Salazar vs Achosa

FACTS: Rosalie Tesoro of Pasay City in a sworn statement filed with the POEA,
charged petitioner with illegal recruitment. Public respondent Atty. Ferdinand
Marquez sent petitioner a telegram directing him to appear to the POEA
regarding the complaint against him. On the same day, after knowing that
petitioner had no license to operate a recruitment agency, public respondent
Administrator Tomas Achacoso issued a Closure and Seizure Order No. 1205
to petitioner. It stated that there will a seizure of the documents and
paraphernalia being used or intended to be used as the means of committing
illegal recruitment, it having verified that petitioner has— (1) No valid
license or authority from the Department of Labor and Employment to
recruit and deploy workers for overseas employment; (2) Committed/are
committing acts prohibited under Article 34 of the New Labor Code in
relation to Article 38 of the same code. A team was then tasked to
implement the said Order. The group, accompanied by mediamen and
Mandaluyong policemen, went to petitioner’s residence. They served the
order to a certain Mrs. For a Salazar, who let them in. The team confiscated
assorted costumes. Petitioner filed with POEA a letter requesting for the
return of the seized properties, because she was not given prior notice and
hearing. The said Order violated due process. She also alleged that it
violated sec 2 of the Bill of Rights, and the properties were confiscated
against her will and were done with unreasonable force and intimidation.

ISSUE: Whether or Not the Philippine Overseas Employment

Administration (or the Secretary of Labor) can validly issue warrants of
search and seizure (or arrest) under Article 38 of the Labor Code

HELD: No. Under the new Constitution, “. . . no search warrant or warrant of

arrest shall issue except upon probable cause to be determined personally
by the judge after examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly describing the place to
be searched and the persons or things to be seized”. Mayors and prosecuting
officers cannot issue warrants of seizure or arrest. The Closure and Seizure
Order was based on Article 38 of the Labor Code. The Supreme Court held,
“We reiterate that the Secretary of Labor, not being a judge, may no longer
issue search or arrest warrants. Hence, the authorities must go through the
judicial process. To that extent, we declare Article 38, paragraph (c), of the
Labor Code, unconstitutional and of no force and effect… The power of the
President to order the arrest of aliens for deportation is, obviously,
exceptional. It (the power to order arrests) cannot be made to extend to
other cases, like the one at bar. Under the Constitution, it is the sole domain
of the courts.” Furthermore, the search and seizure order was in the nature
of a general warrant. The court held that the warrant is null and void,
because it must identify specifically the things to be seized.

Filamer Christian Vs. IAC

FACTS: Daniel Funtecha was a working student at the Filamer Christian Institute. He
was assigned as the school janitor to clean the school 2 hours every morning. Allan
Masa was the son of the school president and at the same time he was the school’s
jeepney service driver. On October 20, 1977 at about 6:30pm, after driving the students
to their homes, Masa returned to the school to report and thereafter have to go home
with the jeep so that he could fetch the students early in the morning. Masa and
Funtecha live in the same place so they usually go home together. Funtecha had a
student driver’s license so Masa let him take the driver’s seat. While Funtecha was
driving, he accidentally hit an elderly Kapunan which led to his hospitalization for 20
days. Kapunan filed a criminal case and an independent civil action based on Article
2180 against Funtecha.
In the independent civil action, the lower court ruled that Filamer is subsidiarily liable for
the tortious act of Funcheta and was compelled to pay for damages based on Article
2180 which provides that employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their assigned tasks.
Filamer assailed the decision and it argued that under Section 14, Rule X, Book III of
the Labor Code IRR, working scholars are excluded from the employment coverage
hence there is no employer-employee relations between Filamer and Funcheta; that the
negligent act of Funcheta was due to negligence only attributable to him alone as it is
outside his assigned task of being the school janitor. The CA denied Filamer’s appeal
but the Supreme Court agreed with Filamer. Kapunan filed for a motion for
reconsideration.
ISSUE: Whether or not Filamer should be held subsidiarily liable.
HELD: Yes. This time, the SC ruled in favor of Kapunan (actually his heirs cause by this
time Kapunan was already dead). The provisions of Section 14, Rule X, Book III of the
Labor Code IRR was only meant to provide guidelines as compliance with labor
provisions on working conditions, rest periods, and wages is concerned. This does not
in any way affect the provisions of any other laws like the civil code. The IRR cannot
defeat the provisions of the Civil Code. In other words, Rule X is merely a guide to the
enforcement of the substantive law on labor. There is a distinction hence Section 14,
Rule X, Book III of the Rules is not the decisive law in a civil suit for damages instituted
by an injured person during a vehicular accident against a working student of a school
and against the school itself.
The present case does not deal with a labor dispute on conditions of employment
between an alleged employee and an alleged employer. It invokes a claim brought by
one for damages for injury caused by the patently negligent acts of a person, against
both doer-employee and his employer. Hence, the reliance on the implementing rule on
labor to disregard the primary liability of an employer under Article 2180 of the Civil
Code is misplaced. An implementing rule on labor cannot be used by an employer as a
shield to void liability under the substantive provisions of the Civil Code.
Funtecha is an employee of Filamer. He need not have an official appointment for a
driver’s position in order that Filamer may be held responsible for his grossly negligent
act, it being sufficient that the act of driving at the time of the incident was for the benefit
of Filamer (the act of driving the jeep from the school to Masa’s house is beneficial to
the school because this enables Masa to do a timely school transportation service in the
morning). Hence, the fact that Funtecha was not the school driver or was not acting with
the scope of his janitorial duties does not relieve Filamer of the burden of rebutting the
presumption juris tantum that there was negligence on its part either in the selection of a
servant or employee, or in the supervision over him. Filamer has failed to show proof of
its having exercised the required diligence of a good father of a family over its
employees Funtecha and Allan.

