Viana vsAl-Lagadan and Piga
FACTS:
The fishing sailboat “Magkapatid”,owned by Anastacio Viana, had a collisio
n with a U.S. Navy vessel and sunk to the waters. Alejandro Al-
Lagadan, a member of the crew of the former disappeared with the craft. W
orkmen’s Compensation Commission ordered Anastacio Viana to pay the cl
aimants, Alejo Al-
Lagadan and Filomena Piga. Petioner said, however, that this case does not
fall within the purview of Act No. 3428, because Alejandro Al-
Lagadan was, at the time of his death, industrial partner, not his employee.
He further contended that they were in a share basis—
owner of the vessel, on one hand receives one-
half of the earnings of the sailboat, the other half is divided pro rata among
the members of the crew. The trial referee said, as well as the Workmen’s C
ompensation Commission that there was an employer-
employee relation between the Respondent and the deceased, Alejandro Al
- crew, and also, that the members thereof are subject to his control and may
Lagadan, and the share which the deceased received at the end of each trip
was in the nature of ‘wages’ which is defined under section 39 of the Comp
ensation Act. This is so because such share could be reckoned in terms of m
oney. In other words, there existed the relation of employer and employee
between the Respondent and Alejandro Al-
Lagadan at the time of the latter’s death.
ISSUE:
Whether or not the mere fact that a person’s share in the understanding “co
uld be reckoned in terms of money”, sufficed to characterize him as an emp
loyee of another.
HELD:
No, the Court did not share with the Trial Referee and Commission’s view.
However, petitioner’s theory to the effect that the deceased was his partne
r, not an employee, simply because he (the deceased) shared in the profits,
not in the losses cannot be accepted. In determining the existence of emplo
yer-
employee relationship, the following elements are generally considered, na
mely:(1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal;(4) the power to control the employees’
conduct —
although the latter is the most important element (35 Am. Jur. 445). Assum
ing that the share received by the deceased could partake of the nature of w
ages and that the second element, therefore, exists in the case at bar, the re
cord does not contain any specific data regarding the third and fourth elem
ents.
Furthermore, the report contained that the patron selects and engages the
be dismissed by him. To put it differently, the literal import of said report i
s open to the conclusion that the crew has a contractual relation, not with t
he owner of the vessel, but with the patron, and that the latter, not the form
er, is either their employer or their partner.
The case was remanded to the Workmen’s Compensation Commission, for f
urther proceedings in conformity with the decision of the Supreme Court
VICTOR METEORO an employer-employee relationship. It added that petitioners were free-
lance individuals, performing special services with skills and expertise
versus CREATIVE CREATURES, INC., Respondent. inherently exclusive to them like actors, actresses, directors, producers,
and script writers, such that they were treated as special types of
Assailed in this petition for review on certiorari are the Court of Appeals
workers.[7]
Decision[1] dated May 31, 2005 and Resolution[2] dated January 27, 2006
in CA-G.R. SP No. 76942.
Petitioners, on the other hand, averred that they were employees of
respondent, as the elements of an employer-employee relationship existed.
The facts of the case are as follows:
Meanwhile, on April 12, 1999, petitioners filed a complaint for illegal
Respondent is a domestic corporation engaged in the business of
dismissal against petitioner, with prayer for payment of overtime pay,
producing, providing, or procuring the production of set designs and set
premium pay for holiday and rest day, holiday pay, service incentive leave
construction services for television exhibitions, concerts, theatrical
pay, 13th month pay and attorney's fees before the National Labor
performances, motion pictures and the like. It primarily caters to the
Relations Commission (NLRC). The case was docketed as NLRC-NCR Case
production design requirements of ABS-CBN Broadcasting Corporation in
No. 00-04-04459-9.[8]
Metro Manila and nationwide.[3] On the other hand, petitioners were hired
by respondent on various dates as artists, carpenters and welders. They
On October 11, 1999, DOLE Regional Director Maximo Baguyot Lim issued
were tasked to design, create, assemble, set-up and dismantle props, and
an Order[9] directing respondent to pay petitioners the total amount of
provide sound effects to respondent's various TV programs and movies.[4]
P2,694,709.00. The dispositive portion of the Order reads as follows:

Sometime in February and March 1999, petitioners filed their respective

WHEREFORE, premises considered, this Office finds merit in the complaint.
complaints for non-payment of night shift differential pay, overtime pay,
Accordingly, Respondent Creative Creatures, Inc. and/or Mr. Edmond Ty, is
holiday pay, 13th month pay, premium pay for Sundays and/or rest days,
hereby ordered to pay thirty three (33) Complainants, within ten (10) days
service incentive leave pay, paternity leave pay, educational assistance, rice
from receipt hereof, the total amount of TWO MILLION SIX HUNDRED
benefits, and illegal and/or unauthorized deductions from salaries against
NINETY FOUR THOUSAND SEVEN HUNDRED NINE PESOS (P2,694,709.00)
respondent, before the Department of Labor and Employment (DOLE),
representing unpaid 13th month pay, vacation and sick leave benefits,
National Capital Region (NCR). Their complaints were consolidated and
regular holiday pay, rest day and holiday premiums, overtime pay,
docketed as NCR00-9902-IS-011.[5]
educational allowance, and rice allowance presented as follows:

After the inspection conducted at respondent's premises, the labor

x x x x
inspector noted that "the records were not made available at the time of
the inspection;" that respondent claimed that petitioners were contractual
Failure to pay Complainants within the given period will constrain this
employees and/or independent talent workers; and that petitioners were
Office to issue a WRIT OF EXECUTION for the immediate enforcement of
required to punch their cards.[6]
this order.

In its position paper, respondent argued that the DOLE-NCR had no

SO ORDERED.[10]
jurisdiction over the complaint of the petitioners because of the absence of
The Regional Director sustained petitioners' claim on the existence of an
employer-employee relationship using the determinants set forth by the
Labor Code, specifically, the elements of control and supervision, power of
dismissal, payment of wages, and the selection and engagement of
employees. He added that since the petitioners had worked for more than
one year doing the same routine work, they were regular employees with
respect to the activity in which they were employed. Lastly, he upheld the
DOLE-NCR's jurisdiction to hear and determine cases in violation of labor
standards law.[11]
On appeal, then DOLE Secretary Patricia A. Sto. Tomas affirmed the findings
of the DOLE Regional Director.[12] In upholding the jurisdiction of the
DOLE-NCR, she explained that the Secretary of Labor or his duly authorized
representative is allowed to use his visitorial and enforcement powers to
give effect to labor legislation, regardless of the amount involved, pursuant
to Article 128 of the Labor Code, as amended by Republic Act (R.A.) No.
7730.
respondent had consistently disputed the existence of employer-employee
relationship, thereby placing the case beyond the jurisdiction of the
Regional Director.
Petitioners now come before this Court in this petition for review on
certiorari raising the lone issue of:
Whether or not the Court of Appeals committed an error when it ruled that
the instant case falls within the exception clause of Article 128 (b) of the
Labor Code, as amended, and in annulling and setting aside the Orders of
the Secretary of Labor which affirmed the Order of the Regional Director of
DOLE-NCR awarding the claims of the petitioners for benefits under the
Labor Standards laws, namely, 13th month benefit, overtime pay, night
shift differentials, premium on rest days, vacation and sick leave and other
benefits accorded to employees of the responden[t] in the exercise of its
visitorial powers pursuant to Article 128 (b) of the Labor Code as
amended.[14]

For failure to obtain a favorable decision, respondent elevated the matter In fine, we are tasked to determine which body/tribunal has jurisdiction
to the Court of Appeals in CA-G.R. SP No. 76942. On May 31, 2005, the over petitioners' money claims --- the DOLE Secretary or his duly
appellate court rendered the assailed decision, the dispositive portion of authorized representative, or the NLRC.
which reads:
We sustain the appellate court's conclusion that the instant case falls
WHEREFORE, premises considered, the instant petition is GRANTED. For within the exclusive jurisdiction of the NLRC.
lack of jurisdiction, the Orders dated October 18, 2002 and February 5,
2003, issued by respondent Secretary are hereby declared NULL and VOID. The DOLE Secretary and her authorized representatives, such as the DOLE-
However, in view of the filing of a similar case before the NLRC, referral of NCR Regional Director, have jurisdiction to enforce compliance with labor
the instant case to the NLRC for appropriate determination is no longer standards laws under the broad visitorial and enforcement powers
necessary. conferred by Article 128 of the Labor Code, and expanded by Republic Act
(R.A.) No. 7730,[15] to wit:[16]
SO ORDERED.[13]
Art. 128. Visitorial and Enforcement Power -
While recognizing the visitorial and enforcement powers of the Regional
Director and his jurisdiction to entertain money claims, the appellate court (a) The Secretary of Labor or his duly authorized representatives, including
noted that Article 128 of the Labor Code provides an instance when he labor regulation officers, shall have access to employer's records and
(Regional Director) may be divested of jurisdiction. The CA pointed out that premises at anytime of the day or night whenever work is being
undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement of
this Code and of any labor law, wage order or rules and regulations issued
pursuant thereto.
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to
the contrary, and in cases where the relationship of employer-employee
relation still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of this Code and
other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of
inspection. The Secretary or his duly authorized representatives shall issue
writs of execution, to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of the
labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of
inspection.
x x x x
As it is now worded, and as consistently held in a number of cases,[17] the
visitorial and enforcement powers of the Secretary, exercised through his
representatives, encompass compliance with all labor standards laws and
other labor legislation, regardless of the amount of the claims filed by
workers.
It is well to note that the Regional Director's visitorial and enforcement
powers have undergone a series of amendments. Confusion was
engendered with the promulgation of the decision in Servando's Inc. v.
Secretary of Labor and Employment.[18] In that case, this Court held that
to harmonize Articles 217 (a) (6),[19] 129,[20] and 128 of the Labor Code,
the Secretary of Labor should be deemed as clothed with plenary visitorial
powers to order the inspection of all establishments where labor is
employed, and to look into all possible violations of labor laws and
regulations; but the power to hear and decide employees' claims exceeding
P5,000.00 for each employee should be left to the Labor Arbiter as the
exclusive repository of the power to hear and decide such claims.
Jurisprudence, however, rendered the Servando ruling inapplicable. In
Guico, Jr. v. Quisumbing,[21] Allied Investigation Bureau, Inc. v. Sec. of
Labor,[22] and Cirineo Bowling Plaza, Inc. v. Sensing,[23] we had occasion
to explain that while it is true that under Articles 129 and 217 of the Labor
Code, the Labor Arbiter has jurisdiction to hear and decide cases where the
aggregate money claim of each employee exceeds P5,000.00, these
provisions of law do not contemplate or cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives. Thus, we upheld the jurisdiction of the Regional Director,
notwithstanding the fact that the amount awarded exceeded P5,000.00 per
employee.
In order to do away with the jurisdictional limitations imposed by the
Servando ruling and to finally settle any lingering doubts on the extent of
the visitorial and enforcement powers of the Secretary of Labor and
Employment, R.A. 7730 was enacted, amending Article 128 (b) to its
present formulation, so as to free it from the jurisdictional restrictions
found in Articles 129 and 217.
This notwithstanding, the power of the Regional Director to hear and
decide the monetary claims of employees is not absolute. The last sentence
of Article 128 (b) of the Labor Code, otherwise known as the "exception
clause," provides an instance when the Regional Director or his
representatives may be divested of jurisdiction over a labor standards
case.
Under prevailing jurisprudence, the so-called "exception clause" has the
following elements, all of which must concur:
(a) that the employer contests the findings of the labor regulations officer
and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and
(c) that such matters are not verifiable in the normal course of
inspection.[24]
In the present case, the CA aptly applied the "exception clause." At the
earliest opportunity, respondent registered its objection to the findings of
the labor inspector. The labor inspector, in fact, noted in its report that
"respondent alleged that petitioners were contractual workers and/or
independent and talent workers without control or supervision and also
supplied with tools and apparatus pertaining to their job."[25] In its
position paper, respondent again insisted that petitioners were not its
employees. It then questioned the Regional Director's jurisdiction to
entertain the matter before it, primarily because of the absence of an
employer-employee relationship. Finally, it raised the same arguments
before the Secretary of Labor and the appellate court. It is, therefore, clear
that respondent contested and continues to contest the findings and
conclusions of the labor inspector.
To resolve the issue raised by respondent, that is, the existence of an
employer-employee relationship, there is need to examine evidentiary
matters. The following elements constitute the reliable yardstick to
determine such relationship: (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.[26] There is no
hard and fast rule designed to establish the aforesaid elements. Any
competent and relevant evidence to prove the relationship may be
admitted. Identification cards, cash vouchers, social security registration,
appointment letters or employment contracts, payrolls, organization
charts, and personnel lists, serve as evidence of employee status.[27] These
pieces of evidence are readily available, as they are in the possession of
either the employee or the employer; and they may easily be looked into by
the labor inspector (in the course of inspection) when confronted with the
question of the existence or absence of an employer-employee
relationship.
Some businessmen, however, try to avoid an employer-employee
relationship from arising in their enterprises, because that juridical
relation spawns obligations connected with workmen's compensation,
social security, medicare, termination pay, and unionism.[28] Thus, in
addition to the above-mentioned documents, other pieces of evidence are
considered in ascertaining the true nature of the parties' relationship. This
is especially true in determining the element of "control." The most
important index of an employer-employee relationship is the so-called
"control test," that is, whether the employer controls or has reserved the
right to control the employee, not only as to the result of the work to be
done, but also as to the means and methods by which the same is to be
accomplished.[29]
In the case at bar, whether or not petitioners were independent
contractors/project employees/free lance workers is a question of fact that
necessitates the examination of evidentiary matters not verifiable in the
normal course of inspection. Indeed, the contracts of independent services,
as well as the check vouchers, were kept and maintained in or about the
premises of the workplace and were, therefore, verifiable in the course of
inspection. However, respondent likewise claimed that petitioners were
not precluded from working outside the service contracts they had entered
into with it (respondent); and that there were instances when petitioners
abandoned their service contracts with the respondent, because they had
to work on another project with a different company. Undoubtedly, the
resolution of these issues requires the examination of evidentiary matters
not verifiable in the normal course of inspection. Verily, the Regional
Director and the Secretary of Labor are divested of jurisdiction to decide
the case.
We would like to emphasize that "to contest" means to raise questions as to
the amounts complained of or the absence of violation of labor standards
laws; or, as in the instant case, issues as to the complainants' right to labor
standards benefits. To be sure, raising lack of jurisdiction alone is not the
"contest" contemplated by the exception clause.[30] It is necessary that the
employer contest the findings of the labor regulations officer during the
hearing or after receipt of the notice of inspection results.[31] More
importantly, the key requirement for the Regional Director and the DOLE
Secretary to be divested of jurisdiction is that the evidentiary matters be
not verifiable in the course of inspection. Where the evidence presented
was verifiable in the normal course of inspection, even if presented
belatedly by the employer, the Regional Director, and later the DOLE
Secretary, may still examine it; and these officers are not divested of
jurisdiction to decide the case.[32]

