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CASE #5. CEBU METAL CORP V.

GREGORIO ROBERT SALILING, 2006


FACTS
Respondent (Cebu Metal Corporation) is a corporation engage in buying and selling of scrap iron. In the Bacolod Branch, it has
three regular (3) employees holding such positions as Officer-in-Charge, a scaler and a yardman, whose salaries are paid
directly by its main office in Cebu

Am ong th ose w ork ers w ho pre sen ted for w ork i n t he unl oad ing of s cra p ir on in the area ar e t he
unem ploy ed p e rso n s o r t ri si k ad d ri ve rs stan ding by in the v ic init y som e o f whom a re the h e rein
com pla inant s

T hes e wor kers i nc lud in g t he h ere in com pl ain an ts ar e pa id at th e ra te of P 15. 0 0 per to n f or wh ic h


eac h p ers on can un lo ad at le ast t wo ( 2) to thre e (3 ) ton s p er h our or can ear n at lea st P 240 .00 to
P3 60. 00 in ei ght (8) ho urs if w ork is o nl y a va ila bl e w hic h p ay men t n ece ss ari ly i ncl ude s co st of li vi ng
all ow an ce ( CO L A) and 13 t h - mont h p ay .

The Ba co lod bu yi ng st at io n i s m ai nl y a st oc ky ard wh ere scr ap met al de li vere d by it s s upp li ers ar e


sto ck pi led . T h e sup pl y o f scra p m eta l is no t ste ady as it dep end s upo n m any f act ors, s uc h a s
ava il abi li ty of s upp li es, pr i ce, co mpe ti tio n a nd dem a nd a mon g o ther s.

Wh oev er a re ava il ab le and wh oe ver a re w il lin g t o h el p un lo ad on a p art icu lar o cca si on are hir ed to
unl oad – sea so nal w o rk ers

On 10 Jan uar y 1 997 , r esp onde nt co mpl ai nan ts fi led a C omp la int be fore th e Re gio nal Arb itra ti on
Bra nc h No VI , Ba co lod C it y f or u nder pa yme nt of wa g es and no n - pa yme nt of th e fo llo w ing be nef it s: 1)
13 t h mo nth pa y; 2) ho lid ay pa y; and 3) ser vi ce in ce nt ive l eav e p ay . Al so c lai me d I lle ga l d is mi ssa l

Labor arbiter rendered a decision in favor of the respondent complainants, ordering their reinstatement plus backwages

Und er Art ic le 28 0 o f t he L abor Co de, c omp la ina nt s are r egu lar emp lo yee s si n ce the y ar e “eng age d t o
perfo rm a ct iv it ie s whi ch ar e ne ce ss ary an d d es irab le in th e u sua l bus i n es s or t rade of the em pl oye r ”.
Com pla in ant s job of l oad in g, u nl oad ing an d sto ck pi li ng scra p iron i s n ec es sar y and par t o f t he
bus ine ss of re spo nde nt

pet iti oner c omp any a ppe al ed t he fore go ing de ci si on to t he NL R C. T he NL R C r e vers ed an d s et as ide
the r ul ing o f t he Lab or Arb iter

In a D ec is ion da ted 18 F e bruar y 2 002 , t he Co urt of Ap pea ls an nu lle d a nd se t asi de the a ssa il ed
dec is ion of th e NL RC

IS S U E: Il leg al D is mi ssa l

RU LI NG:

“T he pet ty ca sh vo uc hers sho w tha t c omp la ina nt s ar e no t p ai d o n h our ly or dai ly ba si s a s t he y wou ld


li ke thi s off ic e t o b el ie ve b ut o n “p ak ia o ” or ta sk ba si s a t P15 .00 p er m etri c ton . The re is no ba si s
then for c omp la ina nt s t o c l aim tha t t he y ar e u nde rpa i d s in ce ther e is no mi nim u m w age in th i s t ype of
wor k. Co mpl ai nan ts ’ e arn i ngs de pen d u pon th eir o w n d il ige nce an d spe ed in u nlo adi ng and
sto ck pi lin g scr ap iro n. M or e im por tan tl y, it dep en ds upon th e a va il abi l ity of s cr ap iron to be un lo ade d
and st oc kpi le d. ”

T here ca n b e n o il leg al di s mis sa l t o spe ak of. Be sid e s, com pl ain ant s can not c la im r egu lar it y i n t he
hiri ng ev ery ti me a tr uc k c omes l oad ed w ith s crap m eta l. T hi s is co nfi rmed i n t he Pe tty c as h
Vo uch ers w hi ch are in th e name s o f dif fere nt le ader s wh o a ppor ti on the a m oun t earn ed amo ng hi s
memb ers.
CASE #6. GREAT PACIFIC LIFE ASSURANCE CORPORATION vs. HONORATO JUDICO and NLRC [G.R. No.
73887 December 21, 1989]

FACTS:

On June 09, 1976, Great Pacific Life Assurance Corporation (Grepalife, for brevity) entered into an
agreement of agency with Honorato Judico to become a debit agent to the industrial life agency.

Debit agent-an insurance agent selling/servicing industrial life plans and policy holders.

Industrial life plans-are those whose premiums are payable either daily, weekly or monthly and which
are collectible b the debit agents at the home or any place designated by the policy holder.

As a debit agent, Judico had definite work assignments including but not limited to collections of
premiums from policy holders and selling insurance to prospective clients.

Judico was initially paid P200.00 as allowance for thirteen (13) weeks REGARDLESS OF PRODUCTION
and later a certain percentage denominated as “sales reserve” of his total collections but not lesser than
P200.00.

In September 1981, he was promoted to the position of Zone Supervisor and paid additional
(supervisor’s) allowance fixed at P110,00 per week. However, two months thereafter, he was reverted
to his former position as debit agent, but, for unknown reasons, not paid so-called weekly sales reserve
of at least P200.00.

Finally, on June 28, 1982, he was dismissed by way of termination of his agency contract.

Contentions of the petitioner. a. Judico’s compensation was not based on any fixed number of hours but
was based on actual production.

b. Judico’s compensation, in the form of commissions and bonuses, cannot be construed as salary, but
as a subsidy or way of assistance for transportation and meal expenses of a new debit agent during the
initial period of his training which was fixed for thirteen (13) weeks.

Ruling of the Labor Arbiter (LA) – In favor of Grepalife a. The LA dismissed the complaint on the ground
that no employer-employee relationship exist.

Ruling of the NLRC - In favor of Honorato Judico a. It ruled that Judico is a regular employee as defined
under Article 281 of the Labor Code. Art. 281. Probationary employment. Probationary employment
shall not exceed six (6) months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee who has been
engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a probationary
period shall be considered a regular employee.
Elevated to the SC

RULING:

Salaried employees vs. Registered representatives 1. In Investment Planning Corp. vs. SSS, 21 SCRA 294,
an insurance agent may have two classes of agents who sell its insurance policies. a. Salaried employees
– who keep definite hours and work under the control and supervision of the company. b. Registered
representatives – who works on a commission basis.

 These agents are not required to report for work anytime;

 They do not have to devote their time exclusively to or work exclusively for the company since the
time and effort they spend in their work depend entirely upon their own will and initiative;

 They are not required to account for their time nor submit a report of their activities;

 They shoulder their own selling and transportation expenses; and

 They are paid their commission based on a certain percentage of their sales. Element of control 2. The
test is whether the “employer” controls or has reserved the right to control the “employee” not only as
to the result of the work to be done but also as to the means and methods by which the same is to be
accomplished. 3. In this case, the element of control is evident.

2. The element of control by the petitioner on Judico was very much present.

 The record shows that petitioner Judico received a definite minimum amount per week as his wage
known as "sales reserve" wherein the failure to maintain the same would bring him back to a beginner's
employment with a fixed weekly wage of P 200.00 for thirteen weeks regardless of production.

 He was assigned a definite place in the office to work on when he is not in the field; and in addition to
his canvassing work he was burdened with the job of collection.

 In both cases he was required to make regular report to the company regarding these duties, and for
which an anemic performance would mean a dismissal.

 Conversely faithful and productive service earned him a promotion to Zone Supervisor with additional
supervisor's allowance, a definite amount of P110.00 aside from the regular P 200.00 weekly
"allowance".  Furthermore, his contract of services with petitioner is not for a piece of work nor for a
definite period.

An ORDINARY COMMISSION AGENT works at his own volition or at his own leisure without fear of
dismissal from the company and short of committing acts detrimental to the business interest of the
company or against the latter, whether he produces or not is of no moment as his salary is based on his
production, his anemic performance or even dead result does not become a ground for dismissal.
INSULAR LIFE ASSURANCE V. NLRC AND MELECIO BASIAO (G.R. NO. 84484)

Facts:

Petitioner Insular Life entered into a contract with respondent Basiao where the latter is authorized to
solicit for insurance policies. (SEE CONTRACT IN THE FULL TEXT)

Sometime later, the parties entered into another contract which caused Basiao to organize an agency in
order to fulfill its terms.

The contract being subsequently terminated by petitioner, Basiao sued the latter which prompted also
for the termination of their engagement under the first contract.

Basiao thus filed before the Ministry of Labor seeking to recover alleged unpaid commissions. Petitioner
contends that Basiao is not an employee but an independent contractor for which they have no
obligation to pay said commissions.

The Labor Arbiter found for Basiao ruling that there exists employer-employee relationship between him
and petitioner. NLRC affirmed.

Issue:

Whether or not employer-employee relationship existed between petitioner and Basiao.

Ruling: NO.

In determining the existence of employer-employee relationship, the following elements are generally
considered, namely: (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 — although the latter is
the most important element. It should, however, be obvious that not every form of control that the
hiring party reserves to himself over the conduct of the party hired in relation to the services rendered
may be accorded the effect of establishing an employer-employee relationship between them in the
legal or technical sense of the term.

Rules and regulations governing the conduct of the business are provided for in the Insurance Code and
enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company
to promulgate a set of rules to guide its commission agents in selling its policies that they may not run
afoul of the law and what it requires or prohibits. None of these really invades the agent’s contractual
prerogative to adopt his own selling methods or to sell insurance at his own time and convenience,
hence cannot justifiably be said to establish an employer-employee relationship between him and the
company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the
petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions
should have been litigated in an ordinary civil action.

*In contrast to the case decided by the Court 10 years after, Insular
Life Assurance v. NLRC and Pantaleon De Los Reyes.
CASE #8 21 SCRA 924

CASE #9. Philippine American Life Assurance Co. vs. Ansaldo 234 SCRA 509
CASE #10.

Cosmopolitan Funeral Homes vs. Noli Maalat and NLRC, G.R. No. 86693, 187 SCRA 108,
July 2, 1990 (with EE or independent contractor?) (research again)

Facts:
Sometime in 1962, petitioner Cosmopolitan Funeral Homes, Inc. engaged the services of
private respondent Noli Maalat as a "supervisor" . He was paid on a commission basis of 3.5% of
the amounts actually collected and remitted.
Later in 1987, respondent Maalat was dismissed by the petitioner. Maalat filed a
complaint for illegal dismissal and non-payment of commissions.
Labor Arbiter rendered a decision declaring Maalat's dismissal illegal and ordering the
petitioner to pay separation pay, commission, interests and attorney's fee in the total amount of
P205,571.52.
In an appeal, the National Labor Relations Commission (NLRC), reversed the Arbiter's
action and rendered a new decision
The petitioner's motion for reconsideration was denied, hence, this petition for review before this
Court.

Issue:
WON there exist ER-EE relationship or merely an independent contractor?

Held:
Yes, there is an ER-EE relationship.

The right of control was manifested in the facts and evidence on record which was the
most crucial and determinative indicator of the presence or absence of an employer-employee
relationship. Under this test, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only the end to be achieved,
but also the manner and means to be used in reaching that end.The petitioner has failed to
overcome this factual findings that;
1-The fact that the petitioner imposed and applied its rule prohibiting superiors from engaging in
other funeral business which it considered inimical to company interests proves that it had the
right of control and actually exercised its control over the private respondent. In other words,
Maalat worked exclusively for the petitioner.
2-the private respondent was not allowed to issue his own receipts, nor was he allowed to
directly deduct his commission as truly independent salesmen practice.
3-two other company rules which provide that "negotiation and making of contract with
customers shall be done inside the office". Said rules belie the petitioner's stand that it does not
have control over the means and methods by which the work is accomplished. The control test
has been satisfied.
4-that the petitioner has reported private respondent to the Social Security System as a covered
employee adds strength to the conclusion that Maalat is an employee.

