CORAZON ALMIREZ v. INFINITE LOOP TECHNOLOGY CORPORATION, et al.

481 SCRA 364

(!!6", THIR# #I$ISION (Ca%&'( M(%ale), *."
Under the control test, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only the end achieved, but also
the manner and means to be used in reaching that end.
Fa+t),
Petitioner Corazon Almirez was hired by respondent Infnite Loop Technology Corporation
(Infnite Loop) to be a Refnery Senior Process esign !ngineer "or a specifc pro#ect starting
$ctober %&' %((( with a g)aranty o" %* contin)o)s months o" ser+ice or )ntil a m)t)ally
agreed date, -owe+er' Almirez was later on s)spended, -ence' she fled an action be"ore
the .ational Labor Relations Commission (.LRC) against Infnite Loop and its /eneral
0anager1President1co2petitioner !dwin R, Rabino on the gro)nd o" breach o" contract o"
employment,

3oth the Labor Arbiter and the .LRC r)led that there is an e4isting employer2employee
relationship between Almirez and Infnite Loop since the latter e4ercises control o+er the
means and methods )sed by Almirez in the per"ormance o" her d)ties, The Co)rt o" Appeals
r)led that there was no e4isting employer2employee relationship between the parties since
Almirez was hired to render her pro"essional ser+ice only "or a specifc pro#ect,
ISS-E
5 6hether or not there is employee2employer relationship between Almirez and Infnite Loop
HEL#
To ascertain the e4istence o" an employer2employee relationship' #)rispr)dence has
in+ariably applied the "o)r2"old test' to wit5 (%) the manner o" selection and engagement7 (*)
the payment o" wages7 (8) the presence or absence o" the power o" dismissal7 and (9) the
presence or absence o" the power o" control, $" these "o)r' the last one' the so called
:control test: is commonly regarded as the most cr)cial and determinati+e indicator o" the
presence or absence o" an employer2employee relationship, ;nder the control test' an
employer2employee relationship e4ists where the person "or whom the ser+ices are
per"ormed reser+es the right to control not only the end achie+ed' b)t also the manner and
means to be )sed in reaching that end, <rom the earlier2=)oted scope o" Almirez>
pro"essional ser+ices' there is no showing o" a power o" control o+er petitioner, The ser+ices
to be per"ormed by her specifed what she needed to achie+e b)t not on how she was to go
abo)t it, Contrary to the fnding o" the Labor Arbiter' as a?rmed by the .LRC' paragraph .o,
@ o" the :Scope o" Pro"essional Ser+ices: re=)iring her to :maAe reports and
recommendations to the company management team regarding worA progress' re+isions
and impro+ement o" process design on a reg)lar basis as re=)ired by company management
team: does not :show that the companyBs management team e4ercises control o+er the
means and methods in the per"ormance o" her d)ties as Refnery Process esign !ngineer,
:-a+ing hired AlmirezB pro"essional ser+ices on acco)nt o" her :e4pertise and =)alifcations:
as Almirez hersel" proCers in her Position Paper' the company nat)rally e4pected to be
)pdated reg)larly o" her :worA progress': i" any' on the pro#ect "or which she was specifcally
hired, The ded)ction "rom Almirez> rem)neration o" amo)nts representing SSS premi)ms'
Philhealth contrib)tion sand withholding ta4' was made in the only pay slip iss)ed to
Almirez' that "or the period o" Dan)ary %@28%' *EEE' the other amo)nts o" rem)neration
ha+ing been doc)mented by cash +o)chers, S)ch pay slip cannot pro+e the e4istence o" an
employer2employee relationship between the parties, As "or the designation o" the payments
to Almirez as :salaries': it is not determinati+e o" the e4istence o" an employer2employee
relationship, :Salary: is a general term defned as rem)neration "or ser+ices gi+en,: It is the
abo+e2=)oted contract o" engagement o" ser+ices2letter dated September 8E' %((('
together with its attachments' which is the law between the parties, !+en Almirez concedes
rendering ser+ice :based on the contract': which' as reFected earlier' is bere"t o" a showing
o" power o" control' the most cr)cial and determinati+e indicator o" the presence o" an
employer2employee relationship,
LOPEZ ET AL $S. M.SS
FACTS,
In %((G' 06SS entered into a Concession Agreement with 0anila 6ater Ser+ice' Inc,
and 3enpress2Lyonnaise' wherein the collection o" bills was trans"erred to said pri+ate
concessionaires' eCecti+ely terminating the contracts o" ser+ice between petitioners and
06SS, Reg)lar employees o" the 06SS' e4cept those who had retired or opted to remain
with the latter' were absorbed by the concessionaires, Reg)lar employees o" the 06SS
were paid their retirement benefts' b)t not petitioners, Instead' they were re")sed said
benefts' 06SS relying on a resol)tion o" the Ci+il Ser+ice Commission (CSC) that contract2
collectors o" the 06SS are not its employees and there"ore not entitled to the benefts d)e
reg)lar go+ernment employees,
