employer employee relationship

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010 LVN PICTURES, INC. vs. PHILIPPINE MUSICIANS Guild (FFW) & COURT OF INDUSTRIAL RELATIONS

G.R. No. L-12582, January 28, 1961

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

G.R. No. L-12598, January 28, 1961 | CONCEPCION, J.:

FACTS:

Respondent Philippine Musicians Guild (FFW) is a duly registered legitimate labor organization. LVN Pictures, Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc1. are corporations, duly organized under the Philippine laws, engaged in the making of motion pictures and in the processing and distribution thereof. Petitioner companies employ musicians for the purpose of making music recordings for title music, background music, musical numbers, finale music and other incidental music, without which a motion picture is incomplete.

Ninety-five (95%) percent of all the musicians playing for the musical recordings of said companies are members of the Guild. The Guild has no knowledge of the existence of any other legitimate labor organization representing musicians in said companies. Premised upon these allegations, the Guild prayed that it be certified as the sole and exclusive bargaining agency for all musicians working in the aforementioned companies. In their respective answers, the latter denied that they have any musicians as employees, and alleged that the musical numbers in the filing of the companies are furnished by independent contractors.

The lower court sustained the Guild’s theory. A reconsideration of the order complained of having been denied by the Court en banc, LVN Pictures, inc., and Sampaguita Pictures, Inc., filed these petitions for review for certiorari.

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

RULING: YES

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

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

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

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

The “musical directors” have no such control over the musicians involved in the present case. Said musical directors control neither the music to be played, nor the musicians playing it. The

1 Premier Production did not appeal the decision of the Court en banc (that’s why it’s not one of the petitioners in the case).

film companies summon the musicians to work, through the musical directors. The film companies, through the musical directors, fix the date, the time and the place of work. The film companies, not the musical directors, provide the transportation to and from the studio. The film companies furnish meal at dinner time.

It is well settled that "an employer-employee relationship exists . . .where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end . . . ." (Alabama Highway Express Co., Express Co., v. Local 612, 108S. 2d. 350.) The decisive nature of said control over the "means to be used", is illustrated in the case of Gilchrist Timber Co., et al., in which, by reason of said control, the employer-employee relationship was held to exist between the management and the workers, notwithstanding the intervention of an alleged independent contractor, who had, and exercise, the power to hire and fire said workers. The aforementioned control over the means to be used" in reading the desired end is possessed and exercised by the film companies over the musicians in the cases before us.

WHEREFORE, the order appealed from is hereby affirmed, with costs against petitioners herein. It is so ordered.

020 REPUBLIC OF THE PHILIPPINES, represented by the SOCIAL SECURITY COMMISSION and SSS vs. ASIAPRO COOPERATIVE

G.R. No. 172101, November 23, 2007 | CHICO-NAZARIO, J.:

FACTS:

Respondent Asiapro, as a cooperative, is composed of owners-members. Under its by-laws, owners-members are of two categories, to wit: (1) regular member, who is entitled to all the rights and privileges of membership; and (2) associate member, who has no right to vote and be voted upon and shall be entitled only to such rights and privileges provided in its by-laws. Its primary objectives are to provide savings and credit facilities and to develop other livelihood services for its owners-members. In the discharge of the aforesaid primary objectives, respondent cooperative entered into several Service Contracts with Stanfilco - a division of DOLE Philippines, Inc. The owners-members do not receive compensation or wages from the respondent cooperative. Instead, they receive a share in the service surplus which the respondent cooperative earns from different areas of trade it engages in, such as the income derived from the said Service Contracts with Stanfilco.

In order to enjoy the benefits under the Social Security Law of 1997, the owners-members of the respondent cooperative, 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.

Petitioner SSS sent a letter to the respondent cooperative informing the latter that based on the Service Contracts it executed with Stanfilco, respondent cooperative 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, respondent cooperative should make the corresponding report and remittance of premium contributions in accordance with the SSS Law. Respondent cooperative sent a reply asserting that it is not an employer because its owners-members are the cooperative itself; hence, it cannot be its own employer.

Accordingly, petitioner SSS filed a Petition before petitioner SSC against the respondent cooperative and Stanfilco. SSC issued an Order denying the Motion to Dismiss filed by the respondent cooperative. Respondent cooperative filed a Petition for Certiorari before the CA. The CA rendered a Decision granting the petition filed by the respondent cooperative. Hence, this Petition.

ISSUE: W/N there exist an Employer-Employee relationship between respondent cooperative and its owners-members.

RULING: YES.

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 worker’s conduct, with the latter assuming primacy in the overall consideration.

The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish. 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. All the aforesaid elements are present in this case.

First. It is expressly provided in the Service Contracts that it is the respondent cooperative 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. 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." In this case, 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. Third. It is also stated in the above-mentioned Service Contracts that it is the respondent cooperative which has the power to investigate, discipline and remove the owners-members and its team leaders who were rendering services at Stanfilco. Fourth. It is the respondent cooperative which has the sole control over the manner and means of performing the services under the Service Contracts with Stanfilco as well as the means and methods of work. Also, the respondent cooperative 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.

It is true that the Service Contracts executed between the respondent cooperative and Stanfilco expressly provide that there shall be no employer-employee relationship between the respondent cooperative and its owners-members. This Court, however, cannot give the said provision force and effect.

As previously pointed out by this Court, an employee-employer relationship actually exists between the respondent cooperative and its owners-members. The four elements in the four-fold test for the existence of an employment relationship have been complied with. The respondent cooperative must not be allowed to deny its employment relationship with its owners-members by invoking the questionable Service Contracts provision, when in actuality, it does exist. The existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract, when the terms and surrounding circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by what the parties say it should be.

