GODOFREDO L.

SABADO III

INSULAR LIFE ASSURANCE V. NLRC

179 SCRA 459

It is true that the "control test" expressed in the following pronouncement of the Court in the 1956
case of Viana vs. Alejo Al-Lagadan 10

... In determining the existence of employer-employee relationship, the following

elements are generally considered, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employees' conduct although the latter is the most important element
(35 Am. Jur. 445). ...

has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without question a valid
test of the character of a contract or agreement to render service. It should, however, be obvious that not
every form of control that the hiring party reserves to himself over the conduct of the party hired in relation
to the services rendered may be accorded the effect of establishing an employer-employee relationship
between them in the legal or technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual contractor is not to vanish altogether.
Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and
eschews any intervention whatsoever in his performance of the engagement.

Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed
in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the
use of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it. The
distinction acquires particular relevance in the case of an enterprise affected with public interest, as
is the business of insurance, and is on that account subject to regulation by the State with respect,
not only to the relations between insurer and insured but also to the internal affairs of the insurance
company. 12 Rules and regulations governing the conduct of the business are provided for in the
Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an
insurance company to promulgate a set of rules to guide its commission agents in selling its policies that
they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which
prescribe the qualifications of persons who may be insured, subject insurance applications to processing
and approval by the Company, and also reserve to the Company the determination of the premiums to be
paid and the schedules of payment. None of these really invades the agent's contractual prerogative to
adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot
justifiably be said to establish an employer-employee relationship between him and the company.

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

287 SCRA 476

As to the matter involving the power of dismissal and control by the employer, the latter of which is
the most important of the test, petitioner asserts that its termination of De los Reyes was but an
exercise of its inherent right as principal under the contracts and that the rules and guidelines it set
forth in the contract cannot, by any stretch of the imagination, be deemed as an exercise of control
over the private respondent as these were merely directives that fixed the desired result without
dictating the means or method to be employed in attaining it. The following factual findings of the
NLRC however contradict such claims:
11

A perusal of the appointment of complainant as Acting Unit Manager reveals that:

1. Complainant was to "exclusively" serve respondent company. Thus it is provided: .

. . 7..7 Other causes of Termination:
This appointment may likewise be terminated for any of the following causes: . . .
7..7..2. Your entering the service of the government or another life insurance
company; 7..7..3. Your accepting a managerial or supervisory position in any firm
doing business in the Philippines without the written consent of the Company; . . .

2. Complainant was required to meet certain manpower and production quotas.

3. Respondent (herein petitioner) controlled the assignment and removal of soliciting

agents to and from complainant's unit, thus: . . . 7..2. Assignment of Agents: Agents
recruited and trained by you shall be attached to your unit unless for reasons of
Company policy, no such assignment should be made. The Company retains the
exclusive right to assign new soliciting agents to the unit. It is agreed that the
Company may remove or transfer any soliciting agents appointed and assigned to
the said unit. . . .

It would not be amiss to state that respondent's duty to collect the company's premiums using
company receipts under Sec. 7.4 of the management contract is further evidence of petitioner's
control over respondent, thus:

xxx xxx xxx

7.4. Acceptance and Remittance of Premiums. . . . . the Company hereby

authorizes you to accept and to receive sums of money in payment of premiums,
loans, deposits on applications, with or without interest, due from policyholders and
applicants for insurance, and the like, specially from policyholders of business
solicited and sold by the agents attached to your unit provided however, that all such
payments shall be duly receipted by you on the corresponding Company's "Agents'
Receipt" to be provided you for this purpose and to be covered by such rules and
accounting regulations the Company may issue from time to time on the matter.
Payments received by you shall be turned over to the Company's designated District
or Service Office clerk or directly to the Home Office not later than the next working
day from receipt thereof . . . .
Petitioner would have us apply our ruling in Insular Life Assurance Co., Ltd. v. NLRC and Basiao to12

the instant case under the doctrine of stare decisis, postulating that both cases involve parties
similarly situated and facts which are almost identical.

But we are not convinced that the cited case is on all fours with the case at bar. In Basiao, the agent
was appointed Agency Manager under an Agency Manager Contract. To implement his end of the
agreement, Melecio Basiao organized an agency office to which he gave the name M. Basiao and
Associates. The Agency Manager Contract practically contained the same terms and conditions as
the Agency Contract earlier entered into, and the Court observed that, "drawn from the terms of the
contract they had entered into, (which) either expressly or by necessary implication, Basiao (was)
made the master of his own time and selling methods, left to his own judgment the time, place and
means of soliciting insurance, set no accomplishment quotas and compensated him on the bases of
results obtained. He was not bound to observe any schedule of working hours or report to any
regular station; he could seek and work on his prospects anywhere and at anytime he chose to and
was free to adopt the selling methods he deemed most effective." Upon these premises, Basiao was
considered as agent an independent contractor of petitioner INSULAR LIFE.

