Rolando Tan vs. Leovigildo Lagarama & Court of Appeals G.R. No.

151228 August 15, 2002 Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17, 1998. On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga modrawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw anymore. From now on, no more drawing. Get out.") Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the premises. Lagrama filed a complaint with the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages. As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file their position papers. It declared that the dismissal illegal and order the payment of monetary benefits. Tan appealed to the NLRC and reversing the decision of the Labor Arbiter. Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment of benefits provided by law. Ruling: The respondent was illegally dismissed and entitled to benefits. The Implementing Rules of the Labor Code provide that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. This provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal without due process. In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a work place other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to promote a

healthy environment under Art. 282(1) of the Labor Code for purposes of terminating employment, but the same must be shown by evidence. Here there is no evidence that Lagrama did urinate in a place other than a rest room in the premises of his work. Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found that the relationship between the employer and employee has been so strained that the latter's reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the grant of separation pay in lieu of reinstatement is appropriate. This is of course in addition to the payment of backwages which, in accordance with the ruling in Bustamante v. NLRC should be computed from the time of Lagrama's dismissal up to the time of the finality of this decision, without any deduction or qualification. The Bureau of Working Conditions 32 classifies workers paid by results into two groups, namely; (1) those whose time and performance is supervised by the employer, and (2) those whose time and performance is unsupervised by the employer. The first involves an element of control and supervision over the manner the work is to be performed, while the second does not. If a piece worker is supervised, there is an employer-employee relationship, as in this case. However, such an employee is not entitled to service incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, 34 he is paid a fixed amount for work done, regardless of the time he spent in accomplishing such work. ANGELINA FRANCISCO vs. NLRC 500 SCRA 690 (2006) Facts: Petitioner was hired by Kasei Corporation during the incorporation stage. She was designated as accountant and corporate secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liason Officer to the City of Manila to secure permits for the operation of the company. In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all employees and perform management administration functions. In 2001, she was replaced by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was until September. She asked for her salary but was informed that she was no longer connected to the company. She did not anymore report to work since she was not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter. The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision while CA reversed it. Issue: Whether or not there was an employer-employee relationship.

Ruling: The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic conditions prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the worker. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business. There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to Respondent Corporation on a regular basis over an indefinite period of engagement. Respondent Corporation hired and engaged petitioner for

compensation, with the power to dismiss her for cause. More importantly, Respondent Corporation had the power to control petitioner with the means and methods by which the work is to be accomplished.

Sevilla vs CA G..R. No. L-41182-3 April 16, 1988 Facts: The petitioners invoke the provisions on human relations of the Civil Code in this appeal by certiorari. Mrs. Segundina Noguera, party of the first part; the Tourist World Service, Inc., represented by Mr. Eliseo Canilao as party of the second part, and hereinafter referred to as appellants, the Tourist World Service, Inc. leased the premises belonging to the party of the first part at Mabini St., Manila for the former-s use as a branch office. In the said contract the party of the third part held herself solidarily liable with the party of the part for the prompt payment of the monthly rental agreed on. When the branch office was opened, the same was run by the herein appellant Una 0. Sevilla payable to Tourist World Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be withheld by the Tourist World Service, Inc. On November 24, 1961 the Tourist World Service, Inc. appears to have been informed that Lina Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the branch office was anyhow losing, the Tourist World Service considered closing down its office. On June 17,1963, appellant Lina Sevilla refiled her case against the herein appellees and after the issues were joined, the reinstated counterclaim of Segundina Noguera and the new complaint of appellant Lina Sevilla were jointly heard following which the court ordered both cases dismiss for lack of merit. In her appeal, Lina Sevilla claims that a joint bussiness venture was entered into by and between her and appellee TWS with offices at the Ermita branch office and that she was not an employee of the TWS to the end that her relationship with TWS was one of a joint business venture appellant made declarations. Issue: Whether or not the padlocking of the premises by the Tourist World Service, Inc. without the knowledge and consent of the appellant Lina Sevilla entitled the latter to the relief of damages prayed for and whether or not the evidence for the said appellant supports the contention that the appellee Tourist World Service, Inc. unilaterally and without the consent of

