Labor

Auza Jr. vs MOL Philippines (GR No. 175481 November 21, 2012)

Auza Jr. vs MOL Philippines Inc.
GR No. 175481 November 21, 2012

Facts: Respondent MOL is a common carrier engaged in  transporting cargoes to and from  the different parts of the world.   On October 1, 1997, it employed Auza and Jeanjaquet as Cebu’s  Branch Manager and  Administrative Assistant, respectively.  It also employed Otarra  as its Accounts Officer on November 1, 1997.  On October 14, 2002, Otarra  tendered her  resignation  letter effective November 15, 2002 while Auza and Jeanjaquet submitted their resignation letters on October 30, 2002 to take  effect on November 30, 2002.  Petitioners were then given their separation pay and  the monetary  value of  leave credits, 13th  month pay, MOL cooperative shares and unused dental/optical  benefits as shown in documents entitled “Remaining  Entitlement Computation,”  which documents were signed by each of them  acknowledging receipt of such benefits.  Afterwhich, they  executed  Release and  Quitclaims  and then issued  Separation  Clearances. In February 2004 or almost 15 months after their severance from employment, petitioners filed separate Complaints  for illegal dismissal before the Arbitration Branch of the NLRC against respondents and MOL’s Manager for Corporate Services, George  Dolorfino alkeging that the reason for their resignations were that the clmpany informed everyone that it is downsizing ang even has to close the said branch which did not happen.

Issue: Whether or not petitioners were constructively dismissed.

Held: No. “Resignation is the formal pronouncement or relinquishment of an office.”   The overt act of relinquishment should be coupled with an intent to relinquish, which intent could  be inferred from the acts  of the employee before and after  the alleged resignation.

It appears that petitioners, on their own  volition, decided to  resign from their positions after being informed of the management’s  decision that the Cebu branch would eventually be  manned by a mere skeletal force.  As proven by the email correspondences presented, petitioners  were fully aware and had, in fact, acknowledged that  Cebu branch has been incurring  losses and was already unprofitable to operate.   Note that there was evidence produced  to prove that indeed the Cebu branch’s productivity had  deteriorated as shown in a Profit and Loss Statement  for the years 2001 and 2002.   Also, there was  a substantial reduction  of  workforce as  all of  the Cebu  branch staff  and personnel, except one, were not retained.  On  the other hand, petitioners’ assertions that the Cebu  branch was performing well are not  at  all  substantiated.   What they  presented  was a document entitled “1999 Performance Standards”,  which only provides for performance objectives but tells nothing about the branch’s progress.  Likewise, the Cebu Performance Reports  submitted  which showed outstanding company performance only pertained to  the year 1999 and the first  quarter of year 2000.  No other financial documents were submitted to show that such progress continued until year 2002.  

Ample jurisprudence provides that subsequent and substantial compliance may call for the relaxation of the rules.   Indeed, “imperfections of form and technicalities of procedure  are to  be disregarded,  except where substantial rights would otherwise be prejudiced.”  Due to petitioners’ subsequent and substantial compliance, we thus apply the rules liberally  in order not to frustrate the ends of justice. 

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Reso: Tongko vs Manulife (GR No. 167622 January 25, 2011)

Tongko vs Manufacturer’s Life Insurance Co.
GR No. 167622 January 25, 2011

Issue: Whether or not petitioner as insurance agent is an employee of respondent company.

Held: No. Based on the evidence on record, the petitioner’s occupation was to sell Manulife’s insurance policies and products from 1977 until the termination of the career agent’s agreement. The evidence also shows that through the years, Manulife permitted him to exercise guiding authority over other agents who operate under their own agency agreements with Manulife and whose commissions he shared. Under this scheme — an agreement that pervades the insurance industry — petitioner in effect became a “lead agent” and his own commissions increased as they included his share in the commissions of the other agents; he also receive greater reimbursement for expenses and was allowed to use Manulife’s facilities. His designation also changed from unit manager to branch manager and then to regional sales manager, to reflect the increase in the number of agents he recruited and guided, as well as the increase in the area where these agents operated.

