 Jurisprudence is frmly settled that the existence of an employment relationship is
founded on four elements constituting as the reliable yardstick: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employer's power to control the employee's conduct. t is the so!called
"control test#" and that is# whether the employer controls or has reser$ed the right to
control the employee not only as to the result of the work to be done but also as to
the means and methods by which the same is to be accomplished# which constitute
the most important index of the existence of the employer!employee relationship.
%tated otherwise# an employer!employee relationship exists where the person for
whom the ser$ices are performed reser$es the right to control not only the end to be
achie$ed but also the means to be used in reaching such end.
G.R. No. L-29590 September 30 !9"2
*espondent +arcia started working for the company in ,-.. as a copra carrier. n ,-/,# he
was promoted to foreman with ., or .. men working under him. 0y ,-12# these men were
employed under pakiao arrangements but the company paid the workers directly and the
function of their foreman insofar as wages were concerned was to distribute the money. )he
pakiao workers unloaded copra from trucks or carriers# stored it in the company warehouses
and deli$ered copra from the warehouses to the company's 3ill 4ay 0in. n ,-55# the pakiao
arrangement were formali6ed in writing through a series of written agreement and +arcia#
the former copra carrier and foremen# was gi$en the authority to choose and hire the men to
do the work assigned to him. nstead of the company paying the workers directly with +arcia
merely distributing their wages# the work was compensated on a $olume basis at so many
centa$os per metric ton handled by all of them in the $arious phases of the 7ob ! receipt#
storage# and distribution of copra ! with the money being gi$en to +arcia. )he work of the ..
laborers is an essential# permanent# and indispensable process it the business of the
petitioner company. 8hen the %ocial %ecurity 'ct was implemented#the petitioner company
took no steps to report the .. workers to the %ocial %ecurity %ystem for co$erage in the
belief that 9icente +arcia was an independent contractor and the workers he employed
pursuant to the pakiao arrangement were his own employees for whom the company was
not accountable in any manner. )hus# in 'pril ,-:,# respondent labor union fled a petition
for compulsory co$erage of the .. workers with the %ocial %ecurity (ommission. )he
respondent (ommission declared that +arcia and the .. workers were employees of the
petitioner company. )he (ourt of 'ppeals a;rmed the (ommission<s resolution. =ence# this
%%>?: 8hether the public respondents are employees of the petitioner!appellant.
(opra is the basic raw material of the petitioner!appellant's business. )he company must
ha$e# and the facts show that it has# positi$e and direct control o$er the handling of copra
immediately prior to its being fed into the manufacturing process. )he con$eyor is owned by
the company. )he load it may carry and the time and manner of its operation are controlled
by the appellant. ' company employee ordered the supposed independent contractor where
to store copra# when to bring out copra# how much to load and where# and what class of
copra to handle. )he appellant limited the number of workers which 3r. +arcia could hire to
assure that statutory minimum wages were paid from the lump sum payments# gi$en for the
"pakiao " work. 3r. +arcia had no o;ce of his own. =e had no independent funds to pay the
men working under him. =e could not work for any other company but was completely
dependent on the appellant. 3r. 9icente +arcia denies that he is an independent contractor.
)he control test is more than satisfactorily met.
Ari$ate respondent @uis %. %alas was appointed "notarial and legal counsel" for petitioner 'ir
3aterial 8ings %a$ings and @oan 'ssociation ('38%@') in ,-2B. )he appointment was
renewed for three years in an implementing order that he is reappointed as Cotarial and
@egal (ounsel by the association for another term of / years. )he petitioner issued another
order reminding %alas of the approaching termination of his legal ser$ices under their
contract. )his prompted %alas to lodge a complaint against '38%@' for separation pay#
$acation and sick lea$e benefts# cost of li$ing allowances# refund of %%% premiums# moral
and exemplary damages# payment of notarial ser$ices rendered from &ebruary ,# ,-2B to
3arch .# ,--B# and attorney's fees.
8hether or not %alas can be considered an employee of the petitioner company.
)he terms and conditions set out in the letter!contract entered into by the parties on January
./# ,-2D# clearly show that %alas was an employee of the petitioner. =is selection as the
company counsel was done by the board of directors in one of its regular meetings. )he
petitioner paid him a monthly compensationEretainer's fee for his ser$ices. )hough his
appointment was for a fxed term of three years# the petitioner reser$ed its power of
dismissal for cause or as it might deem necessary for its interest and protection. Co less
importantly# '38%@' also exercised its power of control o$er %alas by defning his duties
and functions as its legal counsel# to wit:)o act on all legal matters pertinent to his F;ce; )o
seek remedies to eGect collection of o$erdue accounts of members without pre7udice to
initiating court action to protect the interest of the association; )o defend by all means all
suit against the interest of the 'ssociation.
