Employer – Employee Relationship

Parties and What is the What are the rights and Is he an Final Disposition
Case No. business of the duties of the Complainant? employee
Company? of the
company?
Coca-Cola Retail Dr. Dean Climaco was hired No. The Court, in determining the existence
Bottlers, business by virtue of a Retainer of an employer-employee relationship,
Inc. vs Agreement as company has invariably adhered to the four-fold
Climaco doctor. He has the following test:
GR. No. duties: (1) the selection and engagement of the
146881 employee;
February 5, 1. Consultation, diagnosis (2) the payment of wages;
2007 and treatment of (3) the power of dismissal; and
occupational and non- (4) The power to control the employee’s
occupational injuries and conduct, or the so-called “control test,”
diseases considered to be the most important
2. Evaluate other matters element.
relating to health such as
absenteeism, leave and In effect, the Labor Arbiter held that
termination. petitioner company, through the
3. Periodic inspections for Comprehensive Medical Plan, provided
food services and rest rooms. guidelines merely to ensure that the end
result was achieved, but did not control
the means and methods by which
 4. Encourage employees of
the Company to maintain
good personal health.
Under the Retainer
Agreement, the Complainant
had the following rights:
1. The Agreement shall be
good only for a period of one
(1) year.
2. Either party may
terminate the contract upon
giving 30-day written notice
to the other.
3. Compensation of 3,800 per
month for the Complainant.
respondent performed his assigned
tasks.
In addition, the Court finds that the
schedule of work and the requirement to
be on call for emergency cases do not
amount to such control, but are
necessary incidents to the Retainership
Agreement.
The Court also notes that the
Retainership Agreement granted to both
parties the power to terminate their
relationship upon giving a 30-day
notice. Hence, petitioner company did
not wield the sole power of dismissal or
termination.

Angelina Corporation – Complainant was hired as an Yes. The better approach would therefore be
Francisco v Restaurant Accountant and Corporate to adopt a two-tiered test involving:
NLRC Operation Secretary. Her duties (1) the putative employer’s power to
G.R. No. include: control the employee with respect to the
170087
 August 31, 1. Handle all the accounting
2006 needs of the company
2. Designated as Liaison
Officer to the City of Makati
to secure business permits,
construction permits and
other licenses for the initial
operation of the company.
3. She was not entrusted
with any corporate
document.
After a year, she was
designated as Acting
Manager assigned to handle
recruitment of all employees
and perform management
administration functions;
represent the company in all
dealings with government
agencies.
Thereafter, she was demoted
to a Technical Assistant and
means and methods by which the work
is to be accomplished; and
(2) The underlying economic realities of
the activity or relationship. This two-
tiered test would provide us with a
framework of analysis, which would take
into consideration the totality of
circumstances surrounding the true
nature of the relationship between the
parties.
This is especially appropriate in this
case where there is no written
agreement or terms of reference to base
the relationship on; and due to the
complexity of the relationship based on
the various positions and
responsibilities given to the worker over
the period of the latter’s employment.
The determination of the relationship
between employer and employee
depends upon the circumstances of the
whole economic activity, such as:
her salary was reduced by (1) the extent to which the services
P2,500 a month. performed are an integral part of the
employer’s business;
(2) the extent of the worker’s investment
in equipment and facilities;
(3) the nature and degree of control
exercised by the employer;
(4) the worker’s opportunity for profit
and loss;
(5) the amount of initiative, skill,
judgment or foresight required for the
success of the claimed independent
enterprise;
(6) the permanency and duration of the
relationship between the worker and the
employer; and
(7) the degree of dependency of the
worker upon the employer for his
continued employment in that line of
business.
Under the broader economic reality test,
the petitioner can likewise be said to be
an employee of respondent corporation
because she had served the company for
six years before her dismissal, receiving
check vouchers indicating her salaries/
wages, benefits, 13th month pay,
bonuses and allowances, as well as
deductions and Social Security
contributions from August 1, 1999 to
December 18, 2000.

