GUIDEPOSTS CASES Labor Law; Employment; Control Test; The

better approach would therefore be to adopt a

(1) Tondo Medical Center Employees two-tiered test.—The better approach would
Association vs. Court of Appeals therefore be to adopt a two-tiered test involving: (1)
the putative employer’s power to control the
Reorganizations of government units or
employee with respect to the means and methods
departments are valid, for so long as they are
by which the work is to be accomplished; and (2)
pursued in good faith—that is, for the purpose of
the underlying economic realities of the activity or
economy or to make bureaucracy more efficient;
relationship. This two-tiered test would provide us
While the Supreme Court recognizes the
with a framework of analysis, which would take
inconvenience suffered by public servants in their
into consideration the totality of circumstances
deployment to distant areas, the executive
surrounding the true nature of the relationship
department’s finding of a need to make health
between the parties. This is especially appropriate
services available to these areas and to make
in this case where there is no written agreement or
delivery of health services more efficient and more
terms of reference to base the relationship on; and
compelling is far from being unreasonable or
due to the complexity of the relationship based on
arbitrary, a determination which is well within its
the various positions and responsibilities given to
authority.—In several cases, this Court regarded
the worker over the period of the latter’s
reorganizations of government units or
employment.
departments as valid, for so long as they are
pursued in good faith—that is, for the purpose of (3) Francisco vs. National Labor Relations
economy or to make bureaucracy more efficient. Commission
On the other hand, if the reorganization is done for
the purpose of defeating security of tenure or for Same; Same; Same; Economic Activity; The
illmotivated political purposes, any abolition of determination of the relationship between
position would be invalid. None of these employer and employee depends upon the
circumstances are applicable since none of the circumstances of the whole economic
petitioners were removed from public service, nor activity.—The determination of the relationship
did they identify any action taken by the DOH that between employer and employee depends upon the
would unquestionably result in their dismissal. circumstances of the whole economic activity, such
The reorganization that was pursued in the present as: (1) the extent to which the services performed
case was made in good faith. The RSP was clearly are an integral part of the employer’s business; (2)
designed to improve the efficiency of the the extent of the worker’s investment in equipment
department and to implement the provisions of the and facilities; (3) the nature and degree of control
Local Government Code on the devolution of health exercised by the employer; (4) the worker’s
services to local governments. While this Court opportunity for profit and loss; (5) the amount of
recognizes the inconvenience suffered by public initiative, skill, judgment or foresight required for
servants in their deployment to distant areas, the the success of the claimed independent enterprise;
executive department’s finding of a need to make (6) the permanency and duration of the
health services available to these areas and to relationship between the worker and the employer;
make delivery of health services more efficient and and (7) the degree of dependency of the worker
more compelling is far from being unreasonable or upon the employer for his continued employment
arbitrary, a determination which is well within its in that line of business.
authority. In all, this Court finds petitioners’
contentions to be insufficient to invalidate Dismissals; Constructive Dismissals; A
Executive Order No. 102. diminution of pay is prejudicial to the
employee and amounts to constructive
(2) .” G & M Philippines, Inc. vs. Cuambot, dismissal.—A diminution of pay is prejudicial to
the employee and amounts to constructive
All doubts in the implementation and the dismissal. Constructive dismissal is an involuntary
interpretation of the Labor Code shall be resignation resulting in cessation of work resorted
resolved in favor of labor.—Indeed, the rule is to when continued employment becomes
that all doubts in the implementation and the impossible, unreasonable or unlikely; when there
interpretation of the Labor Code shall be resolved is a demotion in rank or a diminution in pay; or
in favor of labor, in order to give effect to the policy when a clear discrimination, insensibility or
of the State to “afford protection to labor, promote disdain by an employer becomes unbearable to an
full employment, ensure equal work opportunities employee. In Globe Telecom, Inc. v. Florendo-
regardless of sex, race or creed, and regulate the Flores, 390 SCRA 201 (2002), we ruled that where
relations between workers and employers,” and to an employee ceases to work due to a demotion of
“assure the rights of workers to selforganization, rank or a diminution of pay, an unreasonable
collective bargaining, security of tenure, and just situation arises which creates an adverse working
and humane conditions of work. environment rendering it impossible for such
employee to continue working for her employer.
Hence, her severance from the company was not of Contract of services with petitioner by private
her own making and therefore amounted to an respondent is not for a piece of work nor for a
illegal termination of employment. definite period.

