G.R. No.

84484 November 15, 1989

INSULAR LIFE ASSURANCE CO., LTD., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.

On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao
entered into a contract, as an insurance agent, which stated that

RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to
time, place and means of soliciting insurance. Nothing herein contained shall therefore be
construed to create the relationship of employee and employer between the Agent and the
Company. However, the Agent shall observe and conform to all rules and regulations which
the Company may from time to time prescribe.

Some four years later, in April 1972, the parties entered into another contract — an Agency Manager's
Contract — and to implement his end of it Basiao organized an agency or office to which he gave the name M.
Basiao and Associates, while concurrently fulfilling his commitments under the first contract with the
Company. 2

In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration,
Basiao sued the Company in a civil action and this, he was later to claim, prompted the Insular to terminate
also his engagement under the first contract and to stop payment of his commissions starting April 1, 1980. 

Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its president.
Without contesting the termination of the first contract, the complaint sought to recover commissions
allegedly unpaid thereunder, plus attorney's fees.

CONTENTION OF INSULAR

The respondents disputed the Ministry's jurisdiction.

Basiao was not the Company's employee, but an independent contractor and that the Company had no
obligation to him for unpaid commissions under the terms and conditions of his contract. 

That based on the contract they entered into, Basiao is the master of his own time and selling methods, left to
his judgment the time, place and means of soliciting insurance, set no accomplishment quotas and
compensated him on the basis of results obtained. He was not bound to observe any schedule of working
hours or report to any regular station; he could seek and work on his prospects anywhere and at anytime he
chose to, and was free to adopt the selling methods he deemed most effective.

CONTENTION OF BASIAO

The Basiao contend that the contents of the contract do not constitute the decisive determinant of the nature
of his engagement, invoking that the critical feature distinguishing the status of an employee from that of an
independent contractor is control, that is, whether or not the party who engages the services of another has
the power to control the latter's conduct in rendering such services. Pursuing the argument, the respondents
draw attention to the provisions of Basiao's contract obliging him to "... observe and conform to all rules and
regulations which the Company may from time to time prescribe ...," as well as to the fact that the Company
prescribed the qualifications of applicants for insurance, processed their applications and determined the
amounts of insurance cover to be issued as indicative of the control, which made Basiao, in legal
contemplation, an employee of the Company. 9
LABOR ARBITER

Ruled in favor of Basiao. He ruled that the underwriting agreement had established an employer-employee
relationship between him and the Company, and this conferred jurisdiction on the Ministry of Labor to
adjudicate his claim.

NATIONAL LABOR RELATIONS COMMISSION.

Affirmed the labor arbiter’s decision.

ISSUE: Basiao is an employee of insular.

RULING:

In determining the existence of employer-employee relationship, the following elements are generally
considered, namely:

(1) the selection and engagement of the employee;

(2) the payment of wages;

(3) the power of dismissal; and

(4) the power to control the employees' conduct — (the most important element )

However, the court said that not every form of control that the hiring party reserves to himself over the
conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an
employer-employee relationship between them in the legal or technical sense of the term.

the line should be drawn between rules that (1)merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and (2)those
that control or fix the methodology and bind or restrict the party hired to the use of such means.

The first, which aim only to promote the result, create no employer-employee relationship unlike the second,
which address both the result and the means used to achieve it.

The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to
observe and conform to such rules and regulations as the latter might from time to time prescribe. No
showing has been made that any such rules or regulations were in fact promulgated, much less that any rules
existed or were issued which effectively controlled or restricted his choice of methods — or the methods
themselves — of selling insurance. Absent such showing, the Court will not speculate that any exceptions or
qualifications were imposed on the express provision of the contract leaving Basiao "... free to exercise his
own judgment as to the time, place and means of soliciting insurance."

The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the
petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions should
have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and
adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the
Arbiter's decision. This conclusion renders it unnecessary and premature to consider Basiao's claim for
commissions on its merits.
G.R. No. 119930. March 12, 1998

INSULAR LIFE ASSURANCE CO., LTD., Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION (Fourth

Division, Cebu City), LABOR ARBITER NICASIO P. ANINON and PANTALEON DE LOS REYES, Respondents.

In 1992, Insular entered into an agency contract with Pantaleon de los Reyes[4] authorizing the latter to solicit
within the Philippines applications for life insurance and annuities for which he would be paid compensation in
the form of commissions.

The contract was prepared by Insular in its entirety and De los Reyes merely signed his conformity thereto. It
contained the stipulation that no employer-employee relationship shall be created between the parties and
that the agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance.

Delos Reyes however was prohibited by petitioner from working for any other life insurance company, and
violation of this stipulation was sufficient ground for termination of the contract. Aside from soliciting
insurance for the petitioner, private respondent was required to submit to the former all completed
applications for insurance within ninety (90) consecutive days, deliver policies, receive and collect initial
premiums and balances of first year premiums, renewal premiums, deposits on applications and payments on
policy loans. Private respondent was also bound to turn over to the company immediately any and all sums of
money collected by him. In a written communication by petitioner to respondent De los Reyes, the latter was
urged to register with the Social Security System as a self-employed individual as provided under PD No. 1636.

Again on 1993 Insular and Delos Reyes entered into another contract where the latter was appointed as Acting
Unit Manager under its office the Cebu DSO V (157). It was similarly provIded in the management contract that
the relation of the acting unit manager and/or the agents of his unit to the company shall be that of
independent contractor. If the appointment was terminated for any reason other than for cause, the acting
unit manager would be reverted to agent status and assigned to any unit. As in the previous agency contract,
De los Reyes together with his unit force was granted freedom to exercise judgment as to time, place and
means of soliciting insurance.

As long as he was unit manager in an acting capacity, De los Reyes was prohibited from working for other life
insurance companies or with the government. He could not also accept a managerial or supervisory position in
any firm doing business in the Philippines without the written consent of petitioner.

Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner
on 18 November 1993 that his services were terminated effective 18 December 1993. On 7 March 1994 he
filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed and that he was not
paid his salaries and separation pay.

CONTENTION OF INSULAR

The complaint of Delos Reyes should be dismissed for lack of jurisdiction, citing the absence of employer-
employee relationship. it reasoned out that applying the four-fold test, De los Reyes was not an employee but
an independent contractor.

Petitioner contends that De los Reyes was never required to go through the pre-employment procedures and
that the probationary employment status was reserved only to employees of petitioner. On this score, it insists
that the first requirement of selection and engagement of the employee was not met.

On the matter of payment of wages, petitioner points out that respondent was compensated strictly on
commission basis, the amount of which was totally dependent on his total output.
As to the matter involving the power of dismissal and control by the employer, the latter of which is the most
important of the test, petitioner asserts that its termination of De los Reyes was but an exercise of its inherent
right as principal under the contracts and that the rules and guIdelines it set forth in the contract cannot be
deemed as an exercise of control over the private respondent as these were merely directives that fixed the
desired result without dictating the means or method to be employed in attaining it.

Lastly, Insular raised the ruling in Insular Life Assurance Co., Ltd. v. NLRC and Basiao [12] to the instant case
under the doctrine of stare decisis, postulating that both cases involve parties similarly situated and facts
which are almost Identical.

LABOR ARBITER: GRANTED THE MOTION TO DISMISS

The element of control was not sufficiently established since the rules and guidelines set by petitioner in its
agency agreement with respondent De los Reyes were formulated only to achieve the desired result without
dictating the means or methods of attaining it.

NLRC: REVERSED THE RULING

and determined that respondent De los Reyes was under the effective control of petitioner in the critical and
most important aspects of his work as Unit Manager. This conclusion was derived from the provisions in the
contract which appointed private respondent as Acting Unit Manager, to wit:

(a) De los Reyes was to serve exclusively the company, therefore, he was not an independent contractor;

(b) he was required to meet certain manpower and production quota; and,

(c) petitioner controlled the assignment to and removal of soliciting agents from his unit.

The NLRC also took into account other circumstances showing that petitioner exercised employers
prerogatives over De los Reyes, e.g., (a) limiting the work of respondent De los Reyes to selling a life insurance
policy known as Salary Deduction Insurance only to members of the Philippine National Police, public and
private school teachers and other employees of private companies; (b) assigning private respondent to a
particular place and table where he worked whenever he has not in the field; (c) paying private respondent
during the period of twelve (12) months of his appointment as Acting Unit Manager the amount of  P1,500.00
as Unit Development Financing of which 20% formed his salary and the rest, i.e., 80%, as advance of his
expected commissions; and (d) promising that upon completion of certain requirements, he would be
promoted to Unit Manager with the right of petitioner to revert him to agent status when warranted.

ISSUE:

WON DELOS REYES AND INSULAR HAVE EMPLOYEE – EMPLOYER RELATIONSHIP

RULING:

the NLRC was correct in finding that private respondent was an employee of petitioner, but this holds true
only insofar as the management contract is concerned. In view thereof, he Labor Arbiter has jurisdiction over
the case.

