FILAMER CHRISTIAN INSTITUTE vs. HON. INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P.

SUPLICO, in his
capacity as Judge of the Regional Trial Court, Branch XIV, Roxas City and POTENCIANO KAPUNAN, SR.
G.R. No. 75112 August 17, 1992
Reporter: Christine Zaldivar

FACTS
Daniel Fuentecha was a working student assigned as the school janitor at the Filamer Christian Institute (FCI).
On October 20, 1977, while driving a jeep owned by FCI along with Allan Masa, Funtecha hit Potenciano Kapunan, Sr.
which led to the latter's multiple injuries.
Kapunan filed a criminal case against Funtecha and an independent civil action based on Article 2180 against Funtecha,
Filamer & Agustin Masa.
RTC Ruling: The trial court rendered judgment finding Filamer, Funtecha as well as Allan Masa, a non-party at fault.
Daniel Fuentecha was a working student assigned as the school janitor at the Filamer Christian Institute (FCI).
On October 20, 1977, while driving a jeep owned by FCI along with Allan Masa, Funtecha hit Potenciano Kapunan, Sr.
which led to the latter's multiple injuries.
Kapunan filed a criminal case against Funtecha and an independent civil action based on Article 2180 against Funtecha,
Filamer & Agustin Masa.
RTC Ruling: The trial court rendered judgment finding Filamer, Funtecha as well as Allan Masa, a non-party at fault.
IAC Ruling: Affirmed the trial courts decision in toto.
SC Ruling: The Court ruled that the petitioner is not liable for the injuries caused by Funtecha on the grounds that the
latter was not an authorized driver for whose acts the petitioner shall be directly and primarily answerable, and that
Funtecha was merely a working scholar who, under Section 14, Rule X, Book III of the Rules and Regulations
Implementing the Labor Code is not considered an employee of the petitioner.
The heirs of Kapunan sought reconsideration of the decision rendered that there exists an employer- employee
relationship between FCI and Funtecha.

ISSUE
Whether or not there is an employer-employee relationship between Filamer Christian Institute and Funtecha as to
render the former liable for the injury caused by the latter?

RULING
After a re-examination of the laws relevant to the facts found by the trial court and the appellate court, the Court
reconsiders its decision.
The fact that Funtecha was not the school driver or was not acting within the scope of his janitorial duties does not
relieve Filamer of the burden. The act of driving the jeepney was an act in furtherance of the interest and for the benefit
of the petitioner.
The clause "within the scope of their assigned tasks" for purposes of raising the presumption of liability of an
employer, includes any act done by an employee, in furtherance of the interests of the employer or for the account of
the employer at the time of the infliction of the injury or damage.
The present case does not deal with a labor dispute on conditions of employment between an alleged employee and
an alleged employer. It invokes a claim brought by one for damages for injury caused by the patently negligent acts of a
person, against both doer-employee and his employer.
Hence, the reliance on the implementing rule on labor to disregard the primary liability of an employer under Article
2180 of the Civil Code is misplaced. An implementing rule on labor cannot be used by an employer as a shield to void
liability under the substantive provisions of the Civil Code.

DR. RENATO SARA AND ROMEO ARANA vs. CERILA AGARRADO and THE NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 73199 October 26, 1988
Reporter: Ivy Casiano

FACTS
1973 - Private respondent quit her job as an attendant in the clinic of petitioner Dr. Renato Sara
1977 - Petitioners entered into a verbal agreement with private respondent.
1982 - Private respondent filed with NLRC a complaint against petitioners for her unpaid commissions January 17, 1983 -
Labor arbiter rendered a decision
in favor of private respondent
June 25, 1986 - Petitioner filed an appeal to the decision, NLRC dismissed the appeal

ISSUE
Whether an employer employee relationship exist between petitioners and private respondent as to warrant cognizance
by the Labor Arbiter of Case No LRD-ROXII-006-82.

Four-fold Test:
(1) the selection and engagement of the employee
There was a selection and engagement of private respondent in 1977.
(2) the payment of wages
Private respondent was not guaranteed any minimum compensation nor was she allowed any drawing account or
advance of any kind against unearned commissions.
(3) the power of dismissal
Either may terminate the business arrangement at will, with or without cause.
(4) the power to control the employees conduct
We observe that the means and methods of purchasing and selling rice or palay by private respondent were totally
independent of petitioners control.

RULING
Wherefore, the instant petition for certiorari is granted, Case No LRD-RCXII- 006-82 of the National Labor Relations
Commission is hereby ordered DISMISSED for lack of jurisdiction.

DY KEH BENG v. INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES, ET. AL.
Reporter: Bryan Eric T. Cerebo

Petitioner Dy Keh Beng, a proprietor of a basket factory, seeks a review by certiorari of the decision of the Court of
Industrial Relations dated March 23, 1970.
The Court of Industrial Relations in that case found Dy Keh Beng guilty of the unfair labor practice acts for dismissing
Carlos Solano and Ricardo Tudla for their union activities and ordered him to reinstate them to their
former jobs with backwages.

The issue centered on whether there existed an employee-employer relation between petitioner Dy Keh Beng and the
respondents Solano and Tudla.
Petitioner contends that the private respondents did not meet the control test in the light of the ... definition of the
terms employer and employee, because there was no evidence to show that petitioner had the right to direct the
manner and method of respondent's work.
Moreover, it is argued that petitioners evidence showed that Solano worked on a pakiaw basis and that he stayed in
the establishment only when there was work.

The evidence for the complainant Union showed that Solano and Tudla became employees of Dy Keh Beng from May 2,
1953 and July 15, 1955, respectively, and that except in the event of illness, their work with the establishment was
continuous although their services were compensated on piece basis.
Since the petitioner is engaged in the manufacture of baskets (kaing), those working under him would have to observe
his requirements of size and quality of the kaing. The work on the baskets is done at his establishment, it can be inferred
that he could easily control the men he employed.

Section 6, Republic Act 875

provides that in unfair labor practice cases, the factual findings of the Court of Industrial Relations are conclusive on the
Supreme Court, if supported by substantial evidence.
Republic Act 875, as amended, Section 4
Unfair Labor Practices.
a) It shall be unfair labor practice for an employer:
1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in section three; xxxx
(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or
discourage membership in any labor organization;

The ruling of the court considered the formula for backwages worked out by Justice Claudio Teehankee in "cases not
terminated sooner."
WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein modified to an award of
backwages for three years without qualification and deduction at the respective rates of compensation the employees
concerned were receiving at the time of dismissal.

