SECOND DIVISION

JEROMIE D. ESCASINAS and EVAN G.R. No. 178827

RIGOR SINGCO,
Petitioners, Present:

QUISUMBING, J., Chairperson,

CARPIO MORALES,
- versus - NACHURA,*
BRION, and
PERALTA,** JJ.

SHANGRI-LAS MACTAN ISLAND Promulgated:

RESORT and DR. JESSICA J.R. March 4, 2009
PEPITO,
Respondents.

FACTS:

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were
engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to
work in her clinic at respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which
she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) against
respondents, claiming that they are regular employees of Shangri-la.

Shangri-la claimed, however, that petitioners were not its employees but of respondent
doctor whom it retained via Memorandum of Agreement (MOA)[2] pursuant to Article 157 of the
Labor Code, as amended.

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.

Labor Arbiter Ernesto F. Carreon declared petitioners to be regular employees of

Shangri-la. , the NLRC granted Shangri-las and respondent doctors appeal and dismissed
petitioners complaint for lack of merit, it finding that no employer-employee relationship exists
between petitioner and Shangri-la. 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: Whether or not petitioner nurses are employees of Shangri-la.

RULING: No. 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. 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-las principal business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the

following: salaries, SSS contributions and other benefits of the staff[13]; group life, group
personal accident insurance and life/death insurance[14] for the staff with minimum benefit
payable at 12 times the employees last drawn salary, as well as value added taxes and
withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the
service charges from Shangri-las guests who avail of the clinic services. It is unlikely that
respondent doctor would report petitioners as workers, pay their SSS premium as well as their
wages if they were not indeed her employees.[15]
 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 conformity[17] 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-las regular workers, governs how they
perform their respective tasks and responsibilities.

Contrary to petitioners contention, the various office directives issued by Shangri-las

officers do not imply that it is Shangri-las 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. The letter[18] addressed to respondent doctor dated February 7, 2003 from a certain Tata L.
Reyes giving instructions regarding the replenishment of emergency kits is, at most,
administrative in nature, related as it is to safety matters; while the letter[19] dated May 17, 2004
from Shangri-las Assistant Financial Controller, LotlotDagat, forbidding the clinic from
receiving cash payments from the resorts guests is a matter of financial policy in order to ensure
proper sharing of the proceeds, considering that Shangri-la and respondent doctor share in the
guests payments for medical services rendered. In fine, as Shangri-la does not control how the
work should be performed by petitioners, it is not petitioners employer.
WHEREFORE, the petition is hereby DENIED. The Decision of the Court of Appeals
dated May 22, 2007 and the Resolution dated July 10, 2007 are AFFIRMED.
G.R. No. L-12582 January 28, 1961

LVN PICTURES, INC., petitioner-appellant,

vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL
RELATIONS, respondents-appellees.

x---------------------------------------------------------x

G.R. No. L-12598 January 28, 1961

SAMPAGUITA PICTURES, INC., petitioner-appellant,

vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL
RELATIONS, respondents-appellees.

In its petition in the lower court, the Philippine Musicians Guild (FFW), hereafter referred to as
the Guild, averred that it is a duly registered legitimate labor organization; that LVN Pictures,
Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized
under the Philippine laws, engaged in the making of motion pictures and in the processing and
distribution thereof; that said companies employ musicians for the purpose of making music
recordings for title music, background music, musical numbers, finale music and other incidental
music, without which a motion picture is incomplete; that ninety-five (95%) percent of all the
musicians playing for the musical recordings of said companies are members of the Guild; and
that the same has no knowledge of the existence of any other legitimate labor organization
representing musicians in said companies. Premised upon these allegations, the Guild prayed that
it be certified as the sole and exclusive bargaining agency for all musicians working in the
aforementioned companies. In their respective answers, the latter denied that they have any
musicians as employees, and alleged that the musical numbers in the filing of the companies are
furnished by independent contractors

Issue: is whether or not the musicians in question are employees of the film companies.

Ruling: yes. The work of the musical director and musicians is a functional and integral
part of the enterprise performed at the same studio substantially under the direction and
control of the company.

In other words, to determine whether a person who performs work for another is the
latter's employee or an independent contractor, the National Labor Relations relies on 'the
right to control' test. Under this test an employer-employee relationship exist where the
person for whom the services are performed reserves the right to control not only the end
to be achieved, but also the manner and means to be used in reaching the end. (United
Insurance Company, 108, NLRB No. 115.).
 'Notwithstanding that the employees are called independent contractors', the Board will
hold them to be employees under the Act where the extent of the employer's control over
them indicates that the relationship is in reality one of employment. (John Hancock
Insurance Co., 2375-D, 1940, Teller, Labor Dispute Collective Bargaining, Vol.).

The right of control of the film company over the musicians is shown (1) by calling the
musicians through 'call slips' in 'the name of the company; (2) by arranging schedules in
its studio for recording sessions; (3) by furnishing transportation and meals to musicians;
and (4) by supervising and directing in detail, through the motion picture director, the
performance of the musicians before the camera, in order to suit the music they are
playing to the picture which is being flashed on the screen.

Thus, in the application of Philippine statutes and pertinent decisions of the United States
Courts on the matter to the facts established in this case, we cannot but conclude that to
effectuate the policies of the Act and by virtue of the 'right of control' test, the members
of the Philippine Musicians Guild are employees of the three film companies and,
therefore, entitled to right of collective bargaining under Republic Act No. 875.

What is more — in the language of the order appealed from — "during the recording sessions,
the motion picture director who is an employee of the company" — not the musical director —
"supervises the recording of the musicians and tells them what to do in every detail". The motion
picture director — not the musical director — "solely directs and performance of the musicians
before the camera". The motion picture director "supervises the performance of all the
actors, including the musicians who appear in the scenes, so that in the actual performance to be
shown in the screen, the musical director's intervention has stopped." Or, as testified to in the
lower court, "the movie director tells the musical director what to do; tells the music to be cut or
tells additional music in this part or he eliminates the entire music he does not (want) or he may
want more drums or move violin or piano, as the case may be". The movie director "directly
controls the activities of the musicians." He "says he wants more drums and the drummer plays
more" or "if he wants more violin or he does not like that.".

