SINGER SEWING MACHINE COMPANY vs. HON.

FRANKLIN DRILON
[193 SCRA 271]
Facts:
Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and exclusive bargaining agent of all
collectors of Singer Sewing Machine. The company opposed the petition mainly because the union members are not employees but
independent contractors as evidenced by the collection agency agreement which they signed.
Med-Arbiter ruled that there exists an employee-employer relationship and granted the certification election which was affirmed by
Sec. Drilon. The company files the present petition on the determination of the relationship. The union insist that the provisions of
the Collection Agreement belie the companys position that the union members are independent contractors.
Issue:
Whether or not there exists an employer-employee relationship between the parties.
SC Ruling:
The present case calls for the application of the control test, which if not satisfied, would lead to the conclusion that no employeeemployer relationship exists. If the union members are not employees, no right to organize for the purpose of bargaining or as a
bargaining agent cannot be recognized.
The following elements are generally considered in the determination of the relationship: the selection and engagement of the
employee, payment of wages, power of dismissal and the power to control the employees conduct which is the most important
element.
The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular
relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors. The agreement
confirms the status of the collecting agents as independent contractor. The requirement that collection agents utilize only receipt
forms and report forms issued by the company and that reports shall be submitted at least once a week is not necessarily an
indication of control over the means by which the job collection is to be performed. Even if report requirements are to be called
control measures, any control is only with respect to the end result of the collection since the requirements regulate the things to be
done after the performance of the collection job or the rendition of service.
The plain language of the agreement reveals that the designation as collection agent does not create an employment relationship
and that the applicant is to be considered at all times as an independent contractor.
The court finds that since private respondents are not employees of the company, they are not entitled to the constitutional right to
form or join a labor organization for the purposes of collective bargaining. There is no constitutional and legal basis for their union to
be granted their petition for direct certification.

MANILA GOLF CLUB, INC. VS. INTERMEDIATE APPELLATE COURT

[237 SCRA 207]
Facts:
This is originally filed with the Social Security Commission (SSC) via petition of 17 persons who styled themselves as Caddies of
Manila Golf and Country Club-PTCCEA for the coverage and availment of benefits of the Social Security Act as amended, PTCCEA
(Philippine Technical, Clerical, Commercial Employees Association) a labor organization where which they claim for membership.
The same time two other proceedings were filed and pending. These are certification election case filed by PTCCEA on behalf of the
same caddies of Manila Golf and Country club which was in favor of the caddies and compulsory arbitration case involving PTCCEA
and Manila Golf and Country Club which was dismissed and ruled that there was no employer-employee relationship between the
caddies and the club.
Issue:
Whether or not rendering caddying services for members of golf clubs and their guests in said clubs courses or premises are the
employees of such clubs and therefore within the compulsory coverage of the Social Security System (SSS).
SC Ruling:
The Court does not agree that the facts logically point to the employer-employee relationship.
In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their
occupation within the premises and grounds of whatever club they do work in. They work for the club to which they attach
themselves on sufferance but, on the other hand, also without having to observe any working hours, free to leave anytime they
please, to stay away for as long they like.
These considerations clash frontally with the concept of employment. It can happen that a caddy who has rendered services to a
player on one day may still find sufficient time to work elsewhere. Under such circumstances, the caddy may leave the premises and
to go to such other place of work that he wishes. These are things beyond the control of the petitioner.
The caddy (LLamar) is not an employee of petitioner Manila Golf and Country Club and the petitioner is under no obligation to
report him for compulsory coverage of SSS.

ENCYCLOPEDIA BRITANNICA (Philippines), INC. vs. NLRC

[264 SCRA 4]
Facts:
Limjoco was a Sales Divison of Encyclopaedia Britannica and was in charge of selling the products through some sales
representatives. As compensation, he would receive commissions from the products sold by his agents. He was also allowed to use
the petitioners name, goodwill and logo. It was agreed that office expenses would be deducted from Limjocos commissions.
In 1974, Limjoco resigned to pursue his private business and filed a complaint against petitioner for alleged non-payment of
separation pay and other benefits and also illegal deduction from sales commissions. Petitioner alleged that Limjoco was not an
employee of the company but an independent dealer authorized to promote and sell its products and in return, received
commissions therein. Petitioner also claims that it had no control and supervision over the complainant as to the manners and
means he conducted his business operations. Limjoco maintained otherwise. He alleged he was hired by the petitioner and was
assigned in the sales department.
The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed the decision and opined that there was
no evidence supporting allegation that Limjoco was an independent contractor or dealer.
Issue:
Whether or not there was an employee-employer relationship between the parties.
SC Ruling:
There was no employee-employer relationship. In determining the relationship, the following elements must be present: selection
and engagement of the employee, payment of wages, power of dismissal and power to control the employees conduct. The power
of control is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employeeemployer relationship. Under the control test, an employee-employer relationship exists where the person for whom the services
are performed reserves a right to control not only the end to be achieved, but also the manner and means to be employed in
reaching that end.
The issuance of guidelines by the petitioner was merely guidelines on company policies which sales managers follow and impose on
their respective agents. Limjoco was not an employee of the company since he had the free rein in the means and methods for
conducting the marketing operations. He was merely an agent or an independent dealer of the petitioner. He was free to conduct
his work and he was free to engage in other means of livelihood.
In ascertaining the employee-employer relationship, the factual circumstances must be considered. The element of control is absent
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 in according to the result of his efforts and not the amount thereof. Hence, there was no
employee-employer relationship.

SUSAN CARUNGCONG vs. NLRC

[283 SCRA 319]
Facts:
Susan Carungcong began her career in the insurance industry in 1974 as an agent of Sun Life Assurance Company of Canada. She signed an Agent
Agreement with Sun Life. In virtue of which she was designated the latters agent to solicit applications for its insurance and annuity policies.
This contract was superseded some five years later when she signed two (2) new agreements. The first, denominated Career Agents or Unit
Managers Agreement, dealt with such matters as the agents commissions, his obligations, limitations on his authority, and termination of the
agreement by death, or by written notice with or without cause. The second was titled, Managers Supplementary Agreement. It explicitly
described as a further agreement. Carungcong and Sun Life executed another Agreement named New Business Manager with the function
generally to manage a New Business Office established. This latest Agreement stressed that the New Business Manager in performance of his
duties defined herein, shall be considered an independent contractor and not an employee of Sun Life, and that under no circumstance shall the
New Business Manager and/or his employees be considered employees of Sun Life.
Ms. Eleizer Sibayan, Manager of Sun Lifes Internal Audit Department, commenced an inquiry into the special fund availments of Carungcong and
other New Business Managers. Respondent Lance Kemp, had been receiving reports of anomalies in relation thereto from unit managers and
agents. Thereafter, on January 1990, Carungcong was confronted with and asked to explain the discrepancies set out in Sibayans report. She was
given a letter signed by Metron V. Deveza, CLU, Director, Marketing, which advised of the termination of her relationship with Sun Life.
Carungcong promptly instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations Commissions on January 16,
1990. There she succeeded in obtaining a favorable judgment. Labor Arbiter found that there existed an employer-employee relationship between
her and Sun Life. On appeal, the National Labor Relations Commission reversed the Arbiters judgment. It affirmed that no employment
relationship existed between Carungcong and Sun Life.
Issue:
Whether or not there petitioner was an employee subject to control and supervision by Sun Life.
SC Ruling:
Noteworthy is that this last agreement which emphasized, like the Career Agents or Unit Managers Agreement first signed by her, that in
performance of her duties defined herein. Carungcong would be considered an independent contractor and not an employee of Sun Life, and that
under no circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life.
Carungcong is an independent contractor. It was indicated in the very face of the contract. The rules and regulations of the company is not
sufficient to establish an employer-employee relationship. It does not necessarily create any employer-employee relationship where the
employers controls have to interfere in the methods and means by which employee would like employ to arrive at the desired results.
Carungcong admitted that she was free to work as she pleases, at the place and time she felt convenient for her to do so. She was not paid to a
fixed salary and was mainly paid by commissions depending on the volume of her performance.
She was not an employee of Sun Life Co.

JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION

[G.R. No. 138051. June 10, 2004]
Facts:
In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation (MJMDC). ABS-CBN was represented
by its corporate officers while MJMDC was represented by Sonza, as President and general manager, and Tiangco as its EVP and treasurer. Referred
to in the agreement as agent, MJMDC agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed
to pay Sonza a monthly talent fee of P310, 000 for the first year and P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent events concerning his program and career.
After the said letter, Sonza filed with the Department of Labor and Employment a complaint alleging that ABS-CBN did not pay his salaries,
separation pay, service incentive pay,13th month pay, signing bonus, travel allowance and amounts under the Employees Stock Option Plan (ESOP).
ABS-CBN contended that no employee-employer relationship existed between the parties. However, ABS-CBN continued to remit Sonzas monthly
talent fees but opened another account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC affirmed the decision of the Labor
Arbiter. CA also affirmed the decision of NLRC.
Issue:
Whether or not there was employer-employee relationship between the parties.
SC Ruling:
Case law has consistently held that the elements of an employee-employer relationship are selection and engagement of the employee, the
payment of wages, the power of dismissal and the employers power to control the employee on the means and methods by which the work is
accomplished. The last element, the so-called "control test", is the most important element.
Sonzas services to co-host its television and radio programs are because of his peculiar talents, skills and celebrity status. Independent contractors
often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring
of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not
conclusive, of an independent contractual relationship. All the talent fees and benefits paid to SONZA were the result of negotiations that led to
the Agreement. For violation of any provision of the Agreement, either party may terminate their relationship. Applying the control test to the
present case, we find that SONZA is not an employee but an independent contractor.
The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. This test is based on
the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is considered an
independent contractor. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and
sounded on radio were outside ABS-CBNs control. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to
modify the program format and airtime schedule "for more effective programming." ABS-CBNs sole concern was the quality of the shows and their
standing in the ratings.
Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonzas work. A radio broadcast specialist who works
under minimal supervision is an independent contractor. Sonzas work as television and radio program host required special skills and talent, which
SONZA admittedly possesses.
ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents like Sonza as independent
contractors. The right of labor to security of tenure as guaranteed in the Constitutionarises only if there is an employer-employee
relationship under labor laws. Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent
contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure
cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor.

ROGELIO RAMOS and ERLINDA RAMOS vs. CA

[380 SCRA 467]
Facts:
Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in the gall bladder. She was referred to Dr. Hosaka, a
surgeon, who agreed to do the operation. The operation was scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda was admitted
to the medical center the day before the operation. On the following day, she was ready for operation as early as 7:30 am. Around 9:30, Dr. Hosaka
has not yet arrived. By 10 am, Rogelio wanted to pull out his wife from the operating room. Dr. Hosaka finally arrived at 12:10 pm more than 3
hours of the scheduled operation.
Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in her left hand. At 3 pm, Erlinda was being wheeled to the
Intensive care Unit and stayed there for a month. Since the ill-fated operation, Erlinda remained in comatose condition until she died.
The family of Ramos sued them for damages.
Issue:
Whether or not there was an employee-employer relationship that existed between the medical center and Drs. Hosaka and Guiterrez.
SC Ruling:
Private Hospitals hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not technically
employees, the control exercised, the hiring and the right to terminate consultants fulfill the hallmarks of an employer-employee relationship with
the exception of payment of wages. The control test is determining.
In applying the four fold test, DLSMC cannot be considered an employer of the respondent doctors. It has been consistently held that in
determining whether an employer-employee relationship exists between the parties, the following elements must be present: (1) selection and
engagement of services; (2) payment of wages; (3) the power to hire and fire; and (4) the power to control not only the end to be achieved, but the
means to be used in reaching such an end.
The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a clinic and/or admitting patients. It is the patient
who pays the consultants. The hospital cannot dismiss the consultant but he may lose his privileges granted by the hospital. The hospitals
obligation is limited to providing the patient with the preferred room accommodation and other things that will ensure that the doctors orders are
carried out.
The court finds that there is no employer-employee relationship between the doctors and the hospital.

ANGELITO LAZARO vs. SOCIAL SECURITY COMMISSION

[435 SCRA 472 (2004)]
Facts:
Respondent Rosalina M. Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security
contributions against her three (3) employers. Among the respondents was herein petitioner Angelito L. Lazaro, proprietor of Royal Star Marketing
(Royal Star), which is engaged in the business of selling home appliances.
Lazaro denied that Laudato was an employee but instead claimed that she was an agent of the company. Lazaro also maintained that she was not
mandated to work of definite work hours and thus not deemed to be a regular employee of Royal Star Marketing, the company of Lazaro.
SSC promulgated a decision rendering that Laudato is a regular employee of Royal Star Marketing and entitled to social security contributions.
Lazaro filed a petition for review before the CA where CA ruled that Laudato was an employee of Royal Star Marketing. This petition before the
Court assails same arguments raised by Lazaro in SSC. She raised that Laudato was not an employee of Royal Star Marketing since Royal Star had no
control over the activities of Laudato.
Issue:
Whether or not Laudato was a regular employee of Royal Star Marketing and thus, entitled to social security contributions.
SC Ruling:
It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship
warrants the application of the control test, that is, whether the employer controls or has reserved the right to control the employee, not only as
to the result of the work done, but also as to the means and methods by which the same is accomplished.
The SSC, applying the control test found that Laudato was an employee of Royal Star. The Court agrees with the findings of the SSC and the CA. The
fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship.
In the case of Grepalife v. Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its
agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the
person insured. The relevant factor remains, as stated earlier, 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 as to the means and methods by which the same is to be accomplished.
Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee.
In the case of Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied the existence of an employer-employee relationship, as
the claimant according to it, was a supervisor on commission basis who did not observe normal hours of work. This Court declared that there was
an employer-employee relationship, noting that [the] supervisor, although compensated on commission basis, [is] exempt from the observance of
normal hours of work for his compensation is measured by the number of sales he makes.

[G.R. No. 157214. June 7, 2005] PHILIPPINE GLOBAL COMMUNICATIONS, INC.,

petitioner, vs. RICARDO DE VERA, respondent.
FACTS: De Vera and petitioner Company entered into a contract where respondent
was to attend to the medical needs of petitioners employees while being paid a
retainer fee of P4, 000 per month. Later, De Vera was informed by petitioner that
the retainership will be discontinued. Respondent filed a case for illegal dismissal.
ISSUE: Whether or not de Vera is an employee of PhilComm or an independent
contractor.
HELD Applying the four fold test, de Vera is not an employee. There are several
indicators apart from the fact that the power to terminate the arrangement lay on
both parties from the time he started to work with petitioner, he never was
included in its payroll; was never deducted any contribution for remittance to the
Social Security System(SSS); he was subjected by petitioner to the ten (10%)
percent withholding tax for his professional fee, in accordance with the National
Internal Revenue Code, matters which are simply inconsistent with an employeremployee relationship; the records are replete with evidence showing that
respondent had to bill petitioner for his monthly professional fees. It simply runs
against the grain of common experience to imagine that an ordinary employee has
yet to bill his employer to receive his salary. Finally, the element of control s
absent. Petition granted.

ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO et al.

[G.R. No. 164156. September 26, 2006]
Facts:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio
stations, whose operations revolve around the broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise
utilizes the airtime it generates from its radio and television operations. It has a franchise as a broadcasting company, and was likewise issued a
license and authority to operate by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned
at the news and public affairs, for various radio programs in the Cebu Broadcasting Station. On December 19, 1996, petitioner and the ABS-CBN
Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to
December 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay,
Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter
rendered judgment in favor of the respondents, and declared that they were regular employees of petitioner as such, they were awarded
monetary benefits. NLRC affirmed the decision of the Labor Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.
Issue:
Whether or not the respondents were considered regular employees of ABS-CBN.
SC Ruling:
The respondents are regular employees of ABS-CBN. It was held that where a person has rendered at least one year of service, regardless of the
nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity
exists, the reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status.
In Universal Robina Corporation v. Catapang, the Court states that the primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by
considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has
been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such activity and while such activity exists.
Additionally, respondents cannot be considered as project or program employees because no evidence was presented to show that the duration
and scope of the project were determined or specified at the time of their engagement. In the case at bar, however, the employer-employee
relationship between petitioner and respondents has been proven. In the selection and engagement of respondents, no peculiar or unique skill,
talent or celebrity status was required from them because they were merely hired through petitioners personnel department just like any ordinary
employee. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship.
Respondents are highly dependent on the petitioner for continued work. The degree of control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the
employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an
independent contractor. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under
the CBA . Besides, only talent-artists were excluded from the CBA and not production assistants who are regular employees of the respondents.
Moreover, under Article 1702 of the New Civil Code: In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living of the laborer.

