A.
Elements of Relationship
TITLE II – WAGES; CHAPTER I – PRELIMINARY MATTERS
Article 97. Definitions. As used in this Title:
(a) "Person" means an individual, partnership, association, corporation, business trust, legal
representatives, or any organized group of persons.
(b) "Employer" includes any person acting directly or indirectly in the interest of an employer in relation
to an employee and shall include the government and all its branches, subdivisions and
instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit
private institutions, or organizations.
(c) "Employee" includes any individual employed by an employer.
(e) "Employ" includes to suffer or permit to work.
TITLE II – EMPLOYEES COMPENSATION AND STATE INSURANCE FUND; CHAPTER I – POLICY
AND DEFINITIONS
Article 173. Definitions of Terms – As used in this Title, unless the context indicates otherwise:
(f) “Employer” means any person, natural or juridical, employing the services of the employee.
(g) “Employee” means any person compulsorily covered by the GSIS under Commonwealth Act
Numbered One Hundred Eighty-Six, as amended, including the members of the Armed Forces of the
Philippines, and any person employed as casual, emergency, temporary, substitute or contractual, or
any person compulsorily covered by the SSS under Republic Act Numbered Eleven Hundred Sixty-One,
as amended.
BOOK FIVE – LABOR RELATIONS; TITLE I POLICY AND DEFINITIONS; CHAPTER II –
DEFINITIONS
Article 219. Definitions –
(e) “Employer” includes any person acting in the interest of an employer, directly or indirectly. The term
shall not include any labor organization or any of its officers or agents except when acting as employer.
(f) “Employee” includes any person in the employ of an employer. The term shall not be limited to the
employees of a particular employer, unless the Code so explicitly states. It shall include any individual
whose work has ceased as a result of or in connection with any current labor dispute or because of any
unfair labor practice if he has not obtained any other substantially equivalent and regular employment.
CASES:
Television and Production Exponents v. Servaña (Jerald Ambe)
January 28, 2008 | Tinga, J. | Employer-Employee Relationship
Petitioners: Television and Production Exponents, Inc. and/or Antonio P. Tuviera
Respondent: Roberto C. Servaña
DOCTRINE:
Jurisprudence is abound with cases that recite the factors to be considered in determining the existence
of employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee
with respect to the means and method by which the work is to be accomplished. The most important
factor involves the control test. Under the control test, there is an employer-employee relationship when
the person for whom the services are performed reserves the right to control not only the end achieved
but also the manner and means used to achieve that end.
FACTS:
TAPE is a domestic corporation engaged in the production of television programs, such as the long-
running variety program, Eat Bulaga!. Its president is Antonio P. Tuviera (Tuviera). Respondent Roberto
C. Servana had served as a security guard for TAPE from March 1987 until he was terminated on 3
March 2000.
Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged
that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE
as a regular company guard. He was detailed at Broadway Centrum in Quezon City where Eat Bulaga!
regularly staged its productions. On 2 March 2000, respondent received a memorandum informing him
of his impending dismissal on account of TAPE’s decision to contract the services of a professional
security agency. At the time of his termination, respondent was receiving a monthly salary of P6,000.00.
He claimed that the holiday pay, unpaid vacation and sick leave benefits and other monetary
considerations were withheld from him. He further contended that his dismissal was undertaken without
due process and violative of existing labor laws, aggravated by nonpayment of separation pay.
In a motion to dismiss which was treated as its position paper, TAPE countered that the labor arbiter
had no jurisdiction over the case in the absence of an employer-employee relationship between the
parties. TAPE argued that they engaged respondent’s services, as part of the support group to provide
security service and it was agreed that complainant would render his services until such time that
respondent company shall have engaged the services of a professional security agency. TAPE started
negotiations for the engagement of a professional security agency , the Sun Shield Security Agency.
TAPE averred that respondent was an independent contractor falling under the talent group category
and was working under a special arrangement which is recognized in the industry.
Respondent for his part insisted that he was a regular employee having been engaged to perform an
activity that is necessary and desirable to TAPE’s business for thirteen (13) years.
On 29 June 2001, the Labor Arbiter declared respondent to be a regular employee of TAPE. On appeal,
the National Labor Relations Commission (NLRC) in a Decision dated 22 April 2002 reversed the Labor
Arbiter and considered respondent a mere program employee. Respondent filed a petition for certiorari
with the Court of Appeals contending that the NLRC acted with grave abuse of discretion amounting to
lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. The CA reversed the
decision of the NLRC, and found respondent to be a regular employee.
ISSUE/S:
Whether or not an employer-employee relationship exists between TAPE and respondent.
HELD:
YES
RATIO:
Jurisprudence is abound with cases that recite the factors to be considered in determining the existence
of employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee
with respect to the means and method by which the work is to be accomplished. The most important
factor involves the control test. Under the control test, there is an employer-employee relationship when
the person for whom the services are performed reserves the right to control not only the end achieved
but also the manner and means used to achieve that end.
In concluding that respondent was an employee of TAPE, the Court applied the four-fold test in this
wise:
(a) the selection and engagement of the employee
Respondent was first connected with Agro-Commercial Security Agency, which assigned him to assist
TAPE in its live productions. When the security agency’s contract with RPN-9 expired in 1995,
respondent was absorbed by TAPE or, in the latter’s language, retained as talent. Clearly, respondent
was hired by TAPE. Respondent presented his identification card to prove that he is indeed an
employee of TAPE. It has been in held that in a business establishment, an identification card is usually
provided not just as a security measure but to mainly identify the holder thereof as a bona fide
employee of the firm who issues it.
(b) the payment of wages
Respondent claims to have been receiving P5,444.44 as his monthly salary while TAPE prefers to
designate such amount as talent fees. Wages, as defined in the Labor Code, are remuneration or
earnings, however designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece or commission basis, or other method of calculating the same, which
is payable by an employer to an employee under a written or unwritten contract of employment for work
done or to be done, or for service rendered or to be rendered. It is beyond dispute that respondent
received a fixed amount as monthly compensation for the services he rendered to TAPE.
(c) the power of dismissal
The Memorandum informing respondent of the discontinuance of his service proves that TAPE had the
power to dismiss respondent.
(d) power to control the employee
Control is manifested in the bundy cards submitted by respondent in evidence. He was required to
report daily and observe definite work hours. To negate the element of control, TAPE presented a
certification from M-Zet Productions to prove that respondent also worked as a studio security guard for
said company. Notably, the said certificate categorically stated that respondent reported for work on
Thursdays from 1992 to 1995. It can be recalled that during said period, respondent was still working for
RPN-9. As admitted by TAPE, it absorbed respondent in late 1995.
TAPE further denies exercising control over respondent and maintains that the latter is an independent
contractor. Aside from possessing substantial capital or investment, a legitimate job contractor or
subcontractor carries on a distinct and independent business and undertakes to perform the job, work
or service on its own account and under its own responsibility according to its own manner and method,
and 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. TAPE failed to show that respondent has substantial capital or
investment to be qualified as an independent contractor. They likewise failed to present a written
contract which specifies the performance of a specified piece of work, the nature and extent of the work
and the term and duration of the relationship between respondent and TAPE.
As a regular employee, respondent cannot be terminated except for just cause or when authorized by
law. It is clear from the tenor of the 2 March 2000 Memorandum that respondents termination was due
to redundancy.
We uphold the finding of the Labor Arbiter that respondent was terminated upon [the] management’s
option to professionalize the security services in its operations. x x x However, [we] find that although
petitioners services [sic] was for an authorized cause, i.e., redundancy, private respondents failed to
prove that it complied with service of written notice to the Department of Labor and Employment at least
one month prior to the intended date of retrenchment.
Under prevailing jurisprudence the termination for an authorized cause requires payment of separation
pay. Procedurally, if the dismissal is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and Employment written notice 30 days
prior to the effectivity of his separation. Where the dismissal is for an authorized cause but due process
was not observed, the dismissal should be upheld. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be liable for non-compliance with
procedural requirements of due process.
In sum, we find no reversible error committed by the Court of Appeals in its assailed decision. However,
with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that he acted
with malice or bad faith in terminating respondent, he cannot be held solidarily liable with TAPE. Thus,
the Court of Appeals ruling on this point has to be modified.
 
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with
MODIFICATION in that only petitioner TAPE is liable to pay respondent the amount of P10,000.00 as
nominal damages and respondent’s separation pay computed at the rate of one (1) month pay for every
year of service or in the total amount of P78,000.00.
ABS-CBN BROADCASTING CORPORATION VS. NAZARENO (Querijero)
Petitioner-appellant: ABS-CBN Broadcasting Corporation, engaged in the broadcasting business and
owns a network of television and radio stations, whose operations revolve around the broadcast,
transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes the
airtime it generates from its radio and television operations. It has a franchise as a broadcasting
company, and was likewise issued a license and authority to operate by the National
Telecommunications Commission (NTC).
Respondent-appellee: Marilyn Nazareno, Merlou Gerzon, Jennifer Deiparine, & Josephine Lerasan,
hired as production assistants (PA)
DOCTRINE: Where a person has rendered at least one (1) year of service, regardless of the nature of
the activity performed, or where the work is continuous or intermittent, the employment is considered
regular as long as the activity exists, the reason being that a customary appointment is not
indispensable before one may be formally declared as having attained regular status.
FACTS: The respondents were hired by petitioner and was assigned at the news and public affairs, for
various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They
were issued ABS-CBN employees' IDs and were required to work for a minimum of 8 hours a day,
including Sundays and holidays. They were made to perform the certain tasks and duties. The PAs
were under the control and supervision of Assistant Station Manager Dante Luzon, and News Manager
Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a CBA for the
period starting December 11, 1996 to December 11, 1999. However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were not included to the CBA. On July 20,
2000, petitioner issued a Memo informing the PAs that they would be assigned to non-drama programs,
and that the DYAB studio operations would be handled by the studio technician. Respondent Gerzon
was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay,
and 13th Month Pay with Damages against the petitioner before the NLRC. Respondents failed to file
their position papers within the reglementary period, so the case was dismissed. Consequently, they
filed an Earnest Motion to Refile Complaint with Motion to Admit Position Paper and Motion to Submit
Case For Resolution. The Labor Arbiter granted this motion. It was alleged that complainants were
engaged by respondent ABS-CBN as regular and full-time employees for a continuous period of more
than five (5) years with a monthly salary rate of P4,000.00 pesos beginning 1995 up until the filing of
this complaint on November 20, 2000. Respondents insisted that they belonged to a "work pool" from
which petitioner chose persons to be given specific assignments at its discretion, and were thus under
its direct supervision and control regardless of nomenclature. Petitioner also alleged that the Labor
Arbiter had no jurisdiction to involve the CBA and interpret the same, especially since respondents were
not covered by the bargaining unit.
On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that
they were regular employees of petitioner; as such, they were awarded monetary benefits. They
appealed to the NLRC. On November 14, 2002, the NLRC rendered judgment modifying the decision of
the Labor Arbiter, ordering the respondents to pay complainants of their wage differentials and other
benefits arising from the CBA as of 30 September 2002 in the amount of P2,561,948.22. Petitioner filed
a motion for reconsideration, which the NLRC denied.
Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, and on
February 10, 2004, the CA rendered judgment dismissing the petition. They filed a Motion for
Reconsideration. Finding no merit in petitioner's motion for reconsideration, the CA denied the same in
a Resolution.
ISSUE: Whether or not the respondents are considered regular employees of ABS-CBN Broadcasting
Corporation
HELD: Yes. The respondents are regular employees of ABS-CBN Broadcasting Corporation.
RATIO: The Court agrees with respondents' contention that where a person has rendered at least one
(1) year of service, regardless of the nature of the activity performed, or where the work is continuous or
intermittent, the employment is considered regular as long as the activity exists, the reason being that a
customary appointment is not indispensable before one may be formally declared as having attained
regular status. Article 280 of the Labor Code provides:
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.
In Universal Robina Corporation v. Catapang, the Court reiterated the test in determining whether one is
a regular employee:
The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business of
the employer. The test is whether the former is usually necessary or desirable in the usual business or
trade of the employer. The connection can be determined by considering the nature of work performed
and its relation to the scheme of the particular business or trade in its entirety. Also, 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.
In the case at bar, the employer-employee relationship between petitioner and respondents has been
proven.
First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity
status was required from them because they were merely hired through petitioner's personnel
department just like any ordinary employee.
Second. The so-called "talent fees" of respondents correspond to wages given as a result of an
employer-employee relationship. Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer
and when the worker, relative to the employer, does not furnish an independent business or
professional service, such work is a regular employment of such employee and not an independent
contractor. The Court will peruse beyond any such agreement to examine the facts that typify the
parties' actual relationship.
It follows then that respondents are entitled to the benefits provided for in the existing CBA between
petitioner and its rank-and-file employees. As regular employees, respondents are entitled to the
benefits granted to all other regular employees of petitioner under the CBA. As earlier stated, it is not
the will or word of the employer which determines the nature of employment of an employee but the
nature of the activities performed by such employee in relation to the particular business or trade of the
employer. Considering that the court has clearly found that private respondents are regular employees
of petitioner, their exclusion from the said CBA on the misplaced belief of the parties to the said
agreement that they are project employees, is therefore not proper. Finding said private respondents as
regular employees and not as mere project employees, they must be accorded the benefits due under
the said Collective Bargaining Agreement.
A collective bargaining agreement is a contract entered into by the union representing the employees
and the employer. However, even the non-member employees are entitled to the benefits of the
contract. To accord its benefits only to members of the union without any valid reason would constitute
undue discrimination against non-members. A collective bargaining agreement is binding on all
employees of the company. Therefore, whatever benefits are given to the other employees of ABS-CBN
must likewise be accorded to private respondents who were regular employees of petitioner.
Besides, only talent-artists were excluded from the CBA and not production assistants who are regular
employees of the respondents. Moreover, under Article 1702 of the New Civil Code: "In case of doubt,
all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of
the laborer."
Fulache v. ABS-CBN (Jued Cisneros)
January 21, 2010 | Brion, J. | Employer-Employee Relationship
Petitioner-appellant: FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO, JEFFREY
LAGUNZAD, MAGDALENA MALIG-ON BIGNO, FRANCISCO CABAS, JR., HARVEY PONCE and
ALAN C. ALMENDRAS
Respondent-appellee: ABSCBN BROADCASTING CORPORATION
DOCTRINE:
FACTS: Petitioners herein and Atinen filed two separate complaints for regularization against ABS-
CBN. Fulache and Castillo were drivers/cameramen; Atinen, Lagunzad and Jabonero were drivers;
Ponce and Almendras were cameramen/editors; Bigno was a PA/Teleprompter Operator-Editing, and
Cabas was a VTR man/editor.
On December 17, 1999, ABS-CBN and the ABS-CBN Rank-and-File Employees Union (Union)
executed a collective bargaining agreement (CBA) effective December 11, 1999 to December 10, 2002;
they only became aware of the CBA when they obtained copies of the agreement; they learned that
they had been excluded from its coverage as ABS-CBN considered them temporary and not regular
employees, in violation of the Labor Code. Petitioners claimed they already rendered more than a year
of service in the company and, therefore, should have been recognized as regular employees. They
asked they be paid overtime, night shift differential, holiday, rest day and service incentive leave pay.
Moreover, attorney’s fees and moral damages.
ABS-CBN explained the petitioner’s explanation:
1. Regional Network Group RNG exercises control and supervision over all the ABS-CBN local
stations to ensure that ABS-CBN programs are extended to the provinces. They can resort to
cost-effective and cost-saving measures to remain viable. the production of programs per se is
not necessary or desirable in its business because it could generate profits by selling airtime to
block-timers or through advertising.
2. To cope with fluctuating business conditions, it contracts on a case-to-case basis the services
of persons who possess the necessary talent, skills, training, expertise or qualifications to meet
the requirements of its programs and productions. These contracted persons are called
"talents" and are considered independent contractors who offer their services to broadcasting
companies.
3. Instead of salaries, talents are paid a pre-arranged consideration called "talent fee" taken from
the budget of a particular program and subject to a ten percent (10%) withholding tax. Talents
do not undergo probation. Their services are engaged for a speci􀀾c program or production, or
a segment thereof. Their contracts are terminated once the program, production or segment is
completed.
Labor Arbiter rendered his decision holding that the petitioners were regular employees of ABS-CBN,
not independent contractors, and are entitled to the benefits and privileges of regular employees.