Petitioner would have the SC apply Their ruling in Insular Life Assurance Co., Ltd. v. NLRC and Basiao 

But they are not convinced that the cited case is on all fours with the case at bar. In Basiao, the agent was
appointed Agency Manager under an Agency Manager Contract. To implement his end of the agreement,
Melecio Basiao organized an agency office to which he gave the name M. Basiao and Associates. The  Agency
Manager Contract practically contained the same terms and conditions as the Agency Contract earlier entered
into, and the Court observed that drawn from the terms of the contract they had entered into, (which) either
expressly or by necessary implication, Basiao (was) made the master of his own time and selling methods.

Unlike Basiao, herein respondent De los Reyes was appointed Acting Unit Manager, not agency manager. De
los Reyes had not organized an office like basiao . De los Reyes was given a place and a table at its office where
he reported for and worked whenever he was not out in the field.

Under the managership contract, De los Reyes was obliged to work exclusively for petitioner in life
insurance solicitation and was imposed premium production quotas.

He was proscribed from accepting a managerial or supervisory position in any other office including the
government without the written consent of petitioner.

De los Reyes could only be promoted to permanent unit manager if he met certain requirements and his
promotion was recommended by the petitioners District Manager and Regional Manager and approved by
its Division Manager. As Acting Unit Manager, De los Reyes performed functions beyond mere solicitation of
insurance business for petitioner. As found by the NLRC, he exercised administrative functions which were
necessary and beneficial to the business of INSULAR LIFE.

Exclusivity of service, control of assignments and removal of agents under private respondents unit, collection
of premiums, furnishing of company facilities and materials as well as capital described as Unit Development
Fund are but hallmarks of the management system in which herein private respondent worked. This obtaining,
there is no escaping the conclusion that private respondent Pantaleon de los Reyes was an employee of herein
petitioner.
G.R. No. 138051             June 10, 2004

JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.

In 1994, respondent ("ABS-CBN") signed an Agreement ("Agreement") with the Mel and Jay Management and
Development Corporation ("MJMDC"). MJMDC was represented by SONZA, as President and General Manager,
and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to in the Agreement as "AGENT," MJMDC
agreed to provide SONZA’s services exclusively to ABS-CBN as talent for radio and television. The Agreement
listed the services SONZA would render to ABS-CBN, as follows:

a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;

b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays. 3

In 1996, Sonza resigned from his shows.

On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment,
National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation
pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the
Employees Stock Option Plan ("ESOP").

On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship
existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996. Meanwhile, ABS-CBN
continued to remit SONZA’s monthly talent fees through his bank accounts.

CONTENTION OF ABSCBN

Presented Soccoro Vidanes and Rolando V. Cruz as witnesses. These witnesses stated in their affidavits that
the prevailing practice in the television and broadcast industry is to treat talents like SONZA as independent
contractors.

CONTENTION OF SONZA

SONZA maintains that all essential elements of an employer-employee relationship are present in this case.
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. 18 The last element, the so-called "control test",
is the most important element.19

LABOR ARBITER:

dismissed the complaint for lack of jurisdiction. Sonza is an independent contractor

complainant was engaged by respondent by reason of his peculiar skills and talent as a TV host and a radio
broadcaster. Unlike an ordinary employee, he was free to perform the services he undertook to render in
accordance with his own style.

NLRC

NLRC rendered a Decision affirming the Labor Arbiter’s decision.

COURT OF APPEALS

The Court of Appeals affirmed the NLRC’s finding that no employer-employee relationship existed between
SONZA and ABS-CBN.

x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as an
agent of complainant Sonza, the principal. By all indication and as the law puts it, the act of the agent
is the act of the principal itself. This fact is made particularly true in this case, as admittedly MJMDC ‘is
a management company devoted exclusively to managing the careers of Mr. Sonza and his broadcast
partner, Mrs. Carmela C. Tiangco.’ (Opposition to Motion to Dismiss)

Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC,
and not between ABS-CBN and MJMDC. This is clear from the provisions of the May 1994 Agreement
which specifically referred to MJMDC as the ‘AGENT’. As a matter of fact, when complainant herein
unilaterally rescinded said May 1994 Agreement, it was MJMDC which issued the notice of rescission
in behalf of Mr. Sonza, who himself signed the same in his capacity as President.

ISSUE

JAY SONZA, EMPLEYADO BA?

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.29 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.30

First, SONZA contends that ABS-CBN exercised control over the means and methods of his work.

To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBN’s control. SONZA did not have to render eight hours of
work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as
pre- and post-production staff meetings. 31 ABS-CBN could not dictate the contents of SONZA’s script. However,
the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. 32 The clear implication
is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its
interests.

SONZA claims that ABS-CBN’s power not to broadcast his shows proves ABS-CBN’s power over the means
and methods of the performance of his work.
  Although ABS-CBN did have the option not to broadcast SONZA’s show, ABS-CBN was still obligated to pay
SONZA’s talent fees.

Clearly, ABS-CBN’s right not to broadcast SONZA’s show, burdened as it was by the obligation to continue
paying in full SONZA’s talent fees, did not amount to control over the means and methods of the performance
of SONZA’s work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of
performance of his work - how he delivered his lines and appeared on television - did not meet ABS-CBN’s
approval. This proves that ABS-CBN’s control was limited only to the result of SONZA’s work, whether to
broadcast the final product or not. In either case, ABS-CBN must still pay SONZA’s talent fees in full until the
expiry of the Agreement.

SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew.
No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel & Jay" programs.
However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA needed to
perform his job. What SONZA principally needed were his talent or skills and the costumes necessary for his
appearance.38 Even though ABS-CBN provided SONZA with the place of work and the necessary equipment,
SONZA was still an independent contractor since ABS-CBN did not supervise and control his work. ABS-CBN’s
sole concern was for SONZA to display his talent during the airing of the programs.

Second, SONZA urges us to rule that he was ABS-CBN’s employee because ABS-CBN subjected him to its
rules and standards of performance. SONZA claims that this indicates ABS-CBN’s control "not only [over] his
manner of work but also the quality of his work."

The Agreement stipulates that SONZA shall abide with the rules and standards of performance " covering
talents"41 of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of
performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the
Agreement refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP),
which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics." 42 The KBP code applies to
broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily employees of
radio and television stations. Clearly, the rules and standards of performance referred to in the Agreement are
those applicable to talents and not to employees of ABS-CBN.

Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of control which
ABS-CBN exercised over him.

This argument is futile. 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.
G.R. No. 164156             September 26, 2006

ABS-CBN BROADCASTING CORPORATION, petitioner,

vs.
MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN, respondents.

ABSCBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on
different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu
Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees’
identification cards and were required to work for a minimum of eight hours a day, including Sundays and
holidays.

In 1996, While the petitioners are employed, ABSCBN and the ABS-CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA). However, since ABSCBN refused to recognize PAs as part of the
bargaining unit, respondents were not included to the CBA. 6

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th
Month Pay with Damages against the petitioner before the NLRC.

Complainants were engaged by respondent ABS-CBN as regular and full-time employees for a continuous
period of more than five (5) years. Respondents insisted that they belonged to a "work pool" from which
petitioner chose persons to be given specific assignments at its discretion, and were thus under its direct
supervision and control regardless of nomenclature.

Complainants further pray of this Arbiter to declare them regular and permanent employees of respondent
ABS-CBN as a condition precedent for their admission into the existing union and collective bargaining unit of
respondent company where they may as such acquire or otherwise perform their obligations thereto or enjoy
the benefits due therefrom.

CONTENTION OF ABSCBN

ABSCBN alleged in its position paper that the respondents were considered in the industry as "program
employees" in that, as distinguished from regular or station employees, they are basically engaged by the
station for a particular or specific program broadcasted by the radio station. Petitioner asserted that as PAs,
the complainants were issued talent information sheets which are updated from time to time, and are thus
made the basis to determine the programs to which they shall later be called on to assist.

Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other programs they
produce, such as drama talents in other productions. As program employees, a PA’s engagement is
coterminous with the completion of the program, and may be extended/renewed provided that the program is
on-going; a PA may also be assigned to new programs upon the cancellation of one program and the
commencement of another. As such program employees, their compensation is computed on a program
basis, a fixed amount for performance services irrespective of the time consumed. At any rate, petitioner
claimed, as the payroll will show, respondents were paid all salaries and benefits due them under the law. 12
LABOR ARBITER

the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular
employees of petitioner.

NLRC

AFFIRMED THE LABOR ARBITER

CA

the appellate court stated that respondents are not mere project employees, but regular employees who
perform tasks necessary and desirable in the usual trade and business of petitioner and not just its project
employees.

ISSUE

WON COMPLAINANTS ARE REGULAR EMPLOYEES

RULING:

YES.

We reject, as barren of factual basis, petitioner’s contention that respondents are considered as its talents,
hence, not regular employees of the broadcasting company. Petitioner’s claim that the functions performed by
the respondents are not at all necessary, desirable, or even vital to its trade or business is belied by the
evidence on record.

Petitioner’s reliance on the ruling of this Court in Sonza v. ABS-CBN Broadcasting Corporation 43 is misplaced. In
that case, the Court explained why Jose Sonza, a well-known television and radio personality, was an
independent contractor and not a regular employee:

In the case at bar, however, the employer-employee relationship between petitioner and respondents has
been proven.

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was
required from them because they were merely hired through petitioner’s personnel department just like any
ordinary employee.