Labor Law; Equal Work Opportunity; In Same; Same; Same; Same; Same; Illegal
affording full protection to labor, this Court dismissal; Private respondent by the nature of
must ensure equal work opportunities his position and work had been a regular
regardless of sex, race or creed.—In affording employee of petitioner and entitled to the
full protection to labor, this Court must ensure protection of the law and could not just be
equal work opportunities regardless of sex, race or terminated without valid and justifiable
creed. Even as we, in every case, attempt to cause.—On the other hand, an ordinary
carefully balance the fragile relationship between commission insurance agent works at his own
employees and employers, we are mindful of the volition or at his own leisure without fear of
fact that the policy of the law is to apply the Labor dismissal from the company and short of
Code to a greater number of employees. This would committing acts detrimental to the business
enable employees to avail of the benefits accorded interest of the company or against the latter,
to them by law, in line with the constitutional whether he produces or not is of no moment as his
mandate giving maximum aid and protection to salary is based on his production, his anemic
labor, promoting their welfare and reaffirming it as performance or even dead result does not become a
a primary social economic force in furtherance of ground for dismissal. Whereas, in private
social justice and national development. respondent’s case, the undisputed facts show that
he was controlled by petitioner insurance company
(4) Great Pacific Life Assurance Corporation not only as to the kind of work; the amount of
vs. Judico, results, the kind of performance but also the power
of dismissal. Undoubtedly, private respondent, by
An insurance company may have two classes of nature of his position and work, had been a
agents who sell its insurance policies: (1) salaried regular employee of petitioner and is therefore
employees who keep definite hours and work entitled to the protection of the law and could not
under the control and supervision of the company; just be terminated without valid and justifiable
and (2) registered representatives who work on cause.
commission basis. The agents who belong to the
second category are not required to report for work
at anytime, they do not have to devote their time (5) Tongko vs. The Manufactures Life
exclusively to or work solely for the company since Insurance Co. (Phils), Inc
the time and the effort they spend in their work
depend entirely upon their own will and initiative; Labor Law; Agency; Employer-Employee
they are not required to account for their time nor Relationship; Control over the performance of
submit a report of their activities; they shoulder the task of one providing service—both with
their own selling expenses as well as respect to the means and manner, and the results
transportation; and they are paid their commission of the service—is the primary element in
based on a certain percentage of their sales. determining whether an employment relationship
exists; Manulife’s control fell short of this norm
Same; Same; Same; Labor; Employer-employee and carried only the characteristic of the
relationship; Test to determine employer- relationship between an insurance company and
employee relationship.—One salient point in the its agents, as defined by the Insurance Code and
determination of employer-employee relationship by the law of agency under the Civil Code
which cannot be easily ignored is the fact that the
compensation that these agents on commission Same; Same; Same; Codes of conduct are norms or
received is not paid by the insurance company but standards of behavior rather than employer
by the investor (or the person insured). After directives into how specific tasks are to be done;
determining the commission earned by an agent on These codes as well as insurance industry rules
his sales the agent directly deducts it from the and regulations are not per se indicative of labor
amount he received from the investor or the person law control under over jurisprudence.
insured and turns over to the insurance company
the amount invested after such deduction is made. Our ruling in the present case is specific to the
The test therefore is whether the “employer” insurance industry where the law permits an
controls or has reserved the right to control the insurance company to exercise control over its
“employee” not only as to the result of the work to agents within the limits prescribed by law and to
be done but also as to the means and methods by engage independent agents for several transactions
which the same is to be accomplished. and within an unlimited period of time without the
relationship amounting to employment.
Same; Same; Same; Same; Element of control by
petitioner on the private respondent is present;
 (6) Sonza vs. ABS-CBN Broadcasting SONZA does not conclusively determine his status.
Corporation, 431 SCRA 583 We must consider all the circumstances of the
relationship, with the control test being the most
important element.
Labor Law; Labor Code; Employer-Employee
Relationship; Existence of an employer- Same; Same; Same; Same; Whatever benefits
employee relationship is a question of fact; SONZA enjoyed arose from contract and not
Appellate courts accord the factual findings of because of an employer-employee
the Labor Arbiter and the NLRC not only relationship.—All the talent fees and benefits paid
respect but also finality when supported by to SONZA were the result of negotiations that led
substantial evidence; Court does not substitute to the Agreement. If SONZA were ABS-CBN’s
its own judgment for that of the tribunal in employee, there would be no need for the parties to
determining where the weight of evidence lies stipulate on benefits such as “SSS, Medicare, x x x
or what evidence is credible.—The existence of and 13th month pay” which the law automatically
an employer-employee relationship is a question of incorporates into every employer-employee
fact. Appellate courts accord the factual findings of contract. Whatever benefits SONZA enjoyed arose
the Labor Arbiter and the NLRC not only respect from contract and not because of an employer-
but also finality when supported by substantial employee relationship.
evidence. Substantial evidence means such
relevant evidence as a reasonable mind might Same; Same; Same; Same; The power to
accept as adequate to support a conclusion. A bargain talent fees way above the salary
party cannot prove the absence of substantial scales of ordinary employees is a circumstance
evidence by simply pointing out that there is indicative, but not conclusive, of an
contrary evidence on record, direct or independent contractual relationship.—
circumstantial. The Court does not substitute its SONZA’s talent fees, amounting to P317,000
own judgment for that of the tribunal in monthly in the second and third year, are so huge
determining where the weight of evidence lies or and out of the ordinary that they indicate more an
what evidence is credible. independent contractual relationship rather than
an employer-employee relationship. ABS-CBN
Same; Same; Same; Essential Elements of an agreed to pay SONZA such huge talent fees
Employer-Employee Relationship; The so-called precisely because of SONZA’s unique skills, talent
“control test” is the most important element.— and celebrity status not possessed by ordinary
Case law has consistently held that the elements of employees. Obviously, SONZA acting alone
an employer-employee relationship are: (a) the possessed enough bargaining power to demand
selection and engagement of the employee; (b) the and receive such huge talent fees for his services.
payment of wages; (c) the power of dismissal; and The power to bargain talent fees way above the
(d) the employer’s power to control the employee on salary scales of ordinary employees is a
the means and methods by which the work is circumstance indicative, but not conclusive, of an
accomplished. The last element, the so-called independent contractual relationship.
