[G.R. No. 103606.

October 13, 1999]

RELIGIOUS OF THE VIRGIN MARY, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMI
SSION, COLEGIO DE SAN PASCUAL BAYLON
As this Court has consistently ruled, the power of control is the most decisive
factor[17] in determining the existence of an employer-employee relationship.
In Encyclopedia Britannica (Phils.), Inc. v. NLRC,[18] we held:
In determining the existence of an employer-employee relationship the following
elements must be present: (1) selection and engagement of the employee; (2) paym
ent of wages; (3) power of dismissal; and (4) the power to control the employee s
conduct. Of the above, control of employee s conduct is commonly regarded as the
most crucial and determinative indicator of the presence or absence of an employ
er-employee relationship. Under the control test, an employer-employee relation
ship exists where the person for whom the services are performed reserves the ri
ght to control not only the end to be achieved, but also the manner and means to
be used in reaching that end.
In this case, CDSPB reserved the right to control and supervise the operations o
f the Girls Department. As noted by the labor arbiter himself and affirmed by th
e NLRC, although CDSPB actually exercised minimal supervision over petitioner, [i
t] could exercise substantial supervision and control as it did when [it] preter
minated the Agreement. There was, therefore, no basis in finding that petitioner
had a greater degree of autonomy and independence in running the affairs of the sc
hool. The presence of the school director, whose vast powers have already been
noted, negates any suggestion or semblance of autonomy.
Nor is there any merit in the claim that actual and effective control was exercise
d by petitioner since the designation of the parish priest as director was a mere
formality, as he did perform functions which are purely ministerial and figurat
ive in nature. [19] Time and again we have held that the control test only requires t
he existence of the right to control the manner of doing the work not necessaril
y the actual exercise of the power by him, which he can delegate. [20] Indeed, alt
hough the letters of appointment were signed by the principal/representative of
petitioner, they bore the name/letterhead of CDSPB and clearly indicated therein
that the employees were hired as teachers/personnel by CDSPB, and not by RVM.
Moreover, CDSPB itself admits that its name not petitioner s appears in the employ
ees payroll ledger cards.[21]
One other crucial fact to consider is that private respondents-complainants cont
inued to render services beyond April 10, 1987, the termination date of the Agre
ement. If they were employees of petitioner and not of CDSPB, their services sh
ould have been terminated the moment the Agreement was no longer in effect. Ins
tead, CDSPB continued to honor their respective employment contracts/appointment
papers and avail of their services even after petitioner turned over the school s
administration to CDSPB. Indeed, it does not appear that there was a break or
change in the employment status of private respondents-complainants, neither are
they claiming separation pay from petitioner, unlike in cases where there is a
supposed change in employers.[22]
Based on the Agreement and other evidence on record, it thus appears that petiti
oner was merely the agent or administrator of CDSPB, and that private respondent
s are its employees. In Ponce v. NLRC,[23] this Court held:
Under Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing the Labo
r Code, an independent contractor is one who undertakes job contracting, i.e., a p
erson who (a) carries on an independent business and undertakes the contract wor
k on his own account under his own responsibility according to his own manner an
d method, free from the control and direction of his employer or principal in al
l matters connected with the performance of the work except as to the results th
ereof, and (b) has substantial capital or investment in the form of tools, equip
ment, machineries, work premises, and other materials which are necessary in the
conduct of the business. Jurisprudential holdings are to the effect that in de
termining the existence of an independent contractor relationship, several facto
rs might be considered such as, but not necessarily confined to, whether or not
the contractor is carrying on an independent business; the nature and extent of
the work; the skill required; the term and duration of the relationship; the rig
ht to assign the performance of specified pieces of work, the control and superv
ision of the work to another; the employer s power with respect to the hiring, fir
ing and payment of the contractor s workers; the control of the premises; the duty
to supply premises, tools, appliances, materials and labor; and the mode, manne
r and terms of payment.
As above stated, petitioner was subject to the control and supervision of CDSPB
in running the Girls Department. Petitioner has not been shown to have substanti
al capital or investment necessary in the conduct of the business. Under the Ag
reement, the ownership of the parcel of land and the building thereon remained w
ith CDSPB. Tested by the standards announced in Ponce, petitioner cannot be con
sidered an independent contractor.
CDSPB nonetheless argues that petitioner should be made liable to pay the salari
es for the month of May 1987 since petitioner collected the revenues for school
year 1986-1987 from which said salaries should be sourced.[24] Petitioner, on th
e other hand, claims that it has been its uniform and traditional practice in its
administration of various schools throughout the Philippines to fix the school
budget from May 1 to April 30. [25]
It is unnecessary to pass upon this claim. The fact that CDSPB is the direct an
d only employer of private respondents makes it solely liable to pay the salarie
s for the month of May 1987 to the concerned employees. Whether or not said sal
aries should come from the fees collected by its agent (petitioner) for the prev
ious year is a matter to be litigated between CDSPB and RVM. Here, the only iss
ue is who is the employer of private respondents.
WHEREFORE, the petition is hereby GRANTED and the decision, dated November 18, 1
991, of the National Labor Relations Commission is SET ASIDE. Colegio de San Pa
scual Baylon is ORDERED to pay private respondents their salaries for the month
of May 1987, in the amount of P67,139.84, and P6,713.98 as attorney s fees.
SO ORDERED.
Quisumbing, Buena, and De Leon, Jr., JJ., concur.
Bellosillo, (Chairman), J., on leave on official business.
[17] Orlando Farms Growers Association v. NLRC, G.R. No. 129076, Nov. 25, 1998;
Insular Life Assurance Co., Ltd. v. NLRC, 179 SCRA 459 (1989); Mafinco Trading
Corporation v. Ople, 162 Phil. 195 (1976).
[18] 332 Phil. 1, 6 (1996).
[19] Comment, pp. 8-9; Rollo, pp. 91-92.
[20] Tiu v. NLRC, 254 SCRA 1, 8 (1996).
[21] Comment, p. 6; Rollo, p. 89.
[22] See San Felipe Neri School of Mandaluyong, Inc. v. NLRC, 201 SCRA 478 (199
1).
[23] 293 SCRA 366, 374-375 (1998).
[24] Comment, p. 11; Rollo, p. 94.
[25] Petition, p. 19, Rollo, p. 22.