Case Digests on Ee-Ee

7/28/2019 Case Digests on Ee-Ee

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Insular Life v. NLRC (Nov. 15, 1989)

FACTS:

Insular Life and Basiao entered into a contract by which Basiao was authorized to solicit forinsurance in accordance with the rules of the company.

He would also receive compensation, in the form of commissions.

The contract also contained the relations of the parties, duties of the Agent and the acts prohibitedto him including the modes of termination.

After 4 years (April 1972), the parties entered into another contract an Agency Managers Contact and to implement his end of it, Basiao organized an agency while concurrently fulfilling hiscommitments under the first contract.

In May 1979, the company terminated the Agency Managers Contract.

Basiao sued the company in a civil action. Thus, the company terminated Basiaos engagementunder the first contract and stopped payment of his commissions starting April 1980.

He thereafter filed with the then Ministry of Labor a complaint seeking to recover the allegedlyunpaid commissions.

Insular Life disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not theCompany's employee, but an independent contractor and that the Company had no obligation to

him for unpaid commissions under the terms and conditions of his contract.

The Labor Arbiter favored Basiao. He ruled that the underwriting agreement had established anemployer-employee relationship between Basiao and Insular Life, and this conferred jurisdiction onthe Ministry of Labor to adjudicate Basiaos claim. Said official's decision directed payment of hisunpaid commissions.

This decision was, on appeal by Insular Life, affirmed by the National Labor Relations Commission.

ISSUE:

W/N Basiao had become the companys employee by virtue of the contract, thereby placing hisclaim for unpaid commission.

HELD:

No.

The existence of Er-Ee relationship is determined by the ff. elements, namely:

1. Selection and engagement of the Ee

2. Payment of wages

3. Powers of dismissal

4. Power of control over the Ee's conduct (w/c is the most important element)

It should, however, be obvious that not every form of control that the hiring party reserves tohimself over the conduct of the party hired in relation to the services rendered establishes Er-Eerelationship between them.

A line must be drawn somewhere, if the recognized distinction between an Ee and an individualcontractor is not to vanish altogether.

When an insurance agent is free to adopt his own selling methods or is free to sell insurance at hisown time, he is an independent contractor.

Rules and regulations governing the conduct of the business are provided for in the Insurance Code.These rules merely serve as guidelines towards the achievement of the mutually desired result withoutdictating the means or methods to be employed in attaining it. Its aim is only to promote the result,thereby creating no employer-employee relationship.


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It is usual and expected for an insurance company to promulgate a set of rules to guide its commissionagents in selling its policies which prescribe the qualifications of persons who may be insured.

None of these really invades the agents contractual prerogative to adopt his ownselling methods or to sell insurance at his own time and convenience, hence cannot justifiably be saidto establish an employer-employee relationship between Basiao and the company.

The respondents limit themselves to pointing out that Basiaos contract with the company bound himto observe and conform to such rules and regulations.

There is no showing that such rules were in fact promulgated which effectivelycontrolled or restrictedhis choice of methods of selling insurance.

Therefore, Basiao was not an employee of the petitioner, but a commission agent, an independentcontract whose claim for unpaid commissions should have been litigated in an ordinary civil action.

Wherefore, the complaint of Basiao is dismissed.

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, vs. NLRC and GRACE DE GUZMAN

FACTS:

PT&T initially hired Grace de Guzman specifically as Supernumerary Project Worker, for a fixed

period from November 21, 1990 until April 20, 1991 as reliever for C.F. Tenorio who went onmaternity leave.

She was again invited for employment as replacement of Erlina F. Dizon who went on leave on 2periods, from June 10, 1991 to July 1, 1991 and July 19, 1991 to August 8, 1991.

On September 2, 1991, de Guzman was again asked to join PT&T as a probationary employeewhere probationary period will cover 150 days.

She indicated in the portion of the job application form under civil status that she was singlealthough she had contracted marriage a few months earlier.

When petitioner learned later about the marriage, its branch supervisor, sent de Guzman amemorandum requiring her to explain the discrepancy.

Included in the memorandum, was a reminder about the companys policy of not accepting marriedwomen for employment.

She was dismissed from the company.

Labor Arbiter handed down decision declaring that petitioner illegally dismissed De Guzman, whohad already gained the status of a regular employee.

Furthermore, it was apparent that she had been discriminated on account of her having contractedmarriage in violation of company policies.

ISSUE: Whether the alleged concealment of civil status can be grounds to terminate the services of anemployee.

HELD:

Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits discriminationmerely by reason of marriage of a female employee. It is recognized that company is free to regulatemanpower and employment from hiring to firing, according to their discretion and best business judgment,except in those cases of unlawful discrimination or those provided by law.

PT&Ts policy of not accepting or disqualifying from work any woman worker who contracts marriage isafoul of the right against discrimination provided to all women workers by our labor laws and by ourConstitution. The record discloses clearly that de Guzmans ties with PT&T were dissolved principally


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because of the companys policy that married women are not qualified for employment in the company,and not merely because of her supposed acts of dishonesty.

The government abhors any stipulation or policy in the nature adopted by PT&T. As stated in the laborcode:

ART. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of

employment or continuation of employment that a woman shall not get married, or to stipulate expresslyor tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or toactually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason ofmarriage.

The policy of PT&T is in derogation of the provisions stated in Art.136 of the Labor Code on the right of awoman to be free from any kind of stipulation against marriage in connection with her employment and itlikewise is contrary to good morals and public policy, depriving a woman of her freedom to choose herstatus, a privilege that is inherent in an individual as an intangible and inalienable right. The kind of policyfollowed by PT&T strikes at the very essence, ideals and purpose of marriage as an inviolable socialinstitution and ultimately, family as the foundation of the nation. Such policy must be prohibited in all itsindirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land notonly for order but also imperatively required.