In sum, respondent contested the findings of the labor inspector during and
after the inspection and raised issues the resolution of which necessitated
the examination of evidentiary matters not verifiable in the normal course
of inspection. Hence, the Regional Director was divested of jurisdiction and
should have endorsed the case to the appropriate Arbitration Branch of the
NLRC.[33] Considering, however, that an illegal dismissal case had been
filed by petitioners wherein the existence or absence of an employer-
employee relationship was also raised, the CA correctly ruled that such
endorsement was no longer necessary.

WHEREFORE, premises considered, the petition is DENIED for lack of

merit. The Court of Appeals Decision dated May 31, 2005 and its Resolution
dated January 27, 2006 in CA-G.R. SP No. 76942, are AFFIRMED.

SO ORDERED.
Sevilla vs CA 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
FACTS: is further admitted that Sevilla was not in the company’s
payroll. For her efforts, she retained 4% incommissions from
A contract by and between Noguera and Tourist World Service (TWS), represented by
airline bookings, the remaining 3% going to TWS. Unlike an employee, who
Canilao, wherein TWSleased the premises belonging to Noguera as branch
earns a fixed salary,she earned compensation in fluctuating amount
office of TWS. When the branch office was opened, it was runby appellant
depending on her booking successes. The fact that Sevilla had been
Sevilla payable to TWS by any airline for any fare brought in on the efforts
designated “branch manager” does not make her a TWS
of Mrs. Sevilla, 4% was togo to Sevilla and 3% was to be withheld by
employee. Itappears that Sevilla is a bona fide travel agent herself, and
the TWS.Later, TWS was informed that Sevilla was connected with rival
she acquired an interest in the business entrusted toher. She also had
firm, and since the branch office was losing, TWS considered closing down
assumed personal obligation for the operation thereof, holding
its office.On January 3, 1962, the contract with appellee for the use of the
herself solidary liable for thepayment of rentals.Wherefore, TWS and
branch office premises was terminatedand while the effectivity thereof was
Canilao are jointly and severally liable to indemnify the petitioner, Sevilla.
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 c o n t r a c t
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
Phil Global Communications Inc. vs De Vera
Subject: Four- Fold Test in determining the existence of an employer-
employee relationship; The power to terminate the parties’ relationship
was mutually vested on both negates employer- employee relationship;
Right to control as to the means and methods; Article 157 of the Labor
Code only requires the services of a physician “on retained basis” and only
in non-hazardous workplaces
Facts:
PhilCom enlisted Dr. De Vera to attend to the medical needs of its
employees in accordance with his plan of works required of a practitioner
in industrial medicine. The parties agreed and formalized respondent’s
proposal in a document denominated as RETAINERSHIP CONTRACT and
renewed every year.
Years after, Philcom informed De Vera of its decision to discontinue the
latter’s retainer’s contract with the Company because management has
decided that it would be more practical to provide medical services to its
employees through accredited hospitals near the company premises.
De Vera filed a complaint for illegal dismissal alleging that that he had been
actually employed by Philcom as its company physician since 1981 and was
dismissed without due process.
The Labor Arbiter dismissed the complaint and held that De Vera was an
“independent contractor.” The NLRC ordered reinstatement of De Vera. The
Court of Appeals awarded separation pay in lieu of reinstatement.
Held:
Four- Fold Test in determining the existence of an employer-
employee relationship
1. In determining the existence of an employer-employee relationship, has
invariably adhered to the four-fold test, to wit: [1] the selection and
engagement of the employee; [2] the payment of wages; [3] the power of
dismissal; and [4] the power to control the employee’s conduct, or the so-
called “control test”, considered to be the most important element.
2. In this case, it was De Vera himself who sets the parameters of what his
duties would be in offering his services to Philcom. Also, from the time he
started to work, he never was included in its payroll; was never deducted
any contribution for remittance to the SSS and was in fact subjected by
Philcom to the ten percent withholding tax for his professional fee, matters
which are simply inconsistent with an employer-employee relationship.
3. Clearly, the elements of an employer-employee relationship are wanting
in this case. The records are replete with evidence showing that De Vera
had to bill Philcom 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.
The power to terminate the parties’ relationship was mutually vested
on both negates employer- employee relationship
4. The power to terminate the parties’ relationship was mutually vested on
both. Either may terminate the arrangement at will, with or without cause.
Right to control as to the means and methods
5. Finally, where the employer has reserved the right to control the
employee not only as to the result of the work done but also as to the
means and methods by which the same is to be accomplished.
6. In this case, Philcom had no control over the means and methods by
which De Vera went about performing his work at the company premises.
He could even embark in the private practice of his profession. In fine, the
parties themselves practically agreed on every terms and conditions of de
Vera’s engagement, which thereby negates the element of control in their
relationship.
Article 157 of the Labor Code only requires the services of a physician
“on retained basis” and only in non-hazardous workplaces
7. Under Article 157 of the Labor Code, the employer may engage the
services of a physician “on retained basis” and only in non-hazardous
workplaces. But nothing is there in the law which says that medical
practitioners so engaged be actually hired as employees, adding that the
law, as written, only requires the employer “to retain”, not employ, a part-
time physician who needed to stay in the premises of the non-hazardous
workplace for two hours.
Jardin vs NLRC

Facts:
Petitioners were drivers of private respondent’s taxicabs under the
boundary system whose earnings were regularly deducted washing fee for
the taxi units. Petitioners decided to form a labor union to protect their
rights and interests on the belief that the deductions made were illegal.
Upon learning, respondent refused to let petitioners drive their taxicabs
when they reported for work. Aggrieved, petitioners filed a complaint for
illegal dismissal with the Labor Arbiter but the latter dismissed said
complaint. On appeal, the NLRC tribunal declared that petitioners are
employees of private respondent. On reconsideration however, the
decision was reversed by the NLRC tribunal and held that no employer-
employee relationship between the parties exists.

Issue:
Whether or not petitioner taxi drivers are employees of respondent
company.

