G.R. No.

84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
MELECIO BASIAO, respondents.
Tirol & Tirol for petitioner.
Enojas, Defensor & Teodosio Cabado Law Offices for
private respondent.
any right to any commission on renewal of premiums
that may be paid after the termination of this agreement
for any cause whatsoever, except when the termination
is due to disability or death in line of service. As to
commission corresponding to any balance of the first
year's premiums remaining unpaid at the termination of
this agreement, the Agent shall be entitled to it if the
balance of the first year premium is paid, less actual cost
of collection, unless the termination is due to a violation
of this contract, involving criminal liability or breach of
trust.

NARVASA, J.:
On July 2, 1968, Insular Life Assurance Co., Ltd.
(hereinafter simply called the Company) and Melecio T.
Basiao entered into a contract 1 by which:
1. Basiao was "authorized to solicit within the Philippines
applications for insurance policies and annuities in
accordance with the existing rules and regulations" of
the Company;
---four years later, in April 1972, the parties entered into
another contract — an Agency Manager's Contract
Basiao then organized an agency or office to which he
gave the name M. Basiao and Associates, while
concurrently fulfilling his commitments under the first
contract with the Company.
---In May, 1979, the Company terminated the Agency
Manager's Contract.

2. he would receive "compensation, in the form of
commissions ... as provided in the Schedule of
Commissions" of the contract to "constitute a part of the
consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its
Agent's Manual, as well as all its circulars ... and those
which may from time to time be promulgated by it, ..."
were made part of said contract.
-The contract also contained, among others,
1. provisions governing the relations of the parties
2. the duties of the Agent
3. the acts prohibited to him
4. and the modes of termination of the agreement
RELATION WITH THE COMPANY. The Agent shall be free
to exercise his own judgment as to time, place and
means of soliciting insurance. Nothing herein contained
shall therefore be construed to create the relationship of
employee and employer between the Agent and the
Company. However, the Agent shall observe and
conform to all rules and regulations which the Company
may from time to time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is
prohibited from giving, directly or indirectly, rebates in
any form, or from making any misrepresentation or over-
selling, and, in general, from doing or committing acts
prohibited in the Agent's Manual and in circulars of the
Office of the Insurance Commissioner.
TERMINATION. The Company may terminate the
contract at will, without any previous notice to the
Agent, for or on account of ... (explicitly specified causes).
...
Either party may terminate this contract by giving to the
other notice in writing to that effect. It shall become ipso
facto cancelled if the Insurance Commissioner should
revoke a Certificate of Authority previously issued or
should the Agent fail to renew his existing Certificate of
Authority upon its expiration. The Agent shall not have
---Subsequently, Basiao sued the Company in a civil
action and this, he was later to claim, prompted the
latter to terminate also his engagement under the first
contract and to stop payment of his commissions starting
April 1, 1980.
---Basiao thereafter filed with the then Ministry of Labor
a complaint 4 against the Company and its president.
__ The respondents disputed the Ministry's jurisdiction
over Basiao's claim, asserting that he was not the
Company's employee, but an independent contractor
and that the Company had no obligation to him for
unpaid commissions under the terms and conditions of
his contract. 5
The Labor Arbiter:
Ruled in favor of Basiao. He ruled that the underwriting
agreement had established an employer-employee
relationship between him and the Company, and this
conferred jurisdiction on the Ministry of Labor to
adjudicate his claim. Said official's decision directed
payment of his unpaid commissions
NLRC:
Affirmed the Labor Arbiter’s Decision.
Hence, the present petition for certiorari and
prohibition.
ISSUE:
WON there exists an employer-employee relationship
between Insular life Assurance Co.Ltd. and Basiao.
Insular’s position/contention:
that no employer-employee relation in the legal and
generally accepted sense existed between it and Basiao,
is drawn from the terms of the contract they had entered
into, which,
1. either expressly or by necessary implication,
made Basiao the master of his own time and
selling methods,
 2. left to his judgment the time, place and means of
soliciting insurance,
3. set no accomplishment quotas and
compensated him on the basis of results
obtained. He was not bound to observe any
schedule of working hours or report to any
regular station;
4. he could seek and work on his prospects
anywhere and at anytime he chose to, and was
free to adopt the selling methods he deemed
most effective.
The respondents Contention:
Emphasizes the provisions of Basiao's contract obliging
him to "...
1.observe and conform to all rules and regulations which
the Company may from time to time prescribe ...,"
2. as well as to the fact that the Company prescribed the
qualifications of applicants for insurance, processed their
applications and determined the amounts of insurance
cover to be issued
as indicative of the control, which made Basiao, in legal
contemplation, an employee of the Company. 9
Ruling and Explanation of the SC:
There is no Employer-employee relationship in this
case.
The SC explained that; Logically, the line should be drawn
between
1.rules that merely serve as guidelines towards the
achievement of the mutually desired result without
dictating the means or methods to be employed in
attaining it.
---This type of “control” aims only to promote the result,
create no employer-employee relationship.