Unlike Basiao, herein respondent De los Reyes was appointed Acting Unit Manager, not agency
manager. There is no evidence that to implement his obligations under the management contract,
De los Reyes had organized an office. Petitioner in fact has admitted that it provided De los Reyes a
place and a table at its office where he reported for and worked whenever he was not out in the field.
Placed under petitioner's Cebu District Service Office, the unit was given a name by petitioner De
los Reyes and Associates and assigned Code No. 11753 and Recruitment No. 109398. Under the
managership contract, De los Reyes was obliged to work exclusively for petitioner in life insurance
solicitation and was imposed premium production quotas. Of course, the acting unit manager could
not underwrite other lines of insurance because his Permanent Certificate of Authority was for life
insurance only and for no other. He was proscribed from accepting a managerial or supervisory
position in any other office including the government without the written consent of petitioner. De los
Reyes could only be promoted to permanent unit manager if he met certain requirements and his
promotion was recommended by the petitioner's District Manager and Regional Manager and
approved by its Division Manager. As Acting Unit Manager, De los Reyes performed functions
beyond mere solicitation of insurance business for petitioner. As found by the NLRC, he exercised
administrative functions which were necessary and beneficial to the business of INSULAR LIFE.

In Great Pacific Life Insurance Company v. NLRC which is closer in application than Basiao to this
13

present controversy, we found that "the relationships of the Ruiz brothers and Grepalife were those
of employer-employee. First, their work at the time of their dismissal as zone supervisor and district
manager was necessary and desirable to the usual business of the insurance company. They were
entrusted with supervisory, sales and other functions to guard Grepalife's business interests and to
bring in more clients to the company, and even with administrative functions to ensure that all
collections, reports and data are faithfully brought to the company . . . . A cursory reading of their
respective functions as enumerated in their contracts reveals that the company practically dictates
the manner by which their jobs are to be carried out . . . ." We need elaborate no further.

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

G.R. No. 119268 February 23, 2000

ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE
LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA
INTERNATIONAL, INC.) respondents.

In a number of cases decided by this Court, 19 we ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers on the other under the boundary system is that
of employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor
loses complete control over the chattel leased although the lessee cannot be reckless in the use
thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former exercise supervision and control over the latter.
The management of the business is in the owner's hands. The owner as holder of the certificate of
public convenience must see to it that the driver follows the route prescribed by the franchising
authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not
receive fixed wages but get only that in excess of the so-called "boundary" they pay to the
owner/operator is not sufficient to withdraw the relationship between them from that of employer and
employee. We have applied by analogy the abovestated doctrine to the relationships between bus
owner/operator and bus conductor, 20 auto-calesa owner/operator and driver, 21 and recently between
taxi owners/operators and taxi drivers.22 Hence, petitioners are undoubtedly employees of private
respondent because as taxi drivers they perform activities which are usually necessary or desirable
in the usual business or trade of their employer.

G.R. No. 64948 September 27, 1994

MANILA GOLF & COUNTRY CLUB, INC., petitioner,

vs.
INTERMEDIATE APPELLATE COURT and FERMIN LLAMAR, respondents.

The Intermediate Appellate Court gave short shirt to the first assigned error, dismissing it as of the
least importance. Nor, it would appear, did it find any greater merit in the second alleged error.
Although said Court reserved the appealed SSC decision and declared Fermin Llamar an employee
of the Manila Gold and Country Club, ordering that he be reported as such for social security
coverage and paid any corresponding benefits, 8 it conspicuously ignored the issue of res
adjudicata raised in said second assignment. Instead, it drew basis for the reversal from this Court's ruling
in Investment Planning Corporation of the Philippines vs. Social Security System, supra 9 and declared
that upon the evidence, the questioned employer-employee relationship between the Club and Fermin
Llamar passed the so-called "control test," establishment in the case i.e., "whether 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 as to the means and methods by which the same is to be accomplished," the Club's control
over the caddies encompassing:

(a) the promulgation of no less than twenty-four (24) rules and regulations just about
every aspect of the conduct that the caddy must observe, or avoid, when serving as
such, any violation of any which could subject him to disciplinary action, which may
include suspending or cutting off his access to the club premises;
 (b) the devising and enforcement of a group rotation system whereby a caddy is
assigned a number which designates his turn to serve a player;

(c) the club's "suggesting" the rate of fees payable to the caddies.