In sum, having declared that there is an employer-employee relationship between the respondent cooperative and its owners-member. We conclude that the petitioner SSC has jurisdiction over the petition-complaint filed before it by the petitioner SSS.

030 WILHELMINA S. OROZCO, PETITIONER, vs. THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER, AND

LETICIA JIMENEZ MAGSANOC, RESPONDENTS. G.R. No. 155207, August 13, 2008 | NACHURA, J.:

FACTS:

In March 1990, Philippine Daily Inquirer engaged the services of petitioner to write a weekly column for its Lifestyle section. She religiously submitted her articles every week, except for a six-month stint in New York City when she, nonetheless, sent several articles through mail. She received compensation of P250.00 - later increased to P300.00 - for every column published.

On November 7, 1992, petitioner's column appeared in the PDI for the last time. Petitioner claims that her then editor, Ms. Lita T. Logarta, told her that respondent Leticia Jimenez Magsanoc, PDI Editor in Chief, wanted to stop publishing her column for no reason at all and advised petitioner to talk

to Magsanoc herself. Petitioner narrates that when she talked to Magsanoc, the latter informed her that it was PDI Chairperson Eugenia Apostol who had asked to stop publication of her column, but that in a telephone conversation with Apostol, the latter said that Magsanoc informed her (Apostol) that the Lifestyle section already had many columnists.

On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to discuss how to improve said section. They agreed to cut down the number of columnists by keeping only those whose columns were well-written, with regular feedback and following. In their judgment, petitioner's column failed to improve, continued to be superficially and poorly written, and failed to meet the high standards of the newspaper. Hence, they decided to terminate petitioner's column.

Aggrieved by the newspaper's action, petitioner filed a complaint for illegal dismissal, backwages, moral and exemplary damages, and other money claims before the NLRC. The Labor Arbiter rendered a judgment finding complainant to be an employee of respondent company and ordering respondent company to reinstate her to her former or equivalent position, with backwages. Respondent company is also ordered to pay her 13th month pay and service incentive leave pay.

PDI appealed the Decision to the NLRC. NLRC affirmed the Labor Arbiter's Decision. PDI then filed a Petition for Review before this Court. However, in a Resolution this Court referred the case to the Court of Appeals, pursuant to the ruling in St. Martin Funeral Homes v. National Labor Relations Commission. The CA set aside the NLRC Decision and dismissed petitioner's Complaint. Petitioner's Motion for Reconsideration was also denied. Hence, the present Petition for Review.

Petitioner argues that several factors exist to prove that respondents exercised control over her and her work, namely:

a. As to the Contents of her Column (to insure that the contents of her column hewed closely to the objectives of its Lifestyle Section and the over-all principles that the newspaper);

b. As to Time Control (she had to observe the deadlines of the newspaper for her articles to be published);

c. As to Control of Space (she was told to submit only two or three pages of article for the columnto go beyond that, the Lifestyle editor would already chop off the article and publish the rest for the next week);

d. As to Discipline (she was disciplined to submit her articles on highly relevant and significant issues on time by the private respondents who have a say on whether the topics belong to those considered as highly relevant and significant, through the Lifestyle Section Editor; she had to discuss the topics first and submit the articles two days before publication date to keep her column in the newspaper space regularly as expected or without miss by its readers)

ISSUE: Whether or not petitioner (newspaper columnist) is an employee of PDI

RULING: NO.

This Court has constantly adhered to the "four-fold test" to determine whether there exists an employer-employee relationship between parties. The four elements of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. Of these four elements, it is the power of control which is the most crucial and most determinative factor, so important, in fact, that the other elements may even be disregarded.

As this Court has previously held: the significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control.

In other words, the test is whether the employer controls or has reserved the right to control the employee, not only as to the work done, but also as to the means and methods by which the same is accomplished.

Xxx


Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. Rules which serve as general guidelines towards the achievement of the mutually desired result are not indicative of the power of control.

Thus, this Court has explained:

It should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement.

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.

The main determinant therefore is whether the rules set by the employer are meant to control not just the results of the work but also the means and method to be used by the hired party in order to achieve such results. Thus, in this case, we are to examine the factors enumerated by petitioner to see if these are merely guidelines or if they indeed fulfill the requirements of the control test.

Petitioner believes that respondents' acts are meant to control how she executes her work. We do not agree. A careful examination reveals that the factors enumerated by the petitioner are inherent conditions in running a newspaper. In other words, the so-called control as to time, space, and discipline are dictated by the very nature of the newspaper business itself.

We agree with the observations of the Office of the Solicitor General that:

The Inquirer is the publisher of a newspaper of general circulation which is widely read throughout the country. As such, public interest dictates that every article appearing in the newspaper should subscribe to the standards set by the Inquirer, with its thousands of readers in mind. It is not, therefore, unusual for the Inquirer to control what would be published in the newspaper. What is important is the fact that such control pertains only to the end result, i.e., the submitted articles. The Inquirer has no control over [petitioner] as to the means or method used by her in the preparation of her articles. The articles are done by [petitioner] herself without any intervention from the Inquirer.

Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce her articles each week. Aside from the constraints presented by the space allocation of her column, there were no restraints on her creativity; petitioner was free to write her column in the manner and style she was accustomed to and to use whatever research method she deemed suitable for her purpose. The apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not translate to control, but was simply a logical consequence of the fact that her column appeared in that section and therefore had to cater to the preference of the readers of that section.

