NLRC.

In effect, they filed an instant petition claiming that NLRC committed a

grave abuse of discretion in: (a) Finding that petitioners were project employees;
(b) Ruling that petitioners were not illegally dismissed; and (c) Reversing the
decision of the Labor Arbiter.
In the instant case, the petitioners allege that the NLRC acted in total disregard
of evidence material or decisive of the controversy.
Issues:
(a) W/N there exist an employee- employer relationship between the petitioners
and the private respondents.
(b) W/N the private respondents are engaged in the business of making movies.
(c) W/N the producer is a job contractor.
Held:
There exist an employee- employer relationship between the petitioners and the
private respondents because of the ff. reasons that nowhere in the appointment
slip does it appear that it was the producer who hired the crew members.
Moreover, it was VIVAs corporate name appearing on heading of the slip. It can
likewise be said that it was VIVA who paid for the petitioners salaries.
Respondents also admit that the petitioners were part of a work pool wherein
they attained the status of regular employees because of the ff. requisites: (a)
There is a continuous rehiring of project employees even after cessation of a
project; (b) The tasks performed by the alleged project employees are vital,
necessary and indispensable to the usual business or trade of the employer; and
(c) However, the length of time which the employees are continually re-hired is
not controlling but merely serves as a badge of regular employment.
Since the producer and the crew members are employees of VIVA and that these
employees works deal with the making of movies. It can be said that VIVA is
engaged of making movies and not on the mere distribution of such.
The producer is not a job contractor because of the ff. reasons: (Sec. Rule VII,
Book III of the Omnibus Rules Implementing the Labor Code.)
a. A contractor carries on an independent business and undertakes the contract
work on his own account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except as to
the results thereof. The said producer has a fix time frame and budget to make
the movies.

10. ALEJANDRO MARAGUINOT, JR. AND PAUILINO

ENERO v. NLRC, VIC DEL ROSARIO, VIVA FILMS
GR No. 120969
Facts:
Maraguinot and Enero were separately hired by Vic Del Rosario under Viva Films
as part of the filming crew. Sometime in May 1992, sought the assistance of their
supervisor to facilitate their request that their salary be adjusted in accordance
with the minimum wage law.
On June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del Rosario
would agree to their request only if they sign a blank employment contract.
Petitioners refused to sign such document. After which, the Mr. Enero was forced
to go on leave on the same month and refused to take him back when he
reported for work. Mr. Maraguinot on the other hand was dropped from the
payroll but was returned days after. He was again asked to sign a blank
employment contract but when he refused, he was terminated.
Consequently, the petitioners sued for illegal dismissal before the Labor Arbiter.
The private respondents claim the following: (a) that VIVA FILMS is the trade
name of VIVA PRODUCTIONS, INC. and that it was primarily engaged in the
distribution & exhibition of movies- but not then making of movies; (b) That they
hire contractors called producers who act as independent contractors as that of
Vic Del Rosario; and (c) As such, there is no employee-employer relation
between
petitioners
and
private
respondents.
The Labor Arbiter held that the complainants are employees of the private
respondents. That the producers are not independent contractor but should be
considered as labor-only contractors and as such act as mere agent of the real
employer. Thus, the said employees are illegally dismissed.
The private respondents appealed to the NLRC which reversed the decision of
the Labor Arbiter declaring that the complainants were project employees due to
the ff. reasons: (a) Complainants were hired for specific movie projects and their
employment was co-terminus with each movie project; (b)The work is dependent
on the availability of projects. As a result, the total working hours logged
extremely varied; (c) The extremely irregular working days and hours of
complainants work explains the lump sum payment for their service; and (d) The
respondents alleged that the complainants are not prohibited from working with
other movie companies whenever they are not working for the independent
movie
producers
engaged
by
the
respondents.
A motion for reconsideration was filed by the complainants but was denied by

associate producers in this case have none of these. The movie-making

equipment are supplied to the producers and owned by VIVA. Thus, it is clear
that the associate producer merely leases the equipment from VIVA. In addition,
the associate producers of VIVA cannot be considered labor-only contractors as
they did not supply, recruit nor hire the workers. It was Cesario, the Shooting
Supervisor of VIVA, who recruited crew members. Thus, the relationship between
VIVA and its producers or associate producers seems to be that of agency. With
regards to the issue of illegal dismissal, petitioners assert that they were regular
employees who were illegally dismissed. Petitioners in this case had already
attained the status of regular employees in view of VIVAs conduct. Thus,
petitioners are entitled to back wages. A project employee or a member of a work
pool may acquire the status of a regular employee when:
a.

there is a continuous rehiring of project employees even after a cessation of

project

b.

the tasks performed by the alleged project employee are vital and
necessary to the business of employer The tasks of petitioners in loading
movie equipment and returning it to VIVAs warehouse and fixing the lighting
system were vital, necessary and indispensable to the usual business or
trade of the employer.

Wherefore, petition is granted.

ARTICLE 6 Applicability. All rights and benefits granted to workers under this
Code shall, except as may otherwise be provided herein, apply alike to all
workers, whether agricultural or non-agriculturaL.

b. The contractor should have substantial capital and materials necessary to

conduct his business. The said producer, Del Rosario, does not have his own
tools, equipment, machinery, work premises and other materials to make motion
pictures. Such materials were provided by VIVA.
It can be said that the producers are labor-only contractors. Under Article 106 of
the Labor Code (reworded) where the contractor does not have the requisites as
that of the job contractors.
Maraguinot v. NLRC
FACTS:
Petitioner maintains that he was employed by respondents as part of the
filming crew. He was later promoted as an electrician. Petitioners tasks
contained of loading movie equipment in the shoothing area. Petitioners sought
the assistance of their supervisor, Cesario, to facilitate their request that
respondents adjust their salary in accordance with the minimum wage law. Mrs.
Cesario informed petitioners that del Rosario would agree to increase their salary
only if they signed a blank employment contract. As petitioner refused to sign,
respondents forced Enero (the other petitioner who worked as a crew member)
to go on leave. However, when he reported to work, respondent refused to take
him back. Maraguinot was dropped from the company payroll but when he
returned, he was again asked to sign a blank employment contract, and when he
still refused, respondents terminated his services. Petitioners thus sued for
illegal dismissal. Private respondents assert that they contract persons called
producers to produce or make movies for private respondents and contend that
petitioners are project employees of the associate producers, who act as
independent contractors. Thus, there is no ER-EE relationship. However,
petitioners cited that their performance of activities is necessary in the usual
trade or business of respondents and their work in continuous.
ISSUE: W/N ER-EE relationship exists
HELD:
Yes. With regards to VIVAs contention that it does not make movies but merely
distributes motion pictures, there is no sufficient proof to prove this contention. In
respect to respondents allegation that petitioners are project employees, it is a
settled rule that the contracting out of labor is allowed only in case of job
contracting. However, assuming that the associate producers are job contactors,
they must then be engaged in the business of making motion pictures. Associate
producers must have tools necessary to make motion pictures. However, the

- Respondent Antero Maghari raised the defense that he was a mere employee who was hired
as an overseer of Hda. B-70 sometime during crop years 1964-65 to 1971-72, and as such,
his job was limited to those defined for him by the employer which never involved matters
relating to the SSS.
- For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr. was her
employee, admitting only that he was hired intermittently as an independent contractor to
plow, harrow, or burrow Hda. No. Audit B-15-M. Tana used his own carabao and other
implements, and he followed his own schedule of work hours. Ayalde further alleged that she
never exercised control over the manner by which Tana performed his work as an
independent contractor. Moreover, Ayalde averred that way back in 1971, the University of
the Philippines had already terminated the lease over Hda. B-15-M and she had since
surrendered possession thereof to the University of the Philippines. Consequently, Ignacio
Tana, Sr. was no longer hired to work thereon starting in crop year 1971-72, while he was
never contracted to work in Hda. B-70.
- SSS ruled in favor of Tana. CA ruled in favor of Ayalde.

11. SSS V CA (AYALDE)

348 SCRA 1
YNARES-SANTIAGO; December 14, 2000

ISSUE : WON an agricultural laborer who was hired on "pakyaw" basis can be considered an
employee entitled to compulsory coverage and corresponding benefits under the Social
Security Law

NATURE
Petition for review on certiorari

HELD

- In a petition before the Social Security Commission, Margarita Tana, widow of the
late Ignacio Tana, Sr., alleged that her husband was, before his demise, an employee of
Conchita Ayalde as a farmhand in the two (2) sugarcane plantations she owned in
Pontevedra, La Carlota City (Hda. B-70) and leased from the University of the Philippines
(Hda. B-15-M). She further alleged that Tana worked continuously six (6) days a week, four (4)
weeks a month, and for twelve (12) months every year between January 1961 to April 1979.
For his labor, Tana allegedly received a regular salary according to the minimum wage
prevailing at the time.
- She further alleged that throughout the given period, social security contributions, as well as
medicare and employees compensation premiums were deducted from Tana's wages. It was
only after his death that Margarita discovered that Tana was never reported for coverage, nor
were his contributions/premiums remitted to the SSS. Consequently, she was deprived of the
burial grant and pension benefits accruing to the heirs of Tana had he been reported for
coverage.
- She prayed for the Commission to issue an order directing respondents Conchita Ayalde and
Antero Maghari as her administrator to pay the premium contributions of the deceased Ignacio
Tana, Sr. and report his name for SSS coverage; and for the SSS to grant petitioner Margarita
Tana the funeral and pension benefits due her.
- The SSS revealed that neither Hda. B-70 nor respondents Ayalde and Maghari were
registered members-employers of the SSS, and consequently, Ignacio Tana, Sr. was never
registered as a member-employee. Likewise, SSS records reflected that there was no way of
verifying whether the alleged premium contributions were remitted since the respondents were
not registered members-employers.

- The mandatory coverage under the SSS Law (Republic Act No. 1161, as amended
by PD 1202 and PD 1636) is premised on the existence of an employer-employee
relationship, and Section 8(d) defines an "employee" as "any person who performs services
for an employer in which either or both mental and physical efforts are used and who receives
compensation for such services where there is an employer-employee relationship." The
essential elements of an employer-employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the power of control with regard to the means and methods by which the work is to be
accomplished, with the power of control being the most determinative factor.
- There is no question that Tana was selected and his services engaged by either Ayalde
herself, or by Antero Maghari, her overseer. Corollarily, they also held the prerogative of
dismissing or terminating Tana's employment. The dispute is in the question of payment of
wages. Claimant Margarita Tana and her corroborating witnesses testified that her husband
was paid daily wages "per quincena" as well as on "pakyaw" basis. Ayalde, on the other
hand, insists that Tana was paid solely on "pakyaw" basis. To support her claim, she
presented payrolls covering the period January of 1974 to January of 1976 and November of
1978 to May of 1979.
- A careful perusal of the records readily show that the exhibits offered are not complete, and
are but a mere sampling of payrolls. While the names of the supposed laborers appear
therein, their signatures are nowhere to be found. And while they cover the years 1975, 1976
and portions of 1978 and 1979, they do not cover the 18-year period during which Tana was
supposed to have worked in Ayalde's plantations. Also an admitted fact is that these exhibits

FACTS

his work hours and method of performing his task as "arador." A closer scrutiny of the records,
however, reveals that while Ayalde herself may not have directly imposed on Tana the manner
and methods to follow in performing his tasks, she did exercise control through her overseer.
- Under the circumstances, the relationship between Ayalde and Tana has more of the
attributes of employer-employee than that of an independent contractor hired to perform a
specific project.
- Lastly, as a farm laborer who has worked exclusively for Ayalde for eighteen (18) years, Tana
should be entitled to compulsory coverage under the Social Security Law, whether his service
was continuous or broken.
Disposition Decision of CA reversed. Decision of SSS reinstated

only cover Hda. B70, Ayalde having averred that all her records and payrolls for the other
plantation (Hda. B-15-M) were either destroyed or lost.
- To our mind, these documents are not only sadly lacking, they are also unworthy of
credence. The fact that Tana's name does not appear in the payrolls for the years 1975, 1976
and part of 1978 and 1979, is no proof that he did not work in Hda. B70 in the years 1961 to
1974, and the rest of 1978 and 1979. The veracity of the alleged documents as payrolls are
doubtful considering that the laborers named therein never affixed their signatures to show
that they actually received the amounts indicated corresponding to their names. Moreover, no
record was shown pertaining to Hda. B-15-M, where Tana was supposed to have worked.
Even Ayalde admitted that she hired Tana as "arador" and sometimes as laborer during milling
in Hda. B-15-M.[16] In light of her incomplete documentary evidence, Ayalde's denial that
Tana was her employee in Hda. B-70 or Hda. B-15-M must fail. In contrast to Ayalde's
evidence, or lack thereof, is Margarita Tana's positive testimony, corroborated by two (2) other
witnesses.
- The witnesses did not waver in their assertion that while Tana was hired by Ayalde as an
"arador" on "pakyaw" basis, he was also paid a daily wage which Ayalde's overseer disbursed
every fifteen (15) days. It is also undisputed that they were made to acknowledge receipt of
their wages by signing on sheets of ruled paper, which are different from those presented by
Ayalde as documentary evidence. In fine, we find that the testimonies of Margarita Tana and
the two other witnesses prevail over the incomplete and inconsistent documentary evidence of
Ayalde.
- No particular form of evidence is required to prove the existence of an employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be admitted.
For, if only documentary evidence would be required to show that relationship, no scheming
employer would ever be brought before the bar of justice, as no employer would wish to come
out with any trace of the illegality he has authored considering that it should take much
weightier proof to invalidate a written instrument.
- The testimonial evidence of the claimant and her witnesses constitute positive and credible
evidence of the existence of an employer-employee relationship between Tana and Ayalde.
As the employer, the latter is duty-bound to keep faithful and complete records of her business
affairs, not the least of which would be the salaries of the workers.
- The assertion that Tana is an independent contractor is specious because (1) while Tana
was sometimes hired as an "arador" or plower for intermittent periods, he was hired to do
other tasks in Ayalde's plantations. It is indubitable, as testified by the witnesses, that Tana
worked continuously for Ayalde, not only as "arador" on "pakyaw" basis, but as a regular
farmhand, doing backbreaking jobs for Ayalde's business. There is no shred of evidence to
show that Tana was only a seasonal worker, much less a migrant worker. All witnesses,
including Ayalde herself, testified that Tana and his family resided in the plantation. If he was
a mere "pakyaw" worker or independent contractor, then there would be no reason for Ayalde
to allow them to live inside her property for free. The only logical explanation is that he was
working for most part of the year exclusively for Ayalde, in return for which the latter
gratuitously allowed Tana and his family to reside in her property; and, (2) Ayalde made much
ado of her claim that Tana could not be her employee because she exercised no control over

1.
2.
Held
1.

