Justin Dominic P.

Manaog Labor Law 1 – Block C September 15, 2020

Villuga et. al. v. NLRC

G.R. No. 75038; August 23, 1993
Nocon, J.

Issue: Whether or not employer-employee relationship exists where the employees were allowed
to perform work at home and paid wages on a piece rate basis.

Complainant’s Argument: Petitioner argues that employer-employee relationship exists since the
fact that they were allowed to work at home does not imply absence of control and supervision.

Respondent’s Argument: Respondent argues that "there is no employer-employee relationship,

for it is clear that respondents are interested only in the result and not in the means and manner
and how the result is obtained." In addition, respondent argues that no employer-employee
relationship exists since the employees were allowed to work at home and were paid wages on a
piece rate basis.

Instruction Learned / Court Decision: The court ruled that employer-employee relationship exists
since “wage” was broadly defined in Article 97 of the Labor Code. “The facts of this case
indicate that payment by the piece is just a method of compensation and does not define the
essence of the relation.” “The petitioners were allowed to perform their work at home does not
likewise imply absence of control and supervision. The control test calls merely for the existence
of a right to control the manner of doing the work, not the actual exercise of the right.”

Ratio: For an employer-employee relationship to exist, the following elements are generally
considered: "(1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal and (4) the power to control the employee's conduct." In determining
whether the relationship is that of employer and employee or one of an independent contractor,
"each case must be determined on its own facts and all the features of the relationship are to be
considered."
Justin Dominic P. Manaog Labor Law 1 – Block C September 15, 2020

Hijos De F. Escano, Inc. v. NLRC

G.R. No. 59229; August 22, 1991
Feliciano, J.

Issue: Whether or not there exists an employer-employee relationship where the laborers were
hired thru a contractor who is not indispensable to the operations of the business.

Complainant’s Argument: Complainant argues that the contractor who hired the laborers is an
independent contractor and as such no employer-employee relationship exists between the
business and the laborers hired thru the contractor.

Petitioner’s Argument: Petitioner argues that there exists an employer-employee relationship

since the contractor is a labor-only contractor in view of the following: “(1) They perform their
duties or work assignments under the close supervision of supervisors of respondent Hijos de F.
Escaño Inc.; (2) The machineries, equipment, tools and other facilities complainants used, while
in the performance of their jobs, are owned by respondent Hijos de F. Escaño, Inc.; (3) The jobs
they were performing from the time they were first employed, until their dismissals, are principal
phases of respondent's operations; and (4) The so-called Pier 8 Arrastre & Stevedoring Services,
Inc. is a mere middleman; its vital role is purely one of supplying workers to respondent Hijos de
F. Escaño, Inc. in short, a mere recruiting agent. Plainly, said contractor can be categorized as an
agent of respondent Hijos de F. Escaño, Inc. as it performs activities directly related to the
principal business of said Hijos de F. Escaño, Inc.”

Instruction Learned / Court Decision: The court ruled that employer-employee relationship does
not exist since the contractor should be considered as an independent contractor which merely
acted as an agent for the company.

Ratio: It is firmly settled that the existence or non-existence of the employer-employee

relationship is commonly to be determined by examination of certain factors or aspects of that
relationship. These include: (a) the manner of selection and engagement of the putative
employee; (b) the mode of payment of wages; (c) the presence or absence of the power of
dismissal; and (d) the presence or absence of a power to control the putative employee's conduct.
Justin Dominic P. Manaog Labor Law 1 – Block C September 15, 2020

Sevilla v. CA
G.R. No. 44182-3, April 15, 1988
Sarmiento, J.

Issue: Whether or not a person who did not receive any salary but received commissions and
shared in the expenses for the use of a building and was given an honorary title of branch
manager is considered an employee and thus establishing an employer-employee relationship
with the company.

Complainant’s Argument: Complainant argues that the agreement with the company constitutes
that of a joint venture and not of an employer-employee relationship.

Respondent’s Argument: Respondent argues that appellant was an employee of the company and
was a designated manager.

