GUIDEPOSTS CASES Labor Law; Employment; Control Test; The
better approach would therefore be to adopt a
(1) Tondo Medical Center Employees
Association vs. Court of Appeals
Reorganizations of government units or
departments are valid, for so long as they are
pursued in good faith—that is, for the purpose of
economy or to make bureaucracy more efficient;
While the Supreme Court recognizes the
inconvenience suffered by public servants in their
deployment to distant areas, the executive
department’s finding of a need to make health
services available to these areas and to make
delivery of health services more efficient and more
compelling is far from being unreasonable or
arbitrary, a determination which is well within its
authority.—In several cases, this Court regarded
reorganizations of government units or
departments as valid, for so long as they are
pursued in good faith—that is, for the purpose of
economy or to make bureaucracy more efficient.
On the other hand, if the reorganization is done for
the purpose of defeating security of tenure or for
illmotivated political purposes, any abolition of
position would be invalid. None of these
circumstances are applicable since none of the
petitioners were removed from public service, nor
did they identify any action taken by the DOH that
would unquestionably result in their dismissal.
The reorganization that was pursued in the present
case was made in good faith. The RSP was clearly
designed to improve the efficiency of the
department and to implement the provisions of the
Local Government Code on the devolution of health
services to local governments. While this Court
recognizes the inconvenience suffered by public
servants in their deployment to distant areas, the
executive department’s finding of a need to make
health services available to these areas and to
make delivery of health services more efficient and
more compelling is far from being unreasonable or
arbitrary, a determination which is well within its
authority. In all, this Court finds petitioners’
contentions to be insufficient to invalidate
Executive Order No. 102.
(2) .” G & M Philippines, Inc. vs. Cuambot,
All doubts in the implementation and the
interpretation of the Labor Code shall be
resolved in favor of labor.—Indeed, the rule is
that all doubts in the implementation and the
interpretation of the Labor Code shall be resolved
in favor of labor, in order to give effect to the policy
of the State to “afford protection to labor, promote
full employment, ensure equal work opportunities
regardless of sex, race or creed, and regulate the
relations between workers and employers,” and to
“assure the rights of workers to selforganization,
collective bargaining, security of tenure, and just
and humane conditions of work.
two-tiered test.—The better approach would
therefore be to adopt a two-tiered test involving: (1)
the putative employer’s power to control the
employee with respect to the means and methods
by which the work is to be accomplished; and (2)
the underlying economic realities of the activity or
relationship. This two-tiered test would provide us
with a framework of analysis, which would take
into consideration the totality of circumstances
surrounding the true nature of the relationship
between the parties. This is especially appropriate
in this case where there is no written agreement or
terms of reference to base the relationship on; and
due to the complexity of the relationship based on
the various positions and responsibilities given to
the worker over the period of the latter’s
employment.
(3) Francisco vs. National Labor Relations
Commission
Same; Same; Same; Economic Activity; The
determination of the relationship between
employer and employee depends upon the
circumstances of the whole economic
activity.—The determination of the relationship
between employer and employee depends upon the
circumstances of the whole economic activity, such
as: (1) the extent to which the services performed
are an integral part of the employer’s business; (2)
the extent of the worker’s investment in equipment
and facilities; (3) the nature and degree of control
exercised by the employer; (4) the worker’s
opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for
the success of the claimed independent enterprise;
(6) the permanency and duration of the
relationship between the worker and the employer;
and (7) the degree of dependency of the worker
upon the employer for his continued employment
in that line of business.
Dismissals; Constructive Dismissals; A
diminution of pay is prejudicial to the
employee and amounts to constructive
dismissal.—A diminution of pay is prejudicial to
the employee and amounts to constructive
dismissal. Constructive dismissal is an involuntary
resignation resulting in cessation of work resorted
to when continued employment becomes
impossible, unreasonable or unlikely; when there
is a demotion in rank or a diminution in pay; or
when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to an
employee. In Globe Telecom, Inc. v. Florendo-
Flores, 390 SCRA 201 (2002), we ruled that where
an employee ceases to work due to a demotion of
rank or a diminution of pay, an unreasonable
situation arises which creates an adverse working
environment rendering it impossible for such
employee to continue working for her employer.
Hence, her severance from the company was not of
her own making and therefore amounted to an
illegal termination of employment.
Labor Law; Equal Work Opportunity; In
affording full protection to labor, this Court
must ensure equal work opportunities
regardless of sex, race or creed.—In affording
full protection to labor, this Court must ensure
equal work opportunities regardless of sex, race or
creed. Even as we, in every case, attempt to
carefully balance the fragile relationship between
employees and employers, we are mindful of the
fact that the policy of the law is to apply the Labor
Code to a greater number of employees. This would
enable employees to avail of the benefits accorded
to them by law, in line with the constitutional
mandate giving maximum aid and protection to
labor, promoting their welfare and reaffirming it as
a primary social economic force in furtherance of
social justice and national development.