It is well settled that "an employer-employee relationship exists . . .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 . . . ." (Alabama Highway Express Co., Express Co., v.
Local 612, 108S. 2d. 350.) The decisive nature of said control over the "means to be used", is
illustrated in the case of Gilchrist Timber Co., et al., Local No. 2530 (73 NLRB No. 210, pp.
1197, 1199-1201), in which, by reason of said control, the employer-employee relationship was
held to exist between the management and the workers, notwithstanding the intervention of an
alleged independent contractor, who had, and exercise, the power to hire and fire said workers.
The aforementioned control over the means to be used" in reading the desired end is possessed
and exercised by the film companies over the musicians in the cases before us.

WHEREFORE, the order appealed from is hereby affirmed, with costs against petitioners herein.
It is so ordered.
SECOND DIVISION

SOUTH DAVAO DEVELOPMENT G.R. No. 171814

COMPANY, INC. (NOW SODACO
AGRICULTURAL CORPORATION)
AND/OR MALONE PACQUIAO Present:
AND VICTOR A. CONSUNJI,
Petitioners,
CARPIO MORALES,* J.
- versus - Acting Chairperson,
TINGA,
VELASCO, JR.,
SERGIO L. GAMO, ERNESTO LEONARDO DE CASTRO,**and
BELLEZA, FELIX TERONA, BRION, JJ.
CARLOS ROJAS, MAXIMO
MALINAO, VIRGILIO COSEP,
ELEONOR COSEP, MAXIMO Promulgated:
TOLDA, NELSON BAGAAN,
and TRADE UNION OF THE
PHILIPPINES and ALLIED May 8, 2009
SERVICES (TUPAS),
Respondents.
Petitioner South Davao Development Company (petitioner or petitioner corporation) is
the operator of a coconut and mango farm in San Isidro, Davao Oriental and
Inawayan/Baracatan, Davao del Sur. On August 1963 petitioner hired respondent Sergio L.
Gamo (Gamo) as a foreman. Sometime in 1987, petitioner appointed Gamo as a copra maker
contractor. Respondents Ernesto Belleza, Carlos Rojas, Maximo Malinao were all employees in
petitioners coconut farm, while respondents Felix Terona, Virgilio Cosep, Maximo Tolda, and
Nelson Bagaan were assigned to petitioners mango farm. All of the abovenamed respondents
(copra workers) were later transferred by petitioner to Gamo as the latters copraceros. From
1987 to 1999, Gamo and petitioner entered into a profit-sharing agreement wherein 70% of the
net proceeds of the sale of copra went to petitioner and 30% to Gamo. The copra workers were
paid by Gamo from his 30% share.

Petitioner wanted to standardize payments to its contractors in its coconut farms. On 2

October 1999, petitioner proposed a new payment scheme to Gamo. The new scheme provided a
specific price for each copra making activity. Gamo submitted his counter proposal.[6] Petitioner
did not accept Gamos counter proposal since it was higher by at least fifty percent (50%) from its
original offer. Without agreeing to the new payment scheme, Gamo and his copra workers
started to do harvesting work. Petitioner told them to stop. Eventually, petitioner and Gamo
agreed that the latter may continue with the harvest provided that it would be his last contract
with petitioner. Gamo suggested to petitioner to look for a new contractor since he was not
amenable to the new payment scheme.[7]

Gamo and petitioner failed to agree on a payment scheme, thus, petitioner did not renew
the contract of Gamo. Gamo and the copra workers alleged that they were illegally dismissed.

On the other hand, respondent Eleonor Cosep (Eleonor) was employed as a mango
classifier in the packing house of petitioners mango farm in San Isidro, Davao Oriental.
Sometime in October 1999, she did not report for work as she had wanted to raise and sell pigs
instead. Petitioner, through Malone Pacquiao, tried to convince Eleonor to report for work but to
no avail.
On 22 March 2000, respondents filed a complaint[8] for illegal dismissal against petitioner.
They alleged that sometime in December 1999, petitioner verbally terminated them en
masse.

The labor arbiter dismissed[9] the complaint. He ruled that there was no employee-employer
relationship between petitioner and respondents. As to Eleonor, he ruled that she had voluntarily
stopped working The NLRC granted[12] the motion for reconsideration and ruled that the nature
of the job of the respondents could not result in an employer-employee relationship. Respondents
moved for reconsideration which was denied.[13]

Respondents filed a petition for certiorari[14] under Rule 65 with the Court of Appeals. The Court
of Appeals ruled that there existed an employer-employee relationship. It declared that
respondents were regular seasonal employees who can be dismissed by the petitioner at the end
of the season provided due process is observed.[15] With regard to Eleonor, the Court of Appeals
ruled that she did not abandon her work.

Issue: (1) whether the Court of Appeals failed to take judicial notice of the accepted practice of
independent contractors in the coconut industry; (2) whether there is a valid job contracting
between petitioner and Gamo; and (3) whether Eleonor had effectively abandoned her work.

Ruling: (, it is clear that an employer-employee relationship has existed between petitioner

corporation and respondents since the beginning and such relationship did not cease despite their
reassignments and the change of payment scheme.)
 A related issue is whether Gamo is an independent contractor. To establish the existence
of an independent contractor, we apply the following conditions: first, the contractor carries on
an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the control and direction of
his employer or principal in all matters connected with the performance of the work except to the
result thereof; and second, the contractor has substantial capital or investments in the form of
tools, equipment, machineries, work premises and other materials which are necessary in the
conduct of his business. In the case at bar, Gamo and the copra workers did not exercise
independent judgment in the performance of their tasks. The tools used by Gamo and his copra
workers like the karit, bolo, pangbunot, panglugit and pangtapok are not sufficient to enable
them to complete the job.[24] Reliance on these primitive tools is not enough. In fact, the
accomplishment of their task required more expensive machineries and equipment, like the
trucks to haul the harvests and the drying facility, which petitioner corporation owns.