W/N there existed an employer-employee relationship between SPI and

Chavez?
W/N Chavez is an independent contractor?
Yes, there existed an employer-employee relationship between SPI
and Chavez
Applying four-fold test, all elements are present

1. selection and engagement of the employee

- it was SPI who engaged the services of Chavez without intervention of third
party
2. payment of wages
- that petitioner was paid on per trip basis is not significant, this is merely a
method of computing compensation and not a basis for determining the
existence or absence of er-ee relationship
3. power of dismissal
- power to dismiss was inherent in the fact that they engaged the services of
Chavez as driver
4. power to control employee's conduct
- an employee is subject to employer's power to control the means and method
by which the work is to be performed while an independent contractor is free
from control and supervision of employer
* Manifestation of Power of Control of SPI to Chavez
1. truck was owned by SPI
2. express instruction in the method of delivery
3. instruction on parking of delivery truck
4. instruction on when and where Chavez would perform his task by
issuing to him gate passes and routing slips
2. Chavez is not and Independent Contractor
* Proof that Chavez is not an Independent Contractor
1. Chavez did not own the truck
2. SPI did not have substantial capitalization or investment
3. Delivery was exclusively done for SPI for 10years
* Er-Ee Relationship cannot be negated by expressly repudiating it in contract
and providing therein that the employee is an independent contractor. Indeed the
employment status of the person is defined and prescribed by law and not by
what parties say it should be.

12. Chavez v. NLRC

448 SCRA 478

Facts

Issue

Petitioner Pedro Chavez was hired as truck driver of Private Respondent

Supreme Packaging, Inc.
Chavez requested to avail himself of the benefits that a regular
employees were receiving but his request was denied
Chavez filed before NLRC a complaint for regularization. Later on he
was dismissed by SPI
He later on filed an amended complaint for illegal dismissal

Lagrama works for Tan as painter of billboards and murals for

the motion pictures shown at the theaters managed by Tan for more
than 10years. Lagrama was dismissed for having urinated in his
working area. Lagrama filed a complaint for illegal dismissal and non
payment of benefits. Tan asserted that Lagrama was an independent
contractor as he was paid in piece-work basis
Issue: W/N Lagrama is an independent contractor or an employee of
Tan.
Ruling:
Lagrama is an employee, not an independent contractor.
Applying Four Fold Test
A. Power of Control - Evidence shows that the Lagrama performed
his work as painter and under the supervision and control of Tan.
1.
Lagrama worked in a designated work area
inside the theater of Tan for the use of which
petitioner prescribed rules, which rules
included the observance of cleanliness and
hygeine and prohibition against urinating in
the work area and any other place other
than rest rooms and
2.
Tan's control over Lagrama's work extended
not only the use of work area but also the
result of Lagrama;s work and the manner
and means by which the work was to be
accomplished
3.
Lagrama is not an independent contractor
because he did not enjoy independence and
freedom from the control and supervision of
Tan and he was subjected to Tan's control

13. Tan vs. Lagrama

387 SCRA 393
Facts:

14. AIR MATERIAL WING SAVINGS AND LOAN

ASSOCIATION, INC.,
petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, et al.,
respondents.
G.R. No. 111870 June 30, 1994
FACTS:
Private respondent Luis S. Salas was appointed "notarial and legal counsel"
for petitioner Air Material Wings Savings and Loan Association (AMWSLAI) in 1980.
The appointment was renewed for three years in an implementing order that he is
reappointed as Notarial and Legal Counsel by the association for another term of 3
years. The petitioner issued another order reminding Salas of the approaching
termination of his legal services under their contract.
This prompted Salas to lodge a complaint against AMWSLAI for separation
pay, vacation and sick leave benefits, cost of living allowances, refund of SSS
premiums, moral and exemplary damages, payment of notarial services rendered
from February 1, 1980 to March 2, 1990, and attorney's fees.
ISSUE: Whether or not Salas can be considered an employee of the petitioner
company.
HELD:
The terms and conditions set out in the letter-contract entered into by the
parties on January 23, 1987, clearly show that Salas was an employee of the
petitioner. His selection as the company counsel was done by the board of directors in
one of its regular meetings. The petitioner paid him a monthly compensation/retainer's
fee for his services. Though his appointment was for a fixed term of three years, the
petitioner reserved its power of dismissal for cause or as it might deem necessary for
its interest and protection.
No less importantly, AMWSLAI also exercised its power of control over Salas
by defining his duties and functions as its legal counsel, to wit: To act on all legal
matters pertinent to his Office; To seek remedies to effect collection of overdue
accounts of members without prejudice to initiating court action to protect the interest

over the means and methods by which his

work is to be performed and accomplished
B. Payment of Wages
1.
Lagrama worked for Tan on a fixed piece work basis is of
no moment. Payment by result is a method of
compensation and does not define the essence of the
relation.
2.
Tat Lagrama was not reported as an employee to the SSS
is not conclusive, on the question whether he was an
employee, otherwise Tan would be rewarded for his failure
or even neglect to perform his obligation.
C. Power of Dismissal by Tan stating that he had the right to fire
Lagrama, Tan in effect acknowledged Lagrama to be his employee
D. Power of Selection and Engagement of Employees Tan
engaged the services of Lagrama without the intervention of third
party
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. [8] 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.

1). His selection as the company counsel was done by the board of directors
in one of its regular meetings.
2). the petitioner paid him a monthly compensation/ retainers fee for his
services.
3). through his appointment was for a fixed term of three years, the petitioner
reserve its power of dismissal for cause or as it might deem necessary for
the interest and protection.
4). Petitioner exercised its power of control over Atty. Salas by defining his
duties and functions as its legal counsel.
b. NO. Wherefore the modification of the awarding of notarial fees and attorneys fees
is disallowed by the court. There were no stipulations on the contract about it.
Absence of the stipulation does not entitle Atty. Salas for a separate payment of
notarial and attorneys fee, it would already be part of his regular functions and will be
covered by his monthly compensation.

15. Chavez v. NLRC

448 SCRA 478
Facts

Issue
1
3.
Held
1

Petitioner Pedro Chavez was hired as truck driver of Private Respondent

Supreme Packaging, Inc.
Chavez requested to avail himself of the benefits that a regular
employees were receiving but his request was denied
Chavez filed before NLRC a complaint for regularization. Later on he
was dismissed by SPI
He later on filed an amended complaint for illegal dismissal
W/N there existed an employer-employee relationship between SPI and
Chavez?
W/N Chavez is an independent contractor?
Yes, there existed an employer-employee relationship between SPI
and Chavez
Applying four-fold test, all elements are present

1. selection and engagement of the employee

of the association; To defend by all means all suit against the interest of the
Association. The claims for the notarial fee should be dismissed because it arose out
of Salas' employment contract with the petitioner which assigned him the duty to
notarize loan agreements and other legal documents.
AIR MATERIAL WINGS SAVINGS AND LOAN ASSOCIATION, INC, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSIONS, et al, respondents
(G. R. No. 111870

June 30, 1994)

FACTS: Petitioner was appointed as notarial and legal counsel for petitioner Air
Material Wings Savings and Loan Association (AMWSLAI) in 1980. According to the
implementing order issued by the President of AMWSLAI, Atty. Salas will be
reappointed for a term of three (3) years effective March 1987 and will receive
monthly compensation/ retainers fee. In 1990, the petitioner issued another order
reminding Salas of the approaching termination of his legal services under the
contract which prompted him to file a complaint against the petitioner for separation
pay, vacation and sick leave benefits, cost of living, allowances, refund of SSS
premiums, moral and exemplary damages, payment if notarial services rendered from
February 1, 1980 to March 1990 and attorneys fee. Instead of filing an answer,
AMWSLAI dismiss the jurisdiction for according to them, there was no employeremployee relationship between the petitioner and Salas.

ISSUE: a. Whether or not, employer- employee relationship exist between Atty Salas
and the petitioner
b. Whether or not Atty Salas will be awarded notarial fees and attorneys
fees in the matter of his stay in AMWSLAI

RULING: a. YES. Wherefore the four fold test to determine employer- employee
relationship were present. Atty. Salas was proved to be an employee of the petitioner
because of the following reasons:

- it was SPI who engaged the services of Chavez without intervention of third
party
2. payment of wages
- that petitioner was paid on per trip basis is not significant, this is merely a
method of computing compensation and not a basis for determining the
existence or absence of er-ee relationship
3. power of dismissal
- power to dismiss was inherent in the fact that they engaged the services of
Chavez as driver
4. power to control employee's conduct
- an employee is subject to employer's power to control the means and method
by which the work is to be performed while an independent contractor is free
from control and supervision of employer
* Manifestation of Power of Control of SPI to Chavez
1 truck was owned by SPI
5. express instruction in the method of delivery
6. instruction on parking of delivery truck
7. instruction on when and where Chavez would perform his task by
issuing to him gate passes and routing slips
2. Chavez is not and Independent Contractor

16 Vallum Security Services vs. NLRC

Vallum vs. NLRC
FACTS:
Petitioner Hyatt Baguio and petitioner Vallum entered into a
contract for security services wherein Vallumagreed to
protect the properties and premises of Hyatt by providing
guards.Hyatts Manager wrote a letter to the President of
Vallum that the contract of security services would
beterminated. So, Vallum informed the respondents that the
contract had already expired. Private respondents
weredirected to report to Vallum;s office for re-assignment.
However, none of the respondents reported. Instead,

* Proof that Chavez is not an Independent Contractor

1 Chavez did not own the truck
4. SPI did not have substantial capitalization or investment
5. Delivery was exclusively done for SPI for 10years
* Er-Ee Relationship cannot be negated by expressly repudiating it in contract
and providing therein that the employee is an independent contractor. Indeed the
employment status of the person is defined and prescribed by law and not by
what parties say it should be.

theyfiled complaints for illegal dismissal and unfair labor

practices.
ISSUE:
W/N private respondent security guards are indeed
employees of petitioner Hyatt
HELD:
Yes.In respect of the selection and engagement of
employees, private respondents filled up Hyatt
employmentapplication forms and submitted directly to
Hyatt.With regards to control and supervision, orders
received by private respondent security guards were setforth
on paper bearing the letterheads of both Hyatt and Vallum.
Therefore, Hyatt explicitly purported at the veryleast, to
share with Vallum the exercise of the power of control and
supervision with Vallum over the guards.However, in the
contract for security services between Vallum and Hyatt, it
provides that the Agency shallexercise supervision and
control, provide its own expense all necessary paraphernalia
and the Agency shall be heldsolely liable for any claim of
wages and damages. SC ruled that the aforementioned facts
are different from that of the contract. The characterization
of such relationship cannot conclusively be made in terms
alone in the writtenagreement but must rest upon the
detailed facts.Under Rule VII of Book III Sec. 8, there is job
contracting when the contractor carries on an
independentbusiness. In the case at bar, Vallum did not have
a branch in Baguio. Hyatt provided Valum with offices at
Hyattsown premises.With respect to the performance of
work, the security guards were performing activities directly
related tothe business operation of Hyatt since to safeguard
the person and belongings of the guests is an obligation of
ahotel with its guests.Wherefore, petition is dismissed

that they were engaged to perform activities necessary in the usual business or
trade. Despite past shutdowns of the glass plant, the workers promptly returned
to their jobs. The term of the petitioners employment appears indefinite and the
continuity and habituality of the petitioners work bolsters the claim of an
employee status.
As for the payment of the workers wages, the contention that the independent
contractors were paid a lump sum representing only the salaries the workers
where entitled to have no merit. The amount paid by San Miguel to the
contracting firm is no business expense or capital outlay of the latter. What the
contractor receives is a percentage from the total earnings of all the workers plus
an additional amount from the earnings of each individual worker.
The power of dismissal by the employer was evident when the petitioners had
already been refused entry to the premises. It is apparent that the closure of the
warehouse was a ploy to get rid of the petitioners, who were then agitating the
company for reforms and benefits.
The inter-office memoranda submitted in evidence prove the companys control
over the workers. That San Miguel has the power to recommend penalties or
dismissal is the strongest indication of the companys right of control over the
workers as direct employer.
*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.

