WB

1. San Miguel Corporation vs Etcuban

❖ Reasonable Causal Connection Rule”; Under the “reasonable causal connection
rule,” if there is a reasonable causal connection between the claim asserted and
the employer-employee relations, then the case is within the jurisdiction of the
labor courts.
❖ Damages incurred by employees as a result of an alleged fraudulent
retrenchment program and the allegedly defective “contract of termination” are
merely the civil aspect of the injury brought about by their illegal dismissal, and
the civil ramifications of their actual claim cannot alter the reality that it is
primordially a labor matter and, as such, is cognizable by labor courts.
❖ If the consent of a contracting party is vitiated by fraud, the contract is not void
but, merely, voidable.

Facts:
San Miguel Corporation (SMC) informed its Mandaue City Brewery employees
that it was suffering from heavy losses and financial distress which could eventually
lead to its total closure. SMC offered its “Retrenchment to Prevent Loss Program” to its
employees. The offering of the retrenchment program was coupled with an unsolicited
advise from SMC that it would be in the best interest of the affected employees to avail
of the said program since, by doing so, they would be able to obtain their retrenchment
benefits and privileges with ease. SMC admonished its employees that their failure to
avail of the retrenchment program might lead to difficulty in following-up and obtaining
their separation pay from SMCʼs main office in Manila. After their inclusion in the
retrenchment program, respondents were given their termination letters and separation
pay. In return, respondents executed “receipt and release” documents in favor of SMC.
Sometime in May of 1986, respondents got hold of an SMC publication allegedly
revealing that SMC was never in financial distress during the time when they were being
retrenched but was, in fact, enjoying a growth in sales. Respondents filed a complaint
before the NLRC for the declaration of nullity of the retrenchment program. In their
complaint, respondents alleged that they were former regular employees of SMC who
were deceived into severing their employment due to SMCʼs concocted financial
distress story and fraudulent retrenchment program. Those who were retrenched in
1983, at the very latest, had only until 1987 to institute a complaint against SMC. The
records will show that all the above captioned cases were filed in 1988. Their cases
were dismissed, not because of lack of jurisdiction, but because their cause of action
already prescribed, the cases having been filed after the three-year prescriptive period.
the contract of termination which plaintiffs were allegedly induced to sign is not void
from the beginning. At most, such contract is voidable, plaintiffsʼ consent thereto being
allegedly vitiated by fraud and deceit. Defendant corporation inculcated into the minds
of defendants the worry of non-recovery of their benefits in the event defendant
corporation closes down, induced plaintiffs to accept the “offer of retrenchment.”
Thereupon, they were paid their so-called “separation pay.” defendant corporation never
suffered any business reverses or losses in its operation.”

When the consent of one of the contracting parties is vitiated by fraud or deceit,
the resulting contract is only voidable or annulable, not void or inexistent. A scrutiny of
 WB

the allegations of the present complaint reveals that plaintiffsʼ cause of action is not
actually based on an employer- employee relationship between the plaintiffs and the
defendants.

Issue:
Whether or not the contract of termination of services entered into by plaintiffs with
defendants is void from the beginning due to inexistent cause of action under Article
1409 of the Civil Code, places the case within the jurisdiction of the civil courts.

Ruling:
Jurisprudence has developed the “reasonable causal connection rule.” Under this rule, if
there is a reasonable causal connection between the claim asserted and the employer-
employee relations, then the case is within the jurisdiction of our labor courts. In the
absence of such nexus, it is the regular courts that have jurisdiction. Jurisprudence has
evolved the rule that claims for damages under paragraph 4 of Article 217, to be
cognizable by the Labor Arbiter, must have a reasonable causal connection with any of
the claims provided for in that article. Only if there is such a connection with the other
claims can the claim for the damages be considered as arising from employer-employee
relations. Illegally dismissed employee has only a single cause of action although the
act of dismissal may be a violation not only the Labor Code but also of the Civil Code.
The fact that SMC was never in financial distress does not, in any way, affect the cause
of their “contract of termination.” Rather, the fraudulent representations of SMC only
affected the consent of respondents in entering into the said contract. If the consent of a
contracting party is vitiated by fraud, the contract is not void but, merely, voidable.

WHEREFORE, premises considered, the Decision of the Court of Appeals dated 16

May 1996 and its Resolution dated 14 November 1996 are hereby REVERSED and
SET ASIDE and the Resolution dated 21 June 1994 of the Regional Trial Court of Cebu,
Branch 19, in CEB15310, REINSTATED.