(4) Great Pacific Life Assurance Corporation
vs. Judico,
An insurance company may have two classes of
agents who sell its insurance policies: (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. The agents who belong to the
second category are not required to report for work
at anytime, they do not have to devote their time
exclusively to or work solely for the company since
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 report of their activities; they shoulder
their own selling expenses as well as
transportation; and they are paid their commission
based on a certain percentage of their sales.
Same; Same; Same; Labor; Employer-employee
relationship; Test to determine employer-
employee relationship.—One salient point in the
determination of employer-employee relationship
which cannot be easily ignored is the fact that the
compensation that these agents on commission
received is not paid by the insurance company but
by the investor (or the person insured). After
determining the commission earned by an agent on
his sales the agent directly deducts it from the
amount he received from the investor or the person
insured and turns over to the insurance company
the amount invested after such deduction is made.
The test therefore is whether the “employer”
controls or has reserved the right to control the
“employee” not only as to the result of the work to
be done but also as to the means and methods by
which the same is to be accomplished.
Same; Same; Same; Same; Element of control by
petitioner on the private respondent is present;
Contract of services with petitioner by private
respondent is not for a piece of work nor for a
definite period.
Same; Same; Same; Same; Same; Illegal
dismissal; Private respondent by the nature of
his position and work had been a regular
employee of petitioner and entitled to the
protection of the law and could not just be
terminated without valid and justifiable
cause.—On the other hand, an ordinary
commission insurance agent works at his own
volition or at his own leisure without fear of
dismissal from the company and short of
committing acts detrimental to the business
interest of the company or against the latter,
whether he produces or not is of no moment as his
salary is based on his production, his anemic
performance or even dead result does not become a
ground for dismissal. 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.
(5) Tongko vs. The Manufactures Life
Insurance Co. (Phils), Inc
Labor Law; Agency; Employer-Employee
Relationship; Control over the performance of
the task of one providing service—both with
respect to the means and manner, and the results
of the service—is the primary element in
determining whether an employment relationship
exists; Manulife’s control fell short of this norm
and carried only the characteristic of the
relationship between an insurance company and
its agents, as defined by the Insurance Code and
by the law of agency under the Civil Code
Same; Same; Same; Codes of conduct are norms or
standards of behavior rather than employer
directives into how specific tasks are to be done;
These codes as well as insurance industry rules
and regulations are not per se indicative of labor
law control under over jurisprudence.
Our ruling in the present case is specific to the
insurance industry where the law permits an
insurance company to exercise control over its
agents within the limits prescribed by law and to
engage independent agents for several transactions
and within an unlimited period of time without the
relationship amounting to employment.
 (6) Sonza vs. ABS-CBN Broadcasting
Corporation, 431 SCRA 583
Labor Law; Labor Code; Employer-Employee
Relationship; Existence of an employer-
employee relationship is a question of fact;
Appellate courts accord the factual findings of
the Labor Arbiter and the NLRC not only
respect but also finality when supported by
substantial evidence; Court does not substitute
its own judgment for that of the tribunal in
determining where the weight of evidence lies
or what evidence is credible.—The existence of
an employer-employee relationship is a question of
fact. Appellate courts accord the factual findings of
the Labor Arbiter and the NLRC not only respect
but also finality when supported by substantial
evidence. Substantial evidence means such
relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. A
party cannot prove the absence of substantial
evidence by simply pointing out that there is
contrary evidence on record, direct or
circumstantial. The Court does not substitute its
own judgment for that of the tribunal in
determining where the weight of evidence lies or
what evidence is credible.
Same; Same; Same; Essential Elements of an
Employer-Employee Relationship; The so-called
“control test” is the most important element.—
Case law has consistently held that the elements of
an employer-employee relationship are: (a) the
selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and
(d) the employer’s power to control the employee on
the means and methods by which the work is
accomplished. The last element, the so-called
“control test,” is the most important element.
Same; Same; Same; Independent Contractor;
The specific selection and hiring of SONZA,
because of his unique skills, talent and
celebrity status not possessed by ordinary
employees, is a circumstance indicative but
not conclusive of independent contractual
relationship; The method of selecting and
engaging SONZA does not conclusively
determine his status.—Independent contractors
often present themselves to possess unique skills,
expertise or talent to distinguish them from
ordinary employees. The specific selection and
hiring of SONZA, because of his unique skills,
talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative,
but not conclusive, of an independent contractual
relationship. If SONZA did not possess such
unique skills, talent and celebrity status, ABS-CBN
would not have entered into the Agreement with
SONZA but would have hired him through its
personnel department just like any other employee.
In any event, the method of selecting and engaging
SONZA does not conclusively determine his status.
We must consider all the circumstances of the
relationship, with the control test being the most
important element.
Same; Same; Same; Same; Whatever benefits
SONZA enjoyed arose from contract and not
because of an employer-employee
relationship.—All the talent fees and benefits paid
to SONZA were the result of negotiations that led
to the Agreement. If SONZA were ABS-CBN’s
employee, there would be no need for the parties to
stipulate on benefits such as “SSS, Medicare, x x x
and 13th month pay” which the law automatically
incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose
from contract and not because of an employer-
employee relationship.