ILOILO CHINESE COMMERCIAL SCHOOL vs. LEONORA FABRIGAR and THE WORKMENS COMPENSATION COMMISSION
3 SCRA 712 December 27,1961
Reporter: Anna Victoria M. Dela Vega

FACTS
Petition for review by certiorari of a decision of Workmens Compensation Commission (WCC)
On June 28, 1956 - as a result of the death of Santiago Fabrigar, his heirs in the person of Leonora Fabrigar (common-
law wife) and their children filed a claim for compensation with the WCC. However the claim was denied by the Hearing
Officer and the case was dismissed because nothing was shown that the disease was contracted in line of duty. The heirs
appealed the decision with the WCC and on November 12, 1959 rendered judgement reversing the decision of its
Hearing Officer
Santiago Fabrigar had been employed from 1947 to March 12, 1956, as a janitor- messenger of the respondent
On March 11, 1956, preparatory to graduation day, he carried desks and chairs from the classrooms to the auditorium,
set the curtains and worked harder and faster than usual; that although he felt shortness of breath and did not feel very
well that day, he continued working at the request of the overseer of respondent
On March 13, he spat blood and stopped working; that from April 29, 1956 to May 15, 1956, he was under treatment
for far advanced pulmonary tuberculosis and for heart disease;

ISSUES
1. Whether or not the contention of the petitioner on evidence presented has merit.
2. Whether or not there is an employer-employee relationship.
3. Whether or not the petitioner is exempt from the scope of the Workmens Compensation Law.
4. Whether or not the heirs of Santiago Fabrigar are entitled to compensation under WCC.

RULING
1. The petitioners pretension is without merit. The Workmens Compensation Commission, like Court of Industrial
Relations is bound not by the rule of preponderance of evidence as in ordinary civil cases, but by the rule of substantial
evidence.
2. The deceased was not an employee of the school but of the Chinese Chamber of Commerce which should be the one
responsible for the compensation. However, according to the Commission, there is substantial proof to the effect that
Fabrigar was employed by and rendered service for the petitioner and was an employee within the purview of the
Workmens Compensation Law.
the most important test of employer-employee relation is the power to control the employees conduct
3. The decision of the Commission does not show that the matter was taken up. Factual question not raised before the
Commission may no longer be raised on
appeal
4. Yes. The court ruled in favor of the heirs of Santiago Fabrigar.

In view hereof, the appeal interposed by the petitioner is dismissed, and the decision appealed from is AFFIRMED, with
costs against the herein petitioner.
Note: Workmens Compensation Law
The burden of proving that that the employees injury or illness was not, and could not be, caused or aggravated by
the nature of his work, lies on the employer.
Even where the cause of the employees death is unknown, the right to compensation subsists.
The law should be given a broad interpretation to resolve all doubts in favor of workmen and their families.
Every employee is taken as he is, with his infirmities, whether few or many, and those infirmities are not to be
aggravated or accelerated unnecessarily during his employment.
And to the extent that they are aggravated or accelerated by accidental injuries and in some states to exposure, to
hazardous conditions, not necessarily constituting an accident, compensation may be awarded.

MANILA GOLF & COUNTRY CLUB, INC. v. INTERMEDIATE APPELLATE COURT and FERMIN LLAMAR
G.R. No. 64948 September 27, 1994
Reporter: Val Deatras

FACTS
This petition for review was originally filed with the Social Security Commission via petition of 17 persons who styled
themselves as Caddies of Manila Golf and Country Club- PTCCEA for the coverage of and availment of benefits of
Social Security Act as amended, "PTCCEA" being the acronym of a labor organization, the "Philippine Technical, Clerical,
Commercial Employees Association," with which the petitioners claimed to be affiliated.
Subsequently, all but two of the seventeen petitioners of their own accord withdrew their claim for social security
coverage, avowedly coming to realize that indeed there was no employment relationship between them and the Club.
The case continued, and was eventually adjudicated by the SSC after protracted proceedings only as regards the two
holdouts, Fermin Llamar and Raymundo Jomok. The Commission dismissed the petition for lack of merit
Appeal was taken to the Intermediate Appellate Court by the union representing Llamar and Jomok.
Raymundo Jomoks appeal was dismissed at his instance, leaving Fermin Llamar the lone appellant
IAC reversed the appealed SSC decision and declared Fermin Llamar an employee of the Manila Golf and Country Club,
ordering that he be reported as such for social security coverage and paid any corresponding benefits.
The Clubs control over the caddies encompassing:
(1) The Club promulgates no less than 24 rules and regulations in just about every aspect of the conduct
(conduct, dress,language, etc) that the caddy must observe, or avoid, when serving as such, any violation of any
which could subject him to disciplinary action, which may include suspending or cutting off his access to the club
premises.
(2) The Club devises and enforces a group rotation system whereby a caddy is assigned a number, which
designates his turn to serve a player.
(3) The Club suggests to guests the rate of fees payable to the caddies.

ISSUE
Whether or not persons rendering caddying services for members of golf club and their guests in said clubs courses or
premises the employees of such clubs and therefore within the compulsory coverage of the Social Security System (SSS)?

RULING
They are NOT employees of the Club as the latter has no control over the means and methods by which they perform
caddying services. Thus they are not entitled to compulsory coverage in the SSS. As long as it is, the list detailing the
various matters of conduct, dress, language, etc. covered by the petitioners regulations, does not so circumscribe the
actions or judgment of the caddies concerned as to leave them little or no freedom of choice whatsoever in the manner
of carrying out their services.
In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of
pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made
to appear, they work for the club to which they attach themselves on sufferance but, on the other hand, also without
having to observe any working hours, free to leave anytime they please, to stay away for as long as they like.
 AFP MUTUAL BENEFIT ASSOCIATION, INC. vs. NATIONAL LABOR RELATIONS COMMISSION AND EUTIQUIO
BUSTAMANTE
G.R. No. 102199 January 28, 1997
Reporter: Tanya Lynne M. Diestro

FACTS
Eutiquio Bustamante had been an insurance underwriter of AFP Mutual Benefit Association Inc. (AFPMBAI) since 1975.
The Sales Agent Agreement between the parties provides that:
o Duties and Obligations:
1. During the lifetime of this Agreement, the Sales Agent shall solicit exclusively for AFPMBAI, and shall be
bound by the latters policies, memo circulars, rules and regulations which it may from time to time, revise,
modify or cancel to serve its business interests.
2. ...He is free to solicit in the area for which he/she is licensed and is authorized, provided, however, that
AFPMBAI may from time to time, assign him a specific area of responsibility and a production quota on a case
to case basis.
xxx
o Commission
1. The Sales Agent shall be entitled to the commission due for all premiums actually due and received by
AFPMBAI out of life insurance policies solicited and obtained by the Sales Agent at the rates set forth
in the applicants commission schedules hereto attached.
xxx
o General Provisions
1. There shall be no employer-employee relationship between the parties, the Sales Agent being hereby
deemed an independent contractor.
On July 5, 1989, petitioner dismissed private respondent for misrepresentation and for simultaneously selling
insurance for another life insurance company in violation of the Sales Agent Agreement between the parties.
Private respondent was entitled to accrued commissions equivalent to 24 months per the Sales Agent Agreement and
as stated in the account summary.
The summary showed private respondent had a total commission receivable of P428,835.00 of which P78,039.00 had
been paid to him.
Private respondent sought the release of his commissions through a letter he sent Marketing Manager Juan
Conception.
o Entitled to only P75,000-100,000.00
o Private respondent believed the computations to be true, thus signed a quitclaim in favor of petitioner.
Sometime in October 1989, private respondents check was ready for release and upon collecting his check he
discovered from a document attached that his commissions actually amounted to P354,796, however he was only paid
P35,000.00.
November 23, 1989 Private respondent filed a complaint with the Office of the Insurance Commissioner, however he
was advised that it was the Department of Labor and Employment that had jurisdiction over his complaint.
February 26, 1990 Private respondent filed his complaint with the Department of Labor
August 24, 1990, Labor Arbiter Jose G. de Vera rendered his decision.
The labor arbiter relied on the Sales Agents Agreement proviso that petitioner could assign private respondent a
specific area of responsibility and a production quota, thus read it as signaling the existence of employer-employee
relationship between the parties.
On appeal, the Second Division of the respondent Commission affirmed the decision of the Labor Arbiter, thus this
petition.