In order to determine the existence of an employer-employee relationship, the Court has

frequently applied the four-fold test: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees
conduct, or the so called control test, which is considered the most important element.[25] From
the time they were hired by petitioner corporation up to the time that they were reassigned to
work under Gamos supervision, their status as petitioner corporations employees did not
cease. Likewise, payment of their wages was merely coursed through Gamo. As to the most
determinative test―the power of control, it is sufficient that the power to control the manner of
doing the work exists, it does not require the actual exercise of such power.[26] In this case, it was
in the exercise of its power of control when petitioner corporation transferred the copra workers
from their previous assignments to work as copraceros. It was also in the exercise of the same
power that petitioner corporation put Gamo in charge of the copra workers although under a
different payment scheme. Thus, it is clear that an employer-employee relationship has existed
between petitioner corporation and respondents since the beginning and such relationship did not
cease despite their reassignments and the change of payment scheme.
To constitute abandonment, there must be clear proof of deliberate and unjustified intent
to sever the employer-employee relationship. Clearly, the operative act is still the employees
ultimate act of putting an end to his employment.[29] However, an employee who takes steps to
protest her layoff cannot be said to have abandoned her work because a charge of abandonment
is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so
when it includes a prayer for reinstatement.[30] When Eleonor filed the illegal dismissal
complaint, it totally negated petitioners theory of abandonment.
Also, to effectively dismiss an employee for abandonment, the employer must comply with the
due process requirement of sending notices to the employee.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals

is AFFIRMED. Cost against petitioner.

SO ORDERED.
DY KEH BENG, Petitioner, v. INTERNATIONAL LABOR and MARINE UNION OF
THE PHILIPPINES, ET. AL., Respondents.

A. M. Sikat for Petitioner.

D. A. Hernandez for Respondents.

The facts as found by the Hearing Examiner are as follows:chanrob1es virtual 1aw library

A charge of unfair labor practice was filed against Dy KehBeng, proprietor of a basket factory,
for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4), Republic
Act No. 875, 3 by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and
Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case
was filed in the Court of Industrial Relations for in behalf of the International Labor and Marine
Union of the Philippines and two of its members, Solano and Tudla. In his answer, Dy KehBeng
contended that he did not know Tudla and that Solano was not his employee because the latter
came to the establishment only when there was work which he did on pakiaw basis, each piece of
work being done under a separate contract. Moreover, Dy KehBeng countered with a special
defense of simple extortion committed by the head of the labor union,
BienvenidoOnayan.chanrobles virtual lawlibrary

After trial, the Hearing Examiner prepared a report which was subsequently adopted in toto by
the Court of Industrial Relations. An employee-employer relationship was found to have existed
between Dy KehBeng and complainants Tudla and Solano, although Solano was admitted to
have worked on piece basis.

According to Dy KehBeng, however, Solano was not his employee for the following
reasons:jgc:chanrobles.com.ph

"(1) Solano never stayed long enough at Dy’s establishment;

(2) Solano had to leave as soon as he was through with the order given him by Dy;

(3) When there were no orders needing his services there was nothing for him to do;

(4) When orders came to the shop that his regular workers could not fill, it was then that Dy went
to his address in Caloocan and fetched him for these orders; and

(5) Solano’s work with Dy’s establishment was not continuous." 7

According to petitioner, these facts show that respondents Solano and Tudla are only piece
workers, not employees under Republic Act 875, where an employee 8 is referred to as
"shall include any employee and shall not be limited to the employee of a particular employer
unless the Act explicitly states otherwise and shall include any individual whose work has ceased
as a consequence of, or in connection with any current labor dispute or because of any unfair
labor practice and who has not obtained any other substantially equivalent and regular
employment."cralaw virtua1aw library

while an employer 9

"includes any person acting in the interest of an employer, directly or indirectly but shall not
include any labor organization (otherwise than when acting as an employer) or anyone acting in
the capacity of officer or agent of such labor organization."cralaw virtua1aw library

Petitioner really anchors his contention of the non-existence of employee-employer relationship

on the control test. Petitioner contends that the private respondents "did not meet the control test
in the light of the . . . definition of the terms employer and employee, because there was no
evidence to show that petitioner had the right to direct the manner and method of respondent’s
work." 10 Moreover, it is argued that petitioner’s evidence showed that "Solano worked on a
pakiaw basis" and that he stayed in the establishment only when there was work.

Issue: whether there existed an employee employer relation between petitioner Dy KehBeng and
the respondents Solano and Tudla.

Ruling: yes. Considering the finding by the Hearing Examiner that the establishment of Dy
KehBeng is "engaged in the manufacture of baskets known as kaing, 13 it is natural to expect
that those working under Dy would have to observe, among others, Dy’s requirements of size
and quality of the kaing. Some control would necessarily be exercised by Dy as the making of
the kaing would be subject to Dy’s specifications. Parenthetically, since the work on the baskets
is done at Dy’s establishments, it can be inferred that the proprietor Dy could easily exercise
control on the men he employed.

As to the contention that Solano was not an employee because he worked on piece basis, this
Court agrees with the Hearing Examiner that

"circumstances must be construed to determine indeed if payment by the piece is just a method
of compensation and does not define the essence of the relation
[G.R. No. 129315. October 2, 2000]

OSIAS I. CORPORAL, SR., PEDRO TOLENTINO, MANUEL CAPARAS, ELPIDIO

LACAP, SIMPLICIO PEDELOS, PATRICIA NAS, and TERESITA
FLORES, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LAO
ENTENG COMPANY, INC. and/or TRINIDAD LAO ONG, respondents.

The records of the case show that the five male petitioners, namely, Osias I. Corporal, Sr.,
Pedro Tolentino, Manuel Caparas, Elpidio Lacap, and SimplicioPedelos worked as barbers,
while the two female petitioners, Teresita Flores and Patricia Nas worked as manicurists in New
Look Barber Shop located at 651 P. Paterno Street, Quiapo, Manila owned by private respondent
Lao Enteng Co. Inc.. Petitioner Nas alleged that she also worked as watcher and marketer of
private respondent.
Petitioners claim that at the start of their employment with the New Look Barber Shop, it
was a single proprietorship owned and managed by Mr. Vicente Lao. In or about January 1982,
the children of Vicente Lao organized a corporation which was registered with the Securities and
Exchange Commission as Lao Enteng Co. Inc. with Trinidad Ong as President of the said
corporation. Upon its incorporation, the respondent company took over the assets, equipment,
and properties of the New Look Barber Shop and continued the business. All the petitioners were
allowed to continue working with the new company until April 15, 1995 when respondent
Trinidad Ong informed them that the building wherein the New Look Barber Shop was located
had been sold and that their services were no longer needed.[2]
On April 28, 1995, petitioners filed with the Arbitration Branch of the NLRC, a complaint for
illegal dismissal, illegal deduction, separation pay, non-payment of 13th month pay, and
salary differentials.
Private respondent in its position paper averred that the petitioners were joint venture
partners and were receiving fifty percent commission of the amount charged to customers. Thus,
there was no employer-employee relationship between them and petitioners. And
assuming arguendo, that there was an employer-employee relationship, still petitioners are not
entitled to separation pay because the cessation of operations of the barber shop was due to
serious business losses.
Labor Arbiter Potenciano S. Caizares, Jr. ordered the dismissal of the complaint on the basis
of his findings that the complainants and the respondents were engaged in a joint venture and
that there existed no employer-employee relation between them. The Labor Arbiter also found
that the barber shop was closed due to serious business losses or financial reverses and
consequently declared that the law does not compel the establishment to pay separation pay to
whoever were its employees.[4]
On appeal, NLRC affirmed the said findings of the Labor Arbiter and dismissed the complaint
for want of merit.
. They contend that they were employees of the respondent company and cannot be
considered as independent contractors because they did not carry on an independent
business. They did not cut hair, manicure, and do their work in their own manner and
method. They insist they were not free from the control and direction of private respondents in
all matters, and their services were engaged by the respondent company to attend to its customers
in its barber shop. Petitioners also stated that, individually or collectively, they do not have
substantial capital nor investments in tools, equipments, work premises and other materials
necessary in the conduct of the barber shop. What the barbers owned were merely combs,
scissors, and razors, while the manicurists owned only nail cutters, nail polishes, nippers and
cuticle removers. By no standard can these be considered "substantial capital" necessary to
operate a barbers shop.