Ruling: YES.
In a number of cases decided by this Court, we 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 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. We have
applied by analogy the doctrine 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.
Chavez vs NLRC
Subject: An employer-employee relationship existed between Chavez and
the company; Power of control (independent contractor vs employee);
Employment status of a person is defined and prescribed by law and not by
the parties; Charge of Abandonment is inconsistent with the filing of a
complaint for illegal dismissal ; Negligence, as a ground for termination,
must be both Gross and Habitual
Facts:
Supreme Packaging, Inc., is in the business of manufacturing cartons and
other packaging materials for export and distribution. in 1984, it engaged
the services of the petitioner, Pedro Chavez, as truck driver to deliver the
company’s products from its factory in Mariveles, Bataan, to its various
customers, mostly in Metro Manila. The company furnished the petitioner
with a truck. The deliveries were made in accordance with the routing slips
issued by the company indicating the order, time and urgency of delivery.
Initially, Chavez was paid the sum of P350 per trip. This was later adjusted
to P480 per trip and then increased to P900 per trip.
In 1995, Chavez filed a complaint for regularization with the Regional
Arbitration Branch of the NLRC. Before the case could be heard, the
company terminated the services of Chavez. Consequently, Chavez filed an
amended complaint against the company for illegal dismissal, unfair labor
practice and non-payment of overtime pay, nightshift differential pay, 13th
month pay, among others.
The company denied the existence of an employer-employee relationship
and averred that Chavez was an independent contractor as evidenced by
the contract of service which he and the company entered into. The
company insisted that Chavez had the sole control over the means and
methods by which his work was accomplished. He paid the wages of his
helpers and exercised control over them. The company likewise
maintained that they did not dismiss Chavez. Rather, the severance of his
contractual relation with the company was due to his violation of the terms
and conditions of their contract, i.e., by failing to observe the minimum
degree of diligence in the proper maintenance of the truck he was using.
The Labor Arbiter (LA) declared that Chavez was a regular employee of the
company as he was performing a service that was necessary and desirable
to the latter’s business, and further, has discharged his duties as truck
driver for the company for a continuous and uninterrupted period of more
than ten years. The LA held that Chavez was illegally dismissed.
The NLRC reversed the decision of the LA. The NLRC held that Chavez was
an independent contractor, pointing out that the contract of service was
silent as to the time by which Chavez was to make the deliveries and that
he could hire his own helpers whose wages would be paid from his own
account. The NLRC held that the fixed period of employment contained in
the service contract, having been knowingly and voluntarily entered into
by the parties, is valid.
The Court of Appeal (CA) initially ruled that the petitioner was a regular
employee of the company and not an independent contractor since he had
no substantial capital in the form of tools and machinery. However, on
motion for reconsideration, the CA upheld the contract of service and
declared that Chavez was an independent contractor. The CA dismissed the
complaint for illegal dismissal. Hence, this petition by Chavez.
Held:
An employer-employee relationship existed between Chavez and the
company
1. The elements to determine the existence of an employment relationship
are: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the employer’s power to control
the employee’s conduct. The most important element is the employer’s
control of the employee’s conduct, not only as to the result of the work to
be done, but also as to the means and methods to accomplish it.
2. All the four elements are present in this case.
First. It was the company who engaged the services of Chavez without the
intervention of a third party.
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.” That Chavez was paid
on a per trip basis is not significant. This is merely a method of computing clearly show otherwise. Indeed, the employment status of a person is
compensation and not a basis for determining the existence or absence of defined and prescribed by law and not by what the parties say it should be.
employer-employee relationship. One may be paid on the basis of results or
time expended on the work, and may or may not acquire an employment Power of control (independent contractor vs employee)
status, depending on whether the elements of an employer-employee
relationship are present or not. In this case, it cannot be gainsaid that 5. Compared to an employee, an independent contractor is one who carries
Chavez received compensation from the company for the services that he on a distinct and independent business and undertakes to perform the job,
rendered to the latter. work, or service on its own account and under its own responsibility
according to its own manner and method, free from the control and
Third. The power to dismiss is inherent in the fact that the comany engaged direction of the principal in all matters connected with the performance of
the services of Chavez as truck driver. They exercised this power by the work except as to the results thereof. Hence, while an independent
terminating the services of Chavez albeit in the guise of “severance of contractor enjoys independence and freedom from the control and
contractual relation” due allegedly to the latter’s breach of his contractual supervision of his principal, an employee is subject to the employer’s
obligation. power to control the means and methods by which the employee’s work is
to be performed and accomplished.
Fourth. Chavez performed his work as truck driver under the supervision
and control of the company as manifested by the following circumstances: Chavez was not validly terminated
(a) truck driven by Chavez belonged to the company; (b) there was an
express instruction fthat the truck shall be used exclusively to deliver the (a) Charge of Abandonment is inconsistent with the filing of a
company’s goods; (c) Chavez, after completion of each delivery, was complaint for illegal dismissal
directed to park the truck in either of two specific places only, both
belonging to the company; (d) the company determined how, where and 6. As a rule, the employer bears the burden to prove that the dismissal was
when Chavez would perform his task by issuing to him gate passes and for a valid and just cause. In this case, the company failed to prove any such
routing slips cause for Chavez’s dismissal. They insinuated that Chavez abandoned his
job.
3. These circumstances prove that the respondents exercised control over
the means and methods by which Chavez accomplished his work. 7. To constitute abandonment, these two factors must concur: (1) the
Petitioner was not an independent contractor as he did not even own the failure to report for work or absence without valid or justifiable reason;
truck used for his services. Evidently, he did not possess substantial and (2) a clear intention to sever employer-employee relationship.
capitalization or investment in the form of tools, machinery and work
premises. Moreover, he performed the delivery services exclusively for the 8. Obviously, Chavez did not intend to sever his relationship with the
company for a continuous and uninterrupted period of ten years. company for at the time that he allegedly abandoned his job, he just filed a
complaint for regularization, which was forthwith amended to one for
Employment status of a person is defined and prescribed by law and illegal dismissal. A charge of abandonment is totally inconsistent with the
not by the parties immediate filing of a complaint for illegal dismissal, more so when it
includes a prayer for reinstatement.
4. The contract of service to the contrary notwithstanding, the factual
circumstances establish the existence of an employer-employee (b) Negligence, as a ground for termination, must be both Gross and
relationship between the company and the petitioner. It bears stressing Habitual
that the existence of an employer-employee relationship cannot be negated
by expressly repudiating it in a contract and providing therein that the 9. The company cannot claim that Chavez was guilty of gross negligence in
employee is an independent contractor when, as in this case, the facts the proper maintenance of the truck to constitute a valid and just cause for
his dismissal. Gross negligence implies a want or absence of or failure to
exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid
them. The negligence, to warrant removal from service, should not merely
be gross but also habitual. The single and isolated act of the petitioner’s
negligence in the proper maintenance of the truck alleged by the
respondents does not amount to “gross and habitual neglect” warranting
his dismissal.
Tan vs Lagrama
Subject: Four-Fold Test to determine employer-employee relationship;
Reasonable connection between the activity performed by the employee in
relation to the usual business of the employer; Abandonment requires
proof of failure to report for work without valid reason and intention to
sever employment relationship; Urinating in a work place other than the
one designated is a reasonable ground for termination of employment;
Separation pay in lieu of reinstatement on the ground of restrained
relationship; A piece worker if supervised is an employee but is not entitled
to service incentive leave pay
Facts:
Rolando Tan is the president of Supreme Theater Corporation and the
general manager of Crown and Empire Theaters in Butuan City. While,
Leovigildo Lagrama is a painter, making ad billboards and murals for the
motion pictures shown at the Empress, Supreme, and Crown Theaters for
more than 10 years.
Lagrama was summoned by Tan and scolded him for urinating inside Tan’s
working area and dismissed him outright. He denied the charge against him
and claimed that he was not the only one who entered the drawing area
and that, even if the charge was true, it was a minor infraction to warrant
his dismissal. He filed a complaint with the NLRC for illegal dismissal and
payment of other benefits provided by law.
Tan denied that Lagrama was his employee. He asserted that Lagrama was
an independent contractor who did his work according to his methods,
while he was only interested in the result thereof. He denied having
dismissed Lagrama and alleged that it was the latter who refused to paint
for him after he was scolded for his habits.
The Labor Arbiter declared that Lagrama was illegally dismissed and
ordered Tan to pay Lagrama separation pay and other benefits. The NLRC
reversed the decision of the Labor Arbiter and declared that Lagrama was
an independent contractor. The Court of Appeals reversed the decision of
the NLRC and reinstated the decision of the Labor Arbiter.
Held:
Four-Fold Test to determine employer-employee relationship
1. In determining whether there is an employer-employee relationship, we
have applied a “four-fold test,” to wit: (1) whether the alleged employer
has the power of selection and engagement of employees; (2) whether he
has control of the employee with respect to the means and methods by
which work is to be accomplished; (3) whether he has the power to
dismiss; and (4) whether the employee was paid wages.
2. Of the four elements of the employer-employee relationship, the “control
test” is the most important. While anindependent contractor enjoys
independence and freedom from the control and supervision of his
principal, anemployee is subject to the employer’s power to control the
means and methods by which the employee’s work is to be performed and
accomplished.
3. In this case, all of the elements are present. First, it was Tan who engaged
the services of Lagrama without the intervention of a third party.
4. Secondly, Lagrama performed his work as painter under the supervision
and control of Tan. He worked in a designated work area which Tan
prescribed rules. The rules included the observance of cleanliness and
hygiene and a prohibition against urinating in the work area and any place
other than the toilet. Tan also has control as to the result of Lagrama’s
work, and the manner and means by which the work was to be
accomplished. Moreover, Tan supplied the materials used for the paintings,
because he admitted that he paid Lagrama only for the latter’s services.
Lastly, the fact that Lagrama worked for at least 3 to 4 days a week proves
regularity in his employment by Tan.
5. Thirdly, Tan acknowledged Lagrama to be his employee when he stated
that he had the right to fire Lagrama. Indeed, the fact that, Tan himself said,
he waited for Lagrama to report for work but the latter simply stopped
reporting for work reinforces the conviction that Lagrama was indeed his
employee. For only an employee can nurture such an expectancy, the
frustration of which can bring about some disciplinary action on the part of
the employer.
6. Lastly, that Lagrama worked for Tan on a fixed piece-work basis is of no
moment. Payment by result is a method of compensation and does not
define the essence of the relation. It is a method of computing
compensation, not a basis for determining the existence or absence of
employer-employee relationship. One may be paid on the basis of results or
time expended on the work, and may or may not acquire an employment
status, depending on whether the elements of an employer-employee
relationship are present or not.
Reasonable connection between the activity performed by the
employee in relation to the usual business of the employer
7. The primary standard for determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer.
8. In this case, there is such a connection between the job of Lagrama
painting billboards and murals and the business of Tan. To let the people
know what movie was to be shown in a movie theater requires billboards.
9. If the employee has been performing the job for at least one year, even if
not continuously but intermittently, the repeated and continuing need for
its performance is sufficient evidence of the necessity, if not
indispensability, of that activity to the business of his employer. Hence, the
employment is also considered regular, although with respect only to such
activity, and while such activity exists.
10. In this case, Lagrama had been employed by petitioner since 1988.
Under the law, therefore, he is deemed a regular employee and is thus
entitled to security of tenure. (See Art. 279 of Labor Code)
Abandonment requires proof of failure to report for work without
valid reason and intention to sever the employment relationship
11. Abandonment requires two elements: (1) the failure to report for work
or absence without valid or justifiable reason, and (2) a clear intention to
sever the employer-employee relationship manifested by some overt acts.
What is more, the burden is on the employer to show a deliberate and
unjustified refusal on the part of the employee to resume his employment
without any intention of returning.
12. In the case at bar, Tan has not established clear proof of the intention of
Lagrama to abandon his job or to sever the employment relationship
between him and the Private Respondent. On the contrary, it was Tan who
told Lagrama that he did not want the latter to draw for him and thereafter
refused to give him work to do or any mural or billboard to paint or draw
on. Moreover, after the repeated refusal of Tan to give Lagrama murals or
billboards to work on, Lagrama filed with the NLRC a complaint for illegal
dismissal which negate any intention to sever employment relationship.
Urinating in a work place other than the one designated is a
reasonable ground for termination of employment
13. The employer has the burden of proving the lawfulness of his
employee’s dismissal. The validity of the charge must be clearly established
in a manner consistent with due process. The Implementing Rules of the
Labor Code provide that no worker shall be dismissed except for a just or
authorized cause provided by law and after due process. This provision has
two aspects: (1) the legality of the act of dismissal and (2) the legality in the
manner of dismissal. The illegality of the act of dismissal constitutes
discharge without just cause, while illegality in the manner of dismissal is
dismissal without due process.
14. In this case, urinating in a work place other than the one designated for
the purpose by the employer constitutes violation of reasonable
regulations intended to promote a healthy environment under Art. 282(1)
of the Labor Code for purposes of terminating employment, but the same
must be shown by evidence. However, there is no evidence that Lagrama
did urinate in a place other than a rest room in the premises of his work.
Separation pay in lieu of reinstatement on the ground of restrained
relationship
15. The grant of separation pay in lieu of reinstatement is appropriate since
the relationship between the employer and the employee has been so
strained that the latter’s reinstatement would no longer serve any purpose.
This is in addition to the payment of backwages which should be computed
from the time of Lagrama’s dismissal up to the time of the finality of this
decision, without any deduction or qualification.
A piece worker if supervised is an employee but is not entitled to
service incentive leave pay
16. The Bureau of Working Conditions classifies workers paid by results
into two groups, namely; (1) those whose time and performance is
supervised by the employer, and (2) those whose time and performance is
unsupervised by the employer. The first involves an element of control and
supervision over the manner the work is to be performed, while the second
does not.