Same; Same; Same; Same; The power to
bargain talent fees way above the salary
scales of ordinary employees is a circumstance
indicative, but not conclusive, of an
independent contractual relationship.—
SONZA’s talent fees, amounting to P317,000
monthly in the second and third year, are so huge
and out of the ordinary that they indicate more an
independent contractual relationship rather than
an employer-employee relationship. ABS-CBN
agreed to pay SONZA such huge talent fees
precisely because of SONZA’s unique skills, talent
and celebrity status not possessed by ordinary
employees. Obviously, SONZA acting alone
possessed enough bargaining power to demand
and receive such huge talent fees for his services.
The power to bargain talent fees way above the
salary scales of ordinary employees is a
circumstance indicative, but not conclusive, of an
independent contractual relationship.
Same; Same; Same; Same; The greater the
supervision and control the hirer exercises, the
more likely the worker is deemed an employee; The
less control the hirer exercises, the more likely the
worker is considered an independent contractor;
Applying the control test, SONZA is not an
employee but an independent contractor.
A radio broadcast specialist who works under
minimal supervision is an independent contractor
In the broadcast industry, exclusivity is not
necessarily the same as control.
The right of labor to security of tenure as
guaranteed in the Constitution arises only if there
is an employer-employee relationship under labor
laws; Not every performance of services for a fee
creates an employer-employee relationship.
The Labor Arbiter can decide a case based solely
on the position papers and the supporting
documents without a formal trial; The holding of a
formal hearing or trial is something that the
parties cannot demand as a matter of right;
Subject to the requirements of due process, the
technicalities of law and the rules obtaining in the
courts of law do not strictly apply in proceedings
before a Labor Arbiter.
(7) Dumpit-Murillo vs. Court of Appeals
Labor Law; Fixed-Term Contracts; Broadcast
Industry; The practice of having fixed-term
contracts in the broadcast industry does not
automatically make all talent contracts valid
and compliant with labor law—the assertion
that a talent contract exists does not
necessarily prevent a regular employment
status.—The Court of Appeals committed
reversible error when it held that petitioner was a
fixedterm employee. Petitioner was a regular
employee under contemplation of law. The practice
of having fixed-term contracts in the industry does
not automatically make all talent contracts valid
and compliant with labor law. The assertion that a
talent contract exists does not necessarily prevent
a regular employment status.
Same; Same; Employer-Employee Relationship;
Elements.—In Manila Water Company, Inc. v.
Pena, 434 SCRA 53 (2004), we said that 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, and (d) the
employer’s power to control. The most important
element is the employer’s control of the employee’s
conduct, not only as to the result of the work to be
done, but also as to the means and methods to
accomplish it.
Same; Same; Regular Employment; Regular
status arises from either the nature of the
work of the employee or the duration of his
employment.—Concerning regular employment,
the law provides for two kinds of employees,
namely: (1) those who are engaged to perform
activities which are usually necessary or desirable
in the usual business or trade of the employer; and
(2) those who have rendered at least one year of
service, whether continuous or broken, with
respect to the activity in which they are employed.
In other words, regular status arises from either
the nature of work of the employee or the duration
of his employment. In Benares v. Pancho, 457
SCRA 652 (2005), we very succinctly said: . . .
[T]he primary standard for determining regular
employment is the reasonable connection between
the particular activity performed by the employee
vis-à-vis the usual trade or business of the
employer. This connection can be determined by
considering the nature of the work performed and
its relation to the scheme of the particular
business or trade in its entirety. If the employee
has been performing the job for at least a year,
even if the performance is not continuous and
merely intermittent, the law deems repeated and
continuing need for its performance as sufficient
evidence of the necessity if not indispensability of
that activity to the business. Hence, the
employment is considered regular, but only with
respect to such activity and while such activity
exists.
Same; Same; Same; For a fixed-term contract
to be valid, it should be shown that the fixed
period was knowingly and voluntarily agreed
upon by the parties—there should have been no
force, duress or improper pressure brought to
bear upon the employee, neither should there
be any other circumstance that vitiates the
employee’s consent.—The contention of the
appellate court that the contract was characterized
by a valid fixed-period employment is untenable.
For such contract to be valid, it should be shown
that the fixed period was knowingly and voluntarily
agreed upon by the parties. There should have
been no force, duress or improper pressure
brought to bear upon the employee; neither should
there be any other circumstance that vitiates the
employee’s consent. It should satisfactorily appear
that the employer and the employee dealt with
each other on more or less equal terms with no
moral dominance being exercised by the employer
over the employee. Moreover, fixed-term
employment will not be considered valid where,
from the circumstances, it is apparent that periods
have been imposed to preclude acquisition of
tenurial security by the employee.
Same; Same; Same; While the Supreme Court has
recognized the validity of fixed-term employment
contracts in a number of cases, it has consistently
emphasized that when the circumstances of a case
show that the periods were imposed to block the
acquisition of security of tenure, they should be
struck down for being contrary to law, morals,
good customs, public order or public policy.