The payment of compensation by way of commission does not militate against the
conclusion that private respondent was an employee. Under Article 97 of the Labor Code,
"wage" shall mean "the renumeration of earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, pace or commission
basis . . .".

Thus, the Court declared that there was an EE-ER 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.

We take exception, therefore, to the grant of separation pay to private respondent.

In Philippine Long Distance Telephone Company (PLDT) v. NLRC, (164 SCRA 671 [1988]), this
Court re-examined, the doctrine in the aforecited Firestone and Soco cases and other previous
cases that employees dismissed for cause are nevertheless entitled to separation pay on the ground
of social and compassionate justice. In abandoning this doctrine, the Court held, and we quote:

. . . We hold that henceforth separation pay shall be allowed as a measure of social


justice only in those instances where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character. Where the reason for
the valid dismissal is, for example, habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be
required to give the dismissed employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect of rewarding
rather than punishing the erring employee for his offense. . . .

The policy of social justice is not intended to countenance wrongdoing simply because it
is committed by the underprivileged. At best it may mitigate the penalty but it certainly will
not condone the offense. Compassion for the poor is an imperative of every humane
society but only when the recipient is not a rascal claiming an undeserved privilege. . . .

Subsequent decisions have abided by this pronouncement. (See Philippine National Construction
Corporation v. National Labor Relations Commission, 170 SCRA 207 [1989]; Eastern Paper Mills,
Inc. v. National Labor Relations Commission, 170 SCRA 597 [1989]; Osias Academy v. National
Labor Relations Commission, G.R. No. 83234, April 18, 1989; and Nasipit Lumber Co., Inc. v.
National Labor Relations Commission, G.R. No. 54424, August 31, 1989.)

Conformably with the above cited PLDT ruling, this Court pronounces that the grant of separation
pay to private respondent Maalat, who was validly terminated for dishonesty, is not justified.

WHEREFORE, the judgment of the National Labor Relations Commission is AFFIRMED


except for the grant of separation pay which is hereby disallowed. Private respondent Maalat is
entitled to unclaimed commissions of P39,344.80 and 2% attorney's fees of P786.89, said amounts
being considered final.

Case #11

AFP MUTUAL BENEFIT ASSOCIATION, INC. VS, NLRC\GR NO. 102199, JANUARY 28, 1997

FACTS

1.Eutiquio Bustamante had been an insurance underwriter of AFP Mutual Benefit Association, Inc.. The Sales
Agent's Agreement between them includes: a.Bustamante shall solicit exclusively for AFPMBAI and shall be bound
by policies, memo circulars, rules and regulations which it may revise, modify orcancel to serve interests and assign
him on other areas on a case to casebasis.b.“There shall be no employer-employee relationship between the
parties, theSALES AGENT being hereby deemed an independent contractor."

2.AFPMBAI dismissed Bustamante for misrepresentation and for simultaneously selling insurance for another life
insurance company in violation of said agreement.

3.At the time of dismissal, Bustamante was entitled to accrued commissions equivalentto P438,835. AFPMBAI
Manager said he is only entitled to P75,000. Relying on thecomputation he signed a quitclaim in favor of
Petioner. Upon release of the check,Bustamante noticed he is legally entitled to P354,769 of commissions. He filed
forthe recovery of the correct amount in the Office of the Insurance Commissioner butwas advised that the DOLE
has jurisdiction over his case. Bustamante filed underthe DOLE.

4.In decision of the case, Bustamante’s dismissal was considered valid thus noseparation pay to be
awarded. However, it granted the recovery of his unpaidcommissions.

5.The Labor arbiter relied on the provision that AFPMBAI may assign Bustamante inother areas and impose quotas
which is an existence of employer-employeerelationship. The decision was affirmed on appeal. Hence the present
petition.ISSUE

Whether or not there exist an employer-employee relationship thus vesting jurisdiction over the case to DOLE.

HELD

The existence of an employer-employee relationship is ultimately a question of fact and that the findings thereon
by the labor arbiter and the National Labor Relations Commissions shall be accorded not only repect but even
finality when supported by substantial evidence.

The Court has applied the "four-fold" test in determining the existence of employer-employee relationship. This tst
considers the following elements: (1) the power to dismiss; and (4) the power to control, the last being the most
important element. The fact that private respondent was required to solicit business exclusively for petitioner
could hardly be considered as control in labor jurisprudence.
Thus, the exclusivity restriction clearly springs from a regulation issued by the Insurance Commission, and not from
an intention by petitioner to establish control over the method and manner by which private respondent shall
accomplish his work. This feature is not meant to change the nature of the relationship between the parties,
nor does it necessarily imbue such relationship with the quality of control envisioned by the law.

Case #12.

Tabas vs. California Manufacturing Co., Inc. [169 SCRA 497, GR 80680]

(Labor Standards – Both employer and labor-only contractor may be liable)

Facts: Petitioners filed a petition in the NLRC for reinstatement and payment of various benefits against California
Manufacturing Company. The respondent company then denied the existence of an employer-employee
relationship between the company and the petitioners.

Pursuant to a manpower supply agreement, it appears that the petitioners prior their involvement with California
Manufacturing Company were employees of Livi Manpower service, an independent contractor, which assigned
them to work as “promotional merchandisers.” The agreement provides that:

California “has no control or supervisions whatsoever over [Livi’s] workers with respect to how they accomplish
their work or perform [Californias] obligation” It was further expressly stipulated that the assignment of workers to
California shall be on a “seasonal and contractual basis”; that “[c]ost of living allowance and the 10 legal holidays
will be charged directly to [California] at cost “; and that “[p]ayroll for the preceding [sic] week [shall] be delivered
by [Livi] at [California’s] premises.”

The petitioners were then made to sign employment contracts with durations of six months, upon the expiration
of which they signed new agreements with the same period, and so on. Unlike regular California employees, who
received not less than P2,823.00 a month in addition to a host of fringe benefits and bonuses, they received P38.56
plus P15.00 in allowance daily.

The petitioners now allege that they had become regular California employees and demand, as a consequence
whereof, similar benefits. They likewise claim that pending further proceedings below, they were notified by
California that they would not be rehired. As a result, they filed an amended complaint charging California with
illegal dismissal.

California admits having refused to accept the petitioners back to work but deny liability therefor for the reason
that it is not, to begin with, the petitioners' employer and that the "retrenchment" had been forced by business
losses as well as expiration of contracts.9 It appears that thereafter, Livi re-absorbed them into its labor pool on a
"wait-in or standby" status. 10

Amid these factual antecedents, the Court finds the single most important issue to be: Whether the petitioners are
California's or Livi's employees.

Held: Yes. The existence of an employer-employee relation cannot be made the subject of an agreement.
Based on Article 106, “labor-only” contractor is considered merely as an agent of the employer, and the liability
must be shouldered by either one or shared by both.

There is no doubt that in the case at bar, Livi performs “manpower services”, meaning to say, it contracts out labor
in favor of clients. We hold that it is one notwithstanding its vehement claims to the contrary, and notwithstanding
the provision of the contract that it is “an independent contractor.”

The nature of one’s business is not determined by self-serving appellations one attaches thereto but by the tests
provided by statute and prevailing case law.

The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided
California with workers to pursue the latter’s own business. In this connection, we do not agree that the
petitioners had been made to perform activities ‘which are not directly related to the general business of
manufacturing,” California’s purported “principal operation activity.” Livi, as a placement agency, had simply
supplied California with the manpower necessary to carry out its (California’s) merchandising activities, using its
(California’s) premises and equipment.

The petitioner's had been charged with "merchandizing [sic] promotion or sale of the products of [California] in the
different sales outlets in Metro Manila including task and occational [sic] price tagging," 24 an activity that is
doubtless, an integral part of the manufacturing business. It is not, then, as if Livi had served as its (California's)
promotions or sales arm or agent, or otherwise, rendered a piece of work it (California) could not have itself done;
Livi, as a placement agency, had simply supplied it with the manpower necessary to carry out its (California's)
merchandising activities, using its (California's) premises and equipment. 25

Neither Livi nor California can therefore escape liability, that is, assuming one exists.

The fact that the petitioners have allegedly admitted being Livi's "direct employees" 26 in their complaints is
nothing conclusive. For one thing, the fact that the petitioners were (are), will not absolve California since liability
has been imposed by legal operation. For another, and as we indicated, the relations of parties must be judged
from case to case and the decree of law, and not by declarations of parties.

The fact that the petitioners have been hired on a "temporary or seasonal" basis merely is no argument
either. As we held in Philippine Bank of Communications v. NLRC, 27 a temporary or casual employee,
under Article 218 of the Labor Code, becomes regular after service of one year, unless he has been
contracted for a specific project. And we cannot say that merchandising is a specific project for the
obvious reason that it is an

It is not that by dismissing the terms and conditions of the manpower supply agreement, we have, hence,
considered it illegal. Under the Labor Code, genuine job contracts are permissible, provided they are
genuine job contracts. But, as we held in Philippine Bank of Communications, supra, when such
arrangements are resorted to "in anticipation of, and for the very purpose of making possible, the
secondment" 30 of the employees from the true employer, the Court will be justified in expressing its
concern. For then that would compromise the rights of the workers, especially their right to security of
tenure.

This brings us to the question: What is the liability of either Livi or California?
The records show that the petitioners bad been given an initial six-month contract, renewed for another
six months. Accordingly, under Article 281 of the Code, they had become regular employees-of-
California-and had acquired a secure tenure. Hence, they cannot be separated without due process of
law.

California resists reinstatement on the ground, first, and as we Id, that the petitioners are not its
employees, and second, by reason of financial distress brought about by "unfavorable political and
economic atmosphere" 31"coupled by the February Revolution." 32 As to the first objection, we reiterate
that the petitioners are its employees and who, by virtue of the required one-year length-of-service, have
acquired a regular status. As to the second, we are not convinced that California has shown enough
evidence, other than its bare say so, that it had in fact suffered serious business reverses as a result
alone of the prevailing political and economic climate. We further find the attribution to the February
Revolution as a cause for its alleged losses to be gratuitous and without basis in fact.

activity related to the day-to-day operations of California.

(1) the manner of selection and engagement of the putative employee; (2) the mode of payment of
wages; (3) the presence or absence of a power of dismissal; and (4) the presence or absence of a
power to control the putative employee's conduct. 14 Of the four, the right-of-control test has been
held to be the decisive factor.

Case # 1

G.R. No. 114733 January 2, 1997


AURORA LAND PROJECTS CORP. Doing business under the name "AURORA PLAZA" and TERESITA T.
QUAZON, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and HONORIO DAGUI, respondents.

FACTS:

Private respondent Honorio Dagui was hired by Doña Aurora Suntay Tanjangco in 1953 to take charge of
the maintenance and repair of the Tanjangco apartments and residential buildings.

He was to perform carpentry, plumbing, electrical and masonry work. Upon the death of Doña Aurora
Tanjangco in 1982, her daughter, petitioner Teresita Tanjangco Quazon, took over the administration of
all the Tanjangco properties.

On June 8, 1991, private respondent Dagui received the shock of his life when Mrs. Quazon suddenly
told him: "Wala ka nang trabaho mula ngayon," 3 on the alleged ground that his work was unsatisfactory.
On August 29, 1991, private respondent, who was then already sixty-two (62) years old, filed a
complaint for illegal dismissal with the Labor Arbiter.

On May 25, 1992, Labor Arbiter rendered judgment, respondents Aurora Plaza and/or Teresita
Tanjangco Quazon are hereby ordered to pay the complainant the total amount of ONE HUNDRED
NINETY FIVE THOUSAND SIX HUNDRED TWENTY FOUR PESOS (P195,624.00) representing complainant's
separation pay and the ten (10%) percent attorney's fees within ten (10) days from receipt of this
Decision.

