certificate that it is a legitimate job
• Quintanar v. Coca Cola Bottlers Philippines, June 28, 2016 -JOSH contractor, that still cannot turn it into one. As stated, the principal purpose in the articles of
incorporation of intersere is to provide janitorial service , the delivery and distribution to coca-cola
FACTS : assigned to the petitioner is no way allied to janitorial service. While the DOLE may have found that
Complainants allege that they are former employees directly hired by COCA-COLA on the capital and investment of INTERSERVE are sufficient for an independent contractor for janitorial
different days assigned as regular route helpers under the direct supervision of the Route Sales serbice, this does not mean that it is sufficient ot maintain an indepdent contracting business for the
Survivors. Their duties consist of distributing coca-cola products to the store and custmers in their distribution of coca-cola products. ( yes, the capital is sufficnet, but it is not sufficient to maintain an
assigned routes and were paid salaries and commission. independent contracting busiess)
After working for a while, they were transferred as agency workers to the following The possession of the element of substantial is only one of the element, labor only
manpower agency. Complainants later allege that dole conducted inspection of Coca-cola to contracting exist when any of the two elements are present. ( hence, even though Interserve did
determine whether It is complying with various labor standards, the complainants are later have substantial capital, it Is not enough to make it legitimate, because it cannot be denied that the
determined to be the regular employees of Coca-cola. When coca -cola learned of the filing of the petitoners are performing activites which are directly related to the principal activities of the business
complaint they dismissed the settlement allegedly did not include issues on reinstatement and )
payment of CBA benefits. They then filed an illegal dismissal case against coca-cola alleging that There was also a failure to register the same as a contractor, hence there is a
they are directly hired by respondent coca-cola as route helpers.   presumption that arises that one is engaged in a labor only contracinhg unless the contractor
overcomes the burden of proving that it has substantial capital, investment, tools equipment and
like.
Coca- cola later alleged that there is no employee employer relationship with the  
complainant pointing to respondent Interserve with whom it has a service agreement as the Finally, the Court determined the existence of an ER-EE relationship between the parties since the
complainants employer. As alleged independent service contractor of coca-cola, respondent contract of service between the respondent and the manpower services showed that the former
interserve is engaged in the business of rendereing substitute or reliever delivery service to its own indeed exercised the power of control over the complainants therein. "
clients and for CCBP in particular the delivery of CCBPI softdrinks and beverage products. ( hence • Nestle Philippines, Inc. v. Puedan, Jr., January 20, 2017 -JOSH
COCA COCA alleged that it is only concerned with the result of the contract)  Facts:
 
LABOR
1. Respondent alleged that on Various dates, OODSI and Nestle hired them to sell does its distributionsrihp agreement.
various NPI products in the assigned covered area. After some time, respondent ---------- independent contractor---
demanded thay they should be considered as regular employees of Nestle, but they
were directed to sign contracts with ODSI instead. When Respodents did not want to JOSE Y SONZA VS ABS-CBN
comply with the directives, NPI and ODSI terminated them, they then filed a
complained arguing that ODSI is a labor only contracting and thus they should be JOSE SONZA VS ABS-CBN
treated as regular employees of NPI and there was no authorized cause for their FACTS
dismissal.          ABS-CBN signed an agreement with Mel and Jay Management and Development
2. ODSI averred that iti s a company engage in the business of buying, selling , Corporation ( MJMDC). MJMDC was represented by Jose Sonza( President)and Mel Tiangco.
distributing and marketing of goods and commodities of every kind, according to MJMDC was referred to as an agent to provide Sonza’s services exclusively to ABS-CBN as talent
ODSI it hired the respondent as its employees and assigned them to execute the for radio and television. On April 1, 1996 Sonza as President and General Manager wrote a letter to
distributorship agreement it entered with NPI. Hence, a distribution agreement ABS-CBN, stating that Mr Jay Sonza is to irrevocably resign in view of the recent events that
between ODSI and NPI was entered into. happened. Sonza stated that he is waiving and renouncing recovery of the remaining amount
stipulated in paragraph 7 of the agreement but reserves the right to seek recovery of the other
benefits in the agreement.
         Sonza later filed a complaint against ABS-CBN before the DOLE alleging that the later did
The relationship between NPI and ODSI turned sour, when the formers sales department not pay his salaries, separation pay, service incentive pay, 13 th month pay, signing bonus, travel
badgered ODSI regarding sales target. Hence, NPI downsized its marketing and allowances and amounts due under the Employees stock plan. ABS-CBN later field a motion to
promotional support from ODS which resulted to business reverses and in the latters filing dismiss on the ground that there was no employee relationship between them and Sonza. Sonza
of a petition for corporate rehabilitation and subsequently the closure of Nestle unit due to was arguing that there has been a prevailing practice in television and broadcast industry to treat
the termination of distribution agreement. ODSI argued that there was no termination, talents like SONZA as independent contractors. Both the labor arbiter and NLRC ruled that there
what happened is that they just place the respondent as floating status. has been no employee-employer relationship between SONZA and ABS-CBN.
Issues
ISSUE : WN labor only contracting ODSI
1.     Whether employee-employer relationship exist between SONZA and ABS-CBN
Held: (no because there is no labor only contracting) 2.     Whether there is labor only contracting in this case.

