MARSMAN & COMPANY, INC., PETITIONER, V. RODIL C. STA.

RITA,
RESPONDENT.

LEONARDO-DE CASTRO,[*] J.:

FACTS:

1. Marsman, a domestic corporation, was formerly engaged in the business of

distribution and sale of pharmaceutical and consumer products for different
manufacturers within the country.
2. Marsman temporarily hired Sta. Rita as a warehouse helper. After the
contract expired, Marsman rehired Sta. Rita as a warehouseman and placed
him on probationary status. Later, Sta. Rita joined Marsman Employees
Union (MEU), the recognized sole and exclusive bargaining representative of
Marsman's employees.

Marsman administered Sta. Rita's warehouse assignments. Initially, Marsman

assigned Sta. Rita to work in its GMA warehouse. Marsman then transferred Sta.
Rita to Warehouses C and E of Kraft General Foods, Inc. Thereafter, Marsman
reassigned Sta. Rita to Marsman Consumer Product Division Warehouse D in ACSIE,
Parañaque.[8]

3. Marsman purchased Metro Drug, a company that was also engaged in the
distribution and sale of pharmaceutical and consumer products, from Metro
Pacific, Inc.
4. Concomitant to the integration of employees is the transfer of all office,
sales and warehouse personnel of Marsman to Metro Drug and the
latter's assumption of obligation with regard to the affected employees' labor
contracts and Collective Bargaining Agreement. The integration and transfer
of employees ensued out of the transitions of Marsman and CPDSI into,
respectively, a holding company and an operating company. Thereafter,
Metro Drug amended its Articles of Incorporation by changing its name to
"Consumer Products Distribution Services, Inc." (CPDSI).
5. EAC's operations were affected when Valiant Distribution decided to
terminate their contract of lease.

CPDSI terminate the employment of those assigned to EAC-Libis Warehouse,

including Sta. Rita. Aggrieved, Sta. Rita filed a complaint in the NLRC,
National Capital Region-Quezon City against Marsman on January 25, 2000
for illegal dismissal with damages in the form of moral, exemplary, and
actual damages and attorney's fees.

6. Marsman filed a Motion to Dismiss on the premise that the Labor Arbiter had
no jurisdiction over the complaint for illegal dismissal because Marsman is
not Sta. Rita's employer.
7. Labor Arbiter Gaudencio P. Demaisip, Jr. (Demaisip) rendered his Decision
finding Marsman guilty of illegal dismissal - MOA is a piece of evidence that
 Marsman is the employer of complainant because it is solely the employer
who can negotiate and conclude the terms and conditions of employment of
the workers.
8. The NLRC reversed Labor Arbiter Demaisip's Decision and found that there
was no employer-employee relationship between Marsman and Sta. Rita.
NLRC applied four fold test.
9. Sta. Rita filed before the Court of Appeals a Petition for Certiorari imputing
grave abuse of discretion on the part of the NLRC. The Court of Appeals
reversed the NLRC Decision. The Court of Appeals held that Marsman was
Sta. Rita's employer.

ISSUE:

Whether or not an employer-employee relationship existed between Marsman and

Sta. Rita at the time of Sta. Rita's dismissal.

HELD: NO.

1. Sta. Rita failed to satisfy the four-fold test which determines the existence of
an employer-employee relationship. The elements of the four-fold test are:
1) the selection and engagement of the employees; 2) the payment of
wages; 3) the power of dismissal; and 4) the power to control the
employee's conduct. There is no hard and fast rule designed to establish the
aforesaid elements. Any competent and relevant evidence to prove the
relationship may be admitted. Identification cards, cash vouchers, social
security registration, appointment letters or employment contracts, payrolls,
organization charts, and personnel lists, serve as evidence of employee
status.
2. The Memorandum of Agreement effectively transferred Marsman's employees
to CPDSI. However, there was nothing in the agreement to negate CPDSI's
power to select its employees and to decide when to engage them. This is in
line with Article 1700 of the Civil Code which provides that:

Art. 1700. The relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good. Therefore, such contracts are subject to the
special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects.

3. This conclusion draws its force from the right of an employer to select his/her
employees and equally, the right of the employee to refuse or voluntarily
terminate his/her employment with his/her new employer by resigning or
retiring. That CPDSI took Sta. Rita into its employ and assigned him to one of
its clients signified the former's acquiescence to the transfer.

To prove the element on the payment of wages, Sta. Rita submitted forms for leave
application, with either Marsman's logo or CPDSI's logo. Significantly, the earlier
leave forms bore Marsman's logo but the latest leave application of Sta. Rita
already had CPDSI's logo. In any event, the forms for leave application did not
sufficiently establish that Marsman paid Sta. Rita's wages. Sta. Rita could have
presented pay slips, salary vouchers, payrolls, certificates of withholding tax on
compensation income or testimonies of his witnesses. The submission of his Social
Security System (SSS) identification card (ID) only proved his membership in the
social insurance program. Sta. Rita should have instead presented his SSS records
which could have reflected his contributions, and the name and address of his
employer. Thus, Sta. Rita fell short in his claim that Marsman still had him in its
payroll at the time of his dismissal.

As to the power of dismissal, the letter dated January 14, 2000 clearly indicated
that CPDSI, and not Marsman, terminated Sta. Rita's services by reason of
redundancy.

Finally, Sta. Rita failed to prove that Marsman had the power of control over his
employment at the time of his dismissal. The power of an employer to control the
work of the employee is considered the most significant determinant of the
existence of an employer-employee relationship. Control in such relationships
addresses the details of day to day work like assigning the particular task that has
to be done, monitoring the way tasks are done and their results, and determining
the time during which the employee must report for work or accomplish his/her
assigned task. The Court likewise takes notice of the company IDs attached in Sta.
Rita's pleading. The "old" ID bore Marsman's logo while the "new" ID carried Metro
Drug's logo. The Court has held that in a business establishment, an identification
card is usually provided not only as a security measure but mainly to identify the
holder thereof as a bona fide employee of the firm that issues it. Thus the "new" ID
confirmed that Sta. Rita was an employee of Metro Drug, which, to reiterate, later
changed its name to CPDSI.
ROMEO ALBA, PETITIONER, VS. CONRADO G. ESPINOSA, ET AL.,
RESPONDENTS.

