BROTHERHOOD LABORHOOD UNITY MOVEMENT OF THE PHILIPPINES et al. v.

HONORABLE RONALDO B. ZAMORA

G.R. No. L-48645, 7 June, 1987, SECOND DIVISION, (GUTIERREZ, JR., J.)

DOCTRINE OF THE CASE

In determining the existence of an employer-employee relationship, the

elements that are generally considered are: (1) the selection and engagement of

the employee; (2) the payment of wages; (3) the power of dismissal; (4) the

employer’s power to control the employee with respect to the means and

methods by which work is to be accomplished

FACTS

Petitioners were employed as cargadores and pahinantes at the SMC Plant,

unloading, piling, or palleting empty bottles and wooden shellsto and from the company

trucks and warehouses. Petitioners were paid every 10 days on a piece rate basis. In

1969 petitioners organized themselves into a union and engaged in union activities.

They pressed management for overtime and holiday pay. Respondent San Miguel

Corporation refused to heed such request as they argue that petitioners are not their

employees. Respondents argue that petitioners are hired by the independent contractor,

Guaranteed Labor Contractor.

ISSUE

WON an employer-employee relationship exists between petitioner and San

Miguel Corporation?
RULING

YES. Pursuant to Section 8, Rule 8 Book 3 of the Implementing Rules of the

Labor Code, job contracting is allowed provided the following requirements are present:

(1) the contractor carries and independent business and undertakes the contract work

on his own account according to his own manner and free from the control and direction

of his employer; (2) the contractor has substantial capital and investment in the form of

tools, equipment, machineries, work premises, and other materials. In the case at bar,

the contract who hired petitioners neither have substantial nor investment to qualify as

independent contractors. It is only man power or labor force which the contractors

supply which is prohibited under the Labor Code. Article 106 of the same Code provides

the legal effect of labor only contracting where the contractor shall be deemed merely

as an agent of the employer who shall be responsible for the workers.

Furthermore, the Court established that SMC is the employer of the petitioner

based on the control the former has on the latter with respect to means and methods by

which petitioners are to go to their work, as well as disciplinary measures imposed. In

the case at bar, documentary evidence shows that SMC has the right to impose

disciplinary measures for violations of its rules. That being said, the right to impose

penalties creates the impression that SMC has power of control over petitioners.
 DANILO B. TABAS et al. v. CALIFORNIA MANUFACTURING COMPANY

G.R. No. 80680, 26 January, 1989, SECOND DIVISION, (Sarmiento, J.)

DOCTRINE OF THE CASE

The existence of an employer-employee relationship is a question of law

and it cannot be made the subject of an agreement.

FACTS

A manpower supply agreement was formed between Livi Manpower Services

and California Manufacturing Company wherein the employees of the former shall be

assigned to work in the latter as promotional merchandisers. Stated in the agreement is

that California has no control or supervision whatsoever over the workers with respect

on how will they accomplish their work.

California has stated that they will no longer re-hire the workers, and as a result

petitioners filed against the former of illegal discharge.

ISSUE

WON petitioners are employees of California?

RULING

YES. The man power supply between Livi and California which designated the

former as petitioner’s employer and absolves the latter from any liability as an employer

will not erase either party’s obligations as an employer if an employer-employee

relationship exists.
 Pursuant to Article 106 of the Labor Code, notwithstanding the absence of a

employer-employee relationship between the employer in whose work had been

contracted out by a labor only contractor, and the employees the former has the

responsibility with the labor only contractor for any labor claims by operation of law. This

is because the labor only contractor is merely an agent of the employer. In the case at

bar, the Court it is clear that Livi performs manpower services. Regardless that it

performs another line of business, the act of providing California with workers for the

latter’s business does not absolve from committing labor only contacting. More so, the

worked done by the workers is directly related to the general business of California

Moreover, as held in Philippine Bank Communications v. NLRC, a temporary or

casual employee, under Article 218 of the Labor Code, becomes a regular employee

after service of one year, unless he has been contracted for a specific subject. In the

case at bar, the job taken by the employees as merchandising cannot be considered as

specific project since, it is necessary to the operation of California. Furthermore, based

on the records, petitioners were given initially a 6 month contract which was renewed for

another 6 months. Therefore, they are considered as regular employees of California

and cannot be separated without due process of law.

