Book Three

Conditions of Employment
(Art. 82- Art. 155)

I. Conditions of Employment: Coverage and Exclusion

 Elements of employment relationship/ General Principles
 Four-fold test:
 Cases of Employer-Employee Relationship:

 Villamaria vs. CA April 19, 2006 (G.R. No. 165881)

- Petition for review assailing the decision and resolution of the CA which set aside the decision of
the NLRC, which in turn affirmed the Decision[4] of the Labor Arbiter dismissing the complaint
filed by respondent Jerry V. Bustamante.
- Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship
engaged in assembling passenger jeepneys with a public utility franchise to operate along
the Baclaran-Sucat route. By 1995, Villamaria stopped assembling jeepneys and retained only
nine, four of which he operated by employing drivers on a boundary basis. One of those drivers
was respondent Bustamante who drove the jeepney with Plate No. PVU-660. Bustamante
remitted P450.00 a day to Villamaria as boundary and kept the residue of his daily earnings
as compensation for driving the vehicle. In August 1997, Villamaria verbally agreed to sell
the jeepney to Bustamante under the boundary-hulog scheme, where Bustamante would
remit to Villarama P550.00 a day for a period of four years; Bustamante would then become
the owner of the vehicle and continue to drive the same under Villamarias franchise. It was also
agreed that Bustamante would make a downpayment of P10,000.00.
- The parties agreed that if Bustamante failed to pay the boundary-hulog for three days, Villamaria
Motors would hold on to the vehicle until Bustamante paid his arrears, including a penalty
of P50.00 a day; in case Bustamante failed to remit the daily boundary-hulog for a period of one
week, the Kasunduan would cease to have legal effect and Bustamante would have to return the
vehicle to Villamaria Motors.
- Under the Kasunduan, Bustamante was prohibited from driving the vehicle without prior
authority from Villamaria Motors. Thus, Bustamante was authorized to operate the vehicle to
transport passengers only and not for other purposes. He was also required to display an
identification card in front of the windshield of the vehicle; in case of failure to do so, any fine that
may be imposed by government authorities would be charged against his account. Bustamante
further obliged himself to pay for the cost of replacing any parts of the vehicle that would be lost
or damaged due to his negligence. In case the vehicle sustained serious damage, Bustamante
was obliged to notify Villamaria Motors before commencing repairs. Bustamante was not allowed
to wear slippers, short pants or undershirts while driving. He was required to be polite and
respectful towards the passengers. He was also obliged to notify Villamaria Motors in case the
vehicle was leased for two or more days and was required to attend any meetings which may be
called from time to time. Aside from the boundary-hulog, Bustamante was also obliged to pay
for the annual registration fees of the vehicle and the premium for the vehicles
comprehensive insurance. Bustamante promised to strictly comply with the rules and
regulations imposed by Villamaria for the upkeep and maintenance of the jeepney.
- Bustamante continued driving the jeepney under the supervision and control of Villamaria. As
agreed upon, he made daily remittances of P550.00 in payment of the purchase price of the
vehicle. Bustamante failed to pay for the annual registration fees of the vehicle, but
Villamaria allowed him to continue driving the jeepney.
- On July 24, 2000, Villamaria took back the jeepney driven by Bustamante and barred the
latter from driving the vehicle.
- On August 15, 2000, Bustamante filed a Complaint[7] for Illegal Dismissal against Villamaria and
his wife Teresita.
- In his Position Paper,[8] Bustamante alleged that he was employed by Villamaria in July 1996
under the boundary system, where he was required to remit P450.00 a day. After one year of
continuously working for them, the spouses Villamaria presented the Kasunduan for his
 signature, with the assurance that he (Bustamante) would own the jeepney by March 2001 after
paying P550.00 in daily installments and that he would thereafter continue driving the vehicle
along the same route under the same franchise. He further narrated that in July 2000, he
informed the Villamaria spouses that the surplus engine of the jeepney needed to be
replaced, and was assured that it would be done. However, he was later arrested and his
drivers license was confiscated because apparently, the replacement engine that was
installed was taken from a stolen vehicle. Due to negotiations with the apprehending
authorities, the jeepney was not impounded. The Villamaria spouses took the jeepney from
him on July 24, 2000, and he was no longer allowed to drive the vehicle since then unless
