Vous êtes sur la page 1sur 89

ATTY. ANDREA UY and FELIX YUSAY vs.

ARLENE VILLANUEVA and NLRC FACTS Countrywide Rural Bank of La Carlota, Inc. is a private banking corporation engaged in rural banking and other allied services. In 1998, the Bank experienced liquidity problems. The depositors were alarmed of losing their deposits. Consequently, the depositors holding 70% of the Banks deposit accounts met and organized themselves into a "Committee of Depositors," for the purpose of protecting their collective interests and to increase their chances of recovering their deposits. They assumed temporary administrative control of the remaining Bank operations, with the incumbent BODs consent and approval. The Committee designated Felix Yusay as Chairman of the Interim BOD, while Atty. Andrea Uy as Secretary. However, the rehabilitation of the bank had failed and the Committee was disbanded. BSP placed the bank under receivership and appointed a liquidator. Meanwhile, the PDIC commenced the processing of claims for return of deposits. Eventually, three separate cases for illegal dismissal were filed against the Bank before NLRC. These were filed by Amalia Bueno, Amelia Valdez and Lyn Villa and Private Respondent Arlene Villanueva. 11/16/1999, Labor Arbiter Arturo P. Gamolo decided in favor of Villanueva and held the Bank, Atty. Andrea Uy and Felix Yusay solidarily liable to pay the monetary awards and attorneys fees. Upon the filing of the Motion for Execution, the Bank filed an Opposition through PDIC. Labor Arbiter Gamolo found PDICs opposition to be meritorious and directed complainants to file their respective money claims as adjudged before the liquidation court for PDICs approval of inclusion in the Banks Distribution Plan. Petitioners filed with the NLRC:

Notice of Appeal with Memorandum of Appeal but was Dismissed for being filed out of time (11/27/2000 Resolution); Motion for Reconsideration NLRC recalled its Resolution and set the case for clarificatory hearing, but Petitioners received the Resolution 5 days after the scheduled hearing NLRC then reinstated its 11/27/2000 Resolution (10/10/2001 Resolution)

Petitioners filed a petition for certiorari before the CA to nullify the NLRCs Resolutions, but the CA dismissed the petition for certiorari on technical grounds. Subsequent Motion for Reconsideration was filed, but it was likewise denied. Hence, the instant petition. Petitioners Claim Previous decisions of the Court held that technicalities can be relaxed in order to uphold the substantive rights of the parties They cannot be held solidarily liable to private respondent because they were mere depositors of the Bank and not stockholders. Even assuming that they were stockholders, they still cannot be held individually liable for the Banks obligations ISSUES 1. WON dismissal of their petition for certiorari on technical grounds deprived them of substantial justice 2. WON there existed an employer-employee relationship between Petitioners and Private Respondent HELD The petition is meritorious. At the outset, we note that the Bank did not appeal the NLRCs rulings. As to the bank, therefore, the NLRC Decision has become final and executory. 1. YES

Rule 45 of the Rules of Civil Procedure provides that only questions of law shall be raised in an appeal by certiorari before this Court. However, it admits of certain exceptions, among them are: when there is a grave abuse of discretion and when the judgment is based on misappreciation of facts. CA committed grave abuse of discretion in dismissing the petition without examining its merits. In the past, the Court held that technicalities should not be permitted to stand in the way of equitably and completely resolving the rights and obligations of the parties. Where the ends of substantial justice would be better served, the application of technical rules of procedure may be relaxed. Dismissal of appeals purely on technical grounds is frowned upon and the rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice, and thereby defeat their very aims.

2. NO Illegal dismissal presupposes that there was an employer-employee relationship between the dismissed employee and the persons complained of. The Court has consistently used the "four-fold" test: (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the control test is the most important element. In this case, all these elements are attributable to the bank and not to petitioners. As mentioned, the NLRC

Decision has become final and executory as to the bank. Its liability for private respondents dismissal is no longer in dispute. However, the same cannot apply to petitioners because they assumed only limited administrative control of the bank as part of the "Committee of Depositors." There is no showing that they took over the management and control of the bank. Even assuming that an employer-employee relationship exist between petitioners and private respondent, the former still cannot be held liable with Countrywide Bank for the illegal dismissal of private respondent. Corporate officers are not personally liable for the money claims of discharged corporate employees, unless they acted with evident malice and bad faith in terminating their employment. It has been held that an "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee. Petitioners are neither officers nor employees of the bank. They are mere depositors who sought to manage the bank in order to save it. The doctrine of piercing the veil of corporate fiction finds no application in the case. For petitioners are not even stockholders of the bank but mere depositors. They assumed temporary control of the banks administration, but that did not change the character of their relationship with the Bank. In fact, their bid to convert their interest in the Bank to that of stockholders failed as the BSP denied their plan to rehabilitate the bank.

DISPOSITION: Petition GRANTED. Decisions of LABOR ARBITER and CA, finding petitioners solidarily liable, are REVERSED and SET ASIDE.

2. Who are Managerial Employees? HELD: 1. Yes. The employees concerned are managerial employees within the purview of Art. 212 which provides: (m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Route managers cant be classified as mere Supervisors because their work not only involves, but goes beyond the simple direction of operating employees to accomplish objectives set by superiors. Route managers are not mere functionaries with simple oversight functions, but business administrators in their own rights. They are therefore properly classified as managerial employees. 1. The term manager generally refers to anyone who is responsible for subordinates and other organization resources. As a class, managers constitute three levels of a pyramid: FIRST-LINE MANAGERS The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other

United Pepsi-Cola Supervisory Union vs Laguesma 288 SCRA 15 Facts: UPSU is a union of supervisory employees. The union filed a petition for certification election on behalf of the route managers at PepsiCola Products Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which says, Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. ISSUE: 1. Whether the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees

managers. Example of first-line managers are the foreman or production supervisor in a manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a large office. First-level managers are often called supervisors. MIDDLE MANAGERS The term middle management can refer to more than one level in an organization. Middle managers direct the activities of other managers and sometimes also those of operating employees. Middle managers principal responsibilities are to direct the activities that implement their organizations policies and to balance the demands of their superiors with the capacities of their subordinates. A plant manager in an electronics firm is an example of a middle manager. TOP MANAGERS Composed of a comparatively small group of executives, top management is responsible for the overall management of the organization. It establishes operating policies and guides the organizations interactions with its environment. Typical titles of top managers are chief executive officer, president, and senior vice-president. Actual titles vary from one organization to another and are not always a reliable guide to membership in the highest management classification. What distinguishes them from the rank-and file employees is that they act in the interest of the employer in supervising such rank-and-file employees. Managerial employees may therefore be said to fall into two distinct categories: the managers per se, who compose the

former group described above, and the supervisors who form the latter group. Whether they belong to the first or second category, managers, vis--vis employers, are, likewise, employees. ADDITIONAL INFO: ART. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rankand-file employees but may join, assist or form separate labor organizations of their own In the case of Art. 245, there is a rational basis for prohibiting managerial employees from forming or joining labor organizations. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form, assist or joint a labor union equally applies to them. If these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership." TELEVISION AND PRODUCTION EXPONENTS, INC. (TAPE) vs. SERVAA FACTS:

Servaa was a security guard for the Agro-Commercial Security Agency (ACSA) since 1987. The agency had a contract with TV network RPN 9. TAPE was handling shows like Eat Bulaga which was then with RPN 9. When the security agencys contract with RPN-9 expired in 1995, respondent was absorbed by TAPE. In 2000, TAPE contracted the services of Sun Shield Security Agency. It then notified Servaa that he is being terminated because he is now a redundant employee. Servaa then filed a case for illegal Dismissal. The Labor Arbiter ruled that Servaas dismissal is valid on the ground of redundancy but though he was not illegally dismissed he is still entitled to be paid a separation pay which is amounting to one month pay for every year of service which totals to P78,000.00. TAPE appealed and argued that Servaa is not entitled to receive separation pay for he is considered as a talent and not as a regular employee; that as such, there is no employee-employer relationship between TAPE and Servaa. The National Labor Relations Commission ruled in favor of TAPE. It ruled that Servaa is a program employee. Servaa appealed before the Court of Appeals. The Court of Appeals reversed the NLRC and affirmed the LA. The CA further ruled that TAPE and its president Tuviera should pay for nominal damages amounting to P10,000.00. ISSUE: WON there is an employee-employer relationship existing between TAPE and Servaa. HELD: Yes. Servaa is a regular employee.

In determining Servaas nature of employment, the Supreme Court employed the Four Fold Test: 1. WON employer conducted the selection and engagement of the employee. Servaa was selected and engaged by TAPE when he was absorbed as a talent in 1995. He is not really a talent, as termed by TAPE, because he performs an activity which is necessary and desirable to TAPEs business and that is being a security guard. Further, the primary evidence of him being engaged as an employee is his employee identification card. An identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it. 2 WON there is payment of wages to the employee by the employer. Servaa is definitely receiving a fixed amount of monthly compensation. Hes receiving P6,000.00 a month. 3. WON employer has the power to dismiss employee.

The Memorandum of Discontinuance issued to Servaa to notify him that he is a redundant employee evidenced TAPEs power to dismiss Servaa. 4. WON the employer has the power of control over the employee. The control test is the most important. The bundy cards which showed that Servaa was required to report to work at fixed hours (form 11:30-1:00 pm) of the day manifested that TAPE has control over him. Otherwise, Servaa could have reported at any time during the day as he may wish. Precisely, he is being paid for being the security of "Eat Bulaga!"

The Daily Time Record is a form of control by the management of TAPE. Therefore, Servaa is entitled to receive a separation pay. On the other hand, the Supreme Court ruled that Tuviera, as president of TAPE, should not be held liable for nominal damages as there was no showing he acted in bad faith in terminating Servaa.

marketing and would end at 5:30pm or even later, after most of the employees, if not all, had left the company premises. 1. She continuously worked for Remington until she was unceremoniously prevented from reporting for work when Remington transferred to a new site in Edsa, Caloocan City. She averred that she reported for work at the new site on January 15, 1998, only to be informed that Remington no longer needed her services. Castaneda believed that her dismissal was illegal because she was not given any notice as required by law. Hence, she filed a complaint for reinstatement without loss of seniority rights, salary differentials, service incentive leave pay, 13th month pay and fees. 2. Remington denied that it dismissed Castaneda illegally. It posited that Castaneda was a domestic helper, not a regular employee and that her work as a cook had nothing to do with Remingtons business of trading in construction materials. 3. Remington also maintained that it did not exercise any degree of control and/or supervision over Castanedas work as her only concern was to ensure that the employees lunch and snacks were available and served at the designated time. 4. Remington also claimed that it was Castaneda who refused to report for work when the company transferred to the new location ISSUE: WON CASTANEDA IS A REGULAR EMPLOYEE OF PETITIONER OR MERE DOMESTIC WORKER OF THE FAMILY TAN HELD: Yes, Castaneda was a regular employee of petitioner. Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms house helper or domestic servant are defined as follows: The term house helper as used herein is synonymous to the term domestic servant and shall refer to any person, whether

Regular Employee Defined: One having been engaged to perform an activity that is necessary and desirable to a companys business. Under the control test, 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.

REMINGTON INDUSTRIAL SALES CORP V. CASTANEDA 507 SCRA 391 (2006) FACTS: Castaneda alleged that she started working in August 1983 as company cook with a salary P4,000/month for Remington, a corporation engaged in the trading business; that she worked for 6 days a week, starting as early as 6am because she had to do the

male or female, who renders services in and about the employers home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employers family. The foregoing definition clearly contemplates such house helper or domestic servant who is employed in the employers home to minister exclusively to the personal comfort and enjoyment of the employers family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and similar house helps. The criteria are the personal comfort and enjoyment of the family of the employer in the home of said employer. While it may be true that the nature of the work of a house helper, domestic servant or laundrywoman in a home or in a company staff house may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, the mere fact that the house helper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, as in its staff houses for its guest or even for its officers and employees, warrants the conclusion that such house helper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family house helper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended. Clearly, the situs, as well as the nature of respondents work as a cook, who caters not only to the needs of Mr. Tan and his family but also to that of the petitioners employees, makes her fall squarely within the definition of a regular employee under the doctrine enunciated in the Apex Mining case. That she works within company premises, and that she does not cater exclusively to the personal comfort of Mr. Tan and his family, is

reflective of the existence of the petitioners right of control over her functions, which is the primary indicator of the existence of an employer-employee relationship. Moreover, it is wrong to say that if the work is not directly related to the employer's business, then the person performing such work could not be considered an employee of the latter. The determination of the existence of an employeremployee relationship is defined by law according to the facts of each case, regardless of the nature of the activities involved. In addition, no less than the companys corporate secretary has certified that respondent is a bona fide company employee; she had a fixed schedule and routine of work and was paid a monthly salary of P4,000.00; she served with the company for 15 years starting in 1983, buying and cooking food served to company employees at lunch and merienda, and that this service was a regular feature of employment with the company.

In the second issue, abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty; hence, a just cause for termination of employment by the employer under Article 282 Labor Code, which enumerates the just causes for termination by the employer. For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employee has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.

In the instant case, Erlindas immediate filing of her complaint with the NLRC negates abandonment. Indeed, an employee who loses no time in protesting her layoff cannot by any reasoning be said to have abandoned her work, for it is well-settled that the filing of an employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of her desire to return to work, thus, negating the employers charge of abandonment. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause; failure to do so would necessarily mean that the dismissal was illegal. The employers case succeeds or fails on the strength of its evidence and not on the weakness of the employees defense. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.

MIGUEL vs. JCT GROUP, INC. and VICENTE CUEVAS FACTS Glorious Sun Garment Manufacturing Companywas a garment exporter until it folded up in October 1994. De Soliel Apparel Manufacturing Corporation and American Inter-Fashion Corporation took over Glorious Suns manufacturing plant, facilities and equipment and absorbed its employees, including the petitioners. After the 1986 EDSA Revolution, the Presidential Commission on Good Government sequestered De Soleil and AIFC and took over their assets and operations. On 4/24/1989, JCT Group, Inc. and De Soleil executed a Management and Operating Agreement for the purpose of servicing De Soleils export quota to ensure its rehabilitation and preserve its viability and profitability. The MOA expired on 5/1/1990 and in July 1990, De Soleil ceased business operations, terminating petitioners employment. In April 1993, petitioners filed complaints for illegal dismissal and payment of backwages and other monetary claims before the NLRC against De Soleil, AIFC, PCGG, Glorious Sun, JCT, Nemesio Co and Vicente Cuevas III. On 5/26/1993, JCT and Cuevas filed a motion to dismiss founded on lack of jurisdiction over the subject matter of the action because of

the absence of an employer-employee relationship between them and petitioners. Without resolving the motion to dismiss, Labor Arbiter Vladimir P.L. Sampang decided in favor of the Petitioners, declaring De Soleil, AIFC, PCGG, Glorious Sun, JCT, Nemesio Co and Cuevas jointly and severally guilty of illegal dismissal and to pay complainants monetary awards. Glorious Sun and Respondents appealed the labor arbiters decision. Petitioners then filed a motion to dismiss both appeals on the ground that the same were not perfected for failure to post a bond as required. NLRC then modified labor arbiters decision by absolving Glorious Sun from liability and dismissing respondents appeal. Aggrieved, respondents instituted a special civil action for certiorari before the SC but the petition was referred to the CA for appropriate action and disposition. Subsequently, CA reversed the Decision of the NLRC and remanded the case to the labor arbiter. It found no factual basis for the ruling that JCT had become the employer of petitioners after the cessation of operations of Glorious Sun and failed to account for the liability of Cuevas in solidum with AIF, De Soleil and JCT. Hence, this Petition.

NO. CA did not err in remanding the case for further proceedings. Both the labor arbiter and NLRC abused their discretion when they ruled in favor of herein petitioners without determining the existence of an employer-employee relationship between them and respondents. The Decisions were silent on why JCT and Cuevas were held liable. CA has correctly observed that NLRC made no finding that JCT (on the supposition that it became petitioners employer pursuant to the MOA dated 4/24/1989) had assumed the obligations of petitioners previous employers, i.e., Glorious Sun, AIF and De Soleil. The facts and the law on which decisions are based must be clearly and distinctly expressed. The failure of the labor arbiter and the NLRC to express the basis for their Decisions was an evasion of their constitutional duty, an evasion that constituted grave abuse of discretion. The Court has cited Saballa v. National Labor Relations Commission to explain how the decision of an administrative body must be drawn: Court previously held that judges and arbiters should draw up their decisions and resolutions with due care, and make certain that they truly and accurately reflect their conclusions and their final dispositions. The same thing goes for the findings of fact made by the NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by substantial evidence; otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of discretion. It is a requirement of due process and fair play that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. The defense of respondents is anchored on an alleged lack of employer-employee relationship with petitioners as stipulated in the formers MOA with De Soleil. JCT further claims that any relationship with De Soleil and the latters employees was severed upon the

ISSUE WON CA erred in remanding the case to the labor arbiter because of lack of factual findings to prove Employer-Employee relationship between JCT and Miguel which would be the basis of the liability of JCT HELD

termination of that Agreement. It is imperative to determine the nature of the MOA -- whether or not it partook only of a consultancy agreement, in which no employer-employee relationship existed between respondents and petitioners. The only way to find out whether Respondents JCT and Cuevas are liable to petitioners is by remanding the case to the lower court. The remand of the case, instead of the dismissal of the Complaint, was beneficial to petitioners and was made in consideration of the policy to protect and promote the general welfare of employees. DISPOSITION: Petition is DENIED and the assailed Decision AFFIRMED. Wack-wack Golf and Country Club vs NLRC 456 SCRA 280 FACTS: A large portion of the Wack Wack clubhouse (including the kitchen) was destroyed by fire, and because of this, the management had to suspend operations of the Food and Beverage department, requiring the suspension of 54 employees. The Employees Union found the suspension as arbitrary and constitutive of union-busting, and went on strike. The parties soon after entered into an amicable settlement, whereby a special separation benefit/ retirement package was formulated. The same provides for, among other things, a 1 month separation pay for every year of service, and be considered on priority basis for employment by concessionaires and/or contractors, and even by the club, upon full resumption of operations. The package was availed of by 3 employees (Cagasan, Dominguez, and Baluyot), who received large sums of money as Separation pay. Soon after, Wack-wack entered into a Management Contract with Business Staffing and Management Inc (BSMI), whereby the latter will provide management services for Wack-wack. Cagasan and Dominguez filed their application for employment with BMSI.

They, by reason of the priority given by the separation package, were rehired on probationary status by BMSI. Wack-wack also engaged other contractors in the operations of the club (like janitorial services, Finance and accounting services). Because of the various management service contracts, BMSI made an organizational analysis and manpower evaluation to stream line its operations. It found the positions of Cagasan and Domiguez redundant, and subsequently terminated them. Cagasan and Dominguez then filed complaints in the NLRC for illegal dismissal against Wackwack. NLRC ordered reinstatement. ISSUE: 1. Whether or not BMSI is an independent contractor or a laboronly contractor 2. Whether or not there was an employer-employee relationship between Wack-wack and private respondents. HELD: 1. Yes. There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial business establishments. 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, equipments, machineries,

work premises and other materials which are necessary in the conduct of the business. Jurisprudential holdings are to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employers power with respect to the hiring, firing, and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. Labor Secretary Bienvenido Laguesma, recognized BSMI as an independent contractor. As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee relationship between the contractor and the workers.

evaluation of its personnel organization, BSMI was impelled to terminate the services of the respondents on the ground of redundancy. This right to hire and fire is another element of the employer-employee relationship which actually existed between the respondents and BSMI, and not with Wack Wack.

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. vs. SCHONFELD, FACTS: Respondent is a Canadian citizen.

2. No. There being no employer-employee relationship between the petitioner and respondents Cagasan and Dominguez, the latter have no cause of action for illegal dismissal and damages against the petitioner. Consequently, the petitioner cannot be validly ordered to reinstate the respondents and pay them their claims for backwages. BSMI admitted that it employed the respondents, giving the said retired employees some degree of priority merely because of their work experience with the petitioner. The respondents were made to sign applications for employment, accepting the condition that they were hired by BSMI as probationary employees only. Unfortunately, after a study and

Pacicon Philippines, Inc. (PPI) is a corporation in accordance with the laws of the Philippines and is a subsidiary of Pacific Consultants International of Japan (PCIJ). In 1997, PCIJ decided to engage in consultancy services for water and sanitation in the Philippines and respondent was employed by PCIJ as PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ. 1998, PCIJs President, Henrichsen, transmitted a letter of employment to respondent in Canada in which respondent signed and sent a copy to the Henrichsen.