 MAKATI HABERDASHERY, INC et al. v. NATIONAL LABOR RELATIONS

COMMISSION

G.R. No. 83380-81, 15 November, 1989, THIRD DIVISION, (Fernan, J.)

DOCTRINE OF THE CASE

The test of employer-employee relationship is four-fold: (1) the selection

and engagement of the employee; (2) the payment of wages; (3) the power of

dismissal; (4) and the power of control the employee’s conduct. The power of

control is the most important element. It pertains to the determination whether

the employer controls or has reserved the right to control the employee not only

as to the result of the work but also as to the means and method which the same

is to be accomplished.

FACTS

Respondents worked as tailors, seamstress, sewers, and basters at Makati

Haberdashery. Private respondents left package containing a barong sewed for a

particular client. Later that day, it was admitted that respondents copied the design

owned by the petitioner. When asked in a memorandum why no action should be taken

against them, respondents did not submit any explanation and did not report to work.

Hence, petitioner dismissed the respondents.

Respondents filed a complaint before the Labor Arbiter for illegal dismissal to

which it was granted. Before the Supreme Court, petitioners argued that the NLRC

erred in stating that there exists an employer-employee relationship between

respondents and petitioner.

ISSUE

WON petitioner and respondent have an employer-employee relationship?

RULING

YES. Based from the facts of the case, the requisite of control is present. Based

on the operations of the petitioner, respondents follow a procedure established by the

former in catering with their clients. Moreover, the presence of control is also present in

the Memorandum issued by Assistant Manager, which reserves the right to control the

employees not only as to the result but also to the means and methods by which the

same shall be accomplished. The argument by the petitioners that respondents

independence in their own methods lacks merit as the respondents are subject to the

control of their employers from start to finish. The tools, accessories, and paraphernalia

used by the private respondents also came from petitioners hence, there is the

presence of power of control.

GREAT PACIFIC LIFE ASSURANCE CORPORATION v. HONORATO JUDICO et al.

G.R. No. 73887, 21 December, 1989, SECOND DIVISION, (Paras, J.)

DOCTRINE OF THE CASE

Insurance company may have to classes of agents: (1) the salaried

employees who keep definite hours and work under the control and supervision

of the company; (2) registered representatives who work on commission basis.

Agents who belong to the second category are not required to report for work at

anytime, they do not devote their time exclusively to or work solely for the

company since the time and the effort they spend in their work depend entirely

upon their own will and initiative.

One salient point in the determination the existence of employer-employee

relationship is the fact that these agents on commission acquire compensation

not through the insurance company but from the investor. Hence, the test is

whether the employer controls or has reserved the right to control the employee

not only as to the result of the work to be done, but also to the means and

methods which the same is to be accomplished.

FACTS

Respondents filed a complaint before the NLRC for illegal dismissal against

petitioner insurance firm. The Labor Arbiter dismissed on the grounds of lack of

employer-employee relationship between the insurance agent and petitioner. On appeal

in the NLRC, the Commission reversed the decision of the LA and stated that an

employer-employee relationship existed. Hence, the present petition.

ISSUE

WON the employer-employee relationship existed between the petitioner and

private respondent?

RULING

YES. Applying the rule stated Investment Planning Corp v. SSS, the element of

control by petitioner on Judico is present. Based from the record, it shows that Judico

received a definite minimum amount per week as his wage. He was also assigned at a

definite place in the office to work whenever he is not in the field, and in addition to his

canvassing work, he was burdened with the job of collection and make weekly reports

regarding his duties. In his case, it is clear that petitioner has control over respondent’s

kind of work, the amount of results, and the kind of performance, and the power of

dismissal as he was dismissed due to anemic performance. Hence, respondent is a

regular employee which entitles him to the protection of the law and could not just be

terminated without valid and justifiable cause

MANILA GOLF AND COUNTRY CLUB, INC v. INTERMEDIATE APELATE COURT et

al.

G.R. No. 64948, 27 September, 1994, FIRST DIVISION, (Narvasa C.J.)

