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Atok Big Wedge Company vs. Gison, G.R. No.

169510, August 8, 2011z


Facts:
The respondent in this case, Jesus P. Gison, was engaged as part-time consultant of the petitioner, Atok Big Wedge Company
thorugh its then Asst. VP and Acting Resident Manager, Rutillo A. Torres. As a consultant on retainer basis, the former assisted
the petitioners retained legal counsel with matters pertaining to the prosecution of cases against illegal surface occupants within
the area covered by the companys mineral claims. He also tasked to perform liason work with government agencies which he
said his expertise. Respondent is not required to report to its office on a regular basis, except when occassionally requested by
the management to discuss the matters which needs of his expertise as a consultant. He is paid a retainer fee of 3,000Php a
month and delivered to him either in his residence or in a local restaurant. They have also executed a retainer agreement
however was misplaced and can no longer be found. This kind of arrangement continued on for the next 11 years. Since
respondent was getting old, he requested petitioner to cause his registration with the Social Security System but petitioner did
not accede to his request considering the former only a retainer/consultant.
Respondent herein, filed a complaint with SSS against petitioners refusal to cause his registration with the SSS. The Resident
Manager of the petitioner issued then a Memorandum advising respondent that within 30 days from receipt thereof, petitioners
services as a retainer/consultant will be terminated since his services are no longer necessary. As a result, respondent filed a
complaint for illegal dismissal, unfair labor practice, underpayment of wages, non-payment of 13th Month pay, vacation pay and
sick leave with the NLRC, Regional Arbitration Branch and Cordillera Administrative Region against the petitioner.
The Labor Arbiter rendered a decision in favor of the petitioner ruling that there is no employer-employee relationship and
dismissed the complaint for lack of merit. An appeal was made before the NLRC but same was dismissed and affirmed the
decision of the Labor Arbiter. A petition for review was filed under Rule 65 before the Court of Appeals. The Court of Appeals
annuled and has set aside the decision of NLRC. The CA opined that, both the Labor Arbiter and NLRC overlooked Article 280 of
the Labor Code, which distinguishes between the two kinds of employees, i.e., regular and casual employees. The respondent is
deemed a regular employee of the petitioner after the lapse of one year from his employment. Considering also that the
respondent had been performing services for the petitioner for the last 11 years entitling him to the rights and privileges of a
regular employee. The CA added that although there was an agreement between the parties that the employment of the
respondent will be only temporary, it clearly disregarded the same by repeatedly giving petitioner several tasks to perform.
Moreover, although the respondent may have waived his right to attain a regular status when he agreed to perform these tasks
on a temporary employment status, still it was the law that recognized and considered him a regular employee after his first year
of rendering service to petitioner. As such, the waiver is ineffective.
Petitioner herein posits that CA erred in applying Article 280 of the Labor Code in determining whether there exists an employeremployee relationship. Petitioner contends that where the existence of an employer-employee relationship is in dispute, Article
280 of the Labor Code is inapplicable. The said article only set the distinction between a casual employee from a regular
employee for purposes of determining the rights of an employee to be entitled to certain benefits.
Issue:
Whether or not CA erred in applying Article 280?
Ruling:
Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that
the findings thereon by the Labor Arbiter and the NLRC shall be accorded not only respect but even finality when supported by
substantial evidence. Being a question of fact, the determination whether such a relationship exists between petitioner and
respondent was well within the province of the Labor Arbiter and the NLRC. Being supported by substantial evidence, such
determination should have been accorded great weight by the CA in resolving the issue. To ascertain the existence of an
employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1) the selection and
engagement 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." The so-called "control test" is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-employee relationship

Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at bar. Among other
things, respondent was not required to report everyday during regular office hours of petitioner. Respondent's monthly retainer
fees were paid to him either at his residence or a local restaurant. More importantly, petitioner did not prescribe the manner in
which respondent would accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent was left
alone and given the freedom to accomplish the tasks using his own means and method. Respondent was assigned tasks to
perform, but petitioner did not control the manner and methods by which respondent performed these tasks. Verily, the absence
of the element of control on the part of the petitioner engenders a conclusion that he is not an employee of the petitioner.
Moreover, the absence of the parties' retainership agreement notwithstanding, respondent clearly admitted that petitioner hired
him in a limited capacity only and that there will be no employer-employee relationship between them.
Respondent was well aware of the agreement that he was hired merely as a liaison or consultant of the petitioner and he agreed
to perform tasks for the petitioner on a temporary employment status only. However, respondent anchors his claim that he
became a regular employee of the petitioner based on his contention that the "temporary" aspect of his job and its "limited"
nature could not have lasted for eleven years unless some time during that period, he became a regular employee of the
petitioner by continually performing services for the company.
Respondent is not an employee, much more a regular employee of petitioner. The appellate court's premise that regular
employees are those who perform activities which are desirable and necessary for the business of the employer is not
determinative in this case. In fact, any agreement may provide that one party shall render services for and in behalf of another,
no matter how necessary for the latter's business, even without being hired as an employee. Hence,respondent's length of
service and petitioner's repeated act of assigning respondent some tasks to be performed did not result to respondent's
entitlement to the rights and privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years, he still cannot be
considered as a regular employee of petitioner. Article 280 of the Labor Code, in which the lower court used to buttress its
findings that respondent became a regular employee of the petitioner, is not applicable in the case at bar. Indeed, the Court has
ruled that said provision is not the yardstick for determining the existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the
right of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where the existence of
an employment relationship is in dispute.It is, therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in
determining whether an employer-employee relationship exists between respondent and the petitioner.
Considering that there is no employer-employee relationship between the parties, the termination of respondent's services by the
petitioner after due notice did not constitute illegal dismissal warranting his reinstatement and the payment of full backwages,
allowances and other benefits.

Bernarte vs. Phil. Basketball Assoc., G.R. No. 192084, September 14, 2011
Facts:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join the PBA as referees. During the
leadership of Commissioner Emilio Bernardino, they were made to sign contracts on a year-to-year basis. During the term of
Commissioner Eala, however, changes were made on the terms of their employment.
Complainant Bernarte, for instance, was not made to sign a contract during the first conference of the All-Filipino Cup which was
from February 23, 2003 to June 2003. It was only during the second conference when he was made to sign a one and a half
month contract for the period July 1 to August 5, 2003.
On January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him that his contract would not be
renewed citing his unsatisfactory performance on and off the court. It was a total shock for Bernarte who was awarded Referee
of the year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On
March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly contract as Regular Class C referee. On May
6, 2003, respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over his questioning on the
assignment of referees officiating out-of-town games. Beginning February 2004, he was no longer made to sign a contract.

