CASE 1

G.R. No. 153511 July 18, 2012

LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON NAPUD, in

his capacity as the President of Petitioner Corporation, Petitioner,
vs.
HERNANI S. REALUYO, also known as JOEY ROA, Respondent.

FACTS:

- This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel.

- August 9, 1999: Realuyo, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor
practice,constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for
holidays, separationpay, service incentive leave pay, and 13Th month pay. He prayed for attorney’s fees,
moral damages of P100,000.00 and exemplary damages for P100,000.00

- Joey Roa averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night; and that it had increased to P750.00/night. During
his employment, he couldnot choose the time of performance, which had been fixed from 7:00PM to
10:00pm for three to six times a week.

- July 9, 1999: the management had notified him that as a cost-cutting measure, his services as a pianist
would no longer be required effective July 30, 1999.- In its defense, petitioner denied the existence of
an employer-employee relationship with Roa, insisting that he had been only a talent engaged to
provide live music at Legend Hotel’s Madison Coffee Shop for three hours/day on two days each week;
and stated that the economic crisis that had hit the country constrained management todispense with
his services

.- December 29,1999: the Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding that
the partieshad no employer-employee relationship, because Roa was receiving talent fee and not salary,
which wasreinforced by the fact that Roa received his talent fee nightly, unlike the regular employees of
the hotel who arepaid monthly. NLRC affirmed the LA’s decision on May 31, 2001.

- CA set aside the decision of the NLRC, saying CA failed to take into consideration that in Roa’s line of
work, hewas supervised and controlled by the hotel’s restaurant manager who at certain times would
require him to perform only tagalong songs or music, or wear barong tagalong to conform with the
Filipinana motif of the placeand the time of his performance is fixed. As to the status of Roa, he is
considered a regular employee of the hotelsince his job was in furtherance of the restaurant business of
the hotel. Granting that Roa was initially acontractual employee, by the sheer length of service he had
rendered for the company, he had been convertedinto a regular employee.

- CA held that the dismissal was due to retrenchment in order to avoid or minimize business losses,
which isrecognized by law under Art. 283 of the Labor Code.
ISSUES:

- Whether or not there was employer-employee relationship between the two, and if so,

- Whether or not Roa was validly terminated

RULING:

- YES. Employer-employee relationship existed between the parties. Roa was undeniably employed as a
pianist of the restaurant. The hotel wielded the power of selection at the time it entered into the service
contract dated Sept. 1, 1992 with Roa. The hotel could not seek refuge behind the service contract
entered into with Roa. It is the law that defines and governs an employment relationship, whose terms
are not restricted to those fixed in the written contract, for other factors, like thenature of the work the
employee has been called upon to perform, are also considered. The law affords protection to an
employee, and does not countenance any attempt to subvert its spirit andintent. Any stipulation in
writing can be ignored when the employer utilizes the stipulation to deprive theemployee of his security
of tenure. The inequality that characterizes employer-employee relationshipgenerally tips the scales in
favor of the employer, such that the employee is often scarcelyprovided real and better options.

The argument that Roa was receiving talent fee and not salary is baseless. There is no denying that
theremuneration denominated as talent fees was fixed on the basis of his talent, skill, and the quality
ofmusic he played during the hours of his performance. Roa’s remuneration, albeit denominated as
talent fees, was still considered as included in the term wage in the sense and context of the Labor
Code,regardless of how petitioner chose to designate the remuneration, as per Article 97(f) of the Labor
Code. The power of the employer to control the work of the employee is considered the most
significantdeterminant of the existence of an employer-employee relationship. This is the so-called
control test, and is premised on whether the person for whom the services are performed reserves the
right to control both the end achieved and the manner and means used to achieve that end

No, Roa was not validly terminated as he was not allowed to have his separation pay, and backwages.
Employer did not exemplify the rules of retrenchment or reasons to do so.
Case 2:

G.R. No. 165881 April 19, 2006

OSCAR VILLAMARIA, JR. Petitioner,

vs.