Tabas et al vs California Manufacturing

FACTS: Petitioners were the employees of Livi Manpower Services. They were assigned to the respondent
pursuant to a manpower supply agreement as “promotional merchandisers”. It was provided in the
agreement that: 1) California would have no control or supervision over the workers as to how they perform
or accomplish their work, 2) Livi is an independent contractor and that it has the sole responsibility of
complying with all the existing as well as future laws, rules and regulations pertinent to employment of
labor, 3) the assignment to California was “seasonal and contractual”, and 4) payroll, including COLA and
holiday pay shall be delivered Livi at California’s premises. Petitioners were made to sign 6-month
employment contracts which were renewed for the same period. Unlike regular employees of California,
they did not receive fringe benefits and bonuses and were paid only a daily allowance. Petitioners contend
that they have become regular employees of California. Subsequent to their claim for regularization,
California no longer re-hired them. Livi, on the other hand, claims the workers as its employees and that it
is an independent contractor. Labor Arbiter found that no employer-employee relationship existed. The
NLRC affirmed the ruling.

ISSUE: Is there an employer-employee relationship between California and the petitioners?

HELD: YES. The existence of an employer-employee relationship is a question of law and cannot be made
subject to agreement. The stipulations in the manpower supply agreement will not erase either party’s
obligations as an employer. Livi is a labor-only contractor, notwithstanding the provisions in the agreement.
The nature of one’s business is not determined by self-serving appellations but by test provided by statute
and the prevailing case law. California’s contention that the workers are not performing activities which are
directly related to its general business of manufacturing is untenable. The promotion or sale of products,
including the task of occasional price tagging, is an integral part of the manufacturing business. Livi as a
placement agency had simply supplied the manpower necessary for California to carry out its
merchandising activities, using the latter’s premises and equipment. Merchandising is likewise not a
specific project because it is an activity related to the day-to-day operations of California. Based on Article
106 of the Labor Code, the labor-only contractor is considered merely an agent of the employer and liability
must be shouldered by either one or by both. Petitioners are ordered reinstated as regular employees.

Masonic Contractor vs. Madjos

FACTS: Respondents Magdalena Madjos, Zenaida Tiamzon and Carmelita Rapadas were employed
sometime in 1991 as all-around laborers (driver/sweeper/ “taga-libing”/grass-cutter) by Masonic Contractor,
Inc. (MCI). Each of them received an initial daily wage of P165.00 and were required to report for work from
7:00 a.m. to 4:00 p.m. Three years thereafter, MCI increased their wages by P15.00 per day but not without
earning the ire of Melvin Balais, president of MCI. Sometime in 2004, Balais told Madjos, Tiamzon and
Rapadas, along with nine (9) other employees, to take a two-day leave. When they reported for work two
days thereafter, they were barred from entering the work premises and were informed that they had already
been replaced by other workers. This prompted Madjos and her co-workers to file a complaint against
herein petitioners for illegal dismissal and for non-payment of overtime pay, holiday pay, 13th month pay,
and damages. Petitioners, for their part, denied being the direct employer of respondents. Essentially, they
argued that MCI had maintenance contracts with different memorial park companies and that, over the
years, they had engaged the services of a certain Luz Malibiran to provide them with the necessary
manpower depending on MCI’s volume of work.

ISSUE: Are respondents regular employees of petitioner?

HELD: Yes. Petitioners’ defense that they merely contracted the services of respondents
through Malibiran fails to persuade us. The facts of this case show that respondents have been
under the employ of MCI as early as 1991. They were hired not to perform a specific job or
undertaking. Instead, they were employed as all-around laborers doing varied and intermittent
jobs, such as those of drivers, sweepers, gardeners, and even undertakers or tagalibing, until
they were arbitrarily terminated by MCI in 2004. Their wages were paid directly by MCI, as
evidenced by the latter’s payroll summary, belying its self-serving and unsupported contention
that it paid directly to Malibiran for respondents’ services. Respondents had identification cards
or gate passes issued not by Malibiran, but by MCI, and were required to wear uniforms bearing
MCI’s emblem or logo when they reported for work.
It is common practice for companies to provide identification cards to individuals not only as a
security measure, but more importantly to identify the bearers thereof as bona fide employees
of the firm or institution that issued them. The provision of company-issued identification cards
and uniforms to respondents, aside from their inclusion in MCI’s summary payroll, indubitably
constitutes substantial evidence sufficient to support only one conclusion: that respondents
were indeed employees of MCI.

