Brotherhood Labor Unity Movement vs 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. However,, 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: WON petitioners are employees of SMC.

Held: YES. In determining the existence of an employer-employee relationship, the

elements that are generally considered are the following: (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 with respect to the means
and methods by which the work is to be accomplished. It. is the called "control test"
that is the most important element.

Applying the above criteria, the evidence strongly indicates the existence of an
employer-employee relationship between petitioner workers and respondent San
Miguel Corporation. The respondent asserts that the petitioners are employees of
the Guaranteed Labor Contractor, an independent labor contracting firm, but the
facts and evidence on record negate respondent SMC's claim.

The existence of an independent contractor relationship is generally established by

the following criteria: "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 a specified piece
of work; the control and supervision of the work to another; the employer's power
with respect to the hiring, firing and payment of the contractor's workers; the
control of the premises; the duty to supply the premises tools, appliances, materials
and labor; and the mode, manner and terms of payment". None of the criteria exists
in the case at bar.

Highly unusual and suspect is the absence of a written contract to specify the
performance of a specified piece of work, the nature and extent of the work and the
term and duration of the relationship. The records fail to show that a large
commercial outfit, such as the San Miguel Corporation, entered into mere oral
agreements of employment or labor contracting where the same would involve
considerable expenses and dealings with a large number of workers over a long
period of time. Despite respondent company's allegations not an iota of evidence
was offered to prove the same or its particulars. Such failure makes respondent
SMC's stand subject to serious doubts.

Uncontroverted is the fact that for an average of seven (7) years, each of the
petitioners had worked continuously and exclusively for the respondent company's
shipping and warehousing department. Considering the length of time that the
petitioners have worked with the respondent company, there is justification to
conclude that they were engaged to perform activities necessary or desirable in the
usual business or trade of the respondent, and the petitioners are, therefore regular
employees.
Sevilla vs CA and Tourist World Service, Inc.

Facts: Private respondent Cantilao, as representative of Tourist World Service, Inc.,

entered into an agreement with co-respondent Noguera for the lease of her property
in Mabini St., Manila. The purpose of the lease was to establish a branch office. The
designated head of the said office was petitioner Sevilla.

The contract states that petitioner held herself solidarily liable with the party of the
part for the prompt payment of the monthly rental agreed on. Further, Lina Sevilla
was entitled to 4% of any airline fare bought through her efforts, and 3% was to be
withheld by TWS.

One year later, TWS was informed that Lina Sevilla was connected with a rival firm,
the Philippine Travel Bureau, and since the branch office was performing below the
bar, it considered closing down its office. Respondent’s corporate secretary was
tasked to retrieve the properties located in the Mabini branch.

It appears that the contract of lease between TWS and Noguera was terminated a
few months before, because it was no longer used. The corporate secretary, being
unable to find and or contact Lina Sevilla, padlocked the premises to protect the
interests of TWS.

When the employees could not enter the premises, they filed for the issuance of a
mandatory preliminary injunction against TWS with the RTC.

The RTC held that private respondent TWS was acting within its prerogative to
terminate the lease and padlock the premises, being the true lessee. It likewise
found that petitioner Lina Sevilla was an employee of TWC, thus she was bound by
acts of her employee. This was affirmed by the CA.

Issue: WON an employer-employee relationship exists between Sevilla and

TWS.

Held: NO. The records will show that the petitioner, Lina Sevilla, was not subject to
control by the private respondent Tourist World Service, Inc., either as to the result
of the enterprise or as to the means used in connection therewith. In the first place,
under the contract of lease covering the Tourist Worlds Ermita office, she had bound
herself in solidum as and for rental payments, an arrangement that would be like
claims of a master-servant relationship. True the respondent Court would later
minimize her participation in the lease as one of mere guaranty, that does not make
her an employee of Tourist World, since in any case, a true employee cannot be
made to part with his own money in pursuance of his employer's business, or
otherwise, assume any liability thereof. In that event, the parties must be bound by
some other relation, but certainly not employment.
In the second place, and as found by the Appellate Court, when the branch office was
opened, the same was run by the herein appellant Lina O. Sevilla payable to Tourist
World Service, Inc. by any airline for any fare brought in on the effort of Mrs. Lina
Sevilla. Under these circumstances, it cannot be said that Sevilla was under the
control of Tourist World Service, Inc. "as to the means used." Sevilla in pursuing the
business, obviously relied on her own gifts and capabilities.

