labor standards case digest compiled 6 0-6-02 work relationship 1

7/28/2019 Labor Standards Case Digest Compiled 6 0-6-02 Work Relationship 1

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ATTY. ANDREA UY and FELIX YUSAY vs. ARLENE VILLANUEVA and NLRC

FACTSCountrywide Rural Bank of La Carlota, Inc. is a private banking corporation engaged inrural banking and other allied services. In 1998, the Bank experienced liquidity

problems. The depositors were alarmed of losing their deposits. Consequently, thedepositors holding 70% of the Banks deposit accounts met and organized themselvesinto a "Committee of Depositors," for the purpose of protecting their collective interestsand to increase their chances of recovering their deposits. They assumed temporaryadministrative control of the remaining Bank operations, with the incumbent BODsconsent and approval. The Committee designated Felix Yusay as Chairman of theInterim BOD, while Atty. Andrea Uy as Secretary.

However, the rehabilitation of the bank had failed and the Committee was disbanded.BSP placed the bank under receivership and appointed a liquidator. Meanwhile, thePDIC commenced the processing of claims for return of deposits.

Eventually, three separate cases for illegal dismissal were filed against the Bank beforeNLRC. These were filed by Amalia Bueno, Amelia Valdez and Lyn Villa and PrivateRespondent Arlene Villanueva.

11/16/1999, Labor Arbiter Arturo P. Gamolo decided in favor of Villanueva and held theBank, Atty. Andrea Uy and Felix Yusay solidarily liable to pay the monetary awards andattorneys fees. Upon the filing of the Motion for Execution, the Bank filed an Oppositionthrough PDIC. Labor Arbiter Gamolo found PDICs opposition to be meritorious anddirected complainants to file their respective money claims as adjudged before theliquidation court for PDICs approval of inclusion in the Banks Distribution Plan.

Petitioners filed with the NLRC:

Notice of Appeal with Memorandum of Appeal but was Dismissed for being filedout of time (11/27/2000 Resolution);

Motion for Reconsideration NLRC recalled its Resolution and set the case for clarificatory hearing, but

Petitioners received the Resolution 5 days after the scheduled hearing

NLRC then reinstated its 11/27/2000 Resolution (10/10/2001 Resolution)

Petitioners filed a petition for certiorari before the CA to nullify the NLRCs Resolutions,but the CA dismissed the petition for certiorari on technical grounds. Subsequent

Motion for Reconsideration was filed, but it was likewise denied. Hence, the instantpetition.

Petitioners Claim Previous decisions of the Court held that technicalities can be relaxed in order to

uphold the substantive rights of the parties


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They cannot be held solidarily liable to private respondent because they weremere depositors of the Bank and not stockholders. Even assuming that they werestockholders, they still cannot be held individually liable for the Banks obligations

ISSUES

1. WON dismissal of their petition for certiorari on technical grounds deprived themof substantial justice2. WON there existed an employer-employee relationship between Petitioners

and Private Respondent

HELDThe petition is meritorious. At the outset, we note that the Bank did not appeal theNLRCs rulings. As to the bank, therefore, the NLRC Decision has become final andexecutory.

1. YES

Rule 45 of the Rules of Civil Procedure provides that only questions of lawshall be raised in an appeal by certiorari before this Court. However, itadmits of certain exceptions, among them are: when there is a graveabuse of discretion and when the judgment is based on misappreciation offacts.

CA committed grave abuse of discretion in dismissing the petition withoutexamining its merits. In the past, the Court held that technicalities shouldnot be permitted to stand in the way of equitably and completely resolvingthe rights and obligations of the parties. Where the ends of substantial

justice would be better served, the application of technical rules ofprocedure may be relaxed.

Dismissal of appeals purely on technical grounds is frowned upon and therules of procedure ought not to be applied in a very rigid, technical sense,for they are adopted to help secure, not override, substantial justice, andthereby defeat their very aims.

2. NO Illegal dismissal presupposes that there was an employer-employee

relationship between the dismissed employee and the personscomplained of. The Court has consistently used the "four-fold" test:

(1) whether the alleged employer has the power of selection andengagement of an employee;

(2) whether he has control of the employee with respect to themeans and methods by which work is to be accomplished;

(3) whether he has the power to dismiss; and(4) whether the employee was paid wages.

Of the four, the control test is the most important element.

In this case, all these elements are attributable to the bank and not topetitioners. As mentioned, the NLRC Decision has become final and


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executory as to the bank. Its liability for private respondents dismissal isno longer in dispute.

However, the same cannot apply to petitioners because they assumedonly limited administrative control of the bank as part of the "Committee ofDepositors." There is no showing that they took over the

management and control of the bank. Even assuming that an employer-employee relationship exist betweenpetitioners and private respondent, the former still cannot be held liablewith Countrywide Bank for the illegal dismissal of private respondent.Corporate officers are not personally liable for the money claims ofdischarged corporate employees, unless they acted with evident maliceand bad faith in terminating their employment.

It has been held that an "office" is created by the charter of the corporationand the officer is elected by the directors or stockholders. On the otherhand, an "employee" usually occupies no office and generally isemployed not by action of the directors or stockholders but by the

managing officer of the corporation who also determines thecompensation to be paid to such employee. Petitioners are neither officers nor employees of the bank. They are

mere depositors who sought to manage the bank in order to save it. The doctrine ofpiercing the veil of corporate fiction finds no application

in the case. For petitioners are not even stockholders of the bank butmere depositors. They assumed temporary control of the banksadministration, but that did not change the character of their relationshipwith the Bank. In fact, their bid to convert their interest in the Bank tothat of stockholders failed as the BSP denied their plan torehabilitate the bank.

DISPOSITION: Petition GRANTED. Decisions of LABOR ARBITER and CA, findingpetitioners solidarily liable, are REVERSED and SET ASIDE.


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United Pepsi-Cola Supervisory Union vs Laguesma 288 SCRA 15

Facts:UPSU is a union of supervisory employees. The union filed a petition for certificationelection on behalf of the route managers at Pepsi-Cola Products Philippines, Inc.

However, its petition was denied by the med-arbiter and, on appeal, by the Secretary ofLabor and Employment, on the ground that the route managers are managerialemployees and, therefore, ineligible for union membership under the first sentence of

Art. 245 of the Labor Code, which says, Managerial employees are not eligible to join,assist or form any labor organization. Supervisory employees shall not be eligible formembership in a labor organization of the rank-and-file employees but may join, assistor form separate labor organizations of their own.

ISSUE:1. Whether the route managers at Pepsi-Cola Products Philippines, Inc. are

managerial employees2. Who are Managerial Employees?

HELD:1. Yes. The employees concerned are managerial employees within the purview of

Art. 212 which provides:

(m) "managerial employee" is one who is vested with powers orprerogatives to lay down and execute management policies and/or tohire, transfer, suspend, lay off, recall, discharge, assign or disciplineemployees. Supervisory employees are those who, in the interest of theemployer, effectively recommend such managerial actions if the exerciseof such authority is not merely routinary or clerical in nature but requiresthe use of independent judgment. All employees not falling within any ofthe above definitions are considered rank-and-file employees forpurposes of this Book.

Route managers cant be classified as mere Supervisors because their work notonly involves, but goes beyond the simple direction of operating employees toaccomplish objectives set by superiors. Route managers are not merefunctionaries with simple oversight functions, but business administrators in theirown rights. They are therefore properly classified as managerial employees.

1. The term manager generally refers to anyone who is responsible forsubordinates and other organization resources. As a class, managers constitutethree levels of a pyramid:

FIRST-LINE MANAGERS The lowest level in an organization at whichindividuals are responsible for the work of others is called first-line orfirst-level management. First-line managers direct operating employeesonly; they do not supervise other managers. Example of first-linemanagers are the foreman or production supervisor in a manufacturing


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plant, the technical supervisor in a research department, and the clericalsupervisor in a large office. First-level managers are often calledsupervisors.

MIDDLE MANAGERS The term middle managementcan refer to more

than one level in an organization. Middle managers direct the activitiesof other managers and sometimes also those of operating employees.Middle managers principal responsibilities are to direct the activities thatimplement their organizations policies and to balance the demands oftheir superiors with the capacities of their subordinates. A plantmanager in an electronics firm is an example of a middle manager.