Coca-Cola Vs Hingpin

FACTS: Pioneer Multi-Services Co (PIONEER) and Lipercon Services, Inc (LIPERCON) are manning
companies with which Coca-Cola successively entered into contracts for the supply of
manpower needs of its plant in Tagbilaran. Coca-Cola’s contract with Pioneer was executed on
May 28, 1983 and that with Lipercon, 5 years later, on December 17, 1988. 11 persons were
claiming they were employees of Coca-Cola in its Tagbilaran City Plant. They filed a complaint
against Coca-Cola with the Regional Arbitration Board of the National Labor Relations
Commission in Cebu City. In the decision of the RAB, it was found that the complainants were
supplied as workers to Coca-Cola first by Pioneer and later by Lipercon. When Lipercon entered
into the picture, the complainants were already regular employees of Coca-Cola. This is because
while Lipercon was an independent contractor, its predecessor Pioneer was not.The
Commission revered the Labor Arbiter’s conclusion that Lipercon was an independent labor
contractor. It declared it instead to be a mere “labor-only” contractor.

ISSUE: Whether or not Lipercon is a “labor only” contractor.

HELD: The SC held in the negative. The NLRC grounded its decision solely on an earlier case
where the court held Lipercon to a be a “Labor only” contractor because it failed to prove that
“it has substantial capital, investment, tools, etc.”It is not so in the present case. Here, there is
substantial evidence detailed by the labor arbiter, to establish Lipercon’s character as an
independent contractor in the real sense of the word. The Labor Arbiter’s ruling is therefore
more acceptable that that of the Commission because its decision was founded solely on an
inapplicable precedent. Lipercon proved to be an independent contractor. Aside from hiring its
own employees and paying the workers their salaries, it also exercised supervision and control
over them which is the most important aspect in determining employer-employee relations.
That indeed has substantial capital is proven by the fact that it did not depend upon its billing
on respondent regarding payment of worker’s salaries. And when complainants were separated
from Lipercon, they singed quitclaim and release documents.

People’s Broadcasting vs Sec of Labor

FACTS: Private respondent Jandeleon Juezan filed a complaint against petitioner with the
Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City, for illegal
deduction, nonpayment of service incentive leave, 13th month pay, premium pay for holiday and
rest day and illegal diminution of benefits, delayed payment of wages and noncoverage of SSS,
PAG-IBIG and Philhealth. The DOLE Regional Director found that private respondent was an
employee of petitioner, and was entitled to his money claims. The Acting DOLE Secretary
dismissed petitioner’s appeal on technical grounds. The CA held that DOLE Secretary had
jurisdiction over the matter, as the jurisdictional limitation imposed by Article 129 of the Labor
Code on the power of the DOLE Secretary under Art. 128(b) had been repealed by R.A. 7730.
The Supreme Court reversed and set aside the decision of CA, and dismissed the complaint
against petitioner. The Court found that there was no employer-employee relationship between
petitioner and private respondent. It was held that while the DOLE may make a determination of
the existence of an employer-employee relationship, this function could not be co-extensive with
the visitorial and enforcement power provided in Art. 128(b) of the Labor Code, as amended by
RA 7730. The NLRC is the primary agency in determining the existence of an employer-
employee relationship.
The Public Attorney’s Office sought clarification as to when the visitorial and enforcement
power of the DOLE be not considered as co-extensive with the power to determine the existence
of an employer-employee relationship. The DOLE sought clarification as well, as to the extent of
its visitorial and enforcement power under the Labor Code, as amended.

ISSUE: WON DOLE empowered to determine the existence of employer-employee relationship?

RULING: Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully
empowered to make a determination as to the existence of an employer-employee relationship in
the exercise of its visitorial and enforcement power, subject to judicial review, not by the NLRC.
If a complaint is brought before the DOLE to give effect to the labor standards provisions of the
Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing
employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC.
If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly
with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for
reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor
Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those
cases involving wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement.
In the present case, the finding of the DOLE Regional Director that there was an
employer-employee relationship has been subjected to review by the Supreme Court,
with the finding being that there was no employer-employee relationship between
petitioner and private respondent, based on the evidence presented. The DOLE had no
jurisdiction over the case, as there was no employer-employee relationship present.
Thus, the dismissal of the complaint against petitioner is proper.

