Batch 3

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Atty. Anonuevo| G01 | A.Y. 2016-2017

01. A.C. RANSOM LABOR UNION-CCLU v. NATIONAL LABOR RELATIONS AUTHOR: ACIDO
COMMISSION, First Division, A.C. RANSOM (PHILS.) CORPORATION, RUBEN NOTES:
HERNANDEZ, MAXIMO C. HERNANDEZ, JR., PORFIRIO R. VALENCIA, LAURA H. Guys, yung naka-hyperlink sa outline, Motion for Reconsideration na nung kaso. I
CORNEJO, FRANCISCO HERNANDEZ, CELESTINO C. HERNANDEZ & MA. included some facts just in case (marked with *) but nasa 1986 decision yung
ROSARIO HERNANDEZ ruling relevant to the topic haha
G.R. No. L-69494, June 10, 1986/May 29, 1987 (MR)
TOPIC: Definition: Employer & Employee PONENTE: Melencio-Herrera, J. RANSOM A.C. Ransom Philippine Corporation
UNION A.C. Ransom Labor Union
ROSARIO Rosario Industrial Corporation
CASE LAW/ DOCTRINE:
Article 212 (c) of the Labor Code provides: (c) Employer includes any person acting in the interest of an employer directly or indirectly. The term shall not include
any labor organization or any of its officers or agents except when acting as employer. Since RANSOM is an artificial person, it must have an officer who can be
presumed to be the employer, being the "person acting in the interest of (the) employer" RANSOM. The corporation, only in the technical sense, is the employer.
FACTS:
RANSOM was established in 1933 by Maximo C. Hernandez, Sr. It was a "family" corporation, the stockholders of which were/are members of the Hernandez
family. It has a compound in Las Pinas Rizal, where it has been engaged in the manufacture mainly of ink and articles associated with ink.
June 6, 1961: Employees of RANSOM, most of them being members of petitioner Labor UNION, went on strike and established a picket line which was lifted on
June 21st with most of the strikers returning and being allowed to resume their work by RANSOM. 22 strikers were refused reinstatement by the company.
*August 19, 1972: The Court of Industrial Relations declared: RANSOM guilty of unfair labor practice of interference and discrimination and ordered its officers
and agents to cease and desist strike was legal and justified RANSOM must immediately reinstate dismissed employees, with backwages
o *22 employees backwages = Php 199,276.00. UNION filed Motions for Execution, which RANSOM opposed, stressing its precarious financial
position if immediate execution of the backwages would be ordered.
o *UNION filed a motion for RANSOM to deposit the backwages. RANSOM manifested that it did not have the necessary funds; eventually,
nakatawad. After several hearings, a recomputation was made and the award of P199,276.00 was reduced to P 164,984.00.
December 19, 1972: CIR ordered RANSOMs officers and agents to reinstate the 22 strikers with back wages from July 25, 1969.
April 2, 1973: RANSOM was granted clearance by the Secretary of Labor on June 7, 1973 to cease operation and terminate employment effective May 1, 1973,
without prejudice to the right of the subject employees to seek redress of grievances under existing laws and decrees. Reason: financial difficulties on account
of obligations incurred prior to 1966. Although it has stopped operations, RANSOM has continued its personality as a corporation.
*January 21, 1974: UNION filed another Motion for Execution, stating that although RANSOM claimed they were suffering financially, its officers and principal
stockholders had organized a new corporation, ROSARIO, using the same equipment, personnel, business stocks and the same place of business. But RANSOM
claimed that ROSARIO was a distinct and separate corporation, which was organized in 1969, long before the instant cases were decided adversely against
RANSOM.
o *It was a closed corporation engaged in the same line of business as RANSOM with the same Hernandez family as the owners, the same
officers, the same President, the same counsel and the same address at 555 Quirino Avenue, Paranaque, Rizal. The compound, building, plant,
equipment, machinery, laboratory and bodega were the same as those occupied and used by RANSOM.
Up to September 9, 1976, petitioner UNION had filed about 10 motions for execution against RANSOM; but all of them could not be implemented, presumably
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for failure to find leviable assets of RANSOM; although it appears that, in 1975, RANSOM had sold machineries and equipment for P28M to Revelations
Manufacturing Corporation.
December 18, 1978: UNION again filed an ex-parte Motion for Writ of Execution and Garnishment. RANSOM countered that the August 19, 1972 CIR Decision
could no longer be enforced by mere Motion because more than 5 years had already lapsed.
Labor Arbiter: Issued an order for the writ of execution for the Php 164k against 7 of RANSOMs officers and agents. *4 of the Hernandezes, all named in the
order, died between 1966 and 1979.
NLRC: On appeal, held that the officers and agents were not personally liable; no showing that they exceeded their authority.
ISSUE:
Whether or not the individual respondents (RANSOM officers and agents) are liable for the strikers back wages.

HELD:
Yes. NLRC decision set aside and LA order reinstated, BUT only Ruben Hernandez, the President of RANSOM in 1974, is personally liable. He is jointly and severally
liable with other RANSOM presidents elected from 1972 until termination of corporate life.
RATIO:
Article 265 of the labor Code, in part. expressly provides: Any worker whose employment has been terminated as a consequence of an unlawful lockout
shall be entitled to reinstatement with fill back wages. Article 273 of the Code provides that, Any person violating any of the provisions of Article 265 of
this Code shall be punished by a fine of not exceeding five hundred pesos and/or imprisonment for not less than one (1) day nor more than six (6) months.
How can the foregoing provisions be implemented when the employer is a corporation? Article 212 (c) of the Labor Code provides: (c) Employer includes
any person acting in the interest of an employer directly or indirectly. The term shall not include any labor organization or any of its officers or agents except
when acting as employer. Since RANSOM is an artificial person, it must have an officer who can be presumed to be the employer, being the "person
acting in the interest of (the) employer" RANSOM. The corporation, only in the technical sense, is the employer.
o *The inclusion of the officers and agents was but proper since a corporation, as an artificial being, can act only through them. It was also pursuant to
the
CIR Act (CA No. 103) SEC. 6. In case the employer or landlord committing any such violation or contempt is an association or corporation,
the manager or the person who has charge of the management of the business of the association or corporation and the officers or directors
thereof who have ordered or authorized the violation or contempt shall be liable.
Industrial Peace Act (R.A. 875) SEC. 2 (c) The Term "employer" includes any person acting in the interest of an employer. directly or indirectly
but shall not include any labor organization (otherwise than when acting as an employer or anyone acting in the capacity of officer or agent
of such labor organization.
Minimum Wage Law (R.A. 602) SEC. 2(b) "Employer" includes any person acting directive or indirectly in the interest of an employer in
relation to an employee and shall include the Government, and the government corporation.
The responsible officer of an employer corporation can be held personally, not to say even criminally, liable for non-payment of back wages. In PD 525,
where a corporation fails to pay the emergency allowance therein provided, the prescribed penalty "shall be imposed upon the guilty officer or officers" of
the corporation. If the policy of the law were otherwise, the corporation employer can have devious ways for evading payment of back wages. In the
instant case, it would appear that RANSOM, in 1969, foreseeing the possibility or probability of payment of back wages to the 22 strikers, organized
ROSARIO to replace RANSOM, with the latter to be eventually phased out if the 22 strikers win their case. RANSOM actually ceased operation on May 1,
1973, after the December 19, 1972 CIR Decision was promulgated against RANSOM.
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The record does not clearly Identify "the officer or officers" of RANSOM directly responsible for failure to pay the back wages of the 22 strikers. In the
absence of definite proof in that regard, the Court believes it should be presumed that the responsible officer is the President of the corporation who can
be deemed the chief operation officer thereof. Thus, in RA 602, criminal responsibility is with the "Manager" or in his default, the person acting as such. In
RANSOM, the President appears to be the Manager.

02. Orlando Farms Growers Association vs. NLRC AUTHOR: Adre
[G.R. No. 129076. November 25, 1998] NOTES:
TOPIC: definition: employer and employee
PONENTE: Romero, J
CASE LAW/ DOCTRINE:
an employer-employee relationship can be deduced from the existence of the following elements: (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 employees conduct.
FACTS:
Petitioners: Orlando Farms Growers Association and Glicerio Aover (President), an association of landowners engaged in the production of export quality bananas
located in Kinamayan, Sto. Tomas, Davao del Norte, established for the sole purpose of dealing collectively with Stanfilco on matters concerning technical services,
canal maintenance, irrigation and pest control, among others.

Private Respondents: hired as farm workers by several member- landowners but, nonetheless, were made to perform functions as packers and harvesters in the
plantation of petitioner association

Background:
Orlando dismissed the respondents on various dates (no reason stated why) and as a result several complaints were filed against Orlando for illegal dismissal
and monetary benefits.
Since all the cases were of similar grounds, they were consolidated in the office of Labor Arbiter Newton R. Sancho who, in a decision dated September 6,
1995 stated that respondents were illegally dismissed and ordered Orlando to pay individual complainants their respective backwages and other benefits
(wage differentials, 13th month pay and holiday pay) plus moral damages and attorneys fees.
Orlando appealed to NLRC but NLRC affirmed the LAs decision.
MR of Orlando was denied so this petition for certiorari was filed by Orlando.

Petitioners Arguments:
NLRC erred in finding that respondents were its employees and not of the individual landowners which fact can easily be deduced from the payments made
by the latter of respondents Social Security System (SSS) contributions.
it could have never exercised the power of control over them with regard to the manner and method by which the work was to be accomplished, which
authority remain vested with the landowners despite becoming members.
That they are an unregistered association and formed solely to serve as an affective medium for dealing collectively with Stanfilco.
Therefore, there exists no employer-employee relationship between them and respondents.

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ISSUE(S):
Related to topic: whether or not an unregistered association may be an employer independent of the respective members it represents. YES.
Not so related: Whether or not petitioner had a valid ground to dismiss respondents from their respective employment. No.
RATIO:
Article 212(e) of the Labor Code, as amended, defines an employer as any person acting in the interest of an employee, directly or indirectly.

The law does not require an employer to be registered before he may come within the purview of the Labor Code, consistent with the established rule in
statutory construction that when the law does not distinguish, we should not distinguish.

In the case of Filipinas Broadcasting Network, Inc. v. NLRC:
The following are generally considered in the determination of the existence of an employer- employee relationship: (1) the manner of selection and
engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control; of
these four, the last one being the most important.

Circumstances in the case at bar which support the existence of employer- employee relations cannot be denied.
several circulars and memoranda were issued concerning, among other things, absences without formal request, loitering in the work area and
disciplinary measures with which every worker is enjoined to comply.
the employees were issued identification cards which the Court, in the case of Domasig v. NLRC, construed, not only as a security measure but
mainly to identify the holder as a bonafide employee of the firm.
what makes the relationship explicit is the power of Orlando to enter into compromise agreements involving money claims filed by three of its
employees (Lorna Paquit, Lovella Dorlones and Jasmine Espanola.) [HINDI NAMAN INEXPLAIN ANO YUNG GINAWA NILA]

The Court said Orlandos preposterous claim that the ID card, circulars and memoranda were issued merely to facilitate the efficient use of common resources, as
well as to promote uniform rules in the work establishment is not acceptable.
Since (taking into account the observations of NLRC), while the original purpose of the formation of the association was merely to provide the landowners a
unified voice in dealing with Stanfilco, petitioner however exceeded its avowed intentions when its subsequent actions re-enforced only too clearly its admitted
role of employer (yung mga ID cards, circulars, and compromise agreements.).

For the not so related issue:
Employer bears the burden of proving that the dismissal is for just cause, failing which it would mean that the dismissal is not justified and the employer is
entitled to reinstatement.
The dismissal of employees must be made within the parameters of the law and pursuant to the basic tenets of equity, justice and fair play.
In Brahm Industries, Inc. v. NLRC: two (2) facets of valid termination of employment: (a) the legality of the act of dismissal, i.e., the dismissal must be under

any of the just causes provided under Art. 282 of the Labor Code; and (b) the legality of the manner of dismissal, which means that there must be
observance of the requirements of due process, otherwise known as the two-notice rule.
In the instant case, petitioner severed employment relations when it whimsically dismissed the respondents in utter disregard of the safeguards
underscored in the Constitution, as well as in the Labor Code.
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Petitioner failed to controvert the allegation that it was responsible for the dismissal of the employees.
Instead of denying the same or otherwise imputing liability on its member-landowner by naming the employees allegedly in his employ, petitioner was silent on the
issue and harped on the non- existence of employer-employee relationship between the parties.
Therefore, the respondents are entitled to receive full backwages from the date of their dismissal up to the time of their reinstatement.

03. Feati University v. Bautista AUTHOR: Castro
[G.R. No. L-21278, December 27, 1966] NOTES: Three consolidated petitions for Certiorari (G.R. Nos. L-21278, L- 21462,
TOPIC: Definition: Employer and Employee and L-21500). Included the other petitions but FOCUS on Certiorari #1. Long
PONENTE: Zaldivar, J. talaga. I tried L

CASE LAW/ DOCTRINE:
Section 2(c) of RA 875 Act: DefinitionsAs used in this Act (c) The term employer includes any person acting in the interest of an employer, directly or indirectly,
but shall not include any labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent of such labor
organization." Among these statutory exemptions, educational institutions are not included; hence, they can be included in the term "employer". An employer is
one who employs the services of others; one for whom employees work and who pays their wages or salaries. An employer includes any person acting in the
interest of an employer directly or indirectly. A university that engaged the services of professors, provided them work and paid them compensation or salary for
their services is an employer even if it considers itself a mere "lessee" of the services of said professors.

Section 2 (d) of Republic Act No. 875 provides: "(d) The term 'employee' shall include any employee and shall not be limited to the employee of a particular
employer unless the act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with, any current
labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment."' Correlatively, an
employee must be one who is engaged in the service of another; who performs services for another; who works for salary or wages. It is admitted by the University
that the striking professors and/or instructors are under contract to teach particular courses and that they are paid for their services. They are, therefore, employees
of the University.
BACKGROUND: Feati University Faculty Club (Faculty Club) is composed of members who are professors and/or instructors of Feati University (University). The
President of the Faculty Club wrote to University President Araneta a letter 1) informing her of the organization of the Faculty Club into a registered labor union; and
2) containing 26 demands that have connection with the employment of their members. The Counsel for the University, to whom the demands were referred, wrote
to the Faculty Clubs President demanding proof of its majority status and its designation as a bargaining representative. The Faculty Club filed a Notice of Strike with
the Bureau of Labor for the Universitys alleged refusal to bargain collectively and efforts to conciliate the parties failed. As a result, members of the Faculty Club
declared a strike and established picket lines in the premises of the University, resulting in the disruption of classes. The University and the striking faculty members
did not resolve their conflict despite further efforts from the Department of Labor. So on March 21, 1963, the President of the Philippines certified to the Court of
Industrial Relations the dispute between the management of the University and the Faculty Club pursuant to the provisions of Section 10 of Republic Act No. 875,
An Act to Promote Industrial Peace and for Other Purposes. In connection with the parties dispute, various cases, which gave rise to the present Petitions for
Certiorari, were filed with the Court of Industrial Relations (CIR).
FACTS:
G.R. No. L-21278 [Certiorari #1] Three cases are involved in this case: CIR Cases 41-IPA, 1183-MC, and V-30
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1. CIR Case No. 41-IPA (in connection with the strike staged by the members of the Faculty Club) 1st case
On the strength of the presidential certification to the CIR of the dispute, respondent Judge Bautista set the case for hearing on March 23, 1963.
During the hearing, it was agreed upon that the striking faculty members would return to work and the University would readmit them under a status quo
arrangement.
However, the University filed a Motion to Dismiss.
o Ground for MTD: CIR has no jurisdiction because RA 875 is not applicable to the University, it being an educational institution, nor to the members
of the Faculty Club, they being independent contractors
March 30, 1963 order: respondent Judge Bautista denied the motion to dismiss and declaring that the Industrial Peace Act (RA 875) is applicable to both parties
in the case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification. In the same order, Judge, believing that the
dispute could not be decided promptly, ordered the strikers to return immediately to work and the University to take them back under the last terms and
conditions existing before the dispute arose, as per agreement had during the hearing; and likewise enjoined the University, pending adjudication of the case,
from dismissing any employee or laborer without previous authorization from the CIR. [1st order sought to be annulled]
The University filed a Motion for Reconsideration of the order dated March 30, 1963.
Before the March 30, 1963 order was issued, University had employed professors and/or instructors to take the places of those professors and/or instructors
who had struck.
So, the Faculty Club filed a Petition to declare in contempt of court the University, alleging that it refused to accept the returning strikers, in violation of the
March 30, 1963 order.
April 6, 1963 order: "said replacements are hereby warned and cautioned, for the time being, not to disturb nor' in any manner commit any act tending to
disrupt the effectivity of the order of March 30, 1963, pending the final resolution of the same." [2nd order sought to be annulled] MR was filed.

2. CIR Case No. 1183-MC 2nd case
Faculty Club filed a Petition for certification election before the CIR, praying that it be certified as the sole and exclusive bargaining representative of all the
employees of the University, to which the University opposed and filed a Motion to Dismiss raising the same issue that CIR has no jurisdiction because RA 875
is inapplicable.
Before Judge Villanueva could act on the MTD, Faculty Club filed a Motion to Withdraw the petition on the ground that the issues raised in this 2nd case were
already absorbed in the 1st case, to which the University opposed.
April 6, 1963 order: granted the Withdrawal of the petition [3rd order sought to be annulled] MR was also filed.

3. CIR Case No. V-30 3rd case
Faculty Club, thru the Acting Chief Prosecutor of the CIR, filed a Complaint for Indirect contempt against Pres. Victoria L. Araneta, Dean Daniel Salcedo,
Executive VP Rodolfo Maslog, and Asst. to the President Jose Segovia (officials of the University) for violation of the March 30, 1963 order.
April 29, 1963 order: Judge Bautista commanded any officer of the law to arrest the above named officials of the University so that they may be dealt with in
accordance with law, and the same time fixed the bond for their release at P500.00 each. [4th order sought to be annulled]

*Note: When this first Petition for Certiorari and Prohibition with Preliminary Injunction was filed, the Motions for Reconsideration filed by the University were still
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pending. On May 10, 1963, the Court issued a Writ of Preliminary Injunction ordering respondent Judge Bautista (Presiding Judge of the CIR) until further order
from the Court, to desist and refrain from proceeding with the 3 cases mentioned above.

G.R. No. L-21462 [Certiorari #2] Involves the 2nd case (1183-MC)
June 5, 1963 resolution: the CIR en banc denied the Motion for Reconsideration of the April 6, 1963 order in the 2nd case.
Hence, the University filed this second Petition for Certiorari by way of an appeal
Universitys allegations: a) June 5, 1963 resolution was null and void because it was issued in violation of the Writ of Preliminary Injunction; and b) Motion to
withdraw the petition for certification election should not have been granted because the issues of employer-employee relationship, the alleged status as a
labor union, majority representation and designation as bargaining representative in an appropriate unit of the Faculty Club should have been resolved first
Faculty Club: The writ of injunction was issued against Judge Bautista and not against the Court of Industrial Relations, much less against Judge Baltazar
Villanueva who was the trial judge of the 2nd case.