In the arbitration clause of the contract, it stated that any question arising between them which can not be settled amicably, is to be settled by the Court of Arbitration in London. Respondent received his compensation from PPI in February to June 1998, November to December 1998, and January to August 1999. He was also reimbursed by PPI for the expenses he incurred in connection with his work as sector manager. He reported for work in Manila except for occasional assignments abroad, and received instructions from Henrichsen. On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective August 4, 1999. However, on July 24, 1999, Henrichsen, requested respondent to stay put in his job after August 5, 1999. Respondent continued his work with PPI until October 1, 1999. Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest. In 2000, respondent filed a Complaint for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor Arbiter. The Labor Arbiter rendered a decision granting petitioners Motion to Dismiss. And the NLRC likewise agreed with the disquisitions of the Labor Arbiter.

On a petition for certiorari with the CA, the CA declared that respondent was an employee of PPI. And reversed and set aside the decision of the NLRC. ISSUE: WON there is an employment relationship existed between petitioners and respondent despite that respondent is a foreign national and was hired abroad by a foreign corporation and executed their contract abroad.

HELD: The petition is denied for lack of merit. We agree with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent using the four-fold test. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationshipthat is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished.

Stated otherwise, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. In the case at bar, the power to control and supervise petitioners work performance devolved upon the respondent company. Likewise, the power to terminate the employment relationship was exercised by the President of the respondent company. An employer-employee relationship may indeed exist even in the absence of a written contract, so long as the four elements mentioned in the Mafinco case are all present. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. This case is REMANDED to the Labor Arbiter for disposition of the case on the merits.

3. There is no law providing the operator to require the drivers to pay said fees 4. On April 30, 1995, petitioner told them not to drive anymore and when they went to the garage to report for work the next day, they were not given a unit to drive 5. That the boundary drivers of passenger jeepneys are considered regular employees of the jeepneys operators. Being such, they are entitled to security of tenure. Petitioner, however, dismissed them without factual basis and without due process. Petitioner Gabriel, on the other hand, contends that: 1. He does not remember if the respondents were under his employ as jeepneys drivers. However, he is certain that the neither the respondents nor other drivers were ever dismissed by him. As a matter of fact, some his drivers just stopped reporting for work. 2. He made sure that none of the jeepneys would stay idle for a day so he could collect his earnings; hence it had been his practice to establish a pool of drivers. Had the respondents manifested their desire to drive his units, it would have been immaterial whether they were his former drivers or not so long as they had the necessary licenses and references, they would have been accommodated 3. The amounts claimed to have been deducted from the respondents earnings were preposterous. Where there were deductions made from the earnings of the drivers, it was to pay on installment the advances made to them (e.g. to pay for traffic violations) 4. LA held in favor of the respondents and ordered Gabriel to pay back wages and separation pay. NLRC dismissed the case for lack of employer-employee relationship ISSUE; WON THERE IS A EMPLOYER-EMPLOYEE RELATIONSHIP IN THIS CASE; WON THE RESPONDENTS WERE ILLEGALLY DISMISSED

GABRIEL V. BILON 515 SCRA 29 (2007) FACTS: Respondents Bilon, Brazil and Pagaygay filed separate complaints for illegal dismissal, illegal deductions and separation pay against petitioner Gabriel with the NLRC. Respondents alleged that: 1. They were regular drivers of Gabriel Jeepney, driving their respective units under a boundary system of P400 per day, plying Baclaran to Divisoria via Tondo and vice-versa since December 1990, November 1984 and November 1991, respectively up to April 30, 1995, driving 5 days a week with an average daily earnings of 400 2. That they were required/forced to pay additional P55 for the following: P20 police protection, P20 washing, P10 deposit, P5 garage fees

HELD: Yes, the respondents were employees of petitioner Gabriel. It has been held in earlier cases that the relationship between jeepney owners/operators and jeepney drivers under the boundary system is that of employer-employee and not of lessor-lessee because in the lease of chattels the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercises supervision and control over the latter. The fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" [that] they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. Thus, private respondents were employees because they had been engaged to perform activities which were usually necessary or desirable in the usual business or trade of the employer. The SC also agreed with LA that respondents were illegally dismissed by petitioner. Respondents were not accorded due process. Moreover, petitioner failed to show that the cause for termination falls under any of the grounds enumerated in Article 282 Labor Code. Consequently, respondents are entitled to reinstatement without loss of seniority rights and other privileges and to their full back wages computed from the date of dismissal up to the time of their actual reinstatement in accordance with Article 279 of the Labor Code.

PHILIPPINE GLOBAL COMMUNICATIONS, INC. vs. RICARDO DE VERA FACTS Petitioner Philippine Global Communications, Inc. is engaged in the business of communication services and allied activities. Respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. On 5/15/1981 De Vera offered his services to the petitioner through a letter, he proposed his plan of works required of a practitioner in industrial medicine. The parties agreed and executed a RETAINERSHIP CONTRACT for a period of one year subject to renewal. The retainership arrangement went on from 1981 to 1994 with changes in the retainer's fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally. In December 1996, through a letter Philcom informed De Vera that they decided to discontinue the 'retainer's contract effective at the close of business hours of 12/31/1996. They decided that it would be

more practical to provide medical services to its employees through accredited hospitals near the company premises. On 1/22/1997, De Vera filed a complaint for illegal dismissal, claiming that since 1981, he has been employed by Philcom as its company physician and was dismissed without due process. On 12/21/1998, Labor Arbiter Ramon Valentin C. Reyes dismissed De Vera's complaint for lack of merit. De Vera was an independent contractor and that he was not dismissed but rather his contract with ended when said contract was not renewed after 12/31/1996. Upon De Veras appeal to NLRC, the Labor Arbiters decision was reversed and declared De Vera a regular employee and accordingly directed the company to reinstate him to his former position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement. Philcom filed a motion for reconsideration but it was denied by the NLRC, prompting it file a petition to CA for certiorari imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC. Subsequently, CA modified NLRCs decision. CA deleted the award of traveling allowance and ordered payment of separation pay to De Vera in lieu of reinstatement. The companys latest motion for reconsideration was denied. Hence, this petition. ISSUE WON an employer-employee relationship exists between petitioner and respondent

payment of wages; [3] the power of dismissal; and [4] the power to control the employee's conduct, or the so-called 'control test', considered to be the most important element. Application of the four-fold test: Selection and engagement of the employee Proposal Letter (5/15/1981) It was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner. My plan of works and targets shall cover the duties and responsibilities required of a practitioner in industrial medicine which includes the following: 1. Application of preventive medicine including periodic check-up of employees; 2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for consultation services to employees; 3. Management and treatment of employees that may necessitate hospitalization including emergency cases and accidents; 4. Conduct pre-employment physical check-up of prospective employees with no additional medical fee; 5. Conduct home visits whenever necessary; 6. Attend to certain medical administrative functions such as accomplishing medical forms, evaluating conditions of employees applying for sick leave of absence and subsequently issuing proper certification, and all matters referred which are medical in nature. Payment of wages and power of dismissal Letter dated 4/211982 De Veras proposal for the extension of his two-hour service indicated that PHILCOM did not control complainants schedule and as to how he is to be paid for his services. This serves as proof that the complainant understood his relationship with PHILCOM as a retained physician and not as an employee. If he were an employee he could not negotiate as to his hours of work.

HELD NO. The Court held that in determining the existence of an employeremployee relationship, has invariably adhered to the four-fold test, to wit: [1] the selection and engagement of the employee; [2] the

Term of the Contract The contract (9/6/1982) signed by De Vera clearly states that is it a retainership contract. The retainer fee and duration of the contract for one year are clearly indicated in paragraph 5 of said Retainership Contract. The complainant cannot claim that he was unaware of the term, as he signed and accepted its renewal every year until 1994 without any objections. As a Doctor of Medicine, a literate and educated person, the complainant cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis. Tax and SSS Contribution The labor arbiter noted that from the time he started to work for Philcom, he never was included in its payroll; was never deducted any contribution for remittance to the SSS; and was in fact subjected by Philcom to the 10% withholding tax for his professional fee, matters which are simply inconsistent with an employer-employee relationship. Power to terminate The power to terminate the parties' relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause.

The parties themselves practically agreed on every terms and conditions of respondent's engagement, which thereby negates the element of control in their relationship. For sure, respondent has never cited even a single instance when petitioner interfered with his work.

DISPOSITION: Petition is GRANTED and CAs is REVERSED and SET ASIDE. Labor Arbiters decision is REINSTATED.

Control Test Remarkably absent from the parties' arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. Petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. De Vera could even embark in the private practice of his profession, not to mention the fact that respondent's work hours and the additional compensation were negotiated upon by the parties. Lopez vs Metropolitan Waterworks and Sewerage Systems 462 SCRA 425 FACTS:

By virtue of an Agreement, petitioners were engaged by the MWSS as collectors-contractors, wherein the former agreed to collect from the concessionaires of MWSS, charges, fees, assessments of rents for water, sewer and/or plumbing services which the MWSS bills from time to time. In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred to said private concessionaires, effectively terminating the contracts of service between petitioners and MWSS. Regular employees of the MWSS were paid their retirement benefits, but not petitioners. Instead, they were refused said benefits, MWSS relying on a resolution of the CSC that contract collectors of the MWSS are not its employees and therefore not entitled to the benefits due regular government employees. Petitioners filed a complaint with the CSC which denied their claims, stating that petitioners were engaged by MWSS through a contract of service, which explicitly provides that a bill collectorcontractor is not an MWSS employee. Relying on Part V of CSC Memorandum Circular No. 38, Series of 1993, the CSC stated that contract services/job orders are not considered government services, which do not have to be submitted to the CSC for approval, unlike contractual and plantilla appointments. Moreover, it found that petitioners were unable to show that they have contractual appointments duly attested by the CSC. In addition, the CSC stated that petitioners, not being permanent employees of MWSS and not included in the list submitted to the concessionaire, are not entitled to severance pay. Petitioners claims for retirement benefits and terminal leave pay were likewise denied. Petitioners sought reconsideration of the CSC Resolution, which was however denied. Petitioners filed a petition for review with the Court of Appeals which affirmed the ruling of the CSC.

ISSUE: Whether or not petitioners were employees of the MWSS and, consequently, entitled to the benefits they claim. HELD: Yes. The Court ruled that the bill collectors were regular employees of Manila Water. For purposes of determining the existence of employer-employee relationship, the Court has consistently adhered to the four-fold test, namely: (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the control test is the most important element. A review of the circumstances surrounding the case reveals that petitioners are employees of MWSS. Despite the obvious attempt of MWSS to categorize petitioners as mere service providers, not employees, by entering into contracts for services, its actuations show that they are its employees, pure and simple. MWSS wielded its power of selection when it contracted with the individual petitioners, undertaking separate contracts or agreements. The same goes true for the power to dismiss. Although termed as causes for termination of the Agreement, a review of the same shows that the grounds indicated therein can similarly be grounds for termination of employment. On the issue of remuneration, MWSS claims that the compensation received by petitioners does not fall under the definition of wages as provided in Section 2(i) of P.D. 1146, which is the basic pay or salary received by an employee, pursuant to his employment appointments, excluding per diems, bonuses, overtime pay and allowances; thus petitioners are not its employees. Petitioners rendered services to MWSS for which they were paid and given similar benefits due the other employees of MWSS. Significantly, MWSS granted petitioners benefits usually given to employees, to wit: COLA, meal, emergency,

and traveling allowances, hazard pay, cash gift, and other bonuses. In an unabashed bid to claim credit for itself, MWSS professes that these additional benefits were its acts of benevolence and generosity. We are not impressed. The control test merely calls for the existence of the right to control, and not the 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. While petitioners were contract-collectors of MWSS, they were under the latters direction as to where and how to perform their collection and were even subject to disciplinary measures. Trainings were in fact conducted to ensure that petitioners are conversant of the procedures of the MWSS Other manifestations of control are evident from the records. The power to transfer or reassign employees is a management prerogative exclusively enjoyed by employers. In this case, MWSS had free reign over the transfer of bill collectors from one branch to another. MWSS also monitored the performance of the petitioners and determined their efficiency ratings. The Court has invariably affirmed that it will not hesitate to tilt the scales of justice to the labor class for no less than the Constitution dictates that the State . . . shall protect the rights of workers and promote their welfare. It is committed to this policy and has always been quick to rise to defense in the rights of labor, as in this case.

Petitioner Dr. Felix joined the National Center for Mental Health (NCMH) as a resident physician and after 3 years, he was promoted to Senior Resident Physician.The Ministry of Health reorganized the NCMH pursuant to E.O. 119. Under the said reorganization, Felix was appointed to the position of Sr. Resident Physician in a temporary capacity. Felix was later promoted to the position of Medical Specialist 1 (Temporary Status) which was renewed the following year. In 1988, the DOH issued Dept. Order 347, which required board certification as a prerequisite for renewal of specialist positions in various med. centers, hospitals and agencies. Then Sec. of Health issued D.O. 478 (amending Sec.4 of D.O. 347) which provided for an extension of appointments of Medical Specialists in cases where termination of those who failed to meet the requirement for board certification might result in disruption of hospital services. In 1991, after reviewing petitioners service record and performance, the Medical Credentials Committee of the NCMH recommended nonrenewal of his appointment as Medical Specialist 1. He was, however, allowed to continue in the service, and receive his salary even after being informed of the termination of his appointment. The Chiefs of Service held an emergency meeting to discuss the petitioners case. In the meeting, the overall consensus among the dept. heads was for petitioners non-renewal where his poor performance, frequent tardiness and inflexibility were pointed as among the factors responsible for the recommendation not to renew his appointment.

FELIX V BUENASEDA FACTS:

The matter was referred to the CSC, which ruled that the temporary appointment can be terminated any time and that any renewal of such appointment is within the discretion of the appointing authority. Consequently, petitioner was advised by hospital authorities to vacate his cottage. Refusing to comply, petitioner filed a petition with the Merit System Protection Board (MSPB) complaining about the alleged non-renewal of his appointment, the MSPB, however, dismissed his complaint for lack of merit. This decision was appealed to the Civil Service Commission (CSC) which dismissed the same. ISSUE WON petitioners removal from a permanent position was void for being violative of the constitutional provision on security of tenure. HELD:NO A residency or resident physician position in a medical specialty is never a permanent one. Residency connotes training and temporary status. Promotion to the next post- graduate year is based on merit and performance determined by periodic evaluations and examinations of knowledge, skills and bedside manner. Under this system, residents, especially those in university teaching hospitals enjoy their right to security of tenure only to the extent that they periodically make the grade.

mortality and morbidity audits, feedback from residents, interns and medical students and research output. The nature of the contracts of resident physicians meets traditional tests for determining employer employee relationships, but because the focus of residency is training, they are neither here nor there . Moreover, stringent standards and requirements for renewal of specialist rank positions or of promotion to the next postgraduate residency year are necessary because lives are ultimately at stake. From the position of senior resident physician, the next logical step was his promotion to the rank of Medical Specialist 1, a position which he apparently accepted. Such status, however, clearly carried with it certain professional responsibilities including the responsibility of keeping up with the minimum requirements of specialty rank, the responsibility of keeping abreast with current knowledge in his specialty and in Medicine in general, and the responsibility of completing board certification requirements within a reasonable period of time. The evaluation made by petitioner's peers and superiors clearly showed that he was deficient in a lot of areas, in addition he was not even board-certified. As respondent CSC has correctly pointed out, the appointment was for a definite and renewable period which, when it was not renewed, did not involve a dismissal but an expiration of the petitioners term.

TRANSPORT CORP V. EJANDRA 428 SCRA 725 (2004) While physicians (or consultants) of specialist rank are not subject to the same stringent evaluation procedures, specialty societies require continuing education as a requirement for accreditation in good standing, in addition to peer review processes based on performance, FACTS: Rogelio Ejandra worked for petitioner bus company as a driver. On Jan 31 1996, he was apprehended for obstruction of traffic. His license was confiscated. He reported this to his manager, Oscar Pasquin, who gave him P500 to redeem the license. He was able to

retrieve the license after a week since the apprehending officer turned it in only then. 1. On Feb 8, 1996, he reported for work. The company said they were reviewing if they were going to allow him drive again. Also, he was being blamed for damage to the bus. Ejandra said the bus was damaged during the week he wasnt able to drive. 2. Petitioner, on the other hand, claims that Ejandra is a habitual absentee and has abandoned his job. 3. To belie private respondents allegation that his license had been confiscated, petitioner asserted that, had it been true, he should have presented an apprehension report and informed petitioner of his problems with the LTO. But he did not. 4. Petitioner further argued that private respondent was not an employee because theirs was a contract of lease and not of employment, with petitioner being paid on commission basis. 5. The labor arbiter ruled in favor of Ejandra. It was held that he didnt abandon his work, since there was valid reason for his 1week absence. He also was not afforded due process. NLRC and CA affirmed the same. ISSUE: WON THERE WAS AN EMPLOYER-EMPLOYEE RELATIONSHIP; WON EJANDRA WAS DISMISSED FOR JUST CAUSE HELD: Yes. Petitioner is barred to negate the existence of an employer-employee relationship. He has invoked rulings on the right of an employer to dismiss an employee for just cause. The power to dismiss an employee is one of the indications that there was such relationship. Also, A97 Labor Code states that employees can be paid in form of commissions. By adopting said rulings, petitioner impliedly admitted that it was in fact the employer of private respondent. According to the control test, the power to dismiss an employee is one of the indications of an employer-employee relationship. Petitioners claim that private respondent was legally dismissed for abandonment was in fact a negative pregnant: an acknowledgement

that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on commission basis did not rule out the presence of an employee-employer relationship. Article 97(f) of the Labor Code clearly provides that an employees wages can be in the form of commissions. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Petitioner did not fulfill the requisites. First, Ejandras absence was justified since his license wasnt release until after a week. Second, Ejandra did not want to sever their relationship when he got his license back. Third, labor arbiter Yulo correctly observed that, if private respondent really abandoned his work, petitioner should have reported such fact to the nearest Regional Office of the Department of Labor and Employment in accordance with Section 7, Rule XXIII, Book V of Department Order No. 9, series of 1997 (Rules Implementing Book V of the Labor Code). Petitioner made no such report. In addition, he wasnt also given due process by not giving him notice and hearing.

relationship of employee and employer between the Agent and the Company. However, the Agent shall observe and conform to all rules and regulations which the Company may from time to time prescribe. 4 years later, the parties entered into another contract (April 1972 Agency Manager's Contract) and to implement his end, Basiao organized an agency which he named M. Basiao and Associates, while concurrently fulfilling his commitments under the first contract with the Company. However, it was terminated in May 1979. Basiao sought for a reconsideration and later sued the Company in a civil action. He claimed that this prompted the Company to terminate his engagement under the first contract and to stop payment of his commissions starting 4/1/1980. Thereafter, Basiao filed a complaint against the Company and its president. Without contesting the termination of the first contract, the complaint sought to recover commissions allegedly unpaid, plus attorney's fees. The Company disputed the Ministry's jurisdiction over Basiao's claim and asserted that he was not a Company's employee, but an independent contractor. The Company had no obligation to him for unpaid commissions under the terms and conditions of his contract. INSULAR LIFE ASSURANCE CO., LTD. vs. NLRC and MELECIO BASIAO FACTS On 7/2/1968, Insular Life Assurance Co., Ltd. and Melecio T. Basiao entered into a contract, stipulating that Basiao (1) would be an authorized agent of the Company; (2) to receive compensation in the form of commissions; and (3) the Company's Rate Book and its Agent's Manual, as well as all its circulars will be deemed part of the contract. Other provisions include matters governing the relations of the parties, the duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement, viz: RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. Nothing herein contained shall therefore be construed to create the The labor arbiters decision had established an employer-employee relationship between him and the Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. On appeal, the decision was affirmed by NLRC. Hence, the present petition for certiorari and prohibition. Petitioners Defense The terms of the contract the Company and Basiao entered into expressly conferred to Basiao an independent contractor status. The Company did not have a hand in determining the time, place and means of soliciting insurance and have set no accomplishment quotas. The Company only compensated him on the basis of results obtained. Further, it contends that they do not constitute the decisive

determinant of the nature of his engagement, invoking precedents to the effect that the critical feature distinguishing the status of an employee from that of an independent contractor is control, that is, whether or not the party who engages the services of another has the power to control the latter's conduct in rendering such services. ISSUES WON Basiao had become the Company's employee by virtue of the contract invoked by him, placing his claim within the original and exclusive jurisdiction of the labor arbiter under the Labor Code HELD NO. The Court notes that the provisions of the contract which obliged Basiao to "observe and conform to all rules and regulations which the Company may from time to time prescribe," as well as to the fact that the Company prescribed the qualifications of applicants for insurance, processed their applications and determined the amounts of insurance cover to be issued as indicative of the control, which made Basiao, in legal contemplation, an employee of the Company. However, in Viana vs. Alejo Al-Lagadan, it was held that that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means

used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but also to the internal affairs of the insurance company. The Insurance Code provides the rules and regulations governing the conduct of the business and these are enforced by the Insurance Commissioner. It is expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that are in line with the law. The character of such rules (e.g. which prescribe the qualifications of persons who may be insured, determination of the premiums to be paid and the schedules of payment) does not invade 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. The Company has limited themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to time prescribe. There has been no showing that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance." The Court rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. DISPOSITION: NLRCs decision is set aside and complaint by respondent is DISMISSED.