TOP MANAGERS Composed of a comparatively small group ofexecutives, top management is responsible for the overall managementof the organization. It establishes operating policies and guides theorganizations interactions with its environment. Typical titles of top

managers are chief executive officer, president, and senior vice-president. Actual titles vary from one organization to another and arenot always a reliable guide to membership in the highest managementclassification.

What distinguishes them from the rank-and file employees is that they act in theinterest of the employer in supervising such rank-and-file employees.

Managerial employees may therefore be said to fall into two distinct categories:the managersper se, who compose the former group described above, and thesupervisors who form the latter group. Whether they belong to the first or

second category, managers, vis--vis employers, are, likewise, employees.

ADDITIONAL INFO:ART. 245. Ineligibility of managerial employees to join any labor organization;right of supervisory employees. - Managerial employees are not eligible to join,assist or form any labor organization. Supervisory employees shall not beeligible for membership in a labor organization of the rank-and-file employees butmay join, assist or form separate labor organizations of their own

In the case of Art. 245, there is a rational basis for prohibiting managerialemployees from forming or joining labor organizations. By the very nature of their

functions, they assist and act in a confidential capacity to, or have access toconfidential matters of, persons who exercise managerial functions in the field oflabor relations. As such, the rationale behind the ineligibility of managerialemployees to form, assist or joint a labor union equally applies to them. If thesemanagerial employees would belong to or be affiliated with a Union, the lattermight not be assured of their loyalty to the Union in view of evident conflict ofinterests. The Union can also become company-dominated with the presence ofmanagerial employees in Union membership."


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TELEVISION AND PRODUCTION EXPONENTS, INC. (TAPE) vs. SERVAA

FACTS:

Servaa was a security guard for the Agro-Commercial Security Agency (ACSA)since 1987. The agency had a contract with TV network RPN 9.

TAPE was handling shows like Eat Bulaga which was then with RPN 9.

When the security agencys contract with RPN-9 expired in 1995, respondentwas absorbed by TAPE.

In 2000, TAPE contracted the services of Sun Shield Security Agency. It thennotified Servaa that he is being terminated because he is now a redundant employee.

Servaa then filed a case for illegal Dismissal. The Labor Arbiter ruled thatServaas dismissal is valid on the ground of redundancy but though he was not illegallydismissed he is still entitled to be paid a separation pay which is amounting to onemonth pay for every year of service which totals to P78,000.00.

TAPE appealed and argued that Servaa is not entitled to receive separation payfor he is considered as a talent and not as a regular employee; that as such, there is noemployee-employer relationship between TAPE and Servaa. The National LaborRelations Commission ruled in favor of TAPE. It ruled that Servaa is a programemployee. Servaa appealed before the Court of Appeals.

The Court of Appeals reversed the NLRC and affirmed the LA. The CA furtherruled that TAPE and its president Tuviera should pay for nominal damages amountingto P10,000.00.

ISSUE:WON there is an employee-employer relationship existing between TAPE and Servaa.

HELD: Yes. Servaa is a regular employee.In determining Servaas nature of employment, the Supreme Court employed the FourFold Test:

1. WON employer conducted the selection and engagement of the employee.

Servaa was selected and engaged by TAPE when he was absorbed as a talent in1995. He is not really a talent, as termed by TAPE, because he performs an activitywhich is necessary and desirable to TAPEs business and that is being a securityguard. Further, the primary evidence of him being engaged as an employee is hisemployee identification card. An identification card is usually provided not just as a


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security measure but to mainly identify the holder thereof as a bona fide employee ofthe firm who issues it.

2 WONthere is payment of wages to the employee by the employer.

Servaa is definitely receiving a fixed amount of monthly compensation. Hes receivingP6,000.00 a month.

3. WON employer has the power to dismiss employee.

The Memorandum of Discontinuance issued to Servaa to notify him that he is aredundant employee evidenced TAPEs power to dismiss Servaa.

4. WON the employer has the power of control over the employee. The controltest is the most important.

The bundy cards which showed that Servaa was required to report to work at fixedhours (form 11:30-1:00 pm) of the day manifested that TAPE has control over him.Otherwise, Servaa could have reported at any time during the day as he may wish.

Precisely, he is being paid for being the security of "Eat Bulaga!"

The Daily Time Record is a form of control by the management of TAPE.

Therefore, Servaa is entitled to receive a separation pay.

On the other hand, the Supreme Court ruled that Tuviera, as president of TAPE, shouldnot be held liable for nominal damages as there was no showing he acted in bad faith interminating Servaa.

Regular Employee Defined:One having been engaged to perform an activity that is necessary and desirable to acompanys business.

Under the control test, there is an employer-employee relationship when the person forwhom the services are performed reserves the right to control not only the end achievedbut also the manner and means used to achieve that end.


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REMINGTON INDUSTRIAL SALES CORP V. CASTANEDA 507 SCRA 391 (2006)

FACTS: Castaneda alleged that she started working in August 1983 as company cookwith a salary P4,000/month for Remington, a corporation engaged in the trading

business; that she worked for 6 days a week, starting as early as 6am because she had

to do the marketing and would end at 5:30pm or even later, after most of theemployees, if not all, had left the company premises.

1. She continuously worked for Remington until she was unceremoniouslyprevented from reporting for work when Remington transferred to a new site inEdsa, Caloocan City. She averred that she reported for work at the new site onJanuary 15, 1998, only to be informed that Remington no longer needed herservices. Castaneda believed that her dismissal was illegal because she was notgiven any notice as required by law. Hence, she filed a complaint forreinstatement without loss of seniority rights, salary differentials, service incentiveleave pay, 13th month pay and fees.

2. Remington denied that it dismissed Castaneda illegally. It posited that Castanedawas a domestic helper, not a regular employee and that her work as a cook hadnothing to do with Remingtons business of trading in construction materials.

3. Remington also maintained that it did not exercise any degree of control and/orsupervision over Castanedas work as her only concern was to ensure that theemployees lunch and snacks were available and served at the designated time.

4. Remington also claimed that it was Castaneda who refused to report for workwhen the company transferred to the new location

ISSUE: WON CASTANEDA IS A REGULAR EMPLOYEE OF PETITIONER OR MERE

DOMESTIC WORKER OF THE FAMILY TAN

HELD: Yes, Castaneda was a regular employee of petitioner.

Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms house

helper or domestic servant are defined as follows: The term house helper as used

herein is synonymous to the term domestic servant and shall refer to any person,

whether male or female, who renders services in and about the employers home and

which services are usually necessary or desirable for the maintenance and enjoyment

thereof, and ministers exclusively to the personal comfort and enjoyment of the

employers family.

The foregoing definition clearly contemplates such house helper or domestic servant

who is employed in the employers home to minister exclusively to the personal comfort

and enjoyment of the employers family. Such definition covers family drivers, domestic

servants, laundry women, yayas, gardeners, houseboys and similar house helps. The

criteria are the personal comfort and enjoyment of the family of the employer in the

home of said employer. While it may be true that the nature of the work of a house


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helper, domestic servant or laundrywoman in a home or in a company staff house may

be similar in nature, the difference in their circumstances is that in the former instance

they are actually serving the family while in the latter case, the mere fact that the house

helper or domestic servant is working within the premises of the business of the

employer and in relation to or in connection with its business, as in its staff houses for

its guest or even for its officers and employees, warrants the conclusion that such

house helper or domestic servant is and should be considered as a regular employee of

the employer and not as a mere family house helper or domestic servant as

contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended.

Clearly, the situs, as well as the nature of respondents work as a cook, who caters not

only to the needs of Mr. Tan and his family but also to that of the petitioners employees,

makes her fall squarely within the definition of a regular employee under the doctrine

enunciated in the Apex Mining case.

That she works within company premises, and that she does not cater exclusively to thepersonal comfort of Mr. Tan and his family, is reflective of the existence of the

petitioners right of control over her functions, which is the primary indicator of the

existence of an employer-employee relationship. Moreover, it is wrong to say that if the

work is not directly related to the employer's business, then the person performing such

work could not be considered an employee of the latter. The determination of the

existence of an employer-employee relationship is defined by law according to the facts

of each case, regardless of the nature of the activities involved.

In addition, no less than the companys corporate secretary has certified that

respondent is a bona fide company employee; she had a fixed schedule and routine ofwork and was paid a monthly salary of P4,000.00; she served with the company for 15

years starting in 1983, buying and cooking food served to company employees at lunch

and merienda, and that this service was a regular feature of employment with the

company.

