Zamudio vs.

NLRC
Chester Cabalza recommends his visitors to please read the original & full text of the
case cited. Xie xie!
Employee-Employer Relationship
ZAMUDIO VS. NLRC
GR NO. 76723
March 25, 1990
Facts:
Petitioners rendered services essential for the cultivation of respondents farm. While
the services were not continuous in the sense that they were not rendered everyday
throughout the year, as is the nature of farm work, petitioners had never stopped
working for respondent from year to year from the time he hired them to the time he
dismissed.
Issue:
Are the petitioners considered as employees?
Ruling:
The nature of their employment, i.e. Pakyao basis, does not make petitioner
independent contractors. Pakyao workers are considered employees as long as the
employer exercises control over the means by which such workers are to perform their
work inside private respondents farm, the latter necessarily exercised control over the
performed by petitioners.
The seasonal nature of petitioners work does not detract from the conclusion that
employer employee relationship exits. Seasonal workers whose work is not merely for
the duration of the season, but who are rehired every working season are considered
regular employees. The circumstances that petitioners do not apears in respondents
payroll does not destroy the employer employee relationship between them. Omission
of petitioners in the payroll was not within their control, they had no hand in the
preparation of the payroll. This circumstance, even if true, cannot be taken against
petitioners.
FIRST DIVISION

[G.R. No. 147816. May 9, 2003]

EFREN P. PAGUIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,

METROMEDIA TIMES CORPORATION, ROBINA Y. GOKONGWEI, LIBERATO
GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GO and ALDA
IGLESIA, respondents.
DECISION
VITUG, J.:
On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth
time, into an agreement with petitioner Efren P. Paguio, appointing the latter to be an
account executive of the firm.[1] Again, petitioner was to solicit advertisements for "The
Manila Times," a newspaper of general circulation, published by respondent
company. Petitioner, for his efforts, was to receive compensation consisting of a 15%
commission on direct advertisements less withholding tax and a 10% commission on
agency advertisements based on gross revenues less agency commission and the
corresponding withholding tax. The commissions, released every fifteen days of each
month, were to be given to petitioner only after the clients would have paid for the
advertisements. Apart from commissions, petitioner was also entitled to a monthly
allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the
contentious points raised by the parties had something to do with the following
stipulations of the agreement; viz:
12. You are not an employee of the Metromedia Times Corporation nor does the
company have any obligations towards anyone you may employ, nor any responsibility
for your operating expenses or for any liability you may incur. The only rights and
obligations between us are those set forth in this agreement. This agreement cannot be
amended or modified in any way except with the duly authorized consent in writing of
both parties.
13. Either party may terminate this agreement at any time by giving written notice to the
other, thirty (30) days prior to effectivity of termination. [2]
On 15 August 1992, barely two months after the renewal of his contract, petitioner
received the following notice from respondent firm Dear Mr. Paguio,
Please be advised of our decision to terminate your services as Account Executive of
Manila Times effective September 30, 1992.
This is in accordance with our contract signed last July 1, 1992. [3]
Apart from vague allegations of misconduct on which he was not given the opportunity
to defend himself, i.e., pirating clients from his co-executives and failing to produce
results, no definite cause for petitioners termination was given. Aggrieved, petitioner
filed a case before the labor arbiter, asking that his dismissal be declared unlawful and

that his reinstatement, with entitlement to backwages without loss of seniority rights, be
ordered. Petitioner also prayed that respondent company officials be held accountable
for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00
exemplary damages.
In their defense, respondent Metromedia Times Corporation asserted that it did not
enter into any agreement with petitioner outside of the contract of services under
Articles 1642 and 1644 of the Civil Code of the Philippines. [4] Asserting their right to
terminate the contract with petitioner, respondents pointed to the last provision thereof
stating that both parties could opt to end the contract provided that either party would
serve, thirty days prior to the intended date of termination, the corresponding notice to
the other.
The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter
ordered respondent Metromedia Times Corporation and its officers to reinstate
petitioner to his former position, without loss of seniority rights, and to pay him his
commissions and other remuneration accruing from the date of dismissal on 15 August
1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general
manager of respondent corporation, be held liable to petitioner for moral damages in the
amount of P20,000.00.
On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of
the labor arbiter and declared the contractual relationship between the parties as being
for a fixed-term employment. The NLRC declared a fixed-term employment to be lawful
as long as it was agreed upon knowingly and voluntarily by the parties, without any
force, duress or improper pressure being brought to bear upon the worker and absent
any other circumstances vitiating his consent." [5] The finding of the NLRC was primarily
hinged on the assumption that petitioner, on account of his educated stature, having
indeed personally prepared his pleadings without the aid of counsel, was an unlikely
victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular
employee, the NLRC held: "The decisive determinant would not be the activities that the
employee (was) called upon to perform but rather, the day certain agreed upon by the
parties for the commencement and termination of their employment relationship, a day
certain being understood to be that which (would) necessarily come, although it (might)
not be known when."[6]
Petitioner appealed the ruling of the NLRC before the Court of Appeals which
upheld in toto the findings of the commission. In his petition for review on certiorari,
petitioner raised the following issues for resolution:
WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENTS
COMPANY IS FOR A FIXED PERIOD.
WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.
WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL
DAMAGES.[7]

The crux of the matter would entail the determination of the nature of contractual
relationship between petitioner and respondent company - was it or was it not one of
regular employment?
A regular employment, whether it is one or not, is aptly gauged from the
concurrence, or the non-concurrence, of the following factors - a) the manner of
selection and engagement of the putative employee, b) the mode of payment of wages,
c) the presence or absence of the power of dismissal; and d) the presence or absence
of the power to control the conduct of the putative employee or the power to control the
employee with respect to the means or methods by which his work is to be
accomplished.[8] The "control test" assumes primacy in the overall consideration.Under
this test, an employment relation obtains where work is performed or services are
rendered under the control and supervision of the party contracting for the service, not
only as to the result of the work but also as to the manner and details of the
performance desired.[9]
An indicum of regular employment, rightly taken into account by the labor arbiter,
was the reservation by respondent Metromedia Times Corporation not only of the right
to control the results to be achieved but likewise the manner and the means used in
reaching that end.[10] Metromedia Times Corporation exercised such control by requiring
petitioner, among other things, to submit a daily sales activity report and also a monthly
sales report as well. Various solicitation letters would indeed show that Robina
Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick
Go, the advertising director, directed and monitored the sales activities of petitioner.
The Labor Code, in Article 280 thereof, provides:
ART. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the proceeding
paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists.
Thus defined, a regular employee is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as against those
which are undertaken for a specific project or are seasonal. Even in these latter cases,
where such person has rendered at least one year of service, regardless of the nature
of the activity performed or of whether it is continuous or intermittent, the employment is
considered regular as long as the activity exists, it not being indispensable that he be

first issued a regular appointment or be formally declared as such before acquiring a

regular status.[11]
That petitioner performed activities which were necessary and desirable to the
business of the employer, and that the same went on for more than a year, could hardly
be denied. Petitioner was an account executive in soliciting advertisements, clearly
necessary and desirable, for the survival and continued operation of the business of
respondent corporation. Robina Gokongwei, its President, herself admitted that the
income generated from paid advertisements was the lifeblood of the newspaper's
existence. Implicitly, respondent corporation recognized petitioners invaluable
contribution to the business when it renewed, not just once but five times, its contract
with petitioner.
Respondent company cannot seek refuge under the terms of the agreement it has
entered into with petitioner. The law, in defining their contractual relationship, does so,
not necessarily or exclusively upon the terms of their written or oral contract, but also on
the basis of the nature of the work petitioner has been called upon to perform. [12] The
law affords protection to an employee, and it will not countenance any attempt to
subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it
is utilized to deprive the employee of his security of tenure. [13]The sheer inequality that
characterizes employer-employee relations, where the scales generally tip against the
employee, often scarcely provides him real and better options.
The real question that should thus be posed is whether or not petitioner has been
justly dismissed from service. A lawful dismissal must meet both substantive and
procedural requirements; in fine, the dismissal must be for a just or authorized cause
and must comply with the rudimentary due process of notice and hearing. It is not
shown that respondent company has fully bothered itself with either of these
requirements in terminating the services of petitioner. The notice of termination recites
no valid or just cause for the dismissal of petitioner nor does it appear that he has been
given an opportunity to be heard in his defense.
The evidence, however, found by the appellate court is wanting that would indicate
bad faith or malice on the part of respondents, particularly by respondent Liberato I.
Gomez, and the award of moral damages must thus be deleted.
WHEREFORE, the instant petition is GRANTED. The decision of the Court of
Appeals in C.A. G.R. SP No. 527773 and that of the National Labor Relations
Commission are hereby SET ASIDE and that of the Labor Arbiter is REINSTATED
except with respect to the P20,000.00 moral damages adjudged against respondent
Liberato I. Gomez which award is deleted.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

[1]

The letter contract dated 22 June 1992 read -

Dear Mr. Paguio:

This letter is to appoint you as Account Executive for The Manila Times for a period of
twelve (12) months effective July 1, 1992 to June 30, 1993, and to set forth the
terms and conditions of your contract.
1. As account executive, you will use your best efforts to obtain advertisements
exclusively for us and for such projects that The Manila Times may decide to do
from time to time.
2. You are authorized to solicit advertisements and quote advertising rates in
accordance with and subject to all the terms and conditions in our rate cards.
3. All advertisements are subject to acceptance by us and we reserve the right in our
absolute discretion to reject or omit any advertisements.
4. You will be paid fifteen (15) percent commission on direct advertisements less
corresponding withholding tax.
5. You will be paid ten (10) percent commission on agency advertisements based on
gross ad revenues less agency commission and corresponding withholding tax.
6.

Walk-in advertisements,
commissionable.

not

solicited

by

the

Advertising

staff,

are

not

7. All payments must be paid direct to Metromedia Times Corporation. In no case,

however, will commission be paid until and unless the advertisements, whether
agency or direct, have been paid for, subject to the corresponding withholding
taxes authorized by law.
8. Commissions earned on paid advertisements covering the period from the first (1 st) to
the fifteenth (15) of every month shall be payable at the end of the same month;
commissions earned on paid advertisements covering the period from the
sixteenth (16th ) to the end of the month shall be payable on the fifteenth (15) of
the succeeding month.
9. You will be entitled to a monthly allowance of P2,000.00 provided that you meet a
monthly quota of P30,000.00 in advertising lineage. But should you fail to meet
your quota, your allowance shall be charged against your future account.
10 For all ex-deal arrangements, the barter agreement and your commission will be
subject to the written approval of the President and Treasurer on a case-to-case
basis.
11. You will be paid your approved commission only after the payment for the liquidation
(sold and/or consumed) of the goods received from the advertiser has been
completed.
12. You are not an employee of Metromedia Times Corporation nor does the Company
have any obligations towards anyone you may employ, nor any responsibility for
your operating expenses or for any liability you may incur. The only rights and
obligations between us are those set forth in this agreement. This agreement

cannot be amended or modified in any way except with the duly authorized
consent in writing of both parties.
13. Either party may terminate this agreement at any time by giving written notice to the
other thirty (30) days prior to the effectivity of termination.
If these terms and conditions are acceptable to you, please indicate your conformity by
signing below. (Rollo, pp. 41-42.)
[2]

Rollo, p. 42.

[3]

Rollo, p. 43.

[4]

Article 1642 of the Civil Code provides: "The contract of lease may be of things, or of
work and service."

Article 1644 provides: "In the lease of work or service, one of the parties binds himself
to execute a piece of work or to render to the other some service for a price
certain, but the relation of principal and agent does not exist between them."
[5]

Rollo, NLRC Decision dated 15 December 1998, p. 82.

[6]

Rollo, p. 85.

[7]

Rollo, p. 18.

[8]

Hijos de F. Escano, Inc., vs. NLRC G.R. No. 59229, 22 August 1991, 201 SCRA 63;
Ecal vs. NLRC, G.R. Nos. 92777-78, 13 March 1991, 195 SCRA 224.

[9]

Iloilo Chinese Commercial School vs. Fabrigar, L-16600, 27 December 1961, 3 SCRA
712.

[10]

Cosmopolitan Funeral Homes, Inc., vs. Maalat, G.R. No. 86693, 02 July 1990, 187
SCRA 108.

[11]

Article 280, Labor Code.

[12]

A.M. Oreta and Co., Inc., vs. NLRC, et al., G.R. No. 74004, 10 August 1989, 176
SCRA 218.

[13]

Cielo vs. NLRC, G.R. No. 78693, 28 January 1991, 193 SCRA 410.

Kaso ng account executive

IKAW AT ANG BATAS Ni IKAW AT ANG BATAS Atty.Jose C. Sison | Updated August
21, 2003 - 12:00am
SI Pete ay pumirma bilang account executive sa kumpanya ng diyaryo kung saan
makakatanggap siya ng 15% komisyon para sa direct advertisements at 10% naman
kapag agency advertisements. Nakasaad din sa kontrata na ibibigay lamang ang
nasabing komisyon kada kinsenas ng buwan kapag ang anunsyo ay bayad na ng mga
kliyente. Kabilang din ang kanyang P2,000 monthly allowance kapag naabot niya ang
P30,000 quota. Naatasan din siyang magsumite ng daily sales activity at monthly sales
report upang i-monitor ito ng presidente, ng advertising manager at ng director nila.
Gayunpaman, nakasaad sa kontrata na hindi siya empleyado ng kompanya at sa

anumang oras, maaaring tapusin ng mga partido ang kasunduan 30 araw bago maging
epektibo ang terminasyon sa pamamagitan ng isang written notice.
Makalipas ang dalawang buwan matapos ang 5th renewal ng kanyang kontrata,
inabisuhan siyang tatapusin na ang kanyang serbisyo pagkatapos ng 45 araw.
Masamang asal daw ni Pete ang dahilan ngunit hindi siya binigyan ng pagkakataong
ipaliwanag
ang
kanyang
panig.
Kaya, nagsampa siya ng kasong illegal dismissal sa labor arbiter at hiniling na mabalik
sa trabaho kasama ang P500,000 bilang moral damages at P200,000 bilang exemplary
damages.
Iginiit naman ng kompanya na hindi nila empleyado si Pete. Serbisyo lamang daw nito
ang kanilang inupahan ayon na rin sa art. 1642 at 1644 ng Civil Code, kung saan
maaring tapusin ng mga partido ang kasunduan matapos magbigay ng abiso 30 araw
bago
ang
pagwawakas
nito.
Tama
ba
ang
kompanya?
MALI. Si Pete ay empleyado ng kompanya, patunay ang naging paraan nito sa pagpili
kay Pete bilang empleyado; ang naging patakaran nito sa pagbibigay ng suweldo; ang
pagkakaroon nito ng kapangyarihang tanggalin si Pete sa anumang oras; at ang
pagkontrol nito di lamang sa magiging resulta kundi ang pamamaraan at iba pang
detalye ng pagganap ni Pete sa trabaho. Patunay ng pinakamahalagang elemento ng
kontrol ang pag-atas kay Pete na magsumite ng daily sales activity at monthly sales
report
upang
mamonitor
ang
kanyang
pagganap
sa
trabaho.
Bukod pa rito, si Pete ay isang regular na empleyado ng kumpanya. Ang pangangalap
niya ng mga anunsyo bilang account executive ang naging dahilan ng patuloy na
paglalathala ng diyaryo at operasyon ng negosyo nito. Anunsyo ang buhay ng diyaryo
kaya malaki ang kontribusyon niya sa kompanya, kung saan kinilala naman ito ng
kompanya
nang
papirmahin
siya
ng
kontrata
ng
limang
beses.
Bilang regular na empleyado, maaari lamang siyang tanggalin sa legal na katwiran at
pagbibigay sa kanya ng notice at hearing. Subalit hindi ito tinupad ng kumpanya kaya
ilegal ang naging pagtanggal kay Pete. Kaya, ibabalik siya sa serbisyo at babayaran
ang kanyang komisyon mula sa araw na tinanggal siya hanggang sa pagbalik niya sa
trabaho maliban sa moral damages dahil walang napatunayang bad faith o malice sa
panig ng kumpanya (Paguio vs. NLRC et. al. G.R. 147816, May 9, 2003).