Phil Global vs De Vera

FACTS: De Vera and petitioner company entered into a contract where respondent was to
attend to the medical needs of petitioner’s employees while being paid a retainer fee of P4,000
per month. Later, De Vera was informed y petitioner that the retainership will be discontinued.
Respondent filed a case for illegal dismissal.

ISSUE: Whether or not de Vera is an employee of PhilComm or an independent contractor.

HELD: Applying the four fold test, de Vera is not an employee. There are several indicators apart
from the fact that the power to terminate the arrangement lay on both parties: from the time
he started to work with petitioner, he never was included in its payroll; was never deducted any
contribution for remittance to the Social Security System (SSS); he was subjected by petitioner
to the ten (10%) percent withholding tax for his professional fee, in accordance with the
National Internal Revenue Code, matters which are simply inconsistent with an employer-
employee relationship; the records are replete with evidence showing that respondent had to
bill petitioner for his monthly professional fees. It simply runs against the grain of common
experience to imagine that an ordinary employee has yet to bill his employer to receive his
salary.
Finally, the element of control s absent.

Petition granted.

Co vs People

FACTS: Information charging Nely T. Co with violation of Section 22(d) in relation to Section

28(e) of RA]161, as amended by RA 8282 (the Social Security Law of 1997), on the basis of the

complaint of respondent spouses Jose and Mercedes Lim, who claimed to be petitioners

employees.] Petitioner was accused of failing to remit the compulsory contributions of

respondent spouses to respondent Social Security System (SSS).]On July 3, 2001, petitioner filed

a motion to quash the Information, arguing that the facts alleged in the Information did not

constitute an offense because respondent spouses were not her employees. In support of her

motion, petitioner cited the ruling of the National Labor Relations Commission (NLRC) on the

issue of whether petitioner and respondent spouses had an employer-employee relationship with

her or her company.Prior to this, on March 27, 2000 (before the filing of the Information),

respondent spouses had filed a labor case for illegal dismissal and nonpayment of overtime pay,
holiday pay, holiday premium pay, service incentive leave and 13th month pay against Ever-
Ready Phils., Inc.[7] and its officers Joseph Thomas Co, William Co, Wilson Co and

petitioner.]On September 29, 2000, labor arbiter (LA) Ernesto S. Dinopol rendered a decision

dismissing the complaint for lack of merit. He held that respondent spouses had voluntarily left

the company as shown by the deeds of release and quitclaim they executed. They were also not

entitled to their monetary claims under Article 82 of the Labor Code because they were field

personnel of the company.[9]

ISSUE: Won are Lim Spouses are Employee.

HELD: here being no employer-employee relationship, respondent spouses were not

entitled to coverage under RA 1161, as amended, and petitioner should not be

penalized under said law. We agree. Well-settled is the rule that the mandatory
coverage of RA 1161, as amended, is premised on the existence of an employer-
employee relationship. The NLRC and LA ruled that the respondent spouses, as sales
representatives, were independent contractors.[10] Therefore, there was no
employer-employee relationship between the parties. This NLRC resolution
attained finality on December 20, 2001.] the doctrine of conclusiveness of
judgment also applies in criminal cases. As we declared in Constantino v.
Sandiganbayan (First Division):[22]Although the instant case involves a criminal
charge whereas Constantino involved an administrative charge, still the findings in the
latter case are binding herein because the same set of facts are the subject of both
cases. What is decisive is that the issues already litigated in a final and executory
judgment preclude by the principle of bar by prior judgment, an aspect of the doctrine
of res judicata, and even under the doctrine of "law of the case," the re-litigation of
the same issue in another action. It is well established that when a right or fact has
been judicially tried and determined by a court of competent jurisdiction, so long as it
remains unreversed, it should be conclusive upon the parties and those in privity with
them. The dictum therein laid down became the law of the case and what was once
irrevocably established as the controlling legal rule or decision continues to be
binding between the same parties as long as the facts on which the decision was
predicated continue to be the facts of the case before the court. Hence, the binding
effect and enforceability of that dictum can no longer be resurrected anew since such
issue had already been resolved and finally laid to rest, if not by the principle of res
judicata, at least by conclusiveness of judgment. It may be true that the basis of
administrative liability differs from criminal liability as the purpose of administrative
proceedings on the one hand is mainly to protect the public service, based on the time-
honored principle that a public office is a public trust. On the other hand, the purpose
of the criminal prosecution is the punishment of crime. However, the dismissal by the
Court of the administrative case against Constantino based on the same subject matter
and after examining the same crucial evidence operates to dismiss the criminal case
because of the precise finding that the act from which liability is anchored does not
exist.It is likewise clear from the decision of the Court in Constantino that the level of
proof required in administrative cases which is substantial evidence was not mustered
therein. The same evidence is again before the Court in connection with the appeal in
the criminal case. Ineluctably, the same evidence cannot with greater reason satisfy
the higher standard in criminal cases such as the present case which is evidence
beyond reasonable doubt.[23]

Brotherhood Unity (BLUM) v Zamora

FACTS: BLUM filed a complaint charging San Miguel and some officers of unfair labor practice and illegal dismissal. Respondents
moved for dismissal alleging that complainants are not their employees but of the independent contractor. Petitioners are
workers employed at San Miguel, loading and piling empty bottles and shells. They first reported for work to the
superintendent wherein the latter issues gate passes and they were provided with tools by the company.