Aggrieved, petitioners Aurora Land Projects Corporation and Teresita T. Quazon appealed to the
National Labor Relations Commission. The Commission affirmed, with modification, the Labor Arbiter's
decision in a Resolution promulgated on March 16, 1994, in the following manner:
WHEREFORE, in view of the above considerations, let the appealed decision be as it is hereby AFFIRMED with (the)
MODIFICATION that complainant must be paid separation pay in the amount of P88,920.00 instead of
P177,840.00. The award of attorney's fees is hereby deleted. 5

ISSUES:
(1) Whether or not private respondent Honorio Dagui was an employee of petitioners; and (2) If he
were, whether or not he was illegally dismissed.

RULING:

Petitioners insist that private respondent had never been their employee. Since the establishment of
Aurora Plaza, Dagui served therein only as a job contractor.
Honorio Dagui earns a measly sum of P180.00 a day (latest salary) and there was no proof adduced by
the petitioners to show that Dagui was merely a job contractor, and it is absurd to expect that private
respondent, with such humble resources, would have substantial capital or investment in the form of
tools, equipment, and machineries, with which to conduct the business of supplying Aurora Plaza with
manpower and services for the exclusive purpose of maintaining the apartment houses owned by the
petitioners.
The bare allegation of petitioners, without more, that private respondent Dagui is a job contractor has
been disbelieved by the Labor Arbiter and the NLRC. Dagui, by the findings of both tribunals, was an
employee of the petitioners.
Dagui was not compensated in terms of profits for his labor or services like an independent contractor
or job contractor. Rather, he was paid on a daily wage basis at the rate of P180.00. Employees are those
who are compensated for their labor or services by wages rather than by profits.
There are two kinds of regular employees, namely: (1) those who are engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer; and (2) those
who have rendered at least one year of service, whether continuous or broken, with respect to the
activity in which they are employed.
The jobs assigned to private respondent as maintenance man, carpenter, plumber, electrician and
mason were directly related to the business of petitioners as lessors of residential and apartment
buildings. Moreover, such a continuing need for his services by herein petitioners is sufficient evidence
of the necessity and indispensability of his services to petitioners' business or trade.
Private respondent Dagui should likewise be considered a regular employee by the mere fact that he
rendered service for the Tanjangcos for more than one year, that is, beginning 1953 until 1982, under
Doña Aurora; and then from 1982 up to June 8, 1991 under the petitioners, for a total of twenty-nine
(29) and nine (9) years respectively. Owing to private respondent's length of service, he became a
regular employee, by operation of law, one year after he was employed in 1953 and subsequently in
1982.
Petitioners argue, however, that even assuming arguendo that private respondent can be considered an
employee, he cannot be classified as a regular employee. He was merely a project employee whose
services were hired only with respect to a specific job and only while the same exists, thus falling under
the exception of Article 280, paragraph 1 of the Labor Code. Hence, it is claimed that he is not entitled
to the benefits prayed for and subsequently awarded by the Labor Arbiter as modified by the NLRC.

If truly, private respondent was employed as a "project employee," petitioners should have submitted a
report of termination to the nearest public employment office everytime his employment is terminated
due to completion of each project, as required by Policy Instruction No. 20. Throughout the duration of
private respondent's employment as maintenance man, there should have been filed as many reports of
termination as there were projects actually finished, if it were true that private respondent was only a
project worker. Failure of the petitioners to comply with this simple, but nonetheless compulsory,
requirement is proof that Dagui is not a project employee.

The second issue as to whether or not private respondent Dagui was illegally dismissed, the SC ruled
that indeed the Dagui was illegally dismissed.
The twin requirements of notice and hearing constitute the essential elements of due process. This
simply means that the employer shall afford the worker ample opportunity to be beard and to defend
himself with the assistance of his representatives if he so desires.
These mandatory requirements were undeniably absent in the case at bar. Petitioner Quazon dismissed
private respondent on June 8, 1991, without giving him any written notice informing the worker herein
of the cause for his termination. Neither was there any hearing conducted in order to give Dagui the
opportunity to be heard and defend himself. He was simply told: "Wala ka nang trabaho mula ngayon,"
allegedly because of poor workmanship on a previous job.
The undignified manner by which private respondent's services were terminated smacks of absolute
denial of the employee's right to due process and betrays petitioner Quazon's utter lack of respect for
labor. Such an attitude indeed deserves condemnation.
The SC also noted that only an award for separation pay in lieu of reinstatement was made by both the
Labor Arbiter and the NLRC. No back wages were awarded. It must be remembered that back wages and
reinstatement are two reliefs that should be given to an illegally dismissed employee. They are separate
and distinct from each other. In the event that reinstatement is no longer possible, as in this
case, separation pay is awarded to the employee. The award of separation pay is in lieu of reinstatement
and not of back wages. In other words, an illegally dismissed employee is entitled to (1) either
reinstatement, if viable, or separation pay if reinstatement is no longer viable, and (2) back
wages. Payment of back wages is specifically designed to restore an employee's income that was lost
because of his unjust dismissal. On the other hand, payment of separation pay is intended to provide the
employee money during the period in which he will be looking for another employment.
The petition was partly GRANTED and the Resolution of National Labor Relations Commission dated
March 16, 1994 was MODIFIED, that the award of separation pay against the petitioners shall be
reckoned from the date private respondent was re-employed by the petitioners in 1982, until June 8,
1991. In addition to separation pay, full back wages are likewise awarded to private respondent,
inclusive of allowances, and other benefits or their monetary equivalent pursuant to Article 279 of the
Labor Code, as amended by Section 34 of Republic Act No. 6715, computed from the time he was
dismissed on June 8, 1991 up to the finality of this decision, without deducting therefrom the earnings
derived by private respondent elsewhere during the period of his illegal dismissal

Tiu vs.NLRC and de la Cruz 1996 (search again)

Facts
Private respondent, a dispatcher, filed a complaint for illegal dismissal. Petitioner, a land transportation
operator, denied private respondent as his employee, but the labor arbiter ruled the private respondent
was an employee of the petitioner, and thus awarded differentials, 13th month pay and separation pay.
On appeal, NLRC affirmed the labor arbiter’s decision in toto. Th0us, the petition for certiorari citing
NLRC for reckless disregard of the applicable facts and law which amounts to grave abuse of discretion.

Issue(s) (1). Whether private respondent is an employee petitioner?

Held. Yes. Petitioner’s denial that private respondent [de la Cruz] was not his employee for security
reasons is countered by the agreement entered into between private respondents’ father, Chief
Dispatcher, and petitioner. As Chief Dispatcher, de la Cruz(father) was acting under supervisory powers
in behalf of the petitioner, which therefore negates the fact that he is an independent contractor
providing labor only to the petitioner. As Chief Dispatcher, de la Cruz (father) was also tasked in keeping
daily time records (DTR) of the private respondent de la Cruz (son). Private respondent is indeed an
employee by petitioner, as correctly ruled by the labor arbiter and affirmed by the NLRC. The higher
court cannot interfere with questions of fact based on substantial evidence, as the same rule has been
satisfied in the lower tribunals.
Air Material Wing Savings and Loan Association, Inc. vs NLRC
FACTS
Luis S. Salas was appointed "notarial and legal counsel" for Air Material Wings Savings and Loan
Association, Inc. (AMWSLAI) in 1980. The appointment was renewed for three years in an implementing
order dated January 23, 1987, reading as follows:

SUBJECT: Implementing Order on the Reappointment of the Legal Officer

TO: ATTY. LUIS S. SALAS

Per approval of the Board en banc in a regular meeting held on January 21, 1987, you are hereby
reappointed as Notarial and Legal Counsel of this association for a term of three (3) years effective March 1, 1987,
unless sooner terminated from office for cause or as may be deemed necessary by the Board for the interest and
protection of the association.

Aside from notarization of loan & other legal documents, your duties and responsibilities are hereby
enumerated in the attached sheet, per Articles IX, Section 1-d of the by-laws and those approved by the Board en
banc.

Your monthly compensation/retainer's fee remains the same.


This shall form part of your 201 file.

BY AUTHORITY OF THE BOARD:


LUVIN S. MANAY
President & Chief of the Board

AMWSLAI also defined some of his duties, as follows:


1. To act on all legal matters pertinent to his Office.
2. To seek remedies to effect collection of overdue accounts of members without prejudice to initiating court action
to protect the interest of the association.
3. To defend by all means all suit against the interest of the Association.

On January 9, 1990, the company issued another order reminding Salas of the approaching termination
of his legal services under their contract. This prompted Salas to file a complaint with NLRC against
AMWSLAI for separation pay, vacation and sick leave benefits, cost of living allowances, refund of SSS
premiums, moral and exemplary damages, payment of notarial services and attorney's fees.
AMWSLAI moved to dismiss for lack of jurisdiction. The company held that there was no employer-
employee relationship and that Salas’ monetary claims properly fell within the jurisdiction of the regular
courts. They contended that the NLRC is not empowered to adjudicate claims for notarial fees

Issue: Whether or not an employee-employer relationship exists between AMWSLAI and Atty. Salas

Ruling:

Employee-employer relationship exists. The Labor Arbiter has jurisdiction over money claims arising out
of or in connection with the employer-employee relationship or some aspect or incident of such
relationship.
The terms and conditions set out in the letter-contract entered by the parties show that Salas was an
employee of AMWSLAI. His selection as the company counsel was done by the board of directors in one
of its regular meetings. The company paid him a monthly compensation/retainer's fee for his services.
Though his appointment was for a fixed term of three years, the employer reserved its power of
dismissal for cause or as it might deem necessary. AMWSLAI also exercised its power of control over
Salas by defining his duties and functions.
The two classes of lawyers
The Court quoted an earlier case Hydro Resources Contractors Corp. v. Pagalilauan:
A lawyer, like any other professional, may very well be an employee of a private corporation or even of
the government. It is not unusual for a big corporation to hire a staff of lawyers as its in-house counsel,
pay them regular salaries, rank them in its table of organization, and otherwise treat them like its other
officers and employees. At the same time, it may also contract with a law firm to act as outside counsel
on a retainer basis. The two classes of lawyers often work closely together but one group is made up of
employees while the other is not. A similar arrangement may exist as to doctors, nurses, dentists, public
relations practitioners and other professionals.

G.R. No. L-75038 August 23, 1993


ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN BRIZUELA, NORLITO
LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, and
DOMINGO SAGUIT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and BROAD STREET TAILORING and/or
RODOLFO ZAPANTA, respondents.

Facts: Elias Villuga was employed in Broad Street Tailoring as a cutter. He receives monthly salary and
transportation allowance. In addition to his work as a cutter, during the absence of the shop’s manager and assistant
manager, he would be the one distributing the work to the shop’s tailors. He is to make sure that their work
conformed with the pattern he prepared. On the other hand, other petitioners were ironers, repairmen and sewers.
Their salaries are based on every item ironed, repaired or sewn regardless of the time consumed. There are also
allowed to perform their work at home especially when they could no longer cope with the volume of work.

Petitioner Villuga, for four days, failed to report to work allegedly due to illness. He was not able to notify his employer
and the latter considered he abandoned his work. He filed with Regional Office of the Department of Labor for illegal
dismissal and the refusal of his admittance for work is due to his active participation in the union organized by private
respondent’s tailors. He also claimed that he was not paid overtime pay, holiday pay, premium pay for work done on
rest days and holidays, service incentive leave pay and 13th month. Other petitioners also claimed that they were
dismissed from their work because they joined the Philippine Social Security Labor Union (PSSLU). They stopped
working because private respondents gave them few pieces of work to do after learning their membership with
PSSLU.

Labor Arbiter dismissed the complaint except petitioner Villuga’s claim for 13th month pay for the years 1976, 1977
and 1980. The complaints regarding the other eleven petitioners were likewise dismissed for want of jurisdiction. On
appeal, NLRC affirmed the assailed decision. Thus, this is the present petition.

