Cases on Employer-Employee Relationship

LABOR LAW REVIEW Atty. Natividad Roma Cecille Carmela T. de los Reyes Philippine Christian University College of Law FINAL PROJECT ON LABOR LAW REVIEW EMPLOYER-EMPLOYEE RELATIONSHIP Case Title Who are the Who are the What are the facts of the Is there an employer- What happened employers? employees? case? employee relationship? to the case? On what ground? Restituto Palomado charges Evidence point to the fact Palomado vs. The alleged The person NLRC, G.R. employers are: concerned is respondent Marling Rice Mill, Mario that he is not an employee Tan Ten Kuan and Ronaldo Tan for of Marling Rice Mill. 96520; June Marling Rice Mill, Restituto illegal dismissal, 21, 1996 Mario Tan Ten Palomado, who alleged underpayment of wages and other “An indispensable precondition Kuan and claims to be an benefits. He claimed that he was of illegal dismissal is the prior Ronaldo Tan. employee of hired by Marling Rice Mill as a truck existence of an employerMarling Rice Mill. driver paid on a ‘per-trip basis’ employee relationship; in this amounting to a monthly average of P3,000.00. Allegedly, he was dismissed by Rolando Tan, who, according to Palomado, was the manager/ operator of Marling Rice Mill. He further alleged that respondent Mario Tan Ten Kuan suffered from stroke and as a result, respondent Ronaldo Tan allegedly took over the business as manager/ operator. As part of his evidence, he submitted “Certification of Premium

case, since it was established that there was no such relationship between petitioner and private respondent Tan, therefore, the allegation of illegal dismissal does not have any leg to stand on. The claims for backwages, separation pay and other benefits must likewise fail.

Payments” issued by the Employee Accounts Department of the SSS which shows that after July 1979, he was no longer included in the quarterly collection list submitted by the respondent. Meanwhile, Rolando Tan argued that he is not the owner neither the manager of Marling Rice Mill although he was a former employee of Mario Tan Ten Kuan. Subsequently, he started his own R.S. Ricemill as a proprietor and concluded that Palomado was neither an employee of R.S. Ricemill which he owned and operated.

Francisco v. National Labor Relations

Employer in this Employee in this case is Kasei case is petitioner Corporation. Angelina

Another statement in behalf of the Marling Rice Mill stated that Palomado asked to go on a vacation leave but ceased to report after that. Hence, the LA concluded that petitioner ceased to be an employee since July 1979, and, considering he filed a case against respondents only in 1990, the reglementary period has already prescribed and thus the complaint is already barred by prescription. Petitioner Angelina Francisco was hired by Kasei Corporation during its incorporation stage where she

Angelina Francisco is an employee of Kasei Corporation. It must be

Commission (2006)

Francisco.

was designated as Accountant and Corporate Secretary. Although she was designated as such, she was not entrusted with the corporate documents, neither did she attend any board meeting nor required to do so. In 1996, she was designated as Acting Manager where she was then assigned to handle and perform management and administration functions pertaining to Kasei Restaurant, owned by Kasei Corporation. Finding that the corporation was not earning well, it failed to pay petitioner’s salary. As a result, she was informed that she was no longer connected with the company and thereafter filed an action for constructive dismissal before the Labor Arbiter. Kasei Corporation claims that petitioner Francisco is not an employee since as Corporate Secretary, she performed work at her own discretion without control and supervision from the Kasei Corporation. Further, she had no daily time record and came to the office anytime she wanted. The

noted that there are instances that the control test alone will not suffice the existence of an employer-employee relationship. The determination of the relationship between the employer and employee depends on the circumstances of the entire economic activity —such as, (1) the extent to which the services performed are an integral part of the employer’s business (2) the extent of the worker’s investment in equipment and facilities, (3) the nature and degree of control exercised by the employer (4) the worker’s opportunity for profit and loss (5) the amount of initiative, skill and judgment or foresight required for the success of the claimed independent enterprise, (6) the permanency and duration of the relationship between the worker and employer (7) the degree of dependency of the worker upon the employer for his continued employment in

company did not interfere with her work except that from time to time, they would ask Francisco on matters relating to her profession. Moreover, her services was not through a selection but by a board resolution.

that line of business. By applying the control test, there is no doubt that Francisco is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, corporation’s technical consultant; she reported for work regularly and served in various capacities and performing functions necessary and desirable for the proper operation of the corporation. Under the economic reality test, she can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal. Based on the evidences such as her receipt of 13th month pay, salaries, benefits, bonuses, allowances and SSS contributions; she is no doubt an employee of the said corporation. As a result, when corporation reduced

the her

Paz Martin Jo v. NLRC, G.R. 121605 (2000)

The employer The employee in concerned is this case is Peter Winfield Mejila. Barbershop, then named Dina’s Barbershop.