(8) Fuji Television Network, Inc. vs.
Espiritu, 744 SCRA 31, G.R. Nos.
204944-45 December 3, 2014
Labor Law; Appeals; Article 223 of the Labor
Code does not provide any mode of appeal for
decisions of the National Labor Relations
Commission (NLRC).—Article 223 of the Labor
Code does not provide any mode of appeal for
decisions of the National Labor Relations
Commission. It merely states that “[t]he decision of
the Commission shall be final and executory after
ten (10) calendar days from receipt thereof by the
parties.” Being final, it is no longer appealable.
However, the finality of the National Labor
Relations Commission’s decisions does not mean
that there is no more recourse for the parties.
Same; Same; The Supreme Court (SC) clarified that
judicial review of National Labor Relations
Commission’s (NLRC’s) decisions shall be by way of
a petition for certiorari under Rule 65. Citing the
doctrine of hierarchy of courts, it further ruled that
such petitions shall be filed before the Court of
Appeals (CA). From the CA, an aggrieved party may
file a petition for review on certiorari under Rule
45.
Same; Employer-Employee Relationship; The
Supreme Court (SC) has often used the four (4)-
fold test to determine the existence of an
employer-employee relationship.—This court
has often used the four-fold test to determine the
existence of an employer-employee relationship.
Under the four-fold test, the “control test” is the
most important. As to how the elements in the
four-fold test are proven, this court has discussed
that: [t]here is no hard and fast rule designed to
establish the aforesaid elements. Any competent
and relevant evidence to prove the relationship
may be admitted. Identification cards, cash
vouchers, social security registration, appointment
letters or employment contracts, payrolls,
organization charts, and personnel lists, serve as
evidence of employee status.
Same; Same; Independent Contractors; There
is no employer-employee relationship between
the contractor and principal who engages the
contractor’s services, but there is an employer-
employee relationship between the contractor
and workers hired to accomplish the work for
the principal.—In Department Order No. 18-A,
Series of 2011, of the Department of Labor and
Employment, a contractor is defined as having:
Section 3. . . . . . . . (c) . . . an arrangement
whereby a principal agrees to put out or farm out
with a contractor the performance or completion of
a specific job, work or service within a definite or
predetermined period, regardless of whether such
job, work or service is to be performed or
completed within or outside the premises of the
principal. This department order also states that
there is a trilateral relationship in legitimate job
contracting and subcontracting arrangements
among the principal, contractor, and employees of
the contractor. There is no employer-employee
relationship between the contractor and principal
who engages the contractor’s services, but there is
an employer-employee relationship between the
contractor and workers hired to accomplish the
work for the principal.
Same; Same; Same; Since no employer-
employee relationship exists between
independent contractors and their principals,
their contracts are governed by the Civil Code
provisions on contracts and other applicable
laws.—Since no employer-employee relationship
exists between independent contractors and their
principals, their contracts are governed by the Civil
Code provisions on contracts and other applicable
laws. A contract is defined as “a meeting of minds
between two persons whereby one binds himself,
with respect to the other, to give something or to
render some service.” Parties are free to stipulate
on terms and conditions in contracts as long as
these “are not contrary to law, morals, good
customs, public order, or public policy.” This
presupposes that the parties to a contract are on
equal footing. They can bargain on terms and
conditions until they are able to reach an
agreement.
Same; Same; Same; Employees under fixed-
term contracts cannot be independent
contractors because in fixed-term contracts, an
employer-employee relationship exists.—Fuji’s
argument that Arlene was an independent
contractor under a fixed-term contract is
contradictory. Employees under fixed-term
contracts cannot be independent contractors
because in fixed-term contracts, an employer-
employee relationship exists. The test in this kind
of contract is not the necessity and desirability of
the employee’s activities, “but the day certain
agreed upon by the parties for the commencement
and termination of the employment relationship.”
For regular employees, the necessity and
desirability of their work in the usual course of the
employer’s business are the determining factors.
On the other hand, independent contractors do not
have employer-employee relationships with their
principals.
Same; Same; Same; Wages should not be the
conclusive factor in determining whether one is an
employee or an independent contractor.
Regular Employees; The test for determining
regular employment is whether there is a
reasonable connection between the employee’s
activities and the usual business of the
employer.— An employee can be a regular
employee with a fixed-term contract.—An employee
can be a regular employee with a fixed-term
contract. The law does not preclude the possibility
that a regular employee may opt to have a fixed-
term contract for valid reasons. This was
recognized in Brent School, Inc. v. Zamora, 181
SCRA 702 (1990): For as long as it was the
employee who requested, or bargained, that the
contract have a “definite date of termination,” or
that the fixed-term contract be freely entered into
by the employer and the employee, then the
validity of the fixed-term contract will be upheld.
