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Chavez V NLRC
Facts: Supreme Packaging, Inc., is in the business of manufacturing cartons and other
packaging materials for export and distribution. It engaged the services of the
petitioner, Pedro Chavez, as truck driver on October 25, 1984. As such, the petitioner
was tasked to deliver the respondent companys products from its factory in Mariveles,
Bataan, to its various customers, mostly in Metro Manila. The respondent company
furnished the petitioner with a truck. Most of the petitioners delivery trips were made
at nighttime, commencing at 6:00 p.m. from Mariveles, and returning thereto in the
afternoon two or three days after. Sometime in 1992, the petitioner expressed to
respondent Alvin Lee, respondent companys plant manager, his (the petitioners) desire
to avail himself of the benefits that the regular employees were receiving such as
overtime pay, nightshift differential pay, and 13th month pay, among others. Although he
promised to extend these benefits to the petitioner, respondent Lee failed to actually do
so.
On February 20, 1995, the petitioner filed a complaint for regularization with the
Regional Arbitration Branch No. III of the NLRC in San Fernando, Pampanga. Before the
case could be heard, respondent company terminated the services of the petitioner.
Consequently, on May 25, 1995, the petitioner filed an amended complaint against the
respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay,
nightshift differential pay, 13th month pay, among others.
The respondents, for their part, denied the existence of an employer-employee
relationship between the respondent company and the petitioner. They averred that the
petitioner was an independent contractor as evidenced by the contract of service which
he and the respondent company entered into. The said contract provided as follows:
Issue: WON Chavez is an employee of Supreme Packaging or merely an independent
contractor
Ruling. YES. 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)
the power of dismissal; and (4) the employers power to control the employees
conduct. The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the means and
methods to accomplish it.All the four elements are present in this case, of the four
elements of the employer-employee relationship, the "control test" is the most
important. Compared to an employee, an independent contractor is one who carries on a
distinct and independent business and undertakes to perform the job, work, or service
on its own account and under its own responsibility according to its own manner and
method, free from the control and direction of the principal in all matters connected
with the performance of the work except as to the results thereof.Hence, while an
independent contractor enjoys independence and freedom from the control and
supervision of his principal, an employee is subject to the employers power to control
the means and methods by which the employees work is to be performed and
accomplished.Although the respondents denied that they exercised control over the
manner and methods by which the petitioner accomplished his work, a careful review of
the records shows that the latter performed his work as truck driver under the
respondents supervision and control.

San Miguel v. Aballa


Facts: Petitioner San Miguel Corporation (SMC), and Sunflower Multi-Purpose
Cooperative (Sunflower) entered into a one-year Contract of Services, to be renewed on
a month to month basis until terminated by either party.Pursuant to the contract,
Sunflower engaged private respondents to, as they did, render services at SMCs Bacolod
Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed renewed by
the parties every month after its expiration on January 1, 1994 and private respondents
continued to perform their tasks until September 11, 1995. In July 1995, private
respondents filed a complaint, praying to be declared as regular employees of SMC, with
claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees.
Private respondents subsequently filed on September 25, 1995 an Amended Complaint to
include illegal dismissal as additional cause of action following SMCs closure of its
Bacolod Shrimp Processing Plant on September 15, 1995 which resulted in the
termination of their services.
Issue: WON Sunflower is an independent contractor.

Ruling: NO, Sunflower is a Labor-Only Contractor. While indeed Sunflower was issued
Certificate of Registration No. IL0-875 February 10, 1992 by the Cooperative
Development Authority, this merely shows that it had at leastP2,000.00 in paid-up share
capital which amount cannot be considered substantial capitalization. What appears is
that Sunflower does not have substantial capitalization or investment in the form of tools,
equipment, machineries, work premises and other materials to qualify it as an
independent contractor. On the other hand, it is gathered that the lot, building,
machineries and all other working tools utilized by private respondents in carrying out
their tasks were owned and provided by SMC.Furthermore, Sunflower did not carry on an
independent business or undertake the performance of its service contract according to
its own manner and method, free from the control and supervision of its principal, SMC,
its apparent role having been merely to recruit persons to work for SMC.

