Union Filipro Employees vs Vivar (1992) 205 SCRA 203

Facts:

Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission
a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its
monthly paid employees for holiday pay.

Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary arbitration
and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. Arbitrator Vivar rendered a decision
directing Filipro to pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject
only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are
provided for in the Code. However, the respondent arbitrator refused to take cognizance of the case
reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from
service effective May 1, 1986.

Issue: WON sales personnel are excluded in the payment of holiday pay.

Held: Field personnel are not entitled to holiday pay.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as
"non-agricultural employees who regularly perform their duties away from the principal place of business
or branch office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty."

The law requires that the actual hours of work in the field be reasonably ascertained. The company has
no way of determining whether or not these sales personnel, even if they report to the office before 8:00
a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field
work. Moreover, the requirement that "actual hours of work in the field cannot be determined with
reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which
provides:

"Rule IV Holidays with Pay. SECTION 1. Coverage. — This rule shall apply to all employees except: (e)
Field personnel and other employees whose time and performance is unsupervised by the employer

The clause "whose time and performance is unsupervised by the employer" did not amplify but merely
interpreted and expounded the clause "whose actual hours of work in the field cannot be determined
with reasonable certainty." The former clause is still within the scope and purview of Article 82 which
defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field
can be determined with reasonable certainty, query must be made as to whether or not such employee's
time and performance is constantly supervised by the employer.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales
target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good
merchandising work; (5) minimal market returns and (6) proper truck maintenance. The criteria indicate
that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring
their actual hours of field work. These employees are evaluated by the result of their work and not by the
actual hours of field work which are hardly susceptible to determination.

In San Miguel Brewery, Inc. v. Democratic Labor Organization, the Court had occasion to discuss the
nature of the job of a salesman. It states that : "The reasons for excluding an outside salesman are fairly
apparent. Such a salesman, to a greater extent, works individually. There are no restrictions respecting
the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition
dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away
from his employer's place of business, is not subject to the personal supervision of his employer, and his
employer has no way of knowing the number of hours he works per day."

G.R. No. 73681

COLGATE PALMOLIVE PHILIPPINES, Inc. vs.
HON. BLAS F. OPLE, COLGATE PALMOLIVE SALES UNION
JUNE 30, 1988

Facts:
Respondent Union filed a Notice of Strike with the Bureau of Labor Relations (BLR) on ground of unfair
labor practice consisting of alleged refusal to bargain, dismissal of union officers/members; and coercing
employees to retract their membership with the union and restraining non-union members from joining
the union. The Office of the MOLE, upon petition of petitioner, assumed jurisdiction over the dispute
pursuant to Article 264 (g) of the Labor Code.

Petitioner pointed out that the allegations regarding dismissal from employment due to union
membership were false. It also averred that the suspension and eventual dismissal of the three
employees were due to infractions committed by them and that the management reserves the right to
discipline erring employees. Petitioner also assailed the legality of the Union, among others.

The minister rendered its decision, ruling that there was no merit in the Union’s complaint. It also ruled
that the three dismissed employees were “not without fault” but nonetheless ordered the reinstatement
of the same. At the same time, respondent Minister directly certified the respondent Union as the
collective bargaining agent for the sales force in petitioner company and ordered the reinstatement of the
three salesmen to the company on the ground that the employees were first offenders.

Issue:
Whether or not the minister erred in directly certifying the Union based on the latter’s self-serving
assertion that it enjoys the support of the majority of the sales force in petitioner’s company and in
ordering the reinstatement of the three dismissed employees.

Held:
The Court held that the minister failed to determine with legal certainty whether the Union indeed
enjoyed majority representation. The Court held that by relying only on the Notice of Strike, the minister
had encouraged disrespect of the law. He had also erroneously vested upon himself the right to choose
the collective bargaining representative which ought to have been upon the employees.
The Court held that the reinstatement of the three employees despite a clear finding of guilt on their part
is not in conformity with law. Ruling otherwise would only encourage unequal protection of the laws with
respect to the rights of the management and the employees.
The court rendered the decision of the minister reversed and set aside, ordering petitioners to give the
three employees their separation pay.

PASEI v. Drilon
G.R. No. 81958 June 30, 1988, Sarmiento, J.

(Labor Standards, Police Power defined)

FACTS:

Phil association of Service Exporters, Inc., is engaged principally in the recruitment of Filipino workers,
male and female of overseas employment. It challenges the constitutional validity of Dept. Order No. 1
(1998) of DOLE entitled “Guidelines Governing the Temporary Suspension of Deployment of Filipino
Domestic and Household Workers.” It claims that such order is a discrimination against males and
females. The Order does not apply to all Filipino workers but only to domestic helpers and females with
similar skills, and that it is in violation of the right to travel, it also being an invalid exercise of the
lawmaking power. Further, PASEI invokes Sec 3 of Art 13 of the Constitution, providing for worker
participation in policy and decision-making processes affecting their rights and benefits as may be
provided by law. Thereafter the Solicitor General on behalf of DOLE submitting to the validity of the
challenged guidelines involving the police power of the State and informed the court that the respondent
have lifted the deployment ban in some states where there exists bilateral agreement with the Philippines
and existing mechanism providing for sufficient safeguards to ensure the welfare and protection of the
Filipino workers.