Second. The so-called "talent fees" of respondents correspond to wages given as a result of an employer-
employee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance
negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents
are highly dependent on the petitioner for continued work.

Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors
negates the allegation that respondents are independent contractors.
[G.R. NO. 164652   : June 8, 2007]

THELMA DUMPIT-MURILLO, Petitioner, v. COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE

JAVIER AND EDWARD TAN, Respondents.

On October 2, 1995, private respondent Associated Broasting Company (ABC) hired petitioner Thelma Dumpit-
Murillo as a newscaster and co-anchor for Balitang-Balita.

The contract was for a period of three months. The contract was repeatedly renewed(fifteen times or for four
consecutive years.).

On September 30, 1999, after four years of repeated renewals, petitioner's talent contract expired. Two
weeks after the expiration of the last contract, petitioner sent a letter to Mr. Jose Javier, Vice President for
News and Public Affairs of ABC, informing the latter that she was still interested in renewing her contract
subject to a salary increase. Thereafter, petitioner stopped reporting for work. On November 5, 1999, she
wrote Mr. Javier another letter stating that should she not receive any formal response from them, she will
deem it as a constructive dismissal of my services.

A month later, petitioner sent a demand letter 7 to ABC, demanding: (a) reinstatement to her former position;
(b) payment of unpaid wages for services rendered from September 1 to October 20, 1999 and full backwages;
(c) payment of 13th month pay, vacation/sick/service incentive leaves and other monetary benefits due to a
regular employee starting March 31, 1996. ABC replied that a check covering petitioner's talent fees for
September 16 to October 20, 1999 had been processed and prepared, but that the other claims of petitioner
had no basis in fact or in law.

On December 20, 1999, petitioner filed a complaint 8 against ABC, Mr. Javier and Mr. Edward Tan, for illegal
constructive dismissal, nonpayment of salaries, overtime pay, premium pay, separation pay, holiday pay,
service incentive leave pay, vacation/sick leaves and 13th month pay in NLRC-NCR Case No. 30-12-00985-99.
She likewise demanded payment for moral, exemplary and actual damages, as well as for attorney's fees.

Tried to settle through a mandatory conference/conciliation.

However, the parties eventually agreed to submit the case for resolution after settlement failed during the
mandatory conference/conciliation.

LABOR ARBITER

Dismissed the complaint.

NLRC

the NLRC reversed the Labor Arbiter in a Resolution

The NLRC held that an employer-employee relationship existed between petitioner and ABC; that the subject
talent contract was void; that the petitioner was a regular employee illegally dismissed; and that she was
entitled to reinstatement and backwages or separation pay, aside from 13th month pay and service incentive
leave pay, moral and exemplary damages and attorney's fees.
CA

Appellate court ruled that the NLRC committed grave abuse of discretion, and reversed the decision of the
NLRC.

The appellate court reasoned that petitioner should not be allowed to renege from the stipulations she had
voluntarily and knowingly executed by invoking the security of tenure under the Labor Code. According to the
appellate court, petitioner was a fixed-term employee and not a regular employee within the ambit of
Article 28014 of the Labor Code because her job, as anticipated and agreed upon, was only for a specified
time.

ISSUE

WON THE CA IS CORRECT IN FINDING THAT THERE IS NO EMPLOYEE EMPLOYER RELATIONSHIP

RULING

NO. The Court of Appeals committed reversible error when it held that petitioner was a fixed-term
employee.

SONZA CASE WAS RAISED BY ABC5

In the case at bar, ABC had control over the performance of petitioner's work. Noteworthy too, is the
comparatively low P28,000 monthly pay of petitioner 25 vis the P300,000 a month salary of Sonza, 26 that all the
more bolsters the conclusion that petitioner was not in the same situation as Sonza.

The duties of petitioner as enumerated in her employment contract indicate that ABC had control over the
work of petitioner. Aside from control, ABC also dictated the work assignments and payment of petitioner's
wages. ABC also had power to dismiss her. All these being present, clearly, there existed an employment
relationship between petitioner and ABC.
G.R. No. 204944-45               December 3, 2014

FUJI TELEVISION NETWORK, INC., Petitioner,

vs.
ARLENE S. ESPIRITU, Respondent.

In 2005, Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc. ("Fuji") as a news
correspondent/producer4 "tasked to report Philippine news to Fuji through its Manila Bureau field
office."5 Arlene’s employment contract initially provided for a term of one (1) year but was successively
renewed on a yearly basis with salary adjustment upon every renewal. 6 Sometime in January 2009,
Arlenewas diagnosed with lung cancer. 7 She informed Fuji about her condition. In turn, the Chief of News
Agency of Fuji, Yoshiki Aoki, informed Arlene "that the company will have a problem renewing her
contract"8 since it would be difficult for her to perform her job.

After several verbal and written communications, 11 Arlene and Fuji signed a non-renewal contract on May 5,
2009 where it was stipulated that her contract would no longer be renewed after its expiration on May 31,
2009.

On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for illegal
dismissal and attorney’s fees with the National Capital Region Arbitration Branch of the National Labor
Relations Commission. She alleged that she was forced to sign the nonrenewal contract when Fuji came to
know of her illness and that Fuji withheld her salaries and other benefits for March and April 2009 when she
refused to sign.15

Arlene claimed that she was left with no other recourse but to sign the non-renewal contract, and it was only
upon signing that she was given her salaries and bonuses, in addition to separation pay equivalent to four (4)
years.16

LABOR ARBITER

Dismissed Arlene’s complaint.18 Citing Sonza v. ABS-CBN19 and applying the four-fold test, the Labor Arbiter
held that Arlene was not Fuji’s employee but an independent contractor.

NLRC

the National Labor Relations Commission reversed the Labor Arbiter’s decision. 21 It held that Arlene was a
regular employee with respect to the activities for which she was employed since she continuously rendered
services that were deemednecessary and desirable to Fuji’s business.

CA

the Court of Appeals affirmed the National Labor Relations Commission. the Court of Appeals held that Arlene
was a regular employee because she was engaged to perform work that was necessary or desirable in the
business of Fuji,31 and the successive renewals of her fixed-term contract resulted in regular employment. 32

According to the Court of Appeals, Sonza does not apply in order to establish that Arlene was an independent
contractor because she was not contracted on account of any peculiar ability, special talent, or skill. 33 The fact
that everything used by Arlene in her work was owned by Fuji negated the idea of job contracting. 34
CONTENTION OF FUJI

She was hired as an independent contractor as defined in Sonza. 41 Fuji had no control over her work. 42 The
employment contracts were executed and renewed annually upon Arlene’s insistence to which Fuji relented
because she had skills that distinguished her from ordinary employees. 43 

Fuji alleges that it did not need a permanent reporter since the news reported by Arlene could easily be
secured from other entities or from the internet. 48 Fuji "never controlled the manner by which she performed
her functions."49 It was Arlene who insisted that Fuji execute yearly fixed-term contracts so that she could
negotiate for annual increases in her pay. 50

Fuji then posits that the Court of Appeals erred when it held that the elements of an employer-employee
relationship are present, particularly that of control.

CONTENTION OF ARLENE

Arlene argues that she was a regular employee because Fuji had control and supervision over her work. The
news events that she covered were all based on the instructions of Fuji. 142 She maintains that the successive
renewal of her employment contracts for four (4) years indicates that her work was necessary and
desirable.143 In addition, Fuji’s payment of separation pay equivalent to one (1) month’s pay per year of service
indicates that she was a regular employee. 144 To further support her argument that she was not an
independent contractor, she states that Fuji owns the laptop computer and mini-camera that she used for
work.145 Arlene also argues that Sonza is not applicable because she was a plain reporter for Fuji, unlike Jay
Sonza who was a news anchor, talk show host, and who enjoyed a celebrity status. 146 

ISSUE

Is there an employee – employer relationship

RULING YES.

Fuji alleges that Arlene was an independent contractor, citing Sonza v. ABS-CBN and relying on the following
facts: (1) she was hired because of her skills; (2) her salary was US$1,900.00, which is higher than the normal
rate; (3) she had the power to bargain with her employer; and (4) her contract was for a fixed term.

Independent contractors are recognized under Article 106 of the Labor Code:

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for
the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if
any, shall be paid in accordance with the provisions of this Code.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-
out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he
may make appropriate distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the parties involved shall be
considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision
of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are performing activities which are directly related to the
principal business of such employer. In such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.

In Sec. 3 of Department Order No. 18-A, Seriesof 2011, of the Department of Labor and Employment, a
contractor is defined as having:

(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.

Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and
talents that set them apart from ordinary employees. There is no trilateral relationship in this case because the
independent contractor himself or herself performs the work for the principal. In other words, the relationship
is bilateral.

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." 179 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. Hence, before
the status of employment can be determined, the existence of an employer-employee relationship must be
established.

Application of the four-fold test

The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and affirmed the ruling of the
National Labor Relations Commission finding that Arlene was a regular employee.

Arlene was hired by Fuji as a news producer, but there was no showing that she was hired because of unique
skills that would distinguish her from ordinary employees.

Neither was there any showing that she had a celebrity status. Her monthly salary amounting to US$1,900.00
appears tobe a substantial sum, especially if compared to her salary whenshe was still connected with
GMA.199 Indeed, wages may indicate whether oneis an independent contractor. Wages may also indicate that
an employee is able to bargain with the employer for better pay. However, wages should not be the conclusive
factor in determining whether one is an employee or an independent contractor.

Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional employment
contract.200 Her contract also indicated that Fuji had control over her work because she was required to work
for eight (8) hours from Monday to Friday, although on flexible time. 201 Sonza was not required to work for
eight (8) hours, while Dumpit-Murillo had to be in ABC to do both on-air and off-air tasks.

On the power to control, Arlene alleged that Fuji gave her instructions on what to report. 202 Even the mode of
transportation in carrying out her functions was controlled by Fuji. Paragraph 6 of her contract states:

6. During the travel to carry out work, if there is change of place or change of place of work, the train, bus, or
public transport shall be used for the trip. If the Employee uses the private car during the work and there is an
accident the Employer shall not be responsible for the damage, which may be caused to the Employee. 203

Thus, the Court of Appeals did not err when it upheld the findings of the National Labor Relations Commission
that Arlene was not an independent contractor.

G.R. No. 142625             December 19, 2006

ROGELIO P. NOGALES, for himself and on behalf of the minors, ROGER ANTHONY, ANGELICA, NANCY, and
MICHAEL CHRISTOPHER, all surnamed NOGALES, petitioners,
vs.
CAPITOL MEDICAL CENTER, DR. OSCAR ESTRADA, DR. ELY VILLAFLOR, DR. ROSA UY, DR. JOEL ENRIQUEZ, DR.
PERPETUA LACSON, DR. NOE ESPINOLA, and NURSE J. DUMLAO, respondents.

Pregnant with her fourth child, Corazon Nogales ("Corazon"), was under the exclusive prenatal care of Dr.
Oscar Estrada ("Dr. Estrada"). While Corazon was on her last trimester of pregnancy, Dr. Estrada noted
symptoms which is a dangerous complication of pregnancy.

Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting Corazon and
Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada
advised her immediate admission to the Capitol Medical Center ("CMC").

On 26 May 1976, Corazon was admitted at 2:30 a.m. at the Capitol Medical Center

Dr. Rosa Uy ("Dr. Uy"), who was then a resident physician of CMC, conducted an internal examination of
Corazon. Dr. Uy then called up Dr. Estrada to notify him of her findings.

an anesthesiologist at CMC, Dr. Estrada needed the services of one, Dr. Estrada refused. Despite Dr. Estrada's
refusal, Dr. Enriquez(the anestheologist) stayed to observe Corazon's condition.

Subsequently Corazon gave birth, however she experienced continuous profuse vaginal bleeding upon giving
birth. Corazon died at 9:15 a.m. The cause of death was "hemorrhage, post partum." 14

On 14 May 1980, petitioners filed a complaint for damages 15 with the Regional Trial Court 16 of Manila against
CMC, Dr. Estrada, Dr. Villaflor, Dr. Uy, Dr. Enriquez, Dr. Lacson, Dr. Espinola, and a certain Nurse J. Dumlao for
the death of Corazon. Petitioners mainly contended that defendant physicians and CMC personnel were
negligent in the treatment and management of Corazon's condition. Petitioners charged CMC with
negligence in the selection and supervision of defendant physicians and hospital staff.

RTC DECISION

the trial court rendered judgment finding Dr. Estrada solely liable for damages.

On the part however of Dra. Ely Villaflor, Dra. Rosa Uy, Dr. Joel Enriquez, Dr. Lacson, Dr. Espinola, nurse J.
Dumlao and CMC, the Court finds no legal justification to find them civilly liable.
In the pre-trial order, plaintiffs and CMC agreed that defendant CMC did not have any hand or participation in
the selection or hiring of Dr. Estrada or his assistant Dra. Ely Villaflor as attending physician[s] of the deceased.
In other words, the two (2) doctors were not employees of the hospital and therefore the hospital did not have
control over their professional conduct. When Mrs. Nogales was brought to the hospital, it was an emergency
case and defendant CMC had no choice but to admit her. Such being the case, there is therefore no legal
ground to apply the provisions of Article 2176 and 2180 of the New Civil Code referring to the vicarious liability
of an employer for the negligence of its employees. If ever in this case there is fault or negligence in the
treatment of the deceased on the part of the attending physicians who were employed by the family of the
deceased, such civil liability should be borne by the attending physicians under the principle of "respondeat
superior".

APPEAL OF NOGALES

Petitioners appealed the trial court's decision. Petitioners claimed that aside from Dr. Estrada, CMC should be
held equally liable for negligence. Petitioners pointed out the extent of each respondent's alleged liability.

based on Article 2180 in relation to Article 2176 of the Civil Code. These provisions pertinently state:

Art. 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible.

xxxx

Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former are not engaged in any business or
industry.

xxxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damage.

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

In the present case, petitioners maintain that CMC, in allowing Dr. Estrada to practice and admit patients at
CMC, should be liable for Dr. Estrada's malpractice. Rogelio claims that he knew Dr. Estrada as an accredited
physician of CMC, though he discovered later that Dr. Estrada was not a salaried employee of the
CMC.35 Rogelio further claims that he was dealing with CMC, whose primary concern was the treatment and
management of his wife's condition. Dr. Estrada just happened to be the specific person he talked to
representing CMC.36 Moreover, the fact that CMC made Rogelio sign a Consent on Admission and Admission
Agreement37 and a Consent to Operation printed on the letterhead of CMC indicates that CMC considered Dr.
Estrada as a member of its medical staff.

CONTENTION OF CMC

CMC disclaims liability by asserting that Dr. Estrada was a mere visiting physician and that it admitted Corazon
because her physical condition then was classified an emergency obstetrics case. 38
CMC alleges that Dr. Estrada is an independent contractor "for whose actuations CMC would be a total
stranger." CMC maintains that it had no control or supervision over Dr. Estrada in the exercise of his medical
profession.

CA

Court of Appeals upheld the trial court's ruling.

ISSUE:

Basically, the issue in this case is whether CMC is vicariously liable for the negligence of Dr. Estrada.

RULING:

After a thorough examination of the voluminous records of this case, the Court finds no single evidence pointing
to CMC's exercise of control over Dr. Estrada's treatment and management of Corazon's condition.

 While the Court in Ramos v. Court of Appeals did not expound on the control test, such test essentially
determines whether an employment relationship exists between a physician and a hospital based on
the exercise of control over the physician as to details. Specifically, the employer (or the hospital) must
have the right to control both the means and the details of the process by which the employee (or the
physician) is to accomplish his task.

It is undisputed that throughout Corazon's pregnancy, she was under the exclusive prenatal care of Dr. Estrada.
At the time of Corazon's admission at CMC and during her delivery, it was Dr. Estrada, assisted by Dr.
Villaflor, who attended to Corazon. There was no showing that CMC had a part in diagnosing
Corazon's condition. While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not
make him an employee of CMC.42 CMC merely allowed Dr. Estrada to use its facilities 43 when
Corazon was about to give birth, which CMC considered an emergency. Considering these
circumstances, Dr. Estrada is not an employee of CMC, but an independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however,
an exception to this principle. The hospital may be liable if the physician is the "ostensible" agent of the
hospital.44 This exception is also known as the "doctrine of apparent authority."

[U]nder the doctrine of apparent authority a hospital can be held vicariously liable for the negligent
acts of a physician providing care at the hospital, regardless of whether the physician is an
independent contractor, unless the patient knows, or should have known, that the physician is an
independent contractor. The elements of the action have been set out as follows:

"For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that:

(1) the hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the
individual who was alleged to be negligent was an employee or agent of the hospital;

(2) where the acts of the agent create the appearance of authority, the plaintiff must also prove that the
hospital had knowledge of and acquiesced in them; and

(3) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary
care and prudence."
**considering that Dr. Estrada is an independent contractor-physician is CMC automatically exempt from
liability?

 In general, a hospital is not liable for the negligence of an independent contractor-physician

  There is, however, an exception to this principle.  The hospital may be liable if the physician is the
"ostensible" agent of the hospital

 This exception is also known as the "doctrine of apparent authority." In Gilbert v. Sycamore Municipal
Hospital,46 the Illinois Supreme Court explained the doctrine of apparent authority in this wise:

o doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a
physician providing care at the hospital, regardless of whether the physician is an independent
contractor, unless the patient knows, or should have known, that the physician is an independent
contractor

 The doctrine of apparent authority essentially involves TWO FACTORS to determine the liability of an
independent-contractor physician.

 first factor focuses on the hospital's manifestations and is sometimes described as an inquiry whether the
1st hospital acted in a manner which would lead a reasonable person to conclude that the individual who
was alleged to be negligent was an employee or agent of the hospital

o In this regard, the hospital need not make express representations to the patient that the treating
physician is an employee of the hospital; rather a representation may be general and implied

 In the instant case, CMC impliedly held out Dr. Estrada as a member of its medical staff through its acts

o CMC extended its medical staff and facilities to Dr. Estrada.

o CMC made Rogelio sign consent forms printed on CMC letterhead

o  Dr. Estrada's referral of Corazon's profuse vaginal bleeding to Dr. Espinola gave the impression that
Dr. Estrada as a member of CMC's medical staff was collaborating with other CMC-employed
specialists

 Without any indication in these consent forms that Dr. Estrada was an independent contractor-physician,
the Spouses Nogales could not have known that Dr. Estrada was an independent contractor.

 second factor focuses on the patient's reliance. It is sometimes characterized as an inquiry on whether the
plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and
prudence.