)he claims for the notarial fee should be dismissed because it arose out of %alas'
employment contract with the petitioner which assigned him the duty to notari6e loan
agreements and other legal documents.
&(r(/01)ot 2r. ,-. NLRC
Aetitioners were employed by pri$ate respondents (9i$a). 3araguinot# Jr. as electrician and
?nero as shooting member# petitioners< tasks consisted of loading# unloading and arranging
mo$ie eHuipment in the shooting area as instructed by the cameraman# returning the
eHuipment to 9i$a &ilms< warehouse# assisting in the IfxingJ of the lighting system# and
performing other tasks that the cameraman andEor director may assign. Aetitioners sought
the assistance of their super$isor# 3rs. 'le7andria(esario# to facilitate their reHuest that
pri$ate respondents ad7ust their salary in accordance with the minimum wage law. n June
,--.# 3rs. (esario informed petitioners that 3r. 9ic del *osario would agree to increase their
salary only if they signed a blank employment contract. *efusing to sign# pri$ate respondent
terminated their ser$ice.
Aetitioners thus sued for illegal dismissal before the @abor 'rbiter and thus# it declared the
complainants were illegally dismissed. )he C@*(# in re$ersing the @abor 'rbiter# then
concluded that herein petitioners were pro7ect employees.
8hether the petitioners were pro7ect employees.
' pro4e5t emp.o6ee or ( member o7 ( 8or9 poo. m(6 (5:01re t;e -t(t0- o7 (
re/0.(r emp.o6ee when:
a. there is a continuous rehiring of pro7ect employees e$en after a cessation of pro7ect ;
b. the tasks performed by the alleged pro7ect employee are $ital and necessary to the
business of
n the instant case# the e$idence on record shows that petitioner ?nero was employed for a
total of two (.) years and engaged in at least eighteen (,2) pro7ects# while petitioner
3araguinot was employed for some three (/) years and worked on at least twenty!three (./)
pro7ects. 3oreo$er# as petitioners< tasks in$ol$ed# among other chores# the loading#
unloading and arranging of mo$ie eHuipment in the shooting area as instructed by the
cameramen# returning the eHuipment to the 9i$a &ilms< warehouse# and assisting in the
IfxingJ of the lighting system# it may not be gainsaid that these tasks were $ital# necessary
and indispensable to the usual business or trade of the employer.
)he cessation of construction acti$ities at the end of e$ery pro7ect is a foreseeable
suspension of work. Co compensation can be demanded from the employer because the
stoppage of operations at the end of the pro7ect and before the start of a new one is regular
and expected by both parties to the labor relations. %imilar to the case of regular employees#
the employment is not se$ered but merely being suspended. )he employees are# strictly
speaking# not separated from ser$ice but merely on lea$e of absence without pay until they
are re!employed.
NELL% ACTA &ARTINE< petitioner#
)he pri$ate respondents alleged that they ha$e been regular dri$ers of *aul 3artine6 since
.B Fctober ,-2- earning no less than A1BB.BB per day dri$ing twenty!four (.1) hours e$ery
other day. &or the duration of employment# not once did they recei$e a ,/th month pay.
'fter the death of *aul 3artine6# petitioner took o$er the management and operation of the
business. Fn or about .. June ,--. she informed them that because of di;culty in
maintaining the business# she was selling the units together with the corresponding
franchises. =owe$er# petitioner did not proceed with her plan; instead# she assigned the
units to other dri$ers.
8hether there is employer!employee relationship in Iboundary systemJ
)he (ourt ruled that the relationship between 7eepney ownersEoperators on one hand and
7eepney dri$ers on the other under the boundary system is that of employer!employee and
not of lessor!lessee. )herein we explained that in the lease of chattels the lessor loses
complete control o$er the chattel leased although the lessee cannot be reckless in the use
thereof# otherwise he would be responsible for the damages to the lessor. n the case of
7eepney ownersEoperators and 7eepney dri$ers# the former exercise super$ision and control
o$er the latter. )he fact that the dri$ers do not recei$e fxed wages but get only that in
excess of the so!called "boundary" they pay to the ownerEoperator is not su;cient to
withdraw the relationship between them from that of employer and employee. )he doctrine
is applicable by analogy to the present case. )hus# pri$ate respondents were employees of
*aul 3artine6 because they had been engaged to perform acti$ities which were usually
necessary or desirable in the usual business or trade of the employer.