In the second issue, abandonment is the deliberate and unjustified refusal of an

employee to resume his employment. It is a form of neglect of duty; hence, a just cause

for termination of employment by the employer under Article 282 Labor Code, whichenumerates the just causes for termination by the employer. For a valid finding of

abandonment, these two factors should be present: (1) the failure to report for work or

absence without valid or justifiable reason; and (2) a clear intention to sever employer-

employee relationship, with the second as the more determinative factor which is

manifested by overt acts from which it may be deduced that the employee has no more


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intention to work. The intent to discontinue the employment must be shown by clear

proof that it was deliberate and unjustified.

In the instant case, Erlindas immediate filing of her complaint with the NLRC negates

abandonment. Indeed, an employee who loses no time in protesting her layoff cannot

by any reasoning be said to have abandoned her work, for it is well-settled that the filingof an employee of a complaint for illegal dismissal with a prayer for reinstatement is

proof enough of her desire to return to work, thus, negating the employers charge of

abandonment. In termination cases, the burden of proof rests upon the employer to

show that the dismissal is for a just and valid cause; failure to do so would necessarily

mean that the dismissal was illegal. The employers case succeeds or fails on the

strength of its evidence and not on the weakness of the employees defense. If doubt

exists between the evidence presented by the employer and the employee, the scales

of justice must be tilted in favor of the latter.


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MIGUEL vs. JCT GROUP, INC. and VICENTE CUEVAS

FACTSGlorious Sun Garment Manufacturing Companywas a garment exporter until it folded upin October 1994. De Soliel Apparel Manufacturing Corporation and American Inter-

Fashion Corporation took over Glorious Suns manufacturing plant, facilities andequipment and absorbed its employees, including the petitioners.

After the 1986 EDSA Revolution, the Presidential Commission on Good Governmentsequestered De Soleil and AIFC and took over their assets and operations.

On 4/24/1989, JCT Group, Inc. and De Soleil executed a Management and OperatingAgreement for the purpose of servicing De Soleils export quota to ensure itsrehabilitation and preserve its viability and profitability. The MOA expired on 5/1/1990and in July 1990, De Soleil ceased business operations, terminating petitionersemployment.

In April 1993, petitioners filed complaints for illegal dismissal and payment ofbackwages and other monetary claims before the NLRC against De Soleil, AIFC,PCGG, Glorious Sun, JCT, Nemesio Co and Vicente Cuevas III.

On 5/26/1993, JCT and Cuevas filed a motion to dismiss founded on lack of jurisdictionover the subject matter of the action because of the absence of an employer-employeerelationship between them and petitioners.

Without resolving the motion to dismiss, Labor Arbiter Vladimir P.L. Sampang decidedin favor of the Petitioners, declaring De Soleil, AIFC, PCGG, Glorious Sun, JCT,

Nemesio Co and Cuevas jointly and severally guilty of illegal dismissal and to paycomplainants monetary awards.

Glorious Sun and Respondents appealed the labor arbiters decision. Petitioners thenfiled a motion to dismiss both appeals on the ground that the same were not perfectedfor failure to post a bond as required. NLRC then modified labor arbiters decision byabsolving Glorious Sun from liability and dismissing respondents appeal.

Aggrieved, respondents instituted a special civil action for certiorari before the SC butthe petition was referred to the CA for appropriate action and disposition.

Subsequently, CA reversed the Decision of the NLRC and remanded the case to thelabor arbiter. It found no factual basis for the ruling that JCT had become the employerof petitioners after the cessation of operations of Glorious Sun and failed to account forthe liability of Cuevas in solidum with AIF, De Soleil and JCT. Hence, this Petition.


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ISSUEWON CA erred in remanding the case to the labor arbiter because of lack of factualfindings to prove Employer-Employee relationship between JCT and Miguel whichwould be the basis of the liability of JCT

HELDNO. CA did not err in remanding the case for further proceedings. Both the laborarbiter and NLRC abused their discretion when they ruled in favor of herein petitionerswithout determining the existence of an employer-employee relationship between themand respondents. The Decisions were silent on why JCT and Cuevas were held liable.

CA has correctly observed that NLRC made no finding that JCT (on the supposition thatit became petitioners employer pursuant to the MOA dated 4/24/1989) had assumedthe obligations of petitioners previous employers, i.e., Glorious Sun, AIF and De Soleil.

The facts and the law on which decisions are based must be clearly and distinctly

expressed. The failure of the labor arbiter and the NLRC to express the basis for theirDecisions was an evasion of their constitutional duty, an evasion that constituted graveabuse of discretion.

The Court has cited Saballa v. National Labor Relations Commission to explain how thedecision of an administrative body must be drawn: Court previously held that judges andarbiters should draw up their decisions and resolutions with due care, and make certainthat they truly and accurately reflect their conclusions and their final dispositions. Thesame thing goes for the findings of fact made by the NLRC, as it is a settled rule thatsuch findings are entitled to great respect and even finality when supported bysubstantial evidence; otherwise, they shall be struck down for being whimsical andcapricious and arrived at with grave abuse of discretion. It is a requirement of dueprocess and fair play that the parties to a litigation be informed of how it was decided,with an explanation of the factual and legal reasons that led to the conclusions of thecourt.

The defense of respondents is anchored on an alleged lack of employer-employeerelationship with petitioners as stipulated in the formers MOA with De Soleil. JCTfurther claims that any relationship with De Soleil and the latters employees wassevered upon the termination of that Agreement. It is imperative to determine thenature of the MOA -- whether or not it partook only of a consultancy agreement, inwhich no employer-employee relationship existed between respondents and petitioners.The only way to find out whether Respondents JCT and Cuevas are liable to petitionersis by remanding the case to the lower court.

The remand of the case, instead of the dismissal of the Complaint, was beneficial topetitioners and was made in consideration of the policy to protect and promote thegeneral welfare of employees.

DISPOSITION: Petition is DENIED and the assailed Decision AFFIRMED.


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Wack-wack Golf and Country Club vs NLRC 456 SCRA 280

FACTS: A large portion of the Wack Wack clubhouse (including the kitchen) was

destroyed by fire, and because of this, the management had to suspend

operations of the Food and Beverage department, requiring the suspension of54 employees. The Employees Union found the suspension as arbitrary andconstitutive of union-busting, and went on strike. The parties soon after enteredinto an amicable settlement, whereby a special separation benefit/ retirementpackage was formulated. The same provides for, among other things, a 1month separation pay for every year of service, and be considered on prioritybasis for employment by concessionaires and/or contractors, and even by theclub, upon full resumption of operations.

The package was availed of by 3 employees (Cagasan, Dominguez, andBaluyot), who received large sums of money as Separation pay. Soon after,Wack-wack entered into a Management Contract with Business Staffing and

Management Inc (BSMI), whereby the latter will provide management servicesfor Wack-wack. Cagasan and Dominguez filed their application for employmentwith BMSI. They, by reason of the priority given by the separation package, wererehired on probationary status by BMSI.

Wack-wack also engaged other contractors in the operations of the club (likejanitorial services, Finance and accounting services). Because of the variousmanagement service contracts, BMSI made an organizational analysis andmanpower evaluation to stream line its operations. It found the positions ofCagasan and Domiguez redundant, and subsequently terminated them.Cagasan and Dominguez then filed complaints in the NLRC for illegal dismissalagainst Wack-wack. NLRC ordered reinstatement.

ISSUE:1. Whether or not BMSI is an independent contractor or a labor-only contractor2. Whether or not there was an employer-employee relationship between Wack-

wack and private respondents.

HELD:1. Yes. There is indubitable evidence showing that BSMI is an independent

contractor, engaged in the management of projects, business operations,functions, jobs and other kinds of business ventures, and has sufficient capitaland resources to undertake its principal business. It had provided management

services to various industrial and commercial business establishments.

An independent contractor is one who undertakes job contracting, i.e., aperson who: (a) carries on an independent business and undertakes thecontract work on his own account under his own responsibility according to hisown manner and method, free from the control and direction of his employer orprincipal in all matters connected with the performance of the work except asto the results thereof; and (b) has substantial capital or investment in the form


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of tools, equipments, machineries, work premises and other materials whichare necessary in the conduct of the business.