ANGELINA FRANCISCO vs. NLRC

[500 SCRA 690 (2006)]
Facts:
Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated as accountant and corporate secretary and was
assigned to handle all the accounting needs of the company. She was also designated as Liason Officer to the City of Manila to secure permits for
the operation of the company.
In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all employees and perform management
administration functions. In 2001, she was replaced by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which
was until September. She asked for her salary but was informed that she was no longer connected to the company. She did not anymore report to
work since she was not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision while CA reversed it.
Issue:
Whether or not there was an employer-employee relationship.
SC Ruling:
The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally,
courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only
the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic
conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employeremployee relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers 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.
In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic conditions prevailing between the parties, in addition
to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an
employer-employee relationship based on an analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity,
such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in
equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration
of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued
employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer
for his continued employment in that line of business.
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 corporations Technical Consultant. It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latters line of business.
There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the company
for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function
involved accounting and tax services rendered to Respondent
Corporation on a regular basis over an indefinite period of engagement. Respondent Corporation hired and engaged petitioner for compensation,
with the power to dismiss her for cause. More importantly, Respondent Corporation had the power to control petitioner with the means and
methods by which the work is to be accomplished.

ROGELIO NOGALES vs. CAPITOL MEDICAL CENTER et al.

[G.R. No. 142625. December 19, 2006]
Facts:
Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then 37 years old, was under the exclusive prenatal care of Dr. Oscar Estrada
("Dr. Estrada") beginning on her fourth month of pregnancy or as early as December 1975. Around midnight of 25 May 1976, Corazon started to
experience mild labor pains prompting Corazon and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After examining Corazon,
Dr. Estrada advised her immediate admission to the Capitol Medical Center ("CMC"). t 6:13 a.m., Corazon started to experience convulsionsAt 6:22
a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the process, a 1.0 x 2.5 cm. piece of cervical tissue was
allegedly torn.At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which rapidly became profuse. Corazon died at 9:15 a.m. The
cause of death was "hemorrhage, post partum.
Issue:
Whether or not CMC is vicariously liable for the negligence of Dr. Estrada.
SC Ruling:
Private hospitals, hire, fire and exercise real control over their attending and visiting "consultant" staff. The basis for holding an employer solidarily
responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own
acts but also for those of others based on the former's responsibility under a relationship of patria potestas.
In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The
hospital may be liable if the physician is the
"ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent authority.
For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that: (1) the hospital, or its agent, acted in a manner that
would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital; (2)
where the acts of the agent create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced in
them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence. In the instant
case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through CMC's acts, CMC clothed Dr. Estrada with apparent authority
thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC.

COCA-COLA BOTTLERS PHILS., INC., vs. DR. DEAN CLIMACO

[G.R. No. 146881. February 15, 2007]
Facts:
Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer agreement. The agreement states that there is no employeremployee relationship between the parties. The retainer agreement was renewed annually. The last one expired on Dec. 31, 1993. Despite of the
non-renewal of the agreement, respondent continued to perform his functions as company doctor until he received a letter in March 1995
concluding their retainer agreement.
Respondent filed a complaint before the NLRC seeking recognition as a regular employee of the petitioner company and prayed for the payment of
all benefits of a regular employee. In the decision of the Labor Arbiter, the company lacked control over the respondents performance of his
duties. Respondent appealed where it rendered that no employer-employee relationship existed between the parties.
The CA ruled that an employer-employee relationship existed.
Issue:
Whether or not there exists an employer-employee relationship between the parties.
SC Ruling :
The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or the
so-called control test, considered to be the most important element.
The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case show that no employer-employee
relationship exists between the parties. The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved,
but did not control the means and methods by which respondent performed his assigned tasks. In addition, the Court finds that the schedule of
work and the requirement to be
on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement.
Considering that there is no employer-employee relationship between the parties, the termination of the Retainership Agreement, which is in
accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent.

Lopez vs. Bodega City

[G.R. No. 155731. Sept 3, 2007]
Facts:
Under a concessionaire agreement, Lopez was the "lady keeper" of Bodega City tasked with manning
its ladies' comfort room. Yap (owner of Bodega) alleged that Lopez have acted in a hostile manner
against a lady customer after the customer informed the management that Lopez was sleeping while
on duty. Yap later informed Lopez of the termination of the concessionaire agreement between them.
Lopez sued for illegal dismissal.
Issue:
Was Lopez an employee of Bodega City?
Held:
Payment of wages
She presented a petty cash voucher showing that she received an allowance for five (5) days.
However, this solitary petty cash voucher did not prove that she had been receiving salary from
respondents or that she had been respondents' employee for 10 years. If she was really an employee
of respondents for that length of time, she should have been able to present salary vouchers or pay
slips and not just a single petty cash voucher.
Also, she could have easily shown other pieces of evidence such as a contract of employment, SSS or
Medicare forms, or certificates of withholding tax on compensation income; or she could have
presented witnesses to prove her contention that she was an employee of respondents. But she failed
to do so.
Control
It is true that petitioner was required to follow rules and regulations prescribing appropriate conduct
while within the premises of Bodega City. However, this was imposed upon petitioner as part of the
terms and conditions in the concessionaire agreement embodied in a 1992 letter of Yap addressed to
petitioner.
The concessionaire agreement merely stated that petitioner shall maintain the cleanliness of the
ladies' comfort room and observe courtesy guidelines that would help her obtain the results they
wanted to achieve. There is nothing in the agreement which specifies the methods by which
petitioner should achieve these results. Respondents did not indicate the manner in which she
should go about in maintaining the cleanliness of the ladies' comfort room.
Fact that she did not sign document does not negate existence of agreement; estoppel applies
While she did not affix her signature to the letter the document evidencing the subject
concessionaire agreement, the fact that she performed the tasks indicated in the said agreement for a
period of three years without any complaint or question only goes to show that she has given her
implied acceptance of or consent to the said agreement. The principle of estoppel in pais applies wherein -- by one's
acts, representations or admissions, or
silence when one ought to speak out -- intentionally or through culpable negligence, induces another
to believe certain facts to exist and to rightfully rely and act on such belief, so as to be prejudiced if the
former is permitted to deny the existence of those facts.
ID card alone not sufficient proof of employment
It is true that the words "EMPLOYEE'S NAME" appear printed below petitioner's name. However, she
failed to dispute respondents' evidence that other "contractors" of Bodega City were also issued the
same ID cards for the purpose of enabling them to enter the premises of Bodega City

CALAMBA MEDICAL CENTER vs NLRC

GR 176484 November 25, 2008
Strike Managerial Employees Control Illegal Dismissal
FACTS: Ronaldo and Merceditha are doctors employed by Calamba Medical Center, Inc. They are given a retainers fee
by the hospital as well as shares from fees obtained from patients.
One time, Ronaldo was overheard by Dr. Trinidad talking to another doctor about how low the admission rate to the
hospital is. That conversation was reported to Dr. Desipeda who was then the Medical Director of the hospital.
Eventually Ronaldo was suspended. Ronaldo filed a case for Illegal Suspension in March 1998. In the same month, the
rank and file employees organized a strike against the hospital for unfair labor practices. Desipeda eventually fired
Ronaldo for his alleged participation in the strike, which is not allowed under the Labor Code for he is a managerial
employee. Desipeda also fired Merceditha on the ground that she is the wife of Ronaldo who naturally sympathizes with
him.
The Labor Arbiter ruled that there was no Illegal Suspension for there was no employer-employee relationship because
the hospital has no control over Ronaldo as he is a doctor who even gets shares from the hospitals earnings.
The National Labor Relations Commission as well as the Court of Appeals reversed the LA.
ISSUE: Whether or not there is an employer-employee relationship?
HELD: Yes. Under the control test, an employment relationship exists between a physician and a hospital if the hospital
controls both the means and the details of the process by which the physician is to accomplish his task. There is control
in this case because of the fact that Desipeda schedules the hours of work for Ronaldo and his wife.
The doctors are also registered by the hospital under the SSS which is premised on an employer-employee relationship.
There is Illegal Dismissal committed against Rolando for there was no notice and hearing held. It was never shown that
Rolando joined the strike. But even if he did, he has the right to do so for he is not a part of the managerial or
supervisory employees. As a doctor, their decisions are still subject to revocation or revision by Desipeda.
There is Illegal Dismissal committed against Merceditha for the ground therefor was not mentioned in Article 282 of the
Labor Code.
When is Control (One of the Four Tests of Employer-Employee Relationship) Absent?
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 is compensated according to the result of his efforts and not the amount thereof, the element of
control is absent.