Later on, during the case is pending in NLRC, some of the petitioners were dismissed due to their
refusal to sign contract of employment with Able Services. It turns out the ABS-CBN decided to course
through service contractors some of its worker’s category. Thus, dismissal is necessary since employer-
employee relationship has been strained due to them being contracted out.
Labor Arbiter upheld the validity of ABS-CBN's contracting out of certain work or services in its
operations. He found that the petitioners had been dismissed due to redundancy, an authorized cause
under the law, and then awarded them separation pays. ABS-CBN appealed on both cases of
regularization and illegal dismissal.
NLRC on regularization: ruled that there was an employer-employee relationship between the
petitioners and ABS-CBN since:
1. the company exercised control over the petitioners in the performance of their work;
2. the petitioners were regular employees because they were engaged to perform activities
usually necessary or desirable in ABS-CBN's trade or business;
3. they cannot be considered contractual employees since they were not paid for the result of
their work, but on a monthly basis and were required to do their work in accordance with the
company's schedule.
NLRC on illegal dismissal: reversed LA’s decision. Found petitioners illegally dismissed and awarded
them backwages and separation pay in lieu of reinstatement.
Upon appeal, CA rules that the petitioners were not illegally dismissed as their separation from the
service was due to redundancy; they had not presented any evidence that ABS-CBN abused its
prerogative in contracting out the services of drivers. Except for separation pay, the CA denied the
petitioners' claim for backwages, moral and exemplary damages, and attorney's fees.
ISSUE/S:
1. WON CA erred in denying petitioner’s claim salaries, allowances and CBA benefits after
declaration of NLRC that they were regular employees
2. WON CA erred in declaring that the petitioner’s were not illegally dismissed and was
dismissed due to redundancy.
HELD:
1. YES (they are regulars thus has a right for the benefits)
2. YES (they are illegally dismissed)
RATIO:
1. In the root decision (the labor arbiter's decision of January 17, 2002) that the NLRC and CA
affirmed, the labor arbiter declared that petitioners are regular employees and not independent
contractors.
This declaration unequivocally settled the petitioners' employment status: they are ABS-CBN's regular
employees entitled to the bene􀀾ts and privileges of regular employees. These benefits and
privileges arise from entitlements under the law (specifically, the Labor Code and its related
 laws), and from their employment contract as regular ABS-CBN employees, part of which is
the CBA if they fall within the coverage of this agreement.
From this factual finding flows legal effects touching on the terms and conditions of the petitioners'
regular employment. This was what the labor arbiter meant when he stated in his decision that
"henceforth they are entitled to the benefits and privileges attached to regular status of their
employment." Significantly, ABS-CBN itself posited before this Court that "the Court of Appeals
did not gravely err nor gravely abuse its discretion then it affirmed the resolution of the NLRC
dated March 24, 2006 reinstating and adopting in toto the decision of the Labor Arbiter…" This
representation alone fully resolves all the objections — procedural or otherwise — ABSCBN
raised on the regularization issue.
2. The termination of employment of the four drivers occurred under highly questionable
circumstances and with plain and unadulterated bad faith.
First, the regularization case was filed leading to the labor arbiter's decision declaring the petitioners to
be regular employees.
In the course of this appeal, ABS-CBN took matters into its own hands and
terminated the petitioners' services, clearly disregarding its own appeal then pending with the NLRC.
The appeal posits the petitioner are not employees but mere independent contractors. In
justifying their case, the
company cited redundancy as its authorized cause but offered no justificatory supporting evidence.
ABS-CBN's intent, of course, based on the records, was to transfer the petitioners and their activities to
a service contractor without paying any attention to the requirements of our labor laws; hence,
ABS-CBN dismissed the petitioners when they refused to sign up with late service contractor.
By doing all these, ABS-CBN forgot labor law and its realities. It forgot that by claiming redundancy as
authorized cause for dismissal, it impliedly admitted that the petitioners were regular
employees whose services, by law, can only be terminated for the just and authorized causes
defined under the Labor Code.
Likewise ABS-CBN forgot that it had an existing CBA with a union, which agreement must be respected
in any move affecting the security of tenure of affected employees; otherwise, it ran the risk of
committing unfair labor practice — both a criminal and an administrative offense. It similarly
forgot that an exercise of management prerogative can be valid only if it is undertaken in good
faith and with no intent to defeat or circumvent the rights of its employees under the laws or
under valid agreements.
Lastly, it forgot that there was a standing labor arbiter's decision that, while not yet final because of its
own pending appeal, cannot simply be disregarded. By implementing the dismissal action at
the time the labor arbiter's ruling was under review, the company unilaterally negated the
effects of the labor arbiter's ruling while at the same time appealing the same ruling to the
NLRC. This unilateral move is a direct affront to the NLRC's authority and an abuse of the
appeal process.
Dumpit-Murillo v. Court of Appeals (Alex Jaleco)
June 8, 2007 | Quisumbing, J. | Employer-Employee Relationship
DOCTRINE: The elements to determine the existence of an employment relationship are:
(a) the selection and engagement of the employee,
(b) the payment of wages,
(c) the power of dismissal, and
(d) the employers power to control.
The most important element is the employers control of the employees conduct, not only as to the result
of the work to be done, but also as to the means and methods to accomplish it.
FACTS: Under a Talent Contract, private respondent Associated Broadcasting Company (ABC) hired
petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor for Balitang-Balita, an early evening
news program, and for the program Live on Five. The contract was for a period of three months, which
were continuously renewed. On September 30, 1999, after four years of repeated renewals, petitioners
talent contract expired. Two weeks after the expiration of the last contract, petitioner sent a letter to Mr.
Jose Javier, Vice President for News and Public Affairs of ABC, informing the latter that she was still
interested in renewing her contract subject to a salary increase. Thereafter, petitioner stopped reporting
for work. She then wrote another letter to Mr. Javier to inform him that she deems the unheeded letters
as constructive dismissal.
After a month, petitioner sent a demand letter to ABC, demanding:
(a) reinstatement to her former position;
(b) payment of unpaid wages for services rendered from September 1 to October 20, 1999 and full
backwages;
(c) payment of 13th month pay, vacation/sick/service incentive leaves and other monetary benefits due
to a regular employee starting March 31, 1996.
ABC replied that a check covering petitioners talent fees had been processed and prepared, but that the
other claims of petitioner had no basis in fact or in law.
Petitioner filed a complaint against ABC, Mr. Javier and Mr. Edward Tan, for illegal constructive
dismissal, nonpayment of salaries, overtime pay, premium pay, separation pay, holiday pay, service
incentive leave pay, vacation/sick leaves and 13th month pay. She also demanded payment for moral,
exemplary and actual damages, as well as for attorneys fees.
Labor Arbiter: dismissed the complaint.[9]
NLRC: reversed the Labor Arbiter. It held that an employer-employee relationship existed between
petitioner and ABC; that the subject talent contract was void; that the petitioner was a regular employee
illegally dismissed; and that she was entitled to reinstatement and backwages or separation pay, aside
from 13th month pay and service incentive leave pay, moral and exemplary damages and attorneys
fees.
ABC filed a petition for certiorari under Rule 65.
CA: Reversed NLRC as it committed grave abuse of discretion on the ground that petitioner should not
be allowed to renege from the stipulations she had voluntarily and knowingly executed by invoking the
security of tenure under the Labor Code. According to the appellate court, petitioner was a fixed-term
employee and not a regular employee within the ambit of Article 280[14] of the Labor Code because her
job, as anticipated and agreed upon, was only for a specified time.
Hence, this petition. ABC stated that prevailing jurisprudence has recognized and sustained the
absence of employer-employee relationship between a talent and the media entity which engaged the
talents services on a per talent contract basis, citing the case of Sonza v. ABS-CBN Broadcasting
Corporation.
Petitioner avers however that an employer-employee relationship was created when the private
respondents started to merely renew the contracts repeatedly fifteen times or for four consecutive
years.
ISSUE:
1. WON an employer-employee exists between ABC and Thelma - YES
2. WON Thelma is a regular employee – YES
3. WON Thelma was illegally dismissed – YES
RATIO: The Court of Appeals committed reversible error when it held that petitioner was a fixed-term
employee. Petitioner 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.[23]
Further, the Sonza case is not applicable. In Sonza, the television station did not instruct Sonza how to
perform his job. How Sonza delivered his lines, appeared on television, and sounded on radio were
outside the television stations control. Sonza had a free hand on what to say or discuss in his shows
provided he did not attack the television station or its interests. Clearly, the television station did not
exercise control over the means and methods of the performance of Sonzas work.[24] In the case at
bar, ABC had control over the performance of petitioners work. Noteworthy too, is the comparatively low
P28,000 monthly pay of petitioner[25] vis the P300,000 a month salary of Sonza,[26] that all the more
bolsters the conclusion that petitioner was not in the same situation as Sonza.
The elements to determine the existence of an employment relationship are: (a) the selection and
engagement of the employee, (b) the payment of wages, (c) the power of dismissal, and (d) the
employers power to control. The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the means and methods to
accomplish it.
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.
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:
The 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.
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 pre-condition 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.[34]
The contention of the appellate court that the contract was characterized by a valid fixed-period
employment is untenable. For such contract to be valid, it should be shown that the fixed period was
knowingly and voluntarily agreed upon by the parties. There should have been no force, duress or
improper pressure brought to bear upon the employee; neither should there be any other circumstance
that vitiates the employees consent.[35] It should satisfactorily appear that the employer and the
employee dealt with each other on more or less equal terms with no moral dominance being exercised
by the employer over the employee.[36] Moreover, fixed-term employment will not be considered valid
where, from the circumstances, it is apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee.
In the case at bar, it does not appear that the employer and employee dealt with each other on equal
terms. Understandably, the petitioner could not object to the terms of her employment contract because
she did not want to lose the job that she loved and the workplace that she had grown accustomed to,
[38] which is exactly what happened when she finally manifested her intention to negotiate. Being one
of the numerous newscasters/broadcasters of ABC and desiring to keep her job as a broadcasting
practitioner, petitioner was left with no choice but to affix her signature of conformity on each renewal of
her contract as already prepared by private respondents; otherwise, private respondents would have
simply refused to renew her contract. Patently, the petitioner occupied a position of weakness vis--vis
the employer. Moreover, private respondents practice of repeatedly extending petitioners 3-month
contract for four years is a circumvention of the acquisition of regular status. Hence, there was no valid
fixed-term employment between petitioner and private respondents.
While this Court has recognized the validity of fixed-term employment contracts in a number of cases, it
has consistently emphasized that when the circumstances of a case show that the periods were
imposed to block the acquisition of security of tenure, they should be struck down for being contrary to
law, morals, good customs, public order or public policy.[39]
As a regular employee, petitioner is entitled to security of tenure and can be dismissed only for just
cause and after due compliance with procedural due process. Since private respondents did not
observe due process in constructively dismissing the petitioner, we hold that there was an illegal
dismissal.
FUJI TELEVISION NETWORK, INC., petitioner, vs. ARLENE S. ESPIRITU, respondent. (Marga
Dacanay)
December 3, 2014 | Leonen, J. | Employer-Employee Relationship
DOCTRINE: 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. The Supreme Court affirms the Court of Appeals finding that the
successive renewals of Respondent's (Espiritu) contract indicated the necessity and desirability of her
work in the usual course of Fuji's business. Because of this, Arlene had become a regular employee
with the right to security of tenure.
FACTS:
In 2005, Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc. ("Fuji") as a news
correspondent/producer 4 "tasked to report Philippine news to Fuji through its Manila Bureau field
office." 5 Arlene's employment contract initially provided for a term of one (1) year but was successively
renewed on a yearly basis with salary adjustment upon every renewal. 6
Sometime in January 2009, Arlene was diagnosed with lung cancer. 7 She informed Fuji about her
condition. In turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene "that the company
will have a problem renewing her contract" 8 since it would be difficult for her to perform her job. 9 She
"insisted that she was still fit to work as certified by her attending physician." 10
After several verbal and written communications, 11 Arlene and Fuji signed a non-renewal contract on
May 5, 2009 where it was stipulated that her contract would no longer be renewed after its expiration on
May 31, 2009. The contract also provided that the parties release each other from liabilities and
responsibilities under the employment contract. 12 SDTIaE
In consideration of the non-renewal contract, Arlene "acknowledged receipt of the total amount of
US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus, mid-
year bonus, and separation pay." 13 However, Arlene affixed her signature on the non-renewal contract
with the initials "U.P." for "under protest." 14
On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for illegal
dismissal and attorney's fees with the National Capital Region Arbitration Branch of the National Labor
Relations Commission. She alleged that she was forced to sign the non-renewal contract when Fuji
came to know of her illness and that Fuji withheld her salaries and other benefits for March and April
2009 when she refused to sign. 15
Arlene claimed that she was left with no other recourse but to sign the non-renewal contract, and it was
only upon signing that she was given her salaries and bonuses, in addition to separation pay equivalent
to four (4) years. 16
In the decision 17 dated September 10, 2009, Labor Arbiter Corazon C. Borbolla dismissed Arlene's
complaint. 18 Citing Sonza v. ABS-CBN 19 and applying the four-fold test, the Labor Arbiter held that
Arlene was not Fuji's employee but an independent contractor. 20
Arlene appealed before the National Labor Relations Commission. In its decision dated March 5, 2010,
the National Labor Relations Commission reversed the Labor Arbiter's decision. 21 It held that Arlene
was a regular employee with respect to the activities for which she was employed since she
continuously rendered services that were deemed necessary and desirable to Fuji's business. 22 The
National Labor Relations Commission ordered Fuji to pay Arlene backwages, computed from the date
of her illegal dismissal.
Arlene and Fuji filed separate motions for reconsideration. 25 Both motions were denied by the National
Labor Relations Commission for lack of merit in the resolution dated April 26, 2010. 26
From the decision of the National Labor Relations Commission, both parties filed separate petitions for
certiorari 27 before the Court of Appeals. The Court of Appeals consolidated the petitions and
considered the following issues for resolution:
1) Whether or not Espiritu is a regular employee or a fixed-term contractual employee;
2) Whether or not Espiritu was illegally dismissed; and
3) Whether or not Espiritu is entitled to damages and attorney's fees.
In the assailed decision, the Court of Appeals affirmed the National Labor Relations Commission with
the modification that Fuji immediately reinstate Arlene to her position as News Producer without loss of
seniority rights, and pay her backwages, 13th-month pay, mid-year and year-end bonuses, sick leave
and vacation leave with pay until reinstated, moral damages, exemplary damages, attorney's fees, and
legal interest of 12% per annum of the total monetary awards.
In arriving at the decision, the Court of Appeals held that Arlene was a regular employee because she
was engaged to perform work that was necessary or desirable in the business of Fuji, 31 and the
successive renewals of her fixed-term contract resulted in regular employment. 32
According to the Court of Appeals, Sonza does not apply in order to establish that Arlene was an
independent contractor because she was not contracted on account of any peculiar ability, special
talent, or skill. 33 The fact that everything used by Arlene in her work was owned by Fuji negated the
idea of job contracting. 34
The Court of Appeals also held that Arlene was illegally dismissed because Fuji failed to comply with
the requirements of substantive and procedural due process necessary for her dismissal since she was
a regular employee.
The Court of Appeals found that Arlene did not sign the non-renewal contract voluntarily and that the
contract was a mere subterfuge by Fuji to secure its position that it was her choice not to renew her
contract. She was left with no choice since Fuji was decided on severing her employment.
Fuji filed a motion for reconsideration that was denied in the resolution 37 dated December 7, 2012 for
failure to raise new matters. 38 EASIHa
Aggrieved, Fuji filed this petition for review and argued that the Court of Appeals erred in affirming with
modification the National Labor Relations Commission's decision, holding that Arlene was a regular
employee and that she was illegally dismissed. Fuji also questioned the award of monetary claims,
benefits, and damages. 39
Fuji points out that Arlene was hired as a stringer, and it informed her that she would remain one. 40
She was hired as an independent contractor as defined in Sonza.41 Fuji had no control over her work.