Deemed of title or no moment by the Appellate Court was the fact that the caddies were paid by the
players, not by the Club, that they observed no definite working hours and earned no fixed income. It
quoted with approval from an American decision 10 to the effect that: "whether the club paid the caddies
and afterward collected in the first instance, the caddies were still employees of the club." This, no matter
that the case which produced this ruling had a slightly different factual cast, apparently having involved a
claim for workmen's compensation made by a caddy who, about to leave the premises of the club where
he worked, was hit and injured by an automobile then negotiating the club's private driveway.

G.R. No. 72409 December 29, 1986

MAMERTO S. BESA, doing business under the name and style of BESA'S CUSTOMBUILT
SHOES, petitioner,
vs.
THE HONORABLE CRESENCIANO B. TRAJANO, DIRECTOR OF THE BUREAU OF LABOR
RELATIONS, MINISTRY OF LABOR AND EMPLOYMENT, AND KAISAHAN NG
MANGGAGAWANG PILIPINO (KAMPIL-KATIPUNAN), respondents.

Be it noted that the defunct CIR in dismissing the cases for unfair labor practice filed by the
shoeshiners against herein petitioner BESA declared in its Decision dated December 21, 1965 that:

The shoe shiner is distinct from a piece worker because while the latter is paid for work
accomplished, he does not, however, contribute anything to the capital of the employer other
than his service. It is the employer of the piece worker who pays his wages, while the shoe
shiner in this instance is paid directly by his customer. The piece worker is paid for work
accomplished without regard or concern to the profit as derived by his employer, but in the
case of the shoe shiners, the proceeds derived from the trade are always divided share and
share alike with respondent BESA. The shoe shiner can take his share of the proceeds
everyday if he wanted to or weekly as is the practice of qqqBesas The employer of the piece
worker supervises and controls his work, but in the case of the shoe shiner, respondent
BESA does not exercise any degree of control or supervision over their person and their
work. All these are not obtaining in the case of a piece worker as he is in fact an employee in
contemplation of law, distinct from the shoe shiner in this instance who, in relation to
respondent MAMERTO B. BESA, is a partner in the trade. Consequently, employer-
employee relationship between members of the Petitioning union and respondent
MAMERTO B. BESA being absent the latter could not be held guilty of the unfair tabor
practice acts imputed against him. (p. 6, Annex "B1 " of said Decision). <re||an1w>

Then too on Dec. 27, 1983, then Director Augusto Sanchez of the Bureau of Working Conditions,
MOLE, in response to a letter of petitioner relative to the implementation of wage Order No. 2 which
provided for an increase both in minimum wage and cost of living allowance, opined as follows:

Entitlement of the minimum requirements of the law particularly on wages and allowances
presupposes the existence of employer-employee relationship which is determined by the
concurrence of the following conditions:
 1. right to hire

2. payment of wages

3. right to fire; and

4. control and supervision

The most important condition to be considered is the exercise of control and supervision over
the employees, per our conversation, the persons concerned under your query are the shoe
shiners and based on the decision rendered by Associate Judge Emiliano Tabigne of the
defunct Court of Industrial Relations, these shoe shiners are not employees of the company,
but are partners instead. This is due to the fact that the owner/manager does not exercise
control and supervision over the shoe shiners. That the shiners have their own customers
from whom they charge the fee and divide the proceeds equally with the owner, which make
the owner categorized them as on purely commission basis. The attendant circumstances
clearly show that there is no employer-employee relationship existing, and such the
owner/manager is not by law, under obligation to extend to those on purely commission
basis the benefit of Wage Order No. 2. However, the law does not preclude the employer in
giving such benefit to all its employees including those which may not be covered by the
mandate of the law.

(Letter dated December 27, 1985 addressed to petitioner Annex B-2, Petition)

The Office of the Solicitor General as counsel for public respondent agrees that in the present case,
no employer-employee relationship exists.

The Supreme Court in the Rosario Brothers case ruled that;

A basic factor underlying the exercise of rights under the Labor Code is the status of
employment. It is important in the determination of who shall be included in a proposed
bargaining unit because it is sine qua non. The fundamental and essential condition that a
bargaining unit be composed of employees. Failure to establish this juridical relationship
between the union members and the employer affects the legality of the union itself. It means
the ineligibility of the union members to present a petition for certification election as well as
to vote therein.

Existence of employer-employee relationship is determined by the following elements,

namely, a] selection and engagement of the employee; b] payment of wages; c] powers of
dismissal; and d] power to control the employee's conduct although the latter is the most
important element (Rosario Brothers Inc, vs. Ople, 131 SCRA 72, 1984)

G.R. No. 170087 August 31, 2006

ANGELINA FRANCISCO, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO
TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and
RAMON ESCUETA, Respondents.
We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there has been no uniform test to
determine the existence of an employer-employee relation. Generally, courts have relied on the so-
called right of control test where the person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be used in reaching such end. In
addition to the standard of right-of-control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an
employer-employee relationship.