2. Filipinas Broadcasting vs NLRC

❖ Employer-Employee Relationship; Elements to determine the existence of an
employer-employee relationship.—The following are generally considered in the
determination of the existence of an employer-employee relationship: (1) the
manner of selection and engagement, (2) the payment of wages, (3) the
presence or absence of the power of dismissal, and (4) the presence or absence
of the power of control; of these four, the last one is the most important.
❖ There could be no employer-employee relationship where the element of control
is absent.
❖ As a rule, factual findings of the NLRC are binding on this Court. However, when
the findings of the NLRC and the labor arbiter are contradictory, this Court may
review questions of fact.
 WB

Facts:
Complainant Simeon M. Mapa, Jr., had not been an employee of the respondent
DZRC Radio Station before February 16, 1992. He was but a volunteer reporter when
accommodated to air his report on the respondent radio station as his application for
employment with the respondent as field reporter had not been accepted yet or
approved before February, 1992. There was no employer-employee relations that
existed between the complainant and the respondent since March 11, 1990 until
February 16, 1992. The complainant (herein private respondent) began to work for the
respondent as a radio reporter starting March 11, 1990. On May 14, 1990, upon being
informed by then respondentʼs Station Manager, Mr. Plaridel Brocales, that
complainantʼs employment with respondent is being blocked by Ms. Brenda Bayona of
DZGB, complainantʼs previous employer, the said complainant took a leave of absence.
Again the complainant took a leave of absence because of his desperation over the
failure of respondent to make good its promise of payment of salaries. He was
reinstated on January 16, 1992 and resigned on February 27, 1992 when he decided to
run for an elective office in the town of Daraga, Albay. Unfortunately, the respondent
paid salary to the complainant only for the period from January 16, 1992 up to February
27, 1992. Respondent did not pay the complainant for all the services rendered by the
latter from March 11, 1990 up to January 16, 1992.” Mapa sought employment from
DZRC as a radio reporter. Taking pity on Mapa and pending the issuance of the
clearance from PBN-DZGB Legaspi, Mr. Larry Brocales granted the request of Mapa to
be accommodated only as a volunteer reporter of DZRC on a part-time basis. Mapa
advertised his sponsors and pocketed the payment of these sponsors for his advertising
services. Mapa resigned as a radio reporter in order to run for an elective office in the
May 1992 elections and was paid all his salaries and benefits for the period of his
employment commencing from January 16, 1992 until February 27, 1992; Labor Arbiter
Emeterio Ranola dismissed the complaint for lack of merit, finding that no employer-
employee relationship existed between Mapa and DZRC during the period March 11,
1990 to February 16, 1992. The NLRC subsequently denied petitionerʼs motion for
reconsideration 11 on November 9, 1994. 12 Hence, this petition.

Issue:
Whether or not there is an employee-employer relationship? Whether or not Private
Respondent Was Not an Employee During the Period in Controversy?

Ruling:
Facts alleged by the private respondent and relied upon by the public respondent
do not prove an employer-employee relationship. Petitioner did not act on his
application for employment as a radio reporter because private respondent admittedly
failed to present a clearance from his former employer. Nevertheless, private
respondent “volunteered” his services, private respondent willingly acted as a volunteer
reporter, fully cognizant that he was not an employee and that he would not receive any
compensation directly from the petitioner, but only from his own advertising sponsors.
petitioner did not exercise the power to dismiss private respondent during the period in
question. Mapa Was Not Subject to Control of Petitioner.
 WB

The most crucial test—the control test—demonstrates all too clearly the absence of an
employer-employee relationship. No one at the DZRC had the power to regulate or
control private respondentʼs activities or inputs. Unlike the regular reporters, he was not
subject to any supervision by petitioner or its officials. Uncontroverted is the statement
that the private respondent was a regular employee from January 16, 1992 to February
28, 1992, for which period he received all employee benefits. But such period, it must
be stressed again, is not covered by private respondentʼs complaint.

In sum, the evidence, which Public Respondent NLRC relies upon, does not justify the
reversal of the labor arbiterʼs ruling which, in turn, we find amply supported by the
records. Clearly, private respondent was not an employee during the period in question.

WHEREFORE, the petition is hereby GRANTED and the assailed Decision and
Resolution are hereby SET ASIDE. The Order of the Labor Arbiter dated October 13,
1993 dismissing the case for lack of merit is hereby REINSTATED. No costs.

3. Insular Life Assurance Co. Urbanes, Jr. vs Secretary of Labor

and Employment
Facts:
(di ko mahanap sa escra, ito lang nakita ko http://www.lawphil.net/judjuris/juri1986/jan1986/
gr_49267_1986.html)