No. As stipulated in the agreement, NPI agreed to sell its products ODSI at discounted Ruling
prices which in turn will be resold to identified customers ensuring in the process the integrity and
quality of the products as agreed by the parties. 1.     NO. Sonza is not an employee of ABS-CBN he is an independent contractor. As provided
under the labor code, these elements are to determine whether employee employer
As said by NPI, the goods it manufactures are distributed to the market through various relationship exist.
distributors, therefore reselling activities allegedly performed by the respondent property pertain to
the ODSI whose principal business pertains to the buying ,selling distributing and marketing goods a.     The selection and engagement of the employee
and commodities of every kind. b.     The payment of the wages
c.     Power of dismissal
d.     And the employer’s power to control the employee on the means, and methods which
the work is to be accomplished- most important.
The imposition of the minimum standards by nestle does not constitute as a control
A.    Selection and Engagement of Employee- NONE
The imposition of minimum standards concerning sales, marketing, finance and In this case, the selection of SONZA was because of his unique skills, talent and celebrity
operations is nothing more than an exercise of sound business practice to increase sales and status not possessed by ordinary employees, is a circumstance indicative of employee
maximize profits for the benefits of both steelcase and its istirbutiors. For as long as these employer relationship. If Sonza would not have possessed such qualification, ABS-CBN
requirements do not impinge on the distributors independence, then there is nothing wrong with would not have entered into an agreement with SONZA.
placing reasonable expectation. Hence, NPI was only right when it imposed a condition on ODSI
these means and methods do not constitute the control over the means, and methods o how ODSI
LABOR
In any event, the method of selecting and engaging SONZA does not conclusively SONZA claims that ABS-CBN’s power not to broadcast his shows proves ABS-CBN’s power over
determine his status. We must consider all the circumstances of the relationship , with the the means and methods of the performance of his work. Although ABS-CBN did have the option not
control test being the most important element. to broadcast SONZA’s show, ABS-CBN was still obligated to pay SONZA’s talent fees... Thus, even
B.    Payment of Wages- YES PAID, BUT THEY HAVE NO CHOICE BECAUSE CONTRACT if ABS-CBN was completely dissatisfied with the means and methods of SONZA’s performance of
STATES  his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even
discipline SONZA. All that ABS-CBN could do is not to broadcast SONZA’s show but ABS-CBN
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to must still pay his talent fees in full. 35
MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of ABS- Clearly, ABS-CBN’s right not to broadcast SONZA’s show, burdened as it was by the obligation to
CBN. SONZA also points out that ABS-CBN granted him benefits and privileges "which he would continue paying in full SONZA’s talent fees, did not amount to control over the means and methods
not have enjoyed if he were truly the subject of a valid job contract." of the performance of SONZA’s work. ABS-CBN could not terminate or discipline SONZA even if the
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the means and methods of performance of his work - how he delivered his lines and appeared on
Agreement. If SONZA were ABS-CBN’s employee, there would be no need for the parties to television - did not meet ABS-CBN’s approval. This proves that ABS-CBN’s control was limited only
stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay" 20 which the law to the result of SONZA’s work, whether to broadcast the final product or not. In either case, ABS-
automatically incorporates into every employer-employee contract. 21 Whatever benefits SONZA CBN must still pay SONZA’s talent fees in full until the expiry of the Agreement.
enjoyed arose from contract and not because of an employer-employee relationship. 22
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA further contends that ABS-CBN exercised control over his work by supplying all
SONZA as an independent contractor. The parties expressly agreed on such mode of payment. equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to
Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over broadcast the "Mel & Jay" programs. However, the equipment, crew and airtime are not the "tools
any talent fee accruing under the Agreement. and instrumentalities" SONZA needed to perform his job. What SONZA principally needed were his
C. Power of Dismissal talent or skills and the costumes necessary for his appearance.38 Even though ABS-CBN provided
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA with the place of work and the necessary equipment, SONZA was still an independent
SONZA failed to show that ABS-CBN could terminate his services on grounds other than breach of contractor since ABS-CBN did not supervise and control his work. ABS-CBN’s sole concern was for
contract, such as retrenchment to prevent losses as provided under labor laws. 23 SONZA to display his talent during the airing of the programs. 39
              