However, in certain cases the control test is not sufficient to give a complete picture of the
relationship between the parties, owing to the complexity of such a relationship where several
positions have been held by the worker. There are instances when, aside from the employers power
to control the employee with respect to the means and methods by which the work is to be
accomplished, economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee, independent contractor,
corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employers power to control the employee with respect to the means and methods by which the work
is to be accomplished; and (2) the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the relationship between
the parties. This is especially appropriate in this case where there is no written agreement or terms
of reference to base the relationship on; and due to the complexity of the relationship based on the
various positions and responsibilities given to the worker over the period of the latters employment.

The control test initially found application in the case of Viaa v. Al-Lagadan and Piga, 19 and lately
in Leonardo v. Court of Appeals, 20 where we held that there is an employer-employee relationship
when the person for whom the services are performed reserves the right to control not only the end
achieved but also the manner and means used to achieve that end.

In Sevilla v. Court of Appeals, 21 we observed the need to consider the existing economic conditions
prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the
employee in the payrolls, to give a clearer picture in determining the existence of an employer-
employee relationship based on an analysis of the totality of economic circumstances of the worker.

Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, 22 such as: (1) the extent to which the services
performed are an integral part of the employers business; (2) the extent of the workers investment
in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the
workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight
required for the success of the claimed independent enterprise; (6) the permanency and duration of
the relationship between the worker and the employer; and (7) the degree of dependency of the
worker upon the employer for his continued employment in that line of business. 23

The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business. 24 In the United States, the
touchstone of economic reality in analyzing possible employment relationships for purposes of the
Federal Labor Standards Act is dependency. 25By analogy, the benchmark of economic reality in
analyzing possible employment relationships for purposes of the Labor Code ought to be the
economic dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporations
Technical Consultant. She reported for work regularly and served in various capacities as
Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with
substantially the same job functions, that is, rendering accounting and tax services to the company
and performing functions necessary and desirable for the proper operation of the corporation such
as securing business permits and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000. 26 When petitioner was designated General Manager, respondent corporation
made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as
manifested by a copy of the SSS specimen signature card which was signed by the President of
Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the
existence of an employer-employee relationship between petitioner and respondent corporation. 27

It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latters line of business.

In Domasig v. National Labor Relations Commission, 28 we held that in a business establishment, an

identification card is provided not only as a security measure but mainly to identify the holder thereof
as a bona fide employee of the firm that issues it. Together with the cash vouchers covering
petitioners salaries for the months stated therein, these matters constitute substantial evidence
adequate to support a conclusion that petitioner was an employee of private respondent.

We likewise ruled in Flores v. Nuestro 29 that a corporation who registers its workers with the SSS is
proof that the latter were the formers employees. The coverage of Social Security Law is predicated
on the existence of an employer-employee relationship.

Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that
petitioner never acted as Corporate Secretary and that her designation as such was only for
convenience. The actual nature of petitioners job was as Kamuras direct assistant with the duty of
acting as Liaison Officer in representing the company to secure construction permits, license to
operate and other requirements imposed by government agencies. Petitioner was never entrusted
with corporate documents of the company, nor required to attend the meeting of the corporation. She
was never privy to the preparation of any document for the corporation, although once in a while she
was required to sign prepared documentation for the company. 30

The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001
affidavit has been allegedly withdrawn by Kamura himself from the records of the case. 31 Regardless
of this fact, we are convinced that the allegations in the first affidavit are sufficient to establish that
petitioner is an employee of Kasei Corporation.

Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally
look with favor on any retraction or recanted testimony, for it could have been secured by
considerations other than to tell the truth and would make solemn trials a mockery and place the
investigation of the truth at the mercy of unscrupulous witnesses. 32 A recantation does not
necessarily cancel an earlier declaration, but like any other testimony the same is subject to the test
of credibility and should be received with caution. 33
Based on the foregoing, there can be no other conclusion that petitioner is an employee of
respondent Kasei Corporation. She was selected and engaged by the company for compensation,
and is economically dependent upon respondent for her continued employment in that line of
business. Her main job function involved accounting and tax services rendered to respondent
corporation on a regular basis over an indefinite period of engagement. Respondent corporation
hired and engaged petitioner for compensation, with the power to dismiss her for cause. More
importantly, respondent corporation had the power to control petitioner with the means and methods
by which the work is to be accomplished.

G.R. No. 204944-45 December 3, 2014

FUJI TELEVISION NETWORK, INC., Petitioner,

vs.
ARLENE S. ESPIRITU, Respondent.