DOCTRINE OF THE CASE

As long as it is, the list made in the appealed decision detailing the various

matters of conduct, dress, language, etc. covered by the petitioner’s regulations

does not so circumscribe the actions or judgement of the caddies concerned as

to leave them little to no freedom of choice whatsoever in the manner of carrying

out their services.

FACTS

Respondents filed a proceeding against petitioner golf club before the Social

Security Commission for coverage and availment of benefits under the Social Security

Act since they claim that they are employees of petitioner. Respondents also file two

separate cases, a certification election case, which was resolved in favor respondents

and a compulsory arbitration case which was dismissed for lack of merit. In the case

before the SSC, petitioners argued that the respondents as caddies of the golf club,

were not subject to the direction and control of the Club as to the manner which their

work is to be performed. Hence, they are not the Club’s employees. They are only

allowed to enter the club and render services as to the members and guests of the club

whom are paid by the latter itself.

The Security Commission denied the case. Upon appeal before the Intermediate

Appellate Court, the respondents raised that the case has already been resolved in the
certification election case, therefore constituting res judicata. In that case, it was ruled

that an employer-employee relationship existed between petitioner and respondent. The

IAC also added that the power of control exists, through the promulgation of rules and

the presence of the group rotation system suggesting that the Club controls the mode

and method of employment of the respondents. Hence, the present petition.

ISSUE

WON respondents and petitioner have an employer-employee relationship?

RULING

NO. As to the res judicata case, it has been held that to constitute res judicata,

the case must be adversarial and contentious as distinguished from an ex parte hearing

as held in the certification election cases where it is not adversarial. Therefore, the

respondents cannot appeal to the principle of res judicata since the certification election

cases does not fall under the requirements to constitute res judicata.

However, as to the existence of an employer-employee relationship, the Court

disagrees with the claim of the respondents. Based on the facts of the case, the details

of conduct, dress, language covered by petitioner’s regulations does not fully leave no

freedom on the part of respondents in the manner of carrying their business.

Respondents, by the very nature of things, must submit to the supervision to some

supervision of their conduct while within the premises of petitioner. However, such

submission does not stop them from pursuing other things, like to leave anytime as they

please for as long as they want since they do not observe any working hours.
 In the case of the group rotation system, the Court states that such is not a

measure of petitioner’s control over respondents, but to assure that work is fairly

distributed to the caddies. Therefore, caddies are not subject to any control from

petitioners as they are still free to do what they want.

 PHILIPPINE FUJI XEROX CORPORATION et al. v.

G.R. No. 111501, 15 March, 1996, SECOND DIVISION, (Mendoza, J.)

DOCTRINE OF THE CASE

The determination of the existence of employer-employee relationship is

defined by law according to the facts of each case, regardless of the nature of the

activities involved.

FACTS

Fuji Xerox entered into an agreement with Skillpower, Inc wherein the latter shall

supply the former with workers to operate copier machies. Respondent Pedro Garado

was employed as a key operator of Fuji’s Xerox Branch. Garado was suspended due to

his acts, and he filed for legal dismissal. The Labor Arbiter held that Garado is an

employee of Skillpower, hence, he cannot file a complaint against Fuji Xerox. However,

in an appeal before the NRLC, the Commission stated that Garado was an employee of

Fuji Xerox and was illegally dismissed. Furthermore, it stated that Skillpower was a

labor-only contractor, hence Garado was directly employed by Fuji Xerox. Hence, the

present petition.

ISSUE

WON Garado is an employee of Fuji Xerox?

RULING

YES. Although the duties conducted by petitioner Garido may not generate profit

in favor of petitioner, yet there are activities which a company may find necessary to
engage in, because they ultimately redound to its benefit. By operating the copy

machines at different branches, it advertises the quality of their products and promotes

petitioner’s reputation. To say that that a task is not necessarily directly related to

employer’s business or that it falls under considered housekeeping activities, the one

performing the job is a job contractor.

Likewise, petitioner exercised control over Garado when it conducted an

administrative investigation against him. Fuji Xerox exercised disciplinary authority

against Garado and that Skillpower issued an order of dismissal as obedience to the

decision of petitioner.