ISSUE:

Whether or not D.O. No. 1 of DOLE is constitutional as it is an exercise of police power.

RULING:
“[Police power] has been defined as the "state authority to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare." As defined, it consists of (1) an
imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not capable
of an exact definition but has been, purposely, veiled in general terms to underscore its all-
comprehensive embrace.

“The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is
no question that Department Order No. 1 applies only to "female contract workers," but it does not
thereby make an undue discrimination between the sexes. It is well-settled that "equality before the law"
under the Constitution does not import a perfect Identity of rights among all men and women. It admits
of classifications, provided that (1) such classifications rest on substantial distinctions; (2) they are
germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they apply
equally to all members of the same class.
The Court is satisfied that the classification made-the preference for female workers — rests on
substantial distinctions.

Ang Tibay v CIR

Facts:
Ang Tibay was a manufacturer of rubber slippers. There was a shortage of leather soles, and it was
necessary to temporarily lay off members of the National Labor Union. According to the Union however,
this was merely a scheme to systematically terminate the employees from work, and that the shortage of
soles is unsupported. It claims that Ang Tibay is guilty of unjust labor practice because the owner,
Teodoro, is discriminating against the National Labor Union, and unjustly favoring the National Workers
Brotherhood, which was allegedly sympathetic to the employer. The Court of Industrial Relation decided
the case and elevated it to the Supreme Court, but a motion for new trial was raised by the NLU. But the
Ang Tibay filed a motion for opposing the said motion.

The motion for new trial was raised because according to NLU, there are documents that are so
inaccessible to them that even with the exercise of due diligence they could not be expected to have
obtained them and offered as evidence in the Court of Industrial Relations. That these documents, which
NLU have now attached as exhibits are of such far-reaching importance and effect that their admission
would necessarily mean the modification and reversal of the judgment rendered therein.

Issue:
WON the union was denied due process by CIR.

Held:
To begin with the issue before us is to realize the functions of the CIR. The CIR is a special court whose
functions are specifically stated in the law of its creation which is the Commonwealth Act No. 103). It is
more an administrative board than a part of the integrated judicial system of the nation. It is not
intended to be a mere receptive organ of the government. Unlike a court of justice which is essentially
passive, acting only when its jurisdiction is invoked and deciding only cases that are presented to it by
the parties litigant, the function of the CIR, as will appear from perusal of its organic law is more active,
affirmative and dynamic. It not only exercises judicial or quasi-judicial functions in the determination of
disputes between employers and employees but its functions are far more comprehensive and extensive.
It has jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question,
matter controversy or disputes arising between, and/ or affecting employers and employees or laborers,
and landlords and tenants or farm-laborers, and regulates the relations between them, subject to, and in
accordance with, the provisions of CA 103.

SC had the occasion to point out that the CIR is not narrowly constrained by technical rules of procedure,
and equity and substantial merits of the case, without regard to technicalities or legal forms and shall not
be bound by any technical rules of legal evidence but may inform its mind in such manner as it may
deem just and equitable.

The fact, however, that the CIR may be said to be free from rigidity of certain procedural requirements
does not mean that it can in justiciable cases coming before it, entirely ignore or disregard the
fundamental and essential requirements of due process in trials and investigations of an administrative
character. There are cardinal primary rights which must be respected even in proceedings of this
character:

(1) the right to a hearing, which includes the right to present one's cause and submit evidence in support
thereof;
(2) The tribunal must consider the evidence presented;
(3) The decision must have something to support itself;
(4) The evidence must be substantial;
(5) The decision must be based on the evidence presented at the hearing; or at least contained in the
record and disclosed to the parties affected;
(6) The tribunal or body or any of its judges must act on its own independent consideration of the law
and facts of the controversy, and not simply accept the views of a subordinate;
 (7) The Board or body should, in all controversial questions, render its decision in such manner that the
parties to the proceeding can know the various Issue involved, and the reason for the decision rendered.

SC said there was a failure to grasp the fundamental issue involved due to failure to receive all relevant
evidence. Thus, the motion for a new trial was granted and the entire record of this case is remanded to
the CIR.

IBAA EMPLOYEES UNION VS. INCIONG

FACTS
On June 20, 1975, the petitioner filed a complaint against the respondent bank for the payment of
holiday pay before the then Department of Labor, NLRC in Manila. Conciliation having failed, the case
was certified for arbitration and later on a decision was rendered by the Labor Arbiter granting
petitioner’s complaint. Respondent bank complied by paying the holiday pay to and including January
1976. On December 1975, PD 850was promulgated amending the provisions of the Labor Code with the
controversial section stating that monthly paid employees receiving uniform monthly pay is presumed to
be already paid the “10 paid legal holidays”. Policy instruction 9 was issued thereafter interpreting the
said rule. Respondents bank stopped the payment by reason of the promulgated PD 850 and Policy
Instruction 9.

ISSUE
Whether or not monthly paid employees are excluded from the benefit of holiday pay.

HELD
No. It is elementary in the rules of statutory construction that when the language of the law is clear and
unequivocal the law must be taken to mean exactly what it says. In the case at bar, the provisions of the
Labor Code on the entitlement to the benefits of holiday pay are clear and explicit- it provides for both
the coverage of and exclusion from the benefits. In Policy Instruction 9, the then Secretary of Labor
categorically state that the benefit is principally intended for daily paid employees, when the law clearly
states that every worker shall be paid their regular holiday pay. While it is true that the contemporaneous
construction placed upon a statue by executive officers whose duty is to enforce it should be given great
weight by the courts, still if such construction is so erroneous, the same must be declared as null and
void.

