Labor

#12 false
What is the so-called boundary

system?
Under this system the driver is engaged to drive the owner/operators unit and pays the latter a fee
commonly called boundary for the use of the unit. Whatever he earned in excess of that amount is
his income. (Paguio Transport Corp. v. NLRC, G.R. No. 119500, Aug. 28, 1998)
What kind of relationship exists

between the owner of the vehicle and
the driver under a "boundary system"
arrangement?
The relationship between jeepney owners/operators on one hand and jeepney drivers on the other
under the boundary system is that of employer-employee and not of lessor-lessee. (Martinez v.
NLRC, G.R. No. 117495, May 29, 1997).
The features which characterize, the "boundary system" namely, the fact that the driver does not
receive a fixed wage but gets only the excess of the amount of fares collected by him over the
amount he pays to the jeep- owner, and that the gasoline consumed by the jeep is for the account of
the driver are not sufficient to withdraw, the relationship between them from that of the employer
and employee. (National Labor Union v. Dinglasan, G.R. No. L-14183, Nov. 4, 1993)
#1 false
The buren of proof in establishing employer-employee relationship is on the
employee Many employers would deny the existence of such relationship or misclassify an
employee to avoid paying taxes or other benefits but if you substantially fall under the
definition within an employer-employee relationship, then you are entitled to certain
employee rights. https://www.hg.org/article.asp?id=19477
The employee lies the burden to pass the well-settled tests to determine the
existence of an employer-employee relationship, viz: (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 employees conduct. Of these elements, the most
important criterion is whether the employer controls or has reserved the right to
control the employee not only as to the result of the work but also as to the means
and methods by which the result is to be accomplished.
Javier v. Fly Ace & Castillo
#2 false
substantial evidence that amount of relevant evidence which a

reasonable mind might accept as adequate to justify a conclusion
is sufficient.
petitioner needs to show by substantial evidence that he was
indeed an employee of the company against which he claims
illegal dismissal.
Javier v. Fly Ace & Castillo
COCA COLA BOTTLERS (PHILS.), G.R. No. 146881

INC./ERIC MONTINOLA, Manager,
Petitioners, Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
- versus - CORONA,
AZCUNA, and
GARCIA, JJ.
DR. DEAN N. CLIMACO, Promulgated:
Respondent.
February 5, 2007
The main issue in this case is whether or not there exists an employeremployee relationship between the parties. The resolution of the main issue will
determine whether the termination of respondents employment is illegal.
The Court, in determining the existence of an employer-employee
relationship, has invariably adhered to the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct, or the so-called
control test, considered to be the most important element.[18]
The Court agrees with the finding of the Labor Arbiter and the NLRC that
the circumstances of this case show that no employer-employee relationship exists
between the parties. The Labor Arbiter and the NLRC correctly found that
petitioner company lacked the power of control over the performance by
respondent of his duties. The Labor Arbiter reasoned that the Comprehensive
Medical Plan, which contains the respondents objectives, duties and obligations,
does not tell respondent how to conduct his physical examination, how to
immunize, or how to diagnose and treat his patients, employees of [petitioner]
company, in each case. He likened this case to that of Neri v. National Labor
Relations Commission,[19] which held:
In the case of petitioner Neri, it is admitted that FEBTC issued a
job description which detailed her functions as a radio/telex
operator.However, a cursory reading of the job description shows that
what was sought to be controlled by FEBTC was actually the end result
of the task, e.g., that the daily incoming and outgoing telegraphic
transfer of funds received and relayed by her, respectively, tallies with
that of the register. The guidelines were laid down merely to ensure that
the desired end result was achieved. It did not, however, tell Neri how
the radio/telex machine should be operated.
In effect, the Labor Arbiter held that petitioner company, through

the Comprehensive Medical Plan, provided guidelines merely to ensure that the
end result was achieved, but did not control the means and methods by which
respondent performed his assigned tasks.
The NLRC affirmed the findings of the Labor Arbiter and stated that it is
precisely because the company lacks the power of control that the contract
provides that respondent shall be directly responsible to the employee concerned
and their dependents for any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.
The Labor Arbiter also correctly found that the provision in the Retainer
Agreement that respondent was on call during emergency cases did not make him a
regular employee. He explained, thus:
Likewise, the allegation of complainant that since he is on call at
anytime of the day and night makes him a regular employee is offtangent.Complainant does not dispute the fact that outside of the two (2)
hours that he is required to be at respondent companys premises, he is
not at all further required to just sit around in the premises and wait for
an emergency to occur so as to enable him from using such hours for his
own benefit and advantage. In fact, complainant maintains his own
private clinic attending to his private practice in the city, where he
services his patients, bills them accordingly -- and if it is an employee of
respondent company who is attended to by him for special treatment that
needs hospitalization or operation, this is subject to a special
billing. More often than not, an employee is required to stay in the
employers workplace or proximately close thereto that he cannot utilize
his time effectively and gainfully for his own purpose. Such is not the
prevailing situation here.
In addition, the Court finds that the schedule of work and the requirement to
be on call for emergency cases do not amount to such control, but are necessary
incidents to the Retainership Agreement.
The Court also notes that the Retainership Agreement granted to both parties
the power to terminate their relationship upon giving a 30-day notice. Hence,
petitioner company did not wield the sole power of dismissal or termination.
The Court agrees with the Labor Arbiter and the NLRC that there is nothing
wrong with the employment of respondent as a retained physician of petitioner
company and upholds the validity of the Retainership Agreement which clearly
stated that no employer-employee relationship existed between the parties. The
Agreement also stated that it was only for a period of 1 year beginning January 1,
1988 to December 31, 1998, but it was renewed on a yearly basis.
Considering that there is no employer-employee relationship between the
parties, the termination of the Retainership Agreement, which is in accordance with
the provisions of the Agreement, does not constitute illegal dismissal of
respondent.Consequently, there is no basis for the moral and exemplary damages
granted by the Court of Appeals to respondent due to his alleged illegal dismissal.
FIRST DIVISION
COCA COLA BOTTLERS (PHILS.), G.R. No. 146881
INC./ERIC MONTINOLA, Manager,
Petitioners, Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
- versus - CORONA,
AZCUNA, and
GARCIA, JJ.
DR. DEAN N. CLIMACO, Promulgated:
Respondent.
February 5, 2007
x ---------------------------------------------------------------------------------------- x
DECISION
AZCUNA, J.:
This is a petition for review on certiorari of the Decision of the Court of
Appeals[1] promulgated on July 7, 2000, and its Resolution promulgated on January
30, 2001, denying petitioners motion for reconsideration. The Court of Appeals
ruled that an employer-employee relationship exists between respondent Dr. Dean
N. Climaco and petitioner Coca-Cola Bottlers Phils., Inc. (Coca-Cola), and that
respondent was illegally dismissed.
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by
petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement that
stated:
WHEREAS, the COMPANY desires to engage on a retainer basis
the services of a physician and the said DOCTOR is accepting such
engagement upon terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual agreement hereinafter contained, the parties agree as follows:
1.
This Agreement shall only be for a period of one (1) year

beginning January 1, 1988 up to December 31, 1988. The said
term notwithstanding, either party may terminate the contract
upon giving a thirty (30)-day written notice to the other.
2.
The compensation to be paid by the company for the services of

the DOCTOR is hereby fixed at PESOS: Three Thousand Eight
Hundred (P3,800.00) per month. The DOCTOR may charge
professional fee for hospital services rendered in line with his
specialization.All payments in connection with the Retainer
Agreement shall be subject to a withholding tax of ten percent
(10%) to be withheld by the COMPANY under the Expanded
Withholding Tax System. In the event the withholding tax rate
shall be increased or decreased by appropriate laws, then the rate
herein stipulated shall accordingly be increased or decreased
pursuant to such laws.
3.
That in consideration of the above mentioned retainers fee, the

DOCTOR agrees to perform the duties and obligations
enumerated in the COMPREHENSIVE MEDICAL PLAN, hereto
attached as Annex A and made an integral part of this Retainer
Agreement.
4.
That the applicable provisions in the Occupational Safety and

Health Standards, Ministry of Labor and Employment shall be
followed.
5.
That the DOCTOR shall be directly responsible to the employee

concerned and their dependents for any injury inflicted on, harm
done against or damage caused upon the employee of the
COMPANY or their dependents during the course of his
examination, treatment or consultation, if such injury, harm or
damage was committed through professional negligence or
incompetence or due to the other valid causes for action.
6.
That the DOCTOR shall observe clinic hours at the COMPANYS

premises from Monday to Saturday of a minimum of two (2)
hours each day or a maximum of TWO (2) hours each day or
treatment from 7:30 a.m. to 8:30 a.m. and 3:00 p.m. to 4:00 p.m.,
respectively unless such schedule is otherwise changed by the
COMPANY as [the] situation so warrants, subject to the Labor
Code provisions on Occupational Safety and Health Standards as
the COMPANY may determine. It is understood that the
DOCTOR shall stay at least two (2) hours a day in the
COMPANY clinic and that such two (2) hours be devoted to the
workshift with the most number of employees. It is further
understood that the DOCTOR shall be on call at all times during
the other workshifts to attend to emergency case[s];
7.
That no employee-employer relationship shall exist between the