ABS-CBN could not terminate SONZA even though it suffered business losses it is still obligated to The KBP code which Sonza was arguing that he is covered with applies to broadcasters,
pay Sonza’s talent fee during the life of the agreement, This then indicates contractual relationship, not to employees of radio and television stations. Broadcasters are not necessarily employees of the
radio and tv stations. Hence the rules and standards of the performance referred to in the
C.    Power of Control agremenet are only applicable to ABS-CBN emplyoees and besides, these rules are just to serve as
Sonza is not an employee , but an independent contractor . The control test is the most guidelines towards the achievement of desired results and not means method to control
important test our courts apply to distinguish employee employer relationship. Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of
control which ABS-CBN exercised over him.
. ABS-CBN engaged SONZA’s services specifically to co-host the "Mel & Jay" programs. ABS-CBN This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an
did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively
talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control.
ABS-CBN’s control. SONZA did not have to render eight hours of work per day. The Agreement MJMDC as Agent of SONZA: not a job contractor, nor labor only contractor,because they are to be
required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post- considered as Independent cotnractors.
production staff meetings.31 ABS-CBN could not dictate the contents of SONZA’s script. However, Not 106, they are not a job contractor nor a labor only contractor because they are to be considered
the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. 32 The clear as indepdent contractor.LABOR CODE WILL NOT APPLY IF NOT INDEPENDENT CONTRACTOR
implication is that SONZA had a free hand on what to say or discuss in his shows provided he did 2:  SONZA insists that MJMDC is a "labor-only" contractor and ABS-CBN is his employer.
not attack ABS-CBN or its interests. In a labor-only contract, there are three parties involved: (1) the "labor-only" contractor; (2) the
ABS-CBN was not involved in the actual performance that produced the finished product employee who is ostensibly under the employ of the "labor-only" contractor; and (3) the principal
of SONZA’s work.33 ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely who is deemed the real employer. Under this scheme, the "labor-only" contractor is the agent of the
reserved the right to modify the program format and airtime schedule "for more effective principal. The law makes the principal responsible to the employees of the "labor-only contractor" as
programming."34 ABS-CBN’s sole concern was the quality of the shows and their standing in the if the principal itself directly hired or employed the employees. 48 These circumstances are not
ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of present in this case.
SONZA’s work. There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-
CBN. MJMDC merely acted as SONZA’s agent. The Agreement expressly states that MJMDC acted
LABOR
as the "AGENT" of SONZA. The records do not show that MJMDC acted as ABS-CBN’s agent. operation and maintenance of the system not covered by the O & M agreement, LRTA undertook to
MJMDC, which stands for Mel and Jay Management and Development Corporation, is a corporation reimburse MTOI such operating expenses and advances to the revolving fund.. LRTA  is to
organized and owned by SONZA and TIANGCO. The President and General Manager of MJMDC is reimburse expenses that were not covered by the O and M agreement,
SONZA himself.
It is absurd to hold that MJMDC, which is owned, controlled, headed and managed by "Operating expenses" included "all salaries, wages and fringe benefits (both direct and
SONZA, acted as agent of ABS-CBN in entering into the Agreement with SONZA, who himself is indirect) up to the rank of manager, and a lump sum amount to be determined annually as top
represented by MJMDC. That would make MJMDC the agent of both ABS-CBN and SONZA. management compensation (above the rank of manager up to president), subject to consultation
with the LRTA." MTOI hired the necessary employees for its operations and forged collective
As SONZA admits, MJMDC is a management company devoted exclusively to managing the bargaining agreements (CBAs) with the employees' unions, with the LRTA's approval.
careers of SONZA and his broadcast partner, TIANGCO. MJMDC is not engaged in any other
business, not even job contracting. MJMDC does not have any other function apart from acting as On June 9, 1989, the Manila Electric Company, who owned 499,990 of MTOI shares of
agent of SONZA or TIANGCO to promote their careers in the broadcast and television industry. 49 stocks, sold said shares to the LRTA. Consequently, MTOI became a wholly owned subsidiary of
Talents as Independent Contractors LRTA. MTOI changed its corporate name to Metro Transit Organization, Inc. (METRO), but
         Yes. They are to be considered Independent contractors. To hold that every person who maintained its distinct and separate personality. LRTA and METRO renewed the O & M agreement
renders services to another for a fee is an employee to give meaning to the security of tenure clause upon its expiration on June 8, 1994, extended on a month-to-month basis.
- will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer their services as On July 25, 2000, the Pinag-isang Lakas ng Manggagawa sa METRO, INC. , the rank-and-
independent contractors. The right to life and livelihood guarantees this freedom to contract as file union at METRO, staged an illegal strike over a bargaining deadlock, paralyzing the operations
independent contractors. The right of labor to security of tenure cannot operate to deprive an of the light rail transport system. On July 28, 2000, the LRTA Board of Directors issued Resolution
individual, possessed with special skills, expertise and talent, of his right to contract as an No. 00-446 where LRTA agreed to shoulder METRO'S operating expenses for a maximum of two
independent contractor. An individual like an artist or talent has a right to render his services without months counted from August 1, 2000. It also updated the Employee Retirement Fund.Because of
any one controlling the means and methods by which he performs his art or craft.  the strike, LRTA no longer renewed the O & M agreement when it expired on July 31, 2000,
  resulting in the cessation of METRO'S operations and the termination of employment of its
LRTA VS MENDOZA ET AL  workforce, including the respondents Romulo Mendoza, Francisco Mercado, Roberto Reyes,
doctrine :  Edgardo Cristobal, Jr., and Rodolfo Roman.