Jurisprudential holdings are to the effect that in determining the existence ofan independent contractor relationship, several factors may be considered,

such as, but not necessarily confined to, whether or not the contractor iscarrying on an independent business; the nature and extent of the work; theskill required; the term and duration of the relationship; the right to assign theperformance of specified pieces of work; the control and supervision of thework to another; the employers power with respect to the hiring, firing, andpayment of the contractors workers; the control of the premises; the duty tosupply premises, tools, appliances, materials and labor; and the mode,manner and terms of payment.

Labor Secretary Bienvenido Laguesma, recognized BSMI as an independentcontractor. As a legitimate job contractor, there can be no doubt as to the

existence of an employer-employee relationship between the contractor and theworkers.

2. No. There being no employer-employee relationship between the petitioner andrespondents Cagasan and Dominguez, the latter have no cause of action forillegal dismissal and damages against the petitioner. Consequently, thepetitioner cannot be validly ordered to reinstate the respondents and pay themtheir claims for backwages.

BSMI admitted that it employed the respondents, giving the said retired

employees some degree of priority merely because of their work experience withthe petitioner. The respondents were made to sign applications for employment,accepting the condition that they were hired by BSMI as probationary employeesonly. Unfortunately, after a study and evaluation of its personnel organization,BSMI was impelled to terminate the services of the respondents on the ground ofredundancy. This right to hire and fire is another element of the employer-employee relationship which actually existed between the respondents andBSMI, and not with Wack Wack.


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PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. vs. SCHONFELD,

FACTS:

Respondent is a Canadian citizen.

Pacicon Philippines, Inc. (PPI) is a corporation in accordance with the laws of thePhilippines and is a subsidiary of Pacific Consultants International of Japan (PCIJ).

In 1997, PCIJ decided to engage in consultancy services for water and sanitationin the Philippines and respondent was employed by PCIJ as PPI sector manager inthe Philippines. His salary was to be paid partly by PPI and PCIJ.

1998, PCIJs President, Henrichsen, transmitted a letter of employment torespondent in Canada in which respondent signed and sent a copy to theHenrichsen.

In the arbitration clause of the contract, it stated that any question arisingbetween them which can not be settled amicably, is to be settled by the Court of

Arbitration in London.

Respondent received his compensation from PPI in February to June 1998,November to December 1998, and January to August 1999.

He was also reimbursed by PPI for the expenses he incurred in connection withhis work as sector manager. He reported for work in Manila except for occasionalassignments abroad, and received instructions from Henrichsen.

On May 5, 1999, respondent received a letter from Henrichsen informinghim that his employment had been terminated effective August 4, 1999.

However, on July 24, 1999, Henrichsen, requested respondent to stay put in hisjob after August 5, 1999.

Respondent continued his work with PPI until October 1, 1999.

Respondent filed with PPI several money claims, including unpaid salary, leavepay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI

partially settled some of his claims (US$5,635.99), but refused to pay the rest.

In 2000, respondent filed a Complaint for Illegal Dismissal against petitioners PPIand Henrichsen with the Labor Arbiter.

The Labor Arbiter rendered a decision granting petitioners Motion to Dismiss.And the NLRC likewise agreed with the disquisitions of the Labor Arbiter.


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On a petition for certiorari with the CA, the CA declared that respondent was anemployee of PPI. And reversed and set aside the decision of the NLRC.

ISSUE:

WON there is an employment relationship existed between petitioners and respondentdespite that respondent is a foreign national and was hired abroad by a foreigncorporation and executed their contract abroad.

HELD: The petition is denied for lack of merit.

We agree with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent using the four-foldtest.

Jurisprudence is firmly settled that whenever the existence of anemployment relationship is in dispute, four elements constitute the reliableyardstick:

(a) the selection and engagement of the employee;(b) the payment of wages;(c) the power of dismissal; and(d) the employers power to control the employees conduct.

It is the so-called "control test" which constitutes the most importantindex of the existence of the employer-employee relationshipthat is, whether

the employer controls or has reserved the right to control the employee not only asto the result of the work to be done but also as to the means and methods bywhich the same is to be accomplished.

Stated otherwise, an employer-employee relationship exists where theperson for whom the services are performed reserves the right to control not onlythe end to be achieved but also the means to be used in reaching such end.

In the case at bar, the power to control and supervise petitioners workperformance devolved upon the respondent company.

Likewise, the power to terminate the employment relationship wasexercised by the President of the respondent company. An employer-employeerelationship may indeed exist even in the absence of a written contract, so long asthe four elements mentioned in the Mafinco case are all present.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals isAFFIRMED. This case is REMANDED to the Labor Arbiter for disposition of the case onthe merits.


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GABRIEL V. BILON 515 SCRA 29 (2007)

FACTS: Respondents Bilon, Brazil and Pagaygay filed separate complaints for illegal

dismissal, illegal deductions and separation pay against petitioner Gabriel with theNLRC. Respondents alleged that:

1. They were regular drivers of Gabriel Jeepney, driving their respective units undera boundary system of P400 per day, plying Baclaran to Divisoria via Tondo andvice-versa since December 1990, November 1984 and November 1991,respectively up to April 30, 1995, driving 5 days a week with an average dailyearnings of 400

2. That they were required/forced to pay additional P55 for the following: P20 policeprotection, P20 washing, P10 deposit, P5 garage fees

3. There is no law providing the operator to require the drivers to pay said fees

4. On April 30, 1995, petitioner told them not to drive anymore and when they wentto the garage to report for work the next day, they were not given a unit to drive5. That the boundary drivers of passenger jeepneys are considered regular

employees of the jeepneys operators. Being such, they are entitled to security oftenure. Petitioner, however, dismissed them without factual basis and withoutdue process.

Petitioner Gabriel, on the other hand, contends that:

1. He does not remember if the respondents were under his employ as jeepneysdrivers. However, he is certain that the neither the respondents nor other driverswere ever dismissed by him. As a matter of fact, some his drivers just stoppedreporting for work.

2. He made sure that none of the jeepneys would stay idle for a day so he couldcollect his earnings; hence it had been his practice to establish a pool of drivers.Had the respondents manifested their desire to drive his units, it would havebeen immaterial whether they were his former drivers or not so long as they hadthe necessary licenses and references, they would have been accommodated

3. The amounts claimed to have been deducted from the respondents earningswere preposterous. Where there were deductions made from the earnings of thedrivers, it was to pay on installment the advances made to them (e.g. to pay fortraffic violations)

4. LA held in favor of the respondents and ordered Gabriel to pay back wages andseparation pay. NLRC dismissed the case for lack of employer-employeerelationship

ISSUE; WON THERE IS A EMPLOYER-EMPLOYEE RELATIONSHIP IN THIS CASE;WON THE RESPONDENTS WERE ILLEGALLY DISMISSED


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HELD: Yes, the respondents were employees of petitioner Gabriel. It has been held inearlier cases that the relationship between jeepney owners/operators and jeepney

drivers under the boundary system is that of employer-employee and not of lessor-

lessee because in the lease of chattels the lessor loses complete control over the

chattel leased although the lessee cannot be reckless in the use thereof, otherwise he

would be responsible for the damages to the lessor. In the case of jeepney

owners/operators and jeepney drivers, the former exercises supervision and control

over the latter. The fact that the drivers do not receive fixed wages but get only that in

excess of the so-called "boundary" [that] they pay to the owner/operator is not sufficient

to withdraw the relationship between them from that of employer and employee. Thus,

private respondents were employees because they had been engaged to perform

activities which were usually necessary or desirable in the usual business or trade of the

employer.

The SC also agreed with LA that respondents were illegally dismissed by petitioner.

Respondents were not accorded due process. Moreover, petitioner failed to show that

the cause for termination falls under any of the grounds enumerated in Article 282 Labor

Code. Consequently, respondents are entitled to reinstatement without loss of seniority

rights and other privileges and to their full back wages computed from the date of

dismissal up to the time of their actual reinstatement in accordance with Article 279 of

the Labor Code.


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PHILIPPINE GLOBAL COMMUNICATIONS, INC. vs. RICARDO DE VERA

FACTSPetitioner Philippine Global Communications, Inc. is engaged in the business ofcommunication services and allied activities. Respondent Ricardo De Vera is a

physician by profession whom petitioner enlisted to attend to the medical needs of itsemployees.