The four-fold test can be used in determining whether an employeremployee relationship exists.
180

The elements of the four-fold test are the following: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control, which
is the most important element. 181

The "power of control" was explained by this court in Corporal, Sr. v. National Labor Relations
Commission: 182

The power to control refers to the existence of the power and not necessarily to the actual exercise
thereof, nor is it essential for the employer to actually supervise the performance of duties of the
employee. It is enough that the employer has the right to wield that power. (Citation omitted)
183

Orozco v. Court of Appeals further elucidated the meaning of "power of control" and stated the
following:

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. . . .
184
(Citation omitted)

In Locsin, et al. v. Philippine Long Distance Telephone Company, the "power of control" was
185

defined as "[the] right to control not only the end to be achieved but also the means to be used in
reaching such end." 186

Here, the Court of Appeals applied Sonza v. ABS-CBN and Dumpit Murillo v. Court of Appeals in 187

determining whether Arlene was an independent contractor or a regular employee.

In deciding Sonza and Dumpit-Murillo, this court used the four-fold test. Both cases involved
newscasters and anchors. However, Sonza was held to be an independent contractor, while Dumpit-
Murillo was held to be a regular employee.

Comparison of the Sonza and

Dumpit-Murillo cases using
the four-fold test
Sonza was engaged by ABS-CBN in view of his "unique skills, talent and celebrity status not
possessed by ordinary employees." His work was for radio and television programs. On the other
188 189

hand, Dumpit-Murillo was hired by ABC as a newscaster and co-anchor. Sonzas talent fee
190

amounted to P317,000.00 per month, which this court found to be a substantial amount that
indicatedhe was an independent contractor rather than a regular employee. Meanwhile, Dumpit-
191

Murillos monthly salary was P28,000.00, a very low amount compared to what Sonza received. 192

Sonza was unable to prove that ABS-CBN could terminate his services apart from breach of
contract. There was no indication that he could be terminated based on just or authorized causes
under the Labor Code. In addition, ABS-CBN continued to pay his talent fee under their agreement,
even though his programs were no longer broadcasted. Dumpit-Murillo was found to have
193

beenillegally dismissed by her employer when they did not renew her contract on her fourth year
with ABC. 194

In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered his lines, how he
appeared on television, or how he sounded on radio. All that Sonza needed was his
195

talent. Further, "ABS-CBN could not terminate or discipline SONZA even if the means and methods
196

of performance of his work . . . did not meet ABS-CBNs approval." In Dumpit-Murillo, the duties
197

and responsibilities enumerated in her contract was a clear indication that ABC had control over her
work.198

Application of the four-fold test

The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and affirmed the ruling
of the National Labor Relations Commission finding that Arlene was a regular employee. Arlene was
hired by Fuji as a news producer, but there was no showing that she was hired because of unique
skills that would distinguish her from ordinary employees. Neither was there any showing that she
had a celebrity status. Her monthly salary amounting to US$1,900.00 appears tobe a substantial
sum, especially if compared to her salary whenshe was still connected with GMA. Indeed, wages
199

may indicate whether oneis an independent contractor. Wages may also indicate that an employee is
able to bargain with the employer for better pay. However, wages should not be the conclusive factor
in determining whether one is an employee or an independent contractor.

Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional employment
contract. Her contract also indicated that Fuji had control over her work because she was required
200

to work for eight (8) hours from Monday to Friday, although on flexible time. Sonza was not
201

required to work for eight (8) hours, while Dumpit-Murillo had to be in ABC to do both on-air and off-
air tasks.

On the power to control, Arlene alleged that Fuji gave her instructions on what to report. Even the202

mode of transportation in carrying out her functions was controlled by Fuji. Paragraph 6 of her
contract states:

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

Thus, the Court of Appeals did not err when it upheld the findings of the National Labor Relations
Commission that Arlene was not an independent contractor.
Having established that an employer-employee relationship existed between Fuji and Arlene, the
next questions for resolution are the following: Did the Court of Appeals correctly affirm the National
Labor Relations Commission that Arlene had become a regular employee? Was the nature of
Arlenes work necessary and desirable for Fujis usual course of business?

Arlene was a regular employee

with a fixed-term contract

The test for determining regular employment is whether there is a reasonable connection between
the employees activities and the usual business of the employer. Article 280 provides that the nature
of work must be "necessary or desirable in the usual business or trade of the employer" as the test
for determining regular employment. As stated in ABS-CBN Broadcasting Corporation v. Nazareno: 204

In determining whether an employment should be considered regular or non-regular, the applicable

test is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The standard, supplied by the law itself, is
whether the work undertaken is necessary or desirable in the usual business or trade of the
employer, a fact that can be assessed by looking into the nature of the services rendered and its
relation to the general scheme under which the business or trade is pursued in the usual course. It is
distinguished from a specific undertaking that is divorced from the normal activities required
incarrying on the particular business or trade.205

However, there may be a situation where an employees work is necessary but is not always
desirable inthe usual course of business of the employer. In this situation, there is no regular
employment.

