G.R. No.

L-58639 August 12, 1987

CEBU ROYAL PLANT (SAN MIGUEL CORPORATION), vs.
THE HONORABLE DEPUTY MINISTER OF LABOR and RAMON PILONES
Subject: Labor Standards
FACTS:
Ramon Pilones, private respondent, was employed on February 16, 1978 on a probationary
period of employment for six (6) months with petitioner CRP. After said period, he underwent
medical examination for qualification as regular employee but the results showed that he is
suffering from PTB minimal. Consequently, he was informed of the termination of his
employment by respondent since his illness was not curable within 6 months.
Pilones complained against his termination before the Ministry of Labor which dismissed the
same. The dismissal was reversed by the public respondent who ordered the reinstatement
and payment of back wages.
Granting reinstatement, the public respondent argues that Pilones was already a permanent
employee at the time of his dismissal and so was entitled to security of tenure. The alleged
ground for his removal, to wit, pulmonary tuberculosis minimal, was not certified as incurable
within six months as to justify his separation and that the petitioner should have first obtained a
clearance, as required by the regulations then in force, for the termination of his employment.
CRP claims that the private respondent was still on probation at the time of his dismissal and
so had no security of tenure. The dismissal was necessary for the protection of the public
health, as he was handling ingredients in the processing of soft drinks which were being sold
to the public.
ISSUE: Whether the dismissal was proper.
HELD:
No. The dismissal was not proper. Under Article 282 of the Labor Code, an employee who is
allowed to work after a probationary period shall be considered a regular employee. Pilones
was already on permanent status when he was dismissed on August 21, 1978, or four days
after he ceased to be a probationer. As such, he could validly claim the security of tenure
guaranteed to him by the Constitution and the Labor Code.
The petitioner claims it could not have dismissed the private respondent earlier because the xray examination was made only on August 17, 1978, and the results were not immediately
available. That excuse is untenable. We note that when the petitioner had all of six months
during which to conduct such examination, it chose to wait until exactly the last day of the
probation period.

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The applicable rule on the ground for dismissal invoked against him is Section 8, Rule I, Book
VI, of the Rules and Regulations Implementing the Labor Code which states that the employer
shall not terminate his employment unless there is a certification by a competent public health
authority that the disease is of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. The record does not contain the
certification required by the above rule. Hence, dismissal was illegal.
It is also worth noting that the petitioners application for clearance to terminate the
employment of the private respondent was filed with the Ministry of Labor only on August 28,
1978, or seven days after his dismissal. As the NLRC has repeatedly and correctly said, the
prior clearance rule (which was in force at that time) was not a trivial technicality. It required
not just the mere filing of a petition or the mere attempt to procure a clearance but that the
said clearance be obtained prior to the operative act of termination.
Although we must rule in favor of his reinstatement, this must be conditioned on his fitness to
resume his work, as certified by competent authority.
**Another Doctrine under Sec4 of Labor Code on construction:
Concern for the lowly worker who, often at the mercy of his employers, must look up to the law
for his protection. Fittingly, that law regards him with tenderness and even favor and always
with faith and hope in his capacity to help in shaping the nations future. It is error to take him
for granted. He deserves our abiding respect. How society treats him will determine whether
the knife in his hands shall be a caring tool for beauty and progress or an angry weapon of
defiance and revenge. The choice is obvious, of course. If we cherish him as we should, we
must resolve to lighten the weight of centuries of exploitation and disdain that bends his back
but does not bow his head.

Page 2 of 40

JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 138051
June 10, 2004
Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while
MJMDC was represented by Sonza, as President and general manager, and Tiangco as its
EVP and treasurer. Referred to in the agreement as agent, MJMDC agreed to provide Sonzas
services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay
Sonza a monthly talent fee of P310, 000 for the first year and P317, 000 for the second and
third year.
On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the
recent events concerning his program and career. After the said letter, Sonza filed with the
Department of Labor and Employment a complaint alleging that ABS-CBN did not pay his
salaries, separation pay, service incentive pay,13th month pay, signing bonus, travel allowance
and amounts under the Employees Stock Option Plan (ESOP). ABS-CBN contended that no
employee-employer relationship existed between the parties. However, ABS-CBN continued to
remit Sonzas monthly talent fees but opened another account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no employee-employer
relationship. NLRC affirmed the decision of the Labor Arbiter. CA also affirmed the decision of
NLRC.
Issue: Whether or not there was employer-employee relationship between the parties.
Ruling: Case law has consistently held that the elements of an employee-employer relationship
are selection and engagement of the employee, the payment of wages, the power of dismissal
and the employers power to control the employee on the means and methods by which the
work is accomplished. The last element, the so-called "control test", is the most important
element.
Sonzas services to co-host its television and radio programs are because of his peculiar
talents, skills and celebrity status. Independent contractors often present themselves to
possess unique skills, expertise or talent to distinguish them from ordinary employees. The
specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status
not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. All the talent fees and benefits paid to SONZA were the
result of negotiations that led to the Agreement. For violation of any provision of the
Agreement, either party may terminate their relationship. Applying the control test to the
present case, we find that SONZA is not an employee but an independent contractor.
The control test is the most important test our courts apply in distinguishing an employee from
an independent contractor. This test is based on the extent of control the hirer exercises over a
worker. The greater the supervision and control the hirer exercises, the more likely the worker
is deemed an employee. The converse holds true as well the less control the hirer exercises,
Page 3 of 40

the more likely the worker is considered an independent contractor. To perform his work,
SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBNs control. ABS-CBN did not instruct
SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program
format and airtime schedule "for more effective programming." ABS-CBNs sole concern was
the quality of the shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control over the means and methods of performance of
Sonzas work. A radio broadcast specialist who works under minimal supervision is an
independent contractor. Sonzas work as television and radio program host required special
skills and talent, which SONZA admittedly possesses.
ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment
industries to treat talents like Sonza as independent contractors. The right of labor to security
of tenure as guaranteed in the Constitution arises only if there is an employer-employee
relationship under labor laws. Individuals with special skills, expertise or talent enjoy the
freedom to offer their services as independent contractors. The right to life and livelihood
guarantees this freedom to contract as independent contractors. The right of labor to security
of tenure cannot operate to deprive an individual, possessed with special skills, expertise and
talent, of his right to contract as an independent contractor.

G.R. No. 164652

June 8, 2007
Page 4 of 40

THELMA DUMPIT-MURILLO, petitioner,

vs.
COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE JAVIER AND
EDWARD TAN, respondents.
Thelma Dumpit-Murillo was hired by ABC as a newscaster in 1995. Her contract with the TV
station was repeatedly renewed until 1999. She then wrote Jose Javier (VP for News and
Public Affairs of ABC) advising him of her intention to renew the contract.
Javier did not respond.
Dumpit then demanded reinstatement as well as her backwages, service incentive leave pays
and other monetary benefits.
ABC said they could only pay her backwages but her other claims had no basis as she was not
entitled thereto because she is considered as a talent and not a regular employee.
Dumpit sued ABC. The Labor Arbiter ruled against Dumpit. The National Labor Relations
Commission reversed the LA. The Court of Appeals reversed the NLRC and ruled that as per
the contract between ABC and Dumpit, Dumpit is a fixed term employee.
ISSUE: Whether or not Dumpit is a regular employee.
HELD: Yes. Dumpit was a regular employee under contemplation of law. The practice of
having fixed-term contracts in the industry does not automatically make all talent contracts
valid and compliant with labor law. The assertion that a talent contract exists does not
necessarily prevent a regular employment status.
The duties of Dumpit as enumerated in her employment contract indicate that ABC had control
over the work of Dumpit. Aside from control, ABC also dictated the work assignments and
payment of petitioners wages. ABC also had power to dismiss her. All these being present,
clearly, there existed an employment relationship between Dumpit and ABC.
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 Dumpits work in
ABCs business.
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 petitioners wages. ABC also had power to dismiss her. All these being
present, clearly, there existed an employment relationship between petitioner and ABC.

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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 employer; and (2) those who have rendered at least one year of
service, whether continuous or broken, with respect to the activity in which they are
employed.30 In other words, regular status arises from either the nature of work of the
employee or the duration of his employment.31 In Benares v. Pancho,32 we very succinctly
said:
[T]he primary standard for determining regular employment is the reasonable connection
between the particular activity performed by the employee vis--vis the usual trade or business
of the employer. This connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. If the
employee has been performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but only with respect to such activity
and while such activity exists.33
In our view, the requisites for regularity of employment have been met in the instant case.
Gleaned from the description of the scope of services aforementioned, petitioners 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 governments 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
petitioners work in private respondent ABCs business.