On 5/15/1981 De Vera offered his services to the petitioner through a letter, heproposed his plan of works required of a practitioner in industrial medicine. The partiesagreed and executed a RETAINERSHIP CONTRACT for a period of one year subject torenewal. The retainership arrangement went on from 1981 to 1994 with changes in theretainer's fee. However, for the years 1995 and 1996, renewal of the contract was onlymade verbally.

In December 1996, through a letter Philcom informed De Vera that they decided to

discontinue the 'retainer's contract effective at the close of business hours of12/31/1996. They decided that it would be more practical to provide medical services toits employees through accredited hospitals near the company premises.

On 1/22/1997, De Vera filed a complaint for illegal dismissal, claiming that since 1981,he has been employed by Philcom as its company physician and was dismissed withoutdue process.

On 12/21/1998, Labor Arbiter Ramon Valentin C. Reyes dismissed De Vera's complaintfor lack of merit. De Vera was an independent contractor and that he was not dismissedbut rather his contract with ended when said contract was not renewed after12/31/1996.

Upon De Veras appeal to NLRC, the Labor Arbiters decision was reversed anddeclared De Vera a regular employee and accordingly directed the company to reinstatehim to his former position without loss of seniority rights and privileges and with fullbackwages from the date of his dismissal until actual reinstatement.

Philcom filed a motion for reconsideration but it was denied by the NLRC, prompting itfile a petition to CA for certiorari imputing grave abuse of discretion amounting to lack orexcess of jurisdiction on the part of the NLRC. Subsequently, CA modified NLRCsdecision. CA deleted the award of traveling allowance and ordered payment ofseparation pay to De Vera in lieu of reinstatement. The companys latest motion forreconsideration was denied. Hence, this petition.

ISSUEWON an employer-employee relationship exists between petitioner and respondent


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HELDNO. The Court held that in determining the existence of an employer-employeerelationship, has invariably adhered to the four-fold test, to wit: [1] the selection andengagement of the employee; [2] the payment of wages; [3] the power of dismissal; and[4] the power to control the employee's conduct, or the so-called 'control test',

considered to be the most important element.

Application of the four-fold test:Selection and engagement of the employee

Proposal Letter (5/15/1981) It was respondent himself who sets the parametersof what his duties would be in offering his services to petitioner.

My plan of works and targets shall cover the duties and responsibilities required of apractitioner in industrial medicine which includes the following:

1. Application of preventive medicine including periodic check-up of employees;2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily

for consultation services to employees;

3. Management and treatment of employees that may necessitate hospitalizationincluding emergency cases and accidents;4. Conduct pre-employment physical check-up of prospective employees with no

additional medical fee;5. Conduct home visits whenever necessary;6. Attend to certain medical administrative functions such as accomplishing medical

forms, evaluating conditions of employees applying for sick leave of absence andsubsequently issuing proper certification, and all matters referred which aremedical in nature.

Payment of wages and power of dismissal

Letter dated 4/211982 De Veras proposal for the extension of his two-hourservice indicated that PHILCOM did not control complainants schedule and as tohow he is to be paid for his services. This serves as proof that the complainantunderstood his relationship with PHILCOM as a retained physician and not as anemployee. If he were an employee he could not negotiate as to his hours of work.

Term of the Contract The contract (9/6/1982) signed by De Vera clearly statesthat is it a retainership contract. The retainer fee and duration of the contract forone year are clearly indicated in paragraph 5 of said Retainership Contract. Thecomplainant cannot claim that he was unaware of the term, as he signed andaccepted its renewal every year until 1994 without any objections. As a Doctor ofMedicine, a literate and educated person, the complainant cannot claim that he

does not know what contract he signed and that it was renewed on a year to yearbasis.

Tax and SSS Contribution The labor arbiter noted that from the time he startedto work for Philcom, he never was included in its payroll; was never deducted anycontribution for remittance to the SSS; and was in fact subjected by Philcom to the10% withholding tax for his professional fee, matters which are simply inconsistentwith an employer-employee relationship.


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Power to terminate The power to terminate the parties' relationship wasmutually vested on both. Either may terminate the arrangement at will, with orwithout cause.

Control Test

Remarkably absent from the parties' arrangement is the element of control,whereby the employer has reserved the right to control the employee not only as tothe result of the work done but also as to the means and methods by which thesame is to be accomplished.

Petitioner had no control over the means and methods by which respondent wentabout performing his work at the company premises.

De Vera could even embark in the private practice of his profession, not tomention the fact that respondent's work hours and the additional compensationwere negotiated upon by the parties.

The parties themselves practically agreed on every terms and conditions ofrespondent's engagement, which thereby negates the element of control in theirrelationship. For sure, respondent has never cited even a single instance whenpetitioner interfered with his work.

DISPOSITION: Petition is GRANTED and CAs is REVERSED and SET ASIDE. LaborArbiters decision is REINSTATED.


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Lopez vs Metropolitan Waterworks and Sewerage Systems 462 SCRA 425

FACTS: By virtue of an Agreement, petitioners were engaged by the MWSS as collectors-

contractors, wherein the former agreed to collect from the concessionaires of

MWSS, charges, fees, assessments of rents for water, sewer and/or plumbingservices which the MWSS bills from time to time.

In 1997, MWSS entered into a Concession Agreement with Manila Water Service,Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred to saidprivate concessionaires, effectively terminating the contracts of service betweenpetitioners and MWSS.

Regular employees of the MWSS were paid their retirement benefits, but notpetitioners. Instead, they were refused said benefits, MWSS relying on a resolutionof the CSC that contract collectors of the MWSS are not its employees andtherefore not entitled to the benefits due regular government employees.

Petitioners filed a complaint with the CSC which denied their claims, stating that

petitioners were engaged by MWSS through a contract of service, which explicitlyprovides that a bill collector-contractor is not an MWSS employee. Relying on PartV of CSC Memorandum Circular No. 38, Series of 1993, the CSC stated thatcontract services/job orders are not considered government services, which do nothave to be submitted to the CSC for approval, unlike contractual and plantillaappointments. Moreover, it found that petitioners were unable to show that theyhave contractual appointments duly attested by the CSC. In addition, the CSCstated that petitioners, not being permanent employees of MWSS and not includedin the list submitted to the concessionaire, are not entitled to severance pay.Petitioners claims for retirement benefits and terminal leave pay were likewisedenied.

Petitioners sought reconsideration of the CSC Resolution, which was howeverdenied.

Petitioners filed a petition for review with the Court of Appeals which affirmed theruling of the CSC.

ISSUE: Whether or not petitioners were employees of the MWSS and, consequently,entitled to the benefits they claim.

HELD: Yes. The Court ruled that the bill collectors were regular employees of ManilaWater.

For purposes of determining the existence of employer-employee relationship, the Courthas consistently adhered to the four-fold test, namely: (1) whether the alleged employerhas the power of selection and engagement of an employee; (2) whether he has controlof the employee with respect to the means and methods by which work is to beaccomplished; (3) whether he has the power to dismiss; and (4) whether the employeewas paid wages. Of the four, the control test is the most important element.


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A review of the circumstances surrounding the case reveals that petitioners areemployees of MWSS. Despite the obvious attempt of MWSS to categorize petitionersas mere service providers, not employees, by entering into contracts for services, itsactuations show that they are its employees, pure and simple. MWSS wielded its powerof selection when it contracted with the individual petitioners, undertaking separate

contracts or agreements. The same goes true for the power to dismiss. Although termedas causes for termination of the Agreement, a review of the same shows that thegrounds indicated therein can similarly be grounds for termination of employment.

On the issue of remuneration, MWSS claims that the compensation received bypetitioners does not fall under the definition of wages as provided in Section 2(i) of P.D.1146, which is the basic pay or salary received by an employee, pursuant to hisemployment appointments, excluding per diems, bonuses, overtime pay andallowances; thus petitioners are not its employees. Petitioners rendered services toMWSS for which they were paid and given similar benefits due the other employees ofMWSS. Significantly, MWSS granted petitioners benefits usually given to employees, to

wit: COLA, meal, emergency, and traveling allowances, hazard pay, cash gift, andother bonuses. In an unabashed bid to claim credit for itself, MWSS professes thatthese additional benefits were its acts of benevolence and generosity. We are notimpressed.