Employer-employee Relationship

1. Brotherhood Labor Unity Movement of the Philippines vs Zamora

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 four-fold 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 employer’s 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 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 petitioner’s employment appears indefinite and the continuity and habituality of the
petitioner’s 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 company’s control over the workers. That
San Miguel has the power to recommend penalties or dismissal is the strongest indication of the
company’s right of control over the workers as direct employer.

*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.

FRANCISCO VS. NLRC ET AL DIGEST

ANGELINA FRANCISCO, Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION,

KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE

BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents., G.R. No. 170087, 2006

Aug 31.

FACTS:

1995, Petitioner was hired by Kasei Corporation during its 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 Liaison Officer to the City of Makati to secure business permits,

construction permits and other licenses for the initial operation of the company.

Although she was designated as Corporate Secretary, she was not entrusted with the corporate

documents; neither did she attend any board meeting nor required to do so. She never prepared any

legal document and never represented the company as its Corporate Secretary. 1996, petitioner was

designated Acting Manager. Petitioner was assigned to handle recruitment of all employees and perform

management administration functions; represent the company in all dealings with government agencies,

especially with the BIR, SSS and in the city government of Makati; and to administer all other matters

pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation.

January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager. Kasei Corporation

reduced her salary, she was not paid her mid-year bonus allegedly because the company was not earning

well. On October 2001, petitioner did not receive her salary from the company. She made repeated

follow-ups with the company cashier but she was advised that the company was not earning well.

Eventually she was informed that she is no longer connected with the company.

Since she was no longer paid her salary, petitioner did not report for work and filed an action for

constructive dismissal before the labor arbiter. Private respondents averred that petitioner is not an

employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical

consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant,

petitioner performed her work at her own discretion without control and supervision of Kasei Corporation.
Petitioner had no daily time record and she came to the office any time she wanted and that her services

were only temporary in nature and dependent on the needs of the corporation.

The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed with modification the

Decision of the Labor Arbiter. On appeal, CA reversed the NLRC decision. CA denied petitioner’s MR,

hence, the present recourse.

ISSUES:

1. WON there was an employer-employee relationship between petitioner and private respondent; and

if in the affirmative,

2. Whether petitioner was illegally dismissed.

RULING:

1. 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-of-control, 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.

There are instances when, aside from the employer’s power to control the employee, economic realities

of the employment relations help provide a comprehensive analysis of the true classification of the

individual, whether as employee, independent contractor, corporate officer or some other capacity.

It is better, therefore, to adopt a two-tiered test involving: (1) the employer’s power to control; and (2)

the economic realities of the activity or relationship.

The control test means that there is an employer-employee relationship when the person for whom the

services are performed reserves the right to control not only the end achieved but also the manner and

means used to achieve that end.

There has to be 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

employer’s business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature

and degree of control exercised by the employer; (4) the worker’s opportunity for profit and loss; (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

By applying the control test, it can be said that petitioner is an employee of Kasei Corporation because

she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical

Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison

Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job

functions, that is, rendering accounting and tax services to the company and performing functions

necessary and desirable for the proper operation of the corporation such as securing business permits
and other licenses over an indefinite period of engagement. Respondent corporation had the power to

control petitioner with the means and methods by which the work is to be accomplished.

Under the economic reality test, the petitioner can also be said to be an employee of respondent

corporation because she had served the company for 6 yrs. 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. When petitioner was designated General Manager,

respondent corporation made a report to the SSS. Petitioner’s membership in the SSS evinces the

existence of an employer-employee relationship between petitioner and respondent corporation. The

coverage of Social Security Law is predicated on the existence of an employer-employee relationship.

2. The corporation constructively dismissed petitioner when it reduced her. This amounts to an illegal

termination of employment, where the petitioner is entitled to full backwages

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. Petition is GRANTED.

LOLITA LOPEZ, petitioner, vs. BODEGA CITY (Video-Disco Kitchen of the Philippines) and/or
ANDRES C. TORRES-YAP, respondents.