Page 6 of 40

FUJI TELEVISION NETWORK, INC. VS. ARLENE S. ESPIRITU

G.R. NO. 204944-45
DECEMBER 3, 2014
J. Leonen
FACTS: Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a
news correspondent/producer tasked to report Philippine news to Fuji through its Manila
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.
In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her
condition, and the Chief of News Agency of Fuji, Yoshiki Aoki, informed the former that the
company had a problem with renewing her contract considering her condition. Arlene insisted
she was still fit to work as certified by her attending physician.
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 and separation pay. However,
Arlene executed the non-renewal contract under protest.
Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the NLRC,
alleging that she was forced to sign the non-renewal contract after Fuji came to know of her
illness. She also alleged that Fuji withheld her salaries and other benefits when she refused to
sign, and that she was left with no other recourse but to sign the non-renewal contract to get
her salaries.
ISSUES:
1.
Was Arlene an independent contractor?
2.
Was Arlene a regular employee?
3.
Was Arlene illegally dismissed?
4.
Did the Court of Appeals correctly awarded reinstatement, damages and attorneys
fees?
LAWS:
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph;
Provided, That, any employee who has rendered at least one year of service, whether such

Page 7 of 40

service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exist.
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause of when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
Thus, on the right to security of tenure, no employee shall be dismissed, unless there are just
or authorized causes and only after compliance with procedural and substantive due process
is conducted.
Art. 284. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his coemployees: Provided, That he is paid separation pay equivalent to at least one (1) month
salary or to one-half (1/2) month salary for every year of service, whichever is greater, a
fraction of at least six (6) months being considered as one (1) whole year.
Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code. Disease as a
ground for dismissal. Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his coemployees, the employer shall not terminate his employment unless there is a certification by a
competent public health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical treatment. If the
disease or ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of his normal health.
CASE HISTORY:
Labor Arbiter dismissed the complaint and held that Arlene was not a regular employee but an
independent contractor.
The NLRC reversed the Labor Arbiters decision and ruled that Arlene was a regular employee
since she continuously rendered services that were necessary and desirable to Fujis
business.
The Court of Appeals affirmed that NLRC ruling with modification that Fuji immediately
reinstate Arlene to her position without loss of seniority rights and that she be paid her
backwages and other emoluments withheld from her. The Court of Appeals agreed with the
NLRC that Arlene was a regular employee, engaged to perform work that was necessary or
desirable in the business of Fuji, and the successive renewals of her fixed-term contract
resulted in regular employment. The case of Sonza does not apply in the case because Arlene
was not contracted on account of a special talent or skill. Arlene was illegally dismissed
Page 8 of 40

because Fuji failed to comply with the requirements of substantive and procedural due
process. Arlene, in fact, signed the non-renewal contract under protest as she was left without
a choice.
Fuji filed a petition for review on certiorari under Rule 45 before the Supreme Court, alleging
that Arlene was hired as an independent contractor; that Fuji had no control over her work; that
the employment contracts were renewed upon Arlenes insistence; that there was no illegal
dismissal because she freely agreed not to renew her fixed-term contract as evidenced by her
email correspondences.
Arlene filed a manifestation stating that the SC could not take jurisdiction over the case since
Fuji failed to authorize Corazon Acerden, the assigned attorney-in-fact for Fuji, to sign the
verification.
RULING:
1.
Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing the Sonzacase. She was hired
because of her skills. Her salary was higher than the normal rate. She had the power to
bargain with her employer. Her contract was for a fixed term. It also stated that Arlene was not
forced to sign the non-renewal agreement, considering that she sent an email with another
version of her non-renewal agreement.
Arlene argued (1) that she was a regular employee because Fuji had control and supervision
over her work; (2) that she based her work on instructions from Fuji; (3) that the successive
renewal of her contracts for four years indicated that her work was necessary and desirable;
(4) that the payment of separation pay indicated that she was a regular employee; (5) that the
Sonzacase is not applicable because she was a plain reporter for Fuji; (6) that her illness was
not a ground for her dismissal; (7) that she signed the non-renewal agreement because she
was not in a position to reject the same.
Distinctions among fixed-term employees, independent contractors, and regular employees
Fixed Term Employment
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more
or less equal terms with no moral dominance exercised by the former or the latter.
These indications, which must be read together, make the Brent doctrine applicable only in a
few special cases wherein the employer and employee are on more or less in equal footing in
entering into the contract. The reason for this is evident: when a prospective employee, on
account of special skills or market forces, is in a position to make demands upon the
prospective employer, such prospective employee needs less protection than the ordinary

Page 9 of 40

worker. Lesser limitations on the parties freedom of contract are thus required for the
protection of the employee.155 (Citations omitted)
For as long as the guidelines laid down in Brent are satisfied, this court will recognize the
validity of the fixed-term contract. (GMA Network, Inc. vs. Pabriga)
Independent Contractor
One who carries on a distinct and independent business and undertakes to perform the job,
work, or service on its own account and under ones own responsibility according to ones own
manner and method, free from the control and direction of the principal in all matters
connected with the performance of the work except as to the results thereof.
No employer-employee relationship exists between the independent contractors and their
principals.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the formers work, the employees of the contractor and
of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.
XXX
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit
the contracting-out of labor to protect the rights of workers established under this Code. In so
prohibiting or restricting, he may make appropriate distinctions between labor-only contracting
and job contracting as well as differentiations within these types of contracting and determine
who among the parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter were directly
employed by him.
Department Order No. 18-A, Series of 2011, Section 3
(c) . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the
performance or completion of a specific job, work or service within a definite or predetermined
period, regardless of whether such job, work or service is to be performed or completed within
or outside the premises of the principal.
This department order also states that there is a trilateral relationship in legitimate job
contracting and subcontracting arrangements among the principal, contractor, and employees
of the contractor. There is no employer-employee relationship between the contractor and
principal who engages the contractors services, but there is an employer-employee
Page 10 of 40

relationship between the contractor and workers hired to accomplish the work for the
principal.162chanRoblesvirtualLawlibrary
Jurisprudence has recognized another kind of independent contractor: individuals with unique
skills and talents that set them apart from ordinary employees. There is no trilateral
relationship in this case because the independent contractor himself or herself performs the
work for the principal. In other words, the relationship is bilateral.
XXX
There are different kinds of independent contractors: those engaged in legitimate job
contracting and those who have unique skills and talents that set them apart from ordinary
employees.
Since no employer-employee relationship exists between independent contractors and their
principals, their contracts are governed by the Civil Code provisions on contracts and other
applicable laws.
Regular Employees
Contracts of employment are different and have a higher level of regulation because they are
impressed with public interest. Article 13, Section 3 of the 1987 Constitution provides full
protection to labor.
Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that :The
relations between capital and labor are not merely contractual. They are so impressed with
public interest that labor contracts must yield to the common good. Therefore, such contracts
are subject to the special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects.
In contracts of employment, the employer and the employee are not on equal footing. Thus, it
is subject to regulatory review by the labor tribunals and courts of law. The law serves to
equalize the unequal. The labor force is a special class that is constitutionally protected
because of the inequality between capital and labor.176 This presupposes that the labor force
is weak.
The level of protection to labor should vary from case to caese. When a prospective employee,
on account of special skills or market forces, is in a position to make demands upon the
prospective employer, such prospective employee needs less protection than the ordinary
worker.
The level of protection to labor must be determined on the basis of the nature of the work,
qualifications of the employee, and other relevant circumstances such as but not limited to
educational attainment and other special qualifications.
Fujis argument that Arlene was an independent contractor under a fixed-term contract is
contradictory. Employees under fixed-term contracts cannot be independent contractors
Page 11 of 40

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 employees 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 employers 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.
In appliacation, 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 rquired to report for 8 hours from Monday to Friday. Fuji gave her
instructions on what to report and even her mode of transportation in carrying out her functions
was controlled.
Therefore, Arlene could not be an independent contractor.
2.

Arlene was a regular employee with a fixed-term contract.