“control test,” is the most important element.
Same; Same; Same; Same; The greater the
Same; Same; Same; Independent Contractor; supervision and control the hirer exercises, the
The specific selection and hiring of SONZA, more likely the worker is deemed an employee; The
because of his unique skills, talent and less control the hirer exercises, the more likely the
celebrity status not possessed by ordinary worker is considered an independent contractor;
employees, is a circumstance indicative but Applying the control test, SONZA is not an
not conclusive of independent contractual employee but an independent contractor.
relationship; The method of selecting and
engaging SONZA does not conclusively A radio broadcast specialist who works under
determine his status.—Independent contractors minimal supervision is an independent contractor
often present themselves to possess unique skills,
In the broadcast industry, exclusivity is not
expertise or talent to distinguish them from
necessarily the same as control.
ordinary employees. The specific selection and
hiring of SONZA, because of his unique skills, The right of labor to security of tenure as
talent and celebrity status not possessed by guaranteed in the Constitution arises only if there
ordinary employees, is a circumstance indicative, is an employer-employee relationship under labor
but not conclusive, of an independent contractual laws; Not every performance of services for a fee
relationship. If SONZA did not possess such creates an employer-employee relationship.
unique skills, talent and celebrity status, ABS-CBN
would not have entered into the Agreement with The Labor Arbiter can decide a case based solely
SONZA but would have hired him through its on the position papers and the supporting
personnel department just like any other employee. documents without a formal trial; The holding of a
In any event, the method of selecting and engaging formal hearing or trial is something that the
parties cannot demand as a matter of right; has been performing the job for at least a year,
Subject to the requirements of due process, the even if the performance is not continuous and
technicalities of law and the rules obtaining in the merely intermittent, the law deems repeated and
courts of law do not strictly apply in proceedings continuing need for its performance as sufficient
before a Labor Arbiter. evidence of the necessity if not indispensability of
that activity to the business. Hence, the
employment is considered regular, but only with
(7) Dumpit-Murillo vs. Court of Appeals respect to such activity and while such activity
exists.

Labor Law; Fixed-Term Contracts; Broadcast Same; Same; Same; For a fixed-term contract
Industry; The practice of having fixed-term to be valid, it should be shown that the fixed
contracts in the broadcast industry does not period was knowingly and voluntarily agreed
automatically make all talent contracts valid upon by the parties—there should have been no
and compliant with labor law—the assertion force, duress or improper pressure brought to
that a talent contract exists does not bear upon the employee, neither should there
necessarily prevent a regular employment be any other circumstance that vitiates the
status.—The Court of Appeals committed employee’s consent.—The contention of the
reversible error when it held that petitioner was a appellate court that the contract was characterized
fixedterm employee. Petitioner was a regular by a valid fixed-period employment is untenable.
employee under contemplation of law. The practice For such contract to be valid, it should be shown
of having fixed-term contracts in the industry does that the fixed period was knowingly and voluntarily
not automatically make all talent contracts valid agreed upon by the parties. There should have
and compliant with labor law. The assertion that a been no force, duress or improper pressure
talent contract exists does not necessarily prevent brought to bear upon the employee; neither should
a regular employment status. there be any other circumstance that vitiates the
employee’s consent. It should satisfactorily appear
Same; Same; Employer-Employee Relationship; that the employer and the employee dealt with
Elements.—In Manila Water Company, Inc. v. each other on more or less equal terms with no
Pena, 434 SCRA 53 (2004), we said that the moral dominance being exercised by the employer
elements to determine the existence of an over the employee. Moreover, fixed-term
employment relationship are: (a) the selection and employment will not be considered valid where,
engagement of the employee, (b) the payment of from the circumstances, it is apparent that periods
wages, (c) the power of dismissal, and (d) the have been imposed to preclude acquisition of
employer’s power to control. The most important tenurial security by the employee.
element is the employer’s control of the employee’s
conduct, not only as to the result of the work to be Same; Same; Same; While the Supreme Court has
done, but also as to the means and methods to recognized the validity of fixed-term employment
accomplish it. contracts in a number of cases, it has consistently
emphasized that when the circumstances of a case
Same; Same; Regular Employment; Regular show that the periods were imposed to block the
status arises from either the nature of the acquisition of security of tenure, they should be
work of the employee or the duration of his struck down for being contrary to law, morals,
employment.—Concerning regular employment, good customs, public order or public policy.
the law provides for two kinds of employees,
namely: (1) those who are engaged to perform
activities which are usually necessary or desirable (8) Fuji Television Network, Inc. vs.
in the usual business or trade of the employer; and Espiritu, 744 SCRA 31, G.R. Nos.