Respondent Bodega City (Bodega City) is a corporation duly registered and existing under and by virtue
of the laws of the Republic of the Philippines, while respondent Andres C. Torres-Yap (Yap) is its owner/
manager. Petitioner was the “lady keeper” of Bodega City tasked with manning its ladies’ comfort room.
In a letter signed by Yap dated February 10, 1995, petitioner was made to explain why the
concessionaire agreement between her and respondents should not be terminated or suspended in view
of an incident that happened on February 3, 1995, wherein petitioner was seen to have acted in a hostile
manner against a lady customer of Bodega City who informed the management that she saw petitioner
sleeping while on duty.
Yap informed petitioner that because of the incident that happened respondents had decided to
terminate the concessionaire agreement between them.
Petitioner filed a complaint for illegal dismissal against respondents contending that she was dismissed
from her employment without cause and due process.
In their answer, respondents contended that no employer-employee relationship ever existed between
them and petitioner; that the latter’s services rendered within the premises of Bodega City was by virtue
of a concessionaire agreement she entered into with respondents.
Labor Arbiter rendered judgment finding that petitioner was an employee of respondents and that the
latter illegally dismissed her.3
NLRC SET ASIDE AND VACATED LA Decision.
ISSUE:
Whether or not petitioner is an employee of respondents.
RULING:
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an
employee was for a valid cause.13 However, before a case for illegal dismissal can prosper, an employer-
employee relationship must first be established.14
In filing a complaint before the Labor Arbiter for illegal dismissal based on the premise that she was an
employee of respondent, it is incumbent upon petitioner to prove the employee-employer relationship by
substantial evidence.15
The NLRC and the CA found that petitioner failed to discharge this burden, and the Court finds no cogent
reason to depart from their findings.
The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing and Parts Corp.,16 to
wit:
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the
four-fold test, namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the
presence or absence of the power of dismissal; and (4) the presence or absence of the power of control.
Of these four, the last one is the most important. The so-called “control test” is commonly regarded as
the most crucial and determinative indicator of the presence or absence of an employer-employee
relationship. 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 achieved, but also the
manner and means to be used in reaching that end.17
To prove the element of payment of wages, petitioner presented a petty cash voucher showing that she
received an allowance for five (5) days.18 The CA did not err when it held that a solitary petty cash
voucher did not prove that petitioner had been receiving salary from respondents or that she had been
respondents’ employee for 10 years.
Indeed, if petitioner was really an employee of respondents for that length of time, she should have been
able to present salary vouchers or pay slips and not just a single petty cash voucher. The Court agrees
with respondents that petitioner could have easily shown other pieces of evidence such as a contract of
employment, SSS or Medicare forms, or certificates of withholding tax on compensation income; or she
could have presented witnesses to prove her contention that she was an employee of respondents.
Petitioner failed to do so.

Anent the element of control, petitioner’s contention that she was an employee of respondents because
she was subject to their control does not hold water.

Petitioner failed to cite a single instance to prove that she was subject to the control of respondents
insofar as the manner in which she should perform her job as a “lady keeper” was concerned.
It is true that petitioner was required to follow rules and regulations prescribing appropriate conduct
while within the premises of Bodega City. However, this was imposed upon petitioner as part of the terms
and conditions in the concessionaire agreement embodied in a 1992 letter of Yap addressed to petitioner.
Petitioner does not dispute the existence of the letter; neither does she deny that respondents offered
her the subject concessionaire agreement. However, she contends that she could not have entered into
the said agreement with respondents because she did not sign the document evidencing the same.
Petitioner is likewise estopped from denying the existence of the subject concessionaire agreement. She
should not, after enjoying the benefits of the concessionaire agreement with respondents, be allowed to
later disown the same through her allegation that she was an employee of the respondents when the
said agreement was terminated by reason of her violation of the terms and conditions thereof.
The principle of estoppel in pais applies wherein — by one’s acts, representations or admissions, or
silence when one ought to speak out — intentionally or through culpable negligence, induces another to
believe certain facts to exist and to rightfully rely and act on such belief, so as to be prejudiced if the
former is permitted to deny the existence of those facts.24

Hence, going back to the element of control, the concessionaire agreement merely stated that petitioner
shall maintain the cleanliness of the ladies’ comfort room and observe courtesy guidelines that would help
her obtain the results they wanted to achieve. There is nothing in the agreement which specifies the
methods by which petitioner should achieve these results.
Lastly, the Court finds that the elements of selection and engagement as well as the power of dismissal
are not present in the instant case.

It has been established that there has been no employer-employee relationship between respondents
and petitioner. Their contractual relationship was governed by the concessionaire agreement embodied in
the 1992 letter. Thus, petitioner was not dismissed by respondents. Instead, as shown by the letter of
Yap to her dated February 15, 1995,37 their contractual relationship was terminated by reason of
respondents’ termination of the subject concessionaire agreement, which was in accordance with the
provisions of the agreement in case of violation of its terms and conditions.
In fine, the CA did not err in dismissing the petition for certiorari filed before it by petitioner.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals are AFFIRMED. Costs against petitioner.
SO ORDERED.

Liner v. Race | Chico-Nazario, J.

Keywords: Injured bus driver illegally dismissed; Prescription: 4 years from the accrual of the cause of
action

FACTS:
• Pablo M. Race was employed by Victory Liner, Inc. as a bus driver for the Alaiminos, Pangasinan
– Cubao, Quezon City evening route.
• 24 August 1994: Race’s bus figured in an accident, wherein Race suffered a fractured leg, for
which he was confined in the hospital until 10 October 1994.
• 10 November 1994: Race was confined again for further treatment for another month.
• Victory Liner shouldered all of Race’s medical expenses for both instances.
• January 1998: Race reported for work, but was informed that he was considered resigned, and
was offered consideration of P50,000.00, which he rejected.
• Before Christmas 1998: Victory Liner reiterated that he was regarded as resigned, this time,
offering him P100,000.00, which he again rejected.
• 30 June 1999: Race sent a letter to Victory Liner demanding employment-related money claims;
no response from Victory Liner.
• 1 September 1999: Race filed a complaint before the Labor Arbiter for:
o Unfair labor practice;
o Illegal dismissal;
o Underpayment of wages;
 o Nonpayment of overtime and holiday premium, service incentive leave pay, vacation and
sick leave benefits, 13th month pay;
o Excessive deduction of withholding tax and SSS premium; and
o Moral and exemplary damages and attorney’s fees.
• LABOR ARBITER: Dismissed; stating that the prescriptive period for filing a case for illegal
dismissal had elapsed—considered dismissed on 24 November 1994.
• NLRC: Reversed Labor Arbiter; cause of action accrued in January 1998, when Race reported for
work but was rejected; Also stated that Victory Liner failed to accord Race due process in
terminating his employment.

