EMPLOYEE-EMPLOYER RELATIONSHIP ● Otherwise, Servaña could have reported at any time during the day as he may wish.

Television and Production Exponents, Inc. vs. Servaña

Digest Author: FABI CONCLUSION: Therefore, Servaña is a regular employee of TAPE and hence entitled to receive a separation pay.

DOCTRINE: Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of employer-
On the other hand, the Supreme Court ruled that Tuviera, as president of TAPE, should not be held liable for nominal damages as there
employee relationship, namely:
was no showing he acted in bad faith in terminating Servaña
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and DISPOSITION: CA decision is affirmed.
(d) the employer’s power to control the employee with respect to the means and method by which the work is to be
accomplished. SONZA v. ABS-CBN COMPARISON: In that case, the Court explained why Jose Sonza, a well-known television and radio personality,
was an independent contractor and not a regular employee:
The most important factor involves the control test. Under the control test, there is an employer-employee relationship when the person
for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to SELECTION AND ENGAGEMENT:
achieve that end.
ABS-CBN engaged SONZA’S services to co-host its television and radio programs because of SONZA’S peculiar
FACTS:
skills, talent and celebrity status.
1. TAPE is a domestic corporation engaged in the production of television programs, such as the long-running variety program,
“Eat Bulaga!.” BASIS: Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them
2. Its president is Tuviera. Respondent Servaña had served as a security guard for TAPE from March 1987 until he was from ordinary employees.
terminated on 3 March 2000.
3. Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged that he was first APP:
connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular company guard.
4. In a motion to dismiss which was treated as its position paper, TAPE countered that the labor arbiter had no jurisdiction over ● The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not
the case in the absence of an employer-employee relationship between the parties. possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent
5. TAPE averred that respondent was an independent contractor falling under the talent group category and was working contractual relationship.
under a special arrangement which is recognized in the industry. ● If SONZA did not possess such unique skills, talent and celebrity status, ABSCBN would not have entered into
the Agreement with SONZA but would have hired him through its personnel department just like any other
employee.
DECISIONS:
● In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We
must consider all the circumstances of the relationship, with the control test being the most important element.
1. Labor Arbiter declared respondent to be a regular employee of TAPE, LA relied on the nature of the work of respondent,
which is securing and maintaining order in the studio, as necessary and desirable in the usual business activity of TAPE. PAYMENT OF WAGES:
2. NLRC reversed the LA and considered respondent a mere program employee.
3. Court of Appeals found respondent to be a regular employee. BASIS: The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative,
but not conclusive, of an independent contractual relationship.
ISSUE: W/N an employer-employee relationship exists between TAPE and respondent.
APP: All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement.
RULING+RATIO: YES.

LB: In determining Servaña’s nature of employment, the Supreme Court employed the Four Fold Test: (S-W-D-C) ● If SONZA were ABSCBN’s employee, there would be no need for the parties to stipulate on benefits such as
(a) the selection and engagement of the employee; “SSS, Medicare, x x x and 13th month pay which the law automatically incorporates into every employer-
(b) the payment of wages; employee contract.
(c) the power of dismissal; and ● Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.
(d) the employer’s power to control the employee with respect to the means and method by which the work is to be ● SONZA’s talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the
accomplished. ordinary that they indicate more an independent contractual relationship rather than an employer-employee
relationship.
APP: In this case, all of the factors are present. ● ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZA’s unique skills, talent and
celebrity status not possessed by ordinary employees.
● Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent
1. SELECTION AND ENGAGEMENT
fees for his services.
● Servaña was selected and engaged by TAPE when he was absorbed as a “talent” in 1995.
● The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an
● He is not really a talent, as termed by TAPE, because he performs an activity which is necessary and desirable to TAPE’s
independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC
business and that is being a security guard. is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the
● Further, the primary evidence of him being engaged as an employee is his employee identification card. An identification Agreement.”
card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of
the firm who issues it.
2. PAYMENT OF WAGES FABI NOTE: although regular employee si Servana mali ung pag dismiss sa kanya on the basis of redundancy kasi hindi nag send ng
● Servaña is definitely receiving a fixed amount as monthly compensation. notice si TAPE sa DOLE.
● He’s receiving P6,000.00 a month.
3. POWER TO DISMISS
● The Memorandum of Discontinuance issued to Servaña to notify him that he is a redundant employee evidenced TAPE’s
power to dismiss Servaña.
4. POWER OF CONTROL
● The bundy cards which showed that Servaña was required to report to work at fixed hours of the day manifested the fact
that TAPE does have control over him.

1
 EMPLOYEE-EMPLOYER RELATIONSHIP
ABS-CBN Broadcasting Corporation vs. Nazareno
Digest Author: FABI
DOCTRINE: There are two kinds of regular employees under the law—
(1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the
employer, and,
(2) those casual employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed.
FACTS:
1. Petitioner ABS-CBN is engaged in the broadcasting business and owns a network of television and radio stations.
2. Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different
dates.
3. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station.
4. Petitioner and the ABS-CBN Rank-and-File Employees executed a CBA, however, since petitioner refused to recognize PAs
as part of the bargaining unit, respondents were not included to the CBA.
5. Respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday
Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before
the NLRC.
DECISIONS:
The Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular employees of petitioner as such,
they were awarded monetary benefits. NLRC affirmed the decision of the Labor Arbiter. Petitioner filed a motion for reconsideration but
CA dismissed it.
ISSUE: W/N respondents are regular employees of ABS-CBN and not project employees.
RULING+RATIO: YES.
LB: There are two kinds of regular employees under the law—
(1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the
employer, and,
(2) those casual employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed.
APP: In this case, it is undisputed that respondents had continuously performed the same activities for an average of five years.
● Their assigned tasks are necessary or desirable in the usual business or trade of the petitioner.
● The persisting need for their services is sufficient evidence of the necessity and indispensability of such services to
petitioner’s business or trade. While length of time may not be a sole controlling test for project employment, it can be a
strong factor to determine whether the employee was hired for a specific undertaking or in fact tasked to perform functions
which are vital, necessary and indispensable to the usual trade or business of the employer.
● Petitioner did not report the termination of respondents’ employment in the particular “project” to the Department of Labor
and Employment Regional Office having jurisdiction over the workplace within 30 days following the date of their separation
from work, using the prescribed form on employees’ termination/dismissals/suspensions.
● As gleaned from the records of this case, petitioner itself is not certain how to categorize respondents. In its earlier
pleadings, petitioner classified respondents as program employees, and in later pleadings, independent contractors.
Program employees, or project employees, are different from independent contractors because in the case of the latter, no
employer-employee relationship exists.
SONZA v. ABS-CBN COMPARISON: In that case, the Court explained why Jose Sonza, a well-known television and radio personality,
was an independent contractor and not a regular employee:
SELECTION AND ENGAGEMENT:
ABS-CBN engaged SONZA’S services to co-host its television and radio programs because of SONZA’S peculiar
skills, talent and celebrity status.
SONZA contends that the “discretion used by respondent in specifically selecting and hiring complainant over other
broadcasters of possibly similar experience and qualification as complainant belies respondent’s claim of independent
contractorship.”
BASIS: Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them
from ordinary employees.
APP:
● The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not
possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent
contractual relationship.
● If SONZA did not possess such unique skills, talent and celebrity status, ABSCBN would not have entered into
the Agreement with SONZA but would have hired him through its personnel department just like any other
employee.
● In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We
must consider all the circumstances of the relationship, with the control test being the most important element.
PAYMENT OF WAGES:
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this
mode of fee payment shows that he was an employee of ABS-CBN.
SONZA also points out that ABS-CBN granted him benefits and privileges “which he would not have enjoyed if he were truly
the subject of a valid job contract.”
BASIS: The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative,
but not conclusive, of an independent contractual relationship.
APP: All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement.
● If SONZA were ABSCBN’s employee, there would be no need for the parties to stipulate on benefits such as
“SSS, Medicare, x x x and 13th month pay which the law automatically incorporates into every employer-
employee contract.
● Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.
● SONZA’s talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the
ordinary that they indicate more an independent contractual relationship rather than an employer-employee
relationship.
● ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZA’s unique skills, talent and
celebrity status not possessed by ordinary employees.
● Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent
fees for his services.
● The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an
independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC
is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the
Agreement.”
IN THE CASE AT BAR: In this case, however, the employer-employee relationship between petitioner and respondents has been
proven.
● First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required
from them because they were merely hired through petitioner’s personnel department just like any ordinary employee.
● Second. The so-called “talent fees” of respondents correspond to wages given as a result of an employer-employee
relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent
contractual relationship.
● Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are highly
dependent on the petitioner for continued work.
● Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates
the allegation that respondents are independent contractors.
DISPOSITION: Petition Denied.
2
SONZA v. ABS-CBN COMPARISON: ○ They cannot be considered contractual employees since they were not paid for the result of their work, but
on a monthly basis and were required to do their work in accordance with the company’s schedule.
● Sonza was engaged by ABS-CBN in view of his “unique skills, talent and celebrity status not possessed by ordinary ○ It found that petitioners were illegally dismissed and must be awarded with back wages and separation pay.
employees.” His work was for radio and television programs.
ISSUE: W/N Petitioners are regular employees? YES
● Sonza’s talent fee amounted to P317,000.00 per month, which this court found to be a substantial amount that indicated he
W/N they are entitled to CBA benefits? YES
was an independent contractor rather than a regular employee.
W/N they are illegally dismissed? YES
● Sonza was unable to prove that ABS-CBN could terminate his services apart from breach of contract. There was no
indication that he could be terminated based on just or authorized causes under the Labor Code. In addition, ABS-CBN RULING:
continued to pay his talent fee under their agreement, even though his programs were no longer broadcasted. Claim for CBA Benefits

● In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered his lines, how he appeared on television, or LA unequivocally settled the petitioner’s employment status: they are ABS-CBN’s regular employees entitled to the benefits and
how he sounded on radio. All that Sonza needed was his talent. Further, “ABS-CBN could not terminate or discipline privileges of regular employees. These benefits and privileges arise from entitlements under the law and from their employment contract
SONZA even if the means and methods of performance of his work . . . did not meet ABSCBN’s approval.” as regular employees, part of which is the CBA if they fall within the coverage of this agreement.