It is therefore apparent that petitioner is

economically dependent on respondent
corporation for her continued
employment in the latter’s line of
business.

A diminution of pay is prejudicial to the

employee and amounts to constructive
dismissal. Constructive dismissal is an
involuntary resignation resulting in
cessation of work resorted to when
continued employment becomes
impossible, unreasonable or unlikely;
when there is a demotion in rank or a
diminution in pay; or when a clear
discrimination, insensibility or disdain
 by an employer becomes unbearable to
an employee.
Great Insurance Brothers Rodrigo and Yes Article 280 of the Labor Code provides
Pacific Life Business Ernesto Ruiz entered into an that “[t]he provisions of written
Assurance individual agency agreement to the contrary
Corporation agreements with the notwithstanding and regardless of the
vs. NLRC petitioner. They started as oral agreements of the parties, an
G.R. Nos. trainee-agents and got employment shall be deemed to be
80750-51 promoted to higher positions. regular where the employee has been
July 23, One after the other, they engaged to perform activities which are
1990 became district managers usually necessary or desirable in the
and zone supervisors and usual business or trade of the employer.
were tasked to collect and . . .” Furthermore, in determining who
remit premium. is considered an “employee”, the Court
has time and again applied the “four-
However, they were fold” test,** with control being the most
dismissed after having been crucial and determinative indicator of an
found guilty of acts inimical employer-employee relationship.
to the interest of the Applying the above, the Court finds that,
company. as correctly held by public respondent,
the relationships of the Ruiz brothers
and Grepalife were those of employer-
employee.
First, their work at the time of their
dismissal as zone supervisor and district
manager are necessary and desirable to
the usual business of the insurance
company.

True, it cannot be denied that based on

the definition of an “insurance agent” in
the Insurance Code [Art. 300] some of
the functions performed by private
respondents were those of insurance
agents. Nevertheless, it does not follow
that they are not employees of Grepalife.
The Insurance Code may govern the
licensing requirements and other
particular duties of insurance agents,
but it does not bar the application of the
Labor Code with regard to labor
standards and labor relations.

Moreover, it is well-settled that the

existence of an employer-employee
relationship is ultimately a question of
fact, and such findings of fact of the
 labor arbiter and the NLRC shall be
accorded not only respect but even
finality when supported by substantial
evidence
Manila Utility ASDAI (agency) and Meralco No. As to the provision in the agreement that
Electric (company) entered into a MERALCO reserved the right to seek
Company Security Service Agreement replacement of any guard whose
vs. which provides the behavior, conduct or appearance is not
Benamira complainants the following satisfactory, such merely confirms that
G.R. No. duties and responsibilities the power to discipline lies with the
145271 for the Company: agency.
July 14, 1. Work on 8 hour security
2005 duty. It is a standard stipulation in security
2. Discharge duties and service agreements that the client may
responsibilities as provided request the replacement of the guards to
in the written specific it. Service-oriented enterprises, such as
instruction furnished by the the business of providing security
Company to the Agency. services, generally adhere to the
3. Company reserves the business adage that “the customer or
right to require without client is always right” and, thus, must
explanation replacement of satisfy the interests, conform to the
the guards. needs, and cater to the reasonable
impositions of its clients.
Neither is the stipulation that the agency
cannot pull out any security guard from
MERALCO without its consent an
indication of control. It is simply a
security clause designed to prevent the
agency from unilaterally removing its
security guards from their assigned
posts at MERALCO’s premises to the
latter’s detriment.

Needless to stress, for the power of

control to be present, the person for
whom the services are rendered must
reserve the right to direct not only the
end to be achieved but also the means
for reaching such end. Not all rules
imposed by the hiring party on the hired
party indicate that the latter is an
employee of the former. Rules which
serve as general guidelines towards the
achievement of the mutually desired
result are not indicative of the power of
control.
ASDAI and AFSISI are not “labor-only”
contractors.