he paid them P70,000.00.
- In their Position Paper,[10] the spouses Villamaria admitted the existence of the Kasunduan, but
alleged that Bustamante failed to pay the P10,000.00 downpayment and the vehicles annual
registration fees. They further alleged that Bustamante eventually failed to remit the requisite
boundary-hulog of P550.00 a day, which prompted them to issue the Paalaala. Instead of
complying with his obligations, Bustamante stopped making his remittances despite his daily trips
and even brought the jeepney to the province without permission. Worse, the jeepney figured in
an accident and its license plate was confiscated; Bustamante even abandoned the vehicle in a
gasoline station in Sucat, Paraaque Cityfor two weeks. When the security guard at the gasoline
station requested that the vehicle be retrieved and Teresita Villamaria asked Bustamante for the
keys, Bustamante told her: Di kunin ninyo. When the vehicle was finally retrieved, the tires were
worn, the alternator was gone, and the battery was no longer working.
- On March 15, 2002, the Labor Arbiter rendered judgment [17] in favor of the spouses
Villamaria and ordered the complaint dismissed.
- Bustamante appealed the decision to the NLRC, [19] insisting that the Kasunduan did not
extinguish the employer-employee relationship between him and Villamaria. While he did
not receive fixed wages, he kept only the excess of the boundary-hulog which he was required to
remit daily to Villamaria under the agreement. Bustamante maintained that he remained an
employee because he was engaged to perform activities which were necessary or desirable to
Villamarias trade or business.
- The NLRC rendered judgment[20] dismissing the appeal for lack of merit.
 The NLRC ruled that under the Kasunduan, the juridical relationship
between Bustamante and Villamaria was that of vendor and vendee, hence,
the Labor Arbiter had no jurisdiction over the complaint. Bustamante filed a
Motion for Reconsideration, which the NLRC resolved to deny on May 30,
2003.[22]
- Bustamante elevated the matter to the CA via Petition for Certiorari, alleging that the NLRC
erred
- In its Decision[25] dated August 30, 2004, the CA reversed and set aside the NLRC decision.
 The appellate court ruled that the Labor Arbiter had jurisdiction over
Bustamantes complaint. Under the Kasunduan, the relationship between him and
Villamaria was dual: that of vendor-vendee and employer-employee. The CA
ratiocinated that Villamarias exercise of control over Bustamantes conduct in
operating the jeepney is inconsistent with the formers claim that he was not
engaged in the transportation business. There was no evidence that petitioner
was allowed to let some other person drive the jeepney.
 The CA further held that, while the power to dismiss was not mentioned in
the Kasunduan, it did not mean that Villamaria could not exercise it. It explained
that the existence of an employment relationship did not depend on how
the worker was paid but on the presence or absence of control over the
means and method of the employees work. In this case, Villamarias directives
(to drive carefully, wear an identification card, don decent attire, park the vehicle
in his garage, and to inform him about provincial trips, etc.) was a means to
control the way in which Bustamante was to go about his work. In view of
Villamarias supervision and control as employer, the fact that the boundary
represented installment payments of the purchase price on the jeepney did not
remove the parties employer-employee relationship.
- While the appellate court recognized that a weeks default in paying the boundary-
hulog constituted an additional cause for terminating Bustamantes employment, it held that the
latter was illegally dismissed.
- Villamaria, now petitioner, seeks relief from this Court (SC)
- SC’s Ruling: We resolve these issues in the affirmative.
 The rule is that, the nature of an action and the subject matter thereof, as well as,
which court or agency of the government has jurisdiction over the same, are
determined by the material allegations of the complaint in relation to the law
involved and the character of the reliefs prayed for, whether or not the
complainant/plaintiff is entitled to any or all of such reliefs. [33] A prayer or demand
for relief is not part of the petition of the cause of action; nor does it enlarge the
cause of action stated or change the legal effect of what is alleged. [34] In
determining which body has jurisdiction over a case, the better policy is to
consider not only the status or relationship of the parties but also the nature of
the action that is the subject of their controversy.[35]
 Article 217 of the Labor Code, as amended, vests on the Labor Arbiter exclusive
original jurisdiction only over the following:

x x x (a) Except as otherwise provided under this Code, the Labor

Arbiters shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
o 1. Unfair labor practice cases;
o 2. Termination disputes;
o 3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wage, rates of pay, hours of work,
and other terms and conditions of employment;
o 4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
o 5. Cases arising from violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and
o 6. Except claims for Employees Compensation,
Social Security, Medicare and maternity
benefits, all other claims, arising from
employer-employee relationship, including
those of persons in domestic or household
service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for
reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction

over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of

collective bargaining agreements, and those arising from the
interpretation or enforcement of company personnel policies
shall be disposed of by the Labor Arbiter by referring the same to
the grievance machinery and voluntary arbitration as may be
provided in said agreements.
 In the foregoing cases, an employer-employee relationship is an
indispensable jurisdictional requisite.[36] 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.[37] 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.[38] 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.[39]
- We agree with the ruling of the CA that, under the boundary-hulog scheme incorporated in
the Kasunduan, a dual juridical relationship was created between petitioner and
respondent: that of employer-employee and vendor-vendee. The Kasunduan did not
extinguish the employer-employee relationship of the parties extant before the execution
of said deed.
- As early as 1956, the Court ruled in National Labor Union v. Dinglasan[40] 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 Magboo v. Bernardo[41] and Lantaco, Sr. v. Llamas,[42] and was analogously applied to govern
the relationships between auto-calesa owner/operator and driver,[43] bus owner/operator and
conductor,[44] and taxi owner/operator and driver.[45]
- 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 latters daily earnings are remitted to the owner/operator less the excess of the
boundary which represents the drivers 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.[46]
- Under the boundary-hulog scheme, petitioner retained ownership of the jeepney although
its material possession was vested in respondent as its driver. In case respondent failed to
make his P550.00 daily installment payment for a week, the agreement would be of no force and
effect and respondent would have to return the jeepney to petitioner; the employer-employee
relationship would likewise be terminated unless petitioner would allow respondent to continue
driving the jeepney on a boundary basis of P550.00 daily despite the termination of their vendor-
vendee relationship.
- Indeed, petitioner, as the owner of the vehicle and the holder of the franchise, is entitled to
exercise supervision and control over the respondent, by seeing to it that the route provided
in his franchise, and the rules and regulations of the Land Transportation Regulatory Board are
duly complied with. Moreover, in a business establishment, an identification card is usually
provided not just as a security measure but to mainly identify the holder thereof as a bona
fide employee of the firm who issues it.[57]
- Moreover, well-settled is the rule that, the employer has the burden of proving that
the dismissal of an employee is for a just cause. The failure of the employer to
discharge this burden means that the dismissal is not justified and that the
employee is entitled to reinstatement and back wages.
- IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of
Appeals in CA-G.R. SP No. 78720 is AFFIRMED. Costs against petitioner.
  Alhambra Industries vs. CIR (G.R. No. L-15984)

- Appeal by certiorari from respondent court's decision in an unfair labor practice case that the
fifteen drivers and helpers not recognized by petitioners are in truth and in fact its employees, and
not separate and independent employees of its salesmen and propagandists, and are therefore
entitled retroactively to all the privileges, rights and benefits provided for all its other regular
employees under its collective bargaining agreement with respondent union.
- The complaint for unfair labor practice1 for violation of section 4 (a) subsections (4) and (6) of
the Industrial Peace Act, was filed by the acting prosecutor of respondent court against petitioner,
upon the charges of respondent union that fifteen of the union members, employed as
drivers and helpers of petitioner, were being discriminated against by petitioner's not
affording the the benefits and privileges enjoyed by all the other employees for no
justifiable reason other than their union membership; and that the union had asked petitioner
to negotiate with respect to said fifteen drivers and helpers who were being excluded from the
benefits of their subsisting collective bargaining agreement, but petitioner refused to do so. The
union prayed for a desistance order and that petitioner be ordered to bargain collectively in good
faith and to grant the drivers and helpers the same benefits and privileges extended to and
enjoyed by all its other employees.
- In answer, petitioner denied the unfair labor practice imputed to it and countered that the
fifteen drivers and helpers were not its employees, but separate and independent employee's of
its salesmen and propagandists who exercised discretion and control over their selection,
employment, compensation, suspension and dismissal.
- Respondent court in its decision, affirmed by its resolution en banc of April 11, 1966,
categorically held petitioners disclaimer of the employee status of drivers and 17 helpers
to be baseless and untenable as follows: "In accordance with the "memorandum of
instructions," Exhibit "24," which the respondent corporation issues to the salesman or
propagandist, it is really from here that the latter is authorized by the former to engage the
services of a driver or helper. So that even when the driver or helper does not apply directly to the
respondent corporation for the job but to the salesman or propagandist, nevertheless, the
authority of the saleman or propagandist to employ the driver or helper emanates from the
respondent corporation. It is, therefore, apparent that in truth and in fact, the respondent
corporation is the "employer" of the driver or helper and not the salesman or propagandist
who is merely expressly authorized by the former to engage such services.
- "The salary of the driver or helper also comes from the respondent corporation in the form of
'driver allowance' which is appropriated for the purpose. This allowance is given to the salesman
or propagandist who in turn pays the same to the driver or helper for salaries or wages. Of
course, we realize that this mode of paying the salaries or wages of the driver or helper indirectly
through the salesman or propagandist will save the respondent corporation the burden of record
keeping and other similar indirect costs. Nevertheless, it could not be denied that it is the
respondent corporation that pays the wages and salaries of the driver or helper."
- It is therefore clear that the terms and conditions of employment of the driver or helper are
those fixed and determined by the respondent corporation. From all the foregoing
consideration we are convinced that the driver and helper is an "employee" of respondent
corporation."
- It therefore rendered the following judgment against petitioner:
- Petitioner in this appeal, does not dispute the respondent courts basic ruling that the
fifteen drivers and helpers are in truth and in fact its employees and that its making use of its
salesmen and propagandists, as the ostensible "employers" of the drivers and helpers was in
effect but an elaborate artifice to deprive the drivers and helpers of their status as employees of
petitioner, entitled to enjoy all the privileges, rights and benefits provided for all other employees
under the collective bargaining agreements.
- The lone error assigned by petitioner in its brief is that respondent court "acted in excess of
jurisdiction in entering judgment against petitioner in spite of its finding that the petitioner
had not committed any act of unfair labor practice."
- SC’s Ruling:
  Petitioner's appeal must be dismissed. It is speciously grounded on mere form
rather than the realities of the case. In form, respondent court gently treated
petitioner's scheme to deprive the fifteen drivers and helpers of their rightful
status as employees and did not denounce it as a betrayal of the salutary
purpose and objective of the Industrial Peace Act, 4 but instead remarked that
since the grant of employees' benefits hinged on the court's decision on their
status as such employees, petitioner "could not have been guilty of refusal to
bargain in accordance with the Act." The reality, however, is that respondent
court expressly found that "in truth and in fact, (petitioner) corporation is
the "employer" of the driver or helper and not the salesman or
propagandist who is merely expressly authorized by the former to engage
such services." Petitioner's failure to comply with its duty under the collective
bargaining agreement to extend the privileges, rights and benefits thereof to the
drivers and helpers as its actual employees clearly amounted to the commission
of an unfair labor practice. And consequently respondent court properly
ordered in, its judgment that said drivers and helpers "should be given and/or
extended all the privileges, rights and benefits that are given to all the other
regular employees retroactive as of the effectivity of the first agreement of March
14, 1962 up to the present." In ordering, respondent court but discharging its
function under section 5(c) of the Act, supra, to order the cessation of an unfair
labor practice and "take such affirmative action as will effectuate the policies of
this Act."
- ACCORDINGLY, the judgment appealed from is affirmed. The writ of preliminary injunction
heretofore issued on May 17, 1966 is lifted and set aside. With costs against petitioner.