"On May 20, 1958, the (respondent) Unions went on strike and picketed the
offices of the Insular Life Building at Plaza Moraga". Thereafter. "the striking employees
decided to call off their strike and to report back to work on June 2, 1958". "It is not
denied that when the strikers reported for work on June 2, 1958, 63 members of the
Union were refused readmission because they had pending criminal charges". "On July
29, 1958, the CIR prosecutor filed a complaint for unfair labor practice against the
companies", naming in paragraph 6 thereof the 63 strikers not readmitted on June 2,
1958. It appears that, by August, 1958, 29 strikers had been readmitted, with only 34
strikers not re-admitted. Said the CIR:
Upon the termination of the investigations conducted by the respondents on those
included in Exhibit '15', at various dates in the months of June, July and August,
1958, twenty seven (27) of the employees mentioned in paragraph 6 of the
complaint and three (3) employees who were not included as complainants in this
case (Francisco Baltazar, Castor Reyes and Alfredo Velmonte) were
readmitted upon showing to the satisfaction of respondents that they did not commit
unlawful acts during the strike.
When practically all the strikers had secured clearances from the fiscal's office, the
Companies readmitted only some but adamantly refused re-admission to 34 officials
and members of the Unions who were most active in the strike, on the ground that they
committed 'acts inimical to the interest of the respondent's, without however stating the
specific acts allegedly committed. this court said, in respect of back wages from June 2,
 WB

1958, that the "Court considers the fixing and limitation of the backwages award to their
total equivalent of three years without qualification and deduction as applicable to and
fully justified in the case at bar." In proceedings for the implementation of the judgment
of this Court, a Labor Arbiter, in an Order dated May 23, 1977, confirmed by respondent
National Labor Relations Commission in a Resolution dated August 1, 1978, upheld the
claim of respondent Unions that the 29 strikers who were not readmitted on June 2,
1958, but only during June, July and August, 1958, should also be entitled to the three
years back pay together with the 34 strikers who were never readmitted. On November
14, 1978, these certiorari proceedings were instituted by petitioner companies
questioning the propriety of NLRC's interpretation of this Court's judgment in L-25291. It
was already conceded that of the 63 Union members not readmitted on June 2, 1958,
29 were subsequently readmitted during June, July and August, 1958. Petitioner
companies had only "adamantly refused readmission to 34". Hence, the judgment of
January 30, 1971 "ordering the respondents to reinstate the dismissedmembers of the
petitioning Union" could only refer to the 34 strikers refuse readmission, excluding the
29 who had already been readmitted during the mentioned period of June, July and
August, 1958. This Court could not have intended to order the reinstatement of, and
payment of three years back wages, to dismissed members of the Union who had
admittedly been reinstated long before the date of the judgment.
The Union submission that all strikers refused readmission on June 2, 1958 are entitled
to backwages despite their reinstatement in June, July and August, 1958, would be
tantamount to unjust enrichment at the expense of the employers. As commented for
the public respondent by Ruben M. Alberto, the NLRC Chief, Research and Legal
Services, "The fact of payment of wages after reinstatement naturally precludes the
assessment of backwages for the same period. This is elementary, otherwise that would
be double pay."
ACCORDINGLY, the Writ of certiorari is granted. The Order of the Labor Arbiter dated
May 23, 1977, and the Resolution of the NLRC dated August 1, 1978, are hereby
REVERSED and SET ASIDE. No costs.

4. Trader’s Royal Bank vs NLRC

❖ The fact that an employeeʼs allegations were never controverted at any stage of
the proceedings affirms that such averments were true.
❖ Independent Contractors; Even if a Service Contractor could very well be an
independent contractor and that a particular employee appeared in its payroll, it
will not be considered as the employer where its principal had control and
supervision over the employeeʼs work—the principal should be considered as the
employer.
❖ An illegally dismissed employee is entitled to back wages from the time he was
dismissed to the time of his actual reinstatement.
 WB

Facts:
Agro-Commercial Security Services Agency, Inc. (AGRO) assigned Rogelio
Española to work as a janitor at the Iloilo Branch of petitioner Traders Royal Bank
(TRB). This assignment was covered by Mission Order No. 29 dated 26 June 1974
which was duly issued by the Administrative Officer of AGRO, Alberto G. Espinosa.
Sometime in 1982 Española was informed that he would be absorbed by a new agency,
Royal Protective and Janitorial Services, Inc. (ROYAL), and that he would perform the
same functions. On 15 July 1988 TRB and ROYAL executed a new service agreement
whereby ROYAL would continue supplying janitorial services TRB for one year,
beginning 23 March 1988. The contract also stated that if there was no notice to
terminate at the end of the one (1) year period it would remain in force on a monthly
basis. ROYAL sent a notice to private respondent Española informing him that due to
TRBʼs decision to end their contract his services were no longer needed. After being
dismissed ROYAL declined to give him any further assignment since his job was
allegedly coterminous with its contract with TRB. Labor Arbiter ruled in favor of TRB
holding that Española had no cause of action against it as there was no employer-
employee relationship between them. National Labor Relations Commission (NLRC)
reversed the decision of the Labor Arbiter and ruled that Española was not an employee
of ROYAL but of TRB. Who was Españolaʼs real employer? If Española was ROYALʼs
employee then he would have no recourse against TRB since his dismissal was caused
by the legitimate termination of a service contract. But if he was really TRBʼs employee
then he would be entitled to reinstatement and full back wages as he was illegally
dismissed. TRB asserts that aside from the agreement itself which reveals that it was
ROYAL which provided the janitorsʼ salary, and that the janitors were its own
employees. Thus, Españolaʼs dismissal was the result of a valid termination of its
service agreement with ROYAL. Who then had control over Españolaʼs conduct? Was it
ROYAL or TRB? Between the two, we believe it was TRB. The fact that Españolaʼs
allegations were never controverted at any stage of the proceedings affirms that such
averments were true.