There is “labor only” contract when the

person acting as contractor is
considered merely as an agent or
intermediary of the principal who is
responsible to the workers in the same
manner and to the same extent as if they
had been directly employed by him. On
the other hand, “job (independent)
contracting” is present if the following
conditions are met:
(a) the contractor carries on an
independent business and undertakes
the contract work on his own account
under his own responsibility according
to his own manner and method, free
from the control and direction of his
employer or principal in all matters
connected with the performance of the
work except to the result thereof; and
(b) the contractor has substantial capital
or investments in the form of tools,
equipment, machineries, work premises
and other materials which are necessary
in the conduct of his business.

Given the above distinction and the

provisions of the security service
agreements entered into by petitioner
with ASDAI and AFSISI, we are
convinced that ASDAI and AFSISI were
engaged in job contracting.

The individual respondents cannot be

considered as regular employees of the
MERALCO for, although security
services are necessary and desirable to
the business of MERALCO, it is not
directly related to its principal business
and may even be considered
unnecessary in the conduct of
MERALCO’s principal business, which
is the distribution of electricity.

The fact that there is no actual and

direct employer-employee relationship
between MERALCO and the individual
respondents does not exonerate
MERALCO from liability as to the
monetary claims of the individual
respondents.

When MERALCO contracted for security

services with ASDAI as the security
agency that hired individual
respondents to work as guards for it,
MERALCO became an indirect employer
of individual respondents pursuant to
Article 107 of the Labor Code, which
reads:

ART. 107. Indirect employer.—The

provisions of the immediately preceding
Article shall likewise apply to any
person, partnership, association or
corporation which, not being an
employer, contracts with an
independent contractor for the
performance of any work, task, job or
project. When ASDAI as contractor failed
 to pay the individual respondents,
MERALCO as principal becomes jointly
and severally liable for the individual
respondents’ wages, under Articles 106
and 109 of the Labor Code.
**Basay v Sugar Cane Complainants Romeo Basay, Basay and The court found that Basay and Literal
Hacienda Plantation Julian Literal and Julian Literal were employees but were not illegally
Consolacion Abueva were hired as were dismissed on the ground of
G.R. No. laborers in the Hacienda. employees. abandonment.
175532
April 19, Abueva We are not unmindful of the rule in labor
2010 was found cases that the employer has the burden
to be a of proving that the termination was for a
mere valid or authorized cause; however, it is
contractor. likewise incumbent upon the employees
that they should first establish by
competent evidence the fact of their
dismissal from employment.

The one who alleges a fact has the

burden of proving it and the proof
should be clear, positive and convincing.
In this case, aside from mere allegations,
no evidence was proffered by the

PAL v Ligan Transportation The Respondents, by virtue Yes
G.R. No. of the Contractual Agreement
146408. between PAL and Synergy
February Services Conrporation, were
29, 2008 tasked of the following:
a. Loading and unloading of
baggage and cargo to and
from the aircraft;
petitioners that they were dismissed
from employment. The records are bereft
of any indication that petitioners were
prevented from returning to work or
otherwise deprived of any work
assignment by respondents.
The elements to determine the existence
of an employment relationship are:
(1) selection and engagement of the
employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the employer’s power to control the
employee’s conduct.
Legitimate contracting and labor-only
contracting are defined in Department
Order (D.O.) No. 18-02, Series of 2002
(Rules Implementing Articles 106 to 109
of the Labor Code, as amended) as
follows:
Section 3. Trilateral relationship in
contracting arrangements. In legitimate
contracting, there exists a trilateral
b. Delivering of baggage relationship under which there is a
from the ramp to the baggage contract for a specific job, work or
claim area; service between the principal and the
c. Picking up of baggage contractor or subcontractor, and a
from the baggage sorting area contract of employment between the
to the designated parked contractor or subcontractor and its
aircraft; workers. Hence, there are three parties
d. Delivering of cargo involved in these arrangements, the
unloaded from the flight to principal which decides to farm out a job
cargo terminal; or service to a contractor or
e. Other related jobs (but subcontractor, the contractor or
not janitorial functions) as subcontractor which has the capacity to
may be required and independently undertake the
necessary; performance of the job, work or service,
and the contractual workers engaged by
the contractor or subcontractor to
accomplish the job, work or service.