 Hydro Resources Corp. vs. Pagalilaun, April 18, 1989 (GR No. L-62909)

- This is a petition to review on certiorari the resolution of the National Labor Relations
Commission (NLRC) which affirmed the labor arbiter's decision ordering herein petitioner,
Hydro Resources Contractors Corporation to reinstate Rogelio A. Aban to his former
position without loss of seniority rights, to pay him 12 months backwages in the amount of
P18,000.00 and to pay attorney's fees in the amount of P1,800.00.
- On October 24, 1978, petitioner corporation hired the private respondent Aban as its "Legal
Assistant."
- On September 4, 1980, Aban received a letter from the corporation informing him that he
would be considered terminated effective October 4, 1980 because of his alleged failure to
perform his duties well.
- On October 6, 1980, Aban filed a complaint against the petitioner for illegal dismissal.
- The labor arbiter ruled that Aban was illegally dismissed.
- This ruling was affirmed by the NLRC on appeal.
- Hence, this present petition.
- The only issue raised by the petitioner is whether or not there was an employer-employee
relationship between the petitioner corporation and Aban. The petitioner questions the
jurisdiction of the public respondents considering the alleged absence of an employer-employee
relationship. The petitioner contends that its relationship with Aban is that of a client with
his lawyer. It is its position that "(a) lawyer as long as he is acting as such, as long as he is
performing acts constituting practice of law, can never be considered an employee. His
relationship with those to whom he renders services, as such lawyer, can never be governed by
the labor laws. For a lawyer to so argue is not only demeaning to himself (sic), but also his
profession and to his brothers in the profession." Thus, the petitioner argues that the labor arbiter
and NLRC have no jurisdiction over the instant case.
- SC’s Ruling: The contention is without merit.
- A lawyer, like any other professional, may very well be an employee of a private corporation or
even of the government. It is not unusual for a big corporation to hire a staff of lawyers as its
in-house counsel, pay them regular salaries, rank them in its table of organization, and
otherwise treat them like its other officers and employees. At the same time, it may also
contract with a law firm to act as outside counsel on a retainer basis. The two classes of
lawyers often work closely together but one group is made up of employees while the other is not.
A similar arrangement may exist as to doctors, nurses, dentists, public relations practitioners, and
other professionals.
- This Court is not without a guide in deciding whether or not an employer-employee relation
exists between the contending parties or whether or not the private respondent was hired
on a retainer basis.
- As stated in the case of Tabas v. California Manufacturing Co., (G.R. No. 80680, January 26,
1989):
 This Court has consistently ruled that the determination of whether or not
there is an employer-employee relation depends upon four standards:
 (1) the manner of selection and engagement of the putative
employee;
 (2) the mode of payment of wages;
 (3) the presence or absence of a power of dismissal; and
 (4) the presence or absence of a power to control the putative
employee's conduct. Of the four, the right-of-control test has been
held to be the decisive factor.
- Aban was employed by the petitioner to be its Legal Assistant as evidenced by his
appointment paper (Exhibit "A"). The petitioner paid him a basic salary plus living allowance.
Thereafter, Aban was dismissed on his alleged failure to perform his duties well. (Exhibit "B").
- Aban worked solely for the petitioner and dealt only with legal matters involving the said
corporation and its employees. He also assisted the Personnel Officer in processing
appointment papers of employees. This latter duty is not an act of a lawyer in the exercise
of his profession but rather a duty for the benefit of the corporation.
- The above-mentioned facts show that the petitioner paid Aban's wages, exercised its power
to hire and fire the respondent employee and more important, exercised control over Aban
by defining the duties and functions of his work.
- Considering that the private respondent was illegally dismissed from his employment in 1980, he
is entitled to reinstatement to his former or similar position without loss of seniority rights, if it is
still feasible, to backwages without qualification or deduction for three years, (D.M. Consunji, Inc.
v. Pucan 159 SCRA 107 (1988); Flores v. Nuestro, G.R. No. 66890, April 15, 1988), and to
reasonable attorney's fees in the amount of P5,000.00. Should reinstatement prove no longer
feasible, the petitioner will pay him separation pay in lieu of reinstatement. (City Trust Finance
Corp. v. NLRC, 157 SCRA 87; Santos v. NLRC, 154 SCRA 166; Metro Drug v. NLRC, et al., 143
SCRA 132; Luzon Brokerage v. Luzon Labor Union, 7 SCRA 116).
- WHEREFORE, the petition is hereby DISMISSED for lack of merit. The petitioner is ordered
to reinstate the private respondent to his former or a similar position without loss of
seniority rights and to pay three (3) years backwages without qualification or deduction
and P5,000.00 in attorney's fees. Should reinstatement not be feasible, the petitioner shall
pay the private respondent termination benefits in addition to the above stated three years
backpay and P5,000.00 attorney's fees.
  Cases of NO Employer-employee Relationship