Issue:
Whether or not NLRC abused its discretion?
Whether or not there is an employee-employer relationsship?

Ruling:
The NLRC therefore did not abuse its discretion in ruling that Española was not
the employee of ROYAL. On the contrary, it was the Labor Arbiter who came up with the
erroneous conclusion. He disregarded the uncontroverted allegations of Española and
hastily concluded that since ROYAL was an independent contractor, it was Españolaʼs
direct employer. Since Española was illegally dismissed he is entitled to reinstatement
with full back wages. The NLRC erred in ruling that he was only entitled to back wages
from 16 March 1994 to 30 September 1996. An illegally dismissed employee is entitled
to back wages from the time he was dismissed to the time of his actual reinstatement.
However, the NLRCʼs ruling with regard to the salary differentials and 13th month pay
differentials must be sustained.
 WB

WHEREFORE, the petition is DISMISSED. The assailed Decision of public respondent

National Labor Relations Commission reversing that of the Labor Arbiter and ordering
petitioner Traders Royal Bank to reinstate private respondent Rogelio Española and to
pay him salary differentials of P15,698.00, 13th month pay differentials of P3,143.45
and attorneyʼs fees of P10,075.43 is AFFIRMED, but with the modification that petitioner
should pay private respondent full back wages from 16 March 1994 up to his actual
reinstatement. Costs against petitioner.

5. Paguio vs NLRC

Facts:
Respondent Metromedia Times Corporation entered, for the fifth time, into an
agreement with petitioner Efren P. Paguio, appointing the latter to be an account
executive of the firm. compensation consisting of a 15% commission on direct
advertisements less withholding tax and a 10% commission on agency advertisements
based on gross revenues less agency commission and the corresponding withholding
tax. Apart from commissions, petitioner was also entitled to a monthly allowance of
P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the contentious
points raised by the parties had something to do with the following stipulations of the
agreement; viz:
“You are not an employee of the Metromedia Times Corporation nor does the company
have any obligations towards anyone you may employ, nor any responsibility for your
operating expenses or for any liability you may incur. Either party may terminate this
agreement at any time by giving written notice to the other, thirty (30) days prior to
effectivity of termination. Petitioner filed a case before the labor arbiter, asking that his
dismissal be declared unlawful and that his reinstatement, with entitlement to
backwages without loss of seniority rights, be ordered. Petitioner also prayed that
respondent company officials be held accountable for acts of unfair labor practice, for
P500,000.00 moral damages and for P200,000.00 exemplary damages.”

In their defense, respondent Metromedia Times Corporation asserted that it did not
enter into any agreement with petitioner outside of the contract of services under
Articles 1642 and 1644 of the Civil Code of the Philippines.

Issue:
WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENTS
COMPANY IS FOR A FIXED PERIOD?
WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL?
WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL
DAMAGES?
 WB

Ruling:
National Labor Relations Commission (NLRC) reversed the ruling of the labor
arbiter and declared the contractual relationship between the parties as being for a
fixed-term employment. Petitioner appealed the ruling of the NLRC before the Court of
Appeals which upheld in toto the findings of the commission.

An indicum of regular employment, rightly taken into account by the labor arbiter,
was the reservation by respondent Metromedia Times Corporation not only of the right
to control the results to be achieved but likewise the manner and the means used in
reaching that end.

WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals
in C.A. G.R. SP No. 527773 and that of the National Labor Relations Commission are
hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to
the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which
award is deleted.

6. Sy vs Court of Appeals
❖ Employer-employee Relationship; Elements to determine the existence of an
employment relationship.
❖ If doubt exists between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter.
❖ 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;
Requisites for an employeeʼs dismissal to be valid.
❖ The requirement for a medical certificate under Article 284 of the Labor Code
cannot be dispensed with.
Facts:
Private respondent Jaime Sahot started working as a truck helper for petitionersʼ
family-owned trucking business named Vicente Sy Trucking. In 1965, he became a
truck driver of the same family business, renamed T. Paulino Trucking Service, later
6Bʼs Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation
since 1994. Throughout all these changes in names and for 36 years, private
respondent continuously served the trucking business of petitioners.