In determining whether an employment should be considered regular or non-regular, the

applicable test is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The standard, supplied by
the law itself, is whether the work undertaken is necessary or desirable in the usual business
or trade of the employer, a fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business or trade is pursued
in the usual course. It is distinguished from a specific undertaking that is divorced from the
normal activities required in carrying on the particular business or trade.
However, there may be a situation where an employees work is necessary but is not always
desirable in the usual course of business of the employer. In this situation, there is no regular
employment.
Fujis Manila Bureau Office is a small unit213 and has a few employees. Arlene had to do all
activities related to news gathering.

Page 12 of 40

A news producer plans and supervises newscast [and] works with reporters in the field
planning and gathering information, including monitoring and getting news stories, rporting
interviewing subjects in front of a video camera, submission of news and current events
reports pertaining to the Philippines, and traveling to the regional office in Thailand. She also
had to report for work in Fujis office in Manila from Mondays to Fridays, eight per day. She had
no equipment and had to use the facilities of Fuji to accomplish her tasks.
The successive renewals of her contract indicated the necessity and desirability of her work in
the usual course of Fujis business. Because of this, Arlene had become a regular employee
with the right to security of tenure.
Arlenes contract indicating a fixed term did not automatically mean that she could never be a
regular employee. For as long as it was the employee who requested, or bargained, that the
contract have a definite date of termination, or that the fixed-term contract be freely entered
into by the employer and the employee, then the validity of the fixed-term contract will be
upheld.
3.

Arlene was illegally dismissed.

As a regular employee, Arlene was entitled to security of tenure under Article 279 of the Labor
Code and could be dismissed only for just or authorized causaes and after observance of due
process.
The expiration of the contract does not negate the finding of illegal dismissal. The manner by
which Fuji informed Arlene of non-renewal through email a month after she informed Fuji of her
illness is tantamount to constructive dismissal. Further, Arlene was asked to sign a letter of
resignation prepared by Fuji. The existence of a fixed-term contract should not mean that there
can be no illegal dismissal. Due process must still be observed.
Moreoever, disease as a ground for termination under Article 284 of the Labor Code and Book
VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code require two
requirements to be complied with: (1) the employees disease cannot be cured within six
months and his continued employment is prohibited by law or prejudicial to his health as well
as to the health of his co-employees; and (2) certification issued by a competent public health
authority that even with proper medical treatment, the disease cannot be cured within six
months. The burden of proving compliance with these requisites is on the employer. Noncompliance leads to illegal dismissal. blesvirtualLawlibrary
Arlene was not accorded due process. After informing her employer of her lung cancer, she
was not given the chance to present medical certificates. Fuji immediately concluded that
Arlene could no longer perform her duties because of chemotherapy. Neither did it suggest for
her to take a leave. It did not present any certificate from a competent public health authority.
Therefore, Arlene was illegally dismissed.
4.

The Court of Appeals correctly awarded reinstatement, damages and attorneys fees.
Page 13 of 40

The Court of Appeals awarded moral and exemplary damages and attorneys fees. It also
ordered reinstatement, as the grounds when separation pay was awarded in lieu of
reinstatement were not proven.
The Labor Code provides in Article 279 that illegally dismissed employees are entitled to
reinstatement, backwages including allowances, and all other benefits.
Separation pay in lieu of reinstatement is allowed only (1) when the employer has ceased
operations; (2) when the employees position is no longer available; (3) strained relations; and
(4) a substantial period has lapsed from date of filing to date of finality.
The doctrine of strained relations should be strictly applied to avoid deprivation of the right to
reinstatement. In the case at bar, no evidence was presented by Fuji to prove that
reinstatement was no longer feasible. Fuji did not allege that it ceased operations or that
Arlenes position was no longer feasible. Nothing showed that the reinstatement would cause
an atmosphere of antagonism in the workplace.
Moral damages are awarded when the dismissal is attended by bad faith or fraud or
constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good
customs or public policy. On the other hand, exemplary damages may be awarded when the
dismissal was effected in a wanton, oppressive or malevolent manner.
After Arlene had informed Fuji of her cancer, she was informed that there would be problems in
renewing her contract on account of her condition. This information caused Arlene mental
anguish, serious anxiety, and wounded feelings. The manner of her dismissal was effected in
an oppressive approach with her salary and other benefits being withheld until May 5, 2009,
when she had no other choice but to sign the non-renewal contract.
With regard to the award of attorneys fees, Article 111 of the Labor Code states that [i]n cases
of unlawful withholding of wages, the culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages recovered. In actions for recovery of wages
or where an employee was forced to litigate and, thus, incur expenses to protect his rights and
interest, the award of attorneys fees is legally and morally justifiablen.Due to her illegal
dismissal, Arlene was forced to litigate.
Therefore, the awards for reinstatement, damages and attorneys fees were proper.

Page 14 of 40

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN AND MA. CRISTINA
SUMAYAO, Petitioners, vs. ABS-CBN CORPORATION (FORMERLY, ABS-CBN
BROADCASTING CORPORATION) AND AMALIA VILLAFUERTE, Respondents.
G.R. No. 199166, 20 April 2015.
PEREZ, J.:
Respondent ABS-CBN, through Respondent Villafuerte, 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.
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 companys policy on attendance and punctuality.
Respondents countered that, pursuant to their Talent Contracts and Project Assignment
Forms, Petitioners were hired as talents to act as reporters, editors and/or cameramen.
Respondents further 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.
While the case was pending, Petitioners contracts were terminated, prompting the latter to file
a second complaint for illegal dismissal.
The Arbitration Branch ruled that Petitioners were regular employees, and ordered
Respondents to reinstate the Petitioners.
The NLRC affirmed the ruling, but the CA overturned the decision.
ISSUE: W/N Petitioners are regular employees of Respondents.
RULING: Yes.

Page 15 of 40

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.
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.
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. The exclusivity clause and prohibitions in their Talent Contract
were likewise indicative of Respondents' control over them, however obliquely worded.
Also,the presumption is that when the work done is an integral part of the regular business of
the employer and when the worker does not furnish an independent business or professional
service, such work is a regular employment of such employee and not an independent
contractor.

Page 16 of 40

GREAT PACIFIC LIFE ASSURANCE CORPORATION (GREPALIFE) VS. JUDICO

HONORATO (GR NO. 73887 DECEMEBER 21, 1989)

FACTS:
Petition for certiorari to review the decision NLRC dated September 9, 1985

Ordering petitioner Grepalife to recognize private respondent HonoratoJudico, as its

regular employee as defined under Art. 281 of the Labor Code.

Remanding the case to its origin for the determination of private respondent Judico's
money claims.
HonoratoJudico filed a complaint for illegal dismissal against Grepalife, a duly organized
insurance firm.
Said complaint prayed for award of money claims consisting of:

Separation pay,

Unpaid salary and 13th month pay,

Refund of cash bond,

Moral and exemplary damages and attorney's fees.

Grepalife admits that Judico entered into an agreement of agency with them to become a debit
agent attached in Cebu City.
Grepalife defines a debit agent as "an insurance agent selling/servicing industrial life plans and
policy holders.
As a debit agent, Judico had definite work assignments including but not limited to collection of
premiums from policyholders and selling insurance to prospective clients.
Public respondent NLRC also found out that complainant was initially paid P 200. 00 as
allowance for thirteen (13) weeks regardless of production and later a certain percentage
denominated as sales reserve of his total collections but not lesser than P 200.00.
Judicowas promoted to the position of Zone Supervisor and was given additional (supervisor's)
allowance fixed at P110.00 per week.
During the third week of November 1981, he was reverted to his former position as debit agent
but, for unknown reasons, not paid so-called weekly sales reserve of at least P 200.00.
Finally on June 28, 1982, complainant was dismissed by way of termination of his agency
contract.
Petitioner assails and argues that the respondent is not an employee and that his
compensation was not based on any fixed number of hours he was required to devote to the
service of company but rather it was the production or result of his efforts or his work that was
being compensated
That the so-called allowance for the first thirteen weeks that Judico worked as debit agent,
cannot be construed as salary but as a subsidy or a way of assistance for transportation and
meal expenses of a new debit agent during the initial period of his training which was fixed for
thirteen (13) weeks.
Said contentions of petitioner were strongly rejected by respondent he maintains that he
received a definite amount as his wage known as "sales reserve" the failure to maintain the
same would bring him back to a beginner's employment with a fixed weekly wage of P 200.00
regardless of production.
He was assigned a definite place in the office to work on when he is not in the field and in
addition to canvassing and making regular reports.
Page 17 of 40

He was burdened with the job of collection and to make regular weekly report thereto for which
an anemic performance would mean dismissal.
He earned out of his faithful and productive service, a promotion to Zone Supervisor with
additional supervisor's allowance, (a definite or fixed amount of P110.00) that he was
dismissed primarily because of anemic performance and not because of the termination of the
contract of agency substantiate the fact that he was indeed an employee of the petitioner and
not an insurance agent in the ordinary meaning of the term.
Both parties appealed to the NLRC and decision was rendered by the Labor Arbiter dismissing
the complaint on the ground that:

The employer-employee relations did not exist between the parties.