The warehousemen and checkers relays the orders to the group leaders who give orders to the workers. Work in the factory
was neither regular nor continuous. It did not necessarily mean full 8 hours and they were neither paid overtime nor
compensation for work on Sundays and holidays. Petitioners were paid every 10 days on a piece-rate basis according to the
number of cartons they were able to load.
ISSUE: W/N ER-EE relationship exists between workers and San Miguel

HELD: Yes.

The existence of an independent contractor is established by the ff. criteria:

1. whether or not contractor is carrying on an independent business

2. nature and extent of work
3. skill required
4. term and duration of the relationship
5. right to assign the performance of a specified piece of work
6. control and supervision of the work to another
7. employer’s power of hiring, firing and payment of workers
8. control of premises
9. duty to supply the tools
10. mode of payment Job contracting is permissible under the ff. conditions: 1) the contractor carries an independent business
with his own contract under his own responsibility according to his own method; 2) the contractor has substantial capital in
the form of tools, equipment and other materials.

In the case at bar, the contractors have neither substantial capital nor investment. The tools are supplied by the company. The
power of SMC to recommend penalties or dismissal of the piece workers is the strongest indication that the company has right
to control as direct employer.

As to the change of unfair labor practice because of SMC’s refusal to bargain with petitioners, it is clear that the company had
an existing collective bargaining with IBM union which is the recognized union at the respondent’s company. Thus, the
petitioners cannot merely form a union and demand bargaining because there is a recognized bargaining representative of all
employees at the company.

Locsin Vs PLDT

FACTS: On November 1, 1990, Philippine Long Distance Telephone Company (PLDT) and the Security and
Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement (Agreement)
whereby SSCP would provide armed security guards to PLDT to be assigned to its various offices o
petitioners Raul Locsin and Eddie Tomaquin, among other security guards, were posted at a PLDT office
respondent issued a Letter dated August 30, 2001 terminating the Agreement effective October 1, 2001
Despite the termination of the Agreement, however, petitioners continued to secure the premises of
their assigned office. They were allegedly directed to remain at their post by representatives of
respondent. • petitioners provided the Labor Arbiter with copies of petitioner Locsin’s pay slips for the
period of January to September 2002. On September 30, 2002, petitioners’ services were terminated.
petitioners filed a complaint before the Labor Arbiter for illegal dismissal and recovery of money
claims such as overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave
pay, Emergency Cost of Living Allowance, and moral and exemplary damages against PLDT.
ISSUE: whether petitioners became employees of respondent after the Agreement between SSCP and
respondent was terminated.

HELD: YES

• There was no employer-employee relationship between the parties from the time of petitioners’ first
assignment to respondent by SSCP in 1988 until the alleged termination of the Agreement between
respondent and SSCP. In fact, this was the conclusion that was reached by this Court in Abella v.
Philippine Long Distance Telephone Company where we ruled that petitioners therein, including herein
petitioners, cannot be considered as employees of PLDT. It bears pointing out that petitioners were
among those declared to be employees of their respective security agencies and not of PLDT.

• However, after termination, they were already considered employees of PLDT.

• Notably, respondent does not deny the fact that petitioners remained in the premises of their offices
even after the Agreement was terminated.

• They were told to remain at their post by respondent’s Security Department and that they were
informed by SSCP Operations Officer Eduardo Juliano that their salaries would be coursed through SSCP
as per arrangement with PLDT, it does not state why they were not made to vacate their posts.
Respondent said that it did not know why petitioners remained at their posts. In the ordinary course of
things, responsible business owners or managers would not allow security guards of an agency with
whom the owners or managers have severed ties with to continue to stay within the business’ premises.
This is because upon the termination of the owners’ or managers’ agreement with the security agency,
the agency’s undertaking of liability for any damage that the security guard would cause has already
been terminated. At the very least, responsible business owners or managers would inquire or learn
why such security guards were remaining at their posts, and would have a clear understanding of the
circumstances of the guards’ stay. It is but logical that responsible business owners or managers would
be aware of the situation in their premises. Also it is seriously doubtful that a security agency that was
established for profit would allow its security guards to secure respondent’s premises when the
Agreement was already terminated.