ISSUE/HELD:
[1] WoN the cause of action for illegal dismissal had prescribed.—NO. Cause of action
accrued January 1998.

[2] WoN Race was illegally dismissed, thus entitled to reinstatement with full back wages
and other benefits.—YES. But separation pay in lieu of reinstatement.

RATIO:
[1] Prescription
• Victory Liner insists that Race already abandoned his work and ceased to be its employee since
November 1994.
o Among other arguments, under the 4-fold test of employer-employee relationship:
Victory claimed that it no longer paid Race wages nor exercised control over him since
November 1994.
o If reckoning period is counted from when the written demand was made by Race, the 4-
year prescriptive period would be indeterminate, contrary to the spirit of the law.
• In illegal dismissal cases, the employee concerned is given a period of four years from the
time of his dismissal within which to institute a complaint.
o Art. 1146 [CC] Actions based upon an injury to the rights of the plaintiff must
be brought within four years.
o Employment is a “property right”—within the protection of a constitutional guarantee of
dues process of law.
o Therefore, when one is arbitrarily and unjustly deprived of his job or means of livelihood,
the action instituted to contest the legality of one’s dismissal from employment
constitutes, an action predicated "upon an injury to the rights of the plaintiff."
• The four-year prescriptive period shall commence to run only upon the accrual of a cause
of action of the worker—the time the employment of the worker was unjustly
terminated.
• Race was not unjustly terminated on 10 November 1994
o At that time, still confined for further treatment of his fractured left leg.
o He must be considered as merely on sick leave
• Neither could be deemed as illegally dismissed from work upon his release in December 1994 up
to December 1997.
o Race still reported for work to the petitioner and was granted sick and disability leave by
Victory Liner for that period.
• Race must be considered as unjustly terminated in January 1998 since this was the first time he
was informed by the Victory Liner that he was deemed resigned from his work.
• Consequently, Race’s filing of complaint for illegal dismissal on 1 September 1999 was well within
the four-year prescriptive period.
• It must also be noted that from 10 November 1994 up to December 1997, Victory Liner never
formally informed the respondent of the fact of his dismissal
• Moveover, Race did not abandon his work for lack of the 2 factors that constitute abandonment:
o Failure to report for work or absence without valid or justifiable reason; and
o A clear intention to sever employer-employee relationship.
• Similarly, the employer-employee relationship between the petitioner and respondent cannot be
deemed to have been extinguished on 10 November 1994,.
o Race reported for work to the petitioner after his release from the hospital in December
1994.
o He was also granted a 120-day sick leave and disability leave
o And also availed himself of the services of the Victory Liner’s physician on two occasions
after his release
o Victory Liner failed to establish the fact that Race ceased to be its employee on 10
November 1994, except for its flimsy reason that the sick leave, disability leave and
physician consultations were given to the respondent as mere accommodations for a
former employee.

[2.a.] Illegal dismissal

• The Labor Code mandates that before an employer may legally dismiss an employee from the
service, the requirement of substantial and procedural due process must be complied with.
• Substantial due process—the grounds for termination of employment must be based on just or
authorized causes.
 o Although abandonment of work is within the scope of the just causes for termination
(under gross and habitual neglect by the emlployee of his duties), the court found that
there was not abandonment on the part of Race.
• The records also failed to show that the said charges were proven and that respondent was duly
informed and heard with regard to the accusations.
• And as Victory Liner is the employer, it is its burdened to prove just cause for terminating the
employment of respondent with clear and convincing evidence, and that Victory Liner failed to
discharge this burden, we hold that respondent was dismissed without just cause by the
petitioner.

[2.b.] Reinstatement
• Race was willing to be hired as a dispatcher or conductor, and was no longer requesting to be
reinstated as a driver since he cannot drive anymore due to his leg injury.
• Even assuming that Race was willing, reinstatement would still be unwarranted.
o Since Victory Liner is a common carrier, and is obliged to exercise extra-ordinary
diligence in transporting its passengers, it would be a violation of this diligence to
reinstate an incapacitated driver.
o An employer may not be compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his interests.
• Therefore, in lieu of reinstatement, payment to respondent of separation pay equivalent to one
month pay for every year of service.

Goma vs. Pamplona Plantation

557 SCRA 124

Facts:

Petitioner commencedthe instant suit by filing a complaint for illegal dismissal, underpayment of wages,
non-payment of premium pay for holiday and rest day, five (5) days incentive leave pay, damages and
attorney’s fees, against the respondent. The case was filed with the Sub-Regional Arbitration Branch No.
VII of Dumaguete City. Petitioner claimed that he worked as a carpenter at the Hacienda Pamplona since
1995; that he worked from 7:30 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. daily with a salary
rate of P90.00 a day paid weekly; and that he worked continuously until 1997 when he was not given any
work assignment. On a claim that he was a regular employee, petitioner alleged to have been illegally
dismissed when the respondent refused without just cause to give him work assignment. Thus, he prayed
for backwages, salary differential, service incentive leave pay, damages and attorney’s fees.