In April 1994, Sahot was already 59 years old. He had been incurring absences
as he was suffering from various ailments. He inquired about his medical and retirement
benefits with the Social Security System (SSS) on April 25, 1994, but discovered that
his premium payments had not been remitted by his employer. Sahot found himself in a
dilemma. He was facing dismissal if he refused to work. But he could not retire on
pension because petitioners never paid his correct SSS premiums. The fact remained
he could no longer work as his left thigh hurt abominably. Petitioners ended his
dilemma. They carried out their threat and dismissed him from work, effective June 30,
1994. He ended up sick, jobless and penniless. They contend that private respondent
 WB

was not illegally dismissed as a driver because he was in fact petitionersʼ industrial
partner. Petitioners add that due to Sahotʼs refusal to work after the expiration of his
authorized leave of absence, he should be deemed to have voluntarily resigned from his
work. They contended that Sahot had all the time to extend his leave or at least inform
petitioners of his health condition. Labor Arbiter Ariel Cadiente Santos, ruled that there
was no illegal dismissal in Sahot’s case. The Labor Arbiter concluded by ordering
petitioners to pay “financial assistance” of P15,000 to Sahot for having served the
company as a regular employee since January 1994 only. On appeal, the National
Labor Relations Commission modified the judgment of the Labor Arbiter. It declared that
private respondent was an employee, not an industrial partner, since the start. Private
respondent Sahot did not abandon his job but his employment was terminated on
account of his illness, pursuant to Article 284 9 of the Labor Code. Accordingly, the
NLRC ordered petitioners to pay private respondent separation pay in the amount of
P60,320.00, at the rate of P2,080.00 per year for 29 years of service.

Issue:
(1) Whether or not an employer-employee relationship existed between petitioners and
respondent Sahot;
(2) Whether or not there was valid dismissal; and
(3) Whether or not respondent Sahot is entitled to separation pay.

Ruling:
A computation of the age of complainant shows that he was only twenty-three
(23) years when he started working with respondent as truck helper. How can we
entertain in our mind that a twenty-three (23) year old man, working as a truck helper,
be considered an industrial partner. Hence we rule that complainant was only an
employee, not a partner of respondents from the time complainant started working for
respondent.
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 employerʼs power to control the employeeʼs conduct.
The most important element is the employerʼs control of the employeeʼs conduct,
petitioners owned and operated a trucking business since the 1950s and by their own
allegations, they determined private respondentʼs wages and rest day.
Sahot stated that he was no longer fit to continue working, and instead he
demanded separation pay. While it was very obvious that complainant did not have any
intention to report back to work due to his illness which incapacitated him to perform his
job, such intention cannot be construed to be an abandonment. Instead, the same
should have been considered as one of those falling under the just causes of
terminating an employment.
For an employeeʼs dismissal to be valid, (a) the dismissal must be for a valid
cause, and (b) the employee must be afforded due process. employer shall not
terminate his employment unless there is a certification by competent public health
authority that the disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment. If the disease or
ailment can be cured within the period, the employer shall not terminate the employee
 WB

but shall ask the employee to take a leave. The employer shall reinstate such employee
to his former position immediately upon the restoration of his normal health. the
requirement for a medical certificate under Article 284 of the Labor Code cannot be
dispensed with; the employer clearly did not comply with the medical certificate
requirement before Sahotʼs dismissal was effected. The employer is required 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. respondent Jaime Sahot is entitled to
separation pay. The law is clear on the matter. An employee who is terminated because
of disease is entitled to “separation pay equivalent to at least one month salary or to
one-half month salary for every year of service, whichever is greater.

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated
February 29, 2000 is AFFIRMED. Petitioners must pay private respondent Jaime Sahot
his separation pay for 36 years of service at the rate of one-half monthly pay for every
year of service, amounting to P74,880.00, with interest of six per centum (6%) per
annum from finality of this decision until fully paid.

7. Lopez vs Bodega City

❖ While it is a settled rule that only errors of law are generally reviewed by this
Court in petitions for review on certiorari of Court of Appeals decisions, there are
well-recognized exceptions to this rule, as in this case, when the factual findings
of the National Labor Relations Commission as affirmed by the Court of Appeals
contradict those of the Labor Arbiter.
❖ Employer-Employee Relationship; Evidence; Burden of Proof; The test for
determining on whom the burden of proof lies is found in the result of an inquiry
as to which party would be successful if no evidence of such matters were given;
It is incumbent upon a party, in filing a complaint before the Labor Arbiter for
illegal dismissal based on the premise that she was an employee, to prove the
employee-employer relationship by substantial evidence.
❖ Cash Vouchers; A solitary petty cash voucher does not prove that a person had
been receiving salary from another or that she had been the latterʼs employee for
ten (10) years.
❖ Settled is the rule that contracts are perfected by mere consent, upon the
acceptance by the offeree of the offer made by the offeror; A contract will be
upheld as long as there is proof of consent, subject matter and cause
❖ ID cards where the words “EMPLOYEEʼS NAME” appear printed therein do not
prove employer-employee relationship where said ID cards are issued for the
purpose of enabling certain“contractors,” such as singers and band performers,
to enter the premises of an establishment.
❖ Control Test; 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
 WB