When the branch office was opened, it was run by appellant Sevilla payable to TWS by any airline for any fare brought in on the efforts of Sevilla, 4% was to go to Sevilla and 3% was to be withheld by TWS. TWS appears to have been informed that Sevilla was connected with a rival firm, the Philippine Travel Bureau, and since the branch office was anyhow losing, the TWS considered closing down its office. This was firmed up by two resolutions of the TWS board of directors to abolish the office of the manager and VP of the branch office and authorizing the corporate secretary to receive the properties in the said branch office. The corporate secretary went to the branch office, and finding the premises locked and being unable to contact Sevilla, padlocked the premises to protect the interests of TWS. When neither Sevilla nor her employees could enter the locked premises, she filed a complaint against TWS with a prayer for the issuance of a mandatory preliminary injunction. The trial court dismissed the case holding that TWS, being the true lessee, was within its prerogative to terminate the lease and padlock the premises. It likewise found that Sevilla was a mere employee of TWS and as such, was bound by the acts of her employer. The CA affirmed. Hence this petition. ISSUE: Whether or not that the relation between the parties was in the character of employer-employee relationship. Sevilla vs CA 160 SCRA 171 FACTS: On the strength of a contract, Tourist World Service Inc. (TWS) leased the premises belonging to Mrs. Segundina Noguera for the formers use as a branch office. Lina Sevilla bound herself solidarily liable with TWS for the prompt payment of the monthly rentals thereon. HELD: No. We are convinced, considering the circumstances and from the respondent Court's recital of facts, that the ties had contemplated a principal agent relationship, rather than a joint managament or a partnership. When the petitioner, Lina Sevilla, agreed to (wo)man the private respondent, Tourist World Service, Inc.'s Ermita office, she must have

done so pursuant to a contract of agency. It is the essence of this contract that the agent renders services "in representation or on behalf of another. 18 In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her principal, Tourist World Service, Inc. As compensation, she received 4% of the proceeds in the concept of commissions. And as we said, Sevilla herself based on her letter of November 28, 1961, pre-assumed her principal's authority as owner of the business undertaking. But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible with the intent of the parties, cannot be revoked at will. The reason is that it is one coupled with an interest, the agency having been created for mutual interest, of the agent and the principal. 19 It appears that Lina Sevilla is a bona fide travel agent herself, and as such, she had acquired an interest in the business entrusted to her. Moreover, she had assumed a personal obligation for the operation thereof, holding herself solidarily liable for the payment of rentals. She continued the business, using her own name, after Tourist World had stopped further operations. Her interest, obviously, is not to the commissions she earned as a result of her business transactions, but one that extends to the very subject matter of the power of management delegated to her. It is an agency that, as we said, cannot be revoked at the pleasure of the principal. Accordingly, the revocation complained of should entitle the petitioner, Lina Sevilla, to damages. In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. 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.

Lina Sevilla, was not subject to control by the private respondent Tourist World Service, Inc., either as to the result of the enterprise or as to the means used in connection therewith. Under the contract of lease covering the Tourist Worlds Ermita office, she had bound herself in solidum as and for rental payments, an arrangement that would be like claims of a master-servant relationship. True the respondent Court would later minimize her participation in the lease as one of mere guaranty, that does not make her an employee of Tourist World, since in any case, a true employee cannot be made to part with his own money in pursuance of his employer's business, or otherwise, assume any liability thereof. When the branch office was opened, the same was run by the herein appellant Lina O. Sevilla payable to Tourist World Service, Inc. by any airline for any fare brought in on the effort of Mrs. Lina Sevilla. 13 Under these circumstances, it cannot be said that Sevilla was under the control of Tourist World Service, Inc. "as to the means used." Sevilla in pursuing the business, obviously relied on her own gifts and capabilities It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in commissions from airline bookings, the remaining 3% going to Tourist World. Unlike an employee then, who earns a fixed salary usually, she earned compensation in fluctuating amounts depending on her booking successes. The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist World's employee. As we said, employment is determined by the right-of-control test and certain economic parameters. But titles are weak indicators. FRANCISCO vs. NLRC

FACTS: In 1995, petitioner was hired by Kasei Corporation.

She was designated as Accountant and Corporate. She was also designated to secure business permits, construction permits and other licenses for the initial operation of the company. In 1996, petitioner was designated Acting Manager. Petitioner was assigned to handle recruitment of all employees and perform management administration functions; represent the company in BIR, SSS. In January 2001, petitioner was replaced by Fuentes as Manager. On October 15, 2001, petitioner asked for her salary but she was informed that she is no longer connected with the company. Petitioner filed an action for constructive dismissal before the labor arbiter. The LA found that petitioner was illegally dismissed. The NLRC affirmed the Decision of the LA. The CA reversed the NLRCs decision. ISSUE: WON there was an employer-employee relationship?

(2) the underlying economic realities of the activity or relationship. This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latters employment. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (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, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting

HELD: There are instances when, aside from the employers power to control the employee with respect to the means and methods by which the work is to be accomplished, 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. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and

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. 2. Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from. It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business.

3.

4.

5.

CHAVEZ V. NLRC (SUPREME PACKAGING INC) 448 SCRA 478 (2005) FACTS: The respondent company, Supreme Packaging, Inc. engaged the services of the petitioner, Pedro Chavez, as truck driver on October 25, 1984. The respondent company furnished the petitioner with a truck. 1. Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent companys plant manager, his (the

6.

petitioners) desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others. Although he promised to extend these benefits to the petitioner, respondent Lee failed to actually do so. On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration Branch No. III of the NLRC in San Fernando, Pampanga. Before the case could be heard, respondent company terminated the services of the petitioner. Consequently, on May 25, 1995, the petitioner filed an amended complaint against the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, and 13th month pay, among others. The respondents, for their part, denied the existence of an employer-employee relationship between the respondent company and the petitioner. They averred that the petitioner was an independent contractor as evidenced by the contract of service which he and the respondent company entered into. The relationship of the respondent company and the petitioner was allegedly governed by this contract of service. The respondents insisted that the petitioner had the sole control over the means and methods by which his work was accomplished. He paid the wages of his helpers and exercised control over them. As such, the petitioner was not entitled to regularization because he was not an employee of the respondent company. The respondents, likewise, maintained that they did not dismiss the petitioner. Rather, the severance of his contractual relation with the respondent company was due to his violation of the terms and conditions of their contract.

ISSUE: WON THERE WAS AN EMPLOYER-EMPLOYEE RELATIONSHIP THAT EXISTED BETWEEN THE RESPODENT COMPANY AND THE PETITIONER

HELD: The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. All the four elements are present in this case. Of the four elements of the employer-employee relationship, the control test is the most important. Although the respondents denied that they exercised control over the manner and methods by which the petitioner accomplished his work, a careful review of the records shows that the latter performed his work as truck driver under the respondents supervision and control. Their right of control was manifested by the following attendant circumstances: 1. The truck driven by the petitioner belonged to respondent company; 2. There was an express instruction from the respondents that the truck shall be used exclusively to deliver respondent companys goods; 3. Respondents directed the petitioner, after completion of each delivery, to park the truck in either of two specific places only, to wit: at its office in Metro Manila at 2320 Osmea Street, Makati City or at BEPZ, Mariveles, Bataan and; 4. Respondents determined how, where and when the petitioner would perform his task by issuing to him gate passes and routing slips.

The contract of service indubitably established the existence of an employer-employee relationship between the respondent company and the petitioner. It bears stressing that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract and providing therein that the employee is an independent contractor when, as in this case, the facts clearly show otherwise. Indeed, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. The employer-employee relationship being established, the Court ruled that private respondent is guilty of illegal dismissal.

SAN MIGUEL CORPORATION vs. ABELLA, et al. These circumstances, to the Courts mind, prove that the respondents exercised control over the means and methods by which the petitioner accomplished his work as truck driver of the respondent company. FACTS Petitioner San Miguel Corporation and Sunflower Multi-Purpose Cooperative entered into a one-year Contract of Services

commencing on 1/1/1993, to be renewed on a month to month basis until terminated by either party. The provisions of the contract provide that: (1) The cooperative shall perform and/or provide for the company, on a non-exclusive basis for a period of one year the following services for the Bacolod Shrimp Processing Plant: (a) Messengerial/Janitorial; (b) Shrimp Harvesting/Receiving; & (c) Sanitation/Washing/Cold Storage (2) Further, as per Section 4 of the Contract, there is no employer-employee relationship between the company and the cooperative, or the cooperative and any of its members, or the company and any members of the cooperative. The cooperative is an association of self-employed members, an independent contractor, and an entrepreneur . It is subject to the control and direction of the company only as to the result to be accomplished by the work or services herein specified, and not as to the work herein contracted . The cooperative and its members recognize that it is taking a business risk in accepting a fixed service fee to provide the services contracted for and its realization of profit or loss from its undertaking, in relation to all its other undertakings, will depend on how efficiently it deploys and fields its members and how they perform the work and manage its operations. Pursuant to the contract, Sunflower engaged private respondents to SMCs Bacolod Shrimp Processing Plant. The contract was deemed renewed by the parties every month after its expiration on 1/1/1994 and private respondents continued to perform their tasks until 9/11/1995. In July 1995, private respondents filed a complaint before the NLRC, praying to be declared as regular employees of SMC. Subsequently, they filed an Amended Complaint which includes illegal dismissal as additional cause of action following SMCs closure of its Bacolod Shrimp Processing Plant on 9/15/1995.

SMC filed a Motion for Leave to File Attached Third Party Complaint to implead Sunflower as Third Party Defendant which was granted by Labor Arbiter Ray Alan T. Drilon. On 9/30/1996, SMC filed before the DOLE a Notice of Closure of its aquaculture operations effective on even date, citing serious business losses. Labor Arbiter Drilon dismissed private respondents complaint for lack of merit, sustaining the stand of SMC that it could properly exercise its management prerogative to contract out the preparation and processing aspects of its aquaculture operations. Private respondents appealed to the NLRC, but in its Decision dated 12/29/1998, the NLRC dismissed the appeal for lack of merit, it finding that third party respondent Sunflower was an independent contractor. Subsequent Motion for Reconsideration filed to NLRC was denied and so they filed a petition for certiorari before the CA. By Decision of 2/7/2001, CA reversed NLRCs decision based on the following accounts: Terms of the non-exclusive contract of service showed a clear intent to abstain from establishing an employer-employee relationship between SMC and Sunflower or the latters members, the extent to which the parties successfully realized this intent in the light of the applicable law is the controlling factor in determining the real and actual relationship between or among the parties Power to control petitioners conduct a. It appears that Petitioners were under the direct control and supervision of SMC supervisors. Petitioners working inside the premises of SMC, were under the control and supervision of SMC both as to the manner and method in discharging their functions and as to the results b. SMC would never have allowed the petitioners to work within its premises, using its own facilities, equipment and tools, alongside SMC employees discharging similar or identical activities unless it exercised a substantial degree of

control and supervision over the petitioners not only as to the manner they performed their functions but also as to the end results of such functions. c. Moreover, the 97 employees is a considerable workforce and raises the suspicion that the non-exclusive service contract between SMC and Sunflower was designed to evade the obligations inherent in an employer-employee relationship. The CA held that it cannot allow these two entities through the convenience of a non-exclusive service contract to stipulate on the existence of employer-employee relation. Such existence is a question of law which cannot be made the subject of agreement to the detriment of the petitioners. ISSUE WON the Respondents are employees of SMC HELD YES. The Petition lacks merit. SMC insists that private respondents are the employees of Sunflower, an independent contractor. On the other hand, private respondents assert that Sunflower is a labor-only contractor. The test to determine the existence 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. In legitimate labor contracting, the law creates an employeremployee relationship for a limited purpose. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.

In labor-only contracting, the statute creates an employeremployee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.

The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the existence of an employer-employee relationship between SMC and private respondents. The language of a contract is not, however, determinative of the parties relationship; rather it is the totality of the facts and surrounding circumstances of the case. A party cannot dictate, by the mere expedient of a unilateral declaration in a contract, the character of its business (i.e., whether as labor-only contractor or job contractor), it being crucial that its character be measured in terms of and determined by the criteria set by statute. What appears from the circumstances of the cases is that, Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor and that during the existence of its service contract with SMC, did not own a single machinery, equipment, or working tool used in the processing plant. Everything was owned and provided by respondent SMC. The lot, the building, and working facilities are owned by respondent SMC. The Court considered the following uncontroverted allegations of private respondents in the Joint Affidavit: The job description provided by SMC itself, the work assigned to private respondents was directly related to the aquaculture operations of SMC. Undoubtedly, the nature of the work performed by private respondents in shrimp harvesting, receiving and packing formed an integral part of the shrimp processing operations of SMC.

As for janitorial and messengerial services, that they are considered directly related to the principal business of the employer has been jurisprudentially recognized. Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of SMC, its apparent role having been merely to recruit persons to work for SMC. Daily time records were signed by SMC supervisors, which fact shows that SMC exercised the power of control and supervision over its employees and control of the premises in which private respondents worked was by SMC. These tend to disprove the independence of the contractor.

DISPOSITION: Petition is DENIED. CAs decisions are AFFIRMED with MODIFICATION. Note: The other issue focused on the validity of the retrenchment. Private Respondents were deemed employees of SMC. SMC has proven substantial business reverses justifying retrenchment of its employees. However, SMC merely informed Private Respondents of their dismissal and failed to comply with the notice requirement. The Court awards each Private Respondents P50,000 as nominal damages.

As the CA has observed, Private respondents had been working in the aqua processing plant inside the SMC compound alongside regular SMC shrimp processing workers performing identical jobs under the same SMC supervisors. This circumstance is another indicium of the existence of a labor-only contractorship. And as private respondents alleged in their Joint Affidavit, Sunflower did not cater to clients other than SMC and with the closure of SMCs Baco lod Shrimp Processing Plant, Sunflower likewise ceased to exist. All the foregoing considerations affirm by more than substantial evidence the existence of an employer-employee relationship between SMC and private respondents. Since private respondents who were engaged in shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be deemed regular employees of the latter and as such are entitled to all the benefits and rights appurtenant to regular employment. They should thus be awarded differential pay corresponding to the difference between the wages and benefits given them and those accorded SMCs other regular employees.

Lopez vs Metropolitan Waterworks and Sewerage System 462 SCRA 428 FACTS: By virtue of an Agreement, petitioners were engaged by the MWSS as collectors-contractors, wherein the former agreed to collect from the concessionaires of MWSS, charges, fees, assessments of rents for water, sewer and/or plumbing services which the MWSS bills from time to time. In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred to said private concessionaires, effectively terminating the contracts of service between petitioners and MWSS. Regular employees of the MWSS were paid their retirement benefits, but not petitioners. Instead, they were refused said benefits, MWSS relying on a resolution of the CSC that contract collectors of the MWSS are not its employees and therefore not entitled to the benefits due regular government employees. Petitioners filed a complaint with the CSC which denied their claims, stating that petitioners were engaged by MWSS through a contract of service, which explicitly provides that a bill collectorcontractor is not an MWSS employee. Relying on Part V of CSC Memorandum Circular No. 38, Series of 1993, the CSC stated that contract services/job orders are not considered government services, which do not have to be submitted to the CSC for approval, unlike contractual and plantilla appointments. Moreover, it found that petitioners were unable to show that they have contractual appointments duly attested by the CSC. In addition, the CSC stated that petitioners, not being permanent employees of MWSS and not included in the list submitted to the concessionaire, are not entitled to severance pay. Petitioners claims for retirement benefits and terminal leave pay were likewise denied. Petitioners sought reconsideration of the CSC Resolution, which was however denied.

Petitioners filed a petition for review with the Court of Appeals which affirmed the ruling of the CSC.

ISSUE: Whether petitioners are not the employees of MWSS by virtue of the Agreement. HELD: The petitioners must be considered employees of MWSS, despite the obvious attempt of MWSS to categorize petitioners as mere service providers, not employees, by entering into contracts for services Under the Agreement, MWSS may terminate it if the CollectorContractor does or fails to do any of the following: Fails to collect = neglect of duty; Erases, alters, or changes any figure on the bills or remittance receipt for purposes of defrauding either the concessioner or the MWSS =fraud; discourteous, dishonest, arrogant = misconduct. Although termed as causes for termination of the Agreement, a review of the same shows that the grounds indicated therein can similarly be grounds for termination of employment. MWSS makes an issue out of the proviso in the Agreement that specifically denies the existence of employer-employee relationship between it and petitioners. It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in an agreement and providing therein that the employee is not an MWSS employee when the terms of the agreement and the surrounding circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by what the parties say it should be. The relationship defined by the Agreement cannot fall within the purview of contract of services or job orders. Payments made by MWSS subscribers are the lifeblood of the company. Viewed in that context the work rendered by the petitioners is essential to the companys survival and growth

Petitioners are indeed regular employees of the MWSS. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Likewise, the repeated and continuing need for the performance of the job has been deemed sufficient evidence of the necessity, if not indispensability of the activity to the business. Some of the petitioners had rendered more than two decades of service to the MWSS. The continuous and repeated rehiring of these bill collectors indicate the necessity and desirability of their services, as well as the importance of the role of bill collectors in the MWSS.

ABS-CBN signed Agreement with Mel and Jay Management and Devt Corp (MJMDC), which agreed to provide Sonzas services exclusively to the network as talent for radio and TV. Sonza resigned and filed a complaint against ABS-CBN before the DOLE that the said network didnt pay his salaries, separation pay, service incentive leave pay, etc. ABS filed Motion to Dismiss because there was no employeremployee relationship. Labor Arbiter dismissed complaint because of lack of jurisdiction. It stands to reason that a "talent" cannot be considered as an employee. NLRC affirmed Arbiters decision. Sonza filed certiorari action with CA, which dismissed the case. Hence this petition. ISSUE WON there was an employer-employee relationship between ABSCBN and Sonza? HELD: No employer-employee relationship. SONZA maintains that all essential elements of an employeremployee relationship are present in this case. The last element, the so-called control test, is the most important element Power of Control The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABSCBN could not dictate the contents of SONZAs 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 ABSCBN or its interests.

SONZA V ABS-CBN BROADCASTING CORPORATION FACTS

The Agreement stipulates that SONZA shall abide with the rules and standards of performance covering talents of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performance prescribed for employees of ABS-CBN. In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. In this case, SONZA failed to show that these rules controlled his performance. We find that these general rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs that comply with standards of the industry. We have ruled that: Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an employeremployee relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that: Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. Lastly, SONZA insists that the exclusivity clause in the Agreement is the most extreme form of control which ABS-CBN exercised over him. This argument is futile. 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. SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive leave, signing bonus, travel allowance, and amounts due under the Employee Stock Option Plan. These claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor Code. This case call for an interpretation and implementation of the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.

INSULAR LIFE ASSURANCE CO. LTD V. NLRC 287 SCRA (1998) FACTS: On 21 August 1992 petitioner entered into an agency contract with respondent Pantaleon de los Reyes authorizing the latter to solicit within the Philippines applications for life insurance and annuities for which he would be paid compensation in the form of commissions. The contract was prepared by petitioner in its entirety and De los Reyes merely signed his conformity thereto. 1. It contained the stipulation that no employer-employee relationship shall be created between the parties and that the

2.

3.

4.