However,
2.those that control or fix the methodology and bind or
restrict the party hired to the use of such means.
--- which address both the result and the means used to
achieve it.
determination of the premiums to be paid and the
schedules of payment. 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 respondents limit themselves to pointing out that
Basiao's contract with the Company bound him to
observe and conform to such rules and regulations as the
latter might from time to time prescribe.
No showing has been made that any such rules or
regulations were in fact promulgated, much less that any
rules existed or were issued which effectively controlled
or restricted his choice of methods — or the methods
themselves — of selling insurance.
Absent such showing, the Court will not speculate that
any exceptions or qualifications were imposed on the
express provision of the contract leaving Basiao "... free
to exercise his own judgment as to the time, place and
means of soliciting insurance."
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.
The Labor Arbiter erred in taking cognizance of, and
adjudicating, said claim, being without jurisdiction to do
so, as did the respondent NLRC in affirming the Arbiter's
decision. This conclusion renders it unnecessary and
premature to consider Basiao's claim for commissions on
its merits.
WHEREFORE, the appealed Resolution of the National
Labor Relations Commission is set aside
SO ORDERED.
ADDITIONAL NOTE: There is no dearth of authority
holding persons similarly placed as respondent Basiao to
be independent contractors, instead of employees of the
parties for whom they worked.

The distinction acquires particular relevance in the case

of an enterprise affected with public interest, as is the
business of insurance, and is on that account subject to
regulation by the State with respect, not only to the
relations between insurer and insured but also to the
internal affairs of the insurance company. 12

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.
Of such a character are the rules which prescribe the
qualifications of persons who may be insured, subject
insurance applications to processing and approval by the
Company, and also reserve to the Company the
G.R. No. 91307 January 24, 1991
SINGER SEWING MACHINE COMPANY, petitioner
vs.
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B.
CHAGUILE, JR., and SINGER MACHINE COLLECTORS
UNION-BAGUIO (SIMACUB), respondents.
Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for
petitioner.
Domogan, Lockey, Orate & Dao-ayan Law Office for
private respondent.
GUTIERREZ, JR., J.:
-On February 15, 1989, the respondent union filed a
petition for direct certification as the sole and exclusive
bargaining agent of all collectors of the Singer Sewing
Machine Company, Baguio City branch.
The Petitioner’s Position/Contention:
The Company opposed the petition mainly on the ground
that the union members are actually not employees but
are independent contractors as evidenced by the
collection agency agreement which they signed.
---The Respondent Med-Arbiter, finding that there exists
an employer-employee relationship between the union
members and the Company, granted the petition for
certification election.
Secretary of Labor Franklin Drilon:
Affirmed the med-Arbiter’s decision.
Hence, this petition in which the Company alleges that
public respondents acted in excess of jurisdiction and/or
committed grave abuse of discretion
ISSUE: WON there exists employer-employee
relationship between the Petitioner and the respondent
Union members collecting agents.
Respondents Position/Contention:
Here, respondents insist that the provisions of the Collection
Agency Agreement belie the Company's position that the
union members are independent contractors.
To prove that union members are employees, it is asserted
that they "perform the most desirable and necessary activities
for the continuous and effective operations of the business of
the petitioner Company" (citing Article 280 of the Labor Code).
They add that the termination of the agreement by the
petitioner pending the resolution of the case before the DOLE
"only shows the weakness of petitioner's stand" and was "for
the purpose of frustrating the constitutionally mandated rights
of the members of private respondent union to self-
organization and collective organization."
They also contend that under Section 8, Rule 8, Book No. III of
the Omnibus Rules Implementing the Labor Code, which
defines job-contracting, they cannot legally qualify as
independent contractors who must be free from control of the
alleged employer, who carry independent businesses and who
have substantial capital or investment in the form of
equipment, tools, and the like necessary in the conduct of the
business.
The present case mainly calls for the application of the
control test, which if not satisfied, would lead us to
conclude that no employer-employee relationship exists.
The following elements are generally considered in the
determination of the employer-employee relationship;
"(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 — although
the latter is the most important element"
Ruling of The SC:
There is no Employer-Employee Relationship.
The SC explained that:
The nature of the relationship between a company and
its collecting agents depends on the circumstances of
each particular relationship. Not all collecting agents are
employees and neither are all collecting agents
independent contractors. The collectors could fall under
either category depending on the facts of each case.
Here, The Agreement confirms the status of the
collecting agent in this case as an independent
contractor not only because he is explicitly described as
such but also because the provisions permit him to
perform collection services for the company without
being subject to the control of the latter except only as
to the result of his work. After a careful analysis of the
contents of the agreement, we rule in favor of the
petitioner.
The Respondent’s contention ignores the following
circumstances:
1. The collection agents are not required to observe office
hours or report to Singer's office everyday except, naturally
and necessarily, for the purpose of remitting their collections.
2. The collection agents do not have to devote their time
exclusively for SINGER.