 Rogelio testified that he and his wife specifically chose Dr. Estrada to handle Corazon's delivery not only
because of their friend's recommendation, but more importantly because of Dr. Estrada's "connection
with a reputable hospital, the [CMC].

 Dr. Estrada's relationship with CMC played a significant role in the Spouses Nogales' decision in accepting
Dr. Estrada's services as the obstetrician-gynecologist for Corazon's delivery. Moreover, as earlier stated,
there is no showing that before and during Corazon's confinement at CMC, the Spouses Nogales knew or
should have known that Dr. Estrada was not an employee of CMC.

 Other argument of CMC: petitioners are estopped from claiming damages based on the Consent on
Admission and Consent to Operation
 SC: The documents do not expressly release CMC from liability for injury to Corazon due to negligence
during her treatment or operation. Neither do the consent forms expressly exempt CMC from liability for
Corazon's death due to negligence during such treatment or operation. Such release forms, being in the
nature of contracts of adhesion, are construed strictly against hospitals. Besides, a blanket release in favor
of hospitals "from any and all claims," which includes claims due to bad faith or gross negligence, would be
contrary to public policy and thus void.

The Court finds respondent Capitol Medical Center vicariously liable for the negligence of Dr. Oscar Estrada

CALAMBA MEDICAL CENTER, INC., Petitioner v. NATIONAL LABOR RELATIONS COMMISSION, RONALDO

LANZANAS AND MERCEDITHA* LANZANAS, Respondents.

(EER – Four-Fold Test)

G.R. No. 176484             November 25, 2008
CALAMBA MEDICAL CENTER, INC., petitioner
vs. NATIONAL LABOR RELATIONS COMMISSION, RONALDO LANZANAS AND
MERCEDITHA* LANZANAS, respondents.

FACTS

 Calamba Medical Center engaged the services of medical doctors-spouses Ronaldo Lanzanas and
Merceditha Lanzanas as part of its team of resident physicians

 The spouses doctors were paid 4,800 monthly and they were given percentage share out of fees charged
for out-patient treatments, operating room assistance and discharge billings

 The work schedules of the physicians were fixed by medical director Dr. Raul Desipeda,and the schedules
are for twice a week with 24hour shifts

 And they were issued identification cards by petitioner and were enrolled in the Social Security System
(SSS). Income taxes were withheld from them
 March 7, 1998 Dr. Meluz Trinidad overheard a telephone conversation of respondent Dr. Ronaldo with a
fellow employee, Diosdado Miscala discussing the low "census" or admission of patients to the hospital

 Dr. Desipeda issued to Dr. Ronaldo a Memorandum requiring Dr. Ronaldo to explain and is hereby placed
under 30-days preventive suspension.

 Dr. Merceditha, who was not involved in the said incident, was also not given schedule

 March 20, 1998, Dr. Ronaldo filed a complaint for illegal suspension and Dr. Merceditha subsequently filed
a complaint for illegal dismissal

 In the meantime, Rank and file employees went on strike, thereafter the secretary of DOLE issued a return
to work order to striking union officers and employees

 April 25, 1998 = a notice was given to Dr. Ronaldo indicating that for his failure to report back to work
despite the DOLE order and his supposed role in the striking union, he is terminated.

 Dr. Ronaldo amend his complaint into illegal dismissal, similar to Dr. Merceditha's complaints

LA = dismissed the spouses' complaints

NLRC = reversed LA’s findings
CA = E-E relationship exist thus they were illegally dismissed

CONTENTION

Petitioner (CMC)
The spouses doctors report only twice a week and are free to practice their profession elsewhere the rest of
the week, and aside from their monthly retainers, were entitled to one-half of all suturing, admitting,
consultation, medico-legal and operating room assistance fees. These circumstances, it stresses, are clear
badges of the absence of any employment relationship between them

ISSUE
WON E-E relationship exists between the parties (YES)
WON they were illegally dismissed (YES)

SC RULING

 Under the "control test," an employment relationship exists between a physician and a hospital if the
hospital controls both the means and the details of the process by which the physician is to accomplish his
task

 Where a person who works for another does so more or less at his own pleasure and is not subject to
definite hours or conditions of work, and is compensated according to the result of his efforts and not
the amount thereof, the element of control is absent
 As priorly stated, private respondents maintained specific work-schedules, as determined by petitioner
through its medical director, which consisted of 24-hour shifts totaling forty-eight hours each week and
which were strictly to be observed under pain of administrative sanctions

 That petitioner exercised control over respondents gains light from the undisputed fact that in the
emergency room, the operating room, or any department or ward for that matter, respondents' work is
monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent
of petitioner or its medical director, no operations can be undertaken in those areas. For control test to
apply, it is not essential for the employer to actually supervise the performance of duties of the employee,
it being enough that it has the right to wield the power

 With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment
tie between them and petitioner as this merely mirrors additional form or another form of compensation
or incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the
Labor Code, thus

o "Wage" paid to any employee shall mean the remuneration or earning, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task,
piece, or commission basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of employment for work done or
to be done, or for services rendered or to be rendered and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee

 More importantly, petitioner itself provided incontrovertible proof of the employment status of
respondents, namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316) Forms
which reflect their status as employees, and the classification as "salary" of their remuneration. Moreover,
it enrolled respondents in the SSS and Medicare (Philhealth) program.

 It bears noting at this juncture that mandatory coverage under the SSS Law is premised on the existence
of an employer-employee relationship, except in cases of compulsory coverage of the self-employed.

 It would be preposterous for an employer to report certain persons as employees and pay their SSS
premiums as well as their wages if they are not its employees

 Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employer-
employee relationship exists between the resident physicians and the training hospitals, unless there is a
training agreement between them, and the training program is duly accredited or approved by the
appropriate government agency.

 In respondents' case, they were not undergoing any specialization training. They were considered non-
training general practitioners, assigned at the emergency rooms and ward sections

**Issue on Illegal Dismissal

Dismissal of Ronaldo

 private respondents were illegally dismissed.

 Dr. Ronaldo was neither a managerial nor supervisory employee but part of the rank-and-file. This is the
import of the Secretary of Labor's Resolution which reads:
 o their job is merely routinary in nature and consequently, they cannot be considered supervisory
employees. They are not therefore barred from membership in the union of rank and file

 Admittedly, Dr. Ronaldo was a union member in the hospital, which is considered indispensable to the
national interest

 An assumption or certification order of the DOLE Secretary automatically results in a return-to-work of

all striking workers, whether a corresponding return-to-work order had been issued. The DOLE Secretary
in fact issued a return-to-work Order, failing to comply with which is punishable by dismissal or loss of
employment status.

 Participation in a strike and intransigence to a return-to-work order must, however, be duly proved in

order to justify immediate dismissal in a "national interest" case. however, there is nothing in the records
that would bear out Dr. Ronaldo actual participation in the strike

 Dr. Ronaldo claim that, after his 30-day preventive suspension ended he was never given any work
schedule

 Petitioner thus failed to observe the two requirements,before dismissal can be effected ─ notice and
hearing ─ which constitute essential elements of the statutory process

 the first to apprise the employee of the particular acts or omissions for which his dismissal is sought, and
the second to inform the employee of the employer's decision to dismiss him

 Non-observance of these requirements runs afoul of the procedural mandate

 The termination notice sent to and received by Dr. Ronaldo on April 25, 1998 was the first and only time
that he was apprised of the reason for his dismissal. He was not afforded, however, even the slightest
opportunity to explain his side. His was a "termination upon receipt" situation. While he was priorly made
to explain on his telephone conversation with Miscala, he was not with respect to his supposed
participation in the strike and failure to heed the return-to-work order.

Dismissal of Merceditha

 her dismissal was worse, it having been effected without any just or authorized cause and without
observance of due process. In fact, petitioner never proferred any valid cause for her dismissal except its
view that "her marriage to [Dr. Ronaldo] has given rise to the presumption that her sympath[y] [is] with
her husband; [and that when [Dr. Ronaldo] declared that he was going to boycott the scheduling of their
workload by the medical doctor, he was presumed to be speaking for himself [and] for his wife
Merceditha
JEROMIE D. ESCASINAS and EVAN RIGOR SINGCO, Petitioners, v. SHANGRI-LA'S MACTAN ISLAND RESORT and
DR. JESSICA J.R. PEPITO, Respondents.

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged by Dr. Jessica Joyce
R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-la's Mactan Island Resort (Shangri-la
which she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) Regional Arbitration Branch
No. VII (NLRC-RAB No. VII) a complaint 1 for regularization, underpayment of wages, non-payment of holiday
pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular
employees of Shangri-la.

CONTENTION OF SHANGRI LA

Shangri-la claimed, however, that petitioners were not its employees but of DR. JESSICA J.R. PEPITO whom it
retained via Memorandum of Agreement (MOA) 2 pursuant to Article 157 of the Labor Code, as amended.

 and that respondent doctor is a legitimate individual independent contractor who has the power to hire,
fire and supervise the work of the nurses under her

CONTENTION OF DR. JESSICA J.R. PEPITO

Respondent doctor for her part claimed that petitioners were already working for the previous retained
physicians of Shangri-la before she was retained by Shangri-la; and that she maintained petitioners' services
upon their request.