G.R.No. L-21500 [Certiorari #3] Involves the 1st case
May 7, 1963 resolution: CIR en banc denied the Motion for Reconsideration of the March 30, 1963 order in the 1st case. (The resolution was stamped at the
Clerk of Court on June 28 and received by the University on July 2)
Hence, the University filed this third Petition for Certiorari by was of appeal.
Universitys allegations: a) May 7, 1963 resolution was null and void because it was issued in violation of the Writ of Preliminary Injunction; b) CIR had no
jurisdiction to decide on the 1st case; c) certification made by the President of the Philippines is not authorized by Section 10 of Republic Act 875; d) that the
Faculty Club has no right to unionize or organize as a labor union for collective bargaining purposes and to be certified as a collective bargaining agent; and
e) return-to-work order of March 30, 1963 is improper and illegal.
Faculty Club: petition for certiorari is not proper because the orders appealed from are interlocutory in nature.
Universitys main contentions:
Republic Act No. 875 is not applicable to the University because it is an educational institution not an industrial establishment and hence, not an
"employer" in contemplation of the Act
Republic Act No. 875 is likewise not applicable to the members of the Faculty Club because they are independent contractors and, therefore, not employees
within the purview of the Act.
ISSUE:
1. Whether RA 875 (Industrial Peace Act) is applicable
2. Whether the University is an employer
3. Whether the faculty members are employees
HELD: YES. YES. YES.
RATIO:
The University argues that being an educational institution, it is beyond the scope of Republic Act No. 875. However, the Supreme Court had already ruled in
various cases (University of San Agustin vs. CIR, University of Santo Tomas v. Hon. Baltazar Villanueva, and La Consolacion College, et al. vs. CIR) that what
are excluded from the operation of Republic Act 875 are those entities which are not organized, maintained, and operated for profit and do not declare
dividends to stockholders. Further, in the Far Eastern University v. CIR case, the Court had unanimously decided that an educational institution that is
operated for profit comes within the scope of RA 875. Therefore, it is a settled doctrine that the Industrial Peace Act is applicable to any organization or
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entitywhatever may be its purpose when it was createdthat is operated for profit or gain. In this case, the University itself admits that it has declared
dividends.

Feati University is an employer

The University claims that it is not an employer within RA 875 because it is not an industrial establishment. At most, it says, it is only a lessee of the services of its
professors and/or instructors pursuant to a contract of services entered into between them. Wrong!

Section 2(c) of RA 875 Act provides: DefinitionsAs used in this Act (c) The term employer includes any person acting in the interest of an employer, directly
or indirectly, but shall not include any labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent of such labor
organization."

In using the word "includes" and not "means", Congress did not intend to give a complete definition of "employer", but rather that such definition should be
complementary to what is commonly understood as employer.
Congress intended the term to be understood in a broad meaning because:
1) The statutory definition includes not only "a principal employer but also a person acting in the interest of the employer"; and
2) The Act itself specifically enumerated those who are not included in the term "employer", namely:
(a) a labor organization (otherwise than when acting as an employer);
(b) anyone acting in the capacity of officer or agent of such labor organization [Sec. 2(c)]; and
(c) the Government and any political subdivision or instrumentality thereof insofar as the right to strike for the purpose of securing changes or modifications
in the terms and conditions of employment is concerned (Section 11)
Among these statutory exemptions, educational institutions are not included; hence, they can be included in the term "employer".
An employer is one who employs the services of others; one for whom employees work and who pays their wages or salaries. An employer includes any
person acting in the interest of an employer directly or indirectly. A university that engaged the services of professors, provided them work and paid them
compensation or salary for their services is an employer even if it considers itself a mere "lessee" of the services of said professors.

Other definitions of Employer:
"one who employs; one who uses; one who engages or keeps in service;" and "to employ" is "to provide work and pay for; to engage one's service; to hire."
"every person or association of persons, incorporated or not, public or private, and the legal representative of the deceased employer" and "includes the
owner or lessee of a factory or establishment or place of work or any other person who is virtually the owner or manager of the business carried on in the
establishment or place of work but who, for reason that there is an independent contractor in the same, or for any other reason, is not the direct employer
of laborers employed there." (Workmens Compensation Act)
"employer includes any person acting directly or indirectly in the interest of the employer in relation to an employee and shall include the Government and
the government corporations" (Minimum Wage Law)
"any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of any kind and
uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions,
branches or instrumentalities, including corporations owned or controlled by the Government. (Social Security Act)
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The faculty members are employees

University urges that even if it were an employer, there would still be no employer-employee relationship between it and the striking members of the Faculty Club
because the latter are not employees within the purview of Sec. 2(d) of Republic Act No. 875 but are independent contractors. Still wrong!

Section 2 (d) of Republic Act No. 875 provides: "(d) The term 'employee' shall include any employee and shall not be limited to the employee of a particular
employer unless the act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with, any
current labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment."'

Again, the definition, by using "include" instead of means, is complementary. It embraces not only those who are usually and ordinarily considered
employees, but also those who have ceased as employees as a consequence of a labor dispute. The term "employee" is not limited to those of a particular
employer. Under the Industrial Peace Act independent contractors are included in the term "employee".
Correlatively, an employee must be one who is engaged in the service of another; who performs services for another; who works for salary or wages. It is
admitted by the University that the striking professors and/or instructors are under contract to teach particular courses and that they are paid for their
services. They are, therefore, employees of the University.
The professors and/or instructors of the University neither ceased to be employees when they struck because RA 875 included among employees any
individual whose work has ceased as consequence of, or in connection with labor disputes. Striking employees, maintain their status as employees of the
employer.
Professors and instructors are not independent contractors. The Court may take judicial notice that a university controls the work of the members of its
faculty; that it prescribes the courses or subjects that they teach and the time and place for teaching; that the professor's work is characterized by regularity
and continuity for a fixed duration; that professors are compensated for their services by wages and salaries, rather than by a share of the profits; that
professors or instructors cannot control their work. Therefore, employees and not independent contractors.

04. Madrigal Shipping Co. v. Melad AUTHOR: Miguel M. Consing
[G.R. No. L-17362 and L-17367-69; February 28, 1963] NOTES:
TOPIC: Employer-Employee Relationship
PONENTE: Regala, J.
FACTS:
The S.S. Cetus was owned and operated by Madrigal Shipping Co., Inc. On November 25, 1955, it left the port of Aparri for Manila. However, after sailing
five miles, the officers of the ship decided to return to port for repair of its rudder.

The captain sent a message to the ships agent in Aparri who informed the Aparri Pilots Association of the situation.

Primitivo Siccuan (chief pilot) and Francisco Ricerra, (district pilot) of the pilots association, made arrangements with Filoteo Siccuan and Domingo Batta to
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take them by boat to the ship in distress.

The party reached the ship past 12 MN, unfortunately the ship sank and the 4 died.

Four claims were filed in the Workmens Compensation Commission against Madrigal. The claimants were awarded after hearing.

Madrigal claimed that there was no employer-employee relationship between them and the deceased on the grounds that:

o Its pilotage contract was with the Aparri Pilots Association and not with its members;
o The salaries of the pilots were paid by the Association, not Madrigal;
o Madrigal had no control over the action of the Chief pilot and district pilot; and
o the service of Filoteo Siccuan and Domingo Batta were contracted by the pilots association and not by Madrigal.
ISSUE(S):
Were the deceased employees of Madrigal Shipping Co.?
HELD/RATIO:
Yes. As pointed out by the Workmens Compensation Commission, Primitivo Siccuan and Francisco Ricerra were members of the Aparri Pilots Association, not its
employees. While it is true that their salaries were paid by the association, it is also true that these salaries were taken out of the pilotage fees paid by vessels. The
pilots association cannot be considered an independent contractor so as to free the petitioner from the liability of an employer because it appears to have neither
capital nor money to pay its employees nor does it appear to have filed a bond.

A pilot is responsible for the direction of the vessel from the moment he assumes control of the same, the provision nevertheless makes the conduct of the pilot
subject to approval by the master of the vessel. That is why it relieves the pilot of responsibility if his action is disapproved by the master of the vessel (Customs
Admin Order 69).

With regard to Filoteo Siccuan and Domingo Batta, who were actually employeed by the Association, the services of the two were needed so that the pilots could be
taken to the S.S. Cetus. It is well settled that a person who is asked for help in an emergency which threatens the employers interests becomes an employee under
an implied contract of hire.
CASE LAW/ DOCTRINE:
he Workmens Compensation Law should be construed fairly, reasonably, or liberally in favor of and for the benefit of employees and their dependents and all doubt
as to right of compensation resolved in their favor and all presumptions indulged in their favor.

05. J. Reyes v. Glaucoma Research Foundation, Eye Referral Center AUTHOR: Pineda
[G.R. No. 189255; 17 June 2015] NOTES:
TOPIC: ER-EE relationship PONENTE: Peralta, J.
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CASE LAW/ DOCTRINE:
Four standards in determining ER-EE relationship
o Manner of selection and engagement of the putative EE
o Mode of payment of wages
o Presence or absence of power of dismissal
o Presence or absence of control of the putative EEs conduct
Control Test: power of the ER to control the work of the EE control over both the end achieved and the manner and means used to achieve that end

FACTS:
Reyes was hired by the Eye Referral Center (ERC) for the purpose of formulating an organizational set-up and employees manual. He was eventually
dismissed.
Reyes filed a case for illegal dismissal with NLRC. LA dismissed case. NLRC reversed LA. CA ultimately dismissed case on the ground that there is no ER-EE
relationship, hence LA and NLRC had no jurisdiction.
Facts concerning Reyes ERC Relationship
o No control over working hours Reyes can show up in the office at any time
o Reyes was also working as a consultant for various government agencies
o Discretion in performance of duties
o Actions not supervised

ISSUE(S): W/N there is an ER-EE relationship

HELD: NO. Petition dismissed. No jurisdiction.

RATIO:
In an illegal dismissal case, the onus probandi rests on the ER to prove that its dismissal of an EE was for valid cause. However, before a case for illegal
dismissal can prosper, an ER-EE relationship must first be established.
Factors must be established by substantial evidence
o Who has the power to select the EE
o Who pays the EE wages
o Who has the power to dismiss the EE
o Who exercises control of the methods and results by which the work of EE is accomplished
Four standards in determining ER-EE relationship
o Manner of selection and engagement of the putative EE
o Mode of payment of wages
o Presence or absence of power of dismissal
o Presence or absence of control of the putative EEs conduct
Control Test: power of the ER to control the work of the EE control over both the end achieved and the manner and means used to achieve that end
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o Reyes: ERC was exercising control by subjecting his organizational plans to their approval
o SC: ERCs power to approve the organizational plans is NOT control. It is but logical that the one who commissions another to do a piece of work
should have the right to accept or reject. Control must be over how the work itself is done, not just the end result thereof.
Economic Reality Test: the economic realities prevailing within the activity or between the parties are examined, taking into consideration the totality of
circumstances surrounding the true nature of the relationship
o SC: Test not met. Reyes was not wholly dependent on ERC for his income, as he held other consultancy posts.
Reyes: Pay slips evidence of employment
o SC: Designation of payment as salaries is not determinative of ER-EE relationship. Salary is a general term for remuneration.
Reyes: Designation as intra-company correspondence + ID card evidence of employment
o Mere title of designation in a corporation will not, by itself, determine the existence of ER-EE relationship
DISSENTING/CONCURRING OPINION(S):

06. SONZA vs. ABS-CBN AUTHOR: De Leon
[G.R. No. Date] G.R. No. 138051 June 10, 2004 NOTES:
TOPIC: Employer-employee relationship
PONENTE: CARPIO, J.
CASE LAW/ DOCTRINE:
FACTS:
In May 1994, respondent ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation (MJMDC) represented by Jose Y.
Sonza and Carmela Tiangco. Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for
radio and television. On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, saying that he irrevocably resigns in view of recent
events concerning his programs and career. The acts of the station are violative of the Agreement and said letter will serve as notice of rescission of said
contract. The letter also contained the waiver and renunciation for recovery of the remaining amount stipulated but reserves the right to seek recovery of
the other benefits under said Agreement. On 30 April 1996, SONZA filed a complaint against ABS-CBN before the DOLE- NCR Q.C.. SONZA complained for
none payment of 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 employee-employer relationship existed between the
parties.
The Labor Arbiter denied the motion to dismiss by respondents but later dismissed the complaint for lack of jurisdiction.
SONZA appealed to the NLRC but it affirmed the Labor Arbiters decision. SONZA filed a motion for reconsideration, which the NLRC also denied.
The Court of Appeals affirmed the Decision. Hence, this petition.
ISSUE(S): W/N there exist an employer-employee relationship between Sonza and ABS-CBN.

HELD: No

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RATIO:
SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case law has consistently held that the elements of an
employer-employee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee on the means and methods by which the work is accomplished

Selection and Engagement of Employee

Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary 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.

Payment of Wages

All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were 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

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.

Power of Control

Applying the control test, SONZA is not an employee but an independent contractor. 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-CBNs control was limited only to the result of SONZAs work, whether to broadcast the final
product or not. The records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows. 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 right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an
individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to
render his services without any one controlling the means and methods by which he performs his art or craft. If radio and television program hosts can render their
services only as employees, the station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to
freedom of the press. SONZAs claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor Code.

Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and implementation of the May 1994 Agreement. In
effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.
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07. ROYAL HOMES MARKETING CORP V ALCANTARA AUTHOR: DELFIN
[G.R. No. 195190 July 28, 2014] NOTES:
TOPIC: Limits of Management Power
PONENTE: DEL CASTILLO
CASE LAW/ DOCTRINE:
Not every form of control that a hiring party imposes on the hired party is indicative of employee-employer relationship. Rules and regulations that merely serve as guidelines
towards the achievement of a mutually desired result without dictating the means and methods of accomplishing it do not establish employer-employee relationship.
FACTS:
Royale Homes is engaged in marketing real estates. It appointed Alcantara as Marketing Director for a fixed period of one year. His work consisted mainly of marketing
Royale Homes real estate inventories on an exclusive basis. Royale Homes reappointed him for several consecutive years, the last of which covered the period January 1 to
December 31, 2003 where he held the position of Division 5 Vice-President-Sale.

In December 17, 2003, Alcantara filed a complaint of Illegal Dismissal against Royale Holmes, also impleading some of its employees. (President Matilde Robles, Executive
Vice-President for Administration and Finance Ma. Melinda Bernardino, and Executive Vice- President for Sales Carmina Sotto)

Alcantara claims that he is a regular employee of Royale Homes since he is performing tasks that are necessary and desirable to its business and that the acts of the Exec
Officers alienating him amounted to a constructive dismissal.

He prayed to be reinstated this former position without loss of seniority rights and other privileges, as well as to be paid backwages, moral and exemplary damages, and
attorneys fees, He also wants ownership of the Mitsubishi Adventure be transferred to his name.

Royal Homes on the other hand claims that Alcantara is not an employee and argued the following:
1. The appointment paper of Alcantara is clear that it engaged his services as an independent sales contractor for a fixed term of one year only.
2. He never received any salary, 13th month pay, overtime pay or holiday pay from Royale Homes as he was paid purely on commission basis.
3. Royale Homes had no control on how Alcantara would accomplish his tasks and responsibilities as he was free to solicit sales at any time and by any manner
which he may deem appropriate and necessary.

Also, Royal Holmes avers that Alcantara decided to leave the company after his wife, who was once connected with it as a sales agent, had formed a brokerage company
that directly competed with its business, and even recruited some of its sales agents, which is against the exclusivity clause of his contract.
LABOR ARBITER:
Alcantara is an employee of Royale Homes with a fixed-term employment period from January 1 to December 31, 2003 and that the pre-termination of his contract was
against the law.
NLRC:
Alcantara is not an employee but a mere independent contractor of Royale Homes. It based its ruling mainly on: 1. The contract which does not require Alcantara to
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observe regular working hours. H
2. He was also free to adopt the selling methods he deemed most effective and can even recruit sales agents to assist him in marketing the inventories of Royale Homes.
3. The fact that Alcantara was not receiving monthly salary, but was being paid on commission basis as stipulated in the contract.
COURT OF APPEALS:
Reversed the NLRCs Decision. Held that Alcantara is an employee: (used the four- fold economic reality test this wasnt discussed in the case pero parang same din sha sa
baba I think)
1. Royale Homes exercised some degree of control over Alcantara since his job is subject to company rules, regulations, and periodic evaluations.
2. He is also bound by the company code of ethics.
3. The exclusivity clause of the contract has made Alcantara economically dependent on Royale Homes, supporting the theory that he is an employee of said company.

ISSUE(S): Whether or not Alcantara was an independent contractor or an employee of Royale Homes?

HELD: Alcantara is not an employee of Royale Homes, but a mere independent contractor.

RATIO:
The primary evidence of the nature of the parties relationship in this case is the written contract that they signed and executed in pursuance of their mutual agreement.
While the existence of employer-employee relationship is a matter of law, the characterization made by the parties in their contract as to the nature of their juridical
relationship cannot be simply ignored, particularly in this case where the parties written contract unequivocally states their intention at the time they entered into it.
(CONTRACT CLLEARLY STATES THAT "no employer-employee relationship exists between" Royale Homes and Alcantara, as well as his sales agents.)

In determining the existence of an employer-employee relationship, this Court has generally relied on the four-fold test, to wit: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employers power to control the employee with respect to the means and methods by which
the work is to be accomplished.

The Court used the control test to determine the juridical relationship of the parties.

Power of Control: (see argument of CA above, below is what the court said on that)
Not every form of control is indicative of employer-employee relationship. A person who performs work for another and is subjected to its rules, regulations, and code of
ethics does not necessarily become an employee. As long as the level of control does not interfere with the means and methods of accomplishing the assigned tasks, the
rules imposed by the hiring party on the hired party do not amount to the labor law concept of control that is indicative of employer-employee relationship.
Payment of Wages:
Alcantaras remunerations consist only of commission override of 0.5%, budget allocation, sales incentive and other forms of company support. There is no proof that he
received fixed monthly salary. No payslip or payroll was ever presented and there is no proof that Royale Homes deducted from his supposed salary withholding tax or that
it registered him with the Social Security System, Philippine Health Insurance Corporation, or Pag-Ibig Fund. In fact, his Complaint merely states a ballpark figure of his
alleged salary of P100,000.00, more or less. All of these indicate an independent contractual relationship.
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08. DISSENT of J. Brion in Re: Request of (Ret.) Chief Justice Artemio V. AUTHOR: Enriquez
Panganiban For Recomputation of His Creditable Service For The Purpose of
Recomputing His Retirement Benefits NOTES: Sorry mahaba. Madaming sinabi si Justice Brion sa dissent niya e at
feeling ko baka tanungin sa atin ni Morgan Freeman. Just in case, I also included
A.M. No. 10-9-15-SC, February 12, 2013 the ratio of the majority view.

TOPIC: Work Relationship; Employer-Employee Relationship; A Question of Fact;
Factors in Determining Existence; the Control Test and the Economic Reality
Test

PONENTE: Perlas-Bernabe
CASE LAW/ DOCTRINE:
FACTS: Former Chief Justice Panganiban retired on December 6, 2006 under the provisions of R.A. No. 910 which required that for purposes of lifetime annuity, the
minimum age and service requirements: (1) of at least 20 years of service either in the Judiciary or in any other branch of the Government, or in both; (2)
retirement for having attained the age of 70, or resignation by reason of his incapacity to discharge the duties of his office.

When CJ Panganiban compulsorily retired at the age of 70, with 11 years, one month and 27 days or 11.15844 years of government service, as computed by the
Office of Administrative Services (OAS). This computation was never disputed. These years were wholly spent as a Justice of the Supreme Court.

Prior to his retirement in 2006, former CJ Panganiban had made a first request that his four-year service as consultant of the Board of National Education (BNE) and
as legal counsel to DepEd Sec. Roces be considered as "creditable government service" for purposes of his retirement benefits. He attached to this application
Secretary Roces and Solicitor Pardos Sworn Certification which acknowledged that CJ Panganiban served as CONSULTANT.
Atty. Eden T. Candelaria, Deputy Clerk of Court and Chief Administrative Officer, OAS, merely noted former Chief Justice Panganibans claimed consultancy services.
He was credited with only 11 years, one month, and 27 days of government service clearly excluding the consultancy service now being claimed. Thus, former Chief
Justice Panganiban was given his five-year lump sum benefit under R.A. No. 910 and was not granted the lifetime annuity that begins five (5) years after retirement.
However, a law was passed which reduced the 20-year requirement to only 15 years. Hence, CJ Panganiban again requested before the Deputy Clerk of Court that
his consultancy agreement with Sec. Roces and BNE be accredited in order to comply with the 15-year requirement and hence, be given a lifetime annuity. CJ
Panganiban also invoked the rulings in the cases of former Chief Justice Narvasa and retired Justice Sarmiento where the Court included the services rendered by
the two justices as general counsel of the Agrava Board and as special legal counsel of the University of the Philippines, respectively, as creditable government
service.
Atty. Eden T. Candelaria, Deputy Clerk of Court denied the request again.
That the services of CJ Panganiban as legal counsel to then Secretary Roces was rendered only to the Board of National Education (BNE) in the practice of
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his legal profession.
While Secretary Roces was a member of the BNE in an ex-oficio capacity as Secretary of Education, there is no showing that CJ Panganiban actually rendered
legal services directly to the Department of Education.