17. If a piece worker is supervised, there is an employer-employee

relationship, as in this case. However, such an employee is not entitled to
service incentive leave pay since he is paid a fixed amount for work done,
regardless of the time he spent in accomplishing such work. (See Makati
Haberdashery v. NLRC)
Maraguinot vs NLRC
FACTS:
Petitioner maintains that he was employed by respondents as
part of the filming crew. He was laterpromoted
as an electrician. Petitioners’ tasks contained of loading movie
equipment in the shoothing area.Petitioners sought the assistance of
their supervisor, Cesario, to facilitate their request that respondents
adjusttheir salary in accordance with the minimum wage law. Mrs. Cesario
informed petitioners that del Rosario wouldagree to increase their
salary only if they signed a blank employment contract. As
petitioner refused to sign,respondents forced Enero (the other
petitioner who worked as a crew member) to go on leave. However, when
hereported to work, respondent refused to take him back.
Maraguinot was dropped from the company payroll
butw h e n h e r e t u r n e d , h e w a s
again asked to sign a blank employment contract,
a n d w h e n h e s t i l l r e f u s e d , respondent’s terminated his services. Petitioners
thus sued for illegal dismissal.Private respondents assert that they
contract persons called producers to produce or make movies
forprivate respondents and contend that petitioners are project
employees of the associate producers, who act asindependent
contractors. Thus, there is no ER-EE relationship.However, petitioners
cited that their performance of activities is necessary in the usual trade or
business of respondents and their work in continuous.
merely leases the equipment from VIVA.In addition, the associate producers of
VIVA cannot be considered labor-only contractors as they did notsupply,
recruit nor hire the workers. It was Cesario, the Shooting Supervisor of
VIVA, who recruited crew members. Thus, the relationship between VIVA and its
producers or associate producers seems to be that of agency.With regards to the issue
of illegal dismissal, petitioners assert that they were regular employees
who wereillegally dismissed. Petitioners in this case had already attained
the status of regular employees in view of VIVA’sconduct. Thus, petitioners
are entitled to back wages.A project employee or a member of a work pool
may acquire the status of a regular employee when:a.there is a continuous
rehiring of project employees even after a cessation of projectb . t h e
tasks performed by the alleged project
employee are vital and necessary to the business
o f employer The tasks of petitioners in loading movie equipment and
returning it to VIVA’s warehouse and fixing thelighting system were vital,
necessary and indispensable to the usual business or trade of
the employer.Wherefore, petition is granted.

ISSUE:
W/N ER-EE relationship exists

HELD:
Yes.W ith regards to VIVA’s contention that it does not make
movies but merely distributes motion pictures,there is no
sufficient proof to prove this contention.In respect to respondents’
allegation that petitioners are project employees, it is a settled
rule that thecontracting out of labor is allowed only in case of job
contracting. However, assuming that the associate producersare job
contactors, they must then be engaged in the business of
making motion pictures. Associate producersmust have tools
necessary to make motion pictures. However, the associate producers in
this case have none of these. The movie-making equipment are supplied to
the producers and owned by VIVA. Thus, it is clear that theassociate producer
Air Material Wing Savings and Loan Association Inc. vs NLRC on all legal matters and seeking remedies to effect collection of overdue
accounts.As cited in the case of Hydro Resources v. Pagalilauan,
FACTS: “A lawyer, like any other professional (doctors,nurses, dentists,
Private respondent Luis S. Salas was appointed "notarial and legal counsel" public relations practitioners), may very well be an employee of a private
for petitioner AirMaterial Wings Savings and Loan Association in 1980. The corporation or even of the government. It is not unusual for a big
appointment was renewed for three years inan implementing order dated corporation to hire a staff of lawyers as its in-house counsel, pay
January 23, 1987. Subsequently, on January 9, 1990, the petitioner themregular salaries, rank them and treat them like its other officers and
issuedanother order reminding Salas of the approaching termination of his employees.”With regards to Salas’ claim of notarial fees, it is based
legal services under their contract.This prompted Salas to lodge a on his employment as a notarial officer of thepetitioner and thus
complaint against AMWSLAI for separation pay, vacation and sick labor arbiters have the original and exclusive jurisdiction. As provided
leavebenefits, cost of living allowances, refund of SSS premiums, moral and under Art. 3 of 217 of theLabor Code, claims which have reasonable
exemplary damages, payment of notarial services rendered from February connection with ER-EE relationship are under the jurisdiction of the labor
1, 1980 to March 2, 1990, and attorney's fees.Instead of filing an answer, arbite r. In respect to the separate payment of notarial fees to Salas, the
AMWSLAI moved to dismiss for lack of jurisdiction. It averred thatthere contract does not contain any stipulationabout it. Absence of such
was no employer-employee relationship between it and Salas and that his stipulation does not entitle the respondent to collect separate payment of
monetary claimsproperly fell within the jurisdiction of the regular courts. notarial fees.
Salas opposed the motion and presenteddocumentary evidence to show
that he was indeed an employee of AMWSLAI. Nevertheless, most of Salas'
claims were dismissed by the labor arbiter in his decision dated November
21, 1991.It was there held that Salas was not illegally dismissed and so not
entitled to collect separationbenefits. His claims for vacation leave, sick
leave, medical and dental allowances and refund of SSSpremiums were
rejected on the ground that he was a managerial employee. He was also
denied moraland exemplary damages for lack of evidence of bad faith on
the part of AMWSLAI. Neither was heallowed to collect his notarial fees
from 1980 up to 1986 because the claim therefore had alreadyprescribed.
However, the petitioner was ordered to pay Salas his notarial fees from
1987 up to March 2,1990, and attorney's fee equivalent to 10% of the
judgment award.On appeal, the decision was affirmed in toto by the
respondent Commission, prompting thepetitioner to seek relief in the
Supreme Court, hence, the case at bar.

ISSUE:
W/N ER-ER exists between petitioner and respondent

HELD:
Yes.The terms and conditions in the contract show that respondent was an
employee of petitioner. His selectionas the company counsel was done
by the board of directors and the respondent was paid with a
monthly retainer’sfee. The petitioner also reserved its power of dismissal
by defining the duties of the respondent as its legal counselsuch as acting
Vallum Security Services vs NLRC

FACTS:
Petitioner Hyatt Baguio and petitioner Vallum entered into a contract for
security services wherein Vallumagreed to protect the properties and premises of
Hyatt by providing guards.Hyatt’s Manager wrote a letter to the President of
Vallum that the contract of security services would beterminated. So,
Vallum informed the respondents that the contract had already expired.
Private respondents weredirected to report to Vallum;s office for re-
assignment. However, none of the respondents reported. Instead, theyfiled
complaints for illegal dismissal and unfair labor practices.

ISSUE:
W/N private respondent security guards are indeed employees of
petitioner Hyatt

HELD:
Yes.In respect of the selection and engagement of employees, private
respondents filled up Hyatt employmentapplication forms and submitted
directly to Hyatt.With regards to control and supervision, orders received
by private respondent security guards were setforth on paper bearing the
letterheads of both Hyatt and Vallum. Therefore, Hyatt explicitly purported
at the veryleast, to share with Vallum the exercise of the power of control and supervision
with Vallum over the guards.However, in the contract for security services
between Vallum and Hyatt, it provides that the Agency shallexercise
supervision and control, provide its own expense all necessary
paraphernalia and the Agency shall be heldsolely liable for any claim
of wages and damages. SC ruled that the aforementioned facts are different
from that of the contract. The characterization of such relationship cannot
conclusively be made in terms alone in the writtenagreement but must rest
upon the detailed facts.Under Rule VII of Book III Sec. 8, there is
job contracting when the contractor carries on
an independentbusiness. In the case at bar, Vallum did not have a branch
in Baguio. Hyatt provided Valum with offices at Hyatt’sown premises.With
respect to the performance of work, the security guards were performing
activities directly related tothe business operation of Hyatt since to
safeguard the person and belongings of the guests is an
obligation of ahotel with its guests.Wherefore, petition is dismissed.
Brotherhood Labor Unity Movement of the Philippines vs Zamora
Subject: Elements to determine the existence of an employer-employee
relationship; Criteria to determine existence of an independent contractor
relationship; Conditions for Job Contracting; The payment of the workers'
wages is a critical factor in determining the actuality of an employer-
employee relationship; Payment by piece does not define the essence of
employment relation
Facts:
The complainant workers who have been employed at the San Miguel
Parola Glass Factory, averaging about seven (7) years of service at the time
of their termination. They worked as "cargadores" or "pahinante" at the
SMC Plant loading.
Work in the glass factory was neither regular nor continuous, depending
wholly on the volume of bottles manufactured to be loaded and unloaded.
However, work,at times, exceeded the eight (8) hour day and necessitated
work on Sundays and holidays. They were paid every ten days on a piece
rate basis, that is, according to the number of cartons and wooden shells
they were able to load, unload, or pile.
140 workers organized and affiliated themselves with the Brotherhood
union and engaged in union activities. They later filed a notice of strike. San
Miguel refused to bargain with the union alleging that the workers are not
their employees. All the complainant-workers were dismissed from their
jobs and, thereafter, denied entrance to respondent company's glass
factory despite their regularly reporting for work.
BLUM filed a complaint charging San Miguel Corporation and its officers of
unfair labor practice and illegal dismissal. It was alleged that the SMC
officers ordered the individual complainants to disaffiliate from the
complainant union and that management dismissed the individual
complainants when they insisted on their union membership.
The officers and SMC moved for the dismissal of the complaint on the
grounds that the complainants are not and have never been employees of
company but employees of the independent contractor (Guaranteed Labor
Contractor).
In defense, the workers strongly argue that there exists an employer-
employee relationship between them and the company and that they were
dismissed for unionism, an act constituting unfair labor practice "for which
respondents must be made to answer."
The Labor Arbiter held in favor of the complainants which were concurred
in by the NLRC.
Held:
Elements to determine the existence of an employer-employee
relationship
1. In determining the existence of an employer-employee relationship,
the elements that are generally considered are the following: (a) the
selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer's power to control the
employee with respect to the means and methods by which the work is to
be accomplished. It. is the called "control test" that is the most important
element
2. In this case, the evidence strongly indicates the existence of an employer-
employee relationship between workers and San Miguel Corporation.
Criteria to determine existence of an independent contractor
relationship
3. The existence of an independent contractor relationship is generally
established by the following criteria: "whether or not the contractor is
carrying on an independent business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right to
assign the performance of a specified piece of work; the control and
supervision of the work to another; the employer's power with respect to
the hiring, firing and payment of the contractor's workers; the control of
the premises; the duty to supply the premises tools, appliances, materials
and labor; and the mode, manner and terms of payment"
4. In this case, none of the above criteria exists. Highly unusual and suspect
is the absence of a written contract to specify the performance of a
specified piece of work, the nature and extent of the work and the term and
duration of the relationship. The records fail to show that a large
commercial outfit, such as the San Miguel Corporation, entered into mere
oral agreements of employment or labor contracting where the same important to emphasize that in a truly independent contractor-contractee
would involve considerable expenses and dealings with a large number of relationship, the fees are paid directly to the manpower agency in lump
workers over a long period of time. sum without indicating or implying that the basis of such lump sum is the
salary per worker multiplied by the number of workers assigned to the
5. Also, for an average of seven (7) years, each of the workers had worked company. (See Social Security System v. Court of Appeals)
continuously and exclusively for the company's shipping and warehousing
department. Thus, they were engaged to perform activities necessary or 9. In this case, the alleged independent contractors were paid a lump sum
desirable in the usual business or trade of the respondent, and are representing only the salaries the workers were entitled to, arrived at by
therefore regular employees. adding the salaries of each worker which depend on the volume of work
they had accomplished individually. Instead, the alleged contractor
Conditions for Job Contracting receives a percentage from the total earnings of all the workers plus an
additional amount corresponding to a percentage of the earnings of each
6. Job contracting permissible under the Code if the individual worker, which, perhaps, accounts for the petitioners' charge of
following conditions are met: unauthorized deductions from their salaries by the respondents.