CONTENTION OF THE NURSES

 respondent doctor cannot be a legitimate independent contractor, lacking as she does in substantial
capital, the clinic having been set-up and already operational when she took over as retained physician;
that respondent doctor has no control over how the clinic is being run, as shown by the different orders
issued by officers of Shangri-la forbidding her from receiving cash payments and several purchase orders
for medicines and supplies which were coursed thru Shangri-la’s Purchasing Manager, circumstances
indubitably showing that she is not an independent contractor but a mere agent of Shangri-la

LABOR ARBITER

declared petitioners to be regular employees of Shangri-la

In finding petitioners to be regular employees of Shangri-la, the Arbiter noted that they usually perform work
which is necessary and desirable to Shangri-la's business; that they observe clinic hours and render services
only to Shangri-la's guests and employees; that payment for their salaries were recommended to Shangri-la's
Human Resource Department (HRD); that respondent doctor was Shangri-la's "in-house" physician, hence, also
an employee; and that the MOA between Shangri-la and respondent doctor was an "insidious mechanism in
order to circumvent [the doctor's] tenurial security and that of the employees under her."

NLRC

the NLRC granted Shangri-la's and respondent doctor's appeal and dismissed petitioners' complaint for lack of
merit, it finding that no employer-employee relationship exists between petitioner and Shangri-la.

the NLRC held that the Arbiter erred in interpreting Article 157 in relation to Article 280 of the Labor Code, as
what is required under Article 157 is that the employer should provide the services of medical personnel to its
employees, but nowhere in said article is a provision that nurses are required to be employed; that contrary to
the finding of the Arbiter, even if Article 280 states that if a worker performs work usually necessary or
desirable in the business of the employer, he cannot be automatically deemed a regular employee; and that
the MOA amply shows that respondent doctor was in fact engaged by Shangri-la on a retainer basis, under
which she could hire her own nurses and other clinic personnel.

CA

affirmed the NLRC Decision that no employer-employee relationship exists between Shangri-la and petitioners.
The appellate court concluded that all aspects of the employment of petitioners being under the supervision and
control of respondent doctor and since Shangri-la is not principally engaged in the business of providing
medical or healthcare services, petitioners could not be regarded as regular employees of Shangri-la.

ISSUE

WON E-E relationship exists between Shangri-La and the Nurses (NO, Dr Jessica is the one who has control
over them)

RULING:

The existence of an independent and permissible contractor relationship is generally established by

considering the following determinants:

whether the contractor is carrying on an independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign the performance of a specified piece
of work; the control and supervision of the work to another; the employer's power with respect to the
hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the
premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. 11

On the other hand, existence of an employer - employee relationship is established by the presence of the
following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the
payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter
assuming primacy in the overall consideration.12

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent
contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and
guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides,
the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which
are not directly related to Shangri-la's principal business - operation of hotels and restaurants.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document,
"Clinic Policies and Employee Manual" 16 claimed to have been prepared by respondent doctor exists, to which
petitioners gave their conformity17 and in which they acknowledged their co-terminus employment status. It is
thus presumed that said document, and not the employee manual being followed by Shangri-la's regular
workers, governs how they perform their respective tasks and responsibilities.

Contrary to petitioners' contention, the various office directives issued by Shangri-la's officers do not imply that
it is Shangri-la's management and not respondent doctor who exercises control over them or that Shangri-la has
control over how the doctor and the nurses perform their work.

G.R. No. 169757               November 23, 2011

CESAR C. LIRIO, doing business under the name and style of CELKOR AD SONICMIX,  Petitioner,
vs.
WILMER D. GENOVIA, Respondent.

(EER – Four-Fold Test)

G.R. No. 169757               November 23, 2011
CESAR C. LIRIO, doing business under the name and style of CELKOR AD SONICMIX, Petitioner,
vs. WILMER D. GENOVIA, Respondent.

FACTS

 August 15, 2001 = Wilmer D. Genovia was hired as studio manager by Cesar Lirio, owner of Celkor Ad
Sonicmix Recording Studio (Celkor)
 He was employed to manage and operate Celkor and to promote and sell the recording studio's services
to music enthusiasts and other prospective clients
 His salary is 7k/month with additional commission of 100/hour when a client uses the studio for recording
and report for work from Mon-Fri and half day on Sat.
 Cesar Lirio asked Wilmer D. Genovia to compose and arrange songs for Celine Mei Lirio (daughter)
 As agreed upon, the additional services that Wilmer D. Genovia would render included composing and
arranging musical scores only
 the technical aspect in producing the album, such as digital editing, mixing and sound engineering would
be performed by respondent in his capacity as studio manager
 Wilmer D. Genovia was tasked by Cesar Lirio to prepare official correspondence, establish contacts and
negotiate with various radio stations, malls, publishers, record companies and manufacturers, record bars
and other outlets in preparation for the promotion of the said album
 February 26, 2002, Wilmer D. Genovia again reminded Cesar Lirio about the contract on his compensation
as composer and arranger of the album
 Cesar Lirio told Wilmer D. Genovia that since he had proved nothing yet in music industry, the latter does
not deserve high compensation and that he was entitled only to 20% of net profit and not of the gross
sales and that the salaries he received and would continue to receive as studio manager of Celkor would
be deducted from the said 20% net profit share
 Wilmer D. Genovia objected and insisted that he be properly compensated. subsequently, Cesar Lirio
verbally terminated Wilmer D. Genovia’s services, and he was instructed not to report for work.
 Thus, Wilmer D. Genovia filed a case for illegal dismissal

Contention

Respondent (Wilmer D. Genovia)

 Having worked for more than six months, he was already a regular employee. Although he was a so called
"studio manager," he had no managerial powers, but was merely an ordinary employee
Petitioner (Cesar Lirio)

 Petitioner asserted that from the aforesaid terms and conditions, his relationship with respondent is one
of an informal partnership under Article 1767 of the New Civil Code, since they agreed to contribute
money, property or industry to a common fund with the intention of dividing the profits among
themselves.
 Petitioner had no control over the time and manner by which respondent composed or arranged the
songs, except on the result thereof. Respondent reported to the recording studio between 10:00 a.m. and
12:00 noon. Hence, petitioner contended that no employer-employee relationship existed between him
and the respondent, and there was no illegal dismissal to speak of.

LA = E-E relationship exist between Wilmer and Cesar

NLRC = reversed and set aside LA’s decision
CA = reversed and set aside NLRC’s decision

ISSUE

WON E-E relationship exist between Wilmer and Cesar (YES)

SC RULING

 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 employee’s conduct. 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
 In this case, the documentary evidence presented by respondent to prove that he was an employee of
petitioner are as follows:
o (a) a document denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified
correct by Cesar Lirio, which showed that Wilmer D. Genovia received a monthly salary of
₱7,000.00 (₱3,500.00 every 15th of the month and another ₱3,500.00 every 30th of the month)
with the corresponding deductions due to absences incurred by Wilmer D. Genovia; and (2)
copies of petty cash vouchers, showing the amounts he received and signed for in the payrolls
 The said documents showed that petitioner hired respondent as an employee and he was paid monthly
wages of ₱7,000.00.
 Petitioner wielded the power to dismiss as respondent stated that he was verbally dismissed by petitioner,
and respondent, thereafter, filed an action for illegal dismissal against petitioner
 The power of control refers merely to the existence of the power. It is not essential for the employer to
actually supervise the performance of duties of the employee, as it is sufficient that the former has a right
to wield the power
 Nevertheless, petitioner stated in his Position Paper that it was agreed that he would help and teach
respondent how to use the studio equipment. In such case, petitioner certainly had the power to check
on the progress and work of respondent

 On the other hand, petitioner failed to prove that his relationship with respondent was one of
partnership. Such claim was not supported by any written agreement
  in the payroll dated July 31, 2001 to March 15, 2002, there were deductions from the wages of
respondent for his absence from work, which negates petitioner’s claim that the wages paid were
advances for respondent’s work in the partnership
 In Nicario v. National Labor Relations Commission, the Court held: “It is a well-settled doctrine, that if
doubts exist between the evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter.”