Issue: whether or not an employer-employee relationship existed between petitioners and private
respondent Lao Enteng Company, Inc.
Ruling: yes. The following elements must be present for an employer-employee relationship to
exist: (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. Records of the case show
that the late Vicente Lao engaged the services of the petitioners to work as barbers and
manicurists in the New Look Barber Shop, then a single proprietorship owned by him;
that in January 1982, his children organized a corporation which they registered with the
Securities and Exchange Commission as Lao Enteng Company, Inc.; that upon its
incorporation, it took over the assets, equipment, and properties of the New Look Barber
Shop and continued the business; that the respondent company retained the services of all
the petitioners and continuously paid their wages. Clearly, all three elements exist in
petitioners' and private respondent's working arrangements.
As to the "control test", the following facts indubitably reveal that respondent company
wielded control over the work performance of petitioners, in that: (1) they worked in the barber
shop owned and operated by the respondents; (2) they were required to report daily and observe
definite hours of work; (3) they were not free to accept other employment elsewhere but devoted
their full time working in the New Look Barber Shop for all the fifteen (15) years they have
worked until April 15, 1995; (4) that some have worked with respondents as early as in the
1960's; (5) that petitioner Patricia Nas was instructed by the respondents to watch the other six
(6) petitioners in their daily task. Certainly, respondent company was clothed with the power to
dismiss any or all of them for just and valid cause. Petitioners were unarguably performing work
necessary and desirable in the business of the respondent company.
IN VIEW WHEREOF, the petition is GRANTED.
[G.R. No. 120969. January 22, 1998]

ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners, vs. NATIONAL

LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of
Presiding Commissioner RAUL T. AQUINO, Commissioner ROGELIO I.
RAYALA and Commissioner VICTORIANO R. CALAYCAY (Ponente), VIC DEL
ROSARIO and VIVA FILMS, respondents.
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents
on 18 July 1989 as part of the filming crew with a salary of P375.00 per week. About months
later, he was designated as Electrician. Petitioners tasks consisted of loading, unloading and
arranging movie equipment in the shooting area as instructed by the cameraman, returning the
equipment to Viva Films warehouse, assisting in the fixing of the lighting system, and
performing other tasks that the cameraman and/or director may assign.[4]
Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria
Cesario, to facilitate their request that private respondents adjust their salary in accordance with
the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del
Rosario would agree to increase their salary only if they signed a blank employment contract.As
petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then
refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot
was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June
1992. He was again asked to sign a blank employment contract, and when he still refused,
private respondents terminated his services on 20 July 1992.[5] Petitioners thus sued for illegal
dismissal[6] before the Labor Arbiter.
Private respondents further contend that it was the associate producer of the
film MahirapMagingPogi, who hired petitioner Maraguinot. The movie shot from 2 July
up to 22 July 1992, and it was only then that Maraguinot was released upon payment of
his last salary, as his services were no longer needed. Anent petitioner Enero, he was
hired for the movie entitled Sigaw ng Puso, later re-titled Narito ang Puso. He went on
vacation on 8 June 1992, and by the time he reported for work on 20 July 1992, shooting
for the movie had already been completed.
Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:

WHEREFORE, judgment is hereby rendered declaring that complainants were illegally

dismissed.

The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken
together, indicated that complainants (herein petitioners) were project employees.
Issue: NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in: (1) finding that petitioners were project employees; (2) ruling that petitioners
were not illegally dismissed; and (3) reversing the decision of the Labor Arbiter.
Ruling: The employer-employee relationship between petitioners and VIVA can further be
established by the control test. While four elements are usually considered in determining the
existence of an employment relationship, namely: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to
control the employees conduct, the most important element is the employers control of the
employees conduct, not only as to the result of the work to be done but also as to the means and
methods to accomplish the same.[27] These four elements are present here. In their position paper
submitted to the Labor Arbiter, private respondents narrated the following circumstances:

[T]he PRODUCER has to work within the limits of the budget he is given by the company, for
as long as the ultimate finish[ed] product is acceptable to the company...

To ensure that quality films are produced by the PRODUCER who is an independent contractor,
the company likewise employs a Supervising PRODUCER, a Project accountant and a Shooting
unit supervisor. The Companys Supervising PRODUCER is Mr. Eric Cuatico, the Project
accountant varies from time to time, and the Shooting Unit Supervisor is Ms. Alejandria Cesario.