COURT OF APPEALS and JERRY V. BUSTAMANTE, Respondents

FACTS:

- 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 operated by employing
drivers on a “boundary basis.” One of those drivers was respondent Bustamante.

- Bustamante remitted 450 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 a “boundary-hulog scheme”, where Bustamante would remit to Villamaria P550 a
day for a period of 4 years; Bustamane would then become the owner of the vehicle and continue to
drive the same under Villamaria’s franchise, but with Php 10,000 downpayment.

- August 7, 1997, Villamaria executed a contract entitled “Kasunduan ng Bilihan ng Sasakyan sa

Pamamagitan ng Boundary Hulog”. The parties agreed that if Bustamante failed to pay the boundary-
hulog for 3 days, Villamaria Motors would hold on to the vehicle until Bustamante paid his arrears,
including a penalty of 50 a day; in case Bustamante failed to remit the daily boundary-hulog for a period
of one week, the Kasunduan would cease to have the legal effect and Bustamante would have to return
the vehicle to Villamaria motors.

- In 1999, Bustamante and other drivers who also had the same arrangement failed to pay their
respective boundary-hulog. The prompted Villamaria to serve a “Paalala”. On July 24, 2000. Villamaria
took back the jeepney driven by Bustamante and barred the latter from driving the vehicle.

- Bustamante filed a complaint for Illegal Dismissal.

DECISION OF LOWER COURTS:

*Labor Arbiter: petition dismissed.

*NLRC: dismissed appeal.

*CA: reversed NLRC, awarded Bustamante separation pay and backwages.

Hence, this petition for review on certiorari.

ISSUES:

(1) WON the existence of a boundary-hulog agreement negates the employer-employee relationship
between the vendor and vendee

(2) WON the Labor Arbiter has jurisdiction over a complaint for illegal dismissal in such a case.

HELD:

(1) NO. Under the boundary-hulog scheme, a dual juridical relationship is created; that of employer-
employee and vendor-vendee. The Kasanduan did not extinguish the employer employee relationship of
the parties existing before the execution of said deed.

a. 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.

b. The driver performs activities which are usually necessary or desirable in the usual business or trade
of the owner/operator. Under the Kasunduan, respondent was required to remit Php 550 daily to
petitioner, an amount which represented the boundary of petitioner as well as respondent’s partial
payment (hulog) of the purchase price of the jeepney. Thus, the daily remittances also had a dual
purpose: that of petitioner’s boundary

and respondent’s partial payment (hulog) for the vehicle.

c. The obligation is not novated by an instrument that expressly recognizes the old one,

changes only the terms of payment and adds other obligations not incompatible with the old

provisions or where the contract merely supplements the previous one.

d. The existence of an employment relation is not dependent on how the worker is paid but on the
presence or absence of control over the means and method of the work. The amount earned in excess
of the “boundary hulog” is equivalent to wages and the fact that the power of dismissal was not
mentioned in the Kasunduan did not mean that private respondent never exercised such power, or
could not exercise such power.
(2) YES. The Labor Arbiter and the NLRC has jurisdiction 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 statues of their collective bargaining agreement.

Case 3

Facts:

Lagrama works for Tan as painter of billboards and murals for the motion pictures shown at the theaters
managed by Tan for more than 10years

Lagrama was dismissed for having urinated in his working area

Lagrama filed a complaint for illegal dismissal and non payment of benefits

Tan asserted that Lagrama was an independent contractor as he was paid in piece-work basis

Issue:

W/N Lagrama is an independent contractor or an employee of Tan?

Ruling:

Lagrama is an employee not an independent contractor

Applying Four Fold Test

A. Power of Control - Evidence shows that the Lagrama performed his work as painter and under the
supervision and control of Tan.

Lagrama worked in a designated work area inside the theater of Tan for the use of which petitioner
prescribed rules, which rules included the observance of cleanliness and hygeine and prohibition against
urinating in the work area and any other place other than rest rooms and

Tan's control over Lagrama's work extended not only the use of work area but also the result of
Lagrama;s work and the manner and means by which the work was to be accomplished

Lagrama is not an independent contractor because he did not enjoy independence and freedom from
the control and supervision of Tan and he was subjected to Tan's control over the means and methods
by which his work is to be performed and accomplished

B. Payment of Wages
Lagrama worked for Tan on a fixed piece work basis is of no moment. Payment by result is a method of
compensation and does not define the essence of the relation.