Lastly, the Court finds that Skillpower is a labor contractor. Although Skillpower

had instruments and vehicles to conduct its services, the fact is that it did not have any

copy machines as that of petitioners which could change the outcome since, they will be

considered as an independent contractor.

 ENCYCLOPEDIA BRITANNICA PHILIPPINES, INC. v. NATIONAL LABOR

RELATIONS COMMISSION et al.

G.R. No. 87098, 4 November, 1996, SECOND DIVISION, (Torres, J.)

DOCTRINE OF THE CASE

Where a person who works for another does so more or less at his own

pleasure and is not subject to definite hours or conditions of work, and in turn is

compensated according to the result of his efforts and not the amount thereof,

we should not find that the relationship of employer and employee exists

FACTS

Respondent Benjamin Limjoco was a Sales Division Manager of petitioner who is

in charge of selling petitioner’s products through some sale representatives. In 1974,

Limjoco resigned to pursue his personal business, but later filed a complaint against the

petitioner claiming payment of separation pay and other benefits. Petitioner alleged that

the complaint should be dismissed as the respondent is considered an independent

dealer authorized to promote and sell its products; that respondent has its own separate

office, financed the business expenses and maintained his own workforce. Therefore,

petitioner exercises no supervision over respondent.

Respondent further argued that petitioner exercises supervision over him based

on the memoranda and guidelines of the petitioner company’s policy and instructions,

suggesting that petitioner had control over and how to sell its products.
ISSUE

WON an employer-employee relationships exists between petitioner and

respondent.

RULING

NO. The issuance of the memoranda by petitioner to respondent is not a

conclusive proof that it had control over the sales operation of the latter. The

memoranda were merely guidelines on company policies which sales managers should

follow and impose on their respective agents.

The sales operations of the petitioner’s products was conducted through

dealership agreements which consists of independent sales agents like respondents,

who did not receive regular compensations, hiring their own sales representatives,

financed their own office expenses and maintained their own staff. The issuance of the

memoranda was necessary in order for the sales manager to be apprised of the

company policy, but they are still free to conduct and promote their sales operations.

Otherwise said, respondent had free rein in the means and methods for conducting the

marketing operations. Being said, petitioner does not exercise supervision on how

respondent should conduct is marketing operations therefore concluding that there was

not employer-employee relationship between petitioner and respondent

 ALEJANDRO MARAGUINOT, JR. et al. v. NATIONAL LABOR RELATIONS

COMMISSION et al.

G.R. No. 120969, 22 January, 1998, FIRST DIVISION, (Davide, Jr., J.)

DOCTRINE OF THE CASE

While four elements are usually considered in determining the existence of

an employment relationship, the most important element is the employer’s

control of the employee’s conduct, not only as to the result of the work to be

done but also as to the means and methods to accomplish the same.

FACTS

Petitioner Maraguinot and Enero was employed filming crew of VIVA Films. They

were tasked to load and unload movie equipment from the shooting area to the VIVA

Films Warehouse and vice-versa. Petitioners both requested an increase in their wage,

but private respondents would only abide in their request if they sign blank employment

contract to which they refused. Soon, petitioners were dismissed from their work which

led them to file a complaint for illegal dismissal against private respondents.

Private respondents argued that petitioners are project employees of the

associate producers, being independent contractors, and not of them, hence, there is no

employer-employee relationship between them. As project employees, the term of their

employment ceases when the production of the film is finished. The Labor Arbiter

granted the petition and states petitioners are the employees of VIVA Films and that the

producers are not independent contractors, but labor contractors.

ISSUE

WON an employer-employee relationship exists between petitioners and private

respondent?

RULING

YES. Private respondent producers are not independent contractors as the

movie making equipment are supplied by Viva Films themselves. Being said, the

producers are only labor contractors. However, based from certain facts of the case,

more specifically a Memorandum from VIVA Films that it was an employee of VIVA that

recruited petitioners. Hence, the producers are not labor only contractors, since they are

not the ones who supplied VIVA with the labor of petitioners.