But ordered Grepalife to pay complainant the sum of Pl,000.00 by reason of Christian
Charity.
On appeal, decision was reversed by the NLRC ruling that:

Complainant is a regular employee as defined under Art. 281 of the Labor Code.

Declaring the appeal of Grepalife questioning the legality of the payment of Pl,000.00 to
complainant moot and academic.
Petitioner company moved to reconsider, which was denied, hence this petition.
ISSUE:

Whether or not employer-employee relationship existed between petitioner and private

respondent.
HELD:
That Judico was an agent of the petitioner is unquestionable.
As held in (Investment Planning Corp. vs. SSS, 21 SCRA 294), an insurance company may
have two classes of agents who sell its insurance policies: Salaried employees who keep
definite hours and work under the control and supervision of the company.
Registered representatives who work on commission basis. The test therefore is whether the
"employer" controls or has reserved the right to control the "employee" not only as to the result
of the work to be done but also as to the means and methods by which the same is to be
accomplished.
Applying the test to the case at bar, We can readily see that the element of control by the
petitioner on Judico was very much present.
The record shows that:
Petitioner Judico received a definite minimum amount per week as his wage known as "sales
reserve".
He was assigned a definite place in the office to work on when he is not in the field.
In addition to his canvassing work he was burdened with the job of collection.
Both cases he was required to make regular report to the company regarding these duties, and
for which an anemic performance would mean a dismissal.
Conversely faithful and productive service earned him a promotion and additional supervisor's
allowance, a definite amount of P110.00 aside from the regular P 200.00 weekly "allowance".
His contract of services with petitioner is not for a piece of work nor for a definite period.
In the instant case the facts show that:

He was controlled by petitioner insurance company not only as to the kind of work.
Page 18 of 40


The amount of results, the kind of performance but also the power of dismissal.
Ratio:
Undoubtedly, private respondent, by nature of his position and work, had been a regular
employee of petitioner and is therefore entitled to the protection of the law and could not just
be terminated without valid and justifiable cause.
Premises considered, the appealed decision is hereby AFFIRMED.

Page 19 of 40

GREGORIO V. TONGKO, petitioner, vs. THE MANUFACTURERS LIFE INSURANCE CO.

(PHILS.), INC. and RENATO A. VERGEL DE DIOS, respondents.
BRION, J.:
FACTS:
Taking from the November 2008 decision, the facts are as follows:
Manufacturers Life Insurance, Co. is a domestic corporation engaged in life insurance
business. De Dios was its President and Chief Executive Officer. Petitioner Tongko started his
relationship with Manulife in 1977 by virtue of a Career Agent's Agreement.
Pertinent provisions of the agreement state that:
It is understood and agreed that the Agent is an independent contractor and nothing contained
herein shall be construed or interpreted as creating an employer-employee relationship
between the Company and the Agent.
a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and
other products offered by the Company, and collect, in exchange for provisional receipts issued
by the Agent, money due or to become due to the Company in respect of applications or
policies obtained by or through the Agent or from policyholders allotted by the Company to the
Agent for servicing, subject to subsequent confirmation of receipt of payment by the Company
as evidenced by an Official Receipt issued by the Company directly to the policyholder.
b) The Company may terminate this Agreement for any breach or violation of any of the
provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days
from the time of the discovery of the breach. No waiver, extinguishment, abandonment,
withdrawal or cancellation of the right to terminate this Agreement by the Company shall be
construed for any previous failure to exercise its right under any provision of this Agreement.
c) Either of the parties hereto may likewise terminate his Agreement at any time without cause,
by giving to the other party fifteen (15) days notice in writing.
Sometime in 2001, De Dios addressed a letter to Tongko, then one of the Metro North
Managers, regarding meetings wherein De Dios found Tongko's views and comments to be
unaligned with the directions the company was taking. De Dios also expressed his concern
regarding the Metro North Managers' interpretation of the company's goals. He maintains that
Tongko's allegations are unfounded. Some allegations state that some Managers are unhappy
with their earnings, that they're earning less than what they deserve and that these are the
reasons why Tonko's division is unable to meet agency development objectives. However, not
a single Manager came forth to confirm these allegations. Finally, De Dios related his worries
about Tongko's inability to push for company development and growth.

Page 20 of 40

De Dios subsequently sent Tongko a letter of termination in accordance with Tongko's Agents
Contract. Tongko filed a complaint with the NLRC against Manulife for illegal dismissal,
alleging that he had an employer-employee relationship with De Dios instead of a revocable
agency by pointing out that the latter exercised control over him through directives regarding
how to manage his area of responsibility and setting objectives for him relating to the business.
Tongko also claimed that his dismissal was without basis and he was not afforded due
process. The NLRC ruled that there was an employer-employee relationship as evidenced by
De Dios's letter which contained the manner and means by which Tongko should do his work.
The NLRC ruled in favor of Tongko, affirming the existence of the employer-employee
relationship.
The Court of Appeals, however, set aside the NLRC's ruling. It applied the four-fold test for
determining control and found the elements in this case to be lacking, basing its decision on
the same facts used by the NLRC. It found that Manulife did not exert control over Tongko,
there was no employer-employee relationship and thus the NLRC did not have jurisdiction over
the case.
The Supreme Court reversed the ruling of the Court of Appeals and ruled in favor of Tongko.
However, the Supreme Court issued another Resolution dated June 29, 2010, reversing its
decision. Tongko filed a motion for reconsideration, which is now the subject of the instant
case.
ISSUE: Whether the Supreme Court erred in issuing the June 29, 2010 resolution, reversing its
earlier decision that an employer-employee relationship existed.
HELD: The petition is unmeritorious.
LABOR LAW Agency; Employer-employee relationships
The Supreme Court finds no reason to reverse the June 29, 2010 decision. Control over the
performance of the task of one providing service both with respect to the means and manner,
and the results of the service is the primary element in determining whether an employment
relationship exists. The Supreme Court ruled petitioners Motion against his favor since he
failed to show that the control Manulife exercised over him was the control required to exist in
an employer-employee relationship; Manulifes control fell short of this norm and carried only
the characteristic of the relationship between an insurance company and its agents, as defined
by the Insurance Code and by the law of agency under the Civil Code.
In the Supreme Courts June 29, 2010 Resolution, they noted that there are built-in elements of
control specific to an insurance agency, which do not amount to the elements of control that
characterize an employment relationship governed by the Labor Code.The Insurance Code
provides definite parameters in the way an agent negotiates for the sale of the companys
insurance products, his collection activities and his delivery of the insurance contract or policy.
They do not reach the level of control into the means and manner of doing an assigned task
that invariably characterizes an employment relationship as defined by labor law.

Page 21 of 40

To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature of dictating
the means and methods to be employed in attaining the result. Tested by this norm, Manulifes
instructions regarding the objectives and sales targets, in connection with the training and
engagement of other agents, are among the directives that the principal may impose on the
agent to achieve the assigned tasks.They are targeted results that Manulife wishes to attain
through its agents. Manulifes codes of conduct, likewise, do not necessarily intrude into the
insurance agents means and manner of conducting their sales. Codes of conduct are norms or
standards of behavior rather than employer directives into how specific tasks are to be done.
In sum, the Supreme Court found absolutely no evidence of labor law control.
Petition is DENIED.