Under Article 107 of the Labor Code, an indirect employer is "any person, partnership, On April 1, 2001, the METRO Board of Directors authorized the payment of 50 % of the
association or corporation which, not being an employer, contracts with an independent contractor dismissed employees' separation pay, to be sourced from the retirement fund. In May 2001,
for the performance of any work, task, job or project ."On the other hand, Article 109 on solidary respondents received one half (1/2) of their separation pay. Dissatisfied, they demanded from LRTA
liability, mandates that x x x "every employer or indirect employer shall be held responsible with his payment of the 50% balance of their separation pay, but LRTA rejected the demand, prompting
contractor or subcontractor for any violation of any provisions of this Code. For purposes of them to file on August 31, 2004, a formal complaint, 7 before the labor arbiter, against LRTA and
determining the extent of their civil liability under this Chapter, they shall be considered as direct METRO.
employers."
LRTA moved to dismiss the complaint on grounds of absence of employer-employee relationship
Department Order No. 18-02, s. 2002, the rules implementing Articles 106 to 109 of the with the respondents, lack of jurisdiction and of merit, and prescription of action
Labor Code, provides in its Section 19 that " the principal shall also be solidarity liable in case the
contract between the principal is preterminated for reasons not attributable to the contractor or ISSUE : Whether LRTA is entitled to pay the respondent the balance of 50% of their separation pay
subcontractor."
Ruling: 
The Light Rail Transit Authority (LRTA) is a government-owned and -controlled Yes. LRT is obligated to pay for the retirement or severance pay of the METRO
corporation created under Executive Order No. 603 for the construction, operation, maintenance, employees as a part of the operating expense. Since the agreement mentions “ operating expense”
and/or lease of light rail transit systems in the Philippines. covers retirement funds. The promulgation of RESO NO 0044 was specifically made to pay the
employees. The clear language of Resolution No.00-44, to our mind, established the LRTA's
To carry out its mandate, LRTA entered into a ten-year operations and management ( O & obligation for the 50% unpaid balance of the respondents' separation pay. Without doubt, it bound
M) agreement4 with the Meralco Transit Organization, Inc. ( MTOI) from June 8, 1984, to June 8, itself to provide the necessary funding to METRO'S Employee Retirement Fund to fully compensate
1994, for an annual fee of P5,000,000.00. Subject to specified conditions, and in connection with the
LABOR
the employees who had been involuntary retired by the cessation of operations of METRO. This is
not at all surprising considering that METRO was a wholly owned subsidiary of the LRTA.