More so, VIVA Films exercises control over petitioner The goal of VIVA based

from the narrated facts is to make quality film and to accomplish this objective, they

follow a certain procedure, especially with the producers. The means and method to

accomplish such result are likewise controlled by VIVA. Selection and engagement of

employees are also present as VIVA has appointment slips indicating the designation of

employees, including the petitioner.

 INSULAR LIFE ASSURANCE CO., LTD v. NATIONAL LABOR RELATIONS

COMMISSION et al.

G.R. No. 119930, 12 March, 1998, FIRST DIVISION, (Bellosillo, J.)

DOCTRINE OF THE CASE

The employment status of a person is defined and prescribed by law and

not by what the parties say it should be.

FACTS

In 1992, petitioner entered into an agency contract with respondent Pantaelon

Delos Reyes authorizing the latter to solicit within the Philippines, applications for life

insurances and annuities, and he would be paid by commission. In the agency contract,

it was stipulated that no employer-employee relationship shall be established between

them, and that respondent is free to exercise his own judgement as to the means and

method of soliciting. He is also required to submit all applications for insurance, collect

premiums and balances and he is also prohibited from working for any other insurance

agency.

In 1993, both petitioner and private respondent entered into another contract

where Delos Reyes was appointed as Acting Unit Manager. The duties imposed on him

included the recruitment, training and organization and deployment within his

designated territory of underwriters and to supervise and coordinate the sales efforts of

the underwriters. Like the old contract, Delos Reyes was granted freedom to exercise

judgement as to time and place and means of soliciting. He was also prohibited from

working in other life insurance company or with the government.

 While concurrently working as agent and Acting Unit Manager, Delos Reyes was

terminated from his job. Hence, he filed a complaint of illegal dismissal against

petitioner. Petitioner argued that according to the agency agreement, no employer-

employee relationship existed between them, and that private respondent was an

independent contractor.

ISSUE

WON there exist an employer-employee relationship between petitioner and

private respondent.

RULING

YES. While the first contract indicated a contracts of agency, the second contract

is far removed from the concept of agency in that provisions were included that

suggests the existence of an employer-employee relationship.

The element of selection and engagement of the employee was not met as

private respondent was not required to go through the pre-employment procedures. On

the matter of wages, based on the management contract, private respondent is already

entitled to the free and validated portions of the UDF based on his production

performance. As to the power of dismissal and control, based on the factual findings of

the NLRC, which the Court affirmed, that based on the management contract Delos

Reyes was obliged to work exclusively for petitioner. He was also prohibited from

accepting any managerial position from any office, including the government. As a

conclusion, petitioner performed not only solicitation of insurances, but also exercised
administrative functions which were necessary and beneficial to petitioner’s insurance

firm.
 DR. CARLOS L. SEVILLA et al. v. THE COURT OF APPEALS et al.

G.R. No. L-41182-3, 5 April, 1988, SECOND DIVISION, (Sarmiento, J.)

DOCTRINE OF THE CASE

In general we have relied on the so called right of control test, where the

person from whom the services are performed reserves the right to control not

only the end to be achieved, but also the means to be used in reaching such end.

Subsequently, in addition to the standard of right of control, we have also

considered the existing economic conditions prevailing between parties, like the

inclusion of the employee in the payroll, in determining the existence of an

employer-employee relationship.,

FACTS

Respondent Noguera and Tourist World Service entered into a contract wherein

the latter leased the premises belonging to the former located in Manila. Petitioner

Sevilla held herself liable for the payment of the monthly rental of the TWS. The branch

was run by petitioner payable to TWS by any airline for any fare bought in on efforts of

petitioner. Finding that petitioner was connected with a rival travel firm, TWS resulted in

closing the travel branch. This led petitioner to file against TWS.

In her arguments, Sevilla argued that a joint business venture was entered into

between her and TWS with offices at the Ermita Branch, and that she was not an

employee of the latter. The trial court held that TWS is the true lessee and it was within

his management prerogative to close the branch, and that petitioner is a mere employee

of the TWS.
ISSUE

WON there exists a employer-employee relationship between petitioner and

TWS?