ISSUE(S): Whether CJ Panganibans consultancy work should be considered as government service

HELD: According to the Majority, YES. However, Justice Brion dissented.
RATIO: CJ Panganiban performed work ranging from high level assignments involving policy development and implementation to the more humble tasks of selection
and distribution of educational materials and setting of school calendars. He himself views his work, thus: "unlike some present day consultants or counsels of
government offices and officials, I rendered full and actual service to the Philippine government, working daily at an assigned desk near the Office of the Secretary of
Education throughout the full term of Secretary Alejandro R. Roces, January 1962 to December 1965."

Under the old Administrative Code (Act No. 2657), a government "employee" includes any person in the service of the Government or any branch thereof of
whatever grade or class. A government "officer," on the other hand, refers to officials whose duties involve the exercise of discretion in the performance of the
functions of government, whether such duties are precisely defined or not. Clearly, the law, then and now, did not require a specific job description and job
specification. Thus, the absence of a specific position in a governmental structure is not a hindrance for the Court to give weight to CJ Panganibans government
service as legal counsel and consultant. It must be remembered that retired Chief Justice Andres R. Narvasas (CJ Narvasa) stint in a non-plantilla position as Member
of the Court Studies Committee of the Supreme Court, created under Administrative Order No. 164 of then Chief Justice Querube C. Makalintal, was considered
sufficient for purposes of crediting him with an additional five (5) years of government service, reckoned from September 2, 1974 to 1979.
In any case, having previously ruled to include as creditable government service the post-retirement work of Justice Abraham T. Sarmiento as Special Legal
Counsel to the University of the Philippines System and to credit former CJ Narvasa with the legal counselling work he did for the Agrava Fact-Finding Board to which
he was appointed General Counsel by then President Marcos, the Court sees no reason not to likewise credit in CJ Panganibans favor the work he had performed as
Legal Counsel to the DepEd and its Secretary, not to mention his concurrent work as consultant to the BNE, and accordingly, qualify him for entitlement to
retirement benefits.
DISSENTING OPINION OF JUSTICE BRION:

Based from CJ Panganibans own record his Bio Data and Personal Data Sheet filed immediately after he joined the Court shows that he was in private law
practice at the time he now claims to have been in government service. This record shows that he was then in private law practice as Senior Partner ofPanganiban,
Benitez, Parlade Africa & Barinaga Law Office (PABLAW) from 1963-1995.
Also, NO GOVERNMENT SERVICE WAS INVOLVED. Assuming that he did render consultancy service, this service is not "government service" that can be credited for
retirement purposes since the elements of Public Office and Public Officer do not exist. The consultancy work did not qualify former Chief Justice Panganiban as a
"public officer" occupying a "public office" as the law and the Civil Service rules require since:
1. he was neither elected nor appointed to a public office that was created by law, but his consultancy is through a mere contract;
2. he did not render service in the performance of a governmental function; and
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3. the fact of appointment and of the required oath are likewise missing.
The CSC, in the first place, has long clarified and defined what "consultancy" means. Its definition of the term "consultant" in its Resolution No. 95-6939 (Pagaduan v.
Malonzo) held that a "consultant" to be one who provides professional advice on matters within the field of his special knowledge or training. There is no
employer-employee relationship in the engagement of a consultant but that of client-professional relationship. Thus, consultancy services and a consultant is not a
government employee. Consequently, a contract of consultancy is not submitted to the Commission for approval.
No proof of employment relationship likewise existed (MOST IMPORTANT)
To determine the existence of an employer-employee relationship, the Court has consistently adhered to the four-fold test and has asked: "(1) whether the alleged
employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by
which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the control test is the most
important element," and its absence renders any further discussion a surplusage.
Recent jurisprudence adds another test, applied in conjunction with the control test, in determining the existence of employment relations. The two-tiered test
involves an inquiry into: "(1) the putative employers power to control the employee with respect to the means and methods by which the work is to be
accomplished [control test]; and (2) the underlying economic realities of the activity or relationship [broader economic reality test]."
Employment relationship under the control test is determined by asking whether "the person for whom the services are performed reserves [a] the right to control
not only the end [to be] achieved but also the manner and means [to be used in reaching such] end."
The broader economic reality test calls for the determination of the nature of the relationship based on the circumstances of the whole economic activity, namely:
(1) the extent to which the services performed are an integral part of the employers business;
(2) the extent of the workers investment in equipment and facilities;
(3) the nature and degree of control exercised by the employer;
(4) the workers opportunity for profit and loss;
(5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise;
(6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker on the employer for his continued employment in that line of business.
The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of
business."
The two-tiered test gives a complete picture of the relationship between the parties. Aside from the employers power to control the employee, an inquiry into the
economic realities of the relationship helps provide a comprehensive analysis of the true classification of the individual, whether as employee, independent
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contractor, corporate officer or some other capacity.
In this case, The Sworn Certifications do not expressly claim that former Chief Justice Panganiban was in an employment relationship with the BNE and with the
DepEd. What they expressly state is that former Chief Justice Panganiban rendered "actual services," as a consultant,
The statement alone that former Chief Justice Panganiban was a "consultant" already raises alarm bells for questions that the Sworn Certifications do not (and
apparently cannot) answer. Aside from questions arising from the Civil Service rules and rulings, the Court can judicially notice that the position of "consultant" is not
included in the organizational chart of government agencies as the services a consultant renders are usually demanded by exigencies of the service or by the lack of
qualified persons to perform the required tasks in the organization.
The omission, however, should be significant as it can be read as an implied admission of how former Chief Justice Panganiban actually stood at the BNE or the
DepEd a consultant who did not occupy any fixed position that would entitle him to recognition as a public officer.
Even granting that former Chief Justice Panganiban was paid a monthly compensation, the Sworn Certifications attest only to the matter of payment. The fact of
payment per se, however, is meaningless in an employer-employee relationship issue where the evidence expressly states that actual services were rendered as
"consultant." In fact, if indeed payment had been paid for consultancy work, that indeed the payments were made in the concept of retainer fees is an easy
inference to make if we consider that, at that time CJ Panganiban was in active law practice, initially as an Associate in the Salonga Law Office and later as the Senior
Partner of PABLAW.
Neither do the submitted Sworn Certifications satisfy the broader economic reality test to establish that an employer-employee relationship existed
First, while the consultancy services performed by CJ Panganiban may be important, the records do not show that they were vital to the operations of the BNE and
of the DepEd. Notably, the plantilla of both the BNE and the DepEd under E.O. No. 94, series of 1947, did not include any item for legal counsel or consultant.
Without a public position to which he had been appointed, the services rendered by CJ Panganiban by way of consultancy would only amount to services specific to
the BNE or for the Secretary, for their sole benefits, and at most paid from a budget for outside consultants that the budget of these government offices might
have allowed.
Under these circumstances and without any position in the BNE or the DepEd structural hierarchy, former Chief Justice Panganiban simply remained a private
lawyer on call for specific questions or requirements of the BNE and of Secretary Roces.
Second, The incompatibility of simultaneously holding public and private employment should lead to no other conclusion than that there was only a consultancy
arrangement which was part of former Chief Justice Panganibans legal practice.
Third, CJ Panganiban continued with his private law practice even after the termination of his consultancy services. This continuity indicates that he has been in
private law practice all the time and simply rendered consultancy services on the side. In other words, his consultancy service was separate from and was not
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dependent on any employment relationship with the government.
In these lights, the Sworn Certifications do not clearly indicate that an employer-employee relationship, requiring the elements of control and dependency, existed
between former Chief Justice Panganiban, on the one hand, and the BNE and Secretary Roces, on the other hand. On the contrary, these sworn statements read
jointly with former Chief Justice Panganibans Bio Data and Personal Data Sheet point to the existence of a consultancy extended to former Chief Justice
Panganiban as a lawyer on active private law practice.

9 Benigno vs. ABS-CBN Corporation AUTHOR: Garcia
[G.R. No. 199166 April 20, 2015] NOTES:
TOPIC: Employer-Employee Relationship: a Question of Fact; Factors in Determining Petitioners:
Existence; The Control Test and the Economic Reality Test Nelson V. Benigno
PONENTE: Perez, J. Gener Del Valle
Monina Villa-Llorin
Ma. Cristina Sumayao
Project: TV PATROL BICOL
CASE LAW/ DOCTRINE:
Four-fold test:
The selection and engagement of the employee
The payment of wages
The power of dismissal
The employers power to control the employee on the means and methods by which the work is accomplished.

Control test an employer employee relationship is said to exist where the person for whom the services are performed reserves the right to control not only the end result but also
the manner and menas utilized the achieve the same.
FACTS:
ABS-CBN Corporation, for its Regional Network Gorup in Naga City, employed Villafuerte as Manager. Thru Villafuerte, ABS-CBN engaged the services of Benigno and Del Valle
sometime in 1996 as Cameramen/Editors for TV Broadcasting. Sumaya and Llorin were engaged as reporters sometime in 1996 and 2002, respectively.
Their services were engaged by respondents thru Talent Contracts (regularly renewerd over the years). Petitioners were given Project Assignment Forms which detailed the
duration of a particular project as well as the budget and the daily technical requirements thereof.
The Talent Contracts included the following matters:
o The Talents creation and performance of work in accordance with the ABS-CBNs professional standards and compliance with its policies and guidelines
covering intellectual property creators, industry codes as well as the rules and regulations of the Kapisanan ng mga Broadcasters sa Pilipinas and other
regulatory agencies;
o The Talents non engagement in similar work for a person or entity directly or indirectly in compettion with or adverse to the interests of ABS-CBN and non-
promotion of any product or service without prior written consent; and
o The results-oriented nature of the talents work which did not require them to observe normal or fixed working hours.
Claiming that they (petitioners) were regular employees of ABS-CBN, petitioners filed against respondent a complaint (regularization, underpayment of overtime pay, holiday
th
pay, 13 month pay, service incentive leae pay, damages and attys fees) before NLRC.
Petitioners averred that they worked under the direct control and supervision of Villafuerte (Mandated to wear company IDs and provided all the equipment they needed). At
the endo f each day, the petitioners were informed about the news to be covered the following day, the routes they were to take and whenever the subject f their news
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coverage is quite distant, even the start of their workday. They were also bound by the companys policy on attendance and punctuality.
They were subjected to an annual competency assessment alongside other ABS-CBNs employees.
ABS-CBN argued that it is primarily engaged in the business of broadcasting television and radio. The company had allegedly resorted to engaging independent contractors like
actors, directors, artists, anchormen, reporters, scriptwriters and various production and technical staff, who offered their services in relation to a particular program.
The company cannot afford to provide regular work for talents with whom it negotiates specific or determinable professional fees on a per project, weekly or daily basis, usually
depending on the budget allocation for a project.
Pursuant to their Talent Contracts/ Project Assignment Forms, petitioners were hired as talents.
With regard to control, the control was limited to the imposition of general guidelines and conduct and performance. They were never subjected to any control or restrictions
over the means and methods by which they performed or discharged the tasks for which their services were engaged.
Petitioners were terminated during the pendency of the case
Second complaint was filed against ABS-CBN for regularization, payment of labor standard benefits, illegal dismissal and unfair labor practice.
nd
The 2 complaint was dismissed for violation of the rules against non-forum shopping.
LA: ruled in favor of petitioner having rendered services necessary and related to ABS-CBNs business for more than a year.
NLRC: affirmed the Labor Arbiters appealed decision.
CA: reversed the decision
ISSUE(S):
Whether or not there is an employer-employee relationship between the petitioners and ABS-CBN
HELD:
Yes
RATIO:
Article 280 (please read this article J) contemplates four kinds of employees namely:
o Regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer;
o Project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined
at the time of the engagement of the employee;
o Seasonal employees or those who work or perform services which are seasonal in nature, and the employment is for the duration of the season; and
o Casual employees or those who are not regular, project or seasonal employees.
It has been ruled that the test to determine whether employment is regular or not is the reasonable connection between the activity performed by the employee in relation
to the business or trade of the employer. As cameramen/editors and reporters, petitioners were undoubtedly performing functions necessary and essential to ABS-CBNs
business of broadcasting television and radio content.
Petitioners were continuously re-hired by respondent over the years. If the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated or continuing performance as sufficient evidence of the necessity, if not indispensability of that activity in
the business.
It also appears that petitioners were subject to the control and supervision of respondents which provided them with the equipment essential for the discharge of their
functions. The respondent have the right to require the petitioners to attend and participate in all promotional or merchandising campaigns, activities or events for the
Program and required them to perform their functions at such locations and performance/exhibition schedules.
Not Talent: No peculiar, or unique skill, talent or celebrity status was required from them. Petitioners did not have the power to bargain for huge talent fees, a circumstance
negating independent contractual relationship. Respondnets could always discharge petitioners should it find their work unsatisfactory, and petitioners are highly
dependent on the respondent continued work. The degree of control and supervision exercised by respondent over petitioner through its supervisors negates the allegation
that petitioners are independent contractor
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Orozco vs. CA, Philippine Daily Inquirer, Leticia Magsanoc AUTHOR: Tristan
[G.R. No.155207, August 13, 2008] NOTES: Case involves issue on whether a newspaper columnist is an employee of
TOPIC: Employer-Employee Relationship, limitations PONENTE: Nachura the newspaper, which publishes the column. Sorry mahaba, ang dami important
stuff that Atty. might ask.

CASE LAW/ DOCTRINE: It is the power of control, which is the most crucial and most determinative factor, so important, in fact, that the other elements may even
be disregarded. The significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and
the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control. In other words, the test is
whether the employer controls or has reserved the right to control the employee, not only as to the work done, but also as to the means and methods by which the
same is accomplished.
Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or conditions of
work, and is compensated according to the result of his efforts and not the amount thereof, no employer-employee relationship exists.
FACTS:
PDI engaged the services of petitioner to write a weekly column for its Lifestyle section. Her column was entitled feminist reflections She religiously
submitted her articles every week, except for a six-month stint in New York City when she, nonetheless, sent several articles through mail. She received
compensation of P250.00 later increased to P300.00 for every column published.
On November 7, 1992, petitioners column appeared in the PDI for the last time. PDI claims that in June 1991, Magsanoc (PDI Editor in Chief) met with the
Lifestyle section editor to discuss how to improve said section. They agreed to cut down the number of columnists by keeping only those whose columns
were well written, with regular feedback and following. In their judgment, petitioners column failed to improve, continued to be superficially and poorly
written, and failed to meet the high standards of the newspaper.
Aggrieved by the newspapers action, Orozco filed a complaint for illegal dismissal, backwages, moral and exemplary damages, and other money claims
before the NLRC.
Petitioners arguments to prove existence of er-ee relationship: 1) She had to insure that the contents of her column hewed closely to the objectives of its
Lifestyle Section and the over-all principles that the newspaper projects itself to stand for. 2) She had to observe deadlines set by PDI in submitting articles.
3) She was advised to submit only 2-3 pages of article for the column 4) She had to discuss the topics first and submit the articles two days before
publication date to keep her column in the newspaper space regularly.

LA: In favor of Orozco, ruled that there was indeed er-ee relationship. Ratio: PDI had the prerogative to reject any article submitted by complainant for
publication. By virtue of this power, complainant was helplessly constrained to adopt her subjects and style of writing to suit the editorial taste of her editor.
Otherwise, off to the trashcan went her articles.
NLRC: affirmed LA
CA: Reversed, thus this petition by Orozco
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ISSUE (S): WoN Orozco is considered an employee of PDI.
HELD: No. Petition is DISMISSED. PDI won.

RATIO:
This Court has constantly adhered to the "four-fold test" to determine whether there exists an employer-employee relationship between parties. The
four elements of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employees conduct.

Of these four elements, it is the power of control which is the most crucial and most determinative factor, so important, in fact, that the other elements
may even be disregarded. The significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to
control the method and the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such
control. In other words, the test is whether the employer controls or has reserved the right to control the employee, not only as to the work done, but
also as to the means and methods by which the same is accomplished.

Petitioner has misconstrued the "control test," as did the Labor Arbiter and the NLRC. 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.

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

The main determinant therefore is whether the rules set by the employer are meant to control not just the results of the work but also the means and
method to be used by the hired party in order to achieve such results. A careful examination reveals that the factors enumerated by the petitioner are
inherent conditions in running a newspaper. In other words, the so-called control as to time, space, and discipline are dictated by the very nature of the
newspaper business itself.

The Inquirer has no control over [petitioner] as to the means or method used by her in the preparation of her articles. The articles are done by [petitioner]
herself without any intervention from the Inquirer. Aside from the constraints presented by the space allocation of her column, there were no restraints on
her creativity; petitioner was free to write her column in the manner and style she was accustomed to and to use whatever research method she deemed
suitable for her purpose. The apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not translate to control, but
was simply a logical consequence of the fact that her column appeared in that section and therefore had to cater to the preference of the readers of that
section.

The perceived constraint on petitioners column was dictated by her own choice of her columns perspective. The column title "Feminist Reflections" was of

her own choosing, as she herself admitted, since she had been known as a feminist writer. Thus, respondent PDI, as well as her readers, could reasonably
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expect her columns to speak from such perspective.

It does not appear that there was any actual restraint or limitation on the subject matter within the Lifestyle section that she could write about.
Respondent PDI did not dictate how she wrote or what she wrote in her column. Neither did PDIs guidelines dictate the kind of research, time, and
effort she put into each column. Therefore, the control that PDI exercised over petitioner was only as to the finished product of her efforts.

The newspapers power to approve or reject publication of any specific article she wrote for her column cannot be the control contemplated in the "control
test," as it is but logical that one who commissions another to do a piece of work should have the right to accept or reject the product. The important factor
to consider in the "control test" is still the element of control over how the work itself is done, not just the end result thereof.

Although petitioner had a weekly deadline to meet, she was not precluded from submitting her column ahead of time or from submitting columns to be
published at a later time. More importantly, respondents did not dictate upon petitioner the subject matter of her columns, but only imposed the general
guideline that the article should conform to the standards of the newspaper and the general tone of the particular section.

Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no employer-employee relationship exists.

ECONOMIC REALITY TEST: The economic realities prevailing within the activity or between the parties are examined, taking into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate when, as in this case, there is no written
agreement or contract on which to base the relationship. The benchmark of economic reality in analyzing possible employment relationships for purposes of
applying the Labor Code ought to be the economic dependence of the worker on his employer. Petitioners main occupation is not as a columnist for
respondent but as a womens rights advocate working in various womens organizations. She also contributes articles to other publications. Thus, it cannot
be said that petitioner was dependent on respondent PDI for her continued employment in respondents line of business.

CONCLUSION: There is no inflexible rule to determine if a person is an employee or an independent contractor; thus, the characterization of the relationship

must be made based on the particular circumstances of each case. There are several factors that may be considered by the courts, but as already said, the
right to control is the dominant factor in determining whether one is an employee or an independent contractor.

Petitioner was not respondent PDIs employee but an independent contractor, engaged to do independent work. An independent contractor is one who
carries on a distinct and independent business and undertakes to perform the job, work, or service on ones own account and under ones own responsibility
according to ones own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work
except as to the results thereof.

She was engaged as a columnist for her talent, skill, experience, and her unique viewpoint as a feminist advocate. How she utilized all these in writing her
column was not subject to dictation by PDI. PDI was not involved in the actual performance that produced the finished product. It only reserved the right to
shorten petitioners articles based on the newspapers capacity to accommodate the same. This fact was not unique to petitioners column. It is a reality in
the newspaper business that space constraints often dictate the length of articles and columns, even those that regularly appear therein
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11. MARTICIO SEMBLANTE and DUBRICK PILAR v CA, SPs Vicente, Loot AUTHOR: LAURETA
[G.R. No. Date] G.R. No. 196426, August 15, 2011 NOTES:
TOPIC: Employer-Employee Relationship: a Question of Fact; Factors in
Determining Existence; the Control Test and the Economic Reality Test
PONENTE: VELASCO, JR
CASE LAW/ DOCTRINE: Four-fold test of employment We have repeatedly mentioned in countless decisions: (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 employees conduct, which is the most important element.