DISPOSITION: Petition Denied.

On Illegal Dismissal

To justify the termination of service, respondent cited redundancy as its authorized cause but offered no justificatory supporting
evidence. It merely claimed that it was contracting out the petitioner’s activities in the exercise of it management prerogative. For such
to be valid, it must be exercised with good faith which respondent failed to do so. By implementing the dismissal action at the time the
LA’s ruling was under review, the company unilaterally negated the effects of the LA’s ruling while at the same time appealling the same
EMPLOYEE-EMPLOYER RELATIONSHIP
Fulache v. ABS-CBN ruling to the NLRC - an affront to NLRC”s authority and an abuse for the appeal process. Hence, abs-cbn acted in bad faith.
Digest Author:
DOCTRINE: By claiming redundancy as authorized cause for dismissal, ABS-CBN impliedly admitted that the petitioners were regular
By claiming redundancy as authorized cause for dismissal, ABS-CBN impliedly admitted that the petitioners were regular employees whose services, by law, can only be terminated for the just and authorized causes defined under the Labor Code.
employees whose services, by law, can only be terminated for the just and authorized causes defined under the Labor Code.
Conclusion: Hence, petitioners as regular employees were deprived of CBA benefits and were illegally dismissed.
FACTS:
Disposition: Granted. Reinstatement, back wages with damages.
The Regularization Case
In relation to Sonza case:
● Petitioners were drivers/cameramen, editors, PA/ Teleprompter Operator- editing and VTR man.
● They filed complaints for regularization, ULP and several money claims against respondent.
● They alleged that respondent executed a CBA, which they only became aware of when they obtained copies of it. They
learned that they had been excluded from its coverage as ABS-CBN considered them as temporary and not regular
employees.

Respondent’s contention:

- Respondent claimed that to cope with the fluctuating business conditions, it contracts the services of persons who possess
the necessary talent, skills, training ,expertise to meet the requirements of it programs.
- These contracted persons are called “talents” and are considered independent contractors and are paid a pre-arranged
consideration called “talent fee”

LA held that petitioners were regular employees of ABS-CBN, not independent contractors, and are entitled to the benefits of regular
employees.

The Illegal Dismissal Case

● Pending appeal, ABS-CBN dismissed petitioners for their refusal to sign up contracts of employment with service contractor
Able Services.
● Petitioners then filed an illegal dismissal case.
● LA upheld the validity of ABS-CBN’s contracting out of certain work or services in its operations. LA found that petitioners
were dismissed due to redundancy and must be awarded with separation pay. Respondent appealed to NLRC.
● NLRC ruled that there was an ER-EE relationship between the petitioners and ABS-CBN
○ as the company exercised control over the petitioners in the performance of their work
○ They were regular employees because they were engaged to perform activities usually necessary in
respondent’s trade or business

3
 EMPLOYEE-EMPLOYER RELATIONSHIP
EMPLOYEE-EMPLOYER RELATIONSHIP Fuji Television Network, Inc. vs. Espiritu
Dumpit-Murillo vs. Court of Appeals Digest Author: FABI
Digest Author: FABI
DOCTRINE: There is no employeremployee relationship between the contractor and principal who engages the contractor’s services,
DOCTRINE: but there is an employer-employee relationship between the contractor and workers hired to accomplish the work for the principal.
Concerning regular employment, the law provides for two kinds of employees, namely:
(1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the Employees under fixed-term contracts cannot be independent contractors because in fixed-term contracts, an employer-employee
employer; and relationship exists.
(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. In other words, regular status arises from either the nature of work of the employee or the duration of his FACTS:
employment.
(1) Espiritu was engaged by Fuji as a news correspondent/producer tasked to report Philippine news to Fuji through its Manila
FACTS: Bureau field office. The employment contract was initially for one year, but was successively renewed on a yearly basis with
salary adjustments upon every renewal.
1. Murillo was hired under a talent contract, as a newscaster and co-anchor for ABC’s early evening news program.
2. The contract was for a period of three months. It was renewed fifteen times within four years. (2) Arlene was diagnosed with lung cancer. She informed Fuji about her condition, and the Chief of News Agency of Fuji, Aoki,
3. Upon the expiration of her last talent contract, she informed ABC of her desire to renew. informed the former that the company had a problem with renewing her contract considering her condition. Arlene insisted
4. Not having received a reply, she considered the company’s inaction as constructive dismissal of her services. she was still fit to work as certified by her attending physician.

ISSUE: W/N petitioner is a regular employee of the private respondent. (3) After a series of verbal and written communications, Arlene and Fuji signed a non-renewal contract. In consideration thereof,
Arlene acknowledged the receipt of the total amount of her salary from March-May 2009, year-end bonus, mid-year bonus
RULING+RATIO: YES. and separation pay. However, Arlene executed the non-renewal contract under protest.

LB: The law provides for two kinds of employees, namely: (4) Arlene filed a complaint for illegal dismissal, alleging that she was forced to sign the non-renewal contract after Fuji came to
(1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of know of her illness. She also alleged that Fuji withheld her salaries and other benefits when she refused to sign, and that
the employer; and she was left with no other recourse but to sign the non-renewal contract to get her salaries.
(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. CONTENTION OF FUJI:
Fuji alleged that Arlene was an independent contractor citing the Sonza case. She was hired because of her
The elements to determine the existence of an employment relationship are: skills. Her salary was higher than the normal rate. She had the power to bargain with her employer. Her contract was for a
(a) the selection and engagement of the employee, fixed term. It also stated that Arlene was not forced to sign the non-renewal agreement, considering that she sent an email
(b) the payment of wages, with another version of her non-renewal agreement.
(c) the power of dismissal, and
(d) the employer’s power to control. ISSUE: W/N Espiritu is a regular employee and not an independent contractor.
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. RULING+RATIO: YES, Espiritu is a regular employee. Fuji’s argument that Arlene was an independent contractor under a
fixed-term contract is contradictory.

APP:
● In this case, the duties of petitioner as enumerated in her employment contract indicate that ABC had control over the work
of petitioner.
● Aside from control, ABC also dictated the work assignments and payment of petitioner’s wages.
● ABC also had power to dismiss her. All these being present, clearly, there existed an employment relationship between
petitioner and ABC.
● Further, the requisites for regularity of employment have been met in the instant case.
● Gleaned from the description of the scope of services aforementioned, petitioner’s work was necessary or desirable in the
usual business or trade of the employer which includes, as a precondition for its enfranchisement, its participation in the
government’s news and public information dissemination.
● In addition, her work was continuous for a period of four years.
● This repeated engagement under contract of hire is indicative of the necessity and desirability of the petitioner’s work in
private respondent ABC’s business
SONZA v. ABS-CBN COMPARISON:
● The Sonza case is not applicable.
● In Sonza, the television station did not instruct Sonza how to perform his job. How Sonza delivered his lines, appeared on
television, and sounded on radio were outside the television station’s control. Sonza had a free hand on what to say or
discuss in his shows provided he did not attack the television station or its interests.
● Clearly, the television station did not exercise control over the means and methods of the performance of Sonza’s work.
● In the case at bar, ABC had control over the performance of petitioner’s work. Noteworthy too, is the comparatively low
P28,000 monthly pay of petitioner vis the P300,000 a month salary of Sonza, that all the more bolsters the conclusion that
petitioner was not in the same situation as Sonza.
LB: Employees under fixed-term contracts cannot be independent contractors because in fixed-term contracts, an employer-employee
relationship exists.
The test in this kind of contract is not the necessity and desirability of the employee’s activities, “but the day certain agreed upon by the
parties for the commencement and termination of the employment relationship.” For regular employees, the necessity and desirability of
their work in the usual course of the employer’s business are the determining factors. On the other hand, independent contractors do
not have employer-employee relationships with their principals.
To determine the status of employment, the existence of employer-employee relationship must first be settled with the use of the four-
fold test, especially the qualifications for the power to control.
The distinction is in this guise:
Rules that merely serve as guidelines towards the achievement of a mutually desired result without dictating the means or methods to
be employed creates no employer-employee relationship; whereas those that control or fix the methodology and bind or restrict the
party hired to the use of such means creates the relationship.
APP:
● In this case, Arlene was hired by Fuji as a news producer, but there was no evidence that she was hired for her unique skills
that would distinguish her from ordinary employees.
● Her monthly salary appeared to be a substantial sum.
● Fuji had the power to dismiss Arlene, as provided for in her employment contract.
● The contract also indicated that Fuji had control over her work as she was required to report for 8 hours from Monday to
Friday. (Unlike in SONZA case where Sonza was not required.)
● Fuji gave her instructions on what to report and even her mode of transportation in carrying out her functions was controlled.
Therefore, as all the elements of four fold test are present, Arlene could not be an independent contractor.