(1) The contractor carries on an independent business and undertakes the Payment by piece does not define the essence of employment relation
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 10. Circumstances must be construed to determine indeed if payment by
employer or principal in all matters connected with the performance of the the piece is just a method of compensation and does not define the essence
work except as to the results thereof; and of the relation. Units of time and units of work are in establishments are
just yardsticks whereby to determine rate of compensation, to be applied
(2) The contractor has substantial capital or investment in the form of whenever agreed upon. (See Dy Keh Beng v. International Labor and
tools, equipment, machineries, work premises, and other materials which Marine)
are necessary in the conduct of his business.
11. Firmly establishing SMC's role as employer is the control exercised by it
7. In this case, the Guaranteed and Reliable Labor contractors have neither over the workers that is, control in the means and methods/manner by
substantial capital nor investment to qualify as an independent contractor which workers are to go about their work, as well as in disciplinary
under the law. The premises, tools, equipment and paraphernalia used by measures imposed by it. Because of the nature of the work as cargadores or
the workers in their jobs are admittedly all supplied by the company. It is pahinantes, supervision as to the means and manner of performing the
only the manpower or labor force which the alleged contractors supply, same is practically nil. The mere concern of both SMC and the alleged
suggesting the existence of a "labor only" contracting scheme prohibited by contractor is that the job of having the bottles and wooden shells brought
law. In fact, even the alleged contractor's office are provided for by SMC. It to and from the warehouse be done. More evident and pronounced is the
is therefore clear that the alleged contractors have no capital outlay company's right to control in the discipline of workers
involved in the conduct of its business, in the maintenance thereof or in the
payment of its workers' salaries. 12. That SMC has the power to recommend penalties or dismissal of the
piece workers, even as to Abner Bungay who is alleged by SMC to be a
The payment of the workers' wages is a critical factor in determining representative of the alleged labor contractor, is the strongest indication of
the actuality of an employer-employee relationship company's right of control over the workers as direct employer. There is no
evidence to show that the alleged labor contractor had such right of control
8. The payment of the workers' wages is a critical factor in determining the or much less had been there to supervise or deal with the petitioners.
actuality of an employer-employee relationship whether between SMC and
workers or between the alleged independent contractor and workers. It is
Cosmopolitan Funeral Homes vs Maalat

FACTS:
Petitioner Cosmopolitan Funeral Homes, Inc. engaged the services ofprivate respondent
Noli Maalat as a "supervisor" to handle the solicitation ofmortuary
arrangements, sales and collections. he funeral services !hich he soldrefer
to the ta ing of the corpse, em#alming, cas eting, vie!ing and delivery. heprivate
respondent !as paid on a commission #asis of $.%& of the amounts actuallycollected and
remitted. 'n (anuary )%, )*+ , respondent Maalat !as dismissed #ythe petitioner for
commission of several violations despite previous !arnings.Maalat -led a complaint for
illegal dismissal and non payment of commissions. he/a#or 0r#iter rendered
a decision declaring Maalat1s dismissal illegal. 'n appeal, theN/2C reversed the /a#or
0r#iter1s decision.

ISSUE: Whether or not !"#ner r$ ! %#&er'$%or $% n e(&)o*ee or

+o(($%%$on ent
RULING
: 3nder the "right of control" test, an employer employee relationship e4ists!here the
person for !hom the services are performed reserves the right to controlnot only the end
to #e achieved, #ut also the manner and means to #e used inreaching that
end. In the case at #ar, the fact that the petitioner imposed andapplied its rule
prohi#iting superiors from engaging in other funeral #usiness !hichit considered inimical to
company interests proves that it had the right of controland actually e4ercised its control
over the private respondent. In other !ords,Maalat !or ed e4clusively for the petitioner. He
!as also prohi#ited from engagingin part time em#alming #usiness outside
of the company and a violation thereof!as cause for dismissal. Incurring a#sences
!ithout leave !as li e!ise su#5ect todisciplinary action. Moreover, the payment of
compensation #y !ay of commissiondoes not militate against the conclusion
that private respondent as an employee.
Insurance Life Assurance Co vs NLRC

Subject: Elements to determine the existence of employer-employee
relationship; None of the rules and regulations provided for in the
Insurance Code cannot justifiably be said to establish an employer-
employee relationship; Length of stay in Insurance Company does not
determine employment relationship
Facts:
Insular Life Assurance Co., Ltd. and Melecio T. Basiao entered into a
contract by which Basiao was authorized to solicit within the Philippines
applications for insurance policies and annuities. He would receive
"compensation, in the form of commissions” and the Company’s Rate Book
and its Agent's Manual were made part of said contract.
Some four years later, the parties entered into another contract (Agency
Manager's Contract) wherein Basiao organized his own agency or office,
while concurrently fulfilling his commitments under the first contract with
the Company.
The Company terminated the Agency Manager's Contract. Basiao sued the
Company in a civil action and this, prompted the Company to terminate
also his engagement under the first contract and to stop payment of his
commissions.
Basiao filed a complaint against the Company and its president to recover
commissions allegedly unpaid. In defense, the Company argued that there
was no employer-employee relation since Basiao is the master of his own
time and selling methods.
The Ministry of Labor ruled that Basiao was not the Company's employee,
but an independent contractor. The Labor Arbiter ruled that the
underwriting agreement had established an employer-employee
relationship between him and the Company. The NLRC affirmed the
decision of the Labor Arbiter.
Held:
Elements to determine the existence of employer-employee
relationship
1. In determining the existence of employer-employee relationship,
the following elements are generally considered, namely: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power to control the employees' conduct —
although the latter is the most important element. (See Viana vs. Alejo Al-
Lagadan)
2. The 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 do not create employer- employee relationship.
While, the rules that control or fix the methodology and bind or restrict the
party hired to the use of such means create employer-employer
relationship.
None of the rules and regulations provided for in the Insurance Code
can justifiably be said to establish an employer-employee relationship
3. Rules and regulations governing the conduct of the business are
provided for in the Insurance Code and enforced by the Insurance
Commissioner. It is 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. But 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.
Length of stay in Insurance Company does not determine employment
relationship
4. What is germane is Basiao's status under the contract of July 2, 1968, not
the length of his relationship with the Company to justify employment
relationship. Basiao was not an employee but a commission agent, an
independent contractor whose claim for unpaid commissions should have
been litigated in an ordinary civil action.
Tongko vs Manulife Contract.

Subject: Agency vis-a-vis Employment relationship; Insurance agency
(element of control); The Cited Cases are not squarely applicable; Intent of
the governing Agreement between the parties was to create an Agency
relationship; Tongko remained an independent agent of Manulife despite
his increased managerial role; Tongko's consistent declaration of being
self-employed in his income tax returns is an admission against his
interest; Lack of evidence showing that Manulife exercised means-and-
manner control; Distinguished from other cases; Article 4 of the Labor
Code only applies when there is clearly an employment relationship
Facts:
Tongko responded by filing an illegal dismissal complaint. The labor arbiter
decreed that no employer-employee relationship existed between the
parties. However, the NLRC reversed the labor arbiter's decision. The Court
of Appeals (CA) everted to the labor arbiter's decision.
The case eventually reached the Supreme Court where, in its Decision of
November 7, 2008, the Court found that an employer-employee
relationship existed between Manulife and Gregorio Tongko and ordered
Manulife to pay Tongko backwages and separation pay for illegal
dismissal. The Court ruled that Manulife had the power of control over
Tongko, sufficient to characterize him as an employee.