The perceived constraint on petitioner's column was dictated by her own choice of her column's perspective. The column title "Feminist Reflections" was of her own choosing, as she herself admitted, since she had been known as a feminist writer. Thus, respondent PDI, as well as her readers, could reasonably expect her columns to speak from such perspective.

Contrary to petitioner's protestations, it does not appear that there was any actual restraint or limitation on the subject matter - within the Lifestyle section - that she could write about. Respondent PDI did not dictate how she wrote or what she wrote in her column. Neither did PDI's guidelines dictate the kind of research, time, and effort she put into each column. In fact, petitioner herself said that she received "no comments on her articles...except for her to shorten them to fit into the box allotted to her column." Therefore, the control that PDI exercised over petitioner was only as to the finished product of her efforts, i.e., the column itself, by way of either shortening or outright rejection of the column.

The newspaper's power to approve or reject publication of any specific article she wrote for her column cannot be the control contemplated in the "control test," as it is but logical that one who commissions another to do a piece of work should have the right to accept or reject the product. The important factor to consider in the "control test" is still the element of control over how the work itself is done, not just the end result thereof.

In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We note the common practice in the newspaper business of assigning its regular reporters to cover specific subjects, geographical locations, government agencies, or areas of concern, more commonly referred to as "beats." A reporter must produce stories within his or her particular beat and cannot switch to another beat without permission from the editor. In most newspapers also, a reporter must inform the editor about the story that he or she is working on for the day. The story or article must also be submitted to the editor at a specified time. Moreover, the editor can easily pull out a reporter from one beat and ask him or her to cover another beat, if the need arises.

This is not the case for petitioner. Although petitioner had a weekly deadline to meet, she was not precluded from submitting her column ahead of time or from submitting columns to be published at a later time. More importantly, respondents did not dictate upon petitioner the subject matter of her columns, but only imposed the general guideline that the article should conform to the standards of the newspaper and the general tone of the particular section.

Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no employer-employee relationship exists.

Aside from the control test, this Court has also used the economic reality test. The economic realities prevailing within the activity or between the parties are examined, taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate when, as in this case, there is no written agreement or contract on which to base the relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of the worker on his employer.

Petitioner's main occupation is not as a columnist for respondent but as a women's rights advocate working in various women's organizations. Likewise, she herself admits that she also contributes articles to other publications. Thus, it cannot be said that petitioner was dependent on respondent PDI for her continued employment in respondent's line of business.

The inevitable conclusion is that petitioner was not respondent PDI's employee but an independent contractor, engaged to do independent work.

040 SOCIAL SECURITY SYSTEM vs. COURT OF APPEALS

AND CONCHITA AYALDE G.R. No. 100388, 14 December 2000 | Ynares-Santiago, J.

FACTS:

Margarita Tana, widow of the late Ignacio Tana, Sr., alleged that her husband was, before his demise, an employee of Conchita Ayalde as a farmhand in the two (2) sugarcane plantations she owned and leased from the University of the Philippines (in Pontevedra and La Granja in La Carlota City, respectively). She further alleged that Ignacioi worked continuously six (6) days a week, four (4) weeks a month, and for twelve (12) months every year between January 1961 to April 1979. For his labor, Ignacio allegedly received a regular salary according to the minimum wage prevailing at the time. She further alleged that throughout the given period, social security contributions, as well as medicare and employees compensation premiums were deducted from Ignacio’s wages. It was only after his death that Margarita discovered that Ignacio was never reported for coverage, nor were his contributions/premiums remitted to the Social Security System (SSS). Consequently, she was deprived of the burial grant and pension benefits accruing to the heirs of Tana had he been reported for coverage.

Hence, Margarita filed a petition with Social Security Commission (SSC) praying Ayalde to pay the premium contributions of the deceased Ignacio and report his name for SSS coverage; and the


SSS to grant Margarita the funeral and pension benefits due her. The SSS, in a petition-in-intervention, revealed that Ayalde was not registered members-employers of the SSS, and consequently, Ignacio was never registered as a member-employee. Likewise, SSS records reflected that there was no way of verifying whether the alleged premium contributions were remitted since the respondents were not registered members-employers. Being the agency charged with the implementation and enforcement of the provisions of the Social Security Law, as amended, the SSS asked the SSC’s leave to intervene in the case.

Ayalde belied the allegation that Ignacio was her employee, admitting only that he was hired intermittently as an independent contractor to plow, harrow, or burrow the land in Pontevedra. Ignacio used his own carabao and other implements, and he followed his own schedule of work hours. Ayalde further alleged that she never exercised control over the manner by which Ignacio performed his work as an independent contractor. Moreover, Ayalde averred that way back in 1971, the University of the Philippines had already terminated the lease over the land in La Granja and she had since surrendered possession thereof to the University of the Philippines. Consequently, Ignacio was no longer hired to work thereon starting in crop year 1971-72, while he was never contracted to work in Pontevedra. Hence, she prayed for the dismissal of the case considering that Ignacio was never her employee.

The SSC finds that Ignacio was employed by Ayalde from January 1961 to March 1979. The testimony of Margarita which was corroborated by the co-workers of Ignacio, sufficienty established the latter’s employment with Ayalde.

Ayalde is, therefore, made liable for the payment of damages equivalent to the death benefits in the amount of P7,067.40 plus the amount of P750.00 representing funeral benefit or a total of P7,817.40.

Further, the SSS is ordered to pay to the petitioner her accrued pension covering the period after the 5-year guaranteed period corresponding to the employer’s liability.

Respondent Ayalde filed a motion for reconsideration, which the Commission denied for lack of merit.