DISPOSITION: Petition Denied.

4
SONZA v. ABS-CBN COMPARISON: - The NLRC affirmed. CA overturned the decision.

● Sonza was engaged by ABS-CBN in view of his “unique skills, talent and celebrity status not possessed by ordinary
employees.” His work was for radio and television programs.
● Sonza’s talent fee amounted to P317,000.00 per month, which this court found to be a substantial amount that indicated he
was an independent contractor rather than a regular employee.
● Sonza was unable to prove that ABS-CBN could terminate his services apart from breach of contract. There was no
indication that he could be terminated based on just or authorized causes under the Labor Code. In addition, ABS-CBN
continued to pay his talent fee under their agreement, even though his programs were no longer broadcasted.
● In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered his lines, how he appeared on television, or
how he sounded on radio. All that Sonza needed was his talent. Further, “ABS-CBN could not terminate or discipline
SONZA even if the means and methods of performance of his work . . . did not meet ABSCBN’s approval.”
ISSUE: W/N Petitioners are regular employees? YES
RULING: Yes.
LB: One of the criteria to determine whether there is an employer-employee relationship, the so-called "control test" is generally
regarded as the most crucial and determinative indicator of the said relationship.
Under this test, an employer-employee relationship is said to exist where the person for whom the services are performed
reserves the right to control not only the end result but also the manner and means utilized to achieve the same.
APP: Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms and condition
embodied therein, petitioners are regular employees of ABS-CBN.

DISPOSITION: Petition Denied.

1. As cameramen, editors and reporters, it appears that Petitioners were subject to the control and supervision of Respondents
which provided them with the equipment essential for the discharge of their functions.
2. The exclusivity clause and prohibitions in their Talent Contract were likewise indicative of Respondents' control over them,
however obliquely worded.
EMPLOYEE-EMPLOYER RELATIONSHIP 3. Also,the presumption is that when the work done is an integral part of the regular business of the employer and when the
Begino vs. ABS-CBN Corporation worker does not furnish an independent business or professional service, such work is a regular employment of such
Digest Author: FABI employee and not an independent contractor.

DOCTRINE: One of the criteria to determine whether there is an employer-employee relationship, the so-called "control test" is
generally regarded as the most crucial and determinative indicator of the said relationship.

Under this test, an employer-employee relationship is said to exist where the person for whom the services are performed reserves the
right to control not only the end result but also the manner and means utilized to achieve the same.

FACTS:
● ABS-CBN engaged the services of Petitioners as cameramen, editors or reporters for TV Broadcasting.
● Petitioners signed regularly renewed Talent Contracts (3 months - 1 year) and Project Assignment Forms which detailed the
duration, budget and daily technical requirements of a particular project.
● Petitioners were tasked with coverage of news items for subsequent daily airings in Respondents’ TV Patrol Bicol Program.
● The Talent Contract has an exclusivity clause and provides that nothing therein shall be deemed or construed to establish
an employer-employee relationship between the parties.
● Petitioners filed against Respondents a complaint for regularization before the NLRC's Arbitration branch.
● While the case was pending, Petitioners contracts were terminated, prompting the latter to file a second complaint for illegal
dismissal.

Petitioner’s contention:
● In support of their complaint, Petitioners claimed that:
○ they worked under the direct control of Respondent Villafuerte
○ they were mandated to wear company IDs
○ they were provided the necessary equipment
○ they were informed about the news to be covered the following day, and
○ they were bound by the company’s policy on attendance and punctuality.

Respondent’s contention:
● Pursuant to their Talent Contracts and Project Assignment Forms, Petitioners were hired as talents to act as reporters,
editors and/or cameramen.
● Respondents claimed they never imposed control as to how Petitioners discharged their duties. At most, they were briefed
regarding the general requirements of the project to be executed.

- The Arbitration Branch ruled that Petitioners were regular employees, and ordered Respondents to reinstate the Petitioners.

5

EMPLOYEE-EMPLOYER RELATIONSHIP
Bernarte vs. PBA
Digest Author: FABI
DOCTRINE: The referees are the only, absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot
and do not determine which calls to make or not to make and cannot control the referee when he blows the whistle because such
authority exclusively belongs to the referees. The very nature of petitioner’s job of officiating a professional basketball game
undoubtedly calls for freedom of control by respondents.
FACTS:
(1) Complainants Bernarte and Guevarra aver that they were invited to join the PBA as referees.
(2) Complainant Bernarte received a letter from the Office of the Commissioner advising him that his contract would not be
renewed citing his unsatisfactory performance on and off the court. It was a total shock for Bernarte who was awarded
Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.
(3) Complainant Guevarra alleges that he signed a yearly contract as Regular Class C referee. Respondent Martinez issued a
memorandum to Guevarra expressing dissatisfaction over his questioning on the assignment of referees officiating out-of-
town games. He was no longer made to sign a contract.
(4) Respondents aver that complainants were not illegally dismissed because they were not employees of the PBA. Their
respective contracts of retainer were simply not renewed. PBA had the prerogative of whether or not to renew their
contracts, which they knew were fixed.
DECISIONS:
● Both the Labor Arbiter and NLRC decided that the petitioners were employees whose dismissals by respondents were
illegal.
● However, the CA overturned the decisions of the NLRC and LA on the ground that the petitioner is an independent
contractor since respondents did not exercise any form of control over the means and methods by which petitioner
performed his work as a basketball referee.
ISSUE: W/N petitioner is an employee of respondents, which in turn determines whether petitioner was illegally dismissed.
● Once in the playing court, the referees exercise their own independent judgment, based on the rules of the game, as to
when and how a call or decision is to be made. The referees decide whether an infraction was committed, and the PBA
cannot overrule them once the decision is made on the playing court.
● The referees are the only, absolute, and final authority on the playing court.
● Respondents or any of the PBA officers cannot and do not determine which calls to make or not to make and cannot control
the referee when he blows the whistle because such authority exclusively belongs to the referees.
● The very nature of petitioner’s job of officiating a professional basketball game undoubtedly calls for freedom of control by
respondents.
● Furthermore, the foreign case law declares that a referee is an independent contractor, whose special skills and
independent judgment are required specifically for such position and cannot possibly be controlled by the hiring
party.
● Therefore, the power of control according to the Four Fold Test was absent in this case.
OTHER FACTORS INDICATING PETITIONER IS AN INDEPENDENT CONTRACTOR:
The following circumstances indicate that petitioner is an independent contractor:
(1) the referees are required to report for work only when PBA games are scheduled, which is three times a week spread over
an average of only 105 playing days a year, and they officiate games at an average of two hours per game; and
(2) the only deductions from the fees received by the referees are withholding taxes.
REPEATED HIRING; HIRING PARTY MUST HAVE CONTROL
● In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an employee of the former.
● For a hired party to be considered an employee, the hiring party must have control over the means and methods by which
the hired party is to perform his work, which is absent in this case.
DISPOSITION: Petition Denied.

RULING+RATIO: No, petitioner is not an employee of PBA.

LB: To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer’s power to control the employee on the means and methods by which the work is accomplished.

The so-called “control test” is the most important indicator of the presence or absence of an employer-employee relationship.

In Sonza v. ABS-CBN Broadcasting Corporation, which determined the relationship between a television and radio station and one of its
talents, the Court held that not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of
the former.

APP:

CONTROL TEST:

● In this case, petitioner asserts that he is an employee of respondents since the latter exercise control over the performance
of his work. Petitioner cites the several stipulations in the retainer contract which evidence control.

● However, the SC ruled that the stipulations hardly demonstrate control over the means and methods by which petitioner
performs his work as a referee officiating a PBA basketball game.

● The contractual stipulations do not pertain to, much less dictate, how and when petitioner will blow the whistle and make
calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity of the
professional basketball league.

6
 EMPLOYEE-EMPLOYER RELATIONSHIP EMPLOYEE-EMPLOYER RELATIONSHIP
Abella vs. PLDT Consulta vs. Court of Appeals
Digest Author: FABI Digest Author: FABI

DOCTRINE: To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to DOCTRINE: Not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the
wit: services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical
(a) the selection and engagement of the employee; sense of the term.
(b) the payment of wages;
(c) the power of dismissal; and FACTS:
(d) the employer’s power to control the employee on the means and methods by which the work is accomplished. (1) Pamana Philippines, Inc. (“Pamana”) is engaged in health care business. Raquel P. Consulta (“Consulta”) was a Managing
FACTS: Associate of Pamana.
(1) Respondent PSI entered into an agreement with the PLDT to provide the latter with such number of qualified security
guards. (2) Consulta negotiated with the Federation of Filipino Civilian Employees Association (“FFCEA”) working at the United States
Subic Naval Base for a Health Care Plan for the FFCEA members.
(2) Under the agreement, it was expressly provided that there shall be no employer-employee relationship between the PLDT
and the security guards, and that PSI shall have the entire charge, control and supervision. (3) Pamana issued Consulta a Certification.