The contractual relationship between Gregorio Tongko and The Hence, the present Motion for Reconsideration.
Manufacturers Life Insurance Co. (Manulife) had two basic phases. The first
or initial phase began on July 1, 1977, under a Career Agent's Agreement Held:
(Agreement) which provided that the Agent is an independent contractor.
Agency vis-a-vis Employment relationship
The second phase started in 1983 when Tongko was named Unit Manager
in Manulife's Sales Agency Organization. In 1990, he became a Branch 1. The factual antecedents were set in the insurance industry so that the
Manager. In 1996, Tongko became a Regional Sales Manager. Insurance Code primarily governs. Moreover, “agency” is a civil law matter
governed by the Civil Code. At the very least, three sets of laws - namely,
Tongko's gross earnings consisted of commissions, persistency income, and the Insurance Code, the Labor Code and the Civil Code - have to be
management overrides. Since the beginning, Tongko consistently declared considered in looking at the present case.
himself self-employed in his income tax returns. Manulife withheld the
corresponding 10% tax on Tongko's earnings. 2. The main issue of whether an agency or an employment relationship
exists depends on the incidents of the relationship. The Labor Code concept
In a letter dated November 6, 2001, Renato Vergel de Dios, in behalf of of "control" has to be compared and distinguished with the "control" that
Manulife, wrote to Tongko on concerns that were brought up during the must necessarily exist in a principal-agent relationship. The principal
October 18, 2001 Metro North Sales Managers Meeting, pointing to his cannot but also have his or her say in directing the course of the principal-
region's lackluster sales performance and his overall poor attitude. agent relationship, especially in cases where the company-representative
relationship in the insurance industry is an agency.
Subsequently, de Dios wrote Tongko another letter, dated December 18,
2001, notifying Tongko of the “termination of your Agency Agreement” 3. The Civil Code defines an agent as a "person [who] binds himself to
pursuant to the prerogative of Manulife under Section 14 of the Agents render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter." While this is a very
broad definition that on its face may even encompass an employment
relationship, the distinctions between agency and employment are
sufficiently established by law and jurisprudence. Generally,
the determinative element is the control exercised over the one
rendering service. The employer controls the employee both in the results
and in the means and manner of achieving this result. The principal in an
agency relationship, on the other hand, also has the prerogative to exercise
control over the agent in undertaking the assigned task based on the
parameters outlined in the pertinent laws.
Insurance agency (element of control)
4. Under the Insurance Code, the agent must, as a matter of qualification,
be licensed and must also act within the parameters of the authority
granted under the license and under the contract with the principal. Other
than the need for a license, the agent is limited in the way he offers and
negotiates for the sale of the company's insurance products, in his
collection activities, and in the delivery of the insurance contract or
policy. Rules regarding the desired results (e.g., the required volume to
continue to qualify as a company agent, rules to check on the parameters
on the authority given to the agent, and rules to ensure that industry, legal
and ethical rules are followed) are built-in elements of control specific to
an insurance agency and should not and cannot be read as elements of
control that attend an employment relationship governed by the Labor
Code.
5. Under the general law on agency as applied to insurance, an agency
must be express in light of the need for a license and for the designation by
the insurance company. In the present case, the Agreement fully serves as
grant of authority to Tongko as Manulife's insurance agent. This agreement
is supplemented by the company's agency practices and usages, duly
accepted by the agent in carrying out the agency. By authority of the
Insurance Code, an insurance agency is for compensation, a matter the Civil
Code Rules on Agency presumes in the absence of proof to the contrary.
Other than the compensation, the principal is bound to advance to, or to
reimburse, the agent the agreed sums necessary for the execution of the
agency.
6. With particular relevance to the present case is the provision that "In
the execution of the agency, the agent shall act in accordance with the
instructions of the principal." This provision is pertinent for purposes of
the necessary control that the principal exercises over the agent in
undertaking the assigned task, and is an area where the instructions can
intrude into the labor law concept of control so that minute consideration
of the facts is necessary. A related article is Article 1891 of the Civil Code
which binds the agent to render an account of his transactions to the
principal.
The Cited Cases are not squarely applicable
7. The November 7, 2008 Decision refers to the first Insular and Grepalife
cases to establish that the company rules and regulations that an agent has
to comply with are indicative of an employer-employee relationship. The
Dissenting Opinions of Justice Velasco, Jr. and Justice Carpio Morales also
cite Insular Life Assurance Co. vs. NLRC (second Insular case) to support
the view that Tongko is Manulife's employee. On the other hand, Manulife
cites the Carungcong case and AFP Mutual Benefit Association, Inc. v.
National Labor Relations Commission (AFPMBAI case) to support its
allegation that Tongko was not its employee.
8. The present case at first glance appears aligned with the facts in the
Carungcong, the Grepalife, and the second Insular Life cases. A critical
difference, however, exists as these cited cases dealt with the proper legal
characterization of a subsequent management contract that superseded the
original agency contract between the insurance company and its agent. In
all these cited cases, a determination of the presence of the Labor Code
element of control was made on the basis of the stipulations of
the subsequent contracts.
9. In contrast, the only contract submitted as evidence in the present case
is the Career Agent's Agreement - a pure agency agreement in the Civil
Code context similar to the original contract in the first Insular Life case
and the contract in the AFPMBAI case. And while Tongko was later on
designated unit manager in 1983, Branch Manager in 1990, and Regional
Sales Manager in 1996, no formal contract regarding these undertakings
appears in the records of the case. Any such contract or agreement, had
there been any, could have at the very least provided the bases for properly
ascertaining the juridical relationship established between the parties.
Intent of the governing Agreement between the parties was to create
an Agency relationship
10. The July 1, 1977 Career Agent's Agreement (the Agreement) governed
and defined the parties' relations until the its termination in 2001. 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.
11. 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. The characterization of the juridical relationship the
Agreement embodied is a matter of law that is for the courts to determine.
12. At the same time, though, the parties' legal characterization of their
intent, although not conclusive, is critical in this case because this intent is
not illegal or outside the contemplation of law, particularly of the Insurance
and the Civil Codes. We can take judicial notice that as a matter of
Insurance Code-based business practice, an agency relationship prevails in
the insurance industry for the purpose of selling insurance. The Agreement,
by its express terms, is in accordance with the Insurance Code model when
it provided for a principal-agent relationship, and thus cannot lightly be set
aside nor simply be considered as an agreement that does not reflect the
parties' true intent. This intent, incidentally, is reinforced by the system of
compensation the Agreement provides, which likewise is in accordance
with the production-based sales commissions the Insurance Code provides.
Tongko remained an independent agent of Manulife despite his
increased managerial role
13. Evidence shows that Tongko's role as an insurance agent never
changed during his relationship with Manulife. If changes occurred at all, it
was that Tongko 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.
14. That Tongko assumed a leadership role but nevertheless wholly
remained an agent is the inevitable conclusion that results from the
reading of the Agreement and his continuing role thereunder as sales
agent. To the dissent, Tongko's administrative functions as recruiter,
trainer, or supervisor of other sales agents constituted a substantive
alteration of Manulife's authority over Tongko and the performance of his
end of the relationship with Manulife. We could not deny though that
Tongko remained, first and foremost, an insurance agent, and thathis
additional role as Branch Manager did not lessen his main and dominant
role as insurance agent; this role continued to dominate the relations
between Tongko and Manulife even after Tongko assumed his leadership
role among agents. This conclusion cannot be denied because it proceeds
from the undisputed fact that Tongko and Manulife never altered their July
1, 1977 Agreement, a distinction the present case has with the contractual
changes made in the second Insular Life case. Tongko's results-based
commissions, too, attest to the primacy he gave to his role as insurance
sales agent.
Tongko's consistent declaration of being self-employed in his income
tax returns is an admission against his interest
15. 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.
16. Hand in hand with the concept of admission against interest in
considering the tax returns, the concept of estoppel - a legal and equitable
concept- necessarily must come into play. Tongko's previous admissions in
several years of tax returns as an independent agent, as against his belated
claim that he was all along an employee, are too diametrically opposed to
be simply dismissed or ignored.
Lack of evidence showing that Manulife exercised means-and-manner
control
17. There is 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. 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 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.
18. 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.
19. The Insurance Code imposes obligations on both the insurance
company and its agents in the performance of their respective obligations
under the Code, particularly on licenses and their renewals, on the
representations to be made to potential customers, the collection of
premiums, on the delivery of insurance policies, on the matter of
compensation, and on measures to ensure ethical business practice in the
industry. The general law on agency expressly allows the principal an
element of control over the agent in a manner consistent with an agency
relationship. In this sense, these control measures cannot be read as
indicative of labor law control. Foremost among these are the directives
that the principal may impose on the agent to achieve the assigned tasks, to
the extent that they do not involve the means and manner of undertaking
these tasks. The law likewise obligates the agent to render an account; in
this sense, the principal may impose on the agent specific instructions on
how an account shall be made, particularly on the matter of expenses and
reimbursements. To these extents, control can be imposed through rules
and regulations without intruding into the labor law concept of
control for purposes of employment.
20. 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.
21. 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.
22. Even de Dios' letter is not determinative of control as it indicates the
least amount of intrusion into Tongko's exercise of his role as manager in
guiding the sales agents. Strictly viewed, de Dios' directives are merely
operational guidelines on how Tongko could align his operations with
Manulife's re-directed goal of being a "big league player." The method is to
expand coverage through the use of more agents. This requirement for
therecruitment of more agents is not a means-and-method control as it
relates,to Manulife's objective of expanded business operations through the
use of a bigger sales force whose members are all on a principal-agent
relationship. An important point to note here is that Tongko was not
supervising regular full-time employees of Manulife engaged in the running
of the insurance business; Tongko was effectively guiding his corps of sales
agents, who are bound to Manulife through the same Agreement that he
had with Manulife, all the while sharing in these agents' commissions
through his overrides. The title of Branch Manager used by the parties is
really a misnomer given that what is involved is not a specific regular
branch of the company but a corps of non-employed agents. Still another
point to consider is that Tongko was not even setting policies in the way a
regular company manager does; company aims and objectives were simply
relayed to him with suggestions on how these objectives can be reached
through the expansion of a non-employee sales force.
Distinguished from other cases
23. In Grepalife, the details of how to do the job are specified and pre-
determined; in the present case, the operative words are the "sales target,"
the methodology being left undefined except to the extent of being
"coordinative." To be sure, a "coordinative" standard for a manager cannot
be indicative of control; the standard only essentially describes what a
Branch Manager is - the person in the lead who orchestrates activities
within the group. To "coordinate," and thereby to lead and to orchestrate, is
not so much a matter of control by Manulife; it is simply a statement of a
branch manager's role in relation with his agents from the point of view of
Manulife whose business Tongko's sales group carries.
24. The present case must be distinguished from the second Insular Life
case that showed the hallmarks of an employer-employee relationship in
the management system established. These were: exclusivity of service,
control of assignments and removal of agents under the private
respondent's unit, and furnishing of company facilities and materials as
well as capital described as Unit Development Fund. All these are obviously
absent in the present case. If there is a commonality in these cases, it is in
the collection of premiums which is a basic authority that can be delegated
to agents under the Insurance Code.
Article 4 of the Labor Code only applies when there is clearly an
employment relationship
25. The dissent pointed out that any doubt in the existence of an employer-
employee relationship should be resolved in favor of the existence of the
relationship. This observation, apparently drawn from Article 4 of the
Labor Code, is misplaced, as Article 4 applies only when a doubt exists in
the "implementation and application" of the Labor Code and its
implementing rules; it does not apply where no doubt exists as in a
situation where the claimant clearly failed to substantiate his claim of
employment relationship by the quantum of evidence the Labor Code
requires.
Sonza vs ABS CBN
1. Independent contractors often present themselves to possess unique
Subject: Unique skills, talent and celebrity status not possessed by skills, expertise or talent to distinguish them from ordinary employees. The
ordinary employees are indicative of an independent contractor; The specific selection and hiring of SONZA, because of his unique skills, talent
power to bargain talent fees way above the salary scales of ordinary and celebrity status not possessed by ordinary employees, is a
employees indicates an independent contractual relationship’ A circumstance indicative, but not conclusive, of an independent contractual
radio/television broadcast specialist who works under minimal relationship. If SONZA did not possess such unique skills, talent and
supervision is an independent contractor; The KBP code applies to celebrity status, ABS-CBN would not have entered into the Agreement with
broadcasters, not to employees of radio and television stations; Not all SONZA but would have hired him through its personnel department just
rules imposed by the hiring party on the hired party indicate that the latter like any other employee.
is an employee of the former; In the broadcast industry, exclusivity is not
necessarily the same as control; Three parties involved in labor- only The power to bargain talent fees way above the salary scales of
contracting; Talents as Independent Contractors ordinary employees indicates an independent contractual
relationship
Facts:
2. All the talent fees and benefits paid to SONZA were the result of
ABS-CBN Broadcasting signed an Agreement with the Mel and Jay negotiations that led to the Agreement. If SONZA were ABS-CBN’s
Management and Development Corporation ("MJMDC"). The Agreement employee, there would be no need for the parties to stipulate on benefits
listed the services SONZA would render to ABS-CBN as co-host of Mel & Jay such as "SSS, Medicare, and 13th month pay" which the law automatically
program. ABS-CBN agreed to pay for SONZA’s services a monthly talent fee incorporates into every employer-employee contract. Whatever benefits
of P310,000 for the first year and P317,000 for the second and third year of SONZA enjoyed arose from contract and not because of an employer-
the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th employee relationship.
days of the month.
3. SONZA’s talent fees, amounting to P317,000 monthly in the second and
SONZA wrote a letter to ABS-CBN’s President wherein in view of his third year, are so huge and out of the ordinary that they indicate more an
resignation, he wanted to rescind the agreement. He filed a complaint independent contractual relationship rather than an employer-employee
against ABS-CBN before the DOLE wherein he complained that ABS-CBN relationship. Obviously, SONZA acting alone possessed enough bargaining
did not pay his salaries and other benefits. power to demand and receive such huge talent fees for his services. The
power to bargain talent fees way above the salary scales of ordinary
ABS-CBN filed a Motion to Dismiss on the ground that no employer- employees is a circumstance indicative, but not conclusive, of an
employee relationship existed between the parties. Meanwhile, ABS-CBN independent contractual relationship.
continued to remit SONZA’s monthly talent fees.
4. The parties expressly agreed on payment of talent fees. Under the
The Labor Arbiter ruled the Sonza was not a regular employee. The NLRC Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have
affirmed the decision of the Labor Arbiter. The Court of Appeals dismissed to turn over any talent fee accruing under the Agreement.
the special civil action for certiorari filed by Sonza. The company remained obligated to pay talent fees during the lifetime of
the agreement
Held:
5. For violation of any provision of the Agreement, either party may
Unique skills, talent and celebrity status not possessed by ordinary terminate their relationship. SONZA failed to show that ABS-CBN could
employees are indicative of an independent contractor terminate his services on grounds other than breach of contract, such as
retrenchment to prevent losses as provided under labor laws. Even if it
suffered severe business losses, ABS-CBN could not retrench SONZA The KBP code applies to broadcasters, not to employees of radio and
because ABS-CBN remained obligated to pay SONZA’s talent fees during the television stations
life of the Agreement.
11. The Agreement stipulates that SONZA shall abide with the rules and
A radio/television broadcast specialist who works under minimal standards of performance "covering talents" of ABS-CBN. The Agreement
supervision is an independent contractor does not require SONZA to comply with the rules and standards of
performance prescribed for employees of ABS-CBN. The code of conduct
6. Applying the control test, SONZA is not an employee but an independent imposed on SONZA under the Agreement refers to the "Television and
contractor. The greater the supervision and control the hirer exercises, the Radio Code of the KBP which has been adopted by the ABS-CBN as its Code
more likely the worker is deemed an employee. The converse holds true as of Ethics." The KBP code applies to broadcasters, not to employees of radio
well – the less control the hirer exercises, the more likely the worker is and television stations. Broadcasters are not necessarily employees of
considered an independent contractor. radio and television stations. Clearly, the rules and standards of
performance referred to in the Agreement are those applicable to talents
7. ABS-CBN did not exercise control over the means and methods of and not to employees of ABS-CBN.
performance of SONZA’s work. It did not assign any other work to SONZA.
To perform his work, SONZA only needed his skills and talent. SONZA had a Not all rules imposed by the hiring party on the hired party indicate
free hand on what to say or discuss in his shows provided he did not attack that the latter is an employee of the former
ABS-CBN or its interests. ABS-CBN was not involved in the actual
performance that produced the finished product of SONZA’s work. It did 12. In any event, not all rules imposed by the hiring party on the hired
not instruct SONZA how to perform his job. ABS-CBN merely reserved the party indicate that the latter is an employee of the former. In this case,
right to modify the program format and airtime schedule. Its sole concern SONZA failed to show that these rules controlled his performance. The
was the quality of the shows and their standing in the ratings. general rules are merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and radio programs
8. ABS-CBN could not terminate or discipline SONZA even if the means and that comply with standards of the industry.
methods of performance of his work - how he delivered his lines and
appeared on television - did not meet ABS-CBN’s approval. This proves that In the broadcast industry, exclusivity is not necessarily the same as
ABS-CBN’s control was limited only to the result of SONZA’s work, whether control
to broadcast the final product or not. In either case, ABS-CBN must still pay
SONZA’s talent fees in full until the expiry of the Agreement. 13. Being an exclusive talent does not by itself mean that SONZA is an
employee of ABS-CBN. Even an independent contractor can validly provide
9. ABS-CBN supplied the equipment, crew and airtime needed to broadcast his services exclusively to the hiring party. In the broadcast industry,
the "Mel & Jay" programs. However, the equipment, crew and airtime are exclusivity is not necessarily the same as control.
not the "tools and instrumentalities" SONZA needed to perform his
job.What SONZA principally needed were his talent or skills and the 14. The hiring of exclusive talents is a widespread and accepted practice in
costumes necessary for his appearance. the entertainment industry. This practice is not designed to control the
means and methods of work of the talent, but simply to protect the
10. A radio broadcast specialist who works under minimal supervision is investment of the broadcast station.
an independent contractor. SONZA’s work as television and radio program
host required special skills and talent, which SONZA admittedly possesses. Three parties involved in labor- only contracting
The records do not show that ABS-CBN exercised any supervision and
control over how SONZA utilized his skills and talent in his shows. 15. In a labor-only contract, there are three parties involved: (1) the
"labor-only" contractor; (2) the employeewho is ostensibly under the
employ of the "labor-only" contractor; and (3) the principal who is deemed
the real employer. Under this scheme, the "labor-only" contractor is the
agent of the principal. The law makes the principal responsible to the
employees of the "labor-only contractor" as if the principal itself directly
hired or employed the employees.