MAIN DOCTRINE 
The court also ruled that even if LRTA did not obligate itself to pay for the separation
benefits, it still cannot avoid liability. They are still to be considered solidarity liable as an indirect
employer under the law for the respondents' separation pay. This liability arises from the O & M
agreement it had with METRO, which created a principal-job contractor relationship between them,
an arrangement it admitted when it argued before the CA that METRO was an independent job
contractor40 who, it insinuated, should be solely responsible for the respondents' claim.

Under Article 107 of the Labor Code, an indirect employer is "any person, partnership,
association or corporation which, not being an employer, contracts with an independent contractor Kinds of Employee
for the performance of any work, task, job or project ."On the other hand, Article 109 on solidary
liability, mandates that x x x "every employer or indirect employer shall be held responsible with his 1. Regular employees- those whose work is usually necessary and desirable to the usual
contractor or subcontractor for any violation of any provisions of this Code. For purposes of trade or business of the employer
determining the extent of their civil liability under this Chapter, they shall be considered as direct 2. Project employee- employment is based on a specific undertaking the completion and
employers." termination is determined at the time the employee was engaged or work or service to be
performed is seasonal in nature and the employment is for the duration of season
Department Order No. 18-02, s. 2002, the rules implementing Articles 106 to 109 of the 3. Casual- those who are neither project or regular
Labor Code, provides in its Section 19 that " the principal shall also be solidarity liable in case the 4. Fixed Term - Jurisprudence
contract between the principal is pre terminated for reasons not attributable to the contractor or
subcontractor."

Although the cessation of METRO'S operations was due to a non-renewal of the O & M Probationary Employment:
agreement and not a pre termination of the contract, the cause of the nonrenewal and the effect on
the employees are the same as in the contract pre termination contemplated in the rules. The 1. The employer must communicate the regularization standards to the probationary
agreement was not renewed through no fault of METRO, as it was solely at the behest of LRTA. employee
The fact is, under the circumstances, METRO really had no choice on the matter, considering that it 2. The employer must make such communication at the time of engagement
was a mere subsidiary of LRTA.Nevertheless, whether it is a pre termination or a nonrenewal of the 3. Must not exceed six months from the time the employee started working
contract, the same adverse effect befalls the workers affected, like the respondents in this case - the
involuntary loss of their employment, one of the contingencies addressed and sought to be rectified “ Made known standard”- when he has exerted reasonable efforts to appise the
by the rules. Therefore, the principal in this case, LRTA is held to be solidarily liable( pre termination employee of what he is expected to do or accomplish at the time of probation.
was due to his wishes) METRO( contractor) had no say because it was a mere subsidiary. 
Adequate Performance is not at all cases measurable by quantitative
specification. Not all standards of quality management may be reduced in hard
figures are readily reducible in pre-engagement desctiptive figures.