Upon appeal, the CA rendered judgment in favor of Ayalde and dismissed the claim of Margarita. The SSS, as intervenor-appellee, filed a Motion for Reconsideration, which was denied on the ground that the arguments advanced are “mere reiterations of issues and arguments, which were already resolved.

ISSUE: Whether or not Ignacio, an agricultural laborer, who was hired on “pakyaw” basis can be considered an employee entitled to compulsory coverage and corresponding benefits under the Social Security Law.

RULING: YES

The SC reiterated the well-settled doctrine that the existence of an employer-employee relationship is ultimately a question of fact. And while it is the general rule that factual issues are not within the province of the SC, said rule is not without exception. In cases, such as this one, where there are conflicting and contradictory findings of fact, the SC has not hesitated to scrutinize the records to determine the facts for itself. The disquisition of the facts shall be SC’s guide as to whose findings are supported by substantial evidence.

The mandatory coverage under the SSS Law (Republic Act No. 1161, as amended by PD 1202 and PD 1636) is premised on the existence of an employer-employee relationship, and Section 8(d) defines an “employee” as “any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services where there is an employer-employee relationship.” The essential 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 power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor.

There is no question that Ignacio was selected and his services engaged by either Ayalde herself, or by Antero Maghari, her overseer. Corollarily, they also held the prerogative of dismissing or terminating Ignacio’s employment. The dispute is in the question of payment of wages. Claimant Margarita and her corroborating witnesses testified that her husband was paid daily wages “per

quincena” as well as on “pakyaw” basis. Ayalde, on the other hand, insists that Tana was paid solely on “pakyaw” basis. To support her claim, she presented payrolls covering the period January of 1974 to January of 1976; and November of 1978 to May of 1979.

A careful perusal of the records readily show that the exhibits offered are not complete, and are but a mere sampling of payrolls. While the names of the supposed laborers appear therein, their signatures are nowhere to be found. And while they cover the years 1975, 1976 and portions of 1978 and 1979, they do not cover the 18-year period during which Tana was supposed to have worked in Ayalde’s plantations. Also an admitted fact is that these exhibits only cover those in Pontevedra, Ayalde having averred that all her records and payrolls for the other plantation in La Granja were either destroyed or lost.

To the SC, these documents are not only sadly lacking, they are also unworthy of credence. The fact that Tana’s name does not appear in the payrolls for the years 1975, 1976 and part of 1978 and 1979, is no proof that he did not work in Pontevedra in the years 1961 to 1974, and the rest of 1978 and 1979. The veracity of the alleged documents as payrolls are doubtful considering that the laborers named therein never affixed their signatures to show that they actually received the amounts indicated corresponding to their names. Moreover, no record was shown pertaining to La Granja, where Tana was supposed to have worked. Even Ayalde admitted that she hired Ignacio as “arador” and sometimes as laborer during milling in La Granja. In light of her incomplete documentary evidence, Ayalde’s denial that Tana was her employee in Pontevedra or La Granja must fail.

In contrast to Ayalde’s evidence, or lack thereof, is Margarita’s positive testimony, corroborated by two (2) other witnesses.

These witnesses did not waver in their assertion that while Ignacio was hired by Ayalde as an “arador” on “pakyaw” basis, he was also paid a daily wage which Ayalde’s overseer disbursed every fifteen (15) days. It is also undisputed that they were made to acknowledge receipt of their wages by signing on sheets of ruled paper, which are different from those presented by Ayalde as documentary evidence. In fine, we find that the testimonies of Margarita and the others to prevail over the incomplete and inconsistent documentary evidence of Ayalde.

In the parallel case of Opulencia Ice Plant and Storage v. NLRC, the petitioners argued that since Manuel P. Esita’s name does not appear in the payrolls of the company it necessarily means that he was not an employee.

It is indubitable, therefore, that Ignacio worked continuously for Ayalde, not only as “arador” on “pakyaw” basis, but as a regular farmhand, doing backbreaking jobs for Ayalde’s business. There is no shred of evidence to show that Ignacio was only a seasonal worker, much less a migrant worker. All witnesses, including Ayalde herself, testified that Ignacio and his family resided in the plantation. If he was a mere “pakyaw” worker or independent contractor, then there would be no reason for Ayalde to allow them to live inside her property for free. The only logical explanation is that he was working for most part of the year exclusively for Ayalde, in return for which the latter gratuitously allowed Ignacio and his family to reside in her property.

The CA, in finding for Ayalde, relied on the claimant’s and her witnesses’ admission that her husband was hired as an “arador” on “pakyaw” basis, but it failed to appreciate the rest of their testimonies. Just because he was, for short periods of time, hired on “pakyaw” basis does not necessarily mean that he was not employed to do other tasks for the remainder of the year. Even Ayalde admitted that Ignacio did other jobs when he was not hired to plow. Consequently, the conclusion culled from their testimonies to the effect that Ignacio was mainly and solely an “arador” was at best a selective appreciation of portions of the entire evidence. It was the Social Security Commission that took into consideration all the documentary and testimonial evidence on record.

Secondly, Ayalde made much ado of her claim that Ignacio could not be her employee because she exercised no control over his work hours and method of performing his task as “arador.” It is also an admitted fact that Ignacio used his own carabao and tools. Thus, she contends that, applying the “control test,” Ignacio was not an employee but an independent contractor.

A closer scrutiny of the records, however, reveals that while Ayalde herself may not have directly imposed on Ignacio the manner and methods to follow in performing his tasks, she did exercise control through her overseer.