RULING

NO. Based from the records, it is clear that Sevilla was not subject to control by

the private respondents TWS. In fact, petitioner had bound herself in solidum as for the

payment of rents which defeats the notion of a master-servant relationship. Also, when

the branch office was opened, the same was run by petitioner. It was further admitted

that Sevilla was not part of the company’s payroll. Her designation as branch manager

did not make her an employee as employment is determined by the right of control test

and certain economic parameters.

However, the Court likewise rejects the arguments of the petitioner that her and

TWS had embarked on a joint venture. In a letter from the petitioner, she stated that she

concedes to the TWS’ right to stop the operation of the subject branch, thus accepting

the latter’s control. A joint venture constitutes a parity of standing between the co-joint

venturers in which the party has an equal proprietary interest in the capital or property

contributed. Being said, the relationship that petitioner and TWS entered together into is

not a joint venture but a contract of agency where the agent renders services in

representation of another. In the case at bar however, the agency to be declared

compatible with the intent of the parties cannot be revoked at will, since it is one

coupled with interest, where the agency was created pursuant to the mutual interest of

the agent and the principal. Petitioner assumed a personal obligation for the personal
operation of the branch, by holding herself liable for the payment of rentals. Her interest

is not limited to the commission she earned as a result of her business transaction, but

it extends to the matter of power and management delegated to her. Thus, the

revocation of the agency or the closing of the branch without petitioner’s consent

entitles her to damages

 ORLANDO FARM v. NLRC

G.R. No. 129706, 25 November 1998, THIRD DIVISION, (Romero, J.)

DOCTRINE

The law does not require an employer to be registered before he may come

within the purview of the Labor Code; as per established rule in statutory construction:

when the law does not distinguish, we should not distinguish. To do otherwise would

bring about a situation whereby employees are denied, not only redress of their

grievances, but, more importantly, the protection and benefits accorded to them by law

if their employer happens to be an unregistered association.

FACTS

Petitioner Orlando Farms Growers Association is an unregistered association of

landowners engaged in the production of export quality bananas in 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. Respondents were hired as farm workers by several member-landowners; they

were made to perform functions as packers and harvesters in the plantation of petitioner

association. After respondents were dismissed complaints were filed against petitioner

for illegal dismissal and monetary benefits. Petitioner alleged that the respondents were

not its employees and but of the individual landowners which fact can easily be deduced
from the payments made by the latter of respondent's Social Security System (SSS)

contributions. Moreover, 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 thereof.

ISSUE

Whether or not an unregistered association may be an employer independent of

the respective members it represents.

RULING

YES. Article 212(e) of the Labor Code, as amended, which defines an employer

as any person acting in the interest of an employer, directly or indirectly. The Court

concluded that the law does not require an employer to be registered before he may

come within the purview of the Labor Code; as per established rule in statutory

construction: when the law does not distinguish, we should not distinguish. To do

otherwise would bring about a situation whereby employees are denied, not only

redress of their grievances, but, more importantly, the protection and benefits accorded

to them by law if their employer happens to be an unregistered association.

In the case of Filipinas Broadcasting Network, Inc. v. NLRC the existence of an

employer- employee relationship is determined by: (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.

 In the case at bar, the circumstances supporting existence of EER cannot be

denied. During the subsistence of the association, 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. Furthermore, the employees were issued identification cards which the Court,

in the case of Domasig v. NLRC, it was construed, not only as a security measure but

mainly to identify the holder as a bonafide employee of the firm.

Moreover, the power of the petitioner to enter into compromise agreements

involving money claims filed by three of its employees made the relationship explicit. If

petitioner's disclaimer were to be believed, what benefit would accrue to it in settling an

employer-employee dispute to which it allegedly lay no claim?

While the original purpose of the formation of the association was merely to

provide the landowners a unified voice in dealing with Stanfilco. The petitioner went

beyond its avowed intentions when its subsequent actions reenforced only too clearly its

admitted role of employer.

As to the dismissal of the respondents by the petitioners, the 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. In Brahm

Industries, Inc. v. NLRC, there are (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 9 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. It must be written and be known to the

employee—the writing of the dismissal.

Herein, 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.

 SY v. CA

G.R. No. 142293, 27 February 2003, SECOND DIVISION, (Quisumbing, J.)