Page 22 of 40

FIRST DIVISION, G.R. No. 192998, April 02, 2014,

BERNARD A. TENAZAS, JAIME M. FRANCISCO AND ISIDRO G. ENDRACA,
PETITIONERS, VS. R. VILLEGAS TAXI TRANSPORT AND ROMUALDO VILLEGAS,
RESPONDENTS.
The Facts:
Bernard (Tenazas, Jaime Francisco) and Isidro (Endraca) were complainants in a consolidated
case for illegal dismissal against R. Villegas Taxi Transport and Romualdo Villegas. In their
positions papers, they alleged they were hired as taxi drivers on a boundary system by the
respondents. On July 1, 2007, the taxi Bernard was driving was sideswiped by another
vehicle. When he reported the matter to the company, he was scolded by the respondents and
told to leave the garage as he was already fired. On the other hand, Jaime alleged that he
was terminated on suspicion that he was organising a labor union, hence he was terminated
without due process on July 4, 2007. Isidro alleged that he was terminated when he fell short
of the required boundary after he brought his unit to an auto repair shop for an urgent repair.
When he returned to the garage his drivers license was confiscated and he was no longer
allowed to drive a taxi despite his pleas. In their defense, the company admitted Bernard and
Isidro were regular and spare drivers respectively, but denied employing Jaime as a driver.
Tenzas was neve terminated by the company. He was informed that his unit was due for
overhaul and advised to wait for further notice from the company if his unit was already fixed.
Despite being informed on July 8, 2007 that his unit was ready for release, Tenazas did not
return. On Isisdro, the company alleged he was a spare driver of the company from 2001,
substituting whenever a driver is not around. They could not have terminated him in 2006
since he stopped reporting for work in 2003.
The complainants filed a Motion to Admit Evidence alleging that they were able to discover
new evidence thru diligent efforts, such as the Affidavit of Good Faith by Aloney Rivera, a codriver; their Joint Affidavit; their pictures wearing company shirts and Tenazas certification of
contribution of SSS premiums.
The Labor Arbiter however dismissed their complaint, finding no employer-employee
relationship between them and the company. The company having denied the existence
thereof, it was incumbent upon complainants to prove the existence elf the employer-employee
relationship. On appeal to the NLRC, however, the commission, relying on the newly
discovered evidence submitted by the complainants, ruled them illegally dismissed. It ordered
payment of their back wages from the time of dismissal, as well as payment of separation pay
and attorneys fees.
On petition for certiorari with the CA, the latter affirmed the NLRC mudgment but deleted the
award of separation pay and ordered their reinstatement. It also deleted the award in favour of
Jaime Francisco, who, the CA averred, failed to prove that he was an employee of the
respondent. Thus, the petitioners elevated their case to the Supreme Court to review the CA
decision dismissing Franciscos complaint and deleting the award of separation pay to the
other petitioners.
Page 23 of 40

The Issue:
Whether or not employer-employee relations exist between the petitioners and the company.
Whether or not the award of separation pay should be deleted.
The Ruling:
The petition lacks merit.
Pivotal to the resolution of the instant case is the determination of the existence of employeremployee relationship and whether there was an illegal dismissal. Remarkably, the LA, NLRC
and the CA had varying assessment on the matters at hand. The LA believed that, with the
admission of the respondents, there is no longer any question regarding the status of both
Tenazas and Endraca being employees of the company. However, he ruled that the same
conclusion does not hold with respect to Francisco whom the respondents denied to have ever
employed or known. With the respondents denial, the burden of proof shifts to Francisco to
establish his regular employment. Unfortunately, the LA found that Francisco failed to present
sufficient evidence to prove regular employment such as company ID, SSS membership,
withholding tax certificates or similar articles. Thus, he was not considered an employee of the
company. Even then, the LA held that Tenazas and Endraca could not have been illegally
dismissed since there was no overt act of dismissal committed by the respondents.1
On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners were all
employees of the company. The NLRC premised its conclusion on the additional pieces of
evidence belatedly submitted by the petitioners, which it supposed, have been overlooked by
the LA owing to the time when it was received by the said office. It opined that the said pieces
of evidence are sufficient to establish the circumstances of their illegal termination. In
particular, it noted that in the affidavit of the petitioners, there were allegations about the
companys practice of not issuing employment records and this was not rebutted by the
respondents. It underscored that in a situation where doubt exists between evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the
employee. It awarded the petitioners with: (1) full backwages from the date of their dismissal
up to the finality of the decision; (2) separation pay equivalent to one month of salary for every
year of service; and (3) attorneys fees.
On petition for certiorari, the CA affirmed with modification the decision of the NLRC, holding
that there was indeed an illegal dismissal on the part of Tenazas and Endraca but not with
respect to Francisco who failed to present substantial evidence, proving that he was an
employee of the respondents. The CA likewise dismissed the respondents claim that Tenazas
and Endraca abandoned their work, asseverating that immediate filing of a complaint for illegal
dismissal and persistent pleas for continuance of employment are incompatible with
abandonment. It also deleted the NLRCs award of separation pay and instead ordered that
Tenazas and Endraca be reinstated.2

Page 24 of 40

Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari
under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of
fact, unless the factual findings complained of are completely devoid of support from the
evidence on record, or the assailed judgment is based on a gross misapprehension of facts.3
The Court finds that none of the mentioned circumstances is present in this case.
In reviewing the decision of the NLRC, the CA found that no substantial evidence was
presented to support the conclusion that Francisco was an employee of the respondents and
accordingly modified the NLRC decision. It stressed that with the respondents denial of
employer-employee relationship, it behooved Francisco to present substantial evidence to
prove that he is an employee before any question on the legality of his supposed dismissal
becomes appropriate for discussion.
Francisco, however, did not offer evidence to
substantiate his claim of employment with the respondents. Short of the required quantum of
proof, the CA correctly ruled that the NLRCs finding of illegal dismissal and the monetary
awards which necessarily follow such ruling lacked factual and legal basis and must therefore
be deleted.
The action of the CA finds support in Anonas Construction and Industrial Supply Corp., et al. v.
NLRC, et al.,4 where the Court reiterated:
[J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65, as a general
rule, is confined only to issues of lack or excess of jurisdiction and grave abuse of discretion on
the part of the NLRC. The CA does not assess and weigh the sufficiency of evidence upon
which the LA and the NLRC based their conclusions. The issue is limited to the determination
of whether or not the NLRC acted without or in excess of its jurisdiction, or with grave abuse of
discretion in rendering the resolution, except if the findings of the NLRC are not supported by
substantial evidence.5 (Citation omitted and emphasis ours)
It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial
proceedings, the quantum of proof necessary is substantial evidence, or such amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.6
[T]he burden of proof rests upon the party who asserts the affirmative of an issue. 7
Corollarily, as Francisco was claiming to be an employee of the respondents, it is incumbent
upon him to proffer evidence to prove the existence of said relationship.
[I]n determining the presence or absence of an employer-employee relationship, the Court
has consistently looked for the following incidents, to wit: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employee on the means and methods by which the work is accomplished.
The last element, the so-called control test, is the most important element.8
There is no hard and fast rule designed to establish the aforesaid elements. Any competent
and relevant evidence to prove the relationship may be admitted. Identification cards, cash
vouchers, social security registration, appointment letters or employment contracts, payrolls,
organization charts, and personnel lists, serve as evidence of employee status.9