Even probationary employees are entitled to the
right to security of tenure. This was explained in
Philippine Daily Inquirer, Inc. v. Magtibay, Jr., 528
SCRA 355 (2007): Within the limited legal six-
month probationary period, probationary
employees are still entitled to security of tenure. It
is expressly provided in the aforequoted Article 281
that a probationary employee may be terminated
only on two grounds: (a) for just cause, or (b) when
he fails to qualify as a regular employee in
accordance with reasonable standards made
known by the employer to the employee at the time
of his engagement. (Citation omitted) The
expiration of Arlene’s contract does not negate the
finding of illegal dismissal by Fuji. The manner by
which Fuji informed Arlene that her contract would
no longer be renewed is tantamount to
constructive dismissal. To make matters worse,
Arlene was asked to sign a letter of resignation
prepared by Fuji. The existence of a fixed-term
contract should not mean that there can be no
illegal dismissal. Due process must still be
observed in the pretermination of fixed-term
contracts of employment.
Same; Termination of Employment; Disease;
Requirements for Termination of Employment
on the Ground of Disease Under Article 284 of
the Labor Code.—For dismissal under Article 284
to be valid, two requirements must be complied
with: (1) the employee’s disease cannot be cured
within six (6) months and his “continued
employment is prohibited by law or prejudicial to
his health as well as to the health of his co-
employees”; and (2) certification issued by a
competent public health authority that even with
proper medical treatment, the disease cannot be
cured within six (6) months. The burden of proving
compliance with these requisites is on the
employer. Non-compliance leads to the conclusion
that the dismissal was illegal.
Same; Same; Illegal Dismissals; The law itself
provides that illegally dismissed employees
are entitled to reinstatement, backwages
including allowances, and all other benefits.—
The Court of Appeals’ modification of the National
Labor Relations Commission’s decision was proper
because the law itself provides that illegally
dismissed employees are entitled to reinstatement,
backwages including allowances, and all other
benefits. On reinstatement, the National Labor
Relations Commission ordered payment of
separation pay in lieu of reinstatement, reasoning
“that the filing of the instant suit may have
seriously abraded the relationship of the parties so
as to render reinstatement impractical.” The Court
of Appeals reversed this and ordered reinstatement
on the ground that separation pay in lieu of
reinstatement is allowed only in several instances
such as (1) when the employer has ceased
operations; (2) when the employee’s position is no
longer available; (3) strained relations; and (4) a
substantial period has lapsed from date of filing to
date of finality.
Same; Quitclaims; Quitclaims in labor cases do not
bar illegally dismissed employees from filing labor
complaints and money claim.
Same; Moral Damages; Exemplary Damages; Moral
damages are awarded “when the dismissal is
attended by bad faith or fraud or constitutes an act
oppressive to labor, or is done in a manner
contrary to good morals, good customs or public
policy.” On the other hand, exemplary damages
may be awarded when the dismissal was effected
“in a wanton, oppressive or malevolent manner.”
Same; Attorney’s Fees; Article 111 of the Labor
Code states that “[i]n cases of unlawful withholding
of wages, the culpable party may be assessed
attorney’s fees equivalent to ten percent (10%) of
the amount of wages recovered”; Where an
employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the
award of attorney’s fees is legally and morally
justifiable.
(9) Begino vs. ABS-CBN Corporation
(formerly ABS-CBN Broadcasting
Corporation),
Although the existence of an employer-
employee relationship is, on the other hand, a
question of fact which is ordinarily not the
proper subject of a Rule 45 petition for review
on certiorari like the one at bar, the
conflicting findings between the labor
tribunals and the Court of Appeals (CA) justify
a further consideration of the matter.—
Although the existence of an employer-employee
relationship is, on the other hand, a question of
fact which is ordinarily not the proper subject of a
Rule 45 petition for reviewon certiorari like the one
at bar, the conflicting findings between the labor
tribunals and the CA justify a further
consideration of the matter. To determine the
existence of said relation, case law has consistently
applied the four-fold test, to wit: (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 on the
means and methods by which the work is
accomplished. Of these criteria, the so-called
“control test” is generally regarded as the most
crucial and determinative indicator of the presence
or absence of an employer-employee relationship.
Under this test, an employer-employee relationship
is said to exist where the person for whom the
services are performed reserves the right to control
not only the end result but also the manner and
means utilized to achieve the same.
Labor Law; Regular Employees; To the mind of
the Supreme Court (SC), respondents’ repeated
hiring of petitioners for its long-running news
program positively indicates that the latter
were ABS-CBN’s regular employees.—The Court
finds that, notwithstanding the nomenclature of
their Talent Contracts and/or Project Assignment
Forms and the terms and condition embodied
therein, petitioners are regular employees of ABS-
CBN. Time and again, it has been ruled that the
test to determine whether employment is regular or
not is the reasonable connection between the
activity performed by the employee in relation to
the business or trade of the employer.
If the employee has been performing the job for at
least one year, even if the performance is not
continuous or merely intermittent, the law deems
the repeated or continuing performance as
sufficient evidence of the necessity, if not
indispensability of that activity in the business.