Be that as it may, the power of control refers merely to the existence of the power. It is not essential for the employer to actually supervise the performance of duties of the employee; it is


sufficient that the former has a right to wield the power. Certainly, Ayalde, on her own or through her overseer, wielded the power to hire or dismiss, to check on the work, be it in progress or quality, of the laborers. As the owner/lessee of the plantations, she possessed the power to control everyone working therein and everything taking place therein

Jurisprudence provides other equally important considerations which support the conclusion that Ignacio was not an independent contractor. First, Ignacio cannot be said to be engaged in a distinct occupation or business. His carabao and plow may be useful in his livelihood, but he is not independently engaged in the business of farming or plowing. Second, he had been working exclusively for Ayalde for eighteen (18) years prior to his demise. Third, there is no dispute that Ayalde was in the business of growing sugarcane in the two plantations for commercial purposes. There is also no question that plowing or preparing the soil for planting is a major part of the regular business of Ayalde.

WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals is hereby REVERSED and SET ASIDE. The Resolution of the Social Security Commission is REINSTATED.

050 Insular Life Assurance Co. Ltd. vs. NLRC and Melecio Basiao

G.R. No. 88484, November 15, 1989 | Narvasa, J.

FACTS:

Melecio Basiao and Insular Life Assurance Co. Ltd. (Insular) entered into a contract

authorizing Basiao to solicit applications for insurance policies and annuities within the Philippines.

Basiao will receive commissions in consideration thereof. The rules in Insular’s Rate Book & its Agent

Manual as well as its circulars and those which may from time to time be promulgated by the company

were made part of said contract. The contract likewise contained provisions governing the relations of

the party. Among others it provided that “the Agent shall be free to exercise his own judgment as to time,

place and means of soliciting insurance. Nothing herein contained shall therefore be construed to create

the relationship of employee and employer between the Agent and the Company.”

Four years later, Insular & Basiao entered into another contract, an Agency Manager's

Contract. To implement his end of it, Basiao organized an agency (M. Basiao and Associates) while

concurrently fulfilling his commitments under the first contract. Insular terminated the Agency

Manager's Contract after seven years. After vainly seeking reconsideration, Basiao sued Insular in a

civil action and this, he claimed, prompted Insular to terminate also his engagement under the first

contract and to stop payment of his commissions.

Basiao filed with the Ministry of Labor a complaint against Insular. Without contesting the

termination of the first contract, the complaint sought to recover commissions allegedly unpaid

thereunder, plus attorney's fees. Insular disputed the Ministry's jurisdiction over Basiao's claim,

asserting that he was not the Company's employee, but an independent contractor.

The Labor Arbiter ruled in favor of Basiao. Said decision was affirmed on appeal by the

NLRC. NLRC contended that the contract’s provisions do not constitute the decisive determinant of the

nature of Basiao’s engagement. The critical feature distinguishing the status of an employee from that

of an independent contractor is control, that is, whether or not the party who engages the services of

another has the power to control the latter's conduct in rendering such services. The provisions of

Basiao's contract obliging him to "... observe and conform to all rules and regulations which the Company

may from time to time prescribe ...," as well as to the fact that the company prescribed the qualifications

of applicants for insurance, processed their applications and determined the amounts of insurance

cover to be issued as indicative of the control, which made Basiao, in legal contemplation, an employee

of the company.

ISSUE: Is Basiao to be considered an employee of Insular?

RULING: NO

While “control” is a valid test of the character of a contract or agreement to render service,

not every form of control that the hiring party reserves to himself over the conduct of the party hired in

relation to the services rendered may be accorded the effect of establishing an employer-employee

relationship between them in the legal or technical sense of the term.

A line should be drawn between (1) rules that merely serve as guidelines towards the

achievement of the mutually desired result without dictating the means or methods to be employed in

attaining it, and (2) rules 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. The

distinction acquires particular relevance in the case of an enterprise affected with public interest, as is

the business of insurance, and is on that account subject to regulation by the State with respect, not

only to the relations between insurer and insured but also to the internal affairs of the insurance

company. Rules and regulations governing the conduct of the business are provided for in the

Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an

insurance company to promulgate a set of rules to guide its commission agents in selling its policies

that they may not run afoul of the law and what it requires or prohibits. Of such a character are the

rules which prescribe the qualifications of persons who may be insured, subject insurance applications

to processing and approval by the company, and also reserve to the company the determination of the

premiums to be paid and the schedules of payment. None of these really invades the agent's contractual

prerogative to adopt his own selling methods or to sell insurance at his own time and convenience,

hence cannot justifiably be said to establish an employer-employee relationship between him and the

company.

Hence, Basiao was not an employee of Insular, but a commission agent, an independent

contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action.

The appealed resolution of the NLRC was set aside, and Basiao’s complaint was dismissed.

060 TONGKO vs. MANULIFE

G.R. No. 167622,. June 29, 2010 | BRION, J.:

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: It

is understood and agreed that the Agent is an independent contractor and nothing contained herein

shall be construed or interpreted as creating an employer-employee relationship between the

Company and the Agent. xxx a) The Agent shall canvass for applications for Life Insurance, Annuities,

Group policies and other products offered by the Company, and collect, in exchange for provisional

receipts issued by the Agent, money due 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.

Tongko additionally agreed (1) to comply with all regulations and requirements of Manulife,

and (2) to maintain a standard of knowledge and competency in the sale of Manulife’s products,

satisfactory to Manulife and sufficient to meet the volume of the new business, required by his

Production Club membership.

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. In 1996, Tongko became a Regional Sales

Manager.