Page 25 of 40

In this case, however, Francisco failed to present any proof substantial enough to establish his
relationship with the respondents. He failed to present documentary evidence like attendance
logbook, payroll, SSS record or any personnel file that could somehow depict his status as an
employee. Anent his claim that he was not issued with employment records, he could have, at
least, produced his social security records which state his contributions, name and address of
his employer, as his co-petitioner Tenazas did. He could have also presented testimonial
evidence showing the respondents exercise of control over the means and methods by which
he undertakes his work. This is imperative in light of the respondents denial of his
employment and the claim of another taxi operator, Emmanuel Villegas (Emmanuel), that he
was his employer. Specifically, in his Affidavit,10 Emmanuel alleged that Francisco was
employed as a spare driver in his taxi garage from January 2006 to December 2006, a fact that
the latter failed to deny or question in any of the pleadings attached to the records of this case.
The utter lack of evidence is fatal to Franciscos case especially in cases like his present
predicament when the law has been very lenient in not requiring any particular form of
evidence or manner of proving the presence of employer-employee relationship.
In Opulencia Ice Plant and Storage v. NLRC11, this Court emphasized, thus:
No particular form of evidence is required to prove the existence of an employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be admitted.
For, if only documentary evidence would be required to show that relationship, no scheming
employer would ever be brought before the bar of justice, as no employer would wish to come
out with any trace of the illegality he has authored considering that it should take much
weightier proof to invalidate a written instrument.12
Here, Francisco simply relied on his allegation that he was an employee of the company
without any other evidence supporting his claim. Unfortunately for him, a mere allegation in
the position paper is not tantamount to evidence.13 Bereft of any evidence, the CA correctly
ruled that Francisco could not be considered an employee of the respondents.
The CAs order of reinstatement of Tenazas and Endraca, instead of the payment of separation
pay, is also well in accordance with prevailing jurisprudence. In Macasero v. Southern
Industrial Gases Philippines,14 the Court reiterated, thus:
[A]n illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The
two reliefs provided are separate and distinct. In instances where reinstatement is no longer
feasible because of strained relations between the employee and the employer, separation pay
is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if
viable, or separation pay if reinstatement is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without
loss of seniority rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an
option, separation pay equivalent to one (1) month salary for every year of service should be
awarded as an alternative. The payment of separation pay is in addition to payment of
backwages.15 (Emphasis supplied)
Page 26 of 40

Clearly, it is only when reinstatement is no longer feasible that the payment of separation pay
is ordered in lieu thereof. For instance, if reinstatement would only exacerbate the tension and
strained relations between the parties, or where the relationship between the employer and the
employee has been unduly strained by reason of their irreconcilable differences, it would be
more prudent to order payment of separation pay instead of reinstatement.16
This doctrine of strained relations, however, should not be used recklessly or applied loosely17
nor be based on impression alone. It bears to stress that reinstatement is the rule and, for the
exception of strained relations to apply, it should be proved that it is likely that if reinstated, an
atmosphere of antipathy and antagonism would be generated as to adversely affect the
efficiency and productivity of the employee concerned.18
Moreover, the existence of strained relations, it must be emphasized, is a question of fact. In
Golden Ace Builders v. Talde,19 the Court underscored:
Strained relations must be demonstrated as a fact, however, to be adequately supported by
evidencesubstantial evidence to show that the relationship between the employer and the
employee is indeed strained as a necessary consequence of the judicial controversy20
(Citations omitted and emphasis ours)
After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of
separation pay to the petitioners. The NLRC decision did not state the facts which
demonstrate that reinstatement is no longer a feasible option that could have justified the
alternative relief of granting separation pay instead.
The petitioners themselves likewise overlooked to allege circumstances which may have
rendered their reinstatement unlikely or unwise and even prayed for reinstatement alongside
the payment of separation pay in their position paper.21 A bare claim of strained relations by
reason of termination is insufficient to warrant the granting of separation pay. Likewise, the
filing of the complaint by the petitioners does not necessarily translate to strained relations
between the parties. As a rule, no strained relations should arise from a valid and legal act
asserting ones right.22 Although litigation may also engender a certain degree of hostility, the
understandable strain in the parties relation would not necessarily rule out reinstatement which
would, otherwise, become the rule rather the exception in illegal dismissal cases.23 Thus, it
was a prudent call for the CA to delete the award of separation pay and order for reinstatement
instead, in accordance with the general rule stated in Article 27924 of the Labor Code.
Finally, the Court finds the computation of the petitioners backwages at the rate of P800.00
daily reasonable and just under the circumstances. The said rate is consistent with the ruling
of this Court in Hyatt Taxi Services, Inc. v. Catinoy,25 which dealt with the same matter.
WHEREFORE, in view of the foregoing disquisition, the petition for review on certiorari is
DENIED. The Decision dated March 11, 2010 and Resolution dated June 28, 2010 of the
Court of Appeals in CA-G.R. SP No. 111150 are AFFIRMED.
G.R. No. 195190
July 28, 2014
Page 27 of 40

ROYALE HOMES MARKETING CORPORATION vs. FIDEL P. ALCANTARA

Case Doctrine: Not every form of control that a hiring party imposes on the hired party
is indicative of employee-employer relationship. Rules and regulations that merely
serve as guidelines towards the achievement of a mutually desired result without
dictating the means and methods of accomplishing it do not establish employeremployee relationship.
Facts:
Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its
Marketing Director for a fixed period 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, the last of which covered the period January 1 to December 31,
2003.
Alcantara filed a Complaint for Illegal Dismissal against Royale. Alcantara alleged that he is a
regular employee of Royale Homes since he is performing tasks that are necessary and
desirable to its business and that the acts of the executive officers of Royale Homes amounted
to his dismissal from work without any valid or just cause and in gross disregard of the proper
procedure for dismissing employees.
Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued
that the appointment paper of Alcantara is clear that it engaged his services as an independent
sales contractor for a fixed term of one year only. He never received any salary, 13th month
pay, overtime pay or holiday pay from Royale Homes as he was paid purely on commission
basis. In addition, Royale Homes had no control on how Alcantara would accomplish his tasks
and responsibilities as he was free to solicit sales at any time and by any manner which he
may deem appropriate and necessary. According to Royale Homes, Alcantara decided to leave
the company after his wife, who was once connected with it as a sales agent, had formed a
brokerage company that directly competed with its business, and even recruited some of its
sales agents. Two months after he relinquished his post, however, Alcantara appeared in
Royale Homes and submitted a letter claiming that he was illegally dismissed.
The Labor Arbiter rendered a Decision holding that Alcantara is an employee of Royale Homes
and that the pre-termination of his contract was against the law. The NLRC rendered its
Decision, ruling that Alcantara is not an employee but a mere independent contractor of Royale
Homes. It based its ruling mainly on his employment contract. The CA promulgated its
Decision granting Alcantaras Petition and reversing the NLRCs Decision. Applying the fourfold and economic reality tests, it held that Alcantara is an employee of Royale Homes.
Issue: Whether or not Alcantara was an independent contractor or an employee of Royale
Homes.
Held: The primary evidence of the nature of the parties relationship in this case is the written
contract that they signed and executed in pursuance of their mutual agreement. 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. In this case, the contract, duly signed and not
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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.
In determining the existence of an employer-employee relationship, this Court has generally
relied on the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the employers power to control the
employee with respect to the means and methods by which the work is to be accomplished.
However, not every form of control is indicative of employer-employee relationship. A person
who performs work for another and is 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 party do not amount to the labor law concept of control that is
indicative of employer-employee relationship. In Insular Life Assurance Co., Ltd. v. National
Labor Relations Commission it was pronounced that:
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the result and the
means used to achieve it.
Notably, Alcantara was not required to observe definite working hours. Except for soliciting
sales, Royale Homes did not assign other tasks to him. He had full control over the means and
methods of accomplishing his tasks as he can "solicit sales at any time and by any manner
which [he may] deem appropriate and necessary." He performed his tasks on his own account
free from the control and direction of Royale Homes in all matters connected therewith, except
as to the results thereof. This Court is, therefore, convinced that Alcantara is not an employee
of Royale Homes, but a mere independent contractor.