the appellant disconnected the telephone lines of the Ermita branch office of the appellee Tourist World Service, Inc.? Held: The trial court held for the private respondent on the premise that the private respondent, Tourist World Service, Inc., being the true lessee, it was within its prerogative to terminate the lease and padlock the premises. It likewise found the petitioner, Lina Sevilla, to be a mere employee of said Tourist World Service, Inc. and as such, she was bound by the acts of her employer. The respondent Court of Appeal rendered an affirmance. In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. In general, we have relied on the so-called right of control test, "where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end." Subsequently, however, we have considered, in addition to the standard of right-of control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, in determining the existence of an employer-employee relationship. the Decision promulgated on January 23, 1975 as well as the Resolution issued on July 31, 1975, by the respondent Court of Appeals is hereby REVERSED and SET ASIDE. The private respondent, Tourist World Service, Inc., and Eliseo Canilao, are ORDERED jointly and severally to indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as and for moral damages, the sum of P10,000.00, as and for exemplary damages, and the sum of P5,000.00, as and for nominal and/or temperate damages. Makati Haberdashery vs NLRC, 179 SCRA 449 (89) Facts: Private complainants are working for M a k a t i Haberdas hery Inc as tail ors, s eams tres s, s ew ers, basters, and plantsadoras and are paid on a piece-rateb a s i s ( e x c e p t t w o p e t i t i o n e r s w h o a r e p a i d o n a monthly basis) and in addition, they are given a dailyallowance of P 3.00 provided they report before 9:30a.m. Work sked: 9:30-6 or 7 p.m., Mondays to Saturdays andeven on Sundays and holidays during peak periods. Unions first case was on: underpayment of basic wage, living allowance, non-payment of , holiday pay, service incentive pay, 13th month pay, benefits provided for under Wage Orders 1-5 While the first case was pending decision, Pelobello left an open package containing a jusi barong tagalong with salesman Rivera. He was caught and confronted about this and he explained that this was ordered by Zapata, also a worker, for his (personal) customer. Zapata allegedly admitted

that he copied the design of the company but later denied ownership of the same. They were made to explain why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business. However they did not submit and went on AWOL until the period given for them to explain expired hence the dismissal. Illegal dismissal complaint on the second case filedbefore the LA Diosana. LA declared petitioners guilty of illegal dismissal and ordered to reinstate Pelobello and Zapata and found petitioners violating decrees of COLA, service incentive and 13th month pay. Commission analyst was directed to compute the monetary awards which retroacts to three years prior to filing of case. NLRC affirmed but limited back wages to one year. Issue: WON employees paid on piece-rate basis are entitled to service incentive pay (relevant to title) Held : NO, fall under exceptions set forth in the implementing rules. Ratio: As to the service incentive leave pay: as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under the exceptions stated in Sec1(d), Rule V, IRR, Book III, Labor Code. Service Incentive Leave SECTION 1. Coverage. This rule shall apply to all employees except:( d ) F i e l d p e r s o n n e l a n d o t h e r e m p l o y e e s w h o s e performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or t h o s e w h o a r e p a i d a f i x e d amount for performing work irrespective of the time consumed in the performance thereof; Other issues discussed: ER-EE relationship Held: There is such relationship because in the application of the four-fold test, it was found that petitioners had control over the respondents not only as to the result but also as to the means and method by which the same is to be accomplished. Such c o n t r o l i s p r o v e n b y a m e m o r a n d u m w h i c h e n u m e r a t e s procedures and instructions regarding job orders, alterations, and their behavior inside the shop. Minimum Wage Hel d : No dis pute that entitled to m inimum wage but court dismissed case for lack of sufficient evidence to support claim that there

was in fact underpayment which was ruled by the LA and which the private respondent did not appeal to in the NLRC nor in the SC. Well-settled is the rule 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. COLA Held: Entitled. They are regular employees. IRR of Wage No. 1,2, and 5 provide that all workers i n the private sector, r e g a r d l e s s o f t h e i r p o s i t i o n , d e s i g n a t i o n o f s t a t u s , a n d irrespective of the m ethod by w hi ch their wages are paid are entitled to such allowance. 13th Month pay Held: Entitled under Sec. 3(e) of the IRR of PD 851 which is an exception to the exception of such provision which states that employers whose workers are paid on piece-rate basis in which are covered by such issuance in so far as such workers are concerned. Illegal dismissal Held: Dismissed for justifiable ground based on Article 283 (a)and (c). Inimical to the interest of the employer. Not dismissed just because of union activities.

employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished. The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. In Grepalife v. Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the person insured. The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. It should also be emphasized that the SSC, also as upheld by the Court of Appeals, found that Laudato was a sales supervisor and not a mere agent. As such, Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results. The finding of the SSC that Laudato was an employee of Royal Star is supported by substantial evidence. The SSC examined the cash vouchers issued by Royal Star to Laudato, calling cards of Royal Star denominating Laudato as a Sales Supervisor of the company, and Certificates of Appreciation issued by Royal Star to Laudato in recognition of her unselfish and loyal efforts in promoting the company. A piece of documentary evidence appreciated by the SSC is Memorandum dated 3 May 1980 of Teresita Lazaro, General Manager of Royal Star, directing that no commissions were to be given on all main office sales from walk-in customers and enjoining salesmen and sales supervisors to observe this new policy. The Memorandum evinces the fact that Royal Star exercised control over its sales supervisors or agents such as Laudato as to the means and methods through which these personnel performed their work.