COMPANY and the DOCTOR whilst this contract is in effect, and
in case of its termination, the DOCTOR shall be entitled only to
such retainer fee as may be due him at the time of termination. [2]
The Comprehensive Medical Plan,[3] which contains the duties and

responsibilities of respondent, adverted to in the Retainer Agreement, provided:
A.
OBJECTIVE
These objectives have been set to give full consideration to [the]

employees and dependents health:
1. Prompt and adequate treatment of occupational and nonoccupational injuries and diseases.
2. To protect employees from any occupational health hazard by

evaluating health factors related to working conditions.
3. To encourage employees [to] maintain good personal health by
setting up employee orientation and education on health,
hygiene and sanitation, nutrition, physical fitness, first aid
training, accident prevention and personnel safety.
4. To evaluate other matters relating to health such as
absenteeism, leaves and termination.
5. To give family planning motivations.
B.
COVERAGE
1. All employees and their dependents are embraced by this
program.
2. The health program shall cover pre-employment and annual
p.e., hygiene and sanitation, immunizations, family
planning, physical fitness and athletic programs and other
activities such as group health education program, safety
and first aid classes, organization of health and safety
committees.
3. Periodically, this program will be reviewed and adjusted based
on employees needs.
C.
ACTIVITIES
1. Annual Physical Examination.
2. Consultations, diagnosis and treatment of occupational and
non-occupational illnesses and injuries.
3. Immunizations necessary for job conditions.
4. Periodic inspections for food services and rest rooms.
5. Conduct health education programs and present education
materials.
6. Coordinate with Safety Committee in developing specific

studies and program to minimize environmental health
hazards.
7. Give family planning motivations.
8. Coordinate with Personnel Department regarding physical
fitness and athletic programs.
9. Visiting and follow-up treatment of Company employees and
their dependents confined in the hospital.
The Retainer Agreement, which began on January 1, 1988, was renewed

annually. The last one expired on December 31, 1993. Despite the non-renewal of
the Retainer Agreement, respondent continued to perform his functions as
company doctor to Coca-Cola until he received a letter [4] dated March 9, 1995 from
petitioner company concluding their retainership agreementeffective 30 days from
receipt thereof.
It is noted that as early as September 1992, petitioner was already making
inquiries regarding his status with petitioner company. First, he wrote a letter
addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee
on Membership, Philippine College of Occupational Medicine. In response, Dr. Sy
wrote a letter[5] to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City,
stating that respondent should be considered as a regular part-time physician,
having served the company continuously for four (4) years. He likewise stated that
respondent must receive all the benefits and privileges of an employee under
Article 157 (b)[6] of the Labor Code.
Petitioner company, however, did not take any action. Hence, respondent
made another inquiry directed to the Assistant Regional Director, Bacolod City
District Office of the Department of Labor and Employment (DOLE), who referred
the inquiry to the Legal Service of the DOLE, Manila. In his letter[7] dated May 18,
1993, Director Dennis P. Ancheta, Legal Service, DOLE, stated that he believed
that an employer-employee relationship existed between petitioner and respondent
based on the Retainer Agreement and the Comprehensive Medical Plan, and the
application of the four-fold test. However, Director Ancheta emphasized that the
existence of employer-employee relationship is a question of fact. Hence,
termination disputes or money claims arising from employer-employee relations
exceeding P5,000 may be filed with the National Labor Relations Commission
(NLRC). He stated that their opinion is strictly advisory.
An inquiry was likewise addressed to the Social Security System (SSS).
Thereafter, Mr. Romeo R. Tupas, OIC-FID ofSSS-Bacolod City, wrote a letter[8] to
the Personnel Officer of Coca-Cola Bottlers Phils., Inc. informing the latter that the
legal staff of his office was of the opinion that the services of respondent partake of
the nature of work of a regular company doctor and that he was, therefore, subject
to social security coverage.
Respondent inquired from the management of petitioner company whether it
was agreeable to recognizing him as a regular employee. The management refused
to do so.
On February 24, 1994, respondent filed a Complaint [9] before the
NLRC, Bacolod City, seeking recognition as a regular employee of petitioner
company and prayed for the payment of all benefits of a regular employee,
including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service
Incentive Leave Pay, and Christmas Bonus. The case was docketed as RAB Case
No. 06-02-10138-94.
While the complaint was pending before the Labor Arbiter, respondent
received a letter dated March 9, 1995 from petitioner company concluding their
retainership agreement effective thirty (30) days from receipt thereof. This
prompted respondent to file a complaint for illegal dismissal against petitioner
company with the NLRC, Bacolod City. The case was docketed as RAB Case No.
06-04-10177-95.
In a Decision[10] dated November 28, 1996, Labor Arbiter Jesus N.
Rodriguez, Jr. found that petitioner company lacked the power of control over
respondents performance of his duties, and recognized as valid the Retainer
Agreement between the parties. Thus, the Labor Arbiter dismissed respondents
complaint in the first case, RAB Case No. 06-02-10138-94. The dispositive portion
of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
dismissing the instant complaint seeking recognition as a regular
employee.
SO ORDERED.[11]
In a Decision[12] dated February 24, 1997, Labor Arbiter Benjamin

Pelaez dismissed the case for illegal dismissal (RAB Case No. 06-04-10177-95) in
view of the previous finding of Labor Arbiter Jesus N. Rodriguez, Jr. in RAB Case
No. 06-02-10138-94 that complainant therein, Dr. Dean Climaco, is not an
employee of Coca-Cola Bottlers Phils., Inc.
Respondent appealed
Division, Cebu City.
both
decisions
to
the
NLRC,
Fourth
In a Decision[13] promulgated on November 28, 1997, the NLRC dismissed

the appeal in both cases for lack of merit. It declared that no employer-employee
relationship existed between petitioner company and respondent based
on the provisions of the Retainer Agreement which contract governed respondents
employment.
Respondents motion for reconsideration was denied by the NLRC in a
Resolution[14] promulgated on August 7, 1998.
Respondent filed a petition for review with the Court of Appeals.
In a Decision promulgated on July 7, 2000, the Court of Appeals ruled that
an employer-employee relationship existed between petitioner company and
respondent after applying the four-fold test: (1) the power to hire the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the employers power to
control the employee with respect to the means and methods by which the work is
to be accomplished.
The Court of Appeals held:

The Retainer Agreement executed by and between the parties,
when read together with the Comprehensive Medical Plan which was
made an integral part of the retainer agreements, coupled with the actual
services rendered by the petitioner, would show that all the elements of
the above test are present.
First, the agreements provide that the COMPANY desires to
engage on a retainer basis the services of a physician and the said
DOCTOR is accepting such engagement x x x (Rollo, page 25). This
clearly shows that Coca-Cola exercised its power to hire the services of
petitioner.
Secondly, paragraph (2) of the agreements showed that petitioner
would be entitled to a final compensation of Three Thousand Eight
Hundred Pesos per month, which amount was later raised to Seven
Thousand Five Hundred on the latest contract. This would represent the
element of payment of wages.
Thirdly, it was provided in paragraph (1) of the agreements that
the same shall be valid for a period of one year. The said term
notwithstanding, either party may terminate the contract upon giving a
thirty (30) day written notice to the other. (Rollo, page 25). This would
show that Coca-Cola had the power of dismissing the petitioner, as it
later on did, and this could be done for no particular reason, the sole
requirement being the formers compliance with the 30-day notice
requirement.
Lastly, paragraphs (3) and (6) of the agreements reveal that CocaCola exercised the most important element of all, that is, control, over
the conduct of petitioner in the latters performance of his duties as a
doctor for the company.
It was stated in paragraph (3) that the doctor agrees to perform the
duties and obligations enumerated in the Comprehensive Medical Plan
referred to above. In paragraph (6), the fixed and definite hours during
which the petitioner must render service to the company is laid down.
We say that there exists Coca-Colas power to control petitioner
because the particular objectives and activities to be observed and
accomplished by the latter are fixed and set under the Comprehensive
Medical Plan which was made an integral part of the retainer
agreement.Moreover, the times for accomplishing these objectives and
activities are likewise controlled and determined by the
company. Petitioner is subject to definite hours of work, and due to this,
he performs his duties to Coca-Cola not at his own pleasure but
according to the schedule dictated by the company.
In addition, petitioner was designated by Coca-Cola to be a
member of its Bacolod Plants Safety Committee. The minutes of the
meeting of the said committee dated February 16, 1994 included the
name of petitioner, as plant physician, as among those comprising the
committee.
It was averred by Coca-Cola in its comment that they exercised no
control over petitioner for the reason that the latter was not directed as to
the procedure and manner of performing his assigned tasks. It went as
far as saying that petitioner was not told how to immunize, inject, treat
or diagnose the employees of the respondent (Rollo, page 228). We
believe that if the control test would be interpreted this strictly, it would
result in an absurd and ridiculous situation wherein we could declare that
an entity exercises control over anothers activities only in instances
where the latter is directed by the former on each and every stage of
performance of the particular activity. Anything less than that would be
tantamount to no control at all.
To our minds, it is sufficient if the task or activity, as well as the
means of accomplishing it, is dictated, as in this case where the
objectives and activities were laid out, and the specific time for
performing them was fixed by the controlling party.[15]
Moreover, the Court of Appeals declared that respondent should be

classified as a regular employee having rendered six years of service as plant
physician by virtue of several renewed retainer agreements. It underscored the
provision in Article 280[16]of the Labor Code stating that any employee who has
rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is
employed, and his employment shall continue while such activity exists. Further, it
held that the termination of respondents services without any just or authorized
cause constituted illegal dismissal.
In addition, the Court of Appeals found that respondents dismissal was an
act oppressive to labor and was effected in a wanton, oppressive or malevolent
manner which entitled respondent to moral and exemplary damages.
The dispositive portion of the Decision reads:
WHEREFORE, in view of the foregoing, the Decision of the
National Labor Relations Commission dated November 28, 1997 and its
Resolution dated August 7, 1998 are found to have been issued with
grave abuse of discretion in applying the law to the established facts, and
are hereby REVERSED and SET ASIDE, and private respondent
Coca-Cola Bottlers, Phils.. Inc. is hereby ordered to:
1.
Reinstate the petitioner with full backwages without loss of

seniority rights from the time his compensation was withheld up
to the time he is actually reinstated; however, if reinstatement is
no longer possible, to pay the petitioner separation pay equivalent
to one (1) months salary for every year of service rendered,
computed at the rate of his salary at the time he was dismissed,
plus backwages.
2.
Pay petitioner moral damages in the amount of P50,000.00.
3.
Pay petitioner exemplary damages in the amount of P50,000.00.
4.
Give to petitioner all other benefits to which a regular employee

of Coca-Cola is entitled from the time petitioner became a regular
employee (one year from effectivity date of employment) until the
time of actual payment.
SO ORDERED.[17]
Petitioner company filed a motion for reconsideration of the Decision of the