5.

agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. De los Reyes however was prohibited by petitioner from working for any other life insurance company, and violation of this stipulation was sufficient ground for termination of the contract. Aside from soliciting insurance for the petitioner, private respondent was required to submit to the former all completed applications for insurance within ninety (90) consecutive days, deliver policies, receive and collect initial premiums and balances of first year premiums, renewal premiums, deposits on applications and payments on policy loans. Private respondent was also bound to turn over to the company immediately any and all sums of money collected by him. On 1 March 1993 petitioner and private respondent entered into another contract where the latter was appointed as Acting Unit Manager under its office at the Cebu DSO V. It was similarly provided in the management contract that the relation of the acting unit manager and/or the agents of his unit to the company shall be that of independent contractor. If the appointment was terminated for any reason other than for cause, the acting unit manager would be reverted to agent status and assigned to any unit. As in the previous agency contract, De los Reyes together with his unit force was granted freedom to exercise judgment as to time, place and means of soliciting insurance. The agents and underwriters recruited and trained by the acting unit manager would be attached to the unit but petitioner reserved the right to determine if such assignment would be made or, for any reason, to reassign them elsewhere. De los Reyes was also expressly obliged to participate in the company's conservation program and to accept moneys duly receipted on agent's receipts provided the same were turned over to the company. As long as he was unit manager in an acting capacity, De los Reyes was prohibited from working for other life insurance

companies or with the government. He could not also accept a managerial or supervisory position in any firm doing business in the Philippines without the written consent of petitioner. 6. Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner on 18 November 1993 that his services were terminated effective 18 December 1993. He filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed and that he was not paid his salaries and separation pay. ISSUE: WON THERE WAS AN EMPLOYER-EMPLOYEE RELATIONSHIP IN THIS CASE HELD: Yes, there was an employer-employee relationship. It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the "employee" is an independent contractor when the terms of the agreement clearly show otherwise. For, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. In determining the status of the management contract, the "four-fold test" on employment 1. Selection and engagement of employee A look at the provisions of the contract shows that private respondent was appointed as Acting Unit Manager only upon recommendation of the District Manager. This indicates that private respondent was hired by petitioner because of the favorable endorsement of its duly authorized officer. The very designation of the appointment of private respondent as "acting" unit manager obviously implies a temporary employment status which may be made permanent only upon compliance with company standards such as those enumerated under the management contract.

2. Payment of wages Under Art. 97 Labor Code, "wage" shall mean "however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, price or commission basis 3. Power of dismissal and Power of control The management contract, however, prescribes reveals that the company practically dictates the manner by which their jobs are to be carried out particularly exclusivity of service, control of assignments and removal of agents under private respondent's unit, collection of premiums, furnishing of company facilities and materials as well as capital described as UDF. These are but hallmarks of the management system in which herein private respondent worked. This obtaining, there is no escaping the conclusion that private respondent Pantaleon de los Reyes was an employee of herein petitioner.

Servaa had served as a security guard for TAPE from March 1987 until he was terminated on 3 March 2000. Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE, alleging the following: He was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular company guard, detailed at Broadway Centrum. On 3/2/2000, he received a memorandum about his impending dismissal. At the time of his termination, he was receiving a monthly salary of P6,000.00 and that holiday pay, unpaid vacation and sick leave benefits and other monetary considerations were withheld from him. Dismissal was undertaken without due process and violative of existing labor laws, aggravated by nonpayment of separation pay. In a Motion to dismiss, TAPE averred that the labor arbiter had no jurisdiction over the case in the absence of an employer-employee relationship between the parties and that respondent was an independent contractor falling under the talent group category and was working under a special arrangement which is recognized in the industry. TAPE made the following assertions: (1) that respondent was initially employed as a security guard for Radio Philippines Network (RPN-9); (2) that he was tasked to assist TAPE during its live productions, specifically, to control the crowd; (3) that when RPN-9 severed its relationship with the security agency, TAPE engaged respondents services, as part of the support group and thus a talent, to provide security service to production staff, stars and guests of "Eat Bulaga!" as well as to control the audience during the one-and-a-half hour noontime program; (4) that it was agreed that complainant would render his services until such time that respondent company shall have engaged the services of a professional security agency;

TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P. TUVIERA vs. ROBERTO C. SERVAA FACTS TAPE is a domestic corporation engaged in the production of television programs, such as the long-running variety program, "Eat Bulaga!" Its president is Antonio P. Tuviera. Respondent Roberto C.

(5) that in 1995, when his contract with RPN-9 expired, respondent was retained as a talent and a member of the support group, until such time that TAPE shall have engaged the services of a professional security agency; (6) that respondent was not prevented from seeking other employment, whether or not related to security services, before or after attending to his "Eat Bulaga!" functions; (7) that sometime in late 1999, TAPE started negotiations for the engagement of a professional security agency, the Sun Shield Security Agency; and (8) that on 2 March 2000, TAPE issued memoranda to all talents, whose functions would be rendered redundant by the engagement of the security agency, informing them of the managements decision to terminate their services. On 6/29/2001, Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a regular employee of TAPE. The Labor Arbiter relied on the nature of the work of respondent, which is securing and maintaining order in the studio, as necessary and desirable in the usual business activity of TAPE, but declared the termination to be valid. Thereby ordering, the payment of respondents separation pay equivalent to 1-month pay for every year of service. On appeal, the NLRC (4/22/2002) reversed the Labor Arbiters decision and considered respondent a mere program employee. Respondent filed a motion for reconsideration but it was denied. Subsequently, Respondent filed a petition for certiorari with the CA contending that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. Respondent asserted that he was a regular employee considering the nature and length of service rendered. Reversing the decision of the NLRC, CA found respondent to be a regular employee. Finding TAPEs motion for reconsideration without

merit, CA issued a Resolution (4/8/2005) denying said motion. Hence, the instant petition. ISSUE WON an employer-employee relationship exists between TAPE and respondent HELD YES. Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and method by which the work is to be accomplished. The Control Test being the most important factor. Under the control test, 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. The Court affirmed the conclusions of the CA that Servana was an employee of TAPE: The selection and hiring of Servana was done by TAPE. They engaged the services of petitioner only in 1995 after TAPE severed its relations with RPN Channel 9. By informing petitioner through the Memo, that his services will be terminated as soon as the services of the newly hired security agency begins, TAPE acknowledged petitioner to be their employee. For the right to hire and fire is another important element of the employer-employee relationship. Also, it has been in held that in a business establishment, an I.D. is usually provided not just as a security measure but to mainly identify the holder as a bona fide employee of the firm who issues it. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation and

payment admitted by TAPE was given by them on a monthly basis at a rate of P5,444.44. Of the four elements of the employer-employee relationship, the "control test" is the most important. a. The bundy cards representing the time petitioner had reported for work are evident proofs of TAPEs control over petitioner, particularly with the time he is required to report for work during the noontime program of "Eat Bulaga!" b. He is being paid for being the security of "Eat Bulaga!" The daily time cards of petitioner are not just for mere record purposes as claimed by private respondents. It is a form of control by the management of private respondent TAPE. c. To negate the element of control, TAPE presented a certification from M-Zet Productions to prove that respondent also worked as a studio security guard for said company. Notably, the said certificate categorically stated that respondent reported for work on Thursdays from 1992 to 1995. It can be recalled that during said period, respondent was still working for RPN-9. As admitted by TAPE, it absorbed respondent in late 1995. On the TAPEs assertion that Servana is a program employee and equating him to independent contractor as per Policy Instruction No. 40, CA held that evidences submitted by TAPE are insufficient to prove that Servana is an independent contractor and that its reliance on such policy is misplaced. An independent contractor is not an employee of the employer, while a talent or program employee is an employee. The only difference between a talent or program employee and a regular employee is the fact that a regular employee is entitled to all the benefits that are being prayed for. Regardless of whether or not respondent had been performing work that is necessary or desirable to TAPEs usual business, respondent is still considered a regular employee under Article 280 of the Labor Code. Servana had been continuously under the employ of TAPE from 1995 until his termination in March 2000, or for a span of 5 years.

In sum, the Court found no reversible error committed by the CA in its decision. However, with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that he acted with malice or bad faith in terminating respondent, he cannot be held solidarily liable with TAPE. Thus, the CAs ruling on this p oint has to be modified. DISPOSITION: CAs Decision and Resolution are AFFIRMED with MODIFICATION. Note: Dismissal is also valid (due to decision of management to professionalize the service in its operations). However, the Severanas services were severed less than the month requirement by the law. Thus, entitling him to nominal damages. Art. 280. Regular and Casual Employment.The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the employee or where the work or service to be performed is seasonal in nature and employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

Jose Javier (VP for News and Public Affairs of ABC) advising him of her intention to renew the contract. Javier did not respond. Dumpit then demanded reinstatement as well as her backwages, service incentive leave pays and other monetary benefits. ABC said they could only pay her backwages but her other claims had no basis as she was not entitled thereto because she is considered as a talent and not a regular employee. Dumpit sued ABC. The Labor Arbiter ruled against Dumpit. The National Labor Relations Commission reversed the LA. The Court of Appeals reversed the NLRC and ruled that as per the contract between ABC and Dumpit, Dumpit is a fixed term employee. ISSUE: 1. Whether or not there exists an employer employee relationship between Dumpit and ABC. 2. Whether or not Dumpit is a regular employee. HELD: 1. Yes. The Court agree to the petitioner when it said that an employer-employee relationship was created when the private respondents started to merely renew the contracts repeatedly fifteen times or for four consecutive years. In Manila Water Company, Inc. v. Pena, we said that the elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee, (b) the payment of wages, (c) the power of dismissal, and (d) the employers power to control. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.

Dumpit-Murillo vs CA 524 SCRA 290 FACTS: Dumpit was hired by ABC as a newscaster in 1995. Her contract with the TV station was repeatedly renewed until 1999. She then wrote

The duties of petitioner as enumerated in her employment contract indicate that ABC had control over the work of petitioner. Aside from control, ABC also dictated the work assignments and payment of petitioners wages. ABC also had power to dismiss her. All these being present, clearly, there existed an employment relationship between petitioner and ABC. 2. Yes. Petitioner was a regular employee under contemplation of law. The practice of having fixed-term contracts in the industry does not automatically make all talent contracts valid and compliant with labor law. The assertion that a talent contract exists does not necessarily prevent a regular employment status. Concerning regular employment, the law provides for two kinds of employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. In other words, regular status arises from either the nature of work of the employee or the duration of his employment. In Benares v. Pancho, we very succinctly said: [T]he primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee vis--vis the usual trade or business of the employer. This connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. If the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.

In our view, the requisites for regularity of employment have been met in the instant case. Gleaned from the description of the scope of services aforementioned, petitioners work was necessary or desirable in the usual business or trade of the employer which includes, as a pre-condition for its enfranchisement, its participation in the governments news and public information dissemination. In addition, her work was continuous for a period of four years. This repeated engagement under contract of hire is indicative of the necessity and desirability of the petitioners work in private respondent ABCs business. While this Court has recognized the validity of fixed-term employment contracts in a number of cases, it has consistently emphasized that when the circumstances of a case show that the periods were imposed to block the acquisition of security of tenure, they should be struck down for being contrary to law, morals, good customs, public order or public policy.

ABS-CBN v. NAZARENO FACTS: Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees IDs and were required to work for a minimum of eight hours a day, including Sundays and holidays. The PAs were under the control and supervision of Assistant Station Manager and News. In 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a CBA. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA. Respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. Respondent failed to file their position papers within the reglementary period, Labor Arbiter dismissed the complaint. Instead of re-filing their complaint with the NLRC within 10 days, they filed an Earnest Motion to Refile Complaint with Motion to Admit Position Paper and Motion to Submit Case For Resolution. The Labor Arbiter granted this motion.

The LA rendered judgment in favor of the respondents The NLRC ruled the same and declared that respondents are entitled to the benefits of the CBA. The CA found that respondents are not project employees but regular employees.

ISSUE: WON respondents are regular or project employees HELD: In the case at bar, however, the employer-employee relationship between petitioner and respondents has been proven. First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them because they were merely hired through petitioners personnel department just like any ordinary employee. Second. The so-called "talent fees" of respondents correspond to wages given as a result of an employer-employee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship. Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are highly dependent on the petitioner for continued work. Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors. The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor . The Court will peruse

beyond any such agreement to examine the facts that typify the parties actual relationship. 2. It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner and its rank-and-file employees. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA. We quote with approval the ruling of the appellate court, that the reason why production assistants were excluded from the CBA is precisely because they were erroneously classified and treated as project employees by petitioner. As earlier stated, it is not the will or word of the employer which determines the nature of employment of an employee but the nature of the activities performed by such employee in relation to the particular business or trade of the employer. 3.

4.

5.

ALMIREZ V. INFINITE LOOP TECHNOLOGY CORP 481 SCRA 364 (2006) FACTS: Almirez was hired as a Refinery Senior Process Design Engineer for a specific project by respondent Infinite Loop Technology Corporation through its General Manager Rubino. 1. September 30, 1999 Details were furnished to Almirez regarding her designation in the company as well as the scope of her services. The scope of the services was to commence on

6.

7.

October 18, 1999 and had a guarantee of 12 continuous months. The senior process design engineer was to work together with the Process Design Consultant in performing the scope of the services which included preparing the process terms of reference or basis of design for the BPSD Petroleum Refinery, to review and revise as necessary the existing conceptual process block diagram of the process flow scheme, implement new process technologies, participate in discussions, make recommendation reports to the company management team, represent the company in meetings and perform other related works. She was to be paid a professional fee of US$2,000 per month (net of tax) to be 50/50 split in US dollars or equivalent peso every 15th of the month. She also had other benefits and bonuses along with equipment such as a laptop computer. Almirez received a total of P77,000. Almirez then wrote a letter to the company, expressing her disappointment because she was receiving less than expected. She had expected the amount to be net of taxes but she was receiving less because of SSS deductions and tax deductions. She asked that her SSS dues be not deducted from her salary because she was voluntarily paying such obligations on her own. She further stated that she was willing to render her services at Infinite Loop based on the contract and that she was willing to serve as technical consultant on other relevant projects. Rabino said that Almirezs letter was different from what they had previously agreed upon. According to him, the BPSD project, like any other project, could be deferred and that since the engineering design for the proposed project was not yet available, it would be prudent to suspend the professional services of Almirez as Senior Process Design Engineer effective February 2007. Almirez, through counsel, wrote a letter to Rabino, asking that she be properly compensated with the total amount of her

contract because the contract stated that her tenure would last for 12 months but she had already been suspended by February of 2000. 8. Rabino responded by explaining to Almirez that the company and its partner corporations were all experiencing financial difficulties with their projects and asked her to bear with them. 9. December 12, 2000 Almirez filed a complaint against Infinite Loop for breach of contract of employment. 10. Infinite Loop countered by saying that the NLRC had no jurisdiction to hear the case because there was no employeremployee relationship and the contract was one of services, not employment. ISSUE: WON THERE WAS AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PETITIONER AND RESPONDENT COMPANY HELD: No. 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 the end. The Court has consistently held a four tier test to evaluate the existence of an employer-employee relationship which include: 1) manner of selection of engagement, 2) payment of wages, 3) presence or absence of power of dismissal and 4) presence or absence of power of control. The last test is known as the control test and is regarded as the most crucial and determinative indicator of the presence of absence of an employer-employee relationship. There is no showing of a controlling power of Infinite Loop over Almirez. They only specified what she needed to achieve but now how she was go on about it. The company had hired her based on her expertise but the company naturally had to appraised of the work progress.

The deduction for SSS and tax do not bolster Almirezs contention that there was an employee-employer relationship. However, only one pay slip was issued (January 16-31, 2000) and the rest were in cash vouchers. As such, the payslip cannot be considered as proof of an employer-employee relationship. The use of the word salary is not determinative of such a relationship either. Salary is defined as remuneration for services given. The contract details her salary and it serves between the parties was the law governing them. But the contract, as pointed out earlier, is bereft of proof of control of Infinite Loop over Almirez.

ANGELITO L. LAZARO vs. SSS, ROSALINA LAUDATO, and CA FACTS Private respondent Rosalina M. Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her employers. Among the

respondents was herein petitioner Angelito L. Lazaro, proprietor of Royal Star Marketing. Laudato alleged that Lazaro had failed to report her to the SSC for compulsory coverage or remit Laudatos soc ial security contributions from April of 1979 to March of 1986. Lazaro denied that Laudato was a sales supervisor of Royal Star and averred that she was a mere sales agent paid on commission basis. He maintained tha Laudato was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an employee of Royal Star. SSC promulgated a Resolution ruling in favor of Laudato. Applying the control test, it held that Laudato was an employee of Royal Star and ordered Royal Star to pay the unremitted social security contributions of Laudato. In addition, Royal Star was made liable to pay damages to the SSC for not reporting Laudato for social security coverage, pursuant to Section 24 of the Social Security Law. After Lazaros Motion for Reconsideration before the SSC was denied, Lazaro filed a Petition for Review with the CA. Lazaro reiterated that Laudato was merely a sales agent who was paid purely on commission basis, not included in the company payroll, and who neither observed regular working hours nor accomplished time cards. CA affirmed SSCs Decision that Laudato was an employee of Royal Star, and hence entitled to coverage under the Social Security Law. Noting that Lazaros arguments were the same as those already presented before the SSC and he failed to substantiate his allegations. ISSUE WON Laudato is an employee of Royal Star HELD YES. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employeremployee relationship warrants the application of the control test, whether the employer controls or has reserved the right to control

the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished. The Court found no error in CAs decision, applying the control test found that Laudato was an employee of Royal Star. Lazaros arguments are nothing more but a mere reiteration of arguments unsuccessfully posed before two bodies: the SSC and the CA. The issue was already passed upon twice. The determination of an employer-employee relationship depends heavily on the particular factual circumstances attending the professional interaction of the parties. Lazaros arguments may be dispensed with by applying precedents: The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. In Grepalife v. Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the person insured. The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. It does not follow that a person who does not observe normal hours of work cannot be deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied the existence of an employer-employee relationship, as the claimant according to it, was a supervisor on commission basis who did not observe normal hours of work. This Court declared that there was an employer-employee relationship, noting that the supervisor, although compensated on commission basis, is exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes.

The finding of the SSC that Laudato was an employee of Royal Star is supported by substantial evidence. The SSC examined the cash vouchers issued by Royal Star to Laudato, calling cards of Royal Star denominating Laudato as a Sales Supervisor of the company, and Certificates of Appreciation issued by Royal Star to Laudato in recognition of her unselfish and loyal efforts in promoting the company. On the other hand, Lazaro has failed to present any convincing contrary evidence, relying instead on his bare assertions. The CA correctly ruled that petitioner has not sufficiently shown that the SSCs ruling was not supported by substantial evidence. Lazaros invocation of our ruling in the 1987 case of Social Security System v. Court of Appeals, that a person who works for another at his own pleasure, subject to definite hours or conditions of work and is compensated according to the result of his effort is not an employee, is misplaced, considering that in the cited case, the Court affirmed the employee-employer relationship between a sales agent and the cigarette firm whose products he sold. DISPOSITION: The Petition is DENIED and CAs decision is AFFIRMED.

the respondents was herein petitioner Angelito L. Lazaro, proprietor of Royal Star Marketing, which is engaged in the business of selling home appliances. Laudato alleged that despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory coverage or remit Laudato's social security contributions. Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an employee of Royal Star. SSC ruled in favor of Laudato. Applying the "control test," it held that Laudato was an employee of Royal Star, and ordered Royal Star to pay the unremitted social security contributions of Laudato in the amount of P5,007.35, together with the penalties totaling P22,218.54. In addition, Royal Star was made liable to pay damages to the SSC in the amount of P15,680.07 for not reporting Laudato for social security coverage, pursuant to Section 24 of the Social Security Law. Lazaro's MR was denied, prompting him to file a petition for review with the CA. However, the CA affirmed the finding that Laudato was an employee of Royal Star, and hence entitled to coverage under the Social Security Law. Lazaro's Argument: that Laudato was not qualified for social security coverage, as she was not an employee of Royal Star, her income dependent on a generation of sales and based on commissions; that Royal Star had no control over Laudato's activities, and that under the so-called "control test," Laudato could not be deemed an employee. ISSUE: Whether or not Laudato is an employee of Royal Star. HELD: Yes. Laudato was an employee of Royal Stars. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee

Lazaro vs SSS 435 SCRA 472 FACTS: Private respondent Rosalina M. Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three employers. Among

relationship warrants the application of the control test, that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished. The SSC, as sustained by the Court of Appeals, applying the control test found that Laudato was an employee of Royal Star. The determination of an employer-employee relationship depends heavily on the particular factual circumstances attending the professional interaction of the parties. Laudato was a sales supervisor and not a mere agent. As such, Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results. It doesnt follow that a person who does not observe normal hours of work cannot be deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied the existence of an employer-employee relationship, as the claimant according to it, was a supervisor on commission basis who did not observe normal hours of work. This Court declared that there was an employer-employee relationship, noting that [the] supervisor, although compensated on commission basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes.

TELEVISION AND PRODUCTION EXPONENTS, INC. (TAPE) vs. SERVAA FACTS: Servaa was a security guard for the Agro-Commercial Security Agency (ACSA) since 1987. The agency had a contract with TV network RPN 9. TAPE was handling shows like Eat Bulaga which was then with RPN 9.