Exemption : When the job is merely self descriptive in nature. The

standards of regularization should not be used to exculpate an employee who
acts in a manner that it contrary to basic knowledge and common sense if the
policy or standards is self explanatory .

Grounds for dismissal

LABOR
1. Just cause 1. Agreement( between the employer and employee)
2. The probationary employee fails to qualify reasonable standards made known to the 2. Profession calls for the nature requires for a longer period ( Doctors, lawyers, surgeon
employer at the time of his engagement ( the employer has the prerogative to choose who
will be accorded regular or permanent status and who will be denied employment after
probation)

How can an Probationary employee become a regular one?

Regular employee
1. When the employer exercised his discretion by appointing a probationary employee to a
regular position 1. Those engaged to perform activities which are usually directly and necessary to the
2. When the employee was not appraised of the reasonable standards set by the employer principal business or trade of the employer
at the time of his engagement 2. Those casual employees who rendered service for at least one year whether the service is
3. When the employee works beyond the probationary period ( if there is a stipulation) An continuous or broken
employee who is allowed to work after a probationary period shall be considered a regular
employee, there is no successive probation The court ruled that the mechanical act of issuing regular appointment papers, is not
necessary, because the status of employment attaches to the casual workers on the day
Termination (merely notify) : Only procedural requirement under the rule , in this case, ABOT has its immediately after the end of his first year of service. For as long as the employee rendered at
own procedure that must be followed, but di nila sinunod ( nominal damages). least one year of service , he comes a regular employee with respect to the activity in which is
employed. The law does not provide for a qualification.
Terminated due to the following grounds :
The primary standard to determine regular employment is the reasonable connection
1. Just cause ( reason that the employee is at fault). between the particular activity performed by the employee in relation to the business or trade of the
2. Or the employee fails to qualify to qualify reasonable standards. ( limited when they fail to employer, the connection can be determined through nature of the work performed and the scheme
qualify as a regular employee, within a reasonable standard of reasonable standard) of the business.

When is the reckoning period: It should be counted according to days ( 6 months is 180 days). Grounds for termination:
1. Just cause- reason is that the employee is at fault
Notice Requirement: it is sufficient that the written notice is served to the employee within a 2. Authorized cause- those grounds where the employee is not at fault but due to business
reasonable time from the effective date of termination reasons
a. If the closure was due to redundancy, closure and retrenchment and not due to
As to termination business losses they shall be paid one month salary for every service
b. If the closure was due to business losses- they are not required to pay for
1. There is a need to prove the employee’s unsatisfactory performance separation pay.
2. Just cause grounded on the failure to pass the agreed standards
3. After the 30 days from the termination report to the DOLE.
 In a termination for just cause, due process involves the two-notice rule:
Comparing with fixed term: This terminates when the agreed period ends there is no need to prove
the unsatisfactory performance. (In fixed term there is no need to prove that unsatisfactory a) A notice of intent to dismiss specifying the ground for termination, and giving said employee
performance did exist) reasonable opportunity within which to explain his or her side;

 Notes b) A hearing or conference where the employee is given opportunity to respond to the charge,
As a general rule, a maximum of six months ( the probationary period of present evidence or rebut the evidence presented against him or her;
employment is set for the regularization)
c) A notice of dismissal indicating that upon due consideration of all the circumstances, grounds
EXEMPT:
have been established to justify termination.
LABOR
The specific date of termination need not be specified, all that is important is that the
employment relationship was to END ON A DAY CERTAIN or a day when the phase of work or in
Fixed term Employment this case, the completion of the PROJECT

