35. Teng vs.
Pahagac
Facts: Albert Teng Fish Trading is engaged in deep sea fishing. 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 filed a complaint for illegal dismissal herein
petitioners, for they were illegally dismissed by mere suspicion from Teng that they were not reporting the
correct volume of their catch. 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 bañera; to report to Teng any other activities in the course of their fishing expedition. 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. In his defense, Teng maintained that he did not have any hand in
hiring the respondent workers; the maestros, rather than he, invited them to join the venture. According to
him, his role was clearly limited to the provision of the necessary capital, tools and equipment, consisting
of basnig, gears, fuel, food, and other supplies.
Issue: Whether or not there exist an employer-employee relationship.
Held: Yes. 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 bearing their names as employees and Teng’s
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 the respondent workers 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. Teng’s 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. More importantly, the element of control—which we have
ruled in a number of cases to be a strong indicator of the existence of an employer-employee relationship—
is present in this case. 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 Teng’s eyes and ears in every fishing
expedition.
As a policy, the Labor Code prohibits labor-only contracting. 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 Teng’s
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 employer’s 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. The respondent worker’s allegation that Teng
summarily dismissed them on suspicion that they were not reporting to him the correct volume of the fish
caught in each fishing voyage was never denied by Teng. Unsubstantiated suspicion is not a just cause to
terminate one’s employment under Article 28250 of the Labor Code.