On the other hand, respondent denied having hired the petitioner as its regular employee. It instead
argued that petitioner was hired by a certain Antoy Cañaveral, the manager of the hacienda at the time it
was owned by Mr. Bower and leased by Manuel Gonzales, a jai-alai pelotari known as “Ybarra.”
Respondent added that it was not obliged to absorb the employees of the former owner.
Issue: WON petitioner is a regular employee.
Held:

Article 280 of the Labor Code provides that there are two kinds of REGULAR EMPLOYEES, namely:

Regular employees by nature of work – Those who are engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer (regardless of length of
service); and

• Regular employees by years of service – Those who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they are employed (regardless of
nature of work).

If the law has been performing the job for at least a year, even if the performance is not continuous or
merely intermittent, the law deems the repeated and continuing need for its performance as sufficient
evidence of the necessity, if not indispensability, of that activity to the business.
Petitioner was engaged to perform carpentry work. His services were needed for a period of 2 years until
such time that respondent decided not to give him work assignment anymore. Owing to his length of
service, petitioner became a regular employee, by operation of law.
The principal test used to determine whether employees are PROJECT EMPLOYEES as distinguished from
REGULAR EMPLOYEES, is whether or not the employees were assigned to carry out a specific project or
undertaking, the duration or scope of which was specified at the time the employees were engaged for
that project. In this case, apart from the respondent’s bare allegation that petitioner was a project
employee, it had not shown that petitioner was informed that he would be assigned to a specific project
or undertaking. Neither was it established that he was informed of the duration and scope of such project
or undertaking at the time of his engagement.s
Petition granted.

LVN Pictures v Philippine Musician Guild

LVN Pictures, Inc. vs. Philippine Musicians Guild

Same; Employer and employee.—Musicians, who supply the musical background for movie productions,
are employees of film companies under the facts stated in the decision. They work under the supervision
of the movie director who is an employee of the film company.

Same; Criterion for employer-employee relationship-—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 may exist notwithstanding the
intervention of an alleged independent contractor who may hire and fire the workers.

Facts:

In its petition in the lower court, the Philippine Musicians Guild (FFW), hereafter referred to as the Guild,
averred that it is a duly registered legitimate labor organization; that LVN Pictures, Inc., Sampaguita
Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized under the Philippine laws,
engaged in the making of motion pictures and in the processing and distribution thereof; that said
companies employ musicians for the purpose of making music recordings for title music, background
music, musical numbers, finale music and other incidental music, without which a motion picture is
incomplete; that ninety-five (95%) percent of all the musicians playing for the musical recordings of said
companies are members of the Guild; and that the same has no knowledge of the existence of any other
legitimate labor organization representing musicians in said companies. Premised upon these allegations,
the Guild prayed that it be certified as the sole and exclusive bargaining agency for all musicians working
in the aforementioned companies.

In their respective answers, the latter denied that they have any musicians as employees, and alleged
that the musical numbers in the films of the companies are furnished by independent contractors. The
lower court, however, rejected this pretense and sustained the theory of the Guild, with the result
already adverted to. A reconsideration of the order complained of having been denied by the Court en
banc, LVN Pictures, Inc. and Sampaguita Pictures, Inc. filed these petitions for review by certiorari.

ISSUE: WON the musicians in question are employees of the film companies.

Yes.

"As a normal and usual course of procedure employed by the companies when a picture is to be made,
the producer invariably chooses, from the musical directors, one who will furnish the musical background
for a film. A price is agreed upon verbally between the producer and musical director for the cost of
furnishing such musical background. Thus, the musical director may compose his own music specially
written for or adapted to the picture. He engages his own men and pays the corresponding compensation
of the musicians under him.

"When the music is ready for recording, the musicians are summoned through 'call slips' in the name of
the film company, which show the name of the musician, his musical instrument, and the date, time and
place where he will be picked up by the truck of the film company. The film company provides the studio
for the use of the musicians for that particular recording. The musicians are also provided transportation
to and from the studio by the company. Similarly, the company furnishes them meals at dinner time.

"During the recording sessions, the motion picture director, who is an employee of the company,
supervises the recording of the musicians and tells what to do in every detail. He solely directs the
performance of the musicians before the camera. As director, he supervises the performance of all the
actors including the musicians who appear in the scenes so that in the actual performance to be shown
on the screen, the musical director's intervention has stopped.

"And even in the recording sessions and during the actual shooting of a scene, the technicians,
soundmen and other employees of the company assist in the operation. Hence, the work of the musicians
is an integral part of the entire motion picture since they not only furnish the music but are also called
upon to appear in the finished picture.

'Notwithstanding that the employees are called independent contractors', the Board will hold them to be
employees under the Act where the extent of the employer's control over them indicates that the
relationship is in reality one of employment.
"The right of control of the film company over the musicians is shown (1) by calling the musicians
through 'call slips' in the name of the company; (2) by arranging schedules in its studio for recording
sessions; (3) by furnishing transportation and meals to musicians; and (4) by supervising and directing in
detail, through the motion picture director, the performance of the musicians before the camera, in order
to suit the music they are playing to the picture which is being flashed on the screen.

