AC RANSOM LABOR UNION-CCLU v. NLRC [G.R. No. L-69494.

May 29, 1987]

FACTS:
AC Ransom Phil Corp was found guilty of unfair labor practice of interference & discrimination in a case filed by the UNION
against it before the Court of Industrial Relations (CIR). After finding the strike legal & justified, CIR ordered AC to reinstate the 22
employees w/ back wages.The UNION filed successive Motions for Execution for the back wages but AC refused and defended that it
does not have necessary funds.
Upon application, AC was cleared to cease operation & terminate employment due to financial difficulties & debts it had from
Commercial Bank & Trust Company (ComTrust).
UNION filed another Motion for Execution alleging that AC had organized a new corporation (Rosario Industrial Corporation),
using the same equipment, business stocks & same place of business. AC defended that ROSARIO was a distinct corporation that has
long been established even before cases were filed against them.
UNION filed an ex parte Motion for Execution & Garnishment. AC contended that the CIR decision could no longer be enforced
by mere motion for execution as more than 5 years had already lapsed. Still, LA ordered for the issuance of a writ of execution against
AC & its officers/agents. It appears that among the persons named as officers of AC were already dead.
AC appealed to NLRC w/c modified LAs decision by relieving the officers & agents of liability, as there was no justification.
GR: officers of a corp are not liable personally for the official acts unless they have exceeded the scope of their authority.
UNIONs MR was denied. Hence, this petition for certiorari. SC ruled that personal liability shall be limited to Ruben Hernandez
- ACs President. AC filed MR, alleging that it is tantamount to deprivation of property w/o due process & that Hernandez was not an
officer of AC at the time the ULPs were committed. UNION filed its MR as well praying that the veil of corporate fiction be pierced.
ISSUE:
W/N AC PRES RUBEN HERNANDEZ SHOULD BE HELD LIABLE FOR THE ULP
RULING:
YES. The inclusion of the officers & agents was but proper since a corporation, as an artificial being, can only act through them.
It was pursuant to CIR Act No. 103, Industrial Peace Act (RA 875( & the Minimum Wage Law (RA 602). SC had properly limited the
liability to the President jointly & severally, with other presidents of the same corp who had been elected as such after 1972/up to the
time the corp life was terminated, since the President should also deemed included in the term employer. (ito na yata yung

issue on point? Walang ibang nabanggit sa case about ee v. er)

As to the back wages naman: ACs alleged bankruptcy is not a justification for non-payment of backwages.
ART 110 of Labor Code gives preference to workers in case of bankruptcy. This applies even if the ers
properties are encumbered by means of a mortgage contract, as in this case. So that, when machinery and
equipment of AC were sold to Revelations Manufacturing Corporation, The right of the 22 laborers to be paid
from the proceeds should have been recognized, even though it is claimed that those proceeds were turned over
to the Commercial Bank and Trust Company (Comtrust) in payment of AC obligations, since the workers
preference is over and above the claim of other creditors.
Aggravating ACs clear evasion of payment of its financial obligations is the organization of a "run-away
corporation," ROSARIO, in 1969 at the time the unfair labor practice case was pending before the CIR by the
same persons who were the officers and stockholders of AC. The corporation will be treated merely as an
aggregation of individuals or, where there are two corporations, they will be merged as one, the one being
merely regarded as part of the instrumentality of the other.

TAPE V. SERVAA [G.R. No. 167648. January 28, 2008]

