Feati University v.

Judge Bautista and Feati University Faculty ClubPaflu

G.R. No. L-21278
December 27, 1966
FACTS:
These are three consolidated cases by the same petitioner to which the
Court required to file only one brief for all petitions. The president of the
Faculty Club wrote a letter to Ms. Araneta (Feati University President)
informing the latter that the Faculty Club is to be organized and registered as
a Labor Union. The Faculty Club is comprised of professors and/or instructors
of the Feati University. Thereafter, the president of Faculty Club sent another
letter to the Feati University concerning twenty six (26) demands that have a
connection with the employment of the members of the Faculty Club.
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.
As Feati University did not respond to the demand letters, the Faculty
Club President filed a notice of strike with the Bureau of Labor alleging as
reason therefor the refusal of the University to bargain collectively.
Conciliation 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. Then,
he 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 (Industrial
Peace Act). As a result of the dispute, various cases were filed before the
Court of Industrial Relations.
During the hearings, the CIR 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. Feati University however filed a motion to dismiss
contending that the Industrial Peace Act (R.A. No. 875) does not apply to the
University since it is not an industry, it being an educational institution, and
the members of the Faculty Club are not employees, but individual
contractors. This was denied by the CIR Judge, and so the University filed a
motion for reconsideration. Pending the petition, the University had

employed professors and/or instructors to take the places of those professors

and/or instructors who had struck. Thus, the Faculty Club moved to hold the
University in contempt. CIR en banc upheld the decision of the CIR Judge,
hence this petition.

ISSUES:
(1)Whether or not the Feati University is covered by the Industrial Peace
Act, and can be considered as an employer under the said act.
(2)Whether or not the members of the Faculty Club are individual
contractors and not employees.
RULING:
First Issue: Feati University is considered as an employer
under the Industrial Peace Act.
It is true that this Court has ruled that certain educational institutions,
like the University of Santo Tomas, and others are not within the purview of
R.A. No. 875 for the principal reason that those entities are not organized,
maintained and operated for profit and do not declare dividends to
stockholders.
Pertinent provisions of R.A. No. 875:
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. It is not a
comprehensive definition but a complementary definition.
A methodical variation in terminology is manifest. This variation and
distinction in terminology and phraseology 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
The term encompasses those that are in ordinary parlance "employers." The
term "employer" has been given several acceptations.
(a) Lexical definition: 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.".
(b)Workmen's Compensation Act: 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."
(c) The Minimum Wage Law: 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".
(d)Social Security Act: "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."

This Court, in the cases of the The Angat River Irrigation System,
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.
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 cannot 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.
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.

Second Issue: The members of the Faculty Club are employees

of Feati University.
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", 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 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.
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).
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 Boy
Scout case, 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 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).
Feati University v. The Court of Industrial Relations, Philippine
Association of Colleges and University Professors (PACUP) and
Tomas Aguirre
G.R. No. L-17620
August 31, 1962
FACTS:
Aguirre was employed as Faculty member by the Feati University in
1948 starting with P6.00 hourly rate, which was then increased to P30.00 per
class when he was contracted to teach in the Boys High School Department
later. Aguirre joined the PACUP, a legitimate labor organization in June 1953.
In July or August, 1953, upon orders of the president of the PACUP, Jose M.
Hernandez, Aguirre began to campaign and recruit members for the PACUP
and was able to recruit seven (7) members.
Then the University classified members into full time or part time
instructors. Aguirre was classified as full time with a rate of P450.00 a month.
Months later, Aguirre was no longer given any teaching assignments. Aguirre
claims that the reason why he no longer received teaching assignments is

due to his union activities. The University on the other hand claims that it
was due to the decreased enrollments in the University. Thus, Aguirre
brought charge against the respondent before the Department of Education
when his teaching load was reduced and the Director of Private Schools. The
latter irected the respondent to pay the salary differential which Aguirre fail
to earn from December 1, 1953 to 1954 and to give Aguirre assignment in
the college department during the first semester of the current school year
under the same condition before his teaching load was reduced. This was
affirmed by the Secretary of the Department of Education.
However, even with the said decision, the University did not give
Aguirre any teaching load on the ground of the pendency of the case. It also
argued that the Industrial Peace Act granting Aguirre reinstatement and
backwages can no longer be applied since the latter was already working at
the Bangko Sentral ng Pilipinas which is equivalent to his position in the
University. Hence, this petition.