42 The employment contracts were executed and renewed annually upon Arlene's insistence to which
Fuji relented because she had skills that distinguished her from ordinary employees. 43 Arlene and Fuji
dealt on equal terms when they negotiated and entered into the employment contracts. 44 There was
no illegal dismissal because she freely agreed not to renew her fixed-term contract as evidenced by her
e-mail correspondences with Yoshiki Aoki. 45 In fact, the signing of the non-renewal contract was not
necessary to terminate her employment since "such employment terminated upon expiration of her
contract." 46 Finally, Fuji had dealt with Arlene in good faith, thus, she should not have been awarded
damages. 47
Fuji alleges that it did not need a permanent reporter since the news reported by Arlene could easily be
secured from other entities or from the internet. 48 Fuji "never controlled the manner by which she
performed her functions." 49 It was Arlene who insisted that Fuji execute yearly fixed-term contracts so
that she could negotiate for annual increases in her pay. 50
Fuji points out that Arlene reported for work for only five (5) days in February 2009, three (3) days in
March 2009, and one (1) day in April 2009. 51 Despite the provision in her employment contract that
sick leaves in excess of 30 days shall not be paid, Fuji paid Arlene her entire salary for the months of
March, April, and May; four (4) months of separation pay; and a bonus for two and a half months for a
total of US$18,050.00. 52 Despite having received the amount of US$18,050.00, Arlene still filed a case
for illegal dismissal. 53
Fuji further argues that the circumstances would show that Arlene was not illegally dismissed. The
decision to not renew her contract was mutually agreed upon by the parties as indicated in Arlene's e-
mail 54 dated March 11, 2009 where she consented to the non-renewal of her contract but refused to
sign anything. 55 Aoki informed Arlene in an e-mail 56 dated March 12, 2009 that she did not need to
sign a resignation letter and that Fuji would pay Arlene's salary and bonus until May 2009 as well as
separation pay. 57
Arlene sent an e-mail dated March 18, 2009 with her version of the non-renewal agreement that she
agreed to sign this time. 58 This attached version contained a provision that Fuji shall re-hire her if she
was still interested to work for Fuji. 59 For Fuji, Arlene's e-mail showed that she had the power to
bargain
ISSUE: Whether the Court of Appeals correctly affirmed the National Labor Relations
Commission's finding that Arlene was a regular employee? - YES.
HELD: The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and affirmed the
ruling of the National Labor Relations Commission finding that Arlene was a regular employee. Arlene
was hired by Fuji as a news producer, but there was no showing that she was hired because of unique
skills that would distinguish her from ordinary employees. Neither was there any showing that she had a
celebrity status. Her monthly salary amounting to US$1,900.00 appears to be a substantial sum,
especially if compared to her salary when she was still connected with GMA. 199 Indeed, wages may
indicate whether one is an independent contractor. Wages may also indicate that an employee is able
to bargain with the employer for better pay. However, wages should not be the conclusive factor in
determining whether one is an employee or an independent contractor.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional employment
contract. 200 Her contract also indicated that Fuji had control over her work because she was required
to work for eight (8) hours from Monday to Friday, although on flexible time. 201 Sonza was not
required to work for eight (8) hours, while Dumpit-Murillo had to be in ABC to do both on-air and off-air
tasks.
On the power to control, Arlene alleged that Fuji gave her instructions on what to report. 202 Even the
mode of transportation in carrying out her functions was controlled by Fuji. Paragraph 6 of her contract
states:
6. During the travel to carry out work, if there is change of place or change of place of work, the train,
bus, or public transport shall be used for the trip. If the Employee uses the private car during the work
and there is an accident the Employer shall not be responsible for the damage, which may be caused to
the Employee. 203
Thus, the Court of Appeals did not err when it upheld the findings of the National Labor Relations
Commission that Arlene was not an independent contractor.
Having established that an employer-employee relationship existed between Fuji and Arlene, the next
questions for resolution are the following: Did the Court of Appeals correctly affirm the National Labor
Relations Commission that Arlene had become a regular employee? Was the nature of Arlene's work
necessary and desirable for Fuji's usual course of business?
Arlene was a regular employee
with a fixed-term contract
The test for determining regular employment is whether there is a reasonable connection between the
employee's activities and the usual business of the employer. Article 280 provides that the nature of
work must be "necessary or desirable in the usual business or trade of the employer" as the test for
determining regular employment. As stated in ABS-CBN Broadcasting Corporation v. Nazareno:204
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. 205
Fuji is engaged in the business of broadcasting, 209 including news programming. 210 It is based in
Japan 211 and has overseas offices to cover international news. 212
Based on the record, Fuji's Manila Bureau Office is a small unit 213 and has a few employees. 214 As
such, Arlene had to do all activities related to news gathering. Although Fuji insists that Arlene was a
stringer, it alleges that her designation was "News Talent/Reporter/Producer." 215
A news producer "plans and supervises newscast ...[and] work[s] with reporters in the field planning and
gathering information. ..." 216 Arlene's tasks included "[m]onitoring and [g]etting [n]ews [s]tories,
[r]eporting interviewing subjects in front of a video camera," 217 "the timely submission of news and
current events reports pertaining to the Philippines[,] and traveling [sic] to [Fuji's] regional office in
Thailand." 218 She also had to report for work in Fuji's office in Manila from Mondays to Fridays, eight
(8) hours per day. 219 She had no equipment and had to use the facilities of Fuji to accomplish her
tasks.
The Court of Appeals affirmed the finding of the National Labor Relations Commission that the
successive renewals of Arlene's contract indicated the necessity and desirability of her work in the usual
course of Fuji's business. Because of this, Arlene had become a regular employee with the right to
security of tenure. 220 The Court of Appeals ruled that:
Here, Espiritu was engaged by Fuji as a stinger [sic] or news producer for its Manila Bureau. She was
hired for the primary purpose of news gathering and reporting to the television network's headquarters.
Espiritu was not contracted on account of any peculiar ability or special talent and skill that she may
possess which the network desires to make use of. Parenthetically, if it were true that Espiritu is an
independent contractor, as claimed by Fuji, the fact that everything that she uses to perform her job is
owned by the company including the laptop computer and mini camera discounts the idea of job
contracting. 221

Moreover, the Court of Appeals explained that Fuji's argument that no employer-employee relationship
existed in view of the fixed-term contract does not persuade because fixed-term contracts of
employment are strictly construed. 222 Further, the pieces of equipment Arlene used were all owned by
Fuji, showing that she was a regular employee and not an independent contractor. 223
The Court of Appeals likewise cited Dumpit-Murillo,which involved fixed-term contracts that were
successively renewed for four (4) years. 224 This court held that "[t]his repeated engagement under
contract of hire is indicative of the necessity and desirability of the petitioner's work in private
respondent ABC's business." 225
With regard to Fuji's argument that Arlene's contract was for a fixed term, the Court of Appeals cited
Philips Semiconductors, Inc. v. Fadriquela 226 and held that where an employee's contract "had been
continuously extended or renewed to the same position, with the same duties and remained in the
employ without any interruption," 227 then such employee is a regular employee. The continuous
renewal is a scheme to prevent regularization. On this basis, the Court of Appeals ruled in favor of
Arlene.
As stated in Price, et al. v. Innodata Corp., et al.:228
The employment status of a person is defined and prescribed by law and not by what the parties say it
should be. Equally important to consider is that a contract of employment is impressed with public
interest such that labor contracts must yield to the common good. Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by simply contracting with each
other. 229 (Citations omitted)
Arlene's contract indicating a fixed term did not automatically mean that she could never be a regular
employee. This is precisely what Article 280 seeks to avoid. The ruling in Brent remains as the
exception rather than the general rule.
Further, an employee can be a regular employee with a fixed-term contract. The law does not preclude
the possibility that a regular employee may opt to have a fixed-term contract for valid reasons. This was
recognized in Brent: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.
Dispositive: WHEREFORE,the petition is DENIED. The assailed Court of Appeals decision dated
June 25, 2012 is AFFIRMED with the modification that backwages shall be computed from June
2009. Legal interest shall be computed at the rate of 6% per annum of the total monetary award
from date of finality of this decision until full satisfaction.
Sonza v. ABS-CBN Broadcasting Corporation (Eduardo Fajardo)
June 10, 2004 | Carpio, J. | Employer-Employee Relationship
Petitioner-appellant: Jose Sonza
Respondent-appellee: ABS-CBN Broadcasting Corporation
DOCTRINE: The control test is the most important test our courts apply in distinguishing an employee
from an independent contractor.[29] This test is based on the extent of control the hirer exercises over a
worker. The greater the supervision and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well the less control the hirer exercises, the more
likely the worker is considered an independent contractor.
FACTS: In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an
Agreement (Agreement) with the Mel and Jay Management and Development Corporation
(MJMDC). ABS-CBN was represented by its corporate officers while MJMDC was represented by
SONZA, as President and General Manager, and Carmela Tiangco (TIANGCO), as EVP and Treasurer.
Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to
ABS-CBN as talent for radio and television. 
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay
his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan (ESOP).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee
relationship existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank,
Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same
bank where ABS-CBN deposited SONZAs talent fees and other payments due him under the
Agreement.
The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of
jurisdiction:
It must be noted that complainant was engaged by respondent by reason of his peculiar skills and talent
as a TV host and a radio broadcaster. Unlike an ordinary employee, he was free to perform the services
he undertook to render in accordance with his own style. The benefits conferred to complainant under
the May 1994 Agreement are certainly very much higher than those generally given to employees. For
one, complainant Sonza’s monthly talent fees amount to a staggering P317,000. Moreover, his
engagement as a talent was covered by a specific contract. Likewise, he was not bound to render eight
(8) hours of work per day as he worked only for such number of hours as may be necessary.
The fact that complainant was made subject to respondents Rules and Regulations, likewise, does not
detract from the absence of employer-employee relationship. As held by the Supreme Court, 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 to achieve it.
NLRC and CA: Found that no employer-employee relationship existed between Sonza and ABS-CBN.
ISSUE/S: Whether or not there is an employer-employee relationship
HELD: NO
RATIO:
Case law has consistently held that the elements of an employer-employee relationship are: (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.
a. Selection and Engagement of Employee
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 of an independent contractual relationship. If SONZA did not possess such unique skills,
talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but
would have hired him through its personnel department just like any other employee.
b. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC.
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement.
If SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits
such as SSS, Medicare and 13th month pay which the law automatically incorporates into every
employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because
of an employer-employee relationship.
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out
of the ordinary that they indicate more an independent contractual relationship rather than an employer-
employee relationship.
c.  Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA
failed to show that ABS-CBN could terminate his services on grounds other than breach of contract,
such as retrenchment to prevent losses as provided under labor laws.
d. Power of Control
Applying the control test to the present case, we find that SONZA is not an employee but an
independent contractor. The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor.[29] This test is based on the extent of control the hirer
exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the
worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the
more likely the worker is considered an independent contractor.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the Mel &
Jay programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only
needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on
radio were outside ABS-CBNs control. SONZA did not have to render eight hours of work per day. The
Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and
post-production staff meetings. ABS-CBN could not dictate the contents of SONZAs script. However,
the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear
implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not
attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual performance that produced the finished
product of SONZAs work. 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.
Although ABS-CBN did have the option not to broadcast SONZAs show, ABS-CBN was still obligated to
pay SONZAs talent fees. Thus, even if ABS-CBN was completely dissatisfied with the means and
methods of SONZAs performance of his work, or even with the quality or product of his work, ABS-CBN
could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs
show but ABS-CBN must still pay his talent fees in full.
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the the means and
methods of the performance of SONZAs work. ABS-CBN could not terminate or discipline SONZA even
if the means and methods of performance of his work - how he delivered his lines and appeared on
television - did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to
the result of SONZAs work, whether to broadcast the final product or not. In either case, ABS-CBN must
still pay SONZAs talent fees in full until the expiry of the Agreement.
Bernarte vs Philippine Basketball Association (JP Sarmiento)
September 11, 2011 | Carpio, J. | Employer-Employee Relationship
Petitioner-appellant: JOSE MEL BERNARTE
Respondent-appellee: PHILIPPINE
BASKETBALL ASSOCIATION (PBA), JOSE EMMANUEL
M. EALA, and PERRY MARTINEZ,
DOCTRINE:
Applicable foreign case law declares that a referee is an independent contractor, whose special skills
and independent judgment is required specifically for such position and cannot possibly be controlled by
the hiring party.
FACTS:
Jose Mel Bernarte and Romeo Guevearra were invited to join the PBA as referees during the leadership
of Commissioner Emilio Bernardino. Bernarte, was not made to sign a contract during the first
conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It was only during
the second conference when he was made to sign a one-and a-half month contract for the period July 1
to August 5, 2003. On the other hand, Guevarra alleges that he was invited to join the PBA pool of
referees in February 2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he
signed a yearly contract as Regular Class C referee.
On January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him that
his contract would not be renewed citing his unsatisfactory performance on and off the court. It was a
total shock for Bernarte who was awarded Referee of the year in 2003. He felt that the dismissal was
caused by his refusal to fix a game upon order of Ernie De Leon, then Guevarra was given a
memorandum by Martinez for expressing his dissatisfaction over his questioning on the assignment of
referees officiating out-of-town games. Beginning February 2004, he was no longer made to sign a
contract.
The Labor arbiter declared the petitioners an employee who were illegally dismissed by the respondent,
and NLRC affirmed the Labor Arbiter’s judgment. The CA however reversed the NLRC since
respondents did not exercise any form of control over the means and methods by which petitioner
performed his work as a basketball referee.
ISSUE/S:
Whether petitioner is an employee of respondents, which in turn determines whether petitioner was
illegally dismissed.
HELD:
NO

RATIO:
The very nature of petitioner’s job of officiating a professional basketball game undoubtedly calls for
freedom of control by respondents, once in the
playing court, the referees exercise their own independent judgment, based on the rules of the game,
as to when and how a call or decision is to be made. The referees decide whether an infraction was
committed, and the PBA cannot overrule them once the decision is made on the playing court. The
referees are the only, absolute, and final authority on the playing court. Respondents or any of the PBA
officers cannot and do not determine which calls to make or not to make and cannot control the referee
when he blows the whistle because such authority exclusively belongs to the referees. The very nature
of petitioner’s job of officiating a professional basketball game undoubtedly calls for freedom of control
by respondents.
Case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control
the employee on the means and methods by which the work is accomplished. The so-called “control
test” is the most important indicator of the presence or absence of an employer-employee relationship.
ABELLA V. PLDT
(Maura Patricia Samson)
June 8, 2005 | Chico-Nazario, J | Employer-Employee Relationship
Petitioners: Zaldy G. Abella and the Members of the PLDT Security Personnel Union
Respondents: PLDT and Peoples Security Inc. (PSI)
DOCTRINE/S: Factors in considering the existence of employer-employee relationship
(1) the selection and engagement of the employee
(2) the payment of wages
(3) the power to dismiss
(4) the power to control the employee’s conduct
FACTS: The case stemmed from a complaint for regularization filed by the petitioners against the
respondents before the NLRC. The petition for review at bar assails the decision of the CA affirming the
decision of NLRC, sustaining the decision of the LA dismissing petitioners; complaint against PLDT and
PSI.
Respondent PSI entered into an agreement with the PLDT to provide the latter with such number of
qualified uniformed and properly armed security guards for the purpose of guarding and protecting
PLDT's installations and properties from theft, pilferage, intentional damage, trespass or other unlawful
acts. Under the agreement, it was expressly provided that there shall be no employer-employee
relationship between the PLDT and the security guards, which may be supplied to it by PSI, and that the
latter shall have the entire charge, control and supervision over the work and services of the supplied
security guards. It was likewise stipulated therein that PSI shall also have the exclusive authority to
select, engage, and discharge its security guards, with full control over their wages, salaries or
compensation.
Consequently, respondent PSI deployed security guards to the PLDT. PLDT’s Security Division
interviewed these security guards and asked them to fill out personal data sheets. Those who did not
meet the height requirements were sent back by PLDT to PSI.
On 05 June 1995, sixty-ffve (65) security guards supplied by respondent PSI 􀀾led a Complaint for
regularization against the PLDT with the Labor Arbiter. The Complaint alleged inter alia that petitioner
security guards have been employed by the company through the years commencing from 1982 and
that all of them served PLDT directly for more than 1 year. It was further alleged that PSI or other
agencies supply security to PLDT, which entity controls and supervises the complainants' work through
its Security Department. Petitioners likewise alleged that PSI acted as the middleman in the payment of
the minimum pay to the security guards, but no premium for work rendered beyond eight hours was
paid to them nor were they paid their 13th month pay. In sum, theComplaint states that inasmuch as the
complainants are under the direct control and supervision of PLDT, they should be considered as
regular employees by the latter with compensation and benefits equivalent to ordinary rank-and-file
employees of the same job grade.