FACTS:

It was alleged by the respondents that on various dates, Alba hired them as
construction workers for his projects in several residential villages within Metro
Manila and nearby provinces. The respondents were Alba's regular employees who
were paid different wage rates that ranged from P350.00 to P500.00 a day, but
were deprived of some statutorily-mandated benefits such as their overtime pay,
13th month pay, holiday pay, and service incentive leave (SIL) pay. On different
dates in 2013, some of the respondents confronted Alba regarding their benefits,
but such action eventually resulted in their dismissal.

In 2014, the other respondents again questioned Alba for his non-payment of their
benefits. The foregoing prompted these respondents to seek the assistance of
media personality Raffy Tulfo (Tulfo) in his Radyo Singko Program. As he addressed
the respondents' dilemma, Tulfo personally called Alba, who was reminded to pay
the respondents their full benefits. The action, however, proved to create more
harm than good for the respondents because when they reported back for
work the following day, they were informed of their dismissal. Feeling
aggrieved, all the respondents filed their complaints for illegal dismissal and
monetary claims with the NLRC. The two complaints were later consolidated before
the Labor Arbiter (LA).

For his defense, Alba argued that the respondents could not be deemed his regular
employees. He claimed to be a mere taker of small-scale construction projects for
house repairs and renovations. In the construction industry, he was deemed a
mere mamamakyaw, who would pool a team of skilled and semi-skilled carpenters
and masons for specific projects that usually lasted from one to two weeks. The
respondents were paid daily wages ranging from P600.00 to P1,000.00, depending
on their skill, and could take on projects with their own clients after Alba's projects
had terminated.

The respondents were displeased by Alba's explanations. To disprove Alba's claim

that he was a mere mamamakyaw, they presented gate passes, issued by the
villages where Alba had construction projects, which indicated that Alba was a
"contractor."[16]

Ruling of the LA: The LA dismissed the complaints via a Decision. For the LA, no
employer-employee relationship existed between Alba and the respondents. The
supposed gate passes issued by village representatives did not qualify as
substantial evidence to show that Alba was indeed a contractor. [19]

Ruling of the NLRC: The respondents' appeal was partly granted by the NLRC

The NLRC justified the dismissal of Jaime, Jr.'s complaint by citing sufficient
evidence that Alba engaged him as an independent contractor, specifically as
excavation contractor. Conrado's complaint, on the other hand, was dismissed given
his admission that he was employed as a tanod in Barangay Almanza Dos, Las
Piñas City.[24]

As to the remaining respondents, the NLRC rejected the LA's finding on the lack of
employer-employee relationship.

Ruling of the CA: The CA to also affirm the finding that the illegally dismissed
respondents were regular employees.

Ruling of the Court

1. The respondents were regular employees of Alba

Contrary to Alba's contention, the existence of an employer-employee relationship

between him and the respondents was sufficiently established.

Alba's relationship with the respondents satisfies the four-fold test.

The presence of the first element is beyond dispute. Alba himself admitted that he
was the one who selected and engaged the workers that comprised his pool of
semi-skilled and skilled workers, for placement in his several construction projects
obtained from various clients. It was equally significant that Alba determined to
which projects the respondents were to be assigned, or whether they would be
assigned at all. As it established Alba's power to select and engage, the
circumstance likewise rendered concomitant the power of Alba to dismiss any of the
respondents. Notwithstanding the length of time that his workers had been working
for his projects, he could opt to simply drop them off any assignment, effectively
dismissing them from employment, albeit with necessary consequences if the
dismissal was proved to be illegal.

Alba's payment of the respondents' wages was likewise established by his plain
admission. As the LA cited in its decision, "[Alba] would pay the [respondents] a
daily fee ranging from [P]600.00 to [P]1,000.00. They were also given bonuses
from savings that [Alba and Alba Construction] made."
From the records, it is clear that Alba possessed this power to control, and had in
fact freely exercised it over the respondents. Alba failed to satisfactorily rebut the
respondents' direct assertions that Alba frequented the work sites, and would
reprimand his workers whom he believed were idle or sluggish. He even controlled
the time when they had to stay at work.[41] The respondents relied upon instructions
coming from Alba, as their work was for projects obtained by the latter. He
controlled the results of the work that the respondents had to perform, along with
the means and methods by which to accomplish them. His control was not negated
by any instructions that came from a foreman or an architect, as directives that
came from them, if there were at all, were understandably limited. The respondents
worked for Alba who held the project, and the latter was the one who exercised
authority over them.

Even Alba's allegation that the respondents were independent contractors was not
amply substantiated. Time and again, the Court has emphasized that "the test of
independent contractorship is 'whether one claiming 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 only as to the results of the
work.'"

"It is the burden of the employer to prove that a person whose services it pays for
is an independent contractor rather than a regular employee with or without a fixed
term."

As the Court affirms the finding of illegal dismissal, it underscores the fact that the
respondents were regular employees, and not project employees as Alba asserts.

Alba is liable for the payment of the other monetary claims

The awards of 13th month pay, SIL pay, moral and exemplary damages, and
attorney's fees are sustained.

Article 95 of the Labor Code provides that "[e]very employee who has rendered at
least one year of service shall be entitled to a yearly [SIL] of five days with pay."
On the other hand, the respondents derive their right to the 13 th month pay from
Presidential Decree No. 851, otherwise known as the 13 th Month Pay Law, as
amended.

After the respondents alleged non-payment of the 13th month and SIL pays, it
became incumbent upon Alba to prove payment of the statutory monetary benefits
when he opted to deny further liability therefor.
3. ANTONIO VALEROSO AND ALLAN LEGATONA, Petitioners, v. SKYCABLE
CORPORATION, Respondent

FACTS:

A complaint for illegal dismissal, non-payment of 13th month pay, separation pay
and illegal deduction was filed by Valeroso and Legatona before the LA.

Petitioners Valeroso and Legatona alleged that they started working as account
executives tasked to solicit cable subscriptions for respondent Skycable.