Semblante vs CA
FACTS:

Filed for illegal dismissal

ISSUE: Whether or not there is EE-ER relationship.

RULING: Respondent spouses: (1) had no part in petitioners selection and management; (2) petitioners salaries were
paid out of the arriba; and (3) petitioners performed their functions as masiador and sentenciador free from the
direction and control of respondents, i.e., mainly on their expertise & they provided their own tools.
No Ee-Er relationship.

EROME D. ESCASINAS and EVAN RIGOR SINGCO vs. SHANGRI-LAS MACTAN ISLAND RESORT and DR. JESSICA J.R. PEPITO
GR No. 178827
March 24, 2009
FACTS:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively,
by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island Resort
(Shangri-la) in Cebu of which she was a retained physician.
In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization,
underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against
respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were
not its employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it
mandatory for a covered establishment to employ health personnel, that the services of nurses is not germane nor
indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to
hire, fire and supervise the work of nurses under her.
The Labor Arbiter (LA) declared petitioners to be regular employees of Shangri-la, noting that the petitioners usually
perform work which is necessary and desirable to Shangri-las business, and thus ordered Shangri-la to grant them the
wages and benefits due them as regular employees from the time their services were engaged.
Upon appeal, the NLRC declared that no employer-employee relationship existed between Shangri-la and petitioners. It
ruled that contrary to the finding of the LA, even if Art. 280 of the Labor Code states that if a worker performs work
usually necessary or desirable in the business of an employer, he cannot be automatically deemed a regular employee,
and that the Memorandum of Agreement between the respondent and the respondent doctor amply shows that
respondent doctor was in fact engaged by Shangri-la on retainer basis, under which she could hire her own nurses and
other clinic personnel.
The Court of Appeals (CA) affirmed the NLRC decision, concluding that all aspects of employment of petitioners being
under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of
providing medical or healthcare services, petitioners could not be regarded as regular employees of Shangri-la.
ISSUES:
1. Whether or not Article 157 of the Labor Code make it mandatory for covered establishment to employ health
personnel; and
2. Whether or not there exists an employer-employee relationship between Shangri-la and petitioners.
HELD:
The Court holds that, contrary to petitioners postulation, Art. 157 does not require the engagement of full-time nurses
as regular employees of a company employing not less than 50 workers. Thus, the Article provides:
ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his employees in
any locality with free medical and dental attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two
hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a

graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The
Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of
employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of
this Article;(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic,
when the number of employees exceeds two hundred (200) but not more than three hundred (300); and(c) The services
of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency
hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three
hundred (300).
In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the
premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less
than eight (8) hours in the case of those employed on full-time basis. Where the undertaking is nonhazardous in nature,
the physician and dentist may be engaged on retained basis, subject to such regulations as the Secretary of Labor may
prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency.
Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to furnish its
employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic
which means that it should provide or make available such medical and allied services to its employees, not necessarily
to hire or employ a service provider. As held in Philippine Global Communications vs. De Vera:
x x x while it is true that the provision requires employers to engage the services of medical practitioners in certain
establishments depending on the number of their employees, nothing is there in the law which says that medical
practitioners so engaged be actually hired as employees, adding that the law, as written, only requires the employer to
retain, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two
(2) hours.The term full-time in Art. 157 cannot be construed as referring to the type of employment of the person
engaged to provide the services, for Article 157 must not be read alongside Art. 280 in order to vest employer-employee
relationship on the employer and the person so engaged. So De Vera teaches:x x For, we take it that any agreement may
provide that
one party shall render services for and in behalf of another, no matter how necessary for the latters business, even
without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as well as
in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for
determining the existence of an employment relationship. As it is, the provision merely distinguishes between two (2)
kinds of employees, i.e., regular and casual. x x x
The phrase services of a full-time registered nurse should thus be taken to refer to the kind of services that the nurse
will render in the companys premises and to its employees, not the manner of his engagement.
The existence of an independent and permissible contractor relationship is generally established by considering the
following determinants: whether the contractor is carrying on an independent business; the nature and extent of the
work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified
piece of work; the control and supervision of the work to another; the employers power with respect to the hiring,
firing and payment of the contractors workers; the control of the premises; the duty to supply the premises, tools,
appliances, materials and labor; and the mode, manner and terms of payment.
On the other hand, existence of an employer- employee relationship is established by the presence of the following
determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by
whatever means; and (4) the power to control the workers conduct, with the latter assuming primacy in the overall
consideration.

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor.
That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does not
necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic
and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangrilas principal business operation of hotels and restaurants.
As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and
other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff with
minimum benefit payable at 12 times the employees last drawn salary, as well as value added taxes and withholding
taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-las guests
who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS
premium as well as their wages if they were not indeed her employees.
With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, Clinic
Policies and Employee Manual claimed to have been prepared by respondent doctor exists, to which petitioners gave
their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said
document, and not the employee manual being followed by Shangri-las regular workers, governs how they perform
their respective tasks and responsibilities.
In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners employer.

EROME D. ESCASINAS and EVAN RIGOR SINGCO vs. SHANGRI-LAS MACTAN ISLAND RESORT and DR. JESSICA J.R. PEPITO
GR No. 178827
March 24, 2009
FACTS:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively,
by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island Resort
(Shangri-la) in Cebu of which she was a retained physician.
In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization,
underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against
respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were
not its employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it
mandatory for a covered establishment to employ health personnel, that the services of nurses is not germane nor
indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to
hire, fire and supervise the work of nurses under her.
The Labor Arbiter (LA) declared petitioners to be regular employees of Shangri-la, noting that the petitioners usually
perform work which is necessary and desirable to Shangri-las business, and thus ordered Shangri-la to grant them the
wages and benefits due them as regular employees from the time their services were engaged.
Upon appeal, the NLRC declared that no employer-employee relationship existed between Shangri-la and petitioners. It
ruled that contrary to the finding of the LA, even if Art. 280 of the Labor Code states that if a worker performs work
usually necessary or desirable in the business of an employer, he cannot be automatically deemed a regular employee,
and that the Memorandum of Agreement between the respondent and the respondent doctor amply shows that
respondent doctor was in fact engaged by Shangri-la on retainer basis, under which she could hire her own nurses and
other clinic personnel.
The Court of Appeals (CA) affirmed the NLRC decision, concluding that all aspects of employment of petitioners being
under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of
providing medical or healthcare services, petitioners could not be regarded as regular employees of Shangri-la.
ISSUES:
1. Whether or not Article 157 of the Labor Code make it mandatory for covered establishment to employ health
personnel; and
2. Whether or not there exists an employer-employee relationship between Shangri-la and petitioners.
HELD:
The Court holds that, contrary to petitioners postulation, Art. 157 does not require the engagement of full-time nurses
as regular employees of a company employing not less than 50 workers. Thus, the Article provides:
ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his employees in
any locality with free medical and dental attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two
hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a

graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The
Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of
employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of
this Article;(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic,
when the number of employees exceeds two hundred (200) but not more than three hundred (300); and(c) The services
of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency
hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three
hundred (300).
In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the
premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less
than eight (8) hours in the case of those employed on full-time basis. Where the undertaking is nonhazardous in nature,
the physician and dentist may be engaged on retained basis, subject to such regulations as the Secretary of Labor may
prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency.
Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to furnish its
employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic
which means that it should provide or make available such medical and allied services to its employees, not necessarily
to hire or employ a service provider. As held in Philippine Global Communications vs. De Vera:
x x x while it is true that the provision requires employers to engage the services of medical practitioners in certain
establishments depending on the number of their employees, nothing is there in the law which says that medical
practitioners so engaged be actually hired as employees, adding that the law, as written, only requires the employer to
retain, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two
(2) hours.The term full-time in Art. 157 cannot be construed as referring to the type of employment of the person
engaged to provide the services, for Article 157 must not be read alongside Art. 280 in order to vest employer-employee
relationship on the employer and the person so engaged. So De Vera teaches:x x For, we take it that any agreement may
provide that
one party shall render services for and in behalf of another, no matter how necessary for the latters business, even
without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as well as
in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for
determining the existence of an employment relationship. As it is, the provision merely distinguishes between two (2)
kinds of employees, i.e., regular and casual. x x x
The phrase services of a full-time registered nurse should thus be taken to refer to the kind of services that the nurse
will render in the companys premises and to its employees, not the manner of his engagement.
The existence of an independent and permissible contractor relationship is generally established by considering the
following determinants: whether the contractor is carrying on an independent business; the nature and extent of the
work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified
piece of work; the control and supervision of the work to another; the employers power with respect to the hiring,
firing and payment of the contractors workers; the control of the premises; the duty to supply the premises, tools,
appliances, materials and labor; and the mode, manner and terms of payment.
On the other hand, existence of an employer- employee relationship is established by the presence of the following
determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by
whatever means; and (4) the power to control the workers conduct, with the latter assuming primacy in the overall
consideration.

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor.
That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does not
necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic
and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangrilas principal business operation of hotels and restaurants.
As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and
other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff with
minimum benefit payable at 12 times the employees last drawn salary, as well as value added taxes and withholding
taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-las guests
who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS
premium as well as their wages if they were not indeed her employees.
With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, Clinic
Policies and Employee Manual claimed to have been prepared by respondent doctor exists, to which petitioners gave
their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said
document, and not the employee manual being followed by Shangri-las regular workers, governs how they perform
their respective tasks and responsibilities.
In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners employer.

RIMO E. CAONG, JR., ALEXANDER J.

TRESQUIO, and LORIANO D. DALUYON,
Petitioners- versus AVELINO REGUALOS,Respondent.
Topic: Wage Enforcement and Recovery
***Despite my best efforts, I could not find an issue squarely on wage enforcement and
recovery***
Is the policy of suspending drivers pending payment of arrears in their boundary
obligations reasonable?
Facts: Petitioners Primo E. Caong, Jr. (Caong), Alexander J. Tresquio (Tresquio), and
Loriano D. Daluyon (Daluyon) were employed by respondent Avelino Regualos under a
boundary agreement, as drivers of his jeepneys. In November 2001, they filed separate
complaints1[2] for illegal dismissal against respondent who barred them from driving the
vehicles due to deficiencies in their boundary payments.
Caong was hired by respondent in September 1998 and became a permanent driver
sometime in 2000. Tresquio was employed by respondent as driver in August 1996. He
became a permanent driver in 1997. On the other hand, Daluyon started working for
respondent in March 1998. He became a permanent driver in July 1998.
During the mandatory conference, respondent manifested that petitioners were not
dismissed and that they could drive his jeepneys once they paid their arrears. Petitioners,
however, refused to do so.
Petitioners Argument: Petitioners averred that they were illegally dismissed by
respondent without just cause. They maintained that respondent did not comply with due
process requirements before terminating their employment, as they were not furnished
notice apprising them of their infractions and another informing them of their dismissal.
Petitioners questioned respondents policy of automatically dismissing the drivers who fail to
remit the full amount of the boundary as it allegedly (a) violates their right to due process;
(b) does not constitute a just cause for dismissal; (c) disregards the reality that there are
days when they could not raise the full amount of the boundary because of the scarcity of
passengers.
Respondents Argument: In his Position Paper, respondent alleged that petitioners were
lessees of his vehicles and not his employees; hence, the Labor Arbiter had no jurisdiction.
He claimed that he noticed that some of his lessees, including petitioners, were not fully
paying the daily rental of his jeepneys. In a list which he attached to the Position Paper, it
was shown that petitioners had actually incurred arrears since they started working. The list
showed that Caongs total arrears amounted to P10,315.00, that of Tresquio was
P10,760.00, while that of Daluyon was P6,890.00. He made inquiries and discovered that
his lessees contracted loans with third parties and used the income of the jeepneys in
1
paying the loans. Thus, on November 4, 2001, he gathered all the lessees in a meeting and
informed them that, effective November 5, 2001, those who would fail to fully pay the daily
rental would not be allowed to rent a jeepney on the following day. He explained to them
that the jeepneys were acquired on installment basis, and that he was paying the monthly
amortizations through the lease income. Most of the lessees allegedly accepted the
condition and paid their arrears. Petitioners, however, did not settle their arrears. Worse,
their remittances were again short of the required boundary fee. Respondent stressed that,
during the mandatory conference, he manifested that he would renew his lease with
petitioners if they would pay the arrears they incurred during the said dates.
The labor arbiter, the NLRC and the CA ruled that there was an employer employee
relationship, but no termination and thus ruled in favor of RESPONDENT.
ISSUE: Is the act of preventing the drivers from driving the jeepneys pending payment of
their arrears legal?

Ruling: (The SC heavily quoted the CA being in agreement with its decision)
On the existence of ER-EE relationship:
It is already settled that the relationship between jeepney owners/operators and
jeepney drivers under the boundary system is that of employer-employee and not of lessorlessee.
The fact that the drivers do not receive fixed wages but only get the amount in
excess of the so-called boundary that they pay to the owner/operator is not sufficient to
negate the relationship between them as employer and employee.
On whether or not there was termination:
The employer-employee relationship of the parties has not been severed, but merely
suspended when respondent refused to allow petitioners to drive the jeepneys while there
were unpaid boundary obligations. The fact that it was within the power of petitioners to
return to work is proof that there was no termination of employment. The condition that
petitioners should first pay their arrears only for the period of November 5-9, 2001 before
they can be readmitted to work is neither impossible nor unreasonable if their total unpaid
boundary obligations and the need to sustain the financial viability of the employers
enterprisewhich would ultimately redound to the benefit of the employeesare taken into
consideration.
As it was, the suspension dragged on for years because of petitioners stubborn
refusal to pay. It would have been different if petitioners complied with the condition and
respondent still refused to readmit them to work. Then there would have been a clear act of
dismissal. But such was not the case. Instead of paying, petitioners even filed a complaint
for illegal dismissal against respondent.
On due process:
Petitioners were not denied the right to due process. It pointed out that the case
does not involve a termination of employment; hence, the strict application of the twinnotice
rule is not warranted. What is important is that petitioners were given the
opportunity to be heard. The meeting conducted by respondent on November 4, 2001
served as sufficient notice to petitioners. During the said meeting, respondent informed his
employees, including petitioners, to strictly comply with the policy regarding remittances
and warned them that they would not be allowed to take out the jeepneys if they did not
remit the full amount of the boundary. Demonstrating their obstinacy, petitioners, on the
days immediately following the implementation of the policy, incurred deficiencies in their
boundary remittances.
It is acknowledged that an employer has free rein and enjoys a wide latitude of
discretion to regulate all aspects of employment, including the prerogative to instill
discipline on his employees and to impose penalties, including dismissal, if warranted, upon
erring employees. This is a management prerogative. Indeed, the manner in which
management conducts its own affairs to achieve its purpose is within the managements
discretion. The only limitation on the exercise of management prerogative is that the
policies, rules, and regulations on work-related activities of the employees must always be
fair and reasonable, and the corresponding penalties, when prescribed, commensurate to
the offense involved and to the degree of the infraction.
On the argument that the the policy is unsound as it does not consider the times when
passengers are scarce and the drivers are not able to raise the amount of the boundary:
Petitioners concern relates to the implementation of the policy, which is another
matter. A company policy must be implemented in such manner as will accord social justice
and compassion to the employee. In case of noncompliance with the company policy, the