Petitioners fled a complaint with the CSC, In its Resol)tion dated % D)ly %(((' the
CSC denied their claims' stating that petitioners were engaged by 06SS thro)gh a contract
o" ser+ice' which e4plicitly pro+ides that a bill collector2contractor is not an 06SS employee,
0oreo+er' it "o)nd that petitioners were )nable to show that they ha+e contract)al
appointments d)ly attested by the CSC, In addition' the CSC stated that petitioners' not
being permanent employees o" 06SS and not incl)ded in the list s)bmitted to the
concessionaire' are not entitled to se+erance pay, PetitionersB claims "or retirement benefts
and terminal lea+e pay were liAewise denied, Therea"ter the petitioner fled "or a 0otion "or
Reconsideration which was later on enied,
Petitioners fled a petition "or with the Co)rt o" Appeals, A?rming and generally reiterating
the r)ling o" the CSC' the Co)rt o" Appeals held that the Agreement entered into by
petitioners and 06SS was clear and )nambig)o)s' and sho)ld be read and interpreted
according to its literal sense, -ence' as per the terms o" the agreement' petitioners were not
06SS employees, The Co)rt o" Appeals held that no other e+idence was add)ced by
petitioners to s)bstantiate their claim that their papers were "orwarded to the CSC "or
attestation and appro+al, It added that in any e+ent' as early as *@ D)ne %((@' the CSC
specifcally stated that Hcontract collectors are not 06SS employees and there"ore not
entitled to se+erance pay, Therea"ter' an appeal was made to the S)preme Co)rt,
ISS-E, 6hether or not %) the petitioner are employees o" the 06SS *) the latter has power
to dismiss the latter 8) i" they are entitled to the benefts pro+ided "or )nder the Labor Code
o" the Philippines
HEL#,
The Co)rt has in+ariably a?rmed that it will not hesitate to tilt the scales o" #)stice to the
labor class "or no less than the Constit)tion dictates that Hthe State , , , shall protect the
rights o" worAers and promote their wel"are,I It is committed to this policy and has always
been =)icA to rise to de"ense in the rights o" labor' as in this case,
Protection to labor' it has been said' e4tends to all o" laborJlocal and o+erseas' organized
and )norganized' in the p)blic and pri+ate sectors, 3esides' there is no reason not to apply
this principle in "a+or o" worAers in the go+ernment, The go+ernment' incl)ding
go+ernment2owned and controlled corporations' as employers' sho)ld set the e4ample in
)pholding the rights and interests o" the worAing class,
<or p)rposes o" determining the e4istence o" employer2employee relationship' the Co)rt has
consistently adhered to the "o)r2"old test' namely5 (%) whether the alleged employer has the
power o" selection and engagement o" an employee7 (*) whether he has control o" the
employee with respect to the means and methods by which worA is to be accomplished7 (8)
whether he has the power to dismiss7 and (9) whether the employee was paid wages,$" the
"o)r' the control test is the most important element,
A re+iew o" the circ)mstances s)rro)nding the case re+eals that petitioners are employees
o" 06SS, espite the ob+io)s attempt o" 06SS to categorize petitioners as mere ser+ice
pro+iders' not employees' by entering into contracts "or ser+ices' its act)ations show that
they are its employees' p)re and simple, 06SS wielded its power o" selection when it
contracted with the indi+id)al petitioners' )ndertaAing separate contracts or agreements,
The same goes tr)e "or the power to dismiss, Altho)gh termed as ca)ses "or termination o"
the Agreement' a re+iew o" the same shows that the gro)nds indicated therein can similarly
be gro)nds "or termination o" employment,
$n the other hand' rele+ant and appropriate is the defnition o" wages in the Labor Code'
namely' that it is the rem)neration' howe+er designated' "or worA done or to be done' or "or
ser+ices rendered or to be rendered, The HcommissionsI d)e petitioners were based on the
bills collected as per the sched)le indicated in the Agreement, Signifcantly' 06SS granted
petitioners benefts )s)ally gi+en to employees' to wit5 C$LA' meal' emergency' and
tra+eling allowances' hazard pay' cash gi"t' and other bon)ses, In an )nabashed bid to claim
credit "or itsel"' 06SS pro"esses that these additional benefts were its acts o" bene+olence
and generosity, 6e are not impressed,
$ther mani"estations o" control are e+ident "rom the records, The power to trans"er or
reassign employees is a management prerogati+e e4cl)si+ely en#oyed by employers, In this
case' 06SS had "ree reign o+er the trans"er o" bill collectors "rom one branch to another,
06SS also monitored the per"ormance o" the petitioners and determined their e?ciency,
!+en the H"o)r2"old testI will show that petitioner is the employer o" pri+ate respondents,
The elements to determine the e4istence o" an employment relationship are5 (a) the
selection and engagement o" the employee7 (b) the payment o" wages7 (c) the power o"