16. In this case, there is no labor-only contracting, there are essentially only
two parties involved under the Agreement, namely, SONZA and ABS-CBN.
MJMDC merely acted as SONZA’s agent. MJMDC is a management company
devoted exclusively to managing the careers of SONZA and his broadcast
partner, TIANGCO. MJMDC is not engaged in any other business, not even
job contracting. MJMDC does not have any other function apart from acting
as agent of SONZA or TIANGCO to promote their careers in the broadcast
and television industry.

Talents as Independent Contractors

17. The right of labor to security of tenure as guaranteed in the

Constitution arises only if there is an employer-employee relationship
under labor laws. Not every performance of services for a fee creates an
employer-employee relationship. Individuals with special skills, expertise
or talent enjoy the freedom to offer their services as independent
contractors. An individual like an artist or talent has a right to render his
services without any one controlling the means and methods by which he
performs his art or craft.
Orozco vs CA the mutually desired result are not indicative of the power of control

Subject: Four Fold test to determine whether there exists an employer- 3. The significant factor in determining the relationship of the parties is the
employee relationship; Rules which serve as general guidelines towards presence or absence of supervisory authority to control the method and the
the achievement of the mutually desired result are not indicative of the details of performance of the service being rendered, and the degree to
power of control; The Economic Reality Test means the economic which the principal may intervene to exercise such control.
dependence of the worker on his employer; A columnist is an independent
contractor 4. 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
Facts: guidelines towards the achievement of the mutually desired result are not
indicative of the power of control.
PDI engaged the services of Wilhelmina Orozco to write a weekly column
for its Lifestyle section. She religiously submitted her articles every week. 5. The main determinant therefore is whether the rules set by the employer
She received compensation of P300.00 – for every column published. Years are meant to control not just the results of the work but also the means and
later, PDI decided to terminate Orozco’s column because it failed to method to be used by the hired party in order to achieve such results.
improve, continued to be superficially and poorly written, and failed to
meet the high standards of the newspaper. 6. In this case, the so-called control as to time, space, and discipline are
dictated by the very nature of the newspaper business itself. The Inquirer is
Orozco filed a complaint for illegal dismissal, backwages, moral and the publisher of a newspaper of general circulation. As such, public interest
exemplary damages. The Labor Arbiter ruled in favor of Orozco. The NLRC dictates that every article appearing in the newspaper should subscribe to
affirmed the Labor Arbiter’s decision. The Court of Appeals reversed the the standards set by the Inquirer. It is usual for the Inquirer to control what
decision of NLRC and ruled that there was no employer- employee would be published in the newspaper. What is important is the fact that
relationship between Orozco and PDI. such control pertains only to the end result, i.e., the submitted articles. The
Inquirer has no control over its writer as to the means or method used by
Held: her in the preparation of her articles. The articles are done by writer
herself without any intervention from the Inquirer.
Four Fold test to determine whether there exists an employer-
employee relationship 7. Orozco has not shown that PDI, acting through its editors, dictated how
she was to write or produce her articles each week. There were no
1. The employment status of a person is defined and prescribed by law and restraints on her creativity; she was free to write her column in the manner
not by what the parties say it should be. 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
2. The “four-fold test” to determine whether there exists an employer- write only on subjects that befitted the Lifestyle section did not translate to
employee relationship between parties are: 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
(a) the selection and engagement of the employee; readers of that section.
(b) the payment of wages;
(c) the power of dismissal; and 8. PDI did not dictate how she wrote or what she wrote in her column.
(d) the employer’s power to control the employee’s conduct. Neither did PDI’s guidelines dictate the kind of research, time, and effort
she put into each column. In fact, Orozco herself said that she received “no
Rules which serve as general guidelines towards the achievement of comments on her articls except for her to shorten them to fit into the box
allotted to her column.”
 newspaper’s capacity to accommodate the same. It is a reality in the
9. The newspaper’s power to approve or reject publication of any specific newspaper business that space constraints often dictate the length of
article she wrote for her column cannot be the control contemplated in the articles and columns, even those that regularly appear therein.
“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 15. Also, PDI did not supply Orozco with the tools and instrumentalities she
important factor to consider in the “control test” is still the element of needed to perform her work. Orozco only needed her talent and skill to
control over how the work itself is done, not just the end result thereof. come up with a column every week. As such, she had all the tools she
needed to perform her work.
10. 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.

The Economic Reality Test means the economic dependence of the

worker on his employer

11. Aside from the control test, the economic reality test can also be used.
In our jurisdiction, the benchmark of economic reality in analyzing possible
employment relationships ought to be the economic dependence of the
worker on his employer.

12. In this case, Orozco’s main occupation is not as a columnist for PDI 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 Orozco was not dependent on PDI for her continued
employment in PDI’s line of business.

A columnist is an independent contractor

13. An independent contractor is one who carries on a distinct and

independent business and undertakes to perform the job, work, or service
on one’s own account and under one’s own responsibility according to
one’s own manner and method, free from the control and direction of the
principal in all matters connected with the performance of the work except
as to the results thereof.