Issue: Whether there is an employee-employer relationship between other eleven petitioners and Broad Street
Tailoring that warrants them a claim for benefits under Labor Code; and when it comes to Villuga, whether his
employment is managerial in character?
Held:

court held that Villuga’s employment is not managerial in character though he distributes and assigns work to
employees during the absence of the manager and assistant manager but such is occasional and not regular.

Another test was of managerial status depends on whether a person possess authority that requires the use of
independent judgment.

In this light, it is obvious that Villuga was hired to be a cutter and not hired to perform managerial functions. He is
therefore not entitled with benefits claimed under Articles 87 (overtime pay and premium pay for holiday and rest day
work), Article 94, (holiday pay), and Article 95 (service incentive leave pay) of the Labor Code. But since he is
uniformly paid, he is entitled from the benefits of holiday pay as held in the case of Insular Bank of America
Employees Union v. Inciong. It was also held that there was no illegal dismissal on the ground of membership on
union. But there was no abandonment that warrants the dismissal. The court held that a sanction was justified and
not dismissal. Instead of reinstatement, Villuga was entitled with separation pay since reinstatement was no longer
possible.

In regards with the other eleven petitioners, the court held that they are not independent contractors. There was an
employee-employer relationship since the four elements were satisfied namely: (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.

The mere fact that petitioners were paid based on piece- rate basis does not mean that they were not employees.
Such was just a method of compensation and does not define the essence of the relation. And though they were
allowed to perform their work in their home does not imply absence of control and supervision. The control test calls
merely for the existence of a right to control the manner of doing the work, not the actual exercise of the right. And in
the case of Rosario Brothers, Inc. v. Ople, the court already pronounced that tailors and similar workers hired in the
tailoring department, although paid weekly wages on piece of work basis, are employees and not independent
contractors. As regular employees paid on a piece-rate basis, petitioners are not entitled to overtime pay, holiday
pay, premium pay for holiday/rest day and service incentive leave pay. They were also not entitled for separation pay
since they were dismissed by the private respondent.
LVN PICTURES, INC. vs. PHILIPPINE MUSICIANS Guild (FFW) & COURT OF INDUSTRIAL RELATIONS

SAMPAGUITA PICTURES, INC. vs. PHILIPPINE MUSICIANS Guild (FFW) & COURT OF
INDUSTRIALRELATIONS

FACTS:

Respondent Philippine Musicians Guild (FFW) is a duly registered legitimate labor organization. LVN
Pictures, Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized
under the Philippine laws, engaged in the making of motion pictures and in the processing and
distribution thereof. Petitioner companies employ musicians for the purpose of making music recordings
for title music, background music, musical numbers, finale music and other incidental music, without
which a motion picture is incomplete. Ninety-five (95%) percent of all the musicians playing for the
musical recordings of said companies are members of the Guild.

The Guild has no knowledge of the existence of any other legitimate labor organization representing
musicians in said companies. Premised upon these allegations, the Guild prayed that it be certified as
the sole and exclusive bargaining agency for all musicians working in the aforementioned companies. In
their respective answers, the latter denied that they have any musicians as employees and alleged that
the musical numbers in the filing of the companies are furnished by independent contractors. The lower
court sustained the Guild’s theory. A reconsideration of the order complained of having been denied by
the Court en banc, LVN Pictures, inc., and Sampaguita Pictures, Inc., filed these petitions for review for
certiorari.

ISSUE:

Whether the musicians in question (Guild members) are “employees “of the petitioner film companies.

RULING: YES

The Court agreed with the lower court’s decision, to wit:


Lower court resorted to apply R.A. 875 and US Laws and jurisprudence from which said Act was
patterned after. (Since statutes are to be construed in the light of purposes achieved and the evils
sought to be remedied). It ruled that the work of the musical director and musicians is a functional and
integral part of the enterprise performed at the same studio substantially under the direction and
control of the company.

In other words, to determine whether a person who performs work for another is the latter's employee
or an independent contractor, the National Labor Relations relies on 'the right to control' test. Under
this test an employer-employee relationship exists when the person for whom the services are
performed reserves the right to control not only the end to be achieved, but also the manner and means
to be used in reaching the end. (United Insurance Company, 108, NLRB No. 115.). Notwithstanding that
the employees are called independent contractors', the Board will hold them to be employees under the
Act where the extent of the employer's control over them indicates that the relationship is in reality one
of employment. (John Hancock Insurance Co., 2375-D, 1940, Teller, Labor Dispute Collective Bargaining,
Vol.).

The right of control of the film company over the musicians is shown (1) by calling the musicians through
'call slips' in 'the name of the company; (2) by arranging schedules in its studio for recording sessions; (3)
by furnishing transportation and meals to musicians; and(4) by supervising and directing in detail,
through the motion picture director, the performance of the musicians before the camera, in order to
suit the music they are playing to the picture which is being flashed on the screen.

The “musical directors” have no such control over the musicians involved in the present case. Said
musical directors control neither the music to be played, nor the musicians playing it. The Premier
Production did not appeal the decision of the Court en banc (that’s why it’s not one of the petitioners in
the case) film companies summon the musicians to work, through the musical directors. The film
companies, through the musical directors, fix the date, the time and the place of work. The film
companies, not the musical directors, provide the transportation to and from the studio. The film
companies furnish meal at dinner time. It is well settled that "an employer-employee 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 means to be used in reaching such end . . . ."

The decisive nature of said control over the "means to be used", is illustrated in the case of Gilchrist
Timber Co., et al., in which, by reason of said control, the employer-employee relationship was held to
exist between the management and the workers, notwithstanding the intervention of an alleged
independent contractor, who had, and exercise, the power to hire and fire said workers

The aforementioned control over the means to be used" in reading the desired end is possessed and
exercised by the film companies over the musicians in the cases before us.
MAM Realty Dev’t Corporation v. NLRC

FACTS:
Balbastro filed a complaint against petitioners, MAM realty and its Vice Pres Centeno, for
wage differentials,overtime pay and others. Balbastro alleged that he was employed by MAM as a pump
operator and performed suchwork at its Rancho Estate. He earned a monthly salary who worked seven
days a week.Petitioner alleged that Balbastro had previously been employed by Francisco Cancho Inc.,
the developer of Rancho Estates. His services were contracted by petitioner for the operation of the
Rancho Estates’ water pump.Under the agreement, Balbastro was made to open and close daily the
water supply system. He worked foronly a maximum of 3 hours a day and used his free times by offering
plumbing services to the residents of the subdivision.

ISSUE:
W/N there exists an ER-EE relationship between petitioner and Balbastro

HELD:

Yes.Repeatedly, the issue of the existence of ER-EE relationship is determined by the following
factors:1.selection and engagement of the employees2.payment of wages3.power of
dismissal4.employer’s power to control the employee with respect to the result to be done and to the
means and methods by which the work is to be accomplished. The power of control refers merely to the
existence of the power and not to the actual exercise thereof.

It is not essential for the employer to actually supervise the performance of duties of the employee; it is
enough that the former has a right to wield the power.

With regard to the liability of Centeno, Vice Pres of MAM, he is not jointly and severally liable with
MAM. A corporation, being a juridical entity, may act only through its directors, officers, employees.
Obligations incurred by them, are not theirs but the direct accountabilities of the corporation they
represent. Solidary liability may at times be incurred but only when exceptional circumstances warrant,
such as:1.When directors and trustees or the officers of a corporation:
a. vote for or assent to patently unlawful acts of the corporation
b. act in bad faith or with gross negligence
c. guilty of conflict of interest

2. When a director or officer has consented to the issuance of watered stocks or who, having
knowledge thereof, did not file his written objection thereto

3.When a director, trustee or officer has agreed to hold himself personally and solidarily liable
withcorporation4.When a director, trustee or officer is made personally liable for his corporate action.
In the case at bench, there is nothing substantial that can justify Centeno’s solidary liability with
corporation.

ZANOTTE SHOES V. NLRC241 SCRA 261VITUG, J.

FACTS

1.Private respondents Joseph Lluz, et. al averred that they started to work for petitioners Zanotte Shoes/
Leonardo Lorenzo between 1975 to 1987. They alleged that they worked for a minimum of 12 hours
daily, including Sundays and holidays when needed and that they were paid on piece-work basis.
2.Private respondents claimed that it angered petitioner Lorenzo when they requested to be made
members of the SSS and that when they demanded an increase in their pay rates, they were prevented
from entering the work premises. Private respondents filed a complaint for illegal discharge against
petitioners.
3.Petitioners, in their Answer, claim that their business operations were only seasonal, normally twice a
year- one in June and another in December, when heavy job orders would come in. They contend that
private respondents were engaged on purely contractual basis and paid the rates conformably with their
respective agreements.
4.The Labor Arbiter rendered judgment in favor of private respondents. He declared that there was an
employer-employee relationship between petitioners and private respondents and that the latter were
regular employees of the former. The Labor Arbiter concluded that there is neither dismissal nor
abandonment, but ordered petitioners to pay the private respondents their separation pay.5.The NLRC,
on appeal, affirmed the Labor Arbiter’s decision

ISSUE
Whether or not there is an employer-employee relationship between petitioners and
private respondents.

HELD
YES. There is an employer-employee relationship between petitioners and private respondents. The
work of private respondents is clearly related to and in the pursuit of the principal activity of the
petitioners. The indicia used for determining the existence of an employer-employee relationship, all
extant in the case at bench, include: (1) the selection and engagement of the employee, (2) the payment
of wages, (3) the power of dismissal, and (4) the employer’s power to control the employee with respect
to the result of the work to be done and to the means and methods by which the work is to be
accomplished. The last requirement, so herein posed as an issue, refers to the existence of the right to
control and not necessarily to the actual exercise of the right. The Court, however, finds the award of
separation pay to be unwarranted. The Labor Arbiter, sustained by the NLRC, concluded that there was
neither dismissal nor abandonment. The fact of the matter is that petitioners have repeatedly indicated
their willingness to accept the private respondents, but the latter have steadfastly refused the offer. For
being without any clear legal basis, the award of separation pay must thus be set aside. There is nothing,
however, that prevents petitioners from voluntarily giving private respondents some amounts on
ex gratia basis.

CAPANELA and JOSE ALVIS v. NLRC and FERNANDO SANCHEZ

The present controversy raises as principal issues for resolution by the Court whether or not (1) the
dismissal of private respondent was legal, and; (2) the appeal was perfected despite failure to file a
supersedeas bond.

Anent the first issue, before we delve into the matter of the alleged illegal dismissal of private respondent
Sanchez by petitioner CAPANELA, it is evidently necessary to ascertain the existence of an employer-
employee relationship between them.

Petitioners asseverate that CAPANELA is an association composed of Negritos who worked inside the
American naval base in Subic Bay (hereinafter referred to as the Base). They initially received a daily
wage of P100.00 and thus earned, on the average, less than P3,000.00 per month. Said association
organized the system of employment of members of this cultural community who were accorded special
treatment concededly because of the occupancy of their ancestral lands as part of the operational area
and military facility used by the Base authorities.

CAPANELA, through its officers, saw to it that its members reported for work, recorded their attendance,
and distributed the workers' salaries paid by the Base at the end of a specific pay period, without gaining
any amount from such undertakings petitioner Alviz, Sr., for his part and as president of CAPANELA, was
himself only an employee at the Base. In other words, neither CAPANELA nor its president was the
employer of private respondent Sanchez; rather, it was the United States Government acting through the
military base authorities. 18

Contrarily, private respondent maintains that there existed an employer-employee relationship, as


allegedly supported by the evidence on record, and that petitioners CAPANELA and Alviz, Sr. exercised
control as employer over the means and methods by which the work was accomplished. He further
argues that since the determination of the existence of an employer-employee relationship is a factual
question, the findings of the labor officials thereon should be considered conclusive and binding upon and
respected by the appellate courts.19
It is hence clearly apparent that the judgment of the labor arbiter, as affirmed by respondent commission,
declaring the dismissal of private respondent illegal and ordering the payment of back wages to him
together with his payroll or physical reinstatement, was premised on the finding that there was an existing
employer-employee relationship.

