Case Digest: Teng v. Pahagac, et al.

G.R. No. 169704: November 17, 2010




Albert Teng Fish Trading is engaged in deep sea fishing and, for this purpose, owns boats (basnig), equipment, and other fishing paraphernalia. As owner of the business, Teng claims that he customarily enters into joint venture agreements with master fishermen (maestros) who are skilled and are experts in deep sea fishing; they take charge of the management of each fishing venture, including the hiring of the members of its complement. He avers that the maestros hired the respondent workers as checkers to determine the volume of the fish caught in every fishing voyage.

The respondent workers alleged that Teng hired them, without any written employment contract, to serve as his "eyes and ears" aboard the fishing boats; to classify the fish caught by bara; to report to Teng via radio communication the classes and volume of each catch; to receive instructions from him as to where and when to unload the catch; to prepare the list of the provisions requested by the maestro and the mechanic for his approval; and, to procure the items as approved by him. They also claimed that they received regular monthly salaries, 13th month pay, Christmas bonus, and incentives in the form of shares in the total volume of fish caught.

They asserted that sometime in September 2002, Teng expressed his doubts on the correct volume of fish caught in every fishing voyage. In December 2002, Teng informed them that their services had been terminated. Respondent workers filed a complaint for illegal dismissal against Albert Teng Fish Trading, Teng, and Chua before the NCMB, Region Branch No. IX, Zamboanga City.

The VA rendered a decision in Tengs favor and declared that no employer-employee relationship existed between Teng and the respondent workers. Respondent workers filed a motion for reconsideration but the same was denied. The VA reasoned out that Section 6, Rule VII of the 1989 Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings (1989 Procedural Guidelines) does not provide the remedy of a motion for reconsideration to the party adversely affected by the VAs order or decision.

Respondents filed an appeal to the CA, where the VA decision was reversed. Teng moved for reconsideration but the same was denied. Hence, this petition.
Whether or not the CA erred in reversing the VA decision


The element of control is a strong indicator of the existence of an employer-employee relationship.

While Teng alleged that it was the maestros who hired the respondent workers, it was his company that issued to the respondent workers identification cards (IDs) bearing their names as employees and Tengs signature as the employer. Generally, in a business establishment, IDs are issued to identify the holder as a bona fide employee of the issuing entity.

For the 13 years that the respondent workers worked for Teng, they received wages on a regular basis, in addition to their shares in the fish caught. The worksheet showed that the respondent workers received uniform amounts within a given year, which amounts annually increased until the termination of their employment in 2002. Tengs claim that the amounts received by the respondent workers are mere commissions is incredulous, as it would mean that the fish caught throughout the year is uniform and increases in number each year. Teng not only owned the tools and equipment, he directed how the respondent workers were to perform their job as checkers; they, in fact, acted as Tengs eyes and ears in every fishing expedition.

Teng cannot hide behind his argument that the respondent workers were hired by the maestros. To consider the respondent workers as employees of the maestros would mean that Teng committed impermissible labor-only contracting. As a policy, the Labor Code prohibits labor-only contracting.


There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer.

In the present case, the maestros did not have any substantial capital or investment. Teng admitted that he solely provided the capital and equipment, while the maestros supplied the workers. The power of control over the respondent workers was lodged not with the maestros but with Teng. As checkers, the respondent workers main tasks were to count and classify the fish caught and report them to Teng. They performed tasks that were necessary and desirable in Tengs fishing business. Taken together, these incidents confirm the existence of a labor-only contracting which is prohibited in our jurisdiction, as it is considered to be the employers attempt to evade obligations afforded by law to employees.

Accordingly, we hold that employer-employee ties exist between Teng and the respondent workers. A finding that the maestros are labor-only contractors is equivalent to a finding that an employer-employee relationship exists between Teng and the respondent workers. As regular employees, the respondent workers are entitled to all the benefits and rights appurtenant to regular employment.


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