17. Brotherhood Labor Unity Movement of the Phil. v.

Zamora
Facts:
The petitioners are workers who have been employed at the San Miguel Parola
Glass Factory as pahinantes or kargadors for almost seven years. They
worked exclusively at the SMC plant, never having been assigned to other
companies or departments of San Miguel Corp, even when the volume of work
was at its minimum. Their work was neither regular nor continuous, depending on
the volume of bottles to be loaded and unloaded, as well as the business activity
of the company. However, work exceeded the eight-hour day and sometimes,
necessitated work on Sundays and holidays. -for this, they were neither paid
overtime nor compensation.
Sometime in 1969, the workers organized and affiliated themselves with
Brotherhood Labor Unity Movement (BLUM). They wanted to be paid to overtime
and holiday pay. They pressed the SMC management to hear their grievances.
BLUM filed a notice of strike with the Bureau of Labor Relations in connection
with the dismissal of some of its members. San Miguel refused to bargain with
the union alleging that the workers are not their employees but the employees of
an independent labor contracting firm, Guaranteed Labor Contractor.
The workers were then dismissed from their jobs and denied entrance to the
glass factory despite their regularly reporting for work. A complaint was filed for
illegal dismissal and unfair labor practices.
Issue:
Whether or not there was employer-employee (ER-EE)relationship between the
workers and San Miguel Corp.
Held:
YES. In determining if there is an existence of the (ER-EE) relationship, the fourfold test was used by the Supreme Court. These are:

The selection and engagement of the employee

Payment of wages
Power of dismissal
Control Test- the employers power to control the employee with respect
to the means and methods by which work is to be accomplished

In the case, the records fail to show that San Miguel entered into mere oral
agreements of employment with the workers. Considering the length of time that
the petitioners have worked with the company, there is justification to conclude

The petitioner argues that Maalat was never its employee for
he was only a commission agent whose work was not subject
to its control. Citing Investment Planning Corporation of the
Philippines v. Social Security System (21 SCRA 924 [1967]),
the petitioner states that the work of its agents approximates
that of an independent contractor since the agent is not
under control by the latter with respect to the means and
methods employed in the performance of the work, but only
as to the results.

The NLRC, after its perusal of the facts and evidence on

record, stated that there exists an employment relationship
between the parties. The petitioner has failed to overcome
this factual finding.
The fact that the petitioner imposed and applied its rule
prohibiting superiors from engaging in other funeral business
which it considered inimical to company interests proves that
it had the right of control and actually exercised its control
over the private respondent. In other words, Maalat worked
exclusively for the petitioner.
Moreover, the private respondent was prohibited from
engaging in part-time embalming business outside of the
company and a violation thereof was cause for dismissal.
Incurring absences without leave was likewise subject to
disciplinary action: a reprimand for the first offense, one
week suspension for the second offense, and dismissal for
the third offense.
The petitioner admits that these prohibitive rules bound the
private respondent but states that these rules have no
bearing on the means and methods ordinarily required of a
supervisor. The overall picture is one of employment. The
petitioner failed to prove that the contract with private
respondent was but a mere agency, which indicates that a
"supervisor" is free to accomplish his work on his own terms
and may engage in other means of livelihood.

3. All the evidence adduced by the parties are hereby

admitted, subject to rebuttal and/or controvertion by either
party during the hearing and the hearings hereafter.

4. The Attorney's fee in favor of complainant's counsel is

hereby fixed at two (2%) percent, assessable over whatever
final money award complainant may be entitled on the
aggregate sums thereof, after proper hearing on the same.
All other claims and counter-claims are hereby dismissed for
lack of merit, except those specified above.
Finally, this case is remanded to the Regional Arbitration
Branch of origin for further proceedings in accordance with
the above judgment. No findings as to costs. (At pp. 66-67,
Rollo)
The petitioner's motion for reconsideration was denied,
hence, this petition for review before this Court.
The issues raised in this petition are:
I. Whether or not the NLRC erred in ruling that an
employment relationship existed between the parties; and
II. Whether or not there was equitable basis for the award of
1/2 month separation pay for every year of service.
I
In determining whether a person who performs work for
another is the latter's employee or an independent
contractor, the prevailing test is the "right of control" test.
Under this test, an employer-employee relationship exists
where the person for whom the services are performed
reserves the right to control not only the end to be achieved,
but also the manner and means to be used in reaching that
end.

whether fixed or ascertained on a time, task, pace or

commission basis . . .".
The non-observance of regular office hours does not
sufficiently show that Maalat is a "supervisor on commission
basis" nor does the same indicate that he is an independent
salesman. As a supervisor, although compensated on
commission basis, he is exempt from the observance of
normal hours of work for his compensation is measured by
the number of sales he makes. He may not have had the
usual fixed time for starting and ending his work as in other
types of employment but he had to spend most of his
working hours at his job. People die at all times of the day or
night.
All considered, we rule that private respondent is an
employee of petitioner corporation.
II
The petitioner impugns the award of separation pay
equivalent to one-half (1/2) month average income for every
year of service to private respondent. The NLRC ruled that:
However, mindful of the fact the complainant Noli Maalat has
served respondent company for the last twenty four (24)
years, more or less, it is but proper to afford him some
equitable relief, consistent with the recent rulings of the
Supreme Court, due to his past services with no known
previous record, and the ends of social and compassionate
justice will thus be served if he is paid a portion of his
separation pay, equivalent to one-half (1/2) month every
year of his service to said company. (See Soco v. Mercantile
Corporation, G.R. No. 53364-65, March 16, 1987; and
Firestone, et al, v. Lariosa et al., G.R. No. 70479, February 27,
1987). We are not inclined to grant complainant his full
month termination pay for every year of his service because,
unlike in the former Soco case, the misconduct of the
employee merely involves infraction of company rules while
in the latter Firestone case it involves misconduct of a rank-

In Investment Planning Corporation, supra, cited by the

petitioner, the majority of the "commission agents" are
regularly employed elsewhere. Such a circumstance is absent
in Maalat's case. Moreover, the private respondent's job
description states that ". . . he attends to the needs of the
clientele and arranges the kind of casket and funeral services
the customers would like to avail themselves of" and
indicates that he must always be on the job or at least most
of time.
Likewise, the private respondent was not allowed to issue his
own receipts, nor was he allowed to directly deduct his
commission as truly independent salesmen practice.
Worthy of note too are two other company rules which
provide that "negotiation and making of contract with
customers shall be done inside the office" and "signing of
contract should be made immediately before the cadaver or
deceased is place in the casket." (Annex 10-B, Petitioner's
Position Paper, Records) Said rules belie the petitioner's
stand that it does not have control over the means and
methods by which the work is accomplished. The control test
has been satisfied. (Social Security System v. Court of
Appeals, 156 SCRA 383 [1987])
The finding by the public respondent that the petitioner has
reported private respondent to the Social Security System as
a covered employee adds strength to the conclusion that
Maalat is an employee.
There is no reversible error in the findings of facts by the
NLRC which are supported by substantial evidence and which
we, therefore, do not disturb on appeal.
The payment of compensation by way of commission does
not militate against the conclusion that private respondent
was an employee. Under Article 97 of the Labor Code, "wage"
shall mean "the renumeration of earnings, however
designated, capable of being expressed in terms of money,

The policy of social justice is not intended to countenance

wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it
certainly will not condone the offense. Compassion for the
poor is an imperative of every humane society but only when
the recipient is not a rascal claiming an undeserved privilege.
...
Subsequent decisions have abided by this pronouncement.
(See Philippine National Construction Corporation v. National
Labor Relations Commission, 170 SCRA 207 [1989]; Eastern
Paper Mills, Inc. v. National Labor Relations Commission, 170
SCRA 597 [1989]; Osias Academy v. National Labor Relations
Commission, G.R. No. 83234, April 18, 1989; and Nasipit
Lumber Co., Inc. v. National Labor Relations Commission, G.R.
No. 54424, August 31, 1989.)
Conformably with the above cited PLDT ruling, this Court
pronounces that the grant of separation pay to private
respondent Maalat, who was validly terminated for
dishonesty, is not justified.
Parenthetically, it may be mentioned that the Labor Arbiter,
apparently unaware of the petition for review pending before
this Court, conducted further proceedings to compute private
respondent's separation pay, unclaimed commission and 2%
attorney's fees, in compliance with the NLRC decision of May
31, 1988. After hearing, the Labor Arbiter rendered a decision
on May 10, 1989, the pertinent portion of which reads:
In sum, the sustainable claims of complainant are as follows:
(1) Separation Pay : P 76,064.40
(2) Unpaid Commissions : 39,344.80

Sub-total : P 115,409.20

and-file employee, although similarly involving acts of

dishonesty. (At pp. 65-66, Rollo)

This Court will not disturb the finding by the NLRC that
private respondent Maalat was dishonest in the discharge of
his functions. The finding is sufficiently supported by the
evidence on record.
Additionally, the private respondent did not appeal from the
NLRC decision, thereby impliedly accepting the validity of his
dismissal.
We take exception, therefore, to the grant of separation pay
to private respondent.
In Philippine Long Distance Telephone Company (PLDT) v.
NLRC, (164 SCRA 671 [1988]), this Court re-examined, the
doctrine in the aforecited Firestone and Soco cases and other
previous cases that employees dismissed for cause are
nevertheless entitled to separation pay on the ground of
social and compassionate justice. In abandoning this
doctrine, the Court held, and we quote:
. . . We hold that henceforth separation pay shall be allowed
as a measure of social justice only in those instances where
the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character.
Where the reason for the valid dismissal is, for example,
habitual intoxication or an offense involving moral turpitude,
like theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed
employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social
justice.
A contrary rule would, as the petitioner correctly argues,
have the effect of rewarding rather than punishing the erring
employee for his offense. . . .

(3) 2% Attorney's Fees : 2,308.18

P 117, 717.38

WHEREFORE, judgment is hereby rendered ordering

respondent Cosmopolitan Funeral Homes, Inc., to pay
complainant Noli Maalat his claims above set forth in the
total amount of P117,717.38 only.
Neither party appealed from said decision.
For being in conflict with our holding that the private
respondent is not entitled to separation pay, this Court sets
aside the Labor Arbiter's computation of separation pay.
However, we uphold his computation of unclaimed
commissions amounting to P39,344.80. The amount of
attorney's fee should consequently be recomputed at 2% of
P39,344.80 or P786.89.

19. Insular Life Assurance Co., Ltd. V. NLRC

FACTS:
Insular Life (company) and Basiao entered into a contract by
which Basiao was authorized to solicit for insurance in
accordance with the rules of the company. He would also
receive compensation, in the form of commissions. The
contract also

WHEREFORE, the judgment of the National Labor Relations

Commission is AFFIRMED except for the grant of separation
pay which is hereby disallowed. Private respondent Maalat is
entitled to unclaimed commissions of P39,344.80 and 2%
attorney's fees of P786.89, said amounts being considered
final.

[G.R. No. 84484 November 15, 1989]

INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and
MELECIO BASIAO, respondents.
FACTS
Since 1968, respondent Basiao has been an agent for
petitioner company, and is authorized to solicit within the
Philippines applications for insurance policies and annuities in
accordance with the existing rules and regulations of the
company. In return, he would receive compensation, in the
form of commissions.
Some four years later, in April 1972, the parties entered into
another contract an Agency Manager's Contract and to
implement his end of it Basiao organized an agency or office
to which he gave the name M. Basiao and Associates, while
concurrently fulfilling his commitments under the first
contract with the Company. In May, 1979, the Company
terminated the Agency Manager's Contract. After vainly
seeking a reconsideration, Basiao sued the Company in a
civil action and this, he was later to claim, prompted the
latter to terminate also his engagement under the first
contract and to stop payment of his commissions starting
April 1, 1980.
Basiao thereafter filed with the then Ministry of Labor a
complaint against the Company and its president. The
complaint sought to recover commissions allegedly unpaid
thereunder, plus attorney's fees. The respondents disputed
the Ministry's jurisdiction over Basiao's claim, asserting that
he was not the Company's employee, but an independent
contractor.
ISSUE
Whether or not there exist an employer-employee
relationship between Basiao and Insular Life.

contained the relations of the parties, duties of the agent and

the acts prohibited to him including the modes of
termination.
After 4 years, the parties entered into another contract an
Agency Managers Contact and to implement his end of it,
Basiao organized an agency while concurrently fulfilling his
commitment under the first contract.
The company terminated the Agency Managers Contract.
Basiao sued the company in a civil action. Thus, the company
terminated Basiaos engagement under the first contract and
stopped payment of his commissions.
ISSUE: W/N Basiao had become the companys employee by
virtue of the contract, thereby placing his claim for unpaid
commissions
HELD: No.
Rules and regulations governing the conduct of the business
are provided for in the Insurance Code. These rules merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed
in attaining it. Its aim is only to promote the result, thereby
creating no employer-employee relationship. It is usual and
expected for
an insurance company to promulgate a set of rules to guide
its commission agents in selling its policies which prescribe
the
qualifications of persons who may be insured. None of these
really invades the agents contractual prerogative to adopt
his own

agent's contractual prerogative to adopt his own selling

methods or to sell insurance at his own time and
convenience, hence cannot justifiably be said to establish an
employer-employee relationship between him and the
company.
The respondents limit themselves to pointing out that
Basiao's contract with the Company bound him to observe
and conform to such rules and regulations as the latter might
from time to time prescribe. No showing has been made that
any such rules or regulations were in fact promulgated, much
less that any rules existed or were issued which effectively
controlled or restricted his choice of methods or the
methods themselves of selling insurance. Absent such
showing, the Court will not speculate that any exceptions or
qualifications were imposed on the express provision of the
contract leaving Basiao "... free to exercise his own judgment
as to the time, place and means of soliciting insurance."
The Court, therefore, rules that under the contract invoked by
him, Basiao was not an employee of the petitioner, but a
commission agent, an independent contractor whose claim
for unpaid commissions should have been litigated in an
ordinary civil action.
NLRC Decision set aside.