In San Miguel Corporation v. National Labor Relations Commission, Francisco de Guzman was
206

hired to repair furnaces at San Miguel Corporations Manila glass plant. He had a separate contract
for every furnace that he repaired. He filed a complaint for illegal dismissal three (3) years after the
end of his last contract. In ruling that de Guzman did not attain the status of a regular employee,
207

this court explained:

Note that the plant where private respondent was employed for only seven months is engaged in the
manufacture of glass, an integral component of the packaging and manufacturing business of
petitioner. The process of manufacturing glass requires a furnace, which has a limited operating life.
Petitioner resorted to hiring project or fixed term employees in having said furnaces repaired since
said activity is not regularly performed. Said furnaces are to be repaired or overhauled only in case
of need and after being used continuously for a varying period of five (5) to ten (10) years. In 1990,
one of the furnaces of petitioner required repair and upgrading. This was an undertaking distinct and
separate from petitioner's business of manufacturing glass. For this purpose, petitioner must hire
workers to undertake the said repair and upgrading. . . .

G.R. No. 164652 June 8, 2007

THELMA DUMPIT-MURILLO, petitioner,

vs.
COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE JAVIER AND
EDWARD TAN, respondents.

In Manila Water Company, Inc. v. Pena,28 we said that 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 employers power to control. The most important
element is the employers control of the employees conduct, not only as to the result of the work to
be done, but also as to the means and methods to accomplish it. 29

The duties of petitioner as enumerated in her employment contract indicate that ABC had control
over the work of petitioner. Aside from control, ABC also dictated the work assignments and payment
of petitioners wages. ABC also had power to dismiss her. All these being present, clearly, there
existed an employment relationship between petitioner and ABC.

Concerning regular employment, the law provides for two kinds of employees, namely: (1) those who
are engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and (2) those who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are employed. 30 In other words,
regular status arises from either the nature of work of the employee or the duration of his
employment.31 In Benares v. Pancho,32 we very succinctly said:

[T]he primary standard for determining regular employment is the reasonable connection between
the particular activity performed by the employee vis--vis the usual trade or business of the
employer. This connection can be determined by considering the nature of the work performed and
its relation to the scheme of the particular business or trade in its entirety. If the employee has been
performing the job for at least a year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its performance as sufficient evidence
of the necessity if not indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such activity exists. 33

In our view, the requisites for regularity of employment have been met in the instant case. Gleaned
from the description of the scope of services aforementioned, petitioners work was necessary or
desirable in the usual business or trade of the employer which includes, as a pre-condition for its
enfranchisement, its participation in the governments news and public information dissemination. In
addition, her work was continuous for a period of four years. This repeated engagement under
contract of hire is indicative of the necessity and desirability of the petitioners work in private
respondent ABCs business.34

G.R. No. 155207 August 13, 2008

WILHELMINA S. OROZCO, petitioner,

vs.
THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS,
PHILIPPINE DAILY INQUIRER, and LETICIA JIMENEZ
MAGSANOC, respondents.

This Court has constantly adhered to the "four-fold test" to determine whether
there exists an employer-employee relationship between parties.24 The four
elements of an employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employees conduct.25
Of these four elements, it is the power of control which is the most
crucial26 and most determinative factor,27 so important, in fact, that the other
elements may even be disregarded.28 As this Court has previously held:

the significant factor in determining the relationship of the parties is the

presence or absence of supervisory authority to control the method and
the details of performance of the service being rendered, and the
degree to which the principal may intervene to exercise such control.29

In other words, the test is whether the employer controls or has reserved the
right to control the employee, not only as to the work done, but also as to the
means and methods by which the same is accomplished.30

Petitioner argues that several factors exist to prove that respondents

exercised control over her and her work, namely:

a. As to the Contents of her Column The PETITIONER had to insure

that the contents of her column hewed closely to the objectives of its
Lifestyle Section and the over-all principles that the newspaper projects
itself to stand for. As admitted, she wanted to write about death in
relation to All Souls Day but was advised not to.

b. As to Time Control The PETITIONER, as a columnist, had to

observe the deadlines of the newspaper for her articles to be published.
These deadlines were usually that time period when the Section Editor
has to "close the pages" of the Lifestyle Section where the column in
located. "To close the pages" means to prepare them for printing and
publication.