Lopez V Metropolitan Waterworks

Facts: In 1997, MWSS entered into a Concession Agreement with Manila Water Service,
Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred to said
private concessionaires, effectively terminating the contracts of service between
petitioners and MWSS. Regular employees of the MWSS, except those who had retired
or opted to remain with the latter, were absorbed by the concessionaires. Regular
employees of the MWSS were paid their retirement benefits, but not petitioners.
Instead, they were refused said benefits, MWSS relying on a resolution of the Civil
Service Commission (CSC) that contract-collectors of the MWSS are not its employees
and therefore not entitled to the benefits due regular government employees. Petitioners
filed a complaint with the CSC. The CSC denied their claims, stating that petitioners
were engaged by MWSS through a contract of service, which explicitly provides that a
bill collector-contractor is not an MWSS employee. Petitioners sought reconsideration of
the CSC, which was however denied by the CSC on 17 September 1999. Aggrieved,
petitioners appealed to the Court of Appeals.Affirming and generally reiterating the
ruling of the CSC, the Court of Appeals held that the Agreement entered into by
petitioners and MWSS was clear and unambiguous, and should be read and interpreted
according to its literal sense. Hence, as per the terms of the agreement, petitioners
were not MWSS employees.
Issue: WON petitioners are employees of the MWSS.
Ruling: YES. A review of the circumstances surrounding the case reveals that petitioners
are employees of MWSS. Despite the obvious attempt of MWSS to categorize petitioners
as mere service providers, not employees, by entering into contracts for services, its
actuations show that they are its employees, pure and simple. MWSS wielded its power
of selection when it contracted with the individual petitioners, undertaking separate
contracts or agreements. The same goes true for the power to dismiss. Although termed
as causes for termination of the Agreement, a review of the same shows that the
grounds indicated therein can similarly be grounds for termination of employment.
Petitioners rendered services to MWSS for which they were paid and given similar
benefits due the other employees of MWSS. It is hard to imagine that MWSS was simply
moved by the spirit of benevolence and generosity when it granted liberal benefits to
petitioners. More so since MWSS is a government owned and controlled corporation
created for the "proper operation and maintenance of waterworks system to insure an
uninterrupted and adequate supply and distribution of potable water for domestic and
other purposes and the proper operation and maintenance of sewerage systems." Now
the aspect of control. MWSS makes an issue out of the proviso in the agreement that
specifically denies the existence of employer-employee relationship between it and
petitioners. It is axiomatic that the existence of an employer-employee relationship
cannot be negated by expressly repudiating it in an agreement and providing therein
that the employee is "not an MWSS employee" when the terms of the agreement and the
surrounding circumstances show otherwise. The employment status of a person is
defined and prescribed by law and not by what the parties say it should be.