DOCTRINE

Among the four-fold test of determining EER, the most important element

is the employer's control of the employee's 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

Respondent Sahot started working as a truck helper for petitioners' family-owned

trucking business became a truck driver of the same family business. The petitioners

dismissed Sahot from work due to his absences as he was suffering from various

ailments. Sahot then filed with the NLRC a complaint for illegal dismissal, but ruled

negatively on his part as there was no illegal dismissal in Sahot's case. On Appeal, the

then NLRC declared that Sahot was an employee who did not abandon his job but his

employment was terminated on account of his illness.

ISSUES

Whether or not an employer- employee relationship existed between petitioners

and respondent Sahot

RULING

YES. Private respondent Jaime Sahot was not an industrial partner but an

employee of petitioners. The Court affirm the findings of the appellate court and the
NLRC. Among the four-fold test of determining EER, the most important element is the

employer's control of the employee's conduct, not only as to the result of the work to be

done, but also as to the means and methods to accomplish it. 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. Such implies that he had

worked as a truck helper and driver of petitioners not for his own pleasure but under the

latter's control. Article 1767 of the Civil Code provided 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 – which were

never present in this case.

 PAGUIO v. NLRC

G.R. No. 147816, 9 May 2003, THIRD DIVISION, (Vitug, J.)

DOCTRINE

An indicum of regular employment was the reservation by the employer not

only of the right to control the results to be achieved but likewise the manner and

the means used in reaching that end.

The law defining contractual relationship does not necessarily or

exclusively upon the terms of their written or oral contract, but also on the basis

of the nature of the work petitioner has been called upon to perform. The law

affords protection to an employee, and it will not countenance any attempt to

subvert its spirit and intent. A stipulation in an agreement can be ignored as and

when it is utilized to deprive the employee of his security of tenure.

FACTS

The respondent herein entered into an agreement with the petitioner, appointing

him as account executive of the firm. Petitioner was to solicit advertisements for "The

Manila Times," a newspaper of general circulation, published by respondent

Corporation. The petitioner receives compensation, commission and other

remuneration. Barely two months after the renewal of the contract, he received a notice

from the respondent Corporation terminating his services because of alleged

misconduct on which he was not given the opportunity to defend himself. Thus,
petitioner while asserting he was a regular employee, filed a complaint for illegal

dismissal before the Labor Arbiter. The contention of the Corporation was it did not

enter into any agreement with petitioner outside of the contract of services under

Articles 1642 and 1644 of the Civil Code and that they were right in terminating the

contract as stipulated in their agreement. After the Labor Arbiter declared the dismissal

illegal, on appeal, the NLRC reversed the ruling of the labor arbiter, and declared the

contractual relationship between the parties as being for a fixed-term employment.

ISSUES

Whether or not the contractual relationship between petitioner and respondent

was of regular employment

RULING

YES. A regular employment, whether it is one or not, is aptly gauged from the

concurrence, or the non-concurrence, of the four-fold test. Given rise by this test, an

employment relation obtains where work is performed or services are rendered under

the control and supervision of the party contracting for the service, not only as to the

result of the work but also as to the manner and details of the performance desired.

An indicum of regular employment was the reservation by respondent not only of

the right to control the results to be achieved but likewise the manner and the means

used in reaching that end. In this case, the respondent exercised such control by

requiring petitioner, among other things, to submit a daily sales activity report and also a

monthly sales report as well.

 Provided by Article 280 of the Labor Code, a regular employee is one who is

engaged to perform activities which are necessary and desirable in the usual business

or trade of the employer, moreover, a person has rendered at least one year of service,

regardless of the nature of the activity performed or of whether it is continuous or

intermittent, the employment is considered regular as long as the activity exists.

In the case at bar, the petitioner performed activities which were necessary and

desirable to the business of the employer, and that the same went on for more than a

year, could hardly be denied. Petitioner was an account executive in soliciting

advertisements, clearly necessary and desirable, for the survival and continued

operation of the business of respondent corporation.

Respondent cannot leverage under the terms of the agreement it has entered

into with petitioner. The law, in defining their contractual relationship, does not

necessarily or exclusively upon the terms of their written or oral contract, but also on the

basis of the nature of the work petitioner has been called upon to perform. The law

affords protection to an employee, and it will not countenance any attempt to subvert its

spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized

to deprive the employee of his security of tenure. The sheer inequality that

characterizes employer-employee relations, where the scales generally tip against the

employee, often scarcely provides him real and better options.