When the security agencys contract with RPN-9 expired in 1995, respondent was absorbed by TAPE. In 2000, TAPE contracted the services of Sun Shield Security Agency. It then notified Servaa that he is being terminated because he is now a redundant employee. Servaa then filed a case for illegal Dismissal. The Labor Arbiter ruled that Servaas dismissal is valid on the ground of redundancy but though he was not illegally dismissed he is still entitled to be paid a separation pay which is amounting to one month pay for every year of service which totals to P78,000.00. TAPE appealed and argued that Servaa is not entitled to receive separation pay for he is considered as a talent and not as a regular employee; that as such, there is no employee-employer relationship between TAPE and Servaa. The National Labor Relations Commission ruled in favor of TAPE. It ruled that Servaa is a program employee. Servaa appealed before the Court of Appeals. The Court of Appeals reversed the NLRC and affirmed the LA. The CA further ruled that TAPE and its president Tuviera should pay for nominal damages amounting to P10,000.00. ISSUE: WON there is an employee-employer relationship existing between TAPE and Servaa. HELD: Yes. Servaa is a regular employee. In determining Servaas nature of employment, the Supreme Court employed the Four Fold Test: 1. WON employer conducted the selection and engagement of the employee.

Servaa was selected and engaged by TAPE when he was absorbed as a talent in 1995. He is not really a talent, as termed by TAPE, because he performs an activity which is necessary and desirable to TAPEs business and that is being a security guard. Further, the primary evidence of him being engaged as an employee is his employee identification card. An identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it. 2 WON there is payment of wages to the employee by the employer. Servaa is definitely receiving a fixed amount of monthly compensation. Hes receiving P6,000.00 a month. 3. WON employer has the power to dismiss employee.

The Memorandum of Discontinuance issued to Servaa to notify him that he is a redundant employee evidenced TAPEs power to dismiss Servaa. 4. WON the employer has the power of control over the employee. The control test is the most important. The bundy cards which showed that Servaa was required to report to work at fixed hours (form 11:30-1:00 pm) of the day manifested that TAPE has control over him. Otherwise, Servaa could have reported at any time during the day as he may wish. Precisely, he is being paid for being the security of "Eat Bulaga!" The Daily Time Record is a form of control by the management of TAPE. Therefore, Servaa is entitled to receive a separation pay.

On the other hand, the Supreme Court ruled that Tuviera, as president of TAPE, should not be held liable for nominal damages as there was no showing he acted in bad faith in terminating Servaa. TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in Policy Instruction No. 40 for Servaa to qualify as Independent contractor. (did not present contract , did not comply with contract registration requirement) Regular Employee Defined: One having been engaged to perform an activity that is necessary and desirable to a companys business. Under the control test, 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.

2.

3.

4.

5.

LOPEZ V. BODEGA CITY 532 SCRA 56 (2007) FACTS: Bodega City is a corporation duly registered in the Philippines with Yap as owner/manager, while petitioner Lopez worked as a lady keeper of Bodega City tasked with manning its ladies comfort room. 1. Petitioner received a notice of explanation from Yap, requiring the former to explain why the concessionaire agreement between her and Bodega City should not be terminated or suspended in view of the incident on February 3, 1995; petitioner allegedly acted in a hostile manner against a lady

customer who informed the management that she saw Lopez sleeping while on duty. In a subsequent letter, Yap informed petitioner that the concessionaire agreement between them was terminated on the account of the February 3 incident Petitioner, then, filed a complaint for illegal dismissal against respondent company with LA, contending that she was dismissed from her employment without cause and due process. Respondent, however, claimed that no employer-employee relationship ever existed between them and petitioner since the Lopez services in Bodega City was by virtue of a concessionaire agreement she entered into with respondents. Petitioners arguments: a. CA erred in concluding that in not signing the document evidencing the concessionaire agreement, she impliedly accepted and thus bound herself to the terms and conditions of the same when she continued to perform the task which was specifically contained in said agreement and that said agreement was only offered to her on her 10th year of service b. Her receipt of special allowance from respondents is a clear indication that she was an employee of the latter, as the amount she received was equivalent to minimum wage at the time c. Her ID clearly shows that she was not a concessionaire but an employee d. That she was required to follow rules and regulations prescribing appropriate conduct while she was within the premises of Bodega City is clear evidence of an employeremployee relationship between her and the company.

ISSUE: WHO HAS THE BURDEN OF PROOF IN PROVING THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP

HELD: The test for determining on whom the burden of proof lies is found in the result of an inquiry as to which party would be successful if no evidence of such matters were given.

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. However, before a case for illegal dismissal can prosper, an employeremployee relationship must first be established. 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. 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. 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. MCLEOD vs NLRC 512 SCRA 222 FACTS In 1956, John F. McLeod was hired by Universal Textiles, Inc. till 1980 under its President, Patricio Lim. In 1978 Patricio Lim formed Peggy Mills, Inc. (PMI) with respondent Filsyn having controlling interest. McLeod was absorbed by PMI as its Vice President and Plant Manager of the Sta. Rosa, Laguna plant. On 8/19/1989 to July 1992, PMIs rank-and-file employees staged a strike, which serious business losses and which prompted PMI to stop permanently plant operations and to send a notice of closure to DOLE on 7/21/1992. Subsequently, a contract between PMI and Sta. Rosa Textile Inc. (SRTI) was executed on 6/15/1992. Wherein, Filsyn sold Peggy Mills, Inc. to Far Eastern Textile Mills, Inc. (renamed as Sta. Rosa Textile

Inc.), with Patricio Lim as Chairman and President. McLeods service to PMI was extended until 12/31/1992 and thereafter, worked for SRTI as a consultant until his resignation in 11/30/1993. He applied for retirement and wrote letters to Patricio Lim requesting for his retirement pay and other benefits. In the last quarter of 1994, respondents offered McLeod a compromise settlement of only P300,000.00. McLeod rejected the offer, alleging that at the time of his retirement, he was receiving P60,000.00 monthly with vacation and sick leave benefits, 13th month pay, holiday pay and two round trip business class tickets on a Manila-London-Manila itinerary every three years which is convertible to cash if unused. He wrote a letter reiterating his demand for full payment of all benefits and to no avail, he filed a complaint, claiming that he is entitled to all his money claims pursuant to law. Labor Arbiters decision was in favor of McLeod. The respondents were held jointly and solidarily liable for McLeods money claims. However, when the decision was appealed to NLRC, it was reversed. NLRC ordered respondent PMI to pay McLeod his retirement pay equivalent to 22.5 days for every year of service for his 12 years of service from 1980-1992 based on a salary rate of P50,495.00 a month. McLeod filed a motion for reconsideration, but NLRC denied it. Later he filed a petition for certiorari before the CA assailing the decision and resolution of the NLRC. On 6/15/2000, the CA affirmed and modified the decision of NLRC, holding respondent Patricio Lim jointly and solidarily liable with Peggy Mills, Inc. The CA rejected McLeods theory that all respondent corporations are the same corporate entity which should be held solidarily liable for the payment of his monetary claims. Hence, this petition. ISSUES Whether an employer-employee relationship exists between the private respondents and McLeod

RULING McLeod was an employee only of PMI. PMI hired McLeod as its acting Vice President and General Manager on 6/20/1980. PMI confirmed McLeods appointment as Vice President/Plant Manager in the Special Meeting of its Board of Directors on 2/10/1981. McLeod himself testified during the hearing before the Labor Arbiter that his "regular employment" was with PMI. After the strike, PMI informed its employees, including McLeod, of the closure of the plant. PMI paid its employees, including managerial employees, except McLeod, their unpaid wages, sick leave, vacation leave, prorated 13th month pay, and separation pay. Under the compromise agreement between PMI and its employees, the employer-employee relationship between them ended on 11/25/1992. The extension of McLeods employment until December 1992 was only due to business matters concerning PMI. McLeod testified on cross-examination that he received his last salary from PMI in December 1992. It is clear that McLeod was a managerial employee of PMI from 6/20/1980 to 12/31/1992. The contract between PMI and SRTI was dation in payment with lease. PMI conveyed to SRTC all of its rights, title and interest in and to the Assets by way of a dation in payment. There was also no merger or consolidation of PMI and SRTI. As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation , provided the former acted in good faith and paid adequate consideration for such assets, except when: (1) where the purchaser expressly or impliedly agrees to assume the debts, (2) where the transaction amounts to a consolidation or merger of the corporations, (3) where the purchasing corporation is merely a continuation of the selling corporation, and (4) where the selling corporation fraudulently enters into the transaction to escape liability for those debts. However, none of the foregoing exceptions is present in this case. PMI transferred its assets to SRTI to settle its obligation to SRTI in the sum of P210,000,000. We are not convinced that PMI fraudulently

transferred these assets to escape its liability for any of its debts. PMI had already paid its employees, except McLeod, their money claims. There is no showing that the subject dation in payment involved any corporate merger or consolidation. Neither is there any showing of those indicative factors that SRTI is a mere instrumentality of PMI. Moreover, SRTI did not expressly or impliedly agree to assume any of PMIs debts. Hence, it is not correct for McLeod to treat PMI and SRTI as the same entity. Respondent corporations assert that SRTI hired McLeod as consultant after PMI stopped operations. On the other hand, McLeod asserts that he was respondent corporations employee from 1980 to 11/30/1993. However, McLeod failed to present any proof of employer-employee relationship between him and Filsyn, SRTI, or FETMI. McLeod could have presented evidence to support his allegation of employer-employee relationship between him and any of Filsyn, SRTI, and FETMI, but he did not. Appointment letters or employment contracts, payrolls, organization charts, SSS registration, personnel list, as well as testimony of co-employees, may serve as evidence of employee status. It is a basic rule in evidence that parties must prove their affirmative allegations. While technical rules are not strictly followed in the NLRC, this does not mean that the rules on proving allegations are entirely ignored. Bare allegations are not enough. They must be supported by substantial evidence at the very least. At any rate, the existence of interlocking incorporators, directors, and officers is not enough justification to pierce the veil of corporate fiction, in the absence of fraud or other public policy considerations. The Court ruled that substantial identity of the incorporators of corporations does not necessarily imply fraud.

In light of the foregoing, and there being no proof of employeremployee relationship between McLeod and respondent corporations and Eric Hu, McLeods cause of action is only against his former employer, PMI. On Patricios personal liability, it is settled that in the absence of malice, bad faith, or specific provision of law, a stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities. Personal liability of corporate directors, trustees or officers attaches only when (1) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders or other persons; (2) they consent to the issuance of watered down stocks or when, having knowledge of such issuance, do not forthwith file with the corporate secretary their written objection; (3) they agree to hold themselves personally and solidarily liable with the corporation; or (4) they are made by specific provision of law personally answerable for their corporate action. Considering that McLeod failed to prove any of the foregoing exceptions in the present case, McLeod cannot hold Patricio solidarily liable with PMI. The records are bereft of any evidence that Patricio acted with malice or bad faith. There is nothing substantial on record to show that Patricio acted in bad faith in terminating McLeods services to warrant Patricios personal liability. PMI had no other choice but to stop plant operations. The work stoppage therefore was by necessity. The company could no longer continue with its plant operations because of the serious business losses that it had suffered. The mere fact that Patricio was president and director of PMI is not a ground to conclude that he should be held solidarily liable with PMI for McLeods money claims. DISPOSITION: The petition was DENIED and CAS decision was AFFIRMED and MODIFIED.

HELD: Yes. The existence of an employer-employee relationship between private respondents and petitioner is supported by substantial evidence on record. Domasig vs NLRC 261 SCRA 779 FACTS: Complaint was instituted by Eddie Domasig against respondents Cata Garments Corporation, a company engaged in garments business and its owner/manager Otto Ong and Catalina Co for illegal dismissal, unpaid commission and other monetary claim(s). Complainant alleged that he started working with the respondent on July 6, 1986 as Salesman; three (3) years ago, because of a complaint against respondent by its workers, the company changed its name to Cata Garments Corporation; and that on August 29, 1992, he was dismissed when respondent learned that he was being pirated by a rival corporation which offer he refused. The Labor Arbiter held that complainant was illegally dismissed and entitled to reinstatement and backwages as well as underpayment of salary; 13th month pay; service incentive leave and legal holiday. The Arbiter also awarded complainant his claim for unpaid commission in the amount of P143,955.00. NLRC remanded the case for further proceedings. Petitioners Claim > Petitioner claims he was an employee, and that he was illegally dismissed. Respondents Comments > Respondents claim that Domasig was a mere commission worker, and not a regular employee (which would warrant backwages). ISSUE: Whether or not there existed an employer-employee relationship between the parties. (Under the topic of proof of employment) Substantial evidence is sufficient as a basis for judgment on the existence of employer-employee relationship. No particular form of evidence is required to prove the existence of such employeremployee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Substantial evidence has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criterion for that of the trial court in determining wherein lies the weight of evidence or what evidence is entitled to belief. 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. Together with the cash vouchers covering petitioners salaries for the months stated therein, we agree with the labor arbiter that these matters constitute substantial evidence adequate to support a conclusion that petitioner was indeed an employee of private respondent. Having been in the employ of private respondents continuously for more than one year, under the law, petitioner is considered a regular employee. Proof beyond reasonable doubt is not required as a basis for judgment on the legality of an employers dismissal of an employee, nor even preponderance of evidence for that matter, substantial evidence being sufficient. The National Labor Relations Commission and the labor arbiter have authority under the Labor Code to decide a case based on the

position papers and documents submitted without resorting to the technical rules of evidence.

LOPEZ v BODEGA CITY FACTS: Petitioner was the "lady keeper" of Bodega City tasked with manning its ladies' comfort room. In a letter written by the owner of bodega city, Yap, petitioner was made to explain why the concessionaire agreement between her and respondents should not be terminated or suspended in view of an incident 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. In a subsequent letter, 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. Respondents contended that no employer-employee relationship ever existed between them and petitioner; that the latter's services rendered was by virtue of a concessionaire agreement she entered into with respondents. The LA found petitioner was illegally dismissed. The NLRC opposed the decision of the LA. The CA dismissed petitioners special civil action for certiorari. ISSUE: WON petitioner is an employee of respondent? HELD: It is a basic rule of evidence that each party must prove his affirmative allegation. If he claims a right granted by law, he must prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness of that of his opponent.

The test for determining on whom the burden of proof lies is found in the result of an inquiry as to which party would be successful if no evidence of such matters were given. 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. To prove the element of payment of wages, petitioner presented a petty cash voucher showing that she received an allowance for five (5) days. 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. Anent the element of control, petitioner's contention that she was an employee of respondents because she was subject to their control. Rules and regulations to be followed by petitioner was imposed upon petitioner as part of the terms and conditions in the concessionaire agreement. Petitioner insists that her ID card is sufficient proof of her employment. As to the ID card, it is undisputed that non-employees, are also issued identification cards that serve as a "passport" from

management assuring the holder thereof of his unmolested access to the premises of Bodega City. With respect to the petty cash voucher, petitioner failed to refute respondent's claim that it was not given to her for services rendered or on a regular basis, but simply granted as financial assistance to help her temporarily meet her family's needs.

ABANTE V. LAMADRID 430 SCRA 368 (2004) FACTS: Petitioner was employed by respondent company Lamadrid Bearing and Parts Corporation sometime in June 1985 as a salesman covering the whole area of Mindanao. His average monthly income

was more or less P16,000, but later was increased to approximately P20,269.50. Aside from selling the merchandise of the respondent corporation, he was also tasked to collect payments from his various customers. 1. Sometime in 1998, petitioner encountered five customers/clients with bad accounts. 2. Petitioner was confronted by respondent Lamadrid over the bad accounts and warned that if he does not issue his own checks to cover the said bad accounts, his commissions will not be released and he will lose his job. Not contented with the issuance of the foregoing checks as security for the bad accounts, respondents "tricked" petitioner into signing two documents, which he later discovered to be a Promissory Note and a Deed of Real Estate Mortgage. 3. Due to financial difficulties, petitioner inquired about his membership with the SSS in order to apply for a salary loan. To his dismay, he learned that he was not covered by the SSS and therefore was not entitled to any benefit. 4. While doing his usual rounds as commission salesman, petitioner was handed by his customers a letter from the respondent company warning them not to deal with petitioner since it no longer recognized him as a commission salesman. 5. Petitioner thus filed a complaint for illegal dismissal with money claims against respondent company and its president, Jose Lamadrid, before the NLRC. ISSUE: WON THERE EXISTS AN EMPLOYER-EMPLOYEE RELATIONSHIP

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. Under the control test, an employeremployee 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. Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, no relationship of employer-employee exists. Petitioner Abante was a commission salesman who received 3% commission of his gross sales. No quota was imposed on him by the respondent. He was not required to report to the office at any time or submit any periodic written report on his sales performance and activities. He was not designated by respondent to conduct his sales activities at any particular or specific place. He pursued his selling activities without interference or supervision from respondent company and relied on his own resources to perform his functions. Respondent company did not prescribe the manner of selling the merchandise; he was left alone to adopt any style or strategy to entice his customers. Moreover, petitioner was free to offer his services to other companies engaged in similar or related marketing activities as evidenced by the certifications issued by various customers.

HELD: No, there is no employer-employee relationship in this case. To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the

the incident to his manager, Mr. Oscar Pasquin, who gave him P500 to redeem his license. He went to LTO the following day to claim it, but he was told that it had not yet been turned over by the officer who apprehended him. He was able to retrieve his license only after a week. On 2/8/1996, Ejandra reported for work. However, he was told that the company was still studying whether to allow him to drive again. Ejandra was likewise accused of causing damage to the bus he used to drive. Denying the charge, Ejandra blamed the person who drove the said bus during his absence, considering that the damage was sustained during the week that he did not drive the bus. Mr. Pacquin nonetheless told him to take a vacation. When respondent asked how long he had to rest, the manager did not give a definite time. Petitioner denied the allegations and claimed that Ejandra abandoned his job. Petitioner asserted that if Ejandras license had really been confiscated, the apprehension report should have been presented by the latter and informed petitioner of his problems with the LTO. Petitioner further argued that private respondent was not an employee because theirs was a contract of lease and not of employment, with petitioner being paid on commission basis. On 2/23/1997, labor arbiter Rogelio Yulo rendered his decision in favor of Ejandra, ordering for his reinstatement, giving no weight to petitioners claim that private respondent abandoned his work. The one-week absence did not constitute abandonment of work because it took him the whole week to reclaim his license. Ejandra could not retrieve it unless and until the apprehending officer first transmitted it to their office. The inability to drive for petitioner was therefore not his fault and petitioner could be held liable for illegal dismissal. Due process was not accorded to private respondent who was never given the opportunity to contest the charge of abandonment. Upon appeal, the NLRC affirmed the decision of the labor arbiter. In addition, appellants defense of denying the existence of employer-

R TRANSPORT CORPORATION vs. ROGELIO EJANDRA FACTS Rogelio Ejandra worked as a bus driver for Petitioner, from 7/15/1990 to 131/1996. He plied the route Muntilupa-Alabang-MalandayMonumento-UE-Letre-Sangandaan from 5:00 a.m. up to 2:00 a.m. the next day and was paid 10% of his daily earnings. On 1/31/1996, a LTO officer apprehended him for obstruction of traffic for which his license was confiscated. He immediately reported

employee relationship with the complainant based on the manner by which complainant was being paid his salary, cannot hold water. While employees paid on piece-rate and commission basis are not covered by the provisions of the Labor Code, as amended, on hours of work, these employees however, for all intents and purposes, are employees of their employers. Petitioner filed in the CA a petition for certiorari on the ground that the NLRC committed grave abuse of discretion in affirming the decision of the labor arbiter, but the petition was dismissed for lack of merit. CA also ruled that petitioner was barred from denying the existence of an employer-employee relationship because petitioner invoked its rights under the law and jurisprudence as an employer in dismissing private respondent. Hence, this appeal. ISSUE WON the court erred in not finding (1) that Ejandra abandoned his work resulting to his dismissal for just cause and (2) that the agreement was for a contract of lease of services, negating the existence of employer-employee relationship HELD NO. NLRC and the CA did not err and were unanimous in their findings. The Court has no reason to disturb all these factual findings because they are amply supported by substantial evidence. 1. To constitute ABANDONMENT, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. The second element is the more determinative factor and should be manifested by some overt acts. Mere absence is not sufficient. It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment

without any intention of returning. However, petitioner fell short of proving the requisites. 2. Denying the existence of an employer-employee relationship, petitioner insists that the parties agreement was for a contract of lease of services. We disagree. Petitioner is barred to negate the existence of an employer-employee relationship. For in its petition filed before this Court, petitioner invoked our rulings on the right of an employer to dismiss an employee for just cause. Consistently, petitioner maintained that private respondent was justifiably dismissed due to abandonment of work. By adopting said rulings, petitioner impliedly admitted that it was in fact the employer of private respondent. According to the control test, the power to dismiss an employee is one of the indications of an employer-employee relationship. The claim that private respondent was legally dismissed for abandonment was in fact a NEGATIVE PREGNANT: an acknowledgement that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on commission basis did not rule out the presence of an employee-employer relationship. 3. The fact that petitioner had no valid cause to terminate private respondent from work, it violated the latters right to procedural due process by not giving him the required notice and hearing. DISPOSITION: Petition is DENIED. Manila Electric Co. vs Quisumbing 302 SCRA 173 FACTS: Meralco Workers Association (MEWA) is a duly recognized labor organization of the rank-and-file employees of MERALCO. On Sept. 7, 1995, it informed MERALCO of its intention to renegotiate the terms and conditions of their existing1992-97 CBA covering the remaining period of 2 years starting from December 1, 1995 to November 30, 1997.