Republic
SUPREME
Manila

of

the

Philippines
COURT

FIRST DIVISION
G.R. No. 147816

May 9, 2003

EFREN
P.
PAGUIO,
petitioner,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION,
METROMEDIA
TIMES
CORPORATION, ROBINA Y. GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E.
ARAGON, FREDERICK D. GO and ALDA IGLESIA, respondents.
VITUG, J.:
On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time,
into an agreement with petitioner Efren P. Paguio, appointing the latter to be an account
executive of the firm.1 Again, petitioner was to solicit advertisements for "The Manila
Times," a newspaper of general circulation, published by respondent company.
Petitioner, for his efforts, was to receive compensation consisting of a 15% commission
on direct advertisements less withholding tax and a 10% commission on agency
advertisements based on gross revenues less agency commission and the
corresponding withholding tax. The commissions, released every fifteen days of each
month, were to be given to petitioner only after the clients would have paid for the
advertisements. Apart from commissions, petitioner was also entitled to a monthly
allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the
contentious points raised by the parties had something to do with the following
stipulations of the agreement; viz:
"12. You are not an employee of the Metromedia Times Corporation nor does the
company have any obligations towards anyone you may employ, nor any responsibility
for your operating expenses or for any liability you may incur. The only rights and
obligations between us are those set forth in this agreement. This agreement cannot be
amended or modified in any way except with the duly authorized consent in writing of
both parties.
"13. Either party may terminate this agreement at any time by giving written notice to the
other, thirty (30) days prior to effectivity of termination." 2

On 15 August 1992, barely two months after the renewal of his contract, petitioner
received the following notice from respondent firm "Dear Mr. Paguio,
"Please be advised of our decision to terminate your services as Account Executive of
Manila Times effective September 30, 1992.
"This is in accordance with our contract signed last July 1, 1992." 3
Apart from vague allegations of misconduct on which he was not given the opportunity
to defend himself, i.e., pirating clients from his co-executives and failing to produce
results, no definite cause for petitioner's termination was given. Aggrieved, petitioner
filed a case before the labor arbiter, asking that his dismissal be declared unlawful and
that his reinstatement, with entitlement to backwages without loss of seniority rights, be
ordered. Petitioner also prayed that respondent company officials be held accountable
for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00
exemplary damages.
In their defense, respondent Metromedia Times Corporation asserted that it did not
enter into any agreement with petitioner outside of the contract of services under
Articles 1642 and 1644 of the Civil Code of the Philippines. 4 Asserting their right to
terminate the contract with petitioner, respondents pointed to the last provision thereof
stating that both parties could opt to end the contract provided that either party would
serve, thirty days prior to the intended date of termination, the corresponding notice to
the other.
The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter
ordered respondent Metromedia Times Corporation and its officers to reinstate
petitioner to his former position, without loss of seniority rights, and to pay him his
commissions and other remuneration accruing from the date of dismissal on 15 August
1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general
manager of respondent corporation, be held liable to petitioner for moral damages in the
amount of P20,000.00.
On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the
labor arbiter and declared the contractual relationship between the parties as being for a
fixed-term employment. The NLRC declared a fixed-term employment to be lawful as
long as "it was agreed upon knowingly and voluntarily by the parties, without any force,
duress or improper pressure being brought to bear upon the worker and absent any
other circumstances vitiating his consent." 5 The finding of the NLRC was primarily

hinged on the assumption that petitioner, on account of his educated stature, having
indeed personally prepared his pleadings without the aid of counsel, was an unlikely
victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular
employee, the NLRC held: "The decisive determinant would not be the activities that the
employee (was) called upon to perform but rather, the day certain agreed upon by the
parties for the commencement and termination of their employment relationship, a day
certain being understood to be that which (would) necessarily come, although it (might)
not be known when."6
Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in
toto the findings of the commission. In his petition for review on certiorari, petitioner
raised the following issues for resolution:
"WHETHER OR NOT PETITIONER'S CONTRACT
RESPONDENT'S COMPANY IS FOR A FIXED PERIOD.

WITH

PRIVATE

"WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.

"WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND
MORAL DAMAGES."7
The crux of the matter would entail the determination of the nature of contractual
relationship between petitioner and respondent company - was it or was it not one of
regular employment?
A "regular employment," whether it is one or not, is aptly gauged from the concurrence,
or the non-concurrence, of the following factors - a) the manner of selection and
engagement of the putative employee, b) the mode of payment of wages, c) the
presence or absence of the power of dismissal; and d) the presence or absence of the
power to control the conduct of the putative employee or the power to control the
employee with respect to the means or methods by which his work is to be
accomplished.8 The "control test" assumes primacy in the overall consideration. Under
this test, an employment relation obtains where work is performed or services are
rendered under the control and supervision of the party contracting for the service, not
only as to the result of the work but also as to the manner and details of the
performance desired.9
An indicum of regular employment, rightly taken into account by the labor arbiter, was
the reservation by respondent Metromedia Times Corporation not only of the right to
control the results to be achieved but likewise the manner and the means used in
reaching that end.10 Metromedia Times Corporation exercised such control by requiring

petitioner, among other things, to submit a daily sales activity report and also a monthly
sales report as well. Various solicitation letters would indeed show that Robina
Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick
Go, the advertising director, directed and monitored the sales activities of petitioner.
The Labor Code, in Article 280 thereof, provides:
"ART. 280. Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
"An employment shall be deemed to be casual if it is not covered by the proceeding
paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists."
Thus defined, a regular employee is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as against those
which are undertaken for a specific project or are seasonal. Even in these latter cases,
where such person has rendered at least one year of service, regardless of the nature
of the activity performed or of whether it is continuous or intermittent, the employment is
considered regular as long as the activity exists, it not being indispensable that he be
first issued a regular appointment or be formally declared as such before acquiring a
regular status.11
That petitioner performed activities which were necessary and desirable to the business
of the employer, and that the same went on for more than a year, could hardly be
denied. Petitioner was an account executive in soliciting advertisements, clearly
necessary and desirable, for the survival and continued operation of the business of
respondent corporation. Robina Gokongwei, its President, herself admitted that the
income generated from paid advertisements was the lifeblood of the newspaper's
existence. Implicitly, respondent corporation recognized petitioner's invaluable
contribution to the business when it renewed, not just once but five times, its contract
with petitioner.

Respondent company cannot seek refuge under the terms of the agreement it has
entered into with petitioner. The law, in defining their contractual relationship, does so,
not necessarily or exclusively upon the terms of their written or oral contract, but also on
the basis of the nature of the work petitioner has been called upon to perform. 12 The law
affords protection to an employee, and it will not countenance any attempt to subvert its
spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized
to deprive the employee of his security of tenure. 13 The sheer inequality that
characterizes employer-employee relations, where the scales generally tip against the
employee, often scarcely provides him real and better options.
The real question that should thus be posed is whether or not petitioner has been justly
dismissed from service. A lawful dismissal must meet both substantive and procedural
requirements; in fine, the dismissal must be for a just or authorized cause and must
comply with the rudimentary due process of notice and hearing. It is not shown that
respondent company has fully bothered itself with either of these requirements in
terminating the services of petitioner. The notice of termination recites no valid or just
cause for the dismissal of petitioner nor does it appear that he has been given an
opportunity to be heard in his defense.
The evidence, however, found by the appellate court is wanting that would indicate bad
faith or malice on the part of respondents, particularly by respondent Liberato I. Gomez,
and the award of moral damages must thus be deleted.
WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals
in C.A. G.R. SP No. 527773 and that of the National Labor Relations Commission are
hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to
the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which
award is deleted.
SO ORDERED.
Feati University v. Bautista

G.R. No.L-21278

December 27, 1966

Lessons Applicable: Applicability to certain specific persons Professors in national

interest

Laws Applicable:

FACTS:

January 14, 1963: the President of Feati University Faculty Club (PAFLU) wrote a
letter to Mrs. Victoria L. Araneta, President of Feati University informing her that it
registered as a labor union.
January 22, 1963: PAFLU sent a letter with 26 demands in relation to their
employment and requesting an answer within 10 days from receipt thereof.
Araneta answered the letters, requesting that she be given at least 30 days to
study thoroughly the different phases of the demands. Meanwhile counsel for
Feati, wrote a letter to the President of PAFLU demanding proof of its majority
status and designation as a bargaining representative
February 1, 1963: the President of PAFLU rejected the extension of time and
filed a notice of strike with the Bureau of Labor due to Featis refusal to bargain
collectively.
Conciliation Division of the Bureau of Labor made efforts to conciliate them but
failed.
February 18, 1963: PAFLU declared a strike and established picket lines in the
premises of Feati resulting in the disruption of classes in the University.
March 21, 1963: the President of the Philippines certified to the Court of
Industrial Relations (CIR) the dispute between Feati and PAFLU pursuant to the
provisions of Section 10 of Republic Act No. 875.
3 cases were filed with the CIR
41-IPA PAFLUs petition to declare in contempt of court since
Feati refused to accept them back to work in violation of the return-to-work order
of March 30, 1963 and has employed professors and/or instructors to take their
places
1183-MC PAFLUs petition for certification election praying that it
be certified as the sole and exclusive bargaining representative
Later withdrawn since the Case 41-IPA had already been
certified by the President to the CIR and has absorbed the issues herein
V-30 PAFLUs complaint for indirect contempt of court filed
against the administrative officials of the Feati reiterating Case 41-IPA
May 10, 1963: Feati filed before the SC a petition for certiorari and prohibition
with writ of preliminary injunction which was issued upon the Feati's filing a bond

of P50,000 (increased from P1,000), ordering CIR Judge Jose S. Bautista to

desist and refrain from further proceeding
March 23, 1963: On the strength of the presidential certification, Judge Bautista
set the case for hearing

Feati, thru counsel filed a motion to dismiss the case upon the ground that
the CIR has no jurisdiction over the case, because:
1. the Industrial Peace Act is NOT applicable to the University, it being an educational
institution, nor to the members of the Faculty Club, they being independent contractors
2.

the presidential certification is violative of Section 10 of the Industrial Peace Act, as the
University is not an industrial establishment and there was no industrial dispute which
could be certified to the CIR

Judge Bautista denied the motion to dismiss and ordered the strikers to return
immediately to work and the University to take them back under the last terms
and conditions existing before the dispute arose
Without the motion for reconsideration having been acted upon by the CIR en
banc, Judge Bautista set the case for hearing on the merits for May 8, 1963 but
was cancelled upon Featis petition for certiorari alleging that Judge Jose S.
Bautista acted without, or in excess of, jurisdiction, or with grave abuse of
discretion, in taking cognizance of, and in issuing the questioned orders in, CIR
Cases Nos. 41-IPA 1183-MC and V-30
Feati claims that it is not an employer within the contemplation of R.A.
875, because it is not an industrial establishment
Feati also claims that it is only a lessee of the services of its professors
and/or instructors pursuant to a contract of services entered into between them
because the University does not exercise control over their work

ISSUES: W/N Feati can be considered an employer and PAFLU as an employee to be

covered by R.A. 875 and have right to unionize

HELD: YES. petition for certiorari and prohibition with preliminary injunction in Case
G.R. No. L-21278 is dismissed
Section 2(c) of R.A. 875:
o The term employer include any person acting in the interest of an employer, directly or
indirectly, but shall not include any labor organization (otherwise than when acting as an
employer) or any one acting in the capacity or agent of such labor organization.

 Congress did not intend to give a complete definition of "employer", but rather that such
definition should be complementary to what is commonly understood as employer
Act itself specifically enumerated those who are not included in the term "employer" and
educational institutions are not included; hence, they can be included in the term
"employer". However, those educational institutions that are not operated for profit are
not within the purview of Republic Act No. 875.
Feati realizes profits and parts of such earning is distributed as dividends to private
stockholders or individuals
It embraces not only those who are usually and ordinarily considered employees, but
also those who have ceased as employees as a consequence of a labor dispute.

employee must be one who is engaged in the service of another; who performs
services for another; who works for salary or wages
"workers" limited to those performing physical labor
embrace stenographers and bookkeepers

Teachers are not included

Feati controls the work of the members of its faculty

prescribes the courses or subjects that professors teach, and when and where to teach

professors' work is characterized by regularity and continuity for a fixed duration

professors are compensated for their services by wages and salaries, rather than by
profits

professors and/or instructors cannot substitute others to do their work without the
consent of the university

professors can be laid off if their work is found not satisfactory

Moreover, even if university professors are considered independent contractors,

still they would be covered by Rep. Act No. 875
professors, instructors or teachers of private educational institutions who
teach to earn a living are entitled to the protection of our labor laws and one
such law is Republic Act No. 875.
The term "labor dispute" includes any controversy concerning terms, tenure or
conditions of employment, or concerning the association or representation of
persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms

or conditions of employment regardless of whether the disputants stand in

proximate relation of employer and employees.
To certify a labor dispute to the CIR is the prerogative of the President under the
law (Because the strike declared by the members of the minority union threatens
a major industry of 18,000 students which affects the national interest), and this
Court will not interfere in, much less curtail, the exercise of that prerogative. The
jurisdiction of the CIR in a certified case is exclusive. The parties involved in the
case may appeal to the Supreme Court from the order or orders thus issued by
the CIR.
Section 10 of Republic Act No. 875 empowers the Court of Industrial Relations to
issue an order "fixing the terms of employment." This clause is broad enough to
authorize the Court to order the strikers to return to work and the employer to
readmit them
The return-to-work order cannot be considered as an impairment of the contract
entered into with the replacements. Besides, labor contracts must yield to the
common good and such contracts are subject to the special laws on labor
unions, collective bargaining, strikes and similar subjects

EN BANC
G.R. No. L-21278
December 27, 1966
FEATI
UNIVERSITY, petitioner,
-versusHON. JOSE S. BAUTISTA, Presiding Judge of the Court of Industrial Relations
and FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondents.
---------------------------------------G.R. No. L-21462
December 27, 1966
FEATI
UNIVERSITY, petitioner-appellant,
-versusFEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.
---------------------------------------G.R. No. L-21500
December 27, 1966
FEATI
UNIVERSITY, petitioner-appellant,
-versusFEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.
Rafael
Dinglasan
for
petitioner.
Cipriano Cid and Associates for respondents.
ZALDIVAR, J.:
This Court, by resolution, ordered that these three cases be considered together,
and the parties were allowed to file only one brief for the three cases.

On January 14, 1963, the President of the respondent Feati University Faculty
Club-PAFLU hereinafter referred to as Faculty Club wrote a letter to Mrs.
Victoria L. Araneta, President of petitioner Feati University hereinafter referred
to as University informing her of the organization of the Faculty Club into a
registered labor union. The Faculty Club is composed of members who are
professors and/or instructors of the University. On January 22, 1963, the
President of the Faculty Club sent another letter containing twenty-six demands
that have connection with the employment of the members of the Faculty Club by
the University, and requesting an answer within ten days from receipt thereof.
The President of the University answered the two letters, requesting that she be
given at least thirty days to study thoroughly the different phases of the demands.
Meanwhile counsel for the University, to whom the demands were referred, wrote
a letter to the President of the Faculty Club demanding proof of its majority status
and designation as a bargaining representative. On February 1, 1963, the
President of the Faculty Club again wrote the President of the University rejecting
the latter's request for extension of time, and on the same day he filed a notice of
strike with the Bureau of Labor alleging as reason therefor the refusal of the
University to bargain collectively. The parties were called to conferences at the
Conciliation Division of the Bureau of Labor but efforts to conciliate them failed.
On February 18, 1963, the members of the Faculty Club declared a strike and
established picket lines in the premises of the University, resulting in the
disruption of classes in the University. Despite further efforts of the officials from
the Department of Labor to effect a settlement of the differences between the
management of the University and the striking faculty members no satisfactory
agreement was arrived at. On March 21, 1963, the President of the Philippines
certified to the Court of Industrial Relations the dispute between the management
of the University and the Faculty Club pursuant to the provisions of Section 10 of
Republic Act No. 875.
In connection with the dispute between the University and the Faculty Club and
certain incidents related to said dispute, various cases were filed with the Court
of Industrial Relations hereinafter referred to as CIR. The three cases now
before this Court stemmed from those cases that were filed with the CIR.
CASE NO. G.R. NO. L-21278
On May 10, 1963, the University filed before this Court a "petition
for certiorari and prohibition with writ of preliminary injunction", docketed as G.R.
No. L-21278, praying: (1) for the issuance of the writ of preliminary injunction
enjoining respondent Judge Jose S. Bautista of the CIR to desist from
proceeding in CIR Cases Nos. 41-IPA, 1183-MC, and V-30; (2) that the
proceedings in Cases Nos. 41-IPA and 1183-MC be annulled; (3) that the orders
dated March 30, 1963 and April 6, 1963 in Case No. 41-IPA, the order dated April
6, 1963 in Case No. 1183-MC, and the order dated April 29, 1963 in Case No. V30, all be annulled; and (4) that the respondent Judge be ordered to dismiss said
cases Nos. 41-IPA, 1183-MC and V-30 of the CIR.
On May 10, 1963, this Court issued a writ of preliminary injunction, upon the
University's filing a bond of P1,000.00, ordering respondent Judge Jose S.
Bautista as Presiding Judge of the CIR, until further order from this Court, "to

desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA,
1183-MC and V-30 of the Court of Industrial Relations)." 1 On December 4, 1963,
this Court ordered the injunction bond increased to P100,000.00; but on January
23, 1964, upon a motion for reconsideration by the University, this Court reduced
the bond to P50,000.00.
A brief statement of the three cases CIR Cases 41-IPA, 1183-MC and V-30
involved in the Case G.R. No. L-21278, is here necessary.
CIR Case No. 41-IPA, relates to the case in connection with the strike staged by
the members of the Faculty Club. As we have stated, the dispute between the
University and the Faculty Club was certified on March 21, 1963 by the President
of the Philippines to the CIR. On the strength of the presidential certification,
respondent Judge Bautista set the case for hearing on March 23, 1963. During
the hearing, the Judge endeavored to reconcile the part and it was agreed upon
that the striking faculty members would return to work and the University would
readmit them under a status quo arrangement. On that very same day, however,
the University, thru counsel filed a motion to dismiss the case upon the ground
that the CIR has no jurisdiction over the case, because (1) the Industrial Peace
Act is not applicable to the University, it being an educational institution, nor to
the members of the Faculty Club, they being independent contractors; and (2)
the presidential certification is violative of Section 10 of the Industrial Peace Act,
as the University is not an industrial establishment and there was no industrial
dispute which could be certified to the CIR. On March 30, 1963 the respondent
Judge issued an order denying the motion to dismiss and declaring that the
Industrial Peace Act is applicable to both parties in the case and that the CIR had
acquired jurisdiction over the case by virtue of the presidential certification. In the
same order, the respondent Judge, believing that the dispute could not be
decided promptly, ordered the strikers to return immediately to work and the
University to take them back under the last terms and conditions existing before
the dispute arose, as per agreement had during the hearing on March 23, 1963;
and likewise enjoined the University, pending adjudication of the case, from
dismissing any employee or laborer without previous authorization from the CIR.
The University filed on April 1, 1963 a motion for reconsideration of the order of
March 30, 1963 by the CIR en banc, and at the same time asking that the motion
for reconsideration be first heard by the CIR en banc. Without the motion for
reconsideration having been acted upon by the CIR en banc, respondent Judge
set the case for hearing on the merits for May 8, 1963. The University moved for
the cancellation of said hearing upon the ground that the court en banc should
first hear the motion for reconsideration and resolve the issues raised therein
before the case is heard on the merits. This motion for cancellation of the hearing
was denied. The respondent Judge, however, cancelled the scheduled hearing
when counsel for the University manifested that he would take up before the
Supreme Court, by a petition for certiorari, the matter regarding the actuations of
the respondent Judge and the issues raised in the motion for reconsideration,
specially the issue relating to the jurisdiction of the CIR. The order of March 30,
1963 in Case 41-IPA is one of the orders sought to be annulled in the case, G.R.
No. L-21278.