employer must consider the surrounding circumstances and the reasons why the employee
failed to comply. When the circumstances merit the relaxation of the application of the
policy, then its noncompliance must be excused.
In the present case, petitioners merely alleged that there were only few passengers
during the dates in question. Such excuse is not acceptable without any proof or, at least,
an explanation as to why passengers were scarce at that time. It is simply a bare allegation,
not worthy of belief. We also find the excuse unbelievable considering that petitioners
incurred the shortages on separate days, and it appears that only petitioners failed to remit
the full boundary payment on said dates.
Under a boundary scheme, the driver remits the boundary, which is a fixed
amount, to the owner/operator and gets to earn the amount in excess thereof. Thus, on a
day when there are many passengers along the route, it is the driver who actually benefits
from it. It would be unfair then if, during the times when passengers are scarce, the
owner/operator will be made to suffer by not getting the full amount of the boundary.
Unless clearly shown or explained by an event that irregularly and negatively affected the
usual number of passengers within the route, the scarcity of passengers should not excuse
the driver from paying the full amount of the boundary.

ATOK BIG WEDGE COMPANY, INC., PETITIONER, VS. JESUS P. GISON,

RESPONDENT.
Topic: Basic Principles
Facts:
Respondent Jesus P. Gison was engaged as part-time consultant on retainer basis by petitioner Atok Big Wedge Company, Inc. As a
consultant on retainer basis, respondent assisted petitioner's retained legal counsel with matters pertaining to the prosecution of
cases against illegal surface occupants within the area covered by the company's mineral claims. Respondent was likewise tasked to
perform liaison work with several government agencies, which he said was his expertise. Petitioner did not require respondent to
report to its office on a regular basis, except when occasionally requested by the management to discuss matters needing his
expertise as a consultant. As payment for his services, respondent received a retainer fee of P3,000.00 a month,[3] which was
delivered to him either at his residence or in a local restaurant. The parties executed a retainer agreement, but such agreement was
misplaced and can no longer be found. The said arrangement continued for the next eleven years. Sometime thereafter, since
respondent was getting old, he requested that petitioner cause his registration with the Social Security System (SSS), but petitioner
did not accede to his request. Respondent filed a Complaint[4] with the SSS against petitioner for the latter's refusal to cause his
registration with the SSS. On the same date, respondent was advised that petitioner is terminating his retainer contract with the
company since his services are no longer necessary.
Issue:
Existence of employer-employee relationship
Ruling:
To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to wit:
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employee's conduct, or the so-called "control test."[18] Of these four, the last one is the most important.[19] The socalled "control test" is commonly regarded as the most crucial and determinativeindicator of the presence or absence of an
employer-employee relationship. Under the control test, an
employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only
the end achieved, but also the manner and means to be used in reaching that end.[20] Applying the aforementioned test, an
employer-employee relationship is apparently absent in the case at bar. Among other things, respondent was not required to report
everyday during regular office hours of petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a
local restaurant. More importantly, petitioner did not prescribe the manner in which respondent would accomplish any of the tasks
in which his expertise as a liaison officer was needed; respondent was left alone and given the freedom to accomplish the tasks
using his own means and method. Respondent was assigned tasks to perform, but petitioner did not control the manner and
methods by which respondent performed these tasks. Verily, the absence of the element of control on the part of the petitioner
engenders a conclusion that he is not an employee of the petitioner.
Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee of petitioner. The appellate
court's premise that regular employees are those who perform activities which are desirable and necessary for the business of the
employer is not determinative in this case. In fact, any agreement may provide that one party shall render services for and in behalf
of another, no matter how necessary for the latter's business, even without being hired as an employee.[23] Hence, respondent's
length of service and petitioner's repeated act of assigning respondent some tasks to be performed did not result to respondent's
entitlement to the rights and privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years, he still cannot be considered
as a regular employee of petitioner. Article 280 of the Labor Code, in which the lower court used to buttress its findings that
respondent became a regular employee of the petitioner, is not applicable in the case at bar. Indeed, the Court has ruled that said
provision is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between
two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to
certain benefits, to join or form a union, or to security of tenure; it does not apply where the existence of an employment
relationship is in dispute.[24] It is, therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in determining
whether an employer-employee relationship exists between respondent and the petitioner
Considering that there is no employer-employee relationship between the parties, the termination of respondent's services by the
petitioner after due notice did not constitute illegal dismissal warranting his reinstatement and the payment of full backwages,
allowances and other benefits.

JOSE MEL BERNARTE vs. PHILIPPINE BASKETBALL ASSOC, ET. AL, G.R. No.
192084, September 14, 2011
FACTS: Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited
to join the PBA as referees. During the leadership of Commissioner Emilio Bernardino, they
were made to sign contracts on a year-to-year basis. During the term of Commissioner Eala,
however, changes were made on the terms of their employment.
Complainant Bernarte, for instance, was not made to sign a contract during the first
conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It was
only during the second conference when he was made to sign a one and a half month
contract for the period July 1 to August 5, 2003.
On January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory performance
on and off the court. It was a total shock for Bernarte who was awarded Referee of the year
in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order of
Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of
referees in February 2001. On March 1, 2001, he signed a contract as trainee. Beginning
2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003, respondent
Martinez issued a memorandum to Guevarra expressing dissatisfaction over his questioning
on the assignment of referees officiating out-of-town games. Beginning February 2004, he
was no longer made to sign a contract.
Respondents aver, on the other hand, that Complainants were not illegally dismissed
because they were not employees of the PBA. Their respective contracts of retainer were
simply not renewed. PBA had the prerogative of whether or not to renew their contracts,
which they knew were fixed.4
ISSUE: whether petitioner is an employee of respondents, which in turn determines
whether petitioner was illegally dismissed.
RULING: The existence of an employer-employee relationship is ultimately a question of
fact. As a general rule, factual issues are beyond the province of this Court. However, this
rule admits of exceptions, one of which is where there are conflicting findings of fact
between the Court of Appeals, on one hand, and the NLRC and Labor Arbiter, on the other,
such as in the present case.18
To determine the existence of an employer-employee relationship, case law has
consistently applied the four-fold test, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employee on the means and methods by which the work is
accomplished. The so-called control test is the most important indicator of the presence
or absence of an employer-employee relationship.19
In this case, PBA admits repeatedly engaging petitioners services, as shown in the retainer
contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as
stipulated in the retainer contract. PBA can terminate the retainer contract for petitioners
violation of its terms and conditions.
However, respondents (PBA) argue that the all-important element of control is lacking in
this case, making petitioner an independent contractor and not an employee of
respondents.
Petitioner contends otherwise. Petitioner asserts that he is an employee of respondents
since the latter exercise control over the performance of his work. Petitioner cites the
following stipulations in the retainer contract which evidence control: (1) respondents
classify or rate a referee; (2) respondents require referees to attend all basketball games
organized or authorized by the PBA, at least one hour before the start of the first game of
each day; (3) respondents assign petitioner to officiate ballgames, or to act as alternate
referee or substitute; (4) referee agrees to observe and comply with all the requirements of
the PBA governing the conduct of the referees whether on or off the court; (5) referee