Forthwith, after filing the complaint, the security guards formed the PLDT Company Security Personnel
Union with petitioner Zaldy Abella as union president. A month later, PLDT allegedly ordered PSI to
terminate about 25 members of said union who participated in a protest picket in front of the PLDT
Office at the Ramon Cojuangco Building in Makati City.
LA: dismissed the complaint of the petitioners
NLRC: sustained the decision of LA
CA: affirmed the decision of NLRC
ISSUE/S: Whether or not an employer-employee relationship exists between petitioners and
respondent PLDT?
HELD: NO.
WHEREFORE, petitioners’ motion for reconsideration x x x is hereby DENIED with FINALITY no
compelling reason having been adduced by petitioners to warrant the reversal thereof. x x x Decision
and Resolution by the CA are hereby AFFIRMED. Costs against petitioners.
RATIO: The case of Philippine Airlines, Inc. v. NLRC provides the legal yardstick in addressing the
issue on whether or not an employer-employee relationship exists:
(1) the selection and engagement of the employee
(2) the payment of wages
(3) the power to dismiss
(4) the power to control the employee’s conduct
In the case at bar, it was the PSI, the security provider of PLDT, which selected or hired and discharged
the security guards. It is not disputed that complainants applied for work with PSI, submitted the
necessary employment documentary requirement with PSI and executed employment contracts with
PSI. PSI is a legitimate job contractor pursuant to Sec. 8, Rule VII, Book II of Omnibus Rules
Implementing Labor Code. Here, the security guards which PSI had assigned to PLDT are already the
former's employees prior to assignment and if the assigned guards to PLDT are rejected by PLDT for
reasons germane to the security agreement, then the rejected or terminated guard may still be assigned
to other clients of PSI.

Secondly, it is PSI that determined petitioners’ wages, salaries, and compensation. I was also not
disputed that complainants enjoy the benefits and incentives of employees of PSI and that they are
reported as employees of PSI with the SSS.
Delinquency reports were nothing but reminders of the infractions committed by the petitioners while on
duty which serve as a basis for PLDT to recommend the termination of the concerned security guard
from PLDT. Termination of services from PLDT did not ipso facto mean dismissal from PSI inasmuch
as some of those pulled out from PLDT were merely detailed at the other clients of PSI. That said
reports merely served as justifiable, not arbitrary, basis for PLDT to demand replacement of guards
found to have committed infractions while on their tours of duty at PLDT’s premises.
As regards the seminars, while they were conducted at the premises of PLDT, it also remains
uncontroverted that complainants' participation was done with the approval and at the expense of PSI.
To be sure, it is not uncommon, specially for big aggressive corporations like PLDT, to align or integrate
their corporate visions and policies externally or with that of other entities they deal with such as their
suppliers, consultants, or contractors, for that matter. It is therefore not surprising that PLDT would
demand that security guards assigned to its premises undergo seminars and trainings on certain areas
of concern which are unique to PLDT.
In fine, while the Constitution is committed to the policy of social justice and the protection of the
working class, it should not be supposed that every labor dispute will be automatically decided in favor
of labor. The partiality for labor has not in any way diminished our belief that justice is in every case for
the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.
Raquel Consulta v Court of Appeals, Pamana Philippines Inc., Razul Requesto and Aleta
Tolentino
March 18, 2005 | Carpio, J. | Employer-Employee Relationship
Petitioner-appellant: Raquel Consulta
Respondent-appellee: Pamana Philippines Inc.
DOCTRINE:
The four elements of an employee-employer relationship
1. The power to hire
2. The power to dismiss
3. The payment of Wages
4. The power to Control
FACTS:
● Pamana Philippines engaged in the healthcare business appointed Raquel Consulta as their
Managing Associate effective Dec. 1987 to Jan 1988
● The appointment indicated that Consulta’s responsibility is to organize, develop, manage, and
maintain a sales division and a full complement of agencies and Health Consultants. In
addition, she is tasked with the recruiting, training and directing of Supervising Associates and
Health Consultants for the purpose of promoting the corporate Love Mission.
● In return she will be receiving a commission in the following rates:
o On Initial Membership Fee Entrance Fee 5%
o Medical Fee 6%
o On Subsequent Membership Fee 6%
● Subsequently she negotiated with the Filipino Civilian Employees Association working at the
US Subic Naval Base for a healthcare plan.
● Pamana and US Navy Supply Depot signed the FFCEA account.
● Alleging that she was not paid by PAMANA, she filed a complaint for unpaid wage or
commission before the Labor Arbiter
● Labor Arbiter
o Pamana is ordered to pay Consulta her commission in relation to the transaction with
FFCEA and US Navy Supply Depot with corresponding atty’s fee of 10%
● Pamana appealed before the NLRC
● NLRC
o Labor Arbiter decision is affirmed
● Pamana filed a petition for certiorari before the SC, however the case was referred to the CA
following the ruling of the honorable court in St. Martin Funeral Home v NLRC.
● Court of Appeals
o Reversed the NLRC decision stating that there exists no employee-employer
relationship between Pamana and Consulta
● A petition for review on certiorari was filed before the SC assailing the decision of the CA
ISSUE/S:
1. WON Consulta was an employee of Pamana
2. WON Labor Arbiter and NLRC has jurisdiction over Consulta’s claim
HELD:
1. No, Consulta is not an employee of Pamana
- The power to control is missing in this case
- The appointment of Consulta clearly indicated that the manner in which she should pursue
the tasks/activities was not subject to the control of Pamana. The amount of time devoted
to soliciting clients was entirely up to her sound judgment and discretion.
- Managing Associates only receive suggestions on how to go about their recruitment and
sales activities but it is not binding upon them.
- Lastly, Pamana paid Consulta not for labor but for the results of her labor. Commissions,
bonuses and other benefits depended solely on the actual sales of her group.
2. No, Labor Arbiter and the NLRC has no jurisdiction over her claim
- Since there is no employer-employee relationship between Pamana and Consulta the
Labor Arbiter and NLRC has no jurisdiction over the case
- Consulta’s remedy is to file an ordinary civil action to litigate her claim
WHEREFORE, the petition is DISMISSED and the Decision of the Court of Appeals in CAG.R. SP No.
50462 is AFFIRMED in toto. SO ORDERED.
Oscar Villamaria, Jr. v. Court of Appeals (Ana Beatha Castil)
April 19, 2006 | Callejo, J. | Employer-Employee Relationship
Petitioner-appellant: Oscar Villamaria, Jr.
Respondent-appellee: Court of Appeals, Jerry Bustamante
DOCTRINE: Employer-Employee Relationship determinants: (a) the selection and engagement of
employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the employer’s power to
control the employee with respect to the means and methods by which the work is to be accomplished.
The so-called “contro test” is the most important element.
FACTS:
Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in
assembling passenger jeepneys with a public utility franchise to operate along the Baclaran-Sucat
route. By 1995, Villamaria stopped assembling jeepneys and retained only nine, four of which he
operated by employing drivers on a boundary basis. One of those drivers was respondent Bustamante
who drove the jeepney with Plate No. PVU-660. Bustamante remitted P450.00 a day to Villamaria as
boundary and kept the residue of his daily earnings as compensation for driving the vehicle. In August
1997, Villamaria verbally agreed to sell the jeepney to Bustamante under the boundary-hulog scheme,
where Bustamante would remit to Villarama P550.00 a day for a period of four years; Bustamante would
then become the owner of the vehicle and continue to drive the same under Villamarias franchise. It
was also agreed that Bustamante would make a downpayment of P10,000.
Villamaria executed a contract called “Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng
Boundary-Hulog” over the subject vehicle. The agreement stipulated that if Bustamante failed to pay for
three days, the vehicle will be held by Villamaria Motors until Bustamante is able to pay arrears with
PHP 50.00 daily penalty. The violation of the Kasunduan prohibited Bustamante to drive the vehicle
without Villamaria’s permission. There were certain things that Villamaria also demanded of him such as
display and identification card, repairs, violations and charges in relation to the vehicle will be
shouldered by Bustamante. He continued to drive the vehicle and remit PHP 550 to Villamaria in
payment of the vehicle’s purchase price until he failed to pay for the annual registration fees.
Nonetheless, he was still allowed by Villamaria to make use of the jeepney.
Other drivers also had the same agreement with Villamaria and also failed to pay their boundary-hulog.
Villamaria served them with the “paalala” that if they still fail to pay in a week, the vehicles that they
have been paying for is going back to Villamaria Motors without any complaint. Instead of complying,
failed, caught the vehicle in an accident and abandoned the vehicle in a gas station. He was barred
from driving the vehicle. Hence, this complaint against Spouses Villamaria for Illegal Dismissal.
ISSUE/S:
Whether or not there is an employer-employee relationship
Whether or not Bustamante was illegally dismissed
HELD:
Yes for both.
RATIO:
Under the Kasunduan between Villamaria and Bustamante, it showed that following the “Employer-
Employee Relationship determinants: (a) the selection and engagement of employee; (b) the payment
of wages; (c) the power of dismissal; and, (d) the employer’s power to control the employee with
respect to the means and methods by which the work is to be accomplished. The so-called “contro test”
is the most important element” it will show that there were manifestations that Villamaria had control
over Bustamante by imposing the use of identification card, don decent attire, parking the vehicle in his
garage and to ask for permission before provincial trips. The fact that “boundary-hulog” had the word
boundary did not remove the employer-employee relationship. Despite his claims that Bustamante had
become reckless, Villamaria never showed proof to support the incident he claims to have happened at
the gas station.
The Labor Arbiters and NLRC under Article 217 of the Labor Code, statutes or CBAs have jurisdiction to
resolve disputes arising from an employer-employee relationship. The boundary system is used by an
owner/operator engaged in transporting passengers as a common carrier to give compensation to the
driver. The owner/operator exercises control over the driver. Regardless of whether the driver only gets
an amount not fixed, but just everything excess of the boundary can not extinguish the relationship
between them. Also, Bustamante drives the jeepneys which is desirable to the usual business of the
owner/operator.
The only burden left on the owner/operator is to prove that there was just cause for dismissing
Bustamante, but failed. Hence, the Court of Appeals decision is affirmed sentencing Villamaria to pay
Bustamante separation pay and backwages.
Republic of the Philippines v. ASIAPRO (Kristine Lacbayo)
November 23, 2007| Chico-Nazario, M. V.| Employer-Employee Relationship
PETITIONER-APPELLANT: Republic of the Philippines, represented by the Social Security
Commission (SSC) and Social Security System (SSS)
RESPONDENT-APPELLEE: Asiapro Cooperative
DOCTRINE:
▪ In determining the existence of an employer-employee relationship, the following elements are
considered:
1. The selection and engagement of the workers;
2. The payment of wages by whatever means;
3. The power of dismissal; and
4. The power to control the workers conduct, with the latter assuming primacy in the overall
consideration.
▪ The most important element is the employer’s control of the employees’ conduct, not only as to the
result of the work to be done, but also as to the means and methods to accomplish.
▪ The power of control refers to the existence of the power and not necessarily to the actual exercise
thereof. It is not essential for the employer to actually supervise the performance of duties of the
employee; it is enough that the employer has the right to wield that power.
FACTS: Asiapro Cooperative (respondent) primarily provides savings and credit facilities and develops
other livelihood services for its owners-members, which are classified into (1) regular members, who
are entitled to all the rights and privileges of membership; and, (2) associate members, who have no
right to vote and be voted upon and shall be entitled only to such rights and privileges provided in its by-
laws. The owner-members do not receive compensation or wages from Asiapro. Instead, they receive a
share in the service surplus which Asiapro earns from different areas of trade it engages in, such as the
income derived from the Service Contracts with Stanfilco, a division of DOLE Philippines, Inc. Likewise,
the owners-members get their income from the service surplus generated by the quality and amount of
services they rendered, which is determined by the Board of Directors of the respondent cooperative.
To enjoy the benefits under the Social Security Law of 1997, the owners-members of Asiapro, who were
assigned to Stanfilco requested the services of the latter to register them with petitioner SSS as self-
employed and to remit their contributions as such. Also, to comply with Section 19-A of Republic Act
No. 1161, as amended by Republic Act No. 8282, the SSS contributions of the subject owners-
members were equal to the share of both the employer and the employee.
SSS sent a letter to Asiapro stating that based on the Service Contracts it executed with Stanfilco,
Asiapro is actually a manpower contractor supplying employees to Stanfilco and for that reason, it is an
employer of its owners-members working with Stanfilco. Thus, Asiapro should register itself with SSS as
an employer and make the corresponding report and remittance of premium contributions in accordance
with the Social Security Law of 1997.
Afterwards, Asiapro sent a letter to SSS asserting that it is not an employer because its owners-
members are the cooperative itself; hence, it cannot be its own employer. Thereafter, SSS sent a letter
ordering Asiapro to register as an employer and report its owners-members as employees for
compulsory coverage with the petitioner SSS. Asiapro continuously ignored the demand of petitioner
SSS.
SSC ruled in favor of SSS. On appeal, CA reversed the decision.
ISSUE/S: Whether or not there is employee-employeer relationship between the owner-members and
the Asiapro.
HELD: YES
RATIO: All the elements of establishing that there is an employee-employer relationship are present in
this case.
First. It is expressly stated in the Service Contracts that it is the Asiapro which has the exclusive
discretion in the selection and engagement of the owners-members as well as its team leaders who will
be assigned at Stanfilco.
Second. The weekly stipends or the so-called shares in the service surplus given by the respondent
cooperative to its owners-members were in reality wages, as the same were equivalent to an amount
not lower than that prescribed by existing labor laws, rules and regulations, including the wage order
applicable to the area and industry; or the same shall not be lower than the prevailing rates of wages. It
cannot be doubted then that those stipends or shares in the service surplus are indeed wages, because
these are given to the owners-members as compensation in rendering services to Asiapro client,
Stanfilco.
Third. It is also stipulated in the above-mentioned Service Contracts that it is the Asiapro which has the
power to investigate, discipline and remove the owners-members and its team leaders who were
rendering services at Stanfilco.
Fourth. It is Asiapro which has the sole control over the manner and means of performing the services
under the Service Contracts with Stanfilco as well as the means and methods of work. Also, Asiapro is
solely and entirely responsible for its owners-members, team leaders and other representatives at
Stanfilco.
All these clearly prove that, indeed, there is an employer-employee relationship between the respondent
cooperative and its owners-members.
Phil. Global Communications v. De Vera (June 7, 2005) Avino Biano
Employer-Employee Relationship
Petitioner-appellant: Phil Global
Respondent-appellee: Dr. De Vera
DOCTRINE: to deteremine empluyer employee relationship, there is such thing as control test . Dr de
vera in here was not under the control of Phil COm, De Vera had his won scheduling and that he was
the one who proposed his services and made the necessary details on hhow he will proceed with his
work as a physician under retainer contract, esentially the power to terminate the said retainer was
vested with both parties
FACTS: 1. PhilCom is a corp in the business of telecommunication
2. ricardo de Vera is a physician
3. The case is about the complaint of De vera that his employment with PhilCom was illegally
dismissed without due process
4. May 15 1981 De vera offered his services to Philcom
a. Clinic for 5 hours daily
b. management and treatment of employees
c. conduct pre-employment check ups for possible employees
d. home visits when deemed necessary
e. other stuffs which are medical in nature
5. yearly renewal of contract of retainership between Philcom and De Vera from 1981-1994,
1995-1996 verbal agreement only
6. Dec 6 1996 , PhilCom terminated the Retainershipmagreement, that it will be more cost
efficent if PhilCom would just employ/ partner with nearby accredited hospitals fio their medical needs.
7. Jan 22 1997 that he was a regular employee, that he had wages and all benefits pertaining
to a regular employee, and that he was illegally terminated without due process.
8. Dec 21 1998, labor arbiter Ramon Reyes ruled in favor of PhilCom that under the
retainership agreement between two parties which is yearly renewed makes it that De Vera was a
independent contractor and that he was not illegally dismissed rather that his contract with PHILCOM
was merely not Renewed.