Tat Lagrama was not reported as an employee to the SSS is not conclusive, on the question whether he
was an employee, otherwise Tan would be rewarded for his failure or even neglect to perform his
obligation.

C. Power of Dismissal – by Tan stating that he had the right to fire Lagrama, Tan in effect
acknowledged Lagrama to be his employee

D. Power of Selection and Engagement of Employees – Tan engaged the services of Lagrama without
the intervention of third party

Case 4

Facts:

In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its
Marketing Director for a fixed period of one year. His work consisted mainly of marketing Royale
Homes' real estate inventories on an exclusive basis. Royale Homes... reappointed him for several
consecutive years, the last of which covered the period January 1 to December 31, 2003 where he held
the position of Division 5 Vice-President-Sales.

On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal[9] against Royale Homes

Alcantara alleged that he is a regular employee of Royale Homes since he is performing tasks that are
necessary and desirable to its business; that in 2003 the company gave him P1.2 million for the services
he rendered to it; that in the first week of November 2003,... however, the executive officers of Royale
Homes told him that they were wondering why he still had the gall to come to office and sit at his
table;[10] and that the acts of the executive officers of Royale Homes amounted to his dismissal from
work without... any valid or just cause and in gross disregard of the proper procedure for dismissing
employees. Thus, he also impleaded the corporate officers who, he averred, effected his dismissal in
bad faith and in an oppressive manner.

Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued that the
appointment paper of Alcantara is clear that it engaged his services as an independent sales contractor
for a fixed term of one year only. He never received any salary,... 13th month pay, overtime pay or
holiday pay from Royale Homes as he was paid purely on commission basis. In addition, Royale Homes
had no control on how Alcantara would accomplish his tasks and responsibilities as he was free to solicit
sales at any time and by any manner which... he may deem appropriate and necessary. He is even free
to recruit his own sales personnel to assist him in pursuance of his sales target.

Issues:

whether Alcantara was an independent contractor or an employee of Royale Homes.

Ruling:

The Petition is impressed with merit.

The primary evidence of the nature of the parties' relationship in this case is the written contract that
they signed and executed in pursuance of their mutual agreement. While the existence of employer-
employee relationship is a matter of law, the characterization made by... the parties in their contract as
to the nature of their juridical relationship cannot be simply ignored, particularly in this case where the
parties' written contract unequivocally states their intention at the time they entered into it.

In this case, the contract,[27] duly signed and not disputed by the parties, conspicuously provides that
"no employer-employee relationship exists between" Royale Homes and Alcantara, as well as his sales
agents. It is clear that they did not want to... be bound by employer-employee relationship at the time
of the signing of the contract.

Since "the terms of the contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations should control."[28] No construction is even needed as
they already expressly state their... intention. Also, this Court adopts the observation of the NLRC that it
is rather strange on the part of Alcantara, an educated man and a veteran sales broker who claimed to
be receiving P1.2 million as his annual salary, not to have contested the portion of the contract...
expressly indicating that he is not an employee of Royale Homes if their true intention were otherwise.
Not every form of control is indicative of employer-employee relationship. A person who performs work
for another and is subjected to its rules, regulations, and code of ethics does not necessarily become an
employee.[34] As long as the level of... control does not interfere with the means and methods of
accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party do not
amount to the labor law concept of control that is indicative of employer-employee relationship.