 Manila Golf Club vs. IAC 237 SCRA 207

- The question before the Court here is whether or not persons rendering caddying services
for members of golf clubs and their guests in said clubs' courses or premises are the
employees of such clubs and therefore within the compulsory coverage of the Social
Security System (SSS).
- That question appears to have been involved, either directly or peripherally, in three separate
proceedings, all initiated by or on behalf of herein private respondent and his fellow caddies. That
which gave rise to the present petition for review was originally filed with the Social Security
Commission (SSC) via petition of seventeen (17) persons who styled themselves "Caddies of
Manila Golf and Country Club-PTCCEA" for coverage and availment of benefits under the 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. The petition, docketed as SSC Case No. 5443, alleged in essence that although the
petitioners were employees of the Manila Golf and Country Club, a domestic corporation, the
latter had not registered them as such with the SSS.
- In the case before the SSC, the respondent Club filed answer praying for the dismissal of the
petition, alleging in substance that the petitioners, caddies by occupation, were allowed
into the Club premises to render services as such to the individual members and guests
playing the Club's golf course and who themselves paid for such services; that as such
caddies, the petitioners were not subject to the direction and control of the Club as
regards the manner in which they performed their work; and hence, they were not the
Club's employees.
- 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,
- From this Resolution appeal was taken to the Intermediate appellate Court by the union
representing Llamar and Jomok. After the appeal was docketed 5 and some months before
decision thereon was reached and promulgated, Raymundo Jomok's appeal was dismissed at
his instance, leaving Fermin Llamar the lone appellant. 6
- Deemed of title or no moment by the Appellate Court was the fact that the caddies were paid
by the players, not by the Club, that they observed no definite working hours and earned
no fixed income. It quoted with approval from an American decision 10 to the effect that:
"whether the club paid the caddies and afterward collected in the first instance, the
caddies were still employees of the club." This, no matter that the case which produced this
ruling had a slightly different factual cast, apparently having involved a claim for workmen's
compensation made by a caddy who, about to leave the premises of the club where he worked,
was hit and injured by an automobile then negotiating the club's private driveway.
- The IAC would point to the fact that the Club suggests the rate of fees payable by the players to
the caddies as still another indication of the latter's status as employees. It seems to the Court,
however, that the intendment of such fact is to the contrary, showing that the Club has not the
measure of control over the incidents of the caddies' work and compensation that an
employer would possess.
- SC’s Ruling: The Court agrees with petitioner that the group rotation system so-called, is
less a measure of employer control than an assurance that the work is fairly distributed, a
caddy who is absent when his turn number is called simply losing his turn to serve and
being assigned instead the last number for the day. 17
- By and large, there appears nothing in the record to refute the petitioner's claim that:
 (Petitioner) has no means of compelling the presence of a caddy. A caddy is not
required to exercise his occupation in the premises of petitioner. He may
 work with any other golf club or he may seek employment a caddy or otherwise
with any entity or individual without restriction by petitioner. . . .
 . . . In the final analysis, petitioner has no was of compelling the presence of the
caddies as they are not required to render a definite number of hours of work on
a single day. Even the group rotation of caddies is not absolute because a player
is at liberty to choose a caddy of his preference regardless of the caddy's order in
the rotation.
 It can happen that a caddy who has rendered services to a player on one day
may still find sufficient time to work elsewhere. Under such circumstances, he
may then leave the premises of petitioner and go to such other place of work that
he wishes (sic). Or a caddy who is on call for a particular day may deliberately
absent himself if he has more profitable caddying, or another, engagement in
some other place. These are things beyond petitioner's control and for which it
imposes no direct sanctions on the caddies. . . . 18
- WHEREFORE, the Decision of the Intermediate Appellant Court, review of which is sought,
is reversed and set aside, it being hereby declared that the private respondent, Fermin
Llamar, is not an employee of petitioner Manila Golf and Country Club and that petitioner
is under no obligation to report him for compulsory coverage to the Social Security
System. No pronouncement as to costs.