Tongko’s gross earnings consisted of commissions, persistency income, and management

overrides. Since the beginning, Tongko consistently declared himself self-employed in his income tax

returns. Thus, under oath, he declared his gross business income and deducted his business expenses

to arrive at his taxable business income. Manulife withheld the corresponding 10% tax on Tongko’s

earnings.

In 2001, Manulife instituted manpower development programs at the regional sales

management level. Respondent Renato Vergel de Dios wrote Tongko a letter dated November 6, 2001

on concerns that were brought up during the October 18, 2001 Metro North Sales Managers Meeting.

De Dios wrote: 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. This may seem diametrically opposed

to the way Manulife was run when you first joined the organization. Since then, however, substantial

changes have taken place in the organization, as these have been influenced by developments both

from within and without the company.

Subsequently, de Dios wrote Tongko another letter, dated December 18, 2001, terminating

Tongko’s services: It would appear, however, that despite the series of meetings and communications,

both one-on-one meetings between yourself and SVP Kevin O’Connor, some of them with me, as well as

group meetings with your Sales Managers, all these efforts have failed in helping you align your

directions with Management’s avowed agency growth policy. xxx On account thereof, Management is

exercising its prerogative under Section 14 of your Agents Contract as we are now issuing this notice of

termination of your Agency Agreement with us effective fifteen days from the date of this letter.

Tongko responded by filing an illegal dismissal complaint with the National Labor Relations

Commission (NLRC) Arbitration Branch. He essentially alleged – despite the clear terms of the letter

terminating his Agency Agreement – that he was Manulife’s employee before he was illegally dismissed.

A. Tongko’s Case for Employment Relationship. Tongko asserted that as Unit Manager, he

was paid an annual over-rider not exceeding P50,000.00, regardless of production levels attained and

exclusive of commissions and bonuses. He also claimed that as Regional Sales Manager, he was given a

travel and entertainment allowance of P36,000.00 per year in addition to his overriding commissions;

he was tasked with numerous administrative functions and supervisory authority over Manulife’s

employees, aside from merely selling policies and recruiting agents for Manulife; and he recommended

and recruited insurance agents subject to vetting and approval by Manulife. He further alleges that he

was assigned a definite place in the Manulife offices when he was not in the field – at the 3rd Floor,

Manulife Center, 108 Tordesillas corner Gallardo Sts., Salcedo Village, Makati City – for which he never

paid any rental. Manulife provided the office equipment he used, including tables, chairs, computers

and printers (and even office stationery), and paid for the electricity, water and telephone bills. As

Regional Sales Manager, Tongko additionally asserts that he was required to follow at least three codes

of conduct.

B. Manulife’s Case – Agency Relationship with Tongko. Manulife argues that Tongko had

no fixed wage or salary. Under the Agreement, Tongko was paid commissions of varying amounts,

computed based on the premium paid in full and actually received by Manulife on policies obtained

through an agent. As sales manager, Tongko was paid overriding sales commission derived from sales

made by agents under his unit/structure/branch/region. Manulife also points out that it deducted and

withheld a 10% tax from all commissions Tongko received; Tongko even declared himself to be self-

employed and consistently paid taxes as such—i.e., he availed of tax deductions such as ordinary and

necessary trade, business and professional expenses to which a business is entitled.

Manulife asserts that the labor tribunals have no jurisdiction over Tongko’s claim as he was

not its employee as characterized in the four-fold test and our ruling in Carungcong v. National Labor

Relations Commission.

The Conflicting Rulings of the Lower Tribunals. The labor arbiter decreed that no

employer-employee relationship existed between the parties. However, the 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.

Our Decision of November 7, 2008. In our Decision of November 7, 2008, we reversed the

CA ruling and found that an employment relationship existed between Tongko and Manulife. We

concluded that Tongko is Manulife’s employee for the following reasons: 1. Our ruling in the first

Insular case did not foreclose the possibility of an insurance agent becoming an employee of an

insurance company; if evidence exists showing that the company promulgated rules or regulations that

effectively controlled or restricted an insurance agent’s choice of methods or the methods themselves

in selling insurance, an employer-employee relationship would be present. The determination of the

existence of an employer-employee relationship is thus on a case-to-case basis depending on the

evidence on record. 2. Manulife had the power of control over Tongko, sufficient to characterize him as

an employee, as shown by the following indicators: 2.1 Tongko undertook to comply with Manulife’s

rules, regulations and other requirements, i.e., the different codes of conduct such as the Agent Code of

Conduct, the Manulife Financial Code of Conduct, and the Financial Code of Conduct Agreement; 2.2

The various affidavits of Manulife’s insurance agents and managers, who occupied similar positions as

Tongko, showed that they performed administrative duties that established employment with

Manulife; and 2.3 Tongko was tasked to recruit some agents in addition to his other administrative

functions. De Dios’ letter harped on the direction Manulife intended to take, viz., greater agency

recruitment as the primary means to sell more policies; Tongko’s alleged failure to follow this directive

led to the termination of his employment with Manulife.

THE MOTION FOR RECONSIDERATION’S ISSUE: WON an employment relationship exists.

RULING: NO.

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. It

assumes primacy because it directly dealt with the nature of the parties’ relationship up to the very

end; moreover, both parties never disputed its authenticity or the accuracy of its terms.

By the Agreement’s express terms, Tongko served as an "insurance agent" for Manulife, not

as an employee. To be sure, the Agreement’s legal characterization of the nature of the relationship

cannot be conclusive and binding on the courts; as the dissent clearly stated, the characterization of the

juridical relationship the Agreement embodied is a matter of law that is for the courts to determine. At

the same time, though, the characterization the parties gave to their relationship in the Agreement

cannot simply be brushed aside 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.


