PART I: LABOR STANDARDS I. INTRODUCTION CONCEPTS 1.

TO LEGAL

a. Definition of Terms: Labor Legislation- consists of statutes, regulations and jurisprudence governing the relations between capital and labor. 2. Labor Standards Law- sets out the minimum terms, conditions, and benefits of employment, which employers must provide or comply with and to which the employees are entitled to as a matter of right. 3. Labor Relations Law- defines the statute, rights, duties and the institutional mechanisms that govern the individual and collective interactions of employers, employees or their representatives. It intends to stabilize the relations of the employees and their employers, adjust differences between them through the encouragement of collective bargaining and settle labor disputes through conciliation, mediation and arbitration. 4. Welfare and Social Legislationstatutes that govern the effects of employment. It involves long range benefits and covers employment for profit or non-profit. It affects the life of employee. 5. Labor - is the exertion by human beings of physical or mental efforts, or both, towards the production of goods and services. Labor also means that sector or groups in a society which

derives its livelihood chiefly from rendition of work or services in exchange for compensation under managerial direction. 6. Social Justiceis neither communism nor despotism nor atomism nor anarchy but the humanization of laws and the equalization of the social and economic forces by the state so that justice in its rational and objectively secular conception may at least be approximated. Purpose: Promotion of the welfare of all the people and adoption by the government of measures to insure economic of all the elements of society. 7. Doctrine of Compassionate Justice- social justice policy mandates a compassionate attitude toward working class in its relation to management. In calling for the protection to labor, the Constitution does not condone wrongdoing by the employee, it nevertheless urges a moderation of the sanctions that may be applied to him in the light of the many disadvantages that weigh heavily on him like an albatross on his neck. (Gandara Mill Supply vs. NLRC). 8. Labor- exertion by human beings of physical or mental efforts or both towards the production of goods and services. Labor also means that sector or groups in a society which derives its livelihood chiefly from rendition of work or services in exchange for compensation under managerial direction. b. Constitutional Provisions Concerning Labor:

Article II, Section 18- State affirms labor as a primary social economic force. It shall protect the right of workers and promote their welfare. Article III, Section 8- The right of the people, including those employed in the public or private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. Article XII, Section 12- State shall promote preferential use of Filipino Labor, domestic materials and locally produced goods, and adopt measures that held make them more competitive. Article XIII, Section 3 (1) State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. (2) State shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to security of tenure, human conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. (3) The State shall promote the principle of shared responsibility between workers and employers, and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. (4)

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The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth. Article XIII, Section 14- The State shall protect the working women by providing safe and healthful working conditions, taking into account their material functions, and provide such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation. c. Basic Rights of Workers: 1. Work under humane conditions; 2. Organize; 3. Conduct collective bargaining or negotiation with management; 4. Receive living wage; 5. Engage in peaceful concerted activities, including strike in accordance with law; 6. Enjoy security of tenure; 7. Participate in policy and decisionmaking processes affecting their rights and benefits as may be provided by law; 8. Share in the fruits of the production. d. Interest of Management 1. Reasonable return of capital; 2. Gain profit; 3. Hire and terminate employees

Facts: Respondent Union filed a Notice of Strike with (BLR) on ground of ULP consisting of alleged refusal to bargain, dismissal of union officers/members; and coercing employees to retract their membership with the union and restraining non-union members from joining the union. The MOLE assumed jurisdiction over the dispute. Colgate- Palmolive Co. pointed out that the formation of the union and the membership therein of Sayson, Reynante and Mejia were not in any manner connected with the companys decision to dismiss the three; that the fact that their dismissal came at a time when the alleged union was being formed was purely coincidental. Public respondent Minister of Labor ordered the reinstatement of the 3 salesmen to the company on the ground that the dismissed employees were the first offenders. PETITIONERs CONTENTION: Respondent Minister committed grave abuse of discretion when, notwithstanding his very own finding that there was just cause for the dismissal of the 2 salesmen, he nevertheless ordered their reistatement. Issue: WON the MOLE is correct reinstating the 3 erring employees. Ruling: The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on their part is not in conformity with law. Reinstatement is in

simply incompatible with a finding of guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the employees the law warrants their dismissal without making any distinction between a first offender and a habitual delinquent. Under the law, respondent Minister is duly mandated to equally protect and respect not only the labor or workers' side but also the management and/or employers' side. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. In the case at bench, to order the reinstatement of the erring employees namely, Mejia, Sayson and Reynante would in effect encourage unequal protection of the laws as a managerial employee of petitioner company involved in the same incident was already dismissed and was not ordered to be reinstated. As stated by in a decided case "an employer cannot legally be compelled to continue with the employment of a person who admittedly was guilty of misfeasance or malfeasance towards his employer, and whose continuance in the service of the latter is patently inimical to his interest." Thus, the order of MOLE is reversed and set aside. e. Balancing of Interest thru regulation: The State, through its inherent police power can regulate the labor relations law to promote general welfare.

COLGATE PALMOLIVE PHILIPPINES vs. BLAS F. OPLE G.R. No. 73681 June 30, 1988 PARAS

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In protecting the labor, the State shall not disregard the capital so as to result to its destruction. Though protecting the welfare of the labor is the primordial consideration of the State; the State also recognized the important role being played by the capital in the national development. f. Declaration of Basic Policy- (Art. 3, LC) The State shall: afford protection to labor; promote full employment; regulate the relations between workers and employers; assure the right of the workers to self-organization, security of tenure, collective bargaining, and just and humane conditions of work; and ensure equal work opportunities regardless of age, sex, or creed.

1. 2. 3. 4.

5.

g. Basis of Labor Law: 1. Police Power- The regulation of liberty and property rights of individuals for the promotion and general welfare of the people. 2. Social Justice- In accordance with the state policy of affording full protection to labor, when social justice collides with the equal protection clause, the law should accord more sympathy and compassion to the less privileged workingman. h. Construction/ Interpretation in Favor of Labor (Art. 4)

In interpreting Labor Code provisions, the workingmans welfare should be the primordial and paramount consideration. Article 4 of the Labor Code provides that all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor. If doubts exist between the evidence presented by the employer and the employee, the doubt should be resolved in favor of the employee. The State is bound under the Constitution to afford full protection to labor and when conflicting interests of labor and capital are to be weighed on the scales of social justice, the heavier influence of the latter should be counterbalanced with the sympathy and compassion the law accords the less privileged workingman. This is only fair if the worker is to be given the opportunity and the right to assert and defend his cause, not as a subordinate, but as part of management with which he can negotiate on even plane. Thus, labor is not a mere employee of capital but its active and equal partner. (Fuentes vs. NLRC, 266 S 24).

Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo, Japan. His widow sued for damages under EO 707 and MC No. 2 of the POEA. The petitioner Eastern Shipping, as owner of the vessel, argued that the complaint was cognizable not by the POEA but by the SSS and should have been filed against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and after considering the position papers of the parties, ruled in favor of the complainant. The award consisted of death benefits and burial expenses. The award was made by the POEA pursuant to MC 2. Such award for seamen is separate and distinct from, and will be in addition to whatever benefits which the seamen is entitled to under the Philippine laws. This circular prescribed a standard contract to be adopted by both foreign and domestic shipping companies in the hiring of the Filipino seamen for overseas employment. Hence, this petition. PETITIONERs CONTENTION: The company did not enter into such kind of contract (MC 2) with Saco. Issue: WON petitioner entered into such kind of contract with Saco.

EASTERN SHIPPING LINES vs. POEA G.R. NO. 76633 OCT. 18, 1988 CRUZ Facts:

Ruling: Whatever doubts may still remain regarding the rights of the parties in

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this case are resolved in favor of the private respondent, in line with the express mandate of the Labor Code and the principle that those with less in life should have more in law. When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the underprivileged worker. This is only fair if he is to be given the opportunity and the right to assert and defend his cause not as a subordinate but as a peer of management, with which he can negotiate on even plane. Labor is not a mere employee of capital but its active and equal partner. In the case at bench, the contention of petitioner is untenable. First, Eastern should have done such a contract as required by MC 2. MC 2 specifically declared that "all parties to the employment of any Filipino seamen on board any ocean-going vessel are advised to adopt and use this employment contract and to desist from using any other format of employment contract effective that date." Second, even if it had not done so, the provisions of the said circular are nevertheless deemed written into the contract with Saco as a postulate of the police power of the State. It is not denied that the private respondent has been receiving a monthly death benefit pension and that she was also paid a funeral benefit by the SSS. In addition, as already observed, she also received burial gratuity from the Welfare Fund for Overseas Workers. These payments will not preclude

allowance of the private respondent's claim against the petitioner because it is specifically reserved in the standard contract of employment for Filipino seamen under MC 2. Petition is dismissed. MANILA ELECTRIC COMPANY vs. NLRC G.R. No. 78763 July 12, 1989 MEDIALDEA Facts: Private respondent Signo was employed in petitioner company as supervisor-leadman since January 1963 up to the time when his services were terminated. A certain Fernando de Lara filed an application with the petitioner company for electrical services at his residence at Peafrancia Subdivision. Signo facilitated the processing of the said application as well as the required documentation for said application at Rizal. In consideration thereof, Signo received from Fernando de Lara the amount of P7,000. Signo thereafter filed the application for electric services with the Power Sales Division of the company. It was established that the area where the residence of de Lara was located is not yet within the serviceable point of Meralco, because the place was beyond the 30-meter distance from the nearest existing Meralco facilities. In order to expedite the electrical connections at de Lara's residence, certain employees of the company, including Signo, made it appear in the application that the sari-sari store at the corner of Marcos Highway, an entrance

to the subdivision, is applicant de Lara's establishment, which, in reality is not owned by the latter. As a result of this scheme, the electrical connections to de Lara's residence were installed and made possible. However, due to the fault of the Power Sales Division of petitioner company, Fernando de Lara was not billed for more than a year. Meralco conducted an investigation of the matter and found Signo responsible for the said irregularities in the installation. Thus, the services of the latter were terminated. Signo filed a complaint for illegal dismissal. NLRC ruled in favor of Signo and ordered his reinstatement. Hence, this petition for certiorari. PETITIONER's CONTENTION: The acts of Signo constituted breach of trust and caused the petitioner company economic losses resulting from the unbilled electric consumption of de Lara Issue: WON Signo should be dismissed. Ruling: The power to dismiss is the normal prerogative of the employer. An employer, generally, can dismiss or lay-off an employee for just and authorized causes enumerated under Articles 282 and 283 of the Labor Code. However, the right of an employer to freely discharge his employees is subject to regulation by the State, basically in the exercise of its paramount police power. This is so because the preservation of the lives

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of the citizens is a basic duty of the State, more vital than the preservation of corporate profits. In the case at bench, there is no question that herein Signo is guilty of breach of trust and violation of company rules, the penalty for which ranges from reprimand to dismissal depending on the gravity of the offense. However, the dismissal should not be meted to Signo considering his 20 years of service in the employ of petitioner, without any previous derogatory record, in addition to the fact that petitioner company had awarded him in the past, two (2) commendations for honesty. If ever the petitioner suffered losses resulting from the unlisted electric consumption of de Lara, this was found to be the fault of petitioner's Power Sales Division. Notwithstanding the existence of a valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be imposed, as it is too severe a penalty if the latter has been employed for a considerable length of time in the service of his employer. Further, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the

Labor Code including its implementing rules and regulations shall be resolved in favor of labor." Petition is dismissed. i. Rules and Regulations (Art. 5) All rules and regulations issued by the DOLE shall become effective 15 days after announcement of their adoption in newspapers of general circulation. Every agency shall file with the UP Law Center 3 certified copies of every ruled adopted by it. (Sec. 3, Chapter 2, RAC) j. Applicability of Labor Code Provisions (Art. 6) General Rule- Applies alike to all workers, whether agricultural or nonagricultural. Exception- All government employees including employees of governmentowned or controlled corporations with original charters shall be governed by Civil Service Law, its Rules and Regulations. GOCCs with original charters are governed by Civil Service Law; while GOCCs not directly chartered or created by special law but were acquired or taken over by corporations created under special law, are governed by the Labor Code. Corporate Officers are governed by the SEC Regulation Code.

a. Four-fold test in determining employeremployee relationship 1. Selection and engagement of employee 2. Payment of Wages 3. Power of Dismissal 4. Control Test Of the above, control test is commonly regarded as the most crucial and determinative indicator of the presence or absence of the ER-EER. The right of control test is 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. NOTE: Not every form of control will have the effect of establishing an employeremployee relationship. A line should be drawn between: a. Rules that merely serve as guidelines, which only promote the result. In such case, no employeremployee relationship exists. b. Rules that fix the methodology and bind or restrict the party hired to the use of such means of methods. These address both the result and the means employed to achieve it and hence, employer-employee relationship exists. (Insular Life vs. NLRC, 179 S 459) PAZ MARTIN JO vs. NLRC and PETER MEJILA G.R. No. 121605 February 2, 2000 QUISUMBING