3. The manner and method of effecting collections are left
solely to the discretion of the collection agents without any
interference on the part of Singer.
4. The collection agents shoulder their transportation
expenses incurred in the collections of the accounts assigned
to them.
5. The collection agents are paid strictly on commission basis.
6. The commissions earned by the collection agents are
directly deducted by them from the amount of collections they
are able to effect. The net amount is what is then remitted to
Singer."
A thorough examination of the facts of the case leads us to the
conclusion that the existence of an employer-employee
relationship between the Company and the collection agents
cannot be sustained.
The Court finds that since private respondents are not
employees of the Company, they are not entitled to the
constitutional right to join or form a labor organization for
purposes of collective bargaining. Accordingly, there is no
constitutional and legal basis for their "union" to be granted
their petition for direct certification.
WHEREFORE, the Order appealed from is reversed and set
aside. So Ordered.
G.R. No. 72409 December 29, 1986
MAMERTO S. BESA, doing business under the name and style
of BESA'S CUSTOMBUILT SHOES, petitioner,
vs.
THE HONORABLE CRESENCIANO B. TRAJANO, DIRECTOR OF
THE BUREAU OF LABOR RELATIONS, MINISTRY OF LABOR
AND EMPLOYMENT, AND KAISAHAN NG MANGGAGAWANG
PILIPINO (KAMPIL-KATIPUNAN), respondents.
De Asis and Hernando Law Office for petitioner.
Estebal M. Mendoza for private respondent.
PARAS, J.:
in January, 1985, private respondent Kaisahan ng
Mangagawang Pilipino (KAMPIL for short), a legitimate
labor union duly registered with the Ministry of Labor
and Employment (MOLE, for short), filed a Petition for
Certification Election, In NLRDivision of the NCR.
---This was opposed by the Petitioner. Alleging among
others that 1. There is no employer-employee
relationship between Besa's and the petitioners-
signatories to the petition;
Med-Arbiter:
on June 27, 1985, issued an order declaring that there
was an employer-employee relationship between the
parties and directed that an election be conducted.
Aggrieved, Petitioner Appealed to the BLR, the BLR:
Upheld the Findings of the Med-Arbiter.
Meanwhile, the Petition of the Union (KAMPIL) before
the Med-Arbiter for the holding of the certification
election was granted.
While the pre-election conference was in progress,
petitioner herein BESAS filed with Us with petition for
certiorari with Prohibition and simultaneously filed with
the Med-Arbiter a motion to suspend the pre-election
conference. The petition filed before Us was dismissed
for lack of merit but was reconsidered upon Motion of
petitioner.
ISSUE: WON employer-employee relationship exists
between petitioner Besas and 17 members of KAMPIL
who are designated as Shoeshiners.
The question of employer-employee relationship became a
primodial consideration in resolving whether or not the subject
shoeshiners have the juridical personality and standing to
present a petition for certification election as well as to vote i
therein.
Petitioner’s Contention:
if the shoeshiners are not considered as employees of
Besa's the basic petition for certification election must
necessarily be dismissed for failure to comply with the
mandatory requirements of the Labor Code, as
amended, that at least thirty (30%) percent of the
employees must support the petition for certification
election and that in order to be certified as the sole and
exclusive bargaining agent, the union must be obtained
a majority of the valid votes cast by eligible voters. In the
instant case, if the 17 shoeshiners are declared ineligible
and their votes are consequently nullified the result of
the certification election would be 16 "Yes" votes (33
minus 17) and 16 "No" votes, which is a tie. Since the
respondent union did not obtain a clear majority for the
"Yes" votes as required under Rule IV Sec. 8(f) of the
Omnibus Rules of the Labor Code, it necessarily follows
that the respondent union cannot be certified as the sole
and exclusive bargaining agent of the workers of Besa's.
Ruling of The SC:
The present petition merits Our consideration. The
records of the case reveal that an employer-employee
relationship does not exist between the 17 shoeshiners
and petitioner.
The shoe shiner is distinct from a piece worker because
while the latter is paid for work accomplished, he does
not, however, contribute anything to the capital of the
employer other than his service.
It is the employer of the piece worker who pays his
wages, while the shoe shiner in this instance is paid
directly by his customer. The piece worker is paid for
work accomplished without regard or concern to the
profit as derived by his employer, but in the case of the
shoe shiners, the proceeds derived from the trade are
always divided share and share alike with respondent
BESA. The shoe shiner can take his share of the proceeds
everyday if he wanted to or weekly as is the practice of
qqqBesas The employer of the piece worker supervises
and controls his work, but in the case of the shoe shiner,
respondent BESA does not exercise any degree of control
or supervision over their person and their work.
The circumstances of this case cannot pass the four fold
test. 1. The selection 2. The payment of wages 3. The
power to dismiss 4. The power to control the conduct of
an employee
Consequently, employer-employee relationship between
members of the Petitioning union and respondent
MAMERTO B. BESA being absent the latter could not be
held guilty of the unfair labor practice acts imputed
against him.