Fixed Term Employment- It does not mean that when an employee performs works and services ( It depends on the specific project and undertaking )- this only hast for the project which is
that are usually necessary and desirable to the principal business or trade of employer, the predetermined at the time of hiring. By definition, therefore a project employment s also a fixed
employer cannot stipulate a fixed period.The decisive determinant is not the activity which they are period employment but not all fixed employment is project or seasonal. Working in place of an
engaged to perform but the day certain on which the termination and completion. employee is a fixed employment, but not project or seasonal ( unless childbearing is a seasonal)

The court compared this with the brent case, the case of Brent is an exception rather that the rule. The employee is hired for a specific project or undertaking and the employment duration is
The decisive determinant in the term of employment contract should not be the activities that they specified by the scope of work and or the length the employee may acquire the status of a regular
are called to perform but the day certain agreed by the parties for the commencement and employee when they are continuously rehired after the completion of the project or when the task
termination of their relationship( a day which necessary come but not known when) they perform are vital, necessary to the usual business or trade of the employer.

Acid test: From the circumstances, it is apparent that the period that has been imposed to preclude Requisites :
the acquisition of tenurial security, it will be DISREGARDED if the purpose is to evade the labor
contract . 1. The employee was assigned to carry out a specific project or undertaking
2. The duration and the scope of which is determined at the time they were engaged.
It does not mean that when the employee and the employer agreed to a fix term of 3. The work or services to be performed by the employee is in connection with the particular
employment it means that one cannot be considered a regular employee. The validity of the fixed project or undertaking for which he is engaged,
term will be upheld of there is a definite date on the termination or completion or that it was validly 4. The employee while not employed and waiting engagmenet, is free to offer his services to
entered by the employee. another employer
5. The termination of his employment in the DOLE having jurisdiction over the workplace
The test here is the day certain agreed upon by the parties for the commencement and within 30 days following the separation from work
the termination of the employment relationship. 6. An undertaking in the employment contract by the employer to pay completion bonus to
the project employee as practiced by most construction companies.
Standards: ( if these are not satisfied the employee is to be considered as fixed term)
When will Project Employee become regular employees:
1. The fixed period of employment was knowingly and voluntarily agreed by the parties
without any force, duress or pressure being brought by the employer a. If the work pool employee has been continuously as opposed to intermittently re-
2. It is satisfactorily shown that the employee and the employee dealth with each other in hired by the same employer for the same task or nature of the task and
equal footing b. These task are vital necessary and indispensable to the usual business r trade of the
employer.
Independent Contractor

One who carries on a DISTINCT AND INDEPENDENT business and undertaking to Even if the employee has been engaged to work for more than a year, they are still to be
perform the work, or service on its own account and under one’s own responsibility according to considered as project employees, if the completion and determination is determined at the
one’s own manner and means free from the control and discretion of the principal in all manners time the employee started working or where work service to be performed is seasonal in
connected with the perfroamnce of the work as to the results thereof. ( Since no employee employer nature and the employment s for a duration of the season. The act of rehiring cannot
relationship exist between the contractor and the principal, their contracts are governed by the code confer regular status, it is only an indication that the employment is indispensable to the
provision on contracts and other applicable laws) business or trade.

Project Employment The duration must be determinable at a day certain or when a phase of work is to be
finished or completed.
LABOR
What are the kinds of project employees? Seasonal employments. Seasonal workers perform work that is seasonal in nature and are
employed only for the duration of the season. Seasonal workers who are rehired every working
1. Those whose project employees are performing activities that are necessary to the usual season are to be considered as regular employees. The nature of their relationship with the
business or trade of the employer- however this can be identified or separated from the employer is such that during off season they are temporarily laid off but when they are needed they
business are re employed. They are not strictly speaking separated from service but are merely considered
2. Those project employees that do not perform activities that are necessary to the usual as on leave without pay until they are employed ( they are regular with respect to the activity)
business or trade of the employer
The employment relationship is not severed but only suspended. As a result, the
Litmus test: the test to determine is whether the employment is based on a specific employees are to be considered as regular employees of the employer.However, this must yield to
undertaking ,the completion and termination is determined at the time of undertaking and the fact that the employees worked only for the duration of the season ( the working for at least one
that their employment is dependent upon the duration of the project. year would convert their employment to a regular one) . To be a regular employee, the employer
must continuously and repeatedly be hired to perform task.
There are two kinds of construction workers : To be a seasonal worker: It is not enough that they pefrom work that is seasonal in nature
but they must be employed for the duration of the season
1. Project employees- or those employment is co-terminous with the project ( the term in this
case is specified) Casual employment
2. Regular Employee- those employment is WITHOUT any specific undertaking without any
project or phase. ( if the completion and termination cannot be determined) An employment shall be deemed to be casual, when the employee is engaged to perform
service which is not usually necessary or desirable to the business of the employer and the services
Notice Requirement: is for a definite period made known to the employee and the time of his or her employment.