Peter Mejila worked as a barber on a piece-rate basis at Dina’s Barber Shop. In 1970, the owner Dina Tan sold the barbershop to petitioners Paz Martin Jo and Cesar Jo. Hence, all the employees were absorbed by the new owners, and the name was changed to Windfield Barber Shop. Peter became the caretaker of the shop because the former caretaker became physically unfit. His duties included the following: report to the owners whether the airconditioning units malfunctioned, call the laundrywoman to wash dirty linen, recommend applicants for interview and hiring and attend to the other needs of the shop. He was given an honorarium equivalent to 1/3 of the net income of the shop. Eventually,

a

misunderstanding

salary, there was already an illegal termination of employment, where she is entitled to full backwages. Since her position is one of trust and confidence, and under the principle of strained relations, she is entitled to separation pay in lieu of reinstatement. The fact that Peter Mejila is in charge primarily with most of the operations in the barbershop, clearly, an employer-employee relationship exists between him and his employers. As to the existence of ER-EE relationship, the Court ruled that the following element are considered: (1) selection and engagement of workers (2) power of dismissal (3) payment of wages (4) power to control the worker’s conduct, with the latter assuming primacy in the overall consideration. The power of control refers to the existence of power and not necessarily to the actual exercise thereof.

between respondent Peter and a fellow co-barber ensued which lead to the attention of Atty. Macaraya of the NLRC labor department. A conciliation was held but Peter failed to attend. He continued to work for the barber shop but eventually surrendered his keys and took his belongings. In a Decision, the Labor Arbiter held that private respondent was not dismissed but left his job voluntarily. In the NLRC, it ruled the existence of employer-employee relationship but considered private respondent Peter illegally dismissed.

It is not 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 power. As to the fact of illegal dismissal, the Court ruled that to constitute abandonment, there must be a concurrence of the intention to abandon and some overt acts from which it may be inferred that the employee concerned has no more interest in working. In this case, evidence showed that respondent Peter showed overt acts that he is no longer interested in continuing to work for the barbershop since he constantly bragged about leaving his job and transferring to a new shop, in which he even surrendered his keys, took his belongings and consequently filed for illegal dismissal. To sum up, he is not entitled to separation pay and full backwages on his alleged illegal dismissal as he voluntarily resigned from his work.

Jerome Escasinas v. Shangri-La Mactan Island, G.R. 178827 (2009)

The employer in this case is Dr. Jessica Joyce Pepito, who works for Shangri-La Mactan Resort Island.

Jerome Escasinas and Evan Rigor Singco were registered nurses engaged by respondent Dr. Jessica Joyce Pepito to work in her clinic at respondent Shangri-La’s Mactan Resort Island.

Jerome Escasinas and Evan Rigor Singco were registered nurses engaged by respondent Dr. Jessica Joyce Pepito to work in her clinic at respondent Shangri-La’s Mactan Resort Island. Escasinas and Singco filed for regularization, underpayment of wages, nonpayment of holiday pay, night shift differential and 13th month pay against Shangri-La Mactan claiming they are regular employees of the latter. However, Shangri-La claims that Escasinas and Singo were not its employees but that of Dr. Pepito whom it retained a MOA pursuant to Art. 157 of the Labor Code.

The nurses are not employees of Shangri-La Mactan, but employees of Dr. Jessica Joyce Pepito, who exercises control over them. The term “full time” under Article 157 is to be construed differently. Article 157 of the Labor Code does not require the engagement of full-time nurses as regular employees of a company employing not less than 50 workers. Further, under the said article, the hotel, which employs more than 200 workers, is mandated to furnish its employees with services of a full-time nurse, a part-time physician, dentist, and an emergency clinic which means that it should provide medical and allied services to its employees; and not necessarily to hire and employ those service providers. The term “full time” cannot be construed as referring to the type of employment of the person engaged to provide the services. Article 157 must be

read alongside with Article 280 of the Labor Code in order to vest employer-employee relationship on the employer and the person engaged to perform work required in the usual trade or business of the employer.

Insular Life v. NLRC, G.R. 119930 (1998)

Employer in this Pantaleon de los Petitioner Insular Life entered into case is Insular Reyes is the person an agency contract with respondent Life.

concerned in this case, who works for the Insular Life.