Court of Appeals.
In a Resolution promulgated on January 30, 2001, the Court of Appeals

stated that petitioner company noted that its Decision failed to mention whether
respondent was a full-time or part-time regular employee. It also questioned how
the benefits under their Collective Bargaining Agreement which the Court awarded
to respondent could be given to him considering that such benefits were given only
to regular employees who render a full days work of not less that eight hours. It
was admitted that respondent is only required to work for two hours per day.
The Court of Appeals clarified that respondent was a regular part-time
employee and should be accorded all the proportionate benefits due to this
category of employees of [petitioner] Corporation under the CBA. It sustained its
decision on all other matters sought to be reconsidered.
Hence, this petition filed by Coca-Cola Bottlers Phils., Inc.
The issues are:
1.
THAT THE HONORABLE COURT OF APPEALS

COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE
FINDINGS OF THE LABOR ARBITERS AND THE
NATIONAL
LABOR
RELATIONS
COMMISSION,
CONTRARY TO THE DECISIONS OF THE HONORABLE
SUPREME COURT ON THE MATTER.
2.

NATIONAL LABOR RELATIONS COMMISSION, AND
HOLDING INSTEAD THAT THE WORK OF A PHYSICIAN IS
NECESSARY AND DESIRABLE TO THE BUSINESS OF
SOFTDRINKS MANUFACTURING, CONTRARY TO THE
RULINGS OF THE SUPREME COURT IN ANALOGOUS
CASES.
3.


HOLDING INSTEAD THAT THE PETITIONERS EXERCISED
CONTROL OVER THE WORK OF THE RESPONDENT.
4.

FINDING THAT THERE IS EMPLOYER-EMPLOYEE
RELATIONSHIP PURSUANT TO ARTICLE 280 OF THE
LABOR CODE.
5.

FINDING THAT THERE EXISTED ILLEGAL DISMISSAL
WHEN THE EMPLOYENT OF THE RESPONDENT WAS
TERMINATED WITHOUT JUST CAUSE.
6.

FINDING THAT THE RESPONDENT IS A REGULAR PART
TIME
EMPLOYEE
WHO
IS
ENTITLED
TO
PROPORTIONATE BENEFITS AS A REGULAR PART TIME
EMPLOYEE ACCORDING TO THE PETITIONERS CBA.
7.

FINDING THAT THE RESPONDENT IS ENTITLED TO
MORAL AND EXEMPLARY DAMAGES.
The main issue in this case is whether or not there exists an employeremployee relationship between the parties. The resolution of the main issue will
determine whether the termination of respondents employment is illegal.
The Court, in determining the existence of an employer-employee
relationship, has invariably adhered to the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct, or the so-called
control test, considered to be the most important element.[18]
The Court agrees with the finding of the Labor Arbiter and the NLRC that
the circumstances of this case show that no employer-employee relationship exists
between the parties. The Labor Arbiter and the NLRC correctly found that
petitioner company lacked the power of control over the performance by
respondent of his duties. The Labor Arbiter reasoned that the Comprehensive
Medical Plan, which contains the respondents objectives, duties and obligations,
does not tell respondent how to conduct his physical examination, how to
immunize, or how to diagnose and treat his patients, employees of [petitioner]
company, in each case. He likened this case to that of Neri v. National Labor
Relations Commission,[19] which held:
In the case of petitioner Neri, it is admitted that FEBTC issued a
job description which detailed her functions as a radio/telex
operator.However, a cursory reading of the job description shows that
what was sought to be controlled by FEBTC was actually the end result
of the task, e.g., that the daily incoming and outgoing telegraphic
transfer of funds received and relayed by her, respectively, tallies with
that of the register.The guidelines were laid down merely to ensure that
the desired end result was achieved. It did not, however, tell Neri how
the radio/telex machine should be operated.
In effect, the Labor Arbiter held that petitioner company, through

the Comprehensive Medical Plan, provided guidelines merely to ensure that the
end result was achieved, but did not control the means and methods by which
respondent performed his assigned tasks.
The NLRC affirmed the findings of the Labor Arbiter and stated that it is
precisely because the company lacks the power of control that the contract
provides that respondent shall be directly responsible to the employee concerned
and their dependents for any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.
The Labor Arbiter also correctly found that the provision in the Retainer
Agreement that respondent was on call during emergency cases did not make him a
regular employee. He explained, thus:
Likewise, the allegation of complainant that since he is on call at
anytime of the day and night makes him a regular employee is offtangent.Complainant does not dispute the fact that outside of the two (2)
hours that he is required to be at respondent companys premises, he is
not at all further required to just sit around in the premises and wait for
an emergency to occur so as to enable him from using such hours for his
own benefit and advantage. In fact, complainant maintains his own
private clinic attending to his private practice in the city, where he
services his patients, bills them accordingly -- and if it is an employee of
respondent company who is attended to by him for special treatment that
needs hospitalization or operation, this is subject to a special
billing. More often than not, an employee is required to stay in the
employers workplace or proximately close thereto that he cannot utilize
his time effectively and gainfully for his own purpose. Such is not the
prevailing situation here.
In addition, the Court finds that the schedule of work and the requirement to
be on call for emergency cases do not amount to such control, but are necessary
incidents to the Retainership Agreement.
The Court also notes that the Retainership Agreement granted to both parties
the power to terminate their relationship upon giving a 30-day notice. Hence,
petitioner company did not wield the sole power of dismissal or termination.
The Court agrees with the Labor Arbiter and the NLRC that there is nothing
wrong with the employment of respondent as a retained physician of petitioner
company and upholds the validity of the Retainership Agreement which clearly
stated that no employer-employee relationship existed between the parties. The
Agreement also stated that it was only for a period of 1 year beginning January 1,
1988 to December 31, 1998, but it was renewed on a yearly basis.
Considering that there is no employer-employee relationship between the
parties, the termination of the Retainership Agreement, which is in accordance with
the provisions of the Agreement, does not constitute illegal dismissal of
respondent.Consequently, there is no basis for the moral and exemplary damages
granted by the Court of Appeals to respondent due to his alleged illegal dismissal.
WHEREFORE, the petition is GRANTED and the Decision and
Resolution of the Court of Appeals are REVERSEDand SET ASIDE. The
Decision and Resolution dated November 28, 1997 and August 7, 1998,
respectively, of the National Labor Relations Commission are REINSTATED.
No costs.
SO ORDERED.
Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 157214
June 7, 2005
PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner,

vs.
RICARDO DE VERA, respondent.
DECISION
GARCIA, J.:
Before us is this appeal by way of a petition for review on certiorari from the 12 September 2002
Decision1 and the 13 February 2003 Resolution2 of the Court of Appeals in CA-G.R. SP No. 65178,
upholding the finding of illegal dismissal by the National Labor Relations Commission against
petitioner.
As culled from the records, the pertinent facts are:
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the
business of communication services and allied activities, while respondent Ricardo De Vera is a
physician by profession whom petitioner enlisted to attend to the medical needs of its employees. At
the crux of the controversy is Dr. De Veras status vis a vis petitioner when the latter terminated his
engagement.
It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981,3 offered his services to the
petitioner, therein proposing his plan of works required of a practitioner in industrial medicine, to
include the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for
consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization including
emergency cases and accidents;
4. Conduct pre-employment physical check-up of prospective employees with no additional
medical fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative function such as accomplishing medical forms,
evaluating conditions of employees applying for sick leave of absence and subsequently
issuing proper certification, and all matters referred which are medical in nature.
The parties agreed and formalized respondents proposal in a document denominated
as RETAINERSHIP CONTRACT4 which will be for a period of one year subject to renewal, it being
made clear therein that respondent will cover "the retainership the Company previously had with Dr.
K. Eulau" and that respondents "retainer fee" will be at P4,000.00 a month. Said contract was
renewed yearly.5 The retainership arrangement went on from 1981 to 1994 with changes in the
retainers fee. However, for the years 1995 and 1996, renewal of the contract was only made
verbally.
The turning point in the parties relationship surfaced in December 1996 when Philcom, thru a
letter6 bearing on the subject boldly written as "TERMINATION RETAINERSHIP CONTRACT",
informed De Vera of its decision to discontinue the latters "retainers contract with the Company
effective at the close of business hours of December 31, 1996" because management has decided
that it would be more practical to provide medical services to its employees through accredited
hospitals near the company premises.
On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor
Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as its
company physician since 1981 and was dismissed without due process. He averred that he was
designated as a "company physician on retainer basis" for reasons allegedly known only to Philcom.
He likewise professed that since he was not conversant with labor laws, he did not give much
attention to the designation as anyway he worked on a full-time basis and was paid a basic monthly
salary plus fringe benefits, like any other regular employees of Philcom.
On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a decision 7 dismissing
De Veras complaint for lack of merit, on the rationale that as a "retained physician" under a valid
contract mutually agreed upon by the parties, De Vera was an "independent contractor" and that he
"was not dismissed but rather his contract with [PHILCOM] ended when said contract was not
renewed after December 31, 1996".
On De Veras appeal to the NLRC, the latter, in a decision8 dated 23 October 2000, reversed (the
word used is "modified") that of the Labor Arbiter, on a finding that De Vera is Philcoms "regular
employee" and accordingly directed the company to reinstate him to his former position without loss
of seniority rights and privileges and with full backwages from the date of his dismissal until actual
reinstatement. We quote the dispositive portion of the decision:
WHEREFORE, the assailed decision is modified in that respondent is ordered to reinstate
complainant to his former position without loss of seniority rights and privileges with full backwages
from the date of his dismissal until his actual reinstatement computed as follows:
Backwages:
a)
Basic Salary
From Dec. 31, 1996 to Apr. 10, 2000 = 39.33 mos.
P44,400.00 x 39.33 mos.
b)
13th Month Pay:

1/12 of P1,750,185.00
c)
Travelling allowance:
P1,000.00 x 39.33 mos.
P1,750,185.00
145,848.75
39,330.00
GRAND TOTAL
P1,935,363.75
The decision stands in other aspects.

SO ORDERED.
With its motion for reconsideration having been denied by the NLRC in its order of 27 February
2001,9 Philcom then went to the Court of Appeals on a petition for certiorari, thereat docketed as CAG.R. SP No. 65178, imputing grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of the NLRC when it reversed the findings of the labor arbiter and awarded thirteenth month
pay and traveling allowance to De Vera even as such award had no basis in fact and in law.
On 12 September 2002, the Court of Appeals rendered a decision,10 modifying that of the NLRC by
deleting the award of traveling allowance, and ordering payment of separation pay to De Vera in lieu
of reinstatement, thus:
WHEREFORE, premises considered, the assailed judgment of public respondent, dated 23 October
2000, isMODIFIED. The award of traveling allowance is deleted as the same is hereby DELETED.
Instead of reinstatement, private respondent shall be paid separation pay computed at one (1)
month salary for every year of service computed from the time private respondent commenced his
employment in 1981 up to the actual payment of the backwages and separation pay. The awards of
backwages and 13th month pay STAND.
SO ORDERED.
In time, Philcom filed a motion for reconsideration but was denied by the appellate court in its
resolution of 13 February 2003.11
Hence, Philcoms present recourse on its main submission that THE COURT OF APPEALS ERRED IN SUSTAINING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION AND RENDERING THE QUESTIONED DECISION AND RESOLUTION
IN A WAY THAT IS NOT IN ACCORD WITH THE FACTS AND APPLICABLE LAWS AND
JURISPRUDENCE WHICH DISTINGUISH LEGITIMATE JOB CONTRACTING AGREEMENTS
FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.
We GRANT.
Under Rule 45 of the Rules of Court, only questions of law may be reviewed by this Court in
decisions rendered by the Court of Appeals. There are instances, however, where the Court departs
from this rule and reviews findings of fact so that substantial justice may be served. The exceptional
instances are where:
"xxx xxx xxx (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture;
(2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the
judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court
of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both
appellant and appellees; (7) the findings of fact of the Court of Appeals are contrary to those of the
trial court; (8) said findings of facts are conclusions without citation of specific evidence on which
they are based; (9) the facts set forth in the petition as well as in the petitioners main and reply
briefs are not disputed by the respondents; and (10) the findings of fact of the Court of Appeals are
premised on the supposed absence of evidence and contradicted by the evidence on record." 12
As we see it, the parties respective submissions revolve on the primordial issue of whether an
employer-employee relationship exists between petitioner and respondent, the existence of which is,
in itself, a question of fact13 well within the province of the NLRC. Nonetheless, given the reality that
the NLRCs findings are at odds with those of the labor arbiter, the Court, consistent with its ruling
in Jimenez vs. National Labor Relations Commission,14 is constrained to look deeper into the
attendant circumstances obtaining in this case, as appearing on record.
In a long line of decisions,15 the Court, in determining the existence of an employer-employee
relationship, has invariably adhered to the four-fold test, to wit: [1] the selection and engagement of
the employee; [2] the payment of wages; [3] the power of dismissal; and [4] the power to control the
employees conduct, or the so-called "control test", considered to be the most important element.
Applying the four-fold test to this case, we initially find that it was respondent himself who sets the
parameters of what his duties would be in offering his services to petitioner. This is borne by no less
than his 15 May 1981 letter16 which, in full, reads:
"May 15, 1981
Mrs. Adela L. Vicente
Vice President, Industrial Relations
PhilCom, Paseo de Roxas
Makati, Metro Manila
Madam:
I shall have the time and effort for the position of Company physician with your corporation if you
deemed it necessary. I have the necessary qualifications, training and experience required by such
position and I am confident that I can serve the best interests of your employees, medically.
My plan of works and targets shall cover the duties and responsibilities required of a practitioner in
industrial medicine which includes the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours
daily for consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization
including emergency cases and accidents;
4. Conduct pre-employment physical check-up of prospective employees with no
additional medical fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative functions such as accomplishing medical
forms, evaluating conditions of employees applying for sick leave of absence and
subsequently issuing proper certification, and all matters referred which are medical
in nature.
On the subject of compensation for the services that I propose to render to the corporation, you may
state an offer based on your belief that I can very well qualify for the job having worked with your
organization for sometime now.
I shall be very grateful for whatever kind attention you may extend on this matter and hoping that it
will merit acceptance, I remain
Very truly yours,
(signed)
RICARDO V. DE VERA, M.D."
Significantly, the foregoing letter was substantially the basis of the labor arbiters finding that there
existed no employer-employee relationship between petitioner and respondent, in addition to the
following factual settings:
The fact that the complainant was not considered an employee was recognized by the complainant
himself in a signed letter to the respondent dated April 21, 1982 attached as Annex G to the
respondents Reply and Rejoinder. Quoting the pertinent portion of said letter:
To carry out your memo effectively and to provide a systematic and workable time schedule which
will serve the best interests of both the present and absent employee, may I propose an extended
two-hour service (1:00-3:00 P.M.) during which period I can devote ample time to both groups
depending upon the urgency of the situation. I shall readjust my private schedule to be available for
the herein proposed extended hours, should you consider this proposal.
As regards compensation for the additional time and services that I shall render to the employees, it
is dependent on your evaluation of the merit of my proposal and your confidence on my ability to
carry out efficiently said proposal.
The tenor of this letter indicates that the complainant was proposing to extend his time with the
respondent and seeking additional compensation for said extension. This shows that the respondent
PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is
proposing his own schedule and asking to be paid for the same. This is proof that the complainant
understood that his relationship with the respondent PHILCOM was a retained physician and not as
an employee. If he were an employee he could not negotiate as to his hours of work.
The complainant is a Doctor of Medicine, and presumably, a well-educated person. Yet, the
complainant, in his position paper, is claiming that he is not conversant with the law and did not give
much attention to his job title- on a retainer basis. But the same complainant admits in his affidavit
that his service for the respondent was covered by a retainership contract [which] was renewed
every year from 1982 to 1994. Upon reading the contract dated September 6, 1982, signed by the
complainant himself (Annex C of Respondents Position Paper), it clearly states that is a
retainership contract. The retainer fee is indicated thereon and the duration of the contract for one
year is also clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot
claim that he was unaware that the contract was good only for one year, as he signed the same
without any objections. The complainant also accepted its renewal every year thereafter until 1994.
As a literate person and educated person, the complainant cannot claim that he does not know what
contract he signed and that it was renewed on a year to year basis. 17
The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work
with petitioner, he never was included in its payroll; was never deducted any contribution for
remittance to the Social Security System (SSS); and was in fact subjected by petitioner to the ten
(10%) percent withholding tax for his professional fee, in accordance with the National Internal
Revenue Code, matters which are simply inconsistent with an employer-employee relationship. In
the precise words of the labor arbiter:
"xxx xxx xxx After more than ten years of services to PHILCOM, the complainant would have noticed
that no SSS deductions were made on his remuneration or that the respondent was deducting the
10% tax for his fees and he surely would have complained about them if he had considered himself
an employee of PHILCOM. But he never raised those issues. An ordinary employee would consider
the SSS payments important and thus make sure they would be paid. The complainant never
bothered to ask the respondent to remit his SSS contributions. This clearly shows that the
complainant never considered himself an employee of PHILCOM and thus, respondent need not
remit anything to the SSS in favor of the complainant." 18
Clearly, the elements of an employer-employee relationship are wanting in this case. We may add
that the records are replete with evidence showing that respondent had to bill petitioner for his
monthly professional fees.19 It simply runs against the grain of common experience to imagine that
an ordinary employee has yet to bill his employer to receive his salary.
We note, too, that the power to terminate the parties relationship was mutually vested on both.
Either may terminate the arrangement at will, with or without cause.20
Finally, remarkably absent from the parties arrangement is the element of control, whereby the
employer has reserved the right to control the employee not only as to the result of the work done
but also as to the means and methods by which the same is to be accomplished. 21
Here, petitioner had no control over the means and methods by which respondent went about
performing his work at the company premises. He could even embark in the private practice of his
profession, not to mention the fact that respondents work hours and the additional compensation
therefor were negotiated upon by the parties.22 In fine, the parties themselves practically agreed on
every terms and conditions of respondents engagement, which thereby negates the element of
control in their relationship. For sure, respondent has never cited even a single instance when
petitioner interfered with his work.
Yet, despite the foregoing, all of which are extant on record, both the NLRC and the Court of Appeals
ruled that respondent is petitioners regular employee at the time of his separation.