 VILLAMARIA v. CA

G.R. No. 165881, 19 April 2006, FIRST DIVISION, (Callejo, Sr., J.)

DOCTRINE

The boundary system is a scheme by an owner/operator engaged in

transporting passengers as a common carrier to primarily govern the

compensation of the driver, that is, the latter's daily earnings are remitted to the

owner/operator less the excess of the boundary which represents the driver's

compensation. Under this system, the owner/operator exercises control and

supervision over the driver.

FACTS

Oscar Villamaria, Jr., the owner of Villamaria Motors, operated passenger

jeepneys by employing drivers on a “boundary basis.” He agreed to sell the jeepney to

driver Bustamante under the “boundary-hulog scheme”, with prohibitions, compliance

and restrictions stipulated in a contract. Bustamante continued driving the jeepney

under the supervision and control of Villamaria, but failed to comply with his obligations

later on, hence, a notice of compliance and warning were ensued. A few years later,

Villamaria took the jeepney back from Bustamante and barred him from driving it.

Bustamante then filed a complaint for illegal dismissal. The CA affirmed the LA’s

order favoring Bustamante on the ground that the relationship between Villamaria and
Bustamante was dual: that of vendor-vendee and employer-employee. Villamaria

averred that their contract was a combination of vendor-vendee and employer-

employee because they had clearly entered into a conditional deed of sale over the

jeepney so that their employer-employee relationship had been transformed into that of

vendor-vendee.

ISSUES

Whether the existence of a boundary-hulog agreement negates the employer-

employee relationship between the vendor and vendee

RULING

NO. The Kasunduan did not extinguish the employer-employee relationship of

the parties extant before the execution of said deed. In National Labor Union v.

Dinglasan that the jeepney owner/operator-driver relationship under the boundary

system is that of employer-employee and not lessor-lessee. This doctrine was affirmed

in Magboo v. Bernardo and Lantaco, Sr. v. Llamas, and was analogously applied to

govern the relationships between auto-calesa owner/operator and driver, bus

owner/operator and conductor, and taxi owner/operator and driver. The boundary

system is a scheme by an owner/operator engaged in transporting passengers as a

common carrier to primarily govern the compensation of the driver, that is, the latter's

daily earnings are remitted to the owner/operator less the excess of the boundary which

represents the driver's compensation. Under this system, the owner/operator exercises

control and supervision over the driver.

 ANGELINA FRANCISCO v. NLRC

G.R. No. 170087, 31 August 2006, FIRST DIVISION, (Ynares-Santiago., J.)

DOCTRINE

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 several positions have been held by the worker. 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.

FACTS

Petitioner was hired by Kasei Corporation later on designated as Acting

Manager, she handled recruitment of all employees and perform management

administration functions; represent the company in all dealings with government

agencies, especially with the BIR, SSS and in the city government of Makati; and to

administer all other matters pertaining to the operation of Kasei Restaurant.

Later, she was replaced as Manager. Kasei Corporation reduced her salary, she

was not paid her mid-year bonus allegedly because the company was not earning well.

In the same year, petitioner did not receive her salary from the company. After

repeated follow-ups with the company cashier she was only advised that the company
was not earning well. Eventually she was informed that she is no longer connected with

the company. As a result, she did not report for work and filed an action for constructive

dismissal before the labor arbiter. Private respondents averred that petitioner is not an

employee of Kasei Corporation, alleging that the petitioner was hired as one of its

technical consultants on accounting matters and act concurrently as Corporate

Secretary. As technical consultant, petitioner performed her work at her own discretion

without control and supervision of Kasei Corporation. Petitioner had no daily time record

and she came to the office any time she wanted and that her services were only

temporary in nature and dependent on the needs of the corporation.

ISSUES

Whether or not there was an employer-employee relationship between petitioner

and private respondent

RULING

YES. As held in Sevilla v. Court of Appeals, 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.

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 several positions have been held by the worker. 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.

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. 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.