9. On appeal NLRC ruled in favor of De Vera, and ordered PHILCOM to reinstate De VERA
plus paymet of backwages amounting ton 1.9m pesos ( 39.33 mos. )
ISSUE/S: W/N employer/employee existed between Philcom and De Vera to warrant the illegal
dismissal climed by De vera
HELD:
YES/NO NO
RATIO:
The court cites 4 rules to establish employee/employer relationship
a. selection and engagement of employee
b. payment of wages
c. power of dismissal
d. power to control employees conduct (CONTROL TEST)
Using the control test whic is the most important of the four, the employer/ employee
relationship was not establish
a. De Vera offered his services, he proposed his own plan on how to render his services, he
also proposed his own schedule on how many hiurs will he be working under the premises of PhilCOm
b. The contract they entered into is on of RETAINERSHIP
c. The contract is beingrenewed every year which De Vera accepts
d. perusal of evidence showed that De Vera was not in the Payroll of Philcom
e. he was never deducted sss contributions
f. he was subjected to 10% withholding tax by Philcom fot his services rendered.
Coca Cola Bottlers v. Climaco (ANDAL)
February 5, 2007 | Azcuna, J. | Employer-Employee Relationship
Petitioner-appellant: COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager
Respondent-appellee: DR. DEAN N. CLIMACO
DOCTRINE:
The Court, in determining the existence of an employer-employee relationship, has invariably adhered
to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the power to control the employee’s conduct, or the so-called "control
test," considered to be the most important element. In this case, there is no Employer-Employee
relationship because the company does not have control over the respondent.
FACTS:
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers
Phils., Inc. by virtue of a Retainer Agreement. The Comprehensive Medical Plan, which contains the
duties and responsibilities of respondent, adverted to in the Retainer Agreement.
The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one
expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent
continued to perform his functions as company doctor to Coca-Cola until he received a letter
dated March 9, 1995 from petitioner company concluding their retainership agreement effective
30 days from receipt thereof.
It is noted that Dr, Climaco was already making inquiries regarding his status with petitioner company.
He wrote letters to Dr. Willie Sy (the Acting President and Chairperson of the Committee on
Membership, Philippine College of Occupational Medicine), the Bacolod City District Office of the
Department of Labor and Employment (DOLE), and to SSS-Bacolod City. They stated that Dr. Climaco
was considered as a regular employee.
Dr. Climaco inquired from the management of petitioner company whether it was agreeable to
recognizing him as a regular employee. The management refused to do so.
On February 24, 1994, Dr. Climaco filed a Complaint before the NLRC, Bacolod City, seeking
recognition as a regular employee of petitioner company and prayed for the payment of all benefits of a
regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive
Leave Pay, and Christmas Bonus. The NLRC found that petitioner company lacked the power of
control over respondent’s performance of his duties, and recognized as valid the Retainer Agreement
between the parties.
Dr. Climaco appealed to the CA. The CA held that there exist an employer-employee relationship
between Dr. Climaco and Coca-Cola. Because there “it is sufficient if the task or activity, as well as the
means of accomplishing it, is dictated, as in this case where the objectives and activities were laid out,
and the specific time for performing them was fixed by the controlling party.”
Coca-Cola appealed.
ISSUE/S:
W/N there is an employer-employee relationship?
HELD:
NO. Thus, there was no illegal dismissal.
RATIO:
The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case
show that no employer-employee relationship exists between the parties. The Labor Arbiter and
the NLRC correctly found that petitioner company lacked the power of control over the performance by
respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which
contains the respondent’s objectives, duties and obligations, does not tell respondent "how to conduct
his physical examination, how to immunize, or how to diagnose and treat his patients, employees of
[petitioner] company, in each case."
In effect, the Labor Arbiter held that petitioner company, through the Comprehensive Medical Plan,
provided guidelines merely to ensure that the end result was achieved, but did not control the means
and methods by which respondent performed his assigned tasks.
The NLRC affirmed the findings of the Labor Arbiter and stated that it is precisely because the company
lacks the power of control that the contract provides that respondent shall be directly responsible to the
employee concerned and their dependents for any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.
The Labor Arbiter also correctly found that the provision in the Retainer Agreement that respondent was
on call during emergency cases did not make him a regular employee
In addition, the Court finds that the schedule of work and the requirement to be on call for emergency
cases do not amount to such control, but are necessary incidents to the Retainership Agreement.
Considering that there is no employer-employee relationship between the parties, the termination of the
Retainership Agreement, which is in accordance with the provisions of the Agreement, does not
constitute illegal dismissal of respondent. Consequently, there is no basis for the moral and exemplary
damages granted by the Court of Appeals to respondent due to his alleged illegal dismissal.
CHAVEZ V. NLRC (Clarice Bernal)
January 17, 2005 | Callejo, SR., J. | Employer-Employee Relationship
Petitioner: PEDRO CHAVEZ
Respondents: NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. and
ALVIN LEE, Plant Manager.
DOCTRINE: The elements to determine the existence of an employment relationship are: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the employers power to control the employees conduct. The most important element is the
employers control of the employees conduct, not only as to the result of the work to be done, but also
as to the means and methods to accomplish it. Also, the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in a contract and providing therein that the
employee is an independent contractor when the facts clearly show otherwise. Employment status is
defined by law and not by what the parties say it should be.
FACTS: Supreme Packaging, Inc., respondent company, is in the business of manufacturing cartons
and other packaging materials for export and distribution. It engaged the services of the petitioner,
Pedro Chavez, as truck driver on October 25, 1984. As such, the petitioner was tasked to deliver the
respondent company’s products from its factory in Mariveles, Bataan, to its various customers, mostly in
Metro Manila. The respondent company furnished the petitioner with a truck. Most of the petitioners
delivery trips were made at nighttime, commencing at 6:00 p.m. from Mariveles, and returning thereto in
the afternoon two or three days after. The deliveries were made in accordance with the routing slips
issued by respondent company indicating the order, time and urgency of delivery.
Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent company’s plant
manager, his desire to avail himself of the benefits that the regular employees were receiving such as
overtime pay, nightshift differential pay, and 13th month pay, among others. Although he promised to
extend these benefits to the petitioner, respondent Lee failed to actually do so.
On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration
Branch No. III of the NLRC in San Fernando, Pampanga. Before the case could be heard, respondent
company terminated the services of the petitioner. The petitioner then filed an amended complaint
against the respondents for illegal dismissal, unfair labor practice and nonpayment of overtime pay,
nightshift differential pay, 13th month pay, among others.
The respondents denied the existence of an employer-employee relationship between the respondent
company and the petitioner. They averred that the petitioner was an independent contractor as
evidenced by the contract of service they entered into. They also contented that petitioner had the sole
control over the means and methods by which his work was accomplished. That he even paid the
wages of his helpers and exercised control over them. As such, the petitioner was not entitled to
regularization because he was not an employee of the respondent company. The respondents, likewise,
maintained that they did not dismiss the petitioner. Rather, the severance of his contractual relation with
the respondent company was due to his violation of the terms and conditions of their contract. The
petitioner allegedly failed to observe the minimum degree of diligence in the proper maintenance of the
truck he was using.
The Labor Arbiter ruled in favor of the petitioner finding the respondent company guilty of illegal
dismissal. The LA declared that petitioner was a regular employee as he was performing a service that
was necessary and desirable for latter’s business. Moreover, petitioner had been working as their truck
driver for a continuous and uninterrupted period of more than 10 years. Also, the contract of service
invoked by the respondents was declared null and void as it constituted a circumvention of the
constitutional provision affording full protection to labor and security of tenure. The Labor Arbiter found
that the petitioners dismissal was anchored on his insistent demand to be regularized. Hence, for lack of
a valid and just cause.
Respondent company then filed an appeal at NLRC whereby the latter dismissed and then affirmed
LA’s decision. Upon motion of consideration of the respondent company, NLRC reversed its first
decision and held that the respondents did not exercise control over the means and methods by which
the petitioner accomplished his delivery services. It upheld the validity of the contract of service as it
pointed out that said contract was silent as to the time by which the petitioner was to make the
deliveries and that the petitioner could hire his own helpers whose wages would be paid from his own
account. These factors indicated that the petitioner was an independent contractor, not an employee of
the respondent company.
The petitioner brought the case to the Court of Appeals. The CA rendered decision reversing NLRC’s
decision. The CA upheld LA’s decision and also stated that the petitioner could not be considered an
independent contractor since he had no substantial capital in the form of tools and machinery. In fact,
the truck that he drove belonged to the respondent company. The CA also observed that the routing
slips that the respondent company issued to the petitioner showed that it exercised control over the
latter.
However, on motion for reconsideration by the respondents, the CA made a complete turnaround as it
rendered the assailed Resolution upholding the contract of service between the petitioner and the
respondent company. In reconsidering its decision, the CA explained that the extent of control exercised
by the respondents over the petitioner was only with respect to the result but not to the means and
methods used by him. The CA cited the following circumstances: (1) the respondents had no say on
how the goods were to be delivered to the customers; (2) the petitioner had the right to employ workers
who would be under his direct control; and (3) the petitioner had no working time. Hence this case.
ISSUE: Whether petitioner Chavez and respondent company Supreme Packaging, Inc. had an
employee-employer relationship
Whether or not petitioner was illegally dismissed
HELD: BOTH YES.
RATIO:
There existed an employer-employee relationship between petitioner Chavez and respondent
company Supreme Packaging, Inc.
The Supreme Court enumerated the elements to determine the existence of an employment
relationship, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the employers power to control the employees conduct. The most
important element is the employers control of the employees conduct, not only as to the result of the
work to be done, but also as to the means and methods to accomplish it. All the four elements are
present in this case.
First – the selection and engagement of the employee.
Undeniably, it was the respondents who engaged the services of the petitioner without the intervention
of a third party.
Second – the payment of wages.
Wages are defined as remuneration or earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for service rendered or to be
rendered. That the petitioner was paid on a per trip basis is not significant. This is merely a method of
computing compensation and not a basis for determining the existence or absence of employer-
employee relationship. One may be paid on the basis of results or time expended on the work, and may
or may not acquire an employment status, depending on whether the elements of an employer--
employee relationship are present or not. In this case, it cannot be gainsaid that the petitioner received
compensation from the respondent company for the services that he rendered to the latter.
Moreover, under the Rules Implementing the Labor Code, every employer is required to pay his
employees by means of payroll. The payroll should show, among other things, the employees rate of
pay, deductions made, and the amount actually paid to the employee. Interestingly, the respondents did
not present the payroll to support their claim that the petitioner was not their employee, raising
speculations whether this omission proves that its presentation would be adverse to their case.
Third – the power of dismissal.
The respondents power to dismiss the petitioner was inherent in the fact that they engaged the services
of the petitioner as truck driver. They exercised this power by terminating the petitioners services albeit
in the guise of severance of contractual relation due allegedly to the latter’s breach of his contractual
obligation.
Fourth – the employer’s power to control the employee’s conduct.
As earlier opined, of the four elements of the employer-employee relationship, the control test is the
most important. Compared to an employee, an independent contractor is one who carries on a distinct
and independent business and undertakes to perform the job, work, or service on its own account and
under its own responsibility according to its 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. Hence, while an independent contractor enjoys independence and freedom from the control
and supervision of his principal, an employee is subject to the employers power to control the means
and methods by which the employees work is to be performed and accomplished. A careful review of
the records shows that the latter performed his work under the respondents’ supervision and control.
The existence of an employer-employee relationship cannot be negated by expressly repudiating it in a
contract and providing therein that the employee is an independent contractor when the facts clearly
show otherwise. Employment status is defined by law and not by what the parties say it should be.
The petitioner was illegally dismissed by the respondent company.
As a rule, the employer bears the burden to prove that the dismissal was for a valid and just cause. In
this case, the respondents failed to prove any such cause for the petitioners dismissal. They insinuated
that the petitioner abandoned his job. To constitute abandonment, these two factors must concur: (1)
the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to
sever employer employee relationship. Obviously, the petitioner did not intend to sever his relationship
with the respondent company for at the time that he allegedly abandoned his job, the petitioner just filed
a complaint for regularization, which was forthwith amended to one for illegal dismissal. A charge of
abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so
when it includes a prayer for reinstatement.
Neither can the respondents claim that the petitioner was guilty of gross negligence in the proper
maintenance of the truck constitute a valid and just cause for his dismissal. Gross negligence implies a
want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It
evinces a thoughtless disregard of consequences without exerting any effort to avoid them. The
negligence, to warrant removal from service, should not merely be gross but also habitual.
Thus, the lack of a valid and just cause in terminating the services of the petitioner renders his dismissal
illegal.
Angelina Francisco v. NATIONAL LABOR RELATIONS
COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO
ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA (Max Bauto)
August 31, 2006 | Ynares-Santiago, J. | Employer-Employee Relationship
Petitioner-appellant: ANGELINA FRANCISCO
Respondent-appellee: NATIONAL LABOR RELATIONS
COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO
ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA
DOCTRINE: a two-tiered test involving: (1) the 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 test takes into consideration the totality of
circumstances surrounding the true nature of the relationship between parties. 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.
FACTS:
In 1995, Francisco 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. In addition, she was also designated as Liaison Officer. Despite being
designated as Corporate Secretary, she was not entrusted with corporate documents nor did she attend
any board meeting or was required to do so.
In 1996, Francisco was designated as Acting Manager. However, the corporation hired Gerry
Nino as accountant in lieu of petitioner. She was assigned to handle recruitment of all employees and
perform management administration functions. She performed such duties for 5 years and as of
December 2000, he salary was P27,500 plus P3,000 housing allowance and a 10% share in the profit
of Kasei.
In January 2001, Francisco was replaced by Liza Fuentes as Managed where Francisco was
required to sign a prepared resolution for her replacement but she was assured that she would still be
connected to Kasei.
 Thereafter, Kasei Corporation reduced her salary by P2,500 for a total reduction of P22,500.
She was not paid her mid-year bonus and her salary during 2001 despite repeated follow-ups,
Francisco was advised that the company was not earning well.
Francisco then asked for her salary from Acedo and the rest of the officers but she was
informed that she is no longer connected  to the company. The company then averred that Francisco
was not an employee of Kasei. They alleged that Francisco was hired as one of its technical consultants
and act concurrently as Corporate Secretary. As technical consultant, she performed her work at her
own discretion without control and supervision of the Corporation. She also had no daily time record
and the company never interfered with her work. Further, she did not go through the usual procedure of
selection of employees, but her services were engaged through a Board Resolution designating her as
technical consultant. The money received by petitioner from the corporation was her professional fee
subject to the 10% expanded withholding tax on professionals, and that she was not one of those
reported to the BIR or SSS as one of the companys employees. In addition, her designation as
technical consultant depended solely on the will of management and her consultancy may be
terminated at any time as her services were only temporary. Further, they submitted a list of employees
for 1999 and 2000 which was received by the BIR showing that Francisco was not one of the
employees reported to the BIR.
The Labor Arbiter found Fransisco was illegally dismissed. The NLRC affirmed the decision.
The Court of Appeals reversed the NLRC decision.
ISSUE/S: W/N there was an employer-employee relationship between Francisco and Kasei
HELD: YES
RATIO:
The court held that the better approach would be to adopt the two-tiered test involving: (1) the
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.
The test takes into consideration the totality of circumstances which surrounds the true nature
of the relationship between the parties. The determination of the relationship between employer and
employee depends on 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 and 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 for 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. Thus, in applying the control
test, there is no doubt that there exists an employer-employee relationship because she was under the
direct control and supervision of Seiji Kamura, the corporations Technical Consultant, she reported for
work regularly.
Under the broader economic reality test, Francisco can be said to be an employee of Kasei
corporation because she had served the company for 6 years before being dismissed, she received
check vouchers indicating her wages, benefits, 13th month pay, bonuses and allowances. In addition,
when Francisco was designated as General Manager, Kasei made a report to SSS which was signed
by Irene Ballesteros. Francisco’s membership in the SSS is showed by a copy of the SSS specimen
signature card which was signed by the President of Kasei Corporation and the inclusion of her name in
the online inquiry system of the SSS.
Hence, it is apparent that Francisco is economically dependent on Kasei corporation for her
continued employment in Kasei’s line of business
Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that
petitioner never acted as Corporate Secretary and that her designation as such was only for
convenience. The actual nature of Francisco’s job was as Kamuras direct assistant with the duty of
acting as Liaison Officer in representing the company to secure construction permits, license to operate
and other requirements imposed by government agencies. A second affidavit by Kamura which
repudiated the first affidavit was given but the court stated that it is convinced that the allegation in the
first affidavit was sufficient to establish that Francisco is an employee of Kasei.