Partly says the appellate court in its assailed decision:
Be that as it may, it is admitted that private respondents written retainer contract was renewed
annually from 1981 to 1994 and the alleged renewal for 1995 and 1996, when it was allegedly
terminated, was verbal.
Article 280 of the Labor code (sic) provides:
The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one (1) year of service, whether such
is continuous or broken, shall be considered a regular with respect to the activity in which he is
employedand his employment shall continue while such activity exists.
Parenthetically, the position of company physician, in the case of petitioner, is usually necessary and
desirable because the need for medical attention of employees cannot be foreseen, hence, it is
necessary to have a physician at hand. In fact, the importance and desirability of a physician in a
company premises is recognized by Art. 157 of the Labor Code, which requires the presence of a
physician depending on the number of employees and in the case at bench, in petitioners case, as
found by public respondent, petitioner employs more than 500 employees.
Going back to Art. 280 of the Labor Code, it was made therein clear that the provisions of a written
agreement to the contrary notwithstanding or the existence of a mere oral agreement, if the
employee is engaged in the usual business or trade of the employer, more so, that he rendered
service for at least one year, such employee shall be considered as a regular employee. Private
respondent herein has been with petitioner since 1981 and his employment was not for a specific
project or undertaking, the period of which was pre-determined and neither the work or service of
private respondent seasonal. (Emphasis by the CA itself).
We disagree to the foregoing ratiocination.
The appellate courts premise that regular employees are those who perform activities which are
desirable and necessary for the business of the employer is not determinative in this case. For, we
take it that any agreement may provide that one party shall render services for and in behalf of
another, no matter how necessary for the latters business, even without being hired as an
employee. This set-up is precisely true in the case of an independent contractorship as well as in an
agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the
yardstick for determining the existence of an employment relationship. As it is, the provision merely
distinguishes between two (2) kinds of employees, i.e., regular and casual. It does not apply where,
as here, the very existence of an employment relationship is in dispute. 23
Buttressing his contention that he is a regular employee of petitioner, respondent invokes Article 157
of the Labor Code, and argues that he satisfies all the requirements thereunder. The provision relied
upon reads:
ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish
his employees in any locality with free medical and dental attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of employees exceeds fifty
(50) but not more than two hundred (200) except when the employer does not maintain
hazardous workplaces, in which case the services of a graduate first-aider shall be provided
for the protection of the workers, where no registered nurse is available. The Secretary of
Labor shall provide by appropriate regulations the services that shall be required where the
number of employees does not exceed fifty (50) and shall determine by appropriate order
hazardous workplaces for purposes of this Article;
(b) The services of a full-time registered nurse, a part-time physician and dentist, and an
emergency clinic, when the number of employees exceeds two hundred (200) but not more
than three hundred (300); and
(c) The services of a full-time physician, dentist and full-time registered nurse as well as a
dental clinic, and an infirmary or emergency hospital with one bed capacity for every one
hundred (100) employees when the number of employees exceeds three hundred (300).
In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist
who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those
engaged on part-time basis, and not less than eight (8) hours in the case of those employed on fulltime basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be
engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe to
insure immediate availability of medical and dental treatment and attendance in case of emergency.
Had only respondent read carefully the very statutory provision invoked by him, he would have
noticed that in non-hazardous workplaces, the employer may engage the services of a physician "on
retained basis." As correctly observed by the petitioner, while it is true that the provision requires
employers to engage the services of medical practitioners in certain establishments depending on
the number of their employees, nothing is there in the law which says that medical practitioners so
engaged be actually hired as employees,24 adding that the law, as written, only requires the employer
"to retain", not employ, a part-time physician who needed to stay in the premises of the nonhazardous workplace for two (2) hours.25
Respondent takes no issue on the fact that petitioners business of telecommunications is not
hazardous in nature. As such, what applies here is the last paragraph of Article 157 which, to stress,
provides that the employer may engage the services of a physician and dentist "on retained basis",
subject to such regulations as the Secretary of Labor may prescribe. The successive "retainership"
agreements of the parties definitely hue to the very statutory provision relied upon by respondent.
Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that is free
from doubt. Where the law is clear and unambiguous, it must be taken to mean exactly what it says,
and courts have no choice but to see to it that the mandate is obeyed. 26 As it is, Article 157 of the
Labor Code clearly and unequivocally allows employers in non-hazardous establishments to engage
"on retained basis" the service of a dentist or physician. Nowhere does the law provide that the
physician or dentist so engaged thereby becomes a regular employee. The very phrase that they
may be engaged "on retained basis", revolts against the idea that this engagement gives rise to an
employer-employee relationship.
With the recognition of the fact that petitioner consistently engaged the services of respondent on a
retainer basis, as shown by their various "retainership contracts", so can petitioner put an end, with
or without cause, to their retainership agreement as therein provided. 27
We note, however, that even as the contracts entered into by the parties invariably provide for a 60day notice requirement prior to termination, the same was not complied with by petitioner when it
terminated on 17 December 1996 the verbally-renewed retainership agreement, effective at the
close of business hours of 31 December 1996.
Be that as it may, the record shows, and this is admitted by both parties,28 that execution of the
NLRC decision had already been made at the NLRC despite the pendency of the present recourse.
For sure, accounts of petitioner had already been garnished and released to respondent despite the
previous Status Quo Order29issued by this Court. To all intents and purposes, therefore, the 60-day
notice requirement has become moot and academic if not waived by the respondent himself.
WHEREFORE, the petition is GRANTED and the challenged decision of the Court of Appeals
REVERSED and SET ASIDE. The 21 December 1998 decision of the labor arbiter is REINSTATED.
No pronouncement as to costs.
SO ORDERED.
Panganiban, (Chairman), Corona, and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., on official leave.
http://www.lexology.com/library/detail.aspx?g=df17b6c0-5d8e-462c-a138accf76dcaaf8
https://www.thebalance.com/hiring-an-attorney-on-retainer-398441
A retainer agreement is a work for hire contract. It falls between a one-time contract and fulltime employment. Its distinguishing feature is that the employer pays in advance for work to be
specified later. Additional contracts regarding the performance of this work may also apply.
It is common for a person seeking the services of a lawyer (attorney) to pay a retainer ("retainer fee")
to the lawyer, to see a case through to its conclusion. [1] A retainer can be a single advance payment
or a recurring (e.g. monthly) payment.[2]
A retainer fee can be paid on a fixed, pre-negotiated rate or on a variable hourly rate depending on
the nature of retainer and also, the practice of the lawyer/advocate being retained. Both models exist
in the industry. The purpose of a retainer fee is to ensure payment for future services or work to be
rendered. Absent an agreement to the contrary, a retainer fee is refundable if the work is not
performed.[3]
Retainer is the basis of authority for an advocate. It limits the authority because it is not for all
general purposes for all time. It is therefore specific in nature, e.g. during litigation the advocate is
authorized by the client to accept service of proceedings that do not require personal service on
behalf of the client. This kind of authority can be expressed, implied, apparent or usual through the
usual practice of the advocate while pursuing the instructions of the client. [4]
Contingent fee
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A contingent fee (in the United States) or conditional fee (in England and Wales) is any fee for
services provided where the fee is payable only if there is a favourable result. Although such a fee
may be used in many fields, it is particularly well associated with legal practice. In the law, it is
defined as a "fee charged for a lawyer's services only if the lawsuit is successful or is favorably
settled out of court.... Contingent fees are usually calculated as a percentage of the client's net
recovery."[1]
In the English legal system, it is generally referred to as a conditional fee agreement or, informally
by the public and press, as no win no fee. The usual form of this agreement is that the solicitor will
take a law case on the understanding that if lost, no payment is made.
However, if the case is won, the lawyer will be entitled to the normal fee based on hourly billing, plus
a success fee. The success fee in England must be as a percentage no greater than 100% of the
normal fee. This contrasts with the contingency fee in the US, which gives the successful attorney a
percentage of the damages awarded in favor of his client.
This makes it easier for the poor to pursue their civil rights since otherwise, to sue someone for
a tort, one must first be wealthy enough to pursue such litigation in the first place. However, because
of the high risk, few attorneys will take cases on a contingency basis unless they feel the case has
good merit.
According to a 2004 book by law professor Herbert Kritzer, contingent fees were allowed as of that
year in the following countries: Australia, Brazil, Canada, the Dominican
Republic, France, Greece, Ireland, Japan, New Zealand, the United Kingdom and the United States.
[2]
They are also allowed in personal injury actions in Lithuania.
THIRD DIVISION
EVANGELINA MASMUD (as substitute
complainant for ALEXANDER J.
MASMUD),
Petitioner,
- versus -
NATIONAL LABOR RELATIONS