(3) It was likewise stipulated that PSI shall also have the exclusive authority to select, engage, and discharge its security (4) Pamana and the U.S. Naval Supply Depot signed the FFCEA account.
guards, with full control over their wages, salaries or compensation.
(5) Consulta, claiming that Pamana did not pay her commission for the FFCEA account, filed a complaint for unpaid wages or
(4) 65 security guards supplied by respondent PSI filed a Complaint for regularization against the PLDT. commission against Pamana, its President Requesto, and its Executive Vice-President Tolentino.

(5) The Complaint alleged that petitioner security guards have been employed by the company and that all of them served ISSUE: W/N Consulta is an employee of Pamana.
PLDT directly for more than 1 year.
RULING+RATIO: No, Consulta is not an employee of Pamana.
(6) It was further alleged that PLDT is the entity that controls and supervises the complainants’ work through its Security
Department. LB: The four elements of an employer-employee relationship, which have since been adopted in subsequent jurisprudence, are (1) the
power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control. The power to control is the most
ISSUE: W/N the security guards were the employees of PAL. important of the four elements.

RULING+RATIO: No, the security guards were not employees of PAL but by PSI. In Insular Life Assurance Co., Ltd. v. NLRC - 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
LB: To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: them in the legal or technical sense of the term.
(a) the selection and engagement of the employee;
(b) the payment of wages; APP:
(c) the power of dismissal; and
(d) the employer’s power to control the employee on the means and methods by which the work is accomplished. In the present case, the power to control is missing.

APP:
● On the first factor, based on the evidence adduced that it was the PSI, the security provider of the PLDT, which
selected, engaged or hired and discharged the security guards.
● On the second factor, it is PSI that determined and paid the petitioners’ wages, salaries, and compensation. As
elucidated by the Labor Arbiter, petitioners’ witness testified that his wages were collected and withdrawn at the
office of PSI and PLDT pays PSI for the security services on a lump-sum basis and that the wages of complainants are
only a portion of the total sum.
CONTROL:
● Pamana tasked Consulta to organize, develop, manage, and maintain a sales division, submit a number of enrollments and
revenue attainments in accordance with company policies and guidelines, and to recruit, train and direct her Supervising
Associates and Health Consultants. However, the manner in which Consulta was to pursue these activities was not subject
to the control of Pamana.
● Consulta failed to show that she had to report for work at definite hours. The amount of time she devoted to soliciting clients
was left entirely to her discretion. The means and methods of recruiting and training her sales associates, were left to her
sound judgment.

● Anent the third and fourth factors, petitioners capitalize on the delinquency reports prepared by PLDT personnel against
some of the security guards as well as certificates of participation in civil disturbance course, certificates of attendance in
first aid training, certificate of completion in fire brigade training seminar and certificate of completion on restricted land
mobile radio telephone operation to show that the petitioners are under the direct control and supervision of PLDT and that
the latter has, in fact, the power to dismiss them.
● Consulta claims that the documents she submitted show that Pamana had control. However, the documents only prove the
absence of the power to control.
● Clearly, the Managing Associates only received suggestions from Pamana. They could adopt the suggestions but the
suggestions were not binding on them.

● Delinquency reports were nothing but reminders of the infractions committed by the petitioners while on duty
which serve as basis for PLDT to recommend the termination of the concerned security guard from PLDT.
● As regards the seminars, while said seminars were conducted at the premises of PLDT, it also remains uncontroverted
that complainants’ participation was done with the approval and at the expense of PSI.
● Therefore, the security guards
DISPOSITION: Motion for reconsideration denied with finality.
● Managing Associates shelled out their own resources to bolster their recruitment. They shared in the payment of the salaries
of their secretaries. They gave cash incentives to their sales associates from their own pocket. These circumstances show
that the Managing Associates were independent contractors, not employees, of Pamana.
WAGES:
● Finally, Pamana paid Consulta not for labor she performed but only for the results of her labor. Without results, Consulta’s
labor was her own burden and loss.
● Aside from commissions, bonuses and other benefits that depended solely on actual sales, Pamana did not pay Consulta
any compensation. As a Managing Associate, she was only entitled to commissions, bonuses and other benefits, which
depended solely on her sales and on the sales of her group. DISPOSITION: Petition dismissed.

7
 EMPLOYEE-EMPLOYER RELATIONSHIP ● The existence of an employment relation is not dependent on how the worker is paid but on the presence or absence of
Villamaria, Jr. vs. Court of Appeals control over the means and method of the work. The amount earned in excess of the “boundary hulog” is equivalent to
Digest Author: FABI wages and the fact that the power of dismissal was not mentioned in the Kasunduan did not mean that private
respondent never exercised such power, or could not exercise such power.
DOCTRINE: Court ruled in National Labor Union v. Dinglasan, that the jeepney owner/operatordriver relationship under the boundary
system is that of employer-employee and not lessor-lessee.
DISPOSITION: Petition dismissed.
FACTS:
(1) Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in assembling passenger jeepneys with a EMPLOYEE-EMPLOYER RELATIONSHIP
public utility franchise to operate along the Baclaran-Sucat route. Villamaria stopped assembling jeepneys and retained only Republic vs. Asiapro Cooperative
nine, four of which operated by employing drivers on a “boundary basis.” Digest Author: FABI
(2) One of those drivers was respondent Bustamante remitted 450 a day to Villamaria as boundary and kept the residue of his DOCTRINE: The existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract, when the
daily earnings as compensation for driving the vehicle. terms and surrounding circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by
what the parties say it should be.
(3) Villamaria verbally agreed to sell the jeepney to Bustamante under a “boundary-hulog scheme”, where Bustamante would
remit to Villamaria P550 a day for a period of 4 years; Bustamane would then become the owner of the vehicle and continue FACTS:
to drive the same under Villamaria’s franchise, but with Php 10,000 downpayment. (1) Respondent Asiapro Cooperative is composed of owners-members with primary objectives of providing them savings and
credit facilities and livelihood services.
(4) Villamaria executed a contract entitled “Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary Hulog”.
(2) In discharge of said objectives, Asiapro entered into several service contracts with Stanfilco.
(5) The parties agreed that if Bustamante failed to pay the boundary- hulog for 3 days, Villamaria Motors would hold on to the
vehicle until Bustamante paid his arrears, including a penalty of 50 a day; in case Bustamante failed to remit the daily (3) Sometime later, the cooperative owners-members requested Stanfilco’s help in registering them with SSS and remitting their
boundary-hulog for a period of one week, the Kasunduan would cease to have the legal effect and Bustamante would have contributions.
to return the vehicle to Villamaria motors.
(4) Petitioner SSS informed Asiapro that being actually a manpower contractor supplying employees to Stanfilco, it must be the
(6) Bustamante and other drivers who also had the same arrangement failed to pay their respective boundary-hulog. This one to register itself with SSS as an employer and remit the contributions.
prompted Villamaria to serve a “Paalala”. Villamaria took back the jeepney driven by Bustamante and barred the latter from
driving the vehicle. (5) Respondent continuously ignoring the demand of SSS the latter filed before the SSC.
(7) Bustamante filed a complaint for Illegal Dismissal. (6) Asiapro alleges that there exists no employer-employee relationship between it and its owners-members.
ISSUE: W/N the existence of a boundary-hulog agreement negates the employer-employee relationship between the vendor (7) SSC ruled in favor of SSS. On appeal, CA reversed the decision.
and vendee, and, as a corollary, whether the Labor Arbiter has jurisdiction over a complaint for illegal dismissal in such case.
ISSUE: W/N there is employer-employee relationship between Asiapro and its owners-members.
RULING+RATIO: NO, under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship was created
between petitioner and respondent: that of employer-employee and vendorvendee. The Kasunduan did not extinguish the employer- RULING+RATIO: YES.
employee relationship of the parties extant before the execution of said deed.
LB: In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and
LB: The Court ruled in National Labor Union v. Dinglasan that the jeepney owner/operatordriver relationship under the engagement of the workers; (2) the payment of wages by whatever means; (3) the power of dismissal; and (4) the power to control the
boundary system is that of employer-employee and not lessor-lessee. worker‘s conduct, with the latter assuming primacy in the overall consideration.
● The boundary system is a scheme by an owner/operator engaged in transporting passengers as a common carrier to APP: All the aforesaid elements are present in this case.
primarily govern the compensation of the driver, that is, the latter’s daily earnings are remitted to the owner/operator less the
excess of the boundary which represents the driver’s compensation. Under this system, the owner/operator exercises
control and supervision over the driver.
(1) First. It is expressly provided in the Service Contracts that it is the respondent cooperative which has the exclusive
● The management of the business is still in the hands of the owner/operator, who, being the holder of the certificate of public discretion in the selection and engagement of the owners-members as well as its team leaders who will be assigned at
convenience, must see to it that the driver follows the route prescribed by the franchising and regulatory authority, and the Stanfilco.
rules promulgated with regard to the business operations.
(2) Second. It cannot be doubted then that those stipends or shares in the service surplus are indeed wages, because
● The fact that the driver does not receive fixed wages but only the excess of the “boundary” given to the owner/operator is not
these are given to the owners-members as compensation in rendering services to respondent cooperative‘s client,
sufficient to change the relationship between them. Indubitably, the driver performs activities which are usually necessary or
desirable in the usual business or trade of the owner/operator. Stanfilco.