WHEREFORE, judgment is hereby rendered giving due
course to the Petition and declaring VOID the decision of
the Director of the Bureau of Labor Relations dated
September 27, 1985. The Petition in BLR Case No. A-8-
165-85 (NCR-LRD-M1-044-85) is therefore hereby
DISMISSED.
SO ORDERED.
Feria (Chairman), Fernan, Alampay, Gutierrez, Jr., JJ.,
concur.
[G.R. No. 138051. June 10, 2004]
JOSE Y. SONZA, petitioner, vs. ABS-CBN
BROADCASTING CORPORATION, respondent.
CARPIO, J.:
---In May 1994, respondent ABS-CBN Broadcasting
Corporation (ABS-CBN) signed an Agreement
(Agreement) with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was
represented by SONZA, as President and General
Manager, and Carmela Tiangco (TIANGCO), as EVP and
Treasurer. Referred to in the Agreement as AGENT,
MJMDC agreed to provide SONZAs services exclusively to
ABS-CBN as talent for radio and television. The
Agreement listed the services SONZA would render to
ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00
a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00
p.m., Sundays.[3]
---ABS-CBN agreed to pay for SONZAs services a monthly
talent fee of P310,000 for the first year and P317,000 for
the second and third year of the Agreement. ABS-CBN
would pay the talent fees on the 10th and 25th days of the
month.
---On 1 April 1996, SONZA wrote a letter to ABS-CBNs
President, Eugenio Lopez III, which reads:
We would like to call your attention to the Agreement
dated May 1994 entered into by your goodself on behalf
of ABS-CBN with our company relative to our talent JOSE
Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in
view of recent events concerning his programs and
career. We consider these acts of the station violative of
the Agreement and the station as in breach thereof. In
this connection, we hereby serve notice of rescission of
said Agreement at our instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing
recovery of the remaining amount stipulated in
paragraph 7 of the Agreement but reserves the right to
seek recovery of the other benefits under said
Agreement.
Thank you for your attention.
Sgd. By mr. JOSE Y. SONZA
---On 30 April 1996, SONZA filed a complaint against ABS-
CBN before the Department of Labor and Employment,
National Capital Region in Quezon City. SONZA
complained that ABS-CBN did not pay his salaries,
separation pay, service incentive leave pay, 13th month
pay, signing bonus, travel allowance and amounts due
under the Employees Stock Option Plan (ESOP).
Defense/Answer of ABS-CBN
---On 10 July 1996, ABS-CBN filed a Motion to Dismiss on
the ground that no employer-employee relationship
existed between the parties.
Labor Arbiter: denied the motion to dismiss and
directed the parties to file their respective position
papers. But later on, it Dismissed the complaint for lack
of Jurisdiction.
The labor Arbiter reasoned that Sonza should not be
considered as an employee of abs-cbn by reason of the
peculiar circumstances surrounding the engagement of
his services. Unlike an ordinary employee, he was free to
perform the services he undertook to render in
accordance with his own style.
Whatever benefits complainant enjoyed arose from
specific agreement by the parties and not by reason of
employer-employee relationship. As correctly put by
the respondent, All these benefits are merely talent fees
and other contractual benefits and should not be
deemed as salaries, wages and/or other remuneration
accorded to an employee, notwithstanding the
nomenclature appended to these benefits.
Aggrieved, Sonza Appealed to the NLRC.
NLRC: the NLRC rendered a Decision affirming the Labor
Arbiters’ decision.
Sonza Filed a special civil action for certiorari Before the
CA.
CA: Dismissed the case.
Hence, this case.
ISSUE: WON there Exists an Employer-Employee
relationship between Sonza and ABS-CBN.
Ruling:
The SC said there is none. It affirmed the assailed
decision.
The SC explained that there is No convincing reason
exists to warrant a reversal of the decision of the Court
of Appeals affirming the NLRC ruling which upheld the
Labor Arbiters dismissal of the case for lack of
jurisdiction.
The present controversy is one of first
impression. Although Philippine labor laws and
jurisprudence define clearly the elements of an
employer-employee relationship, this is the first time
that the Court will resolve the nature of the relationship
between a television and radio station and one of its
talents. There is no case law stating that a radio and
television program host is an employee of the broadcast
station.
---Applying the control test to the present case, we find
that SONZA is not an employee but an independent
contractor. The control test is the most important test
our courts apply in distinguishing an employee from an
independent contractor.[29] This test is based on the
extent of control the hirer exercises over a worker. The
greater the supervision and control the hirer exercises,
the more likely the worker is deemed an employee. The
converse holds true as well the less control the hirer
exercises, the more likely the worker is considered an
independent contractor.[30]
THE Petitioner’s CONTENTIONS vis a vis the Explanation
of The Court’s Ruling:
First, SONZA contends that ABS-CBN exercised control
over the means and methods of his work.