Section 5. Prohibition against labor-only

contracting.—Labor-only contracting is
hereby declared prohibited. For this
purpose, labor-only contracting shall
refer to an arrangement where the
contractor or subcontractor merely
recruits, supplies or places workers to
perform a job, work or service for a
principal, and any of the following
elements are [sic] present:
(i) The contractor or subcontractor does
not have substantial capital or
investment which relates to the job,
work or service to be performed and the
employees recruited, supplied or placed
by such contractor or subcontractor are
performing activities which are directly
related to the main business of the
principal; OR

(ii) The contractor does not exercise the

right to control over the performance of
the work of the contractual employee.
Even if only one of the two elements is
present then, there is labor-only
contracting.

The express provision in the Agreement

that Synergy was an independent
contractor and there would be “no
 employer-employee relationship
between [Synergy] and/or its employees
on one hand, and [petitioner] on the
other hand” is not legally binding and
conclusive as contractual provisions are
not valid determinants of the existence
of such relationship. For it is the totality
of the facts and surrounding
circumstances of the case which is
determinative of the parties’
relationship.
Lopez vs. Warehouse Petitioner was engaged as a No. It is a basic rule of evidence that each
Bodega City Business lady keeper tasked with party must prove his affirmative
G.R. No. manning its ladies’ room by allegation. If he claims a right granted by
155731. virtue of a concessionaire law, he must prove his claim by
September agreement. competent evidence, relying on the
3, 2007. strength of his own evidence and not
upon the weakness of that of his
opponent.

The test for determining on whom the

burden of proof lies is found in the result
of an inquiry as to which party would be
successful if no evidence of such matters
were given.

In an illegal dismissal case, the onus

probandi rests on the employer to prove
that its dismissal of an employee was for
avalid cause. However, before a case for
illegal dismissal can prosper, an
employer-employee relationship must
first be established. In filing a complaint
before the Labor Arbiter for illegal
dismissal based on the premise that she
was an employee of respondent, it is
incumbent upon petitioner to prove the
employee-employer relationship by
substantial evidence.

A solitary petty cash voucher does not

prove that a person had been receiving
salary from another or that she had been
the latter’s employee for ten (10) years.

The so-called “control test” is commonly

regarded as the most crucial and
determinative indicator of the presence
or absence of an employer-employee
relationship. 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.

ID cards where the words “EMPLOYEE’S

NAME” appear printed therein do not
prove employer-employee relationship
where said ID cards are issued for the
purpose of enabling certain
“contractors,” such as singers and band
performers, to enter the premises of an
establishment.

Petitioner is likewise estopped from

denying the existence of the subject
concessionaire agreement. She should
not, after enjoying the benefits of the
concessionaire agreement with
respondents, be allowed to later disown
the same through her allegation that she
was an employee of the respondents
when the said agreement was
terminated by reason of her violation of
the terms and conditions thereof.

The principle of estoppel in pais applies

wherein—by one’s acts, representations
or admissions, or silence when one
ought to speak out—intentionally or
through culpable negligence, induces
another to believe certain facts to exist
and to rightfully rely and act on such
belief, so as to be prejudiced if the
former is permitted to deny the existence
of those facts.

Realistically, it would be a rare contract

of service that gives untrammeled
freedom to the party hired and eschews
any intervention whatsoever in his
performance of the engagement.
Logically, the line should be drawn
between rules that merely serve as
guidelines towards the achievement of
the mutually desired result without
dictating the means or methods to be
employed in attaining it, and those that
control or fix the methodology and bind
or restrict the party hired to the use of
such means. The first, which aim only to
promote the result, create no employer-
employee relationship unlike the
second, which address both the result
and the means used to achieve it.