APP:
● Under this system the owner/operator exercises control and supervision over the driver. It is unlike in lease of
chattels where the lessor loses complete control over the chattel leased but the lessee is still ultimately responsible for the
consequences of its use.
● The driver performs activities which are usually necessary or desirable in the usual business or trade of the owner/operator.
Under the Kasunduan, respondent was required to remit Php 550 daily to petitioner, an amount which represented the
boundary of petitioner as well as respondent’s partial payment (hulog) of the purchase price of the jeepney. Thus, the daily
remittances also had a dual purpose: that of petitioner’s boundary and respondent’s partial payment (hulog) for the
vehicle.
(3) Third. It is also stated in the above-mentioned Service Contracts that it is the respondent cooperative which has the
power to investigate, discipline and remove the owners-members and its team leaders who were rendering services at
Stanfilco.
(4) Fourth. In the case at bar, it is the respondent cooperative which has the sole control over the manner and means of
performing the services under the Service Contracts with Stanfilco as well as the means and methods of work.
(5) Also, the respondent cooperative is solely and entirely responsible for its owners-members, team leaders and other
representatives at Stanfilco.

8
 (6) All these clearly prove that, indeed, there is an employer-employee relationship between the respondent cooperative and its ● From the time he started to work with petitioner, he never was included in its payroll; was never deducted any
owners-members. contribution for remittance to the SSS; and was in fact subjected by petitioner to the ten (10%) percent withholding
tax for his professional fee, matters which are simply inconsistent with an employer-employee relationship.
DISPOSITION: Petition dismissed.
● An ordinary employee would consider the SSS payments important and thus make sure they would be paid. The
complainant never bothered to ask the respondent to remit his SSS contributions.

● This clearly shows that the complainant never considered himself an employee of PHILCOM and thus, respondent need not
EMPLOYEE-EMPLOYER RELATIONSHIP remit anything to the SSS in favor of the complainant.”
Philippine Global Communications, Inc. vs. De Vera
Digest Author: FABI ● The records are replete with evidence showing that –respondent had to bill petitioner for his monthly professional fees.

DOCTRINE: Where the company and the physician practically agreed on every term and condition of the latter’s engagement, the same ● It simply runs against the grain of common experience to imagine that – an ordinary employee has yet to bill his
negates the element of control in their relationship. employer to receive his salary.

FACTS:
(1) Petitioner PhilCom, is a corporation engaged in the business of communication services and allied activities, while AS TO DISMISSAL:
respondent De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. ● The power to terminate the parties’ relationship was mutually vested on both. Either may terminate the arrangement at will,
with or without cause.
(2) De Vera, via a letter offered his services to the petitioner, therein proposing his plan of works required of a practitioner in
industrial medicine, to include [CERTAIN TASKS]. AS TO CONTROL:

(3) The parties agreed and formalized respondent’s proposal in a document denominated as RETAINERSHIP CONTRACT– ● Finally, remarkably absent from the parties’ arrangement is the ELEMENT OF CONTROL, whereby the employer has
which will be for a period of one year subject to renewal, and that respondent’s “retainer fee” will be at P4,000.00 a month. reserved the right to control the employee not only as to the result of the work done but also as to the means and methods
Said contract was renewed yearly. by which the same is to be accomplished.

(4) Philcom, thru a letter bearing on the subject boldly written as “TERMINATION – RETAINERSHIP CONTRACT”, informed De
Vera of its decision to discontinue the latter’s “retainer’s contract with the Company effective at the close of business hours”
because management has decided that it would be more practical to provide medical services to its employees through
accredited hospitals near the company premises.
(5) De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging that he had
been actually employed by Philcom as its company physician since 1981 and was dismissed without due process.
(6) He averred that he was designated as a “company physician on retainer basis” for reasons allegedly known only to Philcom.
● Here, petitioner had no control over the means and methods by which respondent went about performing his work
at the company premises.
● He could even embark in the private practice of his profession, not to mention the fact that respondent’s work hours and the
additional compensation therefor were negotiated upon by the parties.
● In fine, the parties themselves practically agreed on every terms and conditions of respondent’s engagement, which
thereby negates the element of control in their relationship. For sure, respondent has never cited even a single instance
when petitioner interfered with his work.

(7) He likewise professed that since he was not conversant with labor laws, he did not give much attention to the designation as DISPOSITION: Petition GRANTED.
anyway he worked on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other regular
employees of Philcom.

ISSUE: W/N the case is one of a LEGITIMATE JOB CONTRACTING AGREEMENT or an EMPLOYER-EMPLOYEE
RELATIONSHIP.

RULING+RATIO: This is a case of Legitimate Job Contracting Agreement.

LB: FOUR FOLD TEST

APP:

APPLYING THE FOUR-FOLD TEST TO THIS CASE:

● It was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner, as borne
by no less than his own letter.

AS TO SELECTION OR HIRING]:
● The fact that –the complainant was not considered an employee was recognized by the complainant himself in a signed
LETTER to the respondent.

● The tenor of this letter indicates that –the complainant was proposing to extend his time with the respondent and seeking
additional compensation for said extension.

● This shows that the respondent PHILCOM did not have control over the schedule of the complainant as it [is] the
complainant who is proposing his own schedule and asking to be paid for the same.

● This is proof that the complainant understood that his relationship with the respondent PHILCOM was a retained physician
and not as an employee. If he were an employee he could not negotiate as to his hours of work.

AS TO WAGES:

9
 EMPLOYEE-EMPLOYER RELATIONSHIP
Coca-Cola Bottlers (Phils.), Inc. vs. Climaco
Digest Author: FABI
DOCTRINE: Where there is no employer-employee relationship between the parties, the termination of the Retainership Agreement,
which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of the retained physician.
FACTS:
(1) Dr. Climaco is a medical doctor who was hired by Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement.
(2) The Retainer Agreement, which began on January 1, 1988, was renewed annually.
(3) The last one expired and despite the non-renewal of the Retainer Agreement, respondent continued to perform his functions
as company doctor to Coca-Cola until he received a letter from the company concluding their retainership agreement.
(4) Dr. Climaco inquired from the management of the company whether it was agreeable to recognizing him as a regular
employee. The management refused to do so.
(5) Respondent filed a Complaint before the NLRC, Bacolod City, seeking recognition as a regular employee of the company
and prayed for the payment of all benefits of a regular employee.
(6) While the complaint was pending before the Labor Arbiter, respondent received a letter from Petitioner Company concluding
their retainership agreement effective.
ISSUE: W/N there exist an employee-employer relationship
RULING+RATIO: No, employee-employer relationship does not exist in this case.
LB: FOUR FOLD TEST
APP:
● In this case, petitioner company lacked the power of control over the performance by respondent of his duties. The
Comprehensive Medical Plan, which contains the respondent’s objectives, duties and obligations, does not tell
respondent “how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients,
employees of [petitioner] company, in each case.”
● The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control
the means and methods by which respondent performed his assigned tasks.
● It is precisely because the company lacks the power of control that the contract provides that respondent shall be directly
responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.
● The Labor Arbiter also correctly found that the provision in the Retainer Agreement that respondent was on call during
emergency cases did not make him a regular employee.
● The Court also notes that the Retainership Agreement granted to both parties the power to terminate their
relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or
termination.
● The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of respondent
as a retained physician of petitioner company and upholds the validity of the Retainership Agreement which clearly
stated that no employer-employee relationship existed between the parties.
● The Agreement also stated that it was only for a period of 1 year beginning January 1, 1988 to December 31, 1998, but it
was renewed on a yearly basis.
● Considering that there is no employer-employee relationship between the parties, the termination of the Retainership
Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent.
● Consequently, there is no basis for the moral and exemplary damages granted by the Court of Appeals to respondent due to
his alleged illegal dismissal.
DISPOSITION: Petition GRANTED.
EMPLOYEE-EMPLOYER RELATIONSHIP
Chavez vs. National Labor Relations Commissio
Digest Author: FABI
DOCTRINE: The respondents’ power to dismiss the petitioner was inherent in the fact that they engaged the services of the petitioner
as truck driver. They exercised this power by terminating the petitioner’s services albeit in the guise of “severance of contractual
relation” due allegedly to the latter’s breach of his contractual obligation.
FACTS:
The respondent company, Supreme Packaging, Inc., is in the business of manufacturing cartons and other packaging materials for
export and distribution. It engaged the services of the petitioner, Pedro Chavez, as truck driver on October 25, 1984. As such, the
petitioner was tasked to deliver the respondent company’s products from its factory in Mariveles, Bataan, to its various customers,
mostly in Metro Manila.
ISSUE: W/N there exist an employee-employer relationship
RULING+RATIO: No, employee-employer relationship does not exist in this case.
LB: FOUR FOLD TEST
APP:
● In this case, petitioner company lacked the power of control over the performance by respondent of his duties. The
Comprehensive Medical Plan, which contains the respondent’s objectives, duties and obligations, does not tell
respondent “how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients,
employees of [petitioner] company, in each case.”
● The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control
the means and methods by which respondent performed his assigned tasks.
● It is precisely because the company lacks the power of control that the contract provides that respondent shall be directly
responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.
● The Labor Arbiter also correctly found that the provision in the Retainer Agreement that respondent was on call during
emergency cases did not make him a regular employee.
● The Court also notes that the Retainership Agreement granted to both parties the power to terminate their
relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or
termination.
● The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of respondent
as a retained physician of petitioner company and upholds the validity of the Retainership Agreement which clearly
stated that no employer-employee relationship existed between the parties.
● The Agreement also stated that it was only for a period of 1 year beginning January 1, 1988 to December 31, 1998, but it
was renewed on a yearly basis.
● Considering that there is no employer-employee relationship between the parties, the termination of the Retainership
Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent.
● Consequently, there is no basis for the moral and exemplary damages granted by the Court of Appeals to respondent due to
his alleged illegal dismissal.
DISPOSITION: Petition GRANTED.
10
 EMPLOYEE-EMPLOYER RELATIONSHIP
Angelina Francisco v. NLRC
DOCTRINE: The better approach would therefore be to adopt a two-tiered test involving:
(1) the putative employer’s power to control the employee with respect to the means and methods by which the work is to be
accomplished; and
(2) the underlying economic realities of the activity or relationship.
FACTS:
● Petitioner was hired by respondent Kasei Corporation during its incorporation stage as Accountant and Corporate Secretary
and later as Liaison Officer.
● Subsequently she was also designated Acting Manager until replaced, but was assured by the company that she was still
connected as Technical Consultant.
● Thereafter, Kasei Corporation reduced petitioner’s salary until it was later withheld despite repeated follow-ups.
● Petitioner once again asked for her salary but was informed that she is no longer connected with the company.
● Petitioner thus filed an action for constructive dismissal before the Labor Arbiter.
Respondent’s Contention:
Petitioner is not their employee as she performed her work at her own discretion without their control and supervision.
● Both the Labor Arbiter and NLRC tribunal found for petitioner. CA reversed the decision.
ISSUE: Whether or not there was employer-employee relationship between the parties?
RULING: YES
LB: In certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the
complexity of such a relationship where several positions have been held by the worker. The better approach would therefore be to
adopt a two-tiered test involving:
(1) the putative employer’s power to control the employee with respect to the means and methods by which the work is to be
accomplished; and
(2) the underlying economic realities of the activity or relationship.
APP: By applying the control test, petitioner is an employee of Kasei Corporation because
1. she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant.
2. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting
Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services
to the company and performing functions necessary and desirable for the proper operation of the corporation such
as securing business permits and other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation
because
1. she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages,
benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions.
2. Petitioner’s membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the
President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence
of an employer-employee relationship between petitioner and respondent corporation.
3.
CONCLUSION: It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued
employment in the latter’s line of business.
EMPLOYEE-EMPLOYER RELATIONSHIP
Tongko v. Manufacturers Life
DOCTRINE:
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 company’s 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.
FACTS:
(November 2008 decision)
● 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…
● 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.
● 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.
Petitioner’s contention:
- He alleged 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 Court of Appeals 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.
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.
LB: 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.
11
APP: 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.
LB: In the Supreme Court’s 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 company’s 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.
APP: 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.
CONCLUSION: the Supreme Court found absolutely no evidence of labor law control.
Disposition: DENIED.
EMPLOYEE-EMPLOYER RELATIONSHIP
Maitling Industrial v. Coros
DOCTRINE: The creation of an office pursuant to or under a By-Law enabling provision is not enough to make a position a corporate
office.—Conformably with Section 25, a position must be expressly mentioned in the By- Laws in order to be considered as a corporate
office. Thus, the creation of an office pursuant to or under a By-Law enabling provision is not enough to make a position a corporate
office.
Accordingly, the corporate officers in the context of PD No. 902-A are exclusively those who are given that character either by the
Corporation Code or by the corporations By-Laws.
A different interpretation can easily leave the way open for the Board of Directors to circumvent the constitutionally guaranteed security
of tenure of the employee by the expedient inclusion in the By-Laws of an enabling clause on the creation of just any corporate officer
position.
APP: Matling’s By-Laws did no tlist his position as Vice President for Finance and Administration as one of the corporate offices;
Matling’s By-Law No. III listed only four corporate officers, namely: President, Executive Vice President, Secretary, and Treasurer and
the fact that
Matling’s By-Law No. III dealt with Directors & Officers while its By-Law No. V dealt with Officers proved that there was a differentiation
between the officers mentioned in the two provisions, with those classified under By-Law No. V being ordinary or non-corporate officers;
LB: The criteria for distinguishing between corporate officers who may be ousted from office at will, on one hand, and ordinary corporate
employees who may only be terminated for just cause, on the other hand, do not depend on the nature of the services performed,
but on the manner of creation of the office.
APP: In the respondent’s case, he was supposedly at once an employee, a stockholder, and a Director of Matling. The circumstances
surrounding his appointment to office must be fully considered to determine whether the dismissal constituted an intra-corporate
controversy or a labor termination dispute.
Respondent was not appointed as VP for Finance and Administration because of his being a stockholder or Director of Matling. He had
started working for Matling on September 8, 1966, and had been employed continuously for 33 years until his termination on April 17,
2000, first as a bookkeeper, and his climb in 1987 to his last position as Vice President for
Finance and Administration had been gradual but steady. His subsequent acquisition of the status of Director/stockholder had no
relation to his promotion. Besides, his status of Director/stockholder was unaffected by his dismissal from employment as VP for
Finance and Administration.
Conclusion: Therefore Coros is not a corporate officer and is merely an employee of Matling’s.

In Guerrea v. Lezema, the only officers of a corporation were those given that character either by the Corporation Code or by
the By-Laws; the rest of the corporate officers could be considered only as employees or subordinate officials.

FACTS:

● Ricardo R. Coros filed a complaint for illegal suspension and illegal dismissal against Matling and some of its corporate officers in
the NLRC after he was dismissed as the latter’s Vice President for Finance and Administration.
● Matling moved to dismiss the complaint, raising the ground, among others, that the complaint pertained to the jurisdiction of the
Securities and Exchange Commission (SEC) due to the controversy being intra-corporate inasmuch as the respondent was a
corporate officer, the office of Vice President for Finance and Administration being created by Matlings President pursuant to By
Law No. V.
● LA dismissed the complaint. NLRC set aside the dismissal, concluding that the respondents complaint for illegal dismissal was
properly cognizable by the LA, not by the SEC, because he was not a corporate officer by virtue of his position in Matling, albeit
high ranking and managerial, not being among the positions listed in Matlings Constitution and By-Laws. T
● The CA dismissed the petition for certiorari, hence, this petition.

ISSUE: Whether or not the respondent is a corporate officer of Matling

RULING: Respondent is a NOT a corporate officer of Matling.

LB: Conformably with Section 25, a position must be expressly mentioned in the By-Laws in order to be considered as a corporate
office. Thus, the creation of an office pursuant to or under a By-Law enabling provision is not enough to make a position a corporate
office.

In Guerrea v. Lezama, it held that the only officers of a corporation were those given that character either by the Corporation Code or by
the By-Laws; the rest of the corporate officers could be considered only as employees or subordinate officials.