 Filamer Christian Institute vs. IAC (G.R. No. 75112 August 17, 1992)

- The private respondents, heirs of the late Potenciano Kapunan, seek reconsideration of
the decision rendered by this Court on October 16, 1990 (Filamer Christian Institute v. Court of
Appeals, 190 SCRA 477) reviewing the appellate court's conclusion that there exists an
employer-employee relationship between the petitioner and its co-defendant Funtecha.
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 private respondents assert that the circumstances obtaining in the present case call for the
application of Article 2180 of the Civil Code since Funtecha is no doubt an employee of the
petitioner. The private respondents maintain that under Article 2180 an injured party shall
have recourse against the servant as well as the petitioner for whom, at the time of the
incident, the servant was performing an act in furtherance of the interest and for the
benefit of the petitioner. Funtecha allegedly did not steal the school jeep nor use it for a joy ride
without the knowledge of the school authorities.
- 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. We reinstate the Court of Appeals' decision penned
by the late Justice Desiderio Jurado and concurred in by Justices Jose C. Campos, Jr. and
Serafin E. Camilon. Applying Civil Code provisions, the appellate court affirmed the trial court
decision which ordered the payment of the P20,000.00 liability in the Zenith Insurance
Corporation policy, P10,000.00 moral damages, P4,000.00 litigation and actual expenses,
and P3,000.00 attorney's fees.
- It is undisputed that Funtecha was a working student, being a part-time janitor and a
scholar of petitioner Filamer. He was, in relation to the school, an employee even if he was
assigned to clean the school premises for only two (2) hours in the morning of each school day.
- Having a student driver's license, Funtecha requested the driver, Allan Masa, and was allowed, to
take over the vehicle while the latter was on his way home one late afternoon.
- Allan Masa turned over the vehicle to Funtecha only after driving down a road, negotiating a
sharp dangerous curb, and viewing that the road was clear.
- Driving the vehicle to and from the house of the school president where both Allan and Funtecha
reside is an act in furtherance of the interest of the petitioner-school. Allan's job demands that he
drive home the school jeep so he can use it to fetch students in the morning of the next school
day.
- It is indubitable under the circumstances that the school president had knowledge that the
jeep was routinely driven home for the said purpose. Moreover, it is not improbable (unlikely)
that the school president also had knowledge of Funtecha's possession of a student
driver's license and his desire to undergo driving lessons during the time that he was not
in his classrooms.
- SC’s Ruling: Therefore, the Court is constrained (forced) to conclude that the act of
Funtecha in taking over the steering wheel was one done for and in behalf of his employer
for which act the petitioner-school cannot deny any responsibility by arguing that it was
done beyond the scope of his janitorial duties. 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. (Manuel
Casada, 190 Va 906, 59 SE 2d 47 [1950]) Even if somehow, the employee driving the vehicle
derived some benefit from the act, the existence of a presumptive liability of the employer is
determined by answering the question of whether or not the servant was at the time of the
accident performing any act in furtherance of his master's business. (Kohlman v. Hyland,
210 NW 643, 50 ALR 1437 [1926]; Jameson v. Gavett, 71 P 2d 937 [1937])
- 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 avoid
liability under the substantive provisions of the Civil Code.
- Funtecha is an employee of petitioner Filamer. He need not have an official appointment for a
driver's position in order that the petitioner may be held responsible for his grossly negligent act,
it being sufficient that the act of driving at the time of the incident was for the benefit of
the petitioner. Hence, the fact that Funtecha was not the school driver or was not acting within
the scope of his janitorial duties does not relieve the petitioner of the burden of rebutting the
presumption juris tantum that there was negligence on its part either in the selection of a servant
or employee, or in the supervision over him. The petitioner has failed to show proof of its having
exercised the required diligence of a good father of a family over its employees Funtecha and
Allan.
- The Court reiterates that supervision includes the formulation of suitable rules and
regulations for the guidance of its employees and the issuance of proper instructions
intended for the protection of the public and persons with whom the employer has
relations through his employees. (Bahia v. Litonjua and Leynes, supra, at p. 628; Phoenix
Construction, v. Intermediate Appellate Court, 148 SCRA 353 [1987])
- An employer is expected to impose upon its employees the necessary discipline called for
in the performance of any act indispensable to the business and beneficial to their
employer.
- In the present case, the petitioner has not shown that it has set forth such rules and
guidelines as would prohibit any one of its employees from taking control over its vehicles
if one is not the official driver or prohibiting the driver and son of the Filamer president
from authorizing another employee to drive the school vehicle. Furthermore, the petitioner
has failed to prove that it had imposed sanctions or warned its employees against the use of its
vehicles by persons other than the driver.
- The petitioner, thus, has an obligation to pay damages for injury arising from the unskilled manner
by which Funtecha drove the vehicle. (Cangco v. Manila Railroad Co., 38 Phil. 768, 772 [1918]).
- WHEREFORE, the motion for reconsideration of the decision dated October 16, 1990 is
hereby GRANTED. The decision of the respondent appellate court affirming the trial court
decision is REINSTATED.
  CRC Agricultural Trading and Rolando Catindig vs. NLRC and Roberto Obias,
G.R. No. 177664, December 23, 2009.