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

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

However, Lina Sevilla’s argument that both she and TWS embarked only on a joint
venture or partnership cannot be accepted. A joint venture, including a partnership,
presupposes generally a of standing between the joint co-venturers or partners, in
which each party has an equal proprietary interest in the capital or property
contributed and where each party exercises equal rights in the conduct of the
business. Furthermore, the parties did not hold themselves out as partners, and the
building itself was embellished with the electric sign "Tourist World Service, Inc. in
lieu of a distinct partnership name.

The court held that what was present was a contract of agency.
Continental Marble Corp. vs NLRC

Facts: Private respondent Rodito Nasayao claimed that sometime in May 1974, he
was appointed plant manager of the petitioner corporation, with an alleged
compensation of P3,000.00, a month, or 25% of the monthly net income of the
company, whichever is greater, and when the company failed to pay his salary for
the months of May, June, and July 1974, Rodito Nasayao filed a complaint with the
NLRC, for the recovery of said unpaid varies.

Petitioners denied that Nasayao was employed in the company as plant manager.
They claimed that the undertaking agreed upon by the parties was a joint venture, a
sort of partnership, wherein Rodito Nasayao was to keep the machinery in good
working condition and, in return, he would get the contracts from end-users for the
installation of marble products, in which the company would not interfere. In
addition, private respondent Nasayao was to receive an amount equivalent to 25%
of the net profits that the petitioner corporation would realize, should there be any.
Petitioners alleged that since there had been no profits during said period, private
respondent was not entitled to any amount.

The NLRC ruled in favor of Nasayao. ordering the herein petitioners to pay Rodito
Nasayao the amount of P9,000.00. The respondent arbitrator found that the
agreement between the parties was for the petitioner company to pay the private
respondent, Rodito Nasayao, a monthly salary of P3,000.00, and, consequently,
ordered the company to pay Rodito Nasayao the amount of P9,000.00 covering a
period of 3 months, that is, May, June and July 1974.

Issue: WON Nasayao is an employee of petitioner.

Held: NO. The element of control is lacking. In determining the existence of an

employer-employee relationship, the elements that are generally considered are the
following: (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 with respect to the means and methods by which the work is to be
accomplished. It is the so-called "control test" that is the most important element,

In the instant case, it appears that the petitioners had no control over the conduct of
Rodito Nasayao in the performance of his work. He decided for himself on what was
to be done and worked at his own pleasure. He was not subject to definite hours or
conditions of work and, in turn, was compensated according to the results of his
own effort. He had a free hand in running the company and its business, so much so,
that the petitioner Felipe David did not know, until very much later, that Rodito
Nasayao had collected old accounts receivables, not covered by their agreement,
which he converted to his own personal use. It was only after Rodito Nasayao had
abandoned the plant following discovery of his wrong- doings, that Felipe David
assumed management of the plant.
Absent the power to control the employee with respect to the means and methods
by which his work was to be accomplished, there was no employer-employee
relationship between the parties. Hence, there is no basis for an award of unpaid
salaries or wages to Rodito Nasayao.
Dy Keh Beng vs International Labor and Marine Union of the Philippines

Facts: A case of unfair labor practice was filed against petitioner, proprietor of a
basket factory for discriminatory acts by dismissing Carlos Solan and Ricardo Tudla
for their union activities.

Petitioner Dy Keh Beng contended that he did not know Tudla and that Solano was
not his employee because the latter came to the establishment only when there was
work which he did on a “pakiaw” basis. Each piece of work being done under a
separate contract.

The Court of Industrial Relations found that there existed an employer-employee

relationship between Dy Keh Beng and the complainants, even thought SOlan
admitted to have worked on piece basis.