From being direct hires of respondent, petitioners were transferred to Skill Plus
Manpower Services sans any agreement for their transfer. They were informed that
their commissions would be reduced due to the introduction of prepaid cards sold to
cable subscribers resulting in lower monthly cable subscriptions.

They notified their manager, Marlon Pasta (Pasta), of their intention to file a labor
case with the NLRC, which they did. Pasta then informed them that they will be
dropped from the roster of its account executives, which act, petitioners claimed,
constitutes unfair labor practice. Further, petitioners claimed that they did not
receive 13th month pay for 2006 and were underpaid of such benefit for the years
2007 and 2008.

Respondent engaged the services of an independent contractor, Armada Resources

& Marketing Solutions, Inc. (Armada), formerly Skill Plus Manpower Services) under
a Sales Agency Agreement. As a result, petitioners' contracts were terminated but
they, together with other sales account executives, were referred for transfer to
Armada.

Petitioners then became employees of Armada.

LA dismissed the complaint

 petitioners failed to establish by substantial evidence that respondent was their
employer.
NLRC reverses LA
 petitioners are regular employees of respondent having performed their job
as account executives for more than one year.

The CA sustained the LA.

ISSUE:

Whether petitioners were employees of respondent.

HELD: NO.
1. Well-entrenched is the doctrine that the existence of an employer-employee
relationship is ultimately a question of fact and that the findings thereon by
the Labor Arbiter and NLRC shall be accorded not only respect but even
finality when supported by substantial evidence.
2. To prove the claim of an employer-employee relationship, the following
should be established by competent evidence: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer's power to control the employee with respect
to the means and methods by which the work is to be accomplished. Among
the four, the most determinative factor in ascertaining the existence of
employer-employee relationship is the "right of control test." Under this
control test, the person for whom the services are performed reserves the
right to control not only the end to be achieved, but also the means by which
such end is reached.
3. An employer-employee relationship is absent in this case. The evidence
presented by petitioners did not prove their claim that they were employees
of respondent. The certifications issued by De la Cuesta are not competent
evidence of employer-employee relation as these merely certified that
respondent had engaged the services of petitioners without specifying the
true nature of such engagement. 
4. As for the payslips presented, it appears that only the payslips for the years
2001 to 2006 were submitted. No payslips for the years material to this case
(2007 to 2009) were submitted.
5. No merit in petitioners' assertion that respondent's control over them was
demonstrated. "[Guidelines indicative of labor law 'control' do not merely
relate to the mutually desirable result intended by the contractual
relationship; they must have the nature of dictating the means and methods
to be  employed in attaining the result." Absent any intrusion by respondent
into the means and manner of conducting petitioners' tasks, bare assertion
that petitioners' work was supervised and monitored does not suffice to
establish employer-employee relationship.
6. Reliance by petitioners on the case of Francisco v. National Labor Relations
Commission31 is misplaced.
7. In the present case, there is a written contract, i.e., the Sales Agency
Agreement, which served as the primary evidence of the nature of the
parties' relationship. In this duly executed and signed agreement, petitioners
and respondent unequivocally agreed that petitioners' services were to be
engaged on an agency basis as sales account executives and that no
employer-employee relationship is created but an independent
contractorship. It is therefore clear that the intention at the time of the
signing of the agreement is not to be bound by an employer-employee
relationship.
8. Indeed, "[t]he presence of [the] power of control is indicative of an
employment relationship while the absence thereof is indicative of
independent contractorship."33 Moreover, evidence on record reveal the
 existence of independent contractorship between the parties. As mentioned,
the Sales Agency Agreement provided the primary evidence of such
relationship.
9. Article 280 is not the yardstick for determining the existence of an
employment relationship because it merely distinguishes between two kinds
of employees, i.e., regular employees and casual employees, for purposes of
determining [their rights] to certain benefits, [such as] to join or form a
union, or to security of tenure. Article 280 does not apply where the
existence of an employment relationship is in dispute.
10. Evidently, the legal relation of petitioners as sales account executives
to respondent can be that of an independent contractor. There was no
showing that respondent had control with respect to the details of how
petitioners must conduct their sales activity of soliciting cable subscriptions
from the public.

4. EXPEDITION CONSTRUCTION CORPORATION, SIMON LEE PAZ, AND

JORDAN JIMENEZ,*Petitioners, v. ALEXANDER M. AFRICA

FACTS:

1. Petitioner Expedition is a domestic corporation engaged in garbage

collection/hauling. It engaged the services of respondents as garbage truck
drivers to collect garbage from different cities and transport the same to the
designated dumping site.

2. Respondents filed cases against Expedition for illegal dismissal, etc.

Respondents alleged that they were illegally terminated from employment
when they were prevented from entering the premises of Expedition without
cause or due process.

3. Expedition countered that respondents were not illegally dismissed. It

averred that the need for respondents’ services significantly decreased
sometime in 2013 after its contracts with Quezon City and Caloocan City
were not renewed; and, that it nonetheless tried to accommodate
respondents by giving them intermittent trips whenever the need arose.

4. Expedition denied that respondents were its employees. It claimed that

respondents were not part of the company’s payroll but were being paid on a
per trip basis. Respondents were not under Expedition’s direct control and
supervision as they worked on their own, were not subjected to company
rules nor were required to observe regular/fixed working hours, and that
respondents hired/paid their respective garbage collectors. As such,
respondents’ money claims had no legal basis.

5. Respondents insisted that they worked under Expedition’s control and

supervision considering that: (1) Expedition owned the dump trucks; (2)
 Expedition expressly instructed that the trucks should be used exclusively to
collect garbage in their assigned areas and transport the garbage to the
dump site; (3) Expedition directed them to park the dump trucks in the
garage located at Group 5 Area Payatas, Quezon City after completion of
each delivery; and (4) Expedition determined how, where, and when they
would perform their tasks.

6. Respondents also adverted to petitioners’ counsel’s manifestation during the

mandatory conciliation proceedings, regarding Expedition’s willingness to
accept them back to work, as proof of their status as Expedition’s regular
employees.