The control test merely calls for the existence of the right to control, and not theexercise thereof. It is not essential for the employer to actually supervise theperformance of duties of the employee, it is enough that the former has a right to wieldthe power. While petitioners were contract-collectors of MWSS, they were under thelatters direction as to where and how to perform their collection and were even subjectto disciplinary measures. Trainings were in fact conducted to ensure that petitioners are

conversant of the procedures of the MWSS

Other manifestations of control are evident from the records. The power to transfer orreassign employees is a management prerogative exclusively enjoyed by employers. Inthis case, MWSS had free reign over the transfer of bill collectors from one branch toanother. MWSS also monitored the performance of the petitioners and determined theirefficiency ratings.

The Court has invariably affirmed that it will not hesitate to tilt the scales of justice to thelabor class for no less than the Constitution dictates that the State . . . shall protect therights of workers and promote their welfare. It is committed to this policy and hasalways been quick to rise to defense in the rights of labor, as in this case.


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FELIX V BUENASEDA

FACTS: Petitioner Dr. Felix joined the National Center for Mental Health (NCMH) as aresident physician and after 3 years, he was promoted to Senior Resident

Physician.The Ministry of Health reorganized the NCMH pursuant to E.O. 119.

Under the said reorganization, Felix was appointed to the position of Sr. ResidentPhysician in a temporary capacity.

Felix was later promoted to the position of Medical Specialist 1 (TemporaryStatus) which was renewed the following year.

In 1988, the DOH issued Dept. Order 347, which required board certification as aprerequisite for renewal of specialist positions in various med. centers, hospitals andagencies.

Then Sec. of Health issued D.O. 478 (amending Sec.4 of D.O. 347) whichprovided for an extension of appointments of Medical Specialists in cases wheretermination of those who failed to meet the requirement for board certification mightresult in disruption of hospital services.

In 1991, after reviewing petitioners service record and performance, the MedicalCredentials Committee of the NCMH recommended non-renewal of his appointment asMedical Specialist 1.

He was, however, allowed to continue in the service, and receive his salary even

after being informed of the termination of his appointment.

The Chiefs of Service held an emergency meeting to discuss the petitionerscase. In the meeting, the overall consensus among the dept. heads was for petitionersnon-renewal where his poor performance, frequent tardiness and inflexibility werepointed as among the factors responsible for the recommendation not to renew hisappointment.

The matter was referred to the CSC, which ruled that the temporary appointmentcan be terminated any time and that any renewal of such appointment is within thediscretion of the appointing authority.

Consequently, petitioner was advised by hospital authorities to vacate hiscottage. Refusing to comply, petitioner filed a petition with the Merit System ProtectionBoard (MSPB) complaining about the alleged non-renewal of his appointment, theMSPB, however, dismissed his complaint for lack of merit.

This decision was appealed to the Civil Service Commission (CSC) whichdismissed the same.


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ISSUEWON petitioners removal from a permanent position was void for being violativeof the constitutional provision on security of tenure.

HELD:NOA residency or resident physician position in a medical specialty is never a permanentone.

Residency connotes training and temporary status.

Promotion to the next postgraduate year is based on merit and performancedetermined by periodic evaluations and examinations of knowledge, skills and bedsidemanner.

Under this system, residents, especially those in university teaching hospitals enjoy

their right to security of tenure only to the extent that they periodically make the grade.

While physicians (or consultants) of specialist rank are not subject to the same stringentevaluation procedures, specialty societies require continuing education as arequirement for accreditation in good standing, in addition to peer review processesbased on performance, mortality and morbidity audits, feedback from residents, internsand medical students and research output.

The nature of the contracts of resident physicians meets traditional tests fordetermining employer employee relationships, but because the focus ofresidency is training, they are neither here nor there. Moreover, stringentstandards and requirements for renewal of specialist rank positions or ofpromotion to the next postgraduate residency year are necessary because livesare ultimately at stake.

From the position of senior resident physician, the next logical step was his promotion tothe rank of Medical Specialist 1, a position which he apparently accepted. Such status,however, clearly carried with it certain professional responsibilities including theresponsibility of keeping up with the minimum requirements of specialty rank, theresponsibility of keeping abreast with current knowledge in his specialty and in Medicinein general, and the responsibility of completing board certification requirements within areasonable period of time.

The evaluation made by petitioner's peers and superiors clearly showed that he wasdeficient in a lot of areas, in addition he was not even board-certified.

As respondent CSC has correctly pointed out, the appointment was for a definite andrenewable period which, when it was not renewed, did not involve a dismissal but anexpiration of the petitioners term.


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TRANSPORT CORP V. EJANDRA 428 SCRA 725 (2004)

FACTS: Rogelio Ejandra worked for petitioner bus company as a driver. On Jan 311996, he was apprehended for obstruction of traffic. His license was confiscated. He

reported this to his manager, Oscar Pasquin, who gave him P500 to redeem thelicense. He was able to retrieve the license after a week since the apprehending officerturned it in only then.

1. On Feb 8, 1996, he reported for work. The company said they were reviewing ifthey were going to allow him drive again. Also, he was being blamed for damageto the bus. Ejandra said the bus was damaged during the week he wasnt able todrive.

2. Petitioner, on the other hand, claims that Ejandra is a habitual absentee and hasabandoned his job.

3. To belie private respondents allegation that his license had been confiscated,

petitioner asserted that, had it been true, he should have presented anapprehension report and informed petitioner of his problems with the LTO. But hedid not.

4. Petitioner further argued that private respondent was not an employee becausetheirs was a contract of lease and not of employment, with petitioner being paidon commission basis.

5. The labor arbiter ruled in favor of Ejandra. It was held that he didnt abandon hiswork, since there was valid reason for his 1week absence. He also was notafforded due process. NLRC and CA affirmed the same.

ISSUE: WON THERE WAS AN EMPLOYER-EMPLOYEE RELATIONSHIP; WONEJANDRA WAS DISMISSED FOR JUST CAUSE

HELD: Yes. Petitioner is barred to negate the existence of an employer-employeerelationship. He has invoked rulings on the right of an employer to dismiss an employeefor just cause. The power to dismiss an employee is one of the indications that therewas such relationship. Also, A97 Labor Code states that employees can be paid in formof commissions. By adopting said rulings, petitioner impliedly admitted that it was infact the employer of private respondent.

According to the control test, the power to dismiss an employee is one of the indicationsof an employer-employee relationship. Petitioners claim that private respondent was

legally dismissed for abandonment was in fact a negative pregnant: anacknowledgement that there was no mutual termination of the alleged contract of leaseand that private respondent was its employee. The fact that petitioner paid privaterespondent on commission basis did not rule out the presence of an employee-employer relationship. Article 97(f) of the Labor Code clearly provides that anemployees wages can be in the form of commissions.


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To constitute abandonment, two elements must concur: (1) the failure to report for workor absence without valid or justifiable reason and (2) a clear intention to sever theemployer-employee relationship. Petitioner did not fulfill the requisites. First, Ejandrasabsence was justified since his license wasnt release until after a week. Second,Ejandra did not want to sever their relationship when he got his license back. Third,

labor arbiter Yulo correctly observed that, if private respondent really abandoned hiswork, petitioner should have reported such fact to the nearest Regional Office of theDepartment of Labor and Employment in accordance with Section 7, Rule XXIII, Book Vof Department Order No. 9, series of 1997 (Rules Implementing Book V of the LaborCode). Petitioner made no such report. In addition, he wasnt also given due process bynot giving him notice and hearing.


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INSULAR LIFE ASSURANCE CO., LTD. vs. NLRC and MELECIO BASIAO

FACTSOn 7/2/1968, Insular Life Assurance Co., Ltd. and Melecio T. Basiao entered into acontract, stipulating that Basiao (1) would be an authorized agent of the Company; (2)to receive compensation in the form of commissions; and (3) the Company's Rate Bookand its Agent's Manual, as well as all its circulars will be deemed part of the contract.Other provisions include matters governing the relations of the parties, the duties of the

Agent, the acts prohibited to him, and the modes of termination of the agreement, viz:

RELATION WITH THE COMPANY. The Agent shall be free to exercise his ownjudgment as to time, place and means of soliciting insurance. Nothing hereincontained shall therefore be construed to create the relationship of employee and

employer between the Agent and the Company. However, the Agent shall observeand conform to all rules and regulations which the Company may from time to timeprescribe.

4 years later, the parties entered into another contract (April 1972Agency Manager'sContract) and to implement his end, Basiao organized an agency which he named M.Basiao and Associates, while concurrently fulfilling his commitments under the firstcontract with the Company. However, it was terminated in May 1979. Basiao sought fora reconsideration and later sued the Company in a civil action. He claimed that thisprompted the Company to terminate his engagement under the first contract and to stoppayment of his commissions starting 4/1/1980.