FACTS:
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired by respondents-spouses Vicente and Maria Luisa Loot,
the owners of Gallera de Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the cockpit sometime in 1993
As the masiador, Semblante calls and takes the bets from the gamecock owners and other bettors and orders the start of the cockfight. He also
distributes the winnings after deducting the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing
of fighting cocks, determines the fighting cocks physical condition and capabilities to continue the cockfight, and eventually declares the result of the
cockfight.
For their services as masiador and sentenciador, Semblante receives PhP 2,000 per week or a total of PhP 8,000 per month, while Pilar gets PhP 3,500 a
week or PhP 14,000 per month. They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights
held on special holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the morning depending on the
needs of the cockpit. Petitioners had both been issued employees identification cards that they wear every time they report for duty. They alleged
never having incurred any infraction and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and were informed of the
termination of their services effective that date. This prompted petitioners to file a complaint for illegal dismissal against respondents.
In answer, respondents denied that petitioners were their employees and alleged that they were associates of respondents independent contractor,
Tomas Vega. Respondents claimed that petitioners have no regular working time or day and they are free to decide for themselves whether to report
for work or not on any cockfighting day. In times when there are few cockfights in Gallera de Mandaue, petitioners go to other cockpits in the vicinity.
Lastly, petitioners, so respondents assert, were only issued identification cards to indicate that they were free from the normal entrance fee and to
differentiate them from the general public.
LA - petitioners are regular employees as they performed work that was necessary and indispensable to the usual trade or business of respondents for a
number of years; found illegal dismissal, ordered backwges and separation pay
NLRC - respondents having no part in the selection and engagement of petitioners, and that no separate individual contract with respondents was ever
executed by petitioners
CA found for respondents
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ISSUE(S): W/N there is an employer-employee relationship? NO

HELD: CA affirmed
RATIO:
Four-fold test of employment We have repeatedly mentioned in countless decisions: (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 employees conduct, which is the most important element.
As found by both the NLRC and the CA, respondents had no part in petitioners selection and management, petitioners compensation was paid out of
the arriba (which is a percentage deducted from the total bets), not by petitioners; and petitioners performed their functions as masiador and
sentenciador free from the direction and control of respondents. In the conduct of their work, petitioners relied mainly on their expertise that is
characteristic of the cockfight gambling, and were never given by respondents any tool needed for the performance of their work.
The referees and bet-takers need to have that kind of expertise that is characteristic of the cockfight gambling who can interpret the message conveyed
even by mere gestures. They ought to have the talent and skill to get the bets from numerous cockfighting aficionados and decide which cockerel to put in
the arena. They are placed in that elite spot where they can control the game and the crowd. They are not given salaries by cockpit owners as their
compensation is based on the arriba. In fact, they can offer their services everywhere because they are duly licensed by the GAB. They are free to choose
which cockpit arena to enter and offer their expertise. Private respondents cannot even control over the means and methods of the manner by which they
perform their work. In this light, they are akin to independent contractors who possess unique skills, expertise and talent to distinguish them from ordinary
employees.
Respondents, not being petitioners employers, could never have dismissed, legally or illegally, petitioners, since respondents were without power or
prerogative to do so in the first place.

12. Sy and SBT Trucking Corporation v. CA AUTHOR: Mendoza
[G.R. No. Date]: G.R. No. 142293. February 27, 2003 NOTES: The SC noted in this case that before a case for illegal dismissal can
TOPIC: PONENTE: Quisumbing prosper, an employer-employee relationship must first be established.
CASE LAW/ DOCTRINE:
The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.

FACTS:
1. In 1958, private respondent-Jaime Sahot (Sahot) started working as a truck helper for Sys family-owned trucking company. In 1965, he became a truck driver of
the same family business, later renamed as SBT Trucking Corporation since 1994. And for 36 years, private respondent continuously served the trucking business of
petitioners.

2. In April 1994, Sahot was already 59 years old. He had been incurring absences as he was suffering from various ailments. Particularly causing him pain was his left
thigh, which greatly affected the performance of his task as a driver. He inquired about his medical and retirement benefits with the Social Security System (SSS) on
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April 25, 1994, but discovered that his premium payments had not been remitted by his employer.

3. After his one week leave for medical examinations, SBT Trucking Service management told him to file a formal request for extension of his leave. At the end of his
week-long absence, Sahot applied for extension of his leave for the whole month of June, 1994. It was at this time when petitioners allegedly threatened to
terminate his employment should he refuse to go back to work.

4. SBT trucking dismissed Sahot. He then filed a complaint for illegal dismissal and recovery of separation pay with the NLRC.
5. Petitioner: A. That they had a trucking business in the 1950s but denied employing helpers and drivers;
B. That Sahot was not illegally dismissed as a driver because he was in fact petitioners industrial partner; and
C. That it was not until the year 1994, when SBT Trucking Corporation was established, and only then did respondent Sahot become an
employee of the company, with a monthly salary that reached P4,160.00 at the time of his separation.

Sahot: A. That he was never an industrial partner of petitioner; and
B. There was no written agreement, no proof that he received a share in petitioners profits, nor was there anything to show he had any participation with
respect to the running of the business

6. Labor Arbiter: Ruled against Sahot stating that he was not illegally dismissed and agreed with the Petitioners contention that he was an industrial partner before
January 1994.
7. NLRC and CA: That Sahot was an employee, not an industrial partner, since the start (1958). Also, Sahot did not abandon his job but his employment was
terminated on account of his illness, pursuant to Article 284 of the Labor Code and was entitled to separation pay. Citing the NLRC, it stated in its decision favoring
Sahot that. How can we entertain in our mind that a twenty-three (23) year old man, working as a truck helper, be considered an industrial partner.
ISSUE(S):
Whether or not an employer-employee relationship existed between petitioners and respondent Sahot

HELD:
Yes, there was an employer-employee relationship between them. Hence, Sahot cannot be considered as an industrial partner but as an employee from 1958-1994.
And ruling that the was illegally dismissed and entitled to separation pay.
RATIO:

The power of control is the most decisive factor in determining the existence of an employer-employee relationship
Records of the case show that Sahot actually engaged in work as an employee. During the entire course of his employment he did not have the freedom to
determine where he would go, what he would do, and how he would do it. He merely followed instructions of petitioners and was content to do so, as long as he
was paid his wages. Sahot had worked as a truck helper and driver of petitioners not for his own pleasure but under the latters control.

Sahot was never an industrial partner.
Further, Article 1767 of the Civil Code states that in a contract of partnership two or more persons bind themselves to contribute money, property or industry to a
common fund, with the intention of dividing the profits among themselves. Not one of these circumstances is present in this case. There is no proof that he was
receiving a share in the profits as a matter of course, during the period when the trucking business was under operation. Neither is there any proof that he had
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actively participated in the management, administration and adoption of policies of the business.


13. PERPETUAL HELP CREDIT COOPERATIVE, INC., petitioner, vs. BENEDICTO AUTHOR: PELAYO
FABURADA, SISINITA VILLAR, IMELDA TAMAYO, HAROLD CATIPAY, and the NOTES: I just didnt add the issue on the LAs Jurisdiction (because respondent
NATIONAL LABOR RELATIONS COMMISSION, Fourth Division, Cebu City, failed to mediate within the cooperative - exhausting the remedies) and the
respondents. affidavits that evidenced their EE-ER relationship. Its basically just a list of their
G.R. No. 121948 October 8, 2001 respective duties and responsibilities. Parang employment record.
PONENTE: SANDOVAL-GUTIERREZ, J.
CASE LAW/ DOCTRINE:
In determining the existence of an employer-employee relationship, the following elements are considered: 1. the selection and engagement of the worker or the
power to hire; 2. the power to dismiss; 3. the payment of wages by whatever means; and 4. the power to control the workers conduct, with the latter assuming
primacy in the overall consideration. No particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and
relevant evidence may show the relationship.
FACTS:
1990 Benedicto Faburada, Sisinita Vilar, Imelda Tamayo and Harold Catipay, private respondents, filed a complaint against the Perpetual Help Credit
Cooperative, Inc. (PHCCI), petitioner, with the Department of Labor and Employment (DOLE), for illegal dismissal, premium pay on holidays and rest days,
separation pay, wage differential, moral damages, and attorneys fees.
Petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no employer-employee relationship between them as private
respondents are all members and co-owners of the cooperative. Furthermore, private respondents have not exhausted the remedies provided in the
cooperative by-laws.
Subsequently petitioner filed a supplemental motion to dismiss alleging that Article 121 of R.A. No. 6939, otherwise known as the Cooperative Development
Authority Law which took effect on March 26, 1990, requires conciliation or mediation within the cooperative before a resort to judicial proceeding. (NOT
PART OF THE TOPIC)
LA: Denied petitioner's motion to dismiss, holding that the case is impressed with employer-employee relationship and that the law on cooperatives is
subservient to the Labor Code. All other claims are hereby dismissed for lack of merit.
Appeal to NLRC.
NLRC: Affirmed the Labor Arbiter's decision.
Hence, this petition by the PHCCI.
Petitioner PHCCI contends that private respondents are its members and are working for it as volunteers. Not being regular employees, they cannot sue
petitioner.

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ISSUE(S):
WON there is an employer-employee relationship between the parties - YES
WON private respondents are regular employees. - YES
WON private respondents were illegally dismissed - YES
HELD:
YES. Employer-employee exists between the parties
YES. Respondents are regular employees
YES. They were illegally dismissed.

RATIO:
I. WON THERE IS AN ER-EE RELATIONSHIP:
In determining the existence of an employer-employee relationship, the following elements are considered:
1. the selection and engagement of the worker or the power to hire;
2. the power to dismiss;
3. the payment of wages by whatever means; and
4. the power to control the workers conduct, with the latter assuming primacy in the overall consideration.
No particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the
relationship.
The above elements are present here. Petitioner PHCCI, through Mr. Edilberto Lantaca, Jr., its Manager, hired private respondents to work for it. They
worked regularly on regular working hours, were assigned specific duties, were paid regular wages and made to accomplish daily time records just like any
other regular employee. They worked under the supervision of the cooperative manager. But unfortunately, they were dismissed.
An employer-employee exists between the parties is shown by the averments of private respondents in their respective affidavits. (There were affidavits
shown that evidenced their EE-ER relationship (too long, didnt include) basically its just their respective responsibilites)
We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC, the same being supported by substantial evidence, that
quantum of evidence required in quasi-judicial proceedings, like this one.

II. WON PRIVATE RESPONDENTS ARE REGULAR EMPLOYEES
Necessarily, this leads us to the issue of Article 280 of the Labor Code provides for three kinds of employees:
A. regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of
the employer;
B. project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season; and
C. casual employees or those who are neither regular nor project employees.
The employees who are deemed regular are:
A. those who have been engaged to perform activities which are usually necessary or desirable in the usual trade or business of the employer; and
B. those casual employees who have rendered at least one (1) year of service, whether such service is continuous or broken, with respect to the
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activity in which they are employed.
Undeniably, private respondents were rendering services necessary to the day-to-day operations of petitioner PHCCI. This fact alone qualified them as
regular employees.
All of them, except Harold D. Catipay, worked with petitioner for more than one (1) year:
o Benedicto Faburada, for one and a half (1 1/2) years;
o Sisinita Vilar, for two (2) years; and
o Imelda C. Tamayo, for two (2) years and two (2) months.
o That Benedicto Faburada worked only on a part-time basis, does not mean that he is not a regular employee.
Ones regularity of employment is not determined by the number of hours one works but by the nature and by the length of time one has been in that
particular job Petitioner's contention that private respondents are mere volunteer workers, not regular employees, must necessarily fail.

III. WON THEY WERE ILLEGALLY DISMISSED
As regular employees or workers, private respondents are entitled to security of tenure. Thus, their services may be terminated only for a valid cause, with
observance of due process.
The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor Code and the authorized causes under Articles 283 and 284
of the same Code. The just causes are: (1) serious misconduct or willful disobedience of lawful orders in connection with the employees work; (2) gross or
habitual neglect of duties; (3) fraud or willful breach of trust; (4) commission of a crime or an offense against the person of the employer or his immediate
family member or representative; and, analogous cases.
The authorized causes are: (1) the installation of labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) closing or cessation of
operations of the establishment or undertaking, unless the closing is for the purpose of circumventing the provisions of law. A
Article 284 provides that an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the
employees continued employment is prohibited by law or is prejudicial to his health or to the health of his fellow employees
Private respondents were dismissed not for any of the above causes. They were dismissed because petitioner considered them to be mere voluntary
workers, being its members, and as such work at its pleasure. Petitioner thus vehemently insists that their dismissal is not against the law.
Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the termination of their employment
is effected: (a) the first, to apprise them of the particular acts or omissions for which their dismissal is sought and (b) the second, to inform them of the
decision of the employer that they are being dismissed. In this case, only one notice was served upon private respondents by petitioner. It was in the form of
a Memorandum signed by the Manager of the Cooperative dated January 2, 1990 terminating their services effective December 29, 1989. Clearly, petitioner
failed to comply with the twin requisites of a valid notice.
We hold that private respondents have been illegally dismissed.

DISSENTING/CONCURRING OPINION(S): N/A

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14. A. Jardin, et al v. NLRC, Goodman Taxi AUTHOR: Pineda
[G.R. No. 119268; 23 February 2000] NOTES:
TOPIC: ER-EE Relationship PONENTE: Quisumbing, J.
CASE LAW/ DOCTRINE:
Four-fold test of ER-EE relationship
o Selection and engagement of the EE
o Payment of wages
o Power of dismissal
o Power of control over EE conduct: control not only as to the result of the work done but also as to the means and methods by which the same is to
be accomplished
FACTS:
Petitioners were drivers of Goodman Taxi (GT). Petitioners drive GT taxis on a 24-hour work schedule under the boundary system. They earn an average of
P400/day. They do not receive fixed wages, but get only in excess of the so-called boundary they pay to the owner/operator.
GT regularly deducts P30 for the washing of cars. Believing that the P30 deduction was illegal, Petitioners decided to form a labor union.
GT dismissed petitioners upon learning their plans to form a union.
Petitioners filed a case with NLRC: unfair labor practice, illegal dismissal.
NLRC dismissed the case, stating it has no jurisdiction in the absence of ER-EE relationship. NLRC considered the relationship between Petitioners and GT to be a
leasehold system (lessor-lessee).
ISSUE(S): W/N there is ER-EE relationship

HELD: YES. Also, dismissal was illegal as there was no basis. GT ordered to reinstate petitioners.

RATIO:
Four-fold test of ER-EE relationship
o Selection and engagement of the EE
o Payment of wages
o Power of dismissal
o Power of control over EE conduct: control not only as to the result of the work done but also as to the means and methods by which the same is to
be accomplished
The management of the taxi business is in the owners 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. The non-payment of fixed wages is not
sufficient to withdraw the ER-EE relationship.


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15 CORPORAL SR. V NLRC AUTHOR: PAGCALIWAGAN
G.R. No. 129315 October 2, 2000 NOTES:
PONENTE: Quisumbing, J.
CASE LAW/ DOCTRINE:

The power to control refers to the existence of the power and not necessarily to the actual exercise thereof, nor is it 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. As to the "control test", the following
facts indubitably reveal that respondent company wielded control over the work performance of petitioners, in that: (1) they worked in the barber shop owned
and operated by the respondents; (2) they were required to report daily and observe definite hours of work; (3) they were not free to accept other employment
elsewhere but devoted their full time working in the New Look Barber Shop for all the 15 years they have worked until April 15, 1995; (4) that some have worked
with respondents as early as in the 1960's; (5) that petitioner Patricia Nas was instructed by the respondents to watch the other 6 petitioners in their daily
task. Certainly, respondent company was clothed with the power to dismiss any or all of them for just and valid cause. Petitioners were unarguably performing
work necessary and desirable in the business of the respondent company.

FACTS:
5 male petitioners (Osias Corporal Sr., Pedro Tolentino, Manuel Caparas, Elpidion Lacap, and Simplicio Pedelos) worked as barbers, while 2 female petitioners
(Teresita Flores and Patricia Nas) worked as manicurists in New Look Barber Shop.
Owned by Private Respondent Lao Enteng Co. Inc. (Lao Co.)
Petitioner Nas alleged that also she worked as watcher and marketer of Lao Co.
Petitioners claim that at the start of their employment with the New Look Barber Shop, it was a single proprietorship woned by Vicente Lao
January 1982 children of Vicente Lao organized a corporation which was registered with the SEC as Lao Co.
Trinidad Ong as President of said corporation
Upon incorporation, Lao Co. took over the assets, equipment, and properties of the New Look Barber Shop and continued the business
Petitioners were allowed to continue working with the new company until April 15, 1995
Trinidad Ong informed them that the building wherein New Look Barber Shop was located had been sold and that their services were no longer
needed.
Petitioners filed with the Arbitration Branch of NLRC, a complaint for illegal dismissal, illegal deduction, separation pay, non-payment of 13th month pay, and
salary differentials
Petitioner Nas asked for payment of salary differentials as she alleged that she was paid a daily wage of P25 throughout her period of employment
Petitioners also sought the refund of P1 that Lao Co. collected from each of them daily as salary of the sweeper of the barber shop

Lao Co.s Contentions:
Petitioners were joint venture partners and were receiving 50% commission of the amount charged to customers. Thus, there was no employer-eomployee
relationship between them and petitioners.

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Labor Arbiter: Ordered the dismissal of the complaint on the basis of findings that complainants and respondents were engaged in a joint venture and that there
existed no employer-employee relation between them.

NLRC: Affirmed LAs findings and dismissed the complaint.
Complainants failed to show the existence of employer-employee relationship under the fourway test established by the Supreme Court. It is a common
practice in the Barber Shop industry that barbers supply their own scissors and razors and they split their earnings with the owner of the barber shop. The
only capital of the owner is the place of work whereas the barbers provide the skill and expertise in servicing customers. The only control exercised by the
owner of the barber shop is to ascertain the number of customers serviced by the barber in order to determine the sharing of profits. The barbers maybe
characterized as independent contractors because they are under the control of the barber shop owner only with respect to the result of the work, but not
with respect to the details or manner of performance. The barbers are engaged in an independent calling requiring special skills available to the public at
large.

Petitioners Contentions:
They were employees of the respondent company and cannot be considered as independent contractors because they did not carry on an independent
business. They did not cut hair, manicure, and do their work in their own manner and method. They insist they were not free from the control and direction of
private respondents in all matters, and their services were engaged by the respondent company to attend to its customers in its barber shop.
Individually or collectively, they do not have substantial capital nor investments in tools, equipment, work premises and other materials necessary in the
conduct of the barber shop. What the barbers owned were merely combs, scissors, and razors, while the manicurists owned only nail cutters, nail polishes,
nippers and cuticle removers. By no standard can these be considered "substantial capital" necessary to operate a barbers shop.
Faulted the NLRC for disregarding that Petitioners were registered with the SSS as regular employees of Lao Co.
ISSUE(S): WON there is employer-employee relationship.

HELD: YES.

RATIO:

An independent contractor is one who undertakes "job contracting", i.e., a person who (a) carries on an independent business and undertakes the contract work on
his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof, and (b) has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of the business.

Petitioners are not "independent contractors". They did not carry on an independent business. Neither did they undertake cutting hair and manicuring nails, on their
own as their responsibility, and in their own manner and method. The services of the petitioners were engaged by Lao Co. to attend to the needs of its customers in
its barber shop. More importantly, the petitioners, individually or collectively, did not have a substantial capital or investment in the form of tools, equipment, work
premises and other materials which are necessary in the conduct of the business of the respondent company. What the petitioners owned were only combs,
scissors, razors, nail cutters, nail polishes, the nippers - nothing else. By no standard can these be considered substantial capital necessary to operate a barber
shop. From the records, it can be gleaned that petitioners were not given work assignments in any place other than at the work premises of the New Look Barber
Shop owned by the Lao Co. Also, petitioners were required to observe rules and regulations of the respondent company pertaining, among other things, observance
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of daily attendance, job performance, and regularity of job output. The nature of work they performed was clearly directly related to Lao Co.'s business of operating
barber shops. Lao Co. did not dispute that it owned and operated 3 barber shops. Hence, petitioners were not independent contractors.