FACTS:
Tape (Television & Production Exponents, Inc.) is engaged in the production of tv programs such as Eat
Bulaga. Antonio Tuviera, as its president is impleaded in this case. Roberto Servaa was a security guard for
TAPE from March 1987 until his employments termination on March 3 2000.
Servaa filed a complaint for illegal dismissal & nonpayment of benefits against TAPE. He alleged that he
was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular
company guard. He was detailed at Broadway Centrum in Quezon City where Eat Bulaga! regularly staged its
productions. On March 2, 2000, he just received a memo informing him of his impending dismissal on account
of TAPEs decision to contract the services of a professional security agency. To him, this is w/o due process &
violative of existing labor laws, aggravated by nonpayment of separation pay.
TAPE filed a Motion to Dismiss, contending that there was no ee-er relationship, hence, LA had no
jurisdiction. It further averred that Servaa was an independent contractor falling under the talent group
category & was working under a special arrangement. Accdg. To TAPE:
1. Servaa was initially employed as secu guard for RPN-9
2. He was tasked to assist TAPE during live prod to control the crowd
3. When RPN-9 severed its relationship w/ secu agency, TAPE engaged Servaas services as part of
support group & this a talent to provide security services for EB & control the audience during the 1 1/2 hour
noon-time program
4. Termination of employment was due to redundancy
Servaa insisted that he was a regular ee engaged to perform an activity that is necessary & desirable to
TAPEs business for 13 years. LA declared that he is indeed a regular ee of TAPE. relied on the nature of the
work of respondent, which is securing and maintaining order in the studio, as necessary and desirable in the
usual business activity of TAPE. The Labor Arbiter also ruled that the termination was valid on the ground of
redundancy & ordered payment of his separation pay.
On appeal, NLRC considered Servaa as a mere program ee. It ratiocinated that the primary standard to
determine regularity of employment is the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer. TAPE is engaged in the business of
production of television shows. In such industry, security services may not be deemed necessary and desirable
in the usual business of the employer. Servaa was indubitably a program employee of respondent company.
Unlike [a] regular employee, he did not observe working hours x x x. He worked for other companies, such as
M-Zet TV Production, Inc. at the same time that he was working for respondent company. The foregoing
indubitably shows that complainant-appellee was a program employee. Otherwise, he would have two (2)
employers at the same time.
CA found Servaa to be a regular ee.
ISSUE:
W/N SERVAA IS A REGULAR EE OR JUST A TALENT
RULING: regular ee
TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in classifying respondent as a
program employee and equating him to be an independent contractor. It defines program emloyees as those
whose skills, talents or services are engaged by the station for a particular or specific program or undertaking
and who are not required to observe normal working hours such that on some days they work for less than eight

(8) hours and on other days beyond the normal work hours observed by station employees and are allowed to
enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies.
There must be a written contract specifying, among other things, the nature of the work to be performed, rates
of pay and the programs in which they will work. The contract shall be duly registered by the station with the
Broadcast Media Council within three (3) days from its consummation.
TAPE failed to prove that it complied with the requirements laid down in such policy instruction.
Servaa is not even an independent contractor. An independent contractor is not an employee of the
employer, while a talent or program employee is an employee. The only difference between a talent or program
employee and a regular employee is the fact that a regular employee is entitled to all the benefits that are being
prayed for.
As to Tuviera, he is not liable as there is no proof that he acted w/ malice/bad faith.
FACTORS TO BE CONSIDERED IN DETERMINING EXISTENCE OF EE-ER RELATIONSHIP
(baka lang itanong)
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the employee with respect to the means and method by which the work
is to be accomplished

PETROLEUM SHIPPING v. NLRC ]G.R. No. 148130. June 16, 2006]

FACTS:
In 1978, Esso International Shipping (Bahamas) Co., Ltd., (Esso) through Trans-Global Maritime Agency,
Inc. (Trans-Global) hired Florello W. Tanchico (Tanchico) as First Assistant Engineer. (ESSO SHIPPING
DATING PANGALAN NG PETROLEUM SHIPPING) Tanchico became the chief engineer in 1981. He had a
2 month vacation in the Philippines after completing his 8 month deployment.
Before boarding, he underwent the required standard medical exam wherein he was found out to have
Ischemic Heart Disease, Hypertensive Cardio-Muscular Disease and Diabetes Mellitus. He took medications for
2 months & a subsequent stress test showed negative result. However, he was no longer employed by Esso, but
it offered to pay benefits under teh Career Employment Incentive Plan w/c Tanchico accepted.
A year after, Tanchico filed a complaint before the POEA for illegal dismissal w/ claims for backwages,
separation pay, disability & medical benefits & 13 th month pay. Pursuant to RA 8042, the case involving money
claims of overseas worker was transferred to NLRC. Meanwhile, LA dismissed the complaint. Tanchico
appealed to NLRC w/ affirmed LA & later on reversed its own decision upon Tanchicos MR. NLRC ruled that
Tanchico is entitled to disability benefit for 18 days. ESSO & Trans-Global filed MR - DENIED. CA affirmed
NLRCs decision in toto. CA ruled that Tanchico was a regular ee & that Petroleum Shipping is not exempted
from the coverage of PD 851 w/c mandates the payment of 13 th month pay to all ees. Tanchico is entitled to
disability benefits & that ee-er relationship subsisted even during his vacation.
Petroleum Shippings MR was denied. CA modified its decision by deducting Tanchicos vactaion from his
length of service.
ISSUE:
W/N TANCHICO WAS A REGULAR EE OF PETROLEUM SHIPPING
RULING:

NO. SEAFARERS ARE CONTRACTUAL EES. - RAVAGO V. ESSO EASTERN MARINE, LTD.,
They can not be considered as regular employees under Article 280 of the Labor Code. Their employment
is governed by the contracts they sign everytime they are rehired and their employment is terminated when the
contract expires. Their employment is contractually fixed for a certain period of time. They fall under the
exception of Article 280 whose employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.
-MILLARES V. NLRC
Filipino seamen are governed by the Rules and Regulations of the POEA. The Standard Employment
Contract governing the employment of All Filipino Seamen on Board Ocean-Going Vessels of the POEA,
particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed period. And in
no case should the contract of seamen be longer than 12 months.
The circumstance of continuous re-hiring was dictated by practical considerations that experienced crew
members are more preferred. this does not detract the fact that seafarers are contractual employees.
As to the benefits: Tanchicos employmen is governed by his Contract of Enlistment w/c does not provide
for the payment of 13th month pay. Even the Rules & Regulations Governing Overseas Employment do not
provide for separation/termination pay. In the absence of concrete proof that Tanchico acquired his disability
during his last deployment and not during his vacation, he is only entitled to disability benefits for 18 days.

UNIVERSAL ROBINA SUGAR MILLING CORPORATION V. ACIBO [G.R. No. 186439. January 15,
2014]
FACTS:
URSMCO is engaged in sugar cane millingbusiness. Rene Cabati is its Business Unit Gen. Manager.
Ferdinand Acibo, et al were its ees who were hired on various dates between 1988 & 1996 on different
capacities: drivers, crane operators, bucket hookers, welders, mechanics, laboratory attendants and aides, steel
workers, laborers, carpenters and masons, among others. They signed contracts of employment for 1 month/ for
a given season. URSMCO repeatedly hired them to perform same duties & for every engagement, required
them to signed over new contracts for the same duration.
In 2002, they filed before LA complaints for regularization, entitlement to benefits under CBA. LA
dismissed the complaint for lack of merit & held that they were seasonal/project workers & not regular ees. LA

pointed out that the complainants were required to perform, for a definite period, phases of URSUMCOs
several projects that were not at all directly related to the latters main operations. Therefore, they could not be
regularized & were not entitled to CBA benefits w/c covered only regular ees.
Seven of them appealed before NLRC w/c reversed LAs decision. They performed activities which were
usually necessary and desirable in the usual trade or business of URSUMCO, and had been repeatedly hired for
the same undertaking every season. Thus, under ART 280 of the Labor Code, they are regular ees.
URSMCO MR - DENIED. It appealed to CA, w/c maintained that Acibo, et al are regular ees but deleted
the grant of monetary benefits under CBA. CA pointed out that the primary standard for determining regular
employment is the reasonable connection between a particular activity performed by the employee vis--vis the
usual trade or business of the employer. This connection, in turn, can be determined by considering the nature of
the work performed and the relation of this work to the business or trade of the employer in its entirety. The
arious activities that the complainants were tasked to do were necessary, if not indispensable, to the nature of
URSUMCOs business.
ISSUE:
W/N ACIBO, ET AL ARE REGULAR EES OF URSMCO
RULING:
REGULAR SEASONAL EES
1. They were made to perform various tasks that did not at all pertain to any specific phase of URSUMCOs
strict milling operations that would ultimately cease upon completion of a particular phase in the milling of
sugar; rather, they were tasked to perform duties regularly and habitually needed in URSUMCOs operations
during the milling season. As in the milling of sugarcane, the plantation workers perform their duties only
during the planting season.
2. They were regularly and repeatedly hired to perform the same tasks year after year. This regular and
repeated hiring of the same workers (two different sets) for two separate seasons has put in place, principally
through jurisprudence, the system of regular seasonal employment in the sugar industry and other industries
with a similar nature of operations.
3. While URSMCO asserts that Acibo, et al were free to work elsewhere during the off-season, the records
do not support this assertion.
3 KINDS OF EMPLOYMENT ARRANGEMENTS (ART 280 LABOR CODE)
A. Regular employment refers to that arrangement whereby the employee "has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer.
B. Project employment contemplates on arrangement whereby "the employment has been fixed for a
specific project or undertaking whose completion or termination has been determined at the time of the
engagement of the employee.
Seasonal employment operates much in the same way as project employment, albeit it involves work or
service that is seasonal in nature or lasting for the duration of the season.
C. Casual employment refers to any other employment arrangement that does not fall under any of the
first two categories, i.e., regular or project/seasonal.