Indeed, an employment stops being coterminous
with specific projects where the employee is
continuously rehired due to the demands of the
employer’s business. When circumstances show,
moreover, that contractually stipulated periods of
employment have been imposed to preclude the
acquisition of tenurial security by the employee,
this Court has not hesitated in striking down such
arrangements as contrary to public policy, morals,
good customs or public order. The nature of the
employment depends, after all, on the nature of the
activities to be performed by the employee,
considering the nature of the employer’s business,
the duration and scope to be done, and, in some
cases, even the length of time of the performance
and its continued existence. In the same manner
that the practice of having fixed-term contracts in
the industry does not automatically make all talent
contracts valid and compliant with labor law, it
has, consequently, been ruled that the assertion
that a talent contract exists does not necessarily
prevent a regular employment status.
Same; Same; As cameramen/editors and
reporters, it also appears that petitioners were
subject to the control and supervision of
respondents which, first and foremost,
provided them with the equipments essential
for the discharge of their functions.—As
cameramen/editors and reporters, it also appears
that petitioners were subject to the control and
supervision of respondents which, first and
foremost, provided them with the equipments
essential for the discharge of their functions.
Prepared at the instance of respondents,
petitioners’ Talent Contracts tellingly provided that
ABS-CBN retained “all creative, administrative,
financial and legal control” of the program to which
they were assigned. Aside from having the right to
require petitioners “to attend and participate in all
promotional or merchandising campaigns,
activities or events for the Program,” ABS-CBN
required the former to perform their functions “at
such locations and Performance/Exhibition
Schedules” it provided or, subject to prior notice,
as it chose determine, modify or change. Even if
they were unable to comply with said schedule,
petitioners were required to give advance notice,
subject to respondents’ approval. However
obliquely worded, the Court finds the foregoing
terms and conditions demonstrative of the control
respondents exercised not only over the results of
petitioners’ work but also the means employed to
achieve the same.
Same; Same; Parallels cannot be expediently
drawn between this case and that of Sonza v. ABS-
CBN Broadcasting Corporation, 431 SCRA 583
(2004), case which involved a well-known television
and radio personality who was legitimately
considered a talent and amply compensated as
such.
(10) Villamaria, Jr. vs. Court of
Appeals, 487 SCRA 571, G.R. No. 165881
April 19, 2006
Same; Labor Law; Not every dispute between
an employer and employee involves matters
that only the Labor Arbiter and the National
Labor Relations Commission can resolve in the
exercise of their adjudicatory or quasi-judicial
powers—actions between employers and
employees where the employer-employee
relationship is merely incidental is within the
exclusive original jurisdiction of the regular
courts.—An employer-employee relationship is an
indispensable jurisdictional requisite. The
jurisdiction of Labor Arbiters and the NLRC under
Article 217 of the Labor Code is limited to disputes
arising from an employer-employee relationship
which can only be resolved by reference to the
Labor Code, other labor statutes or their collective
bargaining agreement. Not every dispute between
an employer and employee involves matters that
only the Labor Arbiter and the NLRC can resolve in
the exercise of their adjudicatory or quasi-judicial
powers. Actions between employers and employees
where the employer-employee relationship is
merely incidental is within the exclusive original
jurisdiction of the regular courts. When the
principal relief is to be granted under labor
legislation or a collective bargaining agreement, the
case falls within the exclusive jurisdiction of the
Labor Arbiter and the NLRC even though a claim
for damages might be asserted as an incident to
such claim.
Labor Law; Common Carriers; Boundary
System; Words and Phrases; Jeepney
owner/operator-driver relationship under the
boundary system is that of employer-employee
and not lessor-lessee; The boundary system is
a scheme by an owner/operator engaged in
transporting passengers as a common carrier
to primarily govern the compensation of the
driver, that is, the latter’s daily earnings are
remitted to the owner/operator less the excess
of the boundary which represents the driver’s
compensation.—As early as 1956, the Court ruled
in National Labor Union v. Dinglasan, 98 Phil. 649
(1956), that the jeepney owner/operator-driver
relationship under the boundary system is that of
employer-employee and not lessor-lessee. This
doctrine was affirmed, under similar factual
settings, in Mag-boo v. Bernardo, 7 SCRA 952
(1963), and Lantaco, Sr. v. Llamas, 108 SCRA 502
(1981), and was analogously applied to govern the
relationships between auto-calesa owner/operator
and driver, bus owner/operator and conductor,
and taxi owner/operator and driver. The boundary
system is a scheme by an owner/operator engaged
in transporting passengers as a common carrier to
primarily govern the compensation of the driver,
that is, the latter’s daily earnings are remitted to
the owner/operator less the excess of the boundary
which represents the driver’s compensation. Under
this system, the owner/operator exercises control
and supervision over the driver. It is unlike in lease
of chattels where the lessor loses complete control
over the chattel leased but the lessee is still
ultimately responsible for the consequences of its
use. The management of the business is still in the
hands of the owner/operator, who, being the
holder of the certificate of public convenience,
must see to it that the driver follows the route
prescribed by the franchising and regulatory
authority, and the rules promulgated with regard
to the business operations. The fact that the driver
does not receive fixed wages but only the excess of
the “boundary” given to the owner/operator is not
sufficient to change the relationship between them.