Indeed, findings of fact and conclusions of the labor arbiter, 20 as well as those of the NLRC, 21 or, for that
matter, any other adjudicative body which
can be considered as a trier of facts on specific matters within its field of expertise, 22 should be
considered as binding and conclusive upon the appellate courts. This is in addition to the fact that they
were in a better position to assess and evaluate the credibility of the contending parties and the validity of
their respective evidence. 23However, these doctrinal strictures hold true only when such findings and
conclusions are supported by substantial evidence. 24

In the case at bar, we are hard put to find sufficient evidential support for public respondent's conclusion
on the putative existence of an employer-employee relationship between petitioners and private
respondent. We are accordingly persuaded that there is ample justification to disturb the findings of
respondent NLRC and to hold that a reconsideration of its challenged resolutions is in order.

A careful reevaluation of the documentary evidence of record belies the finding that CAPANELA, through
its president and co-petitioner, Jose Alviz, Sr., wielded control as an employer over private respondent. It
will be noted that in his affidavit dated March 4, 1991, 25 private respondent himself declared that through
the intervention of CAPANELA, by way of its June 13, 1389 letter26 to Lt. Mark S. Kistner, he was cleared
of the charge of larceny of U.S. government property. Thereafter, in an indorsement dated July 11, 1989
from the Director of Security, U.S. Navy Public Works Center, the recommendation for his reinstatement
and the release of his gate pass to the Base was addressed to the Director, Investigation Section, U.S.
Facility Security Department via the Director of the Contracts Administration Division. 27

This only goes to show that CAPANELA had in fact no control over the continued employment of its
members working in the U.S. naval base. For, after conducting its own investigation, CAPANELA could
only intervene in behalf of its members facing charges through a recommendatory action request for
favorable consideration. It could not, on its own authority, exonerate such members from the charges,
much less effect their reinstatement without the approval of the Base authorities. Interestingly, in order to
comply with the labor arbiter's decision of June 24, 1991, CAPANELA even had to write to the Resident
Officer-in-Charge of the Facility Support Contracts at Subic Bay recommending the reinstatement of
private respondent to his former position. 28

Under their arrangement, CAPANELA, through its officers, could only impose disciplinary sanctions upon
its members for infractions of its own rules and regulations, to the extent of ousting a member from the
association when called for under the circumstances. Nonetheless, such called termination of
membership in the association, which could result in curtailment of the privilege of working at the Base
inasmuch as employment therein was conditioned upon membership in CAPANELA, is not equivalent to
the illegal dismissal from employment contemplated in our labor laws. Petitioners, not being the employer,
obviously could not arrogate unto themselves an employer's prerogatives of hiring and firing workers.

As succinctly pointed out by the Solicitor General:

True, there was a stipulation to the effect that Fernando Sanchez was employed by
petitioner CAPANELA, but the real employer was the United States government and
petitioner was just a "labor-only contractor." Annexes "G" and "H" of CAPANELA's
Memorandum on Appeal show that the award or contract of work was between
CAPANELA and the United States government through the U.S. Navy. The same
contract likewise clearly stipulated that CAPANELA was "to provide labor and material to
perform trash sorting services in the Base period for all work specified in Section C."
Annex "A" of complainant Fernando Sanchez' Answer to petitioner's Memorandum on
Appeal itself proves that the negotiation was between CAPANELA and the U.S. Navy,
with the former supplying the labor and the U.S. government paying the wages. Since
CAPANELA merely provided the labor force, it cannot be deduced therefrom that
CAPANELA should also compensate the laborers; it is a case of non sequitur. In other
words, the actual mechanical act of making payments was done by CAPANELA, but the
monies therefor were provided and disbursements made by the disbursing officer of the
U.S. Naval Supply Depot, Subic Bay (see Annexes "G" and "H").

Moreover, ingress and egress in the work premises were controlled not by CAPANELA
but by the U.S. Base authorities who could even reject entry of CAPANELA members
then duly employed as part of the project, and impose disciplinary sanctions against
them. Annex "1" of petitioners' Position Paper as respondent in the NLRC Case No. RAB-
III-01-193 1-91, which was the letter of Lt. M.E. Kistner of the U.S. Navy, clearly proves
this. 29 (Emphasis in the original text.)

Prevailing case law enumerates the essential elements of an employer-employee relationship as: (a) the
selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the
means and methods by which the work is to be accomplished, with the power of control being the most
determinative factor. 30

The Solicitor General pertinently illustrates the glaring absence of these elements in the present case:

. . . , as aforeshown, CAPANELA had no control of the premises as it was the U.S. naval
authorities who had the power to issue passes or deny their issuance. In fact,
CAPANELA did not have absolute control on the disciplinary measures to be imposed on
its members employed in the Base. Annex "1" of CAPANELA's Position Paper submitted
before the NLRC Regional Arbitration Branch established the U.S. Navy's right to impose
disciplinary measures for violations or infractions of its rules and regulations as well as
the right to recommend suspensions or dismissals of the workers. Moreover, it was not
shown that CAPANELA had control of the means and methods or manner by which the
workers were to go about their work. These are indeed strong indicia of the U.S. Navy's
right of control over the workers as direct employer.

Third, there is evidence to prove that payment of wages was merely done through
CAPANELA, but the source of payment was actually the U.S. government paying
workers according to the volume of work accomplished on rates agreed upon between
CAPANELA and the U.S. government. . . . 31

It would, therefore, be inutile to discuss the matter of the legality or illegality of the dismissal of private
respondent. Considering that petitioners cannot legally be considered as the employer of herein private
respondent, it follows that it cannot be made liable as such nor be required to bear the responsibility for
the legal consequences of the charge of illegal dismissal. Granting arguendo that private respondent was
illegally dismissed, the action should properly be directed against the U.S. government which, through the
Base authorities, was the true employer in this case.
Neither can petitioners be deemed to have been engaged in permissible job contracting under the law, for
failure to satisfy the following prescribed conditions:

1. The contractor carries on an independent business and undertakes the contract work
on his own account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with performance of the work except as to the results thereof; and

2. The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of
his business. 32

In the present case, the setup was such that CAPANELA was merely tasked with organizing the Negritos
to facilitate the orderly administration of work made available to them at the base facilities, that is, sorting
scraps for recycling. CAPANELA recorded the attendance of its members and submitted the same to the
Base authorities for the determination of wages due them and the preparation of the payroll. Payment of
wages was coursed through CAPANELA but the funds therefor came from the coffers of the Base. Once
inside the Base, control over the means and methods of work was exercised by the Base authorities.
Accordingly, CAPANELA functioned as just an administrator of its Negrito members employed at the
Base.

From the legal standpoint, CAPANELA's activities may at most be considered akin to that of labor-only
contracting, albeit of a special or peculiar type, wherein CAPANELA, operating like a contractor, merely
acted as an agent or intermediary of the employer. 33

The Solicitor General ramifies this aspect:

. . . , petitioner CAPANELA could not be classified as an "independent contractor"


because it was not shown that it has substantial capital or investments to qualify as such
under the law. On the other hand, it was apparent that the premises, tools, equipment,
and other paraphernalia used by the workers were all supplied by the U.S. government
through the U.S. Navy. What CAPANELA supplied was only the local labor force,
complainant Fernando Sanchez among them. It is therefore clear that CAPANELA had
no capital outlay involved in the business or in the maintenance thereof. 34

While it is not denied that an association or a labor organization or union can at times be an employer
insofar as people hired by it to dispose of its business are concerned,35 the situation in this case is
altogether different. A proper and necessary distinction should be made between the employees of
CAPANELA who actually attended to its myriad functions as an association and its members who were
employed in the jobsite inside the Base vis-a-vis CAPANELA's relative position as the employer of the
former and a mere administrator with respect to the latter.
CONTINENTAL MARBLE V. NLRC161 SCRA 151PADILLA, J.

FACTS

1.Rodito Nasayao claimed that sometime in May 1974, he was appointed plant manager of Continental
Marble with an alleged compensation of P3,000.00 a month or 25% of the monthly net income of the
company, whichever is greater.
2.When the company failed to pay his salary for the months of May, June and July1974, Nasayao filed a
complaint with NLRC.
3.Continental Marble denied that Rodito Nasayao was its employee. They claimed that the undertaking
agreed by the parties was a joint venture, a sort of partnership, wherein Nasayao was to keep the
machinery in good working condition and in return, he would get the contracts from end-users for the
installation of marble products, in which the company would not interfere.
4.In addition, Nasayao was to receive an amount equivalent to 25% of the net profits that the
petitioner corporation would realize, should there be any. Since there had been no profits during said
period, private respondent was not entitled to any amount.

ISSUE

Whether or not the private respondent Nasayao was employed as plant manager
of petitioner Continental Marble Corporation.

HELD

NO. There was nothing in the record which would support the claim of Rodito Nasayao that he was an
employee of the petitioner corporation. He was not included in the company payroll nor in the list of
company employees furnished by the Social Security System. Most of all the element of control is
lacking. It appears that the petitioner had no control over the conduct of Rodito Nasayao in the
performance of his work. He decided for himself on what was to be done and worked at his own
pleasure. He was not subject to indefinite hours or conditions of work and in turn was compensated
according to the results of his own effort. He has a free hand in running the company and its business,
so much so, that the petitioner did not know until very later that Nasayao collected old accounts
receivables, not covered by their agreement, which he converted to his personal use.

Iloilo Chinese Commercial School v Fabrigar

Facts:

Santiago Fabrigar had been employed from 1947 to Mar. 12, 1956, as a janitor-messenger of Iloilo
Commercial School. On Mar. 13 he spat blood and stopped working. He undergo treatment for
pulmonary tuberculosis and for heart disease. It was concluded by the commission that between his last
day of work and his death, it was indicated that he had been suffering from such disease even during the
time he was employed and considering the strenuous work he preformed , his employment as janitor
aggravated his pre-existing illness. As a result of the death his heirs filed for a claim for compensation
under the workmen’s compensation commission. The WCC denied the claim for failure to prove that the
disease was contracted in line of duty.

ISSUE: WON the heirs of Fabrigar entitled compensation under WCC

Held: The court ruled in favor of the heirs of fabrigar

The short period of time intervening between his last day of work (March 13, 1956) when he spat blood
and his death June 28, 1956 due to pulmonary tuberculosis indicates that he had been suffering from the
disease even during the time that he was employed by the respondent. Considering the strenuous work
that he performed while in the service of the respondents and the unusually long hours of work he
rendered (6:00 p.m. to 1:30 p.m. and from 2:00 p.m. to 6:00 p.m. or 7:00 p.m.) beyond the normal and
legal working hours, we find that his employment aggravated his pre-existing illness and brought about
his death. Moreover, our conclusion finds support in the fact that immediately preceding his last day of
work with the respondent, he had an unusually hard day lifting desks and other furnitures and assisting in
the preparations for the graduation exercises of the school. Considering also his complaints during that
day (March 11), among which was "shortness of breath", we may also say that his work affected an
already existing heart ailment.

It is claimed that actually the deceased was not an employee of the petitioner, but by the Iloilo Chinese
Chamber of Commerce which was the one that furnished the janitor service in the premises of its
buildings, including the part thereof occupied by the petitioner; that the Chamber of Commerce paid the
salaries of janitors, including the deceased; that the petitioner could not afford to pay rentals of its
premises and janitor due to limited finances depended largely on funds raised among its Board of
Directors, the Chinese Chamber of Commerce and Chinese nationals who helped the school. In other
words, it is pretended that the deceased was not an employee of the school but of the Chinese Chamber
of Commerce which should be the one responsible for the compensation of the deceased. On one hand,
according to the Commission, there is substantial proof to the effect that Fabrigar was employed by and
rendered service for the petitioner and was an employee within the purview of the Workmen's
Compensation Law. On the other hand, the most important test of employer-employee relation is the
power to control the employee's conduct. The records disclose that the person in charge (encargado) of
the respondent school supervised the deceased in his work and had control over the manner he
performed the same.