7. LA dismissed the complaints, ruling that there was employer-employee

relationship. NLRC affirmed LA ruling. Later on, however, NLRC partly
granted respondents’ MR. It ruled that respondents were employees of
Expedition in view of Expedition’s admission that it hired and paid
respondents for their services. The NLRC was also persuaded that Expedition
exercised control on when and how respondents would collect garbage. The
NLRC, however, sustained its earlier finding that there was no illegal
dismissal ratiocinating that respondents were merely placed on a floating
status when the contract with Quezon City and Caloocan City expired and
thus were merely waiting to be reassigned to other similar work. As there
was no dismissal to speak of, the NLRC ordered respondents’ reinstatement
but without the payment of backwages. However, due to lack of clients
where respondents could be reassigned, the NLRC opted to award separation
pay in lieu of reinstatement. CA affirmed NLRC that there is an employer-
employee relationship but ruled that the respondents were illegally
dismissed.

ISSUES:

(1)Whether or not there was an employer-employee relationship.

(2)Whether or not the respondents were illegally dismissed.

HELD:

1. Respondents were regular employees of Expedition. The Court finds

Expedition's position untenable.
a. First, as clearly admitted, respondents were engaged/hired by Expedition
as garbage truck drivers.
b. Second, it is undeniable that respondents received compensation from
Expedition for the services that they rendered to the latter. The fact that
respondents were paid on a per trip basis is irrelevant in determining the
existence of an employer-employee relationship because this was merely
the method of computing the proper compensation due to respondents.
 c. Third, Expedition's power to dismiss was apparent when work was
withheld from respondents as a result of the termination of the contracts
with Quezon City and Caloocan City.
d. Finally, Expedition has the power of control over respondents in the
performance of their work. It was held that "the power of control refers
merely to the existence of the power and not to the actual exercise
thereof.”

e. As aptly observed by the CA, the agreements for the collection of garbage
were between Expedition and the various LGUs, and respondents needed
the instruction and supervision of Expedition to effectively perform their
work in accordance with the stipulations of the agreements.

f. the trucks driven by respondents were owned by Expedition. There was

an express instruction that these trucks were to be exclusively used to
collect and transport garbage. Respondents were mandated to return the
trucks to the premises of Expedition after the collection of garbage.
Expedition determined the clients to be served, the location where the
garbage is to be collected and when it is to be collected. Indeed,
Expedition determined how, where, and when respondents would perform
their tasks.
g. Respondents were neither independent contractors nor project
employees. There was no showing that respondents have substantial
capital or investment and that they were performing activities which were
not directly related to Expedition's business to be qualified as independent
contractors.
h. Having gained regular status, respondents were entitled to security of
tenure and could only be dismissed for just or authorized cause after they
had been accorded due process.

2. There was no illegal dismissal.

a. In this case, there was no positive or direct evidence to substantiate
respondents' claim that they were dismissed from employment. Aside
from mere assertions, the record is bereft of any indication that
respondents were barred from Expedition's premises. 
b. Note that even during the mandatory conciliation and mediation
conference between the parties, Expedition manifested its willingness to
accept respondents back to work. Unfortunately, it was respondents who
no longer wanted to return to work. In fact, in their complaints,
respondents prayed for the payment of separation pay instead of
reinstatement.
c. Here, there was no sufficient proof that respondents were actually laid off
from work. Thus, the CA had no basis in ruling that respondents'
employment was illegally terminated.
 d. As a measure of social justice, the award of separation pay/financial
assistance has been upheld in some cases even if there is no finding of
illegal dismissal. 
e. In a Manifestation submitted before the CA, Expedition expressed
willingness to extend gratuitous assistance to respondents and to pay
them the amounts equivalent to the separation pay.

WHEREFORE, the Petition for Review on Certiorari is PARTLY GRANTED.  

5. JESUS G. REYES, Petitioner, v. GLAUCOMA RESEARCH FOUNDATION, INC.,

EYE REFERRAL CENTER AND MANUEL B. AGULTO, Respondent.

FACTS:

1. Petitioner alleged that on August 1, 2003, he was hired by respondent

corporation as administrator of the latter's Eye Referral Center (ERC); he
performed his duties as administrator and continuously received his monthly
salary of P20,000.00 until the end of January 2005; beginning February
2005,
2. Respondent withheld petitioner's salary without notice but he still continued
to report for work;
3. Petitioner wrote a letter to respondent Manuel Agulto, who is the Executive
Director of respondent corporation, informing the latter that he has not been
receiving his salaries since February 2005 as well as his 14 th month pay for
2004;
4. Petitioner did not receive any response from Agulto; on April 21, 2005,
petitioner was informed by the Assistant to the Executive Director as well as
the Assistant Administrative Officer, that he is no longer the Administrator of
the ERC; subsequently, petitioner's office was padlocked and closed without
notice; he still continued to report for work but on April 29, 2005 he was no
longer allowed by the security guard on duty to enter the premises of the
ERC.
5. Respondents contended that: upon petitioner's representation that he is an
expert in corporate organizational structure and management affairs, they
engaged his services as a consultant; petitioner was not dismissed as he was
the one who voluntarily severed his relations with respondents.
6. a complaint for illegal dismissal filed by petitioner against respondents with
the NLRC.
7. the LA dismissing petitioner's complaint. No EE relationship. NLRC reversed
and set aside the Decision of the LA. The NLRC declared petitioner as
respondents' employee. The CA annulled and set aside the judgment of the
NLRC and reinstated the Decision of the LA.

ISSUE:
Whether an employer-employee relationship exists between petitioner and
respondents.

HELD: NO.