Indubitably, the driver performs activities which
are usually necessary or desirable in the usual
business or trade of the owner/operator.
(11) Bernarte vs. Philippine
Basketball Association (PBA),
Labor Law; Employer-Employee Relationship;
Four-fold test to determine the existence of an
employer-employee relationship; The so-called
“control test” is the most important indicator
of the presence or absence of an employer-
employee relationship. - The very nature of
petitioner’s job of officiating a professional
basketball game undoubtedly calls for freedom of
control by respondents. Applicable foreign case
law declares that a referee is an independent
contractor, whose special skills and independent
judgment are required specifically for such position
and cannot possibly be controlled by the hiring
party.
(12) Reyes vs. Glaucoma Research
Foundation, Inc.,
Employer-Employee Relationship; Before a case
for illegal dismissal can prosper, an employer-
employee relationship must first be
established. - The factors that determine the
issue include who has the power to select the
employee, who pays the employee’s wages, who has
the power to dismiss the employee, and who
exercises control of the methods and results by
which the work of the employee is accomplished.
Employer-Employee Relationship; Etched in an
unending stream of cases are four (4)
standards in determining the existence of an
employer-employee relationship.—Etched in an
unending stream of cases are four standards in
determining the existence of an employer-employee
relationship, namely: (a) the manner of selection
and engagement of the putative employee; (b) the
mode of payment of wages; (c) the presence or
absence of power of dismissal; and (d) the presence
or absence of control of the putative employee’s
conduct. Most determinative among these factors
is the so-called “control test.”
Same; Same; The designation of the payments
to petitioner as salaries, is not determinative
of the existence of an employer-employee
relationship.—The designation of the payments to
petitioner as salaries, is not determinative of the
existence of an employer-employee relationship.
Salary is a general term defined as a remuneration
for services given. Evidence of this fact, in the
instant case, was the cash voucher issued in favor
of petitioner where it was stated therein that the
amount of P20,000.00 was given as petitioner’s
allowance for the month of December 2004,
although it appears from the pay slip that the said
amount was his salary for the same period.
Same; Same; It bears to reiterate that while the
Constitution is committed to the policy of social
justice and the protection of the working class, it
should not be supposed that every labor dispute
will be automatically decided in favor of labor.
Management also has its rights which are entitled
to respect and enforcement in the interest of
simple fair play. Out of its concern for the less
privileged in life, the Court has inclined, more often
than not, toward the worker and upheld his cause
in his conflicts with the employer. Such favoritism,
however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be
dispensed in the light of the established facts and
the applicable law and doctrine.
(13) Century Properties, Inc. vs. Babiano
Control Test; The control test is commonly
regarded as the most important indicator of the
presence or absence of an employer-employee
relationship.
The existence of employer-employee relations
could not be negated by the mere expedient of
repudiating it in a contract.—While the
employment agreement of Concepcion was
denominated as a “Contract of Agency for Project
Director,” it should be stressed that the existence
of employer-employee relations could not be
negated by the mere expedient of repudiating it in
a contract. In the case of Insular Life Assurance
Co., Ltd. v. NLRC (4th Division), 287 SCRA 476
(1998), it was ruled that one’s employment status
is defined and prescribed by law, and not by what
the parties say it should be, viz.: It is axiomatic
that the existence of an employer-employee
relationship cannot be negated by expressly
repudiating it in the management contract and
providing therein that the “employee” is an
independent contractor when the terms of the
agreement clearly show otherwise. For, the
employment status of a person is defined and
prescribed by law and not by what the parties say
it should be. In determining the status of the
management contract, the “four-fold test” on
employment earlier mentioned has to be applied.
(Emphasis and underscoring supplied) Therefore,
the CA correctly ruled that since there exists an
employer-employee relationship between
Concepcion and CPI, the labor tribunals correctly
assumed jurisdiction over her money claims.
(14) Javier vs. Fly Ace Corporation
Labor Law; Appeals; Generally, the Supreme
Court does not review errors that raise factual
questions, however, when there is conflict among
the factual findings of the antecedent deciding
bodies like the Labor Arbiter (LA), the National
Labor Relations Commission (NLRC) and the Court
of Appeals (CA), “it is proper, in the exercise of the
High Court’s equity jurisdiction, to review and re-
evaluate the factual issues and to look into the
records of the case and re-examine the questioned
findings.
Labor officials are enjoined to use reasonable
means to ascertain the facts speedily and
objectively with little regard to technicalities or
formalities but nowhere in the rules are they
provided a license to completely discount evidence,
or the lack of it; When confronted with conflicting
versions on factual matters, it is for them in the
exercise of discretion to determine which party
deserves credence on the basis of evidence
received, subject only to the requirement that their
decision must be supported by substantial
evidence.