---SONZAs argument is misplaced. ABS-CBN engaged
SONZAs services specifically to co-host the Mel & Jay
programs. ABS-CBN did not assign any other work to
SONZA. To perform his work, SONZA only needed his
skills and talent. How SONZA delivered his lines,
appeared on television, and sounded on radio were
outside ABS-CBNs control. SONZA did not have to render
eight hours of work per day. The Agreement required
SONZA to attend only rehearsals and tapings of the
shows, as well as pre- and post-production staff
meetings.[31] ABS-CBN could not dictate the contents of
SONZAs script. However, the Agreement prohibited
SONZA from criticizing in his shows ABS-CBN or its
interests.[32] The clear implication is that SONZA had a
free hand on what to say or discuss in his shows provided
he did not attack ABS-CBN or its interests.
Second, SONZA urges us to rule that he was ABS-CBNs
employee because ABS-CBN subjected him to its rules
and standards of performance. SONZA claims that this
indicates ABS-CBNs control not only [over] his manner of
work but also the quality of his work.
---The Agreement stipulates that SONZA shall abide with
the rules and standards of performance covering
talents[41] of ABS-CBN. The Agreement does not require
SONZA to comply with the rules and standards of
performance prescribed for employees of ABS-CBN. The
code of conduct imposed on SONZA under the
Agreement refers to the Television and Radio Code of the
Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which
has been adopted by the COMPANY (ABS-CBN) as its
Code of Ethics.
In any event, not all rules imposed by the hiring party on
the hired party indicate that the latter is an employee of
the former.
In this case, SONZA failed to show that these rules
controlled his performance. We find that these general
rules are merely guidelines towards the achievement of
the mutually desired result, which are top-rating
television and radio programs that comply with
standards of the industry.
Lastly, SONZA insists that the exclusivity clause in the
Agreement is the most extreme form of control which
ABS-CBN exercised over him.
---This argument is futile. Being an exclusive talent does
not by itself mean that SONZA is an employee of ABS-
CBN. Even an independent contractor can validly provide
his services exclusively to the hiring party. In the
broadcast industry, exclusivity is not necessarily the
same as control.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in
the broadcast and entertainment industries to treat
talents like SONZA as independent contractors. SONZA
argues that if such practice exists, it is void for violating
the right of labor to security of tenure.
The right of labor to security of tenure as guaranteed in
the Constitution[53] arises only if there is an employer-
employee relationship under labor laws. Not every
performance of services for a fee creates an employer-
employee relationship. To hold that every person who
renders services to another for a fee is an employee - to
give meaning to the security of tenure clause - will lead
to absurd results.
Individuals with special skills, expertise or talent enjoy
the freedom to offer their services as independent
contractors. The right to life and livelihood guarantees
this freedom to contract as independent
contractors. The right of labor to security of tenure
cannot operate to deprive an individual, possessed with
special skills, expertise and talent, of his right to contract
as an independent contractor. An individual like an artist
or talent has a right to render his services without any
one controlling the means and methods by which he
performs his art or craft. This Court will not interpret the
right of labor to security of tenure to compel artists and
talents to render their services only as employees. If
radio and television program hosts can render their
services only as employees, the station owners and
managers can dictate to the radio and television hosts
what they say in their shows. This is not conducive to
freedom of the press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code (NIRC)[54] in relation
to Republic Act No. 7716,[55] as amended by Republic Act
No. 8241,[56] treats talents, television and radio
broadcasters differently. Under the NIRC, these
professionals are subject to the 10% value-added tax
(VAT) on services they render. Exempted from the VAT
are those under an employer-employee
[57]
relationship. This different tax treatment accorded to
talents and broadcasters bolters our conclusion that they
are independent contractors, provided all the basic
elements of a contractual relationship are present as in
this case.
Clearly, the present case does not call for an application
of the Labor Code provisions but an interpretation and
implementation of the May 1994 Agreement. In effect,
SONZAs cause of action is for breach of contract which
is intrinsically a civil dispute cognizable by the regular
courts.[58]
WHEREFORE, we DENY the petition. The assailed
Decision of the Court of Appeals dated 26 March 1999 in
CA-G.R. SP No. 49190 is AFFIRMED. Costs against
petitioner.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Panganiban, Ynares-
Santiago, and Azcuna, JJ., concur.
[G.R. No. 124551. August 28, 1998]
USHIO MARKETING, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and SEVERINO
ANTONIO, respondents.
DAVIDE, JR., J.:
Private respondent Severino Antonio was an electrician
who worked within the premises of petitioner Ushios car
accessory shop in Banawe, Quezon City.
On August 22, 1994, private respondent filed a complaint
for illegal dismissal, non-payment of overtime pay,
holiday pay, and other benefits against petitioner Ushio
Marketing
---Ushio Filed a motion to Dismiss. she alleged that it was
a single proprietorship engaged in the business of selling
automobilespare parts and accessories. Petitioner
claimed that private respondent was not among her
employees but a free lance operator who wait[ed] on the
shops customers should the latter require his services.
Labor Arbiter: Dismissed the Complaint against Ushio.