ISSUE
Whether or not there existed an employer-employee relationship between
the petitioner and private respondent

RULING
The Court ruled that no employment relationship had ever existed between the parties.
 Petitioner never exercised control over private respondent for the exclusivity restriction imposed clearly springs from
a regulation issued by the Insurance Commission, and not from an intention by petitioner to establish control over the
method and manner by which private respondent shall accomplish his work.
Furthermore, the test to determine the existence of independent contractorship is whether the one claiming to be an
independent contractor has contracted to do the work according to his own methods and without being subject to the
control of the employer except only as to the result of the work.
Private respondents contention that he was petitioners employee is belied by the fact that he was free to sell
insurance at any time as he was not subject to definite hours or conditions of work and in turn was compensated
according to the result of his efforts.

AURORA LAND PROPERTIES CORPORATION AND TERESITA T. QUAZON vs. NLRC AND HONORIO DAGUI
G.R. No. 114733 January 2, 1997
Reporter: Sulpicio Diaz
FACTS
Sometime in 1953 Honorio Dagui was hired by Doa Aurora Suntay Tanjangco to take charge of the maintenance and
repair of the Tanjangco apartments and residential buildings. He was to perform carpentry, plumbing, electrical and
masonry work. Upon the death of Doa Aurora Tanjangco in 1982, her daughter, petitioner Teresita Tanjangco Quazon,
took over the administration of all the Tanjangco properties. On June 8, 1991, private respondent Dagui received the
shock of his life when Mrs. Quazon suddenly told him: "Wala ka nang trabaho mula ngayon," on the alleged ground that
his work was unsatisfactory. On August 29, 1991, private respondent, who was then already sixty-two (62) years old,
filed a complaint for illegal dismissal with the Labor Arbiter.

ISSUES
1. Whether or not private respondent was an employee of the petitioner?
2. Whether or not Honorio Dagui was illegally dismissed?

RULING
1. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements
constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employers power to control the employees conduct.
2. Jurisprudence abound as to the rule that the twin requirements of due process, substantive and procedural, must be
complied with, before a valid dismissal exists. Without which the dismissal becomes void.

The twin requirements of notice and hearing constitute the essential elements of due process. This simply means that
the employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his
representative, if he so desires.

The law requires that the employer must furnish the worker sought to be dismissed with two written notices before
termination of employee can be legally effected: (1) notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employers
decision to dismiss him.

SAMPAGUITA PICTURES, INC. vs. PHILIPPINE MUSICIANS Guild (FFW) & COURT OF INDUSTRIAL RELATIONS
G.R. No. L-12598 January 28, 1961
Reporter: Quennie Falsario
FACTS
Review by Certiorari order of the CIR certifying PMG (FFW) as the sole and exclusive bargaining agency of SP, LVN,
and PP.

SP, LVN, PP = corporations e n g a g e d i n t h e m a k i n g , processing and distribution of m o t i o n p i c t u r e s.

Lower court rejected SPs contention, in favor of the Guild

MR is denied too
 Guild:
o 95% of the musicians are members of the guild.
o no knowledge of the existence of any other legitimate Labor Organization representing musicians.
o Premised upon these allegations, the Guild prayed that it be certified as the sole and exclusive bargaining
agency for all musicians working in t h e a f o r e m e n t i o n e d c o m p a n i e s
SP and LVN:
o denied having musicians as employees
o musical numbers are furnished by independent contractors
o petition for certification cannot be entertained when the existence of employer-employee relationship between
the parties is contested.

ISSUE
Whether or not the musicians are employees of the film companies

Law Applicable: RA 875, Industrial Peace Act

RULING
The order appealed from is affirmed. The musicians are employees of the film companies.
RA 875
o designed to avert substantial obstruction to the free flow of commerce.
o SO results from strikes and other forms of industrial unrest.

IU is a result of:
-refusal of employees to bargain collectively
- inability of workers to bargain successfully for
improvement in their working conditions
NLRC v. Hearst Publications

Purpose of the Act:

o To eliminate the causes of IU by protecting the exercise by employees of their right to self-organization for the
purpose of collective bargaining,
o To promote sound stable industrial peace and the advancement of the general welfare, and the best interests of
ERs and EEs by the settlement of issues respecting terms and conditions of employment through the process of
collective bargaining between ERs and representatives of their EEs.
The work of the musical director and musicians is a functional and integral part of the
enterprise performed at the same studio substantially under the direction and control of the
company.

The right of control test

o an ER-EE relationship exists where the person for whom the services, are performed reserves the right to control
not only the end to be achieved, but also the manner and means to be used in reaching the end.
the movie director tells the musical director what to do; tells the music to be cut or tells
additional music in this part or he eliminates the entire music he does not (want) or he may
want more drums or more violin or piano, as the case may be. -testified in the lower court
The movie director directly controls the activities of the musicians.

ATOK BIG WEDGE COMPANY, INC., vs. JESUS P. GISON

G.R. No. 169510 August 8, 2011
Reporter: Julius Eco

FACTS
Jesus P. Gison was engaged as part-time consultant on retainer basis by petitioner Atok Big Wedge Company, Inc.
Respondent was likewise tasked to perform liaison work with several government agencies.
 Petitioner did not require respondent to report to its office on a regular basis, except when occasionally requested by
the management to discuss matters needing his expertise as a consultant. The said arrangement continued for the next
eleven years.
Sometime thereafter, since respondent was getting old, he requested that petitioner cause his registration with the
Social Security System (SSS), but petitioner did not accede to his request. He later reiterated his request but it was
ignored by respondent considering that he was only a retainer/consultant. On February 4, 2003, respondent filed a
Complaint with the SSS against petitioner for the latter's refusal to cause his registration with the SSS. On the same date,
Mario D. Cera, in his capacity as resident manager of petitioner, issued a Memorandum advising respondent that within
30 days from receipt thereof, petitioner is terminating his retainer contract with the company since his services are no
longer necessary.

As it happened:
On February 21, 2003, respondent filed a Complaint for illegal dismissal, unfair labor practice, underpayment of wages,
non-payment of 13th month pay, vacation pay, and sick leave pay with the National Labor Relations Commission (NLRC),
Regional Arbitration Branch (RAB), Cordillera Administrative Region.
On September 26, 2003 , Labor Arbiter Rolando D. Gambito rendered a Decision ruling in favor of the petitioner.
Respondent then appealed the decision to the NLRC.
On July 30, 2004, the NLRC, Second Division, issued a
Resolution affirming the decision of the Labor Arbiter. Respondent filed a Motion for Reconsideration, but it was denied
in the
Resolution dated September 30, 2004.
Respondent filed a petition for review under Rule 65 of the Rules of Court before the CA questioning the decision and
resolution of the NLRC.
On May 31, 2005, the CA rendered the assailed Decision annulling and setting aside the decision of the NLRC.
Hence, the petition.