HELD
The SC ruled in favor of Insular Life.
Not every form of control that the hiring party reserves to
himself over the conduct of the party hired in relation to the
services rendered may be accorded the effect of establishing
an employer-employee relationship between them in the
legal or technical sense of the term. A line must be drawn
somewhere, if the recognized distinction between an
employee and an individual contractor is not to vanish
altogether.
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 or methods to be
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the second,
which address both the result and the means used to achieve
it. The distinction acquires particular relevance in the case of
an enterprise affected with public interest, as is the business
of insurance, and is on that account subject to regulation by
the State with respect, not only to the relations between
insurer and insured but also to the internal affairs of the
insurance company. Rules and regulations governing the
conduct of the business are provided for in the Insurance
Code and enforced by the Insurance Commissioner. It is,
therefore, usual and expected for an insurance company to
promulgate a set of rules to guide its commission agents in
selling its policies that they may not run afoul of the law and
what it requires or prohibits. Of such a character are the rules
which prescribe the qualifications of persons who may be
insured, subject insurance applications to processing and
approval by the Company, and also reserve to the Company
the determination of the premiums to be paid and the
schedules of payment. None of these really invades the

It is understood and agreed that the Agent is an independent contractor and

nothing contained herein shall be construed or interpreted as creating an
employer-employee relationship between the Company and the Agent.
a) The Agent shall canvass for applications for Life Insurance, Annuities,
Group policies and other products offered by the Company, and collect, in
exchange for provisional receipts issued by the Agent, money due or to
become due to the Company in respect of applications or policies obtained
by or through the Agent or from policyholders allotted by the Company to the
Agent for servicing, subject to subsequent confirmation of receipt of payment
by the Company as evidenced by an Official Receipt issued by the Company
directly to the policyholder.
b) The Company may terminate this Agreement for any breach or violation of
any of the provisions hereof by the Agent by giving written notice to the Agent
within fifteen (15) days from the time of the discovery of the breach. No
waiver, extinguishment, abandonment, withdrawal or cancellation of the right
to terminate this Agreement by the Company shall be construed for any
previous failure to exercise its right under any provision of this Agreement.
c) Either of the parties hereto may likewise terminate his Agreement at any
time without cause, by giving to the other party fifteen (15) days notice in
writing.
Sometime in 2001, De Dios addressed a letter to Tongko, then one of the
Metro North Managers, regarding meetings wherein De Dios found Tongko's
views and comments to be unaligned with the directions the company was
taking. De Dios also expressed his concern regarding the Metro North
Managers' interpretation of the company's goals. He maintains that Tongko's
allegations are unfounded. Some allegations state that some Managers are
unhappy with their earnings, that they're earning less than what they deserve
and that these are the reasons why Tonko's division is unable to meet
agency development objectives. However, not a single Manager came forth
to confirm these allegations. Finally, De Dios related his worries about
Tongko's inability to push for company development and growth.
De Dios subsequently sent Tongko a letter of termination in accordance with
Tongko's Agents Contract. Tongko filed a complaint with the NLRC against
Manulife for illegal dismissal, alleging that he had an employer-employee
relationship with De Dios instead of a revocable agency by pointing out that
the latter exercised control over him through directives regarding how to
manage his area of responsibility and setting objectives for him relating to the
business. Tongko also claimed that his dismissal was without basis and he

20. Tongko v. The Manufacturers Life Insurance & de Dios

G.R. No. 167622, January 25, 2011
GREGORIO V. TONGKO, petitioner, vs. THE MANUFACTURERS LIFE
INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS,
respondents.
BRION, J.:
FACTS:
Taking from the November 2008 decision, the facts are as follows:
Manufacturers Life Insurance, Co. is a domestic corporation engaged in life
insurance business. De Dios was its President and Chief Executive Officer.
Petitioner Tongko started his relationship with Manulife in 1977 by virtue of a
Career Agent's Agreement.
Pertinent provisions of the agreement state that:

insurance contract or policy. They do not reach the level of control into the
means and manner of doing an assigned task that invariably characterizes
an employment relationship as defined by labor law.
To reiterate, guidelines indicative of labor law "control" do not merely relate to
the mutually desirable result intended by the contractual relationship; they
must have the nature of dictating the means and methods to be employed in
attaining the result. Tested by this norm, Manulifes instructions regarding the
objectives and sales targets, in connection with the training and engagement
of other agents, are among the directives that the principal may impose on
the agent to achieve the assigned tasks.They are targeted results that
Manulife wishes to attain through its agents. Manulifes codes of conduct,
likewise, do not necessarily intrude into the insurance agents means and
manner of conducting their sales. Codes of conduct are norms or standards
of behavior rather than employer directives into how specific tasks are to be
done.

was not afforded due process. The NLRC ruled that there was an employeremployee relationship as evidenced by De Dios's letter which contained the
manner and means by which Tongko should do his work. The NLRC ruled in
favor of Tongko, affirming the existence of the employer-employee
relationship.
The Court of Appeals, however, set aside the NLRC's ruling. It applied the
four-fold test for determining control and found the elements in this case to
be lacking, basing its decision on the same facts used by the NLRC. It found
that Manulife did not exert control over Tongko, there was no employeremployee relationship and thus the NLRC did not have jurisdiction over the
case.
The Supreme Court reversed the ruling of the Court of Appeals and ruled in
favor of Tongko. However, the Supreme Court issued another Resolution
dated June 29, 2010, reversing its decision. Tongko filed a motion for
reconsideration, which is now the subject of the instant case.

In sum, the Supreme Court found absolutely no evidence of labor law control.
Petition is DENIED.

ISSUE: Whether the Supreme Court erred in issuing the June 29, 2010
resolution, reversing its earlier decision that an employer-employee
relationship existed.
HELD: The petition is unmeritorious.
LABOR LAW Agency; Employer-employee relationships
The Supreme Court finds no reason to reverse the June 29, 2010 decision.
Control over the performance of the task of one providing service both with
respect to the means and manner, and the results of the service is the
primary element in determining whether an employment relationship exists.
The Supreme Court ruled petitioners Motion against his favor since he failed
to show that the control Manulife exercised over him was the control required
to exist in an employer-employee relationship; Manulifes control fell short of
this norm and carried only the characteristic of the relationship between an
insurance company and its agents, as defined by the Insurance Code and by
the law of agency under the Civil Code.
In the Supreme Courts June 29, 2010 Resolution, they noted that there are
built-in elements of control specific to an insurance agency, which do not
amount to the elements of control that characterize an employment
relationship governed by the Labor Code.The Insurance Code provides
definite parameters in the way an agent negotiates for the sale of the
companys insurance products, his collection activities and his delivery of the

21.JOSE SONZA vs. ABS-CBN BROADCASTING

CORPORATION
G.R. No. 138051
June 10, 2004
Facts:
In May 1994, ABS-CBN signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was represented by
its corporate officers while MJMDC was represented by Sonza, as President and
general manager, and Tiangco as its EVP and treasurer. Referred to in the agreement
as agent, MJMDC agreed to provide Sonzas services exclusively to ABS-CBN as
talent for radio and television. ABS-CBN agreed to pay Sonza a monthly talent fee of
P310, 000 for the first year and P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in
view of the recent events concerning his program and career. After the said letter,
Sonza filed with the Department of Labor and Employment a complaint alleging that
ABS-CBN did not pay his salaries, separation pay, service incentive pay,13th month
pay, signing bonus, travel allowance and amounts under the Employees Stock Option
Plan (ESOP). ABS-CBN contended that no employee-employer relationship existed
between the parties. However, ABS-CBN continued to remit Sonzas monthly talent
fees but opened another account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no employeeemployer relationship. NLRC affirmed the decision of the Labor Arbiter. CA also
affirmed the decision of NLRC.
Issue: Whether or not there was employer-employee relationship between the parties.
Ruling:
Case law has consistently held that the elements of an employee-employer
relationship are selection and engagement of the employee, the payment of wages,
the power of dismissal and the employers power to control the employee on the
means and methods by which the work is accomplished. The last element, the socalled "control test", is the most important element.

[G.R. No. 138051 June 10, 2004]

JOSE
Y.
SONZA,
petitioner,vs.
CORPORATION, respondent.

ABS-CBN

BROADCASTING

FACTS
ABS-CBN signed an Agreement with the Mel and Jay Management and
Development Corporation (MJMDC). Referred to as AGENT, MJMDC agreed
to provide Jay Sonzas services exclusively to ABS-CBN as talent. After
more than two years, Sonza as agent of MJMDC wrote a letter to ABS-CBN
notifying them of the formers intention to rescind the agreement. Sonza
waived and renounced the recovery of the remaining amounts stipulated in
the agreement but reserved the right to seek the recovery of other benefits
under the same.
Later, SONZA filed a complaint against ABS-CBN before the DOLE-NCR,
alleging that ABS-CBN did not pay his salaries, separation pay, service
incentive leave pay, 13th month pay, signing bonus, travel allowance and
amounts due under the Employees Stock Option Plan ("ESOP"). In response
ABS-CBN filed a Motion to Dismiss on the ground that no employeremployee relationship existed between the parties. Meanwhile, pursuant to
the Agreement, ABS-CBN continued to remit SONZAs monthly talent fees
through his account at PCIBank. ABS-CBN later opened a new account with
the same bank where ABS-CBN deposited SONZAs talent fees and other
payments due him under the Agreement.
ISSUE
Whether or not there existed an employee-employer relationship between
Sonza and ABS-CBN.
HELD
Applying the four fold test, there is no employee-employer relationship.
The elements of an employer-employee relationship are: (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 employee
on the means and methods by which the work is accomplished. The last
element, the so-called "control test", is the most important element.
A. Selection and Engagement of Employee
Sonza says that independent contractors often present themselves as
persons distinguishable form other employees because of their unique
skills, expertise or talent. He however is not such because of the fact that
there are other broadcasters with similar experience and qualification. This
is not independent contractorship therefore because of the presence of
other such capable individuals.

Sonzas services to co-host its television and radio programs are because of his
peculiar talents, skills and celebrity status. Independent contractors often present
themselves to possess unique skills, expertise or talent to distinguish them from
ordinary employees. The specific selection and hiring of SONZA, because of his
unique skills, talent and celebrity status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive, of an independent contractual
relationship. All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. For violation of any provision of the
Agreement, either party may terminate their relationship. Applying the control test to
the present case, we find that SONZA is not an employee but an independent
contractor.
The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor. This test is based on the extent of control
the hirer exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse holds
true as well the less control the hirer exercises, the more likely the worker is
considered an independent contractor. To perform his work, SONZA only needed his
skills and talent. How SONZA delivered his lines, appeared on television, and
sounded on radio were outside ABS-CBNs control. ABS-CBN did not instruct SONZA
how to perform his job. ABS-CBN merely reserved the right to modify the program
format and airtime schedule "for more effective programming." ABS-CBNs sole
concern was the quality of the shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control over the means and methods of
performance of Sonzas work. A radio broadcast specialist who works under minimal
supervision is an independent contractor. Sonzas work as television and radio
program host required special skills and talent, which SONZA admittedly possesses.
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like Sonza as independent contractors. The
right of labor to security of tenure as guaranteed in the Constitution arises only if there
is an employer-employee relationship under labor laws. Individuals with special skills,
expertise or talent enjoy the freedom to offer their services as independent
contractors. The right to life and livelihood guarantees this freedom to contract as
independent contractors. The right of labor to security of tenure cannot operate to
deprive an individual, possessed with special skills, expertise and talent, of his right to
contract as an independent contractor.

because althought ABS CBN had this right under the agreement, it could
not even dismiss nor discipline Sonza because it still had to continue
paying him. This shows that ABS CBNs control extended only to the result
of Sonzas work.
Next, Sonza claims that ABS CBN exercise control by providing him with all
the equipment and crew. However, these are not the tools and
instrumentalities SONZA needed to perform his job. What SONZA
principally needed were his talent or skills and the costumes necessary for
his appearance.
SONZA urges us to rule that he was ABS-CBNs employee because ABSCBN subjected him to its rules and standards of performance. The
Agreement stipulates that SONZA shall abide with the rules and standards
of performance "covering talents" of ABS-CBN. The Agreement does not
require SONZA to comply with the rules and standards of performance
prescribed for employees of ABS-CBN.
In this case, SONZA failed to show that these rules controlled his
performance. We find that these general rules are merely guidelines
towards the achievement of the mutually desired result, which are toprating television and radio programs that comply with standards of the
industry.
Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the
most extreme form of control which ABS-CBN exercised over him. This
argument is futile. Even an independent contractor can validly provide his
services exclusively to the hiring party.
MJMDC as AGENT of SONZA
Sonza says that it is wrong to say that he is a talent of MJMDC. He insists
that MJMDC is a labor-only contractor and ABS CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the "laboronly" contractor; (2) the employee who is ostensibly under the employ of
the "labor-only" contractor; and (3) the principal who is deemed the real
employer. Under this scheme, the "labor-only" contractor is the agent of
the principal. The law makes the principal responsible to the employees of
the "labor-only contractor" as if the principal itself directly hired or
employed the employees.
These circumstances are not present in this case.
There are essentially only two parties involved under the Agreement,
namely, SONZA and ABS-CBN. MJMDC merely acted as SONZAs agent.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like SONZA as independent
contractors. SONZA argues that if such practice exists, it is void for
violating the right of labor to security of tenure. The right of labor to
security of tenure as guaranteed in the Constitution arises only if there is
an employer-employee relationship under labor laws. Not every
performance of services for a fee creates an employer-employee