II. EMPLOYER-EMPLOYEE RELATIONSHIP

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Facts: Private respondent Peter Mejila worked as barber on a piece rate basis at Dina's Barber Shop. In 1970, the owner, Dina Tan, sold the barbershop to petitioners Paz Martin Jo and Cesar Jo. All the employees, including private respondent, were absorbed by the new owners. The name of the barbershop was changed to Windfield Barber Shop. The owners and the barbers shared in the earnings of the barber shop. The barbers got 2/3 of the fee paid for every haircut or shaving job done, while 1/3 went to the owners of the shop. In 1977, petitioners designated private respondent as caretaker of the shop because the former caretaker became physically unfit. Private respondent's duties as caretaker, in addition to his being a barber, were: (1) to report to the owners of the barbershop whenever the airconditioning units malfunctioned and/or whenever water or electric power supply was interrupted, (2) to call the laundry woman to wash dirty linen; (3) to recommend applicants for interview and hiring; (4) to attend to other needs of the shop. For this additional job, he was given an honorarium equivalent to one-third (1/3) of the net income of the shop. As a caretaker, private respondent received monthly honorarium. In November 1992, private respondent had an altercation with his co-barber, Jorge Tinoy. The bickerings became serious so that Private respondent reported the matter to Atty. Allan Macaraya of the labor department. Atty. Macaraya directed petitioners' counsel, Atty. Prudencio Abragan, to thresh out the

problem. During the mediation meeting held at Atty. Abragan's office a new twist was added. Despite the assurance that he was not being driven out as caretakerbarber, private respondent demanded payment for several thousand pesos as his separation pay and other monetary benefits. Meanwhile, private respondent continued reporting for work at the barbershop. But, on January 2, 1993, he turned over the duplicate keys of the shop to the cashier and took away all his belongings therefrom. On January 8, 1993, he began working as a regular barber at the newly opened Goldilocks Barbershop also in Iligan City. Private respondent filed a complaint for illegal dismissal. Significantly, the complaint did not seek reinstatement as a positive relief. Labor Arbiter found that private respondent was an employee of petitioners, and that private respondent was not dismissed but had left his job voluntarily because of his misunderstanding with his co-worker.The Labor Arbiter dismissed the complaint, but ordered petitioners to pay private respondent his 13th month pay and attorney's fees. NLRC sustained the labor arbiter's finding as to the existence of employer-employee relationship between petitioners and private respondent, but it ruled that private respondent was illegally dismissed. Hence, the petitioners were ordered to reinstate private respondent and pay the latter's backwages, 13th month pay, separation pay and attorney's fees. Hence, this petition.

Issue: WON there is employer-employee relationship between petitioners and private respondent. Ruling: In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration. The power of control refers to the existence of the power and not necessarily to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the employer has the right to wield that power. In the case at bench, there is no clear showing that petitioners and private respondent had intended to pursue a relationship of industrial partnership, thus, there is no doubt that private respondent was employed by petitioners as caretakerbarber. Initially, petitioners, as new owners of the barbershop, hired private respondent as barber by absorbing the latter in their employ. Undoubtedly, the services performed by private respondent as barber is related to, and in the pursuit of the principal business activity of petitioners. Later on, petitioners tapped private respondent to serve concurrently

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as caretaker of the shop. Certainly, petitioners had the power to dismiss private respondent being the ones who engaged the services of the latter. In fact, private respondent sued petitioners for illegal dismissal, albeit contested by the latter. As a caretaker, private respondent was paid by petitioners wages in the form of honorarium, originally, at the rate of 1/3 of the shop's net income but subsequently pegged at a fixed amount per month. As a barber, private respondent earned 2/3 of the fee paid per haircut or shaving job done. Furthermore, the following facts indubitably reveal that petitioners controlled private respondent's work performance, in that: (1) private respondent had to inform petitioners of the things needed in the shop; (2) he could only recommend the hiring of barbers and masseuses, with petitioners having the final decision; (3) he had to be at the shop at 9:00 a.m. and could leave only at 9:00 p.m. because he was the one who opened and closed it, being the one entrusted with the key. These duties were complied with by the private respondent upon instructions of petitioners. Moreover, such task was crucial to the business operation of petitioners. Hence, there was enough basis to declare private respondent an employee of petitioners. The Supreme Court found that there was no dismissal of, but abandonment of work by private respondent. Hence, the petition is granted. SOCIAL SECURITY SYSTEM vs. CA and CONCHITA AYALDE G.R. No. 100388.

December SANTIAGO Facts:

14,

2000

YNARES-

In a petition before the Social Security Commission, Margarita Tana, widow of the late Ignacio Tana, Sr., alleged that her husband was, before his demise, an employee of Conchita Ayalde as a farmhand in the 2 sugarcane plantations she owned (Had. B-70) and Hda. B-15-M which leased from the University of the Philippines. She further alleged that Tana worked continuously 6 days a week, 4 weeks a month, and for 12 months every year between 1961-1979. For his labor, Tana allegedly received a regular salary according to the minimum wage prevailing at the time. She further alleged that throughout the given period, social security contributions, as well as medicare and employees compensation premiums were deducted from Tanas wages. It was only after his death that Margarita discovered that Tana was never reported for coverage, nor were his contributions/premiums remitted to SSS. Consequently, she was deprived of the burial grant and pension benefits accruing to the heirs of Tana had he been reported for coverage. The SSS revealed that neither Hda. B-70 nor respondents Ayalde and Maghari were registered membersemployers of the SSS, and consequently, Ignacio Tana, Sr. was never registered as a member-employee. Likewise, SSS records reflected that there was no way of verifying whether the alleged premium contributions were remitted since the

respondents were not registered members-employers. Antero Maghari raised the defense that he was a mere employee who was hired as an overseer of Hda. B-70 and as such, his job was limited to those defined for him by the employer which never involved matters relating to the SSS. Ayalde belied the allegation that Ignacio Tana, Sr. was her employee, admitting only that he was hired intermittently as an independent contractor to plow, harrow, or burrow Hda. No. Audit B-15-M. Tana used his own carabao and other implements, and he followed his own schedule of work hours. Social Security Commission ruled in favor of Tana and absolved Maghari from liability because he is a mere employee of Conchita Ayalde. CA reversed the Social Security Commission and declaring that the late Ignacio Tana, Sr. was an independent contractor, hence, this petition for review on certiorari. Issue: WON an agricultural laborer who was hired on pakyaw basis can be considered an employee entitled to compulsory coverage and corresponding benefits under the Social Security Law. Ruling: The mandatory coverage under the SSS Law is premised on the existence of an employer-employee relationship, and Section 8(d) defines an employee as any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation

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for such services where there is an employer-employee relationship. The essential elements of an employeremployee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor. In the case at bench, there is no question that Tana was selected and his services engaged by either Ayalde herself, or by Antero Maghari, her overseer. Corollarily, they also held the prerogative of dismissing or terminating Tanas employment. As regards the payment of wages, Margarita Tana and her corroborating witnesses testified that her husband was paid daily wages per quincena as well as on pakyaw basis. Ayalde insists that Tana was paid solely on pakyaw basis. To support her claim, she presented payrolls. The records readily show that the exhibits offered are not complete, and are but a mere sampling of payrolls. While the names of the supposed laborers appear therein, their signatures are nowhere to be found. The witnesses did not waver in their assertion that while Tana was hired by Ayalde as an arador on pakyaw basis, he was also paid a daily wage which Ayaldes overseer disbursed every 15 days. Moreover, Tana worked continuously for Ayalde, not only as arador on pakyaw

basis, but as a regular farmhand, doing backbreaking jobs for Ayaldes business. There is no shred of evidence to show that Tana was only a seasonal worker, much less a migrant worker. Ayalde herself testified that Tana and his family resided in the plantation. If he was a mere pakyaw worker or independent contractor, then there would be no reason for Ayalde to allow them to live inside her property for free. Secondly, Ayalde made much ado of her claim that Tana could not be her employee because she exercised no control over his work hours and method of performing his task as arador. It is also an admitted fact that Tana, Jr. used his own carabao and tools. Thus, she contends that, applying the control test, Tana was not an employee but an independent contractor. The records reveal that while Ayalde herself may not have directly imposed on Tana the manner and methods to follow in performing his tasks, she did exercise control through her overseer. Be that as it may, the power of control refers merely to the existence of the power. It is not essential for the employer to actually supervise the performance of duties of the employee; it is sufficient that the former has a right to wield the power. Certainly, Ayalde, on her own or through her overseer, wielded the power to hire or dismiss, to check on the work, be it in progress or quality, of the laborers. As the owner/lessee of the plantations, she possessed the power to

control everyone working therein everything taking place therein.

and

Jurisprudence provides other equally important considerations which support the conclusion that Tana was not an independent contractor. First, Tana cannot be said to be engaged in a distinct occupation or business. His carabao and plow may be useful in his livelihood, but he is not independently engaged in the business of farming or plowing. Second, he had been working exclusively for Ayalde for eighteen (18) years prior to his demise. Third, there is no dispute that Ayalde was in the business of growing sugarcane in the two plantations for commercial purposes. There is also no question that plowing or preparing the soil for planting is a major part of the regular business of Ayalde. CA is reversed. 1. Selection and Hiring: ALIPIO R. RUGA vs. NLRC and DE GUZMAN FISHING ENTERPRISES G.R. No. L-72654-61 January 22, 1990 FERNAN Facts: Petitioners Alipio Ruga were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business. Petitioners rendered service

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aboard said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen. For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. Upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that the same was a countermove to their having formed a labor union. During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal charges were formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return to the fishing vessel to resume their work on the same day. Petitioners filed complaints for illegal dismissal which were joined and thereafter dismissed by the Labor Arbiter and affirmed by NLRC. Hence, the instant petition. Issue: WON there is an employeremployee relationship between private respondents and petitioners. Ruling:

The Supreme Court have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. The employment relation arises from contract of hire, express or implied. In the absence of hiring, no actual employer-employee relation could exist. In the case at bench, petitioners testified that they were directly hired by private respondent through its general manager, Arsenio de Guzman, and its operations manager, Conrado de Guzman; that, except for Laurente Bautu, they had been employed by private respondent from 8 to 15 years in various capacities; that private respondent, through its operations manager, supervised and controlled the conduct of their fishing operations as to the fixing of the schedule of the fishing trips, the direction of the fishing vessel, the volume or number of tubes of the fishcatch the time to return to the fishing port, which were communicated to the patron/pilot by radio (single side band); that they were not allowed to join other outfits even the other vessels owned by private respondent without the permission of the operations manager; that they were compensated on percentage commission basis of the gross sales of the fish-catch which were delivered to them in cash by private respondent's cashier, Mrs. Pilar de

Guzman; and that they have to follow company policies, rules and regulations imposed on them by private respondent. Petition is granted. 2. Payment of Wages: NSULAR LIFE ASSURANCE CO. vs. NLRC and PANTALEON DE LOS REYES G.R. No. 119930 March 12, 1998 BELLOSILLO Facts: Petitioner Insular Life Co. 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. It contained the stipulation that no employer-employee relationship shall be created between the parties and that the 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 90 consecutive days, and collect initial premiums and payments on policy loans.

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Private respondent was also bound to turn over to the company immediately any and all sums of money collected by him. In a written communication by petitioner to respondent De los Reyes, the latter was urged to register with the Social Security System as a self-employed individual. On 1 March 1993 petitioner and private respondent entered into another contract where the latter was appointed as Acting Unit Manager under its office in Cebu. As such, the duties and responsibilities of De los Reyes included the recruitment, training, organization and development within his designated territory. 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. Aside from being granted override commissions, the acting unit manager was given production bonus, development allowance and a unit development financing scheme euphemistically termed "financial assistance. Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner that his services were terminated. Delos Reyes filed a complaint for illegal dismissal before the Labor Arbiter which was dismissed on the ground of lack of

jurisdiction. NLRC, finding there exists employer-employee relationship between the parties, reversed the Labor Arbiter, hence, this petition. Issue: WON there is an employeremployee relationship between the parties. Ruling: The first contract between Insular Life and Delos Reyes is an agency contract. However, the second contract between the parties, contained conditionalities that indicate 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 earlier mentioned has to be applied. In the case at bench, on the matter of payment of wages, petitioner points out that respondent was compensated strictly on commission basis, the amount of which was totally dependent on his total output. But, the manager's contract, speaks differently. The managers contract demonstrates that the performance

requirement imposed on De los Reyes was applicable quarterly while his entitlement to the free portion (P300) and the validated portion (P1,200) was monthly starting on the first month of the twelve (12) months of the appointment. Thus, it has to be admitted that even before the end of the first quarter and prior to the socalled quarterly performance evaluation, private respondent was already entitled to be paid both the free and validated portions of the UDF every month because his production performance could not be determined until after the lapse of the quarter involved. This indicates quite clearly that the unit manager's quarterly performance had no bearing at all on his entitlement at least to the free portion of the UDF which for all intents and purposes comprised the salary regularly paid to him by petitioner. Thus it cannot be validly claimed that the financial assistance consisting of the free portion of the UDF was purely dependent on the premium production of the agent. Be that as it may, it is worth considering that the payment of compensation by way of commission does not militate against the conclusion that private respondent was an employee of petitioner. Under Art. 97 of the 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." Petition is denied. 3. Power of Dismissal:

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CECILIO P. DE LOS SANTOS vs. NLRC and ROGELIO I. RAYALA G.R. No. 121327. December 20, 2001 BELLOSILLO Facts: Petitioner De los Santos was first assigned at the LPC assembly line of Camara Steel Industries Inc., a company engaged in the manufacture of steel products such as LPG cylinders and drums. Then, he became operator of a blasting machine. Later, he was designated as a janitor assigned to clean the premises of the company, and occasionally, to transfer scrap and garbage from one site to another. On 11 May 1993 petitioner was doing his usual chores as a janitor of CAMARA STEEL when he momentarily left his pushcart to answer the call of Narciso Honrado, scrap incharge, who summoned him to the company clinic. There Honrado handed him a box which he placed on top of a drum in his pushcart for transfer to the other lot of the company near gate 2. On his way out of gate 2, however, the security guard on duty found in the box handed to him by Honrado two (2) pieces of electric cable. Apprehensive that he might be charged with theft, petitioner De los Santos explained that the electric cord was declared a scrap by Honrado whose instructions he was only following to transfer the same to the adjacent lot of the company as scrap. Narciso Honrado admitted responsibility for the haul and his error in declaring the electric cables as scrap. The general manager, apparently appeased by Honrados apology, issued a

memorandum acknowledging receipt of his letter of apology and exculpated him of any wrongdoing. Taking an unexpected volte face, however, the company through filed a criminal complaint for frustrated qualified theft against Honrado and petitioner De los Santos. The complaint however was subsequently dismissed by the Provincial Prosecutor of Pasig for lack of evidence. Upon request of Top-Flite, alleged manpower agency of De los Santos, CAMARA terminated the services of the latter. Delos Santos filed an action for illegal dismissal and the Labor Arbiter ordered his reinstatement. NLRC reversed the Labor Arbiter and remanded the case to the arbitration branch of origin for further proceedings. Hence, this petition for certiorari. Issue: WON there is employer-employee relationship between CAMARA and Delos Santos. Ruling: There are the four (4) standards in determining the existence of an employer-employee relationship, namely: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of power of dismisssal; and, (d) the presence or absence of control of the putative employee's conduct. Most determinative among these factors is the so-called "control test." In the case at bench, records would attest that even the power to dismiss was vested with

CAMARA which admitted in its Reply that "Top-Flite requested CAMARA to terminate his employment after he was caught by the security guard committing theft." A cursory reading of this declaration will confirm the fact that the dismissal of De los Santos could only be effected by CAMARA and not by Top-Flite as the latter could only "request" for De los Santos' dismissal. If Top-Flite was truly the employer of De los Santos, it would not be asking permission from or "requesting" respondent CAMARA to dismiss De los Santos considering that it could very well dismiss him without CAMARA's assent. All the foregoing considerations affirm by more than substantial evidence the existence of an employer-employee relationship between De los Santos and CAMARA. Petition is granted. 4. Control Test: OSCAR VILLAMARIA, JR. vs. CA and JERRY V. BUSTAMANTE G.R. No. 165881 April 19, 2006 CALLEJO, SR. Facts: Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in assembling passenger jeepneys. By 1995, Villamaria stopped assembling jeepneys and retained only nine, four of which he operated by employing drivers on a boundary basis. One of those drivers was respondent Bustamante. Bustamante remitted

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P450.00 a day to Villamaria as boundary and kept the residue of his daily earnings as compensation for driving the vehicle. Villamaria verbally agreed to sell the jeepney to Bustamante under the boundary-hulog scheme, where Bustamante would remit to Villarama P550.00 a day for a period of four years; Bustamante would then become the owner of the vehicle and continue to drive the same under Villamarias franchise. It was also agreed that Bustamante would make a downpayment of P10,000.00. Villamaria executed a contract entitled Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog over the passenger jeepney. The parties agreed that if Bustamante failed to pay the boundaryhulog for three days, Villamaria Motors would hold on to the vehicle until Bustamante paid his arrears, including a penalty of P50.00 a day; in case Bustamante failed to remit the daily boundary-hulog for a period of one week, the Kasunduan would cease to have legal effect and Bustamante would have to return the vehicle to Villamaria Motors. Under the Kasunduan, Bustamante was prohibited from driving the vehicle without prior authority from Villamaria Motors. Thus, Bustamante was authorized to operate the vehicle to transport passengers only and not for other purposes. He was also required to display an identification card in front of the windshield of the vehicle; in case of failure to do so, any fine that may be imposed by government authorities would be charged against his account. Bustamante further obliged himself to pay for the cost of

replacing any parts of the vehicle that would be lost or damaged due to his negligence. In case the vehicle sustained serious damage, Bustamante was obliged to notify Villamaria Motors before commencing repairs. Bustamante was not allowed to wear slippers, short pants or undershirts while driving. He was required to be polite and respectful towards the passengers. He was also obliged to notify Villamaria Motors in case the vehicle was leased for two or more days and was required to attend any meetings which may be called from time to time. Aside from the boundary-hulog, Bustamante was also obliged to pay for the annual registration fees of the vehicle and the premium for the vehicles comprehensive insurance. Bustamante promised to strictly comply with the rules and regulations imposed by Villamaria for the upkeep and maintenance of the jeepney. Bustamante continued driving the jeepney under the supervision and control of Villamaria. As agreed upon, he made daily remittances of P550.00 in payment of the purchase price of the vehicle. Bustamante failed to pay for the annual registration fees of the vehicle, but Villamaria allowed him to continue driving the jeepney. In 1999, Bustamante and other drivers who also had the same arrangement with Villamaria Motors failed to pay their respective boundary-hulog. Villamaria took back the jeepney driven by Bustamante and barred the latter from driving the vehicle. Bustamante filed a Complaint for Illegal Dismissal against Villamaria and his wife Teresita. Labor Arbiter rendered judgment in favor of the spouses Villamaria. NLRC

dismissed Bustamantes appeal. CA ruled in favor of Bustamante, hence, this petition. Issue: WON there is employer-employee relationship between Villamaria and Bustamante. Ruling: In a decided case, it has been held that the jeepney owner/operator-driver relationship under the boundary system is that of employer-employee and not lessorlessee. The boundary system is a scheme by an owner/operator engaged in transporting passengers as a common carrier to primarily govern the compensation of the driver, that is, the latters daily earnings are remitted to the owner/operator less the excess of the boundary which represents the drivers compensation. Under this system, the owner/operator exercises control and supervision over the driver. It is unlike in lease of chattels where the lessor loses complete control over the chattel leased but the lessee is still ultimately responsible for the consequences of its use. The management of the business is still in the hands of the owner/operator, who, being the holder of the certificate of public convenience, must see to it that the driver follows the route prescribed by the franchising and regulatory authority, and the rules promulgated with regard to the business operations. The fact that the