ISSUE
Whether or not an employer-employee relationship exists between petitioner and respondent.

To ascertain the existence of an employer-employee relationship jurisprudence 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 employees conduct, or the so-called control test.

Of these four, the last one is the most important. The so-called control test is commonly regarded as the most crucial
and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test,
an employer-employee relationship exists where the person for whom the services are performed reserves the right to
control not only the end achieved, but also the manner and means to be used in reaching that end.

CESAR C. LIRIO, doing business under the name and style of CELKOR AD SONICMIX vs. WILMER D. GENOVIA
G.R. No. 169757, November 23, 2011
Reporter: Ryan Y. Mantac

Petition for review on certiorari of the decision of Court of Appeals and its Resolution denying petitioners motion for
reconsideration.

FACTS
On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor Ad
Sonicmix Recording Studio for illegal dismissal, non-payment of commission and award of moral and exemplary
damages.
Respondents Position Paper:
Respondent Genovia was hired as studio manager on August 15, 2001. He was made to report to work from Monday
to Friday (9am-6pm) and Saturdays (half day).
He received Php 7,000.00 (monthly salary) and Php 100.00 per hour, as additional commission, whenever clients uses
the studio.
He was approached about the project to produce an album and was asked to compose and arrange songs for Celine
Mei Lirio and agreed that the respondent be compensated.
Before the of September 2001, the respondent reminded the petitioner about the compensation but the latter
verbally assured him that he would be duly compensated. On February 26, 2002, respondent again reminded the
petitioner for his compensation. On March 14, 2002, the petitioner verbally terminated the respondent.
Respondent asserted that he was illegally dismissed without any valid grounds and no hearing was conducted before
termination, in violation of his right to due process.

Petitioners Position Paper:

In defense, petitioner Lirio asserted that the respondent was not hired as a studio manager, composer, technician or
as an employee in any other capacity of Celkor.
The petitioner and the respondent verbally agreed to co-produce the album.
Petitioner asserted that his relationship with the respondent is one of an informal partnership under Article 1767
of the New Civil Code, since they agreed to contribute money, property or industry to a common fund with the intention
of dividing the profits among themselves.
Petitioner has no control over the time and manner by which the respondent composed or arranged the songs, except
on the result thereof.
Hence, there is no employer-employee relationship exist and the respondent was not illegally dismissed.

Labor Arbiter Ruling The employer-employee relationship exist and illegal dismissal.
NLRC Reversed and set aside the ruling of the Labor Arbiter.
Court of Appeals Reinstated the Labor Arbiters ruling with modifications.

ISSUE: Whether or not there is an employer- employee relationship?

RULING: YES
The elements to determine the existence of an employment relationship are:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal;
(d) the employers power to control the employees conduct.
In this case, the documentary evidence presented by the respondent (Payroll & Petty Cash Vouchers) showed that he
was hired as an employee and was paid monthly wages of P7,000.
Petitioner wielded the power to dismiss when he verbally dismiss the
respondent.
Petitioner agreed to help and teach the respondent how to use the studio equipment, in such case, petitioner had
power to check on the progress and work of the respondent.

ISSUE: Whether or not the respondent was illegally dismissed?

RULING: YES
In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for
lawful cause and validly made.
For an employees dismissal to be valid:
(a) the dismissal must be for a valid cause,
(b) the employee must be afforded due process.
Petitioner failed to comply with these legal requirements. Hence, the CA correctly affirmed the Labor Arbiters finding
that respondent was illegally dismissed and entitled to backwages and separation pay in lieu of reinstatement.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 88899, dated August 4,
2005, and its Resolution dated September 21, 2005, are AFFIRMED.
 EDDIE DOMASIG vs. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), CATA GARMENTS
CORPORATION and/or OTTO ONG and CATALINA CO.
G.R. No. 118101 September 16, 1996
Reporter: Leonel Ocana

FACTS
Petitioner instituted complaint against private respondents for illegal dismissal, unpaid commission and other
monetary claims.
Contended to have been dismissed when private respondents learned that he was being pirated by rival corporation
which offer he refused.
Alleged that he was receiving salary of P1,500 per month plus commission prior to dismissal.
Private respondents denied that petitioner was a regular employee but a mere commission agent.
Labor Arbiter held that complainant was illegally dismissed and entitled to reinstatement and backwages as well as
underpayment of salary; 13th month pay; service incentive leave and legal holiday and awarded unpaid commission
amounting to P143,955.
Public respondent resolved to remand case for further proceeding for failure of Labor Arbiter to support decision by
evidence on record.

ISSUES
Whether or not employer-employee relationship existed between private respondents and petitioner.
Whether or not substantial evidence is sufficient in establishing the existence of employer-employee relationship.
Whether or not public respondent gravely abused discretion in vacating and setting aside decision of labor arbiter and
remanding case to arbitration branch of origin for further proceedings.

RULING
Long established that in administrative and quasi-judicial proceedings, substantial evidence was sufficient as basis for
judgment on existence of employer-employee relationship.
Finding that in business establishment, identification card is mainly provided to identify holder thereof as bona fide
employee of firm that issues it.
ID and cash vouchers covering petitioners salaries for months stated therein constitute substantial evidence adequate
to support conclusion that petitioner was employee of private respondents.
Finding that having been in the employ of private respondents continuously for more than a year, petitioner is
considered a regular employee.
Public respondent committed error and grave abuse of discretion to remand case for further proceedings to determine
whether or not petitioner was private respondents employee as would only prolong final disposition of complaint.

DR. CARLOS L. SEVILLA and LINA O. SEVILLA vs. THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.
CANILAO, and SEGUNDINA NOGUERA
G.R. No. L-41182-3 April 16, 1988
Reporter: Stephanie Javellana

FACTS
On October 19, 1960, a contract of lease was entered between Mrs. Segundina Noguera and Tourist World Service,
Inc. as represented by Mr. Eliseo Canilao. Petitioner Lina Sevilla held herself solidarily liable for the said contract of
lease. The premise leased was used as a branch office which was run and managed by petitioner Lina Sevilla.

Agreement of the parties: When airline fare was brought in efforts of Lina Sevilla, 4% goes to her and 3% was to be
withheld by the Tourist World Service.

On or about November 24, 1961, Tourist World Service was informed that Sevilla was connected with the rival
company, and due to the losses, the Tourist World Service considered closing down the company. Thru the companys
 board of directors, the office of manager and vice-president were abolished and the other authorized the corporate
secretary to receive properties of Tourist World Service located in the said branch.
Gabino Canilao padlocked the premises to protect the interests of the Tourist World Service, and disconnected
telephone connection.
Lina Sevilla filed a complaint with a prayer of the issuance of mandatory preliminary injunction.
The trial court dismissed the case on the ground of lack of interest.
Sevilla refiled her case against the appellees. She invoked the provisions on human relations of the Civil Code.
o Petitioners contention:
She claimed that there was a joint business venture between her and TWS and the padlocking of the premises
by TWS without her knowledge and consent entitles her claim for damages.
o Respondents contention:
The appellant was an employee and was designated as manager.
The trial court found that it is TWS being the true lessee has the prerogative to terminate the lease and padlock the
premise. It likewise found that petitioner Sevilla to be a mere employee of the said TWS and she was bound by the
acts of her employer. The Court of Appeal affirmed the decision.