Before the above-mentioned order of March 30, 1963 was issued by respondent
Judge, the University had employed professors and/or instructors to take the
places of those professors and/or instructors who had struck. On April 1, 1963,
the Faculty Club filed with the CIR in Case 41-IPA a petition to declare in
contempt of court certain parties, alleging that the University refused to accept
back to work the returning strikers, in violation of the return-to-work order of
March 30, 1963. The University filed, on April 5,1963, its opposition to the petition
for contempt, denying the allegations of the Faculty Club and alleging by way of
special defense that there was still the motion for reconsideration of the order of
March 30, 1963 which had not yet been acted upon by the CIR en banc. On April
6, 1963, the respondent Judge issued an order stating that "said replacements
are hereby warned and cautioned, for the time being, not to disturb nor in any
manner commit any act tending to disrupt the effectivity of the order of March
30,1963, pending the final resolution of the same." 2 On April 8, 1963, there
placing professors and/or instructors concerned filed, thru counsel, a motion for
reconsideration by the CIR en banc of the order of respondent Judge of April 6,
1963. This order of April 6, 1963 is one of the orders that are sought to be
annulled in case G.R. No. L-21278.
CIR Case No. 1183-MC relates to a petition for certification election filed by the
Faculty Club on March 8, 1963 before the CIR, praying that it be certified as the
sole and exclusive bargaining representative of all the employees of the
University. The University filed an opposition to the petition for certification
election and at the same time a motion to dismiss said petition, raising the very
same issues raised in Case No. 41-IPA, claiming that the petition did not comply
with the rules promulgated by the CIR; that the Faculty Club is not a legitimate
labor union; that the members of the Faculty Club cannot unionize for collective
bargaining purposes; that the terms of the individual contracts of the professors,
instructors, and teachers, who are members of the Faculty Club, would expire on
March 25 or 31, 1963; and that the CIR has no jurisdiction to take cognizance of
the petition because the Industrial Peace Act is not applicable to the members of
the Faculty Club nor to the University. This case was assigned to Judge Baltazar
Villanueva of the CIR. Before Judge Villanueva could act on the motion to
dismiss, however, the Faculty Club filed on April 3, 1963 a motion to withdraw the
petition on the ground that the labor dispute (Case No. 41-IPA) had already been
certified by the President to the CIR and the issues raised in Case No. 1183-MC
were absorbed by Case No. 41-IPA. The University opposed the withdrawal,
alleging that the issues raised in Case No. 1183-MC were separate and distinct
from the issues raised in Case No. 41-IPA; that the questions of recognition and
majority status in Case No. 1183-MC were not absorbed by Case No. 41-IPA;
and that the CIR could not exercise its power of compulsory arbitration unless the
legal issue regarding the existence of employer-employee relationship was first
resolved. The University prayed that the motion of the Faculty Club to withdraw
the petition for certification election be denied, and that its motion to dismiss the
petition be heard. Judge Baltazar Villanueva, finding that the reasons stated by
the Faculty Club in the motion to withdraw were well taken, on April 6, 1963,
issued an order granting the withdrawal. The University filed, on April 24, 1963, a

motion for reconsideration of that order of April 6, 1963 by the CIR en banc. This
order of April 6, 1963 in Case No. 1183-MC is one of the orders sought to be
annulled in the case, G.R. No. L-21278, now before Us.
CIR Case No. V-30 relates to a complaint for indirect contempt of court filed
against the administrative officials of the University. The Faculty Club, through
the Acting Chief Prosecutor of the CIR, filed with the CIR a complaint docketed
as Case No. V-30, charging President Victoria L. Araneta, Dean Daniel Salcedo,
Executive Vice-President Rodolfo Maslog, and Assistant to the President Jose
Segovia, as officials of the University, with indirect contempt of court, reiterating
the same charges filed in Case No. 41-IPA for alleged violation of the order dated
March 30, 1963. Based on the complaint thus filed by the Acting Chief Prosecutor
of the CIR, respondent Judge Bautista issued on April 29, 1963 an order
commanding any officer of the law to arrest the above named officials of the
University so that they may be dealt with in accordance with law, and the same
time fixed the bond for their release at P500.00 each. This order of April 29, 1963
is also one of the orders sought to be annulled in the case, G.R. No. L-2l278.
The principal allegation of the University in its petition for certiorari and
prohibition with preliminary injunction in Case G.R. No. L-21278, now before Us,
is that respondent Judge Jose S. Bautista acted without, or in excess of,
jurisdiction, or with grave abuse of discretion, in taking cognizance of, and in
issuing the questioned orders in, CIR Cases Nos. 41-IPA 1183-MC and V-30. Let
it be noted that when the petition for certiorari and prohibition with preliminary
injunction was filed on May 10, 1963 in this case, the questioned order in CIR
Cases Nos. 41-IPA, 1183-MC and V-30 were still pending action by the CIR en
banc upon motions for reconsideration filed by the University.
On June 10, 1963, the Faculty Club filed its answer to the petition
for certiorari and prohibition with preliminary injunction, admitting some
allegations contained in the petition and denying others, and alleging special
defenses which boil down to the contentions that (1) the CIR had acquired
jurisdiction to take cognizance of Case No. 41-IPA by virtue of the presidential
certification, so that it had jurisdiction to issue the questioned orders in said Case
No. 41-IPA; (2) that the Industrial Peace Act (Republic Act 875) is applicable to
the University as an employer and to the members of the Faculty Club as
employees who are affiliated with a duly registered labor union, so that the Court
of Industrial Relations had jurisdiction to take cognizance of Cases Nos. 1183MC and V-30 and to issue the questioned orders in those two cases; and (3) that
the petition for certiorari and prohibition with preliminary injunction was
prematurely filed because the orders of the CIR sought to be annulled were still
the subjects of pending motions for reconsideration before the CIR en banc when
said petition for certiorari and prohibition with preliminary injunction was filed
before this Court.
CASE G.R. NO. L-21462
This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already
stated Case No. 1183-MC relates to a petition for certification election filed by the
Faculty Club as a labor union, praying that it be certified as the sole and
exclusive bargaining representative of all employees of the University. This

petition was opposed by the University, and at the same time it filed a motion to
dismiss said petition. But before Judge Baltazar Villanueva could act on the
petition for certification election and the motion to dismiss the same, Faculty Club
filed a motion to withdraw said petition upon the ground that the issue raised in
Case No. 1183-MC were absorbed by Case No. 41-IPA which was certified by
the President of the Philippines. Judge Baltazar Villanueva, by order April 6,
1963, granted the motion to withdraw. The University filed a motion for
reconsideration of that order of April 6, 1963 by the CIR en banc. That motion for
reconsideration was pending action by the CIR en banc when the petition
for certiorari and prohibition with preliminary injunction in Case G.R. no. L-21278
was filed on May 10, 1963. As earlier stated this Court, in Case G.R. No. L21278, issued a writ of preliminary injunction on May 10, 1963, ordering
respondent Judge Bautista, until further order from this Court, to desist and
refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC
and V-30 of the Court of Industrial Relations).
On June 5, 1963, that is, after this Court has issued the writ of preliminary
injunction in Case G.R. No. L-21278, the CIR en banc issued a resolution
denying the motion for reconsideration of the order of April 6, 1963 in Case No.
1183-MC.
On July 8, 1963, the University filed before this Court a petition for certiorari, by
way of an appeal from the resolution of the CIR en banc, dated June 5, 1963,
denying the motion for reconsideration of the order of April 6, 1963 in Case No.
1183-MC. This petition was docketed as G.R. No. L-21462. In its petition
forcertiorari, the University alleges (1) that the resolution of the Court of Industrial
Relations of June 5, 1963 was null and void because it was issued in violation of
the writ of preliminary injunction issued in Case G.R. No. L-21278; (2) that the
issues of employer-employee relationship, the alleged status as a labor union,
majority representation and designation as bargaining representative in an
appropriate unit of the Faculty Club should have been resolved first in Case No.
1183-MC prior to the determination of the issues in Case No. 41-IPA and
therefore the motion to withdraw the petition for certification election should not
have been granted upon the ground that the issues in the first case have been
absorbed in the second case; and (3) the lower court acted without or in excess
of jurisdiction in taking cognizance of the petition for certification election and that
the same should have been dismissed instead of having been ordered
withdrawn. The University prayed that the proceedings in Case No. 1183-MC and
the order of April 6, 1963 and the resolution of June 5, 1963 issued therein be
annulled, and that the CIR be ordered to dismiss Case No. 1183-MC on the
ground of lack of jurisdiction.
The Faculty Club filed its answer, admitting some, and denying other, allegations
in the petition for certiorari; and specially alleging that the lower court's order
granting the withdrawal of the petition for certification election was in accordance
with law, and that the resolution of the court en banc on June 5, 1963 was not a
violation of the writ of preliminary injunction issued in Case G.R. No. L-21278
because said writ of injunction was issued against Judge Jose S. Bautista and

not against the Court of Industrial Relations, much less against Judge Baltazar
Villanueva who was the trial judge of Case No. 1183-MC.
CASE G.R. NO. L-21500
This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier
stated, Case No. 41-IPA relates to the strike staged by the members of the
Faculty Club and the dispute was certified by the President of the Philippines to
the CIR. The University filed a motion to dismiss that case upon the ground that
the CIR has no jurisdiction over the case, and on March 30, 1963 Judge Jose S.
Bautista issued an order denying the motion to dismiss and declaring that the
Industrial Peace Act is applicable to both parties in the case and that the CIR had
acquired jurisdiction over the case by virtue of the presidential certification; and in
that same order Judge Bautista ordered the strikers to return to work and the
University to take them back under the last terms and conditions existing before
the dispute arose; and enjoined the University from dismissing any employee or
laborer without previous authority from the court. On April 1, 1963, the University
filed a motion for reconsideration of the order of March 30, 1963 by the CIR en
banc. That motion for reconsideration was pending action by the CIR en
banc when the petition for certiorari and prohibition with preliminary injunction in
Case G.R. No. L-21278 was filed on May 10, 1963. As we have already stated,
this Court in said case G.R. No. L-21278, issued a writ of preliminary injunction
on May 10, 1963 ordering respondent Judge Jose S. Bautista, until further order
from this Court, to desist and refrain from further proceeding in the premises
(Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations).
On July 2, 1963, the University received a copy of the resolution of the CIR en
banc, dated May 7, 1963 but actually received and stamped at the Office of the
Clerk of the CIR on June 28, 1963, denying the motion for reconsideration of the
order dated March 30, 1963 in Case No. 41-IPA.
On July 23, 1963, the University filed before this Court a petition for certiorari, by
way of an appeal from the resolution of the Court of Industrial Relations en
bancdated May 7, 1963 (but actually received by said petitioner on July 2, 1963)
denying the motion for reconsideration of the order of March 30, 1963 in Case
No. 41-IPA. This petition was docketed as G.R. No. L-21500. In its petition
for certiorari the University alleges (1) that the resolution of the CIR en banc,
dated May 7, 1963 but filed with the Clerk of the CIR on June 28, 1963, in Case
No. 41-IPA, is null and void because it was issued in violation of the writ of
preliminary injunction issued by this Court in G.R. No. L-21278; (2) that the CIR,
through its Presiding Judge, had no jurisdiction to take cognizance of Case No.
41-IPA and the order of March 30, 1963 and the resolution dated May 7, 1963
issued therein are null and void; (3) that the certification made by the President of
the Philippines is not authorized by Section 10 of Republic Act 875, but is
violative thereof; (4) that the Faculty Club has no right to unionize or organize as
a labor union for collective bargaining purposes and to be certified as a collective
bargaining agent within the purview of the Industrial Peace Act, and consequently
it has no right to strike and picket on the ground of petitioner's alleged refusal to
bargain collectively where such duty does not exist in law and is not enforceable
against an educational institution; and (5) that the return-to-work order of March

30, 1963 is improper and illegal. The petition prayed that the proceedings in
Case No. 41-IPA be annulled, that the order dated March 30, 1963 and the
resolution dated May 7, 1963 be revoked, and that the lower court be ordered to
dismiss Case 41-IPA on the ground of lack of jurisdiction.
On September 10, 1963, the Faculty Club, through counsel, filed a motion to
dismiss the petition for certiorari on the ground that the petition being filed by way
of an appeal from the orders of the Court of Industrial Relations denying the
motion to dismiss in Case No. 41-IPA, the petition for certiorari is not proper
because the orders appealed from are interlocutory in nature.
This Court, by resolution of September 26, 1963, ordered that these three cases
(G.R. Nos. L-21278, L-21462 and L-21500) be considered together and the
motion to dismiss in Case G.R. No. L-21500 be taken up when the cases are
decided on the merits after the hearing.
Brushing aside certain technical questions raised by the parties in their
pleadings, We proceed to decide these three cases on the merits of the issues
raised.
The University has raised several issues in the present cases, the pivotal one
being its claim that the Court of Industrial Relations has no jurisdiction over the
parties and the subject matter in CIR Cases 41-IPA, 1183-MC and V-30, brought
before it, upon the ground that Republic Act No. 875 is not applicable to the
University because it is an educational institution and not an industrial
establishment and hence not an "employer" in contemplation of said Act; and
neither is Republic Act No. 875 applicable to the members of the Faculty Club
because the latter are independent contractors and, therefore, not employees
within the purview of the said Act.
In support of the contention that being an educational institution it is beyond the
scope of Republic Act No. 875, the University cites cases decided by this
Court: Boy Scouts of the Philippines vs. Juliana Araos, L-10091, Jan. 29,
1958; University of San Agustin vs. CIR, et al., L-12222, May 28, 1958; Cebu
Chinese High School vs. Philippine Land-Air-Sea Labor Union, PLASLU, L12015, April 22, 1959; La Consolacion College, et al. vs. CIR, et al., L-13282,
April 22, 1960; University of the Philippines, et al. vs. CIR, et al., L-15416, April 8,
1960; Far Eastern University vs. CIR, L-17620, August 31, 1962. We have
reviewed these cases, and also related cases subsequent thereto, and We find
that they do not sustain the contention of the University. It is true that this Court
has ruled that certain educational institutions, like the University of Santo Tomas,
University of San Agustin, La Consolacion College, and other juridical entities,
like the Boy Scouts of the Philippines and Manila Sanitarium, are beyond the
purview of Republic Act No. 875 in the sense that the Court of Industrial
Relations has no jurisdiction to take cognizance of charges of unfair labor
practice filed against them, but it is nonetheless true that the principal reason of
this Court in ruling in those cases that those institutions are excluded from the
operation of Republic Act 875 is that those entities are not organized, maintained
and operated for profit and do not declare dividends to stockholders. The
decision in the case of University of San Agustin vs. Court of Industrial Relations,