In our June 29, 2010 resolution, we noted that there are built in elements of control specific to an insurance agency, which do not amount to the elements of control that characterizes an employment relationship governed by the labor code. The insurance code provides definite parameters in the way an agent negotiates for the sale of the company’s insurance products, his collection activities and his delivery of the insurance contract or policy. In addition, the civil code defines an agent as a person who binds himself to do something in behalf of another, with the consent or authority of the latter. Article 1887 of the civil code also provides that in the execution of the agency, the agent shall act in accordance with the instructions of the principal.

Dumpit-Murillo vs CA (GR No. 164652 June 8, 2007)

Dumpit-Murillo vs Court of Appeals
GR No. 164652 June 8, 2007

Facts: On October 2, 1995, under talent contract no. NT95-1805, private respondent Associated Broadcasting Company (ABC) hired petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor of Balitang-Balita, an early evening news program. The contract was for a period of 3 months. It renewed under talent contract nos. NT95-1915, NT96-3002, NT98-4984, and NT99-5649. In addition, petitioner’s services were engaged for the program “Live on Five.” On September 30, 1999, after 4 years of repeated renewals, petitioner’s talent contract expired. Two weeks after the expiration of the last contract, petitioner sent a letter to Mr. Jose Javier, Vice President for news and public affairs of ABC, informing the latter that she was still interested in renewing her contract subject to a salary increase, thereafter, petitioner stopped reporting for work. On November 5, 1999 she wrote Mr. Javier another letter.

Issue: Whether or not the continuous renewal of petitioner’s talent contracts constitute regularity in the employment status.

Held: Yes. An employer-employee relationship was created when the private respondents started to merely renew the contracts repeatedly 15 times for 4 consecutive years.

Petitioner was a regular employee under contemplation of law. The practice of having fixed-term contracts in the industry does not automatically make all talent contracts valid and compliant with labor law. The assertion that a talent contract exists does not necessarily prevent a regular employment status.

The elements to determine the existence of an employment relationship are: a.) The selection and engagement of the employee; b.) The payment of wages; c.) The power of dismissal; and d.) The employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.

The duties of petitioner as enumerated in her employment contract indicate that ABC had control over the work or petitioner. Aside from control, ABC also dictated the work assignments and payment of petitioner’s wages. ABC also had power to dismiss her. All these being present, clearly there existed an employment relationship between petitioner and ABC. 

Concerning regular employment, the law provides for 2 kinds of employees, namely: 1.) Those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and 2.) Those who have rendered at least one year of service, whether continuous or broken with respect to the activity in which they are employed. In other words, regular status arises from either the nature of work of the employee or the duration of his employment.

The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee vis-a-vis the usual trade or business of the employer. This connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. If the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. 

AFP Mutual vs NLRC (GR No. 102199 January 28, 1997)

AFP Mutual Benefit Association Inc vs National Labor Relations Commission
GR No. 102199 January 28, 1997

Facts: Private respondent Eutiquio Bustamente had been an insurance underwriter of petitioner AFP Mutual Benefit Association Inc. since 1975. The sales agreement provided for Bustamente’s duties and obligations, commissions and a statement that there shall be no employer-employee relationship between the parties, the sales agent being hereby deemed an independent contractor. On July 5, 1989, petitioner dismissed private respondent for misrepresentation and for simultaneously selling insurance for another life insurance company in violation of said agreement. On November 23, 1989, private respondent filed a complaint with the office of the insurance commissioner praying for the payment of the correct amount of his commission. Atty. German C. Alejandria, chief of the public assistance and information division, office of the insurance commissioner, advised private respondent that it was the DOLE that had jurisdiction over his complaint. On February 26, 1990, private respondent filed his complaint with the Department of Labor claiming : 1.) Commission for 2 years from termination of employment equivalent to 30% of premiums remitted during employment; 2.) P354,796 as commissioned earned from renewals and old business generated since 1983; 3.) P100,000 as moral damages; and 4.) P100,000 as exemplary damages.

Issue: Whether or not there existed an employer-employee relationship between petitioner and private respondent.

Held: No. Well settled is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that the findings thereon by the labor arbiter and the NLRC shall be accorded not only respect but even finality when supported by substantial evidence. The determinative factor in such finality is the presence of substantial evidence to support said finding. Otherwise, such factual findings cannot bind this court.