• Reason dictates that we conclude that petitioners remained at their post under the instructions of
respondent. Further, that respondent dictated upon petitioners that the latter perform their regular
duties to secure the premises during operating hours. This is sufficient to establish the existence of an
employer-employee relationship. It is but reasonable to conclude that, with the behest and, presumably,
directive of respondent, petitioners continued with their services. Evidently, such are indicia of control
that respondent exercised over petitioners. o Such power of control has been explained as the “right to
control not only the end to be achieved but also the means to be used in reaching such end.” With the
conclusion that respondent directed petitioners to remain at their posts and continue with their duties,
it is clear that respondent exercised the power of control over them; thus, the existence of an employer-
employee relationship. LABOR-ONLY
• There is “labor-only” contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by

Sevilla vs. CA

FACTS: A contract by and between Noguera and Tourist World Service (TWS), represented by Canilao, wherein TWSleased the premises belonging to
Noguera as branch office of TWS. When the branch office was opened, it was runby appellant Sevilla payable to TWS by any
airline for any fare brought in on the efforts of Mrs.Sevilla, 4% was togo to Sevilla and 3% was to be withheld by the TWS.Later,
TWS was informed that Sevilla was connected with rival firm, and since the branch office was losing, TWS considered closing
down its office.On January 3, 1962, the contract with appellee for the use of the branch office premises was terminatedand
while the effectivity thereof was January 31, 1962, the appellees no longer used it. Because of this, Canilao, thesecretary of
TWS, went over to the branch office, and finding the premises locked, he padlocked the premises.When
neither appellant Sevilla nor any of his employees could enter, a complaint was filed by the
appellantsagainst the appellees. TWS insisted that Sevilla was a mere employee, being the “branch manager” of its branch
office and thatshe had no say on the lease executed with the private respondent, Noguera.

ISSUE:
W/N ER-EE relationship exists between Sevilla and TWS

HELD:
The records show that petitioner, Sevilla, was not subject to control by the private respondent TWS. In
thef i r s t p l a c e , u n d e r t h e contract of lease, she had bound herself in solidum as and
f o r r e n t a l p a y m e n t s , a n arrangement that would belie claims of a master-servant relationship. That does not make her an employee of
TWS,since a true employee cannot be made to part with his own money in pursuance of his employer’s
business, orotherwise, assume any liability thereof.In the second place, when the branch office was opened, the same was run by the
appellant Sevilla payableto TWS by any airline for any fare brought in on the effort of Sevilla. Thus, it cannot be said that Sevilla
was underthe control of TWS. Sevilla in pursuing the business, relied on her own capabilities.It is further admitted that Sevilla was not
in the company’s payroll. For her efforts, she retained 4% incommissions from airline bookings, the remaining 3%
going to TWS. Unlike an employee, who earns a fixed salary,she earned compensation in fluctuating amount depending on her
booking successes. The fact that Sevilla had been designated “branch manager” does not make her a TWS
employee. Itappears that Sevilla is a bona fide travel agent herself, and she acquired an interest in the business entrusted
toher. She also had assumed personal obligation for the operation thereof, holding herself solidary liable
for thepayment of rentals.Wherefore, TWS and Canilao are jointly and severally liable to indemnify the petitioner, Sevilla.

ENCYCLOPEDIA BRITANNICA (PHILIPPINES), INC., petitioner, vs. NATIONAL LABORRELATIONS COMMISSION,

HON. LABOR ARBITER TEODORICO L. DOGELIO and BENJAMIN LIMJOCO, respondents.

FACTS:Benjamin Limjoco was a Sales Division manager of petitioner Encyclopedia Britannica. Hereceived commissions from the
products sold by his agents, while office expenses are deductedfrom his commissions. Later, Limjoco resigned to pursue his
private business. He then filed acomplaint against petitioner with DOLE for non-payment of separation pay and other
benefits,as well as illegal deduction from his sales commissions. Limjoco claimed that he was hired bythe petitioner, was
assigned in the sales department and was earning an average of P40,000.00monthly as commissions; that he was under the
supervision of the officials of the petitioner whoissued to him and other personnel, memoranda, guidelines on company
policies, instructions,etc.Petitioner, on its part, alleged that Limjoco was not its employee but an independent dealerauthorized
to promote and sell its products and in return, received commissions therefrom.

ISSUE

Whether or not Limjoco was an independent contractor or an employee of EncyclopediaBritannica?

HELD
In determining the existence of an employer-employee relationship, the following elementsmust be present: 1. selection and
engagement of the employee; 2. payment of wages; 3.power of dismissal; and 4. the power to control the employees conduct.
Of the above, controlof employee s conduct is commonly regarded as the most crucial and determinative factor of the
presence or absence of an employer-employee relationship.The fact that petitioner issued memoranda to private respondent
and other sales managers didnot prove that petitioner had control over them. The memoranda were mere guidelines
oncompany policies which sales managers follow and further require on their sales agents. Theissuance of memoranda to
Limjoco and other sales managers was only done to appraise themand their respective agents of the company policies and
procedures. Limjoco was free toconduct and promote their sales operations. The occasional reports to the petitioner
fromLimjoco were required in order to update the company of its dealers performance. Even thoughpetitioner had fixed the
prices of the products for reason of uniformity and that Limjoco cannot alter them, he, nevertheless, had the free rein in the
means and methods in selling them.He was free to conduct his work and he was free to engage in other means of livelihood. At
thetime he was a dealer for the petitioner, Limjoco was also a director and later the president of the Farmers Rural Bank. Had
he been an employee of the petioner, he could not be employedelsewhere and he would be required to devote full time for
petitioner.