The Supervising PRODUCER acts as the eyes and ears of the company and of the Executive
Producer to monitor the progress of the PRODUCERs work accomplishment. He is there usually
in the field doing the rounds of inspection to see if there is any problem that the PRODUCER is
encountering and to assist in threshing out the same so that the film project will be finished on
schedule. He supervises about 3 to 7 movie projects simultaneously [at] any given time by
coordinating with each film PRODUCER. The Project Accountant on the other hand assists the
PRODUCER in monitoring the actual expenses incurred because the company wants to insure
that any additional budget requested by the PRODUCER is really justified and warranted
especially when there is a change of original plans to suit the tast[e] of the company on how a
certain scene must be presented to make the film more interesting and more commercially viable.
(emphasis ours)

VIVAs control is evident in its mandate that the end result must be a quality film acceptable
to the company. The means and methods to accomplish the result are likewise controlled by
VIVA, viz., the movie project must be finished within schedule without exceeding the budget,
and additional expenses must be justified; certain scenes are subject to change to suit the taste of
the company; and the Supervising Producer, the eyes and ears of VIVA and del Rosario,
intervenes in the movie-making process by assisting the associate producer in solving problems
encountered in making the film.
It may not be validly argued then that petitioners are actually subject to the movie directors
control, and not VIVAs direction. The director merely instructs petitioners on how to better
comply with VIVAs requirements to ensure that a quality film is completed within schedule and
without exceeding the budget. At bottom, the director is akin to a supervisor who merely
oversees the activities of rank-and-file employees with control ultimately resting on the
employer.
Moreover, appointment slips [28] issued to all crew members state:

During the term of this appointment you shall comply with the duties and responsibilities of your
position as well as observe the rules and regulations promulgated by your superiors and by Top
Management.
 The words superiors and Top Management can only refer to the superiors and Top
Management of VIVA. By commanding crew members to observe the rules and regulations
promulgated by VIVA, the appointment slips only emphasize VIVAs control over petitioners.
Aside from control, the element of selection and engagement is likewise present in the instant
case and exercised by VIVA. Notably, nowhere in the appointment slip does it appear
that it was the producer or associate producer who hired the crew members; moreover, it
is VIVAs corporate name which appears on the heading of the appointment slip. What
likewise tells against VIVA is that it paid petitioners salaries as evidenced by vouchers,
containing VIVAs letterhead, for that purpose.
WHEREFORE, the instant petition is GRANTED.
G.R. No. 177664 December 23, 2009

CRC AGRICULTURAL TRADING and ROLANDO B. CATINDIG, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO OBIAS, Respondents.

the respondent alleged that the petitioners employed him as a driver sometime in 1985. The
respondent worked for the petitioners until he met an accident in 1989, after which the
petitioners no longer allowed him to work. After six years, or in February 1995, the petitioners
again hired the respondent as a driver and offered him to stay inside the company’s premises.
The petitioners gave him a ₱3,000.00 loan to help him build a hut for his family.

Sometime in March 2003, the petitioners ordered respondent to have the alternator of one of its
vehicles repaired. The respondent brought the vehicle to a repair shop and subsequently gave the
petitioners two receipts issued by the repair shop. The latter suspected that the receipts were
falsified and stopped talking to him and giving him work assignments. The petitioners, however,
still paid him ₱700.00 and ₱500.00 on April 15 and 30, 2004, respectively, but no longer gave
him any salary after that. As a result, the respondent and his family moved out of the petitioners’
compound and relocated to a nearby place. The respondent claimed that the petitioners paid him
a daily wage of ₱175.00, but did not give him service incentive leave, holiday pay, rest day pay,
and overtime pay. He also alleged that the petitioners did not send him a notice of termination.

In opposing the complaint, the petitioners claimed that the respondent was a seasonal driver; his
work was irregular and was not fixed. The petitioners paid the respondent ₱175.00 daily,
but under a "no work no pay" basis. The petitioners also gave him a daily allowance of
₱140.00 to ₱200.00. In April 2003, the respondent worked only for 15 days for which he
was paid the agreed wages. The petitioners maintained that they did not anymore engage
the respondent’s services after April 2003, as they had already lost trust and confidence
in him after discovering that he had forged receipts for the vehicle parts he bought for
them. Since then, the respondent had been working as a driver for different jeepney
operators.

Labor Arbiter Rennell Joseph R. Dela Cruz, in his decision of April 15, 2005, ruled in the
respondent’s favor declaring that he had been illegally dismissed. The labor arbiter held that as a
regular employee, the respondent’s services could only be terminated after the observance of due
process. The NLRC, in its resolution of August 15, 2006,9 modified the labor arbiter’s decision.
The NLRC ruled that the respondent was not illegally dismissed and deleted the labor arbiter’s
award of backwages and attorney’s fees. The NLRC reasoned out that it was respondent himself
who decided to move his family out of the petitioners’ lot; hence, no illegal dismissal occurred.
Moreover, the respondent could not claim wages for the days he did not work, as he was
employed by the petitioners under a "no work no pay" scheme.

Ruling: THE COURT’S RULING

We do not find the petition meritorious.

The existence of an employer-employee relationship

A paramount issue that needs to be resolved before we rule on the main issue of illegal dismissal
is whether there existed an employer-employee relationship between the petitioners and the
respondent. This determination has been rendered imperative by the petitioners’ denial of the
existence of employer-employee relationship on the reasoning that they only called on the
respondent when needed.

The elements to determine the existence of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
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. All the four elements are present in this
case.10

First, the petitioners engaged the services of the respondent in 1995. Second, the petitioners paid
the respondent a daily wage of ₱175.00, with allowances ranging from ₱140.00 to ₱200.00 per
day. The fact the respondent was paid under a "no work no pay" scheme, assuming this claim to
be true, is not significant. The "no work no pay" scheme is merely a method of computing
compensation, not a basis for determining the existence or absence of employer-employee
relationship. Third, the petitioners’ power to dismiss the respondent was inherent in the fact that
they engaged the services of the respondent as a driver. Finally, a careful review of the record
shows that the respondent performed his work as driver under the petitioners’ supervision and
control. Petitioners determined how, where, and when the respondent performed his task. They,
in fact, requested the respondent to live inside their compound so he (respondent) could be
readily available when the petitioners needed his services. Undoubtedly, the petitioners exercised
control over the means and methods by which the respondent accomplished his work as a driver.

We conclude from all these that an employer-employee relationship existed between the
petitioners and respondent.

WHEREFORE, premises considered, we hereby DENY the petition.

G.R. No. 138051. June 10, 2004]

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

CORPORATION, respondent.
In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an
Agreement (Agreement) with the Mel and Jay Management and Development Corporation
(MJMDC). Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs
services exclusively to ABS-CBN as talent for radio and television. On 1 April 1996, SONZA
wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads:

Dear Mr. Lopez,

We would like to call your attention to the Agreement dated May 1994 entered into by your
goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA.