MERALCO signified its willingness to re-negotiate through a letter and formed a CBA negotiating panel for the purpose. Bargaining negotiations proceeded. However, despite the series of meetings bet. The negotiating panels, the parties failed to arrive at "terms and conditions acceptable to both of them. On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) on the grounds of bargaining deadlock and unfair labor practices. The NCMB then conducted a series of conciliation meetings but the parties failed to reach an amicable settlement. Faced with the imminence of a strike, MERALCO filed an urgent petition with the DOLE praying the Secretary to assume jurisdiction over the labor dispute and to enjoin the striking employees to go back to work. The Secretary did so and conducted conciliation conferences between the parties to bridge their differences. Thereafter, the parties submitted their respective memoranda and on August 19, 1996, the Secretary resolved the labor dispute through an Order. Dissatisfied, MERALCO filed this petition contending that the Sec. of Labor gravely abused its discretion in awarding wage increases and other economic benefits (like 2 months Christmas bonus, loan for the employees cooperative, signing hours, 40- day union leave, sick leave, etc.), in expanding the scope of the bargaining unit to all regular rank and file employees, in exercising discretion in determining the retroactivity of the CBA, etc. ISSUE: Whether or not the Secretary of Labor gravely abuse his discretion in ordering that MERALCO should consult the union before any contracting out for more than 6months HELD:

We recognize that contracting out is not unlimited; rather, it is a prerogative that management enjoys subject to well-defined legal limitations. As we have previously held, the company can determine in its best business judgment whether it should contract out the performance of some of its work for as long as the employer is motivated by good faith, and the contracting out must not have been resorted to circumvent the law or must not have been the result of malicious or arbitrary action. The Labor Code and its implementing rules also contain specific rules governing contracting out (Department of Labor Order No. 10, May 30, 1997, Sections. 1-25). Given these realities, we recognize that a balance already exist in the parties relationship with respect to contracting out; MERALCO has its legally defined and protected management prerogatives while workers are guaranteed their own protection through specific labor provisions and the recognition of limits to the exercise of management prerogatives. From these premises, we can only conclude that the Secretarys added requirement only introdu ces an imbalance in the parties collective bargaining relationship on a matter that the law already sufficiently regulates. Hence, we rule that the Secretarys added requirement, being unreasonable, restrictive and potentially disruptive should be struck down. Proceeding from our ruling in San Miguel Employees Union-PTGWO vs Bersamina, (where we recognized that contracting out of work is a proprietary right of the employer in the exercise of an inherent management prerogative) We note that the Secretary himself has considered that management should not be hampered in the operations of its business when he said that: We feel that the limitations imposed by the union advocates are too specific and may not be applicable to the situations that the company and the union may face in the future. To our mind, the greater risk with this type of limitation is that it will tend to curtail rather than allow the business growth that

the company and the union must aspire for. Hence, we are for the general limitations we have stated above because they will allow a calibrated response to specific future situations the company and the union may face.

between CONTRACTOR and/or its employees on the one hand, and OWNER, on the other." On the other hand, Respondents main job is to load and unload baggage and cargo of passengers is directly related to the main business of petitioner. Respondents, who appear to have been assigned by Synergy to petitioner following the execution of the Agreement, filed complaints against petitioner, Synergy for underpayment, non-payment of premium pay for holidays, premium pay for rest days, service incentive leave pay, 13th month pay and allowances, and for regularization of employment status with petitioner The LA ruled that PAL and Synergy jointly and severally to pay all the complainants. The NLRC set aside the decision of the LA and declared Synergy to be a 'labor-only' contractor and ordered PAL to accept, as its regular employees, all the complainants.The CA affirmed the Decision of the NLRC. ISSUE: WON Synergy is a job-only contractor or a legitimate contractor. HELD: Synergy is a labor-only contractor. While petitioner claimed that it was Synergy's supervisors who actually supervised respondents, it failed to present evidence thereon. It did not even identify who were the Synergy supervisors assigned at the workplace. Likewise, petitioner failed to present evidences that synergy has a substantial capital to engage in legitimate contracting. The importance of this decision is, If Synergy is found to be a mere job-only contractor, respondents could be considered as regular

PAL v LIGAN FACTS: Petitioner Philippine Airlines as Owner, and Synergy Services Corporation (Synergy) as Contractor, entered into an Agreement. It expressly provided that Synergy was "an independent contractor and . . . that there would be no employer-employee relationship

employees of petitioner as Synergy would then be a mere agent of petitioner; otherwise, if Synergy is found to be a legitimate contractor, respondents' claims against petitioner must fail as they would then be considered employees of Synergy. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, AND the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Trilateral relationship in contracting arrangements. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service. (Emphasis and underscoring supplied) Labor-only contracting is hereby declared prohibited. One who claims to be an independent contractor has to prove that he contracted to do the work according to his own methods and without being subject to the employer's control except only as to the results.

The express provision in the Agreement that Synergy was an independent contractor and there would be "no employer-employee relationship between [Synergy] and/or its employees on one hand, and [petitioner] on the other hand" is not legally binding and conclusive as contractual provisions are not valid determinants of the existence of such relationship. For it is the totality of the facts and surrounding circumstances of the case which is determinative of the parties' relationship.

PAL V. LIGAN 547 SCRA 181 (2008) FACTS: PAL and Synergy Services Corp entered into an agreement whereby Synergy undertook to provide loading, unloading, delivery of baggage and cargo and other related services from PALs aircraft at the Mactan station. 1. It was expressly stipulated in the contract that Synergy was an independent contractor and there would be no employer-

2.

3.

4.

5.

6.

7.

employee relationship between the Contractor (Synergy) and/or its employees and PAL. It was also specified that should PAL find the services provided by Synergy to be unsatisfactory, Synergy has 15 days to improve its services otherwise PAL has the right the terminate its agreement immediately and without notice Respondents filed a complaint for underpayment, nonpayment of premium pay for holidays, service incentive leave pay, 13th month pay and allowances and for regularization of employment status with PAL LA found Synergy an independent contractor and dismissed the respondents complaint for regularization against petitioner but granted their money claims NLRC reversed LA decision and declared Synergy to be a laboronly contractor and ordered PAL to accept as regular employees, all complainants and give each of the salaries and benefits provided for in the CBA PAL argued that the law does not prohibit an employer from engaging an independent contractor like Synergy, which has substantial capital in carrying on an independent business of contracting, to perform specific jobs. Petitioner also maintained that its contracting out to Synergy services like janitorial, baggage-handling etc, which are directly related to its business, does not make respodents its employees PAL also averred that none of the 4 elements of an employeremployee relationship between petitioner and respondents, i.e., selection and engagement of an employee, payment of wages, power of dismissal, and the power to control employees conduct, were present in the case.

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, AND the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

One who claims to be an independent contractor has to prove that he contracted to do the work according to his own methods and without being subject to the employer's control except only as to the results. While petitioner claimed that it was Synergy's supervisors who actually supervised respondents, it failed to present evidence thereon. It did not even identify who were the Synergy supervisors assigned at the workplace. Respondents having performed tasks which are usually necessary and desirable in the air transportation business of petitioner, they should be deemed its regular employees and Synergy as a labor-only contractor.

ISSUE: WON SYNERGY IS A MERE JOB-ONLY CONTRACTOR OR A LEGITIMATE CONTRACTOR HELD: Synergy is a mere labor-only contractor.

did not dismiss the complaint with respect to Roberto Fabian, despite his failure to file a position paper. Neither did the Labor Arbiters decision concern Roberto Fabian. Hence, this petition shall apply only to Eutiquio, Jay, Felicisimo, and Leonardo, Sr., all surnamed Antonio, the respondents herein. Respondents alleged that as regular employees, they worked from 8:00 a.m. to 5:00 p.m. at petitioners premises using petitioners tools and equipment and they received P250 per day. According to respondents, they were dismissed without just cause and due process; hence, their prayer for reinstatement and full backwages. They also impleaded one Hermie Alejo, a relative of the petitioners owner, as co-respondent in their complaint. Petitioner Big AA Manufacturer, affirmed it is a sole proprietorship registered in the name of Enrico Alejo and engaged in manufacturing office furniture. Petioner claims that: Respondents are not regular employees and Eutiquio Antonio was one of its independent contractors who used the services of the other respondents. There was no employer-employee relationship between petitioner and respondents. However, petitioner stated it allowed respondents to use its facilities to meet job orders. Respondents were not laid-off, since they were project employees only. It added that since Eutiquio Antonio had refused a job order of office tables, their contractual relationship ended. Petitioner surmised that Eutiquio resented the 1/10/2000 Implementing Guidelines it issued to improve efficiency and performance. In Respondents reply to the allegations of Petition, it stated that Enrico Alejo should be impleaded as a proper or indispensable party as sole proprietor of Big AA. They also pointed out that petitioners payroll shows that Eutiquio Antonio was assigned in its carpentry section and obtained advances on salaries on various dates. The

BIG AA MANUFACTURER vs. EUTIQUIO ANTONIO, JAY ANTONIO, FELICISIMO ANTONIO, and LEONARDO ANTONIO, SR. FACTS Petitioner is a sole proprietorship registered in the name of its proprietor, Enrico E. Alejo. On 1/13/2000, respondents Eutiquio Antonio, Jay Antonio, Felicisimo Antonio, Leonardo Antonio, Sr. and Roberto Fabian filed a complaint for illegal lay-off and illegal deductions before the NLRCs Regional Arbitration Branch No. III. They claimed that they were dismissed on 1/11/2000 and sought separation pay from petitioner. The amicable settlement during the mandatory conference failed, the parties were required to file their position papers. The Labor Arbiter

Implementing Guidelines and written warnings addressed to Eutiquio Antonio also prove that respondents were under petitioners control and supervision. On 6/1/2000, the Labor Arbiter ruled that: Respondents were regular employees because their work as carpenters was necessary and desirable in petitioners business. Eutiquio worked in petitioners premises and was without substantial capital or investment in the form of tools, equipment, machinery or work premises. Thus, he could not qualify as an independent contractor. Noting the absence of contracts providing the duration of respondents employment and of reports of project completion to the DOLE, Respondents cannot be considered as project employees. They were constructively dismissed when the Implementing Guidelines changed their status from regular employees to project employees.

Upon denial of the parties motions for reconsideration, petitioner filed a petition for certiorari before the CA, which dismissed the petition but affirmed the NLRC decision. Hence, this petition with prayer for TRO. ISSUES WON respondents are regular employees of petitioner? HELD YES. Respondents were employed for more than one year and their work as carpenters was necessary or desirable in petitioners usual trade or business of manufacturing office furniture. Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered regular or non-regular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. Certain forms of employment require the performance of usual or desirable functions and exceed one year but do not necessarily result to regular employment under Article 280 of the Labor Code. However, specific exceptions include project or seasonal employment, but in this case, respondents cannot be considered project employees. Petitioner had neither shown that respondents were hired for a specific project the duration of which was determined at the time of their hiring nor identified the specific project or phase thereof for which respondents were hired. We also agree that Eutiquio was not an independent contractor for he does not carry a distinct and independent business, and he does not possess substantial capital or investment in tools, equipment, machinery or work premises. He works within petitioners premises using the latters tools and materials, as admitted by petitioner. Eutiquio is also under petitioners control and supervision . It is supported by the fact that petitioner allowed respondents to use its facilities for the "proper implementation" of job orders. Moreover,

Both parties appealed to the NLRC. Petitioner claimed that the Labor Arbiter committed errors in his findings of facts. It also prayed that (1) Eutiquio Antonio be declared a labor-only contractor; (2) Hermie Alejo be dropped from the case; (3) respondents be ordered to report back to work; and (4) the respondents claim for separation pay and backwages be dismissed. The NLRC modified the Labor Arbiters decision. It ordered petitioner to reinstate respondents to their former positions or to pay them separation pay in case reinstatement was no longer feasible, with full backwages in either case. The NLRC ruled that respondents were regular employees, not independent contractors. It further held that petitioner failed to justify its reason for terminating respondents and its failure to comply with the due process requirements.

the Implementing Guidelines regulating attendance, overtime, deadlines, penalties; providing petitioners right to fire employees or "contractors"; requiring the carpentry division to join petitioners exercise program; and providing rules on machine maintenance, all reflect control and supervision over respondents. DISPOSITION: Petition is DENIED for lack of merit. Note: Other issues include (1) Valid termination & (2) abandonment by the Respondents [Petitioner failed to establish valid cause of termination. Charge of abandonment was based only on Petitioners presumption that Respondents resented its issuance of the Implementing Guidelines. The Respondents filing the complaint for illegal dismissal within two days manifested intention against severing employment relationship with petitioner and abandoning their jobs.]

Lakas vs Burlingame Corp 524 SCRA 690 FACTS: Petitioner in this case sought to represent all rank-and-file promo employees of respondent. It alleged that said group of employees is not represented by a Union. So, they filed a petition for certification election before the Department of Labor and Employment. Respondent, however, opposed said petition on the ground that there exists no employer-employee relation between the parties. Respondent here further claimed that the employees sought to be represented by petitioner are not their employees but the employees of F. Garil Manpower Services, a duly licensed local employment agency. ISSUE: Whether or not F. Garil Manpower services is an independent contractor or a labor-only contractor. HELD: F. Garil is not an independent contractor. F. Garil does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, and other materials, to qualify as an independent contractor. No proof was adduced to show F. Garils capitalization. The work of the promo-girls was directly related to the principal business or operation of Burlingame. Marketing and selling of products is an essential activity to the main business of the principal. F. Garil did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, Burlingame.

F. Garil was engaged in labor-only contracting, and as such, is considered merely an agent of Burlingame. In labor-only contracting, the law creates an employer-employee relationship to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.21 Since F. Garil is a labor-only contractor, the workers it supplied should be considered as employees of Burlingame in the eyes of the law. The "four-fold test" will show that respondent is the employer of petitioners members. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. The involvement of F. Garil in the hiring process was only with respect to the recruitment aspect, i.e. the screening, testing and pre-selection of the personnel it provided to Burlingame. The actual hiring itself was done through the deployment of personnel to establishments by Burlingame. The contract states that Burlingame would pay the workers through F. Garil, stipulating that Burlingame shall pay F. Garil a certain sum per worker on the basis of eight-hour work every 15th and 30th of each calendar month. The contract states that Burlingame would pay the workers through F. Garil, stipulating that Burlingame shall pay F. Garil a certain sum per worker on the basis of eight-hour work every 15th and 30th of each calendar month.

and regulations set forth by Burlingame shall be reported to F. Garil and may be replaced upon request." Corollary to this circumstance would be the exercise of control and supervision by Burlingame over workers supplied by F. Garil in order to establish the inefficient, troublesome, and uncooperative nature of undesirable personnel. Also implied in the provision on replacement of personnel carried upon request by Burlingame is the power to fire personnel. F. Garil was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that F. Garil was not an independent contractor.

The contract also provides that "any personnel found to be inefficient, troublesome, uncooperative and not observing the rules Manila Electric Co. vs Benamira

FACTS: Benamira et al are security guards who worked for PSI. PSI was the security agency contracted by MERALCO. The contract between PSI and MEC expired. MERALCO subsequently contracted ASDAI as its new security agency. ASDAI absorbed Benamira et al upon MERALCOs advice. After two years, the contract between ASDAI and MERALCO expired. MERALCO subsequently contracted AFSISI. AFSISI did not schedule any work for Benamira et al. It was interpreted as a constructive dismissal. Benamira sued MERALO, ASDAI, and AFSISI. The Labor Arbiter ruled that ASDAI should reinstate Benamira et al and that MERALCO is solidarily liable. No liability for AFSISI. NLRC affirmed LA. The CA reversed the lower courts. The CA ruled that the employer is actually MERALCO. ISSUE: Whether or not MERALCO is the employer of the fired security guards. HELD: No. Under the contract between ASDAI and MERALCO, it can be seen that ASDAI is indeed the employer of the guards. Applying the 4 Fold Test: ASDAI employed the guards when it absorbed them from PSI. ASDAI provided the salaries of the guards (MERALCO merely pays ASDAI for providing the guards). ASDAI has control over the guards because they are being inspected (MERALCO has the right to conduct its own inspection as per contract with ASDAI only). ASDAI has the power to terminate the guards, as when they did not provide any tours or schedules to them. The individual respondents cannot be considered as regular employees of the MERALCO for, although security services are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCOs principal business, which is the distribution of electricity.

The fact that the individual respondents filed their claim for unpaid monetary benefits against ASDAI is a clear indication that the individual respondents acknowledge that ASDAI is their employer. AFSISI is not the employer of the guards as well (as claimed by the guards) because AFSISI never absorbed them nor was there any evidence showing otherwise. ASDAI and AFSISI are not labor-only contractors. There is labor only contract when the person acting as contractor is considered merely as an agent or intermediary of the principal who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. On the other hand, job (independent) contracting is present if the following conditions are met: (a) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business.[29] Given the above distinction and the provisions of the security service agreements entered into by petitioner with ASDAI and AFSISI, we are convinced that ASDAI and AFSISI were engaged in job contracting.

COCA-COLA BOTTLERS PHIL INC V. NLRC 307 SCRA 131 (1999) FACTS: On April 7, 1986 Coca-Cola entered into a contract of janitorial services with Bacolod Janitorial Services (BJS) as an independent contractor.

1. Private respondent Ramon Canonicato was hired as a janitor by the Bacolod Janitorial Services (BJS). He was assigned at the Coca Cola Bottlers, Inc. considering his familiarity with its premises, having been previous casual employee there. 2. Goaded by information that COCA COLA employed previous BJS employees who filed a complaint against the company for regularization pursuant to a compromise agreement, Canonicato submitted a similar complaint against COCA COLA to the Labor Arbiter on 8 June 1993 and consequently did not report for work. 3. On September 28,1993, BJS sent him a letter advising him to report to work within 3 days from receipt, otherwise he would be terminated. 4. On July 23, 1993, respondent filed with LA a complaint for illegal dismissal and underpayment of wages. He included BJS therein as a co-respondent. The Labor Arbiter dismissed the complaint and ruled that a) there was no employer-employee relationship between Canonicato and Coca Cola (b) BJS was a legitimate job contractor, hence, any liability of COCA COLA as to Canonicato's salary or wage differentials was solidary with BJS in accordance with pars. 1 and 2 of Art. 106, Labor Code; (c) COCA COLA and BJS must jointly and severally pay Canonicato his wage differentials amounting toP2,776.80 and his 13th month salary of P1,068.00, including ten (10%) percent attorney's fees in the sum of P384.48. 5. The NLRC rejected the decision of LA on the ground that the janitorial services of Canonicato were found to be necessary in the usual trade of Coca Cola. In so holding, NLRC applied Art.280 Labor Code and declared that Canonito was a regular employee of Coca-Cola. Its motion for reconsideration having been denied, Coca Cola filed this petition. ISSUE: WON CANONICATO IS A REGULAR EMPLOYEE OF PETITIONER COMPANY

HELD: No, in Kimberly Independent Labor Union v. Drilon where the Court took judicial notice of the practice adopted in several government and private institutions and industries of hiring janitorial services on an "independent contractor basis." In this respect, although janitorial services may be considered directly related to the principal business of an employer, as with every business, we deemed them unnecessary in the conduct of the employer's principal business. This judicial notice, of course, rests on the assumption that the independent contractor is a legitimate job contractor so that there can be no doubt as to the existence of an employer-employee relationship between contractor and the worker. In this situation, the only pertinent question that may arise will no longer deal with whether there exists an employment bond but whether the employee may be considered regular or casual as to deserve the application of Art. 280 of the Labor Code. It was error therefore for the NLRC to apply Art. 280 of the Labor Code in determining the existence of an employment relationship of the parties herein, especially in light of our explicit holding in Singer Sewing Machine Company v. Drilon that The Court agrees with the petitioner's argument that 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 the right of an employee to certain benefits, 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 In determining the existence of an employer-employee relationship it is necessary to determine whether the following factors are present: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power to dismiss; and, (d) the power to control the employee's conduct. Notably, these are all found in the relationship between BJS and Canonicato and not between Canonicato and petitioner COCA COLA.

BJS satisfied all the requirements of a job-contractor under the law, namely, (a) the ability to carry on an independent business and undertake the contract work on its own account under its own responsibility according to its manner and method, free from the control and direction of its principal or client in all matters connected with the performance of the work except as to the results thereof; and, (b) the substantial capital or investment in the form of tools, equipment, machinery, work premises, and other materials which are necessary in the conduct of its business. All told, there being no employer-employee relationship between Canonicato and COCA COLA, the latter cannot be validly ordered to reinstate the former and pay him back wages.