In this case, the Court agrees with Royale Homes that the rules, regulations, code of ethics, and periodic
evaluation alluded to by Alcantara do not involve control over the means and methods by which he was
to perform his job. Understandably, Royale Homes has to fix the... price, impose requirements on
prospective buyers, and lay down the terms and conditions of the sale, including the mode of payment,
which the independent contractors must follow. It is also necessary for Royale Homes to allocate its
inventories among its independent... contractors, determine who has priority in selling the same, grant
commission or allowance based on predetermined criteria, and regularly monitor the result of their
marketing and sales efforts. But to the mind of this Court, these do not pertain to the means and
methods... of how Alcantara was to perform and accomplish his task of soliciting sales. They do not
dictate upon him the details of how he would solicit sales or the manner as to how he would transact
business with prospective clients. In Tongko, this Court held that... guidelines or rules and regulations
that do not pertain to the means or methods to be employed in attaining the result are not indicative of
control as understood in labor law.

Guidelines indicative of labor law "control," as the first Insular Life case tells us, should not merely relate
to the mutually desirable... result intended by the contractual relationship; they must have the nature of
dictating the means or methods to be employed in attaining the result, or of fixing the methodology and
of binding or restricting the party hired to the use of these means.

As the party claiming the existence of employer-employee relationship, it behoved upon Alcantara to
prove the elements thereof, particularly Royale Homes' power of control over the means and methods
of accomplishing the work.[38] He, however, failed... to cite specific rules, regulations or codes of ethics
that supposedly imposed control on his means and methods of soliciting sales and dealing with
prospective clients. On the other hand, this case is replete with instances that negate the element of
control and the... existence of employer-employee relationship. Notably, Alcantara was not required to
observe definite working hours.[39] Except for soliciting sales, Royale Homes did not assign other tasks
to him. He had full control over the means and... methods of accomplishing his tasks as he can "solicit
sales at any time and by any manner which [he may] deem appropriate and necessary." He performed
his tasks on his own account free from the control and direction of Royale Homes in all matters
connected therewith,... except as to the results thereof.[40]
Neither does the repeated hiring of Alcantara prove the existence of employer-employee
relationship.[41] As discussed above, the absence of control over the means and methods disproves
employer-employee relationship. The continuous rehiring of

Alcantara simply signifies the renewal of his contract with Royale Homes, and highlights his satisfactory
services warranting the renewal of such contract. Nor does the exclusivity clause of contract establish
the existence of the labor law concept of control.

The element of payment of wages is also absent in this case. As provided in the contract, Alcantara's
remunerations consist only of commission override of 0.5%, budget allocation, sales incentive and other
forms of company support. There is no proof that he received fixed... monthly salary. No payslip or
payroll was ever presented and there is no proof that Royale Homes deducted from his supposed salary
withholding tax or that it registered him with the Social Security System, Philippine Health Insurance
Corporation, or Pag-Ibig Fund.

All of these indicate an independent contractual relationship.

This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere
independent contractor.

Case 5

Facts:

Respondent ABS-CBN signed an Agreement with the Mel and Jay Management Development
Corporation where the latter agreed to provide petitioner Sonza’s services exclusively to ABS-CBN as
talent for radio and television. Later, Sonza tendered a letter rescinding their agreement and filed a
complaint before the DOLE for payment of his labor standard benefits. ABS-CBN contends on the ground
that no employer-employee relationship existed between the parties. The Labor Arbiter found for
respondent citing that Sonza as a ‘talent’ cannot be considered an employee of petitioner. Both NLRC
and CA affirmed.

Issue:
Whether or not employer-employee relationship existed between petitioner and ABS-CBN.

Ruling: NO.

Applying the control test to the present case, we find that SONZA is not an employee but an
independent contractor. The control test is the most important test our courts apply in distinguishing an
employee from an independent Contractor. This test is based on the extent of control the hirer exercises
over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well – the less control the hirer exercises, the more
likely the worker is considered an independent contractor.

We find that ABS-CBN was not involved in the actual performance that produced the finished product of
SONZA’s work. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the
right to modify the program format and airtime schedule “for more effective programming.” ABS-CBN’s
sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not
exercise control over the means and methods of performance of SONZA’s work.

In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an
employee of the former. In this case, SONZA failed to show that these rules controlled his performance.
We find that these general rules are merely guidelines towards the achievement of the mutually desired
result, which are top-rating television and radio programs that comply with standards of the industry.

Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control.