Issue: WON there existed an employer-employee relationship between Dy Keh

Beng and private respondents.

Held: YES. Petitioner really anchors his contention of the non-existence of

employee-employer relationship on the control test.

The test of the existence of employee and employer relationship is whether there is
an understanding between the parties that one is to render personal services to or
for the benefit of the other and recognition by them of the right of one to order and
control the other in the performance of the work and to direct the manner and
method of its performance.

Petitioner contends that the private respondents "did not meet the control test in
the fight of the ... definition of the terms employer and employee, because there was
no evidence to show that petitioner had the right to direct the manner and method
of respondent's work. Moreover, it is argued that petitioner's evidence showed that
"Solano worked on a pakiaw basis" and that he stayed in the establishment only
when there was work.

While this Court upholds the control test under which an employer-employee
relationship exists "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, " it finds no merit with petitioner's arguments as stated above. It
should be borne in mind that the control test calls merely for the existence of the
right to control the manner of doing the work, not the actual exercise of the right.
Considering the finding by the Hearing Examiner that the establishment of Dy Keh
Beng is "engaged in the manufacture of baskets known as kaing, it is natural to
expect that those working under Dy would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some control would necessarily be
exercised by Dy as the making of the kaing would be subject to Dy's specifications.
Parenthetically, since the work on the baskets is done at Dy's establishments, it can
be inferred that the proprietor Dy could easily exercise control on the men he
employed.

Nevertheless, considering that about eighteen (18) years have already elapsed from
the time the complainants were dismissed, and that the decision being appealed
ordered the payment of backwages to the employees from their respective dates of
dismissal until finally reinstated, it is fitting to apply in this connection the formula
for backwages worked out by Justice Claudio Teehankee in "cases not terminated
sooner." The formula cans for fixing the award of backwages without qualification
and deduction to three years, "subject to deduction where there are mitigating
circumstances in favor of the employer but subject to increase by way of exemplary
damages where there are aggravating circumstances. Considering there are no such
circumstances in this case, there is no reason why the Court should not apply the
abovementioned formula in this instance.
Sonza vs ABS-CBN

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 Sonza’s 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 Sonza’s monthly
talent fees but opened another account for the same purpose.

The Labor Arbiter dismissed the complaint and found that there is no employee-
employer relationship. NLRC affirmed the decision of the Labor Arbiter. CA also
affirmed the decision of NLRC.

Issue: WON there was an employer-employee relationship between the

parties.

Held: NO. 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.

First, Sonza contends that ABS-CBN exercised control over the means and methods
of his work.

Sonza’s argument is misplaced. ABS-CBN engaged in his services specifically to co-

host the Mel & Jay programs. ABS-CBN did not assign any other work to him. To
perform his work, he only needed his skills and talent. How he delivered his lines,
appeared on television, and sounded on radio were outside ABS-CBNs control.
Sonza did not have to render eight hours of work per day. The Agreement required
him to attend only rehearsals and tapings of the shows, as well as pre- and post-
production staff meetings. ABS-CBN could not dictate the contents of his script.
However, the Agreement prohibited him from criticizing in his shows ABS-CBN or
its interests. The clear implication is that Sonza had a free hand on what to say or
discuss in his shows provided he did not attack ABS-CBN or its interests.

We find that ABS-CBN was not involved in the actual performance that produced the
finished product of Sonza’s work. 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 his work.

Sonza claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs
power over the means and methods of the performance of his work. Although ABS-
CBN did have the option not to broadcast his show, ABS-CBN was still obligated to
pay his talent fees. Thus, even if ABS-CBN was completely dissatisfied with the
means and methods of his performance of his work, or even with the quality or
product of his work, ABS-CBN could not dismiss or even discipline him. All that ABS-
CBN could do is not to broadcast his show but ABS-CBN must still pay his talent fees
in full.