G.R. No. L-12222, May 28, 1958, is very pertinent. We quote a portion of the
decision:
It appears that the University of San Agustin, petitioner herein, is an educational
institution conducted and managed by a "religious non-stock corporation duly
organized and existing under the laws of the Philippines." It was organized not for
profit or gain or division of the dividends among its stockholders, but solely for
religious and educational purposes. It likewise appears that the Philippine
Association of College and University Professors, respondent herein, is a nonstock association composed of professors and teachers in different colleges and
universities and that since its organization two years ago, the university has
adopted a hostile attitude to its formation and has tried to discriminate, harass
and intimidate its members for which reason the association and the members
affected filed the unfair labor practice complaint which initiated this proceeding.
To the complaint of unfair labor practice, petitioner filed an answer wherein it
disputed the jurisdiction of the Court of Industrial Relations over the controversy
on the following grounds:
"(a) That complainants therein being college and/or university professors were
not "industrial" laborers or employees, and the Philippine Association of College
and University Professors being composed of persons engaged in the teaching
profession, is not and cannot be a legitimate labor organization within the
meaning of the laws creating the Court of Industrial Relations and defining its
powers and functions;
"(b) That the University of San Agustin, respondent therein, is not an institution
established for the purpose of gain or division of profits, and consequently, it
is not an "industrial" enterprise and the members of its teaching staff are not
engaged in "industrial" employment (U.S.T. Hospital Employees Association vs.
Sto. Tomas University Hospital, G.R. No. L-6988, 24 May 1954; and San Beda
College vs. Court of Industrial Relations and National Labor Union, G.R. No. L7649, 29 October 1955; 51 O.G. (Nov. 1955) 5636-5640);
"(c) That, as a necessary consequence, alleged controversy between therein
complainants and respondent is not an "industrial" dispute, and the Court of
Industrial Relations has no jurisdiction, not only on the parties but also over the
subject matter of the complaint."
The issue now before us is: Since the University of San Agustin is not an
institution established for profit or gain, nor an industrial enterprise, but one
established exclusively for educational purposes, can it be said that its relation
with its professors is one of employer and employee that comes under the
jurisdiction of the Court of Industrial Relations? In other words, do the provisions
of the Magna Carta on unfair labor practice apply to the relation between
petitioner and members of respondent association?
The issue is not new. Thus, in the case of Boy Scouts of the Philippines v.
Juliana V. Araos, G.R. No. L-10091, promulgated on January 29, 1958, this
Court, speaking thru Mr. Justice Montemayor, answered the query in the negative
in the following wise:
"The main issue involved in the present case is whether or not a charitable
institution or one organized not for profit but for more elevated purposes,

charitable, humanitarian, etc., like the Boy Scouts of the Philippines, is included
in the definition of "employer" contained in Republic Act 875, and whether the
employees of said institution fall under the definition of "employee" also
contained in the same Republic Act. If they are included, then any act which may
be considered unfair labor practice, within the meaning of said Republic Act,
would come under the jurisdiction of the Court of Industrial Relations; but if they
do not fall within the scope of said Republic Act, particularly, its definitions of
employer and employee, then the Industrial Court would have no jurisdiction at
all.
xxx
xxx
xxx
"On the basis of the foregoing considerations, there is every reason to believe
that our labor legislation from Commonwealth Act No. 103, creating the Court of
Industrial Relations, down through the Eight-Hour Labor Law, to the Industrial
Peace Act, was intended by the Legislature to apply only to industrial
employment and to govern the relations between employers engaged in industry
and occupations for purposes of profit and gain, and their industrial employees,
but not to organizations and entities which are organized, operated and
maintained not for profit or gain, but for elevated and lofty purposes, such as,
charity, social service, education and instruction, hospital and medical service,
the encouragement and promotion of character, patriotism and kindred virtues in
youth of the nation, etc.
"In conclusion, we find and hold that Republic Act No. 875, particularly, that
portion thereof regarding labor disputes and unfair labor practice, does not apply
to the Boy Scouts of the Philippines, and consequently, the Court of Industrial
Relations had no jurisdiction to entertain and decide the action or petition filed by
respondent Araos. Wherefore, the appealed decision and resolution of the CIR
are hereby set aside, with costs against respondent."
There being a close analogy between the relation and facts involved in the two
cases, we cannot but conclude that the Court of Industrial Relations has no
jurisdiction to entertain the complaint for unfair labor practice lodged by
respondent association against petitioner and, therefore, we hereby set aside the
order and resolution subject to the present petition, with costs against respondent
association.
The same doctrine was confirmed in the case of University of Santo Tomas v.
Hon. Baltazar Villanueva, et al., G.R. No. L-13748, October 30, 1959, where this
Court ruled that:
In the present case, the record reveals that the petitioner University of Santo
Tomas is not an industry organized for profit but an institution of learning devoted
exclusively to the education of the youth. The Court of First Instance of Manila in
its decision in Civil Case No. 28870, which has long become final and
consequently the settled law in the case, found as established by the evidence
adduced by the parties therein (herein petitioner and respondent labor union) that
while the University collects fees from its students, all its income is used for the
improvement and enlargement of the institution. The University declares no
dividend, and the members of the corporation who founded it, as ordained in its
articles of incorporation, receive no material compensation for the time and

sacrifice they render to the University and its students. The respondent union
itself in a case before the Industrial Court (Case No. 314-MC) has averred that
"the University of Santo Tomas, like the San Beda College, is an educational
institution operated not for profit but for the sole purpose of educating young
men." (See Annex "B" to petitioner's motion to dismiss.). It is apparent, therefore,
that on the face of the record the University of Santo Tomas is not a corporation
created for profit but an educational institution and therefore not an industrial or
business organization.
In the case of La Consolacion College, et al. vs. CIR, et al., G.R. No. L-13282,
April 22, 1960, this Court repeated the same ruling when it said:
The main issue in this appeal by petitioner is that the industry trial court
committed an error in holding that it has jurisdiction to act in this case even if it
involves unfair labor practice considering that the La Consolacion College is not
a business enterprise but an educational institution not organized for profit.
If the claim that petitioner is an educational institution not operated for profit is
true, which apparently is the case, because the very court a quo found that it has
no stockholder, nor capital . . . then we are of the opinion that the same does not
come under the jurisdiction of the Court of Industrial Relations in view of the
ruling in the case of Boy Scouts of the Philippines v. Juliana V. Araos, G.R. No. L10091, decided on January 29, 1958.
It is noteworthy that the cases of the University of San Agustin, the University of
Santo Tomas, and La Consolacion College, cited above, all involve charges of
unfair labor practice under Republic Act No. 875, and the uniform rulings of this
Court are that the Court of Industrial Relations has no jurisdiction over the
charges because said Act does not apply to educational institutions that are not
operated or maintained for profit and do not declare dividends. On the other
hand, in the cases of Far Eastern University v. CIR, et al., G.R. No. L-17620,
August 31, 1962, this Court upheld the decision of the Court of Industrial
Relations finding the Far Eastern University, also an educational institution, guilty
of unfair labor practice. Among the findings of fact in said case was that the Far
Eastern University made profits from the school year 1952-1953 to 1958-1959. In
affirming the decision of the lower court, this Court had thereby ratified the ruling
of the Court of Industrial Relations which applied the Industrial Peace Act to
educational institutions that are organized, operated and maintained for profit.
It is also noteworthy that in the decisions in the cases of the Boy Scouts of the
Philippines, the University of San Agustin, the University of Sto. Tomas, and La
Consolacion College, this Court was not unanimous in the view that the Industrial
Peace Act (Republic Act No. 875) is not applicable to charitable, eleemosynary or
non-profit organizations which include educational institutions not operated for
profit. There are members of this Court who hold the view that the Industrial
Peace Act would apply also to non-profit organizations or entities the only
exception being the Government, including any political subdivision or
instrumentality thereof, in so far as governmental functions are concerned.
However, in the Far Eastern University case this Court is unanimous in
supporting the view that an educational institution that is operated for profit
comes within the scope of the Industrial Peace Act. We consider it a settled

doctrine of this Court, therefore, that the Industrial Peace Act is applicable to any
organization or entity whatever may be its purpose when it was created that
is operated for profit or gain.
Does the University operate as an educational institution for profit? Does it
declare dividends for its stockholders? If it does not, it must be declared beyond
the purview of Republic Act No. 875; but if it does, Republic Act No. 875 must
apply to it. The University itself admits that it has declared dividends. 3 The CIR in
its order dated March 30, 1963 in CIR Case No. 41-IPA which order was
issued after evidence was heard also found that the University is not for
strictly educational purposes and that "It realizes profits and parts of such earning
is distributed as dividends to private stockholders or individuals (Exh. A and also
1 to 1-F, 2-x 3-x and 4-x)"4Under this circumstance, and in consonance with the
rulings in the decisions of this Court, above cited, it is obvious that Republic Act
No. 875 is applicable to herein petitioner Feati University.
But the University claims that it is not an employer within the contemplation of
Republic Act No. 875, because it is not an industrial establishment. At most, it
says, it is only a lessee of the services of its professors and/or instructors
pursuant to a contract of services entered into between them. We find no merit in
this claim. Let us clarify who is an "employer" under the Act. Section 2(c) of said
Act provides:
Sec. 2. Definitions.As used in this Act
(c) The term employer include any person acting in the interest of an employer,
directly or indirectly, but shall not include any labor organization (otherwise than
when acting as an employer) or any one acting in the capacity or agent of such
labor organization.
It will be noted that in defining the term "employer" the Act uses the word
"includes", which it also used in defining "employee". [Sec. 2 (d)], and
"representative" [Sec. 2(h)]; and not the word "means" which the Act uses in
defining the terms "court" [Sec. 2(a)], "labor organization" [Sec. 2(e)], "legitimate
labor organization [Sec. 2(f)], "company union" [Sec. 2(g)], "unfair labor practice"
[Sec. 2(i)], "supervisor" [Sec. 2(k)], "strike" [Sec. 2(l)] and "lock-out" [Sec. 2(m)]. A
methodical variation in terminology is manifest. This variation and distinction in
terminology and phraseology cannot be presumed to have been the
inconsequential product of an oversight; rather, it must have been the result of a
deliberate and purposeful act, more so when we consider that as legislative
records show, Republic Act No. 875 had been meticulously and painstakingly
drafted and deliberated upon. In using the word "includes" and not "means",
Congress did not intend to give a complete definition of "employer", but rather
that such definition should be complementary to what is commonly understood
as employer. Congress intended the term to be understood in a broad meaning
because, firstly, the statutory definition includes not only "a principal employer but
also a person acting in the interest of the employer"; and, secondly, the Act itself
specifically enumerated those who are not included in the term "employer",
namely: (1) a labor organization (otherwise than when acting as an employer),
(2) anyone acting in the capacity of officer or agent of such labor organization
[Sec. 2(c)], and (3) the Government and any political subdivision or

instrumentality thereof insofar as the right to strike for the purpose of securing
changes or modifications in the terms and conditions of employment is
concerned (Section 11). Among these statutory exemptions, educational
institutions are not included; hence, they can be included in the term "employer".
This Court, however, has ruled that those educational institutions that are not
operated for profit are not within the purview of Republic Act No. 875. 5
As stated above, Republic Act No. 875 does not give a comprehensive but only a
complementary definition of the term "employer". The term encompasses those
that are in ordinary parlance "employers." What is commonly meant by
"employer"? The term "employer" has been given several acceptations. The
lexical definition is "one who employs; one who uses; one who engages or keeps
in service;" and "to employ" is "to provide work and pay for; to engage one's
service; to hire." (Webster's New Twentieth Century Dictionary, 2nd ed., 1960, p.
595). The Workmen's Compensation Act defines employer as including "every
person or association of persons, incorporated or not, public or private, and the
legal representative of the deceased employer" and "includes the owner or
lessee of a factory or establishment or place of work or any other person who is
virtually the owner or manager of the business carried on in the establishment or
place of work but who, for reason that there is an independent contractor in the
same, or for any other reason, is not the direct employer of laborers employed
there." [Sec. 39(a) of Act No. 3428.] The Minimum Wage Law states that
"employer includes any person acting directly or indirectly in the interest of the
employer in relation to an employee and shall include the Government and the
government corporations". [Rep. Act No. 602, Sec. 2(b)]. The Social Security Act
defines employer as "any person, natural or juridical, domestic or foreign, who
carries in the Philippines any trade, business, industry, undertaking, or activity of
any kind and uses the services of another person who is under his orders as
regards the employment, except the Government and any of its political
subdivisions, branches or instrumentalities, including corporations owned or
controlled by the Government." (Rep. Act No. 1161, Sec. 8[c]).
This Court, in the cases of the The Angat River Irrigation System, et al. vs. Angat
River Workers' Union (PLUM), et al., G.R. Nos. L-10934 and L-10944, December
28, 1957, which cases involve unfair labor practices and hence within the
purview of Republic Act No. 875, defined the term employer as follows:
An employer is one who employs the services of others; one for whom
employees work and who pays their wages or salaries (Black Law Dictionary, 4th
ed., p. 618).
An employer includes any person acting in the interest of an employer, directly or
indirectly (Sec. 2-c, Rep. Act 875).
Under none of the above definitions may the University be excluded, especially
so if it is considered that every professor, instructor or teacher in the teaching
staff of the University, as per allegation of the University itself, has a contract with
the latter for teaching services, albeit for one semester only. The University
engaged the services of the professors, provided them work, and paid them
compensation or salary for their services. Even if the University may be
considered as a lessee of services under a contract between it and the members

of its Faculty, still it is included in the term "employer". "Running through the word
`employ' is the thought that there has been an agreement on the part of one
person to perform a certain service in return for compensation to be paid by an
employer. When you ask how a man is employed, or what is his employment, the
thought that he is under agreement to perform some service or services for
another is predominant and paramount." (Ballentine Law Dictionary, Philippine
ed., p. 430, citing Pinkerton National Detective Agency v. Walker, 157 Ga. 548,
35 A. L. R. 557, 560, 122 S.E. Rep. 202).
To bolster its claim of exception from the application of Republic Act No. 875, the
University contends that it is not state that the employers included in the
definition of 2 (c) of the Act. This contention can not be sustained. In the first
place, Sec. 2 (c) of Republic Act No. 875 does not state that the employers
included in the definition of the term "employer" are only and exclusively
"industrial establishments"; on the contrary, as stated above, the term "employer"
encompasses all employers except those specifically excluded by the Act. In the
second place, even the Act itself does not refer exclusively to industrial
establishments and does not confine its application thereto. This is patent
inasmuch as several provisions of the Act are applicable to non-industrial
workers, such as Sec. 3, which deals with "employees' right to self-organization";
Sections 4 and 5 which enumerate unfair labor practices; Section 8 which
nullifies private contracts contravening employee's rights; Section 9 which relates
to injunctions in any case involving a labor dispute; Section 11 which prohibits
strikes in the government; Section 12 which provides for the exclusive collective
bargaining representation for labor organizations; Section 14 which deals with
the procedure for collective bargaining; Section 17 which treats of the rights and
conditions of membership in labor organizations; Sections 18, 19, 20 and 21
which provide respectively for the establishment of conciliation service,
compilation of collective bargaining contracts, advisory labor-management
relations; Section 22 which empowers the Secretary of Labor to make a study of
labor relations; and Section 24 which enumerates the rights of labor
organizations. (See Dissenting Opinion of Justice Concepcion in Boy Scouts of
the Philippines v. Juliana Araos, G.R. No. L-10091, January 29, 1958.)
This Court, in the case of Boy Scouts of the Philippines v. Araos, supra, had
occasion to state that the Industrial Peace Act "refers only to organizations and
entities created and operated for profits, engaged in a profitable trade,
occupation or industry". It cannot be denied that running a university engages
time and attention; that it is an occupation or a business from which the one
engaged in it may derive profit or gain. The University is not an industrial
establishment in the sense that an industrial establishment is one that is engaged
in manufacture or trade where raw materials are changed or fashioned into
finished products for use. But for the purposes of the Industrial Peace Act the
University is an industrial establishment because it is operated for profit and it
employs persons who work to earn a living. The term "industry", for the purposes
of the application of our labor laws should be given a broad meaning so as to
cover all enterprises which are operated for profit and which engage the services
of persons who work to earn a living.

The word "industry" within State Labor Relations Act controlling labor relations in
industry, cover labor conditions in any field of employment where the objective is
earning a livelihood on the one side and gaining of a profit on the other. Labor
Law Sec. 700 et seq. State Labor Relations Board vs. McChesney, 27 N.Y.S. 2d
866, 868." (Words and Phrases, Permanent Edition, Vol. 21, 1960 edition p. 510).
The University urges that even if it were an employer, still there would be no
employer-employee relationship between it and the striking members of the
Faculty Club because the latter are not employees within the purview of Sec. 2(d)
of Republic Act No. 875 but are independent contractors. This claim is untenable.
Section 2 (d) of Republic Act No. 875 provides:
(d) The term "employee" shall include any employee and shall not be limited to
the employee of a particular employer unless the act explicitly states otherwise
and shall include any individual whose work has ceased as a consequence of, or
in connection with, any current labor dispute or because of any unfair labor
practice and who has not obtained any other substantially equivalent and regular
employment.
This definition is again, like the definition of the term "employer" [Sec. 2(c)], by
the use of the term "include", complementary. It embraces not only those who are
usually and ordinarily considered employees, but also those who have ceased as
employees as a consequence of a labor dispute. The term "employee",
furthermore, is not limited to those of a particular employer. As already stated,
this Court in the cases of The Angat River Irrigation System, et al. v. Angat River
Workers' Union (PLUM), et al., supra, has defined the term "employer" as "one
who employs the services of others; one for whom employees work and who
pays their wages or salaries. "Correlatively, an employee must be one who is
engaged in the service of another; who performs services for another; who works
for salary or wages. It is admitted by the University that the striking professors
and/or instructors are under contract to teach particular courses and that they are
paid for their services. They are, therefore, employees of the University.
In support of its claim that the members of the Faculty Club are not employees of
the University, the latter cites as authority Francisco's Labor Laws, 2nd ed., p. 3,
which states:
While the term "workers" as used in a particular statute, has been regarded as
limited to those performing physical labor, it has been held to embrace
stenographers and bookkeepers. Teachers are not included, however.
It is evident from the above-quoted authority that "teachers" are not to be
included among those who perform "physical labor", but it does not mean that
they are not employees. We have checked the source of the authority, which is
31 Am. Jur., Sec. 3, p. 835, and the latter cites Huntworth v. Tanner, 87 Wash
670, 152 P. 523, Ann Cas 1917 D 676. A reading of the last case confirms Our
view.
That teachers are "employees' has been held in a number of cases (Aebli v.
Board of Education of City and County of San Francisco, 145 P. 2d 601, 62 Col.
App 2.d 706; Lowe & Campbell Sporting Goods Co. v. Tangipahoa Parish School
Board, La. App., 15 So. 2d 98, 100; Sister Odelia v. Church of St. Andrew, 263 N.
W. 111, 112, 195 Minn. 357, cited in Words and Phrases, Permanent ed., Vol. 14,

pp. 806-807). This Court in the Far Eastern University case, supra, considered
university instructors as employees and declared Republic Act No. 875
applicable to them in their employment relations with their school. The professors
and/or instructors of the University neither ceased to be employees when they
struck, for Section 2 of Rep. Act 875 includes among employees any individual
whose work has ceased as consequence of, or in connection with a current labor
dispute. Striking employees maintain their status as employees of the employer.
(Western Cartridge Co. v. NLRB, C.C.A. 7, 139 F2d 855, 858).
The contention of the University that the professors and/or instructors are
independent contractors, because the University does not exercise control over
their work, is likewise untenable. This Court takes judicial notice that a university
controls the work of the members of its faculty; that a university prescribes the
courses or subjects that professors teach, and when and where to teach; that the
professors' work is characterized by regularity and continuity for a fixed duration;
that professors are compensated for their services by wages and salaries, rather
than by profits; that the professors and/or instructors cannot substitute others to
do their work without the consent of the university; and that the professors can be
laid off if their work is found not satisfactory. All these indicate that the university
has control over their work; and professors are, therefore, employees and not
independent contractors. There are authorities in support of this view.
The principal consideration in determining whether a workman is an employee or
an independent contractor is the right to control the manner of doing the work,
and it is not the actual exercise of the right by interfering with the work, but the
right to control, which constitutes the test. (Amalgamated Roofing Co. v.
Travelers' Ins. Co., 133 N.E. 259, 261, 300 Ill. 487, quoted in Words and
Phrases, Permanent ed., Vol. 14, p. 576).
Where, under Employers' Liability Act, A was instructed when and where to work .
. . he is an employee, and not a contractor, though paid specified sum per
square. (Heine v. Hill, Harris & Co., 2 La. App. 384, 390, in Words and Phrases,
loc, cit.) .
Employees are those who are compensated for their labor or services by wages
rather than by profits. (People vs. Distributors Division, Smoked Fish Workers
Union Local No. 20377, Sup. 7 N. Y. S. 2d 185, 187 in Words and Phrases, loc,
cit.)
Services of employee or servant, as distinguished from those of a contractor, are
usually characterized by regularity and continuity of work for a fixed period or one
of indefinite duration, as contrasted with employment to do a single act or a
series of isolated acts; by compensation on a fixed salary rather than one
regulated by value or amount of work; . . . (Underwood v. Commissioner of
Internal Revenue, C.C.A., 56 F. 2d 67, 71 in Words and Phrases, op. cit., p. 579.)
Independent contractors can employ others to work and accomplish
contemplated result without consent of contractee, while "employee" cannot
substitute another in his place without consent of his employer. (Luker Sand &
Gravel Co. v. Industrial Commission, 23 P. 2d 225, 82 Utah, 188, in Words and
Phrases, Vol. 14, p. 576).