ISSUE
Whether there is an employee-employer relationship when the person who works for the company was not in the
latters payroll; bound herself in solidum in a contract of lease covering the office; and was not subject to the control of
the company thereby gives her the right to claim damage when the said property was padlocked without her knowledge
and consent?

RULING
The court held that there was no employer-employee relationship. Under the test of control, it is apparent that Sevilla
was not under the control of the company and she was pursuing the business relying on her own gifts and capabilities.
In addition to the test of control, the court also used certain economic parameters like the inclusion of the employee in
the payrolls. She was not included in the companys payrolls and she earned compensation thru the booking success she
brought to the company. Although she was titled as manager, it does not make her an employee. As pronounced by the
court, employment is determined by the right-of-control test and certain economic parameters, and titles are weak
indicators.
Although she was not an employee, the court also do not agree that there was a joint business venture because Sevilla
herself did not recognize the existence of such relationship as shown in her letter addressed to TWS. The court
pronounced that the relationship between the petitioner and TWS was a contract of agency. And such relationship
cannot be revoked at will. And the revocation complained entitles Sevilla to damages.

CEBU METAL CORPORATION vs. GREGORIO ROBERT SALILING, ELIAS BOLIDO, MANUEL ALQUIZA & BENJIE AMPARADO
G.R. No. 155463 September 5, 2006
Reporter: Rey Aspera Paja

FACTS
Cebu Metal Corporation is a corporation engage in buying and selling of scrap iron. It has a branch in Bacolod with
three (3) regular employees holding the positions of (1) Officer-in-Charge, (2) a Scaler and (3) a Yardman whose
salaries are paid directly by its main office in Cebu.
There are also other workers undertaking pakiao work in the unloading of scrap iron for stockpiling. They were
unemployed persons or trisicad drivers standing by in the vicinity and some of them are the herein complainants.
They started working in the years 1995 and 1996.
As compensation for their services, these workers are paid at the rate of P15.00/ton for which each person can upload
at least two (2) to three (3) tons per hour or can earn at least P240.00 to P360.00 in eight (8) hours.
The Bacolod Branch is mainly a stockyard where scrap metal delivered by its suppliers are stockpiled, and the supply is
not steady as it depends upon the availability, the price, the competition and the demand for said metal.
The trucks used in the delivery of scrap metal are owned and/or rented by the different suppliers with their own driver
and truck boys employed. Sometimes if these trucks do not have any truck boys, the respondent company (now the
 petitioner) hires the services of people who are unloaders and basically seasoned workers only whenever there are
trucks of suppliers who delivered scrap metals for the purpose of unloading.
According to the complainants, they were employed by Cebu Metal Corporation in the years 1988, 1992 and 1994 and
added that they never received any other benefits like 13th month pay, holiday pay, incentive leave pay, bonuses and
other labor benefits, aside from their salary.
When the complainants demanded for salary increase, the corporation got irritated and instructed complainants to
stop working and were precluded from entering the loading and unloading compound of the said corporation.
On January 10, 1997, respondent complainants filed a complaint before the Regional Arbitration Branch VI, Bacolod
City against the Cebu Metal Corporation for underpayment of wages and non-payment of benefits.
On March 6, 1998, respondent complainants manifested that they were including in their complaint the claim for
illegal dismissal due to the fact that they were only dismissed after the filing of their complaint.
On May 27, 1999, Labor Arbiter Jesus N. Rodriguez, Jr. rendered a decision ordering for the REINSTATEMENT of
complainants to their former positions with backwages limited to one (1) year and payment of 13th month pay, ERA &
COLA totaling to P257,009.52. In case reinstatement will not be available, they will be entitled to a separation pay
equivalent to 15 days to be given for every year of service. The Labor Arbiter found them to have been illegally
dismissed explaining that under Art. 280 of the Labor Code, they were regular employees since they are engaged to
perform activities which are necessary and desirable in the usual business and trade of their employer.
Consequently, the aggrieved petitioner company appealed to the National Labor Relations Commission (NLRC)
and on October 9, 2000, the NLRC reversed and set aside the ruling of the Labor Arbiter on the ground that
respondent complainants were not regular employees, thus they could not have been illegally dismissed. They were
only paid on pakiao or task basis at P15.00/metric ton as evidenced by the petty cash vouchers they signed.
The Commission also declared that the respondent complainants invalidly raised the issue of illegal dismissal in the
position paper they filed.
The respondent complainants challenge the ruling of the NLRC before the Court of Appeals (CA) and on February 18,
2002, the CA annulled and set aside the assailed decision of the NLRC on the ground that the Commissioner
committed grave abuse of discretion in reversing and setting aside the decision of the Labor Arbiter since the
petitioner company did not make an issue out of the Labor Arbiters action in ruling on a cause of action, i.e. ILLEGAL
DISMISSAL, not specifically stated in the complaint.

ISSUES
Whether or not the Court of Appeals committed reversible error in ruling that the NLRC had no authority to adjudicate
on an issue not properly raised in petitioner companys Memorandum of Appeal
Whether or not respondent complainants were regular employees of the petitioner company
Whether or not there was an illegal dismissal involved
Whether or not the judgment of the NLRC constitute grave abuse of discretion

RULING
The Supreme Court (SC) GRANTED the petition of Cebu Metal Corporation and hereby reversed and set aside the
Decision and Resolution rendered by the Court of Appeals. Accordingly, the Decision of the NLRC was reinstated.

The ruling of the SC was based on the following premises:

It was plain error for the CA to annul and set aside the decision of the NLRC on the lone reason that the latter
dismissed Petitioners appeal on the basis of an issue not raised by the Private Respondent in its appeal.
Based on the facts of the case, the NLRC arrived at a divergent conclusion that complainants are not paid on hourly or
daily basis as they would like to believe but on pakiao or task basis at P15.00 per metric ton. Their services are
needed only when scrap metals are delivered which occurs only once or twice a week or sometimes no delivery at all
in a given week, therefore, they will not be considered as regular employees.
There can be no illegal dismissal to speak of because complainants cannot claim regularity in the hiring every time a
truck comes loaded and not every truck delivery requires their services.
No grave abuse of discretion can be attributed to the NLRC because its decision simply expressed an observation and it
was not performed in a capricious or whimsical exercise of judgment which is equivalent to lack of jurisdiction.
ANGELINA FRANCISCO vs. NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI,
TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA
GR No. 170087 August 31, 2006
Reporter: Victoria P. Padilla

FACTS
Petitioner alleged that:
In 1995, Kasei Corporation hired her as Accountant, Corporate Secretary, and Liason Officer.
In 1996, she was replaced as Accountant and designated instead as Acting Manager.
Her monthly salary was P27,500, with housing allowance and 10% profit share.
But in January 2001, she was replaced as a manager, was instead designated as Technical Consultant, and her pay was
reduced by P2,500 a month.
In October 2001, Kasei officials told her she was no longer connected with the company.

Respondents countered that:

Petitioner had no daily time record and she came to the office any time she wanted.
Petitioner was not among the employees reported to the BIR, as well as a list of payees subject to expanded
withholding tax on professionals.
SSS records were also submitted showing that petitioners latest employer was Seiji Corporation

Decision of lower courts:

Labor Arbiter: Francisco was illegally dismissed.
NLRC: affirmed LA.
CA: reversed NLRC.
CA (motion for reconsideration): DENIED.
Hence, the petition.