The Supreme Court held that the selection of Sonza because of unique
expertise and skills is a circumstance indicative, but not conclusive of an
independent contractual relationship. Also, if indeed Sonza did not possess
such skills, ABS CBN would not have entered into the Agreement but would
have hired him through the personnel department just like an ordinary
employee. In any event, the method of selecting and engaging does not
conclusively determine his status.
B. Payment of Wages
Sonza claims that because his monthly fees all went to him and not to
MJMDC as well as all the benefits and privileges indicate his status as
employee.
The court said that the compensation and the mode of payment was all a
result of negotiations that led to the Agreement. If indeed Sonza were an
employee, there would be no need for negotiation because these benefits
are deemed incorporated into the contract.
His talent fees are likewise so huge and out of the ordinary that they
indicate more an independent contractual relationship rather than an
employer-employee relationship. Also, the power to bargain talent fees is a
circumstance indicative, but not conclusive, of an independent contractual
relationship.
C. POWER OF DISMISSAL
For violation of any provision of the Agreement, either party may terminate
their relationship. Sonza failed to show that ABS CBN could terminate his
services on grounds other than breach of contract, such as retrenchment
to prevent losses as provided under labor laws. In fact, illustrative of the
power of the Agreement, ABS CBN continued to pay Sonza monthly fees
even of they suffered losses because it was what the stipulations
commanded.
D. POWER OF CONTROL
This last test is based on the extent the hirer has control over the worker.
The greater the supervision and control over the hirer exercises, the more
likely the worker is deemed an employee. The converse holds true as well
the less control the hirer exercises, the more likely the worker is considered
an independent contractor.
First, Sonzas argument that ABS CBN exercised control over the means
and methods of his work is misplaced. He was engaged to co-host a TV
program and nothing more. How he delivered is lines, appeared on
television, and sounded on the radio were outside the control of ABS CBN.
He did not have to render 8 hours of work daily. The only prohibition was
that he could not criticize ABS CBN or its interests. Obviously SONZA had a
free hand on what to say or discuss in his shows provided he did not attack
ABS-CBN or its interests. Clearly, ABS-CBN did not exercise control over the
means and methods of performance of SONZAs work.
Sonza also claims that ABS CBNs power not to broadcast his show tells of
its power over the methods and means of his work. The argument fails

relationship. To hold that every person who renders services to another for
a fee is an employee - to give meaning to the security of tenure clause will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer
their services as independent contractors. The right to life and livelihood
guarantees this freedom to contract as independent contractors. The right
of labor to security of tenure cannot operate to deprive an individual,
possessed with special skills, expertise and talent, of his right to contract
as an independent contractor. An individual like an artist or talent has a
right to render his services without any one controlling the means and
methods by which he performs his art or craft. This Court will not interpret
the right of labor to security of tenure to compel artists and talents to
render their services only as employees. If radio and television program
hosts can render their services only as employees, the station owners and
managers can dictate to the radio and television hosts what they say in
their shows. This is not conducive to freedom of the press.
Petition denied.

22. DUMPIT-MURILLO vs. CA

(c) payment of 13th month pay, vacation/sick/service

incentive leaves and other monetary benefits due to a
regular employee starting March 31, 1996. ABC replied
that a check covering petitioners talent fees for
September 16 to October 20, 1999 had been processed
and prepared, but that the other claims of petitioner
had no basis in fact or in law.
On December 20, 1999, petitioner filed a complaint
against ABC, Mr. Javier and Mr. Edward Tan, for illegal
constructive dismissal, nonpayment of salaries,
overtime pay, premium pay, separation pay, holiday
pay, service incentive leave pay, vacation/sick leaves
and 13th month pay. She likewise demanded payment
for moral, exemplary and actual damages, as well as for
attorneys fees.
Labor Arbiter: DISMISSED.
NLRC: REVERSED on the ground that an employeremployee relationship existed between petitioner and
ABC; that the subject talent contract was void; that the
petitioner was a regular employee illegally dismissed;
and that she was entitled to reinstatement and
backwages or separation pay, aside from 13th month
pay and service incentive leave pay, moral and
exemplary damages and attorneys fees.
CA: REVERSED NLRC decision. The appellate court
reasoned that petitioner should not be allowed to
renege from the stipulations she had voluntarily and
knowingly executed by invoking the security of tenure
under the Labor Code. According to the appellate court,
petitioner was a fixed-term employee and not a
regular employee within the ambit of Article 280 of

G.R. No. 164652

June 8, 2007

PETITIONER: Thelma Dumpit-Murillo

RESPONDENTS: Associated Broadcasting Company,
Jose Javier, Edward Tan
PONENTE: Quisumbing, J.
FACTS:
On October 2, 1995, under a Talent Contract,
Associated
Broadcasting
Company
(ABC)
hired
petitioner Thelma Dumpit-Murillo as a newscaster and
co-anchor for Balitang-Balita, an early evening news
program. The contract was for a period of three months.
It was renewed under 4 more Talent Contracts. In
addition, her services were engaged for the program
"Live on Five." On September 30, 1999, after four
years of repeated renewals, petitioners talent
contract expired. Two weeks after the expiration of the
last contract, petitioner sent a letter to Mr. Jose Javier,
Vice President for News and Public Affairs of ABC,
informing the latter that she was still interested in
renewing her contract subject to a salary increase.
Thereafter, petitioner stopped reporting for work.
On November 5, 1999, she wrote Mr. Javier a letter
saying that it has been more than 15 days since she
wrote them a letter and yet she still has not received
any formal written reply, and that if she should not
receive any formal response by November 8, she will
deem it a constructive dismissal of her services.
A month later, petitioner sent a demand letter to ABC,
demanding: (a) reinstatement to her former position; (b)
payment of unpaid wages for services rendered from
September 1 to October 20, 1999 and full backwages;

employment between petitioner and private

respondents.

the Labor Code because her job, as anticipated and

agreed upon, was only for a specified time.

Two kinds of REGULAR employees under law:

(1) those who are engaged to perform activities
which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those who
have rendered at least one year of service, whether
continuous or broken, with respect to the activity in
which they are employed. In other words, regular
status arises from either the nature of work of the
employee or the duration of his employment

ISSUES:

2. W/N
THERE
WAS
AN
EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN PETITIONER AND ABC?
YES. The elements to determine the existence of an
employment relationship are:
(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 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. The duties of
petitioner as enumerated in her employment
contract indicate that ABC had control over the work
of petitioner. Aside from control, ABC also dictated
the work assignments and payment of petitioners
wages. ABC also had power to dismiss her. All these
being present, clearly, there existed an employment
relationship between petitioner and ABC.

1. W/N DUMPIT-MURILLO IS A REGULAR EMPLOYEE OR

A FIXED TERM EMPLOYEE?
REGULAR EMPLOYEE. Defendants have cited the case
of Sonza v. ABS-CBN Broadcasting Corporation
recognizing the absence of employer-employee
relationship between a talent and the media entity
which engaged the talents services on a per talent
contract basis. However, the petitioner was a
regular employee under contemplation of law. The
practice of having fixed-term contracts in the
industry does not automatically make all talent
contracts valid and compliant with labor law. The
assertion that a talent contract exists does not
necessarily prevent a regular employment status.
The court held that the Sonza case was not
applicable to the case at bar because the television
station did not exercise control over the means and
methods of the performance of Sonzas work. In the
case at bar, ABC had control over the performance of
petitioners work. Noteworthy too, is the
comparatively low P28,000 monthly pay of petitioner
vis the P300,000 a month salary of Sonza, that all the
more bolsters the conclusion that petitioner was not
in the same situation as Sonza.
Moreover, private respondents practice of
repeatedly extending petitioners 3-month contract
for four years is a circumvention of the acquisition of
regular status. Hence, there was no valid fixed-term

BY REASON OF THE CONTINUOUS AND SUCCESSIVE

RENEWALS OF THE THREE-MONTH TALENT CONTRACTS,
AN EMPLOYER-EMPLOYEE RELATIONSHIP WAS CREATED
AS PROVIDED FOR UNDER ARTICLE 280 OF THE LABOR
CODE[;]
IV.
BY THE CONSTRUCTIVE DISMISSAL OF HEREIN
PETITIONER, AS A REGULAR EMPLOYEE, THERE WAS A
DENIAL OF PETITIONERS RIGHT TO DUE PROCESS THUS
ENTITLING HER TO THE MONEY CLAIMS AS STATED IN
THE COMPLAINT[.]16
The issues for our disposition are: (1) whether or not
this Court can review the findings of the Court of
Appeals; and (2) whether or not under Rule 45 of the
Rules of Court the Court of Appeals committed a
reversible error in its Decision.
On the first issue, private respondents contend that the
issues raised in the instant petition are mainly factual
and that there is no showing that the said issues have
been resolved arbitrarily and without basis. They add
that the findings of the Court of Appeals are supported
by overwhelming wealth of evidence on record as well
as prevailing jurisprudence on the matter.17
Petitioner however contends that this Court can review
the findings of the Court of Appeals, since the appellate
court erred in deciding a question of substance in a way
which is not in accord with law or with applicable
decisions of this Court.18
We agree with petitioner. Decisions, final orders or
resolutions of the Court of Appeals in any case

3. W/N there was an illegal dismissal?

YES. While this Court has recognized the validity of
fixed-term employment contracts in a number of
cases, it has consistently emphasized that when the
circumstances of a case show that the periods were
imposed to block the acquisition of security of
tenure, they should be struck down for being
contrary to law, morals, good customs, public order
or public policy.
As a regular employee, petitioner is entitled to
security of tenure and can be dismissed only for just
cause and after due compliance with procedural due
process. Since private respondents did not observe
due process in constructively dismissing the
petitioner, we hold that there was an illegal
dismissal.
I.
THIS HONORABLE COURT CAN REVIEW THE FINDINGS
OF THE HONORABLE COURT OF APPEALS, THE DECISION
OF WHICH IS NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT[;]
II.
THE PRO-FORMA TALENT CONTRACTS, AS CORRECTLY
FOUND BY THE NLRC FIRST DIVISION, ARE "ANTIREGULARIZATION DEVICES" WHICH MUST BE STRUCK
DOWN FOR REASONS OF PUBLIC POLICY[;]
III.

Further, the Sonza case is not applicable. In Sonza, the

television station did not instruct Sonza how to perform
his job. How Sonza delivered his lines, appeared on
television, and sounded on radio were outside the
television stations control. Sonza had a free hand on
what to say or discuss in his shows provided he did not
attack the television station or its interests. Clearly, the
television station did not exercise control over the
means and methods of the performance of Sonzas
work.24 In the case at bar, ABC had control over the
performance of petitioners work. Noteworthy too, is the
comparatively low P28,000 monthly pay of petitioner25
vis the P300,000 a month salary of Sonza, 26 that all the
more bolsters the conclusion that petitioner was not in
the same situation as Sonza.
The contract of employment of petitioner with ABC had
the following stipulations:
xxxx
1. SCOPE OF SERVICES TALENT agrees to devote
his/her talent, time, attention and best efforts in the
performance of his/her duties and responsibilities as
Anchor/Program Host/Newscaster of the Program, in
accordance with the direction of ABC and/or its
authorized representatives.
1.1. DUTIES AND RESPONSIBILITIES TALENT shall:
a. Render his/her services as a newscaster on the
Program;
b. Be involved in news-gathering operations
conducting interviews on- and off-the-air;

by

regardless of the nature of the action or proceeding

involved may be appealed to this Court through a
petition for review. This remedy is a continuation of the
appellate process over the original case, 19 and
considering there is no congruence in the findings of the
NLRC and the Court of Appeals regarding the status of
employment of petitioner, an exception to the general
rule that this Court is bound by the findings of facts of
the appellate court,20 we can review such findings.
On the second issue, private respondents contend that
the Court of Appeals did not err when it upheld the
validity of the talent contracts voluntarily entered into
by petitioner. It further stated that prevailing
jurisprudence has recognized and sustained the
absence
of
employer-employee
relationship
between a talent and the media entity which
engaged the talents services on a per talent
contract basis, citing the case of Sonza v. ABSCBN Broadcasting Corporation.21
Petitioner avers however that an employer-employee
relationship was created when the private respondents
started to merely renew the contracts repeatedly fifteen
times or for four consecutive years.22
Again, we agree with petitioner. The Court of Appeals
committed reversible error when it held that petitioner
was a fixed-term employee. Petitioner was a regular
employee under contemplation of law. The
practice of having fixed-term contracts in the
industry does not automatically make all talent
contracts valid and compliant with labor law. The
assertion that a talent contract exists does not
necessarily prevent a regular employment
status.23

In Manila Water Company, Inc. v. Pena,28 we said that

the elements to determine the existence of an
employment relationship are: (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 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.29

c. Participate in live remote coverages when called

upon;

The duties of petitioner as enumerated in her

employment contract indicate that ABC had control over
the work of petitioner. Aside from control, ABC also
dictated the work assignments and payment of
petitioners wages. ABC also had power to dismiss her.
All these being present, clearly, there existed an
employment relationship between petitioner and ABC.

g. Be present promptly at the studios and/or other place

of assignment at the time designated by ABC;