(2) those who have rendered at least one year of 204944-45 December 3, 2014
service, whether continuous or broken, with
respect to the activity in which they are employed.
In other words, regular status arises from either Labor Law; Appeals; Article 223 of the Labor
the nature of work of the employee or the duration Code does not provide any mode of appeal for
of his employment. In Benares v. Pancho, 457 decisions of the National Labor Relations
SCRA 652 (2005), we very succinctly said: . . . Commission (NLRC).—Article 223 of the Labor
[T]he primary standard for determining regular Code does not provide any mode of appeal for
employment is the reasonable connection between decisions of the National Labor Relations
the particular activity performed by the employee Commission. It merely states that “[t]he decision of
vis-à-vis the usual trade or business of the the Commission shall be final and executory after
employer. This connection can be determined by ten (10) calendar days from receipt thereof by the
considering the nature of the work performed and parties.” Being final, it is no longer appealable.
its relation to the scheme of the particular However, the finality of the National Labor
business or trade in its entirety. If the employee
Relations Commission’s decisions does not mean laws.—Since no employer-employee relationship
that there is no more recourse for the parties. exists between independent contractors and their
principals, their contracts are governed by the Civil
Same; Same; The Supreme Court (SC) clarified that Code provisions on contracts and other applicable
judicial review of National Labor Relations laws. A contract is defined as “a meeting of minds
Commission’s (NLRC’s) decisions shall be by way of between two persons whereby one binds himself,
a petition for certiorari under Rule 65. Citing the with respect to the other, to give something or to
doctrine of hierarchy of courts, it further ruled that render some service.” Parties are free to stipulate
such petitions shall be filed before the Court of on terms and conditions in contracts as long as
Appeals (CA). From the CA, an aggrieved party may these “are not contrary to law, morals, good
file a petition for review on certiorari under Rule customs, public order, or public policy.” This
45. presupposes that the parties to a contract are on
equal footing. They can bargain on terms and
Same; Employer-Employee Relationship; The
conditions until they are able to reach an
Supreme Court (SC) has often used the four (4)-
agreement.
fold test to determine the existence of an
employer-employee relationship.—This court Same; Same; Same; Employees under fixed-
has often used the four-fold test to determine the term contracts cannot be independent
existence of an employer-employee relationship. contractors because in fixed-term contracts, an
Under the four-fold test, the “control test” is the employer-employee relationship exists.—Fuji’s
most important. As to how the elements in the argument that Arlene was an independent
four-fold test are proven, this court has discussed contractor under a fixed-term contract is
that: [t]here is no hard and fast rule designed to contradictory. Employees under fixed-term
establish the aforesaid elements. Any competent contracts cannot be independent contractors
and relevant evidence to prove the relationship because in fixed-term contracts, an employer-
may be admitted. Identification cards, cash employee relationship exists. The test in this kind
vouchers, social security registration, appointment of contract is not the necessity and desirability of
letters or employment contracts, payrolls, the employee’s activities, “but the day certain
organization charts, and personnel lists, serve as agreed upon by the parties for the commencement
evidence of employee status. and termination of the employment relationship.”
For regular employees, the necessity and
Same; Same; Independent Contractors; There
desirability of their work in the usual course of the
is no employer-employee relationship between
employer’s business are the determining factors.
the contractor and principal who engages the
On the other hand, independent contractors do not
contractor’s services, but there is an employer-
have employer-employee relationships with their
employee relationship between the contractor
principals.
and workers hired to accomplish the work for
the principal.—In Department Order No. 18-A, Same; Same; Same; Wages should not be the
Series of 2011, of the Department of Labor and conclusive factor in determining whether one is an
Employment, a contractor is defined as having: employee or an independent contractor.
Section 3. . . . . . . . (c) . . . an arrangement
whereby a principal agrees to put out or farm out Regular Employees; The test for determining
with a contractor the performance or completion of regular employment is whether there is a
a specific job, work or service within a definite or reasonable connection between the employee’s
predetermined period, regardless of whether such activities and the usual business of the
job, work or service is to be performed or employer.— An employee can be a regular
completed within or outside the premises of the employee with a fixed-term contract.—An employee
principal. This department order also states that can be a regular employee with a fixed-term
there is a trilateral relationship in legitimate job contract. The law does not preclude the possibility
contracting and subcontracting arrangements that a regular employee may opt to have a fixed-
among the principal, contractor, and employees of term contract for valid reasons. This was
the contractor. There is no employer-employee recognized in Brent School, Inc. v. Zamora, 181
relationship between the contractor and principal SCRA 702 (1990): For as long as it was the
who engages the contractor’s services, but there is employee who requested, or bargained, that the
an employer-employee relationship between the contract have a “definite date of termination,” or
contractor and workers hired to accomplish the that the fixed-term contract be freely entered into
work for the principal. by the employer and the employee, then the
validity of the fixed-term contract will be upheld.