Thereafter, Basiao filed a complaint against the Company and its president. Withoutcontesting the termination of the first contract, the complaint sought to recovercommissions allegedly unpaid, plus attorney's fees. The Company disputed theMinistry's jurisdiction over Basiao's claim and asserted that he was not a Company'semployee, but an independent contractor. The Company had no obligation to him forunpaid commissions under the terms and conditions of his contract.

The labor arbiters decision had established an employer-employee relationshipbetween him and the Company, and this conferred jurisdiction on the Ministry of Laborto adjudicate his claim. On appeal, the decision was affirmed by NLRC. Hence, the

present petition forcertiorariand prohibition.

Petitioners DefenseThe terms of the contract the Company and Basiao entered into expressly conferred toBasiao an independent contractor status. The Company did not have a hand indetermining the time, place and means of soliciting insurance and have set noaccomplishment quotas. The Company only compensated him on the basis of resultsobtained. Further, it contends that they do not constitute the decisive determinant of the


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nature of his engagement, invoking precedents to the effect that the critical featuredistinguishing the status of an employee from that of an independent contractoris control, that is, whether or not the party who engages the services of another hasthe power to control the latter's conduct in rendering such services.

ISSUESWON Basiao had become the Company's employee by virtue of the contract invoked byhim, placing his claim within the original and exclusive jurisdiction of the labor arbiterunder the Labor Code

HELDNO. The Court notes that the provisions of the contract which obliged Basiao to"observe and conform to all rules and regulations which the Company may from time totime prescribe," as well as to the fact that the Company prescribed the qualifications ofapplicants for insurance, processed their applications and determined the amounts ofinsurance cover to be issued as indicative of the control, which made Basiao, in legal

contemplation, an employee of the Company.

However, in Viana vs. Alejo Al-Lagadan, it was held that that not every form of controlthat the hiring party reserves to himself over the conduct of the party hired inrelation to the services rendered may be accorded the effect of establishing anemployer-employee relationship between them in the legal or technical sense of theterm. Realistically, it would be a rare contract of service that gives untrammelledfreedom to the party hired and eschews any intervention whatsoever in his performanceof the engagement.

Logically, the line should be drawn between rules that merely serve as guidelines

towards the achievement of the mutually desired result without dictating the means ormethods to be employed in attaining it, and those that control or fix the methodologyand bind or restrict the party hired to the use of such means. The first, which aim onlyto promote the result, create no employer-employee relationship unlike thesecond, which address both the result and the means used to achieve it. Thedistinction acquires particular relevance in the case of an enterprise affected with publicinterest, as is the business of insurance, and is on that account subject to regulation bythe State with respect, not only to the relations between insurer and insured but also tothe internal affairs of the insurance company.

The Insurance Code provides the rules and regulations governing the conduct of thebusiness and these are enforced by the Insurance Commissioner. It is expected for aninsurance company to promulgate a set of rules to guide its commission agents inselling its policies that are in line with the law. The character of such rules (e.g. whichprescribe the qualifications of persons who may be insured, determination of thepremiums to be paid and the schedules of payment) does not invade the agent'scontractual prerogative to adopt his own selling methods or to sell insurance athis own time and convenience, hence cannot justifiably be said to establish anemployer-employee relationship between him and the company.


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The Company has limited themselves to pointing out that Basiao's contract with theCompany bound him to observe and conform to such rules and regulations as the lattermight from time to time prescribe. There has been no showing that any such rules orregulations were in fact promulgated, much less that any rules existed or wereissued which effectively controlled or restricted his choice of methods or the

methods themselves of selling insurance. Absent such showing, the Court will notspeculate that any exceptions or qualifications were imposed on the express provisionof the contract leaving Basiao "... free to exercise his own judgment as to the time, placeand means of soliciting insurance."

The Court rules that under the contract invoked by him, Basiao was not an employee ofthe petitioner, but a commission agent, an independent contractor whose claim forunpaid commissions should have been litigated in an ordinary civil action.

DISPOSITION: NLRCs decision is set aside and complaint by respondent isDISMISSED.


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Sevilla vs CA 160 SCRA 171

FACTS: On the strength of a contract, Tourist World Service Inc. (TWS) leased the

premises belonging to Mrs. Segundina Noguera for the formers use as a branch

office. Lina Sevilla bound herself solidarily liable with TWS for the promptpayment of the monthly rentals thereon.

When the branch office was opened, it was run by appellant Sevilla payable toTWS by any airline for any fare brought in on the efforts of Sevilla, 4% was to goto Sevilla and 3% was to be withheld by TWS.

TWS appears to have been informed that Sevilla was connected with a rival firm,the Philippine Travel Bureau, and since the branch office was anyhow losing, theTWS considered closing down its office.

This was firmed up by two resolutions of the TWS board of directors to abolishthe office of the manager and VP of the branch office and authorizing thecorporate secretary to receive the properties in the said branch office.

The corporate secretary went to the branch office, and finding the premiseslocked and being unable to contact Sevilla, padlocked the premises to protect theinterests of TWS.

When neither Sevilla nor her employees could enter the locked premises, shefiled a complaint against TWS with a prayer for the issuance of a mandatorypreliminary injunction.

The trial court dismissed the case holding that TWS, being the true lessee, waswithin its prerogative to terminate the lease and padlock the premises. It likewisefound that Sevilla was a mere employee of TWS and as such, was bound by theacts of her employer.

The CA affirmed. Hence this petition.

ISSUE: Whether or not that the relation between the parties was in the character ofemployer-employee relationship.

HELD:No. We are convinced, considering the circumstances and from the respondent Court'srecital of facts, that the ties had contemplated a principal agent relationship, rather thana joint managament or a partnership.

When the petitioner, Lina Sevilla, agreed to (wo)man the private respondent, TouristWorld Service, Inc.'s Ermita office, she must have done so pursuant to a contract of

agency. It is the essence of this contract that the agent renders services "inrepresentation or on behalf of another. 18 In the case at bar, Sevilla solicited airline fares,but she did so for and on behalf of her principal, Tourist World Service, Inc. Ascompensation, she received 4% of the proceeds in the concept of commissions. And aswe said, Sevilla herself based on her letter of November 28, 1961, pre-assumed herprincipal's authority as owner of the business undertaking.


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But unlike simple grants of a power of attorney, the agency that we hereby declare to becompatible with the intent of the parties, cannot be revoked at will. The reason is that itis one coupled with an interest, the agency having been created for mutual interest, ofthe agent and the principal. 19 It appears that Lina Sevilla is a bona fide travel agentherself, and as such, she had acquired an interest in the business entrusted to her.

Moreover, she had assumed a personal obligation for the operation thereof, holdingherself solidarily liable for the payment of rentals. She continued the business, using herown name, after Tourist World had stopped further operations. Her interest, obviously,is not to the commissions she earned as a result of her business transactions, but onethat extends to the very subject matter of the power of management delegated to her. Itis an agency that, as we said, cannot be revoked at the pleasure of the principal.

Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, todamages.

In this jurisdiction, there has been no uniform test to determine the evidence of anemployer-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 controlnot only the endto 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-ofcontrol, the existing economic conditions prevailing between the parties, like theinclusion of the employee in the payrolls, in determining the existence of an employer-employee relationship.

Lina Sevilla, was not subject to control by the private respondent Tourist World Service,Inc., either as to the result of the enterprise or as to the means used in connectiontherewith.

Under the contract of lease covering the Tourist Worlds Ermita office, she had boundherself in solidum as and for rental payments, an arrangement that would be like claimsof a master-servant relationship. True the respondent Court would later minimize herparticipation in the lease as one of mere guaranty, that does not make her an employeeof Tourist World, since in any case, a true employee cannot be made to part with hisown money in pursuance of his employer's business, or otherwise, assume any liabilitythereof. When the branch office was opened, the same was run by the herein appellantLina O. Sevilla payable to Tourist World Service, Inc. by any airline for any fare broughtin on the effort of Mrs. Lina Sevilla. 13Under these circumstances, it cannot be said thatSevilla was under the control of Tourist World Service, Inc. "as to the means used."Sevilla in pursuing the business, obviously relied on her own gifts and capabilities

It is further admitted that Sevilla was not in the company's payroll. For her efforts, sheretained 4% in commissions from airline bookings, the remaining 3% going to TouristWorld. Unlike an employee then, who earns a fixed salary usually, she earnedcompensation in fluctuating amounts depending on her booking successes.