ISSUE: Whether or not Aguirre may be reinstated in the University under the
Industrial Peace Act despite his position in the Bangko Sentral ng Pilipinas.
RULING: Yes.
The Court ruled that the University is guilty of Unfair Labor Practice. It
affirmed the findings of the other quasi-judicial bodies that Aguirre was not
given any teaching load is due to the fact that he has active participation in
the Universitys Labor Union. It was proven that the claim of the University
that it had decreased enrollment was proven otherwise, since the accounting
records of the University revealed the contrary. As a result of the Unfair Labor
Practice, Aguirre should be reinstated and given backwages.
The Court also ruled that the position of Aguirre in the Bangko Sentral
ng Pilipinas is not equivalent to his teaching position at the University which
would bar his reinstatement in the latter. The grounds cited by the Court are
the following:
a) Aguirre's work in the respondent university is that of a professor, ]
while his
work in the Central Bank is clerical in nature;
(b) As professor Aguirre's maximum teaching period is five (5) hours
daily; while
in the bank he works eight (8) hours a day;

(c) Although his work in the bank allows him to teach part time in the
Philippine College of Commerce for one hour, he could also do the same
work even if he were
employed in the university; and
(d) Aguirre was receiving from the respondent university P5,400.00 a
year, while he receives from the Central Bank P3,000.00 a year only. This
alone fact decides
the issue, namely, that Aguirre's position in the
Central Bank is not substantially
equivalent to his position in the Far
Eastern University. "Any employment at lower wage
rate
is
not
substantially equivalent employment".
Although Mr. Aguirre was, not a professor, but a full time instructor in
the University, we agree with the opinion of the lower court, sitting en banc.
In addition to the circumstances relied upon by the latter, one important
factor, not mentioned in the resolution appealed from, is decisively in favor
of the conclusion therein reached, and that is that Mr. Aguirre is an instructor
in Tagalog, and that, as such, his position as researcher in the Central Bank
has no future for him. The situation would perhaps have been different had
his line been economics. Inasmuch, however, as Mr. Aguirre has especialized
in the Tagalog dialect, his work as a researcher in the Central Bank is inferior
to his job as full time instructor in the University, not so much because his
salary in the latter is substantially bigger, even if we add thereto his
emoluments in the Philippine College of Commerce, but, specially, because
of the future his position as instructor in the University offers him as a
career, which is non-existent in the Central Bank.

Philippine Airlines, Inc. v. Philippine Airlines Employees Association

and Court of Industrial Relations
G.R. No. L-21120
February 28, 1967

FACTS:
This case is a continuation of another case already ruled by the
Supreme Court. In the said case, the Supreme Court has ruled that the
employees herein concerned were illegally dismissed, and so they were
directed to the reinstatement of said employess "to their former or
equivalent position in the company, with back wages from the date of their
reinstatement, and without prejudice to their seniority or other rights and

privileges.As a result of the said ruling, the employees concerned herein

were subsequently reinstated and their backwages, computed at the rate of
their compensation at the time of the aforementioned dismissal, less the
wages and salaries earned by them elsewhere during the lay-off period, were
paid to them. The employees objected to this deduction and the CIR
sustained them, which was reversed by the Supreme Court.
The PALEA moved for the execution of the CIR resolution of July 13,
1954, as regards the "other rights and privileges" therein mentioned,
referring, more specifically to: (1) Christmas bonus from 1950 to 1958; (2)
accumulated sick leave; (3) transportation allowance during lay-off period;
and (4) accumulated free trip passes, both domestic and international. The
CIR granted the motion except for some items which were excluded. Hence,
this appeal.

ISSUE: Whether or not the clause therein "without prejudice to their

seniority or other rights and privileges" should be construed prospectively,
not retroactively.
RULING: Petition of PAL has no merit.
Insofar as the Christmas bonus, the accumulated sick leave privileges
and the transportation allowance during the lay-off period, the PAL's
contention is clearly devoid of merit. The aforementioned clause must be
considered in the light of the entire context of the resolution of July 13, 1954
and of its dispositive part. In ordering therein the "reinstatement" of said
employees with "back wages from the date of their dismissal to the date of
their reinstatement, and without prejudice to their seniority or other rights
and privileges," it is obvious that the resolution intended to restore the
employees to their status immediately prior to their dismissal.
Hence, it directed, not only their reinstatement, but, also, the payment
of their back wages during the period of their lay-off thus referring
necessarily to a period of time preceding their reinstatement and the
retention of "their seniority or other rights and privileges". Rights
reinstatement, but at the time? Certainly, not after their reinstatement, but
at the time of their aforementioned dismissal. In other words, the
reinstatement was with back wages for the lay-off period, coupled with
"seniority or other rights and privileges", attached to the status of the
employees when they were dismissed. To put it differently, the CIR treated
said employees as if they had not been absent from work and had been
uninterruptedly working during the lay-off period.

As a consequence, the employees involved in the case at bar are entitled to

the Christmas bonus that PAL had given to all of its employees during said
period, for said bonus, having been paid regularly, has become part of the
compensation of the employees. Said employees are, likewise, entitled to
transportation allowance and the corresponding sick leave privileges. These
sick leave privileges are subject, however, to the following qualifications,
namely: (1) that the accumulated sick leave cannot exceed 140 days,
pursuant to the collective bargaining agreement between the PAL and the
PALEA, effective in 1959; and (2) that, pursuant to the same agreement,
which denies sick leave privileges to retired employees, Onofre Grio and
Bernardino Abarrientos, who have retired, are not entitled to said privileges.
The PAL's appeal as regards the free trip passes is, however, well taken, for
the employees had no absolute right thereto, even if they had actually
rendered services during the lay-off period. The free trip passes were given,
neither automatically, nor indiscriminately. The employees had to apply
therefore and their applications were subject PAL's approval.