14. In this case, Orozco was engaged as a columnist for her talent, skill,
experience, and her unique viewpoint as a feminist advocate. How she
utilized all these in writing her column was not subject to dictation by PDI.
PDI was not involved in the actual performance that produced the finished
product. It only reserved the right to shorten Orozco’s articles based on the
Bernarte vs PBA
FACTS:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they
were invited to join the PBA as referees. During the leadership
of Commissioner Emilio Bernardino, they were made to sign contracts on a
year-to-year basis. During the term of Commissioner Eala,
however,changes were made on the terms of their
employment. Complainant Bernarte, for instance, was not made to sign a
contract during the first conference of the All-Filipino Cup which was from
February 23,2003 to June 2003. It was only during the second conference
when he was made to sign a one and a half month contract for the period
July 1 toAugust 5, 2003. On January 15, 2004, Bernarte received a letter
from the Office of the Commissioner advising him that his contract would
not be renewed citing hisunsatisfactory performance on and off the court.
It was a total shock for Bernarte who was awarded Referee of the year in
2003. He felt that thedismissal was caused by his refusal to fix a game upon
order of Ernie De Leon. On the other hand, complainant Guevarra alleges
that he was invited to join the PBA pool of referees in February 2001. On
March 1, 2001, he signeda contract as trainee. Beginning 2002, he signed a
yearly contract as Regular Class C referee. On May 6, 2003, respondent
Martinez issued amemorandum to Guevarra expressing dissatisfaction
over his questioning on the assignment of referees officiating out-of-town
games. BeginningFebruary 2004, he was no longer made to sign a
contract. Respondents aver, on the other hand, that complainants entered
into two contracts of retainer with the PBA in the year 2003. The first
contract wasfor the period January 1, 2003 to July 15, 2003; and the second
was for September 1 to December 2003. After the lapse of the latter period,
PBAdecided not to renew their contracts.Complainants were not illegally
dismissed because they were not employees of the PBA. Their respective
contracts of retainer were simply notrenewed. PBA had the prerogative of
whether or not to renew their contracts, which they knew were fixed.In her
31 March 2005 Decision, the Labor Arbiter declared petitioner an
employee whose dismissal by respondents was illegal. Accordingly,
theLabor Arbiter ordered the reinstatement of petitioner and the payment
of backwages, moral and exemplary damages and attorney’s fees. The
NLRCaffirmed the Labor Arbiter's judgment. Respondents filed a petition
for certiorari with the Court of Appeals, which overturned the decisions of
the NLRC and Labor Arbiter.
ISSUE: Whether petitioner is an employee of respondents, which in turn
determines whether petitioner was illegally dismissed
HELD: NO, Petitioner is not an employee of the respondents. The SC
DENIED the petition and AFFIRMED the assailed decision of the Court of
Appeals.To determine the existence of an employer-employee relationship,
case law has consistently applied the four-fold test, to wit: (a) the selection
andengagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employer’s power to control the employee on
themeans and methods by which the work is accomplished. The so-called
“control test” is the most important indicator of the presence or absence of
anemployer-employee relationship.19 In this case, PBA admits repeatedly
engaging petitioner’s services, as shown in the retainer contracts. PBA
pays petitioner a retainer fee, exclusive of per diem or allowances, as
stipulated in the retainer contract. PBA can terminate the retainer contract
for petitioner’s violation of its terms andconditions.However, respondents
argue that the all-important element of control is lacking in this case,
making petitioner an independent contractor and not anemployee of
respondents.The contractual stipulations do not pertain to, much less
dictate, how and when petitioner will blow the whistle and makecalls. On
the contrary, they merely serve as rules of conduct or guidelines in order to
maintain the integrity of the professional basketball league. Ascorrectly
observed by the Court of Appeals, “how could a skilled referee perform his
job without blowing a whistle and making calls? x x x [H]owcan the PBA
control the performance of work of a referee without controlling his acts of
blowing the whistle and making calls?”We agree with respondents that
once in the playing court, the referees exercise their own independent
judgment, based on the rules of the game, as towhen and how a call
or decision is to be made. The referees decide whether an infraction was
committed, and the PBA cannot overrule them once thedecision is made on
the playing court. The referees are the only, absolute, and final authority on
the playing court. Respondents or any of the PBAofficers cannot and do not
determine which calls to make or not to make and cannot control the
referee when he blows the whistle because suchauthority exclusively
belongs to the referees. The very nature of petitioner’s job of officiating a
professional basketball game undoubtedly calls for freedom of control by
respondents.Moreover, unlike regular employees who ordinarily report for
work eight hours per day for five days a week, petitioner is required to
report for work only when PBA games are scheduled or three times a week
at two hours per game. In addition, there are no deductions for
contributions to the SocialSecurity System, Philhealth or Pag-Ibig,
which are the usual deductions from employees’ salaries. These undisputed
circumstances buttress the factthat petitioner is an independent
contractor, and not an employee of respondents.
Francisco vs NLRC
Subject: Two- tiered test to determine existence of employer-employee
relationship; Broader Economic Reality Test; The coverage of Social
Security Law is predicated on the existence of an employer-employee
relationship; A diminution of pay is prejudicial to the employee and
amounts to constructive dismissal
Facts:
Angelina Francisco was hired by Kasei Corporation as Accountant and
Corporate Secretary and was assigned to handle all the accounting needs of
the company. She was also designated as Liaison Officer to the City of
Makati. Although she was designated as Corporate Secretary, she was not
entrusted with the corporate documents; neither did she attend any board
meeting nor required to do so. She never prepared any legal document and
never represented the company as its Corporate Secretary. However, on
some occasions, she was prevailed upon to sign documentation for the
company.
Years later, she was designated Acting Manager where she was assigned to
handle recruitment of all employees and perform management
administration functions; represent the company in all dealings with
government agencies. In January 2001, Francisco was replaced by Liza R.
Fuentes as Manager. Francisco alleged that she was required to sign a
prepared resolution for her replacement but she was assured that she
would still be connected with Kasei Corporation. Thereafter, Kasei
Corporation reduced her salary by P2,500.00 a month and soon was not
paid for her salary. Francisco did not report for work and filed an action for
constructive dismissal.
In defense, by Kasei Corporation averred that Francisco is not its employee
and is only one of its technical consultants on accounting matters and act
concurrently as Corporate Secretary. As technical consultant, petitioner
performed her work at her own discretion without control and supervision.
The company never interfered with her work except that from time to time,
the management would ask her opinion on matters relating to her
profession. Francisco’s designation as technical consultant depended solely
upon the will of management. As such, her consultancy may be terminated
any time considering that her services were only temporary in nature and
dependent on the needs of the corporation.
The Labor Arbiter found that Franscisco was illegally dismissed. The NLRC
affirmed the decision of the LA. The Court of Appeals reversed the decision
of the NLRC and dismissed the complaint for constructive dismissal.
Held:
Two- tiered test to determine existence of employer-employee
relationship
1. The better approach to determine existence of employer-employee
relationship is to adopt a two-tiered testinvolving: (1) the putative
employer’s power to control the employee with respect to the means and
methods by which the work is to be accomplished; and (2) the underlying
economic realities of the activity or relationship. This is especially
appropriate where there is no written agreement or terms of reference to
base the relationship on and due to the complexity of the relationship
based on the various positions and responsibilities given to the worker
over the period of the latter’s employment.
Broader Economic Reality Test
2. The determination of the relationship between employer and employee
depends upon the circumstances of thewhole economic activity, such as:
(1) the extent to which the services performed are an integral part of the
employer’s business; (2) the extent of the worker’s investment in
equipment and facilities; (3) the nature and degree of control exercised by
the employer; (4) the worker’s opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of
the claimed independent enterprise; (6) the permanency and duration of
the relationship between the worker and the employer; and (7) the degree
of dependency of the worker upon the employer for his continued
employment in that line of business.
3. In this case, Francisco is an employee of Kasei Corporation because she
was under the direct control and supervision of Seiji Kamura, the
corporation’s Technical Consultant. She reported for work regularly and
served in various capacities with substantially the same job functions, that
is, rendering accounting and tax services to the company and performing
functions necessary and desirable for the proper operation of the
corporation. The corporation hired and engaged Francisco for
compensation, with the power to dismiss her for cause. More importantly,
the corporation had the power to control Francisco with the means and
methods by which the work is to be accomplished.

4. Under the broader economic reality test, Francisco can likewise be said
to be an employee of the corporation because she had served the company
for six years before her dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and allowances, as well
as deductions and Social Security contributions. As such, Francisco
is economically dependent on corporation for her continued employment
in the latter’s line of business.

The coverage of Social Security Law is predicated on the existence of

an employer-employee relationship

5. A corporation who registers its workers with the SSS is proof that the
latter were the former’s employees. The coverage of Social Security Law is
predicated on the existence of an employer-employee relationship. (See
Flores v. Nuestro)

A diminution of pay is prejudicial to the employee and amounts to

constructive dismissal

6. The corporation constructively dismissed Francisco when it reduced her

salary by P2,500 a month from January to September 2001. A diminution of
pay is prejudicial to the employee and amounts to constructive
dismissal. Constructive dismissal is an involuntary resignation resulting
in cessation of work resorted to when continued employment becomes
impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain
by an employer becomes unbearable to an employee.

7. Where an employee ceases to work due to a demotion of rank or a

diminution of pay, an unreasonable situation arises which creates an
adverse working environment rendering it impossible for such employee
to continue working for her employer. Hence, her severance from the
company was not of her own making and amounted to an illegal
termination of employment.
Matling v Coros
Held:
Subject: Where the illegal dismissal concerns a corporate officer, the
jurisdiction is with the RTC acting as special commercial court; An office Where the illegal dismissal concerns a corporate officer, the
created pursuant to or under a By-Law enabling provision is not a jurisdiction is with the RTC acting as special commercial court.
corporate office; The status or relationship of the parties or the nature of
the question that is the subject of their controversy must be considered in 1. As a rule, the illegal dismissal of an officer or other employee of a private
determining whether a dispute constitutes an intra-corporate controversy employer is properly cognizable by the Labor Arbiter. This is pursuant to
or not. Article 217 (a) 2 of the Labor Code, as amended

Facts: 2. Where the complaint for illegal dismissal concerns a corporate

officer, however, the controversy falls under the jurisdiction of the
Respondent Ricardo Coros filed a complaint for illegal suspension and Securities and Exchange Commission (SEC), because the controversy is
illegal dismissal against petitioner Matling Industrial and Commercial Corp. characterised as an as an intra-corporate dispute.
in the National Labor Relations Commission (“NLRC”), challenging his
dismissal as Vice President for Finance and Administration of the 3. Pursuant to Section 5.2 of Republic Act No. 8799 (The Securities
corporation. Regulation Code), which took effect on August 8, 2000, the SEC's
jurisdiction over all intra-corporate disputes was transferred to the
Matling moved for the dismissal of the said complaint, alleging that it is the Regional Trial Court (RTC),
Securities and Exchange Commission (“SEC”) which has jurisdiction due to
the controversy being intra-corporate inasmuch as Coros was a member of 4. Considering that the respondent's complaint for illegal dismissal was
the Board of Directors of the corporation aside from being its VP for commenced on August 10, 2000, it might come under the coverage of
Finance and Administration prior to his termination. Section 5.2 of RA No. 8799, should it turn out that the respondent was a
corporate, not a regular, officer of Matling.
The Labor Arbiter (“LA”) granted the said motion. On appeal, the NLRC set
aside the dismissal, concluding that the LA, not the SEC, has jurisdiction, An office created pursuant to or under a By-Law enabling provision is
because Coros was not a corporate officer, considering that his position as not a corporate office
Vice-President for Finance and Administration was not among the
positions listed in the corporation’s Constitution and By-Laws. 5. Conformably with Section 25 of the Corporation Code, a position must
be expressly mentioned in the By-Laws in order to be considered as a
Matling sought reconsideration, contending that the position of Vice corporate office. Thus, the creation of an office pursuant to or under a By-
President for Finance and Administration was a corporate office, having Law enabling provision is not enough to make a position a corporate office.
been created by the President of the corporation pursuant to a provision in
its By-Laws granting the President “full power to create new offices and to 6. An “office” is created by the charter of the corporation and the officer is
appoint the officers thereto as he may deem proper and necessary in the elected by the directors or stockholders. On the other hand, an employee
operations of the corporation and as the progress of the business and occupies no office and generally is employed not by the action of the
welfare of the corporation may demand”. directors or stockholders but by the managing officer of the corporation
who also determines the compensation to be paid to such employee. (see
The NLRC denied Matling’s motion for reconsideration. On appeal, the Easycall Communications Phils., Inc. vs King)
Court of Appeals affirmed the decision of the NLRC and denied the
subsequent motion for reconsideration filed by Matling. 7. In this case, respondent was appointed vice president for nationwide
expansion by the corporation’s President, not by its board of directors, who
also determined his compensation package. Thus, respondent was an
employee, not a “corporate officer”. The NLRC, not the SEC (now the
Regional Trial Court pursuant to Republic Act No. 8799), has jurisdiction
over respondent’s complaint.

8. Moreover, the power to elect the corporate officers was a discretionary

power that the law exclusively vested in the Board of Directors, and could
not be delegated to subordinate officers or agents. Therefore, the office of
Vice President for Finance and Administration created by the corporation’s
President pursuant to a By-Law provision was an ordinary, not a corporate,
office.

The status or relationship of the parties or the nature of the question

that is the subject of their controversy must be considered in
determining whether a dispute constitutes an intra-corporate
controversy or not.

9. Finally, the fact that the parties involved in the controversy are all
stockholders or that the parties involved are the stockholders and the
corporation does not necessarily place the dispute within the ambit of the
jurisdiction of SEC. The better policy to be followed in determining
jurisdiction over a case should be to consider concurrent factors such as
the status or relationship of the parties or the nature of the question that is
the subject of their controversy. In the absence of any one of these factors,
the SEC will not have jurisdiction. Furthermore, it does not necessarily
follow that every conflict between the corporation and its stockholders
would involve such corporate matters as only the SEC can resolve in the
exercise of its adjudicatory or quasi-judicial powers.

10. In this case, the Supreme Court considered the circumstances

surrounding respondent’s appointment to office to determine whether his
dismissal constituted an intra-corporate controversy or a labor termination
dispute. The Supreme Court found that respondent had started working for
the corporation in 1966, and had been employed continuously for 33 years
until his dismissal in 2000, and that his promotion to the position of Vice
President for Finance and Administration was by virtue of the length of
quality service he had rendered as an employee of the corporation. Thus,
citing the case of Prudential Bank and Trust Company vs Reyes, the
Supreme Court held that respondent was a regular employee of the
corporation having risen from the ranks and therefore, the complaint for
illegal suspension and illegal dismissal was correctly brought to the NLRC.