Lazaro v SSS

Facts: Private respondent Rosalina M. Laudato ("Laudato") filed a petition before the
SSC for social security coverage and remittance of unpaid monthly social security
contributions against her three (3) employers. Among the respondents was herein
petitioner Angelito L. Lazaro ("Lazaro"), proprietor of Royal Star Marketing ("Royal
Star"), which is engaged in the business of selling home appliances.Laudato alleged that
despite her employment as sales supervisor of the sales agents for Royal Star from April
of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the
SSC for compulsory coverage or remit Laudato's social security contributions. Lazaro
denied that Laudato was a sales supervisor of Royal Star, averring instead that she was
a mere sales agent whom he paid purely on commission basis. Lazaro also maintained
that Laudato was not subjected to definite hours and conditions of work. As such,
Laudato could not be deemed an employee of Royal Star. After the parties submitted
their respective position papers, the SSC ruled in favor of Laudato. Applying the "control
test," it held that Laudato was an employee of Royal Star.
Issue: WON Laudato is an employee of Royal Star.
Ruling: YES. Laudato oversaw and supervised the sales agents of the company, and thus
was subject to the control of management as to how she implements its policies and its
end results. We are disinclined to reverse this finding, in the absence of countervailing
evidence from Lazaro and also in light of the fact that Laudato's calling cards from Royal
Star indicate that she is indeed a sales supervisor. A piece of documentary evidence
appreciated by the SSC is Memorandum dated 3 May 1980 of Teresita Lazaro, General
Manager of Royal Star, directing that no commissions were to be given on all "main
office" sales from walk-in customers and enjoining salesmen and sales supervisors to
observe this new policy. The Memorandum evinces the fact that, contrary to Lazaro's
claim, Royal Star exercised control over its sales supervisors or agents such as Laudato
as to the means and methods through which these personnel performed their work.
Neither does it follow that a person who does not observe normal hours of work cannot
be deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer
similarly denied the existence of an employer-employee relationship, as the claimant
according to it, was a "supervisor on commission basis" who did not observe normal
hours of work. This Court declared that there was an employer-employee relationship,
noting that "[the] supervisor, although compensated on commission basis, [is] exempt
from the observance of normal hours of work for his compensation is measured by the
number of sales he makes."

Almirez v Infinite
Facts: Corazon Almirez (petitioner) was hired as a Refinery Senior Process Design
Engineer for a specific project by respondent Infinite Loop Technology Corporation
(Infinite Loop) through its General Manager/President-co-respondent Edwin R. Rabino
(Rabino). After some ttime Almirez sent Rabino a letter stating When I agreed with a
salary of P30,000.00 monthly, my understanding is that, this amount is already net of tax
x x x. However, when I received my salary for the month of January which is only partial,
(P25,000) and even less because [of] SSS and tax deductions I understand that tax
should be deducted from my salary for your Accounting records but I would like to ask
you not to deduct it from the P30,000.00 salary I am supposed to be receiving. Currently
I am paying my SSS contributions voluntarily so there is no need for the company to pay
my monthly contributions. Responding, Rabino stated that petitioners letter "was
totally different [from] what [they] verbally agreed [upon]" in her house; that "like any
other proposed project, [the Proposed 1,200,000 BPSD Petroleum Refinery] can be
deferred like its present status;". On December 12, 2000, petitioner filed a complaint
against Infinite Loop and Rabino. Infinite Loop moved to dismiss petitioners complaint
on the ground that the NLRC has no jurisdiction over the parties and the subject matter,
there being no employee-employer relationship between them as the contract they
entered into was one of services and not of employment.
Issue: WON Almirez is an employee of Infinite Loop.
Ruling: NO. Contrary to the finding of the Labor Arbiter, as affirmed by the NLRC,
above-quoted paragraph No. 6 of the "Scope of [petitioners] Professional Services"
requiring her to "[m]ake reports and recommendations to the company management
team regarding work progress, revisions and improvement of process design on a
regular basis as required by company management team" does not "show that the
companys management team exercises control over the means and methods in the
performance of her duties as Refinery Process Design Engineer." Having hired
petitioners professional services on account of her "expertise and qualifications" as
petitioner herself proffers in her Position Paper, the company naturally expected to be
updated regularly of her "work progress," if any, on the project for which she was
specifically hired.