Based on the foregoing, it can be concluded that Francisco is an employee of Kasei as she
was selected and engaged by the company for compensation, and is economically dependent upon
Kasei for her continued employment in that line of business. Her main job function involved accounting
and tax services rendered to Kasei on a regular basis over an indefinite period of engagement. Kasei
hired and engaged Francisco for compensation, with the power to dismiss her for cause. More
importantly, Kasei had the power to control Francisco with the means and methods by which the work is
to be accomplished.
Tongko v. Manufacturers Life Insurance Co. (Angelo Prieto)
June 29, 2010 | Brion, J. | Employer-Employee Relationship
Petitioner-appellant: Gregorio V. Tongko
Respondent-appellee: Manufacturers Life Insurance Co.
FACTS:
The contractual relationship between Tongko and Manulife had two basic phases. The first or initial
phase began on July 1, 1977, under a Career Agent's Agreement (Agreement) that provided:
“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 to or 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.“
“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.”
The second phase started in 1983 when Tongko was named Unit Manager in Manulife's Sales Agency
Organization. In 1990, he became a Branch Manager. Six years later Tongko became a Regional Sales
Manager.
Since the beginning, Tongko consistently declared himself self-employed in his income tax returns.
Then Respondent Renato Vergel De Dios wrote a letter to Tongko with regard to concerns that were
brought up during the 2001 Metro North Sales Managers Meeting. He wrote that:
- The first step to transforming Manulife into a big league player has been very clear — to
increase the number of agents to at least 1,000 strong for a start.
- Kevin O'Connor, SVP-Agency, had presented information where evidently, your Region was
the lowest performer (on a per Manager basis) in terms of recruiting in 2000
- It was not clear that we were proceeding in the same direction.
 - In those subsequent meetings you reiterated certain views, the validity of which we challenged
and subsequently found as having no basis.
- You argued that as to Issue # 2: "Some Managers are unhappy with their earnings and would
want to revert to the position of agents." However, no Sales Manager came forward on their
own to confirm your statement and it took you to name Malou Samson as a source of the
same, an allegation that Malou herself denied at our meeting and in your very presence.
- You also argued that "Sales Managers are doing what the company asks them to do but, in the
process, they earn less." All the above notwithstanding, we had your own records checked and
we found that you made a lot more money in the Year 2000 versus 1999.
- I am worried about your capacity to lead this group towards a new direction
- I cannot afford to see a major region fail to deliver on its developmental goals next year and
so, we are making the following changes in the interim: 1. You will hire a competent assistant
2. Kevin and the rest of the Agency Operations will deal with the North Star branch.
De Dios wrote another letter stating:
- Despite the series of meetings, all these efforts have failed in helping you align your directions
with Management's avowed agency growth policy.
- We are now issuing this notice of termination of your Agency Agreement with us effective
fifteen days from the date of this letter.
Tongko filed a case for illegal dismissal with the NLRC Arbitration Branch
Labor Arbiter decreed that there was no employer-employee relationship.
NLRC reversed the labor arbiter's decision on appeal; it found the existence of an employer-employee
relationship and concluded that Tongko had been illegally dismissed.
In the petition for certiorari with the Court of Appeals (CA), the appellate court found that the NLRC
gravely abused its discretion in its ruling and reverted to the labor arbiter's decision that no employer-
employee relationship existed between Tongko and Manulife.
In our Decision of November 7, 2008, we reversed the CA ruling and found that an employment
relationship existed between Tongko and Manulife.
Manulife disagreed with our Decision and led the present motion for reconsideration.
ISSUE/S: Whether or not there is an employer-employee relationship between the parties
HELD: NO
A.
Generally, the determinative element is the control exercised over the one rendering service. The
employer controls the employee both in the results and in the means and manner of achieving this
result.
With particular relevance to the present case is the provision that "In the execution of the agency, the
agent shall act in accordance with the instructions of the principal." This provision is pertinent for
purposes of the necessary control that the principal exercises over the agent in undertaking the
assigned task, and is an area where the instructions can intrude into the labor law concept of control so
that minute consideration of the facts is necessary. A related article is Article 1891 of the Civil Code
which binds the agent to render an account of his transactions to the principal.
B.
The Decision of November 7, 2008 refers to the First Insular and Grepalife cases to establish that the
company rules and regulations that an agent has to comply with are indicative of an employer-employee
relationship.
The present case at first glance appears aligned with the facts in the Carungcong, the Grepalife, and
the second Insular Life cases. A critical difference, however, exists as these cited cases dealt with the
proper legal characterization of a subsequent management contract that superseded the original
agency contract between the insurance company and its agent as opposed to the present case
wherein the agreement never changed.
C.
1. The primary evidence in the present case is the July 1, 1977 Agreement that governed and
defined the parties' relations until the Agreement's termination in 2001. This Agreement stood
for more than two decades and, based on the records of the case, was never modified or
novated.
By the Agreement's express terms, Tongko served as an "insurance agent" for Manulife, not
as an employee. At the same time, the characterization the parties gave to their relationship in
the Agreement cannot be ignored because it embodies their intent at the time they entered
the Agreement, and they were governed by this understanding throughout their relationship.
At the very least, the provision on the absence of employer-employee relationship between the
parties can be an aid in considering the Agreement and its implementation, and in appreciating
the other evidence on record.
Significantly, evidence shows that Tongko's role as an insurance agent never changed
during his relationship with Manulife. If changes occurred at all, the changes did not appear
to be in the nature of their core relationship. Tongko essentially remained an agent, but moved
up in this role through Manulife's recognition that he could use other agents approved by
Manulife, but operating under his guidance and in whose commissions he had a share. For
want of a better term, Tongko perhaps could be labeled as a "lead agent" who guided
under his wing other Manulife agents similarly tasked with the selling of Manulife
insurance.
2. That Tongko assumed a leadership role but nevertheless wholly remained an agent is the
inevitable conclusion that results from the reading of the Agreement (the only agreement on
record in this case) and his continuing role thereunder as sales agent, from the perspective of
the Insurance and the Civil Codes and in light of what Tongko himself attested to as his role as
Regional Sales Manager. To be sure, this interpretation could have been contradicted if other
agreements had been submitted as evidence of the relationship between Manulife and Tongko
on the latter's expanded undertakings.
3. Evidence indicates that Tongko consistently clung to the view that he was an
independent agent selling Manulife insurance products since he invariably declared
himself a business or self-employed person in his income tax returns. This consistency
with, and action made pursuant to the Agreement were pieces of evidence that were never
mentioned nor considered in our Decision of November 7, 2008.
4. Justice Velasco's dissenting opinion states that Tongko was forced to declare himself a
business or self-employed person by Manulife's persistent refusal to recognize him as its
employee. Regrettably, the dissent has shown no basis for this conclusion, an understandable
omission since no evidence in fact exists on this point in the records of the case.
5. A glaring evidentiary gap for Tongko in this case is the lack of evidence on record showing that
Manulife ever exercised means-and-manner control, even to a limited extent, over Tongko
during his ascent in Manulife's sales ladder. In 1983, Tongko was appointed unit manager.
Inexplicably, Tongko never bothered to present any evidence at all on what this designation
meant. This also holds true for Tongko's appointment as branch manager in 1990, and as
Regional Sales Manager in 1996.
6. The best evidence of control — the agreement or directive relating to Tongko's duties
and responsibilities — was never introduced as part of the records of the case. The reality is,
prior to de Dios' letter, Manulife had practically left Tongko alone not only in doing the business
of selling insurance, but also in guiding the agents under his wing.
7. What, to Tongko, serve as evidence of labor law control are the codes of conduct that Manulife
imposes on its agents in the sale of insurance. The mere presentation of codes or of rules and
regulations, however, is not per se indicative of labor law control as the law and jurisprudence
teach us.
8. The general law on agency, on the other hand, expressly allows the principal an element of
control over the agent in a manner consistent with an agency relationship. In this sense, these
control measures cannot be read as indicative of labor law control. To these extents, control
can be imposed through rules and regulations without intruding into the labor law concept of
 control for purposes of employment.
9. From jurisprudence, an important lesson that the First Insular Life case teaches us is that a
commitment to abide by the rules and regulations of an insurance company does not ipso facto
make the insurance agent an employee. Neither do guidelines somehow restrictive of the
insurance agent's conduct necessarily indicate "control" as this term is de ned in jurisprudence.
Thus, Manulife's codes of conduct, all of which do not intrude into the insurance agents'
means and manner of conducting their sales and only control them as to the desired
results and Insurance Code norms, cannot be used as basis for a finding that the labor
law concept of control existed between Manulife and Tongko.
10. We could not deny though that Tongko remained, an insurance agent, and that his additional
role as Branch Manager did not lessen his main and dominant role as insurance agent; this
role continued to dominate the relations between Tongko and Manulife even after Tongko
assumed his leadership role among agents. This conclusion cannot be denied because it
proceeds from the undisputed fact that Tongko and Manulife never altered their July 1, 1977
Agreement, a distinction the present case has with the contractual changes made in the
second Insular Life case.
11. These job contents are worlds apart in terms of "control." In Grepalife, the details of how to do
the job are specified and pre-determined; in the present case, the operative words are the
"sales target," the methodology being left undefined except to the extent of being
"coordinative." To be sure, a "coordinative" standard for a manager cannot be indicative of
control; the standard only essentially describes what a Branch Manager is — the person in the
lead who orchestrates activities within the group. To "coordinate," and thereby to lead and to
orchestrate, is not so much a matter of control by Manulife; it is simply a statement of a branch
manager's role in relation with his agents from the point of view of Manulife whose business
Tongko's sales group carries. A disturbing note, with respect to the presented a davits and
Tongko's alleged administrative functions, is the selective citation of the portions supportive of
an employment relationship and the consequent omission of portions leading to the contrary
conclusion.
12. Even de Dios' letter is not determinative of control as it indicates the least amount of intrusion
into Tongko's exercise of his role as manager in guiding the sales agents. Strictly viewed, de
Dios' directives are merely operational guidelines on how Tongko could align his operations
with Manulife's re-directed goal of being a "big league player." An important point to note here
is that Tongko was not supervising regular full-time employees of Manulife engaged in the
running of the insurance business; Tongko was effectively guiding his corps of sales agents,
who are bound to Manulife through the same Agreement that he had with Manulife, all the
while sharing in these agents' commissions through his overrides.
13. The present case must be distinguished from the second Insular Life case that showed the
hallmarks of an employer-employee relationship in the management system established.
These were: exclusivity of service, control of assignments and removal of agents under the
private respondent's unit, and furnishing of company facilities and materials as well as capital
described as Unit Development Fund. All these are obviously absent in the present case.
14. As previously discussed, what simply happened in Tongko's case was the grant of an
expanded sales agency role that recognized him as leader amongst agents in an area that
Manulife de ned.
15. In the context of the established evidence, Tongko remained an agent all along; although his
subsequent duties made him a lead agent with leadership role, he was nevertheless only an
agent whose basic contract yields no evidence of means-and- manner control.
This conclusion renders unnecessary any further discussion of the question of whether an
agent may simultaneously assume con icting dual personalities. But to set the record straight,
the concept of a single person having the dual role of agent and employee while doing the
same task is a novel one in our jurisprudence, which must be viewed with caution especially
when it is devoid of any jurisprudential support or precedent.
16. T h e Grepalife case dealt with the sole issue of whether the Ruiz brothers' appointment as
zone supervisor and district manager made them employees of Grepalife. Indeed, because of
the presence of the element of control in their contract of engagements, they were considered
Grepalife's employees. This did not mean, however, that they were simultaneously
considered agents as well as employees of Grepalife
17. The second Insular Life case also cannot be applied. We never said in this case though that
the insurance agent had effectively assumed dual personalities for the simple reason that the
agency contract has been effectively superseded by the management contract.
18. The dissent pointed out, as an argument to support its employment relationship conclusion,
that any doubt in the existence of an employer-employee relationship should be resolved in
favor of the existence of the relationship. This observation, apparently drawn from Article 4 of
the Labor Code, is misplaced, as Article 4 applies only when a doubt exists in the
"implementation and application" of the Labor Code and its implementing rules; it does not
apply where no doubt exists as in a situation where the claimant clearly failed to substantiate
his claim of employment relationship by the quantum of evidence the Labor Code requires.
WHEREFORE, considering the foregoing discussion, we REVERSE our Decision of November 7, 2008,
GRANT Manulife's motion for reconsideration and, accordingly, DISMISS Tongko's petition. No costs.
Tongko v. Manufacturers Life Insurance Co. (Angelo Prieto)
January 25, 2011| Brion, J. | Employer-Employee Relationship
Petitioner-appellant: Gregorio V. Tongko
Respondent-appellee: Manufacturers Life Insurance Co.
FACTS:
Petitioner filed a Motion for Reconsideration, to set aside our June 29, 2010 Resolution that reversed
our Decision of November 7, 2008.
Petitioner argues that for 19 years, he performed administrative functions and exercised supervisory
authority over employees and agents of Manulife, in addition to his insurance agent functions. In these
19 years, he was designated as a Unit Manager, a Branch Manager and a Regional Sales Manager,
and now posits that he was not only an insurance agent for Manulife but was its employee as well.
ISSUE/S: Whether or not the 2010 case should be overturned
HELD: NO. The Court merely reiterated most of its previous arguments in the 2010 case.
A.
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.
Manulife's control fell short of this norm and carried only the characteristic of the relationship between
an insurance company and its agents
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.
In addition, the Civil Code defines an agent as a person who binds himself to do something in behalf of
another, with the consent or authority of the latter. Article 1887 of the Civil Code also provides that in
the execution of the agency, the agent shall act in accordance with the instructions of the principal.
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 de ned by labor law. From this perspective, the
petitioner's contentions cannot prevail.
Manulife's 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.
Manulife's codes of conduct, likewise, do not necessarily intrude into the insurance agents' means and
manner of conducting their sales.
The duties that the petitioner enumerated in his Motion are not supported by evidence and, therefore,
deserve scant consideration. For agents leading other agents, these include the task of overseeing
other insurance agents, the recruitment of other insurance agents engaged by Manulife as principal,
and ensuring that these other agents comply with the paperwork necessary in selling insurance.
The petitioner also questions Manulife's act of investing him with different titles and positions in the
course of their relationship, given the respondents' position that he simply functioned as an insurance
agent.
Based on the evidence on record, the petitioner's occupation was to sell Manulife's insurance policies
and products from 1977 until the termination of the Career Agent's Agreement (Agreement). The
evidence also shows that through the years, Manulife permitted him to exercise guiding authority over
other agents who operate under their own agency agreements with Manulife and whose commissions
he shared.
Under this scheme — an arrangement that pervades the insurance industry — petitioner in effect
became a "lead agent" and his own commissions increased as they included his share in the
commissions of the other agents; he also received greater reimbursements for expenses and was
allowed to use Manulife's facilities. His designation also changed from unit manager to branch manager
and then to regional sales manager, to reflect the increase in the number of agents he recruited and
guided, as well as the increase in the area where these agents operated.
These arrangements, and the titles and positions the petitioner was invested with, did not change his
status from the insurance agent that he had always been.
The petitioner simply progressed from his individual agency to being a lead agent who could use other
agents in selling insurance and share in the earnings of these other agents.
B.
We also do not agree that our assailed Resolution has the effect of fostering an inequitable or unjust
situation. The records show that the petitioner was very amply paid for his services as an insurance
agent, who also shared in the commissions of the other agents under his guidance.
In technical terms, he could not have earned all these as an employee because he failed to provide the
substantial evidence required in administrative cases to support the finding that he was a Manulife
employee.
The Dissent's discussion on this aspect of the case begins with the wide disparity in the status of the
parties — that Manulife is a big Canadian insurance company while Tongko is but a single agent of
Manulife. We cannot simply invoke the magical formula by creating an employment relationship even
when there is none because of the unavoidable and inherently weak position of an individual over a
giant corporation.
The Dissent likewise alluded to an ambiguity in the true relationship of the parties after Tongko's
successive appointments. We already pointed out that the legal significance of these appointments had
not been sufficiently explained and that it did not help that Tongko never bothered to present evidence
on this point. The Dissent recognized this but tried to excuse Tongko from this failure in the subsequent
discussion, as follows:
This Court (and all adjudicators for that matter) cannot and should not fill in the evidentiary gaps in a
party's case that the party failed to support; we cannot and should not take the cudgels for any party.