Petition granted.

MANILA GOLF CLUB, INC. VS. INTERMEDIATE APPELLATE COURT

Facts: This is originally filed with the Social Security Commission (SSC) via petition of 17 persons
who styled themselves as “ Caddies of Manila Golf and Country Club-PTCCEA” for the coverage
and availment of benefits of the Social Security Act as amended, PTCCEA (Philippine Technical,
Clerical, Commercial Employees Association) a labor organization where which they claim for
membership.

The same time two other proceedings were filed and pending. These are certification election case
filed by PTCCEA on behalf of the same caddies of Manila Golf and Country club which was in favor
of the caddies and compulsory arbitration case involving PTCCEA and Manila Golf and Country Club
which was dismissed and ruled that there was no employer-employee relationship between the
caddies and the club.

Issue: Whether or not rendering caddying services for members of golf clubs and their guests in
said clubs’ courses or premises are the employees of such clubs and therefore within the
compulsory coverage of the Social Security System (SSS).

Ruling: The Court does not agree that the facts logically point to the employer-employee
relationship.

In the very nature of things, caddies must submit to some supervision of their conduct while enjoying
the privilege of pursuing their occupation within the premises and grounds of whatever club they do
work in. They work for the club to which they attach themselves on sufferance but, on the other
hand, also without having to observe any working hours, free to leave anytime they please, to stay
away for as long they like.

These considerations clash frontally with the concept of employment. It can happen that a caddy
who has rendered services to a player on one day may still find sufficient time to work elsewhere.
Under such circumstances, the caddy may leave the premises and to go to such other place of work
that he wishes. These are things beyond the control of the petitioner.

The caddy (LLamar) is not an employee of petitioner Manila Golf and Country Club and the
petitioner is under no obligation to report him for compulsory coverage of SSS.
 LVN Pictures vs Philippine Musician Guild

Facts: Private respondent was granted their petition before the CIR to be certified as the sole and
exclusive bargaining agency for all musicians working in the aforementioned companies and that the
petitioners exercised the power of control over the member musicians of private respondent.
Petitioners contested and averred that said musicians are independent contractors and not employees,
citing a few cases. The lower court denied their pretense and so did the Supreme Court en banc. Thus
the separate petitions consolidated by this court.

Issue(s) (1). Are the musicians employees of the petitioners?

Held (1). Yes. The SC fully agreed with the decision of the lower court which went as far as relating the
issue to similar US cases (the normal course of procedure when a motion picture is made, US Congress’
intention to eliminate the cause of labor disputes and industrial strikes, and the definition of an
employee which separates him from an independent contractor) to determine the legal relationship
between the musicians and the company, and ruled that the exercise of the power control

[(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] was evident in the petitioners and thus declared that the member musicians of
the private respondent are entitled to the right on collective bargaining. The petitioners cited a long line
of cases which were insignificant to the issue at bar.

The Maligaya Case had a stronger case that the workers were independent contractors. The Sunripe
Case had piece workers who were not independent contractors but were actually employees, as indeed
the musicians in this case are. The Phil. Manufacturing Company Case had casual whereas in the case at
bar the musicians form an integral part of the motion picture.

The Viana Case wherein the relation between the parties were unsettled and remanded to the
Workmen’s Compensation Commission for further evidence. The Josefa Case where no labor law was
construed in the case. The Court delineated the function of the musical director from the motion picture
director (an employee of the petitioner) so that the latter exercised the power of control by:

(1) supervising the musicians on what to do in detail; and

(2) solely directing the performance of the musicians and actors in the camera.
And indeed, it was testified in the lower court that "the movie director tells the musical director what to
do; tells the music to be cut or tells additional music in this part or he eliminates the entire music he
does not (want) or he may want more drums or move violin or piano, as the case may be". The movie
director "directly controls the activities of the musicians." He "says he wants more drums and the
drummer plays more" or "if he wants more violin or he does not like that." The aforementioned overall
amounts to control over the means used by the musicians so that employment relationship exists
between the member musicians of private respondent and petitioners.

Dy Keh Beng Vs. Intl Labor

FACTS: A charge of unfair labor practice was filed against Dy Keh Beng, a proprietor of a basket factory,
by dismissing Solano and Tudla for their union activities. Dy Keh Beng contended that he did not know
Tudla and Solano was not his employee because the latter came to the establishment only when there
was work which he did on pakiaw basis.Dy Keh Beng countered with a special defense of simple
extortion committed by the head of the labor union.