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.
Facts:
Respondent Bodega City (Bodega City) is a corporation duly registered and existing
under and by virtue of the laws of the Republic of the Philippines, while respondent Andres C.
Torres-Yap (Yap) is its owner/ manager. Petitioner was the “lady keeper” of Bodega City tasked
with manning its ladies’ comfort room.
In a letter signed by Yap dated February 10, 1995, petitioner was made to explain why
the concessionaire agreement between her and respondents should not be terminated or
suspended in view of an incident that happened on February 3, 1995, wherein petitioner was
seen to have acted in a hostile manner against a lady customer of Bodega City who informed
the management that she saw petitioner sleeping while on duty. Yap informed petitioner that
because of the incident that happened respondents had decided to terminate the
concessionaire agreement between them.
Petitioner filed a complaint for illegal dismissal against respondents contending that she
was dismissed from her employment without cause and due process. In their answer,
respondents contended that no employer-employee relationship ever existed between them and
petitioner; that the latter’s services rendered within the premises of Bodega City was by virtue of
a concessionaire agreement she entered into with respondents. Labor Arbiter rendered
judgment finding that petitioner was an employee of respondents and that the latter illegally
dismissed her. NLRC SET ASIDE AND VACATED LA Decision.
ISSUE:
Whether or not petitioner is an employee of respondents?
RULING:
In an illegal dismissal case, the onus probandi rests on the employer to prove that its
dismissal of an employee was for a valid cause. However, before a case for illegal
dismissal can prosper, an employer-employee relationship must first be established. In
filing a complaint before the Labor Arbiter for illegal dismissal based on the premise that
she was an employee of respondent, it is incumbent upon petitioner to prove the
employee-employer relationship by substantial evidence. The NLRC and the CA found
that petitioner failed to discharge this burden, and the Court finds no cogent reason to
depart from their findings.
The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing and Parts
Corp.,16 to wit:
To ascertain the existence of an employer-employee relationship, jurisprudence has
invariably applied the four-fold test, namely: (1) the manner of selection and
engagement; (2) the payment of wages; (3) the presence or absence of the power of
dismissal; and (4) the presence or absence of the power of control. Of these four, the
last one is the most important. The so-called “control test” is commonly regarded as the
most crucial and determinative indicator of the presence or absence of an employer-
employee relationship. Under the control test, an employer-employee relationship exists
where the person for whom the services are performed reserves the right to control not
only the end achieved, but also the manner and means to be used in reaching that end.
 WB

To prove the element of payment of wages, petitioner presented a petty cash

voucher showing that she received an allowance for five (5) days. The CA did not err
when it held that a solitary petty cash voucher did not prove that petitioner had been
receiving salary from respondents or that she had been respondents’ employee for 10
years. Indeed, if petitioner was really an employee of respondents for that length of
time, she should have been able to present salary vouchers or pay slips and not just a
single petty cash voucher. The Court agrees with respondents that petitioner could have
easily shown other pieces of evidence such as a contract of employment, SSS or
Medicare forms, or certificates of withholding tax on compensation income; or she could
have presented witnesses to prove her contention that she was an employee of
respondents. Petitioner failed to do so. Anent the element of control, petitioner’s
contention that she was an employee of respondents because she was subject to their
control does not hold water. Petitioner failed to cite a single instance to prove that she
was subject to the control of respondents insofar as the manner in which she should
perform her job as a “lady keeper” was concerned. It is true that petitioner was required
to follow rules and regulations prescribing appropriate conduct while within the premises
of Bodega City. However, this was imposed upon petitioner as part of the terms and
conditions in the concessionaire agreement embodied in a 1992 letter of Yap addressed
to petitioner.
Petitioner does not dispute the existence of the letter; neither does she deny that
respondents offered her the subject concessionaire agreement. However, she contends
that she could not have entered into the said agreement with respondents because she
did not sign the document evidencing the same.Petitioner is likewise estopped from
denying the existence of the subject concessionaire agreement. She should not, after
enjoying the benefits of the concessionaire agreement with respondents, be allowed to
later disown the same through her allegation that she was an employee of the
respondents when the said agreement was terminated by reason of her violation of the
terms and conditions thereof.
Hence, going back to the element of control, the concessionaire agreement
merely stated that petitioner shall maintain the cleanliness of the ladies’ comfort room
and observe courtesy guidelines that would help her obtain the results they wanted to
achieve. There is nothing in the agreement which specifies the methods by which
petitioner should achieve these results. Lastly, the Court finds that the elements of
selection and engagement as well as the power of dismissal are not present in the
instant case.
It has been established that there has been no employer-employee relationship
between respondents and petitioner. Their contractual relationship was governed by the
concessionaire agreement embodied in the 1992 letter. Thus, petitioner was not
dismissed by respondents. Instead, as shown by the letter of Yap to her dated February
15, 1995,37 their contractual relationship was terminated by reason of respondents’
termination of the subject concessionaire agreement, which was in accordance with the
provisions of the agreement in case of violation of its terms and conditions. In fine, the
CA did not err in dismissing the petition for certiorari filed before it by petitioner.
 WB

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of
the Court of Appeals are AFFIRMED. Costs against petitioner.