Same; Same; Same; Since no employer-
employee relationship exists between Even probationary employees are entitled to the
independent contractors and their principals, right to security of tenure. This was explained in
their contracts are governed by the Civil Code Philippine Daily Inquirer, Inc. v. Magtibay, Jr., 528
provisions on contracts and other applicable SCRA 355 (2007): Within the limited legal six-
month probationary period, probationary Same; Quitclaims; Quitclaims in labor cases do not
employees are still entitled to security of tenure. It bar illegally dismissed employees from filing labor
is expressly provided in the aforequoted Article 281 complaints and money claim.
that a probationary employee may be terminated
only on two grounds: (a) for just cause, or (b) when Same; Moral Damages; Exemplary Damages; Moral
he fails to qualify as a regular employee in damages are awarded “when the dismissal is
accordance with reasonable standards made attended by bad faith or fraud or constitutes an act
known by the employer to the employee at the time oppressive to labor, or is done in a manner
of his engagement. (Citation omitted) The contrary to good morals, good customs or public
expiration of Arlene’s contract does not negate the policy.” On the other hand, exemplary damages
finding of illegal dismissal by Fuji. The manner by may be awarded when the dismissal was effected
which Fuji informed Arlene that her contract would “in a wanton, oppressive or malevolent manner.”
no longer be renewed is tantamount to
Same; Attorney’s Fees; Article 111 of the Labor
constructive dismissal. To make matters worse,
Code states that “[i]n cases of unlawful withholding
Arlene was asked to sign a letter of resignation
of wages, the culpable party may be assessed
prepared by Fuji. The existence of a fixed-term
attorney’s fees equivalent to ten percent (10%) of
contract should not mean that there can be no
the amount of wages recovered”; Where an
illegal dismissal. Due process must still be
employee was forced to litigate and, thus, incur
observed in the pretermination of fixed-term
expenses to protect his rights and interest, the
contracts of employment.
award of attorney’s fees is legally and morally
Same; Termination of Employment; Disease; justifiable.
Requirements for Termination of Employment
on the Ground of Disease Under Article 284 of
the Labor Code.—For dismissal under Article 284 (9) Begino vs. ABS-CBN Corporation
to be valid, two requirements must be complied (formerly ABS-CBN Broadcasting
with: (1) the employee’s disease cannot be cured Corporation),
within six (6) months and his “continued
employment is prohibited by law or prejudicial to
Although the existence of an employer-
his health as well as to the health of his co-
employee relationship is, on the other hand, a
employees”; and (2) certification issued by a
question of fact which is ordinarily not the
competent public health authority that even with
proper subject of a Rule 45 petition for review
proper medical treatment, the disease cannot be
on certiorari like the one at bar, the
cured within six (6) months. The burden of proving
conflicting findings between the labor
compliance with these requisites is on the
tribunals and the Court of Appeals (CA) justify
employer. Non-compliance leads to the conclusion
a further consideration of the matter.—
that the dismissal was illegal.
Although the existence of an employer-employee
Same; Same; Illegal Dismissals; The law itself relationship is, on the other hand, a question of
provides that illegally dismissed employees fact which is ordinarily not the proper subject of a
are entitled to reinstatement, backwages Rule 45 petition for reviewon certiorari like the one
including allowances, and all other benefits.— at bar, the conflicting findings between the labor
The Court of Appeals’ modification of the National tribunals and the CA justify a further
Labor Relations Commission’s decision was proper consideration of the matter. To determine the
because the law itself provides that illegally existence of said relation, case law has consistently
dismissed employees are entitled to reinstatement, applied the four-fold test, to wit: (a) the selection
backwages including allowances, and all other and engagement of the employee; (b) the payment
benefits. On reinstatement, the National Labor of wages; (c) the power of dismissal; and (d) the
Relations Commission ordered payment of employer’s power to control the employee on the
separation pay in lieu of reinstatement, reasoning means and methods by which the work is
“that the filing of the instant suit may have accomplished. Of these criteria, the so-called
seriously abraded the relationship of the parties so “control test” is generally regarded as the most
as to render reinstatement impractical.” The Court crucial and determinative indicator of the presence
of Appeals reversed this and ordered reinstatement or absence of an employer-employee relationship.
on the ground that separation pay in lieu of Under this test, an employer-employee relationship
reinstatement is allowed only in several instances is said to exist where the person for whom the
such as (1) when the employer has ceased services are performed reserves the right to control
operations; (2) when the employee’s position is no not only the end result but also the manner and
longer available; (3) strained relations; and (4) a means utilized to achieve the same.
substantial period has lapsed from date of filing to
Labor Law; Regular Employees; To the mind of
date of finality.
the Supreme Court (SC), respondents’ repeated
hiring of petitioners for its long-running news
program positively indicates that the latter as it chose determine, modify or change. Even if
were ABS-CBN’s regular employees.—The Court they were unable to comply with said schedule,
finds that, notwithstanding the nomenclature of petitioners were required to give advance notice,
their Talent Contracts and/or Project Assignment subject to respondents’ approval. However
Forms and the terms and condition embodied obliquely worded, the Court finds the foregoing
therein, petitioners are regular employees of ABS- terms and conditions demonstrative of the control
CBN. Time and again, it has been ruled that the respondents exercised not only over the results of
test to determine whether employment is regular or petitioners’ work but also the means employed to
not is the reasonable connection between the achieve the same.
activity performed by the employee in relation to
the business or trade of the employer. Same; Same; Parallels cannot be expediently
drawn between this case and that of Sonza v. ABS-
If the employee has been performing the job for at CBN Broadcasting Corporation, 431 SCRA 583
least one year, even if the performance is not (2004), case which involved a well-known television
continuous or merely intermittent, the law deems and radio personality who was legitimately
the repeated or continuing performance as considered a talent and amply compensated as
sufficient evidence of the necessity, if not such.
indispensability of that activity in the business.