Defense of private respondent Severino:
---On February 28, 1995, private respondent assisted by
the Public Attorneys Office, appealed the order of the
Honorable Labor Arbiter to the Commission. In his
memorandum, private respondent alleged that Ushio
Marketing hired his services on 15 November 1981 until
July 3, 1994 as an electrician with a daily salary of one
hundred thirty two pesos (P132.00) per day. He further
alleged that:
During the employ of herein complainant with the
respondents, he performed his job religiously and
faithfully, in fact he was the most trusted employee in
the company.
Attached to the private respondents Memorandum of
Appeal were affidavits of his co-electricians who worked
with Ushio Marketing namely: Roberto Lopez and
Narcing Pascua, corroborating the allegation that Mr.
Severino Antonio worked with the petitioner Company
as an electrician for the past four years when they have
been working with the same Company; they were
receiving One Hundred Thirty Two (P132.00) per day
from Mrs. Tan, that they cannot be absent from work
without the permission of Mrs. Tan
NLRC: held that an employer-employee relationship
exists between Ushio and Severino and that the latter
was illegally dismissed.
NOTE:
The OSG’s view
the Office of the Solicitor General (OSG) supports the
stand of petitioner and recommends the reversal of the
challenged decision. The OSG asserts that there was no
employer-employee relationship between the parties
because the control test, being the most important
element of an employer-employee relationship, was
absent. The OSG then points out that there was no
showing that petitioner supplied private respondent
with equipment and tools; apart from private
respondents bare allegation that he could not leave the
premises without petitioners permission, it was not
established that private respondent was under the
control and supervision of petitioner or of its personnel;
private respondent's admission that Mrs. Caroline Tan To
referred jobs directly to him supports the notion that
private respondent was not an employee, otherwise,
Mrs. Tan To would have coursed the job orders for
private respondent through petitioner; and the
arrangement that petitioner would receive the service
fees of private respondent from customers was not
adequate to establish an employer-employee
relationship.
ISSUE: WON there exists an employer-employee
relationship between Ushio and Sevirino Antonio.
Ruling: The SC said none. The SC explained thatIt is not
disputed that on 13 October 1994, Labor Arbiter Leda
directed the parties to file their respective position
papers within a non-extendible period of 25 days. Private
respondent, however, failed to comply with this
order. As to him then, there was no evidence extant on
record to substantiate his allegations.
---We hasten to add, however, that even if the NLRC had
taken into account the various pleadings filed before it,
as the same malady characterized those filed by private
respondent, the conclusion would still be inevitable that
the existence of an employer-employee relationship
between the parties here was not proven by substantial
evidence.
---The factors to be considered in determining the
existence of an employer-employee relationship are: (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.
--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.[11]
---We agree with the Office of the Solicitor General that
here, the power to control the employees conduct, i.e.,
the conduct of private respondent, is absent,
First, private respondent contends that he worked as an
electrician and personal assistant at petitioners store. As
[an] electrician, private respondent may be presumed to
have used equipment or tools in rendering electrical
services. If it is true that private respondent was an
employee of petitioner, he would have used equipment
or tools supplied and owned by his employer.However,
private respondent failed to allege and present proof
that petitioner supplied him equipment and tools.
Second, the conduct of private respondent was not
subject to the control and supervision of petitioner or
any of its personnel.There was no allegation of this, nor
was evidence presented to prove it other than the bare
allegation of private respondent that he could not leave
the work premises without permission from
petitioner. Private respondent himself decided how he
would render electrical services to customers. If it is true
that private respondent was hired as [an] electrician,
petitioner would have exercised supervision and control Categories and Classification of employment
over the means and manner he performed his electrical
Regular Employement. Art. 280:
services for, otherwise, if private respondents work was
unsatisfactory, it would reflect on the business of Experience however abundantly indicate that
petitioner. employees, whenever they institute complaints against
their employers, find it difficult to prove the terms and
Third, private respondent was free to offer his services to
conditions of their employment, or even the
other stores along Banaue, Quezon City, as evidenced by
employeremployee relations itself, as employers
the affidavit of Caroline Tan To, Assistant Manager of
invariably fail, by design or omission, to furnish the
Share Motor Sales (Annex B, Reply to Private
employees copies of the employment contracts. Under
Respondents Comment dated August 5, 1996) and
Article 280 of the Labor Code, the employer is authorized
private respondents own admission. But although
to engage the services of an employee under either a
private respondent admits that he rendered electrical
written or oral contract by providing thus:
services to the customers of other stores, he claims that
petitioner allowed him to do so. If private respondent 280. Regular and Casual Employment. - The provisions
was an employee of petitioner, it was unthinkable for of written agreement to the contrary notwithstanding
petitioner to allow private respondent to render and regardless of the oral agreement of the parties, an
electrical services to three other stores selling employment shall be deemed to be regular where the
automobile spare parts and accessories who were its employee has been engaged to perform activities which
competitors. are usually necessary or desirable in the usual business
or trade of the employer, except where the employment
Fourth, private respondent admits that [i]t was Mrs. Tan
has been fixed for a specific project or undertaking the
who refers electrical and other jobs to private
completion or termination of which has been
respondent (p. 6, Private Respondents Comment dated
determined at the time of the engagement of the
August 5, 1996). If private respondent was an employee
employee or where the work or service to be performed
of petitioner, Tan could not have referred electrical work
is seasonal in nature and the employment is for the
directly to him. She would have to course job orders to
duration of the season. An employment shall be deemed
petitioner. The fact that she dealt directly with private
to be casual if it is not covered by the preceding
respondent means that she did not consider private
paragraph: Provided, That any employee who has
respondent an employee of petitioner.