 Based on the foregoing, the Court agrees with the Court of Appeals that the evidence presented by the
parties showed that an employer-employee relationship existed between petitioner and respondent.
**Illegal dismissal

 In termination cases, the burden is upon the employer to show by substantial evidence that the
termination was for lawful cause and validly made. Article 277 (b) of the Labor Code puts the burden of
proving that the dismissal of an employee was for a valid or authorized cause on the employer, without
distinction whether the employer admits or does not admit the dismissal.
 For an employee’s dismissal to be valid, (a) the dismissal must be for a valid cause, and (b) the employee
must be afforded due process.
 Procedural due process requires the employer to furnish an employee with two written notices before the
latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his
dismissal is sought, which is the equivalent of a charge; and (2) the notice informing the employee of his
dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be
heard on his defense. 
 Petitioner failed to comply with these legal requirements; hence, the Court of Appeals correctly affirmed
the Labor Arbiter’s finding that respondent was illegally dismissed, and entitled to the payment of
backwages, and separation pay in lieu of reinstatement.
(EER – Four-Fold Test)
G.R. No. 197899 March 6, 2017
JOAQUIN LU, Petitioner vs TIRSO ENOPIA,et. al, Respondents

FACTS

 The Respondents in this case were hired as crew members of the fishing mother boat F/B  MG-28 owned
by Joaquin "Jake" Lu who is the sole proprietor of Mommy Gina Tuna Resources (MGTR)
 The workers and Joaquin Lu had an income-sharing arrangement wherein 55% goes to Joaquin Lu, 45% to
the workers, with an additional 4% as "backing incentive.
 They also equally share the expenses for the maintenance and repair of the mother boat, and for the
purchase of nets, ropes and payaos
 in August 1997, Joaquin Lu proposed the signing of a Joint Venture Fishing Agreement between them, but
the workers refused to sign the same as they opposed the one-year term provided in the agreement
 Joaquin Lu terminated their services right there and then because of their refusal to sign the agreement
 August 25, 1997, the workers filed their complaint for illegal dismissal, monetary claims and damages

CONTENTION
Respondents (workers)
 their refusal to sign the Joint Venture Fishing Agreement is not a just cause for their termination
Petitioner (Joaquin Lu)
 their relationship was one of joint venture where he provided the vessel and other fishing paraphernalia,
while petitioners, as industrial partners, provided labor by fishing in the high seas.
 Lu alleged that there was no employer-employee relationship as its elements were not present
 The workers were not hired by Joaquin Lu, as the hiring was done by the piado or master fisherman
ISSUE
WON E-E relationship exists (YES)

SC RULING

 In determining the existence of an employer-employee relationship, the following elements are

considered: (1) the selection and engagement of the workers; (2) the power to control the worker's
conduct; (3) the payment of wages by whatever means; and (4) the power of dismissal. We find all these
elements present in this case.

 Joaquin Lu contends that it was the piado (master fisherman) who hired the workers, however, it was
shown by the latter's evidence that the employer stated in their Social Security System (SSS) online
inquiry system printouts was MGTR, which is owned by Joaquin Lu.

 We have gone over these printouts and found that the date of the SSS remitted contributions coincided
with the date of respondents' employment with petitioner. Joaquin Lu failed to rebut such evidence. Thus,
the fact that Joaquin Lu had registered the workers with SSS is proof that they were indeed his employees.
 The coverage of the Social Security Law is predicated on the existence of an employer-employee
relationship

 It was established that petitioner exercised control over respondents. It should be remembered that the
control test merely calls for the existence of the right to control, and not necessarily the exercise thereof.
It is not essential that the employer actually supervises the performance of duties by the employee. It is
enough that the former has a right to wield the power.

 The Joaquin Lu controls the entire fishing operations. Joaquin Lu assigned a master fisherman (pi ado) and
assistant master fisherman (assistant pi ado) for each mother fishing boat, who every now and then
supervise the fishing operations. Joaquin Lu also assigned checkers based on the office to monitor and
contact every now and then the crew at sea through radio. The checkers advise Joaquin Lu of the
condition and the latter, through radio, will then instruct the "piado" how to conduct the fishing
operations.

 The payment of respondents' wages based on the percentage share of the fish catch would not be
sufficient to negate the employer-employee relationship existing between them.

 The payment of worker’s wages based on the percentage share of the fish catch falls within the scope and
meaning of the term “wage” under Article 97(f) of the Labor Code

 Petitioner wielded the power of dismissal over respondents when he dismissed them after they refused to
sign the joint fishing venture agreement.

**Regular employment

 The primary standard for determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer

 Worker’s jobs as fishermen-crew members of FIB  MG 28 were directly related and necessary to
petitioner's deep-sea fishing business and they had been performing their job for more than one year.

 In fact, MGTR's line of business could not possibly exist, let alone flourish without people like the
fishermen crew members of its fishing vessels who actually undertook the fishing activities in the high
seas.

 Since the workers are regular employees, they are entitled to security of tenure

 Joaquin Lu’s act of asking them to sign the joint fishing venture agreement which provides that the
venture shall be for a period of one year from the date of the agreement, subject to renewal upon mutual
agreement of the parties, and may be pre-terminated by any of the parties before the expiration of the
one-year period, is violative of the former's security of tenure
(EER – Two-tiered Test)
G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO, Petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO
ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents

FACTS

 In 1995 ANGELINA FRANCISCO was hired by Kasei Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of
the company and was also designated as Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company

 Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents. neither did she attend any board meeting nor required to do so. She never prepared any legal
document and never represented the company as its Corporate Secretary. However, on some occasions,
she was prevailed upon to sign documentation for the company

 In 1996, petitioner was designated Acting Manager. As Acting Manager, petitioner was assigned to handle
recruitment of all employees and perform management administration functions; represent the company
in all dealings with government agencies, especially with the Bureau of Internal Revenue (BIR), Social
Security System (SSS) and in the city government of Makati; and to administer all other matters pertaining
to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation

 January 2001, ANGELINA FRANCISCO was replaced by Liza R. Fuentes as Manager

 ANGELINA FRANCISCO alleged that she was required to sign a prepared resolution for her replacement
but she was assured that she would still be connected with Kasei Corporation

 Thereafter, Kasei Corporation reduced her salary by P2,500.00, because the company is not earning well.
 October 15, 2001 ANGELINA FRANCISCO asked for her salary but she was informed that she is no longer
connected with the company, since she was no longer paid her salary, petitioner did not report for work
and filed an action for constructive dismissal before the labor arbiter

CONTENTION
Respondent (Kasei Corporation)
 ANGELINA is not an employee of Kasei Corporation and that petitIONER ANGELINA was hired in 1995 as
one of its technical consultants on accounting matters and act concurrently as Corporate Secretary
 As technical consultant, petitioner performed her work at her own discretion without control and
supervision of Kasei Corporation.

ISSUE
WON E-E relationship exists between the parties (YES)

SC RULING

 there has been no uniform test to determine the existence of an employer-employee relation. Generally,
courts have relied on the so-called right of control test where the person for whom the services are
performed reserves a right to control not only the end to be achieved but also the means to be used in
reaching such end

 In addition to the standard of right-of-control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an
employer-employee relationship

 However, in certain cases the control test is not sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a relationship where several positions have been
held by the worker.

 There are instances when, aside from the employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished, economic realities of the employment
relations help provide a comprehensive analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other capacity.

 The better approach would therefore be to adopt a two-tiered test involving:

o (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;

o (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

**Control test vs. 2tiered test

 The control test initially found application in the case of Viaña v. Al-Lagadan and Piga here we held that
there is an employer-employee relationship when the person for whom the services are performed
reserves the right to control not only the end achieved but also the manner and means used to achieve
that end.
 In Sevilla v. Court of Appeals, we observed the need to consider the existing economic conditions
prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the
employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic circumstances of the worker

 Thus, 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.

 The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business

**as applied to the case

 By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical
Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer,
Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions,
that is, rendering accounting and tax services to the company and performing functions necessary and
desirable for the proper operation of the corporation such as securing business permits and other licenses
over an indefinite period of engagement

 Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal, receiving
check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well
as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. When
petitioner was designated General Manager, respondent corporation made a report to the SSS signed by
Irene Ballesteros. Petitioner’s membership in the SSS as manifested by a copy of the SSS specimen
signature card which was signed by the President of Kasei Corporation and the inclusion of her name in
the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between
petitioner and respondent corporation.

 It is therefore apparent that ANGELINA FRANCISCO is economically dependent on Kasei Corporation for
her continued employment in the latter’s line of business

 Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent
Kasei Corporation. She was selected and engaged by the company for compensation, and is economically
dependent upon respondent for her continued employment in that line of business. Her main job function
involved accounting and tax services rendered to respondent corporation on a regular basis over an
indefinite period of engagement. Respondent corporation hired and engaged petitioner for compensation,
with the power to dismiss her for cause. More importantly, respondent corporation had the power to
control petitioner with the means and methods by which the work is to be accomplished.
(EER – Two-tiered Test)
G.R. No. 189255               June 17, 2015
JESUS G. REYES, Petitioner, vs.
GLAUCOMA RESEARCH FOUNDATION, INC., EYE REFERRAL CENTER and MANUEL B. AGULTO, Respondents.