ISSUE: W/N there existed an employee-employer relation between petitioner and respondents

HELD: Yes. Evidence showed that the work of Solano and Tudla was continuous except in the event of
illness, although their services were compensated on piece basis. The control test calls for the existence
of the right to control the manner of doing the work, not the actual exercise of the right considering that
Dy Keh Beng is engaged in the manufacture of baskets known as “kaing”, those working under Dy would
be subject to Dy’s specifications such as the size and quality of the “kaing”. And since the laborers are
done at Dy’s establishments, it could be inferred that Dy could easily exercise control upon them.

As to the contention that Solano was not an employee because he worked on piece basis, the court
ruled that it should be determined that if indeed payment by piece is just a method of compensation
and does not define the essence of the relation. Payment cannot be construed by piece where work is
done in such establishment so as to put the worker completely at liberty to turn him out and take it
another at pleasure

Justice Perfecto also contended that pakyaw system is a labor contract between employers and
employees between capitalists and laborers.

Wherefore, the award of backwages is modified to an award of backwages for 3 years at the rated of
compensation the employees were receiving at the time of dismissal.

CORPORAL SR. VS. NLRC

Facts: 5 male barbers and 2 female manicurists (Petitioners) worked at New Look Barbershop, a sole
proprietorship owned and managed by Vicente Lao which in 1982 was taken over by Lao Enteng Co.,
Inc., (respondent corporation) a corporation formed by Vicente Lao’s children. The petitioners were
allowed to work there until April 1985 when they were told that the barbershop building was sold and
their services are no longer needed.

Petitioners filed with the Arbitration branch of NLRC a complaint for illegal dismissal, illegal deduction,
separation pay, non-payment of 13th month pay and salary differential. Also they seek for refund of
P1.00 collected from each of them daily as salary of the barbershop’s sweeper.

Respondent Corporation alleged that petitioners were Joint Venture (JV) partners receiving 50%
commission (Petitioners admitted in receiving 50-60%), therefore no employer-employee relationship
existed. And assuming arguendo that employer-employee relationship existed, petitioners were not
entitled to separation pay since cessation of the business was due to serious business losses. Also, they
allege that the barbershop had always been a JV partnership with the operation and management left
entirely to petitioners and that the former had no control over the latter who could freely come and go
as they wish. Lastly, they allege that some of the petitioners were allowed to register in SSS only as an
act of accommodation.

The Labor Arbiter dismissed the complaint and found that there was a JV and no employer-employee
relationship. Also that the business was closed due to serious business losses or financial reverses and
the law does not compel the establishment to pay separation pay to whoever were its employees. On
appeal, NLRC affirmed the decision but held that petitioners were considered independent contractors
and not employees. The MR was also denied by NLRC, hence, this petition on certiorari.

Issue: WON there was an employer-employee relationship.

Held:YES.Petitioners are employees of Respondent Corporation and shall be accorded the benefits given
in Art. 283 of the Labor Code granting separation pay equivalent to 1 month pay for every year of
service and also to 13th month pay. The other claims of petitioners are found to be without basis.

No documentary evidence of the existence of JV other than the self-serving affidavit of the company
president.

The power of control in the 4-fold test (employer-employee relationship) refers to the EXISTENCE and
NOT THE EXERCISE of such power– the following elements must be present for an employer-employee
relationship to exist: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the
payment of wages by whatever means; and (4) the power to control the worker's conduct, with the
latter assuming primacy in the overall consideration.

The records show that Vicente Lao engaged the petitioners to work for the barbershop and retained
them after it was taken over by the respondent corporation who continuously paid their wages. Also,
the fact that the petitioners worked in the barbershop owned and operated by respondents, and that
they were required to report daily, observing definite hours of work, they were not free to accept
employment elsewhere and devoted their full time working in the barbershop proves the existence of
the power of control.
The petitioners are not independent contractors. – An independent contractor is one who undertakes
"job contracting", i.e., a person who (a) carries on an independent business and undertakes the contract
work on his own account under his own responsibility according to his own manner and method, free
from the control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof, and (b) has substantial capital or investment
in the form of tools, equipment, machineries, work premises, and other materials which are necessary in
the conduct of the business.Petitioners have neither of the above since the tools used such as scissors,
razors, nail cutters, polishes, etc. cannot be considered “substantial capital or investment”.

While it is no longer true that membership to SSS is predicated on the existence of an employee-
employer relationship since the policy is now to encourage even the self-employed dressmakers,
manicurists and jeepney drivers to become SSS members, we could not agree with private respondents
that petitioners were registered with the Social Security System as their employees only as an
accommodation. As we have earlier mentioned private respondent showed no proof to their claim that
petitioners were the ones who solely paid all SSS contributions. It is unlikely that respondents would
report certain persons as their workers, pay their SSS premium as well as their wages if it were not true
that they were indeed their employee.