COMMISSION (First Division) and
ATTY. ROLANDO B. GO, JR.,
Respondents.
G.R. No. 183385

Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
PERALTA, JJ.
Promulgated:
February 13, 2009
x------------------------------------------------------------------------------------x
RESOLUTION
NACHURA, J.:
Before the Court is a petition for review on certiorari[1] assailing the

Decision[2] dated October 31, 2007 and the Resolution dated June 6, 2008 of the
Court of Appeals (CA) in CA-G.R. SP No. 96279.
The facts of the case are as follows:

On July 9, 2003, Evangelina Masmuds (Evangelina) husband, the late Alexander J.
Masmud (Alexander), filed a complaint[3]against First Victory Shipping Services
and Angelakos (Hellas) S.A. for non-payment of permanent disability benefits,
medical expenses, sickness allowance, moral and exemplary damages, and
attorneys fees. Alexander engaged the services of Atty. Rolando B. Go, Jr. (Atty.
Go) as his counsel.
In consideration of Atty. Gos legal services, Alexander agreed to pay attorneys fees
on a contingent basis, as follows: twenty percent (20%) of total monetary claims as
settled or paid and an additional ten percent (10%) in case of appeal. It was
likewise agreed that any award of attorneys fees shall pertain to respondents law
firm as compensation.
On November 21, 2003, the Labor Arbiter (LA) rendered a Decision granting the
monetary claims of Alexander. The dispositive portion of the decision, as quoted in
the CA Decision, reads:
WHEREFORE, foregoing considered, judgment is rendered finding the
[First Victory Shipping Services and Angelakos (Hellas) S.A.] jointly
and severally liable to pay [Alexanders] total permanent disability
benefits in the amount of US$60,000.00 and his sickness allowance of
US$2,348.00, both in Philippine currency at the prevailing rate of
exchange at the time of payment; and to pay further the amount
ofP200,000.00 as moral damages, P100,000.00 as exemplary damages
and attorneys fees equivalent to ten percent (10%) of the total monetary
award.
[Alexanders] claim for payment of medical expenses is dismissed for
lack of basis.
SO ORDERED.[4]
Alexanders employer filed an appeal before the National Labor Relations

Commission (NLRC). During the pendency of the proceedings before the NLRC,
Alexander died. After explaining the terms of the lawyers fees to Evangelina, Atty.
Go caused her substitution as complainant. On April 30, 2004, the NLRC rendered
a Decision dismissing the appeal of Alexanders employer. The employer
subsequently filed a motion for reconsideration. The NLRC denied the same in an
Order dated October 26, 2004.
On appeal before the CA, the decision of the LA was affirmed with modification.
The award of moral and exemplary damages was deleted.[5] Alexanders employers
filed a petition for certiorari[6] before this Court. On February 6, 2006, the Court
issued a Resolution dismissing the case for lack of merit.
Eventually, the decision of the NLRC became final and executory. Atty. Go moved
for the execution of the NLRC decision, which was later granted by the LA. The
surety bond of the employer was garnished. Upon motion of Atty. Go, the surety
company delivered to the NLRC Cashier, through the NLRC Sheriff, the check
amounting to P3,454,079.20. Thereafter, Atty. Go moved for the release of the said
amount to Evangelina.
On January 10, 2005, the LA directed the NLRC Cashier to release the amount
of P3,454,079.20 to Evangelina. Out of the said amount, Evangelina paid Atty. Go
the sum of P680,000.00.
Dissatisfied, Atty. Go filed a motion to record and enforce the attorneys lien
alleging that Evangelina reneged on their contingent fee agreement. Evangelina
paid only the amount of P680,000.00, equivalent to 20% of the award as attorneys
fees, thus, leaving a balance of 10%, plus the award pertaining to the counsel as
attorneys fees.
In response to the motion filed by Atty. Go, Evangelina filed a comment with
motion to release the amount deposited with the NLRC Cashier. In her comment,
Evangelina manifested that Atty. Gos claim for attorneys fees of 40% of the total
monetary award was null and void based on Article 111 of the Labor Code.
On February 14, 2005, the LA issued an Order [7] granting Atty. Gos motion,
the fallo of which reads:
WHEREFORE, premises considered, and further considering the
substitute complainants initial payment of 20% to movant-counsel of the
monetary claims as paid, let the balance or unpaid twenty (20%) per cent
of attorneys fees due movant-counsel (or the amount of P839,587.39) be
recorded as lien upon all the monies that may still be paid to substitute
complainant Evangelina Masmud.
Accordingly, the NLRC Cashier is directed to pay movant-counsel the
amount of P677,589.96 which is currently deposited therein to partially
satisfy the lien.
SO ORDERED.[8]
Evangelina questioned the February 14, 2005 Order of the LA before the NLRC.
On January 31, 2006, the NLRC issued a Resolution [9] dismissing the appeal for
lack of merit.
Evangelina then elevated the case to the CA via a petition for certiorari.[10] On
October 31, 2007, the CA rendered a Decision[11] partially granting the petition.
The dispositive portion of the decision reads:
WHEREFORE, the petition is PARTIALLY GRANTED. The
Resolutions dated January 31, 2006 and July 18, 2006 are
herebyAFFIRMED with MODIFICATION in that the Attorneys fees
of respondent Atty. Rolando B. Go, Jr. is declared fully compensated by
the amount of P1,347,950.11 that he has already received.
SO ORDERED.[12]
Evangelina filed a motion for reconsideration. However, on June 6, 2008, the CA

issued a Resolution[13] denying the motion for reconsideration for lack of merit.
Hence, the instant petition.
Evangelina presented this issue, viz.:
THE COURT OF APPEALS COMMITTED SERIOUS AND
REVERSIBLE ERROR OF LAW IN ITS DECISION DATED 31
OCTOBER 2007 AND RESOLUTION DATED 6 JUNE 2008
INSOFAR AS IT UPHOLDS RESPONDENT LAWYERS CLAIM OF
FORTY PERCENT (40%) OF THE MONETARY AWARD IN A
LABOR CASE AS ATTORNEYS FEES.[14]
In effect, petitioner seeks affirmance of her conviction that the legal compensation
of a lawyer in a labor proceeding should be based on Article 111 of the Labor
Code.
There are two concepts of attorney's fees. In the ordinary sense, attorney's fees
represent the reasonable compensation paid to a lawyer by his client for the legal
services rendered to the latter. On the other hand, in its extraordinary concept,
attorney's fees may be awarded by the court as indemnity for damages to be paid
by the losing party to the prevailing party,[15] such that, in any of the cases provided
by law where such award can be made, e.g., those authorized in Article 2208 of the
Civil Code, the amount is payable not to the lawyer but to the client, unless they
have agreed that the award shall pertain to the lawyer as additional compensation
or as part thereof.[16]
Here, we apply the ordinary concept of attorneys fees, or the compensation that
Atty. Go is entitled to receive for representing Evangelina, in substitution of her
husband, before the labor tribunals and before the court.
Evangelina maintains that Article 111 of the Labor Code is the law that should
govern Atty. Gos compensation as her counsel and assiduously opposes their
agreed retainer contract.
Article 111 of the said Code provides:

ART. 111. Attorney's fees. (a) In cases of unlawful withholding of wages
the culpable party may be assessed attorney's fees equivalent to ten
percent of the amount of the wages recovered.
Contrary to Evangelinas proposition, Article 111 of the Labor Code deals with the
extraordinary concept of attorneys fees. It regulates the amount recoverable as
attorney's fees in the nature of damages sustained by and awarded to the prevailing
party. It may not be used as the standard in fixing the amount payable to the lawyer
by his client for the legal services he rendered.[17]
In this regard, Section 24, Rule 138 of the Rules of Court should be observed in
determining Atty. Gos compensation. The said Rule provides:
SEC. 24. Compensation of attorney's; agreement as to fees. An attorney
shall be entitled to have and recover from his client no more than a
reasonable compensation for his services, with a view to the importance
of the subject matter of the controversy, the extent of the services
rendered, and the professional standing of the attorney. No court shall be
bound by the opinion of attorneys as expert witnesses as to the proper
compensation, but may disregard such testimony and base its conclusion
on its own professional knowledge. A written contract for services shall
control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable.[18]
The retainer contract between Atty. Go and Evangelina provides for a contingent
fee. The contract shall control in the determination of the amount to be paid, unless
found by the court to be unconscionable or unreasonable. [19] Attorney's fees are
unconscionable if they affront one's sense of justice, decency or reasonableness.
[20]
The decree of unconscionability or unreasonableness of a stipulated amount in a
contingent fee contract will not preclude recovery. It merely justifies the fixing by
the court of a reasonable compensation for the lawyer's services.[21]
The criteria found in the Code of Professional Responsibility are also to be