agrees (a) to keep himself in good physical, mental, and emotional condition during the life
of the contract; (b) to give always his best effort and service, and loyalty to the PBA, and
not to officiate as referee in any basketball game outside of the PBA, without written prior
consent of the Commissioner; (c) always to conduct himself on and off the court according
to the highest standards of honesty or morality; and (6) imposition of various sanctions for
violation of the terms and conditions of the contract.
The foregoing stipulations hardly demonstrate control over the means and methods by
which petitioner performs his work as a referee officiating a PBA basketball game. The
contractual stipulations do not pertain to, much less dictate, how and when petitioner will
blow the whistle and make calls. On the contrary, they merely serve as rules of conduct or
guidelines in order to maintain the integrity of the professional basketball league. As
correctly observed by the Court of Appeals, how could a skilled referee perform his job
without blowing a whistle and making calls? x x x [H]ow can the PBA control the
performance of work of a referee without controlling his acts of blowing the whistle and
making calls?20
In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined the relationship
between a television and radio station and one of its talents, the Court held that not all rules
imposed by the hiring party on the hired party indicate that the latter is an employee of the
former. The Court held:
We find that these general rules are merely guidelines towards the achievement of
the mutually desired result, which are top-rating television and radio programs that
comply with standards of the industry. We have ruled that:
Further, not every form of control that a party reserves to himself over the conduct
of the other party in relation to the services being rendered may be accorded the
effect of establishing an employer-employee relationship. The facts of this case fall
squarely with the case of Insular Life Assurance Co., Ltd. v. NLRC. In said case, we
held that:
Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the means
or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The first,
which aim only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used to achieve it.22
We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or
decision is to be made. The referees decide whether an infraction was committed, and the
PBA cannot overrule them once the decision is made on the playing court.
The referees are the only, absolute, and final authority on the playing court. Respondents or
any of the PBA officers cannot and do not determine which calls to make or not to make and
cannot control the referee when he blows the whistle because such authority exclusively
belongs to the referees. The very nature of petitioners job of officiating a professional
basketball game undoubtedly calls for freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an independent contractor:
(1) the referees are required to report for work only when PBA games are scheduled, which
is three times a week spread over an average of only 105 playing days a year, and they
officiate games at an average of two hours per game; and (2) the only deductions from the
fees received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per day
for five days a week, petitioner is required to report for work only when PBA games are
scheduled or three times a week at two hours per game. In addition, there are no
deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are
the usual deductions from employees salaries. These undisputed circumstances buttress the
fact that petitioner is an independent contractor, and not an employee of respondents.

Furthermore, the applicable foreign case law declares that a referee is an independent
contractor, whose special skills and independent judgment are required specifically for such
position and cannot possibly be controlled by the hiring party.
In Yonan v. United States Soccer Federation, Inc.,23 the United States District Court of
Illinois held that plaintiff, a soccer referee, is an independent contractor, and not an
employee of defendant which is the statutory body that governs soccer in the United States.
As such, plaintiff was not entitled to protection by the Age Discrimination in Employment
Act. The U.S. District Court ruled:
Generally, if an employer has the right to control and direct the work of an
individual, not only as to the result to be achieved, but also as to details by which
the result is achieved, an employer/employee relationship is likely to exist. The
Court must be careful to distinguish between controlling the conduct of another
party contracting party by setting out in detail his obligations consistent with the
freedom of contract, on the one hand, and the discretionary control an employer
daily exercises over its employees conduct on the other.
Yonan asserts that the Federation closely supervised his performance at each
soccer game he officiated by giving him an assessor, discussing his performance, and
controlling what clothes he wore while on the field and traveling. Putting aside that
the Federation did not, for the most part, control what clothes he wore, the
Federation did not supervise Yonan, but rather evaluated his performance after
matches. That the Federation evaluated Yonan as a referee does not mean that he
was an employee. There is no question that parties retaining independent
contractors may judge the performance of those contractors to determine if the
contractual relationship should continue. x x x
It is undisputed that the Federation did not control the way Yonan refereed his
games. He had full discretion and authority, under the Laws of the Game, to call the
game as he saw fit. x x x In a similar vein, subjecting Yonan to qualification
standards and procedures like the Federations registration and training requirements
does not create an employer/employee relationship. x x x
A position that requires special skills and independent judgment weights in favor of
independent contractor status. x x x Unskilled work, on the other hand, suggests an
employment relationship. x x xHere, it is undisputed that soccer refereeing,
especially at the professional and international level, requires a great deal of skill
and natural ability. Yonan asserts that it was the Federations training that made
him a top referee, and that suggests he was an employee. Though substantial
training supports an employment inference, that inference is dulled significantly or
negated when the putative employers activity is the result of a statutory
requirement, not the employers choice. x x x
In McInturff v. Battle Ground Academy of Franklin,24 it was held that the umpire
was not an agent of the Tennessee Secondary School Athletic Association
(TSSAA), so the players vicarious liability claim against the association should be
dismissed. In finding that the umpire is an independent contractor, the Court of
Appeals of Tennesse ruled:
The TSSAA deals with umpires to achieve a result-uniform rules for all baseball
games played between TSSAA member schools. The TSSAA does not supervise
regular season games. It does not tell an official how to conduct the game beyond
the framework established by the rules. The TSSAA does not, in the vernacular of the
case law, control the means and method by which the umpires work.
In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that
petitioner is an employee of the former. For a hired party to be considered an employee, the
hiring party must have control over the means and methods by which the hired party is to
perform his work, which is absent in this case. The continuous rehiring by PBA of petitioner
simply signifies the renewal of the contract between PBA and petitioner, and highlights the

satisfactory services rendered by petitioner warranting such contract renewal. Conversely, if

PBA decides to discontinue petitioners services at the end of the term fixed in the contract,
whether for unsatisfactory services, or violation of the terms and conditions of the contract,
or for whatever other reason, the same merely results in the non-renewal of the contract,
as in the present case. The non-renewal of the contract between the parties does not
constitute illegal dismissal of petitioner by respondents.
WHEREFORE, we DENY the petition and AFFIRM the assailed decision of the Court of
Appeals.

LIRIO v. GENOVIA
G.R. No. 169757 November 23, 2011
petitioners
Cesar C. Lirio, doing business under the name and style of CELKOR AD SONICMIX
respondents
Wilmer D. Genovia
summary
Studio manager + composer. Genovia was terminated because he did not agree with the small compensation scheme
proposed by Lirio. The court held that they have an employer-employee relationship and that LA & CA is correct

Genovia was illegally dismissed

.
facts of the case
- July 9, 2002: Respondent Genovia filed a complaint against Petitioner Lirio and/or Celkor Ad Sonic mix Recording Studio
for illegal dismissal, non-payment of commission and award of moral and exemplary damages.- In his Position Paper,
respondent Genovia alleged, among others, that on August 15, 2001, he was hired as
studio manager
by petitioner Lirio. He was employed to manage and operate Celkor and to promote and sell the recording studio's
services to music enthusiasts and other prospective clients. He received a monthly salary of P7k. They also agreed that
he was entitled to an additional commission of P100 per hour as recording technician whenever a client uses the studio
for recording, editing or any related work.- Respondent stated that a few days after he started working as a studio
manager, petitioner approached him and told him about his
project to produce an album
for his 15y.o. daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked respondent to
compose and arrange songs
for Celine and promised that he (Lirio) would draft a contract to assure respondent of his compensation for such
services. As agreed upon, the additional services that respondent would render included composing and arranging
musical scores only, while the
technical aspect in producing the album, such as digital editing, mixing and sound engineering would be performed by
respondent in his capacity as studio manager
for which he was paid on a monthly basis. Respondent then started making the album.- Genovia alleged that before the
end of Sept 2001, he reminded petitioner about his compensation as composer and arranger of the album. Petitioner
verbally assured him that he would be duly