Instruction Learned / Court Decision: The court ruled that there exists no employer-employee
relationship between the parties. “A true employee cannot be made to part with his own money
in pursuance of his employer's business, or otherwise, assume any liability thereof. In that event,
the parties must be bound by some other relation, but certainly not employment.”

Ratio: “In general, we 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." Subsequently, however, we have considered, 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, in determining the existence of an
employer-employee relationship.”
Justin Dominic P. Manaog Labor Law 1 – Block C September 15, 2020

Jimenez et. al. v. NLRC

G.R. No. 116960; April 2, 1996
Regalado, J.

Issue: Whether or not a helper who was hired by an employee paid on a commission basis is also
considered an employee of the company for establishing an employer-employee relationship.

Complainant’s Argument: Petitioner argues that being hired as a helper, there exists an
employer-employee relationship.

Respondent’s Argument: Respondent argues that petitioner was not an employee of the firm but
was merely a helper of his father Pedro.

Instruction Learned / Court Decision: The court ruled that there is no employer-employee
relationship between the hired helper and the company. Petitioner was never hired by the
company but was instead availed of by his father, who, at the same time, supervised and
controlled his work and paid his commissions.

Ratio: “Article 281 of the Labor Code does not refer to the basic factors that must underlie every
existing employer-employee relationship, the absence of any of which will negate such
existence. It refers instead to the qualifications of" (A)n employee who is allowed to work after a
probationary period’ and who, employee who as a consequence, "shall be considered a regular
employee.’ Secondly, the test in determining the existence of an employee-employer relationship
is not the necessity and /or desirability of one’s functions in relation to an employer’s business,
but ‘(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power to control the employee’s conduct. The latter is the most
important element’”
Justin Dominic P. Manaog Labor Law 1 – Block C September 15, 2020

MAM Realty Dev. Corp. v. NLRC

G.R. No. 114787; June 2, 1995
Vitug, J.

Issue: Whether or not an employer-employee relationship exists between a laborer whose work
can be done by other employees and the company.

Complainant’s Argument: Petitioner argues that no employer-employee relationship exists since

the laborer is not at all subject to the control or supervision of the company, which in fact his
work can be done by other employees.

Respondent’s Argument: Respondent argues that employer-employee relationship exists between

the parties.

Instruction Learned / Court Decision: The Supreme Court ruled that there exists an employer-
employee relationship between the parties as follows: “It is hard to accede to the contention of
petitioners that private respondent should be considered totally free from such control merely
because the work could equally and easily be done either by Mercado or by the subdivision's
security guard.”

Ratio: “The power of control, the most important feature of that relationship and, here, a point of
controversy, refers merely to the existence of the power and not to the actual exercise thereof. It
is not essential for the employer to actually supervise the performance of duties of the employee;
it is enough that the former has a right to wield the power.”
Justin Dominic P. Manaog Labor Law 1 – Block C September 15, 2020

Insular Life Insurance Co., Ltd. v. NLRC

G.R. No. 84484; November 15, 1989
Narvasa, J.

Issue: Whether or not an employer-employee relationship exists between an insurance company

and an insurance agent who is entitled to receive commissions under their agreement.

Complainant’s Argument: Petitioner argues that the insurance agent is not an employee of the
company but an independent contractor.

Respondent’s Argument: Respondent argues that the insurance agent had become the Company's
employee by virtue of the contract invoked by him.

Instruction Learned / Court Decision: The court ruled that there exists no employer-employee
relationship exists since “the agent's contractual prerogative to adopt his own selling methods or
to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an
employer-employee relationship between him and the company.”

Ratio: “In Investment Planning Corporation of the Philippines us. Social Security System a case
almost on all fours with the present one, this Court held that there was no employer-employee
relationship between a commission agent and an investment company, but that the former was an
independent contractor where said agent and others similarly placed were: (a) paid compensation
in the form of commissions based on percentages of their sales, any balance of commissions
earned being payable to their legal representatives in the event of death or registration; (b)
required to put up performance bonds; (c) subject to a set of rules and regulations governing the
performance of their duties under the agreement with the company and termination of their
services for certain causes; (d) not required to report for work at any time, nor to devote their
time exclusively to working for the company nor to submit a record of their activities, and who,
finally, shouldered their own selling and transportation expenses.”