Lazaro v SSS

Facts: Private respondent Rosalina M. Laudato ("Laudato") filed a petition before the
SSC for social security coverage and remittance of unpaid monthly social security
contributions against her three (3) employers. Among the respondents was herein
petitioner Angelito L. Lazaro ("Lazaro"), proprietor of Royal Star Marketing ("Royal
Star"), which is engaged in the business of selling home appliances.Laudato alleged that
despite her employment as sales supervisor of the sales agents for Royal Star from April
of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the
SSC for compulsory coverage or remit Laudato's social security contributions. Lazaro
denied that Laudato was a sales supervisor of Royal Star, averring instead that she was
a mere sales agent whom he paid purely on commission basis. Lazaro also maintained
that Laudato was not subjected to definite hours and conditions of work. As such,
Laudato could not be deemed an employee of Royal Star. After the parties submitted
their respective position papers, the SSC ruled in favor of Laudato. Applying the "control
test," it held that Laudato was an employee of Royal Star.
Issue: WON Laudato is an employee of Royal Star.
Ruling: YES. Laudato oversaw and supervised the sales agents of the company, and thus
was subject to the control of management as to how she implements its policies and its
end results. We are disinclined to reverse this finding, in the absence of countervailing
evidence from Lazaro and also in light of the fact that Laudato's calling cards from Royal
Star indicate that she is indeed a sales supervisor. A piece of documentary evidence
appreciated by the SSC is Memorandum dated 3 May 1980 of Teresita Lazaro, General
Manager of Royal Star, directing that no commissions were to be given on all "main
office" sales from walk-in customers and enjoining salesmen and sales supervisors to
observe this new policy. The Memorandum evinces the fact that, contrary to Lazaro's
claim, Royal Star exercised control over its sales supervisors or agents such as Laudato
as to the means and methods through which these personnel performed their work.
Neither does it follow that a person who does not observe normal hours of work cannot
be deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer
similarly denied the existence of an employer-employee relationship, as the claimant
according to it, was a "supervisor on commission basis" who did not observe normal
hours of work. This Court declared that there was an employer-employee relationship,
noting that "[the] supervisor, although compensated on commission basis, [is] exempt
from the observance of normal hours of work for his compensation is measured by the
number of sales he makes."

Domasig v NLRC
Facts: The complaint was instituted by Eddie Domasig against respondents Cata
Garments Corporation, a company engaged in garments business and its
owner/manager Otto Ong and Catalina Co for illegal dismissal, unpaid commission and
other monetary claims. Complainant alleged that he started working with the
respondent on July 6, 1986 as Salesman when the company was still named Cato
Garments Corporation; that three (3) years ago, because of a complaint against
respondent by its workers, it changed its name to Cata Garments Corporation; and that
on August 29, 1992, he was dismissed when respondent learned that he was being
pirated by a rival corporation which offer he refused. Prior to his dismissal, complainant
alleged that he was receiving a salary of P1,500.00 a month plus commission.
Respondent denied complainants claim that he is a regular employee contending that he
is a mere commission agent who receives a commission of P5.00 per piece of article sold
at regular price and P2.50 per piece sold in bargain price; that in addition to commission,
complainant received a fixed allowance of P1,500.00 a month; that he had no regular
time schedule; and that the company come into existence only on September 17, 1991.
Issue: WON Domasig is an employee of Cata Garments
Ruling YES.The list of sales collection including computation of commissions due,
expenses incurred and cash advances received (Exhibits B and B-1) which, according
to public respondent, the labor arbiter failed to appreciate in support of private
respondents allegation as regards the nature of petitioners employment as a
commission agent, cannot overcome the evidence of the ID card and salary vouchers
presented by petitioner which private respondents have not denied. The list presented by
private respondents would even support petitioners allegation that, aside from a monthly
salary ofP1,500.00, he also received commissions for his work as a salesman of private
respondents. Having been in the employ of private respondents continuously for more
than one year, under the law, petitioner is considered a regular employee.Proof beyond
reasonable doubt is not required as a basis for judgment on the legality of an employers
dismissal of an employee, nor even preponderance of evidence for that matter,
substantial evidence being sufficient.Petitioners contention that private respondents
terminated his employment due to their suspicion that he was being enticed by another
firm to work for it was not refuted by private respondents. The labor arbiters conclusion
that petitioners dismissal is therefore illegal, is not necessarily arbitrary or erroneous. It
is entitled to great weight and respect.