Respondents aver, on the other hand, that complainants entered into two contracts of retainer with the PBA in the year 2003. The
first contract was for the period January 1, 2003 to July 15, 2003; and the second was for September 1 to December 2003. After
the lapse of the latter period, PBA decided not to renew their contracts.
Complainants were not illegally dismissed because they were not employees of the PBA. Their respective contracts of retainer
were simply not renewed. PBA had the prerogative of whether or not to renew their contracts, which they knew were fixed.
Both the Labor Arbiter and NLRC decided that the petitioners were employees whose dismissals by respondents were illegal.
However, the Court of Appeals overturned the decisions of the NLRC and Labor Arbiter on the ground that the petitioner is an
independent contractor since respondents did not exercise any form of control over the means and methods by which petitioner
performed his work as a basketball referee.
Issue:
Whether petitioner is an employee of respondents, which in turn determines whether petitioner was illegally dismissed.
Ruling
The Supreme Court affirmed the assailed decision of the Court of Appeals.
To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (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 on the means and methods by which the work is accomplished. The so-called " control test" is the
most important indicator of the presence or absence of an employer-employee relationship.
In this case, PBA admits repeatedly engaging petitioner's services, as shown in the retainer contracts. PBA pays petitioner a
retainer fee, exclusive of per diem or allowances, as stipulated in the retainer contract. PBA can terminate the retainer contract
for petitioner's violation of its terms and conditions.
However, respondents argue that the all-important element of control is lacking in this case, making petitioner an independent
contractor and not an employee of respondents.
We agree with respondents that once in the playing court, the referees exercise their own independent judgment, based on the
rules of the game, as to when and how a call or decision is to be made. The referees decide whether an infraction was
committed, and the PBA cannot overrule them once the decision is made on the playing court. The referees are the only,
absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot and do not determine which
calls to make or not to make and cannot control the referee when he blows the whistle because such authority exclusively
belongs to the referees. The very nature of petitioner's job of officiating a professional basketball game undoubtedly calls for
freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the referees are required to report
for work only when PBA games are scheduled, which is three times a week spread over an average of only 105 playing days a
year, and they officiate games at an average of two hours per game; and (2) the only deductions from the fees received by the
referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per day for five days a week, petitioner is
required to report for work only when PBA games are scheduled or three times a week at two hours per game. In addition, there
are no deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from
employees' salaries. These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an
employee of respondents.
Furthermore, the applicable foreign case law declares that a referee is an independent contractor, whose special skills and
independent judgment is required specifically for such position and cannot possibly be controlled by the hiring party.

In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an employee of the former. For
a hired party to be considered an employee, the hiring party must have control over the means and methods by which the hired
party is to perform his work, which is absent in this case. The continuous rehiring by PBA of petitioner simply signifies the
renewal of the contract between PBA and petitioner, and highlights the satisfactory services rendered by petitioner warranting
such contract renewal. Conversely, if PBA decides to discontinue petitioner's services at the end of the term fixed in the contract,
whether for unsatisfactory services, or violation of the terms and conditions of the contract, or for whatever other reason, the
same merely results in the non-renewal of the contract, as in the present case. The non-renewal of the contract between the
parties does not constitute illegal dismissal of petitioner by respondents.

Tongko v. Manufacturer Life Insurance Co. (MANULIFE) Inc., et al., G.R. No 167622, January 25, 2011
Facts:
Tongko was, initially an insurance agent of Manulife who was promoted to the role of a manager. The contractual relationship
between Tongko and Manulife had two basic phases. The initial phase began on July 1, 1977under a Career Agents Agreement
which regarded him as an independent contractor, not an employee. As an agent, his tasks were to canvass for applications for
insurance products and collect money due to the Company. The second phase started in 1983 when Tongko was named Unit
Manager. In 1990, he became a Branch Manager. In 1996, Tongko became a Regional Sales Manager, where he earned
commissions, persistency income and management overrides. Since the beginning, Tongko consistently declared himself selfemployed in his income tax returns.
However, in 2001, Manulife instituted manpower development programs which directed the managers to increase the number of
agents to at least 1,000 strong for a start. It was found that Tongkos region was the lowest performer in terms of recruiting in
2000. Subsequently, Tongko received another letter, dated December 18, 2001, terminating his services. Tongko then filed an
illegal dismissal complaint with the NLRC Arbitration Branch. He alleged the existence of an employment relationship. In support
of this he asserted that as Unit Manager, he was paid an annual over-rider, a travel and entertainment allowance in addition to
his overriding commissions. He was tasked with numerous administrative functions and supervisory authority over Manulifes
employees. He was required to follow at least three codes of conduct. On the other hand, Manulife contended that what existed
between them was a mere agency relationship.
Decisions of the Judicial Tribunals
LA:
No employer-employee relationship existed between the parties.
NLRC: It found the existence of an employer-employee relationship. There was illegal dismissal.
CA:
It reverted to the labor arbiters decision that no employer-employee relationship existed between them.
SC:
In reversing the CA ruling, it declared that an employment relationship existed between them. First, there exists the
possibility of an insurance agent becoming an employee of an insurance company if evidence shows that the company
promulgated rules or regulations that effectively controlled or restricted an insurance agents choice of methods or the methods
themselves in selling insurance.
Second, Manulife had the power of control over Tongko, sufficient to characterize him as an employee, as shown by the fact that
he complied with 3 different codes of conduct and that he performed administrative duties. Also, Tongko was tasked to recruit
some agents in addition to his other administrative functions.
Hence, a Motion for Reconsideration was filed by Manulife and was granted by the SC.
Issue:
Whether or not there exists an employer-employee relationship.
SC Ruling:

Rules regarding the desired results (e.g., the required volume to continue to qualify as a company agent & legal/ ethical rules to
be followed) are built-in elements of control specific to an insurance agency and should not and cannot be read as elements of
control that attend an employment relationship governed by the Labor Code.
Based on decided cases, a determination of the presence of the Labor Code element of control was made on the basis of the
stipulations of the subsequent contracts. In this case, while Tongko was later on designated unit manager in 1983, Branch
Manager in 1990, and Regional Sales Manager in 1996, no formal contract regarding these undertakings appears in the records
of the case. Any such contract or agreement, had there been any, could have at the very least provided the bases for properly
ascertaining the juridical relationship established between the parties.
For this reason, we can take judicial notice that as a matter of Insurance Code-based business practice, an agency relationship
prevails in the insurance industry for the purpose of selling insurance. Significantly, evidence shows that Tongkos role as an
insurance agent never changed during his relationship with Manulife. Tongko essentially remained an agent, but moved up in this
role through Manulifes recognition that he could use other agents approved by Manulife but operating under his guidance. For
want of a better term, Tongko perhaps could be labeled as a "lead agent" who guided under his wing other Manulife agents.
Evidence indicates that Tongko consistently clung to the view that he was an independent agent since he invariably declared
himself a business or self-employed person in his income tax returns. The concept of estoppel a legal and equitable concept
necessarily must come into play. Tongkos previous admissions in several years of tax returns as an independent agent, as
against his belated claim that he was all along an employee, are too diametrically opposed to be simply dismissed or ignored.
There was, indeed, lack of evidence on record showing that Manulife ever exercised means-and-manner control, even to a
limited extent, over Tongko during his ascent in Manulifes sales ladder. The reality is, prior to the directives sent by De Dios,
Manulife had practically left Tongko alone not only in doing the business of selling insurance, but also in guiding the agents under
his wing. In addition, the mere presentation of codes or of rules and regulations is not per se indicative of labor law control. The
codes of conduct do not intrude into the insurance agents means and manner of conducting their sales and only control them as
to the desired results.
Guidelines indicative of labor law "control," based on the case of Insular Life, should not merely relate to the mutually desirable
result intended by the contractual relationship; they must have the nature of dictating the means or methods to be employed in
attaining the result, or of fixing the methodology and of binding or restricting the party hired to the use of these means.
Hence, the failure of Tongko to comply with the guidelines & directives of Manulife is recruiting more agents, as a ground for
termination of Tongkos agency, is a matter that the labor tribunals cannot rule upon in the absence of an employer-employee
relationship. Jurisdiction over the matter belongs to the courts applying the laws of insurance, agency and contracts.
SC:
Tongko is just an AGENT. In effect, the SC is telling us that, first, there must be an evidence of a contract that shows
that the relationship has been converted from contract of agency to that of employment, which is absent in the case at bar.
Secondly, adherence to a code of conduct is not, per se, indicative of control when it merely controls the desired results and not
the means and the manner by which agents are to conduct their sales. The directive of De Dios to Tongko (in increasing the
number of agents) was merely suggestive. Hence, not indicative of control