Pantaleon de los Reyes authorizing the latter to solicit within the Philippines applications for life insurance and annuities for which he would be paid compensation in the form of commissions. The contract contained the stipulation that no employer-employee relationship shall be created between the parties and that the agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance.

Lastly, the phrase ‘services of a full-time registered nurse’ should be taken to refer the kind of services that the nurse will render in the company’s premises and to its employees, not the manner of the engagement. Pantaleon de los Reyes is an employee of Insular Life, for the employeremployee relationship is defined by law and not by mere contractual stipulations. Records of the case are replete with telltale indicators of an existing employer- employee relationship between the two parties despite written contractual disavowals. Further, the employment status is defined by law and

Insular Life vs. Employer in this NLRC and case is Insular Melecio Basiao, Life. G.R. 84484, 1989

The person concerned in this case is Basiao, who works for petitioner Insular Life.

Later, de los Reyes was appointed as Acting Unit Manager. He worked concurrently as agent and Acting Unit Manager when he was notified that his services were terminated. He filed a complaint for illegal dismissal. Insular Life and Basiao entered into a contract by which Basiao is authorized to solicit for insurance in accordance with the rules of the company. He would also receive compensation, in the form of commissions. The contract also contained the relations of the parties, duties of the agents, and the acts prohibited to him including the modes of termination. After four years, the parties entered into another contract—an Agency Manager’s contract, and to implement his end of it, Basiao organized an agency while concurrently fulfilling his commitment under the first contract. The company terminated the Agency Manager’s contract. Basiao sued the company in a civil action. Thus, the company terminated Basiao’s engagement under the

not by with the parties stipulate it should be. In determining the status of the management contract, the “four-fold test” on employment should apply. When the insurance agent is free to adopt his own selling methods and is free to sell insurance at his own time, he is an independent contractor. Logically, the line should be drawn between rules that merely serve as guidelines toward the achievement of mutually desired result without dictating the means and 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, aimed only to promote the result, creates no employer-employee relationship unlike the second which addresses both the result and the means used to achieve it.

first contract and stopped payment of his commissions.

AFP Mutual Benefit Association vs. NLRC, G.R. 102199 (1997)

Employer is AFP Eutiquio Mutual Benefit Association, Inc.

Bustamante is the person alleging employer-employee relationship, an insurance underwriter for AFP Mutual Benefit Association.

Eutiquio Bustamante had been an insurance underwriter of AFP Mutual Benefit Association, Inc. The sales agent agreement between them includes the following: (a) Bustamante shall solicit exclusively for AFPMBAI and shall be bound by the policies, memo circulars, rules and regulations which it may revise, modify or cancel to serve interest and assign him on other areas on a case to case basis. (b) there shall be no employer-employee relationship between the parties, the sales agent being hereby deemed independent contractor.

Further, the rules which prescribe the qualifications of an insurance agent under the Insurance Code does not invade 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. Hence, being an independent contractor, his claim for unpaid commission must be litigated in an ordinary civil contract. Etiquio Bustamante is not an employee, as the restriction imposed by the employer springs from the Insurance Commission regulation with respect to the underwriters, and not control as defined by the labor jurisprudence. The existence of an employeremployee relationship is ultimately a question of fact and that the findings thereon by the labor arbiter and the National Labor Relations

AFPMBAI dismissed him for misrepresentation and simultaneously selling insurance for another life insurance company. At the time of dismissal, Bustamante was entitled to accrued commission equivalent to P400k. The Manager, however, said he is only entitled to P75k. Eventually, Bustamante filed a case against the petitioner alleging he is an employee and is thus entitled to other benefits.

Commission shall be accorded not only respect but even finality when supported by substantial evidence. The Court has applied the “four-fold test” in determining the existence of employeremployee relationship (selection, wages, power to dismiss and power to control). In this case, the fact that private respondent was required to solicit business exclusively for the petitioner could hardly be considered control in labor jurisprudence. The exclusivity restriction springs from a regulation issued by the Insurance Commission, and not from the intention by petitioner to establish control over the method and manner by which private respondent shall accomplish his work. The feature is not meant to change the relationship between the parties, nor does it necessarily imbue such relationship with the quality of control envisioned by the law.

Great Pacific Great Pacific Life. Life v. NLRC, G.R. 80750, 1990

Brothers Rodrigo and Ernesto Ruiz, who entered into individual agency agreements with Great Pacific Life.