It is finally contended that petitioner is an institution devoted solely for learning and is not an industry
within the meaning of the Workmen's Compensation Law. Consequently, it is argued, it is exempt from
the scope of the same law. Considering that this factual question has not been properly put in issue
before the Commission, it may not now be entertained in this appeal for the first time (Atlantic Gulf, etc.
vs. CIR, et al., L-16992, Dec. 23, 1961, citing International Oil Factory Union v. Hon. Martinez, et al., L-
15560, Dec. 31, 1960). The decision of the Commission does not show that the matter was taken up. We
are at a loss to state whether the issue was raised in the motion for reconsideration filed with the
Commission, because the said motion is not found in the record before us. And the resolution to the
motion for reconsideration does not touch this question.

IN VIEW HEREOF, the appeal interposed by the petitioner is dismissed, and the decision appealed from
is affirmed, with costs against the herein petitioner.

G.R. No. 75112 October 16, 1990


FILAMER CHRISTIAN INSTITUTE, petitioner,
vs.
HONORABLE COURT OF APPEALS, HONORABLE ENRIQUE P. SUPLICO, in his capacity as Judge
of the Regional Trial Court,. Branch XIV, Roxas City and the late POTENCIANO KAPUNAN, SR., as
substituted by his heirs, namely: LEONA KAPUNAN TIANGCO, CICERO KAPUNAN, JESUS
KAPUNAN, SANTIAGO KAPUNAN, POTENCIANO KAPUNAN, JR., PAZ KAPUNAN PUBLICO, SUSA
KAPUNAN GENUINO and ERLINDA KAPUNAN TESORO, respondents.

It is manifest that under the just-quoted provision of law, petitioner Filamer cannot be considered as
Funtecha’s employer. Funtecha belongs to that special category of students who render service to the
school in exchange for free tuition Funtecha worked for petitioner for two hours daily for five days a week.
He was assigned to clean the school passageways from 4:00 a.m. to 6:00 a.m. with sufficient time to
prepare for his 7:30 a.m. classes. As admitted by Agustin Masa in open court, Funtecha was not included
in the company payroll. 8
The wording of Section 14 is clear and explicit and leaves no room for equivocation. To dismiss the
implementing rule as one which governs only the “personal relationship” between the school and its
students and not where there is already a third person involved, as espoused by private respondents, is
to read into the law something that was not legislated there in the first place. The provision of Section 14
is obviously intended to eliminate an erstwhile gray area in labor relations and seeks to define in
categorical terms the precise status of working scholars in relation to the learning institutions in which
they work for the privilege of a free education.

OVERRULED BY:
G.R. No. 75112 August 17, 1992
FILAMER CHRISTIAN INSTITUTE, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P. SUPLICO, in his
capacity as Judge of the Regional Trial Court, Branch XIV, Roxas City and
POTENCIANO KAPUNAN, SR., respondents.

Daniel Funtecha was a working student at the Filamer Christian Institute. He was assigned as the school
janitor to clean the school 2 hours every morning. Allan Masa was the son of the school president and at
the same time he was the school’s jeepney service driver. On October 20, 1977 at about 6:30pm, after
driving the students to their homes, Masa returned to the school to report and thereafter have to go
home with the jeep so that he could fetch the students early in the morning. Masa and Funtecha live in
the same place so they usually go home together. Funtecha had a student driver’s license so Masa let
him take the driver’s seat. While Funtecha was driving, he accidentally hit an elderly Kapunan which led
to his hospitalization for 20 days. Kapunan filed a criminal case and an independent civil action based on
Article 2180 against Funtecha.

In the independent civil action, the lower court ruled that Filamer is subsidiarily liable for the tortious
act of Funcheta and was compelled to pay for damages based on Article 2180 which provides that
employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks. Filamer assailed the decision and it argued that under Section
14, Rule X, Book III of the Labor Code IRR, working scholars are excluded from the employment coverage
hence there is no employer-employee relations between Filamer and Funcheta; that the negligent act of
Funcheta was due to negligence only attributable to him alone as it is outside his assigned task of being
the school janitor. The CA denied Filamer’s appeal but the Supreme Court agreed with Filamer. Kapunan
filed for a motion for reconsideration.

ISSUE: Whether or not Filamer should be held subsidiarily liable.

HELD:

Yes. This time, the SC ruled in favor of Kapunan (actually his heirs cause by this time Kapunan was
already dead). The provisions of Section 14, Rule X, Book III of the Labor Code IRR was only meant to
provide guidelines as compliance with labor provisions on working conditions, rest periods, and wages is
concerned. This does not in any way affect the provisions of any other laws like the civil code. The IRR
cannot defeat the provisions of the Civil Code. In other words, Rule X is merely a guide to the
enforcement of the substantive law on labor. There is a distinction hence Section 14, Rule X, Book III of
the Rules is not the decisive law in a civil suit for damages instituted by an injured person during a
vehicular accident against a working student of a school and against the school itself.

The present case does not deal with a labor dispute on conditions of employment between an alleged
employee and an alleged employer. It invokes a claim brought by one for damages for injury caused by
the patently negligent acts of a person, against both doer-employee and his employer. Hence, the
reliance on the implementing rule on labor to disregard the primary liability of an employer under
Article 2180 of the Civil Code is misplaced. An implementing rule on labor cannot be used by an
employer as a shield to void liability under the substantive provisions of the Civil Code.

Funtecha is an employee of Filamer. He need not have an official appointment for a driver’s position in
order that Filamer may be held responsible for his grossly negligent act, it being sufficient that the act of
driving at the time of the incident was for the benefit of Filamer (the act of driving the jeep from the
school to Masa’s house is beneficial to the school because this enables Masa to do a timely school
transportation service in the morning). Hence, the fact that Funtecha was not the school driver or was
not acting with the scope of his janitorial duties does not relieve Filamer of the burden of rebutting the
presumption juris tantum that there was negligence on its part either in the selection of a servant or
employee, or in the supervision over him. Filamer has failed to show proof of its having exercised the
required diligence of a good father of a family over its employees Funtecha and Allan.

FEATI UNIVERSITY V. BAUTISTA18 SCRA 1191ZALDIVAR, J.

FACTS

1.On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU wrote a
letter to the President of petitioner Feati University informing her of the organization of the Faculty Club
into a registered labor union.
2.The Faculty Club is composed of members who are professors and/or instructors of the University.
3.The President of the Faculty Club sent another letter containing twenty-six demands that have
connection with the employment of the members of the Faculty Club by the University.
4.The University administration refused to bargain collectively and so PAFLU’s president filed a notice of
strike with the Bureau of Labor. Thereafter, the members of the Faculty Club declared a strike resulting
to disruption of classes.
5.Despite further efforts of the officials of the Department of Labor, no settlement can be reached
between the parties. Subsequently, the President of the Philippines certified to the Court of Industrial
Relations the dispute between the management of the University and the Faculty Club.6.The University
filed a motion to dismiss the case upon the ground that CIR has
no jurisdiction over the case because the Industrial Peace Act is not applicable to thefaculty members,
they being independent contractors and not employees. The respondent judge denied the motion but
ordered the strikers to return to work and the University to take them back.

ISSUE
Whether or not a charitable institution or one organized for profit is included in the definition of
employer?

HELD

YES. The term “employer“ encompasses all employers except those specifically excluded in the Industrial
Peace Act. The Act itself specifically enumerated those who are not included in the term employer
namely: (1) labor organization; (2) anyone acting in the capacity of officer or agent of such labor
organization (3) the Government and any political subdivision or instrumentality. Among these statutory
exemptions, educational institutions are not included; hence they can be included in the term
“employer.”

The Industrial Court has jurisdiction over unfair labor practice charges against institutions that are
organized, operated and maintained for profit. The Industrial Peace Act is applicable to any organization
or entity – whatever may be its purpose when it was created – that is operated for profit or gain.

col·lec·tive bar·gain·ing
1. negotiation of wages and other conditions of employment by an organized body of employees.

MAFINCO TRADING CORPORATION VS. OPLEGR NO. L-37790, MARCH 25, 1976

FACTS
1.Cosmos Aerated Water Factory, a firm based at Malabon, Rizal, appointed petitioner Mafinco as its
sole distributor of Cosmos soft drinks in Manila.
2.Rodrigo Repomanta and Mafinco executed a peddling contract whereby Repomanta agreed to buy
and sell Cosmos soft drinks. Rey Moralde entered into a similar contract.
3.Months later, Mafinco terminated the peddling contract with Repomanta and Moralde. Consequently,
Repomanta and Moralde, through their union, filed a complaint with the NLRC, charging the general
manager of Mafinco for illegally dismissing them.
4.Mafinco filed a motion to dismiss the complaint on the ground that the NLRC had no jurisdiction
because Repomanta and Moralde were not its employees but were independent contractors. It stressed
that there was termination of the contract not adismissal of an employee.

ISSUE
Whether or not there exist an employer-employee relationship between petitioner Mafinco and private
respondents Repomanta and Moralde.

HELD
The Supreme Court held that under the peddling contracts, Repomanta and Moralde were not
employees of Mafinco but were independent contractors as found by the NLC and its fact finder and by
the committee appointed by the Secretary of Labor to look into the status of Cosmos and Mafinco
peddlers. A contract whereby one engages to purchase and sell soft drinks on trucks supplied by the
manufacturer but providing that the other party (peddler) shall have the right to employ his own
workers, shall post a bond to protect the manufacturer against losses, shall be responsible for damages
caused to third persons, shall obtain the necessary licenses and permits and bear the expenses incurred
in the sale of the soft drinks is not a contract of employment.

MANILA GOLF CLUB INC vs IAC Case Digest


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).

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.

Domasig vs. NLRC


G.R. No.: 118101
Date: September 16, 1996
Petitioner: Eddie Domasig
Respondents: NLRC and/or Otto Ong and Catalina Co.
Ponente: Padilla,J.

Facts:
Eddie Domasig was employed by respondent Cata Garments Corporation as Salesman since July 6, 1986.
He received a monthly salary of 1500 a month plus commission. In August 29, 1992 respondent
company dismissed petitioner based on an allegation that he was being pirated by competitor company
but was declined by the petitioner. Respondent company denied that petitioner was its regular
employee; instead it tried to prove that petitioner was only a commission agent who receives a
commission of 5.00 per article sold and 2.50 on bargain price. To support the claim, company presented
the list of Sales Collections, Computation of Commission due, expenses incurred, cash advances received
for the month of January and March 1992.On the other hand, petitioner presented the company ID
issued to him by respondent company and the cash vouchers to prove that he receives a monthly salary.
The labor arbiter decided in favor of petitioner, but was set aside by NLRC declaring that there was no
sufficient evidence presented to prove the presence of employer-employee relationship, thus Labor
Arbiter’s decision was not supported by evidence. It ordered that the case be reverted to the arbitration
branch of origin for further proceeding.

Issue:
Whether or not the NLRC gravely abused its discretion in vacating and setting aside the decision of the
labor arbiter and remanding the case to the arbitration branch of origin for further proceedings.
Whether or not there is an employer-employee relationship between petitioner and respondent.

Held:
In the case at bar respondent NLRC was not convinced that the evidence presented by the petitioner,
consisting of the identification card issued to him by private respondent corporation and the cash
vouchers reflecting his monthly salaries covering the months stated therein, settled the issue of
employer-employee relationship between private respondents and petitioner. It has long been
established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a
basis for judgment on the existence of employer-employee relationship. No particular form of evidence
is required to prove the existence of such employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted. Substantial evidence has been defined to be such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion. In a business
establishment, an identification card is usually provided not only as a security measure but mainly to
identify the holder thereof as a bonafide employee of the firm that issues it. Together with the cash
vouchers covering petitioner's salaries for the months stated therein, we agree with the labor arbiter
that these matters constitute substantial evidence adequate to support a conclusion that petitioner was
indeed an employee of private respondent. The list of sales collection including computation of
commissions due, expenses incurred and cash advances received (Exhibits "B" and "B-1") which,
according to public respondent, the labor arbiter failed to appreciate in support of private respondents
“allegation as regards the nature of petitioner's employment as a commission agent, cannot overcome
the evidence of the ID card and salary vouchers presented petitioner which private respondents have
not denied.