compensated. On Feb 26, 2002 (after the carrier single was already aired in over the radio on Feb 22), respondent again
reminded petitioner about the contract on his compensation as composer and arranger of the album. Petitioner told
respondent that
since he was practically a nobody and had proven nothing yet in the music industry, respondent did not deserve a high
compensation, and he should be thankful that he was given a job to feed his family
(kapal ng mukha!). Petitioner informed respondent that he was entitled only to 20% of the net profit, and not of the
gross sales of the album, and that the salaries he received and would continue to receive as studio manager of Celkor
would be deducted from the said 20% net profit share.- Respondent objected and insisted that he be properly
compensated. On March 14, 2002, petitioner verbally terminated respondents services, and he was instructed not to
report for work.
Respondent asserts that he was illegally dismissed as he was terminated without any valid grounds, and no hearing was
conducted before he was terminated, in violation of his constitutional right to due process. Having worked for more
than six months, he was already a regular employee. Although he was a so called studio manager, he had no
managerial powers, but was merely an ordinary employee.
Respondents evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which was certified correct by
petitioner,and Petty Cash Vouchers evidencing receipt of payroll payments by respondent from Celkor.- LA: Genovia is
illegally dismissed. NLRC: reversed. CA: reversed and reinstated LA decision. Defense (just in case itanong ni Maam
pero baseless to kasi wala nama ng evidence): Lirio stated in his Position Paper that respondent was not hired as studio
manager, composer, technician or as an employee in any other capacity of Celkor. Respondent could not have been
hired as a studio manager, since the recording studio has no personnel except petitioner. He decided to produce an
album for his daughter and established arecording studio, which he named Celkor Ad Sonic mix Recording Studio. He
looked for a composer/arranger who would compose the songs for the said album
found Genovia. Respondent verbally agreed with petitioner to co-produce the album based on the following terms and
conditions: (1) petitioner shall provide all the financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all
the songs; (3)respondent shall act as composer and arranger of all the lyrics and the music of the five songs he already
composed and the revival songs; (4)petitioner shall have exclusive right to market the album; (5) petitioner was entitled
to 60% of the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of the net profit; and (6)
respondent shall be entitled to draw advances of P7,000.00 a month, which shall be deductible from his share of the net
profits and only until such time that the album has been produced. Petitioner asserted that from the aforesaid terms
and conditions, his relationship with respondent is one of an informal partnership under Article 1767 of NCC, since they
agreed to contribute money, property or industry to a common fund with the intention of dividing the profits among
themselves. Hence, petitioner contended that no employer-employee relationship existed between him and the
respondent, and there was no illegal dismissal to speak of.
Issue/s
WON CA erred in reversing and setting aside the decision of the NLRC, and reinstating the decision of the Labor Arbiter
with modification.
NO.

ratio
In petitions for review, only errors of law are generally reviewed by this Court. This rule, however, is not ironclad.
Where the issue is shrouded by a conflict of factual perceptions by the lower court or the lower administrative body, in
this case, the NLRC, this Court is constrained to review the factual findings of the Court of Appeals.
Before a case for illegal dismissal can prosper, it must first be established that an employer-employee relationship
existed between petitioner and respondent.
The elements to determine the existence of an employment relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employees conduct. The most important element is the employers control of the
employees conduct, not only as to the result of the work to be done, but also as to the means and methods to
accomplish it.t is settled that no particular form of evidence is required to prove the existence of an employer-employee
relationship.
Any competent and relevant evidence to prove the relationship may be admitted. The evidence presented by Genovia
(payroll + petty cash vouchers) showed that petitioner hired respondent as an employee and he was paid monthly
wages of P7,000. Petitioner wielded the power to dismiss as respondent stated that he was verbally dismissed by
petitioner, and respondent, thereafter, filed an action for illegal dismissal against petitioner. The power of control refers
merely to the existence of the power.
It is not essential for the employer to actually supervise the performance of duties of the employee, as it is sufficient
that the former has a right to wield the power.
Nevertheless, petitioner stated in his Position Paper that it was agreed that he would help and teach respondent how to
use the studio equipment. In such case, petitioner certainly had the power to check on the progress and work of
respondent. On the other hand, petitioner failed to prove that his relationship with respondent was one of partnership.
Such claim was not supported by any written agreement. The Court notes that in the payroll dated July 31, 2001 to
March 15, 2002, there were deductions from the wages of respondent for his absence from work, which negates
petitioners claim that the wages paid were advances for respondents work in the partnership. It is a well-settled
doctrine, that if doubts exist between the evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter. (Nicario v NLRC)Court agrees with the CA that the evidence presented by the parties
showed that an employer-employee relationship existed between petitioner and respondent. Petitioner failed to comply
with legal requirements (valid cause for termination + due process); hence, the CA correctly affirmed the LAs finding
that respondent was illegally dismissed, and entitled to the payment of backwages, and separation pay in lieu of
reinstatement.

Jao v. BCC Products

PETITIONER Charlie Jao alleged that respondents BCC Product Sales, Inc. (BCC) and Terrance Ty employed him as a
comptroller. On Oct. 19, 1995, the security guards of BCC barred him from entering its premises. Respondent BCC
countered that petitioner was not its employee but that of Sobien Food Corp. (SFC), its major creditor and supplier. SFC
had posted him as its comptroller in BCC to oversee BCCs finance and business operations and to look after SFCs
interests or investments in BCC. Which contention is more meritorious?
Ruling: That of BCC The Supreme Courts (SC) perusal of the affidavit of petitioner compels a conclusion similar to that
reached by the Court of Appeals (CA) and the Labor Arbiter to the effect that the affidavit supported the contention that
petitioner had really worked in BCC as SFCs representative. It does seem more natural and more believable that
petitioners affidavit was referring to his employment by SFC even while he was reporting to BCC as a comptroller in
behalf of SFC. As respondents pointed out, it was implausible for SFC to still post him to oversee and supervise the
collections of accounts receivables due from BCC beyondDecember1995 if, as he insisted, BCC had already illegally
dismissed him and had even prevented him from entering the premises of BCC. Given the patent animosity and strained
relations between him and respondents in such circumstances, indeed, how could he still efficiently perform in behalf of
SFC the essential responsibility to oversee and supervise collections at BCC? Surely, respondents would have
vigorously objected to any arrangement with SFC involving him. We note that petitioner executed the affidavit in March
1996 to refute a statement by himself made in his own affidavit dated Dec. 11, 1995 to the effect that petitioner had
illegally appropriated some checks without authority from BCC. Petitioner thereby sought to show that they had the
authority to receive the checks pursuant to the arrangements between SFC and BCC. This showing would aid in fending
off the criminal charge respondents filed against him arising from his mishandling of the checks. Naturally, the
circumstances petitioner adverted to in his March 1996 affidavit concerned those occurring before December 11,
1995,the same period when he actually worked as comptroller in BCC (Charlie Jao vs. BCC Products Sales Inc. and
Terrance Ty, G.R. No. 163700, April 18, 2012)

Jao v. BCC Products

PETITIONER Charlie Jao alleged that respondents BCC Product Sales, Inc. (BCC) and Terrance Ty employed him as a
comptroller. On Oct. 19, 1995, the security guards of BCC barred him from entering its premises. Respondent BCC
countered that petitioner was not its employee but that of Sobien Food Corp. (SFC), its major creditor and supplier. SFC
had posted him as its comptroller in BCC to oversee BCCs finance and business operations and to look after SFCs
interests or investments in BCC. Which contention is more meritorious?
Ruling: That of BCC The Supreme Courts (SC) perusal of the affidavit of petitioner compels a conclusion similar to that
reached by the Court of Appeals (CA) and the Labor Arbiter to the effect that the affidavit supported the contention that
petitioner had really worked in BCC as SFCs representative. It does seem more natural and more believable that
petitioners affidavit was referring to his employment by SFC even while he was reporting to BCC as a comptroller in
behalf of SFC. As respondents pointed out, it was implausible for SFC to still post him to oversee and supervise the
collections of accounts receivables due from BCC beyondDecember1995 if, as he insisted, BCC had already illegally
dismissed him and had even prevented him from entering the premises of BCC. Given the patent animosity and strained
relations between him and respondents in such circumstances, indeed, how could he still efficiently perform in behalf of
SFC the essential responsibility to oversee and supervise collections at BCC? Surely, respondents would have
vigorously objected to any arrangement with SFC involving him. We note that petitioner executed the affidavit in March
1996 to refute a statement by himself made in his own affidavit dated Dec. 11, 1995 to the effect that petitioner had
illegally appropriated some checks without authority from BCC. Petitioner thereby sought to show that they had the
authority to receive the checks pursuant to the arrangements between SFC and BCC. This showing would aid in fending
off the criminal charge respondents filed against him arising from his mishandling of the checks. Naturally, the
circumstances petitioner adverted to in his March 1996 affidavit concerned those occurring before December 11,
1995,the same period when he actually worked as comptroller in BCC (Charlie Jao vs. BCC Products Sales Inc. and
Terrance Ty, G.R. No. 163700, April 18, 2012)