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The fact that Sevilla had been designated 'branch manager" does not make her, ergo,Tourist World's employee. As we said, employment is determined by the right-of-controltest and certain economic parameters. But titles are weak indicators.

FRANCISCOvs. NLRC

FACTS: In 1995, petitioner was hired by Kasei Corporation.

She was designated as Accountant and Corporate. She was also designated tosecure business permits, construction permits and other licenses for the initialoperation of the company.

In 1996, petitioner was designated Acting Manager. Petitioner was assigned tohandle recruitment of all employees and perform management administrationfunctions; represent the company in BIR, SSS.

In January 2001, petitioner was replaced by Fuentes as Manager.

On October 15, 2001, petitioner asked for her salary but she was informed thatshe is no longer connected with the company.

Petitioner filed an action for constructive dismissal before the labor arbiter.

The LA found that petitioner was illegally dismissed. The NLRC affirmed theDecision of the LA. The CA reversed the NLRCs decision.

ISSUE: WON there was an employer-employee relationship?

HELD:There are instances when, aside from the employers power to control the employeewith respect to the means and methods by which the work is to be accomplished,economic realities of the employment relations help provide a comprehensive analysisof the true classification of the individual, whether as employee, independent contractor,corporate officer or some other capacity.

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 meansand methods by which the work is to be accomplished; and(2) the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would takeinto consideration the totality of circumstances surrounding the true nature of therelationship between the parties. This is especially appropriate in this case where thereis no written agreement or terms of reference to base the relationship on; and due to the


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complexity of the relationship based on the various positions and responsibilities givento the worker over the period of the latters employment.

Thus, the determination of the relationship between employer and employeedepends upon the circumstances of the whole economic activity, such as:

(1) the extent to which the services performed are an integral part of the employersbusiness;(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 theclaimed independent enterprise;(6) the permanency and duration of the relationship between the worker and theemployer; 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 onthe 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 ofKasei Corporation because she was under the direct control and supervision ofSeiji Kamura, the corporations Technical Consultant. She reported for workregularly and served in various capacities as Accountant, Liaison Officer, TechnicalConsultant, Acting Manager and Corporate Secretary, with substantially the same jobfunctions, that is, rendering accounting and tax services to the company and performingfunctions necessary and desirable for the proper operation of the corporation such assecuring business permits and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to bean employee of respondent corporation because she had served the company forsix years before her dismissal, receiving check vouchers indicating hersalaries/wages, benefits, 13th month pay, bonuses and allowances, as well asdeductions and Social Security contributions from.

It is therefore apparent that petitioner is economically dependent on respondentcorporation for her continued employment in the latters line of business.


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CHAVEZ V. NLRC (SUPREME PACKAGING INC) 448 SCRA 478 (2005)

FACTS: The respondent company, Supreme Packaging, Inc. engaged the services ofthe petitioner, Pedro Chavez, as truck driver on October 25, 1984. The respondentcompany furnished the petitioner with a truck.

1. Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondentcompanys plant manager, his (the petitioners) desire to avail himself of thebenefits that the regular employees were receiving such as overtime pay,nightshift differential pay, and 13th month pay, among others. Although hepromised to extend these benefits to the petitioner, respondent Lee failed toactually do so.

2. On February 20, 1995, the petitioner filed a complaint for regularization with theRegional Arbitration Branch No. III of the NLRC in San Fernando, Pampanga.Before the case could be heard, respondent company terminated the services ofthe petitioner.

3. Consequently, on May 25, 1995, the petitioner filed an amended complaintagainst the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, and 13th month pay, amongothers.

4. The respondents, for their part, denied the existence of an employer-employeerelationship between the respondent company and the petitioner. They averredthat the petitioner was an independent contractor as evidenced by the contract ofservice which he and the respondent company entered into. The relationship ofthe respondent company and the petitioner was allegedly governed by thiscontract of service.

5. The respondents insisted that the petitioner had the sole control over the meansand methods by which his work was accomplished. He paid the wages of hishelpers and exercised control over them. As such, the petitioner was not entitledto regularization because he was not an employee of the respondent company.

6. The respondents, likewise, maintained that they did not dismiss the petitioner.Rather, the severance of his contractual relation with the respondent companywas due to his violation of the terms and conditions of their contract.

ISSUE: WON THERE WAS AN EMPLOYER-EMPLOYEE RELATIONSHIP THAT

EXISTED BETWEEN THE RESPODENT COMPANY AND THE PETITIONER

HELD: The elements to determine the existence of an employment relationship are: (1)the selection and engagement of the employee; (2) the payment of wages; (3) thepower of dismissal; and (4) the employers power to control the employees conduct.The most important element is the employers control of the employees conduct, notonly as to the result of the work to be done, but also as to the means and methods toaccomplish it. All the four elements are present in this case.


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Of the four elements of the employer-employee relationship, the control test is themost important. Although the respondents denied that they exercised control over the

manner and methods by which the petitioner accomplished his work, a careful review ofthe records shows that the latter performed his work as truck driver under therespondents supervision and control. Their right of control was manifested by thefollowing attendant circumstances:

1. The truck driven by the petitioner belonged to respondent company;2. There was an express instruction from the respondents that the truck shall be

used exclusively to deliver respondent companys goods;3. Respondents directed the petitioner, after completion of each delivery, to park

the truck in either of two specific places only, to wit: at its office in Metro Manila at2320 Osmea Street, Makati City or at BEPZ, Mariveles, Bataan and;

4. Respondents determined how, where and when the petitioner would perform histask by issuing to him gate passes and routing slips.

These circumstances, to the Courts mind, prove that the respondents exercised controlover the means and methods by which the petitioner accomplished his work as truckdriver of the respondent company.

The contract of service indubitably established the existence of an employer-employeerelationship between the respondent company and the petitioner. It bears stressingthat the existence of an employer-employee relationship cannot be negated byexpressly repudiating it in a contract and providing therein that the employee isan independent contractor when, as in this case, the facts clearly showotherwise. Indeed, the employment status of a person is defined and prescribedby law and not by what the parties say it should be.

The employer-employee relationship being established, the Court ruled that privaterespondent is guilty of illegal dismissal.


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SAN MIGUEL CORPORATION vs. ABELLA, et al.

FACTSPetitioner San Miguel Corporation and Sunflower Multi-Purpose Cooperative enteredinto a one-year Contract of Services commencing on 1/1/1993, to be renewed on amonth to month basis until terminated by either party. The provisions of the contractprovide that:

(1) The cooperative shall perform and/or provide for the company, on a non-exclusive basis for a period of one year the following services for the BacolodShrimp Processing Plant: (a) Messengerial/Janitorial; (b) ShrimpHarvesting/Receiving; & (c) Sanitation/Washing/Cold Storage

(2) Further, as per Section 4 of the Contract, there is no employer-employee

relationship between the company and the cooperative, or the cooperative andany of its members, or the company and any members of the cooperative. Thecooperative is an association of self-employed members, an independentcontractor, and an entrepreneur. It is subject to the control and direction ofthe company only as to the result to be accomplished by the work orservices herein specified, and not as to the work herein contracted. Thecooperative and its members recognize that it is taking a business risk inaccepting a fixed service fee to provide the services contracted for and itsrealization of profit or loss from its undertaking, in relation to all its otherundertakings, will depend on how efficiently it deploys and fields its members andhow they perform the work and manage its operations.

Pursuant to the contract, Sunflower engaged private respondents to SMCsBacolod Shrimp Processing Plant. The contract was deemed renewed by the partiesevery month after its expiration on 1/1/1994 and private respondents continued toperform their tasks until 9/11/1995.

In July 1995, private respondents filed a complaint before the NLRC, praying to bedeclared as regular employees of SMC. Subsequently, they filed an AmendedComplaint which includes illegal dismissal as additional cause of action following SMCsclosure of its Bacolod Shrimp Processing Plant on 9/15/1995.

SMC filed a Motion for Leave to File Attached Third Party Complaint to impleadSunflower as Third Party Defendant which was granted by Labor Arbiter Ray Alan T.Drilon. On

labor standards case digest compiled 6 0-6-02 work relationship 1

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