The list presented by private respondents would even support petitioner's allegations that, aside from a
monthly salary of P1, 500.00, he also received commissions for his work as a salesman of private
respondents. Having been in the employ of private respondents continuously for more than one year,
under the law, petitioner is considered a regular employee. Proof beyond reasonable doubt is not
required as a basis for judgment on the legality of an employer's dismissal of an employee, nor even
preponderance of evidence for that matter, substantial evidence being sufficient. Labor Arbiter's
decision on the presence of employer-employee relationship is supported by substantial evidence. On
the issue of dismissal, it was indeed, illegal as it was not supported by any valid basis. Respondent did
not deny the allegation that the sole basis of the dismissal was the alleged enticement of another
employer to work with them. Labor Arbiter ordered the reinstatement with modifications on the
computation of monetary claims.

Charlie Jao vs. BCC Product Sales Inc., G.R. No. 163700, April 18, 2012

Facts:
Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and its President, Terrance Ty, employed him as
comptroller starting from September 1995 with a monthly salary of P20,000.00 to handle the financial aspect of BCC’s business.
On October 19,1995, the security guards of BCC, acting upon the instruction of Ty, barred him from entering the premises of
BCC where he then worked. His attempts to report to work in November and December 12, 1995 were frustrated because he
continued to be barred from entering the premises of BCC. He then filed a complaint for illegal dismissal, reinstatement with full
backwages, non-payment of wages, damages and attorney’s fees.
Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation (SFC),
the major creditor and supplier of BCC; and that SFC had posted him as its comptroller in BCC to oversee BCC’s finances and
business operations and to look after SFC’s interests or investments in BCC.

Issue:
Whether or not an employer-employee relationship existed between petitioner Jao and BCC

RULING

The existence of an employer-employee relationship is a question of fact. Generally, a re-examination of


factual findings cannot be done by the Court acting on a petition for review on certioraribecause the
Court is not a trier of facts but reviews only questions of law. Nor may the Court be bound to analyze
and weigh again the evidence adduced and considered in the proceedings below.[16] This rule is not
absolute, however, and admits of exceptions. For one, the Court may look into factual issues in labor
cases when the factual findings of the Labor Arbiter, the NLRC, and the CA are conflicting.[17]

Here, the findings of the NLRC differed from those of the Labor Arbiter and the CA. This conflict among
such adjudicating offices compels the Courts exercise of its authority to review and pass upon the
evidence presented and to draw its own conclusions therefrom.

REASON WHY DISMISSED,


We note that petitioner executed the affidavit in March 1996 to refute a statement Ty himself made in
his own affidavit dated December 11, 1995 to the effect that petitioner had illegally appropriated some
checks without authority from BCC.

It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority
to deliver some 158 checks to SFC. Considering that he contested respondents challenge by pointing to
the existing arrangements between BCC and SFC, it should be clear that respondents did not exercise
the power of control over him, because he thereby acted for the benefit and in the interest of SFC more
than of BCC.

In addition, petitioner presented no document setting forth the terms of his employment by BCC. The
failure to present such agreement on terms of employment may be understandable and expected if he
was a common or ordinary laborer who would not jeopardize his employment by demanding such
document from the employer, but may not square well with his actual status as a highly educated
professional.

Petitioners admission that he did not receive his salary for the three months of his employment by BCC,
as his complaint for illegal dismissal and non-payment of wages[25] and the criminal case for estafa he
later filed against the respondents for non-payment of wages[26] indicated, further raised grave doubts
about his assertion of employment by BCC. If the assertion was true, we are puzzled how he could have
remained in BCCs employ in that period of time despite not being paid the first salary
of P20,000.00/month. Moreover, his name did not appear in the payroll of BCC despite him having
approved the payroll as comptroller.
Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the
insincerity of petitioners assertion of employment by BCC. In the petition for review on certiorari, he
averred that he had been barred from entering the premises of BCC on October 19, 1995,[27] and thus
was illegally dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally dismissed
on December 12, 1995 when respondents security guards barred him from entering the premises of
BCC,[28] causing him to bring his complaint only on December 29, 1995, and after BCC had already filed
the criminal complaint against him. The wide gap between October 19, 1995 and December 12,
1995 cannot be dismissed as a trivial inconsistency considering that the several incidents affecting the
veracity of his assertion of employment by BCC earlier noted herein transpired in that interval.

With all the grave doubts thus raised against petitioners claim, we need not dwell at length on the other
proofs he presented, like the affidavits of some of the employees of BCC, the ID, and the signed checks,
bills and receipts. Suffice it to be stated that such other proofs were easily explainable by respondents
and by the aforestated circumstances showing him to be the employee of SFC, not of BCC.

Tongko v. Manufacturer Life Insurance Co. (MANULIFE) Inc., et al., G.R. No 167622, January 25, 2011

Facts:

Tongko was, initially an insurance agent of Manulife who was promoted to the role of a manager. The contractual
relationship between Tongko and Manulife had two basic phases. The initial phase began on July 1, 1977under a Career
Agent’s Agreement which regarded him as an independent contractor, not an employee. As an agent, his tasks were to
canvass for applications for insurance products and collect money due to the Company. The second phase started in 1983
when Tongko was named Unit Manager. In 1990, he became a Branch Manager. In 1996, Tongko became a Regional
Sales Manager, where he earned commissions, persistency income and management overrides. Since the beginning,
Tongko consistently declared himself self-employed in his income tax returns.

However, in 2001, Manulife instituted manpower development programs which directed the managers to increase the
number of agents to at least 1,000 strong for a start. It was found that Tongko’s region was the lowest performer in terms of
recruiting in 2000. Subsequently, Tongko received another letter, dated December 18, 2001, terminating his services.
Tongko then filed an illegal dismissal complaint with the NLRC Arbitration Branch. He alleged the existence of an
employment relationship. In support of this he asserted that as Unit Manager, he was paid an annual over-rider, a travel
and entertainment allowance in addition to his overriding commissions. He was tasked with numerous administrative
functions and supervisory authority over Manulife’s employees. He was required to follow at least three codes of conduct.
On the other hand, Manulife contended that what existed between them was a mere agency relationship.
Decisions of the Judicial Tribunals

LA: No employer-employee relationship existed between the parties.


NLRC: It found the existence of an employer-employee relationship. There was illegal dismissal.
CA: It reverted to the labor arbiter’s decision that no employer-employee relationship existed between them.
SC: In reversing the CA ruling, it declared that an employment relationship existed between them. First, there exists
the possibility of an insurance agent becoming an employee of an insurance company if evidence shows that the company
promulgated rules or regulations that effectively controlled or restricted an insurance agent’s choice of methods or the
methods themselves in selling insurance.

Second, Manulife had the power of control over Tongko, sufficient to characterize him as an employee, as shown by the
fact that he complied with 3 different codes of conduct and that he performed administrative duties. Also, Tongko was
tasked to recruit some agents in addition to his other administrative functions.

Hence, a Motion for Reconsideration was filed by Manulife and was granted by the SC.

Issue:

Whether or not there exists an employer-employee relationship.

SC Ruling:

Rules regarding the desired results (e.g., the required volume to continue to qualify as a company agent & legal/ ethical
rules to be followed) are built-in elements of control specific to an insurance agency and should not and cannot be read as
elements of control that attend an employment relationship governed by the Labor Code.

Based on decided cases, a determination of the presence of the Labor Code element of control was made on the basis of
the stipulations of the subsequent contracts. In this case, while Tongko was later on designated unit manager in 1983,
Branch Manager in 1990, and Regional Sales Manager in 1996, no formal contract regarding these undertakings appears
in the records of the case. Any such contract or agreement, had there been any, could have at the very least provided the
bases for properly ascertaining the juridical relationship established between the parties.

For this reason, we can take judicial notice that as a matter of Insurance Code-based business practice, an agency
relationship prevails in the insurance industry for the purpose of selling insurance. Significantly, evidence shows that
Tongko’s role as an insurance agent never changed during his relationship with Manulife. Tongko essentially remained an
agent, but moved up in this role through Manulife’s recognition that he could use other agents approved by Manulife but
operating under his guidance. For want of a better term, Tongko perhaps could be labeled as a "lead agent" who guided
under his wing other Manulife agents.

Evidence indicates that Tongko consistently clung to the view that he was an independent agent since he invariably
declared himself a business or self-employed person in his income tax returns. The concept of estoppel – a legal and
equitable concept – necessarily must come into play. Tongko’s previous admissions in several years of tax returns as an
independent agent, as against his belated claim that he was all along an employee, are too diametrically opposed to be
simply dismissed or ignored.

There was, indeed, lack of evidence on record showing that Manulife ever exercised means-and-manner control, even to a
limited extent, over Tongko during his ascent in Manulife’s sales ladder. The reality is, prior to the directives sent by De
Dios, Manulife had practically left Tongko alone not only in doing the business of selling insurance, but also in guiding the
agents under his wing. In addition, the mere presentation of codes or of rules and regulations is not per se indicative of
labor law control. The codes of conduct do not intrude into the insurance agents’ means and manner of conducting their
sales and only control them as to the desired results.

Guidelines indicative of labor law "control," based on the case of Insular Life, should not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature of dictating the means or methods to
be employed in attaining the result, or of fixing the methodology and of binding or restricting the party hired to the use of
these means.

Hence, the failure of Tongko to comply with the guidelines & directives of Manulife is recruiting more agents, as a ground
for termination of Tongko’s agency, is a matter that the labor tribunals cannot rule upon in the absence of an employer-
employee relationship. Jurisdiction over the matter belongs to the courts applying the laws of insurance, agency and
contracts.

SC: Tongko is just an AGENT. In effect, the SC is telling us that, first, there must be an evidence of a contract that
shows that the relationship has been converted from contract of agency to that of employment, which is absent in the case
at bar. Secondly, adherence to a code of conduct is not, per se, indicative of control when it merely controls the desired
results and not the means and the manner by which agents are to conduct their sales. The directive of De Dios to Tongko
(in increasing the number of agents) was merely suggestive. Hence, not indicative of control

GREGORIO V. TONGKO v. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL
DE DIOS

FACTS: Taking from the November 2008 decision, the facts are as follows:

Manufacturers Life Insurance, Co. is a domestic corporation engaged in life insurance business. De Dios was
its President and Chief Executive Officer. Petitioner Tongko started his relationship with Manulife in 1977 by
virtue of a Career Agent's Agreement.

Pertinent provisions of the agreement state that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall
be construed or interpreted as creating an employer-employee relationship between the Company and the
Agent.

a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and other products
offered by the Company, and collect, in exchange for provisional receipts issued by the Agent, money due or
to become due to the Company in respect of applications or policies obtained by or through the Agent or
from policyholders allotted by the Company to the Agent for servicing, subject to subsequent confirmation of
receipt of payment by the Company as evidenced by an Official Receipt issued by the Company directly to the
policyholder.

b) The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by
the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the
breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate this
Agreement by the Company shall be construed for any previous failure to exercise its right under any
provision of this Agreement.
c) Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to
the other party fifteen (15) days notice in writing.

Sometime in 2001, De Dios addressed a letter to Tongko, then one of the Metro North Managers, regarding
meetings wherein De Dios found Tongko's views and comments to be unaligned with the directions the
company was taking. De Dios also expressed his concern regarding the Metro North Managers' interpretation
of the company's goals. He maintains that Tongko's allegations are unfounded. Some allegations state that
some Managers are unhappy with their earnings, that they're earning less than what they deserve and that
these are the reasons why Tonko's division is unable to meet agency development objectives. However, not a
single Manager came forth to confirm these allegations. Finally, De Dios related his worries about Tongko's
inability to push for company development and growth.

De Dios subsequently sent Tongko a letter of termination in accordance with Tongko's Agents Contract.
Tongko filed a complaint with the NLRC against Manulife for illegal dismissal, alleging that he had an
employer-employee relationship with De Dios instead of a revocable agency by pointing out that the latter
exercised control over him through directives regarding how to manage his area of responsibility and setting
objectives for him relating to the business. Tongko also claimed that his dismissal was without basis and he
was not afforded due process. The NLRC ruled that there was an employer-employee relationship as
evidenced by De Dios's letter which contained the manner and means by which Tongko should do his work.
The NLRC ruled in favor of Tongko, affirming the existence of the employer-employee relationship.