As a columnist, the PETITIONERs writings had a definite day on which

it was going to appear. So she submitted her articles two days before
the designated day on which the column would come out.

This is the usual routine of newspaper work. Deadlines are set to fulfill
the newspapers obligations to the readers with regard to timeliness and
freshness of ideas.

c. As to Control of Space The PETITIONER was told to submit only

two or three pages of article for the column, (sic) "Feminist Reflections"
per week. To go beyond that, the Lifestyle editor would already chop off
the article and publish the rest for the next week. This shows that
 PRIVATE RESPONDENTS had control over the space that the
PETITIONER was assigned to fill.

d. As to Discipline Over time, the newspaper readers eyes are trained

or habituated to look for and read the works of their favorite regular
writers and columnists. They are conditioned, based on their daily
purchase of the newspaper, to look for specific spaces in the
newspapers for their favorite write-ups/or opinions on matters relevant
and significant issues aside from not being late or amiss in the
responsibility of timely submission of their articles.

The PETITIONER was disciplined to submit her articles on highly

relevant and significant issues on time by the PRIVATE
RESPONDENTS who have a say on whether the topics belong to those
considered as highly relevant and significant, through the Lifestyle
Section Editor. The PETITIONER had to discuss the topics first and
submit the articles two days before publication date to keep her column
in the newspaper space regularly as expected or without miss by its
readers.31

Given this discussion by petitioner, we then ask the question: Is this the form
of control that our labor laws contemplate such as to establish an employer-
employee relationship between petitioner and respondent PDI?

It is not.

Petitioner has misconstrued the "control test," as did the Labor Arbiter and the
NLRC.

Not all rules imposed by the hiring party on the hired party indicate that the
latter is an employee of the former. Rules which serve as general
guidelines towards the achievement of the mutually desired result are not
indicative of the power of control.32 Thus, this Court has explained:

It should, however, be obvious that not every form of control that the
hiring party reserves to himself over the conduct of the party hired in
relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the
legal or technical sense of the term. A line must be drawn somewhere, if
the recognized distinction between an employee and an individual
contractor is not to vanish altogether. Realistically, it would be a rare
contract of service that gives untrammelled freedom to the party hired
 and eschews any intervention whatsoever in his performance of the
engagement.

Logically, the line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in attaining it,
and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike the
second, which address both the result and the means used to achieve
it. x x x.33

The main determinant therefore is whether the rules set by the employer are
meant to control not just the results of the work but also the means and
method to be used by the hired party in order to achieve such results. Thus, in
this case, we are to examine the factors enumerated by petitioner to see if
these are merely guidelines or if they indeed fulfill the requirements of the
control test.

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

We agree with the observations of the Office of the Solicitor General that:

The Inquirer is the publisher of a newspaper of general circulation which

is widely read throughout the country. As such, public interest dictates
that every article appearing in the newspaper should subscribe to the
standards set by the Inquirer, with its thousands of readers in mind. It is
not, therefore, unusual for the Inquirer to control what would be
published in the newspaper. What is important is the fact that such
control pertains only to the end result, i.e., the submitted articles. The
Inquirer has no control over [petitioner] as to the means or method used
by her in the preparation of her articles. The articles are done by
[petitioner] herself without any intervention from the Inquirer.34

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

The perceived constraint on petitioners column was dictated by her own

choice of her columns perspective. The column title "Feminist Reflections"
was of her own choosing, as she herself admitted, since she had been known
as a feminist writer.35 Thus, respondent PDI, as well as her readers, could
reasonably expect her columns to speak from such perspective.

Contrary to petitioners protestations, it does not appear that there was any
actual restraint or limitation on the subject matter within the Lifestyle section
that she could write about. Respondent PDI did not dictate how she wrote or
what she wrote in her column. Neither did PDIs guidelines dictate the kind of
research, time, and effort she put into each column. In fact, petitioner herself
said that she received "no comments on her articlesexcept for her to
shorten them to fit into the box allotted to her column." Therefore, the control
that PDI exercised over petitioner was only as to the finished product of her
efforts, i.e., the column itself, by way of either shortening or outright rejection
of the column.

The newspapers power to approve or reject publication of any specific article

she wrote for her column cannot be the control contemplated in the "control
test," as it is but logical that one who commissions another to do a piece of
work should have the right to accept or reject the product. The important factor
to consider in the "control test" is still the element of control over how the work
itself is done, not just the end result thereof.