G.R. No. 192558 : February 15, 2012

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

FLORDELYN CASTILLO, Respondents.
MENDOZA, J.:
FACTS:
Javier an employee of Fly Ace performing various work for the latter filed a complaint before
the NLRC for underpayment of salaries and other labor standard benefits.
He alleged that he reported for work from Monday to Saturday from 7:00 oclock in the morning
to 5:00 oclock in the afternoon; that during his employment, he was not issued an identification
card and pay slips by the company; that he reported for work but he was no longer allowed to
enter the company premises by the security guard upon the instruction of Ruben Ong (Mr.
Ong), his superior; that after several minutes of begging to the guard to allow him to enter, he
saw Ong whom he approached and asked why he was being barred from entering the
premises; that Ong replied by saying, Tanungin mo anak mo;that he discovered that Ong had
been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City;
that Annalyn tried to talk to Ong and convince him to spare her father from trouble but he
refused to accede; that thereafter, Javier was terminated from his employment without notice;
and that he was neither given the opportunity to refute the cause/s of his dismissal from work.
For its part p, Fly Ace denied the existence of employer-employee relationship between them
and Javier as the latter was only called roughly 5 to 6 times only in a month whenever the
vehicle of its contracted hauler, Milmar Hauling Services, was not available. Labor Arbiter
dismissed the complaint ruling that respondent Fly Ace is not engaged in trucking business but
in the importation and sales of groceries. Since there is a regular hauler to deliver its products,
we give credence to Respondents claim that complainant was contracted on pakiao basis.
On appeal, NLRC reversed the decisin of the LA. It was of the view that a pakyaw-basis
arrangement did not preclude the existence of employer-employee relationship. Payment by
result x x x is a method of compensation and does not define the essence of the relation. It is a
mere method of computing compensation, not a basis for determining the existence or
absence of an employer-employee relationship. The NLRC further averred that it did not follow
that a worker was a job contractor and not an employee, just because the work he was doing
was not directly related to the employers trade or business or the work may be considered as
extra helper as in this case; and that the relationship of an employer and an employee was
determined by law and the same would prevail whatever the parties may call it. Finding Javier
to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For
failing to present proof of a valid cause for his termination, Fly Ace was found to be liable for
illegal dismissal of Javier who was likewise entitled to backwages and separation pay in lieu of
reinstatement. However, on appeal, CA reversed the ruling of NLRC
The CA ruled thatJaviers failure to present salary vouchers, payslips, or other pieces of
evidence to bolster his contention, pointed to the inescapable conclusion that he was not an
employee of Fly Ace. Further, it found that Javiers work was not necessary and desirable to the
business or trade of the company, as it was only when there were scheduled deliveries, which
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a regular hauling service could not deliver, that Fly Ace would contract the services of Javier as
an extra helper. Lastly, the CA declared that the facts alleged by Javier did not pass the control
test.
He contracted work outside the company premises; he was not required to observe definite
hours of work; he was not required to report daily; and he was free to accept other work
elsewhere as there was no exclusivity of his contracted service to the company, the same
being co-terminous with the trip only. Since no substantial evidence was presented to establish
an employer-employee relationship, the case for illegal dismissal could not prosper. Hence,
this appeal.
ISSUE: Whether or not there exist an employer-employee relationship between Javier and Fly
Ace, thereby holding the latter guilty of illegal dismissal.
HELD: The CA's decision was sustained.
LABOR LAW
As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as
wanting and deficient. The Court is constrained to agree. Labor officials are enjoined to use
reasonable means to ascertain the facts speedily and objectively with little regard to
technicalities or formalities but nowhere in the rules are they provided a license to completely
discount evidence, or the lack of it. The quantum of proof required, however, must still be
satisfied. Hence, when confronted with conflicting versions on factual matters, it is for them in
the exercise of discretion to determine which party deserves credence on the basis of
evidence received, subject only to the requirement that their decision must be supported by
substantial evidence.Accordingly, the petitioner needs to show by substantial evidence that he
was indeed an employee of the company against which he claims illegal dismissal.
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or
substantiate such claim by the requisite quantum of evidence. Whoever claims entitlement to
the benefits provided by law should establish his or her right thereto x x x. Sadly, Javier failed
to adduce substantial evidence as basis for the grant of relief.
By way of evidence on this point, all that Javier presented were his self-serving statements
purportedly showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the
substantiality requirement to support his claim. Hence, the Court sees no reason to depart
from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was
made to work in the company premises during weekdays arranging and cleaning grocery items
for delivery to clients, no other proof was submitted to fortify his claim. The lone affidavit
executed by one Bengie Valenzuela was unsuccessful in strengthening Javiers cause.
The Court is of the considerable view that on Javier lies the burden to pass the well-settled
tests to determine the existence of an employer-employee relationship, viz: (1) the selection
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and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employees conduct. Of these elements, the most important
criterion is whether the employer controls or has reserved the right to control the employee not
only as to the result of the work but also as to the means and methods by which the result is to
be accomplished.
DENIED.

G.R. No. 186621

March 12, 2014

Page 32 of 40

SOUTH EAST INTERNATIONAL RATTAN, INC. and/or ESTANISLAO AGBAY, Petitioners,

vs.
JESUS J. COMING, Respondent.
Facts:
South East International Rattan, Inc. (SEIRI) hired Jesus Coming (Coming) as Sizing Machine
Operator. His compensation was on pakiao basis but later on he was paid weekly.
Coming was dismissed from work after many years of service without lawful cause. He was
told that the company is not doing well and he will be called back to work only if they need his
services again. He did not receive any call from the company almost a year after his
termination.
He filed a complaint before the regional arbitration branch.
SEIRI denied existence of employer-employee relationship with Coming and stressed that he
was not included in the list of employees submitted to Social Security System (SSS) and his
name does not appear in the payrolls and pay envelope records.
Issue:
Does employer-employee relationship exist?

Law applicable:
Control Test
Jurisprudence in the case of Tan vs. Lagrama - The fact that a worker was not reported
as an employee to the SSS is not conclusive proof of the absence of employeremployee relationship. Otherwise, an employer would be rewarded for his failure or
even neglect to perform his obligation.
Case History
April 30, 2004 - Labor Arbiter ruled that Coming is a regular employee of SEIRI and that the
termination of his employment was illegal.
July 28, 2005 NLRC set aside and vacated Labor Arbiter ruling and dismissed the complaint.
February 21, 2008 Court of Appeals reversed the NLRC and ruled that there existed an
employer-employee relationship between petitioners and respondent who was dismissed
without just and valid cause.
Ruling;
Employer-employee relationship exists.

The Court affirmed the control test applied by the Court of Appeals. The SEIRIs control over
the work of Coming was manifested on the following facts:
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They required him to work within the company premises;

they obliged petitioner to report every day of the week and tasked him to usually perform the
same job; they enforced the observance of definite hours of work from 8 oclock in the morning
to 5 oclock in the afternoon;
the mode of payment of petitioners salary was under their discretion, at first paying him on
pakiao basis and thereafter, on daily basis;
they implemented company rules and regulations;
Agbay directly paid petitioners salaries and controlled all aspects of his employment and
Petitioner rendered work necessary and desirable in the business of the respondent company.
Non-reporting of a worker as an employee to the SSS or the fact that Comings name does not
appear in the payrolls and pay envelopes records negate existence of employer-employee
relationship.

Philippine Association of Service Exporters, Inc. v. Torres

G.R. No. 101279 August 6, 1992
Grio-Aquino, J.
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FACTS:
As a result of published stories regarding the abuses suffered by Filipino housemaidsemployed
in Hong Kong, then DOLE Secretary Ruben Torres issued Department Order No.16, Series of
1991, temporarily suspending the recruitment by private employment agenciesof Filipino
domestic helpers going to Hong Kong. The DOLE itself, through the POEA tookover the
business of deploying such Hong Kong-bound workers. The POEA Administrator alsoissued
Memorandum Circular No. 37, Series of 1991, on the processing of employmentcontracts of
domestic workers for Hong Kong. PASEI filed a petition for prohibition to annul the
aforementioned DOLE and POEA circular sand to prohibit their implementation on the grounds
that DOLE and POEA acted with grave abuse of discretion and/or in excess of their rulemaking authority in issuing said circulars; that the assailed DOLE and POEA circulars are
contrary to the Constitution, are unreasonable, unfair and oppressive; and that the
requirements of publication and filing with the Office of the National Administrative Register
were not complied with.
HELD:
The second and first grounds are unmeritorious. Article 36 of the Labor Code grantsthe Labor
Secretary the power to restrict and regulate recruitment and placement activities. It reads: The
Secretary of Labor shall have the power to restrict and regulate the recruitment and placement
activities of all agencies within the coverage of this title [Regulation of Recruitment and
Placement Activities] and is hereby authorized to issue orders and promulgate rules and
regulations to carry out the objectives and implement the provisions of this title. On the other
hand, the scope of the regulatory authority of the POEA, which was created by Executive
Order No. 797 to take over the functions of the Overseas Employment Development Board,
the National Seamen Board, and the overseas employment functions of the Bureau of
Employment Services, is broad and far-ranging for among the functions inherited by the POEA
from the defunct Bureau of Employment Services was the power and duty to establish and
maintain a registration and/or licensing system to regulate private sector participation in the
recruitment and placement of workers, locally and overseas; it assumed from the defunct
Overseas Employment Development Board the power and duty to recruit and place workers
for overseas employment of Filipino contract workers on a government to government
arrangement and in such other sectors as policy may dictate; and from the National Seamen
Board, the POEA took over to regulateand supervise the activities of agents or representatives
of shipping companies in the hiring of seamen for overseas employment; and secure the best
possible terms of employment for contract seamen workers and secure compliance there
with.Said administrative issuances merely restricted the scope or area of PASEIs business
operations by excluding therefrom recruitment and deployment of domestic helpers for Hong
Kong till after the establishment of the mechanisms that will enhance the protection of Filipino
domestic helpers going to Hong Kong. In fine, other than the recruitment and deployment of
Filipino domestic helpers for Hong Kong, PASEI may still deploy other class of Filipino workers
either for Hong Kong and other countries and all other classes of Filipino workers for other
countries. Said administrative issuances, are intended to curtail, if not to end, rampant
violations of the rule against excessive collections of placement and documentation fees, travel
fees and other charges committed by private employment agencies recruiting and deploying
domestic helpers to Hong Kong. They are reasonable, valid and justified under the general
Page 35 of 40