Lazaro vs Social Security Commission (2004) G.R. 138254 Facts: Rosalina Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three (3) employers. Among them was Angelito Lazaro, proprietor of Royal Star, which is engaged in the business of selling home appliances. Laudato alleged that despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory coverage or remit Laudatos social security contributions. Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato was not subjected to definite hours and conditions of work. As such, she could not be deemed an employee of Royal Star. Issue: WON Laudato is considered employee of Royal Star Marketing? Held: Laudato is an employee of Royal Star and as such is entitled to the coverage of Social Security Law. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the control test, that is, whether the

Sime Darby Pilipinas Inc., vs NLRC (1998) 289 SCRA 86 Facts: Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch break. On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule effective 14 September 1992 thus 7:45 A.M. 4:45 P.M. (Mon to Fri) 7:45 A.M. 11:45 P.M.

(Sat). Coffee break time will be ten minutes only anytime between: 9:30 A.M. 10:30 A.M. and 2:30 P.M. 3:30 P.M. Lunch break will be between: 12:00 NN 1:00 P.M. (Mon to Fri).

Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. The Court agrees with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not. Duncan Asso. Of Detailman-PTGWO vs Glaxo Wellcome Phils., (2004) G.R. 162994 Facts: Petitioner Pedro Tecson was hired by respondent Glaxo as medical representative, after Tecson had undergone training and orientation. Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies. Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte sales area. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra, a competitor of Glaxo. She was Astras Branch Coordinator in Albay and supervised the district managers and medical representatives of her company and prepared marketing strategies for Astra in that area. The two married even with the several reminders given by the District Manager to Tecson. In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecsons superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs, although they told him that they wanted to retain him as much as possible because he was performing his job well. This situation eventually led to his constructive dismissal. Issue: WON Glaxos policy prohibiting its employees from marrying an employee of a competitor company is valid? Held: Glaxos policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Tecsons contract of employment with Glaxo being questioned, stipulates that Tescon agrees to abide by the existing company rules of Glaxo, and to

Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work and break time schedules will be maintained as it is now. Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid on call lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court the Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and the elimination of the 30minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and that the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed eight (8) hours. Issue: WON the act of management in revising the work schedule of its employees and discarding their paid lunch break constitutive of unfair labor practice. Held: The revision of work schedule is a management prerogative and does not amount to unfair labor practice in discarding the paid lunch break. The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production. It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they were on call. Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their employer. For a full onehour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work.

study and become acquainted with such policies. In this regard, the Employee Handbook of Glaxo expressly informs its employees of its rules regarding conflict of interest. No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.

Retirement results from a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees to sever his employment with the former. The very essence of retirement is the termination of employer-employee relationship. Retirement of the employee does not in itself affect his employment status especially when it involves all rights and benefits due to him, since these must be protected as though there had been no interruption of service. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted as it were a continuing consideration of services rendered as well as an effective inducement foe remaining with the corporation. It is intended to help the employee enjoy the remaining years of his life. When the retired employees were requesting that their retirement benefits be granted, they were not pleading for generosity but merely demanding that their rights, embodied in the CBA, be recognized. When an employee has retired but his benefits under the law or CBA have not yet been given, he still retains, for the purpose of prosecuting his claims, the status of an employee entitled to the protection of the Labor Code, one of which is the protection of the labor union. ARNULFO O. ENDICO v. QUANTUM DISTRIBUTION CENTER 577 SCRA 299 (2009) FACTS: Quantum Foods Center hired Arnulfo O. Endico (Endico) as Field Supervisor of Davao City. He was later on transferred in Cebu. Due to Endicos achievements and contributions to Quantum Foods, he was promoted as Area Manager of Cebu. However, after fruitful years of employment, Quantum Foods was adversely affected by economic slowdown, which compelled it to streamline its operations through the reduction of the companys contractual merchandisers to save on operation cost. Thereafter, for some misfortunate events, Endico was immediately relieved from service. Endico thereafter filed a complaint for constructive illegal dismissal. The Labor Arbiter rendered a decision in Endicos favor. Quantum Foods appealed to the National Labor Relations Commission (NLRC) which affirmed the Labor Arbiters decision with modification. Quantum Foods then filed a Petition for Certiorari before the Court of Appeals (CA) who ruled in favor of Quantum Foods. The Court of Appeals ruled that Quantum Foods had yet to decide on the administrative case when Endico immediately filed the complaint for constructive dismissal. The CA concluded that Endico filed the complaint in anticipation of what he perceived to be the final outcome of the administrative investigation. Hence, this petition. ISSUE: Whether or not Endico was constructively dismissed