Encyclopedia Britannica (Philippines) Inc., v. National Labor

Relations Commission; et.al and Benjamin Limjoco
G.R. No. 87098
November 4, 1996

FACTS:
Private respondent Benjamin Limjoco was a Sales Division Manager of
petitioner Encyclopaedia Britannica and was in charge of selling petitioner's
products through some sales representatives. His compensation was in the
form of commissions from products sold by his agents. He was also allowed
to use Britannicas name, goodwill, and logo. It was, however, agreed upon
that office expenses would be deducted from private respondent's
commissions. Britannica would also be informed about appointments,
promotions, and transfers of employees in Limjocos district.
Thereafter, Limjoco resigned from Britannica, and filed a complaint
against Britannica for non-payment of separation pay and other benefits, and
also illegal deduction from his sales commissions. Britannica contended that
Limjoco was not entitled to the same since he was not an employee, but an
independent dealer authorized to promote and sell its products and in return,
received commissions therefrom. Limjoco did not have any salary and his

income from the petitioner company was dependent on the volume of sales
accomplished. He also had his own separate office, financed the business
expenses, and maintained his own workforce. The salaries of his secretary,
utility man, and sales representatives were chargeable to his commissions.
Thus, petitioner argued that it had no control and supervision over the
complainant as to the manner and means he conducted his business
operations. The latter did not even report to the office of the petitioner and
did not observe fixed office hours. Consequently, there was no employeremployee relationship.
Limjoco contended that he was an employee since he was under the
supervision of Britannica. He receives memoranda, guidelines on company
policies, instructions and other orders. He was, however, dismissed by the
petitioner when the Laurel-Langley Agreement expired. Labor Arbiter ruled in
favor of Limjoco and held that he is an employee since he was under the
control of Birtannica. It ruled that the petitioner company dictated how and
where to sell its products. Aside from that fact, Limjoco passed the costs to
the petitioner chargeable against his future commissions. Such practice
proved that he was not an independent dealer or contractor for it is required
by law that an independent contractor should have substantial capital or
investment. Hence, this petition.

ISSUE: Whether or not there was an employer-employee relationship

between Limjoco and Britannica.
RULING: No.
In determining the existence of an employer-employee relationship the
following elements must be present: 1) selection and engagement of the
employee; 2) payment of wages; 3) power of dismissal; and 4) the power to
control the employee's conduct. Of the above, control of employee's conduct
is commonly regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship. Under the
control test, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only the
end to be achieved, but also the manner and means to used in reaching that
end.
The fact that petitioner issued memoranda to private respondents and
to other division sales managers did not prove that petitioner had actual
control over them. The different memoranda were merely guidelines on
company policies which the sales managers follow and impose on their
respective agents.

It should be noted that in petitioner's business of selling encyclopedias

and books, the marketing of these products was done through dealership
agreements. The sales operations were primarily conducted by independent
authorized agents who did not receive regular compensations but only
commissions based on the sales of the products. These independent agents
hired their own sales representatives, financed their own office expenses,
and maintained their own staff. Thus, there was a need for the petitioner to
issue memoranda to private respondent so that the latter would be apprised
of the company policies and procedures. Nevertheless, private respondent
Limjoco and the other agents were free to conduct and promote their sales
operations. The periodic reports to the petitioner by the agents were but
necessary to update the company of the latter's performance and business
income.
Private respondent was not an employee of the petitioner company.
While it was true that the petitioner had fixed the prices of the products for
reason of uniformity and private respondent could not alter them, the latter,
nevertheless, had free rein in the means and methods for conducting the
marketing operations. He selected his own personnel and the only reason
why he had to notify the petitioner about such appointments was for purpose
of deducting the employees' salaries from his commissions.
Private respondent was merely an agent or an independent dealer of
the petitioner. He was free to conduct his work and he was free to engage in
other means of livelihood. At the time he was connected with the petitioner
company, private respondent was also a director and later the president of
the Farmers' Rural Bank. Had he been an employee of the company, he could
not be employed elsewhere and he would be required to devote full time for
petitioner.
As stated earlier, "the element of control is absent; where a person
who works for another does so more or less at his own pleasure and is not
subject to definite hours or conditions of work, and in turn is compensated
according to the result of his efforts and not the amount thereof, we should
not find that the relationship of employer and employee exists. In fine, there
is nothing in the records to show or would "indicate that complainant was
under the control of the petitioner" in respect of the means and methods in
the performance of complainant's work.