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driver does not receive fixed wages but only the excess of the boundary given to the owner/operator is not sufficient to change the relationship between them. Indubitably, the driver performs activities which are usually necessary or desirable in the usual business or trade of the owner/operator. In the case at bench, the Supreme Court agreed with the CA that under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship was created between petitioner and respondent: that of employer-employee and vendor-vendee. The Kasunduan did not extinguish the employer-employee relationship of the parties extant before the execution of said deed. Under the Kasunduan, petitioner retained supervision and control over the conduct of the respondent as driver of the jeepney. Under the boundary-hulog scheme, petitioner retained ownership of the jeepney although its material possession was vested in respondent as its driver. In case respondent failed to make his P550.00 daily installment payment for a week, the agreement would be of no force and effect and respondent would have to return the jeepney to petitioner; the employer-employee relationship would likewise be terminated unless petitioner would allow respondent to continue driving the jeepney on a boundary basis of P550.00 daily despite the termination of their vendor-vendee relationship. The juridical relationship of employeremployee between petitioner and

respondent was not negated by the foregoing stipulation in the Kasunduan, considering that petitioner retained control of respondents conduct as driver of the vehicle. Neither is such juridical relationship negated by petitioners claim that the terms and conditions in the Kasunduan relative to respondents behavior and deportment as driver was for his and respondents benefit: to insure that respondent would be able to pay the requisite daily installment of P550.00, and that the vehicle would still be in good condition despite the lapse of four years. What is primordial is that petitioner retained control over the conduct of the respondent as driver of the jeepney. Indeed, petitioner, as the owner of the vehicle and the holder of the franchise, is entitled to exercise supervision and control over the respondent, by seeing to it that the route provided in his franchise, and the rules and regulations of the Land Transportation Regulatory Board are duly complied with. Petition is denied. b. Cases where ER-EER Exists 1. Jeepney drivers on boundary basis ANGEL JARDIN vs. NLRC and GOODMAN TAXI G.R. No. 119268 February 23, 2000 QUISUMBING Facts: Petitioners Angel Jardin were drivers of private respondent, Philjama International

Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent's taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners, daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests.Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. The labor arbiter dismissed said complaint. NLRC reversed the labor arbiter. However, NLRC set aside its own resolution and granted the MFR filed by private respondent company. Hence, this petition. Issue: WON there is an employeremployee relationship between private respondent and petitioners. Ruling: In a number of decided cases, the Supreme Court has ruled that the

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relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employeremployee and not of lessor-lessee. We explained that 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 exercise supervision and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. The Supreme Court has applied by analogy the above-stated doctrine to the relationships between bus owner/operator and bus conductor, autocalesa owner/operator and driver, and recently between taxi owners/operators and taxi drivers. Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer.

Petition is granted. 2. Musicians who were engaged by musical director for background music in motion pictures are employees of the film company LVN PICTURES vs. PHILIPPINE MUSICIANS Guild G.R. No. L-12582 January 28, 1961 CONCEPCION Facts: Philippine Musicians Guild averred that it is a duly registered legitimate labor organization; that LVN Pictures, Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized under the Philippine laws, engaged in the making of motion pictures and in the processing and distribution thereof; that said companies employ musicians for the purpose of making music recordings for title music, background music, musical numbers, finale music and other incidental music, without which a motion picture is incomplete; that 95% of all the musicians playing for the musical recordings of said companies are members of the Guild; and that the same has no knowledge of the existence of any other legitimate labor organization representing musicians in said companies. Premised upon these allegations, the Guild prayed that it be certified as the sole and exclusive bargaining agency for all musicians working in the aforementioned companies. In their respective answers, the latter denied that they have any musicians as employees, and alleged that

the musical numbers in the filing of the companies are furnished by independent contractors. The film companies also alleged that the musical directors were the ones who exercise control over the musicians. The lower court, however, rejected this pretense and sustained the theory of the Guild, with the result already adverted to. Issue: WON the musicians in question are employees of the film companies. Ruling: It is well settled that an employeremployee relationship exists where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. The decisive nature of said control over the "means to be used", is illustrated in one case, in which, by reason of said control, the employer-employee relationship was held to exist between the management and the workers, notwithstanding the intervention of an alleged independent contractor, who had, and exercise, the power to hire and fire said workers. The aforementioned control over the means to be used" in reading the desired end is possessed and exercised by the film companies over the musicians in the cases before us. In the case at bench, the musical directors have no such control over the musicians. Said musical directors control neither the music to be played, nor the musicians playing it. The film companies summon the musicians to

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work, through the musical directors. The film companies, through the musical directors, fix the date, the time and the place of work. The film companies, not the musical directors, provide the transportation to and from the studio. The film companies furnish meal at dinner time. During the recording sessions, the motion picture director who is an employee of the company not the musical director supervises the recording of the musicians and tells them what to do in every detail". The motion picture director not the musical director solely directs and performance of the musicians before the camera. The motion picture director supervises the performance of all the actors, including the musicians who appear in the scenes, so that in the actual performance to be shown in the screen, the musical director's intervention has stopped. The movie director tells the musical director what to do; tells the music to be cut or tells additional music in this part or he eliminates the entire music he does not (want) or he may want more drums or move violin or piano, as the case may be. The movie director directly controls the activities of the musicians. He says he wants more drums and the drummer plays more or if he wants more violins or he does not like that. Order appealed from is affirmed. 3. Tailors, Seamstress paid on piece-rate basis

MAKATI HABERDASHERY vs. NLRC and JACINTO GARCIANO et.al. G.R. Nos. 83380-81 November 15, 1989 FERNAN Facts: Private respondents Jacinto Garciano et.al have been working for petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piecerate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their piecerate, they are given a daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday. Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday and during peak periods even on Sundays and holidays. Private respondent Dioscoro Pelobello left with Salvador Rivera, a salesman of petitioner Haberdashery, an open package which was discovered to contain a "jusi" barong tagalog. When confronted, Pelobello replied that the same was ordered by respondent Casimiro Zapata for his customer. Zapata allegedly admitted that he copied the design of petitioner Haberdashery. But in the afternoon, when again questioned about said barong, Pelobello and Zapata denied ownership of the same. Consequently a memorandum was issued to each of them to explain why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business of the company. Both respondents allegedly did

not submit their explanation and did not report for work. Hence, they were dismissed by petitioners. Issue: WON there is an employeremployee relationship between petitioner and private respondents. Ruling: The test of employer-employee relationship is four-fold: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. It is the so called "control test" that is the most important element. This simply means the determination of whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and method by which the same is to be accomplished. The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from the operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor, the latter directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the customer's measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is actively manifested in all these aspects the manner and quality of cutting, sewing and ironing. NLRC is modified.