welfare clause of the Constitution, since the recruitment and deployment business, as it is
conducted today, is affected with public interest.
Nevertheless, they are legally invalid, defective and unenforceable for lack of power
publication and filing in the Office of the National Administrative Register. As announced in
Taada vs. Tuvera, All statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after publication
unless a different effectivity date is fixed by the legislature. Covered by this rule are
presidential decrees and executive orders promulgated by the President in the exercise of
legislative powers whenever the same are validly delegated by the legislature or, at present,
directly conferred by the Constitution: Administrative rules and regulations must also be
published if their purpose is to enforce or implement existing law pursuant to a valid
delegation. Interpretative regulations and those merely internal in nature, that is, regulating
only the personnel of the administrative agency and the public, neednot be published. Neither
is publication required of the so-called letter of instructions issued by the administrative
superiors concerning the rules or guidelines to be followed by their subordinates in the
performance of their duties.

TAADA VS. TUVERA

136 SCRA 27 (April 24, 1985) 146 SCRA 446 (December 29, 1986)

Page 36 of 40

FACTS:
Invoking the right of the people to be informed on matters of public concern as well as the
principle that laws to be valid and enforceable must be published in the Official Gazette,
petitioners filed for writ of mandamus to compel respondent public officials to publish and/or
cause to publish various presidential decrees, letters of instructions, general orders,
proclamations, executive orders, letters of implementations and administrative orders.
The Solicitor General, representing the respondents, moved for the dismissal of the case,
contending that petitioners have no legal personality to bring the instant petition.
ISSUE:
Whether or not publication in the Official Gazette is required before any law or statute
becomes valid and enforceable.
HELD:
Art. 2 of the Civil Code does not preclude the requirement of publication in the Official Gazette,
even if the law itself provides for the date of its effectivity. The clear object of this provision is to
give the general public adequate notice of the various laws which are to regulate their actions
and conduct as citizens. Without such notice and publication, there would be no basis for the
application of the maxim ignoratia legis nominem excusat. It would be the height of injustive to
punish or otherwise burden a citizen for the transgression of a law which he had no notice
whatsoever, not even a constructive one.
The very first clause of Section 1 of CA 638 reads: there shall be published in the Official
Gazette. The word shall therein imposes upon respondent officials an imperative duty. That
duty must be enforced if the constitutional right of the people to be informed on matter of public
concern is to be given substance and validity.
The publication of presidential issuances of public nature or of general applicability is a
requirement of due process. It is a rule of law that before a person may be bound by law, he
must first be officially and specifically informed of its contents. The Court declared that
presidential issuances of general application which have not been published have no force and
effect.
TAADA VS. TUVERA
146 SCRA 446 (December 29, 1986)
FACTS:
This is a motion for reconsideration of the decision promulgated on April 24, 1985. Respondent
argued that while publication was necessary as a rule, it was not so when it was otherwise as
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when the decrees themselves declared that they were to become effective immediately upon
their approval.
ISSUES:
1. Whether or not a distinction be made between laws of general applicability and laws which
are not as to their publication;
2. Whether or not a publication shall be made in publications of general circulation.
HELD:
The clause unless it is otherwise provided refers to the date of effectivity and not to the
requirement of publication itself, which cannot in any event be omitted. This clause does not
mean that the legislature may make the law effective immediately upon approval, or in any
other date, without its previous publication.
Laws should refer to all laws and not only to those of general application, for strictly speaking,
all laws relate to the people in general albeit there are some that do not apply to them directly.
A law without any bearing on the public would be invalid as an intrusion of privacy or as class
legislation or as an ultra vires act of the legislature. To be valid, the law must invariably affect
the public interest eve if it might be directly applicable only to one individual, or some of the
people only, and not to the public as a whole.
All statutes, including those of local application and private laws, shall be published as a
condition for their effectivity, which shall begin 15 days after publication unless a different
effectivity date is fixed by the legislature.
Publication must be in full or it is no publication at all, since its purpose is to inform the public
of the content of the law.
Article 2 of the Civil Code provides that publication of laws must be made in the Official
Gazette, and not elsewhere, as a requirement for their effectivity. The Supreme Court is not
called upon to rule upon the wisdom of a law or to repeal or modify it if it finds it impractical.
The publication must be made forthwith, or at least as soon as possible.
J. Cruz:
Laws must come out in the open in the clear light of the sun instead of skulking in the shadows
with their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be
recognized as binding unless their existence and contents are confirmed by a valid publication
intended to make full disclosure and give proper notice to the people. The furtive law is like a
scabbarded saber that cannot faint, parry or cut unless the naked blade is drawn.

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Francisco v. NLRC August 31, 2006

G.R NO. 170087 500 SCRA 690
Facts:
Petitioner was hired by Kasei Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and was assigned to handle all the
accounting needs of the company, however she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never
prepared any legal document and never represented the company as its Corporate Secretary,
but she was prevailed upon to sign documentation for the company. She was also designated
as Liason Officer to secure business permits, construction permits and other licenses for the
initial operation of the company.
In 1996, petitioner was designated Acting Manager, she was assigned to handle
recruitment of all employees and perform management administration functions. For 5 years,
petitioner performed the duties of Acting Manager.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager and the
petitioner was assured that she would still be connected with Kasei Corporation as Technical
Assistant to Seiji Kamura and in charge of all BIR matters. Petitioner did not receive her salary
from the company and was informed that she is no longer connected with the company.
Petitioner filed an ction for constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation.
They alleged that as technical consultant, petitioner performed her work at her own discretion
without control and supervision of Kasei Corporation. She had no daily time record and she
came to the office any time she wanted. The company never interfered with her work except
that from time to time, the management would ask her opinion on matters relating to her
profession. The petitioner did not go through the usual procedure of selection of employees
and her designation as technical consuktant depended solely upon the will of management. As
such, her consultancy may be terminated any time considering that her services were only
temporary in nature and dependent on the needs of the corporation.
Issue: Won there was an employer-employee relationship between the parties.
Ruling:
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. There are instances when, aside from the employers
power to control the employee with respect to the means and methods by which the work is to
be accomplished, economic realities of the employment relations help provide a
comprehensive analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: 1)
putative employers power to control the employee with respect to the means and methods by
which the work is to be accomplished; and 2) the underlying economic realities of the activity
or relationship. This two-tiered test would provide us with a framework of analysis, which would
take into consideration the totality of circumstances surrounding the true nature of the
Page 39 of 40

relationship between the parties. This is especially appropriate in this case where there is no
written agreement or terms of reference to base the relationship on; and due to the complexity
of the relationship based on the various positions and responsibilities given to the worker over
the period of the latters employment.
The determination of the relationship between employer and employee depends
upon the circumstances of the whole economic activity, such as: 1) the extent to which the
services performed are an integral part of the employers business; 2) the extent of the
workers investment in equipment and facilities; 3) the nature and degree of control exercised
by the employer; 4) the workers opportunity for profit or loss; 5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; 6) the
permanency and duration of the relationship between the worker and the employer; and 7) the
degree of dependency of the worker upon the employer of his continued employment in that
line of business.
The proper standard of economic dependence is whether the worker is dependent
on the alleged employer for his continued employment in that line of business. Based on the
foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei
Corporations. She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line of
business. Her main job function involved accounting and tax services rendered to respondent
corporation on a regular basis over an indefinite period of engagement. Respondent
corporation hired and engaged petitioner for compensation, with the power to dismiss her for
cause. More importantly, respondent corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.

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