Tongko failed to support his cause and we should simply view him and his case as they are; our duty is
to sit as a judge in the case that he and the respondent presented.
To support its arguments on equity, the Dissent uses the Constitution and the Civil Code, using
provisions and principles that are all motherhood statements. The mandate of the Court, of course, is to
decide cases based on the facts and the law
C.
That his earnings were agent's commissions arising from his work as an insurance agent is a matter
that the petitioner cannot deny, as these are the declarations and representations he stated in his
income tax returns through the years.
D. Refutation of dissenting opinions
The Dissent proposes that Tongko should be considered as part employee (as manager) and part
insurance agent. This solution, according to the line taken by the Dissent then, was justified on the view
that this was made on a case-to-case basis. In the context of this case, the four-fold test is the
established standard for determining employer-employee relationship and the existence of these
elements, most notably control, is the basis upon which a conclusion on the absence of employment
relationship was anchored. This simply means that a conclusion on whether employment relationship
exists in a particular case largely depends on the facts and, in no small measure, on the parties'
evidence vis-à-vis the clearly de ned jurisprudential standards. Given that the parties control what and
how the facts will be established in a particular case and/or how a particular suit is to be litigated,
deciding the issues on a case-to-case basis becomes an imperative.
The compromise solution of declaring Tongko both an employee and an agent is legally unrealistic,
unwieldy and is, in fact, legally in rm, as it goes against the above basic principles of judicial operation.
Likewise, it does not and cannot realistically solve the problem/issue in this case; it actually leaves more
questions than answers.
As already pointed out, there is no legal basis (be it statutory or jurisprudential) for the part-
employee/part-insurance agent status under an essentially principal-agent contractual relation which the
Dissent proposes to accord to Tongko. If the Dissent intends to establish one, this is highly
objectionable for this would amount to judicial legislation.
Additionally, the Dissent's conclusion completely ignores an unavoidable legal reality — that the parties
are bound by a contract of agency that clearly subsists notwithstanding the successive designation of
Tongko as a unit manager, a branch manager and a regional sales manager.
The Dissent's compromise approach would also sanction split jurisdiction. The labor tribunals shall have
jurisdiction over Tongko's employment as manager while another entity shall decide the issues/cases
arising from the agency relationship. If the managerial employment is anchored on the agency, how will
the labor tribunals decide an issue that is inextricably linked with a relationship that is outside the loop of
their jurisdiction?
E.
The Dissent cites the cases of Great Pacific Life Assurance Corporation v. National Labor Relations
Commission and Insular Life Assurance Co., Ltd. v. National Labor Relations Commission to support
the allegation that Manulife exercised control over the petitioner as an employer.
In considering these rulings, a reality that cannot but be recognized is that cases turn and are decided
on the basis of their own unique facts; the ruling in one case cannot simply be bodily lifted and applied
to another, particularly when notable differences exist between the cited cases and the case under
consideration.
Care should be taken in reading the cited cases and applying their rulings to the present case as the
cited cases all dealt with the proper legal characterization of subsequent management contracts that
superseded the original agency contract between the insurance company and the agent.
In contrast, the present case is remarkable for the absence of evidence of any change in the nature of
the petitioner's employment with Manulife. As previously stated above and in our assailed Resolution,
the petitioner had always been governed by the Agreement from the start until the end of his
relationship with Manulife.
We cannot give credit as well to the petitioner's claim of employment based on the a davits executed by
other Manulife agents describing their duties, because these same a davits only a rm their status as
independent agents, not as employees.
The petitioner cannot also rely on the letter written by respondent Renato Vergel de Dios to prove that
Manulife exercised control over him. As we already explained in the assailed Resolution:
Even de Dios' letter is not determinative of control as it indicates the least amount of intrusion into
Tongko's exercise of his role as manager in guiding the sales agents. Strictly viewed, de Dios' directives
are merely operational guidelines on how Tongko could align his operations with Manulife's re-directed
goal of being a "big league player."
Lastly, in assailing the Agreement between him and Manulife, the petitioner cites Paguio v. National
Labor Relations Commission 22 on the claim that the agreement that the parties signed did not
conclusively indicate the legal relationship between them.
No evidence was ever adduced to show that their relationship changed so that Manulife at some point
controlled the means and method of the petitioner's work
Additionally, it is not lost on us that Paguio is a ruling based on a different factual setting; it involves a
publishing rm and an account executive, whose repeated engagement was considered as an indication
of employment. Our ruling in the present case is speci c to the insurance industry, where the law
permits an insurance company to exercise control over its agents within the limits prescribed by law,
and to engage independent agents for several transactions and within an unlimited period of time
without the relationship amounting to employment.
The dissent also erroneously cites eight other cases — Social Security System v. Court of Appeals,
Cosmopolitan Funeral Homes, Inc. v. Maalat, Algon Engineering Construction Corporation v. National
Labor Relations Commission, Equitable Banking Corporation v. National Labor Relations Commission,
Lazaro v. Social Security Commission, Dealco Farms, Inc. v. National Labor Relations Commission,
South Davao Development Company, Inc. v. Gamo, and Abante, Jr. v. Lamadrid Bearing & Parts
Corporation. The dissent cited these cases to support its allegation that labor laws and jurisprudence
should be applied in cases, to the exclusion of other laws such as the Civil Code or the Insurance Code,
even when the latter are also applicable.
It bears stressing that our ruling in this case is not about which law has primacy over the other, but that
we should be able to reconcile these laws. We are merely saying that where the law makes it
mandatory for a company to exercise control over its agents, the complainant in an illegal dismissal
case cannot rely on these legally prescribed control devices as indicators of an employer-employee
relationship. As shown in our discussion, our consideration of the Insurance Code and Civil Code
provisions does not negate the application of labor laws and jurisprudence; ultimately, we dismissed the
petition because of its failure to comply with the control test.
Matling Industrial and Commercial Corporation, Richard K. Spencer, Catherine Spencer, and
Alex Mancilla v. Ricardo R. Coros
(Marianne Dela Cruz)
October 13, 2010 | Bersamin, J. | Employer-Employee Relationship
Petitioner-appellant: Matling Industrial and Commercial Corporation, Richard K. Spencer, Catherine
Spencer, and Alex Mancilla
Respondent-appellee: Ricardo R. Coros
DOCTRINE: A position must be expressly mentioned in the By-Laws in order to be considered as a
corporate office. Thus, the creation of an office pursuant to or under a By-Law enabling provision is not
enough to make a position a corporate office. Only officers of a corporation were those given that
character either by the Corporation Code or by the By-Laws; the rest of the corporate officers could be
considered only as employees or subordinate officials.
An "office" is created by the charter of the corporation and the officer is elected by the directors
or stockholders. On the other hand, an employee occupies no office and generally is employed not by
the action of the directors or stockholders but by the managing officer of the corporation who also
determines the compensation to be paid to such employee.
FACTS: Respondent Coros was dismissed by petitioner as its Vice President for Finance and
Administration. Coros then filed a complaint for illegal suspension and illegal dismissal against Matling
before the NLRC on Aug. 10, 2010.
Petitioner”s Contention:
- Petitioners moved to dismiss the complaint on the ground that the complaint pertained to the
jurisdiction of the Securities and Exchange Commission (SEC) due to the controversy being
intra-corporate because Coros was also member of Matling’s Board of Directors, aside from
being its VP for Finance and Administration, prior to his termination.
-
Respondent’s Contention:
- Coros insists that his status as a member of the board of directors is doubtful as he had not
been elected as such.
Labor Arbiter:
- Granted petitioner’s motion to dismiss stating that respondent was a corporate officer because
he was occupying the position of Vice President for Finance and Administration and at the
 same time was a Member of the Board of Directors of Matling; and that, consequently, his
removal was a corporate act of Matling and the controversy resulting from such removal was
under the jurisdiction of the SEC, pursuant to Section 5, paragraph (c) of Presidential Decree
No. 902.
- absolute. The better policy in determining which body has jurisdiction over a case would be to
NLRC:
- Set aside the dismissal, concluding that the respondent's complaint for illegal dismissal was
properly cognizable by the LA, not by the SEC, because he was not a corporate officer by
virtue of his position in Matling, albeit high ranking and managerial, not being among the
positions listed in Matling's Constitution and By-Laws. Denied petitioner’s motion for
reconsideration.
CA:
- Dismissed petition. Coros' alleged illegal dismissal is therefore, within the jurisdiction of the
labor arbiter.
ISSUE/S:
- Whether the respondent was a corporate officer of Matling or not.
- Whether the LA or the RTC had jurisdiction over his complaint for illegal dismissal.
HELD:
- No. Respondent was a regular officer of Matling.
- The LA had jurisdiction over respondent’s complaint for illegal dismissal.
RATIO:
The LA had Jurisdiction over Respondent’s Complaint for Illegal Dismissal
As a rule, the illegal dismissal of an officer or other employee of a private employer is properly
cognizable by the LA. This is pursuant to Article 217 (a) 2 of the Labor Code, as amended, which
provides as follows:
Article 217. Jurisdiction of the Labor Arbiters and the Commission. — (a) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-agricultural:
2. Termination disputes;
Where the complaint for illegal dismissal concerns a corporate officer, however, the
controversy falls under the jurisdiction of the Securities and Exchange Commission (SEC), because the
controversy arises out of intra-corporate or partnership relations between and among stockholders,
members, or associates, or between any or all of them and the corporation, partnership, or association
of which they are stockholders, members, or associates, respectively; and between such corporation,
partnership, or association and the State insofar as the controversy concerns their individual franchise
or right to exist as such entity; or because the controversy involves the election or appointment of a
director, trustee, officer, or manager of such corporation, partnership, or association. Such controversy,
among others, is known as an intra-corporate dispute. Effective on August 8, 2000, upon the passage of
Republic Act No. 8799, otherwise known as The Securities Regulation Code, the SEC's jurisdiction over
all intra-corporate disputes was transferred to the RTC, pursuant to Section 5.2 of RA No. 8799.
In order to determine whether a dispute constitutes an intra-corporate controversy or not, the
Court considers two elements instead, namely: (a) the status or relationship of the parties; and (b) the
nature of the question that is the subject of their controversy.
In Viray v. Court of Appeals:
The establishment of any of the relationships mentioned above will not necessarily always
confer jurisdiction over the dispute on the SEC to the exclusion of regular courts. The
statement made in one case that the rule admits of no exceptions or distinctions is not that
consider not only the status or relationship of the parties but also the nature of the question
that is the subject of their controversy. Not every conflict between a corporation and its
stockholders involves corporate matters that only the SEC can resolve in the exercise of its
adjudicatory or quasi-judicial powers. If, for example, a person leases an apartment owned by
a corporation of which he is a stockholder, there should be no question that a complaint for his
ejectment for non-payment of rentals would still come under the jurisdiction of the regular
courts and not of the SEC. By the same token, if one person injures another in a vehicular
accident, the complaint for damages filed by the victim will not come under the jurisdiction of
the SEC simply because of the happenstance that both parties are stockholders of the same
corporation. A contrary interpretation would dissipate the powers of the regular courts and
distort the meaning and intent of PD No. 902-A.
In Mainland Construction Co., Inc. v. Movilla:
In order that the SEC (now the regular courts) can take cognizance of a case, the
controversy must pertain to any of the following relationships:
a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its stockholders, partners, members
or officers;
c) between the corporation, partnership or association and the State as far as its franchise,
permit or license to operate is concerned; and
d) among the stockholders, partners or associates themselves.
The fact that the parties involved in the controversy are all stockholders or that the
parties involved are the stockholders and the corporation does not necessarily place the
dispute within the ambit of the jurisdiction of SEC. The better policy to be followed in
determining jurisdiction over a case should be to consider concurrent factors such as the
status or relationship of the parties or the nature of the question that is the subject of their
controversy. In the absence of any one of these factors, the SEC will not have jurisdiction.
Furthermore, it does not necessarily follow that every conflict between the corporation and its
stockholders would involve such corporate matters as only the SEC can resolve in the exercise
of its adjudicatory or quasi-judicial powers.
Respondent’s Position of Vice President for Finance and Administration is not a Corporate Office
Conformably with Section 25, a position must be expressly mentioned in the By-Laws in order
to be considered as a corporate office. Thus, the creation of an office pursuant to or under a By-Law
enabling provision is not enough to make a position a corporate office. Guerrea v. Lezama, the first
ruling on the matter, held that the only officers of a corporation were those given that character either by
the Corporation Code or by the By-Laws; the rest of the corporate officers could be considered only as
employees or subordinate officials. Thus, it was held in Easycall Communications Phils., Inc. v. King:
An "office" is created by the charter of the corporation and the officer is elected by the
directors or stockholders. On the other hand, an employee occupies no office and
generally is employed not by the action of the directors or stockholders but by the
managing officer of the corporation who also determines the compensation to be paid
to such employee.

This interpretation is the correct application of Section 25 of the Corporation Code, which
plainly states that the corporate officers are the President, Secretary, Treasurer and such other officers
as may be provided for in the By-Laws. Accordingly, the corporate officers in the context of PD No. 902-
A are exclusively those who are given that character either by the Corporation Code or by the
corporation's By-Laws.
It is relevant to state in this connection that the SEC, the primary agency administering the Corporation
Code, adopted a similar interpretation of Section 25 of the Corporation Code in its Opinion dated
November 25, 1993, 21 to wit:
Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate
officers enumerated in the by-laws are the exclusive Officers of the corporation and the Board has no
power to create other Offices without amending first the corporate By-laws. However, the Board may
create appointive positions other than the positions of corporate Officers, but the persons occupying
such positions are not considered as corporate officers within the meaning of Section 25 of the
Corporation Code and are not empowered to exercise the functions of the corporate Officers, except
those functions lawfully delegated to them. Their functions and duties are to be determined by the
Board of Directors/Trustees.
Moreover, the Board of Directors of Matling could not validly delegate the power to create a corporate
office to the President, in light of Section 25 of the Corporation Code requiring the Board of Directors
itself to elect the corporate officers. Verily, the power to elect the corporate officers was a discretionary
power that the law exclusively vested in the Board of Directors, and could not be delegated to
subordinate officers or agents. The office of Vice President for Finance and Administration created by
Matling's President pursuant to By Law No. V was an ordinary, not a corporate, office.
To emphasize, the power to create new offices and the power to appoint the officers to occupy them
vested by By-Law No. V merely allowed Matling's President to create non-corporate offices to be
occupied by ordinary employees of Matling. Such powers were incidental to the President's duties as
the executive head of Matling to assist him in the daily operations of the business.
ATLANTA INDUSTRIES, INC. v. SEBOLINO, et. al.
26 January 2011 | Brion, J.
Employer-Employee Relationship: Apprenticeship Agreement
PETITIONER-APPELLANT: Atlanta Industries, Inc. and/or Robert Chan (COO)
RESPONDENT-APPELLEE: Aprilito R. Sebolino, Khim V. Costales, Alvin V. Almoite, And Joseph S.
Sagun (Workers)
SUMMARY: Complainants were engaged as apprentices in Atlanta Corp. and now suing the
corporation for illegal dismissal, among others, for its refusal to grant them regular status 6 months after
commencing their apprenticeship.
DOCTRINE: An apprenticeship agreement only entered into after the probationary employment expires
does not bar the regularization of such employees
FACTS:
1. On March and February of 2005, respondents filed several complaints for illegal dismissal,
regularization, underpayment, nonpayment of wages and other money claims, as well as
claims for moral and exemplary damages and attorney’s fees against the petitioners Atlanta
Industries, Inc. and its President & COO Robert Chan alleging that
a. They had attained regular status as they were allowed to work with Atlanta for more
than six (6) months from the start of a purported apprenticeship agreement
b. They were illegally dismissed after the agreement expired.
2. In defense, petitioner argued
a. That the workers were not entitled to regularization and to their money claims
because they were engaged as apprentices under a government-approved
apprenticeship program.
b. The company offered to hire them as regular employees in the event vacancies for
regular positions occur in the section of the plant where they had trained.
c. They claimed that their names did not appear in the list of employees prior to their
engagement as apprentices.
3. On April 24, 2006, Labor Arbiter Medroso
a. Dismissed the complaint with respect to dela Cruz, Magalang, Zao and Chiong, but
found the termination of service of the remaining nine to be illegal.
b. Awarded the dismissed workers back wages, wage differentials, holiday pay and
service incentive leave pay amounting to P1,389,044.57 in the aggregate.