considered in assessing the proper amount of compensation that a lawyer should
receive. Canon 20, Rule 20.01 of the said Code provides:
CANON 20 A LAWYER SHALL CHARGE ONLY FAIR AND
REASONABLE FEES.
Rule 20.01. A lawyer shall be guided by the following factors in
determining his fees:
(a) The time spent and the extent of the services rendered or required;
(b) The novelty and difficulty of the question involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance
of the proffered case;
(f) The customary charges for similar services and the schedule of fees
of the IBP Chapter to which he belongs;
(g) The amount involved in the controversy and the benefits resulting to
the client from the service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established;
and
(j) The professional standing of the lawyer.
Contingent fee contracts are subject to the supervision and close scrutiny of the
court in order that clients may be protected from unjust charges. [22] The amount of
contingent fees agreed upon by the parties is subject to the stipulation that counsel
will be paid for his legal services only if the suit or litigation prospers. A much
higher compensation is allowed as contingent fees because of the risk that the
lawyer may get nothing if the suit fails. [23] The Court finds nothing illegal in the
contingent fee contract between Atty. Go and Evangelinas husband. The CA
committed no error of law when it awarded the attorneys fees of Atty. Go and
allowed him to receive an equivalent of 39% of the monetary award.
The issue of the reasonableness of attorney's fees is a question of fact. Well-settled
is the rule that conclusions and findings of fact of the CA are entitled to great
weight on appeal and will not be disturbed except for strong and cogent reasons
which are absent in the case at bench. The findings of the CA, which are supported
by substantial evidence, are almost beyond the power of review by the Supreme
Court.[24]
Considering that Atty. Go successfully represented his client, it is only proper that
he should receive adequate compensation for his efforts. Even as we agree with the
reduction of the award of attorney's fees by the CA, the fact that a lawyer plays a
vital role in the administration of justice emphasizes the need to secure to him his
honorarium lawfully earned as a means to preserve the decorum and respectability
of the legal profession. A lawyer is as much entitled to judicial protection against
injustice orimposition of fraud on the part of his client as the client is against abuse
on the part of his counsel. The duty of the court is not alone to ensure that a lawyer
acts in a proper and lawful manner, but also to see that a lawyer is paid his just
fees. With his capital consisting of his brains and with his skill acquired at
tremendous cost not only in money but in expenditure of time and energy, he is
entitled to the protection of any judicial tribunal against any attempt on the part of
his client to escape payment of his just compensation. It would be ironic if after
putting forth the best in him to secure justice for his client, he himself would not
get his due.[25]
WHEREFORE, in view of the foregoing, the Decision dated October 31, 2007
and the Resolution dated June 6, 2008 of the Court of Appeals in CA-G.R. SP No.
96279 are hereby AFFIRMED.
SO ORDERED.
What is a retainership?
2 Answers
Chandrakant Shelkar, Has a degree in Agricultural sciences. Organic Gardeningn as a

Hobby. Has stu...
Written Aug 4, 2015
'Retainer" is a person who is retained by a firm or a company for giving advice on some
complex matters which require expert opinion,such as for example,Labor Laws, Provident
Fund matters or Landed / Intellectual Property issues etc.
He is not required to put in daily attendance or observe any fixed working hours. He would
charge a retainership fee for his services. In case, he is required to put in an attendance or
appear on your behalf before any Govt. Authority/court etc, he charges for the same
separately for such services. This however, depends upon the terms of his engagement as a
'Retainer'
Retainership contract is one in which the employees are hired on retainership basis. Since
there are no fixed hours of office attendance, of such a contract, statutory requirements of
employment like PF,ESIC, Bonus,Gratuity ,etc are not applicable to the individuals.the
working hours ,monthly charges ,and other benefits (if required) can be given depending
upon mutual understanding and terms of contract between the company and the
individual ,there will be no Master and servant relationship in such contract .
As against this, in respect of employment on contractual terms, the incumbent is
required to physically put in attendance as per the terms of the contract.
The basic difference, is, while in the case of retainership, the availability of person for advice
is ensured, in the latter case his physical presence for discharging the duties is necessary.
Independents contractor
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-75038 August 23, 1993

ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN
BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA
ESCOBIDO, JUSTILITA CABANIG, and DOMINGO SAGUIT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and BROAD STREET
TAILORING and/or RODOLFO ZAPANTA, respondents.
Balguma, Macasaet & Associates for petitioners.
Teresita Gandionco Oledan for private respondents.
NOCON, J.:
A basic factor underlying the exercise of rights and the filing of claims for benefits under the Labor
Code and other presidential issuances or labor legislations is the status and nature of one's
employment. Whether an employer-employee relationship exist and whether such employment is
managerial in character or that of a rank and file employee are primordial considerations before
extending labor benefits. Thus, petitioners in this case seek a definitive ruling on the status and
nature of their employment with Broad Street Tailoring and pray for the nullification of the resolution
dated May 12, 1986 of the National Labor Relations Commissions in NLRC Case No. RB-IV- 2155878-T affirming the decision of Labor Arbiter Ernilo V. Pealosa dated May 28, 1979, which held
eleven of them as independent contractors and the remaining one as employee but of managerial
rank.
The facts of the case shows that petitioner Elias Villuga was employed as cutter in the tailoring shop
owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring located at Shaw
Boulevard, Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary of P840.00
and a monthly transportation allowance of P40.00. In addition to his work as cutter, Villuga was
assigned the chore of distributing work to the shop's tailors or sewers when both the shop's manager
and assistant manager would be absent. He saw to it that their work conformed with the pattern he
had prepared and if not, he had them redone, repaired or resewn.
The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount for
every item ironed, repaired or sewn, regardless of the time consumed in accomplishing the task.
Petitioners did not fill up any time record since they did not observe regular or fixed hours of work.
They were allowed to perform their work at home especially when the volume of work, which
depended on the number of job orders, could no longer be coped up with.
From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to illness. For
not properly notifying his employer, he was considered to have abandoned his work.
In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor,
Villuga claimed that he was refused admittance when he reported for work after his absence,
allegedly due to his active participation in the union organized by private respondent's tailors. He
further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on rest
days and holidays, service incentive leave pay and 13th month pay.
Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed that they
were dismissed from their employment because they joined the Philippine Social Security Labor
Union (PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela, Flora
Escobido, Justilita Cabaneg and Domingo Saguit claimed that they stopped working because private
respondents gave them few pieces of work to do after learning of their membership with PSSLU. All
the petitioners laid claims under the different labor standard laws which private respondent allegedly
violated.
On May 28, 1979, Labor Arbiter Ernilo V. Pealosa rendered a decision ordering the dismissal of the
complaint for unfair labor practices, illegal dismissal and other money claims except petitioner
Villuga's claim for 13th month pay for the years 1976, 1977 and 1980. The dispositive portion of the
decision states as follows:
WHEREFORE, premises considered, the respondent Broad Street Tailoring and/or
Rodolfo Zapanta are hereby ordered to pay complainant Elias Villuga the sum of
ONE THOUSAND TWO HUNDRED FORTY-EIGHT PESOS AND SIXTY-SIX
CENTAVOS (P1,248.66) representing his 13th month pay for the years 1976, 1977
and 1978. His other claims in this case are hereby denied for lack of merit.
The complaint insofar as the other eleven (11) complainants are concerned should
be, as it is hereby dismissed for want of jurisdiction. 1
On appeal, the National Labor Relations Commission affirmed the questioned decision in a
resolution dated May 12, 1986, the dispositive portion of which states as follows:
WHEREFORE, premises considered, the decision appealed from is, as it is hereby
AFFIRMED, and the appeal dismissed. 2
Presiding Commissioner Guillermo C. Medina merely concurred in the result while Commissioner
Gabriel M. Gatchalian rendered a dissenting opinion which states as follows:
I am for upholding employer-employee relationship as argued by the complainants
before the Labor Arbiter and on appeal. The further fact that the proposed decision
recognizes complainant's status as piece-rate worker all the more crystallizes
employer-employee relationship the benefits prayed for must be granted. 3
Hence, petitioners filed this instant certiorari case on the following grounds:
1. That the respondent National Labor Relations Commission abused its discretion
when it ruled that petitioner/complainant, Elias Villuga falls within the category of a
managerial employee;
2. . . . when it ruled that the herein petitioners were not dismissed by reason of their
union activities;
3. . . . when it ruled that petitioners Andres Abad, Benjamin Brizuela, Norlito Ladia,
Marcelo Aguilan, David Oro, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and
Domingo Saguit were not employees of private respondents but were contractors.
4. . . . when it ruled that petitioner Elias Villuga is not entitled to overtime pay and
services for Sundays and Legal Holidays; and
5. . . . when it failed to grant petitioners their respective claims under the provisions
of P.D. Nos. 925, 1123 and 851. 4
Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a member of a
managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary duty
consists of the performance of work directly related to management policies; (2) that he customarily
and regularly exercises discretion and independent judgment in the performance of his functions; (3)
that he regularly and directly assists in the management of the establishment; and (4) that he does
not devote his twenty per cent of his time to work other than those described above.
Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primary work or
duty is to cut or prepare patterns for items to be sewn, not to lay down or implement any of the
management policies, as there is a manager and an assistant manager who perform said functions.
It is true that in the absence of the manager the assistant manager, he distributes and assigns work
to employees but such duty, though involving discretion, is occasional and not regular or customary.
He had also the authority to order the repair or resewing of defective item but such authority is part
and parcel of his function as cutter to see to it that the items cut are sewn correctly lest the defective
nature of the workmanship be attributed to his "poor cutting." Elias Villuga does not participate in
policy-making. Rather, the functions of his position involve execution of approved and established
policies. InFranklin Baker Company of the Philippines v. Trajano, 5 it was held that employees who do
not participate in policy-making but are given ready policies to execute and standard practices to observe
are not managerial employees. The test of "supervisory or managerial status" depends on whether a
person possesses authority that is not merely routinary or clerical in nature but one that requires use of
independent judgment. In other words, the functions of the position are not managerial in nature if they
only execute approved and established policies leaving little or no discretion at all whether to implement
said policies or not. 6
Consequently, the exclusion of Villuga from the benefits claimed under Article 87 (overtime pay and
premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95 (service
incentive leave pay) of the Labor Code, on the ground that he is a managerial employee is
unwarranted. He is definitely a rank and file employee hired to perform the work of the cutter and not
hired to perform supervisory or managerial functions. The fact that he is uniformly paid by the month
does not exclude him from the benefits of holiday pay as held in the case ofInsular Bank of America
Employees Union v. Inciong. 7 He should therefore be paid in addition to the 13th month pay, his
overtime pay, holiday pay, premium pay for holiday and rest day, and service incentive leave pay.
As to the dismissal of the charge for unfair labor practices of private respondent consisting of
termination of employment of petitioners and acts of discrimination against members of the labor
union, the respondent Commission correctly held the absence of evidence that Mr. Zapanta was
aware of petitioners' alleged union membership on February 22, 1978 as the notice of union
existence in the establishment with proposal for recognition and collective bargaining negotiation
was received by management only an March 3, 1978. Indeed, self-serving allegations without
concrete proof that the private respondent knew of their membership in the union and accordingly
reacted against their membership do not suffice.
Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. For
abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified
refusal of the employee to resume his employment. Mere absence is not sufficient, it must be
accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to
work anymore. 8 At any rate, dismissal of an employee due to his prolonged absence without leave by
reason of illness duly established by the presentation of a medical certificate is not justified. 9 In the case
at bar, however, considering that petitioner Villuga absented himself for four (4) days without leave and
without submitting a medical certificate to support his claim of illness, the imposition of a sanction is
justified, but surely, not dismissal, in the light of the fact that this is petitioner's first offense. In lieu of
reinstatement, petitioner Villuga should be paid separation pay where reinstatement can no longer be
effected in view of the long passage of time or because of the realities of the situation. 10 But petitioner
should not be granted backwages in addition to reinstatement as the same is not just and equitable under
the circumstances considering that he was not entirely free from blame. 11
As to the other eleven petitioners, there is no clear showing that they were dismissed because the
circumstances surrounding their dismissal were not even alleged. However, we disagree with the
finding of respondent Commission that the eleven petitioners are independent contractors.
For an employer-employee relationship to exist, the following elements are generally considered:
"(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." 12
Noting that the herein petitioners were oftentimes allowed to perform their work at home and were
paid wages on a piece-rate basis, the respondent Commission apparently found the second and
fourth elements lacking and ruled that "there is no employer-employee relationship, for it is clear that
respondents are interested only in the result and not in the means and manner and how the result is
obtained."
Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis is
no argument that herein petitioners were not employees. The term "wage" has been broadly defined
in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission
basis. . . ." The facts of this case indicate that payment by the piece is just a method of
compensation and does not define the essence of the
relation. 13 The petitioners were allowed to perform their work at home does not likewise imply absence of
control and supervision. The control test calls merely for the existence of a right to control the manner of
doing the work, not the actual exercise of the right. 14
In determining whether the relationship is that of employer and employee or one of an independent
contractor, "each case must be determined on its own facts and all the features of the relationship
are to be considered." 15Considering that petitioners who are either sewers, repairmen or ironer, have
been in the employ of private respondent as early as 1972 or at the latest in 1976, faithfully rendering
services which are desirable or necessary for the business of private respondent, and observing
management's approved standards set for their respective lines of work as well as the customers'
specifications, petitioners should be considered employees, not independent contractors.
Independent contractors are those who exercise independent employment, contracting to do a piece
of work according to their own methods and without being subjected to control of their employer
except as to the result of their work. By the nature of the different phases of work in a tailoring shop
where the customers' specifications must be followed to the letter, it is inconceivable that the workers
therein would not be subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar workers hired in the tailoring
department, although paid weekly wages on piece work basis, are employees not independent
contractors. Accordingly, as regular employees, paid on a piece-rate basis, petitioners are not entitled to
overtime pay, holiday pay, premium pay for holiday/rest day and service incentive leave pay. Their claim
for separation pay should also be defined for lack of evidence that they were in fact dismissed by private
respondent. They should be paid, however, their 13th month pay under P.D. 851, since they are
employees not independent contractors.
WHEREFORE, in view of the foregoing reasons, the assailed decision of respondent National Labor
Relations Commission is hereby MODIFIED by awarding
(a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for holiday and rest day,
service incentive leave pay and separation pay, in addition to his 13th month pay; and
(b) in favor of the rest of the petitioners, their respective 13th month pay.
The case is hereby REMANDED to the National Labor Relations Commission for the computation of
the claims herein-above mentioned.
SO ORDERED.
Narvasa C.J., Padilla, Regalado and Puno, JJ., concur.
17 September 2014
Villuga v. NLRC Digest
Villuga v. National Labor Relations Commission