Same; Employer-Employee Relationship; No
particular form of evidence is required to prove
the existence of such employer-employee
relationship.—“No particular form of evidence is
required to prove the existence of such employer-
employee relationship. Any competent and relevant
evidence to prove the relationship may be
admitted. Hence, while no particular form of
evidence is required, a finding that such
relationship exists must still rest on some
substantial evidence. Moreover, the substantiality
of the evidence depends on its quantitative as well
as its qualitative aspects.” Although substantial
evidence is not a function of quantity but rather of
quality, the x x x circumstances of the instant case
demand that something more should have been
proffered. Had there been other proofs of
employment, such as x x x inclusion in petitioner’s
payroll, or a clear exercise of control, the Court
would have affirmed the finding of employer-
employee relationship.”
Same; Same; Tests to Determine the Existence
of Employer-Employee Relationship.—The Court
is of the considerable view that on Javier lies the
burden to pass the well-settled tests to determine
the existence of an employer-employee
relationship, viz.: (1) the selection and engagement
of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the
employee’s conduct. Of these elements, the most
important criterion is whether the employer
controls or has reserved the right to control the
employee not only as to the result of the work but
also as to the means and methods by which the
result is to be accomplished.
Same; Same; Independent Contractors; In
determining whether the relationship is that of
employer and employee or one of an independent
contractor, each case must be determined on its
own facts and all the features of the relationship
are to be considered.
Same; Social Justice; Out of its concern for the
less privileged in life, the Supreme Court has
inclined, more often than not, toward the
worker and upheld his cause in his conflicts
with the employer.—While the Constitution is
committed to the policy of social justice and the
protection of the working class, it should not be
supposed that every labor dispute will be
automatically decided in favor of labor.
Management also has its rights which are entitled
to respect and enforcement in the interest of
simple fair play. Out of its concern for the less
privileged in life, the Court has inclined, more often
than not, toward the worker and upheld his cause
in his conflicts with the employer. Such favoritism,
however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be
dispensed in the light of the established facts and
the applicable law and doctrine.
(15) .South East International Rattan, Inc. vs.
Coming,
Labor Law; Employer-Employee Relationships;
Appeals; The issue of whether or not an employer-
employee relationship exists in a given case is
essentially a question of fact. Only errors of law are
generally reviewed by the Supreme Court. This rule
is not absolute, however, and admits of exceptions.
For one, the Court may look into factual issues in
labor cases when the factual findings of the Labor
Arbiter, the National Labor Relations Commission
(NLRC), and the Court of Appeals (CA) are
conflicting.
Same; Same; Four-Fold Test to Ascertain the
Existence of an Employer-Employee
Relationship.—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 employee’s
conduct, or the so-called “control test.” In resolving
the issue of whether such relationship exists in a
given case, substantial evidence — that amount of
relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion — is
sufficient. Although no particular form of evidence
is required to prove the existence of the
relationship, and any competent and relevant
evidence to prove the relationship may be
admitted, a finding that the relationship exists
must nonetheless rest on substantial evidence.
Same; Same; In any controversy between a
laborer and his master, doubts reasonably
arising from the evidence are resolved in favor
of the laborer.—In any controversy between a
laborer and his master, doubts reasonably arising
from the evidence are resolved in favor of the
laborer. As a regular employee, respondent enjoys
the right to security of tenure under Article 279 of
the Labor Code and may only be dismissed for a
just or authorized cause, otherwise the dismissal
becomes illegal.
Same; Illegal Dismissals; Reinstatement;
Separation Pay; Separation pay equivalent to
one month salary for every year of service
should be awarded as an alternative in case
reinstatement in not possible.—Respondent,
whose employment was terminated without valid
cause by petitioners, is entitled to reinstatement
without loss of seniority rights and other privileges
and to his full back wages, inclusive of allowances
and other benefits or their monetary equivalent,
computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement. Where reinstatement is no longer
viable as an option, back wages shall be computed
from the time of the illegal termination up to the
finality of the decision. Separation pay equivalent
to one month salary for every year of service
should likewise be awarded as an alternative in
case reinstatement in not possible.

Same; Same; The fact that a worker was not

reported as an employee to the Social Security
System (SSS) is not conclusive proof of the
absence of employer-employee relationship;
Nor does the fact that respondent’s name does
not appear in the payrolls and pay envelope
records submitted by petitioners negate the
existence of employer-employee relationship.—
In Tan v. Lagrama, 387 SCRA 393 (2002), the
Court held that the fact that a worker was not
reported as an employee to the SSS is not
conclusive proof of the absence of employer-
employee relationship. Otherwise, an employer
would be rewarded for his failure or even neglect to
perform his obligation. Nor does the fact that
respondent’s name does not appear in the payrolls
and pay envelope records submitted by petitioners
negate the existence of employer-employee
relationship. For a payroll to be utilized to disprove
the employment of a person, it must contain a true
and complete list of the employee. In this case, the
exhibits offered by petitioners before the NLRC
consisting of copies of payrolls and pay earnings
records are only for the years 1999 and 2000; they
do not cover the entire 18-year period during
which respondent supposedly worked for SEIRI.