Indeed, an employment stops being coterminous
with specific projects where the employee is (10) Villamaria, Jr. vs. Court of
continuously rehired due to the demands of the Appeals, 487 SCRA 571, G.R. No. 165881
employer’s business. When circumstances show, April 19, 2006
moreover, that contractually stipulated periods of
employment have been imposed to preclude the
acquisition of tenurial security by the employee, Same; Labor Law; Not every dispute between
this Court has not hesitated in striking down such an employer and employee involves matters
arrangements as contrary to public policy, morals, that only the Labor Arbiter and the National
good customs or public order. The nature of the Labor Relations Commission can resolve in the
employment depends, after all, on the nature of the exercise of their adjudicatory or quasi-judicial
activities to be performed by the employee, powers—actions between employers and
considering the nature of the employer’s business, employees where the employer-employee
the duration and scope to be done, and, in some relationship is merely incidental is within the
cases, even the length of time of the performance exclusive original jurisdiction of the regular
and its continued existence. In the same manner courts.—An employer-employee relationship is an
that the practice of having fixed-term contracts in indispensable jurisdictional requisite. The
the industry does not automatically make all talent jurisdiction of Labor Arbiters and the NLRC under
contracts valid and compliant with labor law, it Article 217 of the Labor Code is limited to disputes
has, consequently, been ruled that the assertion arising from an employer-employee relationship
that a talent contract exists does not necessarily which can only be resolved by reference to the
prevent a regular employment status. Labor Code, other labor statutes or their collective
bargaining agreement. Not every dispute between
Same; Same; As cameramen/editors and an employer and employee involves matters that
reporters, it also appears that petitioners were only the Labor Arbiter and the NLRC can resolve in
subject to the control and supervision of the exercise of their adjudicatory or quasi-judicial
respondents which, first and foremost, powers. Actions between employers and employees
provided them with the equipments essential where the employer-employee relationship is
for the discharge of their functions.—As merely incidental is within the exclusive original
cameramen/editors and reporters, it also appears jurisdiction of the regular courts. When the
that petitioners were subject to the control and principal relief is to be granted under labor
supervision of respondents which, first and legislation or a collective bargaining agreement, the
foremost, provided them with the equipments case falls within the exclusive jurisdiction of the
essential for the discharge of their functions. Labor Arbiter and the NLRC even though a claim
Prepared at the instance of respondents, for damages might be asserted as an incident to
petitioners’ Talent Contracts tellingly provided that such claim.
ABS-CBN retained “all creative, administrative,
financial and legal control” of the program to which Labor Law; Common Carriers; Boundary
they were assigned. Aside from having the right to System; Words and Phrases; Jeepney
require petitioners “to attend and participate in all owner/operator-driver relationship under the
promotional or merchandising campaigns, boundary system is that of employer-employee
activities or events for the Program,” ABS-CBN and not lessor-lessee; The boundary system is
required the former to perform their functions “at a scheme by an owner/operator engaged in
such locations and Performance/Exhibition transporting passengers as a common carrier
Schedules” it provided or, subject to prior notice, to primarily govern the compensation of the
driver, that is, the latter’s daily earnings are Employer-Employee Relationship; Before a case
remitted to the owner/operator less the excess for illegal dismissal can prosper, an employer-
of the boundary which represents the driver’s employee relationship must first be
compensation.—As early as 1956, the Court ruled established. - The factors that determine the
in National Labor Union v. Dinglasan, 98 Phil. 649 issue include who has the power to select the
(1956), that the jeepney owner/operator-driver employee, who pays the employee’s wages, who has
relationship under the boundary system is that of the power to dismiss the employee, and who
employer-employee and not lessor-lessee. This exercises control of the methods and results by
doctrine was affirmed, under similar factual which the work of the employee is accomplished.
settings, in Mag-boo v. Bernardo, 7 SCRA 952
(1963), and Lantaco, Sr. v. Llamas, 108 SCRA 502 Employer-Employee Relationship; Etched in an
(1981), and was analogously applied to govern the unending stream of cases are four (4)
relationships between auto-calesa owner/operator standards in determining the existence of an
and driver, bus owner/operator and conductor, employer-employee relationship.—Etched in an
and taxi owner/operator and driver. The boundary unending stream of cases are four standards in
system is a scheme by an owner/operator engaged determining the existence of an employer-employee
in transporting passengers as a common carrier to relationship, namely: (a) the manner of selection
primarily govern the compensation of the driver, and engagement of the putative employee; (b) the
that is, the latter’s daily earnings are remitted to mode of payment of wages; (c) the presence or
the owner/operator less the excess of the boundary absence of power of dismissal; and (d) the presence
which represents the driver’s compensation. Under or absence of control of the putative employee’s
this system, the owner/operator exercises control conduct. Most determinative among these factors
and supervision over the driver. It is unlike in lease is the so-called “control test.”