1. If the termination brought about was due to COMPLETION OF THE CONTRACT OR SECTION 5. Regular and casual employment. — (a) The provisions of written agreements to the
PHASE- No prior notice is required contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall
2. If the termination is brought about by Failure of the employee to meet the standards of the be considered to be regular employment for purposes of Book VI of the Labor Code where the
employer( Probationary) it is sufficient that a written notice is served to the employee employee has been engaged to perform activities which are usually necessary or desirable in the
within a reasonable time upon the effective date of termination. 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
Notes : in project employee there must be a specific project or undertaking, the employer must engagement of the employee or where the work or service to be performed is seasonal in nature
only let them work for a specific project or undertaking you cannot let them work outside the and the employment is for the duration of the season.
scope of the project, because that gives them a risk to become a regular employee. If the
employer continue to work after the competition of the project , the employee is deemed to be (b) Employment shall be deemed as casual in nature if it is not covered by the preceding paragraph;
regular. Provided, That any employee who has rendered at least one year of service, whether such service
is continuous or not, shall be considered a regular employee with respect to the activity in which he
The employee is allowed to have several employers, what is prohibited in this case is is employed and his employment shall continue while such activity exists.
when one employer assigns several project to an employee without the first project being
terminated. (c) An employee who is allowed to work after a probationary period shall be considered a regular
employee.
Seasonal Employment
SECTION 6. Probationary employment. — (a) Where the work for which an employee has been
When the work to be performed is only for a certain year and the employment s only for engaged is learnable or apprenticeable in accordance with the standards prescribed by the
that duration. This type of common practice is for retail and food business, hospitality and other Department of Labor, the probationary employment period of the employee shall be limited to the
related industries as augmentation of the demand during peak seasons. authorized learnership or apprenticeship period, whichever is applicable.
LABOR
(b) Where the work is neither learnable nor apprenticeable, the probationary employment period
shall not exceed six (6) months reckoned from the date the employee actually started working.

(c) The services of an employee who has been engaged on probationary basis may be terminated
only for a just cause or when authorized by existing laws, or when he fails to qualify as a regular
employee in accordance with reasonable standards prescribed by the employer.

(d) In all cases involving employees engaged on probationary basis, the employer shall make known
to the employee the standards under which he will qualify as a regular employee at the time of his
engagement.

An employment is determined from the following

1. The manner of selection and engagement of the putative employee
2. The mode of payment of wages
3. The presence or absence of the power of dismissal
4. The presence or absence of the power of control the conduct of the putative employee or
the power to control the employee with respect to the means methods and forms.

Teachers :
Section 93 of 1992 : Manual of Regulation for private schools the following requirements need to be
concurred before a private school teacher acquires permanent status
1 . The teacher must be a full time teacher
2.The teacher must have rendered three consecutive years of service
3. The service must be satisfactory.

Rules : The probationary period for academic personnel shall not

1. For those in elementary and secondary levels ( 3 consecutive years of satisfactory
service)
2. those in tertiary level- 6 consecutive regular semester and none consecutive trimester if
the tertiary level is a trimester basis
Additional Requirement of Master’s degree in Undergraduate program
DECS ORDER SERIES 92: College faculty members must have a masters degree in their field of
instruction as a minimum qualification for teaching in a private educational institution to acquire
REGULAR Status
LABOR