The following elements must be present for an employer-employee relationship to exist: (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.

Private respondent claims it had no control over petitioners. The power to control refers to the existence of the power and not necessarily to the actual exercise
thereof, nor is it 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. As to the "control test", the following facts indubitably reveal that respondent company wielded control over the work performance of petitioners,
in that: (1) they worked in the barber shop owned and operated by the respondents; (2) they were required to report daily and observe definite hours of work;
(3) they were not free to accept other employment elsewhere but devoted their full time working in the New Look Barber Shop for all the 15 years they have
worked until April 15, 1995; (4) that some have worked with respondents as early as in the 1960's; (5) that petitioner Patricia Nas was instructed by the
respondents to watch the other 6 petitioners in their daily task. Certainly, respondent company was clothed with the power to dismiss any or all of them for just
and valid cause. Petitioners were unarguably performing work necessary and desirable in the business of the respondent company.

While it is no longer true that membership to SSS is predicated on the existence of an employee-employer relationship since the policy is now to encourage even the
self-employed dressmakers, manicurists and jeepney drivers to become SSS members, we could not agree with private respondents that petitioners were registered
with the Social Security System as their employees only as an accommodation. As we have earlier mentioned private respondent showed no proof to their claim that
petitioners were the ones who solely paid all SSS contributions. It is unlikely that respondents would report certain persons as their workers, pay their SSS premium
as well as their wages if it were not true that they were indeed their employees.

16. RUGA v. NLRC [G.R. No. L-72654-61; January 22, 1990] AUTHOR: RAMOS
TOPIC: Employer-Employee Relationship NOTES:
PONENTE: Fernan, C.J.
CASE LAW/ DOCTRINE:
FACTS:
Petitioners were the fishermen-crew members of 7/B Sandyman II (a fishing vessel owned and operated by respondent De Guzman Fishing Enterprises)
o Petitioners rendered service in various capacities: 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
o paid in cash on percentage commission basis by Pilar de Guzman (cashier of respondent):
received 13% of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during a fishing trip
otherwise, they received 10% of the total proceeds of the sale
o patron/pilot, chief engineer and master fisherman received a minimum income of P350.00/week
o assistant engineer, second fisherman, and fisherman-winchman received a minimum income of P260.00/week
Sept 11, 1983: upon arrival at the port, petitioners were told by Jorge de Guzman (president respondent), to proceed to the Cam Sur police station for
investigation on the report that they sold some of their fish-catch at midsea
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o Petitioners denied this and claimed that it was a countermove to their formation of a labor union and becoming members of Defender of Industrial
Agricultural Labor Organizations and General Workers Union (DIALOGWU)
o During the investigation, no witnesses were presented to prove the charge, and no criminal charges were formally filed
o Still, respondent refused to allow petitioners to return to the fishing vessel
Sept 22, 1983: petitioners filed complaints for illegal dismissal and non-payment (13th month pay, emergency cost of living allowance and service incentive pay)
with the Ministry of Labor and Employment, Regional Arbitration Branch No. V (arbitrarily dismissed without ample time to look for a new job)
Oct 24, 1983: respondent submitted its position paper denying the employer-employee relationship between respondent and petitioners (just a joint venture)
Failing to reach a settlement, the Labor Arbiter handled the case (dismissed the complaints)
o Ruga testified on the conduct of the fishing operations, mode of compensation for services rendered, and the circumstances of their dismissal
o LA Coralde dismissed all the complaints, finding that a "joint fishing venture" existed (NOT an employer-employee relationship)
NLRC affirmed the LA, hence this petition
o crew members do not receive compensation from the boat-owners except their share in the catch produced by their own efforts
Petitioners: there is an employee-employer relationship
o they were directly hired by respondent through its GM, Arsenio, and its operations manager, Conrado
o except for Laurente Bautu, they had been employed from 8 to 15 years in various capacities
o respondent supervised and controlled the conduct of their fishing operations (schedule, direction, number of tubes of the fish-catch, time to return)
o they were not allowed to join other outfits even the other vessels owned by respondent without the permission of the operations manager
o they were compensated on percentage commission basis of the gross sales of the fish-catch
o they have to follow company policies, rules and regulations
Respondents:
o dismissal of the petition (LA decision is final and executory for failure of petitioners to file their appeal with the NLRC within 10 calendar days)
o Sol Gen: ruling of public respondent that a "joint fishing venture" exists between private respondent and petitioners rests on the 1968 resolution of the
SSS exempting De Guzman Fishing Enterprises from compulsory SSS coverage because there is no employer-employee relationship
o there is no employer-employee relationship between the boat-owner and the crew members when the owner supplies the boat and equipment while
the crew contribute the labor and the parties get specific shares in the catch for their respective contribution
o boat-owners in another case did not control the conduct of the fishing operations and the pilot and crew members shared in the catch
ISSUE(S):
1. WON the fishermen-crew members of the trawl fishing vessel are employees of its owner-operator. [YES, they are employees]
2. If so, WON they were illegally dismissed from their employment. [YES, they were illegally dismissed]
HELD: Petition GRANTED. NLRC decision REVERSED and SET ASIDE. Respondent ordered to reinstate petitioners + 3 years backwages and benefits.
Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits rather than to dismiss it on a mere technicality
o Circumstances peculiar to crew members of a fishing vessel engaged in trawl fishing who spend 1 whole week or more in the open sea convince Us to
adopt a more liberal attitude in applying the 10-calendar day rule in the filing of appeals with the NLRC from the decision of the LA
o LA decision earlier received by a non-lawyer rep justifies as substantial compliance the submission of the appeal 7 days after the rep informed them
Elements for determining the existence of an EMPLOYER-EMPLOYEE RELATIONSHIP
1. selection and engagement of the employee;
2. payment of wages;
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3. power of dismissal; and
4. employer's power to control the employee with respect to the means and methods by which the work is to be accomplished
v Employment relation arises from contract of hire, express or implied.
In the absence of hiring, NO actual employer-employee relation could exist
RIGHT-OF-CONTROL TEST
o 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 test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right
In a prior case wherein the Court held that a "joint fishing venture" existed, there was neither right of control nor actual exercise of such right (n/a here)
o pilots therein are not under the order of the boat-owners as regards their employment; rather, they go to sea on their own volition
Here, an employee-employer relationship exists
o Matters like the schedule of the fishing trip and the time to return to the port were under the prerogative of private respondent
o Petitioners regularly reported information and received directives via single-band radio
o As to the 1968 SSS ruling, the circumstances have changed since then
Directly hired by private respondent; save for 1, the crew have been employed by respondent for 8-15 years in various capacities
While length of employment is NOT considered as the test of employment, nevertheless the hiring of petitioners to perform necessary work in
the usual business of respondent for 8-15 years since 1968 qualify them as regular employees under Art 281 of the Labor Code
Commission scheme (10% or 13%) falls within the scope of the term "wage" under Art 97(f) of the Labor Code
o on mere suspicion that petitioners allegedly sold their fish-catch at midsea, petitioners were unjustifiably not allowed to board the fishing vessel to
resume their activities without giving them the opportunity to air their side unmistakably reveals the disciplinary power exercised by respondent
virtual dismissal of petitioners from their employment was characterized by undue haste when less extreme measures consistent with the requirements of due
process should have been first exhausted. In that sense, the dismissal of petitioners was tainted with illegality
o Even assuming that petitioners did sell the fish-catch at midsea, respondents act of virtually dismissing them contradicts its theory of "joint fishing
venture." A joint venture, including partnership, presupposes generally a parity of standing between the joint co-venturers or partners, in which each
has an equal proprietary interest in the capital or property contributed and where each exercises equal rights in the conduct of the business
Instead of arbitrary unilateral action, respondent should have discussed with an open mind the dis/advantages of petitioners' action
o Petitioners were arbitrarily dismissed notwithstanding that no criminal complaints were filed against them
employer-employee relationship between the crew members and the owners of the fishing vessels engaged in deep sea fishing is merely suspended during the
time the vessels are drydocked or undergoing repairs or being loaded with the necessary provisions for the next fishing trip

17. Mendiola v. CA AUTHOR: S A Y O

TOPIC: Employer-employee relationship
PONENTE: PUNO, J.
CASE LAW/ DOCTRINE:
The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.

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FACTS:
Private respondent Pacific Forest Resources, Phils., Inc. (Pacfor/ organized under US law) is a subsidiary of Cellulose Marketing International (organized
under laws of Sweden).
Pacfor entered into a Side Agreement on Representative Office known as Pacific Forest Resources (Phils.), Inc. with petitioner Arsenio T. Mendiola (ATM).
(SEC eventually granted respondents application for a license to transact business in the Phil.)
The Side Agreement provides that Private respondent will establish a Pacfor Phils., as representative office of respondent in the Philippines. ATM was also
designated as the resident agent of respondent in the Ph.
Expenses of the company shall be borne by the representative office and funded by Pacfor/ATM, since Pacfor Phils. is equally owned on a 50-50 equity by
ATM and Pacfor-USA.
Side Agreement was amended (Revised Operating and Profit Sharing Agreement) which increased the salary of petitioner and provides that the operational
expenses will be borne by the representative office and funded by all parties as equal partners, while the profits and commissions will be shared among
them.
ATM wrote Kevin Daley (VP for Asia of Pacfor) seeking confirmation of his 50% equity of Pacfor Phils.
Pacfor, through its President, replied that petitioner is not a part-owner of Pacfor Phils because the latter is merely Pacfor-USAs representative office and
not an entity separate and distinct from Pacfor-USA.
ATM Raised other issues, such as the rentals of office furniture, salary of the employees, company car, as well as commissions allegedly due him.

The issues were not resolved, hence, petitioner wrote Pacfor-USA demanding payment of unpaid commissions and office furniture and equipment rentals,
amounting to more than one million dollars.

Pacfor ordered petitioner to turn over to it all papers, documents, files, records, and other materials in his or ATM Marketing Corporations possession that
belong to Pacfor or Pacfor Phils. and to remit more than three hundred thousand-peso Christmas giveaway fund for clients of Pacfor Phils.

Private respondent Pacfor withdrew all its offers of settlement and ordered petitioner to transfer title and turn over to it possession of the service car.

Private respondent Pacfor likewise sent letters to its clients in the Philippines, advising them not to deal with Pacfor Phils. (ATM construed this as severance
of the unregistered partnership between him and Pacfor, and the termination of his employment as resident manager of Pacfor Phils.
On the basis of the Side Agreement, petitioner insisted that he and Pacfor equally own Pacfor Phils. Thus, it follows that he and Pacfor likewise own, on a
50/50 basis, Pacfor Phils. office furniture and equipment and the service car. He also proposed to offset these with the remaining Christmas giveaway fund
in his possession.

Pacfor placed petitioner on preventive suspension and ordered him to show cause why no disciplinary action should be taken against him. Pacfor charged
petitioner with willful disobedience and serious misconduct for his refusal to turn over the service car and the Christmas giveaway fund which he applied to
his alleged unpaid commissions.

Private respondent alleged: there was loss of confidence and gross neglect of duty for allowing another corporation owned by petitioners relatives to use the same
telephone and facsimile numbers of Pacfor, to possibly steal and divert the sales and business of private respondent for HEPIs principal, International Forest
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Products, a competitor of private respondent.

Petitioner denied the charges: Presidents letters signified cessation of his position
LA: in favor of ATM, there was constructive dismissal (by directing pet to return Pacfors documents)
NLRC: reversed; there was no employer-employee relationship between the parties. (ATM is a co-owner based on the agreements)

ISSUE(S): WON an employer- employee relationship existed
HELD: YES
RATIO:
In the instant case, all the foregoing elements are present. First, it was private respondent Pacfor which selected and engaged the services of petitioner as its
resident agent in the Philippines. Second, as stipulated in their Side Agreement, private respondent Pacfor pays petitioner his salary amounting to $65,000
per annum which was later increased to $78,000. Third, private respondent Pacfor holds the power of dismissal, as may be gleaned through the various
memoranda it issued against petitioner, placing the latter on preventive suspension while charging him with various offenses, including willful disobedience,
serious misconduct, and gross neglect of duty, and ordering him to show cause why no disciplinary action should be taken against him.
Lastly and most important, private respondent Pacfor has the power of control over the means and method of petitioner in accomplishing his work.

The power of control refers merely to the existence of the power, and not to the actual exercise thereof. The principal consideration is whether the
employer has the right to control the manner of doing the work, and it is not the actual exercise of the right by interfering with the work, but the right to
control, which constitutes the test of the existence of an employer-employee relationship.

In the case at bar, private respondent Pacfor, as employer, clearly possesses such right of control. Petitioner, as private respondent Pacfors resident agent in
the Philippines, is, exactly so, only an agent of the corporation, a representative of Pacfor, who transacts business, and accepts service on its behalf.
This right of control was exercised by private respondent Pacfor when it directed petitioner to turn over to it all records of Pacfor Phils.; when it ordered
petitioner to remit the Christmas giveaway fund intended for clients of Pacfor Phils.; and, when it withdrew all its offers of settlement and ordered
petitioner to transfer title and turn over to it the possession of the service car.
It was also during this period when private respondent Pacfor sent letters to its clients in the Philippines, particularly Intercontinental Paper Industries, Inc.
and DAVCOR, advising them not to deal with petitioner and/or Pacfor Phils. This is one unmistakable proof that private respondent Pacfor exercises control
over the petitioner.

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18. Tongko vs. The Manufacturers Life Insurance Co. (Phils.), Inc. AUTHOR: LAST NAME
[G.R. No. 167622. 29 June 2010] NOTES:
TOPIC:
PONENTE: Brion, J.
CASE LAW/ DOCTRINE:
FACTS:
1 July 1977--Tongko and Manulife had a Career Agents Agreement that provided:
It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an
employer-employee relationship between the Company and the Agent.
xxx
(a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and other products offered by the Company, and collect, in exchange
for provisional receipts issued by the Agent, money due or to become due to the Company in respect of applications or policies obtained by or through the
Agent or from policyholders allotted by the Company to the Agent for servicing, subject to subsequent confirmation of receipt of payment by the Company as
evidenced by an Official Receipt issued by the Company directly to the policyholder.
xxx
The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving written notice to the Agent
within 15 days from the time of the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate
this Agreement by the Company shall be construed for any previous failure to exercise its right under any provision of this Agreement.
xxx
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party 15 days notice in writing.

In 1983, Tongko was named Unit Manager in Manulifes Sales Agency Organization. In 1990, he became a Branch Manager. In 1996, Tongko became a Regional
Sales Manager.
In 2001, Manulife instituted manpower development programs at the regional sales management level. Respondent Vergel de Dios wrote Tongko a letter
concerning Tongkos remarks and comments that were not aligned with the directions the company was taking. Tongkos allegations that some managers are
unhappy with their earnings, that theyre earning less than what they deserve and that these are reasons why Tongkos division is unable to meet agency
development objectives, are unfounded.
Subsequently, de Dios wrote Tongko another letter terminating Tongkos services.
Tongko filed a complaint with the National Labor Relations Commission (NLRC) alleging that despite the clear terms of the letter terminating his Agency
Agreementthat he was Manulifes employee before he was illegally dismissed.
NLRC ruled in favor of Tongko, finding that there was an employer-employee relationship as evidenced by De Dios letter which contained the manner and
means by which Tongko should do his work.
CA set aside NLRCs ruling. It applied the four-fold test for determining control and found the elements in this case to be lacking. It found that Manulife did not
have control over Tongko, there was no employer-employee relationship and thus the NLRC did not have jurisdiction over the case.
SC reversed the ruling of the CA. However, the SC issued another Resolution reversing its decision.
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ISSUE(S): Whether there was an employer-employee relationship between Tongko and Manulife.

HELD: No. There was no substantial proof to say that there was an employer-employee relationship between Tongko and Manulife.

RATIO:
The present case must be distinguished from the second Insular Life case that showed the hallmarks of an employer-employee relationship in the
management system established. These were: exclusivity of service, control of assignments and removal of agents under the private respondents unit, and
furnishing of company facilities and materials as well as capital described as Unite Development Fund. All these are obviously absent in the present case. If
there is a commonality in these case, it is in the collection of premiums which is a basic authority that can be delegated to agents under the Insurance Code.
Evidence show that Tongkos role as an insurance agent never changed during his relationship with Manulife.
De Dios letter is not determinative of control as it indicates the least amount of intrusion into Tongkos exercise of his role as manager in guiding the sales
agents. Strictly viewed, de Dios directives are merely operational guidelines on how Tongko could align his operations with Manulifes re-directed goal of
being a big league player. The method is to expand coverage through the use of more agents. This requirement for the recruitment of more agents is not a
means-and-method control as it relates, more than anything else, and is directly relevant, to Manulifes objective of expanded business operations through
the use of a bigger sales force whose member are all on a principal-agent relationship. An important point to not here is that Tongko was not supervising
regular full-time employees of Manulife; Tongko was effectively guiding his corps of sales agents, who are bound to Manulife through the same Agreement
that he had with Manulfei, all the while sharing in these agents commissions through his overrides.
Under this legal situation, the only conclusion that can be made is that the absence of evidence showing Manulifes control over Tongkos contractual duties
points to the absence of any employer-employee relationship between Tongko and Manulife. In the context of the established evidence, Tongko remained
an agent all along; although his subsequent duties made him a lead agent with leadership role, he was nevertheless only an agent whose basic contract
yields no evidence of means-and-manner of control

VELASCO, JR., J.
The dissent of Velasco, JR., J. pointed out, as an argument to support its employment relationship conclusion, that any doubt in the existence of an
employer-employee relationship should be resolved in favor of the existence of the relationship.
In resolving the issue of whether an employer-employee tie obtains, attention was focused, as jurisprudential trend dictates, on the four-fold test on
employment developed and invariably invoked by labor officials and this Court as guiding, if not governing nor, to determine, based on facts and
circumstances involved in a given situation, whether such relationship exists. These four elements are: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the control test.
From the evidence on record, it appears that Manulife had control over the work of Tongko after his appointment as manager of the companys insurance
sales force, indubitably implying the existence of an employer-employee relationship between them.
The fact that the Agreement was subsisting even after Tongkos appointment as manager does not militate against a conclusion that Tongko was Manulifes
employee, at least during his stint as such manager. To be sure, an insurance agent may at the same time be an employee of an insurance company. Or to
put it a bit differently, an employee-manager may be given the privilege of soliciting insurance, as agent, and earn in the process commission for every
contract concluded as a result of such solicitation. The reality of two personalitiesone as employee and the other as non-employee of an insurance
company, coinciding in one personwas acknowledge in Insular Life II.
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Moreover, the fact that Tongko was obliged to obey and comply with the codes of conduct was not disowned by respondents. Thus, with the company
regulations and requirements alone, the fact that Tongko was an employee of Manulife may already be established. Certainly, these requirement controlled
the means and methods by which Tongko was to achieve the companys goals.
More importantly, Manulifes evidence establishes the fact that Tongko was tasked to perform administrative duties that establishes his employment with
Manulife.
Also, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of agents, in addition to his other administrative
functions, leads to no other conclusion that he was an employee of Manulife.