12
 EMPLOYEE-EMPLOYER RELATIONSHIP
Cosare v. Broadcom Asia
DOCTRINE:
In Tabang v. NLRC, the Court also made the following pronouncement on the nature of corporate offices:
There are two circumstances which must concur in order for an individual to be considered a corporate officer, as against an
ordinary employee or officer, namely:
(1) the creation of the position is under the corporations charter or by-laws; and
(2) the election of the officer is by the directors or stockholders.
It is only when the officer claiming to have been illegally dismissed is classified as such corporate officer that the issue is
deemed an intra-corporate dispute which falls within the jurisdiction of the trial courts.
FACTS:
● Cosare was employed as a salesman by Arevalo, who was then in the business of selling broadcast equipment needed by
television networks and production houses.
● Arevalo set up the company Broadcom, still to continue the business of trading communication and broadcast equipment.
● Cosare was named an incorporator of Broadcom, having been assigned 100 shares of stock with par value of P1.00 per share.
● Cosare was promoted to the position of Assistant Vice President for Sales (AVP for Sales) and Head of the Technical
Coordination.
-----
● Alex F. Abiog (Abiog) was appointed as Broadcom’s Vice President for Sales and thus, became Cosare’s immediate superior.
● Cosare sent a confidential memo to Arevalo to inform him of the anomalies which were allegedly being committed by Abiog
against the company.
○ Cosare ended his memo by clarifying that he was not interested in Abiogs position, but only wanted Arevalo to
know of the irregularities for the corporations sake.
● Arevalo failed to act on Cosares accusations.
● Cosare claimed that he was instead called for a meeting by Arevalo, wherein he was asked to tender his resignation in exchange
for "financial assistance" in the amount ofP300,000.00.
● Cosare refused to comply with the directive, as signified in a letter which he sent to Arevalo.
● Cosare received a memo signed by Arevalo, charging him of serious misconduct and willful breach of trust. He was given
forty-eight (48) hours from the date of the memo within which to present his explanation on the charges.
○ He was also "suspended from having access to any and all company files/records and use of company assets
effective immediately."
○ Thus, Cosare claimed that he was precluded from reporting for work and was instead instructed to wait at the
offices receiving section.
○ Upon the specific instructions of Arevalo, he was also prevented by Villareal from retrieving even his personal
belongings from the office until he was totally barred from entering the company premises.
● Cosare filed a labor complaint, claiming that he was constructively dismissed from employment by the
respondents.
Petitioner’s contention:
He argued that he was illegally suspended, as he placed no serious and imminent threat to the life or property of his employer and co-
employees.
Respondent’s contention:
- Cosare was neither illegally suspended nor dismissed from employment.
- Cosare committed acts inimical to the interests of Broadcom.
- Cosare abandoned his job by continually failing to report for work beginning April 1, 2009, prompting them to issue on April
14, 2009 a memorandum accusing Cosare of absence without leave beginning April 1, 2009.
● LA dismissed the complaint on the ground of Cosares failure to establish that he was constructively dismissed.
● Cosare appealed the LA decision to the NLRC. It reversed the LA decision.
● The respondents motion for reconsideration was denied.
● Dissatisfied, they filed a petition for certiorari with the CA on the issues of constructive dismissal and intra-corporate controversy
which was within the jurisdiction of the RTC, instead of the LA. They argued that the case involved a complaint against a
corporation filed by a stockholder, who, at the same time, was a corporate officer.
● The CA granted the respondents petition.
ISSUE:
Was the case instituted by Cosare an intra-corporate dispute that was within the original jurisdiction of the RTC, and not of the LAs?
RULING: NO.
LB: Settled jurisprudence qualifies that when the dispute involves a charge of illegal dismissal, the action may fall under the
jurisdiction of the LAs upon whose jurisdiction, as a rule, falls termination disputes and claims for damages arising from employer-
employee relations as provided in Article 217 of the Labor Code.
APP: Consistent with this jurisprudence, the mere fact that Cosare was a stockholder and an officer of Broadcom at the time the
subject controversy developed failed to necessarily make the case an intra-corporate dispute.
*LB: In Matling Industrial and Commercial Corporation v. Coros,the Court distinguished between a "regular employee" and a
"corporate officer" for purposes of establishing the true nature of a dispute or complaint for illegal dismissal and determining which body
has jurisdiction over it.
***
There are three specific officers whom a corporation must have under Section 25 of the Corporation Code. These are the president,
secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be
provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate
officers is thus limited by law and by the corporations by-laws.
(relevant ruling)
In Tabang v. NLRC, the Court also made the following pronouncement on the nature of corporate offices:
There are two circumstances which must concur in order for an individual to be considered a corporate officer, as against an
ordinary employee or officer, namely:
(1) the creation of the position is under the corporations charter or by-laws; and
(2) the election of the officer is by the directors or stockholders.
It is only when the officer claiming to have been illegally dismissed is classified as such corporate officer that the issue is
deemed an intra-corporate dispute which falls within the jurisdiction of the trial courts.
APP: The only officers who are specifically listed, and thus with offices that are created under Broadcoms by-laws are the following: the
President, Vice-President, Treasurer and Secretary.
Although a blanket authority provides for the Boards appointment of such other officers as it may deem necessary and proper, the
respondents failed to sufficiently establish that the position of AVP for Sales was created by virtue of an act of Broadcoms
board, and that Cosare was specifically elected or appointed to such position by the directors. No board resolutions to establish
such facts form part of the case records.
13
 EMPLOYEE-EMPLOYER RELATIONSHIP
Atlanta Industries v. Sebolino
DOCTRINE:
With the expiration of the first agreement and the retention of the employees, Atlanta recognized the completion of their training and
their acquisition of a regular employee status.—Even if we recognize the company’s need to train its employees through apprenticeship,
we can only consider the first apprenticeship agreement for the purpose. With the expiration of the first agreement and the retention of
the employees, Atlanta had, to all intents and purposes, recognized the completion of their
training and their acquisition of a regular employee status.
FACTS:
● Almoite, Costales, Sebolino were hired as machine operator, extruder operator and scaleman in Petitioner Co., who is engaged
in the manufacture of steel pipes.
● An apprenticeship agreement was thereafter entered in by respondents
● Upon expiration of the said apprenticeship agreement, the respondents were dismissed.
● A complaint was filed before the LA along with 13 employees.
● LA finds 9 of them were illegally dismissed including respondents.
● Atlanta filed an appeal to the NLRC - alleging that Almoite and Costales entered into a compromise agreement to which NLRC
reversed the said decision withdrawing claims of Almoite and Costales and finding there was no illegal dismissal on Sebolino and
Sagun.
● Respondent appealed to the CA. CA reversed the decision of NLRC - holding that respondents were already employees prior to
the apprenticeship agreement and that the same were defective for the agreements did not indicate the trade or occupation in
which the apprentice would be trained; neither was the apprenticeship program approved by TESDA.
● MR was filed - denied
ISSUE: W/N respondents were regular employees when they were required to undergo apprenticeship?
RULING: YES
LB: With the expiration of the first agreement and the retention of the employees, the company recognized the completion of their
training and their acquisition of a regular employee status
APP: Respondent were regular employees because they occupied positions that are usually necessary and desirable in petitioner
employer’s usual business or trade as manufacturer of plastic building materials.
These tasks and their nature characterized the respondents as regular employees under Art 280 of the LC which renders the
apprenticeship agreements irrelevant.
Conclusion: Thus, when they were dismissed without just or authorized cause, without notice, and without the opportunity to be heard,
their dismissal was illegal under the law
EMPLOYEE-EMPLOYER RELATIONSHIP
Intel Technology v. NLRC
DOCTRINE:
The continuity, existence or termination of an employer-employee relationship in a typical secondment contract or any employment
contract for that matter is measured by the following yardsticks:
1. the selection and engagement of the employee;
2. the payment of wages;
3. the power of dismissal; and
4. the employers power to control the employees conduct.
FACTS:
● Cabiles was initially hired by Intel Phil. as an Inventory Analyst
● He was subsequently promoted several times over the years and was also assigned at Intel Arizona and Intel Chengdu.
● He later applied for a position at Intel Semiconductor Limited Hong Kong (Intel HK).
● He received a letter offering the position of Finance Manager by Intel HK.
● Before accepting the offer, he inquired from Intel Phil., through an email the consequences of accepting the newly presented
opportunity in Hong Kong.
● Intel Phil., through Penny Gabronino (Gabronino), replied that he will not be eligible to receive his retirement benefit not
having reached 10 years of service at the time he moved to Hong Kong. Further, Intel do not round up the years of service.
○ In case he move back to the Philippines his total tenure of service will be computed less on the period that you
are out of Intel Philippines.
● Cabiles signed the job offer.
● Intel Phil. issued Cabiles his "Intel Final Pay Separation Voucher"
● Cabiles executed a Release, Waiver and Quitclaim in favor of Intel Phil. acknowledging receipt of P165,857.62 as full and
complete settlement of all benefits due him by reason of his separation from Intel Phil.
● after seven (7) months of employment, Cabiles resigned from Intel HK.
● About two years thereafter, Cabiles filed a complaint for non-payment of retirement benefits and for moral and exemplary
damages with the NLRC.
Cabiles Contention:
- He claims that he was qualified to avail of the benefits under the company's retirement policy allowing an
employee who served for 10 years or more to receive retirement benefits.
- Cabiles views his employment in Hong Kong as an assignment or an extension of his employment with Intel Phil.
● LA held that Cabiles did not sever his employment with Intel Phil. when he moved to Intel HK, similar to the instances when
he was assigned at Intel Arizona and Intel Chengdu. - affirmed by NLRC
ISSUE: Whether Cabiles’ theory of secondment is correct?
RULING: NO
LB: The continuity, existence or termination of an employer-employee relationship in a typical secondment contract or any employment
contract for that matter is measured by the following yardsticks: 1. the selection and engagement of the employee; 2. the payment of
wages; 3. the power of dismissal; and 4. the employers power to control the employees conduct. (Victorio Meteor v. Creative Creatures
Inc.)
APP: As applied, all of the above benchmarks ceased upon Cabiles assumption of duties with Intel HK. Intel HK became the new
employer.
Cabiles decision to move to Hong Kong required the abandonment of his permanent position with Intel Phil. in order for him to assume a
position in an entirely different company. Clearly, the "transfer" was more than just an assignment. It constituted a severance of Cabiles
relationship with Intel Phil., for the assumption of a position with a different employer, rank, compensation and benefits.
Note: What distinguishes Intel Chengdu and Intel Arizona from Intel HK is the lack of intervention of Intel Phil. on the matter. In the two
previous transfers, Intel Phil. remained as the principal employer while Cabiles was on a temporary assignment.
14
 EMPLOYEE-EMPLOYER RELATIONSHIP The juridical relationship of the parties based on Control Test:
Royale Homes v. Alcantara The CA ratiocinated that since the performance of his tasks is subject to company rules, regulations, code of ethics, and periodic
DOCTRINE: evaluation, the element of control is present. The SC disagreed.