ROMMEL C. OREGAS, DARWIN R. HILARIO AND SHERWIN A. ARBOLEDA vs. NLRC, DUSIT HOTEL NIKKO, PHILIPPINE HOTELIER'S INCORPORATED and FVA MANPOWER TRAINING CENTER & SERVICES FACTS

Petitioners Rommel C. Oregas, Darwin R. Hilario and Sherwin A. Arboleda worked as valet parking and door attendants in respondent Dusit Hotel Nikko. They have employment contracts with respondent FVA. In 2000, FVA recalled petitioners from Dusit. Petitioners then instituted a complaint for illegal dismissal, regularization, premium pay for holiday and rest day, holiday pay, service incentive leave pay, 13th month pay and attorney's fees against respondents Dusit, Philippine Hotelier's, Inc. and FVA. Petitioners alleged that despite the length of their service, Dusit never granted them the status and benefits of a regular employee. Thus, when the rank and file employees' union of Dusit learned that petitioners were entitled to regularization, Dusit immediately terminated their services due to "end of contract." On 3/6/2001, Labor Arbiter Potenciano S. Canizares, Jr. dismissed the complaint for lack of merit. Petitioners failed to prove that they were employees of Dusit. Petitioners admitted that they transferred to FVA after their previous placement agencies terminated their contracts of services with Dusit. Labor Arbiter Canizares also noted that petitioners signed application and employment contracts with FVA and were under its payrolls and accounts. Thus, FVA was petitioners' employer. Finally, he ruled that petitioners were merely recalled and not dismissed from the service by FVA. On appeal, the NLRC issued a Resolution dated August 25, 2003, modifying the decision of Labor Arbiter. The NLRC observed that the four-fold test in determining the existence of an employer-employee relationship is present in petitioners' relationship with FVA. On the matter of selection and engagement, records showed that petitioners applied with and were employed by FVA. Although they were required to test drive by Dusit, it was done only to verify if they had the necessary skills and competence required by the job. On the matter of control, it was established that petitioners maintained their daily time records with FVA. On the matter of dismissal, FVA exercised its power to dismiss when it recalled petitioners from Dusit.

Finally, on the matter of payment of wages, it is undisputed that petitioners were under the payrolls and accounts of FVA. Nevertheless, the NLRC noted that after petitioners' recall, they were no longer given new assignments. Since more than six months have already lapsed, petitioners were deemed to have been constructively dismissed and therefore entitled to separation pay of one-half month pay for every year of service. Petitioners elevated the case to the CA which affirmed the NLRC resolution. Reconsideration having been denied, petitioners raises the instant petition. ISSUES WON Respondent FVA is an independent contractor WON there an EMPLOYER-EMPLOYEE RELATIONSHIP exists between Petitioners and Respondent Hotel HELD 1. YES. the Labor Arbiter, NLRC and the CA were unanimous in finding that FVA was a legitimate job contractor. Among the circumstances that established the status of FVA as a legitimate job contractor are: (1) FVA is registered with the DOLE and the DTI; (2) FVA has a Contract for Services with Dusit for the supply of valet parking and door attendant services; (3) FVA has an independent business and provides valet parking and door attendant services to other clients like Mandarin Oriental, Manila Hotel, Peninsula Manila Hotel, Westin Philippine Plaza, Golden B Hotel, Pan Pacific Manila Hotel, and Strikezone Bowling Lane; and (4) FVA's total assets from 1997 to 1999 amount to P1,502,597.70 to P9,021,335.13. In addition, it provides the uniforms and lockers of its employees. 2. NO. By applying the four-fold test used in determining an employer-employee relationship, the status of FVA as the employer of petitioners is indubitably established.

a. Petitioners applied and signed employment contracts with FVA. They were merely assigned to Dusit conformably with the Contract for Services between FVA and Dusit. b. FVA assigned a supervisor in Dusit to monitor petitioners' attendance, leaves of absence, performance and conduct. Petitioners also maintained their daily time records with FVA. c. Petitioners were duly notified by FVA that they would be assigned to Dusit for five months only. Thereafter, they may either be recalled for transfer to other clients or be reassigned to Dusit depending on the result of FVA's evaluation of their performance. In this case, FVA opted to recall petitioners from Dusit. d. While FVA billed Dusit for the services rendered, it was actually FVA which paid petitioners' salaries. Worthy of note, FVA registered petitioners with the Bureau of Internal Revenue and the Social Security System as its employees. In summary, this Court accepts as established the fact that FVA is a legitimate job contractor and, in contemplation of law, the employer of petitioners. DISPOSITION: The instant petition is DENIED for lack of merit. CAs decision is AFFIRMED.

Mercury Drug Corp. vs Libunao 463 SCRA 331 FACTS: According to the plaintiff. Libunao and his friend bought some items at Mercury. He paid for his purchase and placed his receipt in his pocket. As they exited, they were accosted by Sido, the security guard. Sido was armed with a service gun, and was 20 pounds heavier than Libunao. He held Libunaos upper right arm and demanded to see the receipt. Libunao searched but it took time because Sido was holding his right arm. Sido then said Wala yatang resibo yan! Libunao finally found it, and asked Sido, Satisfied ka na? Sido reacted by lunging at him and saying Putang ina mo! Sido was able to hit lubnao on the face, nose, chin, and mouth. He then pointed his revolver at Libunao and said Putang ina mo, pag hindi kayo lumabas ditto papuputukin ko to sa iyo! Libunao eventually filed a criminal complaint against Sido. He was traumatized by the event, he had to consult a psychiatrist, and was found to be suffering from post-traumatic depression syndrome. According to the defendants Sido, the security guard at Mercury, noticed Libunao exiting the store with a plastic bag, and that no receipt was stapled to it. He asked for the receipt, but was given the plastic bag. He found no receipt, and when Libunao finally found the receipt and shoved it in his face, he just explained he was doing hisduty. Libunao said Baka hindi mo ako kilala, security guard ka lang! Ano ba talaga ang problema mo? A violent argument ensued. - The court rendered judgment in favor of the plaintiff, that the defendants Sido, Mercurly Drug Corporation, and Store Manager Vilma Santos, pay the plaintiff moral and exemplary damages to discourage disrespect of the public by such acts as were committed by defendants. ISSUE: Whether or not the remedy of the petitioner is proper that Mercury Drug be liable for Sidos actions HELD: No. The petitioner was not Sidos employer; hence, Article 2180 of the Civil Code should not be applied against petitioner. The respondent was burdened to prove that the petitioner was the employer of Sido but failed to discharge this burden. The respondents counsel admitted Sido was not employed by the petitioner. Store manager Santos testified that Sido was not an employee of the petitioner, but of BSSC, Black Shield Agency. The petitioner adduced in evidence its contract with the BSSC, which contained the following provisions: 1. THE AGENCY shall provide the CLIENT with the necessary number of armed, uniformed and qualified security guards properly licensed by the Chief of Philippine Constabulary; who shall provide security services to the CLIENT at its establishment at These security guards during the life of the Agreement shall be assigned in accordance with arrangements to be made between the CLIENT and the AGENCY. ... 6. The AGENCY assumes full responsibility for any claim or cause of action which may accrue in favor of any security guard by reason of employment with the AGENCY, it being understood that security guards are employees of the AGENCY and not of the CLIENT. Therefore, the respondent had no cause of action against the petitioner for damages for Sidos illegal and harmful acts. The respondent should have sued Sido and the BSSC for damages, conformable to Article 2180. In Soliman, Jr. v. Tuazon the court held that where the security agency recruits, hires and assigns the works of its watchmen orsecurity guards to a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said client

The petitioner had assigned Sido to help the management open and close the door of the drug store; inspect the bags of customers as they enter the store; and, check the receipts issued by the cashier to said customers for their purchases. Such circumstances do not automatically make the security guard the employee of the petitioner, and, as such, liable for the guard's tortious acts. The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render the client responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions.

PAL entered into a service agreement with STELLAR, a corporation engaged in the business of job contracting janitorial services. Pursuant to their service agreement, STELLAR hired workers to perform janitorial and maintenance services for PAL. The workers were under the supervision of STELLARs supervisors/foremen and timekeepers and it also furnished with janitorial supplies, such as vacuum cleaner and polisher. In1990, the service agreement between PAL and STELLAR expired. PAL then called for the bidding of its janitorial requirements. STELLAR exerted efforts to maintain its janitorial contract with PAL which allowed complainants to work at the PALs premises. In a letter, PAL formally informed STELLAR that the service agreement between them would no longer be renewed. Respondents filed complaints against PAL and STELLAR for Illegal Dismissal. The LA ordered PAL to pay the complainants separation pay. NLRC declared that separation pay is sole liability of PAL. ISSUE/s: 1) Whether petitioner was a labor-only contractor; and (2) Whether the individual private respondents became regular employees of PAL because they were allowed to continue working for petitioner after the expiration of the service contract. HELD:

PHILIPPINE AIRLINES, INC., v. NLRC FACTS:

First Issue: Janitorial Service Agreement Is Not Labor-Only Contracting The Court finds no basis for holding that PAL engaged in labor-only contracting. The true nature of the individual private respondents employment is evident from the service agreement between petitioner and STELLAR. Aside from these stipulations in the service agreement, other pieces of evidence support the conclusion that STELLAR, not PAL, was the employer of the individual private respondents: 1. A contract of employment existed between STELLAR and the individual private respondents. 2. It was also STELLAR which dismissed them, as evidenced by Complainant termination letter, which was signed by the VP for operations and comptroller of STELLAR. 3. Likewise, they worked under STELLARs own supervisors. STELLAR even had its own collective bargaining agreement with its employees, including the individual private respondents. 4. Moreover, PAL had no power of control and dismissal over them. In fact, STELLAR claims that it has sufficient capital in the form of tools and equipment, like vacuum cleaners and polishers, and substantial capitalization as proven by its financial statements. Further, STELLAR has clients other than petitioner. The janitorial service agreement between petitioner and STELLAR is definitely a case of permissible job contracting. Extension of Service Contract is Not a Source of Employer-Employee Relation Petitioner did not become the successor-employer of the individual private respondents when the service contract expired. There was no

transfer of the business of STELLAR in this particular case. The separate undertakings of petitioner and STELLAR continued even after the expiration of the service contract and the dismissal of individual private respondents. Second Issue: STELLAR Is Liable for Separation Pay. No EmployerEmployee Relation Between Complainants and PAL. In the case at bar, the service agreement was not a project because its duration was not determined or determinable. While the service agreement may have had a specific term, STELLAR disregarded it, repeatedly renewed the service agreement, and continued hiring the individual private respondents for thirteen consecutive years. Had STELLAR won the bidding, the alleged project would have never ended. Again, we must emphasize that the main business of STELLAR is the supply manpower to perform janitorial services for its clients, and the individual private respondents were janitors engaged to perform activities that were necessary and desirable to STELLARs enterprise. In this case, we hold that the individual private respondents were STELLARs regular employees, and there was no valid cause for their dismissal.

JAGUAR V. SALES 552 SCRA 295 (2008)

FACTS: Petitioner Jaguar Security and Investigation Agency is a private corporation engaged in the business of providing security services to its clients, one of whom is Delta Milling Industries Inc. 1. Respondents Sales et al were hired as security guards by Jaguar. They were assigned at the premises of Delta, Libis. Sales et al alleged that they were terminated by Jaguar and that their dismissals were arbitrary and illegal. All guardemployees claim monetary benefits 2. LA held in favor of Sales et al and ordered Jaguar to pay Sales et al, wage differentials, overtime pay differentials, rest day pay, holiday pay, premium holiday pay, 13th month pay etc. 3. Jaguar averred that Delta was solidarily liable with petitioner. NLRC dismissed the appeal since Jaguar was the direct employer of the security guards, it is the one principally liable to the employees ISSUE: WON DELTA IS SOLIDARILY LIABLE TO PAY WITH JAGUAR THE MONETARY BENEFITS CLAIMED BY RESPONDENTS HELD: There is no question as regards the respective liabilities of petitioner and Delta Milling. Under Articles 106, 107 and 109 Labor Code, the joint and several liability of the contractor and the principal is mandated to assure compliance of the provisions therein including the statutory minimum wage. The contractor, petitioner in this case, is made liable by virtue of his status as direct employer. On the other hand, Delta Milling, as principal, is made the indirect employer of the contractor's employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers' performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution.

In the event that petitioner pays his obligation to the guard employees pursuant to the Decision of the Labor Arbiter, as affirmed by the NLRC and CA, petitioner has the right of reimbursement from Delta Milling under Article 1217 Civil Code, which provides: Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept. He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. The action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists. In the present case, there exists no employer-employee relationship between petitioner and Delta Milling. The liability of Delta Milling to reimburse petitioner will only arise if and when petitioner actually pays its employees the adjudged liabilities.

On 9/20/1989, the 49 employees (complainants) lodged a Complaint for illegal deduction, underpayment, non-payment of overtime pay, legal holiday pay, premium pay for holiday and rest day and night differentials against the private respondents before the Labor Arbiter. In view of the enactment of Republic Act No. 6727, the contract between the petitioner and the private respondents was amended for the 10th time on 11/3/1989 to increase the minimum daily wage per employee from P63.55 to P89.00 or P2,670.00 per month. On 1/2/1990, MIESCOR sent a letter to OPLGS informing them that MIESCO was terminating the contract, effective at the close of business hours on 1/31/1990. Accordingly, the complainants were pulled out from their work. Thus, on 2/27/1990, complainants amended their Complaint to include the charge of illegal dismissal and to implead the petitioner as a party respondent therein. Thereafter, a Decision was rendered by the Labor Arbiter on 3/26/1991, dismissing the Complaint against the petitioner for lack of merit, but ordering the private respondents to pay the complainants the total amount of P487,287.07. All other claims of the complainants against the private respondents were dismissed. Private respondents appealed the aforesaid Decision to the NLRC. Private respondents alleged, among other things, that: the petitioner, being the principal, was solidarily liable with the private respondents for failure to make an adjustment on the wages of the complainants. On 5/28/1993, NLRC affirmed the Labor Arbiters Decision with the modification that the petitioner was solidarily liable with the private respondents. MIESCOR and OPLGS separately moved for reconsideration. The NLRC issued an Order noting that based on the records of the case, the judgment award in the amount of P487,287.07 was secured by a surety bond posted by the private respondents. Resultantly, the NLRC denied OPLGS Motion for Reconsideration. The NLRC likewise directed the Labor Arbiter to enforce the monetary award against the

Meralco Industrial Engineering Services Corporation (MIESCOR) vs NLRC and OPLGS FACTS On 11/7/1984, MIESCOR and OPLGS executed a contract wherein OPLGS would supply the MIESCOR janitorial services at its Rockwell Thermal Plant in Makati City. Pursuant thereto, 49 employees were assigned as janitors to petitioners Rockwell Thermal Plant.

OPLGS surety bond and to determine who should finally shoulder the liability therefor. On 1/30/1996, the NLRC issued an Order which declared the solidarily liability of OPLGS and MIESCOR on the underpayment and on the non-payment of the overtime pay and the sole liability of OPLGS on the payment of separation pay. Thus, an alias writ of execution was issued pursuant thereto. On appeal to CA, the Court rendered the assailed Decision which modified the Decision of the NLRC and holding the petitioner solidarily liable with the private respondents for the satisfaction of the laborers separation pay. Hence, this petition.

Article 107 of the Labor Code, as amended, defines an indirect employer as any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. To ensure that the contractors employees are paid their appropriate wages, Article 106 of the Labor Code, as amended, provides: ART. 106. CONTRACTOR OR SUBCONTRACTOR. x x x. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. Taken together, an indirect employer can only be held solidarily liable with the independent contractor or subcontractor in the event that the latter fails to pay the wages of its employees. While it is true that the petitioner was the indirect employer of the complainants, it cannot be held liable in the same way as the employer in every respect. The petitioner may be considered an indirect employer only for purposes of unpaid wages. There is no question that private respondents are operating as an independent contractor and that the complainants were their employees. There was no employer-employee relationship that existed between the petitioner and the complainants. Thus, the former could not have dismissed the latter from employment. Only private respondents, as the employer, can terminate their services and should be held liable. The only instance when the principal can also be held liable with the independent contractor or subcontractor for the backwages and separation pay of the latters employees is when there is proof that the principal conspired with the independent contractor or subcontractor in the illegal dismissal of the employees. It is the established fact of conspiracy that will tie the principal or indirect employer to the illegal dismissal of the contractor

ISSUE Whether or not MIESCOR should be held solidarily liable with OPLGS for the satisfaction of the laborers separation pay RULING NO. The Court of Appeals erred when it ruled that the MIESCOR was jointly and solidarily liable with the OPLGS as regards the payment of separation pay. The appellate court used as basis Article 109 of the Labor Code, as amended, in holding the petitioner solidarily liable with the private respondents for the payment of separation pay: ART. 109. Solidary Liability. - The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. However, the afore-quoted provision must be read in conjunction with Articles 106 and 107 of the Labor Code, as amended.

or subcontractors employees. In the present case, there is no allegation and proof presented, that the petitioner conspired with private respondents in the illegal dismissal of the latters employees. Hence, it cannot be held liable for the same. Neither can the liability for the separation pay of the complainants be extended to the petitioner based on contract. Contract executed between the MIESCOR and OPLGS contains no provision for separation pay upon termination of contract. A contract is the law between the parties and the stipulations therein shall be binding as between the parties. Hence, if the contract does not provide for such a liability, the Court cannot just read the same into the contract without possibly violating the intention of the parties. Although MIESCOR is not liable for separation pay, the Court conforms to the consistent findings that the petitioner is solidarily liable with OPLGS for the judgment awards for underpayment of wages and non-payment of overtime pay. In this case, however, OPLGS had already posted a surety bond sufficient to cover all the judgment awards due the complainants, including those for underpayment of wages and non-payment of overtime pay. The joint and several liability of the principal with the contractor and subcontractor were enacted to ensure compliance with the provisions of the Labor Code. This liability facilitates, if not guarantees, payment of the workers compensation. With OPLGS surety bond, the interests of the complainants are already adequately protected. Consequently, it will be futile to continuously hold the petitioner jointly and solidarily liable with the private respondents for the judgment awards for underpayment of wages and non-payment of overtime pay. But while this Court had previously ruled that the indirect employer can recover whatever amount it had paid to the employees in accordance with the terms of the service contract between itself and the contractor, the said ruling cannot be applied in reverse to this case as to allow the OPLGS (the independent contractor), who paid

for the judgment awards in full, to recover from the MIESCOR (the indirect employer). MIESCOR had already handed over to OPLGS the wages and other benefits of the complainants. Records reveal that it had complied with complainants salary increases in accordance with the minimum wage set by Republic Act No. 6727 by faithfully adjusting the contract price for the janitorial services. Having already received from petitioner the correct amount of wages and benefits, but having failed to turn them over to the complainants, OPLGS should now solely bear the liability for the underpayment of wages and nonpayment of the overtime pay. DISPOSITION: The petition is GRANTED. The Decision and Resolution of the Court of Appeals are REVERSED AND SET ASIDE.

LDCU filed an appeal before the NLRC. The NLRC found that the security guards are entitled to wage differentials and premium for holiday and rest day work. Although the NLRC held Eparwa and LDCU solidarily liable for the wage differentials and premium for holiday and rest day work, the NLRC did not require Eparwa to reimburse LDCU for its payments to the security guards. Eparwa and LDCU again filed separate motions for partial reconsideration, LDCU questioned the NLRCs deletion of LDCUs entitlement to reimbursement by Eparwa. Eparwa, on the other hand, prayed that LDCU be made to reimburse Eparwa for whatever amount it may pay to the security guards. The NLRC declared that although Eparwa and LDCU are solidarily liable to the security guards for the monetary award, LDCU alone is ultimately liable. LDCU filed a petition for certiorari before the CA, LDCU stated that this would free Eparwa from any liability for payment of the security guards money claims. CA also allowed LDCU to claim reimbursement from Eparwa. ISSUE: Is LDCU alone ultimately liable to the security guards for the wage differentials and premium for holiday and rest day pay? HELD: LDCUs ultimate liability comes into play because of the expiration of the Contract for Security Services. There is no privity of contract between the security guards and LDCU, but LDCUs liability to the security guards remains because of Articles 106, 107 and 109 of the Labor Code. Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwas liability to the security guards remains because of their employer-employee relationship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement from LDCU for any payment it may make to the security guards. However, LDCU cannot claim any reimbursement from Eparwa for any payment it may make to the security guards.