8. Tongko vs Manufacturers Life Insurance Co. Phils.

❖ Control over the performance of the task of one providing service—both with
respect to the means and manner, and the results of the service—is the primary
element in determining whether an employment relationship exists; Manulifeʼs
control fell short of this norm and carried only the characteristic of the relationship
between an insurance company and its agents, as defined by the Insurance
Code and by the law of agency under the Civil Code.—Control over the
performance of the task of one providing service—both with respect to the means
and manner, and the results of the service—is the primary element in
determining whether an employment relationship exists.
❖ Our ruling in the present case is specific to the insurance industry where the law
permits an insurance company to exercise control over its agents within the limits
prescribed by law and to engage independent agents for several transactions
and within an unlimited period of time without the relationship amounting to
employment.
❖ The Court has the responsibility to ensure that the rights of labor, as guaranteed
by the constitution, are actually enjoyed by the workers; When there is doubt as
to the law to be applied in a case with an allegation of an employer-employee
relationship, labor laws and jurisprudence shall apply.
❖ The four-fold test must be used to determine whether Tongko was an employee
of Manulife or not, and not the Insurance Code or Civil Code as claimed by
Manulife.
❖ The fact that the work of the alleged independent contractor is usually necessary
or desirable in the usual business or trade of the employer would establish a
management structure that would mean that Tongko was Manulifeʼs employee.
❖ Tongko cannot be considered as an independent contractor of Manulife;
Requirements for a worker to be considered an independent contractor.
Facts:
(Sorry, di ko na kaya basahin 100+ pages ito, Dasal nalang tayo na hindi itanong to haha)
ISSUE:
Whether or not Tongko during all the time he was directly or indirectly connected with
the company, first as an agent, pursuant to a Career Agents Agreement (Agreement),
and then as unit, branch and eventually regional sales manager of Manulife's Sales
Agency Organization was an employee of Manulife.


Ruling:
The petition is meritorious. In resolving the issue of whether an employer-employee tie
obtains, attention was focused, as jurisprudential trend dictates, on the four-fold test on
 WB

employment developed and invariably invoked by labor officials and this Court as a
guiding, if not governing norm, to determine, based on the facts and circumstances
involved in a given situation, whether such relationship exists. These four elements are:
(1) the selection and engagement of the employee;

(2) the payment of wages;

(3) the power of dismissal; and

(4) the control test.
The control test meaning whether or not the employer controls or has reserved the right
to control the employee not only as to the result of the work to be done but also the
means and methods employed in reaching that end constitutes the most important
index of the existence of an employer-employee relationship.



From the evidence on record, it appears that Manulife had control over the work of
Tongko after his appointment as manager of the company's insurance sales force,
indubitably implying the existence of an employer-employee relationship between them.



In the case of Great Pacific Life Assurance Corporation v. NLRC, Ernesto Ruiz and
Rodrigo Ruiz (the Grepalife case), as Justice Velasco cites, it was held that the
employer company practically dictated the manner by which jobs were to be carried out.
The functions of the then district managers are similar to the functions of Tongko in the
present case. Thus, if the district managers in the Grepalife case were held by the court
to be employees then Tongko who is in the same situation, according to Justice
Velasco, should also be deemed an employee of Manulife.



Also, he maintains that, similar to the respondent in the Grepa case who was an
insurance agent but also had a management contract, the fact that the Agents
Agreement was subsisting even after Tongko's appointment as manager does not
militate against a conclusion that Tongko was Manulife's employee during his stint as a
manager. While there was perhaps no written management contract whence Tongko's
rights, duties and functions as unit/branch manager may easily be fleshed out as a
prelude to determining if an employer-employee relationship with Manulife did exist,
other evidence was adduced to show such duties and responsibilities.



The petition is partially granted such that Tongko may only be considered an employee
of Manulife from the time of his appointment as manager.

9. Legend Hotel vs. Realuyo

❖ Wages; The factors that determine the issue include who has the power to select
the employee, who pays the employeeʼs wages, who has the power to dismiss
the employee, and who exercises control of the methods and results by which
the work of the employee is accomplished.
 WB