"In view of the fact that the three (3) film companies did not question the union's majority, the Philippine
Musicians Guild is hereby declared as the sole collective bargaining representative for all the musicians
employed by the film companies."

The musical directors above referred to have no such control over the musicians involved in the present
case. Said musical directors control neither the music to be played, nor the musicians playing it. The film
companies summon the musicians to work, through the musical directors. The film companies, through
the musical directors, fix the date, the time and the place of work. The film companies, not the musical
directors, provide the transportation to and from the studio. The film companies furnish meal at dinner
time.

What is more—in the language of the order appealed from—"during the recording sessions, the motion
picture director who is an employee of the company"—not the musical director—"supervises the
recording of the musicians and tells them, what to do in every detail". The motion picture director—not
the musical director—"solely directs the performance of the musicians before the camera". The motion
picture director "supervises the performance of all the actors, including the musicians who appear in the
scenes, so that in the actual performance to be shown on the screen, the musical director's intervention
has stopped." Or, as testified to in the lower court, "the movie director tells the musical director what to
do; tells the music to be cut or tells additional music in this part or he eliminates the entire music he does
not (want) or he may want more drums or more violin or piano, as the. case may be". The movie director
"directly controls the activities of the musicians". He "says he wants more drums. and the drummer plays
more" or "if he wants more violin or 'he does not like that".

It is well settled that "an employer-employee relationship exists x x x 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 x x x." (Alabama Highway Express Co. v. Local 612, 108 S. 2d. 350.) The
decisive nature of said control over the "means to be used", is illustrated in the case of Gilchrist Timber
Co., et al., Local No. 2530 (73 NLRB No. 210, pp. 1197, 1199-1201), in which, by reason of said control,
the employer-employee relationship was held to exist between the management and the workers,
notwithstanding the intervention of an alleged independent contractor, who had, and exercise, the power
to hire and fire said workers. The aforementioned control over the means to be used" in reaching the
desired end is possessed and exercised by the film companies over the musicians in the cases before us.

WHEREFORE, the order appealed from is, hereby affirmed, with costs against petitioners herein. It is so
ordered.

Dy Keh Beng vs. Int’l Labor and Maritime Union

FACTS:
A charge of unfair labor practice was filed against Dy Keh Beng, a proprietor of a basket factory, by
dismissing Solano and Tudla for their union activities.
Dy Keh Beng contended that he did not know Tudla and Solano was not his employee because the latter
came to the establishment only when there was work which he did on pakiaw basis.
Dy Keh Beng countered with a special defense of simple extortion committed by the head of the labor
union.

ISSUE: W/N there existed an employee-employer relation between petitioner and respondents

HELD:
Yes. Evidence showed that the work of Solano and Tudla was continuous except in the event of illness,
although their services were compensated on piece basis. The control test calls for the existence of the
right to control the manner of doing the work, not the actual exercise of the right considering that Dy
Keh Beng is engaged in the manufacture of baskets known as “kaing”, those working under Dy would be
subject to Dy’s specifications such as the size and quality of the “kaing”. And since the laborers are done
at Dy’s establishments, it could be inferred that Dy could easily exercise control upon them.
As to the contention that Solano was not an employee because he worked on piece basis, the court ruled
that it should be determined that if indeed payment by piece is just a method of compensation and does
not define the essence of the relation. Payment cannot be construed by piece where work is done in such
establishment so as to put the worker completely at liberty to turn him out and take it another at
pleasure
Justice Perfecto also contended that pakyaw system is a labor contract between employers and
employees between capitalists and laborers.
Wherefore, the award of backwages is modified to an award of backwages for 3 years at the rated of
compensation the employees were receiving at the time of dismissal.

CORPORAL SR. VS. NLRC

341 SCRA 658
[G.R. No. 129315. October 2, 2000]
Facts: 5 male barbers and 2 female manicurists (Petitioners) worked at New Look Barbershop, a sole
proprietorship owned and managed by Vicente Lao which in 1982 was taken over by Lao Enteng Co.,
Inc., (respondent corporation) a corporation formed by Vicente Lao’s children. The petitioners were
allowed to work there until April 1985 when they were told that the barbershop building was sold and
their services are no longer needed.

Petitioners filed with the Arbitration branch of NLRC a complaint for illegal dismissal, illegal deduction,
separation pay, non-payment of 13th month pay and salary differential. Also they seek for refund of P1.00
collected from each of them daily as salary of the barbershop’s sweeper.

Respondent Corporation alleged that petitioners were Joint Venture (JV) partners receiving 50%
commission (Petitioners admitted in receiving 50-60%), therefore no employer-employee relationship
existed. And assuming arguendo that employer-employee relationship existed, petitioners were not
entitled to separation pay since cessation of the business was due to serious business losses. Also, they
allege that the barbershop had always been a JV partnership with the operation and management left
entirely to petitioners and that the former had no control over the latter who could freely come and go as
they wish. Lastly, they allege that some of the petitioners were allowed to register in SSS only as an act
of accommodation.

The Labor Arbiter dismissed the complaint and found that there was a JV and no employer-employee
relationship. Also that the business was closed due to serious business losses or financial reverses and
the law does not compel the establishment to pay separation pay to whoever were its employees. On
appeal, NLRC affirmed the decision but held that petitioners were considered independent contractors
and not employees. The MR was also denied by NLRC, hence, this petition on certiorari.