dismissal7 and (d) the employerBs power to control the employeeBs cond)ct, The most
important element is the employerBs control o" the employeeBs cond)ct' not only as to the
res)lt o" the worA to be done' b)t also as to the means and methods to accomplish it,
Petitioners are indeed reg)lar employees o" the 06SS, The primary standard o" determining
reg)lar employment is the reasonable connection between the partic)lar acti+ity per"ormed
by the employee in relation to the )s)al b)siness or trade o" the employer, The connection
can be determined by considering the nat)re o" the worA per"ormed and its relation to the
scheme o" the partic)lar b)siness or trade in its entirety, LiAewise' the repeated and
contin)ing need "or the per"ormance o" the #ob has been deemed s)?cient e+idence o" the
necessity' i" not indispensability o" the acti+ity to the b)siness, Some o" the petitioners had
rendered more than two decades o" ser+ice to the 06SS, The contin)o)s and repeated
rehiring o" these bill collectors indicate the necessity and desirability o" their ser+ices' as
well as the importance o" the role o" bill collectors in the 06SS,
06SS committed itsel" to pay se+erance and terminal lea+e pay to its reg)lar employees,
The g)idelines thereo" states that reg)lar employees who ha+e rendered at least a year o"
ser+ice and not eligible "or retirement are entitled to se+erance pay e=)i+alent to one (%)
month basic pay "or e+ery ")ll year o" ser+ice, In +iew o" the Co)rtBs fnding that petitioners
were employees o" 06SS' the corresponding se+erance pay' in accordance with the
g)idelines' sho)ld be gi+en to them, Terminal lea+e pay are liAewise d)e petitioners'
pro+ided they meet the re=)irements there"ore,
Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]
Fa+t),
Respondent Rosalina 0, La)dato fled a petition be"ore the SSC "or social sec)rity co+erage
and remittance o" )npaid monthly social sec)rity contrib)tions against her three (8)
employers, Among the respondents was herein petitioner Angelito L, Lazaro' proprietor o"
Royal Star 0arAeting (HRoyal StarI)' which is engaged in the b)siness o" selling home
appliances, Lazaro denied that La)dato was an employee b)t instead claimed that she was
an agent o" the company, Lazaro also maintained that she was not mandated to worA o"
defnite worA ho)rs and th)s not deemed to be a reg)lar employee o" Royal Star 0arAeting'
the company o" Lazaro,
SSC prom)lgated a decision rendering that La)dato is a reg)lar employee o" Royal Star
0arAeting and entitled to social sec)rity contrib)tions, Lazaro fled a petition "or re+iew
be"ore the CA where CA r)led that La)dato was an employee o" Royal Star 0arAeting, This
petition be"ore the Co)rt assails same arg)ments raised by Lazaro in SSC, She raised that
La)dato was not an employee o" Royal Star 0arAeting since Royal Star had no control o+er
the acti+ities o" La)dato, <or the p)rpose o" determining whether the respondent is entitled
to social sec)rity contrib)tions' it m)st be shown that La)dato was a reg)lar employee o"
Royal Star 0arAeting,
R/l'01,
It is an accepted doctrine that "or the p)rposes o" co+erage )nder the Social Sec)rity Act'
the determination o" employer2employee relationship warrants the application o" the
Hcontrol test'I that is' whether the employer controls or has reser+ed the right to control the
employee' not only as to the res)lt o" the worA done' b)t also as to the means and methods
by which the same is accomplished, The SSC' applying the control test "o)nd that La)dato
was an employee o" Royal Star, The Co)rt agrees with the fndings o" the SSC and the CA,
The "act that La)dato was paid by way o" commission does not precl)de the establishment
o" an employer2employee relationship,
In the case o" /repali"e +, D)dico' the Co)rt )pheld the e4istence o" an employer2employee
relationship between the ins)rance company and its agents' despite the "act that the
compensation that the agents on commission recei+ed was not paid by the company b)t by
the in+estor or the person ins)red, The rele+ant "actor remains' as stated earlier' whether
the :employer: controls or has reser+ed the right to control the :employee: not only as to
the res)lt o" the worA to be done b)t also as to the means and methods by which the same
is to be accomplished, .either does it "ollow that a person who does not obser+e normal
ho)rs o" worA cannot be deemed an employee,
In the case o" Cosmopolitan <)neral -omes' Inc, +, 0aalat' the employer similarly denied the
e4istence o" an employer2employee relationship' as the claimant according to it' was a
Hs)per+isor on commission basisI who did not obser+e normal ho)rs o" worA, This Co)rt
declared that there was an employer2employee relationship' noting that HKtheL s)per+isor'
altho)gh compensated on commission basis' KisL e4empt "rom the obser+ance o" normal
ho)rs o" worA "or his compensation is meas)red by the n)mber o" sales he maAes,I