Producers Bank vs NLRC () 335 SCRA 506 Facts: Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas) under a conservator for the purpose of protecting its assets. When the respondents ought to implement the CBA (Sec. 1, Art. 11) regarding the retirement plan and pertaining to uniform allowance, the acting conservator of the petition expressed objection resulting an impasse between the petitioner bank and respondent union. The deadlock continued for at least six months. The private respondent, to resolve the issue filed a case against petitioner for unfair labor practice and flagrant violation of the CBA. The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the implementation of the CBA. Issue: WON the employees who have retired have no personality to file an action since there is no longer an employer-employee relationship. Held: Employees who have retired still have the personality to file a complaint.

HELD: Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage interference with an employers judgment in the conduct of its business. For this reason, the Court often declines to interfere in legitimate business decisions of employers. The law must protect not only the welfare of employees, but also the right of employers. In the pursuit of its legitimate business interests, especially during adverse business conditions, management has the prerogative to transfer or assign employees from one office or area of operation to another provided there is no demotion in rank or diminution of salary, benefits and other privileges and the action is not motivated by discrimination, bad faith, or effected as a form of punishment or demotion without sufficient cause. This privilege is inherent in the right of employers to control and manage their enterprises effectively. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice. In this case, the Court finds no reason to disturb the conclusion of the CA that there was no constructive dismissal. Reassignments made by management pending investigation of violations of company policies and procedures allegedly committed by an employee fall within the ambit of management prerogative. The decision of Quantum Foods to transfer Endico pending investigation was a valid exercise of management prerogative to discipline its employees. The transfer, while incidental to the charges against Endico, was not meant as a penalty, but rather as a preventive measure to avoid further loss of sales and the destruction of Quantum Foods image and goodwill. It was not designed to be the culmination of the then on-going administrative investigation against Endico. Neither was there any demotion in rank or any diminution of Endicos salary, privileges and other benefits. Endico was being transferred to the head office as area sales manager, the same position Endico held in Cebu. There was also no proof that the transfer involved a diminution of Endicos salary, privileges and other benefits. On the alleged inconvenience on Endico and his family because of the transfer from Cebu to the head office in Paraaque, the Court rules that the transfer is valid, there being no showing that there was bad faith on the part of Quantum Foods. Moreover, the Court finds that Quantum Foods, considering the declining sales and the loss of a major account in Cebu, was acting in the legitimate pursuit of what it considered its best interest in deciding to transfer Endico to the head office.

Filamer v. CA G.R. No. 75112 [October 16, 1990] Facts: Private respondent Potenciano Kapunan, Sr., an eighty-two-year old retired schoolteacher (now deceased), was struck by the Pinoy jeep owned by petitioner Filamer and driven by its alleged employee, Funtecha, as Kapunan, Sr. was walking along Roxas Avenue, Roxas City at 6:30 in the evening of October 20, 1977. As a result of the accident, Kapunan, Sr. suffered multiple injuries for which he was hospitalized for a total of twenty (20) days. At the time of the vehicular accident, only one headlight of the jeep was functioning. Funtecha, who only had a student drivers permit, was driving after having persuaded Allan Masa, the authorized driver, to turn over the wheels to him. The two fled from the scene after the incident. A tricycle driver brought the unconscious victim to the hospital. The trial court rendered judgment finding not only petitioner Filamer and Funtecha to be at fault but also Allan Masa, a non-party. Only petitioner Filamer and third-party defendant Zenith Insurance Corporation appealed the lower courts judgment to the Court of Appeals and as a consequence, said lower courts decision became final as to Funtecha. For failure of the insurance firm to pay the docket fees, its appeal was dismissed on September 18, 1984. On December 17, 1985, the Appellate Court rendered the assailed judgment affirming the trial courts decision in toto. Hence the present recourse by petitioner Filamer. Issue: Whether or not the term employer as used in Article 2180 is applicable to petitioner Filamer with reference to Funtecha. Ruling: The Court ruled that even if we were to concede the status of an employee on Funtecha, still the primary responsibility for his wrongdoing cannot be imputed to petitioner Filamer for the plain reason that at the time of the accident, it has been satisfactorily shown that Funtecha was not acting within the scope of his supposed employment. His duty was to sweep the school passages for two hours every morning before his regular classes. Taking the wheels of the Pinoy jeep from the authorized driver at 6:30 in the evening and then driving the vehicle in a reckless manner resulting in multiple injuries to a third person were certainly not within the ambit of his assigned tasks. At the time of the injury, Funtecha was not engaged in the execution of the janitorial services for which he was employed, but for some purpose of his own. It is but fair therefore that Funtecha should bear the full brunt of his tortious negligence. Petitioner Filamer cannot be made liable for the damages he had caused. Furthermore, the Court cited Section 14, Rule X of Book III of the Labor Code, under the Labor Code, petitioner Filamer cannot be considered as Funtechas employer. Funtecha belongs to that special category of students who render service to the school in exchange for free tuition Funtecha worked for petitioner for two hours daily for five days a week. He was assigned to clean the school passageways from 4:00 a.m. to 6:00 a.m. with sufficient time to prepare for his 7:30 a.m. classes. As admitted by Agustin Masa in open court, Funtecha was not included in the company payroll.