1. The power of the employer to control the work of the employee is considered
the most significant determinant of the existence of an employer-employee
relationship.28 This test is premised on whether the person for whom the
services are performed reserves the right to control both the end achieved
and the manner and means used to achieve that end.
2. In the present case, petitioner contends that, as evidence of respondents'
supposed control over him, the organizational plans he has drawn were
subject to the approval of respondent corporation's Board of Trustees.
However, the Court agrees with the disquisition of the CA on this matter, to
wit: [Respondents'] power to approve or reject the organizational plans drawn
by [petitioner] cannot be the control contemplated in the "control test." It is
but logical that one who commissions another to do a piece of work should
have the right to accept or reject the product.
3. What was glaring in the present case is the undisputed fact that petitioner
was never subject to definite working hours. This Court has held that there is
no employer-employee relationship where the supposed employee is not
subject to a set of rules and regulations governing the performance of his
duties under the agreement with the company and is not required to report
for work at any time, nor to devote his time exclusively to working for the
company.
4. In bolstering his contention that there was an employer-employee
relationship, petitioner draws attention to the pay slips he supposedly
received from respondent corporation. However, he does not dispute the
findings of the CA that there are no deductions for SSS and withholding tax
from his compensation, which are the usual deductions from employees'
salaries. Thus, the alleged pay slips may not be treated as competent
evidence of petitioner's claim that he is respondents' employee.
5. Additional evidence of the fact that petitioner was hired as a consultant and
not as an employee of respondent corporation are affidavits to this effect
which were executed by Roy Oliveres and Aurea Luz Esteva who are Medical
Records Custodian and Administrative Officer, respectively, of respondent
corporation. Petitioner insists in its objection of the use of these affidavits on
the ground that they are, essentially, hearsay. However, this Court has ruled
that although the affiants had not been presented to affirm the contents of
their affidavits and be cross-examined, their affidavits may be given
evidentiary value.
6. The fact alone that petitioner was designated as an administrator does not
necessarily mean that he is an employee of respondents. Mere title or
designation in a corporation will not, by itself, determine the existence of an
employer-employee relationship. In this regard, even the identification card
 which was issued to petitioner is not an adequate proof of petitioner's claim
that he is respondents' employee.

WHEREFORE, the instant petition is DENIED.

6. ALLIED BANKING CORPORATION, NOW MERGED WITH PHILIPPINE

NATIONAL BANK, Petitioner, v. REYNOLD CALUMPANG, Respondent.

FACTS:

1. Petitioner Allied Banking Corporation3 ("Bank") and Race Cleaners, Inc.

("RCI"), a corporation engaged in the business of janitorial and manpower
services, had entered into a Service Agreement whereby the latter provided
the former with messengerial, janitorial, communication, and maintenance
services and the personnel therefor.
2. Respondent Reynold Calumpang was hired as a janitor by RCI and was
assigned at the Bank's Tanjay City Branch. He was tasked to perform
janitorial work and messengerial/errand services.
3. Petitioner, however, observed that whenever respondent went out on
errands, it takes a long time for him to return to the Branch. It was
eventually discovered that during these times, respondent was also plying his
pedicab and ferrying passengers. Petitioner also found out through several
clients of the Branch who informed the Bank Manager, Mr. Oscar Infante,
that respondent had been borrowing money from them. Because of these
acts, Mr. Infante informed respondent that his services would no longer be
required at the Branch.
4. respondent thereafter filed a complaint for illegal dismissal and
underpayment of wages against petitioner.
5. Labor Arbiter ruled in favor of respondent. There was an employer-employee
relationship between petitioner and respondent, there is illegal dismissal due
to failure to observe due process. The NLRC affirmed the decision of the
Labor Arbiter. The CA affirmed the decision of the LA and NLRC. CA ruled
that RCI is a labor-only contractor.

ISSUES:

(1)Whether or not RCI is a labor only contractor.

(2)Whether or not there exists an employer-employee relationship between the
Bank and respondent.
(3)Whether the respondent had been illegally dismissed.

HELD:

(1) YES. RCI is a labor-only contractor.

 a. Omnibus Rules Implementing Labor Code, Section 9 - Any person who
undertakes to supply workers to an employer shall be deemed to be
engaged in labor only contracting.
b. As a general rule, a contractor is presumed to be a labor-only
contractor, unless such contractor overcomes the burden of proving
that it has the substantial capital, investment, tools and the like.
c. In the present case, petitioner failed to establish that RCI is a
legitimate labor contractor as contemplated under the Labor Code.
Except for the bare allegation of petitioner that RCI had substantial
capitalization, it presented no supporting evidence to show the same. 
d. Aside from this, petitioner's claim that RCI exercised control and
supervision over respondent is belied by the fact that petitioner
admitted that its own Branch Manager had informed respondent that
his services would no longer be required at the Branch. This overt act
shows that petitioner had direct control over respondent while he was
assigned at the Branch. 

(2) YES.
a. A finding that a contractor is a labor-only contractor, as opposed to
permissible job contracting, is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees
of the supposed contractor, and the labor-only contractor is considered as
a mere agent of the principal, the real employer.
b. In this case, petitioner bank is the principal employer and RCI is the
labor-only contractor. Accordingly, petitioner and RCI are solidarily liable
for the rightful claims of respondent.

(3) NO.
a. We find that petitioner's basis for terminating respondent rests on
valid and legal grounds. At the very first instance, petitioner had
already stressed in its position paper that respondent was found
committing conduct prejudicial to the interests of the Branch when it
was discovered that 1) respondent was plying his pedicab and ferrying
passengers during his work hours and 2) he had been borrowing
money from several clients of the Branch.
b. The very nature of the actions imputed against respondent is serious
and detrimental to the Bank's operations and reputation. Thus,
petitioner's decision to relieve respondent from his employment is
justified.
 7. ROYALE HOMES MARKETING CORPORATION, Petitioner, vs. FIDEL P.
ALCANTARA [deceased], substituted by his heirs, Respondent.

FACTS:

1. Royale Homes, a corporation engaged in marketing real estates, appointed

Alcantara as its Marketing Director for a fixed period of one year. His work
consisted mainly of marketing Royale Homes’ real estate inventories on an
exclusive basis. Royale Homes reappointed him for several consecutive years,
the last of which covered the period January 1 to December 31, 2003.

2. Alcantara filed a Complaint for Illegal Dismissal  against Royale. Alcantara

alleged that he is a regular employee of Royale Homes since he is performing
tasks that are necessary and desirable to its business and that the acts of the
executive officers of Royale Homes amounted to his dismissal from work
without any valid or just cause and in gross disregard of the proper procedure
for dismissing employees.