DM CONSUNJI v. JAMIN [G.R. No. 192514. April 18, 2012]

FACTS:
In 1968, DMCI, a construction company, hired Estelito Jamin as a laborer who became a helper carpenter
in 1975. His employment contract had been renewed a number of times. In 1999, his work at DCMI was
terminated due to the completion of SM Manila project. He was not rehired again.
He filed a complaint for illegal dismissal w/ several money claims, alleging that there was no just &
authorized cause at a time when he was already 55 years old & had no independent source of livelihood. He
rendered services to DCMI continuously for 31 years. Aside form the schedule of projects he was assigned to,
he also had 3 projects: Twin Towers, Ritz Towers & New Istana Project.
DMCI denied liability & argued that it hired Jamin on a project-to-project basis & that it submitted a report
to DOLE every time it terminated his services. LA dismissed the complaint for lack of merit. Jamin was a
project ee whose services had been terminated due to the completion of the project where he was assigned. On
appeal, NLRC had the same findings. CA, on the other hand, held that Jamin was a regular ee, basing it on:
1) Jamins repeated and successive rehiring in DMCIs various projects; and
2) the nature of his work in the projects he was performing activities necessary or desirable in DMCIs
construction business
CA further declared that his dismissal was illegal. DMCI MR - DENIED.
ISSUE:
W/N JAMIN WAS A REGULAR EE
RULING:
YES. Assuming, without granting, that JAMIN was initially hired for specific projects or undertakings, the
repeated re-hiring and continuing need for his services for 31 years have undeniably made him a regular
employee. He was hired 38 times. while the contracts indeed show that Jamin had been engaged as a project
employee, there was an almost unbroken string of Jamins rehiring from December 17, 1968 up to the
termination of his employment on March 20, 1999.
In all the 38 projects where DMCI engaged Jamins services, the tasks he performed as a carpenter were
indisputably necessary and desirable in DMCIs construction business.
Once a project or work pool employee has been:
(1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of
tasks; and
(2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer,
then the employee must be deemed a regular employee. - Maraguinot, Jr. v. NLRC

Sonza V. Abs-cbn [G.R. No. 138051. June 10, 2004]

Facts:
In 1994, ABS-CBN & Mel & Jay mgmt devt corp (MJMdc) signed an agreement. ABS was represented by
its corporate officers while MJMDC was represented by Jose SOnza (Pres & Gen Manager) & Carmela Tiangco
(EVP & Treasurer). MJMDC (agent) agreed to provide Sonzas services exclusively to ABS as talent (co-host)
for radio & tv. ABS agreed to pa Sonzas services a monthly talent fee. In 1996, Sonza wrote a letter to ABS
President Eugenio Lopez III informing him that Sonza irrevocably resigned in view of recent events concerning
his programs & career. Such is violative of their agreement, and as such, a breach. This letter also served as a
notice of rescission of their Agreement. Sonza waived & renounce recovery of remaining amount under the
Agreemnet but reserves the right to seek recover of other benefits.
Sonza filed a complaint against ABS before DOLE for nonpayment of his salaries, saparation pay, service
incentive leave pay, 13th month pay, signing bonus, travel allowance & amounts due under Ees Stock Option
Plan. ABS filed a motion to dismiss as there was no ee-er relationship. - DENIED. Meanwhile, ABS continued
to remit Sonzas talent fee through his account.
They were required to file their position papers. Sonza replied with Motion to Expunge the affidavits of
Soccoro Vidanes & Roland Cruz where they state that the prevailing practice in tv & broadcast industry is to
treat talents like Sonza as independent contractor. LA dismissed the complaint for lack of jurisdiction, yet
declared that Sonza cannot be considered as an ee by reason of the peculiar circumstances surrounding the
engagement of his services. It noted that he was engaged by respondent by reason of his peculiar skills and
talent as a TV host and a radio broadcaster. Unlike an ordinary employee, he was free to perform the services he
undertook to render in accordance with his own style. The benefits conferred to complainant under the May
1994 Agreement are certainly very much higher than those generally given to employees. For one, complainant
Sonzas monthly talent fees amount to a staggering P317,000. Moreover, his engagement as a talent was covered
by a specific contract. Likewise, he was not bound to render eight (8) hours of work per day as he worked only
for such number of hours as may be necessary. Whatever benefits complainant enjoyed arose from specific
agreement by the parties and not by reason of employer-employee relationship.
Sonza appealed to NLRC w/c affirmed LA. His petition for certiorari w/ CA was dismissed.
ISSUE:
W/N SONZA IS AN EE OF ABS-CBN
RULING:

NO. There is no case law in the Philippines stating that a radio & tv program host is an ee of the brodcast
station. SC referred to foreign case law. In lberty-Vlez v. Corporacin De Puerto Rico Para La Difusin Pblica
(WIPR) that a television program host is an independent contractor. Applying the control test, Sonza is not an ee
but an independet contractor. ABS-CBN did not assign any other work to SONZA. To perform his work,
SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded
on radio were outside ABS-CBNs control. SONZA did not have to render eight hours of work per day. The clear
implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack
ABS-CBN or its interests.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means
and methods of the performance of his work. Although ABS-CBN did have the option not to broadcast
SONZAs show, ABS-CBN was still obligated to pay SONZAs talent fees. Thus, even if ABS-CBN was
completely dissatisfied with the means and methods of SONZAs performance of his work, or even with the
quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA.
SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and
crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the Mel & Jay
programs. However, the equipment, crew and airtime are not the tools and instrumentalities SONZA needed to
perform his job. What SONZA principally needed were his talent or skills and the costumes necessary for his
appearance.
A radio broadcast specialist who works under minimal supervision is an independent contractor. Individuals
with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors.
As to SOnzas reliance on Policy # 40: The classification of workers in the broadcast industry into only two
groups (station & program ees) under Policy Instruction No. 40 is not binding on this Court, especially when the
classification has no basis either in law or in fact. It is a mere exec issuance w/o the force & effect of law.

LAZARO v. SOCIAL SECURITY COMMISSION [G.R. No. 138254. July 30, 2004]
FACTS:
Rosario Laudato filed a petition before the SSC for social security coverage & remittance of unpaid
monthly social security contributions against her 3 ers. Angelito Lazaro is the proprietor of Royal Star
Marketing, w/c is engaged in selling home appliances. Laudato alleged that she is a sales supervisor of Royal
Stars sales agents form 1979 to 1986. And during those years, Lazaro failed to report her to SSC for
compulsory coverage/remit her social security contributions.
Lazaro insisted that Laudato was a mere sales agent whom he paid purely on a commissional basis. He also
said that she was no subjected to definite hours & conds of work, hence, Laudato cannot be considered as Royal
Stars ee.
SSC ruled in favor of Laudato. Applying the control test, it held that Laudato was an employee of Royal
Star, and ordered Royal Star to pay the unremitted social security contributions of Laudato together w/ penalties
& damages. Lazaros MR - DENIED.
CA sustained SSC. Before SC, Lazaro insisted that Laudato was not qualified for social security coverage

as she was not Royal Stars ee, her income dependent on a gen of sales & based on commissions. And that
Royal Star had no control over Laudatos activities, hence, she could not be deemed an ee.
ISSUE:
W/N LAUDATO IS DEEMED AN EE OF ROYAL STAR
RULING:
YES. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the
determination of employer-employee relationship warrants the application of the 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
done, but also as to the means and methods by which the same is accomplished.
The fact that Laudato was paid by way of commission does not preclude the establishment of an employeremployee relationship. Neither does it follow that a person who does not observe normal hours of work cannot
be deemed an employee.
Laudato was a sales supervisor and not a mere agent. Laudato oversaw and supervised the sales agents of
the company, and thus was subject to the control of management as to how she implements its policies and its
end results.

SEVILLA v. CA [G.R. No. L-41182-3 April 16, 1988]