Moreover, even if university professors are considered independent contractors,

still they would be covered by Rep. Act No. 875. In the case of the Boy Scouts of
the Philippines v. Juliana Araos, supra, this Court observed that Republic Act No.
875 was modelled after the Wagner Act, or the National Labor Relations Act, of
the United States, and this Act did not exclude "independent contractors" from
the orbit of "employees". It was in the subsequent legislation the Labor
Management
Relation
Act
(Taft-Harley
Act) that "independent contractors" together with agricultural laborers,
individuals in domestic service of the home, supervisors, and others were
excluded. (See Rothenberg on Labor Relations, 1949, pp. 330-331).
It having been shown that the members of the Faculty Club are employees, it
follows that they have a right to unionize in accordance with the provisions of
Section 3 of the Magna Carta of Labor (Republic Act No. 875) which provides as
follows:
Sec. 3. Employees' right to self-organization.Employees shall have the right to
self-organization and to form, join or assist labor organizations of their own
choosing for the purpose of collective bargaining through representatives of their
own choosing and to engage in concerted activities for the purpose of collective
bargaining and other mutual aid or protection. . . .
We agree with the statement of the lower court, in its order of March 30, 1963
which is sought to be set aside in the instant case, that the right of employees to
self-organization is guaranteed by the Constitution, that said right would exist
even if Republic Act No. 875 is repealed, and that regardless of whether their
employers are engaged in commerce or not. Indeed, it is Our considered view
that the members of the faculty or teaching staff of private universities, colleges,
and schools in the Philippines, regardless of whether the university, college or
school is run for profit or not, are included in the term "employees" as
contemplated in Republic Act No. 875 and as such they may organize
themselves pursuant to the above-quoted provision of Section 3 of said Act.
Certainly, professors, instructors or teachers of private educational institutions
who teach to earn a living are entitled to the protection of our labor laws and
one such law is Republic Act No. 875.
The contention of the University in the instant case that the members of the
Faculty Club can not unionize and the Faculty Club can not exist as a valid labor
organization is, therefore, without merit. The record shows that the Faculty Club
is a duly registered labor organization and this fact is admitted by counsel for the
University.5a
The other issue raised by the University is the validity of the Presidential
certification. The University contends that under Section 10 of Republic Act No.
875 the power of the President of the Philippines to certify is subject to the
following conditions, namely: (1) that here is a labor dispute, and (2) that said
labor dispute exists in an industry that is vital to the national interest. The
University maintains that those conditions do not obtain in the instant case. This
contention has also no merit.
We have previously stated that the University is an establishment or enterprise
that is included in the term "industry" and is covered by the provisions of

Republic Act No. 875. Now, was there a labor dispute between the University and
the Faculty Club?
Republic Act No. 875 defines a labor dispute as follows:
The term "labor dispute" includes any controversy concerning terms, tenure or
conditions of employment, or concerning the association or representation of
persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms
or conditions of employment regardless of whether the disputants stand in
proximate relation of employer and employees.
The test of whether a controversy comes within the definition of "labor dispute"
depends on whether the controversy involves or concerns "terms, tenure or
condition of employment" or "representation." It is admitted by the University, in
the instant case, that on January 14, 1963 the President of the Faculty Club
wrote to the President of the University a letter informing the latter of the
organization of the Faculty Club as a labor union, duly registered with the Bureau
of Labor Relations; that again on January 22, 1963 another letter was sent, to
which was attached a list of demands consisting of 26 items, and asking the
President of the University to answer within ten days from date of receipt thereof;
that the University questioned the right of the Faculty Club to be the exclusive
representative of the majority of the employees and asked proof that the Faculty
Club had been designated or selected as exclusive representative by the vote of
the majority of said employees; that on February 1, 1963 the Faculty Club filed
with the Bureau of Labor Relations a notice of strike alleging as reason therefor
the refusal of the University to bargain collectively with the representative of the
faculty members; that on February 18, 1963 the members of the Faculty Club
went on strike and established picket lines in the premises of the University,
thereby disrupting the schedule of classes; that on March 1, 1963 the Faculty
Club filed Case No. 3666-ULP for unfair labor practice against the University, but
which was later dismissed (on April 2, 1963 after Case 41-IPA was certified to the
CIR); and that on March 7, 1963 a petition for certification election, Case No.
1183-MC, was filed by the Faculty Club in the CIR. 6 All these admitted facts show
that the controversy between the University and the Faculty Club involved terms
and conditions of employment, and the question of representation. Hence, there
was a labor dispute between the University and the Faculty Club, as
contemplated by Republic Act No. 875. It having been shown that the University
is an institution operated for profit, that is an employer, and that there is an
employer-employee relationship, between the University and the members of the
Faculty Club, and it having been shown that a labor dispute existed between the
University and the Faculty Club, the contention of the University, that the
certification made by the President is not only not authorized by Section 10 of
Republic Act 875 but is violative thereof, is groundless.
Section 10 of Republic Act No. 875 provides:
When in the opinion of the President of the Philippines there exists a labor
dispute in an industry indispensable to the national interest and when such labor
dispute is certified by the President to the Court of Industrial Relations, said
Court may cause to be issued a restraining order forbidding the employees to
strike or the employer to lockout the employees, and if no other solution to the

dispute is found, the Court may issue an order fixing the terms and conditions of
employment.
This Court had occasion to rule on the application of the above-quoted provision
of Section 10 of Republic Act No. 875. In the case of Pampanga Sugar
Development Co. v. CIR, et al., G.R. No. L-13178, March 24, 1961, it was held:
It thus appears that when in the opinion of the President a labor dispute exists in
an industry indispensable to national interest and he certifies it to the Court of
Industrial Relations the latter acquires jurisdiction to act thereon in the manner
provided by law. Thus the court may take either of the following courses: it may
issue an order forbidding the employees to strike or the employer to lockout its
employees, or, failing in this, it may issue an order fixing the terms and conditions
of employment. It has no other alternative. It can not throw the case out in the
assumption that the certification was erroneous.
xxx
xxx
xxx
. . . The fact, however, is that because of the strike declared by the members of
the minority union which threatens a major industry the President deemed it wise
to certify the controversy to the Court of Industrial Relations for adjudication. This
is the power that the law gives to the President the propriety of its exercise being
a matter that only devolves upon him. The same is not the concern of the
industrial court. What matters is that by virtue of the certification made by the
President the case was placed under the jurisdiction of said court. (Emphasis
supplied)
To certify a labor dispute to the CIR is the prerogative of the President under the
law, and this Court will not interfere in, much less curtail, the exercise of that
prerogative. The jurisdiction of the CIR in a certified case is exclusive (Rizal
Cement Co., Inc. v. Rizal Cement Workers Union (FFW), et al., G.R. No. L12747, July 30, 1960). Once the jurisdiction is acquired pursuant to the
presidential certification, the CIR may exercise its broad powers as provided in
Commonwealth Act 103. All phases of the labor dispute and the employeremployee relationship may be threshed out before the CIR, and the CIR may
issue such order or orders as may be necessary to make effective the exercise of
its jurisdiction. The parties involved in the case may appeal to the Supreme Court
from the order or orders thus issued by the CIR.
And so, in the instant case, when the President took into consideration that the
University "has some 18,000 students and employed approximately 500 faculty
members", that `the continued disruption in the operation of the University will
necessarily prejudice the thousand of students", and that "the dispute affects the
national interest",7 and certified the dispute to the CIR, it is not for the CIR nor
this Court to pass upon the correctness of the reasons of the President in
certifying the labor dispute to the CIR.
The third issue raised by the University refers to the question of the legality of the
return-to-work order (of March 30, 1963 in Case 41-IPA) and the order
implementing the same (of April 6, 1963). It alleges that the orders are illegal
upon the grounds: (1) that Republic Act No. 875, supplementing Commonwealth
Act No. 103, has withdrawn from the CIR the power to issue a return-to-work
order; (2) that the only power granted by Section 10 of Republic Act No. 875 to

the CIR is to issue an order forbidding the employees to strike or forbidding the
employer to lockout the employees, as the case may be, before either
contingency had become a fait accompli; (3) that the taking in by the University of
replacement professors was valid, and the return-to-work order of March 30,
1963 constituted impairment of the obligation of contracts; and (4) the CIR could
not issue said order without having previously determined the legality or illegality
of the strike.
The contention of the University that Republic Act No. 875 has withdrawn the
power of the Court of Industrial Relations to issue a return-to-work order
exercised by it under Commonwealth Act No. 103 can not be sustained. When a
case is certified by the President to the Court of Industrial Relations, the case
thereby comes under the operation of Commonwealth Act No. 103, and the Court
may exercise the broad powers and jurisdiction granted to it by said Act. Section
10 of Republic Act No. 875 empowers the Court of Industrial Relations to issue
an order "fixing the terms of employment." This clause is broad enough to
authorize the Court to order the strikers to return to work and the employer to
readmit them. This Court, in the cases of the Philippine Marine Officers
Association vs. The Court of Industrial Relations, Compania Maritima, et al.;
and Compaia Martima, et al. vs. Philippine Marine Radio Officers Association
and CIR, et al., G.R. Nos. L-10095 and L-10115, October 31, 1957, declared:
We cannot subscribe to the above contention. We agree with counsel for the
Philippine Radio Officers' Association that upon certification by the President
under Section 10 of Republic Act 875, the case comes under the operation of
Commonwealth Act 103, which enforces compulsory arbitration in cases of labor
disputes in industries indispensable to the national interest when the President
certifies the case to the Court of Industrial Relations. The evident intention of the
law is to empower the Court of Industrial Relations to act in such cases, not only
in the manner prescribed under Commonwealth Act 103, but with the same broad
powers and jurisdiction granted by that act. If the Court of Industrial Relations is
granted authority to find a solution to an industrial dispute and such solution
consists in the ordering of employees to return back to work, it cannot be
contended that the Court of Industrial Relations does not have the power or
jurisdiction to carry that solution into effect. And of what use is its power of
conciliation and arbitration if it does not have the power and jurisdiction to carry
into effect the solution it has adopted? Lastly, if the said court has the power to fix
the terms and conditions of employment, it certainly can order the return of the
workers with or without backpay as a term or condition of employment.
The foregoing ruling was reiterated by this Court in the case of Hind Sugar Co. v.
CIR, et al., G.R. No. L-13364, July 26, 1960.
When a case is certified to the CIR by the President of the Philippines pursuant
to Section 10 of Republic Act No. 875, the CIR is granted authority to find a
solution to the industrial dispute; and the solution which the CIR has found under
the authority of the presidential certification and conformable thereto cannot be
questioned (Radio Operators Association of the Philippines vs. Philippine Marine
Radio Officers Association, et al., L-10112, Nov. 29, 1957, 54 O.G. 3218).

Untenable also is the claim of the University that the CIR cannot issue a returnto-work order after strike has been declared, it being contended that under
Section 10 of Republic Act No. 875 the CIR can only prevent a strike or a lockout
when either of this situation had not yet occurred. But in the case of Bisaya
Land Transportation Co., Inc. vs. Court of Industrial Relations, et al., No. L10114, Nov. 26, 1957, 50 O.G. 2518, this Court declared:
There is no reason or ground for the contention that Presidential certification of
labor dispute to the CIR is limited to the prevention of strikes and lockouts. Even
after a strike has been declared where the President believes that public interest
demands arbitration and conciliation, the President may certify the ease for that
purpose. The practice has been for the Court of Industrial Relations to order the
strikers to work, pending the determination of the union demands that impelled
the strike. There is nothing in the law to indicate that this practice is abolished."
(Emphasis supplied)
Likewise untenable is the contention of the University that the taking in by it of
replacements was valid and the return-to-work order would be an impairment of
its contract with the replacements. As stated by the CIR in its order of March 30,
1963, it was agreed before the hearing of Case 41-IPA on March 23, 1963 that
the strikers would return to work under the status quo arrangement and the
University would readmit them, and the return-to-work order was a confirmation
of that agreement. This is a declaration of fact by the CIR which we cannot
disregard. The faculty members, by striking, have not abandoned their
employment but, rather, they have only ceased from their labor (Keith Theatre v.
Vachon et al., 187 A. 692). The striking faculty members have not lost their right
to go back to their positions, because the declaration of a strike is not a
renunciation of their employment and their employee relationship with the
University (Rex Taxicab Co. vs. CIR, et al., 40 O.G., No. 13, 138). The
employment of replacements was not authorized by the CIR. At most, that was a
temporary expedient resorted to by the University, which was subject to the
power of the CIR to allow to continue or not. The employment of replacements by
the University prior to the issuance of the order of March 30, 1963 did not vest in
the replacements a permanent right to the positions they held. Neither could such
temporary employment bind the University to retain permanently the
replacements.
Striking employees maintained their status as employees of the employer
(Western Castridge Co. v. National Labor Relations Board, C.C.A. 139 F. 2d 855,
858) ; that employees who took the place of strikers do not displace them as
`employees." ' (National Labor Relations Board v. A. Sartorius & Co., C.C.A. 2,
140 F. 2d 203, 206, 207.)
It is clear from what has been said that the return-to-work order cannot be
considered as an impairment of the contract entered into by petitioner with the
replacements. Besides, labor contracts must yield to the common good and such
contracts are subject to the special laws on labor unions, collective bargaining,
strikes and similar subjects (Article 1700, Civil Code).
Likewise unsustainable is the contention of the University that the Court of
Industrial Relations could not issue the return-to-work order without having

resolved previously the issue of the legality or illegality of the strike, citing as
authority therefor the case of Philippine Can Company v. Court of Industrial
Relations, G.R. No. L-3021, July 13, 1950. The ruling in said case is not
applicable to the case at bar, the facts and circumstances being very different.
The Philippine Can Company case, unlike the instant case, did not involve the
national interest and it was not certified by the President. In that case the
company no longer needed the services of the strikers, nor did it need substitutes
for the strikers, because the company was losing, and it was imperative that it lay
off such laborers as were not necessary for its operation in order to save the
company from bankruptcy. This was the reason of this Court in ruling, in that
case, that the legality or illegality of the strike should have been decided first
before the issuance of the return-to-work order. The University, in the case before
Us, does not claim that it no longer needs the services of professors and/or
instructors; neither does it claim that it was imperative for it to lay off the striking
professors and instructors because of impending bankruptcy. On the contrary, it
was imperative for the University to hire replacements for the strikers. Therefore,
the ruling in the Philippine Can case that the legality of the strike should be
decided first before the issuance of the return-to-work order does not apply to the
case at bar. Besides, as We have adverted to, the return-to-work order of March
30, 1963, now in question, was a confirmation of an agreement between the
University and the Faculty Club during a prehearing conference on March 23,
1963.
The University also maintains that there was no more basis for the claim of the
members of the Faculty Club to return to their work, as their individual contracts
for teaching had expired on March 25 or 31, 1963, as the case may be, and
consequently, there was also no basis for the return-to-work order of the CIR
because the contractual relationships having ceased there were no positions to
which the members of the Faculty Club could return to. This contention is not well
taken. This argument loses sight of the fact that when the professors and
instructors struck on February 18, 1963, they continued to be employees of the
University for the purposes of the labor controversy notwithstanding the
subsequent termination of their teaching contracts, for Section 2(d) of the
Industrial Peace Act includes among employees "any individual whose work has
ceased a consequence of, or in connection with, any current labor dispute or of
any unfair labor practice and who has not obtained any other substantially
equivalent and regular employment."
The question raised by the University was resolved in a similar case in the United
States. In the case of Rapid Roller Co. v. NLRB 126 F. 2d 452, we read:
On May 9, 1939 the striking employees, eighty-four in number, offered to the
company to return to their employment. The company believing it had not
committed any unfair labor practice, refused the employees' offer and claimed
the right to employ others to take the place of the strikers, as it might see fit. This
constituted discrimination in the hiring and tenure of the striking employees.
When the employees went out on a strike because of the unfair labor practice of
the company, their status as employees for the purpose of any controversy
growing out of that unfair labor practice was fixed. Sec. 2 (3) of the Act. Phelps

Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S. Ct. 845, 85.
L. ed. 1271, 133 A.L.R. 1217.
For the purpose of such controversy they remained employees of the company.
The company contended that they could not be their employees in any event
since the "contract of their employment expired by its own terms on April 23,
1939."
In this we think the company is mistaken for the reason we have just pointed out,
that the status of the employees on strike became fixed under Sec. 2 (3) of the
Act because of the unfair labor practice of the company which caused the strike.
The University, furthermore, claims that the information for indirect contempt filed
against the officers of the University (Case No. V-30) as well as the order of April
29, 1963 for their arrest were improper, irregular and illegal because (1) the
officers of the University had complied in good faith with the return-to-work order
and in those cases that they did not, it was due to circumstance beyond their
control; (2) the return-to-work order and the order implementing the same were
illegal; and (3) even assuming that the order was legal, the same was not Yet
final because there was a motion to reconsider it.
Again We find no merit in this claim of Petitioner. We have already ruled that the
CIR had jurisdiction to issue the order of March 30, 1963 in CIR Case 41-IPA,
and the return-to-work provision of that order is valid and legal. Necessarily the
order of April 6, 1963 implementing that order of March 30, 1963 was also valid
and legal.
Section 6 of Commonwealth Act No. 103 empowers the Court of Industrial
Relations of any Judge thereof to punish direct and indirect contempts as
provided in Rule 64 (now Rule 71) of the Rules of Court, under the same
procedure and penalties provided therein. Section 3 of Rule 71 enumerates the
acts which would constitute indirect contempt, among which is "disobedience or
resistance to lawful writ, process, order, judgment, or command of a court," and
the person guilty thereof can be punished after a written charge has been filed
and the accused has been given an opportunity to be heard. The last paragraph
of said section provides:
But nothing in this section shall be so construed as to prevent the court from
issuing process to bring the accused party into court, or from holding him in
custody pending such proceedings.
The provision authorizes the judge to order the arrest of an alleged contemner
(Francisco, et al. v. Enriquez, L-7058, March 20, 1954, 94 Phil., 603) and this,
apparently, is the provision upon which respondent Judge Bautista relied when
he issued the questioned order of arrest.
The contention of petitioner that the order of arrest is illegal is unwarranted. The
return-to-work order allegedly violated was within the court's jurisdiction to issue.
Section 14 of Commonwealth Act No. 103 provides that in cases brought before
the Court of Industrial Relations under Section 4 of the Act (referring to strikes
and lockouts) the appeal to the Supreme Court from any award, order or decision
shall not stay the execution of said award, order or decision sought to be
reviewed unless for special reason the court shall order that execution be stayed.
Any award, order or decision that is appealed is necessarily not final. Yet under

Section 14 of Commonwealth Act No. 103 that award, order or decision, even if
not yet final, is executory, and the stay of execution is discretionary with the
Court of Industrial Relations. In other words, the Court of Industrial Relations, in
cases involving strikes and lockouts, may compel compliance or obedience of its
award, order or decision even if the award, order or decision is not yet final
because it is appealed, and it follows that any disobedience or non-compliance of
the award, order or decision would constitute contempt against the Court of
Industrial Relations which the court may punish as provided in the Rules of
Court. This power of the Court of Industrial Relations to punish for contempt an
act of non-compliance or disobedience of an award, order or decision, even if not
yet final, is a special one and is exercised only in cases involving strikes and
lockouts. And there is reason for this special power of the industrial court
because in the exercise of its jurisdiction over cases involving strikes and
lockouts the court has to issue orders or make decisions that are necessary to
effect a prompt solution of the labor dispute that caused the strike or the lockout,
or to effect the prompt creation of a situation that would be most beneficial to the
management and the employees, and also to the public even if the solution
may be temporary, pending the final determination of the case. Otherwise, if the
effectiveness of any order, award, or decision of the industrial court in cases
involving strikes and lockouts would be suspended pending appeal then it can
happen that the coercive powers of the industrial court in the settlement of the
labor disputes in those cases would be rendered useless and nugatory.
The University points to Section 6 of Commonwealth Act No. 103 which provides
that "Any violation of any order, award, or decision of the Court of Industrial
Relations shall after such order, award or decision has become final, conclusive
and executory constitute contempt of court," and contends that only the
disobedience of orders that are final (meaning one that is not appealed) may be
the subject of contempt proceedings. We believe that there is no inconsistency
between the above-quoted provision of Section 6 and the provision of Section 14
of Commonwealth Act No. 103. It will be noted that Section 6 speaks of order,
award or decision that isexecutory. By the provision of Section 14 an order,
award or decision of the Court of Industrial Relations in cases involving strikes
and lockouts are immediatelyexecutory, so that a violation of that order would
constitute an indirect contempt of court.
We believe that the action of the CIR in issuing the order of arrest of April 29,
1963 is also authorized under Section 19 of Commonwealth Act No. 103 which
provides as follows:
SEC. 19. Implied condition in every contract of employment.In every contract
of employment whether verbal or written, it is an implied condition that when any
dispute between the employer and the employee or laborer has been submitted
to the Court of Industrial Relations for settlement or arbitration pursuant to the
provisions of this Act . . . and pending award, or decision by the Court of such
dispute . . . the employee or laborer shall not strike or walk out of his employment
when so enjoined by the Court after hearing and when public interest so requires,
and if he has already done so, that he shall forthwith return to it, upon order of
the Court, which shall be issued only after hearing when public interest so

requires or when the dispute cannot, in its opinion, be promptly decided or

settled; and if the employees or laborers fail to return to work, the Court may
authorize the employer to accept other employees or laborers. A condition shall
further be implied that while such dispute . . . is pending, the employer shall
refrain from accepting other employees or laborers, unless with the express
authority of the Court, and shall permit the continuation in the service of his
employees or laborers under the last terms and conditions existing before the
dispute arose. . . . A violation by the employer or by the employee or laborer of
such an order or the implied contractual condition set forth in this section shall
constitute contempt of the Court of Industrial Relations and shall be punished by
the Court itself in the same manner with the same penalties as in the case of
contempt of a Court of First Instance. . . .
We hold that the CIR acted within its jurisdiction when it ordered the arrest of the
officers of the University upon a complaint for indirect contempt filed by the
Acting Special Prosecutor of the CIR in CIR Case V-30, and that order was valid.
Besides those ordered arrested were not yet being punished for contempt; but,
having been charged, they were simply ordered arrested to be brought before the
Judge to be dealt with according to law. Whether they are guilty of the charge or
not is yet to be determined in a proper hearing.
Let it be noted that the order of arrest dated April 29, 1963 in CIR Case V-30 is
being questioned in Case G.R. No. L-21278 before this Court in a special civil
action for certiorari. The University did not appeal from that order. In other words,
the only question to be resolved in connection with that order in CIR Case V-30 is
whether the CIR had jurisdiction, or had abused its discretion, in issuing that
order. We hold that the CIR had jurisdiction to issue that order, and neither did it
abuse its discretion when it issued that order.
In Case G.R. No. L-21462 the University appealed from the order of Judge
Villanueva of the CIR in Case No. 1183-MC, dated April 6, 1963, granting the
motion of the Faculty Club to withdraw its petition for certification election, and
from the resolution of the CIR en banc, dated June 5, 1963, denying the motion
to reconsider said order of April 6, 1963. The ground of the Faculty Club in asking
for the withdrawal of that petition for certification election was because the issues
involved in that petition were absorbed by the issues in Case 41-IPA. The
University opposed the petition for withdrawal, but at the same time it moved for
the dismissal of the petition for certification election.
It is contended by the University before this Court, in G.R. L-21462, that the
issues of employer-employee relationship between the University and the Faculty
Club, the alleged status of the Faculty Club as a labor union, its majority
representation and designation as bargaining representative in an appropriate
unit of the Faculty Club should have been resolved first in Case No. 1183-MC
prior to the determination of the issues in Case No. 41-IPA, and, therefore, the
motion to withdraw the petition for certification election should not have been
granted upon the ground that the issues in the first case were absorbed in the
second case.
We believe that these contentions of the University in Case G.R. No. L-21462
have been sufficiently covered by the discussion in this decision of the main

issues raised in the principal case, which is Case G.R. No. L-21278. After all, the
University wanted CIR Case 1183-MC dismissed, and the withdrawal of the
petition for certification election had in a way produced the situation desired by
the University. After considering the arguments adduced by the University in
support of its petition for certiorari by way of appeal in Case G.R. No. L-21278,
We hold that the CIR did not commit any error when it granted the withdrawal of
the petition for certification election in Case No. 1183-MC. The principal case
before the CIR is Case No. 41-IPA and all the questions relating to the labor
disputes between the University and the Faculty Club may be threshed out, and
decided, in that case.
In Case G.R. No. L-21500 the University appealed from the order of the CIR of
March 30, 1963, issued by Judge Bautista, and from the resolution of the CIR en
bancpromulgated on June 28, 1963, denying the motion for the reconsideration
of that order of March 30, 1963, in CIR Case No. 41-IPA. We have already ruled
that the CIR has jurisdiction to issue that order of March 30, 1963, and that order
is valid, and We, therefore, hold that the CIR did not err in issuing that order of
March 30, 1963 and in issuing the resolution promulgated on June 28, 1963
(although dated May 7, 1963) denying the motion to reconsider that order of
March 30, 1963.
IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with
preliminary injunction in Case G.R. No. L-21278 is dismissed and the writs
prayed for therein are denied. The writ of preliminary injunction issued in Case
G.R. No. L-21278 is dissolved. The orders and resolutions appealed from, in
Cases Nos. L-21462 and L-21500, are affirmed, with costs in these three cases
against the petitioner-appellant Feati University. It is so ordered.
Concepcion, C.J., Dizon, Regala, Makalintal, Bengzon, J.P., Sanchez and
Castro, JJ., concur.
Reyes, J.B.L., J., concurs but reserves his vote on the teacher's right to strike.
Endnotes
1
As quoted from the writ of preliminary injunction issued by this Court.
2
As quoted from the order of April 6, 1963.
3
Petitioner's brief p. 29; also pp. 8-9 petitioner's reply brief.
4
See order as copied on p. 118 of petitioner's brief.
5
We have pointed out that this is not a unanimous view of this Court.
5a
See p. 140, Record of G. R. No. L-21278.
6
Petitioner's Brief, pp. 1, 2, 3, 7 and 8.
7
Words in quotation marks are as quoted from the letter of certification of the
President dated March 21, 1963 addressed to the Presiding Judge of the CIR.

University of Santo Tomas, Faculty of Civil Law 2010 All Rights Reserved.

SECOND DIVISION

[G.R. No. 142293. February 27, 2003]

VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and

SBT[1] TRUCKING CORPORATION, petitioners, vs. HON. COURT OF
APPEALS and JAIME SAHOT, respondents.

DECISION

QUISUMBING, J.:

This petition for review seeks the reversal of the decision [2] of the Court of
Appeals dated February 29, 2000, in CA-G.R. SP No. 52671, affirming with
modification the decision[3] of the National Labor Relations Commission
promulgated on June 20, 1996 in NLRC NCR CA No. 010526-96. Petitioners also
pray for the reinstatement of the decision [4] of the Labor Arbiter in NLRC NCR
Case No. 00-09-06717-94.

Culled from the records are the following facts of this case:

Sometime in 1958, private respondent Jaime Sahot [5] started working as a truck
helper for petitioners family-owned trucking business named Vicente Sy
Trucking. In 1965, he became a truck driver of the same family business,
renamed T. Paulino Trucking Service, later 6Bs Trucking Corporation in 1985,
and thereafter known as SBT Trucking Corporation since 1994. Throughout all
these changes in names and for 36 years, private respondent continuously
served the trucking business of petitioners.

In April 1994, Sahot was already 59 years old. He had been incurring absences
as he was suffering from various ailments. Particularly causing him pain was his
left thigh, which greatly affected the performance of his task as a driver. He
inquired about his medical and retirement benefits with the Social Security
System (SSS) on April 25, 1994, but discovered that his premium payments had
not been remitted by his employer.

Sahot had filed a week-long leave sometime in May 1994. On May 27th, he was
medically examined and treated for EOR, presleyopia, hypertensive retinopathy
G II (Annexes G-5 and G-3, pp. 48, 104, respectively), [6] HPM, UTI, Osteoarthritis
(Annex G-4, p. 105),[7] and heart enlargement (Annex G, p. 107). [8] On said
grounds, Belen Paulino of the SBT Trucking Service management told him to file

a formal request for extension of his leave. At the end of his week-long absence,
Sahot applied for extension of his leave for the whole month of June, 1994. It
was at this time when petitioners allegedly threatened to terminate his
employment should he refuse to go back to work.

At this point, Sahot found himself in a dilemma. He was facing dismissal if he

refused to work, But he could not retire on pension because petitioners never
paid his correct SSS premiums. The fact remained he could no longer work as
his left thigh hurt abominably. Petitioners ended his dilemma. They carried out
their threat and dismissed him from work, effective June 30, 1994. He ended up
sick, jobless and penniless.

On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a
complaint for illegal dismissal, docketed as NLRC NCR Case No. 00-09-0671794. He prayed for the recovery of separation pay and attorneys fees against
Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T.
Paulino Trucking Service, 6Bs Trucking and SBT Trucking, herein petitioners.

For their part, petitioners admitted they had a trucking business in the 1950s but
denied employing helpers and drivers. They contend that private respondent was
not illegally dismissed as a driver because he was in fact petitioners industrial
partner. They add that it was not until the year 1994, when SBT Trucking
Corporation was established, and only then did respondent Sahot become an
employee of the company, with a monthly salary that reached P4,160.00 at the
time of his separation.

Petitioners further claimed that sometime prior to June 1, 1994, Sahot went on
leave and was not able to report for work for almost seven days. On June 1,
1994, Sahot asked permission to extend his leave of absence until June 30,
1994. It appeared that from the expiration of his leave, private respondent never
reported back to work nor did he file an extension of his leave. Instead, he filed
the complaint for illegal dismissal against the trucking company and its owners.

Petitioners add that due to Sahots refusal to work after the expiration of his
authorized leave of absence, he should be deemed to have voluntarily resigned
from his work. They contended that Sahot had all the time to extend his leave or
at least inform petitioners of his health condition. Lastly, they cited NLRC Case
No. RE-4997-76, entitled Manuelito Jimenez et al. vs. T. Paulino Trucking
Service, as a defense in view of the alleged similarity in the factual milieu and
issues of said case to that of Sahots, hence they are in pari material and Sahots
complaint ought also to be dismissed.

The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel Cadiente Santos,
ruled that there was no illegal dismissal in Sahots case. Private respondent had
failed to report to work. Moreover, said the Labor Arbiter, petitioners and private
respondent were industrial partners before January 1994. The Labor Arbiter
concluded by ordering petitioners to pay financial assistance of P15,000 to Sahot
for having served the company as a regular employee since January 1994 only.

On appeal, the National Labor Relations Commission modified the judgment of

the Labor Arbiter. It declared that private respondent was an employee, not an
industrial partner, since the start. Private respondent Sahot did not abandon his
job but his employment was terminated on account of his illness, pursuant to
Article 284[9] of the Labor Code. Accordingly, the NLRC ordered petitioners to pay
private respondent separation pay in the amount of P60,320.00, at the rate of
P2,080.00 per year for 29 years of service.

Petitioners assailed the decision of the NLRC before the Court of Appeals. In its
decision dated February 29, 2000, the appellate court affirmed with modification
the judgment of the NLRC. It held that private respondent was indeed an
employee of petitioners since 1958. It also increased the amount of separation
pay awarded to private respondent to P74,880, computed at the rate of P2,080
per year for 36 years of service from 1958 to 1994. It decreed:

WHEREFORE, the assailed decision is hereby AFFIRMED with MODIFICATION.