Abante v Lamadrid
FACTS: Petitioner was employed by respondent company Lamadrid Bearing and Parts
Corporation asasalesman covering the whole area of Mindanao. His average monthly
income was more or less P16,000.00, but later was increased to approximately P20,
269.50. Aside from selling the merchandise of Respondent Corporation, he was also
tasked to collect payments from his various customers. Petitionerencountered five
customers/clients with bad accounts.Petitioner was confronted by respondent Lamadrid
over the bad accounts and warned that if hedoes not issue his own checks to cover the
said bad accounts, his commissions will not be released andhe will lose his job. Not
contented with the issuance of the foregoing checks as security for the badaccounts,
respondents "tricked" petitioner into signing two documents, which he later discovered to
bea Promissory Note and a Deed of Real Estate Mortgage.Due to financial difficulties,
petitioner inquired about his membership with the SSS in order toapply for a salary loan.
To his dismay, he learned that he was not covered by the SSS and therefore wasnot
entitled to any benefit. While doing his usual rounds as commission salesman, petitioner
washanded by his customers a letter from the respondent company warning them not to
deal withpetitioner since it no longer recognized him as a commission salesman.
Petitioner thus filed a complaintfor illegal dismissal with money claims against respondent
company and its president, Jose Lamadrid,before the NLRC.
ISSUE: WON an employer-employee relationship exists between plaintiff and respondent
company
RULING:
To ascertain the existence of an employer-employee relationship, jurisprudence has
invariablyapplied the four-fold test, namely: (1) the manner of selection and engagement;
(2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4)
the presence or absence of thepower of control. Of these four, the last one is the most
important. Under the control test, an employer-employee relationship exists where the
person for whom the services are performed reserves the rightto control not only the end
achieved, but also the manner and means to be used in reaching that end.Where a
person who works for another does so more or less at his own pleasure and is notsubject
to definite hours or conditions of work, and in turn is compensated according to the result
of hisefforts and not the amount thereof,no relationship of employer-employee
exists.Petitioner Abante was a commission salesman who received 3% commission of his
gross sales.No quota was imposed on him by the respondent. He was not required to
report to the office at anytime or submit any periodic written report on his sales
performance and activities. He was notdesignated by respondent to conduct his sales
activities at any particular or specific place. He pursuedhis selling activities without
interference or supervision from respondent company and relied on his ownresources to
perform his functions. Respondent company did not prescribe the manner of selling
themerchandise; he was left alone to adopt any style or strategy to entice his customers.
Moreover,petitioner was free to offer his services to other companies engaged in similar
or related marketingactivities as evidenced by the certifications issued by various
customers.