- Petition for review assailing the decision of the CA, which reversed and set aside the decision of
the NLRC, and reinstated the decision of the Labor Arbiter finding respondent Robert Obias
(respondent) illegally dismissed from his employment.
- The present petition traces its roots to the complaint[5] for illegal dismissal filed by the
respondent against petitioners CRC Agricultural Trading and its owner, Rolando B.
Catindig (collectively, petitioners), before the Labor Arbiter on June 22, 2004.
- In his Sinumpaang Salaysay,[6] the respondent alleged that the petitioners employed him as
a driver sometime in 1985. The respondent worked for the petitioners until he met an
accident in 1989, after which the petitioners no longer allowed him to work. After six years, or in
February 1995, the petitioners again hired the respondent as a driver and offered him to
stay inside the companys premises. The petitioners gave him a P3,000.00 loan to help him
build a hut for his family.
- Sometime in March 2003, the petitioners ordered respondent to have the alternator of one of its
vehicles repaired. The respondent brought the vehicle to a repair shop and subsequently gave
the petitioners two receipts issued by the repair shop. The latter suspected that the receipts were
falsified and stopped talking to him and giving him work assignments. The petitioners, however,
still paid him P700.00 and P500.00 on April 15 and 30, 2004, respectively, but no longer gave him
any salary after that. As a result, the respondent and his family moved out of the petitioners
compound and relocated to a nearby place. The respondent claimed that the petitioners paid
him a daily wage of P175.00, but did not give him service incentive leave, holiday pay, rest
day pay, and overtime pay. He also alleged that the petitioners did not send him a notice of
termination.
- In opposing the complaint, the petitioners claimed that the respondent was a seasonal driver; his
work was irregular and was not fixed. The petitioners paid the respondent P175.00 daily, but
under a no work no pay basis. xxx The petitioners maintained that they did not anymore engage
the respondents services after April 2003, as they had already lost trust and confidence in him
after discovering that he had forged receipts for the vehicle parts he bought for them.
- The Labor Arbiter Ruling
 Labor Arbiter Rennell Joseph R. Dela Cruz, in his decision of April 15, 2005,
ruled in the respondents favor declaring that he had been illegally
dismissed. The labor arbiter held that as a regular employee, the
respondents services could only be terminated after the observance of due
process. The labor arbiter likewise disregarded the petitioners charge of
abandonment against the respondent.
- The NLRC Ruling
 The NLRC ruled that the respondent was not illegally dismissed and deleted
the labor arbiters award of backwages and attorneys fees. The NLRC reasoned
out that it was respondent himself who decided to move his family out of the
petitioners lot; hence, no illegal dismissal occurred. Moreover, the respondent
could not claim wages for the days he did not work, as he was employed by
the petitioners under a no work no pay scheme.
- The CA Decision
 The CA, in its decision dated February 20, 2007, reversed and set aside the
NLRC resolution dated August 15, 2006, and reinstated the labor arbiters April
15, 2005 decision.
 The CA disregarded the petitioners charge of abandonment against the
respondent for their failure to show that there was deliberate and
unjustified refusal on the part of the respondent to resume his
employment. The CA also ruled that the respondents filing of a complaint for
illegal dismissal manifested his desire to return to his job, thus negating the
petitioners charge of abandonment. Even assuming that there had been
abandonment, the petitioners denied the respondent due process when they did
 not serve him with two written notices, i.e., (1) a notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought;
and (2) a subsequent notice which advises the employee of the employers
decision to dismiss him. Thus, the respondent is entitled to full backwages
without deduction of earnings derived elsewhere from the time his compensation
was withheld from him, up to the time of his actual reinstatement. The CA added
that reinstatement would no longer be beneficial to both the petitioners and
respondent, as the relationship between them had already been strained.
- The SC’s Ruling:
 We do not find the petition meritorious.
 The existence of an employer-employee relationship
 A paramount issue that needs to be resolved before we rule on the main issue
of illegal dismissal is whether there existed an employer-employee
relationship between the petitioners and the respondent. This determination
has been rendered imperative (essential) by the petitioners denial of the
existence of employer-employee relationship on the reasoning that they only
called on the respondent when needed.
 The elements to determine the existence of an employment relationship
are:
 (1) the selection and engagement of the employee;
 (2) the payment of wages;
 (3) the power of dismissal; and
 (4) the employers power to control the employees conduct.
 The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it. All the four elements are present in
this case.[10]