of chattels where the lessor loses complete control
Same; Same; The designation of the payments
over the chattel leased but the lessee is still
to petitioner as salaries, is not determinative
ultimately responsible for the consequences of its
of the existence of an employer-employee
use. The management of the business is still in the
relationship.—The designation of the payments to
hands of the owner/operator, who, being the
petitioner as salaries, is not determinative of the
holder of the certificate of public convenience,
existence of an employer-employee relationship.
must see to it that the driver follows the route
Salary is a general term defined as a remuneration
prescribed by the franchising and regulatory
for services given. Evidence of this fact, in the
authority, and the rules promulgated with regard
instant case, was the cash voucher issued in favor
to the business operations. The fact that the driver
of petitioner where it was stated therein that the
does not receive fixed wages but only the excess of
amount of P20,000.00 was given as petitioner’s
the “boundary” given to the owner/operator is not
allowance for the month of December 2004,
sufficient to change the relationship between them.
although it appears from the pay slip that the said
Indubitably, the driver performs activities which
amount was his salary for the same period.
are usually necessary or desirable in the usual
business or trade of the owner/operator. Same; Same; It bears to reiterate that while the
Constitution is committed to the policy of social
justice and the protection of the working class, it
(11) Bernarte vs. Philippine should not be supposed that every labor dispute
Basketball Association (PBA), will be automatically decided in favor of labor.
Management also has its rights which are entitled
to respect and enforcement in the interest of
Labor Law; Employer-Employee Relationship;
simple fair play. Out of its concern for the less
Four-fold test to determine the existence of an
privileged in life, the Court has inclined, more often
employer-employee relationship; The so-called
than not, toward the worker and upheld his cause
“control test” is the most important indicator
in his conflicts with the employer. Such favoritism,
of the presence or absence of an employer-
however, has not blinded the Court to the rule that
employee relationship. - The very nature of
justice is in every case for the deserving, to be
petitioner’s job of officiating a professional
dispensed in the light of the established facts and
basketball game undoubtedly calls for freedom of
the applicable law and doctrine.
control by respondents. Applicable foreign case
law declares that a referee is an independent
contractor, whose special skills and independent
(13) Century Properties, Inc. vs. Babiano
judgment are required specifically for such position
and cannot possibly be controlled by the hiring
party. Control Test; The control test is commonly
regarded as the most important indicator of the
(12) Reyes vs. Glaucoma Research presence or absence of an employer-employee
Foundation, Inc., relationship.
The existence of employer-employee relations relationship.—“No particular form of evidence is
could not be negated by the mere expedient of required to prove the existence of such employer-
repudiating it in a contract.—While the employee relationship. Any competent and relevant
employment agreement of Concepcion was evidence to prove the relationship may be
denominated as a “Contract of Agency for Project admitted. Hence, while no particular form of
Director,” it should be stressed that the existence evidence is required, a finding that such
of employer-employee relations could not be relationship exists must still rest on some
negated by the mere expedient of repudiating it in substantial evidence. Moreover, the substantiality
a contract. In the case of Insular Life Assurance of the evidence depends on its quantitative as well
Co., Ltd. v. NLRC (4th Division), 287 SCRA 476 as its qualitative aspects.” Although substantial
(1998), it was ruled that one’s employment status evidence is not a function of quantity but rather of
is defined and prescribed by law, and not by what quality, the x x x circumstances of the instant case
the parties say it should be, viz.: It is axiomatic demand that something more should have been
that the existence of an employer-employee proffered. Had there been other proofs of
relationship cannot be negated by expressly employment, such as x x x inclusion in petitioner’s
repudiating it in the management contract and payroll, or a clear exercise of control, the Court
providing therein that the “employee” is an would have affirmed the finding of employer-
independent contractor when the terms of the employee relationship.”
agreement clearly show otherwise. For, the
employment status of a person is defined and Same; Same; Tests to Determine the Existence
prescribed by law and not by what the parties say of Employer-Employee Relationship.—The Court
it should be. In determining the status of the is of the considerable view that on Javier lies the
management contract, the “four-fold test” on burden to pass the well-settled tests to determine
employment earlier mentioned has to be applied. the existence of an employer-employee
(Emphasis and underscoring supplied) Therefore, relationship, viz.: (1) the selection and engagement
the CA correctly ruled that since there exists an of the employee; (2) the payment of wages; (3) the
employer-employee relationship between power of dismissal; and (4) the power to control the
Concepcion and CPI, the labor tribunals correctly employee’s conduct. Of these elements, the most
assumed jurisdiction over her money claims. important criterion is whether the employer
controls or has reserved the right to control the
employee not only as to the result of the work but
also as to the means and methods by which the
(14) Javier vs. Fly Ace Corporation result is to be accomplished.