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 Code 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. In

the absence of any such evidence, however, this reading – based on the available evidence and the

applicable insurance and civil law provisions – must stand, subject only to objective and evidentiary

Labor Code tests on the existence of an employer-employee relationship.

In applying such Labor Code tests, however, the enforcement of the Agreement during the

course of the parties’ relationship should be noted. From 1977 until the termination of the Agreement,

Tongko’s occupation was to sell Manulife’s insurance policies and products. Both parties acquiesced

with the terms and conditions of the Agreement. Tongko, for his part, accepted all the benefits flowing

from the Agreement, particularly the generous commissions.

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. Had they been considered, they could, at the very least, serve as Tongko’s

admissions against his interest. Strictly speaking, Tongko’s tax returns cannot but be legally significant

because he certified under oath the amount he earned as gross business income, claimed business

deductions, leading to his net taxable income. This should be evidence of the first order that cannot be

brushed aside by a mere denial. Even on a layman’s view that is devoid of legal considerations, the

extent of his annual income alone renders his claimed employment status doubtful.

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. 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. The alleged directives covered by de Dios’ letter were policy directions and

targeted results that the company wanted Tongko and the other sales groups to realign with in their

own selling activities. This is the reality that the parties’ presented evidence consistently tells us.

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.

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 defined in jurisprudence. Guidelines indicative of labor

law "control," as the first Insular Life case tells us, should not merely relate to the mutually

desirable result intended by the contractual relationship; they must have the nature of

dictating the means or methods to be employed in attaining the result, or of fixing the methodology

and of binding or restricting the party hired to the use of these means. In fact, results-wise, the

principal can impose production quotas and can determine how many agents, with specific territories,

ought to be employed to achieve the company’s objectives. These are management policy decisions that

the labor law element of control cannot reach. 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.

Under this legal situation, the only conclusion that can be made is that the absence of

evidence showing Manulife’s control over Tongko’s contractual duties points to the absence of any

employer-employee relationship between Tongko and Manulife. 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.

In light of these conclusions, the sufficiency of Tongko’s failure to comply with the guidelines

of de Dios’ letter, as a ground for termination of Tongko’s agency, is a matter that the labor tribunals

cannot rule upon in the absence of an employer-employee relationship. Jurisdiction over the matter

belongs to the courts applying the laws of insurance, agency and contracts.

070 ANGEL JARDIN, et al. vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.)

G.R. No. 119268, February 23, 2000 | QUISUMBING, J.:

FACTS:

Petitioners Jardin et. al. were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Jardin et. al. used to drive Philjama's taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, petitioners earned an average of P400.00 daily. Philjama admittedly regularly deducts from petitioners daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests.

Upon learning about their plan, Philjama refused to let petitioners drive their taxicabs when they reported for work and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, they filed with the labor arbiter a complaint against Philjama for unfair labor practice, illegal dismissal and illegal deduction of washing fees. The labor arbiter dismissed said complaint for lack of merit.

On appeal, the NLRC reversed and set aside the judgment of the labor arbiter. The labor tribunal declared that petitioners are employees of private respondent, and, as such, their dismissal must be for just cause and after due process. The NLRC therefore directed for their reinstatement.

Private respondent's first MR was denied. Thus, it filed another MR. This time, NLRC granted the 2nd MR. It ruled that it lacks jurisdiction over the case as petitioners and Philjama have no employer-employee relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code. Petitioners sought reconsideration of the labor tribunal's latest decision which was denied. Hence, the instant petition.

ISSUE:

1) Whether or not there was employer-employee relationship (this is the issue RELEVANT to the topic)

2) Whether or not the petitioners were illegally dismissed and whether there was illegal deduction of washing fees

3) Whether or not NLRC has no jurisdiction to entertain respondent’s 2nd MR which is admittedly a pleading prohibited under the NLRC rules

RULING:

1) YES. (Go back to the 4-fold test).The SC ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. In the lease of chattels, the lessor loses


complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. The same doctrine is applied to the relationships between bus owner/operator and bus conductor; auto-calesa owner/operator and driver; and recently between taxi owners/operators and taxi drivers. Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer.

2) YES, there was illegal dismissal. But there was NO illegal deduction of washing fees. As consistently held by the SC, termination of employment must be effected in accordance with law. Hence, petitioners, being employees of Philjama, can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, Philjama had no valid cause to terminate the employment of petitioners. Under the law, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement

. With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi units, we view the same as not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play. Hence, the drivers are not entitled to reimbursement of washing charges.

**Private respondent is directed to reinstate petitioners to their positions held at the time of the complained dismissal. Private respondent is likewise ordered to pay petitioners their full backwages, to be computed from the date of dismissal until their actual reinstatement. However, the order of public respondent that petitioners be reimbursed the amount paid as washing charges is deleted.

3) YES, the 2nd MR filed by private respondent is indubitably a prohibited pleading

which should have not been entertained at all. Thus, when Philjama filed a 2nd MR, NLRC should have forthwith denied it in accordance with Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party. The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry.

080 ROSARIO BROTHERS INC. (MANILA COD DEPARTMENT STORE) vs. HON. BLAS F. OPLE, THE NATIONAL LABOR RELATIONS COMMISSION, and

LEONARDO LOVERIA, MARIETTA GALUT, LINDA TAPICERIA, JESUS S. OLIVER, CLARITA SANGLE, RICARDO ROXAS, ANTONIO MABUTOL, LUZ BAYNO,

NESTOR SANCHEZ, TITO CASTALEDA, EDDIE RODRIGUEZ, MANUEL MEJES, FRANCISCA TAPICERIA, EDITHA BAYNO, ET AL.