TRADERS ROYAL BANK vs. NLRC and ROGELIO ESPAOLA

FACTS:

AGRO assigned Espaola to work as a janitor at the Iloilo Branch of petitioner Traders Royal Bank (TRB)

In 1982, Espaola was informed that he would be absorbed by a new agency, (ROYAL), and that he would

perform the same functions. However, since ROYAL was also managed and owned by the same people who

previously handled AGRO, it did not give him separation pay or any other benefits.

On July 1988, TRB and ROYAL executed a new service agreement whereby ROYAL would continue supplying

janitorial services TRB for one year, beginning March 1988. The contract also stated that if there was no

notice to terminate at the end of the one (1) year period it would remain in force on a monthly basis.

When the service agreement expired on March 1989 TRB did not issue a termination notice. Instead, it

continued to avail of ROYALs services on a monthly basis as stated in the contract. It was only on February

1994 that TRB sent a letter to ROYAL apprising the latter of its desire to terminate the service agreement. In

turn, ROYAL sent a notice to private respondent Espaola informing him that due to TRB's decision to end their

contract his services were no longer needed. After being dismissed ROYAL declined to give him any further

assignment since his job was allegedly coterminous with its contract with TRB.

Espaola filed a case against ROYAL, TRB and Alberto Espinosa for, among others, illegal dismissal, illegaldeduction, underpayment of wages.

Labor Arbiter ruled in favor of TRB holding that Espaola had no cause of action against it as there was no Er-Ee relationship between them.

On appeal, NLRC) reversed the decision of the Labor Arbiter and ruled that Espaola was not an employee of

ROYAL but of TRB.

After its motion for reconsideration was denied TRB filed this special civil action for certiorari contending that

the NLRC gravely abused its discretion in reversing the Labor Arbiters decision and declaring Espaola to be

its employee.

Who was Espaolas real employer? If Espaola was ROYALs employee then he would have no recourse

against TRB since his dismissal was caused by the legitimate termination of a service contract. But if he was


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really TRBs employee then he would be entitled to reinstatement and full back wages as he was illegally

dismissed.

To prove that Espaola was not its employee TRB cites Mission Order No. 29 signed by AGRO Administrative

Officer Alberto G. Espinosa. The order stated that Rogelio Espaola would be assigned as janitor to TRBs Iloilo

Branch. It also provided that his employment would be from 26 January 1974 until revoked. TRB argues that

this proves that AGRO was Espaolas employer from 1974 to 1982. And when he agreed to be absorbed by

ROYAL he became its employee from 1982 to 1994. Hence, he was never employed by TRB. To bolster its

contention TRB refers to the provisions of its service agreement with ROYAL, dated 15 July 1988, which state

that: .

TRB asserts that aside from the agreement itself which reveals that it was ROYAL which provided the janitors

salary, par. 2 thereof also states that the janitors were its own employees. Thus, Espaolas dismissal was the

result of a valid termination of its service agreement with ROYAL.

ISSUE:Whether an Er-Ee relationship exists between Traders Royal Bank and private respondent Rogelio Espaola.HELD:

This Court has ruled that the existence of employer-employee relationship cannot be proved by merely showingthe agreement of the parties.] It is a question of fact which should be supported by substantial evidence. And indetermining the existence of such relationship the elements usually considered are: (a) the selection of the employee(b) the payment of wages; (c) the power of dismissal; and, (d) the power to control the employees conduct, with the"control test" generally assuming primacy in the overall consideration.

The above allegations contained in the position paper of Espaola were never refuted. TRB could have easilypresented affidavits, written explanations or any other pleadings to defend itself and disprove Espaolas claims.[16] However, the only evidence it ever presented was its service agreement with ROYAL. From the time TRB submittedits position paper to the Labor Arbiter up to the time it submitted its memorandum to the Supreme Court, not once didit deny that it designated Espaola as its driver. On the other hand, Espaola constantly reiterated in his pleadingsthat TRB supervised and controlled his work as its janitor-driver. The fact that Espaolas allegations were nevecontroverted at any stage of the proceedings affirms that such averments were true. [17] Furthermore, Rule 9, Sec. 11of the Rules of Court, which supplements the NLRC rules, also provides that an allegation which is not specificallydenied is deemed admitted.[18]

The NLRC therefore did not abuse its discretion in ruling that Espaola was not the employee of ROYAL. On thecontrary, it was the Labor Arbiter who came up with the erroneous conclusion. He disregarded the uncontrovertedallegations of Espaola and hastily concluded that since ROYAL was an independent contractor, it was Espaolasdirect employer. While it may be that ROYAL could very well be an independent contractor - although it did not

establish this fact with competent evidence to qualify it as such - and that Espaolas name appeared in its payroll,[22] nevertheless, whatever role ROYAL had in this case, it was certainly not as the employer of Espaola. For the facremains that it was TRB which had control and supervision over Espaolas work. Consequently, it should beconsidered as his employer.

Since Espaola was illegally dismissed he is entitled to reinstatement with full back wages. [23] The NLRC erred inruling that he was only entitled to back wages from 16 March 1994 to 30 September 1996. An illegally dismissedemployee is entitled to back wages from the time he was dismissed to the time of his actual reinstatement[24] However, the NLRCs ruling with regard to the salary differentials and 13th month pay differentials must besustained.

petition is DISMISSED. The assailed Decision of NLRC reversing that of the Labor Arbiter and orderingpetitioner Traders Royal Bank to reinstate private respondent Rogelio Espanola and to pay him salarydifferentials o is AFFIRMED,
http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn12http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn16http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn17http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn18http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn22http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn23http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn24http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn16http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn17http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn18http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn22http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn23http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn24http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/127864.htm#_edn12

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