Petitioner Villuga was employed by Private Respondent Zapanta (of Broad
St. Tailoring) as a cutter. He was also tasked to distribute work to other
tailors and sewers when the shop manager or assistant is not around and
makes sure that the work conform to the pattern given. The other
petitioners were ironers, repairmen and sewers who were paid on
piecerate basis. The petitioners did not fill in any time record since they
did not work on fixed hours, they also work at home when job orders
increased. Villuga got ill and was not able to report to work for a few days
but has notified the employer. Subsequently, he was considered to have
abandoned his job. This prompted Villuga to file a complaint on the
ground that he was refused back to work due to an alleged participation
to a union organized by the tailors. The other petitioners claimed that
they were dismissed due to union participation. The Labor Arbiter
dismissed their complaint, the NLRC affirmed the dismissal.
Issue:
W/N petitioner Villuga is a managerial employee
RULING: No. Villuga's primary work is to cut or prepare patterns and not
to lay down management policies since there is already a
manager/assistant in-charge of this exact responsibility. Note that he
only distributes or assigns work occasionally and does not take part in
policy-making activities.
The test of 'supervisory' or managerial status depends on whether a
person possesses the authority that is not merely routinary/clerical in
nature but one that requires the use of independent judgement. Note
that your functions are not managerial if you only execute approved and
established policies.
Requirements to be considered one to be part of the managerial staff is
laid down in Rule 1, Sec. 2(c) Book III), as follows:
1) Performance of work directly related to management policies.
2) Customarily/regularly exercise discretion and independent judgement
in the performance of his functions.
3) Regularly/directly assists in managing the establishment.
4) Does not devote 20% of his time to work other than those described
above.
Finally, there was no abandonment of work by Villuga, 1) to be
considered as such, his act must be deliberate and an unjustified refusal
and accompanied by overt acts, mere absence is not a sufficient ground.

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What is the so-called boundary

What kind of relationship exists

Javier v. Fly Ace & Castillo

substantial evidence that amount of relevant evidence which a

Javier v. Fly Ace & Castillo

COCA COLA BOTTLERS (PHILS.), G.R. No. 146881

In effect, the Labor Arbiter held that petitioner company, through

This Agreement shall only be for a period of one (1) year

The compensation to be paid by the company for the services of

That in consideration of the above mentioned retainers fee, the

That the applicable provisions in the Occupational Safety and

That the DOCTOR shall be directly responsible to the employee

That the DOCTOR shall observe clinic hours at the COMPANYS

That no employee-employer relationship shall exist between the

The Comprehensive Medical Plan,[3] which contains the duties and

These objectives have been set to give full consideration to [the]

2. To protect employees from any occupational health hazard by

6. Coordinate with Safety Committee in developing specific

The Retainer Agreement, which began on January 1, 1988, was renewed

In a Decision[12] dated February 24, 1997, Labor Arbiter Benjamin

In a Decision[13] promulgated on November 28, 1997, the NLRC dismissed

The Court of Appeals held:

Moreover, the Court of Appeals declared that respondent should be

Reinstate the petitioner with full backwages without loss of

Pay petitioner moral damages in the amount of P50,000.00.

Pay petitioner exemplary damages in the amount of P50,000.00.

Give to petitioner all other benefits to which a regular employee

Petitioner company filed a motion for reconsideration of the Decision of the

In a Resolution promulgated on January 30, 2001, the Court of Appeals

THAT THE HONORABLE COURT OF APPEALS

THAT THE HONORABLE COURT OF APPEALS

THAT THE HONORABLE COURT OF APPEALS

FINDINGS OF THE LABOR ARBITERS AND THE

THAT THE HONORABLE COURT OF APPEALS

THAT THE HONORABLE COURT OF APPEALS

THAT THE HONORABLE COURT OF APPEALS

THAT THE HONORABLE COURT OF APPEALS

In effect, the Labor Arbiter held that petitioner company, through

Republic of the Philippines

PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner,

13th Month Pay:

The decision stands in other aspects.

NATIONAL LABOR RELATIONS

G.R. No. 183385

Before the Court is a petition for review on certiorari[1] assailing the

The facts of the case are as follows:

Alexanders employer filed an appeal before the National Labor Relations

Evangelina filed a motion for reconsideration. However, on June 6, 2008, the CA

Article 111 of the said Code provides:

The criteria found in the Code of Professional Responsibility are also to be

Chandrakant Shelkar, Has a degree in Agricultural sciences. Organic Gardeningn as a

Republic of the Philippines

G.R. No. L-75038 August 23, 1993

Villuga v. NLRC Digest

Villuga v. National Labor Relations Commission

W/N petitioner Villuga is a managerial employee

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