ISSUES
1. Whether or not there was an employer- employee relationship between petitioner and private respondent Kasei
Corporation; and if in the affirmative
2. Whether or not the petitioner was illegally dismissed.

RULING
1. YES. By applying the control test, the petitioner is an employee of Kasei Corporation because she was under the
direct control and supervision of Seiji Kamura, the corporations Technical Consultant.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent
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 from August 1, 1999 to December 18, 2000.

2. YES, she was illegally dismissed. A diminution of pay is prejudicial to the employee and amounts to constructive
dismissal.
PETITION IS GRANTED.

CHARLIE JAO vs. BCC PRODUCTS SALES INC., AND TERRANCE TY

GR No. 163700 April 18, 2012
Reporter: Roland Pama

FACTS
Petitioner Charlie Jao alleged:
That respondents BCC and its President, Terrance Ty, employed him as comptroller from Sept. 1995 with a monthly
salary of 20,000php to handle the financial aspect of BCCs business.
On Oct. 19, 1995, the security guards of BCC barred him from the premises of BCC where he then worked.
 That in Nov. and Dec. 12, 1995, he was continuously barred from entering the premises on his attempts to go to work.

Respondents countered:
That petitioner was not their employee but the employee of SFC, a major creditor and supplier of respondent BCC.
That SFC had posted the petitioner as its Comptroller in BCC to oversee SFCs interests or investment in BCC.

As it happened:
On Dec. 28, 1995, petitioner filed a complaint for illegal dismissal.
On June 24, 1996, the Labor Arbiter Pati ruled in favor of petitioner but the NLRC vacated the ruling and remanded the
case for further proceedings.
On Sept. 20, 2001, Labor Arbiter Mayor dismissed the petitioners complaint for want of employer-employee
relationship between the parties.
On July 31, 2002, the NLRC rendered a decision declaring the petition has been illegally dismissed.
The respondents assailed the NLRC decision with a petition for certiorari in the CA; CA ruled in favor of respondents.
Hence, the petition.

ISSUE
Whether or not an employer- employee relationship existed between petitioner Charlie and BCC

Standards in determining the existence of employer- employee relationship:

a) Selection and engagement of the employee employer-employee relationship created by the act of hiring.
b) Payment of wages if the person hired is compensated in terms of wages.
c) Power of dismissal if person hired is subject to the rules of discipline of the employer.
d) Power to control employees conduct authority on both the means and result of work.
The control test is the most determinative.

RULING
Petition lacks merit; No employer-employee relationship.
Petitioner presented no document setting forth the terms of his employment by BCC.
Petitioners name did not appear in the payroll of BCC despite him having approved such payroll as comptroller.
Petitioners affidavit proves that he only worked in BCC as SFCs representative.
It can be deduced from the March 1996 affidavit of petitioner that the respondents challenged his authority to deliver
some checks to SFC while petitioner contested the challenge by pointing out the arrangements between BCC and SFC.
This shows that respondents did not exercise power of control over for petitioner as he acted for the interests of SFC.
Petitioner failed to sufficiently prove that an employer-employee relationship existed between him and BCC.

GREAT PACIFIC LIFE ASSURANCE CORPORATION (GREPALIFE) vs. HONORATO JUDICO

G.R. No. 73887 December 21, 1989
Reporter: Norvie Aine Pasia

FACTS
On June 9, 1976, Grepalife admits that Judico entered into an agreement of agency with them to become a debit
agent attached in Cebu City. Such admission is in line with the findings of the public respondent NLRC that as a debit
agent, Judico had definite work assignments including but not limited to collection of premiums from policy holders
and selling insurance to prospective clients.
Public respondent NLRC also found out that Judico was initially paid P 200. 00 as allowance for thirteen (13) weeks
regardless of production and later a certain percentage denominated as sales reserve of his total collections but not
lesser than P 200.00. On September 1981, Judico was promoted to the position of Zone Supervisor and was given
additional (supervisor's) allowance fixed at P110.00 per week.
During the third week of November 1981, he was reverted to his former position as debit agent but, for unknown
reasons, not paid so-called weekly sales reserve of at least P 200.00.
Finally on June 28, 1982, Judico was dismissed by way of termination of his agency contract.
 Judico then, filed a complaint for illegal dismissal against Grepalife, a duly organized insurance firm.
o Said complaint prayed for award of money claims consisting of:
- Separation pay,
- Unpaid salary and 13th month pay,
- Refund of cash bond,
- Moral and exemplary damages and attorney's fees.

Petitioner assails and argues that the respondent is not an employee and that his compensation was not based on any
fixed number of hours he was required to devote to the service of company but rather it was the production or result
of his efforts or his work that was being compensated.
Said contentions of petitioner were strongly rejected by respondent he maintains that he received a definite amount
as his wage. He was dismissed primarily because of anemic performance and not because of the termination of the
contract of agency substantiate the fact that he was indeed an employee of the petitioner and not an insurance agent
in the ordinary meaning of the term.
Both parties appealed to the NLRC and decision was rendered by the Labor Arbiter dismissing the complaint on the
ground that:
o The employer-employee relations did not exist between the parties.
o But ordered Grepalife to pay complainant the sum of Pl,000.00
On appeal, decision was reversed by the NLRC ruling that:
o Complainant is a regular employee as defined under Art. 281 of the Labor Code.
o Declaring the appeal of Grepalife questioning the legality of the payment of Pl,000.00 to complainant moot and
academic.

Petitioner company moved to reconsider, which was denied, hence this petition.

ISSUE
Whether or not employer-employee relationship existed between the petitioner (GrePaLife) and the private respondent
(Honorato Judico).

RULING
Whereas, in private respondent's case, the undisputed facts show that he was controlled by petitioner insurance
company not only as to the kind of work; the amount of results, the kind of performance but also the power of dismissal.
Undoubtedly, private respondent, by nature of his position and work, had been a regular employee of petitioner and is
therefore entitled to the protection of the law and could not just be terminated without valid and justifiable cause.
Premises considered, the appealed decision is hereby AFFIRMED in toto. SO ORDERED.

INSULAR LIFE ASSURANCE CO., LTD. vs. NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO
G.R. No. 84484 November 15, 1989

FACTS
July 2, 1968 Company and Basiao entered into contract.
1. Authority to solicit insurance policies in accordance with the RR of Company
2. Compensation in the form of commissions
3. Companys Rate Book and Agents Manual
4. Relation with Company (No employee employer relationship)
5. Illegal and Unethical Practices
6. Termination (Company may terminate at will)
7. Assignment
April 1972 Agencys Manager Contract
* Basiao organized an agency or office and concurrently fulfilling his commitment in the first contract.

May 1979 Company terminated the

Agencys Manager Contract.
 o Basiao sued the Company in a civil action
o He alleged that this prompted Company to terminate his first contract
Basiao filed with Ministry of Labor a complaint against Company to recover unpaid commissions plus attorneys fees.
Company disputed MOLEs jurisdiction over the complaint because Basiao is not an employee but an independent
contractor.
Company had no obligation to him for unpaid commissions under the contract.

Labor Arbiter In FAVOR of Basiao. Ministry of Labor has jurisdiction.