In contrast, a regular reporter is not as independent in doing his or her work

for the newspaper. We note the common practice in the newspaper business
of assigning its regular reporters to cover specific subjects, geographical
locations, government agencies, or areas of concern, more commonly
referred to as "beats." A reporter must produce stories within his or her
particular beat and cannot switch to another beat without permission from the
editor. In most newspapers also, a reporter must inform the editor about the
story that he or she is working on for the day. The story or article must also be
submitted to the editor at a specified time. Moreover, the editor can easily pull
out a reporter from one beat and ask him or her to cover another beat, if the
need arises.
This is not the case for petitioner. Although petitioner had a weekly deadline to
meet, she was not precluded from submitting her column ahead of time or
from submitting columns to be published at a later time. More importantly,
respondents did not dictate upon petitioner the subject matter of her columns,
but only imposed the general guideline that the article should conform to the
standards of the newspaper and the general tone of the particular section.

Where a person who works for another performs his job more or less at his
own pleasure, in the manner he sees fit, not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts
and not the amount thereof, no employer-employee relationship exists.36

Aside from the control test, this Court has also used the economic reality test.
The economic realities prevailing within the activity or between the parties are
examined, taking into consideration the totality of circumstances surrounding
the true nature of the relationship between the parties.37 This is especially
appropriate when, as in this case, there is no written agreement or contract on
which to base the relationship. In our jurisdiction, the benchmark of economic
reality in analyzing possible employment relationships for purposes of
applying the Labor Code ought to be the economic dependence of the worker
on his employer.38

Petitioners main occupation is not as a columnist for respondent but as a

womens rights advocate working in various womens
organizations.39 Likewise, she herself admits that she also contributes articles
to other publications.40 Thus, it cannot be said that petitioner was dependent
on respondent PDI for her continued employment in respondents line of
business.41

The inevitable conclusion is that petitioner was not respondent PDIs

employee but an independent contractor, engaged to do independent work.

There is no inflexible rule to determine if a person is an employee or an

independent contractor; thus, the characterization of the relationship must be
made based on the particular circumstances of each case.42 There are several
factors43 that may be considered by the courts, but as we already said, the
right to control is the dominant factor in determining whether one is an
employee or an independent contractor.44

In our jurisdiction, the Court has held that an independent contractor is one
who carries on a distinct and independent business and undertakes to
perform the job, work, or service on ones own account and under ones own
responsibility according to ones own manner and method, free from the
control and direction of the principal in all matters connected with the
performance of the work except as to the results thereof.45

On this point, Sonza v. ABS-CBN Broadcasting Corporation46 is enlightening.

In that case, the Court found, using the four-fold test, that petitioner, Jose Y.
Sonza, was not an employee of ABS-CBN, but an independent contractor.
Sonza was hired by ABS-CBN due to his "unique skills, talent and celebrity
status not possessed by ordinary employees," a circumstance that, the Court
said, was indicative, though not conclusive, of an independent contractual
relationship. Independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary
employees.47 The Court also found that, as to payment of wages, Sonzas
talent fees were the result of negotiations between him and ABS-CBN.48 As to
the power of dismissal, the Court found that the terms of Sonzas engagement
were dictated by the contract he entered into with ABS-CBN, and the same
contract provided that either party may terminate the contract in case of
breach by the other of the terms thereof.49 However, the Court held that the
foregoing are not determinative of an employer-employee relationship.
Instead, it is still the power of control that is most important.

On the power of control, the Court found that in performing his work, Sonza
only needed his skills and talent how he delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBNs control.50 Thus:

We find that ABS-CBN was not involved in the actual performance that
produced the finished product of SONZAs work. ABS-CBN did not
instruct SONZA how to perform his job. ABS-CBN merely reserved the
right to modify the program format and airtime schedule "for more
effective programming." ABS-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.

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.

In Vaughan, et al. v. Warner, et al., the United States Circuit Court of

Appeals ruled that vaudeville performers were independent contractors
although the management reserved the right to delete objectionable
features in their shows. Since the management did not have control
over the manner of performance of the skills of the artists, it could only
control the result of the work by deleting objectionable features.

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. 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.

A radio broadcast specialist who works under minimal supervision is an

independent contractor. 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.51

The instant case presents a parallel to Sonza. Petitioner was engaged as a

columnist for her talent, skill, experience, and her unique viewpoint as a
feminist advocate. How she utilized all these in writing her column was not
subject to dictation by respondent. As in Sonza, respondent PDI was not
involved in the actual performance that produced the finished product. It only
reserved the right to shorten petitioners articles based on the newspapers
capacity to accommodate the same. This fact, we note, was not unique to
petitioners column. It is a reality in the newspaper business that space
constraints often dictate the length of articles and columns, even those that
regularly appear therein.

Furthermore, respondent PDI did not supply petitioner with the tools and
instrumentalities she needed to perform her work. Petitioner only needed her
talent and skill to come up with a column every week. As such, she had all the
tools she needed to perform her work.