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4. Caddies golf clubs are employees of the golf clubs In the case of Manila Golf and Country Club vs. IAC, 237 S 207, the issue raised was WON the persons rendering caddying services for members of golf clubs and their guests in said clubs courses or premises are the employees of such clubs. The Supreme Court held that in the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufferance but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long as they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may supposed the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment. c. Cases where NO ER-EER exists 1. Independent Contractor

JOSE Y. SONZA vs. ABS-CBN BROADCASTING CORP G.R. No. 138051. June 10, 2004 CARPIO Facts: ABS-CBN signed an Agreement with the Mel and Jay Management and Development Corporation (MJMDC). ABSCBN was represented by its corporate officers while MJMDC was represented by Jose Sonza, as President and General Manager, and Carmela Tiangco, as EVP and Treasurer. In the Agreement, MJMDC agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay for Sonzas services a monthly talent fee of P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month. Sonza wrote a letter to ABS-CBN rescinding the Agreement in view of the irrevocable resignation of Sonza because of the recent events concerning his programs and career, which Sonza considered as breach of the Agreement by ABS-CBN. Sonza also waived the remaining amount stipulated due to him but reserves the right to seek recovery of the other benefits under said Agreement. Sonza filed a complaint against ABS-CBN before DOLE complaining that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP). ABS-CBN filed a Motion to Dismiss on the ground that no

employer-employee relationship existed between the parties. Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCI Bank. ABS-CBN opened a new account with the same bank where ABS-CBN deposited SONZAs talent fees and other payments due him under the Agreement. Labor Arbiter denied the motion to dismiss. The Labor Arbiter considered the case submitted for resolution. The Labor Arbiter dismissed the case for lack of jurisdiction which was affirmed by NLRC and late, the CA. Hence, this petition for certiorari. Issue: WON there is employer-employee relationship between Sonza and ABS-CBN. Ruling: A. Selection and Engagement of Employee ABS-CBN engaged SONZAs services to cohost its television and radio programs because of SONZAs peculiar skills, talent and celebrity status. SONZA contends that the discretion used by respondent in specifically selecting and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant belies respondents claim of independent contractorship. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary

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employees. The specific selection and hiring of Sonza, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If Sonza did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with Sonza but would have hired him through its personnel department just like any other employee. In any event, the method of selecting and engaging Sonza does not conclusively determine his status. B. Payment of Wages ABS-CBN directly paid Sonza his monthly talent fees with no part of his fees going to MJMDC. Sonza asserts that this mode of fee payment shows that he was an employee of ABS-CBN. Sonza also points out that ABS-CBN granted him benefits and privileges which he would not have enjoyed if he were truly the subject of a valid job contract. All the talent fees and benefits paid to Sonza were the result of negotiations that led to the Agreement. If Sonza was ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as SSS, Medicare, and 13th month pay which the law automatically incorporates into every employer-employee contract. Whatever benefits Sonza enjoyed arose from contract and not because of an employer-employee relationship.

Sonzas talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay Sonza such huge talent fees precisely because of Sonzas unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, Sonza acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship. The payment of talent fees directly to Sonza and not to MJMDC does not negate the status of Sonza as an independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the AGENT of Sonza, to whom MJMDC would have to turn over any talent fee accruing under the Agreement. C. Power of Dismissal For violation of any provision of the Agreement, either party may terminate their relationship. Sonza failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent losses as provided under labor laws.

During the life of the Agreement, ABS-CBN agreed to pay Sonzas talent fees as long as AGENT and Jay Sonza shall faithfully and completely perform each condition of this Agreement. Even if it suffered severe business losses, ABS-CBN could not retrench Sonza because ABS-CBN remained obligated to pay Sonzas talent fees during the life of the Agreement. This circumstance indicates an independent contractual relationship between Sonza and ABSCBN. Sonza admits that even after ABSCBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement to continue paying Sonzas talent fees during the remaining life of the Agreement even if ABS-CBN cancelled Sonzas programs through no fault of Sonza. Sonza assails the Labor Arbiters interpretation of his rescission of the Agreement as an admission that he is not an employee of ABS-CBN. The Labor Arbiter stated that if it were true that complainant was really an employee, he would merely resign, instead. Sonza did actually resign from ABS-CBN but he also, as president of MJMDC, rescinded the Agreement. Sonzas letter clearly bears this out. However, the manner by which Sonza terminated his relationship with ABS-CBN is immaterial. Whether Sonza rescinded the Agreement or resigned from work does not determine his status as employee or independent contractor. D. Power of Control

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Since there is no local precedent on whether a radio and television program host is an employee or an independent contractor, the Supreme Court referred to foreign case law in analyzing the present case. In a US decided case, it has been held that a television program host is an independent contractor. Applying the control test to the present case, Sonza is not an employee but an independent contractor. The control test is the most important test the courts apply in distinguishing an employee from an independent contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is considered an independent contractor. First, Sonza contends that ABS-CBN exercised control over the means and methods of his work. Sonzas argument is misplaced. ABS-CBN engaged Sonzas services specifically to co-host the Mel & Jay programs. ABS-CBN did not assign any other work to Sonza. To perform his work, Sonza only needed his skills and talent. How Sonza delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. Sonza did not have to render eight hours of work per day. The Agreement required Sonza to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN

could not dictate the contents of 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 ABS-CBN or its interests. ABS-CBN was not involved in the actual performance that produced the finished product of Sonzas work. ABS-CBN did not instruct Sonza how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule for more effective programming. ABS-CBNs sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonzas work. In a US decided case, it has been held that, vaudeville performers were independent contractors although the management reserved the right to delete objectionable features in their shows. Since the management did not have control over the manner of performance of the skills of the artists, it could only control the result of the work by deleting objectionable features. In the case at bench, although ABS-CBN did have the option not to broadcast Sonzas show, ABS-CBN was still obligated to pay Sonzas talent fees. Thus, even if ABS-CBN was completely dissatisfied with the means and methods of Sonzas performance of his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline Sonza. All that ABS-CBN could do is not to broadcast Sonzas show