1. The contract agreement established employer-employee relationship.
2. Company is directed to pay the unpaid commissions plus attorneys fees.

NLRC AFFIRMED LABOR ARBITER (In favor of Basiao; MOLE has jurisdiction)

Supreme Court
(certiorari and prohibition)

ISSUE
Whether or not MOLE has jurisdiction over Basiaos complaint.

Under the said contract, Basiaos status was that of an independent contractor and his complaint is only cognizable
under regular courts in an ordinary civil action.
No E-E existed under the contract. It stated that Basiao is the master of his own time and selling methods.

Basiao became the Companys employee by virtue of the contract placing his claim for unpaid commissions within LAs
jurisdiction under Art. 217 of the Labor Code.
The terms in the contract do not constitute the decisive determinant of the nature of his engagement. The critical
feature that distinguishes the status of an employee from that of an independent contractor is control.

RULING
Appealed Resolution of the NLRC is set aside and the complaint of Basiao is DISMISSED.

Control test
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
(Viana v. Alejo Al-Lagadan)

Not every form of control that the hiring party reserves to himself over the conduct of the party hired in
relation to the services rendered may be accorded the effect of establishing an employer-employee
relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual contractor is not to vanish altogether.

Distinction

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.

Rules that control or fix the methodology and bind or restrict the party hired to the use of such means.

Aim only to promote the result, create no employer- employee relationship.

Addresses both the result and the means used to achieve it. There is employer-employee relationship.

It is usual and expected for an insurance company to promulgate set of rules to guide its agents in selling its policies
that they may not run afoul with what the law prescribes or prohibit.
The rules which prescribe the qualifications of persons who may be insured, subject insurance applications to
processing and approval by the Company, and also reserve to the Company the determination of the premiums to be
paid and the schedules of payment. None of these 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.

In Investment Planning Corporation of the Philippines vs. Social Security System, the SC held that an independent
contractor and others similarly placed were:
(a) paid compensation in the form of commissions based on percentages of their sales, any balance of commissions
earned being payable to their legal representatives in the event of death or registration;
(b) required to put up performance bonds;
(c) subject to a set of rules and regulations governing the performance of their duties under the agreement with the
company and termination of their services for certain causes;
(d) not required to report for work at any time, nor to devote their time exclusively to working for the company nor to
submit a record of their activities, and who, finally, shouldered their own selling and transportation expenses.

The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and
conform to such rules and regulations as the latter might from time to time prescribe. No showing has been made that
any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively
controlled or restricted his choice of methods or the methods themselves of selling insurance.
... free to exercise his own judgment as to the time, place and means of soliciting insurance.
The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for
twenty-five years. Whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao's
status under the contract and not the length of his relationship with the Company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but
a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an
ordinary civil action.

Appealed Resolution of the NLRC is set aside and the complaint of Basiao is DISMISSED.

COSMOPOLITAN FUNERAL HOMES, INC. vs. NOLI MAALAT

G.R. No. 86693 187 SCRA 108 July 2, 1990
Reporter: Crystal Pido

FACTS
Sometime in 1962, petitioner Cosmopolitan Funeral Homes, Inc. engaged the services of private respondent Noli
Maalat as a supervisor to handle the solicitation of mortuary arrangements, sales and collections. He was paid on a
commission basis of 3.5% of the amounts actually collected and remitted.
In 1987, Respondent was dismissed by the petitioner for commission of the following violations despite previous
warnings: (a) Understatement of the reported contract price against the actual contract price charged to and paid by the
customers; (b) Misappropriation of funds or collections by non- remittance of collections and non-issuance of Official
Receipt; (c) Charging customers additional amount and pocketing the same for the cost of medicines, linen, and security
services without issuing of Official Receipt; (d) Non- reporting of some embalming and re-embalming charges and
pocketing the same and non-issuance of Official Receipt; (e) Engaging in tomb making and inclusion of the price of the
tomb in the package price without prior knowledge of the customer and the company.
Maalat filed a complaint for illegal dismissal and non-payment of commisions.

Labor Arbiter Ruling:

Maalat dismissal is illegal and ordering the petitioner to pay separation pay, commission, interests and attorneys fee in
the total amount of P205,571.52.

NLRC Ruling:
The decision of the Arbiter is reversed and a new decision is rendered. The dismissal of Noli Maalat by respondent-
appellant as justified and with lawful cause.

ISSUE
Whether or not the NLRC erred in ruling that an employment relationship existed between the parties.

RULING
The decision of NLRC is affirmed.
In determining whether a person who performs work for another is the latters employee or an independent
contractor, the prevailing test is the right of control test.
Under this test, an employer-employee relationship exists where the person for whom the services are performed
reserves the right to control not only the end to be achieved, but also the manner and means to be used in reaching that
end.
The NLRC stated that there exists an employment relationship between the parties.

INVESTMENT PLANNING CORPORATION OF THE PHILIPPINES vs. SOCIAL SECURITY SYSTEM

21 SCRA 924 November 18, 1967
Reporter: Cristine Joy T. Pimentel

FACTS
Petitioner is engaged in business management and the sale of securities. It has two classes of agents who sell its
investment plans: (1) salaried employees who keep definite hours and work under the control and supervision of the
company; and (2) registered representatives who work on commission basis.
August 27, 1960 petitioner applied to Social Security Commission for exemption of its so-called registered
representatives from the compulsory coverage of the Social Security Act. *denied on January 16, 1961
Motion to reconsider was filed. *denied on September 8, 1961
Matter was elevated to the SC for review

ISSUE
Whether petitioners registered representatives are employees within the meaning of the Social Security Act (R.A.
No. 1161 as amended).

RULING
No.
Section 8(d) of the Social Security Act defines employee as:
Any person who performs services for an employer in which either or both mental and physical efforts are
used

The registered representatives exert both mental and physical efforts in the performance of
their services.

who receives compensation for such services

**Employee is paid for the labor he performs
**Independent contractor is paid for the result thereof

They receive compensation but not necessarily for those efforts but for the results thereof.
They are paid their commission based on a certain percentage of their sales.
The compensation an agent receives is not paid by petitioner but by the investor because the
commission earned by him on the sale is directly deducted by himself from the amount he receives
 from the investor and he turns over to the company the amount invested after such deduction is
made.

where there is employer-employee relationship

**Control Test 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

The agents are not required to report (for work) at any time; they do not have to devote their
time exclusively to or work solely for petitioner; the time and the effort they spend in their work
depend entirely upon their own will and initiative; they are not required to account for their time
nor submit a record of their activities; they shoulder their own selling expenses as well as
transportation .

Nothing in the contract between petitioner and its registered representatives indicate that the latter are under the
control of the former in respect of the means and methods they employ in the performance of their work.
The employer-employee relationship does not exist between petitioner and its registered representatives.
They are independent contractors not under the mandatory coverage of the Social Security Act.
Resolution of respondent Social Security Commission is reversed and set aside, without pronouncement as to costs.

PHIL. AMERICAN LIFE INSURANCE COMPANY vs. ANSALDO

G.R. No. 76452 July 26, 1994
Reporter: Niezel Anen T. Sabrido

OVERVIEW
This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court to annul and set aside the
Order dated November 6, 1986 of the Insurance Commissioner and the entire proceedings taken in I.C. Special Case No.
1-86.