3. Royale Homes, on the other hand, vehemently denied that Alcantara is its
employee. It argued that the appointment paper of Alcantara is clear that it
engaged his services as an independent sales contractor for a fixed term of
one year only. He never received any salary, 13th month pay, overtime pay or
holiday pay from Royale Homes as he was paid purely on commission basis. In
addition, Royale Homes had no control on how Alcantara would accomplish his
tasks and responsibilities as he was free to solicit sales at any time and by any
manner which he may deem appropriate and necessary. According to Royale
Homes, Alcantara decided to leave the company after his wife, who was once
connected with it as a sales agent. Two months after he relinquished his post,
however, Alcantara appeared in Royale Homes and submitted a letter claiming
that he was illegally dismissed.

4. The Labor Arbiter rendered a Decision holding that Alcantara is an employee of

Royale Homes and that the pre-termination of his contract was against the
law. The NLRC rendered its Decision, ruling that Alcantara is not an employee
but a mere independent contractor of Royale Homes. It based its ruling mainly
on his employment contract. The CA promulgated its Decision granting
Alcantara’s Petition and reversing the NLRC’s Decision. Applying the four-fold
and economic reality tests, it held that Alcantara is an employee of Royale
Homes.

ISSUE:

Whether Alcantara was an independent contractor or an employee of Royale

Homes.

HELD: NO.
1. The juridical relationship of the parties based on their written contract. The
primary evidence of the nature of the parties’ relationship in this case is the
written contract that they signed and executed in pursuance of their mutual
agreement. (Note: In the written contract, it is expressly stated that “that no
employer-employee relationship exists between us” xxx).

2. This Court adopts the observation of the NLRC that it is rather strange on the
part of Alcantara, an educated man and a veteran sales broker who claimed
to be receiving ₱1.2 million as his annual salary, not to have contested the
portion of the contract expressly indicating that he is not an employee of
Royale Homes if their true intention were otherwise.

3. The juridical relationship of the parties based on Control Test. In determining

the existence of an employer-employee relationship, this Court has generally
relied on the four-fold test.

4. Not every form of control is indicative of employer-employee

relationship.1âwphi1 A person who performs work for another and is
subjected to its rules, regulations, and code of ethics does not necessarily
become an employee. As long as the level of control does not interfere with
the means and methods of accomplishing the assigned tasks, the rules
imposed by the hiring party on the hired party do not amount to the labor
law concept of control that is indicative of employer-employee relationship. 

5. In this case, the Court agrees with Royale Homes that the rules, regulations,
code of ethics, and periodic evaluation alluded to by Alcantara do not involve
control over the means and methods by which he was to perform his job.
They do not dictate upon him the details of how he would solicit sales or the
manner as to how he would transact business with prospective clients.

6. This case is replete with instances that negate the element of control and the
existence of employer-employee relationship. Notably, Alcantara was not
required to observe definite working hours. Except for soliciting sales, Royale
Homes did not assign other tasks to him. He had full control over the means
and methods of accomplishing his tasks as he can "solicit sales at any time
and by any manner which [he may] deem appropriate and necessary." He
performed his tasks on his own account free from the control and direction of
Royale Homes in all matters connected therewith, except as to the results
thereof.

7. The element of payment of wages is also absent in this case. As provided in

the contract, Alcantara’s remunerations consist only of commission override
of 0.5%, budget allocation, sales incentive and other forms of company
support. There is no proof that he received fixed monthly salary.

8. No payslip or payroll was ever presented and there is no proof that Royale
Homes deducted from his supposed salary withholding tax or that it
 registered him with the Social Security System, Philippine Health Insurance
Corporation, or Pag-Ibig Fund. 

8. ATOK BIG WEDGE COMPANY, INC., Petitioner, vs. JESUS P.

GISON, Respondent.

FACTS:

1. Respondent Jesus P. Gison was engaged as part-time consultant on retainer

basis by petitioner Atok Big Wedge Company, Inc. As a consultant on retainer
basis, respondent assisted petitioner's retained legal counsel with matters
pertaining to the prosecution of cases against illegal surface occupants within
the area covered by the company's mineral claims. Respondent was likewise
tasked to perform liaison work with several government agencies, which he said
was his expertise.
2. Petitioner did not require respondent to report to its office on a regular basis,
except when occasionally requested by the management to discuss matters
needing his expertise as a consultant. As payment for his services, respondent
received a retainer fee of ₱3,000.00 a month, which was delivered to him either
at his residence or in a local restaurant. The parties executed a retainer
agreement, but such agreement was misplaced and can no longer be found. The
said arrangement continued for the next eleven years.
3. Sometime thereafter, since respondent was getting old, he requested that
petitioner cause his registration with the Social Security System (SSS), but
petitioner did not accede to his request. He later reiterated his request but it
was ignored by respondent considering that he was only a retainer/consultant.
On February 4, 2003, respondent filed a Complaint with the SSS against
petitioner for the latter's refusal to cause his registration with the SSS.
4. On the same date, Mario D. Cera, in his capacity as resident manager of
petitioner, issued a Memorandum advising respondent that within 30 days from
receipt thereof, petitioner is terminating his retainer contract with the company
since his services are no longer necessary.
5. On February 21, 2003, respondent filed a Complaint for illegal dismissal, unfair
labor practice, underpayment of wages, non-payment of 13th month pay,
vacation pay, and sick leave pay with the National Labor Relations Commission
(NLRC), Regional Arbitration Branch (RAB), Cordillera Administrative Region,
against petitioner, Mario D. Cera, and Teofilo R. Asuncion, Jr.
6. Respondent’s argument: Because of his length of service, he invited the
attention of the top officers of the company that he is already entitled to the
benefits due an employee under the law, but management ignored his requests.
However, he continued to avail of his representation expenses and
 reimbursement of company-related expenses. He also enjoyed the privilege of
securing interest free salary loans payable in one year through salary deduction.
7. Petitioner’s argument: No EER as Gison’s contract with Atok is merely
temporary.
8. Labor Arbiter: in favor of the petitioner. Found no EER between petitioner and
respondent and dismissed the complaint.
9. NLRC: LA decision affirmed.
10. CA: In favor of respondents. Applying Art. 280 of the Labor Code, Gison is
deemed a regular employee of the petitioner after the lapse of one year from his
employment. Considering also that respondent had been performing services for
the petitioner for eleven years, respondent is entitled to the rights and privileges
of a regular employee. Also, although there was an agreement between the
parties that respondent's employment would only be temporary, it clearly
appears that petitioner disregarded the same by repeatedly giving petitioner
several tasks to perform.