Time and again, the court has applied the four-fold test in determining the existence of employer-employee relationship. This test considers the following elements: 1.) The power to hire; 2.) The payment of wages; 3.) The power to dismiss; 4.) The power to control, the last being the most important element.

The difficulty lies in correctly assessing if certain factors or elements properly indicate the presence of control. Anent the issue of exclusivity in the case at bar, the fact that private respondent was required to solicit business exclusively for petitioner could hardly be considered as control on labor jurisprudence. Under memo circulars no. 2-81 and 2-85, dated December 17, 1981 and August 7, 1985 respectively issued by the insurance commissioner, insurance agents are barred from serving more than one insurance companies to exercise exclusive supervision over their agents in their solicitation work. Thus, the exclusivity restriction clearly springs from a regulation issued by the insurance commission, and not from an intention by petitioner to establish control over the method and manner by which private respondent shall accomplish his work. This feature is not meant to change the nature of the relationship between the parties, nor does it necessarily imbued such relationship with the quality of control envisioned by law.

To restate, the significant factor in determining the relationship of the parties is the presence or absence of supervisory authority yo control the method and the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control. The presence of such power of control is indicative of an employment relationship, while absence thereof is indicative of independent contractorship. In other words, the test to determine claiming to be independent contractor has contracted to do the work according to his own methods and without being the subject to the control of the employer except only as to the result of his work. Such is exactly the nature of the relationship between petitioner and private respondent.

Such lack of jurisdiction of a court or tribunal may be raised at any stage of the proceedings, even on appeal. The doctrine of estoppel cannot be properly invoked by respondent commission to cure this fatal defect as it cannot confer jurisdiction upon a tribunal that to begin with, was bereft of jurisdiction over a cause of action. Moreover, in the proceedings below, the petitioner consistently challenged the jurisdiction of the labor arbiter and respondent commission.

Insular Life vs NLRC (GR No. 119930 March 12, 1998)

Insular Life Assurance Co. Ltd. vs National Labor Relations Commission (Delos Reyes)
GR No. 119930 March 12, 1998

Facts: On August 21, 1992 petitioner entered into an agency contract with respondent Pantaleon Delos Reyes authorizing the latter to solicit within the Philippines applications for life insurance and annuities for which he would be paid compensation in the form of commitment. The contract was prepared by petitioner in its entirety and Delos Reyes merely signed his confirmity thereto. It contained the stipulation that no employer-employee relationship shall be created between the parties and that the agent shall be free to exercise his own judgement as to time, place and means of soliciting insurance. Delos Reyes however was prohibited by petitioner from working for any other life insurance company, and violation of this stipulation was sufficient ground for termination of the contract. Aside from soliciting insurance for the petitioner, private respondent was required to submit to the former all completed applications for insurance within 90 consecutive days, deliver policies, receive and collect initial premiums and balances of first year premiums, renewal premiums, deposits on applications and payments on policy loans. Private respondent was also bound to turn over to the company immediately any and all sums of money collected by him. In a written communication by petitioner to respondent Delos Reyes, the latter was urged to register with the Social Security System (SSS) as a self-employed individual as provided under PD 1636. On March 1, 1993, petitioner and private respondent entered into another contract where the latter was appointed as acting, unit manager under its office — the Cebu DSO vs Private respondent concurrently as agent and acting unit manager until he was notified by petitioner on November 18, 1993 that his services were terminated effective December 18, 1993. On November 7, 1994 he filed a complaint before the labor arbiter on the ground that he was illegally dismissed and that he was not paid his salaries and separation pay.

Issue: Whether or not there is an employer-employee relationship between the parties to entitle jurisdiction of the case before the labor arbiter.

Held: Yes. It is axiomatic that existence of an employer-employee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the employee is an independent contractor when the terms of the agreement clearly shows otherwise. For, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. In determining the status of the management contract, the “four-fold test” on employment earlier mentioned has to be applied.