Eparwa Security vs Liceo de Cagayan University (LDCU) 508 SCRA 370 [2007] Facts: On 1 December 1997, Eparwa and LDCU, through their representatives, entered into a Contract for Security Services. On 21 December 1998, 11 security guards whom Eparwa assigned to LDCU filed a complaint before the NLRC, against both Eparwa and LDCU for underpayment of salary, legal holiday pay, 13th month pay, rest day, service incentive leave, night shift differential, overtime pay, and payment for attorneys fees. The Labor Arbiter found that the security guards are entitled to wage differentials and premium for holiday and rest day work. The Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor Code.

For the security guards, the actual source of the payment of their wage differentials and premium for holiday and rest day work does not matter as long as they are paid. This is the import of Eparwa and LDCUs solidary liability. Creditors, such as the security guards, may collect from anyone of the solidary debtors. Solidary liability does not mean that, as between themselves, two solidary debtors are liable for only half of the payment. Articles 106, 107 and 109 of the Labor Code read: Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of the employer. In such cases, the person or intermediary shall be

considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Article 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution [See Article II Sec. 18 and Article XIII Sec. 3].

and service incentive leave pay. His other co-workers numbering 260 filed a similar complaint against petitioner MGTI only. MGTI denied the existence of employer-employee relationship with complainants, claiming that they are workers of independent contractors whose services were engaged temporarily and seasonally when the demands for its products are high and could not be met by its regular workforce; the independent contractors recruited and hired the complainants, prepared the payroll and paid their wages, supervised and directed their work, and had authority to dismiss them. LA rendered a Decision holding that 183 complainants are regular employees of MGTI since they were made to perform functions which are necessary to MGTI's rattan furniture manufacturing business and such independent contractors were not properly identified. NLRC affirmed the LA's decision. It held that labor-only contracting and not job-contracting was present since the alleged contractors did not have substantial capital in the form of equipment, machineries and work premises. The CA affirmed the findings of the NLRC. ISSUE: WON the CA committed grave abuse and irreversible error in considering the respondents as employees of the petitioner. MANDAUE etc. v. ANDALES FACTS: Petitioners Mandaue Galleon Trade, Inc. (MGTI) and Gamallosons Traders, Inc. (GTI) are business entities engaged in rattan furniture manufacturing for export. Respondent Andales filed a complaint with LA against both petitioners for illegal dismissal and non-payment of 13th month pay HELD: The Court sees no reason to disturb the findings of fact of the NLRC and the CA. Based on Article 106 of the Labor Code and Sections 5 and 7 of the Implementing Rules, "labor-only" contracting exists when the following criteria are present:

(1) where the contractor or subcontractor supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among other things; and the workers recruited and placed by the contractor or subcontractor are performing activities which are directly related to the principal business of such employer; or (2) where the contractor does not exercise the right to control the performance of the work of the contractual employee. In the present case, petitioners' claim that their contractors are independent contractors, and, therefore, this case is one of permissible job contracting, is without basis. First, respondents' work as weavers, grinders, sanders and finishers is directly related to MGTI's principal business of rattan furniture manufacturing. Where the employees are tasked to undertake activities usually desirable or necessary in the usual business of the employer, the contractor is considered as a "labor-only" contractor and such employees are considered as regular employees of the employer. Second, MGTI was unable to present any proof that its contractors had substantial capital. There was no evidence pertaining to the contractors' capitalization; nor to their investment in tools, equipment or implements actually used in the performance or completion of the job, work, or service that they were contracted to render. The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in jobcontracting. Thus, the contractors are "labor-only" contractors since they do not have substantial capital or investment which relates to the service performed and respondents performed activities which were directly

related to MGTI's main business. MGTI, the principal employer, is solidarily liable with the labor-only contractors, for the rightful claims of the employees. Under this set-up, "labor-only" contractors are deemed agents of the principal, MGTI, and the law makes the principal responsible to the employees of the "labor-only" contractor as if the principal itself directly hired or employed the employees. In prohibiting "labor-only" contracting and creating an employeremployee relationship between the principal and the supposed contractor's employees, the law intends to prevent employers from circumventing labor laws intended to protect employees.

ABOITIZ HAULERS INC V. DIMAPATOI 502 SCRA 271 (2006) REQUISITES AND PROHIBITION OF LABOR CONTRACTOR ONLY

FACTS: Petitioner Aboitiz Haulers Inc is a domestic corporation principally engaged in nationwide and overseas forwarding and distribution of cargo. Private respondents Dimapatoi, Agawin et al

worked as checkers in the Mega Warehouse, owned by Aboitiz Haulers. 1. Petitioner claimed respondents are not its employees but the employees of Grigio Security Agency, a manpower agency that supplies security guards, checkers, and stuffers. It allegedly entered into a contract of service with Grigio March 1994 where Grigio was to supply the petitioner with security guards, checkers and stuffers. Among the checkers assigned to the petitioners warehouse were the private respondents 2. Aboitiz averred that Grigio retained control over the respondents by providing their own supervisors to oversee Grigios personnel, as well as time cards to monitor the attendance of its personnel 3. Petitioner also alleged that on May 9, 1996, the respondents left the warehouse and did not report to work thereafter. As a result of the respondents sudden abandonment of work, there was no orderly turnover of papers and other company property in connection with the termination of the contract for services 4. Whereas the respondents claimed that they have been employed by Aboitiz Haulers even before March 1994 5. Dimapatoi et al maintain that during their employment with petitioner, they were not paid their regular holiday pay, nightshift differential, 5 day service incentive leave and OT premium. They also averred that illegal deductions were being made on their wages, particularly for a mutual assistance fund, a cash bond and claims for damaged and misrouted cargo incurred by petitioner 6. Respondents alleged that on May 15, 1996, Aboitiz Haulers dismissed them on the pretext that the written contract of service between Grigio and petitioner had been terminated 7. Respondents filed a complaint for non-payment of wages and other benefits and illegal deductions. LA held in favor of Aboitiz Haulers since respondents were unable to offer any evidence to show that Grigio had no substantial capital (Grigio

was held to be a legitimate independent job contractor). NLRC affirmed the same 8. CA reversed the decision citing that Grigio was not an independent job contractor, despite its claim that it has sufficient capital. Grigio does not carry on an independent business, since the respondents work as warehouse checkers is necessary and desirable to the petitioners business of forwarding and distribution of cargo. ISSUE: WON GRIGIO IS A LABOR ONLY CONTRACTOR HELD: No, Grigio is not a labor only contractor. In determining whether or not a "labor-only" contracting exists, Art. 106 of the Labor Code and Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, provides the following criteria: (1) where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among other things; (2) the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer; and (3) the contractor does not exercise the right to control the performance of the work of the contractual employee. In order that one is considered by law as a "labor-only" contractor, all three aforementioned criteria need not be present. If the contractor enters into an arrangement characterized by any one of the criteria provided, this would be a clear case of "labor-only contracting." The clear phrasing of Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, support this interpretation. The allegation of the petitioner that Grigio is an independent job contractor, and, therefore, this case is one of permissible job

contracting, is without basis. In this case, the respondents work, as warehouse checkers, is directly related to the principal business of the petitioner. Petitioner also exercises the right to control and determines not only the end to be achieved, but also the manner and means to be used in reaching that end. Lastly, petitioner failed to sufficiently prove that Grigio had "substantial capital or investment." The respondents, as checkers, were employed to check and inspect these cargoes,28 a task which is clearly necessary for the petitioners business of forwarding and distributing of cargoes. The petitioner did not dispute the fact that the respondents were hired as checkers as early as 1992. The fact that they were employed before the Written Contract of Services took effect on 24 February 1994, and continued with their jobs until 1996, after the said contract had already expired on 24 February 1995, indicates that the respondents work was indeed necessary for the petitioners business. In a similar case, Guarin v. National Labor Relations Commission, the workers contracts were repeatedly renewed to perform services necessary for the employers business Thus, Grigio is obviously a "labor-only contractor since it did not have substantial capital or investment which relates to the service performed; the respondents performed activities which were directly related to the main business of the petitioner; and Grigio did not exercise control over the performance of the work of the respondents. Consequently, the petitioner is considered as the employer of the respondents.

Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents as part of the filming crew a salary of P375.00 per week. About 4 months later, he was designated Asst. Electrician and later, he was then promoted to the rank of Electrician. On the other hand, Petitioner Paulino Enero claims that private respondents employed him as a member of the shooting crew. The tasks of Petitioners include the loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films warehouse, assisting in the fixing of the lighting system, and performing other tasks that the cameraman and/or director may assign. In May 1992, Petitioners sought the assistance of their supervisor, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. They were then informed that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. Petitioners refused to sign, private respondents forced Enero to go on leave then refused to take him back when he reported for work. Meanwhile, Maraguinot was dropped from the company payroll but was returned and again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services. Petitioners thus sued for illegal dismissal before the Labor Arbiter. Private Respondents assert that they contract persons called producers -- also referred to as associate producers -- to produce or make movies for private respondents; and contend that petitioners are project employees of the associate producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents; that it was the associate

ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO vs. NLRC, VIC DEL ROSARIO and VIVA FILMS FACTS

producer of a film who hired Maraguinot and he was released upon payment of his last salary, as his services were no longer needed; that Enero was hired for a movie, went on vacation and by the time he reported back to work the move had been completed. The Labor Arbiter ruled that Complainants are the employees of the respondents. The producer cannot be considered as an independent contractor but should be considered only as a labor-only contractor and acts as a mere agent of the real employer. Also, it is an admitted fact that the complainants received their salaries from the respondents for activities which are necessary and essential to the business of the respondents, that of moviemaking. Complainant Maraguinot worked as an electrician, while complainant Enero worked as a crew member. Hence, the complainants were illegally dismissed. Private Respondents appealed to the NLRC and the latter reversed the Labor Arbiters decision, concluding that upon circumstances, taken together, indicated that complainants were project employees. Mainly, Complainants were hired for specific movie projects and their employment was co-terminus with each movie project the completion/termination of which are pre-determined, such fact being made known to complainants at the time of their engagement. Petitioners alleged that, in supporting their claim that they were regular (and not project) employees of private respondents, petitioners cited their performance of activities that were necessary or desirable in the usual trade or business of private respondents and added that their work was continuous. Petitioners thus considered themselves part of a work pool from which private respondents drew workers for assignment to different projects. Petitioners lamented that there was no basis for the NLRCs conclusion that they were project employees

Private respondents reiterate their version of the facts and stress that their evidence supports the view that petitioners are project employees; point to petitioners irregular work load and work schedule; emphasize the NLRCs finding that petitioners never controverted the allegation that they were not prohibited from working with other movie companies; and ask that the facts be viewed in the context of the peculiar characteristics of the movie industry. The OSG is convinced that this petition is improper since petitioners raise questions of fact; and submits that petit ioners reliance on Article 280 of the Labor Code to support their contention that they should be deemed regular employees is misplaced, as said section merely distinguishes between two types of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits. The OSG likewise rejects petitioners contention that since they were hired not for one project, but for a series of projects, they should be deemed regular employees. In closing, the OSG disagrees with petitioners claim that the NLRCs classification of the movie producers as independent contractors had no basis in fact and in law, since, on the contrary, the NLRC took pains in explaining its basis for its decision. ISSUES 1. WON this is a proper action 2. WON an employer-employee relationship existed between the petitioners and private respondents or any one of them HELD 1. YES. A special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the NLRC acted in total disregard of evidence material to or decisive of the controversy. In the instant case, petitioners allege that the NLRCs conclusions have no basis in fact and in law, hence the petition may not be dismissed on procedural or jurisdictional grounds.

2. YES. The relationship between VIVA and its producers or associate producers seems to be that of agency, as the latter make movies on behalf of VIVA, whose business is to make movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer. Job Contracting o It is settled that the contracting out of labor is allowed only in case of job contracting and if contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business o Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion pictures. As such, and to be a job contractor under the preceding description, associate producers must have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures. However, the associate producers here have none of these. Private respondents evidence reveals that the movie-making equipment are supplied to the producers and owned by VIVA. If private respondents insist that their associate producers are labor contractors, then these producers can only be labor-only contractors. Labor-only contracting o There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly

related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. o As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an available group of free-lance workers which includes the complainants Maraguinot and Enero. The employer-employee relationship between petitioners and VIVA can be further established by the control test. While four elements are usually considered in determining the existence of an employment relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct, the most important element is the employers control of the employees conduct, not only as to the result of the work to be done but also as to the means and methods to accomplish the same. Control Test o VIVAs control is evident in its mandate that the end result must be a quality film acceptable to the company. The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must

be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the eyes and ears of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film. It may not be validly argued then that petitioners are actually subject to the movie directors control, and not VIVAs direction. The director merely instructs petitioners on how to better comply with VIVAs requirements to ensure that a quality film is completed within schedule and without exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rank-and-file employees with control ultimately resting on the employer. Appointment Slips issued to all crew members state: During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management. The words superiors and Top Management can only refer to the superiors and Top Management of VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the appointment slips only emphasize VIVAs control over petitioners. Aside from control, the element of selection and engagement is present. A sample appointment slip was offered by private respondents to prove that members of the shooting crew except the driver are project employees of the Independent Producers. Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired the crew members. It is VIVAs corporate name which appears on the heading of the appointment slip. What likewise tells against VIVA is

that it paid petitioners salaries as evidenced by vouchers, containing VIVAs letterhead, for that purpose. DISPOSITION: Petition is GRANTED.

Mandaue etc. vs Andales 548 SCRA 17 [2008] Facts: Petitioners Mandaue Galleon Trade, Inc. (MGTI) and Gamallosons Traders, Inc. (GTI) are business entities engaged in rattan furniture manufacturing for export, with principal place of business at Cabangcalan, Mandaue City. Respondent Vicente Andales (Andales) filed a complaint with (LA) against both petitioners for illegal dismissal and non-payment of 13th month pay and service incentive leave pay. His other co-workers numbering 260 filed a similar complaint against petitioner MGTI only. The complainants alleged that MGTI hired them on various dates as weavers, grinders, sanders and finishers; these workers were told that they could no longer work because theres no work for them; thus they were dismissed without just notice and just cause. MGTI denied the existence of employer-employee relationship with complainants, claiming that they are workers of independent contractors whose services were engaged temporarily and seasonally when the demands for its products are high and could not be met by its regular workforce.

The LA rendered a Decision holding that 183 complainants are regular piece-rate employees of MGTI since they were made to perform functions which are necessary to MGTI's rattan furniture manufacturing business. The NLRC affirmed the LA's finding of employer-employee relationship. It held that labor-only contracting and not jobcontracting was present since the alleged contractors did not have substantial capital in the form of equipment, machineries and work premises. The CA affirmed the findings of the NLRC. It held that MGTI is liable to the respondents because the alleged contractors are not independent contractors but labor-only contractors; that respondents were constructively dismissed when they were unilaterally transferred to another contractor; and that the allegation of retrenchment was not proven. ISSUE: What is the effect of the finding that the contractor was a labor-only contractor? HELD: AUTOMATIC DECLARATION OF EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP A finding that a contractor is a "labor-only" contractor 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. The effect of this is the immediate application of Labor Standards, Security of Tenure, etc. between the employees and the principal. ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the

contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

On appeal, the NLRC ruled that MAERC was a labor-only contractor and that complainants were employees of SMC. The NLRC also held that whether MAERC was a job contractor or a labor-only contractor, SMC was still solidarily liable with MAERC for the latter's unpaid obligations. The CA affirmed the decision of the NLRC.

SAN MIGUEL CORP. V. MAERC Integrated Services, Inc. FACTS: 291workers filed their complaints against San Miguel Corporation (SMC) and Maerc Integrated Services, Inc., for illegal dismissal, underpayment of wages etc. The complainants alleged that they were hired by SMC through its agent MAERC to work inside the SMC premises and in the Philphos Warehouse owned by MAERC. They washed and segregated various kinds of empty bottles used by SMC to sell and distribute its beer beverages to the consuming public. They were paid on a per piece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis. SMC cited its plans to phase out its segregation activities due to the installation of labor and cost saving devices. When the service contract was terminated, respondents filed a complaint for illegal dismissal. . The LA rendered a decision holding that MAERC was an independent contractor.

ISSUE : WON the complainants are employees of petitioner SMC or of respondent MAERC

HELD: We find no basis to overturn the Court of Appeals and the NLRC. Well-established is the principle that findings of fact of quasi-judicial bodies, like the NLRC, are accorded with respect, even finality, if supported by substantial evidence. Particularly when passed upon and upheld by the Court of Appeals, they are binding and conclusive upon the Supreme Court and will not normally be disturbed. Evidence discloses that petitioner played a large and indispensable part in the hiring of MAERC's workers. It also appears that majority of the complainants had already been working for SMC long before the signing of the service contract between SMC and MAERC. The NLRC found that when MAERC was organized into a corporation, SMC gave instructions through its supervisors to make it appear that complainants were hired by MAERC. This was testified to by two (2) of the workers who were segregator and forklift operator who had been working with SMC under a purported contractor since March 1979 and March 1981, respectively. Both witnesses also testified that together with other complainants they continued working for SMC without break from Jopard Services to MAERC.

As for the payment of workers' wages, the memoranda of the labor rates reveals that SMC assumed the responsibility of paying for the mandated overtime, holiday and rest day pays of the MAERC workers. SMC also paid the employer's share of the SSS and Medicare contributions, the 13th month pay, incentive leave pay and maternity benefits. In the lump sum received, MAERC earned a marginal amount representing the contractors share. These lend credence that MAERC merely acted as an agent of SMC. In deciding the question of control, viewed alongside the findings of the Labor Arbiter the responsibility of watching over the MAERC workers by MAERC personnel became superfluous with the presence of additional checkers from SMC. Another are letters by SMC to the MAERC management, the letters named three (3) workers who were responsible for the rejection of several bottles then recommended the penalty to be imposed. Evidently, these workers were reported by the SMC checkers to the SMC inspector. These showed the right of petitioner to recommend disciplinary measures over MAERC employees. Also, the minutes of the meeting held by the SMC officers which discussed to pass the eye examination to be done by SMC EENT company doctor and a review of compensation/incentive system for segregators to improve the segregation activities. But the most telling evidence is a letter by Vice-President of MAERC addressed to SMC President and Chief Executive Officer, asking the latter to reconsider the phasing out of SMCs segregation activities in Mandaue City. In comparison, MAERC, as earlier discussed, displayed the characteristics of a labor-only contractor.

ABOITIZ HAULERS INC V. DIMAPATOI 502 SCRA 271 (2006) EFFECTS OF BINDING FACTS: Petitioner Aboitiz Haulers Inc is a domestic corporation principally engaged in nationwide and overseas forwarding and distribution of cargo. Private respondents Dimapatoi, Agawin et al worked as checkers in the Mega Warehouse, owned by Aboitiz Haulers. 1. Petitioner claimed respondents are not its employees but the employees of Grigio Security Agency, a manpower agency that supplies security guards, checkers, and stuffers. It allegedly entered into a contract of service with Grigio March 1994 where Grigio was to supply the petitioner with security guards, checkers and stuffers. Among the checkers assigned to the petitioners warehouse were the private respondents 2. Aboitiz averred that Grigio retained control over the respondents by providing their own supervisors to oversee Grigios personnel, as well as time cards to monitor the attendance of its personnel 3. Petitioner also alleged that on May 9, 1996, the respondents left the warehouse and did not report to work thereafter. As a result of the respondents sudden abandonment of work, there was no orderly turnover of papers and other company property in connection with the termination of the contract for services 4. Whereas the respondents claimed that they have been employed by Aboitiz Haulers even before March 1994 5. Dimapatoi et al maintain that during their employment with petitioner, they were not paid their regular holiday pay, nightshift differential, 5 day service incentive leave and OT premium. They also averred that illegal deductions were being made on their wages, particularly for a mutual assistance

fund, a cash bond and claims for damaged and misrouted cargo incurred by petitioner 6. Respondents alleged that on May 15, 1996, Aboitiz Haulers dismissed them on the pretext that the written contract of service between Grigio and petitioner had been terminated 7. Respondents filed a complaint for non-payment of wages and other benefits and illegal deductions. LA held in favor of Aboitiz Haulers since respondents were unable to offer any evidence to show that Grigio had no substantial capital (Grigio was held to be a legitimate independent job contractor). NLRC affirmed the same 8. CA reversed the decision citing that Grigio was not an independent job contractor, despite its claim that it has sufficient capital. Grigio does not carry on an independent business, since the respondents work as warehouse checkers is necessary and desirable to the petitioners business of forwarding and distribution of cargo. ISSUE: WHAT IS THE EFFECT OF DETERMINING IF A COMPANY IS A LABOR ONLY CONTRACTOR

HELD: Generally, the findings of fact made by the labor arbiter and the NLRC, as the specialized agencies presumed to have the expertise on matters within their respective fields, are accorded much respect and even finality, when supported by ample evidence. However, when the findings of the labor arbiter and the NLRC are contrary to the evidence on record, this Court shall lay aside such erroneous findings.

Vous aimerez peut-être aussi