ISSUE:

Whether or not an employer-employee relationship exists between petitioner and

respondent.

HELD: NO.

1. Applying the four-fold test, an employer-employee relationship is apparently

absent in the case at bar. Among other things, respondent was not required
to report everyday during regular office hours of petitioner. Respondent's
monthly retainer fees were paid to him either at his residence or a local
restaurant. More importantly, petitioner did not prescribe the manner in
which respondent would accomplish any of the tasks in which his expertise as
a liaison officer was needed; respondent was left alone and given the
freedom to accomplish the tasks using his own means and method.
Respondent was assigned tasks to perform, but petitioner did not control the
manner and methods by which respondent performed these tasks. Verily, the
absence of the element of control on the part of the petitioner engenders a
conclusion that he is not an employee of the petitioner.

2. The absence of the parties' retainership agreement notwithstanding,

respondent clearly admitted that petitioner hired him in a limited capacity
only and that there will be no employer-employee relationship between
them.

3. Respondent was well aware of the agreement that he was hired merely as a
liaison or consultant of the petitioner and he agreed to perform tasks for the
petitioner on a temporary employment status only. However, respondent
anchors his claim that he became a regular employee of the petitioner based
on his contention that the "temporary" aspect of his job and its "limited"
nature could not have lasted for eleven years unless some time during that
 period, he became a regular employee of the petitioner by continually
performing services for the company.

4. Considering that there is no employer-employee relationship between the

parties, the termination of respondent's services by the petitioner after due
notice did not constitute illegal dismissal warranting his reinstatement and
the payment of full backwages, allowances and other benefits.

9. MARIO N. FELICILDA, Petitioner, v. MANCHESTEVE H. UY, Respondent.

FACTS:

1. Petitioner Mario Felicida hired as a truck driver on October 29, 2010 of the
Gold Pillars Trucking (GPT) service owned and managed by the respondent
Machesteve Uy.
2. On December 9, 2011, petitioner took a nap at the work station while waiting
for his truck to be loaded with cargoes, all of which were delivered to
respondents’ clients on schedule. On the next day or on Decmeber 10, 2012
respondents’ helper told petitioner that his employment was already
terminated due to his act of sleeping while on the job.
3. Thereafter, the petitioner filed a complaint to the Legal Arbiters (LA) for
illegal dismissal with money claims against respondent before the NLRC,
claiming that he was dismissed without just cause and due process and that
his act of taking nap did not prejudice respondent business.
4. The Labor Arbiter (LA) ruled in petitioner's favor. The LA concluded that
petitioner was respondent's regular employee. The NLRC affirmed the
petition (EER existed) and the CA affirmed the dismissal.

ISSUE:

Whether or not there is employer-employee relationship existed between petitioner

and respondent and, thus, the latter could not have illegally dismissed the form er.

HELD: YES.

1. the Court agrees with the labor tribunals that all the four (4) elements are
present in this case:

a. First. It is undisputed that respondent hired petitioner to work as a truck

driver for his private enterprise, GPT.
b. Second. Petitioner received compensation from respondent for the
services he rendered. Contrary to the findings of the CA, while the wages
 paid was determined on a "per trip" or commission basis, it has been
constantly ruled that such does not negate employment
relationship.34 Article 97 (f) of the Labor Code broadly defines the term
"wage" as "the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered x x x."35 That petitioner was paid on a
"per trip" or commission basis is insignificant as this is merely a method
of computing compensation and not a basis for determining the existence
or absence of an employer-employee relationship.36chanrobleslaw
c. Third. Respondent's power to dismiss was inherent in the selection and
engagement of petitioner as truck driver.
d. Fourth. The presence of the element of control, which is the most
important element to determine the existence or absence of employment
relationship, can be safely deduced from the fact that: (a) respondent
owned the trucks that were assigned to petitioner; (b) the cargoes loaded
in the said trucks were exclusively for respondent's clients; and (c) the
schedule and route to be followed by petitioner were exclusively
determined by respondent. The latter's claim that petitioner was
permitted to render service to other companies was not substantiated and
there was no showing that he indeed worked as truck driver for other
companies. Given all these considerations, while petitioner was free to
carry out his duties as truck driver, it cannot be pretended that
respondent, nonetheless, exercised control over the means and methods
by which the former was to accomplish his work. To reiterate, the power
of control refers merely to the existence of the power. It is not essential
for the employer to actually supervise the performance of duties of the
employee, as it is sufficient that the former has a right to wield the power

2. In this case, suffice it to say that aside from respondent's averment that
petitioner committed "serious transgressions and misconduct" resulting in the
former's loss of trust and confidence, no other evidence was shown to
substantiate the same. Such averment should be properly deemed as a self
serving assertion that deserves no weight in law.41 Neither was petitioner
accorded procedural due process as he was merely informed by respondent's
helper that he was already terminated from his job. Clearly, respondent
illegally dismissed petitioner, and as such, the latter is entitled to backwages
and separation pay in lieu of reinstatement, as correctly ruled by the labor
tribunals.
10. GREGORIO V. TONGKO, Petitioner, vs. THE MANUFACTURERS LIFE
INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS

FACTS:

1. The contractual relationship between Tongko and Manulife had two basic
phases. The first or initial phase began on July 1, 1977, under a Career
Agent’s Agreement that provided:

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

nothing contained herein shall be construed or interpreted as creating an
employer-employee relationship between the Company and the Agent.

The Company may terminate this Agreement for any breach or violation of
any of the provisions hereof by the Agent by giving written notice to the
Agent within fifteen (15) days from the time of the discovery of the breach.
No waiver, extinguishment, abandonment, withdrawal or cancellation of the
right to terminate this Agreement by the Company shall be construed for any
previous failure to exercise its right under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any
time without cause, by giving to the other party fifteen (15) days notice in
writing.

2. Tongko additionally agreed (1) to comply with all regulations and

requirements of Manulife, and (2) to maintain a standard of knowledge and
competency in the sale of Manulife’s products, satisfactory to Manulife and
sufficient to meet the volume of the new business, required by his Production
Club membership.