NOTE: This case reversed Filamer vs IAC (October 16, 1990) Daniel Funtecha was a working student of Filamer. He was assigned as the school janitor to clean the school 2 hours every morning. Allan Masa was the son of the school president and at the same time he was the schools jeepney service driver. On October 20, 1977 at about 6:30pm, after driving the students to their homes, Masa returned to the school to report and thereafter have to go home with the jeep so that he could fetch the students early in the morning. Masa and Funtecha live in the same place so they usually go home together. Funtecha had a student drivers license so Masa let him take the drivers seat. While Funtecha was driving, he accidentally hit an elderly Kapunan which led to his hospitalization for 20 days. Kapunan filed a criminal case and an independent civil action based on Article 2180 against Funtecha. In the independent civil action, the lower court ruled that Filamer is subsidiarily liable for the tortious act of Funcheta and was compelled to pay for damages based on Article 2180 which provides that employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks. Filamer assailed the decision and it argued that under Section 14, Rule X, Book III of the Labor Code IRR, working scholars are excluded from the employment coverage hence there is no employer-employee relations between Filamer and Funcheta; that the negligent act of Funcheta was due to negligence only attributable to him alone as it is outside his assigned task of being the school janitor. The CA denied Filamers appeal but the Supreme Court agreed with Filamer. Kapunan filed for a motion for reconsideration. ISSUE: Whether or not Filamer should be held subsidiarily liable. HELD: Yes. This time, the SC ruled in favor of Kapunan (actually his heirs cause by this time Kapunan was already dead). The provisions of Section 14, Rule X, Book III of the Labor Code IRR was only meant to provide guidelines as compliance with labor provisions on working conditions, rest periods, and wages is concerned. This does not in any way affect the provisions of any other laws like the civil code. The IRR cannot defeat the provisions of the Civil Code. In other words, Rule X is merely a guide to the enforcement of the substantive law on labor. There is a distinction hence Section 14, Rule X, Book III of the Rules is not the decisive law in a civil suit for damages instituted by an injured person during a vehicular accident against a working student of a school and against the school itself. The present case does not deal with a labor dispute on conditions of employment between an alleged employee and an alleged employer. It invokes a claim brought by one for damages for injury caused by the patently negligent acts of a person, against both doer-employee and his employer. Hence, the reliance on the implementing rule on labor to disregard the primary liability of an employer under Article 2180 of the Civil Code is misplaced. An implementing rule on labor cannot be used by

an employer as a shield to void liability under the substantive provisions of the Civil Code. Funtecha is an employee of Filamer. He need not have an official appointment for a drivers position in order that Filamer may be held responsible for his grossly negligent act, it being sufficient that the act of driving at the time of the incident was for the benefit of Filamer (the act of driving the jeep from the school to Masas house is beneficial to the school because this enables Masa to do a timely school transportation service in the morning). Hence, the fact that Funtecha was not the school driver or was not acting with the scope of his janitorial duties does not relieve Filamer of the burden of rebutting the presumption juris tantum that there was negligence on its part either in the selection of a servant or employee, or in the supervision over him. Filamer has failed to show proof of its having exercised the required diligence of a good father of a family over its employees Funtecha and Allan.