Brothers Rodrigo and Ernesto Ruiz entered into individual agency agreements with Grepalife. Ernesto was designated as district manager under a three-year agreement of managership. However, he was dismissed from service before the lapse of the period fixed in the contract, when upon audit he was found to have delayed the remittance of premium collections in his possession and to have appropriated it in his own use. Rodrigo was designated officer-incharge to take over the functions of district manager in the Butuan district but was also dismissed for the same infractions committed by Ernesto. An illegal dismissal case was filed by the brothers.

The fact that they are advised to take over operations in the Butuan district evinces the fact that there is an existence of an employer-employee relationship When employment is deemed regular? Article 280 of the Labor Code provides that the provisions of the written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employee shall be deemed regular where the employee has been engaged to perform activities which are usually necessary and desirable in the business of the employer. Moreover, to determine the existence of such relationship, the four-fold test must be applied. In this case, evidences point to the fact that indeed, respondents Ruiz Brothers are employees of Grepalife, when they are advised to take over the functions of manager in

Sonza v. ABSCBN, G.R. 138051, 2004

Employer is respondent ABSCBN, a major broadcasting network in the Philippines.

The person who claims to be an employee is Jay Sonza, a reputable radio broadcaster and television host.

In May 1994, ABSCBN signed an agreement with Mel and Jay Management and Development Corporation. ABSCBN was represented by its corporate officers while MJMDC was represented by Sonza as President and General Manager and Tiangco as its EVP and Treasurer. MJMDC agreed to provide Sonza’s services exclusively to ABSCBN as talent for radio and television. Respondent ABSCBN agreed to pay Sonza a monthly talent fee of P310,000 for the first year and P317,000 for the second year. On 1996, Sonza wrote to ABSCBN where he irrevocably resigned in view of the recent events concerning his program and career. The letter contained waiver and renunciation for recovery of the remaining amount stipulated but reserves the right to seek recovery of other benefits in the said agreement. Sonza then filed a case against ABSCBN alleging that the latter did not pay his salaries, separation pay, service incentive pay, 13th month

the Butuan district Sonza is not an employee of ABS-CBN because the latter is merely concerned of the end result (the network ratings) and does not control the manner and method by which Sonza performs his job as a television host. The Court ruled in this case that the so-called “control test” is the most important element in determining whether there really is an existence of er-ee relationship. In this case, Sonza was not controlled by the ABSCBN as to the manner and method in which he performs work as respondent allows Sonza to work under minimum supervision, and is merely concerned for its ratings or to the result of the work to be achieved. Further, independent contractors like Sonza often possess unique skills, expertise and talent to distinguish them from ordinary employees. Whatever benefits he enjoyed solely came out of

pay, signing bonus, travel allowance and amounts under the Employees Stock Option Plan. However, ABSCBN contended that there was no employer-employee relationship between the parties

Coca Cola The employer in Bottlers v. Dr. this case is Coca Dean Climaco, Cola. G.R. 146881, 2007

Dr. Dean Climaco claims to be an employer of petitioner Coca Cola.

Respondent Dr. Dean Climaco is a medical doctor hired by Coca Cola by virtue of a Retainer Agreement. The Retainer Agreement which began on January 1, 1988 was renewed annually. The last one expired December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform his functions as company doctor to Coca Cola

the contract and not out of eree relationship. If Sonza were ABSCBN’s employee, there would be no need for the parties to stipulate on benefits such as SSS, Medicare and 13th month pay; which the law automatically incorporates into an employment contract. Lastly, rules and regulations for radio broadcasters merely serve as ethical guidelines and not control as the law means it. Control, being the most important element, is when the employer exercises his right to control not only the end to be achieved but also the manner and method by which to achieve such end. Dr. Dean Climaco is not an employee of Coca Cola, as he is not controlled as to the manner and method by which he performs his job as a company doctor. There is no employeremployee relationship between the parties. Applying the four-fold test, records show

until he received a letter from the petitioner company concluding their retainership agreement. As a result, Dr. Climaco filed a case before the NLRC seeking recognition as a regular employee of petitioner company and prayed for the benefits of a regular employee, as well as a complaint for illegal dismissal.

that Dr. Climaco is not an employee of Coca Cola. With regard to the Retainership Agreement, the Court agrees with the LA and the NLRC that there is nothing wrong with the employment of respondent as a retained physician of petitioner company and upholds the validity of retainership agreement which clearly stated that no employer-employee relationship existed between the parties. Considering no eree relationship exists, the termination of the Retainership Agreeement, which is in accordance with its provisions, does not constitute illegal dismissal of respondent.