but ABS-CBN must still pay his talent fees in full. Sonza further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the Mel & Jay programs. However, the equipment, crew and airtime are not the tools and instrumentalities Sonza needed to perform his job. What Sonza principally needed were his talent or skills and the costumes necessary for his appearance. Even though ABS-CBN provided Sonza with the place of work and the necessary equipment, Sonza was still an independent contractor since ABS-CBN did not supervise and control his work. ABSCBNs sole concern was for Sonza to display his talent during the airing of the programs. A radio broadcast specialist who works under minimal supervision is an independent contractor. Sonzas work as television and radio program host required special skills and talent, which Sonza admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control over how Sonza utilized his skills and talent in his shows. Second, Sonza argues that ABS-CBN subjected him to its rules and standards of performance. Sonza claims that this indicates ABS-CBNs control not only over his manner of work but also the quality of his work. The Agreement stipulates that Sonza shall abide with the rules and standards of

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performance covering talents of ABS-CBN. The Agreement does not require Sonza to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on Sonza under the Agreement refers to the Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by ABSCBN as its Code of Ethics. The KBP code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and standards of performance referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN. 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. 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. In a US case, it has been held that one could still be an independent contractor although the hirer reserved certain supervision to insure the attainment of the desired result. The hirer, however, must not deprive the one hired from performing his services according to his own initiative. 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. The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. This practice is not designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The broadcast station normally spends substantial amounts of money, time and effort in building up its talents as well as the programs they appear in and thus expects that said talents remain exclusive with the station for a commensurate period of time. Normally, a much higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent fees partially compensates for exclusivity, as in the present case. MJMDC as Agent of Sonza Sonza protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his services to ABS-CBN. The Labor Arbiter ruled that as a talent of MJMDC, Sonza is not an employee of ABSCBN. Sonza insists that MJMDC is a labor-only contractor and ABS-CBN is his employer.

In a labor-only contract, there are three parties involved: (1) the laboronly contractor; (2) the employee who is ostensibly under the employ of the labor-only contractor; and (3) the principal who is deemed the real employer. Under this scheme, the labor-only contractor is the agent of the principal. 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. These circumstances are not present in this case. In the case at bench, there are essentially only two parties involved under the Agreement, namely, Sonza and ABS-CBN. MJMDC merely acted as Sonzas agent. The Agreement expressly states that MJMDC acted as the AGENT of Sonza. The records do not show that MJMDC acted as ABS-CBNs agent. MJMDC, which stands for Mel and Jay Management and Development Corporation, is a corporation organized and owned by Sonza and Tiangco. The President and General Manager of MJMDC is Sonza himself. It is absurd to hold that MJMDC, which is owned, controlled, headed and managed by Sonza, acted as agent of ABS-CBN in entering into the Agreement with Sonza, who himself is represented by MJMDC. That would make MJMDC the agent of both ABS-CBN and Sonza. CA is affirmed. 2. Shoe store and shoe-shiners

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MAMERTO S. BESA vs. CRESENCIANO B. TRAJANO AND KAISAHAN NG MANGGAGAWANG PILIPINO G.R. No. 72409 December 29, 1986 PARAS Facts: Private respondent Kaisahan ng Mangagawang Pilipino KAMPIL, a legitimate labor union filed a Petition for Certification Election in the NLRC. Petitioner Mamerto Besa opposed it alleging that there is no employeremployee relationship between Besa's and the petitioners-signatories to the petition. Acting on the Petition, the Opposition thereto, and the Reply to the Opposition, The Med-Arbiter issued an order declaring that there was an employer-employee relationship between the parties and directed that an election be conducted. BLR affirmed the Med-Arbiter, hence, this petition. Issue: WON there employer-employee relationship between petitioner Besa and 17 of the members of the herein respondent Union who are designated as shoeshiners. Ruling: Existence of employer-employee relationship is determined by the following elements, namely, a] selection and engagement of the employee; b] payment of wages; c] powers of dismissal; and d] power to control the employee's conduct although the latter is the most

important element. The records of the case reveal that an employer-employee relationship does not exist between the 17 shoeshiners and petitioner. In the CIRs Decision dated December 21, 1965 for complaint of ULP filed by the shoeshiners against Besa, it has been held that: The shoe shiner is distinct from a piece worker because while the latter is paid for work accomplished, he does not, however, contribute anything to the capital of the employer other than his service. It is the employer of the piece worker who pays his wages, while the shoe shiner in this instance is paid directly by his customer. The piece worker is paid for work accomplished without regard or concern to the profit as derived by his employer, but in the case of the shoe shiners, the proceeds derived from the trade are always divided share and share alike with respondent Besa. The shoe shiner can take his share of the proceeds everyday if he wanted to or weekly as is the practice of Besa The employer of the piece worker supervises and controls his work, but in the case of the shoe shiner, respondent Besa does not exercise any degree of control or supervision over their person and their work. All these are not obtaining in the case of a piece worker as he is in fact an employee in contemplation of law, distinct from the shoe shiner in this instance who, in relation to respondent Besa, is a partner in the trade. Consequently, employer-employee relationship between members of the Petitioning union and respondent Besa being absent the latter could not be held guilty of the unfair tabor.

Decision appealed from is declared void. 3. Softdrinks company and contractors selling softdrinks MAFINCO TRADING CORPORATION vs. BLAS F. OPLE and RODRIGO REPOMANTA G.R. No. L-37790 March 25, 1976 AQUINO Facts: Cosmos Aerated Water Factory appointed Mafinco as its sole distributor of Cosmos soft drinks in Manila. Rodrigo Repomanta and Mafinco executed a peddling contract whereby Repomanta agreed to "buy and sell" Cosmos soft drinks. Rey Moralde entered into a similar contract. The contracts were to remain in force for one year unless sooner terminated by either party upon five days notice to the other. Mafinco terminated its contract to Repomanta. Repomanta filed a complaint with the NLRC, charging Mafinco with having illegal dismissal. Mafinco filed a motion to dismiss the complaint on the ground that the NLRC had no jurisdiction because Repomanta and Moralde were not its employees but were independent contractors. It stressed that there was termination of the contract, not a dismissal of an employee. NLRC dismissed the complaint for lack of jurisdiction which was reversed by the Secretary of Labor, hence, this petition. Issue: WON there is an employeremployee relationship between Mafinco and Repomante.

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