Concerning regular employment, the law provides

for two kinds of employees, namely: (1) those
who are engaged to perform activities which are
usually necessary or desirable in the usual
business or trade of the employer; and (2) those
who have rendered at least one year of service,
whether continuous or broken, with respect to
the activity in which they are employed.30 In other
words, regular status arises from either the nature of
work of the employee or the duration of his
employment.31 In Benares v. Pancho,32 we very
succinctly said:
[T]he primary standard for determining regular
employment is the reasonable connection between the
particular activity performed by the employee vis--vis
the usual trade or business of the employer. This

d. Be available for any other news assignment, such as

writing, research or camera work;
e. Attend production meetings;
f. On assigned days, be at the studios at least one (1)
hour before the live telecasts;

h. Keep abreast of the news;

i. Give his/her full cooperation to ABC and its duly
authorized representatives in the production and
promotion of the Program; and
j. Perform such other functions as may be assigned to
him/her from time to time.
xxxx
1.3 COMPLIANCE WITH STANDARDS, INSTRUCTIONS
AND OTHER RULES AND REGULATIONS TALENT agrees
that he/she will promptly and faithfully comply with the
requests and instructions, as well as the program
standards, policies, rules and regulations of ABC, the
KBP and the government or any of its agencies and
instrumentalities.27
xxxx

dominance being exercised by the employer over the

employee.36 Moreover, fixed-term employment will not
be considered valid where, from the circumstances, it is
apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee.37
In the case at bar, it does not appear that the employer
and employee dealt with each other on equal terms.
Understandably, the petitioner could not object to the
terms of her employment contract because she did not
want to lose the job that she loved and the workplace
that she had grown accustomed to,38 which is exactly
what happened when she finally manifested her
intention to negotiate. Being one of the numerous
newscasters/broadcasters of ABC and desiring to keep
her job as a broadcasting practitioner, petitioner was
left with no choice but to affix her signature of
conformity on each renewal of her contract as already
prepared by private respondents; otherwise, private
respondents would have simply refused to renew her
contract. Patently, the petitioner occupied a position of
weakness vis--vis the employer. Moreover, private
respondents practice of repeatedly extending
petitioners 3-month contract for four years is a
circumvention of the acquisition of regular status.
Hence, there was no valid fixed-term employment
between petitioner and private respondents.
While this Court has recognized the validity of fixedterm employment contracts in a number of cases, it has
consistently emphasized that when the circumstances
of a case show that the periods were imposed to block
the acquisition of security of tenure, they should be
struck down for being contrary to law, morals, good
customs, public order or public policy.39

connection can be determined by considering the

nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety.
If the employee has been performing the job for at least
a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and
continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is
considered regular, but only with respect to such
activity and while such activity exists.33
In our view, the requisites for regularity of employment
have been met in the instant case. Gleaned from the
description of the scope of services aforementioned,
petitioners work was necessary or desirable in the
usual business or trade of the employer which includes,
as a pre-condition for its enfranchisement, its
participation in the governments news and public
information dissemination. In addition, her work was
continuous for a period of four years. This repeated
engagement under contract of hire is indicative of the
necessity and desirability of the petitioners work in
private respondent ABCs business.34
The contention of the appellate court that the contract
was characterized by a valid fixed-period employment is
untenable. For such contract to be valid, it should be
shown that the fixed period was knowingly and
voluntarily agreed upon by the parties. There should
have been no force, duress or improper pressure
brought to bear upon the employee; neither should
there be any other circumstance that vitiates the
employees consent.35 It should satisfactorily appear
that the employer and the employee dealt with each
other on more or less equal terms with no moral

As a regular employee, petitioner is entitled to

security of tenure and can be dismissed only for
just cause and after due compliance with
procedural
due
process.
Since
private
respondents did not observe due process in
constructively dismissing the petitioner, we hold
that there was an illegal dismissal.
WHEREFORE, the challenged Decision dated January
30, 2004 and Resolution dated June 23, 2004 of the
Court of Appeals in CA-G.R. SP No. 63125, which held
that the petitioner was a fixed-term employee, are
REVERSED and SET ASIDE. The NLRC decision is
AFFIRMED.
Costs against private respondents.
SO ORDERED.

The existence of an employer-employee relationship is

ultimately a question of fact. As a general rule, factual issues
are beyond the province of this Court. However, this rule
admits of exceptions, one of which is where there are
conflicting findings of fact between the Court of Appeals, on
one hand, and the NLRC and Labor Arbiter, on the other, such
as in the present case.
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.
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

23 Bernate v PBA
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.
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.\
The Labor Arbiter declared petitioner an employee whose
dismissal by respondents was illegal.Tthe NLRC affirmed the
Labor Arbiter's judgment. The Court of Appeals, which
overturned the decisions of the NLRC and Labor Arbiter. The
Court of Appeals found petitioner 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.
HELD:
The petitioners are not employees of respondents.
LABOR LAW:

The case eventually reached the Court of Appeals where the

CA ruled that there is no such relationship.
Orozco insists that by applying the four-fold test, it can be
seen that she is an employee of PDI; Orozco insists that PDI
had been exercising the power of control over her because:
a) PDI provides the guidelines as to what her article content
should be;

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.

b) PDI sets deadlines as to when Orozco must submit her

article/s;
c) PDI controls the number of articles to be submitted by
Orozco;
d) PDI requires a certain discipline from their writers so as to
maintain their readership.
ISSUE: Whether or not a newspaper columnist is an employee
of the newspaper which publishes the column.
HELD: No. The type of control being argued by Orozco is not
the type of control contemplated under the four fold test
principle in labor law. The Supreme Court emphasized: The
main determinant to test control is whether the rules set by
the employer are meant to control not just the results of the
work but also the means and method to be used by the hired
party in order to achieve such results.
In this case, the control exercised by PDI over Orozco, as
mentioned earlier, is not that control contemplated under
the four fold test. In fact, such standards set by PDI is merely
incidental or inherent in the newspaper business and is not
an exercise of control over Orozco.

24 Orozco vs. CA 2008

In March 1990, Wilhelmina Orozco was hired as a writer by
the Philippine Daily Inquirer (PDI). She was the columnist of
Feminist Reflections under the Lifestyle section of the
publication. She writes on a weekly basis and on a per article
basis (P250-300/article).
In 1991, Leticia Magsanoc as the editor-in-chief sought to
improve the Lifestyle section of the paper. She said there
were too many Lifestyle writers and that it was time to
reduce the number of writers. Orozcos column was
eventually dropped.
Orozco filed for a case for Illegal Dismissal against PDI and
Magsanoc. Orozco won in the Labor Arbiter where the arbiter
ruled that there exists an employer-employee relationship
between PDI and Orozco.

Orozco has not shown that PDI, acting through its editors,
dictated how she was to write or produce her articles each
week. There were no restraints on her creativity; Orozco was
free to write her column in the manner and style she was
accustomed to and to use whatever research method she
deemed suitable for her purpose. The apparent limitation
that she had to write only on subjects that befitted the
Lifestyle section did not translate to control, but was simply a
logical consequence of the fact that her column appeared in
that section and therefore had to cater to the preference of
the readers of that section.

Consultas work as the term control is understood in labor

jurisprudence. Neither did it
make Consulta an employee of Pamana. Pamana did not
prohibit Consulta fromengaging in any other business, or
from being connected with any other company, for
as long as the business or company did not compete with
Pamanas business. The
exclusivity clause was a reasonable restriction to prevent
similar acts prejudicial to
Pamanas business interest. Article 1306 of the Civil Code
provides that [t]he
contracting parties may establish such stipulation, clauses,
terms and conditions as theymay deem convenient, provided
that they are not contrary to law, morals, goodcustoms,
public order, or public policy.There being no employeremployee relationship between Pamana and Consulta, the
Labor Arbiter and the NLRC had no jurisdiction to entertain
and rule on Consultasmoney claim. Consultas remedy is to
file an ordinary civil action to litigate her claim
Petition is dismissed

25 CONSULTA vs CA
[G.R. No. 145443. March 18, 2005]RAQUEL P. CONSULTA,
petitioner, vs. COURT OF APPEALS, PAMANAPHILIPPINES, INC.,
RAZUL Z. REQUESTO, and ALETA TOLENTINO, respondents.
FACTS:
Consulta was Managing Associate of Pamana. On 1987
she was issued acertification authorizing her to negotiate for
and in behalf of PAMANA with theFederation of Filipino
Civilian Employees Association. Consulta was able to secure
anaccount with FFCEA in behalf of PAMANA. However,
Consulta claimed that PAMANAdid not pay her commission
for the PPCEA account and filed a complaint for unpaidwages
or commission.
ISSUE: Whether or not Consulta was an employee of
PAMANA.
HELD:
The SC held that Pamana was an independent agent
and not an employee.The power of control in the four fold
test is missing. The manner in which Consulta wasto pursue
her tasked activities was not subject to the control of
PAMANA. Consultafailed to show that she worked definite
hours. The amount of time, the methods andmeans, the
management and maintenance of her sales division were left
to her sound judgment.Finally, Pamana paid Consulta not for
labor she performed but only for the results of her
labor. Without results, Consultas labor was her own burden
and loss. H
er right tocompensation, or to commission, depended on the
tangible results of her work -whether she brought in paying
recruits.The fact that the appointment required Consulta to
solicit business exclusively for Pamana did not mean Pamana
exercised control over the means and methods of

contribution for remittance to the Social Security System

(SSS);

he was subjected by petitioner to the ten (10%)

percent withholding tax for his professional fee, in
accordance with the National Internal Revenue Code, matters
which are simply inconsistent with an employer-employee
relationship;

the records are replete with evidence showing that

respondent had to bill petitioner for his monthly professional
fees. It simply runs against the grain of common experience
to imagine that an ordinary employee has yet to bill his
employer to receive his salary.
Finally, the element of control s absent.
Petition granted.

26. [G.R. No. 157214. June 7, 2005]

PHILIPPINE
GLOBAL
COMMUNICATIONS,
petitioner, vs. RICARDO DE VERA, respondent.

INC.,

FACTS
De Vera and petitioner company entered into a contract
where respondent was to attend to the medical needs of
petitioners employees while being paid a retainer fee of
P4,000 per month. Later, De Vera was informed y petitioner
that the retainership will be discontinued. Respondent filed a
case for illegal dismissal.
ISSUE
Whether or not de Vera is an employee of PhilComm or an
independent contractor.
HELD
Applying the four fold test, de Vera is not an employee. There
are several indicators apart from the fact that the power to
terminate the arrangement lay on both parties:

from the time he started to work with petitioner, he

never was included in its payroll; was never deducted any

Department. The Agreement was for a term of 10 years, commencing

in the school year 1983-1984. The Agreement provided:
AGREEMENT
KNOW ALL MEN BY THESE PRESENTS
This instrument is made and entered into by and between -THE ROMAN CATHOLIC BISHOP OF MALOLOS, INC., a corporation
sole duly registered and existing under and by virtue of the laws of the
Philippines with principal office of Malolos, Bulacan, represented by
His Excellency, the MOST REVEREND CIRILO R. ALMARIO, JR.,
D.D., Bishop of Malolos, herein-after referred to as the BISHOP,
- and THE RELIGIOUS OF THE VIRGIN MARY, a religious corporation duly
organized and existing under the laws of the Philippines, with address
at 214 N. Domingo St., Quezon City, represented by REV. M. MARIA
JOSEFINA C. YAMZON, R.V.M., Superior General, hereinafter
referred to as the CONGREGATION,
W I T N E S S E T H : THAT WHEREAS, the Parish of Obando, Bulacan, under and within the
jurisdiction of the BISHOP, has and owns a parochial school called ST.
PASCUAL INSTITUTION, with a Boys and Girls Department
occupying separate quarters and premises;

27. Religious of the Virgin Mary vs. NLRC

FACTS:
Private respondent Colegio de San Pascual Baylon (CDSPB)
[2] is a religious educational institution owned by the Diocese of
Malolos, Bulacan, which operates two high school departments (the
Boys and the Girls departments) in Obando, Meycauayan, Bulacan.
On July 18, 1983, CDSPB, represented by the Bishop of Malolos,
entered into an Agreement[3] with petitioner Religious of the Virgin
Mary (RVM), a religious congregation, whereby the latter was
designated to run, administer and operate the [CDSPB] Girls

2. By virtue of, in connection with and in furtherance of the purposes

of the aforesaid appointment and designation of the
CONGREGATION, by the BISHOP, to run, administer and operate the
Girls Department of the ST. PASCUAL INSTITUTION, the BISHOP
does hereby entrust and cede into the CONGREGATION, and the
CONGREGATION does hereby accept, the use and care of the parcel
of land mentioned in the Second WHEREAS above, including the
buildings mentioned therein;
3. The CONGREGATION undertakes as its sole responsibility and
expense the administration, management and operation of the Girls
Department of ST. PASCUAL INSTITUTION, (Hereinafter, the word
School shall refer to the Girls Department of St. Pascual Institution);
4. The CONGREGATION shall provide the school with Sisters
qualified to handle the direction and the teaching of the different
courses and classes of the school, and if necessary, employ other
qualified teachers;
5. The expenses of operating and maintaining the school including,
but not limited to, the upkeep of equipment, buildings and other
property located in the school; salaries, allowances and other benefits
due to teachers and other personnel of the school; repairs and
improvements of the school; and all expenses relative to the school
shall be for the exclusive account and responsibility of the
CONGREGATION;
6. The school shall be operated at all times with a view to serving the
needs of the ordinary children of the parish and its vicinity and for that
reason, the tuition and other school fees should be as moderate as
possible;

WHEREAS, the Girls Department of ST. PASCUAL INSTITUTION is

situated at and occupies a parcel of land in Obando, Bulacan, owned
by the BISHOP and more particularly described as follows:
Parcel 357 - part of lot No. 11, situated in the Municipality of Obando,
Province of Bulacan, containing an area of FOUR THOUSAND ONE
HUNDRED EIGHTY SIX (4,186) SQUARE METERS, more or less,
(Full technical Description of which in Original Certificate of Title No.
361 of the Register of Deeds for the Province of Bulacan, which is
hereby made an integral part thereof, by way of reference) including
the building connected to the Parish Church of Obando, and the
Home Economics Building.
WHEREAS, the CONGREGATION is competent to run, administer
and operate an educational institution, and the CONGREGATION has
the BISHOPs permission to reside in Obando, Bulacan, where the
CONGREGATION is engaged in educational work;
NOW, THEREFORE, for and in consideration of the foregoing
premises and the covenants and stipulations, terms and conditions
hereunder set forth, the parties have agreed, as they hereby agree as
follows:
1. The BISHOP has appointed and designated, as he hereby appoints
and designates, and the CONGREGATION has accepted, as it hereby
accepts, the aforesaid appointment and designation, to run,
administer and operate the Girls Department of ST. PASCUAL
INSTITUTION; PROVIDED, however, that during the entire period of
this Agreement, the parish Priest of Obando, Bulacan, shall remain as
and be the DIRECTOR of the ST. PASCUAL INSTITUTION, including
the Girls Department;

c. Should the CONGREGATION not agree to the appraisal of the

BISHOP, both parties shall appoint their respective experts to make a
re-appraisal. The decision of those experts may be appealed to the
competent Sacred Congregation in Rome, and the decision of the
latter shall be final and unappealable;
d. The amount to be indemnified by the BISHOP to the
CONGREGATION shall be payable in five (5) equal and successive
yearly installments.
Pursuant to the terms of the above agreement, petitioner hired
teachers and administrative personnel for the Girls Department under
pro forma appointment papers, viz.:
COLEGIO DE SAN PASCUAL BAYLON
Girls Department
Obando, Bulacan
July 14, 1986
APPOINTMENT
MRS. SUSAN V. DEL MUNDO
Malanday, Val. Metro Mla.
Dear Mrs. Del Mundo,