The Court of Appeals, however, set aside the NLRC's ruling. It applied the four-fold test for determining
control and found the elements in this case to be lacking, basing its decision on the same facts used by the
NLRC. It found that Manulife did not exert control over Tongko, there was no employer-employee
relationship and thus the NLRC did not have jurisdiction over the case.

The Supreme Court reversed the ruling of the Court of Appeals and ruled in favor of Tongko. However, the
Supreme Court issued another Resolution dated June 29, 2010, reversing its decision. Tongko filed a motion
for reconsideration, which is now the subject of the instant case.

ISSUE: Did the Supreme Court err in issuing the June 29, 2010 resolution, reversing its earlier decision that
an employer-employee relationship existed?
HELD: The Supreme Court finds no reason to reverse the June 29, 2010 decision. Control over the
performance of the task of one providing service both with respect to the means and manner, and the results
of the service is the primary element in determining whether an employment relationship exists. The
Supreme Court ruled petitioners Motion against his favor since he failed to show that the control Manulife
exercised over him was the control required to exist in an employer-employee relationship; Manulifes control
fell short of this norm and carried only the characteristic of the relationship between an insurance company
and its agents, as defined by the Insurance Code and by the law of agency under the Civil Code.

In the Supreme Courts June 29, 2010 Resolution, they noted that there are built-in elements of control
specific to an insurance agency, which do not amount to the elements of control that characterize an
employment relationship governed by the Labor Code.The Insurance Code provides definite parameters in
the way an agent negotiates for the sale of the companys insurance products, his collection activities and his
delivery of the insurance contract or policy. They do not reach the level of control into the means and
manner of doing an assigned task that invariably characterizes an employment relationship as defined by
labor law.
To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the nature of dictating the means and methods to
be employed in attaining the result. Tested by this norm, Manulifes instructions regarding the objectives and
sales targets, in connection with the training and engagement of other agents, are among the directives that
the principal may impose on the agent to achieve the assigned tasks.They are targeted results that Manulife
wishes to attain through its agents. Manulifes codes of conduct, likewise, do not necessarily intrude into the
insurance agents means and manner of conducting their sales. Codes of conduct are norms or standards of
behavior rather than employer directives into how specific tasks are to be done.

Atok Big-Wedge Company Inc vs Gison


GR No.169510
Facts:
 Jesus P. Gison was engaged as part-time consultant on retainer basis by the petitioner Atok.
Petitioner did not require respondent 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 which was delivered to him at his
residence or in a local restaurant. The said arrangement continued for the next eleven years.
 Since the respondent was getting old he requested that petitioner cause his registration with the SSS
but petitioner did not accede his request.
 Respondent filed a complaint with the SSS against petitioner for the latter’s refusal to cause his
registration with the SSS. On the same date the petitioner issued a memo advising the termination of
the respondent’s retainer contract. Thus he filed for illegal dismissal.
Issue:
 Whether employer-employee relationship exists?
Held:
 No. 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”.
 The commonly so called control test is commonly regarded as the most crucial and determinative
indicator 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.
 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
methods. Respondent was assigned tasks to perform, but petitioner did not control the manner and
methods by which respondent performed these tasks. 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.
Lirio vs. Genovia, G.R. No. 169757, November 23, 2011

Facts:

Respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor Ad Sonicmix Recording Studio for
illegal dismissal, non-payment of commission and award of moral and exemplary damages.

Respondent Genovia alleged in his position paper that on August 15, 2001, he was hired as studio manager by petitioner Lirio,
owner of Celkor Ad Sonicmix Recording Studio (Celkor). 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 P7,000.00.
They also agreed that he was entitled to an additional commission of P100.00 per hour as recording technician whenever a client
uses the studio for recording, editing or any related work. He was made to report for work from Monday to Friday from 9:00 a.m.
to 6 p.m. On Saturdays, he was required to work half-day only, but most of the time, he still rendered eight hours of work or more.
All the employees of petitioner, including respondent, rendered overtime work almost everyday, but petitioner never kept a daily
time record to avoid paying the employees overtime pay.

He also alleged that petitioner approached him and told him about his project to produce an album for his daughter, Celine Mei
Lirio. 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. Petitioner instructed respondent that his work on the album as composer and arranger would only be done during
his spare time, since his other work as studio manager was the priority. Respondent then started working on the album.

After the album was completed and released, 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. 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 respondent’s 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.

Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative, that he be paid separation pay,
backwages and overtime pay; and that he be awarded unpaid commission for services rendered as a studio technician as well as
moral and exemplary damages.

Respondent’s evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which was certified correct by
petitioner, and Petty Cash Voucher evidencing receipt of payroll payments by respondent from Celkor.

In defense, petitioner 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.

According to petitioner, respondent had no track record as a composer, and he was not known in the field of music. Nevertheless,
after some discussion, respondent verbally agreed with petitioner to co-produce the album.

Petitioner asserted that his relationship with respondent is one of an informal partnership and that he had no control over the time
and manner by which respondent composed or arranged the songs, except on the result thereof. Respondent reported to the
recording studio between 10:00 a.m. and 12:00 noon. Hence, petitioner contended that no employer-employee relationship existed
between him and the respondent, and there was no illegal dismissal to speak of.

The Labor Arbiter rendered a decision finding that an employer-employee relationship existed between petitioner and respondent,
and that respondent was illegally dismissed.

However, the NLRC reversed and set aside the decision of the Labor Arbiter on the ground that respondent failed to prove his
employment tale with substantial evidence. It held that respondent failed to proved with substantial evidence that he was selected
and engaged by petitioner, that petitioner had the power to dismiss him, and that they had the power to control him not only as to
the result of his work, but also as to the means and methods of accomplishing his work.

The Court of Appeals rendered a decision reversing and setting aside the resolution of the NLRC, and reinstating the decision of
the Labor Arbiter.

Hence, petitioner Lirio filed this petition.

Issue:

Whether respondent is an employee of the petitioner, which in turn determines whether respondent was illegally dismissed.

Ruling:

The Supreme Court affirmed the assailed decision 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 employer’s power to control the employee’s conduct. The most
important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as
to the means and methods to accomplish it.

It 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.

In this case, the documentary evidence presented by respondent to prove that he was an employee of petitioner are as follows: (a)
a document denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified correct by petitioner, which showed that
respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the
month) with the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash vouchers, showing
the amounts he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid monthly wages
of P7,000.00. 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 petitioner’s claim that the wages paid were
advances for respondent’s work in the partnership.
The Court agrees with the Court of Appeals that the evidence presented by the parties showed that an employer-employee
relationship existed between petitioner and respondent.

In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for lawful cause
and validly made.Article 277 (b) of the Labor Code puts the burden of proving that the dismissal of an employee was for a valid or
authorized cause on the employer, without distinction whether the employer admits or does not admit the dismissal. For an
employee’s dismissal to be valid, (a) the dismissal must be for a valid cause, and (b) the employee must be afforded due process.
Procedural due process requires the employer to furnish an employee with two written notices before the latter is dismissed: (1)
the notice to apprise the employee of the particular acts or omissions for which his sought, which is the equivalent of a charge; and
(2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to
answer and to be heard on his defense. Petitioner failed to comply with these legal requirements; hence, the Court of Appeals
correctly affirmed the Labor Arbiter’s finding that respondent was illegally dismissed, and entitled to the payment of backwages,
and separation pay in lieu of reinstatement.

BITOY JAVIER (DANILO P. JAVIER), Petitioner, v. FLY ACE CORPORATION and FLORDELYN CASTILLO,
Respondents.

FACTS: Javier an employee of Fly Ace performing various work for the latter filed a complaint before the
NLRC for underpayment of salaries and other labor standard benefits.
He alleged that he reported for work from Monday to Saturday from 7:00 oclock in the morning to 5:00
oclock in the afternoon; that during his employment, he was not issued an identification card and pay slips by
the company; that he reported for work but he was no longer allowed to enter the company premises by the
security guard upon the instruction of Ruben Ong (Mr. Ong), his superior; that after several minutes of
begging to the guard to allow him to enter, he saw Ong whom he approached and asked why he was being
barred from entering the premises; that Ong replied by saying, Tanungin mo anak mo;that he discovered that
Ong had been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City; that
Annalyn tried to talk to Ong and convince him to spare her father from trouble but he refused to accede; that
thereafter, Javier was terminated from his employment without notice; and that he was neither given the
opportunity to refute the cause/s of his dismissal from work.

For its part p, Fly Ace denied the existence of employer-employee relationship between them and Javier as
the latter was only called roughly 5 to 6 times only in a month whenever the vehicle of its contracted hauler,
Milmar Hauling Services, was not available. Labor Arbiter dismissed the complaint ruling that respondent Fly
Ace is not engaged in trucking business but in the importation and sales of groceries. Since there is a regular
hauler to deliver its products, we give credence to Respondents claim that complainant was contracted on
pakiao basis.

On appeal, NLRC reversed the decisin of the LA. It was of the view that a pakyaw-basis arrangement did not
preclude the existence of employer-employee relationship. Payment by result x x x is a method of
compensation and does not define the essence of the relation. It is a mere method of computing
compensation, not a basis for determining the existence or absence of an employer-employee relationship.
The NLRC further averred that it did not follow that a worker was a job contractor and not an employee, just
because the work he was doing was not directly related to the employers trade or business or the work may
be considered as extra helper as in this case; and that the relationship of an employer and an employee was
determined by law and the same would prevail whatever the parties may call it. Finding Javier to be a regular
employee, the NLRC ruled that he was entitled to a security of tenure. For failing to present proof of a valid
cause for his termination, Fly Ace was found to be liable for illegal dismissal of Javier who was likewise
entitled to backwages and separation pay in lieu of reinstatement. However, on appeal, CA reversed the
ruling of NLRC
The CA ruled thatJaviers failure to present salary vouchers, payslips, or other pieces of evidence to bolster his
contention, pointed to the inescapable conclusion that he was not an employee of Fly Ace. Further, it found
that Javiers work was not necessary and desirable to the business or trade of the company, as it was only
when there were scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace would
contract the services of Javier as an extra helper. Lastly, the CA declared that the facts alleged by Javier did
not pass the control test.

He contracted work outside the company premises; he was not required to observe definite hours of work;
he was not required to report daily; and he was free to accept other work elsewhere as there was no
exclusivity of his contracted service to the company, the same being co-terminous with the trip only. Since no
substantial evidence was presented to establish an employer-employee relationship, the case for illegal
dismissal could not prosper. Hence, this appeal.

ISSUE:

Does an employer-employee relationship exist between Javier and Fly Ace, thereby holding the latter
guilty of illegal dismissal?
HELD: As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as wanting
and deficient. The Court is constrained to agree. Labor officials are enjoined to use reasonable means to
ascertain the facts speedily and objectively with little regard to technicalities or formalities but nowhere in
the rules are they provided a license to completely discount evidence, or the lack of it. The quantum of proof
required, however, must still be satisfied. Hence, when confronted with conflicting versions on factual
matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis
of evidence received, subject only to the requirement that their decision must be supported by substantial
evidence.Accordingly, the petitioner needs to show by substantial evidence that he was indeed an employee
of the company against which he claims illegal dismissal.

In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such
claim by the requisite quantum of evidence. Whoever claims entitlement to the benefits provided by law
should establish his or her right thereto x x x. Sadly, Javier failed to adduce substantial evidence as basis for
the grant of relief.

By way of evidence on this point, all that Javier presented were his self-serving statements purportedly
showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement
to support his claim. Hence, the Court sees no reason to depart from the findings of the CA.

While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in
the company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other
proof was submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was
unsuccessful in strengthening Javiers cause.

The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to determine
the existence of an employer-employee relationship, viz: (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. Of
these elements, the most important criterion is whether the employer controls or has reserved the right to
control the employee not only as to the result of the work but also as to the means and methods by which
the result is to be accomplished.

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