FACTS:
Segundina Noguera & the Tourist World Service, Inc as represented by Eliseo Canilao entered into a
contract. TWS leased Nogueras property for its use as a branch office. When the branch office opened, it was
run by Una Sevilla payable to Tourist World Service Inc. by any airline for any fare brought in on the efforts of
Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be withheld by the Tourist World Service, Inc.
TWS was informed that Lina Sevilla was connected w/ a rival firm, the Philippine Tracvel Bureau & since
the branch ffice was anyhow losing, TWS considered closing down its office.
In 1962, the contract was terminated.TWS corporate sec Gabino Canilao went over & padlocked the
premises. When neither Lina Sevilla nor any of her ees could enter the premises, they filed a complaint for the
issuance of a preliminary injunction. BOth partes answered w/ counterclaims. The case was DISMISSED.
Noguera sought reconsideration & his case was revived together with that of Sevillas upon refiling. Sevilla
contend, among others, that she was not an ee of TWS & she merely had a joint business venture w/ it. She did
not receive any salary, nor was she an ee, having no particiaption in/connection w/ said business. TWS alleged
that Sevilla is its ee, being designated as a manager. The trial court ruled in favor of TWS & that it was w/n its
prerogative to terminated & padlock the premises. Sevilla, being an ee, is bound by her ers acts. CA affirmed
this ruling.
ISSUE:
W/N SEVILLA IS TWS EE
RULING:
NO. In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee
relation. In general, we have relied on the so-called right of control test, "where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the means to be used
in reaching such end." In addition, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, were also considered in determining the existence of an employeremployee relationship.
The records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent
Tourist World Service, Inc., either as to the result of the enterprise or as to the means used in connection
therewith. In the first place, under the contract of lease covering the Tourist Worlds Ermita office, she had
bound herself in solidum as and for rental payments, an arrangement that would be like claims of a masterservant relationship. This liability was later on minimized into a mere guaranty.
It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in
commissions from airline bookings, the remaining 3% going to Tourist World. Unlike an employee then, who
earns a fixed salary usually, she earned compensation in fluctuating amounts depending on her booking
successes.
The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist World's
employee. As we said, employment is determined by the right-of-control test and certain economic parameters.
But titles are weak indicators.
She was considered as an agent, having agreed to woman (man. Kaloka) TWS branch office.

ESCASINAS v. SHANGRI-LAS MACTAN ISLAND RESORT [G.R. No. 178827. March 4, 2009]
FACTS:
Jeromie D. Escasinas and Evan Rigor Singco were registered nurses engaged in 1999 & 1996 by Dr. Jessica
Pepito to work in her clinic at Shangri-las Mactan Island Resort, of w/c she was a retained physician. In 2002,
Escasinas & Singco filed before NLRC filed a complaint for regularization underpayment of wages, nonpayment of holiday pay, night shift differential and 13th month pay differential, claiming that they were regular
ees. Shangri-la however defended that they were not its ees, but of Dr. Pepitos by virtue of a MOA pursuant to
ARt 157 of the Labor Code. Dr. Pepito contended that the two were already employed there even before she
was retained by Shangri-la. She maintained their services upon their request.
LA ruled that Escasinas & Singco were regular ees, hence, entitles to wages & benefits demanded. It
ratiocinated that:
1.
2.
3.
4.
5.

They usually perform work which is necessary and desirable to Shangri-las business;
they observe clinic hours and render services only to Shangri-las guests and employees;
payment for their salaries were recommended to Shangri-las Human Resource Department (HRD);
Dr. Pepito was Shangri-las in-house physician, hence, also an employee;
The MOA between Shangri-la and Dr. Pepito was an insidious mechanism in order to circumvent
the doctors tenurial security and that of the employees under her.

Shangri-la & Dr. Pepito appealed to NLRC, w/c granted such & dismissed the complaint. It found that there
was no ee-er relationship. It held that LA erred in applying Art 157 in rel to Art 280 of Labor Code, as what is
required under Article 157 is that the employer should provide the services of medical personnel to its
employees, but nowhere in said article is a provision that nurses are required to be employed.
Escasinas & Singco appealed to CA, w/c affirmed NLRC. Since Shangri-la is not principally engaged in the
business of providing medical or healthcare services, they could not be regarded as regular employees of
Shangri-la. MR Denied, hence, this present recourse.
ISSUE:
W/N DR. PEPITO IS AN INDEPENDENT CONTRACTOR
RULING:
YES. The existence of an independent and permissible contractor relationship is generally established by
considering the following determinants:
1. whether the contractor is carrying on an independent business;
2. the nature and extent of the work; the skill required;
3. the term and duration of the relationship;
4. the right to assign the performance of a specified piece of work;
5. the control and supervision of the work to another;
6. the employer's power with respect to the hiring, firing and payment of the contractor's workers;

7.
8.
9.

the control of the premises;

the duty to supply the premises, tools, appliances, materials and labor;
and the mode, manner and terms of payment.

Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does
not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance
of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly
related to Shangri-las principal business operation of hotels and restaurants. As to payment of wages, Dr. Pepito
is the one who underwrites the salaries & other benefits of the staff. It is unlikely that respondent doctor would
report Escasinas & Singco as workers, pay their SSS premium as well as their wages if they were not indeed her
employees. Also, it is the Clinic Policies and Employee Manual prepared by Dr. Pepito that governs their
employment.
DOLE Department Order No. 10, series of 1997:
Sec. 8. Job contracting. There is job contracting permissible under the Code if the following
conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the performance of the work except as to the
results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in the conduct of his business.

Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall
be deemed to be engaged in labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises and other materials; and

(2) The workers recruited and placed by such persons are performing activities which are directly
related to the principal business or operations of the employer in which workers are habitually employed.

(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor
shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers
in the same manner and extent as if the latter were directly employed by him.

(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders
whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after
considering the operating needs of the employer and the rights of the workers involved. In such case, he may
prescribe conditions and restrictions to insure the protection and welfare of the workers.
BABAS v. LORENZO SHIPPING [G.R. No. 186091. December 15, 2010]
FACTS:
Lorenzo Shipping Corp owns several equipments necessary for its business. In 1997, it entered into General
Equipment Maintenance Repair and Management Services Agreement with Best Manpower Services, Inc.
(BMSI). Under the Agreement, BMSI undertook to provide maintenance and repair services to LSCs container
vans, heavy equipment, trailer chassis, and generator sets. BMSI further undertook to provide checkers to
inspect all containers received for loading to and/or unloading from its vessels.
Simultaneous with the execution of the Agreement, LSC leased its equipment, tools, and tractors to BMSI.
The period of lease was coterminous with the Agreement. BMSI then hired Emmanuel Babas, et al on various
dates to work at LSC as checkers, welders, utility men, clerks, forklift operators, motor pool and machine shop
workers, technicians, trailer drivers, and mechanics. Afer 6 years, they entered into a service contract w/ BMSI.
They filed a complaint for regularization before LA against BMSI & LSC. LSC terminated the Agreement,
causing Babas, et al to lose their employment. BMSI asserted that it is an independent contractor. It averred that
it was willing to regularize petitioners; however, some of them lacked the requisite qualifications for the job.
BMSI was willing to reassign petitioners who were willing to accept reassignment. BMSI denied petitioners

claim for underpayment of wages and non-payment of 13thmonth pay and other benefits. LSC defended that
Babas, et al were not their ees but of BMSI. LA dismissed the complaint, finding that they were indeed ees of
BMSI.
Babas et al appealed to NLRC & argued that BMSI was engaged in labor-only contracting. They insisted
that their employer was LSC. NLRC reversed LA & ruled that BMSI is not engaged in legitimate job
contracting as it has no equipment, no office premises, no capital and no investments. Also, it has no
independent business or activity or job to perform in respondent LSC free from the control of respondent LSC
except as to the results thereof. And it has no other client, but LSC. It ruled that LSC is the er of Babas, et al.
CA reversed NLRC & ruled that BMSI was an independent contractor, since BMSI had substantial capital,
as shown by its ability to pay rents to LSC. It added that even under the control test, BMSI would be the real
employer of petitioners, since it had assumed the entire charge and control of petitioners services. It further held
that BMSI has a Certificate of Registration as an independent contractor.
ISSUE:
W/N BMSI IS AN INDEPENDENT CONTRACTOR OR A LABOR-ONLY CONTRACTOR
RULING: LABOR-ONLY CONTRACTOR
In labor-only contracting, the following elements are present: (a) the contractor or subcontractor does not
have substantial capital or investment to actually perform the job, work, or service under its own account and
responsibility; and (b) the employees recruited, supplied, or placed by such contractor or subcontractor perform
activities which are directly related to the main business of the principal.
REQUISITES TO CONSIDER A PERSON AS AN INDEPENDENT CONTRACTOR:
(a) The contractor carries on a distinct and independent business and undertakes the contract work
on his account under his own responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected with the performance of
his work except as to the results thereof;

(b) The contractor has substantial capital or investment; and

(c) The agreement between the principal and the contractor or subcontractor assures the contractual
employees' entitlement to all labor and occupational safety and health standards, free exercise of
the right to self-organization, security of tenure, and social welfare benefits.
Babas, et al worked at LSCs premises, and nowhere else. LSC failed to prove that BMSI had a substantial
capital. Babas, et al performed activities which were directly related to the main business of LSC. BMSI had no
other client except for LSC, and neither BMSI nor LSC refuted this, thereby bolstering the NLRC finding that
BMSI is a labor-only contractor.
Also, a Certificate of Registration issued by the Department of Labor and Employment is not conclusive
evidence of such status. The fact of registration simply prevents the legal presumption of being a mere laboronly contractor from arising.
Consequently, the workers that BMSI supplied to LSC became regular employees of the latter.