❖ Employer-Employee Relationship; Any stipulation in writing can be ignored when

the employer utilizes the stipulation to deprive the employee of his security of
tenure.
❖ Wages; Talent Fees; Respondentʼs remuneration, albeit denominated as talent
fees, was still considered as included in the term wage in the sense and context
of the Labor Code, regardless of how petitioner chose to designate the
remuneration.
❖ Hours of Work; Article 83 of the Labor Code only set a maximum of number of
hours as “normal hours of work” but did not prohibit work of less than eight hours.
❖ Control Test; 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.
❖ Termination of Employment; Retrenchment; Retrenchment is one of the
authorized causes for the dismissal of employees recognized by labor code.
Facts:
Respondent averred that he had worked as a pianist at the Legend Hotel’s
Tanglaw Restaurant from September 1992 with an initial rate of P400.00/night that was
given to him after each night’s performance; that his rate had increased to P750.00/
night; and that during his employment, he could not choose the time of performance,
which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added
that the Legend Hotel’s restaurant manager had required him to conform with the
venue’s motif; that he had been subjected to the rules on employees’ representation
checks and chits, a privilege granted to other employees; that on July 9, 1999, the
management had notified him that as a cost-cutting measure his services as a pianist
would no longer be required effective July 30, 1999; that he disputed the excuse,
insisting that Legend Hotel had been lucratively operating as of the filing of his
complaint; and that the loss of his employment made him bring his complaint.
Issues:
1. Whether or not petition for certiorari to the CA is proper.

2. Whether or not there is ER-EE relationship.

3. Whether or not retrenchment as a ground for respondent’s dismissal is valid.
Ruling:
YES. There is no longer any doubt that a petition for certiorari brought to assail the
decision of the NLRC may raise factual issues, and the CA may then review the
decision of the NLRC and pass upon such factual issues in the process.8 The power of
the CA to review factual issues in the exercise of its original jurisdiction to issue writs of
certiorari is based on Section 9 of Batas Pambansa Blg. 129, which pertinently provides
that the CA “shall have the power to try cases and conduct hearings, receive evidence
and perform any and all acts necessary to resolve factual issues raised in cases falling
within its original and appellate jurisdiction, including the power to grant and conduct
new trials or further proceedings.”
 WB

YES. Petitioner actually wielded the power of selection at the time it entered into the
service contract dated September 1, 1992 with respondent. This is true, notwithstanding
petitioner’s insistence that respondent had only offered his services to provide live
music at petitioner’s Tanglaw Restaurant, and despite petitioner’s position that what had
really transpired was a negotiation of his rate and time of availability. The power of
selection was firmly evidenced by, among others, the express written recommendation
dated January 12, 1998 by Christine Velazco, petitioner’s restaurant manager, for the
increase of his remuneration.
Respondent’s remuneration, albeit denominated as talent fees, was still considered
as included in the term wage in the sense and context of the Labor Code, regardless of
how petitioner chose to designate the remuneration. Anent this, Article 97(f) of the Labor
Code clearly states:
xxx wage paid to any employee shall mean the remuneration or earnings, 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. 


That respondent worked for less than eight hours/day was of no consequence and
did not detract from the CA’s finding on the existence of the employer-employee
relationship. In providing that the “normal hours of work of any employee shall not
exceed eight (8) hours a day,” Article 83 of the Labor Code only set a maximum of
number of hours as “normal hours of work” but did not prohibit work of less than eight
hours.
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 is the so-called control test, and is premised on whether the person for whom the
services are performed reserves the right to control both the end achieved and the
manner and means used to achieve that end.
A review of the records shows, however, that respondent performed his work as a
pianist under petitioner’s supervision and control. Specifically, petitioner’s control of both
the end achieved and the manner and means used to achieve that end was
demonstrated by the following, to wit: a. He could not choose the time of his
performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times a
week; b. He could not choose the place of his performance; c. The restaurant’s
manager required him at certain times to perform only Tagalog songs or music, or to
wear barong Tagalog to conform to the Filipiniana motif; and d. He was subjected to the
rules on employees’ representation check and chits, a privilege granted to other
employees. Relevantly, it is worth remembering that the employer need not actually
supervise the performance of duties by the employee, for it sufficed that the employer
has the right to wield that power.
 WB

NO. Retrenchment is one of the authorized causes for the dismissal of employees
recognized by the Labor Code. It is a management prerogative resorted to by
employers to avoid or to minimize business losses. On this matter, Article 283 of the
Labor Code.
The Court has laid down the following standards that an employer should meet to
justify retrenchment and to foil abuse, namely: (a) The expected losses should be
substantial and not merely de minimis in extent; (b) The substantial losses apprehended
must be reasonably imminent; (c) The retrenchment must be reasonably necessary and
likely to effectively prevent the expected losses; and (d) The alleged losses, if already
incurred, and the expected imminent losses sought to be forestalled must be proved by
sufficient and convincing evidence.
Anent the last standard of sufficient and convincing evidence, it ought to be pointed
out that a less exacting standard of proof would render too easy the abuse of
retrenchment as a ground for termination of services of employees.
In termination cases, the burden of proving that the dismissal was for a valid or
authorized cause rests upon the employer. Here, petitioner did not submit evidence of
the losses to its business operations and the economic havoc it would thereby
imminently sustain. It only claimed that respondent’s termination was due to its “present
business/financial condition.” This bare statement fell short of the norm to show a valid
retrenchment. Hence, we hold that there was no valid cause for the retrenchment of
respondent.