FACTS
The case arose from the letter-complaint of Ramon Paterno, Jr. dated April 17, 1986 alleging certain problems
encountered by employees and consumers of the Philamlife as a result of certain practices of the company.
Commissioner requested petitioner Rodrigo de los Reyes, in his capacity as Philamlife's president, to comment on
respondent Paterno's letter.
The complaint alleges the illegality of the Contract of Agency, prays for the nullification of the provisions on charges
and fees stated in the contract and requests for the reimbursement of the deducted charges and fees.
Manuel Ortega, Philamlife s Senior Assistant Vice- President and Executive Assistant to the President, asked that
respondent Commission first rule on the questions of the jurisdiction of the Insurance Commissioner over the subject
matter.
Insurance Commissioner set the case for hearing and sent subpoena to the officers of Philamlife. Ortega filed a motion
to quash the subpoena.
The motion to quash was denied.

ISSUE
Whether or not the resolution of the legality of the Contract of Agency falls within the jurisdiction of the Insurance
Commissioner.

RULING
The contract of agency entered into between Philamlife and its agents is not included within the meaning of an
insurance business, Section 2 of the Insurance Code cannot be invoked to give jurisdiction over the same to the
Insurance Commissioner. Expressio unius est exclusio alterius.
Insurance Commissioner cannot, in the exercise of its quasi-judicial powers, assume jurisdiction over controversies
between the insurance companies and their agents.
 The relationship between the insurance company and its agents is governed either by the Labor Code or the Civil
Code.

TONGKO vs. THE MANUFACTURERS LIFE INSURANCE CORP. (PHILS.), INC. (MANULIFE)
G.R. No. 167622
November 7, 2008 (570 SCRA 503)
January 25, 2011 (640 SCRA 395)
Reporter: Lech Benigno D. Catacutan

FACTS
July 1, 1977 Gregorio V. Tongko worked for Manulife by virtue of a Career Agents Agreement. In the agreement, it
is provided that:
It is understood and agreed that the Agent is an independent contractor and nothing contained herein
shall be construed or interpreted as creating an employer-employee relationship between the Company
and the Agent
In 1983 Tongko was named as a Unit Manager in Manulifes Sales Agency Organization. In 1990, he became a
Branch Manager. As the CA found, Tongkos gross earnings from his work at Manulife, consisting of commissions,
persistency income, and management overrides, may be summarized as follows:

November 6, 2001- Manulife instituted manpower development programs in the regional sales management level.
The company President and CEO Mr. Renato Vergel De Dios addressed a letter to Mr. Gregorio V. Tongko expressing
his vision for the companys future. In the letter, De Dios expressed his dissatisfaction of Tongkos performance in their
agent recruiting business which resulter in some changes on how Tongko would conduct his duties. It includes that
Tongko hire at his expense a competent assistant to unload him of routine tasks which had been complaining to be
taxing for him.
December 18, 2001 De Dios wrote Tongko another letter which served as notice of termination of his Agency
Agreement with the company effective fifteen days from the date of the letter. The CEO contends that despite their
company meetings, Tongko failed to align his directions with the Managements avowed agency growth policy. On
account thereof, the Management exercised its prerogative to terminate the Agency Agreement of Tongko as
stipulated in his Agents Contract.
November 25, 2002- Tongko filed a Complaint with the NLRC against Manulife for illegal dismissal. In the complaint,
Tongko in a bid to establish an employer- employee relationship, alleged that De Dios gave him specific directives on
how to manage his area of responsibility.

Among his contentions are:

He was hired by Manulife and was promoted and was given various assignments
It was the company that set objectives as regards to productions, recruitments, training programs and all activities
pertaining to business.
Manulife prescribed a rule of conduct which would govern in minute detail all aspects of the work to be undertaken by
employees including the sales process, the underwriting process, signatures, handling of money, policy holder service,
confidentiality, legal and regulatory requirements and ground for termination of employment.

ISSUE
Is there an employee-employer relationship between Gregorio Tongko and Manulife?

RULING
1st Decision dated April 15, 2004 - By Labor Arbiter Marita V. Padolina
 The instant complaint is DISMISSED for lack of jurisdiction, there being no employee-employer
relationship between the parties.

2nd Decision dated Sept 27, 2004 By NLRCs First Division

While finding an employer-employee relationship between Manulife and Tongko applying the four-fold
test, held Manulife liable for illegal dismissal.
The Division further stated that Manulife exercised control over Tongko for they controlled
complainants manner and means of doing his work and achieving the goals set by respondents.

3rd Decision dated November 7, 2008- By the Supreme Court

The Decision dated September 27, 2004 of the NLRC is REINSTATED with the following modifications:
Manulife shall pay Tongko the following:
(1) Full backwages
(2) Separation pay
(3) Nominal damages of PhP 30,000
(4) Attorneys fees

BITOY JAVIER (DANILO P. JAVIER) vs. FLY ACE CORPORATION/FLORDELYN CASTILLO

Reporter: Dianne Maurice Gomez

No. 109975, which reversed the May 28, 2009 Decision of the National Labor Relations Commission (NLRC) in the case
entitled Bitoy Javier v. Fly Ace/Flordelyn Castillo, holding that petitioner Bitoy Javier (Javier) was illegally dismissed from
employment and ordering Fly Ace Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.

FACTS
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor standard
benefits. He alleged that he was an employee of Fly Ace performing various tasks necessary and desirable for the
company.
On May 6, 3008, he was not allowed to enter the company premises by Mr. Ruben Ong and was thereafter dismissed
from service without notice, based on the alleged basis that his daughter refused the affection of Mr. Ong.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was a
stevedore or pahinante of Fly Ace from September 2007 to January 2008.
Fly Ace argues that Bitoy is merely hired on a pakyaw basis at an agreed rate of P300.00 per trip, which was later
increased to P325.00 in January 2008. Denying that he was their employee, Fly Ace insisted that there was no illegal
dismissal.
On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to present
proof that he was a regular employee of Fly Ace.
On appeal with the NLRC, Javier was favored. It was of the view that a pakyaw-basis arrangement did not preclude the
existence of employer- employee relationship. NLRC held that substantial evidence was sufficient basis for judgment on
the existence of the employer-employee relationship.
Javier was a regular employee of Fly Ace because there was reasonable connection between the particular activity
performed by the employee (as a pahinante) in relation to the usual business or trade of the employer (importation,
sales and delivery of groceries). Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security
of tenure.
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace and
reinstated the dismissal of Javiers complaint as ordered by the LA.

ISSUE
1. Whether or not there is an employer-employee relationship between the parties.
2. Whether or not Bitoy was illegally dismissed by Fly Ace Corporation.
RULING
The Court affirms the assailed CA decision. It must be noted that the issue of Javiers alleged illegal dismissal is
anchored on the existence of an employer-employee relationship between him and Fly Ace. This is essentially a question
of fact. In dealing with factual issues in labor cases, substantial evidence: that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion, is sufficient.
As the records bear out, the LA and the CA found JavierEs claim of employment with Fly Ace as wanting and deficient.
The Court is constrained to agree.
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim by the
requisite quantum of evidence. Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief.
Considering the above findings, the Court does not see the necessity to resolve the second issue presented.