rendered at least one year of service, whether such
It is clear that petitioner did not have the power to service is continuous or broken, shall be considered a
control private respondent [w]ith respect to the means regular employee with respect to the activity in which he
and methods by which his work was to be accomplished is employed and his employment shall continue while
(Continental Marble Corporation, et al. vs. National such activity exists."
Labor Relations Commission, 161 SCRA 151, 158 [1988]).
This Bill seeks to require the employers to furnish the
Lastly, private respondent allowed petitioner to collect employees copies of the employment contracts in cases
service fees from his customers. He received said fees on where employment engagement are reduced into writing
a weekly basis.This arrangement, albeit peculiar, does and to make a sworn declaration to this effect.
not prove the existence of an employer-employee
relationship. In Besa vs. Trajano, 146 SCRA 501, 506
[1986], the shoe shiner rendering services in the
premises of Besa, received from Besa the payments for
his services on a weekly basis. Yet the shoe shiner was
not considered an employee of Besa. This is the same
arrangement between petitioner and private
respondent.[12]

WHEREFORE, judgment is hereby rendered GRANTING

the petition, REVERSING the challenged decision and
resolution of the National Labor Relations Commission in
NLRC-NCR CA No. 008495-95 and REINSTATING the
Order of 13 January 1995 of the Labor Arbiter in NLRC-
NCR Case No. 08-06147-94.

No pronouncement as to costs.

SO ORDERED.
SUPREME COURT THIRD DIVISION MOISES DE LEON,
Petitioner, -versus- G.R. No. 70705 August 21, 1989
NATIONAL LABOR RELATIONS COMMISSION and LA
TONDEÑA, INC., Respondents. x--------------------------------
-------------------x
FERNAN, C.J.:
It appears that petitioner was employed by private
respondent La Tondeña, Inc. on December 11, 1981, at
the Maintenance Section of its Engineering Department
in Tondo, Manila.
His work consisted mainly of painting company building
and equipment, and other odd jobs relating to
maintenance. He was paid on a daily basis through petty
cash vouchers.
In the early part of January, 1983, after a service of more
than one (1) year, petitioner requested from respondent
company that he be included in the payroll of regular
workers, instead of being paid through petty cash
vouchers
Private respondent’s response to this request was to
dismiss petitioner from his employment on January 16,
1983.
---petitioner filed a complaint for illegal dismissal,
reinstatement and payment of backwages before the
Office of the Labor Arbiter.
Defense of Respondent:
private respondent claimed that petitioner was not a
regular employee but only a casual worker hired
allegedly only to paint a certain building in the company
premises, and that his work as a painter terminated upon
the completion of the painting job.
Labor Abiter:
Rendered a Decision[3] finding the complaint
meritorious and the dismissal illegal; and ordering the
respondent company to reinstate petitioner with full
backwages and other benefits.
NLRC:
Reversed the decision of the Labor Arbiter.
The OSG recommended that the petition be given due
Course. He further recommends that the questioned
decision and resolution of respondent Commission be
annulled and the Order of the Labor Arbiter directing the
reinstatement of petitioner with payment of backwages
and other benefits be upheld.
ISSUE: WON there exists an employer-employee
relationship between De Leon and the Private
respondent.
Ruling: The SC said Yes.
The law on the matter is Article 281 of the Labor Code
which defines regular and casual employment as follows:
“Art. 281. Regular and casual employment. — The
provisions of a written agreement to the contrary
notwithstanding and regardless of the oral agreements
of the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the employer,
except where 1.) the employment has been fixed for a
specific project or undertaking the completion or
termination of which has been determined at the time of
the engagement of the employee or where the work or
services to be performed is seasonal in nature and the
employment is for the duration of the season.
“An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the
activity in which he is employed and his employment shall
continue while such actually exists.”
-This provision reinforces the Constitutional mandate to
protect the interest of labor. Its language evidently manifests
the intent to safeguard the tenurial interest of the worker who
may be denied the rights and benefits due a regular employee
by virtue of lopsided agreements with the economically
powerful employer who can maneuver to keep an employee
on a casual status for as long as convenient. Thus, contrary
agreements notwithstanding, an employment is deemed
regular when the activities performed by the employee are
usually necessary or desirable in the usual business or trade of
the employer.