R Transport v Ejandra
Facts: Private respondent Rogelio Ejandra alleged that, for almost six years, from July
15, 1990 to January 31, 1996, he worked as a bus driver of petitioner R Transport
Corporation. He plied the route "Muntilupa-Alabang-Malanday-Monumento-UE-LetreSangandaan" from 5:00 a.m. up to 2:00 a.m. the next day and was paid 10% of his daily
earnings. On January 31, 1996, an officer of the Land Transportation Office (LTO),
Guadalupe Branch, Makati City, apprehended him for obstruction of traffic for which his
license was confiscated. Upon his arrival at petitioners garage, he immediately reported
the incident to his manager, Mr. Oscar Pasquin, who gave him P500 to redeem his
license. The following day, he went to LTO, Guadalupe Branch, to claim it but he was
told that it had not yet been turned over by the officer who apprehended him. He was
able to retrieve his license only after a week. On February 8, 1996, private respondent
informed Mr. Pasquin that he was ready to report for work. However, he was told that
the company was still studying whether to allow him to drive again. Private respondent
was likewise accused of causing damage to the bus he used to drive. Denying the
charge, private respondent blamed the person who drove the said bus during his
absence, considering that the damage was sustained during the week that he did not
drive the bus. Mr. Pacquin nonetheless told him "Magpahinga ka muna at tatawagin ka
na lang namin kung kailangan ka na para magmaneho. Magbakasyon ka muna, bata."
When respondent asked how long he had to rest, the manager did not give a definite
time. Petitioner denied private respondents allegations and claimed that private
respondent, a habitual absentee, abandoned his job. Petitioner further argued that
private respondent was not an employee because theirs was a contract of lease and not
of employment, with petitioner being paid on commission basis.
Issue: Won Ejandra's dismissal was valid
Ruling: NO. Denying the existence of an employer-employee relationship, petitioner
insists that the parties agreement was for a contract of lease of services. We disagree.
Petitioner is barred to negate the existence of an employer-employee relationship. In its
petition filed before this Court, petitioner invoked our rulings on the right of an
employer to dismiss an employee for just cause.Petitioner maintained that private
respondent was justifiably dismissed due to abandonment of work. By adopting said
rulings, petitioner impliedly admitted that it was in fact the employer of private
respondent. According to the control test, the power to dismiss an employee is one of
the indications of an employer-employee relationship. Petitioners claim that private
respondent was legally dismissed for abandonment was in fact a negative pregnant: an
acknowledgement that there was no mutual termination of the alleged contract of lease
and that private respondent was its employee. The fact that petitioner paid private
respondent on commission basis did not rule out the presence of an employee-employer
relationship. According to petitioner, private respondent abandoned his job and lied
about the confiscation of his license. To begin with, petitioners absence was justified
because the LTO, Guadalupe Branch, did not release his license until after a week. This
was the unanimous factual finding of the labor tribunals and the Court of Appeals. As
aptly held by labor arbiter, the process of redeeming a confiscated license, based on
common experience, depended on when the apprehending officer turned over the same.

Second, private respondent never intended to sever his employment as he in fact


reported for work as soon as he got his license back. Petitioner offered no evidence to
rebut these established facts. Third, labor arbiter Yulo correctly observed that, if private
respondent really abandoned his work, petitioner should have reported such fact to the
nearest Regional Office of the Department of Labor and Employment.
Manila Electric v Benamira
Facts: Benamira et al are security guards who worked for PSI. PSI was the security
agency contracted by MERALCO. The contract between PSI and MERALCO expired.
MERALCO subsequently contracted ASDAI as its new security agency. ASDAI absorbed
Benamira et al upon MERALCOs advice. After two years, the contract between ASDAI
and MERALCO expired. MERALCO subsequently contracted AFSISI. AFSISI did not
schedule any work for Benamira et al. It was interpreted as a constructive dismissal.
Benamira sued MERALO, ASDAI, and AFSISI. The Labor Arbiter ruled that ASDAI should
reinstate Benamira et al and that MERALCO is solidarily liable. No liability for AFSISI. NLRC
affirmed LA. The CA reversed the lower courts. The CA ruled that the employer is actually
MERALCO.
Issue: WON MERALCO is the employer of the fired security guards.
Held: NO. Under the contract between ASDAI and MERALCO, it can be seen that ASDAI is
indeed the employer of the guards. Applying the 4 Fold Test: ASDAI employed the guards
when it absorbed them from PSI. ASDAI provided the salaries of the guards (MERALCO
merely pays ASDAI for providing the guards). ASDAI has control over the guards because
they are being inspected (MERALCO has the right to conduct its own inspection as per
contract with ASDAI only). ASDAI has the power to terminate the guards, as when they
did not provide any tours or schedules to them. Further, the services offered by the
guards is not necessary to the principal business of MERALCO which is to provide
electricity. AFSISI is not the employer of the guards as well (as claimed by the guards)
because AFSISI never absorbed them nor was there any evidence showing otherwise.
These security agencies are not Labor Only agencies (unlike HR agencies) because they
have their own equipments, machineries and in general they carry their own business.