7. The CONGREGATION shall at its sole expenses, comply with all

laws, ordinances, regulations or circulars of the government, whether
national, provincial or municipal, and instrumentalities thereof, relating
to the land, school and its building and improvements;
8. Whatever net profit that may result from the operation of the school,
after deducting the expenses of management, administration and
supervision, as above-mentioned shall belong exclusively to the
CONGREGATION, except as herein under provided; and any loss
shall be borne by the CONGREGATION exclusively;
9. Upon failure of the CONGREGATION to comply with the provisions
of this Agreement, the BISHOP may declare this contract terminated;
10. Unless otherwise earlier terminated under the provisions of
paragraph 8 above, this Agreement shall be valid and effective for a
period of ten (10) school years, commencing with the school year
1983-1984;
11. Upon the termination or expiration of this contract, or of its
renewal, it is agreed:
a. The CONGREGATION shall deliver the land herein above
mentioned, together with all the buildings and improvements existing
thereat, to the BISHOP;
b. The BISHOP shall indemnify the CONGREGATION for any
constructions or improvements introduced by the CONGREGATION
other than the buildings and improvements belonging to the BISHOP
according to their value, taking into consideration the depreciation of
such constructions or improvements, at the time of departure of the
CONGREGATION;

5. To follow faithfully the provisions of the Faculty Handbook.

As likewise provided in the Agreement, petitioner received all the
income from the Girls Department, in the form of tuition fees and other
charges, and paid all the expenses for the operation of the
department.[4]
On April 10, 1987, the Bishop of Malolos pre-terminated the
Agreement. As a result, petitioner moved out of the school premises,
and CDSPB, through the Bishop of Malolos and his representatives,
took over the administration of the Girls Department.[5] Apparently,
the teaching and non-teaching personnel hired by petitioner for school
year 1986-1987 continued to render services even after the
Agreement was terminated, but they were not paid their salaries for
the month of May 1987. Hence, they filed a complaint[6] for unpaid
salaries with the NLRC-Regional Arbitration Branch III, naming
CDSPB and petitioner as respondents. After the parties had submitted
their respective position papers, Labor Arbiter Cresencio J. Ramos
rendered a decision,[7] dated October 20, 1987, in favor of the
complainant-teachers and ordered CDSPB to pay them their claim for
salaries. Petitioner was absolved from any liability. The dispositive
portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the
complainants, ordering respondent Colegio de San Pascual Baylon to
pay the sum of P67,139.84, to the complainants plus ten per cent
(10%) attorneys fees in the amount of P6,713.98 [in] favor of Atty.
Liberato C. Taneza, counsel of the complainants.
CDSPB appealed the decision to the NLRC on the ground that it was
denied due process since it was not notified of the hearings set by the
labor arbiter.[8]

You are hereby appointed classroom teacher in the Colegio de San

Pascual Baylon at the rate of Eighteen thousand five hundred forty
eight and forty centavos (P18,548.40) per annum.
This appointment shall be deemed in full force and subsisting unless
expressly terminated by either party for a valid cause or causes and
after due process, and approved by the Regional Director.
(Sgd.) Mila Loredo, RVM
(Signature of Principal)
CONFORME:
(Sgd). Susan V. Del Mundo
For Permanent employment only.
Other conditions: I hereby voluntarily and willingly conform to the
following conditions:
1. To carry out the objectives of the school and my department in my
area(s) of responsibility.
2. To fulfill and carry out my rules and functions as specified in the
Faculty Handbook.
3. To attend all official school functions such as meetings, seminars,
conferences, programs, etc.
4. To be regular and punctual in the admission of requirements.

bond will answer for the wages due the employees should the
contractor or sub-contractor fail to pay the same.[10]
On appeal, the NLRC adopted the findings of the labor arbiter and
affirmed his decision. Hence, this petition. Petitioner assigns the
following errors:
1. THE COMPLAINT A QUO BEING A REMANDED CASE ON THE
GROUND THAT THE OTHER RESPONDENT BELOW COLEGIO DE
SAN PASCUAL BAYLON WAS DENIED DUE PROCESS OF LAW
AND THE PARTIES HAVE NOT PRESENTED ANY NEW EVIDENCE
BEFORE SECOND LABOR ARBITER IRENEO B. BERNARDO, IT
WAS GRAVE ERROR ON THE PART OF THE NLRC TO AFFIRM
THE DECISION OF ARBITER BERNARDO WHICH DISREGARDED
THE EARLIER DECISION OF THIS CASE RENDERED BY FIRST
LABOR ARBITER CRESENCIO J. RAMOS DATED OCTOBER 20,
1987.
2. THE OTHER RESPONDENT BELOW COLEGIO DE SAN
PASCUAL BAYLON IS THE EMPLOYER OF THE PRIVATE
RESPONDENTS HEREIN AND NOT THE PETITIONER HEREIN
RVM CONGREGATION WHICH WAS MERELY THE
ADMINISTRATOR OR MANAGER OF THE GIRLS DEPARTMENT
OF THE SCHOOL DULY APPOINTED BY THE BISHOP OF
MALOLOS AS OWNER OF THE SCHOOL.
3. THE RVM CONGREGATIONS APPOINTMENT AS
ADMINISTRATOR OR MANAGER FOR THE GIRLS DEPARTMENT
OF THE SCHOOL WAS REVOKED OR TERMINATED ON APRIL 10,
1987 AND SO, IT HAD NO MORE ACCESS TO THE INCOME OF
THE GIRLS DEPARTMENT FOR THE MONTHS OF APRIL AND

On May 31, 1988, the NLRC set aside the decision of the Labor
Arbiter and remanded the case for further proceedings.
The case was subsequently assigned to then Labor Arbiter Ireneo B.
Bernardo. When called to a hearing for the reception of further
evidence, the parties asked to be allowed instead to file supplemental
memoranda. Their request was granted. After the parties had
submitted their memoranda, Labor Arbiter Bernardo rendered a
decision[9] on April 28, 1989, holding CDSPB and petitioner jointly
and severally liable to complainants for the payment of their salaries
for May 1987. He explained:
From the standpoint of this Office, respondent RVM, may, in the wider
spectrum of labor relations, be considered an independent contractor.
It exercised greater degree of autonomy and independence in running
the affairs of respondent CDSPB, with whose real owner/operator it
had an Agreement. The hiring and paying of salaries of the
complainants primarily rest on it and eventually, the substantial
attributes of a direct employer were exercised by it. The respondent
CDSPB had actually exercised minimal supervision although it could
exercise substantial supervision and control over respondent RVM, as
it did when the former preterminated the Agreement it had with the
latter. Thus, respondent CDSPB may be considered the statutory or
indirect employer of the complainants, insofar as the operation of that
institution of learning is concerned. As indirect employer, CDSPB shall
be jointly and severally liable with its contractor, the respondent RVM,
for the unpaid wages and salaries of the latters employees, the herein
complainants. It is for this reason that the indirect employer is allowed
to require the contractor or sub-contractor to post/furnish a bond at
least equal to the cost of labor under contract on condition that the

manager or administrator of the Girls Department, and that after the

Agreement was terminated on April 10, 1987, it no longer had any
access to the income of the school to entitle and enable it to pay the
salaries of complainants.[12]
CDSPB, on the other hand, contends that petitioner is not an
independent contractor but the sole employer of private respondentscomplainants. It further argues that the payment of salaries for the
month of May 1987 should come from the fees collected by petitioner
during the school year 1986-1987.[13]
For its part, the Solicitor General, representing the NLRC, contends
that, as regards private respondents-complainants, petitioner and
CDSPB are employer and contractor, respectively, under Article 106 of
the Labor Code. They should, therefore, be held solidarily liable for
payment of private respondents salaries under Article 109 of the
Code.[14]
We find petitioners arguments to be meritorious and the position of
CDSPB and the ruling of the NLRC untenable.
The Agreement shows that petitioner entered into the same not as an
independent contractor but, as it claims, a manager or administrator of
the school. It is true that under the Agreement, petitioner had the sole
responsibility and expense [over] the administration, management and
operation of the Girls Department, as well as the authority to employ
teachers needed by the school, impose and collect tuition fees, and
pay the expenses of operations. However, control and supervision
over the schools operations remained in the hands of the Diocese of
Malolos, owner of CDSPB, represented by the Parish Priest of
Obando, Bulacan, who acted as school director. The extent of his
authority over the management and operations of the school is clearly

MAY 1987 WITH WHICH TO PAY THE MAY 1987 SALARIES OF THE
HEREIN PRIVATE RESPONDENTS.
4. THE RVM CONGREGATION IS NOT AN INDEPENDENT
CONTRACTOR.
CDSPB likewise questions the decision of the NLRC. It argues:[11]
1. RESPONDENT CDSPB ALSO ASSAILS THE DECISION DATED
18 NOVEMBER 1991 OF THE THIRD DIVISION OF THE NLRC.
2. PETITIONER RVM CONGREGATION, BEING THE EMPLOYER
OF THE COMPLAINANTS, IS SOLELY RESPONSIBLE FOR THE
LATTERS PAY FOR MAY 1987.
3. PETITIONER RVM CONGREGATION, NONETHELESS,
RECOGNIZES ITS LEGAL AND MORAL OBLIGATIONS TO PAY THE
COMPLAINANTS SALARIES FOR MAY 1987
4. TO HOLD RESPONDENT CDSPB JOINTLY AND SEVERALLY
LIABLE WITH PETITIONER RVM CONGREGATION IS CLEARLY
UNJUST AND PREJUDICIAL TO THE FORMER.
The parties agree that private respondents have not been paid their
salaries for the month of May 1987 and that they are entitled to the
payment thereof. The only question in this case is the liability of either
or both of them for payment of private respondents salaries. It is thus
necessary to determine the relationship between petitioner and
CDSPB under the Agreement.
Petitioner contends that CDSPB is the employer of complainants. It
maintains that it is not an independent contractor but merely the

7. More specifically, as academic and administrative head, the

Director shall exercise the following powers, subject to confirmation by
the Board of Trustees.
a. To accept the resignation of faculty members and employees;

shown in a memorandum,[15] dated September 30, 1986, issued by

the Bishop of Malolos, which reads:
COLEGIO DE SAN PASCUAL BAYLON
Pag-Asa, Obando, Bulacan

b. To grant or deny leaves of absence with or without pay and/or

extend such leaves;

THE DIRECTOR

c. To recommend to the Board of Trustees the retirement of the

members of the faculty and employees;

1. He shall have general control and supervision over all academic

and administrative matters.

d. To make interim appointments;

2. All officers, faculty members and employees of the institution shall

be responsible to and shall be under the direction of the Director.

e. To renew appointments for not more than one year if the budget
permits and the services are necessary.
f. To supervise and control, through the Coordinator of Student Affairs,
all extra-curricular activities of the students and to promulgate rules for
the organization and operation of student organization and for the
election and qualifications of the officers thereof.
The Director shall inform the Board of Trustees of all actions taken by
him in accordance with these functions.
8. He shall hold officers, faculty members, and employees, to the full
discharge of their duties; if in his judgment the necessity arises, he
shall, after consultation with the dean or principal concerned, in proper
cases, initiate the necessary proceedings, for the separation from
service of any of them.

3. He shall determine and prepare the agenda of all meetings of the

Board without prejudice to the right of any member of the Board to
have any matter included therein.
4. He shall preside at commencement exercises and other functions
of the Colegio.
5. All letters, appeal, complaints, etc. by the dean, principals, faculty
members, employees, and students of the Colegio shall be coursed
through him, otherwise they shall not be recognized by the Board;
provided, however, that the Director may not withhold from the Board
any communication addressed to it.
6. Upon consultation with the dean and principals concerned as the
case may be, he shall appoint qualified persons to fill vacancies.