SB Trucking Corporation is hereby directed to pay complainant Jaime Sahot the
sum of SEVENTY-FOUR THOUSAND EIGHT HUNDRED EIGHTY (P74,880.00)
PESOS as and for his separation pay.[10]

Hence, the instant petition anchored on the following contentions:

RESPONDENT COURT OF APPEALS IN PROMULGATING THE

QUESTION[ED] DECISION AFFIRMING WITH MODIFICATION THE DECISION
OF NATIONAL LABOR RELATIONS COMMISSION DECIDED NOT IN ACCORD
WITH LAW AND PUT AT NAUGHT ARTICLE 402 OF THE CIVIL CODE. [11]

II

RESPONDENT COURT OF APPEALS VIOLATED SUPREME COURT RULING

THAT THE NATIONAL LABOR RELATIONS COMMISSION IS BOUND BY THE
FACTUAL FINDINGS OF THE LABOR ARBITER AS THE LATTER WAS IN A

BETTER POSITION TO OBSERVE THE DEMEANOR AND DEPORTMENT OF

THE WITNESSES IN THE CASE OF ASSOCIATION OF INDEPENDENT
UNIONS IN THE PHILIPPINES VERSUS NATIONAL CAPITAL REGION
(305 SCRA 233).[12]

III

PRIVATE RESPONDENT WAS NOT DISMISS[ED] BY RESPONDENT SBT

TRUCKING CORPORATION.[13]

Three issues are to be resolved: (1) Whether or not an employer-employee

relationship existed between petitioners and respondent Sahot; (2) Whether or
not there was valid dismissal; and (3) Whether or not respondent Sahot is
entitled to separation pay.

Crucial to the resolution of this case is the determination of the first issue. Before
a case for illegal dismissal can prosper, an employer-employee relationship must
first be established.[14]

Petitioners invoke the decision of the Labor Arbiter Ariel Cadiente Santos which
found that respondent Sahot was not an employee but was in fact, petitioners
industrial partner.[15] It is contended that it was the Labor Arbiter who heard the
case and had the opportunity to observe the demeanor and deportment of the
parties. The same conclusion, aver petitioners, is supported by substantial
evidence.[16] Moreover, it is argued that the findings of fact of the Labor Arbiter
was wrongly overturned by the NLRC when the latter made the following
pronouncement:

We agree with complainant that there was error committed by the Labor Arbiter
when he concluded that complainant was an industrial partner prior to 1994. A
computation of the age of complainant shows that he was only twenty-three (23)
years when he started working with respondent as truck helper. How can we
entertain in our mind that a twenty-three (23) year old man, working as a truck
helper, be considered an industrial partner. Hence we rule that complainant was
only an employee, not a partner of respondents from the time complainant
started working for respondent.[17]

Because the Court of Appeals also found that an employer-employee relationship

existed, petitioners aver that the appellate courts decision gives an imprimatur to
the illegal finding and conclusion of the NLRC.

Private respondent, for his part, denies that he was ever an industrial partner of
petitioners. There was no written agreement, no proof that he received a share in
petitioners profits, nor was there anything to show he had any participation with
respect to the running of the business.[18]

The elements to determine the existence of an employment relationship are: (a)

the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employers power to control the employees
conduct. The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it.[19]

As found by the appellate court, petitioners owned and operated a trucking

business since the 1950s and by their own allegations, they determined private
respondents wages and rest day.[20] Records of the case show that private
respondent actually engaged in work as an employee. During the entire course of
his employment he did not have the freedom to determine where he would go,
what he would do, and how he would do it. He merely followed instructions of
petitioners and was content to do so, as long as he was paid his wages. Indeed,
said the CA, private respondent had worked as a truck helper and driver of
petitioners not for his own pleasure but under the latters control.

Article 1767[21] of the Civil Code states that in a contract of partnership two or
more persons bind themselves to contribute money, property or industry to a
common fund, with the intention of dividing the profits among themselves. [22] Not
one of these circumstances is present in this case. No written agreement exists
to prove the partnership between the parties. Private respondent did not
contribute money, property or industry for the purpose of engaging in the
supposed business. There is no proof that he was receiving a share in the profits
as a matter of course, during the period when the trucking business was under
operation. Neither is there any proof that he had actively participated in the
management, administration and adoption of policies of the business.Thus, the
NLRC and the CA did not err in reversing the finding of the Labor Arbiter that
private respondent was an industrial partner from 1958 to 1994.

On this point, we affirm the findings of the appellate court and the NLRC. Private
respondent Jaime Sahot was not an industrial partner but an employee of
petitioners from 1958 to 1994. The existence of an employer-employee
relationship is ultimately a question of fact [23] and the findings thereon by the
NLRC, as affirmed by the Court of Appeals, deserve not only respect but finality
when supported by substantial evidence. Substantial evidence is such amount of

relevant evidence which a reasonable mind might accept as adequate to justify a

conclusion.[24]

Time and again this Court has said that if doubt exists between the evidence
presented by the employer and the employee, the scales of justice must be tilted
in favor of the latter.[25] Here, we entertain no doubt. Private respondent since the
beginning was an employee of, not an industrial partner in, the trucking business.

Coming now to the second issue, was private respondent validly dismissed by
petitioners?

Petitioners contend that it was private respondent who refused to go back to

work. The decision of the Labor Arbiter pointed out that during the conciliation
proceedings, petitioners requested respondent Sahot to report back for work.
However, in the same proceedings, Sahot stated that he was no longer fit to
continue working, and instead he demanded separation pay. Petitioners then
retorted that if Sahot did not like to work as a driver anymore, then he could be
given a job that was less strenuous, such as working as a checker. However,
Sahot declined that suggestion. Based on the foregoing recitals, petitioners
assert that it is clear that Sahot was not dismissed but it was of his own volition
that he did not report for work anymore.

In his decision, the Labor Arbiter concluded that:

While it may be true that respondents insisted that complainant continue working
with respondents despite his alleged illness, there is no direct evidence that will
prove that complainants illness prevents or incapacitates him from performing the
function of a driver. The fact remains that complainant suddenly stopped working
due to boredom or otherwise when he refused to work as a checker which
certainly is a much less strenuous job than a driver.[26]

But dealing the Labor Arbiter a reversal on this score the NLRC, concurred in by
the Court of Appeals, held that:

While it was very obvious that complainant did not have any intention to report
back to work due to his illness which incapacitated him to perform his job, such
intention cannot be construed to be an abandonment. Instead, the same should
have been considered as one of those falling under the just causes of terminating
an employment. The insistence of respondent in making complainant work did
not change the scenario.

It is worthy to note that respondent is engaged in the trucking business where

physical strength is of utmost requirement (sic). Complainant started working with
respondent as truck helper at age twenty-three (23), then as truck driver since
1965. Complainant was already fifty-nine (59) when the complaint was filed and
suffering from various illness triggered by his work and age.

x x x[27]

In termination cases, the burden is upon the employer to show by substantial

evidence that the termination was for lawful cause and validly made. [28] Article
277(b) of the Labor Code puts the burden of proving that the dismissal of an
employee was for a valid or authorized cause on the employer, without distinction
whether the employer admits or does not admit the dismissal. [29] For an
employees dismissal to be valid, (a) the dismissal must be for a valid cause and
(b) the employee must be afforded due process.[30]

Article 284 of the Labor Code authorizes an employer to terminate an employee

on the ground of disease, viz:

Art. 284. Disease as a ground for termination- An employer may terminate the
services of an employee who has been found to be suffering from any disease
and whose continued employment is prohibited by law or prejudicial to his health
as well as the health of his co-employees: xxx

However, in order to validly terminate employment on this ground, Book VI, Rule
I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires:

Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a
disease and his continued employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, the employer shall not terminate his
employment unless there is a certification by competent public health authority
that the disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment. If the
disease or ailment can be cured within the period, the employer shall not
terminate the employee but shall ask the employee to take a leave. The
employer shall reinstate such employee to his former position immediately upon
the restoration of his normal health. (Italics supplied).

As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC, [31] the
requirement for a medical certificate under Article 284 of the Labor Code cannot
be dispensed with; otherwise, it would sanction the unilateral and arbitrary

determination by the employer of the gravity or extent of the employees illness

and thus defeat the public policy in the protection of labor.

In the case at bar, the employer clearly did not comply with the medical certificate
requirement before Sahots dismissal was effected. In the same case of Sevillana
vs. I.T. (International) Corp., we ruled:

Since the burden of proving the validity of the dismissal of the employee rests on
the employer, the latter should likewise bear the burden of showing that the
requisites for a valid dismissal due to a disease have been complied with. In the
absence of the required certification by a competent public health authority, this
Court has ruled against the validity of the employees dismissal. It is therefore
incumbent upon the private respondents to prove by the quantum of evidence
required by law that petitioner was not dismissed, or if dismissed, that the
dismissal was not illegal; otherwise, the dismissal would be unjustified. This
Court will not sanction a dismissal premised on mere conjectures and suspicions,
the evidence must be substantial and not arbitrary and must be founded on
clearly established facts sufficient to warrant his separation from work. [32]

In addition, we must likewise determine if the procedural aspect of due process

had been complied with by the employer.

From the records, it clearly appears that procedural due process was not
observed in the separation of private respondent by the management of the
trucking company. The employer is required to furnish an employee with two
written notices before the latter is dismissed: (1) the notice to apprise the
employee of the particular acts or omissions for which his dismissal is sought,
which is the equivalent of a charge; and (2) the notice informing the employee of
his dismissal, to be issued after the employee has been given reasonable
opportunity to answer and to be heard on his defense. [33] These, the petitioners
failed to do, even only for record purposes. What management did was to
threaten the employee with dismissal, then actually implement the threat when
the occasion presented itself because of private respondents painful left thigh.

All told, both the substantive and procedural aspects of due process were
violated. Clearly, therefore, Sahots dismissal is tainted with invalidity.

On the last issue, as held by the Court of Appeals, respondent Jaime Sahot is
entitled to separation pay. The law is clear on the matter. An employee who is
terminated because of disease is entitled to separation pay equivalent to at least
one month salary or to one-half month salary for every year of service, whichever

is greater xxx.[34] Following the formula set in Art. 284 of the Labor Code, his
separation pay was computed by the appellate court at P2,080 times 36 years
(1958 to 1994) or P74,880. We agree with the computation, after noting that his
last monthly salary was P4,160.00 so that one-half thereof is P2,080.00. Finding
no reversible error nor grave abuse of discretion on the part of appellate court,
we are constrained to sustain its decision. To avoid further delay in the payment
due the separated worker, whose claim was filed way back in 1994, this decision
is immediately executory. Otherwise, six percent (6%) interest per annum should
be charged thereon, for any delay, pursuant to provisions of the Civil Code.

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals
dated February 29, 2000 is AFFIRMED. Petitioners must pay private respondent
Jaime Sahot his separation pay for 36 years of service at the rate of one-half
monthly pay for every year of service, amounting to P74,880.00, with interest of
six per centum (6%) per annum from finality of this decision until fully paid.

Costs against petitioners.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, and Callejo, Sr., JJ., concur.

Austria-Martinez, J., no part.

[1]

Sometimes referred to as SB Trucking Corp. in some parts of the records.

[2]

Rollo, pp. 9-17.

[3]

Id. at 88-95.

[4]

Id. at 145-150.

[5]

[6]

Rollo, pp. 131, 133.

[7]

Id. at 132.

Substituted herein by his wife Editha Sahot. Jaime Sahot died on May 1, 1996,
per Certificate of Death, Rollo, p. 241.

[8]

[9]

[10]

Rollo, p. 17.

[11]

Id. at 32.

[12]

Id. at 37.

[13]

Id. at 42.

[14]

[15]

[16]

[17]

Rollo, pp. 91-92.

[18]

Id. at 236.

[19]

Id. at 128.

ART. 284 . Disease as ground for termination.-An employer may terminate the
services of an employee who has been found to be suffering from any disease
and whose continued employment is prohibited by law or is prejudicial to his
health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half month
salary for every year of service, whichever is greater, a fraction of at least six (6)
months being considered as one (1) whole year.

Palomado v. National Labor Relations Commission, 257 SCRA 680, 695

(1996).
The Labor Arbiter based this pronouncement on alleged res judicata. It
appears that a decision was rendered in another case, NLRC Case No. RE
4997-76, where Labor Arbiter Crescencio J. Ramos declared that other drivers
also in the same company, were declared to be industrial partners and not
employees. Labor Arbiter Ariel Cadiente Santos adopted said findings. See Rollo,
p. 114.
Consisting of the position paper of Petitioners and of a decision in a similar
case decided by Labor Arbiter Crescencio J. Ramos in NLRC Case No. RG4997-76, entitled Manuelito Jimenez, et al. versus T. Paulino Trucking Service.
See Rollo, pp. 35, 112-121.

Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA 401, 420

(1998); Maraguinot, Jr. v. NLRC, 284 SCRA 539, 552 (1998); APP Mutual Benefit
Association, Inc. v. NLRC, 267 SCRA 47, 57 (1997); Aurora Land Projects

Corp. v. NLRC, 266 SCRA 48, 59 (1997); Encyclopedia Britannica (Phils.), Inc. v.
NLRC, 264 SCRA 1,6-7 (1996).

[20]

[21]

Two or more persons may also form a partnership for the exercise of a
profession.

[22]

Afisco Insurance Corporation v. Court of Appeals, 302 SCRA 1, 13 (1999).

[23]

Santos v. National Labor Relations Commission, 293 SCRA 113, 125 (1998).

[24]

Triple Eight Integrated Services, Inc. v. NLRC, 299 SCRA 608, 614 (1998).

[25]

Id. at 614-15.

[26]

Rollo, p. 149.

[27]

Id. at 93.

[28]

Supra, note 24 at 615.

[29]

Sevillana v. I.T. (International) Corp., 356 SCRA 451, 466 (2001).

[30]

Id. at 467.

[31]

Supra, note 24 at 618.

[32]

Supra, note 29 at 468.

[33]

Tiu v. NLRC, 251 SCRA 540, 551 (1992).

[34]

Labor Code, Art. 284, see note 9, supra.

Republic
SUPREME
Manila
THIRD DIVISION

Rollo, p. 54.

ART. 1767. By the contract of partnership two or more persons bind

themselves to contribute money, property, or industry to a common fund, with the
intention of dividing the profits among themselves.

of

the

Philippines
COURT

G.R. Nos. 83380-81 November 15, 1989

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G.
INOCENCIO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA
(Labor Arbiter, Department of Labor and Employment, National Capital
Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP
and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y.
LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA,
ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA
ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A.
VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA
ANGELES, respondents.
Ledesma, Saludo & Associates for petitioners.
Pablo S. Bernardo for private respondents.
FERNAN, C.J.:
This petition for certiorari involving two separate cases filed by private
respondents against herein petitioners assails the decision of respondent
National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled
"Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati
Haberdashery and/or Toppers Makati, et al." and NLRC CASE No. 2-428-85
entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v.
Toppers Makati, et al.", affirming the decision of the Labor Arbiter who jointly
heard and decided aforesaid cases, finding: (a) petitioners guilty of illegal
dismissal and ordering them to reinstate the dismissed workers and (b) the
existence of employer-employee relationship and granting respondent workers
by reason thereof their various monetary claims.
The undisputed facts are as follows:
Individual complainants, private respondents herein, have been working for
petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters
(manlililip) and "plantsadoras". They are paid on a piece-rate basis except Maria
Angeles and Leonila Serafina who are paid on a monthly basis. In addition to
their piece-rate, they are given a daily allowance of three (P 3.00) pesos provided
they report for work before 9:30 a.m. everyday.
Private respondents are required to work from or before 9:30 a.m. up to 6:00 or
7:00 p.m. from Monday to Saturday and during peak periods even on Sundays
and holidays.
On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization
of the respondent workers, filed a complaint docketed as NLRC NCR Case No.
7-2603-84 for (a) underpayment of the basic wage; (b) underpayment of living
allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay;
(e) non-payment of service incentive pay; (f) 13th month pay; and (g) benefits
provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1

During the pendency of NLRC NCR Case No. 7-2603-84, private respondent
Dioscoro Pelobello left with Salvador Rivera, a salesman of petitioner
Haberdashery, an open package which was discovered to contain a "jusi" barong
tagalog. When confronted, Pelobello replied that the same was ordered by
respondent Casimiro Zapata for his customer. Zapata allegedly admitted that he
copied the design of petitioner Haberdashery. But in the afternoon, when again
questioned about said barong, Pelobello and Zapata denied ownership of the
same. Consequently a memorandum was issued to each of them to explain on or
before February 4, 1985 why no action should be taken against them for
accepting a job order which is prejudicial and in direct competition with the
business of the company. 2 Both respondents allegedly did not submit their
explanation and did not report for work. 3 Hence, they were dismissed by
petitioners on February 4, 1985. They countered by filing a complaint for illegal
dismissal docketed as NLRC NCR Case No. 2-428-85 on February 5, 1985. 4
On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85
finding respondents guilty of illegal dismissal and ordering them to reinstate
Dioscoro Pelobello and Casimiro Zapata to their respective or similar positions
without loss of seniority rights, with full backwages from July 4, 1985 up to actual
reinstatement. The charge of unfair labor practice is dismissed for lack of merit.
In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment
re violation of the minimum wage law is hereby ordered dismissed for lack of
merit.
Respondents are hereby found to have violated the decrees on the cost of living
allowance, service incentive leave pay and the 13th Month Pay. In view thereof,
the economic analyst of the Commission is directed to compute the monetary
awards due each complainant based on the available records of the respondents
retroactive as of three years prior to the filing of the instant case.
SO ORDERED. 5
From the foregoing decision, petitioners appealed to the NLRC. The latter on
March 30, 1988 affirmed said decision but limited the backwages awarded the
Dioscoro Pelobello and Casimiro Zapata to only one (1) year. 6
After their motion for reconsideration was denied, petitioners filed the instant
petition raising the following issues:
I
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN
EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN PETITIONER
HABERDASHERY AND RESPONDENTS WORKERS.
II
THE
SUBJECT DECISIONS
ERRONEOUSLY CONCLUDED
THAT
RESPONDENTS WORKERS ARE ENTITLED TO MONETARY CLAIMS
DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM
WAGE.
III