Unlike Basiao, herein respondent Delos Reyes was appointed acting unit manager, not agency manager. There is no evidence that to implement his obligations under the management contract, Delos Reyes had organized an office. Petitioner in fact has admitted that it provided Delos Reyes a place and a table at its office where he reported for and worked whenever he was not out in the field. Placed under petitioner’s Cebu District Service Office, the unit was given a name by petitioner – Delos Reyes and Associates — and assigned code no. 11753 and recruitment no. 109398. Under the managership contract, Delos Reyes was obliged to work exclusively for petitioner in life insurance solicitation and was imposed premium production quotas. Of course, the acting unit manager could not underwrite other lines of insurance because his permanent certificate of authority was for life insurance only and for no other. He was proscribed from accepting a managerial or supervisory position. In any other office including the government without the written consent of petitioner. Delos Reyes could only be promoted to permanent unit manager if he met certain requirements and his promotion was recommended by the petitioner’s district manager and regional manager and approved by its division manager. As acting unit manager, Delos Reyes performed functions beyond mere solicitation of insurance business for petitioner. As found by the NLRC, he exercised administrative functions which were necessary and beneficial to the business of insular life.

Exclusivity of service, control of assignment and removal of agents under private respondent’s unit, collection of premiums, furnishing company facilities and materials as well as capital described as unit development fund are but hallmarks of the management system in which herein private respondent worked. This obtaining, there is no escaping the conclusion that private respondent Pantaleon Delos Reyes was an employee of herein petitioner.

Insular Life vs NLRC (GR No. 84484 November 15, 1989)

Insular Life Assurance Co. Ltd vs National Labor Relations Commission
GR No. 84484 November 15, 1989

Facts: On July 2, 1968, Insular Life Assurance Co. Ltd and Melecio T. Basiao entered into a contract by which:

  1. Basiao was “authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and regulations” of the company;
  2. He would receive “compensation, in the form of commissions.. as provided in the schedule of commissions” of the contract to “constitute a part of the consideration of (said) agreement,” and;
  3. The “rules in (the company) rate book and its agent’s manual as well as all circulars and those which may from time to time be promulgated by it,” were made part of said contract.

Some four years later, in April 1972, the parties entered into another contract – An agency manager’s contract – and to implement his end of it Basiao organized an agency or office to which he gave the name M Basiao and Associates, while concurrently fulfilling this commitments under the first contract with the company.

In May 1979, the company terminated the Agency Manager’s contract. After seeking a reconsideration, Basiao sued the company in a civil action and this was later to claim, prompted the latter to terminate also his engagement under the first contract and to stop payment of his commission starting April 1, 1980.

Issue: Whether or not the Labor Arbiter have jurisdiction by virtue of the contract between the company and Basiao.

Held: No. In determining the existence of employer-employee relationship, the following elements are generally considered namely: 

  1. The selection and engagement of the employee;
  2. The payment of wages;
  3. The power of dismissal; and
  4. The power to control the employee’s conduct

— although the latter is the most important element.

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the business of insurance and is on that account subject to regulation by the state with respect, not only to the internal affairs of the insurance company. Rules and Regulations governing the conduct of the business are provided for in the insurance code and enforced by the insurance commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribes the qualifications of persons who may be insured, subject insurance applications to processing and approval by the company and also reserve to the company the determination of the premiums to be paid and the schedules of payment. None of these really invades the agents contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish on employer-employee relationship between him and the company.

The labor arbiter’s decision makes reference to Basiao’s claim of having been connected with the company for 25 years whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao’s status under the contract of July 2, 1968, not the length of his relationship with the company.

The court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. The labor arbiter erred in taking cognizance of and adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the arbiter’s decision. This conclusion renders it unnecessary and premature to consider Basiao’s claim for commission on its merits.

Manila Jockey vs Trajano (G.R. No. 160982 June 26, 2013)