19. Locsin vs. Philippine Long Distance Telephone Company (PLDT) AUTHOR: SOLIS
[G.R. No. 185251. 2 October 2009] NOTES:
TOPIC: Factors in determining the existence of an employer-employee
relationship
PONENTE: Velasco, JR., J.
CASE LAW/ DOCTRINE: Such power of control has been explained as the right to control not only the end to be achieved but also the means to be used in reaching
such end. With the conclusion that respondent directed petitioners to remain at their posts and continue with their duties, it is clear that respondent exercised the
power of control over them; thus, the existence of an employer-employee relationship.
FACTS:
Respondent PLDT and the Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement whereby SSCP would provide
armed security guards to PLDT to be assigned to its various offices.
Petitioners Raul LOCSIN and Eddie TOMAQUIN are among the security guards who were posted at a PLDT office.
On 30 Aug 2001, PLDT issued a Letter terminating the said Agreement effective 1 October 2001. Despite the termination of the Agreement, however,
petitioners continued to secure the premises of their assigned office. They were ordered to remain at their post by representatives of PLDT.
On 30 September 2002, petitioners services were terminated.
Consequently, petitioners filed a complaint before the Labor Arbiter (LA) for illegal dismissal and recovery of money claims.
LA ruled in favor of petitioners and finding PLDT liable for illegal dismissal. LA found that petitioner to be employed by PLDT and not of SSCP, which was based
on the fact that petitioners continued to serve as guards of PLDTs offices despite the Letter stating that the Agreement was terminated.
PLDT appealed to the NLRC which affirmed in toto the LA. PLDT filed a MR which was denied. PLDT filed a Petition for Certiorari with the CA, asking for
nullification of the Resolution issued by the NLRC, which granted PLDTs petition and dismissed petitioners complaint.
CA applied the four-fold test in order to determine the existence of an employer-employee relationship between the parties but did not find such
relationship. It determined that SSCP was not a labor-only contractor and was an independent contractor having substantial capital to operate and
conducts its own business.
ISSUE(S): Whether petitioners became employees of PLDT after the Agreement between SSCP and PLDT was terminated.

HELD: Yes.
RATIO:
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From the foregoing circumstances, reason dictates that we conclude that petitioners remained at their post under the instructions of respondent. We can
further conclude that respondent dictated upon petitioners that the latter perform their regular duties to secure the premises during operating hours. This,
to our mind and under the circumstances, is sufficient to establish the existence of an employer-employee relationship.
To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of the Agreement, petitioner remained at their post
securing the premises of respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials proffered
by respondent do not shed any light to the situation. It is but reasonable to conclude that, with the behest and, presumably, directive of respondent,
petitioner continued with their services. Evidently, such are indicia of control that respondent exercised over petitioners.
Such power of control has been explained as the right to control not only the end to be achieved but also the means to be used in reaching such end. With
the conclusion that respondent directed petitioners to remain at their posts and continue with their duties, it is clear that respondent exercised the power of
control over them; thus, the existence of an employer-employee relationship.

20. Angelina Francisco vs NLRC, Kasei Corporation, Seiichiro Takahashi, AUTHOR: The Talio
Timoteo Acedo, Delfin Liza, Irene Ballesteros, Trinidad Liza, and Ramon Escueta NOTES: Sorry guys, its really a long ass decision.
[G.R. No. 170087; August 31, 2006]
TOPIC: 5.2 Employer-Employee Relationship a Question of Fact; Factors in KC Kasei Corporation
PONENTE: Ynares-Santiago, J.
CASE LAW/ DOCTRINE:
Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.
The determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent
to which the services performed are an integral part of the 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.
business. By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the
economic dependence of the worker on his employer.
FACTS:
1995 - Francisco was hired by KC as Accountant and Corporate Secretary during its incorporation stage, and was assigned to handle all the accounting needs of
the company. She was also designated as Liaison Officer to Makati City to secure business permits, construction permits and other licenses for the initial
operation of the company.
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Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents. Neither did she attend any board meeting nor
required to do so. She never prepared any legal document and never represented the company as its Corporate Secretary. However, on some occasions, she
was prevailed upon to sign documentation for the company.
1996 - Francisco was designated Acting Manager. The corporation also hired Gerry Nino as accountant to replace her. As Acting Manager, she was assigned to
handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies (BIR,
SSS, Makati City); and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation.
For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was Php 27.5K plus Php 3K housing allowance and a 10%
share in the profit of KC.
In January 2001, Francisco was replaced by Liza Fuentes as Manager. Petitioner alleged that she was required to sign a prepared resolution for her replacement
but she was assured that she would still be connected with KC. Acedo (private respondent), the designated Treasurer, convened a meeting of all employees of
KC and announced that nothing had changed and that Francisco was still connected with KC as Technical Assistant to Seiji Kamura and in charge of all BIR
matters.
KC reduced her salary by Php 2.5K a month beginning Jan. to Sept. 2001 for a total reduction of Php 22.5K as of Sept. 2001. Francisco was not paid her mid-year
bonus allegedly because KC was not earning well. On Oct. 2001, Francisco did not receive her salary from KC. She made repeated follow-ups with the KC cashier
but she was advised that KC was not earning well.
On Oct. 15, 2001, Francisco asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the company.
Because of this, Francisco did not report for work and filed an action for constructive dismissal before the labor arbiter.
Private respondents averred that:
o Francisco is not an employee of KC. She was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as Corporate
Secretary. As technical consultant, she performed her work at her own discretion without control and supervision of KC.
o She had no daily time record and she came to the office any time she wanted. KC never interfered with her work except that from time to time, the
management would ask her opinion on matters relating to her profession.
o She did not go through the usual procedure of selection of employees, but her services were engaged through a Board Resolution designating her as
technical consultant.
o The money she received from KC was her professional fee, subject to the 10% expanded withholding tax on professionals, and that she was not one of
those reported to the BIR or SSS as one of the companys employees.
o Her designation as technical consultant depended solely upon the will of management. As such, her consultancy may be terminated any time
considering that her services were only temporary in nature and dependent on the needs of the corporation.
To prove that Francisco was not an employee of KC, private respondents submitted a list of employees for the years 1999-2000 duly received by the BIR
showing that she was not among the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax. SSS records were also
submitted showing that her latest employer was Seiji Corporation.
LA: Francisco was illegally dismissed and that she was an employee of KC.
NLRC: Affirmed the LAs decision.
CA: Reversed the ruling of the NLRC.
ISSUE(S): WON there was an employer-employee relationship between Francisco and KC.

HELD: Yes, there was.
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RATIO:
We held in Sevilla vs Court of Appeals that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee
relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not
only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.
However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a
relationship where the worker has held several positions. There are instances when, aside from the employer's power to control the employee with respect to
the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the
true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer's power to control the employee with respect to the
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.
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the
extent to which the services performed are an integral part of the 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.
business. By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the
economic dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of
Seiji Kamura, the corporation's Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical
Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company
and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an
indefinite period of engagement.
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. When petitioner was designated General Manager, respondent
corporation made a report to the SSS signed by Irene Ballesteros. Petitioner's membership in the SSS as manifested by a copy of the SSS specimen signature
card, which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent corporation. It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latter's line of business.

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21 Teng v. Pahagac AUTHOR: Tan
[G.R. No. 169704 November 17, 2010] NOTES:
TOPIC: Employer-Employee Relationship
PONENTE: Brion, J.

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

FACTS:
Albert Teng Fish Trading is engaged in deep sea fishing and, for this purpose, owns boats (basnig), equipment, and other fishing paraphernalia. As owner of the
business, Teng claims that he customarily enters into joint venture agreements with master fishermen (maestros) who are skilled and are experts in deep sea
fishing; they take charge of the management of each fishing venture, including the hiring of the members of its complement.
The respondent workers filed a complaint for illegal dismissal against Teng, alleging that:
o Teng hired them, without any written employment contract, to serve as his "eyes and ears" aboard the fishing boats; to classify the fish caught
by baera; to report to Teng via radio communication the classes and volume of each catch; to receive instructions from him as to where and
when to unload the catch; to prepare the list of the provisions requested by the maestro and the mechanic for his approval; and, to procure the
items as approved by him.5
o They received regular monthly salaries, 13th month pay, Christmas bonus, and incentives in the form of shares in the total volume of fish
caught.
o Teng expressed his doubts on the correct volume of fish caught in every fishing voyage and later terminated their services.
Teng maintained that:
o He did not have any hand in hiring the respondent workers
o The maestros, rather than he, hired the respondent workers as checkers to determine the volume of the fish caught in every fishing voyage.
o His role was clearly limited to the provision of the necessary capital, tools and equipment.
The Voluntary Arbitrator (National Conciliation and Mediation Board) derclared that no employer-employee relationship existed between the parties.
The CA reversed the decision of the VA and declared that there exists an employer-employee relationship between the parties and found that Teng illegally
dismissed the respondent workers.
Teng elevated the case to the SC.

ISSUE(S): Whether an employer-employee relationship existed between Teng and the respondent workers.

HELD: YES. Petition denied. CA affirmed.

RATIO:
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While Teng alleged that it was the maestros who hired the respondent workers, it was his company that issued to the respondent workers identification cards
(IDs) bearing their names as employees and Tengs signature as the employer. Generally, in a business establishment, IDs are issued to identify the holder as a
bona fide employee of the issuing entity.
For the 13 years that the respondent workers worked for Teng, they received wages on a regular basis, in addition to their shares in the fish caught. The
worksheet showed that the respondent workers received uniform amounts within a given year, which amounts annually increased until the termination of their
employment in 2002. Tengs claim that the amounts received by the respondent workers are mere commissions is incredulous, as it would mean that the fish
caught throughout the year is uniform and increases in number each year.
The element of CONTROL which the SC ruled in a number of cases to be a strong indicator of the existence of an employer-employee relationship is present in
this case. Teng not only owned the tools and equipment, he directed how the respondent workers were to perform their job as checkers; they, in fact, acted as
Tengs eyes and ears in every fishing expedition.
Teng cannot hide behind his argument that the respondent workers were hired by the maestros. To consider the respondent workers as employees of the
maestros would mean that Teng committed impermissible labor-only contracting. As a policy, the Labor Code prohibits labor-only contracting:

ART. 106. Contractor or Subcontractor x x x The Secretary of Labor and Employment may, by appropriate regulations, restrict or
prohibit the contracting-out of labor. x x x There is "labor-only" contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and
the workers recruited and placed by such persons are performing activities which are directly related to the principal business of
such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed by him.

Section 5 of the DO No. 18-02,46 which implements Article 106 of the Labor Code, provides:
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 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.

In the present case, the maestros did not have any substantial capital or investment. Teng admitted that he solely provided the capital and equipment, while the
maestros supplied the workers. The power of control over the respondent workers was lodged not with the maestros but with Teng. As checkers, the
respondent workers main tasks were to count and classify the fish caught and report them to Teng. They performed tasks that were necessary and desirable in
Tengs fishing business. Taken together, these incidents confirm the existence of a labor-only contracting which is prohibited in our jurisdiction, as it is
considered to be the employers attempt to evade obligations afforded by law to employees.
A finding that the maestros are labor-only contractors is equivalent to a finding that an employer-employee relationship exists between Teng and the
respondent workers. As regular employees, the respondent workers are entitled to all the benefits and rights appurtenant to regular employment.
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The dismissal of an employee, which the employer must validate, has a twofold requirement: one is substantive, the other is procedural. Not only must the
dismissal be for a just or an authorized cause, as provided by law; the rudimentary requirements of due process the opportunity to be heard and to defend
oneself must be observed as well. The employer has the burden of proving that the dismissal was for a just cause; failure to show this, as in the present case,
would necessarily mean that the dismissal was unjustified and, therefore, illegal.

22. Philippine Bank of Communications v. NLRC and Orpiada AUTHOR: Tiglao
[G.R. No. L-66598 | December 19, 1985] NOTES: Sorry na 3 pages, I need to include the provisions because its a favor
TOPIC: Independent Contractor and Labor Only Contractor important case, especially nilagyan ni sir ng asterisk.
PONENTE: J. Feliciano
FACTS:
PBC and the Corporate Executive Search Inc (CESI) entered into an agreement wherein CESI undertook to provide temporary services consisting of 11
messengers to PBC. One of these messengers was respondent Orpiada.
There were some questions as to when Orpiada commenced working in PBC because the agreement was dated on January 1976, but CESIs position paper to
the NLRC stated that he was hired in June 1975. Nonetheless, PBC requested CESI to withdraw Orpiadas assignment in PBC for he was no longer needed.
Orpiada then filed a complaint against PBC for illegal dismissal and failure to pay the 13th month pay with the Department of Labor. Complaint was dismissed
due to his failure to show the existence of an employer-employee relationship between the bank and himself.
Despite the dismissal, Orpiada succeeded in instituting compulsory arbitration where PBC, CESI and himself were parties. Both PBC and CESI claimed and
maintained that CESI was Orpiadas employer.
Labor Arbiter: Ordered PBC to reinstate Orpiada. PBC filed an appeal to the NLRC.
NLRC: Affirmed the LAs Decision. NLRC took six years to decide with no valid reason given.
Hence, this petition for certiorari.
Petitioners Arguments: No employee-employer relationship was established because Orpiada was an employee of CESI. They point to the letter agreement
for support of this claim, specifically: 2. Such individuals will nevertheless remain your own employees and you will therefore, retain all liabilities arising
from the new Labor Code as amended Social Security Act and other applicable Governmental decrees, rules and regulations

ISSUE(S): W/N an employer-employee relationship existed between PBC and Orpiada

HELD: Yes, an employer-employee relationship exists. CESI is a labor-only contractor. Petition is denied.

RATIO:
The SC relied on the case of Viana v. Al-Lagdan and Pica (1956) in determining the factors to see if there is an employer-employee relationship, namely: 1)
the selection and engagement of the putative employee; 2) the payment of wages; 3) the power of dismissal; 4) the power to control the putative
employees conduct
While Orpiada was assigned to work by CESI, his selection was still subject to the acceptance of PBC and the bank did accept him.
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As regards Orpiadas wages, the PBC remits to CESI the daily rate of Orpiada and CESI pays him the wages. He was also listed in the payroll of CESI with SSS
deduction.
As to the power of control, Orpiada performed his functions within the banks premises and not with CESI.
Since the payment of wages and the power of dismissal exist between CESI and Orpiada while selection and control exist between PBC and Orpiada, it is
necessary to determine the relationship between PBC and CESI whether or not CESI is a job contractor or a labor-only contractor.
Here, CESIs undertaking in favor of the bank was not the performance of a specific job, but to produce its client the bank with a certain number of
persons to work as messengers. Hence, Orpiada utilized the premises and equipment of the bank and not of CESI.
CESI was only engaged in a labor-only contracting with the Bank and Orpiada. Further, Orpiada, having worked in the bank for a period of 16 months, he is
deemed as a regular employee.
Hence, PBC is liable to Orpiada as if the latter had been directly employed by the Bank.
Articles 106 and 107 of the Labor Code of the Philippines (Presidential Decree No. 442, as amended) provides as follows:
ART. 106. Contractor or sub-contractor Whenever an employer enters into a contract with another person for the performance of the former's
work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions in this Code.

In the event that the contractor or sub-contractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly
and severally liable with his contractor or sub-contructor to such employees to the extent of the work performed under the contract in the same
manner and extent that he is liable to employees directly employed by him

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of
this Code, to prevent any violation or circumvention of any provisions of this Code.

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

ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, part, nership association or
corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.
(Emphasis supplied)

As a general rule, an employer who enters into a contract with a contractor for the performance of work for the employer, does not create an employer-
employee relationship between himself and the employees of the contractor. However, when a contractor fails to pay the wages of his employees, the
employer who contracted out the job becomes solidarily liable with his contractor. Hence, en employer-employee relationship is established for a very
limited purpose.

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Similarly, in a labor-only contractor, the employer is made by statute, responsible to the employees of the labor-only contractor as if such employees
had been directly employed by the employer. Thus, where "labor only" contracting exists in a given case, the statute itself implies or establishes an
employer-employee relationship between the employer (the owner of the project) and the employees of the "labor only" contractor, this time for a
comprehensive purpose: "employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. " The law in effect
holds both the employer and the "labor-only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights
under the Labor Code.

In this case, both CESI and PBC insist that the former was no a labor only contractor.
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shag be deemed to be engaged in labor-only
contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities which are to the principal business or operations of the c
workers are habitually employed,
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him;

(c) For cases not file under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of
labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the
workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. (Emphasis
supplied)

Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met:
(1) 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 as
to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business. (Emphasis supplied)

The undertaking given by CESI in favor of the bank was not the performance of a specific job for instance, the carriage and delivery of documents and
parcels to the addresses thereof. There appear to be many companies today which perform this discrete service, companies with their own personnel who
pick up documents and packages from the offices of a client or customer, and who deliver such materials utilizing their own delivery vans or motorcycles to
the addresses.
In the present case, the undertaking of (CESI) was to provide its client-thebank-with a certain number of persons able to carry out the work of messengers.
Such undertaking of CESI was complied with when the requisite number of persons were assigned or seconded to the petitioner bank. Orpiada utilized the
premises and office equipment of the bank and not those of (CESI) Messengerial work-the delivery of documents to designated persons whether within or
without the bank premises is of course directly related to the day-to-day operations of the bank.
The Supreme Court ruled that based on the circumstances, (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in respect of Ricardo
Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI) but also by the bank.
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23. San Miguel Corporation vs. MARC Integrated Services. AUTHOR: Valera
[G.R. No. 144672. July 10, 2003] NOTES:
Independent contractor and Labor-only contractor. 291 complainants in a Total of 9 complaints. For illegal dismissal, underpayment
Bellosillo of wages, non-payment of service incentive leave pays and other labor standards
benefits.
CASE LAW/ DOCTRINE:
In legitimate job contracting the law creates an employer-employee relationship for a limited purpose, to ensure that the employees are paid their wages.
The principal employer becomes jointly and severally liable with the job contractor only for the payment of employees wages whenever the contractor fails
the same. Other than that, the principal employer is not responsible for any claim made by the employees.
In labor only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws.
The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer. The principal employer therefore becomes solidarily liable with the labor-only contractor
for all the rightful claims of the employees.

FACTS:
The complaints allege that they were hired by SMC through its agent or intermediary MAERC. They washed and segregated various kinds of empty bottles used
by SMC to sell and distribute its beer beverages. They were paid on a per piece/pakyaw basis
The complainants alleged that even before SMC contracted the services of MAERC, majority of them had already been working for SMC under the guise of
being employees of Jopard Services.
SMC denied liability for the claims and asserted that the complainants were not its employees but of MAERC
SMC and MAERC entered into a service contract for 1 year beginning Feb 1988 which was renewed for 2 times. In May 15, 1991 SMC informed MAERC of the
termination of their service contract by the end of June 1991, due to SMCs plan to install labor and cost-saving devices.
At the end of the service contract, the complainants claimed that SMC stopped them from performing their jobs thus amounting to being illegally dismissed by
SMC as their real employer and MAERC was merely a shield by SMCC to avoid liability under the Labor Code
MAERC admitted that it recruited the complainants and placed the n the bottle segregation project of SMC but maintained that it was used by SMC as an
intermediary in operating the project with the end goal of avoiding its obligations and responsibilities towards the workers.
The 9 cases were consolidated. On Jan 1995, the LA rendered a decision holding MAERC was an independent contractor, and dismissed the complaint for illegal
dismissal but ordered MAERC to pay complainants separation benefits, and held MAERC and SMC jointly and severally liable for the payment of the
complainants wage differentials.
The NLRC ruled that MAERC was only a labor-only contractor and that the complainants were employee of SMC and also held that WON MAERC was a job
contractor or a labor only contract. SMC was still solidarily liable with MARC for the latters unpaid obligation under Art. 109(4) of the Labor Code. The NLRC
modified the LA judgement and held SMC jointly and severally liable for the complainants separation benefits.
On March 28, 1998, SMC filed a petition for certiorari with the SC but it was referred to the CA.
The CA denied the petition and affirmed the NLRC decision.
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SMC now seeks a review of the CA decision with the SC.
SMC maintained that MAERC was a legitimate job contractor, and their service contract specified that MAERC had the selection, engagement and dscharge of
its employees in its own control.
ISSUE(S):
1.) WON the complainants are SMC employees.
2.) WON MAERC is a legitimate job contractor?
HELD:
1.) Yes
2.) No.