Issue: WON there was an employer-employee relationship.

Held: YES. Petitioners are employees of Respondent Corporation and shall be accorded the benefits
given in Art. 283 of the Labor Code granting separation pay equivalent to 1 month pay for every year of
service and also to 13th month pay. The other claims of petitioners are found to be without basis.
• No documentary evidence of the existence of JV other than the self-serving affidavit of the
company president.
• The power of control in the 4-fold test (employer-employee relationship) refers to the EXISTENCE
and NOT THE EXERCISE of such power – the following elements must be present for an
employer-employee relationship to exist: (1) the selection and engagement of the workers; (2)
power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control
the worker's conduct, with the latter assuming primacy in the overall consideration.

The records show that Vicente Lao engaged the petitioners to work for the barbershop and
retained them after it was taken over by the respondent corporation who continuously paid their
wages. Also, the fact that the petitioners worked in the barbershop owned and operated by
respondents, and that they were required to report daily, observing definite hours of work, they
were not free to accept employment elsewhere and devoted their full time working in the
barbershop proves the existence of the power of control.

• The petitioners are not independent contractors. – 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 form of tools, equipment, machineries, work premises,
and other materials which are necessary in the conduct of the business. Petitioners have neither
of the above since the tools used such as scissors, razors, nail cutters, polishes, etc. cannot be
considered “substantial capital or investment”.

• While it is no longer true that membership to SSS is predicated on the existence of an employee-
employer relationship since the policy is now to encourage even the self-employed dressmakers,
manicurists and jeepney drivers to become SSS members, we could not agree with private
respondents that petitioners were registered with the Social Security System as their employees
only as an accommodation. As we have earlier mentioned private respondent showed no proof to
their claim that petitioners were the ones who solely paid all SSS contributions. It is unlikely that
 respondents would report certain persons as their workers, pay their SSS premium as well as
their wages if it were not true that they were indeed their employee.

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, respondent’s 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 VIVA’s 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 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 VIVA’s 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 VIVA’s warehouse and fixing the
lighting system were vital, necessary and indispensable to the usual business or trade of the employer.
Wherefore, petition is granted.

Sonza vs ABS-CBN (2004) G.R. 138051

Facts:

In May 1994, ABS-CBN signed an agreement with Mel & Jay Management and Development Corp for a
radio and television program. ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of
P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABS-CBN would
pay the talent fees on the 10th and 25th days of the month.

On April 1996, Sonza wrote a letter to ABS-CBN President Eugenio Lopez III about a recent event
concerning his programs and career, and that the said violation of the company has breached the
agreement, thus, the notice of rescission of Agreement was sent.

At the end of the same month, Sonza filed a complaint against ABS-CBN before the DOLE for non-
payment of salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan (ESOP) which was opposed by ABS-
CBN on the ground there was no employer-employee relationship existed between the parties.
Issue: WON Sonza was an employee or independent contractor?
Held: There was no employer-employee relationship that existed, but that of an independent contractor.
Case law has consistently held that the elements of an employer-employee relationship are:

(a) The selection and engagement of the employee - ABS-CBN engaged SONZA’s services to co-
host its television and radio programs because of SONZA’s peculiar skills, talent and celebrity status. 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.

(b) The payment of wages - ABS-CBN directly paid SONZA his monthly talent fees with no part of his
fees going to MJMDC. All the talent fees and benefits paid to SONZA were the result of negotiations that
led to the Agreement. If SONZA were ABS-CBN’s employee, there would be no need for the parties to
stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay" which the law automatically
incorporates into every employer-employee contract.

(c) The power of dismissal - For violation of any provision of the Agreement, either party may
terminate their relationship. During the life of the Agreement, ABS-CBN agreed to pay SONZA’s talent
fees as long as "AGENT and Jay Sonza shall faithfully and completely perform each condition of this
Agreement." Even if it suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-
CBN remained obligated to pay SONZA’s talent fees during the life of the Agreement.

(d) The employer’s power to control the employee on the means and methods by which the
work is accomplished - The control test is the most important test. 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, ABS-CBN engaged SONZA’s services specifically to co-host the "Mel & Jay" programs. ABS-CBN did
not assign any other work to SONZA. 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-CBN’s control.
SONZA did not have to render eight hours of work per day. The Agreement required SONZA 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 SONZA’s script. However, the Agreement prohibited SONZA 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.

Second, 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. The code of conduct imposed on SONZA
under the Agreement refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa
Pilipinas (KBP), which has been adopted by the COMPANY (ABS- CBN) as its Code of Ethics." The KBP
code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not
necessarily employees of radio and television stations. Clearly, the rules and standards of performance
referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN.

Lastly, being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control. The hiring of exclusive talents is a widespread
and accepted practice in the entertainment industry. This practice is not designed to control the means
and methods of work of the talent, but simply to protect the investment of the broadcast station. The
broadcast station normally spends substantial amounts of money, time and effort "in building up its
talents as well as the programs they appear in and thus expects that said talents remain exclusive with
the station for a commensurate period of time." Normally, a much higher fee is paid to talents who agree
to work exclusively for a particular radio or television station. In short, the huge talent fees partially
compensates for exclusivity.