 First, the petitioners engaged the services of the respondent in 1995. Second,
the petitioners paid the respondent a daily wage of P175.00, with allowances
ranging from P140.00 to P200.00 per day. The fact the respondent was paid
under a no work no pay scheme, assuming this claim to be true, is not
significant. The no work no pay scheme is merely a method of computing
compensation, not a basis for determining the existence or absence of
employer-employee relationship. Third, the petitioners power to dismiss the
respondent was inherent in the fact that they engaged the services of the
respondent as a driver. Finally, a careful review of the record shows that the
respondent performed his work as driver under the petitioners supervision
and control. Petitioners determined how, where, and when the respondent
performed his task. They, in fact, requested the respondent to live inside their
compound so he (respondent) could be readily available when the petitioners
needed his services. Undoubtedly, the petitioners exercised control over the
means and methods by which the respondent accomplished his work as a
driver.
 We conclude from all these that an employer-employee relationship existed
between the petitioners and respondent.
 Supplements
 Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004

 Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [96]

 Singer Sewing Machine vs. NLRC, 193 SCRA 271

 Abante vs. Lamadrid Bearing & Parts, G.R. No. 159890, May 28, 2004

 Phil. Global Communication vs. De Vera, 459 SCRA 260 [05]

 Manila Golf Club vs. IAC, 237 SCRA 207

 Consulta vs. CA, G.R. No. 145443, March 18, 2005

 Insular Life vs. Basiao, 179 SCRA 459

 Ramos vs. CA, 380 SCRA 467

 Carungcong vs. Sunlife, 283 SCRA 319

 Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007

-
  Francisco vs. NLRC, 500 SCRA 690 [06]

 ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006

 Big AA Manufacturer vs. Antonio, 484 SCRA 33 [2006]

 Dumpit-Murillo vs. CA G.R. No. 164652 June 8, 2007

 Traveno vs. Bobomgon Banawa Growers Multi. G.R. No. 164205 September 3,
2009

 MERALCO vs. Benamira G.R. No. 145271, July 14, 2005

 TAPE et.al vs. Servana G.R. No. 167648, January 28, 2008

 Orozco vs. CA G.R. No. 155207, August 13, 2008

 Gabriel vs. Bilon G.R. No. 146989, February 7, 2007

 Calamba Medical Center Inc. vs. NLRC G.R. No. 176484, November 25, 2005

-
 Managerial Employee
o Penaranda vs. Banganga Plywood Corp. G.R. No. 159577 May 3, 2006

o NAWASA vs.NWSA Consolidated Unions, 11 SCRA 766

o McLeod vs. NLRC 512 SCRA 222

 Confidential Employee
o Standard Chartered Bank Employees Union vs. Standard Bank, et.al G.R. No.
161933, April 22, 2008

 Field Personnel
o Auto Bus Transport Systems, Inc. vs. Bautista G.R. No. 156367, May 16, 2005

o Far East Agricultural Supply Inc. vs. Lebatique et.al G.R. No. 162813, February
12, 2007