RATIO:

1.) The court finds no bass to overturn the CA and NLRC Decisions. The Court has invariably held that in ascertaining an employer-employee relationship, the
following factors are considered: (a) the selection and engagement of employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the power
to control an employee's conduct, the last being the most important. Application of the aforesaid criteria clearly indicates an employer-employee
relationship between petitioner and the complainants.
Evidence shows that SMC plays a large and indispensable part in the hiring of MAERCs workers, it also appears that majority of the complaints had
already been working for SMC long before the service contract with MAERC. The incorporators of MAERC admitted to supplying workers for SMC even
before MAERC was created. The NLRC found that workers who were already working for SMC were made to go to apply to MAERC upon SMC
instructuion to make it appear that the worker was hired by MAERC.
PAYMENT OF WAGES it was undisputed that MAERC was paid in lump sum but the remuneration was not according to the result. There is a
memoranda bearing SMC VP and GM for Beer ops. And a director reveals that SMC assumed the responsibility of paying overtime, holiday and rest day
pays of MAERC workers, and SMC also pad for employers share of the SS and Medicare contributions, 13th month pay, incentive leave pay and maternity
benefits. These assurances lend credence to the workers assertions that MAERC paid the wages it acted merely as an agent of SMC.
CONTROL- SMC insists that the most determinant of employer-employee relationship, the right to control is absent. SMC alleges that their service
contract that SMC has no control over such employees. However, the SC stated that the language of the contract is not determinative of the
relationship. The SC found that SMC actively supervised the complainants. Thru a constant presence of its own Checkers. This claim was reinforced by a
letter from SMC to MAERC stating they found workers who are doing subpar work and asked MAERC to impose the appropriate penalty. Other instances
attesting to SMCs supervision of workers are found in the minutes of the meeting held by SMC officers on Dec of 1988. Discussng were calling of SMC
contractors to have workers assigned to segregation to undergo and pass eye examinations to be done by SMC ENT company doctor and a review of
compensation/incentive system for the employees.
2.)
A letter was set out the circumstances under which MAERC entered the service agreement in 1998, with assurances of the SMC president and CEO that
the employment of MAERC services would be long term to enable it to recover its investments, it was with this understand MAERC loaned from banks
and affiliate corporations so that it could comply with the demands of SMC to invest in machinery and facilities. The letter attested to an arrangement by
SMC and MAERC which was not reflected in the Contract of Services. A peculiar relationship mutually beneficial for a time but ended in dispute when
SMC decided to prematurely end the contract leaving MAERC to shoulder all the obligations to the workers.
SMC states as an error the failure of the CA to apply the ruling in Neri vs. NLRC, where it was held that the law did not require one to possess both
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substantial capital and investment in the form of tools, equipment, machinery, work premises, among others, to be considered a job contractor. The
second condition to establish permissible job contracting was sufficiently met if one possessed either attribute.
SMC alleged that the CA and NLRC erred when they declared MAERC a labor contractor despite finding that MAERC had investments amount to at least
4 mconsisting of buildings, machinery and equipment.
The SC cited the case of Vinoya vs. NLRC, where they clarified that it was not enough to show substantial capitalization or investment in the form of
tools, equipment, machinery and work premises, etc., to be considered an independent contractor. In fact, jurisprudential holdings were to the effect
that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to,
whether the contractor was carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of specified pieces of work; the control and supervision of the workers; the power of the employer with
respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools, appliances,
materials and labor; and the mode, manner and terms of payment.
SC discussed the case of NERI where they considered not only the fact the BCC had substantial capitalization but noted that BCC carried on an
independent business and perform its contract according to its own manner and method free from control and supervision of its principal in all matters
except as to the results. The court also mentioned that the employees of BCC were engaged to perform specific special services for their principal. The
status of of BCC has aldo been passed upon by the Court in a previous case where it was found to be a qualified job contractor because it was a big
firm which services among others a university, an international bank, a big local bank a hospital center, govt agencies,
In comparison, MAERC displayed the characteristics of a labor only contract, while its investments in the form of buildings, tools, equipment amount to
more than 4m the court disregarded the fact that it was SMC which required MAERC to undertake such investments under the understanding that the
business relationship between SMC and MAERC would be on a long term basis, the court does not believe that MAERC has an independent business
since it was only set up to specifically meet the needs of DMC when they were having labor issues.
SMC alleges that the CA erred in ruling that W/N is an independent contractor, SMC is liable with MAERC for the latters unpaid obligations to the
workers.
- The SC agrees with SMC in the view that distinctions must be made.
- In legitimate job contracting the law creates an employer-employee relationship for a limited purpose, to ensure that the employees are paid their
wages. The principal employer becomes jointly and severally liable with the job contractor only for the payment of employees wages whenever the
contractor fails the same. Other than that, the principal employer is not responsible for any claim made by the employees.
- In labor only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor
laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal employer. The principal employer therefore becomes solidarily liable
with the labor-only contractor for all the rightful claims of the employees.
- The distinction between job contractor and labor-only contractor will not discharge SMC from paying the separation benefits of the works, inasmuch
as MAERC was shown to be a labor only contractor, in which case SMCs liability is that of a direct employer and thus solidarily liable with MAERC.
SMC also failed to comply with the requirement of written notice to both employees concerned and DOLE which must be given at least one month
before the intended date of retrenchment.

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24. WACK WACK GOLF & COUNTRY CLUB v. NATIONAL LABOR RELATIONS AUTHOR: ACIDO
COMMISSION, MARTINA G. CAGASAN, CARMENCITA F. DOMINGUEZ, and NOTES: Petition for review
BUSINESS STAFFING AND MANAGEMENT, INC.
G.R. No. 149793, April 15, 2005
TOPIC: Independent Contractor & Labor-only Contractor PONENTE: Callejo Sr., J.
CASE LAW/ DOCTRINE:
An independent contractor is one who undertakes job contracting, i.e., a person who: (a) carries on an independent business and undertakes the contract work on
his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof; and (b) has substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of the business.
FACTS:
November 29, 1996: A fire destroyed a large portion of the main clubhouse of the Wack Wack Golf and Country Club, including its kitchen. In view of the
reconstruction of the whole clubhouse complex, Wack Wack filed a notice with the DOLE on April 14, 1997 that it was going to suspend the operations of the
Food and Beverage Department 1 month thereafter. Notices to 54 out of 85 employees were also sent out, informing them that they need not report for work
anymore after April 14, 1997 but that they would still be paid their salaries up to May 14, 1997. They were further told that they would be informed once full
operations in Wack Wack resume
The Wack Wack Golf Employees Union branded the suspension of operations of the F&B Department as arbitrary, discriminatory, and constitutive of union-
busting, so they filed a notice of strike with the DOLEs National Conciliation and Mediation Board. Eventually the parties were able to enter into an amicable
settlement through an Agreement with a special separation benefit retirement package for interested Wack Wack employees, especially those in the F&B
department.
o Special separation benefit equivalent to 1.5 months salary for every year of service, cash equivalent of unused vacation and sick leave credits,
13th month pay, etc.
o 4) All qualified employees who may have been separated from the service under the above package shall be considered under a priority basis for
employment by concessionaires and/or contractors, and even by the Club upon full resumption of operations, upon the recommendation of
the UNION. The Club may even persuade an employee-applicant for availment under the package to remain on his/her job, or be assigned to
another position.
The case mentions 3 people who availed of the special separation package: respondent Carmencita Dominguez (Administrative Department), respondent
Martina Cagasan (Personnel Officer), and Crisanto Baluyot, Sr. (Union president). They received their respective separation pay and economic benefits, and
then signed a Release and Quitclaim in favor of Wack Wack afterwards.
October 15, 1997: Wack Wack entered into a Management Contract with Business Staffing and Management, Inc., a corporation engaged in the business as
Management Service Consultant undertaking and managing for a fee projects which are specialized and technical in character like marketing, promotions,
merchandising, financial management, operation management and the like. For Wack Wack, one of the operational areas where BSMI provided management,
admin, and support services was its F&B operation. As such, pursuant to the Agreement, the retired employees of Wack Wack were given priority by BSMI in
hiring because of their experience.
October 21, 1997: Cagasan and Dominguez filed applications for employment with BSMI. They were eventually hired by BSMI to their former positions in Wack
Wack as project employees and were issued probationary contracts.
Because Wack Wack also engaged several contractors, aside from BSMI, which were assigned in various operating functions of the club, BSMI undertook an
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organizational analysis and manpower evaluation to determine its efficacy and streamline its operations. BSMI saw that the positions of Cagasan and
Dominguez were redundant (Cagasan redundant because of field superintendent and personnel and operations manager; Dominguez redundant because of
accounting dept)
February 27, 1998: the services of Dominguez and Cagasan were terminated. Baluyots position (Chief Porter) was going to be abolished, so he was offered the
position of Caddie Master Aide, which he declined. When he was temporarily accepted as Chief Porter, and he still did not want to accept the Caddie Master
Aide position, BSMI abolished his position and dismissed Baluyot.
The 3 employees filed their complaints with the NLRC for illegal dismissal and damages against Wack Wack and BSMI, saying that they were dismissed without
cause, and that they accepted the separation package upon the assurance that they would be given their former work and assignments once the F&B
Department of Wack Wack resumes its operations.
Labor Arbiter: Cagasan and Dominguezs dismissal for a valid and authorized cause (redundancy). Baluyots dismissal illegal; BSMI must reinstate and pay
backwages.
NLRC (2 na lang silang nag-appeal): Wack Wack must reinstate Cagasan and Dominguez with backwages and full benefits.
CA 12th Division: Dismissed Wack Wacks petition on procedural matters (failure to attach an Affidavit of Service; insufficient verification and certification
against forum shopping = executed by GM without any proof of authority) Also denied Wack Wacks MR.
ISSUE:
Whether or not BSMI is an independent contractor or a labor-only contractor.

HELD:
Independent contractor. Petition granted. CA and NLRC resolutions set aside; Cagasan and Dominguezs complaints dismissed.
RATIO:
The NLRC posits that BSMI is merely a supplier of workers or a labor-only contractor; hence, Wack Wack remains to be the principal employer of the
respondents and liable for their reinstatement and payment of backwages. The NLRC is wrong. An independent contractor is one who undertakes job
contracting, i.e., a person who: (a) carries on an independent business and undertakes the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of
the work except as to the results thereof; and (b) has substantial capital or investment in the form of tools, equipment, machineries, work premises and
other materials which are necessary in the conduct of the business.
In determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to,
whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employers power with
respect to the hiring, firing, and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials
and labor; and the mode, manner and terms of payment.
BSMI is an independent contractor engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures,
and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial
business establishments. Its Articles of Incorporation proves its sufficient capitalization. The Labor Secretary had recognized BSMI as an independent
contractor in a December 1993 labor case.
BSMI admitted that it employed the respondents, giving the said retired employees some degree of priority merely because of their work experience with
the petitioner, and in order to have a smooth transition of operations. Unfortunately, after a study and evaluation of its personnel organization, BSMI was
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impelled to terminate the services of the respondents on the ground of redundancy. This right to hire and fire is another element of the employer-
employee relationship which actually existed between the respondents and BSMI, and not with Wack Wack. There being no employer-employee
relationship between the petitioner and respondents Cagasan and Dominguez, the latter have no cause of action for illegal dismissal and damages against
Wack Wack.

25. Aliviado v. Proctor and Gamble Phils., Inc. AUTHOR: Adre
[G.R. No. 160506, June 6, 2011] NOTES: Motion to refer the case to the Supreme Court en banc.
TOPIC: Independent Contractor and Labor-only Contractor There was an earlier case and court rendered its decision on March 9, 2010. The
PONENTE: Del Castillo one in our outline is the SCs Resolution en banc where they just reiterated their
March 9 decision that SAPS is a labor-only contractor. Focused on the topic since
majority of the discussion in this 2011 case is about the fact na may finality of
judgment na sa 2010 and its immutable.
CASE LAW/ DOCTRINE:
FACTS:
Background (from the 2010 case kasi wala ng facts sa 2011 case):
P&G: Principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various
supermarkets and distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for
the promotion and merchandising of its products.
Aliviado and other petitioners worked as P&Gs merchandisers, and individually signed employment contracts with either Promm-Gem, Inc. (Promm-Gem) or
and Sales and Promotions Services (SAPS) for periods of more or less five months at a time.
They were assigned at different outlets, supermarkets, and stores where they handled all the products of P&G, and received their wages from Promm-Gem or
SAPS. Promm-Gem and SAPS imposed disciplinary measures on erring merchandisers.
THEN On December 1991, petitioners filed a complaint for regularization and other money claims against P&G. The complaint was later amended to include
charges of illegal dismissal.
Labor Arbiter: Dismissed the complaint; there was no employer-employee relationship (EER) between petitioners and P&G, as the former were employed by
Promm-Gem and SAPS.
o Applied the four-fold test for EER:
1. Selection and engagement;
2. Payment of wages;
3. Power of dismissal;
4. Power of control.
o Declared Promm-Gem and SAPS legitimate job contractors.
Petitioners appealed to the NLRC.
NLRC: Dismissed the appeal, affirmed the Labor Arbiters Decision. Motion for reconsideration denied.
Petitioners sought recourse with the Court of Appeals via a petition for certiorari under Rule 65 of the Rules of Court.
CA: Denied the petition and affirmed the NLRCs Decision with modification.
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o P&G ordered to pay service incentive leave pay to petitioners.
In the March 9, 2010, the Court ruled that: (a) that Promm-Gem, Inc. (Promm-Gem) is a legitimate independent contractor; (b) that Sales and Promotions Services
(SAPS) is a labor-only contractor consequently its employees are considered employees of Procter & Gamble Phils., Inc. (P&G); (c) that Promm-Gem is guilty of illegal
dismissal; (d) that SAPS/P&G is likewise guilty of illegal dismissal; (e) that petitioners are entitled to reinstatement; and (f) that the dismissed employees of
SAPS/P&G are entitled to moral damages and attorneys fees there being bad faith in their dismissal.
In this 2011 case: P&G's claim: that the Court erred in not applying the four-fold test, particularly the control test in determining whether SAPS is a legitimate
independent contractor or a labor-only contractor
ISSUE(S): Whether or not the Court erred in ruling that SAPS is a labor-only contractor.
HELD: NO.
RATIO:
Whether or not SAPS is engaged in labor-only contracting. YES. Its a labor-only contractor.
It does not have substantial capitalits paid-in capital is only P31,250.
o Monthly payroll already totaled P44,561. Its contracts with P&G were for six-month periods. Its capital is not even sufficient for one months payroll.
o SAPS failed to show that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate its needed revenue to sustain its
operations independently.
Neither is there a showing of substantial investment in tools, equipment or other assets.
Furthermore, petitioners activities which consisted of merchandising and promotion of P&G products are directly related to the manufacturing business.
Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the
principal business of P&G, the Court found that SAPS is engaged in labor-only contracting.
P&G claims that the Court should have applied the four-fold test, specifically the control test, in determining whether SAPS is a legitimate job contractor or
a labor-only contractor.
This is incorrect. The control test is only one of the ways to determine the existence of labor-only contracting.
Pertinently, Department Order No. 18-02 provides:

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 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) [T]he contractor does not exercise the right to control over the performance of the work of the contractual employee.

In the case at bar, the Court already concluded that (1) SAPS merely recruited workers for P&G, (2) it did not have substantial capital or investment, and
(3) the workers performed activities directly related to the business of the principal.
Hence, SAPS may be considered a labor-only contractor under D.O. 18-02, Sec. 5 (i).
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In Coca-Cola Bottlers Phils., Inc. v. Agito, the Court ruled:

The law clearly establishes an employer-employee relationship between the principal employer and the contractors employee upon a finding that the
contractor is engaged in labor-only contracting. Article 106 of the Labor Code categorically states: There is labor-only contracting where the person
supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer.
Thus, performing activities directly related to the principal business of the employer is only one of the two indicators that labor-only contracting exists;
the other is lack of substantial capital or investment. The Court finds that both indicators exist in the case at bar.

26. First Philippine Industrial Corporation v. Calimbas and Mahilom AUTHOR: Castro
[G.R. No. 179256, July 10, 2013] NOTES: Please read the relevant laws part first before the ratio.
TOPIC: Independent Contractor and Labor-only Contractor
PONENTE: Peralta, J.
CASE LAW/ DOCTRINE:
There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who
shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. In this case, DGMSs actual paid-in capital
in the amount of P75,000.00 does not constitute substantial capital essential to carry out its business as an independent job contractor.
It is axiomatic that the test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has
contracted to do the work according to his own methods and without being subjected to the control of the employer, except only to the results of the work.
Here, DGMS was not an independent job contractor inasmuch as respondents were subjected to the control and supervision of petitioner while they were
performing their jobs.
FACTS:
First Philippine Industrial Corporation (FPIC) is a domestic corporation primarily engaged in the transportation of petroleum products by pipeline, while De
Guzman Manpower Services (DGMS) is engaged in the business of supplying manpower to render general clerical, building and grounds maintenance, and
janitorial and utility services.
March 29, 1993: FPIC entered into a Contract of Special Services with DGMS.
Pursuant to the Contract of Special Services, which took effect on April 1, 1993, respondents Raquel Calimbas and Luisa Mahilom were engaged by DGMS to
perform secretarial and clerical jobs for FPIC.
Calimbas was assigned as a department secretary at the Technical Services Department beginning June 3, 1996, while Mahilom served as a clerk at the Money
Movement Section of the Finance Division starting February 13, 1996.
June 21, 2001: FPIC, through its Human Resources Manager, Lorna Young, informed Calimbas and Mahilom that their services to the company would no longer
be needed by July 31, 2001 as a result of the Pace-Setting Study conducted by an outside consultant.
July 9, 2001: Priscilla de Leon, Treasurer of DGMS, formally notified the two that their respective work assignments in FPIC were no longer available to them
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effective July 31, 2001, citing the termination of the Project Contract with FPIC as the main reason.
August 3, 2001: Calimbas and Mahilom signed quitclaims, releasing and discharging DGMS from whatever claims that they might have against it by virtue of
their past employment, upon receipt of the sums of P17,343.10 and P23,459.14, respectively.
Calimbas and Mahilom filed a Complaint against FPIC for illegal dismissal and for the collection of monetary benefits, damages and attorneys fees, alleging that
they were regular employees of FPIC after serving almost five (5) years, and that they were dismissed without cause.

Calimbas and Mahilom: Their real employer was FPIC and DGMS was merely its agent for having been engaged in prohibited labor-only contracting.
o DGMS did not have substantial capital or investment by way of tools, equipment, machines, work places and other materials.
o They only used office equipment and materials owned by FPIC at its offices in Ortigas Center, Pasig City.
o DGMS never exercised control over them in all matters related to the performance of their work. In fact, DGMS never maintained any representative at the
FPICs office to supervise or oversee their work. They insisted that their direct superiors, who were managerial employees of FPIC, had control over them
since the latter made sure that they always complied with the policies of FPIC.

FPIC: The employer of Calimbas and Mahilom was DGMS.
o There was absolutely no employer-employee relationship between it and Calimbas and Mahilom.
o They were hired by DGMS and were assigned to the Company to render services based on their Contract.
o They received their wages and other benefits from DGMS and they executed quitclaims in favor of DGMS.

Labor Arbiter: Calimbas and Mahilom were regular employees of FPIC and they were illegally dismissed without just cause.
NLRC (1st decision): dismissed FPICs appeal and affirmed LAs decision.
NLRC (2nd decision): On the Motion for Reconsideration, NLRC reversed its decision. NLRC found that DGMS was the employer of Calimbas and Mahilom.
o It also found that DGMS is an independent contractor capitalizing at P75,000.00 to provide the manpower requirements of other clients like the Makati
Commercial Estate Association and the Philippine Transmarine Carrier.
o The MR of Calimbas and Mahilom were denied, NLRC maintained that there is no legal basis to deem DGMS as labor-only contracting entity.
NLRC: The fact that DGMS had only a capitalization of P75,000.00, without an investment in tools, equipment, etc., does not necessarily constitute
the latter as labor-only contractor since it has shown its adequacy of resources, directly or indirectly, in the performance of completion of the job,
work or service contracted out, including operating costs, administrative costs such as training, overhead and other costs as are necessary to enable
DGMS to exercise control, supervision, or direction over its employees in all aspects in performing or completing the job, work or services contracted
out.
Court of Appeals: reversed and set aside NLRCs ruling. DGMS is a labor-only contracting entity.
ISSUE:
Whether DGMS is engaged in labor-only contracting which would mean that the respondents are employees of FPIC
HELD:
Yes. CA is correct in holding that the employees are FPICs and that DGMS is engaged in labor-only contracting.
RATIO:
First, in Vinoya v. National Labor Relations Commission, this Court categorically stated that the actual paid-in capital of P75,000.00 could not be considered
as substantial capital. Thus, DGMSs actual paid-in capital in the amount of P75,000.00 does not constitute substantial capital essential to carry out its
business as an independent job contractor. In spite of its bare assertion that the Vinoya case does not apply in the present case, DGMS has not shown any
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serious and cogent reason to disregard the ruling in the aforementioned case. Records likewise reveal that DGMS has no substantial equipment in the form
of tools, equipment and machinery. As a matter of fact, respondents were using office equipment and materials owned by petitioner while they were
rendering their services at its offices.