THE
SUBJECT DECISIONS
ERRONEOUSLY CONCLUDED
THAT
RESPONDENTS PELOBELLO AND ZAPATA WERE ILLEGALLY DISMISSED. 7
The first issue which is the pivotal issue in this case is resolved in favor of private
respondents. We have repeatedly held in countless decisions that the test of
employer-employee relationship is four-fold: (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. It is the so called "control test" that is
the most important element. 8 This simply means the determination of 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 method by which the
same is to be accomplished. 9
The facts at bar indubitably reveal that the most important requisite of control is
present. As gleaned from the operations of petitioner, when a customer enters
into a contract with the haberdashery or its proprietor, the latter directs an
employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the
customer's measurements, and to sew the pants, coat or shirt as specified by the
customer. Supervision is actively manifested in all these aspects the manner
and quality of cutting, sewing and ironing.
Furthermore, the presence of control is immediately evident in this memorandum
issued by Assistant Manager Cecilio B. Inocencio, Jr. dated May 30, 1981
addressed to Topper's Makati Tailors which reads in part:
4. Effective immediately, new procedures shall be followed:
A. To follow instruction and orders from the undersigned Roger Valderama,
Ruben Delos Reyes and Ofel Bautista. Other than this person (sic) must ask
permission to the above mentioned before giving orders or instructions to the
tailors.
B. Before accepting the job orders tailors must check the materials, job orders,
due dates and other things to maximize the efficiency of our production. The
materials should be checked (sic) if it is matched (sic) with the sample, together
with the number of the job order.
C. Effective immediately all job orders must be finished one day before the due
date. This can be done by proper scheduling of job order and if you will
cooperate with your supervisors. If you have many due dates for certain day,
advise Ruben or Ofel at once so that they can make necessary adjustment on
due dates.
D. Alteration-Before accepting alteration person attending on customs (sic) must
ask first or must advise the tailors regarding the due dates so that we can
eliminate what we call 'Bitin'.
E. If there is any problem regarding supervisors or co-tailor inside our shop,
consult with me at once settle the problem. Fighting inside the shop is strictly
prohibited. Any tailor violating this memorandum will be subject to disciplinary
action.
For strict compliance. 10
From this memorandum alone, it is evident that petitioner has reserved the right
to control its employees not only as to the result but also the means and methods

by which the same are to be accomplished. That private respondents are regular
employees is further proven by the fact that they have to report for work regularly
from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional allowance of P
3.00 daily if they report for work before 9:30 a.m. and which is forfeited when
they arrive at or after 9:30 a.m. 11
Since private respondents are regular employees, necessarily the argument that
they are independent contractors must fail. As established in the preceding
paragraphs, private respondents did not exercise independence in their own
methods, but on the contrary were subject to the control of petitioners from the
beginning of their tasks to their completion. Unlike independent contractors who
generally rely on their own resources, the equipment, tools, accessories, and
paraphernalia used by private respondents are supplied and owned by
petitioners. Private respondents are totally dependent on petitioners in all these
aspects.
Coming now to the second issue, there is no dispute that private respondents are
entitled to the Minimum Wage as mandated by Section 2(g) of Letter of
Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and
reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which
explicitly states that, "All employees paid by the result shall receive not less than
the applicable new minimum wage rates for eight (8) hours work a day, except
where a payment by result rate has been established by the Secretary of
Labor. ..." 12 No such rate has been established in this case.
But all these notwithstanding, the question as to whether or not there is in fact an
underpayment of minimum wages to private respondents has already been
resolved in the decision of the Labor Arbiter where he stated: "Hence, for lack of
sufficient evidence to support the claims of the complainants for alleged violation
of the minimum wage, their claims for underpayment re violation of the Minimum
Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must perforce fall." 13
The records show that private respondents did not appeal the above ruling of the
Labor Arbiter to the NLRC; neither did they file any petition raising that issue in
the Supreme Court. Accordingly, insofar as this case is concerned, that issue has
been laid to rest. As to private respondents, the judgment may be said to have
attained finality. For it is a well-settled rule in this jurisdiction that "an appellee
who has not himself appealed cannot obtain from the appellate court-, any
affirmative relief other than the ones granted in the decision of the court below.
" 14
As a consequence of their status as regular employees of the petitioners, they
can claim cost of living allowance. This is apparent from the provision defining
the employees entitled to said allowance, thus: "... All workers in the private
sector, regardless of their position, designation or status, and irrespective of the
method by which their wages are paid. " 15
Private respondents are also entitled to claim their 13th Month Pay under Section
3(e) of the Rules and Regulations Implementing P.D. No. 851 which provides:
Section 3. Employers covered. The Decree shall apply to all employers except
to:
xxx xxx xxx

(e) Employers of those who are paid on purely commission, boundary, or task
basis, and those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof, except where the
workers are paid on piece-rate basis in which case the employer shall be
covered by this issuance insofar as such workers are concerned. (Emphasis
supplied.)
On the other hand, while private respondents are entitled to Minimum Wage,
COLA and 13th Month Pay, they are not entitled to service incentive leave pay
because as piece-rate workers being paid at a fixed amount for performing work
irrespective of time consumed in the performance thereof, they fall under one of
the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III,
Labor Code. For the same reason private respondents cannot also claim holiday
pay (Section 1(e), Rule IV, Implementing Regulations, Book III, Labor Code).
With respect to the last issue, it is apparent that public respondents have misread
the evidence, for it does show that a violation of the employer's rules has been
committed and the evidence of such transgression, the copied barong tagalog,
was in the possession of Pelobello who pointed to Zapata as the owner. When
required by their employer to explain in a memorandum issued to each of them,
they not only failed to do so but instead went on AWOL (absence without official
leave), waited for the period to explain to expire and for petitioner to dismiss
them. They thereafter filed an action for illegal dismissal on the far-fetched
ground that they were dismissed because of union activities. Assuming that such
acts do not constitute abandonment of their jobs as insisted by private
respondents, their blatant disregard of their employer's memorandum is
undoubtedly an open defiance to the lawful orders of the latter, a justifiable
ground for termination of employment by the employer expressly provided for in
Article 283(a) of the Labor Code as well as a clear indication of guilt for the
commission of acts inimical to the interests of the employer, another justifiable
ground for dismissal under the same Article of the Labor Code, paragraph (c).
Well established in our jurisprudence is the right of an employer to dismiss an
employee whose continuance in the service is inimical to the employer's
interest. 16
In fact the Labor Arbiter himself to whom the explanation of private respondents
was submitted gave no credence to their version and found their excuses that
said barong tagalog was the one they got from the embroiderer for the Assistant
Manager who was investigating them, unbelievable.
Under the circumstances, it is evident that there is no illegal dismissal of said
employees. Thus, We have ruled that:
No employer may rationally be expected to continue in employment a person
whose lack of morals, respect and loyalty to his employer, regard for his
employer's rules, and appreciation of the dignity and responsibility of his office,
has so plainly and completely been bared.
That there should be concern, sympathy, and solicitude for the rights and welfare
of the working class, is meet and proper. That in controversies between a laborer
and his master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writings should be resolved in the former's

favor, is not an unreasonable or unfair rule. But that disregard of the employer's
own rights and interests can be justified by that concern and solicitude is unjust
and unacceptable. (Stanford Microsystems, Inc. v. NLRC, 157 SCRA 414-415
[1988] ).
The law is protecting the rights of the laborer authorizes neither oppression nor
self-destruction of the employer.17 More importantly, while the Constitution is
committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will automatically be decided in
favor of labor. 18
Finally, it has been established that the right to dismiss or otherwise impose
discriplinary sanctions upon an employee for just and valid cause, pertains in the
first place to the employer, as well as the authority to determine the existence of
said cause in accordance with the norms of due process. 19
There is no evidence that the employer violated said norms. On the contrary,
private respondents who vigorously insist on the existence of employer-employee
relationship, because of the supervision and control of their employer over them,
were the very ones who exhibited their lack of respect and regard for their
employer's rules.
Under the foregoing facts, it is evident that petitioner Haberdashery had valid
grounds to terminate the services of private respondents.
WHEREFORE, the decision of the National Labor Relations Commission dated
March 30, 1988 and that of the Labor Arbiter dated June 10, 1986 are hereby
modified. The complaint filed by Pelobello and Zapata for illegal dismissal
docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and
legal bases. Award of service incentive leave pay to private respondents is
deleted.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.
Footnotes
1 Rollo, p. 22.
2 Rollo, pp. 105-106.
3 Rollo, p. 27.
4 Rollo, p. 23.
5 Rollo, pp. 29-30.
6 Rollo, pp. 49-50.
7 Rollo, p. 8.
8 Bautista v. Inciong, G.R. No. 52824, March 16, 1988; Continental Marble
Corporation, et al. v. NLRC, G.R. No. 43825, May 9, 1988; Asim et al. v. Castro,
G.R. No. 75063-64, June 30, 1988; Brotherhood Labor Unity Mov't in the
Philippines v. Zamora, 147 SCRA 49 [1987]; Investment Planning Corp. of the
Phil. v. Social Security System, 21 SCRA 924 [1967]; Mafinco v. Ople, 70 SCRA
139 [1976]; Rosario Brothers v. Ople, L-53590, 131 SCRA 72 [1984]; Shipside,
Inc. v. NLRC, G.R. No. 50358, 118 SCRA 99 [1982]; American President Lines v.
Clave, et al., G.R. No. 51641, 114 SCRA 826 [1982].

9 Social Security System v. Court of Appeals, 156 SCRA 383 [1987].

10 Rollo, pp. 80-81.
11 Rollo, p. 44.
12 Rules and Regulations Implementing P.D. 928.
13 Rollo, p. 29.
14 Alba v. Santander, G.R. No. L-28409, April 15, 1988.
15 Section 3, Rules Implementing Wage No. 1; Section 1 Chapter 3 of the Rules
Implementing Wage No. 2; Section I Chapter 3 of the Rules Implementing Wage
No. 5.
16 San Miguel Corporation v. NLRC, 142 SCRA 377 [1986].
17 Manila Trading & Supply Co. v. Zulueta, 69 Phil. 485 [1939]; Allied Banking
Corp. v. Castro, 156 SCRA 789, 800 [1987].
18 Sosito v. Aguinaldo Development Corp., 156 SCRA 392, 396 [1978].
19 Richardson v. Demetriou 142 SCRA 505 [1986].
The Lawphil Project - Arellano Law Foundation

NATIONAL SUGAR REFINERIES CO. VS. NLRC

G.R. No. 101761; March 24, 1993
Facts
Petitioner, a corporation which is fully owned and controlled by the Government,
operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The
Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50.
Private respondent union represents the former supervisors of the NASUREFCO
Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations
Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General
Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift
Boiler Supervisor, Shift Operations Chemist, Shift Electrical Supervisor, General
Services Supervisor, Instrumentation Supervisor, Community Development Officer,
Employment and Training Supervisor, Assistant Safety and Security Officer, Head of
Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory
Control Section, Shift Process Supervisor, Assistant Shift Process Supervisor, Shift R/M
Supervisor, Day Maintenance Supervisor and Motorpool Supervisor.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all
employees, from rank-and-file to department heads. The JE Program was designed to
rationalize the duties and functions of all positions, reestablish levels of responsibility,
and reorganize both wage and operational structures. Jobs were ranked according to
effort, responsibility, training and working conditions and relative worth of the job. As a

result, all positions were re-evaluated, and all employees including the members of
respondent union were granted salary adjustments and increases in benefits
commensurate to their actual duties and functions.
We glean from the records that for about ten years prior to the JE Program, the
members of respondent union were treated in the same manner as rank-and-file
employees. As such, they used to be paid overtime, rest day and holiday pay pursuant
to the provisions of Articles 87, 93 and 94 of the Labor Code, as amended. With the
implementation of the JE Program, the following adjustments were made: (1) the
members of respondent union were re-classified under levels S-5 to S-8 which are
considered managerial staff for purposes of compensation and benefits; (2) there was
an increase in basic pay on the average of 50% of their basic pay prior to the JE
Program, with the union members now enjoying a wide gap (P1,269.00 per month) in
basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was
increased on top of alignment adjustments; (4) they were entitled to increased company
COLA of P225.00 per month; and (5) there was a grant of P100.00 allowance for rest
day/holiday work.
On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which
was organized pursuant to Republic Act No. 6715 allowing supervisory employees to
form their own unions, as the bargaining representative of all the supervisory employees
at the NASUREFCO Batangas Sugar Refinery.
Two years after the implementation of the JE Program, specifically on June 20, 1990,
the members of herein respondent union filed a complaint with the executive labor
arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of
Article 100 of the Labor Code.
Arguments
Petiitioner: 1) The members of respondent union are members of the managerial staff
who are not entitled to overtime, rest day and holiday pay; and petitioner should not
assume the "double burden" of giving the benefits due to rank-and-file employees
together with those due to supervisors under the JE Program.
2) For purposes of forming and joining unions, certification elections, collective
bargaining, and so forth, the union members are supervisory employees. In terms of
working conditions and rest periods and entitlement to the questioned benefits,
however, they are officers or members of the managerial staff, hence they are not
entitled thereto.
Issue
Whether or not supervisory employees are entitled to overtime, rest day and holiday
pay.
Decision
NO, THEY ARE NOT.
It is not disputed that the members of respondent union are supervisory employees, as
defined under Article 212(m), Book V of the Labor Code on Labor Relations, which
reads:
(m) "Managerial employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off, recall,

discharge, assign or discipline employees. Supervisory employees are those who, in the
interest of the employer, effectively recommend such managerial actions if the exercise
of such authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above definitions are
considered rank-and-file employees for purposes of this Book.
Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and
amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code,
however, provides:
Art. 82. Coverage. The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government
employees, managerial employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
As used herein, "managerial employees" refer to those whose primary duty consists of
the management of the establishment in which they are employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff.
xxx xxx xxx
Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if
they qualify for exemption under the condition set forth herein:
xxx xxx xxx
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in which they
are employed or of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the promotion or
any other change of status of other employees are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to
management policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of the management of the establishment in which he is employed
or subdivision thereof; or (ii) execute under general supervision work along specialized
or technical lines requiring special training, experience, or knowledge; or (iii) execute
under general supervision special assignments and tasks; and
(4) Who do not devote more than 20 percent of their hours worked in a work-week to
activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above.
Petitioner hinges its argument on the latter, while respondent hinges its argument on the
former.
The question whether a given employee is exempt from the benefits of the law is a
factual one dependent on the circumstances of the particular case. In determining

whether an employee is within the terms of the statutes, the criterion is the character of
the work performed, rather than the title of the employee's position.
A cursory perusal of the Job Value Contribution Statements of the union members will
readily show that these supervisory employees are under the direct supervision of their
respective department superintendents and that generally they assist the latter in
planning, organizing, staffing, directing, controlling, communicating and in making
decisions in attaining the company's set goals and objectives. These supervisory
employees are likewise responsible for the effective and efficient operation of their
respective departments.
It is apparent that the members of respondent union discharge duties and
responsibilities which ineluctably qualify them as officers or members of the managerial
staff, as defined in Section 2, Rule I, Book III of the Rules to Implement the Labor Code.
The distinction made by respondent NLRC on the basis of whether or not the union
members are managerial employees, to determine the latter's entitlement to the
questioned benefits, is misplaced and inappropriate. It is admitted that these union
members are supervisory employees and this is one instance where the nomenclatures
or titles of their jobs conform with the nature of their functions. Hence, to distinguish
them from a managerial employee, as defined either under Article 82 or 212(m) of the
Labor Code, is puerile and inefficacious. The controversy actually involved here seeks a
determination of whether or not these supervisory employees ought to be considered as
officers or members of the managerial staff. The distinction, therefore, should have been
made along that line and its corresponding conceptual criteria.
We likewise do not subscribe to the view that the payment of the questioned benefits to
the union members has ripened into a contractual obligation.
The members of respondent union were paid the questioned benefits for the reason
that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they
could not be categorically classified as members or officers of the managerial staff
considering that they were then treated merely on the same level as rank-and-file.
Consequently, the payment thereof could not be construed as constitutive of voluntary
employer practice, which cannot now be unilaterally withdrawn by petitioner. To be
considered as such, it should have been practiced over a long period of time, and must
be shown to have been consistent and deliberate.
The test or rationale of this rule on long practice requires an indubitable showing that
the employer agreed to continue giving the benefits knowingfully well that said
employees are not covered by the law requiring payment thereof. In the case at bar,
respondent union failed to sufficiently establish that petitioner has been motivated or is
wont to give these benefits out of pure generosity.
With the implementation of the JE Program, there was an ascent in position, rank and
salary. This in essence is a promotion which is defined as the advancement from one
position to another with an increase in duties and responsibilities as authorized by law,
and usually accompanied by an increase in salary.
Quintessentially, with the promotion of the union members, they are no longer entitled to
the benefits which attach and pertain exclusively to their former positions. Entitlement to
the benefits provided for by law requires prior compliance with the conditions set forth
therein. With the promotion of the members of respondent union, they occupied
positions which no longer meet the requirements imposed by law. Their assumption of

these positions removed them from the coverage of the law, ergo, their exemption
therefrom.
Promotion of its employees is one of the jurisprudentially-recognized exclusive
prerogatives of management, provided it is done in good faith. In the case at bar, private
respondent union has miserably failed to convince this Court that the petitioner acted in
bad faith in implementing the JE Program. There is no showing that the JE Program
was intended to circumvent the law and deprive the members of respondent union of
the benefits they used to receive.