COCA-COLA BOTTLERS v. AGITO, ET AL [G.R. No. 179546. February 13, 2009]

FACTS:
Coca-Cola Bottlers is engaged in manufacturing, bottling and distributing soft drink beverages and other
allied products. Alan Agito, et al filed before the NLRC two complaints against Coca-Cola, Interserve, Peerless
Integrated Services, Inc., Better Builders, Inc., and Excellent Partners, Inc. for reinstatement with backwages,
regularization, nonpayment of 13th month pay, and damages.
They alleged that they were salesmen assigned at the Lagro Sales Office of Coca-Cola They had been
employed for years, but were not regularized. Their employment was terminated on 8 April 2002 without just
cause and due process. However, no reason was stated on why they filed cases against the other companies.
Coca-Cola defended that Agito, et al were employees of Interserve tasked to perform contracted services in
accordance with the provisions of the Contract of Services between Coca-Cola & Interserve, the latter being an
independent contractor. Coca-Cola sought the dismissal of the complaint, there being no ee-er relationship
between it & the complainants. LA ruled in favor of Coca-Cola & directed Interserve to pay for the pro-rated
13th month pay.
Agito, et al appealed to NLRC, w/c affirmed LA & pronounced that no employer-employee relationship
existed between petitioner and respondents. It reiterated that Interserve was an independent contractor as
evidenced by its substantial assets and registration with the DOLE. On appeal, CA reversed NLRC. It ruled that
Interserve was a labor-only contractor, with insufficient capital and investments for the services which it was
contracted to perform. Coca-Cola had effective control over the means and method of respondents work as
evidenced by the Daily Sales Monitoring Report, the Conventional Route System Proposed Set-up, and the
memoranda issued by the supervisor of petitioner addressed to workers, who, like Agito, et al, were supposedly
supplied by contractors.
ISSUE:
W/N INTERSERVE IS AN INDEPENDENT (LEGITIMATE JOB) CONTRACTOR OR LABOR-ONLY
CONTRACTOR
RULING: LABOR-ONLY CONTRACTOR
A legitimate job contract, wherein an employer enters into a contract with a job contractor for the
performance of the formers work, is permitted by law. Thus, the employer-employee relationship between the
job contractor and his employees is maintained. In legitimate job contracting, the law creates an employeremployee relationship between the employer and the contractors employees only for a limited purpose, i.e., to
ensure that the employees are paid their wages. The employer becomes jointly and severally liable with the job
contractor only for the payment of the employees wages whenever the contractor fails to pay the same. Other
than that, the employer is not responsible for any claim made by the contractors employees.
On the other hand, labor-only contracting is an arrangement wherein the contractor merely acts as an agent
in recruiting and supplying the principal employer with workers for the purpose of circumventing labor law
provisions setting down the rights of employees. It is not condoned by law. Labor-only contracting would give
rise to: (1) the creation of an employer-employee relationship between the principal and the employees of the
contractor or sub-contractor; and (2) the solidary liability of the principal and the contractor to the employees in
the event of any violation of the Labor Code.
The law clearly establishes an employer-employee relationship between the principal employer and the
contractors employee upon a finding that the contractor is engaged in labor-only contracting.
Agito, et al worked for petitioner as salesmen, with the exception of respondent Gil Francisco whose job
was designated as leadman. Their work, constituting distribution and sale of Coca-Cola products, is clearly
indispensable to the principal business of petitioner. The repeated re-hiring of some of them supports this
finding.
Articles of Incorporation of Interserve states that its primary purpose is to operate, conduct, and maintain
the business of janitorial and allied services. But Agito, et al were hired as salesmen and leadman for petitioner.
The delivery and distribution of Coca-Cola products, the work for which respondents were employed and
assigned to petitioner, were in no way allied to janitorial services. Interserve did not have substantial capital or
investment in the form of tools, equipment, machineries, and work premises; and respondents, its supposed
employees, performed work which was directly related to the principal business of Coca-Cola. It is, thus,

evident that Interserve falls under the definition of a labor-only contractor, under Article 106 of the Labor Code;
as well as Section 5(i) of the Rules Implementing Articles 106-109 of the Labor Code, as amended.
With these, Coca-Cola shall be deemed the er of Agito, et al.