3. The second phase started in 1983 when Tongko was named Unit Manager in
Manulife’s Sales Agency Organization. In 1990, he became a Branch
Manager. Six years later, Tongko became a Regional Sales Manager.
4. Tongko’s gross earnings consisted of commissions, persistency income, and
management overrides. Since the beginning, Tongko consistently declared
himself self-employed in his income tax returns. Thus, under oath, he
declared his gross business income and deducted his business expenses to
arrive at his taxable business income. Manulife withheld the corresponding
10% tax on Tongko’s earnings.
5. De Dios addressed a letter to Tongko stating that the former found the
latter’s views and comments unaligned with the directions the company was
taking. The allegations stated that some Managers were unhappy with their
 earnings. However, no Managers confirmed the said allegations. De Dios
worried about Tongko’s inability to push for the company’s development and
growth.
6. Subsequently, de Dios wrote Tongko another letter terminating Tongko’s
services.
7. Tongko responded by filing an illegal dismissal complaint with the NLRC
Arbitration Branch. He essentially alleged – despite the clear terms of the
letter terminating his Agency Agreement – that he was Manulife’s employee
before he was illegally dismissed.
8. Manulife argues that Tongko had no fixed wage or salary. Under the
Agreement, Tongko was paid commissions of varying amounts, computed
based on the premium paid in full and actually received by Manulife on
policies obtained through an agent. As sales manager, Tongko was paid
overriding sales commission derived from sales made by agents under his
unit/structure/branch/region. Manulife also points out that it deducted and
withheld a 10% tax from all commissions Tongko received; Tongko even
declared himself to be self-employed and consistently paid taxes as such—
i.e., he availed of tax deductions such as ordinary and necessary trade,
business and professional expenses to which a business is entitled.
9. Manulife asserts that the labor tribunals have no jurisdiction over Tongko’s
claim as he was not its employee as characterized in the four-fold test.
10. The labor arbiter decreed that no employer-employee relationship
existed between the parties. However, the NLRC reversed the labor arbiter’s
decision on appeal; it found the existence of an employer-employee
relationship and concluded that Tongko had been illegally dismissed. In the
petition for certiorari with the CA, the appellate court found that the NLRC
gravely abused its discretion in its ruling and reverted to the labor arbiter’s
decision that no employer-employee relationship existed between Tongko
and Manulife.In the Supreme Court’s Decision of November 7, 2008, the
Court reversed the CA ruling and found that an employment relationship
existed between Tongko and Manulife for the following reasons:

ISSUES:

(1) Whether or not there is an employee-employer relationship. (2)

Whether or not there is an illegal dismissal.

HELD: NO.

The primary evidence in the present case is the July 1, 1977 Agreement that
governed and defined the parties’ relations until the Agreement’s termination in
2001.

By the Agreement’s express terms, Tongko served as an "insurance agent" for

Manulife, not as an employee.
Evidence indicates that Tongko consistently clung to the view that he was an
independent agent selling Manulife insurance products since he invariably declared
himself a business or self-employ ed person in his income tax returns. Tongko’s tax
returns cannot but be legally significant because he certified under oath the amount
he earned as gross business income, claimed business deductions, leading to his
net taxable income. This should be evidence of the first order that cannot be
brushed aside by a mere denial. Even on a layman’s view that is devoid of legal
considerations, the extent of his annual income alone renders his claimed
employment status doubtful.

A glaring evidentiary gap for Tongko in this case is the lack of evidence on record
showing that Manulife ever exercised means-and-manner control, even to a limited
extent, over Tongko during his a scent in Manulife’s sales ladder. The reality is,
prior to de Dios’ letter, Manulife had practically left Tongko alone not only in doing
the business of selling insurance, but also in guiding the agents under his wing. 

The mere presentation of codes or of rules and regulations, however, is not per se
indicative of labor law control as the law and jurisprudence teach us.

the Insurance Code imposes obligations on both the insurance company and its
agents in the performance of their respective obligations under the Code,
particularly on licenses and their renewals, on the representations to be made to
potential customers, the collection of premiums, on the delivery of insurance
policies, on the matter of compensation, and on measures to ensure ethical
business practice in the industry.

The general law on agency, on the other hand, expressly allows the principal an
element of control over the agent in a manner consistent with an agency
relationship. In this sense, these control measures cannot be read as indicative of
labor law control.  To these extents, control can be imposed through rules and
regulations without intruding into the labor law concept of control for purposes of
employment.

The first Insular Life case teaches us is that a commitment to abide by the rules
and regulations of an insurance company does not ipso facto make the insurance
agent an employee. Neither do guidelines somehow restrictive of the insurance
agent’s conduct necessarily indicate "control" as this term is defined in
jurisprudence. Guidelines indicative of labor law "control," as the first
Insular Life case tells us, should not merely relate to the mutually
desirable result intended by the contractual relationship; they must have
the nature of dictating the means or methods to be employed in attaining the
result, or of fixing the methodology and of binding or restricting the party hired to
the use of these means.

Thus, Manulife’s codes of conduct, all of which do not intrude into the insurance
agents’ means and manner of conducting their sales and only control them as to
the desired results and Insurance Code norms, cannot be used as basis for a finding
that the labor law concept of control existed between Manulife and Tongko.

De Dios’ letter is not determinative of control as it indicates the least amount of

intrusion into Tongko’s exercise of his role as manager in guiding the sales agents.
Strictly viewed, de Dios’ directives are merely operational guidelines on how Tongko
could align his operations with Manulife’s re-directed goal of being a "big league
player." This requirement for the recruitment of more agents is not a means-and-
method control as it relates, more than anything else, and is directly relevant, to
Manulife’s objective of expanded business operations through the use of a bigger
sales force whose members are all on a principal-agent relationship.

Given this anemic state of the evidence, particularly on the requisite confluence of
the factors determinative of the existence of employer-employee relationship, the
Court cannot conclusively find that the relationship exists in the present case, even
if such relationship only refers to Tongko’s additional functions. While a rough
deduction can be made, the answer will not be fully supported by the substantial
evidence needed.

Under this legal situation, the only conclusion that can be made is that the absence
of evidence showing Manulife’s control over Tongko’s contractual duties points to
the absence of any employer-employee relationship between Tongko and Manulife.