FACTS

 August 1, 2003 = JESUS G. REYES was hired by GLAUCOMA RESEARCH FOUNDATION, INC. as
administrator of the latter's Eye Referral Center

 JESUS G. REYES performed his duties as administrator and continuously received his monthly salary of
₱20,000.00 until the end of January 2005

 beginning February 2005, respondent withheld petitioner's salary without notice but he still continued to
report for work

 April 11, 2005, petitioner wrote a letter to respondent Manuel Agulto (Agulto), who is the Executive
Director of respondent corporation, informing the latter that he has not been receiving his salaries since
February 2005 as well as his 14th month pay for 2004

 JESUS G. REYES did not receive any response from Agulto

 April 21, 2005 Jesus was informed by the Assistant to the Executive Director as well as the Assistant
Administrative Officer, that he is no longer the Administrator of the ERC

 subsequently, JESUS G. REYES ‘office was padlocked and closed without notice; he still continued to report
for work but on April 29, 2005 he was no longer allowed by the security guard on duty to enter the
premises of the ERC

 Jesus filed a complaint for illegal Dismissal

CONTENTION
Respondent (corporation)
 upon Jesus’ representation that he is an expert incorporate organizational structure and management
affairs, they engaged his services as a consultant or adviser in the formulation of an updated
organizational set-up and employees' manual which is compatible with their present condition
 there is no employer-employee relationship between them because respondents had no control over
petitioner in terms of working hours as he reports for work at any time of the day and leaves as he pleases

LA = dismissed; failed to prove E-E relationship

NLRC = revered LA’s Ruling
CA = Set aside NLRC’s decision

ISSUE
WON E-E relationship exists between the parties (NONE)

SC RULING

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."
Indeed, the power of the employer to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship. This test 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

In the present case, JESUS contends that, as evidence of respondents' supposed control over him, the
organizational plans he has drawn were subject to the approval of respondent corporation's Board of
Trustees HOWEVER, power to approve or reject the organizational plans drawn by [petitioner] cannot be the
control contemplated in the "control test." It is but logical that one who commissions another to do a piece of
work should have the right to accept or reject the product

Well settled is the rule that where a person who works for another performs his job more or less at his own
pleasure, in the manner he sees fit, not subject to definite hours or conditions of work, and is compensated
according to the result of his efforts and not the amount thereof, no employer-employee relationship exists.

**Economic Reality test

 Aside from the control test, the Supreme Court has also used the economic reality test in determining
whether an employer-employee relationship exists between the parties.

 Under this test, the economic realities prevailing within the activity or between the parties are examined,
taking into consideration the totality of circumstances surrounding the true nature of the relationship
between the parties.

 This is especially appropriate when, as in this case, there is no written agreement or contract on which
to base the relationship

  In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships for
purposes of applying the Labor Code ought to be the economic dependence of the worker on his
employer

 In the instant case, as shown by the resume of JESUS, he concurrently held consultancy positions:

o with the Manila International Airport Authority (from 04 March 2001 to September 2003 and
from 01 November 2004 up to the present)

o Anti-Terrorist Task Force for Aviation and Air Transportation Sector (from 16 April 2004 to 30
June 2004) during his stint with the Eye Referral Center (from 01 August 2003 to 29 April 2005).
Accordingly, it cannot be said that the [petitioner] was wholly dependent on [respondent]
company
 Additional evidence of the fact that petitioner was hired as a consultant and not as an employee of
respondent corporation are affidavits to this effect which were executed by Roy Oliveres and Aurea Luz
Esteva, who are Medical Records Custodian and Administrative Officer, respectively, of respondent
corporation.

 Lastly, the Court does not agree with petitioner's insistence that his being hired as respondent
corporation's administrator and his designation as such in intra-company correspondence proves that
he is an employee of the corporation

 Mere title or designation in a corporation will not, by itself, determine the existence of an employer-
employee relationship
(EER – Two-tiered Test)
G.R. No. 155207             August 13, 2008
WILHELMINA S. OROZCO, petitioner,
vs. THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER, and LETICIA
JIMENEZ MAGSANOC, respondents.

FACTS

 March 1990 Philippine Daily Inquirer (PDI) engaged the services of WILHELMINA S. OROZCO to write a
weekly column for its Lifestyle section
 WILHELMINA religiously submitted her articles every week, except for a six-month stint in New York City
when she, nonetheless, sent several articles through mail. She received compensation of P250.00 – later
increased to P300.00 – for every column published
 November 7, 1992 = WILHELMINA column appeared in the PDI for the last time. WILHELMINA claims that
her then editor, Ms. Lita T. Logarta, told her that respondent Leticia Jimenez Magsanoc, PDI Editor in
Chief, wanted to stop publishing her column for no reason at all and advised WILHELMINA to talk to
Magsanoc herself
 WILHELMINA narrates that when she talked to Magsanoc, the latter informed her that it was PDI
Chairperson Eugenia Apostol who had asked to stop publication of her column, but that in a telephone
conversation with Apostol, the latter said that Magsanoc informed her (Apostol) that the Lifestyle section
already had many columnists.
 On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to discuss
how to improve said section. They agreed to cut down the number of columnists by keeping only those
whose columns were well-written, with regular feedback and following. In their judgment, petitioner’s
column failed to improve, continued to be superficially and poorly written,. Hence, they decided to
terminate petitioner’s column
 Aggrieved by the newspaper’s action, WILHELMINA filed a complaint for illegal dismissal, backwages,
moral and exemplary damages, and other money claims

LA = PDI exercised full control over WILHELMINA’s work

NLRC = affirmed LA’s decision
CA = set aside NLRC’s decision

CONTENTION

ISSUE
WON there’s E-E relationship between the parties and whether petitioner is an employee of PDI (NO)

SC RULING

 This Court has constantly adhered to the "four-fold test" to determine whether there exists an employer-
employee relationship between parties. The four elements 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 employee’s conduct
 Of these four elements, it is the power of control which is the most crucial and most determinative
factor, so important, in fact, that the other elements may even be disregarded
 In other words, the test is whether the employer controls or has reserved the right to control the
employee, not only as to the work done, but also as to the means and methods by which the same is
accomplished
 Now, WILHELMINA argues that several factors that proves the control over her work.
o (Control over content) The contents of her column must be hewed closely to the objectives of its
Lifestyle Section
o (control over time) she had to observe the deadlines of the newspaper for her articles to be
published
 o (control over space) she was told to submit only two or three pages of article for the column
o (as to discipline) disciplined to submit her articles on highly relevant and significant issues
 SC: PETITIONER HAS MISCONSTRUED THE "CONTROL TEST"
 Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the
former. Rules which serve as general guidelines towards the achievement of the mutually desired result
are not indicative of the power of control.
 “It should, however, be obvious that not every form of control that the hiring party reserves to himself
over the conduct of the party hired in relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal or technical sense of the term.
A line must be drawn somewhere, if the recognized distinction between an employee and an individual
contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives
untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of
the engagement.
 Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used to achieve it. x x x.”
 The main determinant therefore is whether the rules set by the employer are meant to control not just
the results of the work but also the means and method to be used by the hired party in order to achieve
such results.

 Petitioner believes that respondents’ acts are meant to control how she executes her work. We do not
agree. A careful examination reveals that the factors enumerated by the petitioner are inherent conditions
in running a newspaper. In other words, the so-called control as to time, space, and discipline are
dictated by the very nature of the newspaper business itself.

 Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce
her articles each week. Aside from the constraints presented by the space allocation of her column,
there were no restraints on her creativity; petitioner was free to write her column in the manner and
style she was accustomed to and to use whatever research method she deemed suitable for her
purpose. The apparent limitation that she had to write only on subjects that befitted the Lifestyle section
did not translate to control, but was simply a logical consequence of the fact that her column appeared in
that section and therefore had to cater to the preference of the readers of that section.

 The perceived constraint on petitioner’s column was dictated by her own choice of her column’s
perspective.
 The newspaper’s power to approve or reject publication of any specific article she wrote for her column
cannot be the control contemplated in the “control test,” as it is but logical that one who commissions
another to do a piece of work should have the right to accept or reject the product. The important factor
to consider in the “control test” is still the element of control over how the work itself is done, not just the
end result thereof.

 In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We note
the common practice in the newspaper business of assigning its regular reporters to cover specific
subjects, geographical locations, government agencies, or areas of concern, more commonly referred to
as “beats.” A reporter must produce stories within his or her particular beat and cannot switch to another
beat without permission from the editor. In most newspapers also, a reporter must inform the editor
about the story that he or she is working on for the day. The story or article must also be submitted to the
editor at a specified time. Moreover, the editor can easily pull out a reporter from one beat and ask him or
her to cover another beat, if the need arises.
 Aside from the control test, this Court has also used the economic reality test. The economic realities
prevailing within the activity or between the parties are examined, taking into consideration the totality
of circumstances surrounding the true nature of the relationship between the parties. This is especially
appropriate when, as in this case, there is no written agreement or contract on which to base the
relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible employment
relationships for purposes of applying the Labor Code ought to be the economic dependence of the
worker on his employer.
 Petitioner’s main occupation is not as a columnist for respondent but as a women’s rights advocate
working in various women’s organizations Likewise, she herself admits that she also contributes articles to
other publications. Thus, it cannot be said that petitioner was dependent on respondent PDI for her
continued employment in respondent’s line of business.
 The inevitable conclusion is that petitioner was not respondent PDI’s employee but an independent
contractor, engaged to do independent work.
 The instant case presents a parallel to Sonza. Petitioner was engaged as a columnist for her talent, skill,
experience, and her unique viewpoint as a feminist advocate. How she utilized all these in writing her
column was not subject to dictation by respondent. As in Sonza, respondent PDI was not involved in the
actual performance that produced the finished product. It only reserved the right to shorten petitioner’s
articles based on the newspaper’s capacity to accommodate the same. This fact, we note, was not unique
to petitioner’s column. It is a reality in the newspaper business that space constraints often dictate the
length of articles and columns, even those that regularly appear therein.