Same; Same; Independent Contractors; In

Labor Law; Appeals; Generally, the Supreme determining whether the relationship is that of
Court does not review errors that raise factual employer and employee or one of an independent
questions, however, when there is conflict among contractor, each case must be determined on its
the factual findings of the antecedent deciding own facts and all the features of the relationship
bodies like the Labor Arbiter (LA), the National are to be considered.
Labor Relations Commission (NLRC) and the Court
of Appeals (CA), “it is proper, in the exercise of the Same; Social Justice; Out of its concern for the
High Court’s equity jurisdiction, to review and re- less privileged in life, the Supreme Court has
evaluate the factual issues and to look into the inclined, more often than not, toward the
records of the case and re-examine the questioned worker and upheld his cause in his conflicts
findings. with the employer.—While the Constitution is
committed to the policy of social justice and the
Labor officials are enjoined to use reasonable protection of the working class, it should not be
means to ascertain the facts speedily and supposed that every labor dispute will be
objectively with little regard to technicalities or automatically decided in favor of labor.
formalities but nowhere in the rules are they Management also has its rights which are entitled
provided a license to completely discount evidence, to respect and enforcement in the interest of
or the lack of it; When confronted with conflicting simple fair play. Out of its concern for the less
versions on factual matters, it is for them in the privileged in life, the Court has inclined, more often
exercise of discretion to determine which party than not, toward the worker and upheld his cause
deserves credence on the basis of evidence in his conflicts with the employer. Such favoritism,
received, subject only to the requirement that their however, has not blinded the Court to the rule that
decision must be supported by substantial justice is in every case for the deserving, to be
evidence. dispensed in the light of the established facts and
the applicable law and doctrine.
Same; Employer-Employee Relationship; No
particular form of evidence is required to prove
the existence of such employer-employee
(15) .South East International Rattan, Inc. vs. Same; Same; In any controversy between a
Coming, laborer and his master, doubts reasonably
arising from the evidence are resolved in favor
Labor Law; Employer-Employee Relationships; of the laborer.—In any controversy between a
Appeals; The issue of whether or not an employer- laborer and his master, doubts reasonably arising
employee relationship exists in a given case is from the evidence are resolved in favor of the
essentially a question of fact. Only errors of law are laborer. As a regular employee, respondent enjoys
generally reviewed by the Supreme Court. This rule the right to security of tenure under Article 279 of
is not absolute, however, and admits of exceptions. the Labor Code and may only be dismissed for a
For one, the Court may look into factual issues in just or authorized cause, otherwise the dismissal
labor cases when the factual findings of the Labor becomes illegal.
Arbiter, the National Labor Relations Commission
(NLRC), and the Court of Appeals (CA) are Same; Illegal Dismissals; Reinstatement;
conflicting. Separation Pay; Separation pay equivalent to
one month salary for every year of service
Same; Same; Four-Fold Test to Ascertain the should be awarded as an alternative in case
Existence of an Employer-Employee reinstatement in not possible.—Respondent,
Relationship.—To ascertain the existence of an whose employment was terminated without valid
employer-employee relationship jurisprudence has cause by petitioners, is entitled to reinstatement
invariably adhered to the four-fold test, to wit: (1) without loss of seniority rights and other privileges
the selection and engagement of the employee; (2) and to his full back wages, inclusive of allowances
the payment of wages; (3) the power of dismissal; and other benefits or their monetary equivalent,
and (4) the power to control the employee’s computed from the time his compensation was
conduct, or the so-called “control test.” In resolving withheld from him up to the time of his actual
the issue of whether such relationship exists in a reinstatement. Where reinstatement is no longer
given case, substantial evidence — that amount of viable as an option, back wages shall be computed
relevant evidence which a reasonable mind might from the time of the illegal termination up to the
accept as adequate to justify a conclusion — is finality of the decision. Separation pay equivalent
sufficient. Although no particular form of evidence to one month salary for every year of service
is required to prove the existence of the should likewise be awarded as an alternative in
relationship, and any competent and relevant case reinstatement in not possible.
evidence to prove the relationship may be
admitted, a finding that the relationship exists
must nonetheless rest on substantial evidence.

Same; Same; The fact that a worker was not

reported as an employee to the Social Security
System (SSS) is not conclusive proof of the
absence of employer-employee relationship;
Nor does the fact that respondent’s name does
not appear in the payrolls and pay envelope
records submitted by petitioners negate the
existence of employer-employee relationship.—
In Tan v. Lagrama, 387 SCRA 393 (2002), the
Court held that the fact that a worker was not
reported as an employee to the SSS is not
conclusive proof of the absence of employer-
employee relationship. Otherwise, an employer
would be rewarded for his failure or even neglect to
perform his obligation. Nor does the fact that
respondent’s name does not appear in the payrolls
and pay envelope records submitted by petitioners
negate the existence of employer-employee
relationship. For a payroll to be utilized to disprove
the employment of a person, it must contain a true
and complete list of the employee. In this case, the
exhibits offered by petitioners before the NLRC
consisting of copies of payrolls and pay earnings
records are only for the years 1999 and 2000; they
do not cover the entire 18-year period during
which respondent supposedly worked for SEIRI.