Second, FPIC exercised the power of control and supervision over the respondents. As aptly observed by the CA, the daily time records of respondents even
had to be countersigned by the officials of petitioner to check whether they had worked during the hours declared therein. Furthermore, the fact that DGMS
did not assign representatives to supervise over respondents work in petitioners company tends to disprove the independence of DGMS. It is axiomatic
that the test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do
the work according to his own methods and without being subjected to the control of the employer, except only to the results of the work. Obviously, on
this score alone, petitioner cannot rightly claim that DGMS was an independent job contractor inasmuch as respondents were subjected to the control
and supervision of petitioner while they were performing their jobs.

Third, also worth stressing are the points highlighted by respondents:
Respondents worked only at petitioners offices for an uninterrupted period of five years, occupying the same position at the same department
under the supervision of company officials;
Three weeks ahead of the termination letters issued by DGMS, petitioners HR Manager Lorna Young notified respondents, in a closed-door meeting,
that their services to the company would be terminated by July 31, 2001;
In the termination letters prepared by DGMS, it was even stressed that the said termination letters will formalize the verbal notice given by
petitioners HR Administration personnel;
The direct superiors of respondents were managerial employees of petitioner, and had direct control over all the work-related activities of the latter.
This control included the supervision of respondents performance of their work and their compliance with petitioners company policies and
procedures. DGMS, on the other hand, never maintained any representative at the petitioners office to oversee the work of respondents.

All told, an employer-employee relationship exists between petitioner and respondents. And having served for almost five years at petitioners company,
respondents had already attained the status of regular employees.

Relevant Laws:
Article 106 of the Labor Code

Article 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the
employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally
liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is
liable to employees directly employed by him.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under the Code.
In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job-contracting as well as differentiations within these
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types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.

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

Sections 8 and 9 of DOLE Department Order No. 10, Series of 1997

Sec. 8. Job contracting.There is job contracting permissible under the Code if the following conditions are met:
(1) 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 as to the
results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the
conduct of his business.

Sec. 9. Labor-only contracting.
(a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person:
1. Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and
2. The workers recruited and placed by such persons are performing activities which are directly related to the principal or operations of the employer in which
workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the
employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is
permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such
case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers.

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27. Alilin, et al v. Petron AUTHOR: Miguel M. Consing
[G.R. No.177952; June 9, 2014] NOTES:
TOPIC: Independent Contractor and Labor-only Contractor DOLE Department Order No. 10, series of 1997
PONENTE: Del Castillo, J. f) "Labor-only contracting" prohibited under this Rule is an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform a job, work or service for a principal and the following
elements are present:

(i) The contractor or subcontractor does not have substantial capital or investment to actually perform the job,
work or service under its own account and responsibility; and

(ii) 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.
FACTS:
Romualdo D. Gindang Contractor recruited the petitioners to work for Petron in 1968.

In 1989, the owner Romualdo D. Gindang died, and his son Romeo D Gindang took over the company and it became Romeo D. Gindang Services (RDG).

Petron and RDG entered into a Contract for Services (utility services) for the period June 1, 2000 to May 31, 2002. The contract was extended until September 30, 2002. It
was no longer renewed after it expired.

The petitioners filed a case in the Labor Arbiter for illegal dismissal. They did not deny that RDG hired them and paid their salaries. However, they claimed that RDG is a
labor-only contractor, which merely acted as an agent of Petron, their true employer.

RDG corroborated petitioners claim that they are regular employees of Petron. It alleged that Petron directly supervised their activities and provided them with their
equipment.

LA ruling: Petitioners are regular employees of Petron. Their jobs were directly related to Petrons business operations; they worked under the supervision of Petrons
foreman and supervisor; and they were using Petrons tools and equipment in the performance of their work

NLRC: Affirmed LAs ruling.

CA: Reversed NLRCs ruling. It found no employer-employee relationship between the parties. It also found RDG to be an independent labor contractor with sufficient
capitalization and investment as shown by its financial statement for year-end 2000. In addition, the works for which RDG was contracted to provide were menial which
were neither directly related nor sensitive and critical to Petrons principal business.
ISSUE(S):
Was RDG a labor-only contractor?

HELD/RATIO:
Yes. the Court finds that RDG is a labor-only contractor. As such, it is considered merely as an agent of Petron. Consequently, the employer-employee relationship which the Court
finds to exist in this case is between petitioners as employees and Petron as their employer. Petron therefore, being the principal employer and RDG, being the labor-only contractor,
are solidarily liable for petitioners' illegal dismissal and monetary claims.
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Petron failed to prove that RDG was a legitimate contractor.

First, Petron submitted RDGs financial statements for the years 1998-2000, but these statements only covered those years. Petron failed to establish the financial capability of RDG
at the time when petitioners actually started to work for Petron in 1968, 1979, 1981, 1987, 1990, 1992 and 1993.

Second, the works performed by petitioners were directly related to Petrons business, another factor which negates Petrons claim that RDG is an independent contractor. While
the jobs performed by petitioners may be menial and mechanical, they are nevertheless necessary and related to Petrons business operations. If not for these tasks, Petrons
products will not reach the consumers in their proper state. Indeed, petitioners roles were vital inasmuch as they involve the preparation of the products that Petron will distribute
to its consumers.

Furthermore, while it may be true that any able-bodied individual can perform the tasks assigned to petitioners, the Court notes the undisputed fact that for many years, it was the
same able-bodied individuals (petitioners) who performed the tasks for Petron. The engagement of petitioners for the same works for a long period of time is a strong indication that
such works were indeed necessary to Petrons business. In view of these, and considering further that petitioners length of service entitles them to become regular employees under
the Labor Code, petitioners are deemed by law to have already attained the status as Petrons regular employees.
CASE LAW/ DOCTRINE:
A contractor is presumed to be a labor-only contractor, unless it proves that it has the substantial capital, investment, tools and the like. However, where the principal is the one
claiming that the contractor is a legitimate contractor, the burden of proving the supposed status of the contractor rests on the principal.

Elements of an Employer-Employee Relationship
The four elements of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the power to
control the employees conduct.

28. GSIS v. NLRC, Private Respondents AUTHOR: Pineda
[G.R. No. 180045; 17 November 2010] NOTES:
TOPIC: liability of principal in job contracting PONENTE: Nachura, J.
CASE LAW/ DOCTRINE:
The principal (GSIS) is made liable to its indirect EEs (Guards) because, after all, it can protect itself from irresponsible contractors by withholding payment of
such sums that are due the EEs and by paying the EEs directly, or by requiring a bond from the contractor for the purpose.
Solidary liability was enacted to ensure compliance with the Labor Code, principally that on minimum wage. The contractor or subcontractor is made liable
by virtue of his status as a direct ER, and the principal as the indirect ER of the contractors EEs. This liability facilitates payment of workers compensation,
thus giving workers ample protection.

FACTS:
Private Respondents are security guards (Guards) employed by DNL Security Agency (DNL).
DNL and GSIS had a contract, wherein the service of the Guards was contracted to GSIS.
The contract was terminated. DNL, however, instructed the Guards to continue reporting for work. They did, but were not paid.
Guards filed a complaint against DNL and GSIS for illegal dismissal.
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ISSUE(S): W/N GSIS liable to Guards for illegal dismissal

HELD: YES. GSIS is solidarily liable with DNL for unpaid wages. HOWEVER, not liable for separation pay, as it did not conspire with DNL to illegally dismiss Guards.

RATIO:
DNL responsible as direct ER. SC did not delve into a discussion, as such was no longer raised on appeal.
The fact that there is no actual and direct ER-EE relationship between GSIS and Guards does not absolve the former from liability for the latters monetary
claims. When GSIS contracted DNL services, it became an indirect ER, pursuant to Article 107 of the Labor Code.
After DNL failed to pay Guards the correct wages, GSIS, as principal, became jointly and severally liable, pursuant to Articles 106&109 of the Labor Code.
GSIS liability covers the payment of Guards salary differential and 13th month pay + unpaid wages during the extended period they worked for GSIS. GSIS
impliedly approved such extension of service.
The principal (GSIS) is made liable to its indirect EEs (Guards) because, after all, it can protect itself from irresponsible contractors by withholding payment of
such sums that are due the EEs and by paying the EEs directly, or by requiring a bond from the contractor for the purpose.
Solidary liability was enacted to ensure compliance with the Labor Code, principally that on minimum wage. The contractor or subcontractor is made liable
by virtue of his status as a direct ER, and the principal as the indirect ER of the contractors EEs. This liability facilitates payment of workers compensation,
thus giving workers ample protection.
GSIS is however NOT LIABLE for separation pay. Separation pay is punitive, such that an indirect ER should not be made liable, absent any finding that he
conspired in the illegal dismissal.

29. Mariveles Shipyard Corporation vs. CA AUTHOR: De Leon
[G.R. No. 144134. 11 November 2003] NOTES: yung facts copied sa digest ni Berna.
TOPIC Liability of the principal in legitimate job contracting
PONENTE: Quisumbing, J.
CASE LAW/ DOCTRINE:
FACTS:
Oct 1993Petitioner Mariveles Shipyard Corporation engaged the services of Longest Force Investigation and Security Agency, Inc. to render security services
at its premises. Pursuant to their agreement, Longest Force deployed its security guards, herein respondents, at the petitioners shipyard in Mariveles, Bataan.
However, later on, Mariveles Corporation found the services rendered by the assigned guards unsatisfactory and inadequate, causing it to terminate its
contract with Longest Force on April 1995. Longest Force, in turn, terminated the employment of the security guards it had deployed at petitioners shipyard.
2 Sept 1996private respondents filed a case for illegal dismissal, underpayment of wages, non-payment of overtime pay, premium pay for holiday and rest
day, service incentive leave pay, and 13th month pay and attorneys fees against Longest Force and petitioner, before the Labor Arbiter.
In Longest Forces cross-claim, it admitted that it employed private respondents and assigned them as security guards at the premises of petitioner, rendering a
12 hours duty per shift for the said period. It likewise admitted its liability as to the non-payment of the alleged wage differential in the total amount of
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P2,618,025 but passed on the liability to petitioner alleging that the service fee paid by the latter to it was way below the PNPSOSIA and PADPAO rate, thus,
contrary to the mandatory and prohibitive laws because the right to proper compensation and benefits provided under the existing labor laws cannot be
waived nor compromised.
While Mariveles Corporation alleged the following: (1) denied the liability on account of the alleged illegal dismissal, stressing that no employer-employee
relationship existed between it and the security guards; and (2) it is not liable for monetary claims which it had already paid. Anent the cross-claim filed by
Longest Force, Mariveles Corporation averred that Longest Force had benefited from the contract, it was now stopped from questioning said agreement on the
ground that it had made a bad deal.
LA ruled in favor of private respondents and declaring Longest Force and Mariveles Corporation jointly and severally liable to pay the money claims.
NLRC affirmed LAs decision. Motion for reconsideration was denied.
Hence, this petition.

ISSUE(S): W/N Mariveles Corporation and Longest Force are jointly and severally liable for the payment of wage differentials and overtime pay owing to the private
respondents.

HELD: Yes.
RATIO:
When petitioner (Mariveles) contracted for security services with Longest Force as the security agency that hired private respondents to work as guards for the
shipyard corporation, petitioner became an indirect employer of private respondents pursuant to Article 107. Following Article 106, when the agency as contractor
failed to pay the guards, the corporation as principal becomes jointly and severally liable for the guards wages. This is mandated by the Labor Code to ensure
compliance with its provisions, including payment of statutory minimum wage. The security agency is held liable by virtue of its status as direct employer, while the
corporation is deemed the indirect employer of the guards for the purpose of paying their wages in the event of failure of the agency to pay them. This statutory
scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution.

Under Article 106, par. 2 of the Labor Code, in the event that the contractor or subcontractor fails to pay wages of his employeesthe employer shall be jointly and
severally liable with his contractor or subcontractor. Also, in Article 107 of the same Code, the law states that the preceding Article shall likewise apply to person,
partnership, association or corporation which, not being an employer, contracts with an independent contractor. Pursuant to the mentioned provisions of the
Labor Code, the Court said that, in this case, the petitioner as an indirect employer, shall truly be liable jointly and severally with Longest Force in paying backwages
and overtime pay to the private respondents. Moreover, the Court emphasized that Labor standard are enacted by the legislature to alleviate the plight of workers
whose wages barely meet the spiraling costs of their basic needs. Labor laws are considered written in every contract. Stipulations in violation thereof are
considered null. Therefore, the petitioner should be held jointly and severally liable, together with Longest Force to the private respondents as earlier decided by
NLRC, as affirmed by the CA.

Codal provisions sa case for reference:

Article 106. CONTRACTOR OR SUBCONTRACTOR.Whenever an employer enters into a contract with another person for the performance of the formers
work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.

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In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.

Article 107. INDIRECT EMPLOYER.The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or
corporation which, not being an employer, contracts with an independent contractors for the performance of any work, task , job or project.

Article 109. SOLIDARY LIABILITY.The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held
responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability
under this Chapter, they shall be considered as direct employers.


30. VIGILLA V PHIL COLLEGE OF CRIMINOLOGY AUTHOR: DELFIN
[G.R. No. 200094 June 10, 2013] NOTES:
TOPIC: Liability of the principal in legitimate job contracting and in labor-only
contracting
PONENTE: DEL CASTILLO
CASE LAW/ DOCTRINE:
In legitimate job contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. Th
principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees' wages whenever the contractor fails to pay th
same. Other than that, the principal employer is not responsible for any claim made by the employees.
In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor
considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been direct
employed by the principal employer. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees
FACTS:
Phil College of Criminology (PCCr) is a non-stock educational institution, while the petitioners were janitors, janitresses and supervisor in the Maintenance
Department of PCCr under the supervision and control of Atty. Florante A. Seril (Atty. Seril), PCCrs Senior Vice President for Administration.
Upon application, petitioners were advised that they will be under MBMSI, a corporation engaged in providing janitorial services to clients. (Atty. Seril is also the
President and General Manager of MBMSI).
The school then found out that the Certificate of Incorporation of MBMSI had been revoked as of July 2, 2003. Because of this, the school terminated its
relationship with MBMSI, resulting in the dismissal of the employees (maintenance personnel under MBMSI) except Alfonso Bongot (Bongot) who was retired.
In the complaint of the petitioners for Illegal Dismissal they alleged that it was the school, not MBMSI, is their real employer because (a) MBMSIs certification had
been revoked;
(b) PCCr had direct control over MBMSIs operations;
(c) there was no contract between MBMSI and PCCr; and
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(d) the selection and hiring of employees were undertaken by PCCr.
On the part of PCCr, they maintain that PCCr could not have illegally dismissed the complainants because:
(a) it was not their direct employer;
(b) MBMSI was the one who had complete and direct control over the complainants; and
(c) PCCr had a contractual agreement with MBMSI, thus, making the latter their direct employer
LABOR ARBITER:
It held that:
(a) PCCr was the real principal employer of the complainants ;
(b) MBMSI was a mere adjunct or alter ego/labor-only contractor;
(c) the complainants were regular employees of PCCr; and
(d) PCCr/Bautista were in bad faith in dismissing the complainants
The LA further explained that PCCr was actually the one which exercised control over the means and methods of the work of the petitioners, thru Atty. Seril, who
was acting, throughout the time in his capacity as Senior Vice President for Administration of PCCr, not in any way or time as the supposed employer/general
manager or president of MBMSI.
LA ordered the respondents (a) to reinstate petitioners except Bongot who was deemed separated/retired; (b) to pay their full back wages from the date of their
illegal dismissal until actual reinstatement (totaling P2,963,584.25); (c) to pay Bongots separation or retirement pay benefit under the Labor Code (amounting to
P254,010.00); (d) to pay their 3-year Service Incentive Leave Pay (P4,245.60 each) except Vigilla (P5,141.40); (e) to pay all the petitioners moral and exemplary
damages in the combined amount of P150,000.00; and finally (f) to pay 10% of the total computable award as Attorneys Fees. (apparently, there was a quitclaim
by the respondents that the LA did not consider in its judgment)
NLRC:
Affirmed the LAs findings but the respondents were excused from their liability by virtue of the releases, waivers and quitclaims executed by the petitioners.
As Respondent MBMSI and Atty. Seril, together are found to be labor only contractor, they are solidarily liable with Respondent PCCr and Gregory Alan F.
Bautista for the valid claims of Complainants pursuant to Article 109 of the Labor Code on the solidary liability of the employer and indirect employer. This
liability, however, is effectively expunged by the acts of the 17 Complainants of executing Release, Waiver, and Quitclaims in favor of Respondent MBMSI. The
liability being joined, the release of one redounds to the benefit of the others, pursuant to Art. 1217 of the Civil Code, which provides that "Payment made by
one of the solidary debtors extinguishes the obligation.
COURT OF APPEALS:
affirmed the decision of NLRC - based on the principle of solidary liability and Article 1217 of the New Civil Code, petitioners respective releases, waivers and
quitclaims in favor of MBMSI and Atty. Seril redounded to the benefit of PCCr.
ISSUE(S):
Whether or not a Labor- only contractor is solidarily liable with the employer? If so, did the quitclaim, release and waivers released PCCr from liability?
HELD:
Yes, they are solidarily liable. Yes, the quitclaims, release and waivers having found to not be defective, releases PCCr from liability.
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RATIO:
Section 19 of Department Order No. 18-02 issued by the Department of Labor and Employment (DOLE), which was still in effect at the time of the decisio
interprets Article 106 of the Labor Code Solidary liability as below:
Section 19. Solidary Liability. The principal shall be deemed as the direct employer of the contractual employees and therefore, solidarily liable
with the contractor or subcontractor for whatever monetary claims the contractual employees may have against the former in the case of
violations as provided for in Sections 5 (LaborOnly contracting), 6 (Prohibitions), 8 (Rights of Contractual Employees) and 16 (Delisting) of these
Rules. In addition, the principal shall also be solidarily liable in case the contract between the principal and contractor or subcontractor is
preterminated for reasons not attributable to the fault of the contractor or subcontractor.
Section 27. Effects of finding of labor-only contracting and/or violation of Sections 7, 8 or 9 of the Rules. A finding by competent authority of labor-
only contracting shall render the principal jointly and severally liable with the contractor to the latters employees, in the same manner and extent
that the principal is liable to employees directly hired by him/her, as provided in Article 106 of the Labor Code, as amended.
Considering that MBMSI, as the labor-only contractor, is solidarily liable with the respondents, as the principal employer, then the NLRC and the CA
correctly held that the respondents solidary liability was already expunged by virtue of the releases, waivers and quitclaims executed by each of the
petitioners in favor of MBMSI pursuant to Article 1217 of the Civil Code which provides that "payment made by one of the solidary debtors extinguishes
the obligation."
The Court holds that the releases, waivers and quitclaims executed by petitioners in favor of MBMSI redounded to the respondents' benefit. The liabilities
of the respondents to petitioners are now deemed extinguished.

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Atty. Anonuevo| G01 | A.Y. 2016-2017

No proof of employment relationship likewise existed (MOST IMPORTANT)

HELD: No. Petition is DISMISSED. PDI won.

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