16. For the proper conduct of the business of the Colegio, for the
implementation of all resolutions of the Board, for the maintenance of
the highest possible standard of instruction in the Colegio, for the
promotion of peace and order, for the development of cordial relations
among the three components of the Colegio - Administration, Faculty
and Student Body - the Director shall have such other powers as
specially authorized by the Board of Trustees and such as are
inherent in or usually pertaining to the Office of the Director of a
Colegio. He is also authorized to delegate in writing any of his specific
functions to any office under his control and supervision, provided that
he shall, at all times, be responsible for the acts of his delegates to the
Board of Trustees.
This memorandum leaves no room for doubt that CDSPB, as
represented by the director, exercised absolute control and
supervision over the schools administration. Under it, the authority to
hire, discipline and terminate the employment of personnel is vested in
the director, as academic and administrative head of the school.
CDSPB contends, however, that
...[T]he designation of the parish priest as director was not unilateral
but by mutual agreement between the diocese of Malolos and
[petitioner]. This being the case, the parish priests designation as
such director merely makes him, in effect, a member of the school
administration which is under the actual and direct control and
supervision of the congregation.[16]
The argument has no merit. As this Court has consistently ruled, the
power of control is the most decisive factor[17] in determining the
existence of an employer-employee relationship. In Encyclopedia
Britannica (Phils.), Inc. v. NLRC,[18] we held:

9. He shall submit through the Board, an annual report of the

operation of the Colegio at the close of the school year, and make
recommendations thereto, said report to be given to MECS.
10. He shall submit to the Board of Trustees the annual budget of the
Colegio with estimates of income and expenses as prepared by the
dean, the principals and the treasurer.
11. He shall make, sign, deliver, and execute contracts, agreements
and other documents wherein the Colegio is a party in the name and
in behalf of the school.
12. He shall sign all checks, negotiable instruments, and other
evidence of payments in the name of the school.
13. He shall have the power to authorize expenses from the
miscellaneous items in the budget for maintenance and repairs or
remodeling and modification of buildings and grounds and equipment
without prior action by the Board of Trustees, provided the total
amount does not exceed ____________ pesos (P _______)
14. As the academic leader of the Colegio, he shall represent it in
meetings, conferences, conventions in which the Colegio may be
interested and speak when occasion arises.
15. Within the limits of the law and proper decorum, he shall try to
secure for the Colegio, aside from the parish appropriation, additional
funds and/or property in the form of prizes, scholarships, donations,
and endowments and land grants to enable the Colegio to accomplish
better the purpose of its establishment.

principal/representative of petitioner, they bore the name/letterhead of

CDSPB and clearly indicated therein that the employees were hired as
teachers/personnel by CDSPB, and not by RVM. Moreover, CDSPB
itself admits that its name not petitioners appears in the employees
payroll ledger cards.[21]
One other crucial fact to consider is that private respondentscomplainants continued to render services beyond April 10, 1987, the
termination date of the Agreement. If they were employees of
petitioner and not of CDSPB, their services should have been
terminated the moment the Agreement was no longer in effect.
Instead, CDSPB continued to honor their respective employment
contracts/appointment papers and avail of their services even after
petitioner turned over the schools administration to CDSPB. Indeed, it
does not appear that there was a break or change in the employment
status of private respondents-complainants, neither are they claiming
separation pay from petitioner, unlike in cases where there is a
supposed change in employers.[22]

In determining the existence of an employer-employee relationship the

following elements must be present: (1) selection and engagement of
the employee; (2) payment of wages; (3) power of dismissal; and (4)
the power to control the employees conduct. Of the above, control of
employees conduct is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employeremployee relationship. Under the control test, an employer-employee
relationship exists where the person for whom the services are
performed reserves the right to control not only the end to be
achieved, but also the manner and means to be used in reaching that
end.

Based on the Agreement and other evidence on record, it thus

appears that petitioner was merely the agent or administrator of
CDSPB, and that private respondents are its employees. In Ponce v.
NLRC,[23] this Court held:

In this case, CDSPB reserved the right to control and supervise the
operations of the Girls Department. As noted by the labor arbiter
himself and affirmed by the NLRC, although CDSPB actually
exercised minimal supervision over petitioner, [it] could exercise
substantial supervision and control as it did when [it] preterminated
the Agreement. There was, therefore, no basis in finding that
petitioner had a greater degree of autonomy and independence in
running the affairs of the school. The presence of the school director,
whose vast powers have already been noted, negates any suggestion
or semblance of autonomy.

Under Section 8, Rule VIII, Book III, of the Omnibus Rules

Implementing the Labor Code, an independent contractor is one who
undertakes job contracting, i.e., a person who (a) carries on an
independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal
in all matters connected with the performance of the work except as to
the results thereof, and (b) has substantial capital or investment in the

Nor is there any merit in the claim that actual and effective control was
exercised by petitioner since the designation of the parish priest as
director was a mere formality, as he did perform functions which are
purely ministerial and figurative in nature.[19] Time and again we have
held that the control test only requires the existence of the right to
control the manner of doing the work not necessarily the actual
exercise of the power by him, which he can delegate.[20] Indeed,
although the letters of appointment were signed by the

to pay the salaries for the month of May 1987 to the concerned
employees. Whether or not said salaries should come from the fees
collected by its agent (petitioner) for the previous year is a matter to
be litigated between CDSPB and RVM. Here, the only issue is who is
the employer of private respondents.
WHEREFORE, the petition is hereby GRANTED and the decision,
dated November 18, 1991, of the National Labor Relations
Commission is SET ASIDE. Colegio de San Pascual Baylon is
ORDERED to pay private respondents their salaries for the month of
May 1987, in the amount of P67,139.84, and P6,713.98 as attorneys
fees.
SO ORDERED

form of tools, equipment, machineries, work premises, and other

materials which are necessary in the conduct of the business.
Jurisprudential holdings are to the effect that in determining the
existence of an independent contractor relationship, several factors
might be considered such as, but not necessarily confined to, whether
or not the contractor is carrying on an independent business; the
nature and extent of the work; the skill required; the term and duration
of the relationship; the right to assign the performance of specified
pieces of work, the control and supervision of the work to another; the
employers power with respect to the hiring, firing and payment of the
contractors workers; the control of the premises; the duty to supply
premises, tools, appliances, materials and labor; and the mode,
manner and terms of payment.
As above stated, petitioner was subject to the control and supervision
of CDSPB in running the Girls Department. Petitioner has not been
shown to have substantial capital or investment necessary in the
conduct of the business. Under the Agreement, the ownership of the
parcel of land and the building thereon remained with CDSPB. Tested
by the standards announced in Ponce, petitioner cannot be
considered an independent contractor.
CDSPB nonetheless argues that petitioner should be made liable to
pay the salaries for the month of May 1987 since petitioner collected
the revenues for school year 1986-1987 from which said salaries
should be sourced.[24] Petitioner, on the other hand, claims that it has
been its uniform and traditional practice in its administration of various
schools throughout the Philippines to fix the school budget from May 1
to April 30.[25]
It is unnecessary to pass upon this claim. The fact that CDSPB is the
direct and only employer of private respondents makes it solely liable

28 LEONARDO vs CA
FACTS:
BALTEL holds the franchise from the Municipality of
Balagtas, Bulacan to operate a
telephone service in the municipality. BALTEL also has
authority from the National
Telecommunications Commission (NTC) to operate in the
municipality.
It hired Emelita Leonardo and others for various positions in
the company. BALTEL and DIGITEL entered into a
management contract, under the terms of the contract,
DIGITEL was to provide:
o personnel, consultancy and technical expertise in the
management,
administration, and operation of BALTELs telephone service
in Balagtas,
Bulacan.
o undertook to improve the internal and external plants of
BALTELs telephone
system and to handle customer relations.
o Handle other matters necessary for the efficient
management and operation of the
telephone system.
1994, BALTEL informed the NTC that it would cease to
operate effective 28 February

RATIO:
To determine the existence of employer-employee
relationship, it has to be resolved who
has the power to select employees, pay for their wages, etc.
The most important element is the CONTROL TEST. There is
employer-employee
relationship when the person for whom the services are
performed reserves the right to

1994 because it was no longer in a financial position to

continue its operations. It
assigned to DIGITEL its buildings and other improvements on
a parcel of land in
Balagtas, Bulacan where BALTEL conducted its business
operations, whish assignment
was in partial payment of BALTELs obligation to DIGITEL.
Leonardos employment ceased.

control not only the end achieved but also the manner and
means used to achieve the

They executed separate, undated and similarly worded

quitclaims acknowledging receipt

end.

of various amounts representing their claims from BALTEL.

DIGITEL has the power to control, however, this power

flows from the management

o In their quitclaims, petitioners absolved and released

BALTEL from all monetary

contract which includes providing for personnel, consultancy,

etc. the control test cannot be applied.

claims that arose out of their employer-employee relationship

with the company.

DIGITEL did not hire petitioners. BALTEL had already

employed them when it entered

o Petitioners also acknowledged that BALTEL closed its

operations due to serious

into an agreement with DIGITEL. Hence, it has no power to

dismiss BALTELs

business losses.

employees

Leonardo filed a compalaint against BALTEL for recovery of

salary differential and o No showing of DIGITEL acquiring
franchise of BALTEL.

ISSUE: Whether an employer-employee relationship

exists between petitioners and DIGITEL?

HELD:
NO, the decision of Court of Appeals is affirmed.

29 FRANCISCO vs. NLRC

GR No. 170087 August 31, 2006

FACTS:
Angelina Francisco was hired by Kasei Corporation during the
incorporation stage. She was designated as
accountant and corporate secretary and was assigned to handle all
the accounting needs of the company. She was also designated as
Liason Officer to the City of Manila to secure permits for the operation
of the company.
In 1996, she was designated as Acting Manager. She was assigned to
handle recruitment of all employees and

(1) WON there was an employer-employee relationship between

petitioner and private respondent Kasei Corporation; and if in the
affirmative,
(2) WON petitioner was illegally dismissed.
HELD:
(1) YES.
The court held that in this jurisdiction, there has been no uniform test
to determine the existence of an employer-employee relation.
Generally, courts have relied on the so-called RIGHT OF CONTROL
TEST where the person for whom the
services are performed reserves a right to control not only the end to
be achieved but also the means to be
used in reaching such end. In addition to the standard of right-ofcontrol, the existing ECONOMIC
CONDITIONS PREVAILING BETWEEN THE PARTIES, like the
inclusion of the employee in the payrolls, can
help in determining the existence of an employer-employee
relationship.
The better approach would therefore be to adopt a two-tiered test
involving:
*CONTROL TEST - YES
*ECONOMIC CONDITIONS -YES
(1) the putative employers POWER TO CONTROL the employee with
respect to the means and methods by
which the work is to be accomplished; and
(2) the underlying ECONOMIC REALITIES of the activity or
relationship.
By applying the control test, there is no doubt that petitioner is an
employee of Kasei Corporation because she

perform management administration functions. In 2001, she was

replaced by Liza Fuentes as Manager. Kasei
Corporation reduced her salary to P2,500 per month which was until
September. She asked for her salary but
was informed that she was no longer connected to the company. She
did not anymore report to work since
she was not paid for her salary. She filed an action for constructive
dismissal with the Labor Arbiter.
Kasei Corporation however averred in its defense that:
- Petitioner had no daily time record and she came to the office any
time she wanted. The company never
interfered with her work except that from time to time, the
management would ask her opinion on matters
relating to her profession.
- petitioner was not among the employees reported to the BIR, as well
as a list of payees subject to expanded
withholding tax which included petitioner. SSS records were also
submitted showing that petitioner's latest
employer was Seiji Corporation
DECISION OF LOWER COURTS:
*Labor arbiter: Francisco was illegally dismissed.
*NLRC: affirmed LA.
*CA: reversed NLRC.
*CA (motion for reconsideration): denied.
Hence, the present petition.
ISSUE/S:

(5) the amount of initiative, skill, judgment or foresight required for the
success of the claimed independent
enterprise;
(6) the permanency and duration of the relationship between the
worker and the employer; 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 on the alleged employer
for his continued employment in that line of business.
(2) YES, she was illegally dismissed. A diminution of pay is prejudicial
to the employee and amounts to
constructive dismissal. Constructive dismissal is an involuntary
resignation resulting in cessation of work
resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a
demotion in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an
employer becomes unbearable to an employee
RATIO:
In affording full protection to labor, this Court must ensure equal work
opportunities regardless of sex, race
or creed. Even as we, in every case, attempt to carefully balance the
fragile relationship between employees
and employers, we are mindful of the fact that the policy of the law is
to apply the Labor Code to a greater
number of employees. This would enable employees to avail of the
benefits accorded to them by law, in line

was under the direct control and supervision of Seiji Kamura, the
corporations Technical Consultant. It is
therefore apparent that petitioner is economically dependent on
respondent corporation for her continued
employment in the latters line of business.
Under the broader economic reality test, the petitioner can likewise be
said to be an employee of respondent
corporation because she had served the company for six years before
her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and
Social Security contributions from August 1, 1999 to December 18,
2000
In Sevilla v. Court of Appeals, the court observed the need to consider
the existing economic conditions
prevailing between the parties, in addition to the standard of right-ofcontrol like the inclusion of the
employee in the payrolls, to give a clearer picture in determining the
existence of an employer-employee
relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer and
employee depends upon the circumstances of the whole economic
activity, such as:
(1) the extent to which the services performed are an integral part of
the employers business;
(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;

with the constitutional mandate giving maximum aid and protection to

labor, promoting their welfare and
reaffirming it as a primary social economic force in furtherance of
social justice and national development.

eighty-six, as amended, including the members of the Armed

Forces of the Philippines, and any person employed as
casual, emergency, temporary, substitute or contractual, or
any person compulsorily covered by the SSS under Republic
Act Numbered Eleven hundred sixty-one, as amended.
Article 219 (e) (f)
(e) e. "Employer" includes any person acting in the interest of
an employer, directly or indirectly. The term shall not include
any labor organization or any of its officers or agents except
when acting as employer.
(f) "Employee" includes any person in the employ of an
employer. The term shall not be limited to the employees of a
particular employer, unless the Code so explicitly states. It
shall include any individual whose work has ceased as a
result of or in connection with any current labor dispute or
because of any unfair labor practice if he has not obtained
any other substantially equivalent and regular employment.

STATUTORY DEFINITIONS OF EMPLOYER EMPLOYEE

-Article 97 (b)(c)
(b) "Employer" includes any person acting directly or
indirectly in the interest of an employer in relation to an
employee and shall include the Government and all its
branches, subdivision and instrumentalities, all governmentowned or -controlled corporations and institutions, as well as
non-profit private institutions, or organizations.

(c) "Employee" includes any individual employed by an

employer.
Article 173 (f) (g) formerly 167
(f)Employer means any person natural or juridical
employing the services of an employee.
(g) Employee" means any person compulsorily covered by
the GSIS under Commonwealth Act Numbered One hundred