As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his
programs and career. We consider these acts of the station violative of the Agreement and the
station as in breach thereof. In this connection, we hereby serve notice of rescission of said
Agreement at our instance effective as of date.

Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount
stipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the other
benefits under said Agreement.

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.
LA, NLRC and CA - that no employer-employee relationship existed between SONZA and ABS-CBN.

Adopting the NLRCs decision, the appellate court quoted the following findings of the
NLRC:

x xx 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.

Issue: THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISION AND REFUSING TO
FIND THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE
THE WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING

Ruling: A. Selection and Engagement of Employee

ABS-CBN engaged SONZAs services to co-host its television and radio programs because
of SONZAs peculiar skills, talent and celebrity status. SONZA contends that the discretion used
by respondent in specifically selecting and hiring complainant over other broadcasters of
possibly similar experience and qualification as complainant belies respondents claim of
independent contractorship.
Independent contractors often present themselves to possess unique skills, expertise or talent
to distinguish them from ordinary employees. The specific selection and hiring of
SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary
employees, is a circumstance indicative, but not conclusive, of an independent contractual
relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN
would not have entered into the Agreement with SONZA but would have hired him through its
personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine
his status. We must consider all the circumstances of the relationship, with the control test being
the most important element.

B. Payment of Wages

ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to
MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of ABS-
CBN. SONZA also points out that ABS-CBN granted him benefits and privileges which he
would not have enjoyed if he were truly the subject of a valid job contract.
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to
stipulate on benefits such as SSS, Medicare, x xx and 13th month pay[20] which the law
automatically incorporates into every employer-employee contract.[21] Whatever benefits
SONZA enjoyed arose from contract and not because of an employer-employee relationship.[22]
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so
huge and out of the ordinary that they indicate more an independent contractual relationship
rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge
talent fees precisely because of SONZAs unique skills, talent and celebrity status not possessed
by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining power to
demand and receive such huge talent fees for his services. The power to bargain talent fees way
above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of
an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status
of SONZA as an independent contractor. The parties expressly agreed on such mode of
payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would
have to turn over any talent fee accruing under the Agreement.

C. Power of Dismissal

For violation of any provision of the Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-CBN could terminate his services on grounds
other than breach of contract, such as retrenchment to prevent losses as provided under labor
laws.[23]
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as
AGENT and Jay Sonza shall faithfully and completely perform each condition of this
Agreement.[24] Even if it suffered severe business losses, ABS-CBN could not retrench SONZA
because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the
Agreement. This circumstance indicates an independent contractual relationship between
SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still
paid him his talent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement to
continue paying SONZAs talent fees during the remaining life of the Agreement even if ABS-
CBN cancelled SONZAs programs through no fault of SONZA.[25]
SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement as an
admission that he is not an employee of ABS-CBN. The Labor Arbiter stated that if it were true
that complainant was really an employee, he would merely resign, instead. SONZA did actually
resign from ABS-CBN but he also, as president of MJMDC, rescinded the Agreement.SONZAs
letter clearly bears this out.[26] However, the manner by which SONZA terminated his
relationship with ABS-CBN is immaterial. Whether SONZA rescinded the Agreement or
resigned from work does not determine his status as employee or independent contractor.
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.
 SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-
host the Mel & Jay programs. ABS-CBN did not assign any other work to SONZA. 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-CBNs 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 SONZAs 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.
We find that ABS-CBN was not involved in the actual performance that produced the
finished product of SONZAs work.[33] ABS-CBN did not instruct SONZA how to perform his
job.ABS-CBN merely reserved the right to modify the program format and airtime schedule for
more effective programming.[34] ABS-CBNs sole concern was the quality of the shows and their
standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods
of performance of SONZAs work.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power
over the means and methods of the performance of his work. Although ABS-CBN did have the
option not to broadcast SONZAs show, ABS-CBN was still obligated to pay SONZAs talent
fees. Thus, even if ABS-CBN was completely dissatisfied with the means and methods of
SONZAs performance of his work, or even with the quality or product of his work, ABS-CBN
could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast
SONZAs show but ABS-CBN must still pay his talent fees in full.[35]
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the
obligation to continue paying in full SONZAs talent fees, did not amount to control over the
means and methods of the performance of SONZAs 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-CBNs approval. This proves that ABS-
CBNs control was limited only to the result of SONZAs work, whether to broadcast the final
product or not. In either case, ABS-CBN must still pay SONZAs 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-CBNs sole
concern was for SONZA to display his talent during the airing of the programs.[39]
A radio broadcast specialist who works under minimal supervision is an independent
contractor.[40] SONZAs work as television and radio program host required special skills and
talent, which SONZA admittedly possesses. The records do not show that ABS-CBN exercised
any supervision and control over how SONZA utilized his skills and talent in his shows.
 Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN
subjected him to its rules and standards of performance. SONZA claims that this indicates ABS-
CBNs 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 saPilipinas (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.
In any event, not all rules imposed by the hiring party on the hired party indicate that the
latter is an employee of the former.[43] In this case, SONZA failed to show that these rules
controlled his performance. We find that these general rules are merely guidelines towards the
achievement of the mutually desired result, which are top-rating television and radio programs
that comply with standards of the industry. We have ruled that:

Further, not every form of control that a party reserves to himself over the conduct of the other
party in relation to the services being rendered may be accorded the effect of establishing an
employer-employee relationship. The facts of this case fall squarely with the case of Insular Life
Assurance Co., Ltd. vs. NLRC. In said case, we held that:

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.[44]

The Vaughan case also held that one could still be an independent contractor although the
hirer reserved certain supervision to insure the attainment of the desired result. The hirer,
however, must not deprive the one hired from performing his services according to his own
initiative.[45]
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.
The hiring of exclusive talents is a widespread and accepted practice in the entertainment
industry.[46] This practice is not designed to control the means and methods of work of the talent,
but simply to protect the investment of the broadcast station. The broadcast station normally
spends substantial amounts of money, time and effort in building up its talents as well as the
programs they appear in and thus expects that said talents remain exclusive with the station for a
commensurate period of time.[47] Normally, a much higher fee is paid to talents who agree to
work exclusively for a particular radio or television station. In short, the huge talent fees partially
compensates for exclusivity, as in the present case.
WHEREFORE, we DENY the petition.
ABS-CBN BROADCASTING G.R. No. 164156
CORPORATION,
Petitioner, Present

PANGANIBAN, C.J., Chairperson,

YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
MARLYN NAZARENO, Promulgated:
MERLOU GERZON,
JENNIFER DEIPARINE,
and JOSEPHINE LERASAN,
Respondents. September 26, 2006

Petitioner Abs-Cbn 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.