Manila Jockey Club Inc vs Trajano
G.R. No. 160982 June 26, 2013

Facts: MJCI had employed Trajano as a selling teller of betting tickets since November 1989. On April 25, 1998, she reported for work. At around 7:15 p.m., two regular bettors gave her their respective lists of bets (rota) and money for the bets for Race 14. Although the bettors suddenly left her, she entered their bets in the selling machine and segregated the tickets for pick up by the two bettors upon their return. Before closing time, one of the bettors (requesting bettor) returned and asked her to cancel one of his bets worth P2,000.00. Since she was also operating the negative machine on that day, she obliged and immediately cancelled the bet as requested. She gave the remaining tickets and the P2,000.00 to the requesting bettor, the money pertaining to the canceled bet. When Race 14 was completed, she counted the bets received and the sold tickets. She found that the bets and the tickets balanced. But then she saw in her drawer the receipt for the canceled ticket, but the canceled ticket was not inside the drawer. Thinking she could have given the canceled ticket to the requesting bettor, she immediately looked for him but could not find him. It was only then that she remembered that there were two bettors who had earlier left their bets with her. Thus, she went to look for the other bettor (second bettor) to ask if the canceled ticket was with him. When she located the second bettor, she showed him the receipt of the canceled ticket to counter-check the serial number with his tickets. Thereafter, the second bettor returned to Trajano and told her that it was one of his bets that had been canceled, instead of that of the requesting bettor. To complicate things, it was also the same bet that had won Race 14. Considering that the bet was for a daily double, the second bettor only needed to win Race 15 in order to claim dividends. At that point, she realized her mistake, and explained to the second bettor that the cancellation of his ticket had not been intentional, but the result of an honest mistake on her part. She offered to personally pay the dividends should the second bettor win Race 15, which the latter accepted. When Race 15 was completed, the second bettor lost. She was thus relieved of the obligation to pay any winnings to the second bettor. To her surprise, the reliever-supervisor later approached Trajano and told her to submit a written explanation about the ticket cancellation incident. The next day (April 26, 1998), she submitted the handwritten explanation to Atty. Joey R. Galit, Assistant Racing Supervisor. She then resumed her work as a selling teller, until later that day, when she received an inter-office correspondence signed by Atty. Galit informing her that she was being placed under preventive suspension effective April 28, 1998, for an unstated period of time. At the end of thirty days of her suspension, Trajano reported for work. But she was no longer admitted. She then learned that she had been dismissed when she read a copy of an interoffice correspondence about her termination posted in a selling station of MJCI.

Issue: Whether or not Trajano is validly dismissed.

Held: No. The valid termination of an employee may either be for just causes under Article 282 or for authorized causes under Article 283 and Article 284, all of the Labor Code.

Specifically, loss of the employer’s trust and confidence is a just cause under Article 282 (c), a provision that ideally applies only to cases involving an employee occupying a position of trust and confidence, or to a situation where the employee has been routinely charged with the care and custody of the employer’s money or property. But the loss of trust and confidence, to be a valid ground for dismissal, must be based on a willful breach of trust and confidence founded on clearly established facts. “A breach is willful,” according to AMA Computer College, Inc. v. Garay, “if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer.” An ordinary breach is not enough.

Moreover, the loss of trust and confidence must be related to the employee’s performance of duties.  As held in Gonzales v. National Labor Relations Commission:

Loss of confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence. He must be invested with confidence on delicate matters such as the custody, handling, care and protection of the employer’s property and/or funds. But in order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer.

As a selling teller, Trajano held a position of trust and confidence. The nature of her employment required her to handle and keep in custody the tickets issued and the bets made in her assigned selling station. The bets were funds belonging to her employer. Although the act complained of – the unauthorized cancellation of the ticket (i.e., unauthorized because it was done without the consent of the bettor) – was related to her work as a selling teller, MJCI did not establish that the cancellation of the ticket was intentional, knowing and purposeful on her part in order for her to have breached the trust and confidence reposed in her by MJCI, instead of being only out of an honest mistake.

The procedure to be followed in the termination of employment based on just causes is laid down in Section 2 (d), Rule I of the Implementing Rules of Book VI of the Labor Code, to wit:

Section 2. Security of Tenure. —
x x x x

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the employee’s last known address.

A review of the records warrants a finding that MJCI did not comply with the prescribed procedure.

There is no question that an illegally dismissed employee is entitled to her reinstatement without loss of seniority rights and other privileges, and to full back wages, inclusive of allowances and other benefits or their monetary equivalent.

In case the reinstatement is no longer possible, however, an award of separation pay, in lieu of reinstatement, will be justified. The Court has ruled that reinstatement is no longer possible: (a) when the former position of the illegally dismissed employee no longer exists; or (b) when the employer’s business has closed down; or (c) when the employer-employee relationship has already been strained as to render the reinstatement impossible. The Court likewise considered reinstatement to be non-feasible because a “considerable time” has lapsed between the dismissal and the resolution of the case. In that regard, a lag of eight years or ten years is sufficient to justify an award of separation pay in lieu of reinstatement.