Clearly, ABS-CBNs right not to broadcast his show, burdened as it was by the
obligation to continue paying in full his talent fees, did not amount to control over
the means and methods of the performance of his work. ABS-CBN could not
terminate or discipline Sonza even if the means and methods of performance of his
work - how he delivered his lines and appeared on television, did not meet ABS-
CBNs approval. This proves that ABS-CBNs control was limited only to the result of
his work, whether to broadcast the final product or not. In either case, ABS-CBN
must still pay Sonza’s talent fees in full until the expiry of the Agreement.
Investment Planning Corporation of the Philippines vs SSS

Facts: Petitioner is a domestic corporation engaged in business management and

the sale of securities. It has two classes of agents who sell its investment plans: (1)
salaried employees who keep definite hours and work under the control and
supervision of the company; and (2) registered representatives who work on
commission basis.

On August 27, 1960 petitioner, through counsel, applied to respondent Social

Security Commission for exemption of its so-called registered representatives from
the compulsory coverage of the Social Security Act. The application was denied in a
letter signed by the Secretary to the Commission on January 16, 1961. A motion to
reconsider was filed and also denied, after hearing, by the Commission itself in its
resolution dated September 8, 1961.

The issue submitted for decision here is whether petitioner's registered

representatives are employees within the meaning of the Social Security Act (R.A.
No. 1161 as amended). Section 8 (d) thereof defines the term "employee" — for
purposes of the Act — 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, employer-employee relationship."
These representatives are in reality commission agents.

Of the three requirements under Section 8 (d) of the Social Security Act it is
admitted that the first is present in respect of the agents whose status is in question.
They exert both mental and physical efforts in the performance of their services.
The compensation they receive, however, is not necessarily for those efforts but
rather for the results thereof, that is, for actual sales that they make. This point is
relevant in the determination of whether or not the third requisite is also present,
namely, the existence of employer-employee relationship. Petitioner points out that
in effect such compensation is paid not by it but by the investor, as shown by the
basis on which the amount of the commission is fixed and the manner in which it is
collected.

Petitioner submits that its commission agents, engaged under the terms and
conditions already enumerated, are not employees but independent contractors, as
defined in Article 1713 of the Civil Code, which provides:

Art. 1713. By the contract for a piece of work the contractor binds himself to execute
a piece of work for the employer, in consideration of a certain price or
compensation. The contractor may either employ only his labor or skill, or also
furnish the material.

Issue: WON there exists an employer-employee relationship in relation to the

purpose of the SSS Act.
Held: NO. The common-law principles expressly adopted by the United States
Congress are summarized in Corpus Juris Secundum as follows:

Under the common-law principles as to tests of the independent contractor

relationship, discussed in Master and Servant, and applicable in determining
coverage under the Social Security Act and related taxing provisions, the significant
factor in determining the relationship of the parties is the presence or absence of a
supervisory power to control the method and detail of performance of the service,
and the degree to which the principal may intervene to exercise such control, the
presence of such power of control being indicative of an employment relationship
and the absence of such power being indicative of the relationship of independent
contractor. In other words, the test of existence of the relationship of independent
contractor, which relationship is not taxable under the Social Security Act and
related provisions, is whether the one who is claimed to be an independent
contractor has contracted to do the work according to his own methods and without
being subject to the control of the employer except as to the result of the work.

Considering the similarity between the definition of "employee" in the Federal

Social Security Act (U.S.) as amended and its definitions in our own Social Security
Act, and considering further that the local statute is admittedly patterned after that
of the United States, the decisions of American courts on the matter before us may
well be accorded persuasive force. The logic of the situation indeed dictates that
where the element of control is absent; where a person who works for another does
so more or less at his own pleasure and is not subject to definite hours or conditions
of work, and in turn is compensated according to the result of his efforts and not the
amount thereof, we should not find that the relationship of employer and employee
exists.

We have examined the contract form between petitioner and its registered
representatives and found nothing therein which would indicate that the latter are
under the control of the former in respect of the means and methods they employ in
the performance of their work. The fact that for certain specified causes the
relationship may be terminated (e.g., failure to meet the annual quota of sales,
inability to make any sales production during a six-month period, conduct
detrimental to petitioner, etc.) does not mean that such control exists, for the causes
of termination thus specified have no relation to the means and methods of work
that are ordinarily required of or imposed upon employees.