On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed
a Collective Bargaining Agreement (CBA) to be effective during the period from December 11,
1996 to December 11, 1999. However, since petitioner refused to recognize PAs as part of the
bargaining unit, respondents were not included to the CBA.[6]

On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum informing the PAs
that effective August 1, 2000, they would be assigned to non-drama programs, and that the
DYAB studio operations would be handled by the studio technician

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.

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.

For its part, petitioner alleged in its position paper that the respondents were PAs who basically
assist in the conduct of a particular program ran by an anchor or talent.Among their duties
include monitoring and receiving incoming calls from listeners and field reporters and calls of
news sources; generally, they perform leg work for the anchors during a program or a particular
production. They are 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

, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were
regular employees of petitioner; as such, they were awarded monetary benefits. The NLRC ruled
that respondents were entitled to the benefits under the CBA because they were regular
employees who contributed to the profits of petitioner through their labor

Anent the substantive issues, 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.

Ruling:

It is of no moment that petitioner hired respondents as talents. The fact that respondents
received pre-agreed talent fees instead of salaries, that they did not observe the required office
hours, and that they were permitted to join other productions during their free time are not
conclusive of the nature of their employment. Respondents cannot be considered talents because
they are not actors or actresses or radio specialists or mere clerks or utility employees. They are
regular employees who perform several different duties under the control and direction of ABS-
CBN executives and supervisors.

Thus, there are two kinds of regular employees under the law: (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer; and
(2) those casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are employed.

Additionally, respondents cannot be considered as project or program employees because

no evidence was presented to show that the duration and scope of the project were determined or
specified at the time of their engagement. Under existing jurisprudence, project could refer to
two distinguishable types of activities. First, a project may refer to a particular job or
undertaking that is within the regular or usual business of the employer, but which is distinct and
separate, and identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. Second, the term project may
also refer to a particular job or undertaking that is not within the regular business of the
employer. Such a job or undertaking must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer. The job or undertaking also begins and
ends at determined or determinable times.[38]

The principal test is whether or not the project employees were assigned to carry out a
specific project or undertaking, the duration and scope of which were specified at the time the
employees were engaged for that project.[39]
In this case, it is undisputed that respondents had continuously performed the same activities for
an average of five years. Their assigned tasks are necessary or desirable in the usual business or
trade of the petitioner. The persisting need for their services is sufficient evidence of the
necessity and indispensability of such services to petitioners business or trade.[40] While length of
time may not be a sole controlling test for project employment, it can be a strong factor to
determine whether the employee was hired for a specific undertaking or in fact tasked to perform
functions which are vital, necessary and indispensable to the usual trade or business of the
employer.[41] We note further that petitioner did not report the termination of respondents
employment in the particular project to the Department of Labor and Employment Regional
Office having jurisdiction over the workplace within 30 days following the date of their
separation from work, using the prescribed form on employees termination/
dismissals/suspensions.

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 petitioners
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.

The presumption is that when the work done is an integral part of the regular business
of the employer and when the worker, relative to the employer, does not furnish an
independent business or professional service, such work is a regular employment of such
employee and not an independent contractor.[45] The Court will peruse beyond any such
agreement to examine the facts that typify the parties actual relationship.[46]

It follows then that respondents are entitled to the benefits provided for in the existing
CBA between petitioner and its rank-and-file employees. As regular employees, respondents are
entitled to the benefits granted to all other regular employees of petitioner under the CBA.[47] We
quote with approval the ruling of the appellate court, that the reason why production assistants
were excluded from the CBA is precisely because they were erroneously classified and treated as
project employees by petitioner:
 x xx The award in favor of private respondents of the benefits accorded to
rank-and-file employees of ABS-CBN under the 1996-1999 CBA is a necessary
consequence of public respondents ruling that private respondents as production
assistants of petitioner are regular employees. The monetary award is not
considered as claims involving the interpretation or implementation of the
collective bargaining agreement. The reason why production assistants were
excluded from the said agreement is precisely because they were classified and
treated as project employees by petitioner.

As earlier stated, it is not the will or word of the employer which

determines the nature of employment of an employee but the nature of the
activities performed by such employee in relation to the particular business or
trade of the employer. Considering that We have clearly found that private
respondents are regular employees of petitioner, their exclusion from the said
CBA on the misplaced belief of the parties to the said agreement that they are
project employees, is therefore not proper. Finding said private respondents as
regular employees and not as mere project employees, they must be accorded the
benefits due under the said Collective Bargaining Agreement.

A collective bargaining agreement is a contract entered into by the union

representing the employees and the employer. However, even the non-member
employees are entitled to the benefits of the contract. To accord its benefits only
to members of the union without any valid reason would constitute undue
discrimination against non-members. A collective bargaining agreement is
binding on all employees of the company. Therefore, whatever benefits are given
to the other employees of ABS-CBN must likewise be accorded to private
respondents who were regular employees of petitioner.[48]

Besides, only talent-artists were excluded from the CBA and not production assistants
who are regular employees of the respondents. Moreover, under Article 1702 of the New Civil
Code: In case of doubt, all labor legislation and all labor contracts shall be construed in favor of
the safety and decent living of the laborer.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
G.R. No. 146881 February 5, 2007

COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager, Petitioners,

vs.
DR. DEAN N. CLIMACO, Respondent.

Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola
Bottlers Phils., Inc. by virtue of a Retainer Agreement . The Retainer Agreement, which began
on January 1, 1988, was renewed annually. The last one expired on December 31, 1993. Despite
the non-renewal of the Retainer Agreement, respondent continued to perform his functions as
company doctor to Coca-Cola until he received a letter4 dated March 9, 1995 from petitioner
company concluding their retainership agreement effective 30 days from receipt thereof.

It is noted that as early as September 1992, petitioner was already making inquiries regarding his
status with petitioner company. , Petitioner company, however, did not take any action Labor
Arbiter Jesus N. Rodriguez, Jr. found that petitioner company lacked the power of control over
respondent’s performance of his duties, and recognized as valid the Retainer Agreement between
the parties. Thus, the Labor Arbiter dismissed respondent’s complaint . the NLRC dismissed the
appeal in both cases for lack of merit. It declared that no employer-employee relationship existed
between petitioner company and respondent based on the provisions of the Retainer Agreement
which contract governed respondent’s employment.