The primary standard, therefore, of determining a
regular employment is the reasonable connection
between the particular activity performed by the
employee in relation to the usual business or trade of the
employer. The test is
1.) whether the former is usually necessary or desirable
in the usual business or trade of the employer. The
connection can be determined by considering the
nature of the work performed and its relation to the
scheme of the particular business or trade in its
entirety. Also,
2.) if the employee has been performing the job for at
least one year, even if the performance is not
continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as
sufficient evidence of the necessity if not
indispensability of that activity to the business.
Respondent’s Contention:
In the case at bar, the respondent company, which is
engaged in the business of manufacture and distillery of
wines and liquors, claims that petitioner was contracted
on a casual basis specifically to paint a certain company
building and that its completion rendered petitioner’s
employment terminated.
This may have been true at the beginning, and had it been
shown that petitioner’s activity was exclusively limited to
painting that certain building, respondent company’s
theory of casual employment would have been worthy of
consideration. However, during petitioner’s period of
employment, the records reveal that the tasks assigned to
him included not only painting of company buildings,
equipment and tools but also cleaning and oiling
machines, even operating a drilling machine, and other
odd jobs assigned to him when he had no painting job. A
regular employee of respondent company, Emiliano
Tanque, Jr., attested in his affidavit that petitioner worked
with him as a maintenance man when there was no
painting job. Petition GRANTED!
[G. R. No. 148492. May 9, 2003]
Magsalin vs. national organization of working men,
Rodolfo melgar, et al.
VITUG, J.:
Coca-Cola Bottlers Phils., Inc., herein petitioner,
engaged the services of respondent workers as sales
route helpers for a limited period of five
months. After five months, respondent workers
were employed by petitioner company on a day-to-
day basis.
According to petitioner company, respondent
workers were hired to substitute for regular sales
route helpers whenever the latter would be
unavailable or when there would be an unexpected
shortage of manpower in any of its work places or an
unusually high volume of work. --->The practice was
for the workers to wait every morning outside the
gates of the sales office of petitioner company. If
thus hired, the workers would then be paid their
wages at the end of the day.
Ultimately, respondent workers asked petitioner
company to extend to them regular
appointments. Petitioner company refused.
---On 07 November 1997, twenty-three (23) of the
temporary workers (herein respondents) filed with
the National Labor Relations Commission (NLRC) a
complaint for the regularization of their employment
with petitioner company. The complaint was
amended a number of times to include other
complainants that ultimately totaled fifty-eight (58)
workers. Claiming that petitioner company
meanwhile terminated their services, respondent
workers filed a notice of strike and a complaint for
illegal dismissal and unfair labor practice with the
NLRC.
-On 01 April 1998, the parties agreed to submit the
controversy, including the issue raised in the
complaint for regularization of employment, for
voluntary arbitration.
Voluntary Arbitrator: Dismissed the Complaint
Respondent workers went to the CA and filed a
petition for review under Rule 43.
CA: Reversed and set aside the ruling of the
arbitrator.
Hence, this case.
ISSUE: WON the nature of work of the respondents
is such that it is to be deemed necessary and
desirable in the usual business or trade of the
Petitioner that could qualify them to be regular
employees.
Ruling: Yes! The SC explained that Coca-Cola Bottlers
Phils., Inc., is one of the leading and largest
manufacturers of softdrinks in the
country. Respondent workers have long been in the
service of petitioner company. Respondent workers,
when hired, would go with route salesmen on board
delivery trucks and undertake the laborious task of
loading and unloading softdrink products of
petitioner company to its various delivery points.
Even while the language of law might have been
more definitive, the clarity of its spirit and
intent, i.e., to ensure a regular workers security of
tenure, however, can hardly be doubted. In
determining whether an employment should be
considered regular or non-regular, the applicable
test is the reasonable connection between the
particular activity performed by the employee in
relation to the usual business or trade of the
employer. The standard, supplied by the law itself, is
whether the work undertaken is necessary or
desirable in the usual business or trade of the
employer, a fact that can be assessed by looking into
the nature of the services rendered and its relation
to the general scheme under which the business or
trade is pursued in the usual course.
although the work to be performed is only for a
specific project or seasonal, where a person thus
engaged has been performing the job for at least one
year, even if the performance is not continuous or is
merely intermittent, the law deems the repeated
and continuing need for its performance as being
sufficient to indicate the necessity or desirability of
that activity to the business or trade of the
employer. The employment of such person is also
then deemed to be regular with respect to such
activity and while such activity exists.
The repeated rehiring of respondent workers and
the continuing need for their services clearly attest
to the necessity or desirability of their services in the
regular conduct of the business or trade of petitioner
company. The Court of Appeals has found each of
respondents to have worked for at least one year
with petitioner company.
(as to those 36 who received and accepted the
amount granted by the voluntary arbitrator, The
receipt of the amount awarded by the voluntary
arbitrator, as well as the execution of a release,
waiver and quitclaim, is, in effect, an acceptance of
said decision.)
Wherefore CA decision is Affirmed. So ordered.