G.R. No. L-53590 July 31, 1984 |RELOVA, J.:

FACTS:

Private respondents are tailors, pressers, stitchers and similar workers hired by the petitioner in its tailoring department (Modes Suburbia). They were paid weekly on piece work basis

minus the withholding tax per BIR rules; registered with the SSS as employees of petitioner and premiums were deducted from their wages; they were members of the Avenida-Cubao COD Department Store Labor Union, which has a Collective Bargaining Agreement with the company; and were required to report for work from Monday through Saturday and to stay in the tailoring shop for no less than eight hours a day, unless no job order was given after waiting for two to three hours, in which case, they may leave and may come back in the afternoon; and their attendance was recorded through a bundy clock. A master cutter distributes job orders equally, supervises the work and sees to it that they were finished as soon as possible. Petitioner, in its memorandum, said that once the job orders and corresponding materials were distributed to them, private respondents were on their own, provided that they finished their work on time and in accordance with their specification. Private respondents filed a complaint for violation for PD 851 (13th month pay) and PD 525 as amended by PD 1123 (Emergency Living Allowance) against petitioner.

The Labor Arbiter dismissed the claim, upon finding that the private respondents are not employees of the petitioner, within the meaning of Article 267(b) of the Labor Code. As a consequence, private respondents were dismissed, and prompted them to file a complaint for illegal dismissal. The Arbiter’s decision was affirmed by the NLRC, but was reversed by the Minister of Labor. Upon finding under the facts, the existence of employment relations, the Minister of Labor ordered the payment of emergency allowances and 13th month pay. Petitioner filed the complaint to annul and set aside the decision of public respondent Minister of Labor and to dismiss the claims of the private respondents.

ISSUE: Was there an employer-employee relationship between the petitioner and the tailors, pressers, and stitchers in their tailoring department?

RULING: YES

An employment relationship exists. As held in Mafinco Trading Corporation vs. Ople, the existence of employer-employee relationship is determined by the following elements: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control employees' conduct although the latter is the most important element. On the other hand, an independent contractor is one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subjected to control of his employer except as to the result of his work.

In the case at bar, as found by the respondent, the selection and hiring of the private respondents were done by the petitioner through the master cutter of its tailoring department who was a regular employee, which was later on modified, as the approval by the Personnel Department was required. Private respondents received their weekly wages from the petitioner on piece-work basis, which is within the scope and meaning of the term “wage”. The petitioner had the power to dismiss private respondents as shown by the various memoranda issued for strict compliance by private respondents, violations of which are grounds for outright dismissal. The conduct of private respondents’ was controlled by petitioner, and they were allowed to register with the SSS as employees of the petitioners, and were deducted from their wages just like its other employees, and withholding taxes were deducted.

The Court, finding to grave abuse of discretion, finds no necessity to disturb, much less, reverse the decision of the respondent.

*NOTE: The Court cannot sustain the petition due to its late filing, because the Labor Minister’s decision had already become final before its judicial review. Also, the questioned decision had already been partially implemented by the sheriff, and what is left for execution was the balance of the claim of the private respondents.

090 FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO, JEFFREY LAGUNZAD, MAGDALENA MALIG-ON BIGNO, FRANCISCO CABAS, JR., HARVEY

PONCE and ALAN C. ALMENDRAS, vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 183810, January 21, 2010 | Brion J:


FACTS:

On June 2001, petitioners Farley Fulache et al. filed two separate complaints for regularization, unfair labor practice and several money claims against ABS-CBN Broadcasting Corporation-Cebu. 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. The petitioners alleged that ABS CBN union and the respondent executed a CBA effective December 11, 1999 to December 10, 2002. However they learned that they were excluded frm the CBA coverage. They claimed they had already rendered more than a year of service in the company and, therefore, should have been recognized as regular employees entitled to security of tenure and to the privileges and benefits enjoyed by regular employees. They asked that they be paid benefits and damages. Respondent meanwhile claims that it operates in several divisions, one of which is the Regional Network Group (RNG). The RNG exercises control and supervision over all the ABS-CBN local stations to ensure that ABS-CBN programs are extended to the provinces. ABS-CBN claims that 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 and that petitioners are “talents” and are considered independent contractors. Instead of salaries therefore they are paid talent fee" taken from the budget of a particular program. The labor arbiter ruled in favor of petitioners. While the illegal dismissal case id pending ABS CBN dismissed respondents for failure refusal to sign up contracts of employment with service contractor Able Services. NLRC and CA affirmed.

ISSUE: Whether or not there exist a employer-employee relationship between the parties so as to be entitled to Cba benefits

RULING: YES

The NLRC ruled that respondents have control and that the work is usually necessary and desirable to the usual trade and business of respondent. As regular employees, the petitioners fall within the coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of law and contract. Most importantly, the labor arbiter’s decision of January 17, 2002 – affirmed all the way up to the CA level – ruled against ABS-CBN’s submission that they are independent contractors. Thus, as regular rank-and-file employees, they fall within CBA coverage under the CBA’s express terms and are entitled to its benefits.

As to the CBA, the petitioners are members of the appropriate bargaining unit because they are regular rank-and-file employees and do not belong to any of the excluded categories. Specifically, nothing in the records shows that they are supervisory or confidential employees; neither are they casual nor probationary employees.

employer employee relationship

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