San Miguel v. Aballa


Facts: Petitioner San Miguel Corporation (SMC), and Sunflower Multi-Purpose
Cooperative (Sunflower) entered into a one-year Contract of Services, to be renewed on
a month to month basis until terminated by either party.Pursuant to the contract,
Sunflower engaged private respondents to, as they did, render services at SMCs Bacolod
Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed renewed by
the parties every month after its expiration on January 1, 1994 and private respondents
continued to perform their tasks until September 11, 1995. In July 1995, private
respondents filed a complaint, praying to be declared as regular employees of SMC, with
claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees.
Private respondents subsequently filed on September 25, 1995 an Amended Complaint to
include illegal dismissal as additional cause of action following SMCs closure of its
Bacolod Shrimp Processing Plant on September 15, 1995 which resulted in the
termination of their services.
Issue: WON Sunflower is an independent contractor.

Ruling: NO, Sunflower is a Labor-Only Contractor. While indeed Sunflower was issued
Certificate of Registration No. IL0-875 February 10, 1992 by the Cooperative
Development Authority, this merely shows that it had at leastP2,000.00 in paid-up share
capital which amount cannot be considered substantial capitalization. What appears is
that Sunflower does not have substantial capitalization or investment in the form of tools,
equipment, machineries, work premises and other materials to qualify it as an
independent contractor. On the other hand, it is gathered that the lot, building,
machineries and all other working tools utilized by private respondents in carrying out
their tasks were owned and provided by SMC.Furthermore, Sunflower did not carry on an
independent business or undertake the performance of its service contract according to
its own manner and method, free from the control and supervision of its principal, SMC,
its apparent role having been merely to recruit persons to work for SMC.

Big AA v Antonio
Facts: Petitioner is a sole proprietorship registered in the name of its proprietor, Enrico
E. Alejo. On January 13, 2000, herein filed a complaint for illegal lay-off and illegal
deductions. They alleged that as regular employees, they worked from 8:00 a.m. to 5:00
p.m. at petitioners premises using petitioners tools and equipment and they received
P250 per day. Eutiquio was employed as carpenter-foreman from 1991-1999; Jay as
carpenter from 1993-1999; Felicisimo as carpenter from 1994-1999; and Leonardo, Sr.
also as carpenter from 1997-1999. According to respondents, they were dismissed
without just cause and due process; hence, their prayer for reinstatement and full
backwages. They also impleaded one Hermie Alejo, a relative of the petitioners owner,
as co-respondent in their complaint. On the other hand, petitioner Big AA
Manufacturer,affirmed it is a sole proprietorship registered in the name of Enrico Alejo
and engaged in manufacturing office furniture, but it denied that respondents were its
regular employees. Instead, petitioner claimed that Eutiquio Antonio was one of its
independent contractors who used the services of the other respondents. According to
petitioner, its independent contractors were paid by results and were responsible for the
salaries of their own workers. Allegedly, there was no employer-employee relationship
between petitioner and respondents. However, petitioner stated it allowed respondents
to use its facilities to meet job orders.
ISSUE: WON Respondents are employees.
Ruling: YES. In this case, respondents cannot be considered project employees.
Petitioner had neither shown that respondents were hired for a specific project the
duration of which was determined at the time of their hiring nor identified the specific
project or phase thereof for which respondents were hired.
We also agree that Eutiquio was not an independent contractor for he does not carry a
distinct and independent business, and he does not possess substantial capital or
investment in tools, equipment, machinery or work premises. He works within
petitioners premises using the latters tools and materials, as admitted by petitioner.
Eutiquio is also under petitioners control and supervision. Attesting to this is
petitioners admission that it allowed respondents to use its facilities for the "proper
implementation" of job orders. Moreover, the Implementing Guidelines regulating
attendance, overtime, deadlines, penalties; providing petitioners right to fire employees
or "contractors"; requiring the carpentry division to join petitioners exercise program;
and providing rules on machine maintenance, all reflect control and supervision over
respondents.