Issue:whether or not there exists an employer-employee relationship between the parties. No.

Ruling: The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of
this case show that no employer-employee relationship exists between the parties. The Labor Arbiter
and the NLRC correctly found that petitioner company lacked the power of control over the
performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical
Plan, which contains the respondent’s objectives, duties and obligations, does not tell respondent "how
to conduct his physical examination, how to immunize, or how to diagnose and treat his patients,
employees of [petitioner] company, in each case."

The Labor Arbiter also correctly found that the provision in the Retainer Agreement that
respondent was on call during emergency cases did not make him a regular employee. He
explained, thus:

Likewise, the allegation of complainant that since he is on call at anytime of the day and night
makes him a regular employee is off-tangent. Complainant does not dispute the fact that outside
of the two (2) hours that he is required to be at respondent company’s premises, he is not at all
further required to just sit around in the premises and wait for an emergency to occur so as to
enable him from using such hours for his own benefit and advantage. In fact, complainant
maintains his own private clinic attending to his private practice in the city, where he services his
patients, bills them accordingly -- and if it is an employee of respondent company who is
attended to by him for special treatment that needs hospitalization or operation, this is subject to
a special billing. More often than not, an employee is required to stay in the employer’s
workplace or proximately close thereto that he cannot utilize his time effectively and gainfully
for his own purpose. Such is not the prevailing situation here.1awphi1.net

In addition, the Court finds that the schedule of work and the requirement to be on call for
emergency cases do not amount to such control, but are necessary incidents to the Retainership
Agreement.

The Court also notes that the Retainership Agreement granted to both parties the power to
terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not
wield the sole power of dismissal or termination.

The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the
employment of respondent as a retained physician of petitioner company and upholds the
validity of the Retainership Agreement which clearly stated that no employer-employee
relationship existed between the parties. The Agreement also stated that it was only for a period
of 1 year beginning January 1, 1988 to December 31, 1998, but it was renewed on a yearly basis.

Considering that there is no employer-employee relationship between the parties, the termination of
the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not
constitute illegal dismissal of respondent.

WHEREFORE, the petition is GRANTED

WPP MARKETING COMMUNICATIONS, INC.,
JOHN STEEDMAN,
MARK WEBSTER, and
NOMINADA LANSANG,
Petitioners,

- versus -

JOCELYN M. GALERA,
Respondent.

Petitioner is Jocelyn Galera (GALERA), a [sic] American citizen who was

recruited from the United States of America by private respondent
John Steedman, Chairman-WPP a corporation based in Hong Kong, China, to
work in the Philippines for private respondent WPP Marketing Communications,
Inc. (WPP), a corporation registered and operating under the laws of
Philippines. GALERA accepted the offer and she signed an Employment
Contract. Four months had passed when private respondent WPP filed before the
Bureau of Immigration an application for petitioner GALERA to receive a
working visa, wherein she was designated as Vice President of WPP. Petitioner
alleged that she was constrained to sign the application in order that she could
remain in the Philippines and retain her employment.

Then, on December 14, 2000, petitioner GALERA alleged she was verbally notified by private
respondent STEEDMAN that her services had been terminated from private respondent WPP. A
termination letter followed the next day

, Galera filed a complaint for illegal dismissal against WPP.

LA – PR liable for illegal dismissal. NLRC reversed. CA- reinstated LA.

An examination of WPPs by-laws resulted in a finding that Galeras appointment as a corporate

officer (Vice-President with the operational title of Managing Director of Mindshare) during a
special meeting of WPPs Board of Directors is an appointment to a non-existent corporate
office. WPPs by-laws provided for only one Vice-President. At the time of Galeras appointment
on 31 December 1999, WPP already had one Vice-President in the person of
Webster. Galera cannot be said to be a director of WPP also because all five directorship
positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its
Amended By-Laws to support its argument that Galera is a corporate officer. The Amended By-
Laws provided for more than one Vice-President and for two additional directors. Even
though WPPs stockholders voted for the amendment on 31 May 2000, the SEC approved the
amendments only on 16 February 2001. Galera was dismissed on 14 December
2000. WPP, Steedman, Webster, and Lansang did not present any evidence
that Galeras dismissal took effect with the action of WPPs Board of Directors.

The appellate court further justified that Galera was an employee and not a corporate officer by
subjecting WPP and Galeras relationship to the four-fold test: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employee with respect to the means and methods by which the work is to be
accomplished. The appellate court found:

x x x Sections 1 and 4 of the employment contract mandate where and how often
she is to perform her work; sections 3, 5, 6 and 7 show that wages she receives are
completely controlled by xx x WPP; and sections 10 and 11 clearly state that she
is subject to the regular disciplinary procedures of x x x WPP.

Another indicator that she was a regular employee and not a corporate officer is
Section 14 of the contract, which clearly states that she is a permanent
employee not a Vice-President or a member of the Board of Directors.

xxxx

Another indication that the Employment Contract was one of regular employment
is Section 12, which states that the rights to any invention,
discovery, improvement in procedure, trademark, or copyright created or
discovered by petitioner GALERA during her employment shall automatically
belong to private respondent WPP. Under Republic Act 8293, also known as the
Intellectual Property Code, this condition prevails if the creator of the work
subject to the laws of patent or copyright is an employee of the one entitled to the
patent or copyright.

Another convincing indication that she was only a regular employee and not a
corporate officer is the disciplinary procedure under Sections 10 and 11 of the
Employment Contract, which states that her right of redress is
through Mindshares Chief Executive Officer for the Asia-Pacific. This implies
that she was not under the disciplinary control of private respondent WPPs Board
of Directors (BOD), which should have been the case if in fact she was a
corporate officer because only the Board of Directors could appoint and terminate
such a corporate officer.

Although petitioner GALERA did sign the Alien Employment Permit from the
Department of Labor and Employment and the application for a 9(g) visa with the
Bureau of Immigration both of which stated that she was private respondents
WPP Vice President these should not be considered against
her. Assurming arguendo that her appointment as Vice-President was a valid act,
it must be noted that these appointments occurred afater she was hired as a regular
employee. After her appointments, there was no appreciable change in her
duties.[20]