4. Petitioner appealed to the National Labor Relations Commission (NLRC). 
5. During the pendency of the case, Ramos, Alegria, Villagomez, Costales and Almoite allegedly
entered into a compromise agreement with Atlanta  which agreed to pay the workers a
specified amount as settlement, and to acknowledge them at the same time as regular
employees except for Ramos.
6. On December 29, 2006, the NLRC modified the ruling of the labor arbiter,
a. Withdrawing the illegal dismissal finding with respect to Sagun, Mabanag, Sebolino
and Pedregoza;
b. Affirming the dismissal of the complaints of dela Cruz, Zao, Magalang and Chiong;
c. Approving the compromise agreement entered into by Costales, Ramos, Villagomez,
Almoite and Alegria; and
d. Denying all other claims.
7. Respondents (Sebolino, Costales, Almoite, and Sagun) moved for the reconsideration of the
decision, but the NLRC denied the motion
8. The four then sought relief from the CA through certiorari charging that
a. NLRC committed grave abuse of discretion when it
i. Failed to recognize their prior employment with Atlanta;
ii. Declared the second apprenticeship agreement valid;
iii. Held that their dismissal is legal; and
iv. Upheld the compromise agreement involving Costales, Ramos, Villagomez,
Almoite and Alegria.
9. The CA granted their petition on the following reasons
a. That the respondents were already employees of the company before they entered
into the first and second apprenticeship agreements
b. That the first and second apprenticeship agreements were defective as they were
executed in violation of the law and the rules because it
i. Did not indicate the trade or occupation in which the apprentice would be
trained
ii. Was not approved by TESDA
c. That the positions occupied by the respondents (machine operator, extruder operator,
and scaleman) are necessary in the manufacture of plastic building materials, the
company’s main business.
d. That the dismissal was illegal for lack of a just or authorized cause and notice.
 e. That the compromise agreement was not binding on Costales and Almoite because
they did not sign the agreement. On January 31, 2007, Cabiles signed the job offer.

ISSUE/S: W/N the termination of the employees after the expiration of the apprenticeship agreement On March 8, 2007, Intel Phil. issued Cabiles his "Intel Final Pay Separation Voucher" indicating a net
was valid cause for dismissal, NO payout ofP165,857.62. On March 26, 2007, Cabiles executed a Release, Waiver and Quitclaim in favor
of Intel Phil. acknowledging receipt of P165,857.62 as full and complete settlement of all benefits due
RULING: him by reason of his separation from Intel Phil.
● Based on company operations at the time material to the case, respondents were already
rendering service to the company as employees before they were made to undergo On September 8, 2007, after seven (7) months of employment, Cabiles resigned from Intel HK.
apprenticeship. The company itself recognized the respondents’ status through relevant
operational records. About two years thereafter, Cabiles filed a complaint for non-payment of retirement benefits and for
● The Master List (of employees) that the petitioners heavily rely upon as proof of their position moral and exemplary damages with the NLRC. He insisted that he was employed by Intel for 10 years
that the respondents were not Atlanta’s employees, at the time they were engaged as and 5 months from April 1997 to September 2007 a period which included his seven (7) month stint with
apprentices, is unreliable and does not inspire belief. The list itself contradicts a lot of Atlanta’s Intel HK. Thus, he believed he was qualified to avail of the benefits under the company's retirement
claims and allegations. policy allowing an employee who served for 10 years or more to receive retirement benefits.
● The fact that respondents were already rendering service to the company when they were
made to undergo apprenticeship (as established by the evidence) renders the apprenticeship The LA held that Cabiles did not sever his employment with Intel Phil. when he moved to Intel HK,
agreements irrelevant as far as they are concerned.  Such tasks and their nature characterized similar to the instances when he was assigned at Intel Arizona and Intel Chengdu.
the respondents as regular employees under Article 280 of the Labor Code. Thus, when they
were dismissed without just or authorized cause, without notice, and without the opportunity to On appeal, the NLRC affirmed the LA decision. It determined that his decision to move to Intel HK was
be heard, their dismissal was illegal. not definitive proof of permanent severance of his ties with Intel Phil. It treated his transfer to Hong
Kong as akin to his overseas assignments in Arizona and Chengdu. As to the email exchange between
DISPOSITION: Petition, DENIED. CA decision, AFFIRMED. Cabiles and Intel Phil., the NLRC considered the same as insufficient to diminish his right over
retirement benefits under the law. Meanwhile, the NLRC disregarded the Waiver because at the time it
was signed, the retirement pay due him had not yet accrued.
Intel Technology v. NLRC & Cabiles (Reesh Miranda)
Aggrieved, Intel Phil. elevated the case to the CA via a petition for certiorari with application for a
February 5, 2014| MENDOZA, J. | Employer-Employee Relationship
Temporary Restraining Order (TRO). The application for TRO was denied. A motion for reconsideration,
was filed, but it was also denied in a Resolution, which also dismissed the petition for certiorari.
Petitioner-appellant: INTEL TECHNOLOGY PHILIPPINES, INC.
Respondent-appellee: NATIONAL LABOR RELATIONS COMMISSION AND JEREMIAS CABILES
Intel Phil. filed a motion for reconsideration.
DOCTRINE:
The NLRC issued a writ of execution against Intel Phil. to pay P3,201,398.60 and P31,510.00
representing the execution fees.
FACTS:
Intel Phil. satisfied the judgment on by paying the amount of P3,201,398.60 which included the
Cabiles was initially hired by Intel Phil. on April 16, 1997 as an Inventory Analyst. He was subsequently
applicable withholding taxes due and paid to the BIR. Cabiles received a net amount ofP2,485,337.35,
promoted several times over the years and was also assigned at Intel Arizona and Intel Chengdu. He
covered by a BPI Managers check.
later applied for a position at Intel Semiconductor Limited Hong Kong (Intel HK). He received a letter
offering the position of Finance Manager by Intel HK. Before accepting the offer, he inquired from Intel
Intel Phil. filed restitution of all the amounts paid by them pursuant to the NLRC's writ of execution and
Phil., through an email the consequences of accepting the newly presented opportunity in Hong Kong.
the NLRC order.
He asked the process he need to go through regarding the benefits and clearances in Intel Phils and
would an email notification be enough. He also clarified whether he will receive retirement benefits
Intel filed a petition for review, however, the CA dismissed the same, affirming the NLRC decision.
considering he will be in the service for 10 years on April 16, 2007 with Intel and should he accept the
offer of Intel HK, will the 9.5 years in the service be rounded of to 10 years.
ISSUE/S: Whether the CA erred in ruling that private respondent was entitled to retire under Intel
Philippines retirement plan.
Intel Phil., through Penny Gabronino (Gabronino), replied that he will not be eligible to receive his
retirement benefit not having reached 10 years of service at the time he moved to Hong Kong. Further,
HELD: YES. The Court of Appeals decision is reversed.
Intel do not round up the years of service.
RATIO:
In case he move back to the Philippines his total tenure of service will be computed less on the period
that you are out of Intel Philippines.
LABOR LAW Resignation

Resignation is the formal relinquishment of an office, the overt act of which is coupled with an intent to
renounce. This intent could be inferred from the acts of the employee before and after the alleged
resignation.
In contemplating whether to accept the offer from Intel HK, Cabiles wrote Intel Phil. through Gabronino.
This communication manifested two of his main concerns: a) clearance procedures; and b) the
probability of getting his retirement pay despite the non-completion of the required 10 years of
employment service. Beyond these concerns, however, was his acceptance of the fact that he would be
ending his relationship with Intel Phil. as his employer. The words he used - local hire, close, clearance
denote nothing but his firm resolve to voluntarily disassociate himself from Intel Phil. and take on new
responsibilities with Intel HK.
His acceptance of the offer meant letting go of the retirement benefits he now claims as he was
informed through email correspondence that his 9.5 years of service with Intel Phil. would not be
rounded off in his favor. He, thus, placed himself in this position, as he chose to be employed in a
company that would pay him more than what he could earn in Chengdu or in the Philippines.
LABOR LAW Theory of Secondment
Cabiles views his employment in Hong Kong as an assignment or an extension of his employment with
Intel Phil.
The continuity, existence or termination of an employer-employee relationship in a typical secondment
contract or any employment contract for that matter is measured by the following yardsticks: 1. the
selection and engagement of the employee; 2. the payment of wages; 3. the power of dismissal; and 4.
the employers power to control the employees conduct. Victorio Meteor v. Creative Creatures Inc, G.R.
No. 171275, July 13, 2009
As applied, all of the above benchmarks ceased upon Cabiles assumption of duties with Intel HK on
February 1, 2007. Intel HK became the new employer.
Undoubtedly, Cabiles decision to move to Hong Kong required the abandonment of his permanent
position with Intel Phil. in order for him to assume a position in an entirely different company. Clearly,
the "transfer" was more than just an assignment. It constituted a severance of Cabiles relationship with
Intel Phil., for the assumption of a position with a different employer, rank, compensation and benefits.
Hence, Cabiles theory of secondment must fail.
What distinguishes Intel Chengdu and Intel Arizona from Intel HK is the lack of intervention of Intel Phil.
on the matter. In the two previous transfers, Intel Phil. remained as the principal employer while Cabiles
was on a temporary assignment.
LABOR LAW - Release, Waiver and Quitclaim
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement, it is binding on the parties and may not later be
disowned simply because of a change of mind. It is only where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its
face, that the law will step in to annul the questionable transaction. But where it is shown that the
person making the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid
and binding undertaking. Goodrich Manufacturing Corporation, v. Ativo, G.R. No. 188002, February 1,
2010
Suffice it to state that nothing is clearer than the words used in the Waiver duly signed by Cabiles - that
all claims, in the present and in the future, were waived in consideration of his receipt of the amount of
P165,857.62. Because the waiver included all present and future claims, the non-accrual of benefits
cannot be used as a basis in awarding retirement benefits to him.
LABOR LAW Retirement benefits
Cabiles is not entitled to the Retirement Benefits
Having effectively resigned before completing his 10th year anniversary with Intel Phil. and after having
validly waived all the benefits due him, if any, Cabiles is hereby declared ineligible to receive the
retirement pay pursuant to the retirement policy of Intel Phil.
For that reason, Cabiles must return all the amounts he received from Intel Phil. pursuant to the Writ of
Execution issued by the NLRC.
The petition is granted.
Royale Homes v. Alcantara (Jerald Ambe)
July 28, 2014 | Del Castillo, J. | Employer-Employee Relationship
Petitioner: Royale Homes Marketing Corporation
Respondent: Fidel P. Alcantara [deceased], substituted by his heirs
DOCTRINE:
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.
FACTS:
In 1994, 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 where he held
the position of Division 5 Vice-President-Sales.
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against Royale Homes and its
President Matilde Robles, Executive Vice-President for Administration and Finance Ma. Melinda
Bernardino, and Executive Vice- President for Sales Carmina Sotto. Alcantara alleged that he is a
regular employee of Royale Homes since he is performing tasks that are necessary and desirable to its
business; that in 2003 the company gave him ₱1.2 million for the services he rendered to it.
Alcantara prayed to be reinstated to his former position without loss of seniority rights and other
privileges, as well as to be paid backwages, moral and exemplary damages, and attorney’s fees.
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. He is even free to
recruit his own sales personnel to assist him in pursuance of his sales target.
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. In a special management committee meeting on
October 8, 2003, however, Alcantara announced publicly and openly that he would leave the company
by the end of October 2003 and that he would no longer finish the unexpired term of his contract. He
has decided to join his wife and pursue their own brokerage business. Royale Homes accepted
Alcantara’s decision. It then threw a despedida party in his honor and, subsequently, appointed a new
independent contractor. Two months after he relinquished his post, however, Alcantara appeared in
Royale Homes and submitted a letter claiming that he was illegally dismissed.
On September 7, 2005, the Labor Arbiter rendered a Decision holding that Alcantara is an employee of
Royale Homes. Both parties appealed to the NLRC. On February 23, 2009, 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 the contract which does not require Alcantara to observe regular working
hours. He was also free to adopt the selling methods he deemed most effective and can even recruit
sales agents to assist him in marketing the inventories of Royale Homes. On June 23, 2010, the Court
of Appeals reversed the NLRC’s Decision. Applying the four-fold and economic reality tests, it held that
Alcantara is an employee of Royale Homes. Royale Homes exercised some degree of control over
Alcantara since his job, as observed by the CA, is subject to company rules, regulations, and periodic
evaluations. He was also bound by the company code of ethics. Moreover, the exclusivity clause of the
contract has made Alcantara economically dependent on Royale Homes, supporting the theory that he
is an employee of said company.
ISSUE/S:
Whether or not an employer-employee relationship exists between Royal Homes and respondent.
HELD:
NO.
RATIO:
The juridical relationship of the parties based on their written contract
The primary evidence of the nature of the parties’ relationship in this case is the written contract that
they signed 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 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.
Portion of the contract read as follows:
“It is understood, however, that no employer-employee relationship exists between us, that of
your sales personnel/agents, and that you shall hold our company x x x, its officers and
directors, free and harmless from any and all claims of liability and damages arising from
and/or incident to the marketing of our real estate inventories.”
Since "the terms of the contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations should control." No construction is even needed as they
already expressly state their intention. Also, this Court adopts the observation of the NLRC that it is
rather strange on the part of Alcantara, an educated man and a veteran sales broker who claimed to be
receiving ₱1.2 million as his annual salary, not to have contested the portion of the contract expressly
indicating that he is not an employee of Royale Homes if their true intention were otherwise.
The juridical relationship of the parties based on Control Test
In concluding that Alcantara is an employee of Royale Homes, the CA ratiocinated that since the
performance of his tasks is subject to company rules, regulations, code of ethics, and periodic
evaluation, the element of control is present.
The Court disagrees.
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. x x x
In this case, the Court agrees with Royale Homes that the rules, regulations, code of ethics, and
periodic evaluation alluded to by Alcantara do not involve control over the means and methods by which
he was to perform his job. Understandably, Royale Homes has to fix the price, impose requirements on
prospective buyers, and lay down the terms and conditions of the sale, including the mode of payment,
which the independent contractors must follow. It is also necessary for Royale Homes to allocate its
inventories among its independent contractors, determine who has priority in selling the same, grant
commission or allowance based on predetermined criteria, and regularly monitor the result of their
marketing and sales efforts. But to the mind of this Court, these do not pertain to the means and
methods of how Alcantara was to perform and accomplish his task of soliciting sales. They do not
dictate upon him the details of how he would solicit sales or the manner as to how he would transact
business with prospective clients.
As the party claiming the existence of employer-employee relationship, it behoved upon Alcantara to
prove the elements thereof, particularly Royale Homes’ power of control over the means and methods
of accomplishing the work. He, however, failed to cite specific rules, regulations or codes of ethics that
supposedly imposed control on his means and methods of soliciting sales and dealing with prospective
clients. On the other hand, this case is replete with instances that negate the element of control and the
existence of employer-employee relationship. 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.

Neither does the repeated hiring of Alcantara prove the existence of employer-employee relationship.
As discussed above, the absence of control over the means and methods disproves employer-
employee relationship. The continuous rehiring of Alcantara simply signifies the renewal of his contract
with Royale Homes, and highlights his satisfactory services warranting the renewal of such contract.
Nor does the exclusivity clause of contract establish the existence of the labor law concept of control.

Payment of Wages
The element of payment of wages is also absent in this case. As provided in the contract, Alcantara’s
remunerations consist only of commission override of 0.5%, budget allocation, sales incentive and other
forms of company support. There is no proof that he received fixed monthly salary. No payslip or payroll
was ever presented and there is no proof that Royale Homes deducted from his supposed salary
withholding tax or that it registered him with the Social Security System, Philippine Health Insurance
Corporation, or Pag-Ibig Fund. In fact, his Complaint merely states a ballpark figure of his alleged salary
of ₱100,000.00, more or less. All of these indicate an independent contractual relationship. Besides, if
Alcantara indeed considered himself an employee of Royale Homes, then he, an experienced and
professional broker, would have complained that he was being denied statutorily mandated benefits.
But for nine consecutive years, he kept mum about it, signifying that he has agreed, consented, and
accepted the fact that he is not entitled to those employee benefits because he is an independent
contractor.

This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere
independent contractor. The NLRC is, therefore, correct in concluding that the Labor Arbiter has no
jurisdiction over the case and that the same is cognizable by the regular courts.