(1) The juridical relationship of the parties based on their written contract: The primary evidence of the nature of the parties' Not every form of control is indicative of employer-employee relationship. A person who performs work for another and is
relationship in this case is the written contract that they signed. subjected to its rules, regulations, and code of ethics does not necessarily become an employee. As long as the level of control
does not interfere with the means and methods of accomplishing the assigned tasks, the rules imposed by the hiring party on the hired
While the existence of employer-employee relationship is a matter of law, the characterization made by the parties in their party do not amount to the labor law concept of control that is indicative of employer-employee relationship.
contract as to the nature of their juridical relationship cannot be simply ignored
APP: The rules and regulations, code of ethics, and period of evaluation of Royale did not involve control over the means and methods
(2) Not every form of control is indicative of employer-employee relationship. A person who performs work for another by which Alcantara was to perform his job (e.g. no working hrs, no other tasks than soliciting sales, he had full control of how to
and is subjected to its rules, regulations, and code of ethics does not necessarily become an employee. As long as the accomplish tasks)
level of control does not interfere with the means and methods of accomplishing the assigned tasks, the rules imposed by the
hiring party on the hired party do not amount to the labor law concept of control that is indicative of employer-employee Other Grounds:
relationship. Repeated hiring - does not prove existence. Only signifies renewal of contract and highlights satisfactory services
Exclusivity clause - does not necessarily result in ER-EE relationship
Payment of wages - Alcantara had no fixed monthly salary. On commission basis only.
FACTS:
● Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its Marketing Director for a fixed period Conclusion: Alcantara is not an employee but a mere independent contractor.
of one year.
● His work consisted mainly of marketing Royale Homes' real estate inventories on an exclusive basis.
● Royale Homes reappointed him for several consecutive years.
● Alcantara filed a Complaint for Illegal Dismissal against Royale Homes alleging that he was dismissed from work without any
valid or just cause and in gross disregard of the proper procedure for dismissing employees.
● He prayed to be reinstated to his former position without loss of seniority rights and other privileges, as well as to be paid
backwages, moral and exemplary damages, and attorney's fees.

Petitioner’s contention:
● Royale Homes denied that Alcantara is its employee because:
(1) it engaged his services as an independent sales contract for one year only;
(2) he never received any salary, 13th month pay, overtime pay or holiday pay;
(3) he was paid on commission basis;
(4) it had no control on how Alcantara would accomplish his tasks

● Labor Arbiter held that Alcantara is an employee of Royale Homes

● NLRC ruled that Alcantara is not an employee but a mere independent contractor of Royale Homes. It based its ruling mainly on
the contract.
● CA reversed NLRC's Decision pointing out that Royale Homes exercised some degree of control over Alcantara since his job is
subject to company rules, regulations, and periodic evaluations.

ISSUE: Whether or not Alcantara was an independent contractor or an employee of Royale Homes

RULING: Alcantara is not an employee of Royal Home but a mere independent contractor.

LB:
The juridical relationship of the parties based on their written contract:
The primary evidence of the nature of the parties' relationship in this case is the written contract that they signed.

While the existence of employer-employee relationship is a matter of law, the characterization made by the parties in their contract as to
the nature of their juridical relationship cannot be simply ignored, particularly in this case where the parties' written contract
unequivocally states their intention at the time they entered into it.

APP: In this case, the contract duly signed and not disputed by the parties, conspicuously provides that "no employer-employee
relationship exists between" Royale Homes and Alcantara, as well as his sales agents. It is clear that they did not want to be bound
by employer-employee relationship at the time of the signing of the contract. The stipulation of the contract is clear and no construction
is needed.

LB:

15
 EMPLOYEE-EMPLOYER RELATIONSHIP
Bazar v. Ruizol
DOCTRINE:
(1) It is the law that defines and governs an employment relationship, whose terms are not restricted by those fixed in the
written contract, for other factors, like the nature of the work the employee has been called upon to perform, are also
considered.
(2) Under the control test, an ER-EE 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.
FACTS:
● Ruizol was a mechanic at Norkis Distributors and assigned at the Surigao City branch.
● He was terminated from work. Thus, he filed a complaint for illegal dismissal.
● Petitioner alleged that Norkis Distributors, Inc. is a corporation engaged in the sale, wholesale and retail of Yamaha
motorcycle units.
● Petitioner countered that responded is not an employee but a franchised mechanic of NDI pursuant to retainership
agreement.
● LA ruled in favor of respondent. NLRC reversed and dismissed the case.
● CA found that there was ER-EE relationship and that respondent was unlawfully dismissed.
Petitioner’s contention:
- Petitioner averred that respondent, being the owner of a motor repair shop, performed repair warranty service, back repair of
Yamaha units, and ordinary repair at his own shop.
- It maintained that NDI terminated the retainership contract with respondent because they were no longer satisfied with the
latter’s services.
ISSUE: W/N there was no ER-EE relationship and there was only retainership agreement?
RULING: YES.
LB: It is the law that defines and governs an employment relationship, whose terms are not restricted by those fixed in the written
contract, for other factors, like the nature of the work the employee has been called upon to perform, are also considered.
The law affords protection to an employee and does not countenance any attempt to subvert its spirit and intent. Any stipulation in
writing can be ignored when the employer utilizes the stipulation to deprive the employee of his security of tenure.
APP: Assuming that respondent signed the retainership agreement, it is not indicative of his employment status.
LB: Wages is defined as remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed
or ascertained on a time, task, piece or commission basis or other method of calculating the same, which is payable by employment for
work done or to be done or for service rendered or to be rendered.
APP: Petitioner claims that respondent was receiving P2,050.00 as his monthly retainer’s fee as of his termination. This fee is covered
by the term “wages”. For services rendered to NDI, respondent received compensation.
LB: Under the control test, an ER-EE 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.
APP: It was shown that respondent had to abide by the standards set by NDI in conducting repair work on Yamaha motorbikes done in
NDI’s service shop. As a matter of fact, on allegations that respondent failed to live up to the demands of the work, he was sent several
memoranda by NDI
Conclusion: Hence, Ruizol is an employee of Norkis Distributors Inc.
EMPLOYEE-EMPLOYER RELATIONSHIP
Dasco v. Philtranco
DOCTRINE:
In order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field
can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the
employee's time and performance are constantly supervised by the employer.
FACTS:
● The petitioners were employed by the respondents as bus drivers and/or conductors with travel routes of Manila (Pasay) to Bicol,
Visayas and Mindanao, and vice versa.
● Petitioners filed a case against the respondents alleging that:
(1) they were already qualified for regular employment status since they have been working with the respondents for
several years;
(2) they were paid only P404.00 per round trip, which lasts from two to five days, without overtime pay and below the
minimum wage rate;
(3) they cannot be considered as field personnel because their working hours are controlled by the respondents
from dispatching to end point and their travel time is monitored and measured by the distance because they are in the
business of servicing passengers where time is of the essence; and
(4) they had not been given their yearly five-day SIL since the time they were hired by the respondents.
● In response, the respondents asserted that:
(1) the petitioners were paid on a fixed salary rate of P0.49 centavos per kilometer run, or minimum wage, whichever is
higher;
(2) the petitioners are seasonal employees since their contracts are for a fixed period and their employment was
dependent on the exigency of the extraordinary public demand for more buses during peak months of the year; and
(3) the petitioners are not entitled to overtime pay and SIL pay because they are field personnel whose time outside the
company premises cannot be determined with reasonable certainty since they ply provincial routes and are left alone in the
field unsupervised.
● The Labor Arbiter ruled in favor of the respondents. NLRC held that the petitioners are not field personnel considering that they
ply specific routes with fixed time schedules determined by the respondents; thus, they are entitled to minimum wage, SIL pay,
and overtime benefits.
● The CA reversed the NLRC and reinstated the Labor Arbiter
ISSUE: Whether the petitioners as bus drivers and/or conductors are field personnel, and thus entitled to overtime pay and SIL pay?
RULING: The bus drivers and/or conductors are regular employees.
LB: The definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his
duties but also with the fact that the employee's performance is unsupervised by the employer. Field personnel are those who
regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the
field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the
employee's time and performance are constantly supervised by the employer.
APP: Petitioners are not field personnel as defined above:
(1) the petitioners, as bus drivers and/or conductors, are directed to transport their passengers at a specified time and place;
(2) they are not given the discretion to select and contract with prospective passengers;
(3) their actual work hours could be determined with reasonable certainty, as well as their average trips per month; and
(4) the respondents supervised their time and performance of duties.
Conclusion: Thus, they are consequently entitled to the benefits accorded to regular employees of the respondents, including overtime
pay and SIL pay.
16