SONZA v ABS-CBN BROADCASTING CORP.

(2004)  
  The specific selection and hiring of SONZA, because of his unique skills, talent and
Facts: celebrity status not possessed by ordinary employees, is a circumstance indicative,
  but not conclusive, of an independent contractual relationship. If SONZA did not
Respondent ABS-CBN signed an Agreement (Agreement) with the Mel and Jay possess such unique skills, talent and celebrity status, ABS-CBN would not have
Management and Development Corporation (MJMDC). Referred to in the entered into the Agreement with SONZA but would have hired him through its
Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to personnel department just like any other employee.
ABS-CBN as talent for radio and television. ABS-CBN agreed to pay for SONZAs  
services a monthly talent fee of P310,000 for the first year and P317,000 for the As to the payment of wages, all the talent fees and benefits paid to SONZA were the
second and third year of the Agreement. ABS-CBN would pay the talent fees on the result of negotiations that led to the Agreement. If SONZA were ABS-CBNs
10th and 25th days of the month. employee, there would be no need for the parties to stipulate on benefits such as
  SSS, Medicare, x x x and 13th month pay which the law automatically incorporates
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III into every employer-employee contract. Whatever benefits SONZA enjoyed arose
informing him of the issues surrounding his resignation and that the same is from contract and not because of an employer-employee relationship.
attributed to the violative acts of the station, hence a breach to their agreement.  
Sonza then filed a complaint against ABS-CBN before the DOLE-QC on the ground It also shows that Sonza is not an employee of ABS-CBN since ABS-CBN adhered to
non-payment of salaries, separation pay, service incentive leave pay, 13th month its undertaking in the Agreement to continue paying SONZAs talent fees during the
pay, signing bonus, travel allowance and amounts due under the Employees Stock remaining life of the Agreement even if ABS-CBN cancelled SONZAs programs
Option Plan (ESOP). ABS-CBN then filed a Motion to Dismiss on the ground that no through no fault of SONZA.
Er-Ee relationship existed between the parties. Still, ABS-CBN continued to remit  
Sonza's monthly talent fees and other amounts due him. Also, it is clear that ABS-CBN has no control over Sonza's work. A radio broadcast
  specialist who works under minimal supervision is an independent contractor.
The LA denied the MR of ABS-CBN. Likewise, it also dismissed the complaint of [40] SONZAs work as television and radio program host required special skills and
Sonza for lack of jurisdiction. NLRC affirmed the decision of LA and also dismissed talent, which SONZA admittedly possesses. The records do not show that ABS-CBN
the MR filed by Sonza. Sonza then filed a special civil action for certiorari before the exercised any supervision and control over how SONZA utilized his skills and talent
Court of Appeals assailing the decision and resolution of the NLRC. On 26 March in his shows. SONZA had a free hand on what to say or discuss in his shows provided
1999, the Court of Appeals rendered a Decision dismissing the case. he did not attack ABS-CBN or its interests.  Clearly, ABS-CBN did not exercise control
  over the means and methods of performance of SONZAs work.
Issues:  
  Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-
1. W/N there is an Er-Ee relationship between the parties CBN. Tt cannot be interpreted that the exclusivity clause is a form of control over
2. W/N LA has jurisdiction to settle the controversy or to take cognizance of the talent/employee. Even an independent contractor can validly provide his
the complaint services exclusively to the hiring party. In the broadcast industry, exclusivity is not
  necessarily the same as control.
Ruling:  
  2. No, the present case does not call for an application of the Labor Code
No, Sonza is not considered as an employee of ABS-CBN for he is an independent provisions but an interpretation and implementation of the May 1994 Agreement.
contractor.   In effect, SONZAs cause of action is for breach of contract which is intrinsically a civil
The elements of an employer-employee relationship are: (a) the selection and dispute cognizable by the regular courts.
engagement of the employee; (b) the payment of wages; (c) the power of dismissal;  
and (d) the employers power to control the employee on the means and methods  
by which the work is accomplished. MURILLO v CA (2007)
  CA reversed the decision of NLRC and held that Murillo was a fixed-term employee
Facts: and not a regular employee within the ambit of Article 280[14] of the Labor Code
  because her job, as anticipated and agreed upon, was only for a specified time.
On October 2, 1995, under Talent Contract No. NT95-1805,[4] private respondent  
ABC hired petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor Issue:
for Balitang-Balita, an early evening news program. The contract was for a period of  
three months. It was renewed under Talent Contracts Nos. NT95-1915, NT96-3002, 1. W/N SC can review the findings of CA
NT98-4984 and NT99-5649.[5] In addition, petitioners services were engaged for 2. W/N there was an Er-Ee relationship that existed between the parties
the program Live on Five. On September 30, 1999, after four years of repeated  
renewals, petitioners talent contract expired. Two weeks after the expiration of the Ruling:
last contract, petitioner sent a letter to Mr. Jose Javier, Vice President for News and  
Public Affairs of ABC, informing the latter that she was still interested in renewing 1. Yes. Decisions, final orders or resolutions of the Court of Appeals in any
her contract subject to a salary increase. Thereafter, petitioner stopped reporting case regardless of the nature of the action or proceeding involved may be appealed
for work. On November 5, 1999, she wrote Mr. Javier another letter asking for the to this Court through a petition for review.  This remedy is a continuation of the
answers to her query re: increase and renewal of her contract. appellate process over the original case, and considering there is no congruence in
  the findings of the NLRC and the Court of Appeals regarding the status of
A month later, petitioner sent a demand letter[7] to ABC, demanding: (a) employment of petitioner, an exception to the general rule that this Court is bound
reinstatement to her former position; (b) payment of unpaid wages for services by the findings of facts of the appellate court, we can review such findings.
rendered from September 1 to October 20, 1999 and full backwages; (c) payment of  
13th month pay, vacation/sick/service incentive leaves and other monetary benefits 2. Yes, petitioner was a regular employee and not a fixed term employee as
due to a regular employee starting March 31, 1996. ABC replied that a check held by the CA. An employer-employee relationship was created when the private
covering petitioners talent fees for September 16 to October 20, 1999 had been respondents started to merely renew the contracts repeatedly fifteen times or for
processed and prepared, but that the other claims of petitioner had no basis in fact four consecutive years. As a regular employee, petitioner is entitled to security of
or in law. tenure and can be dismissed only for just cause and after due compliance with
  procedural due process. 
On December 20, 1999, petitioner filed a complaint[8] against ABC, Mr. Javier and  
Mr. Edward Tan, for illegal constructive dismissal, nonpayment of salaries, overtime The case of Sonza is not applicable in this case because ABC exercised full control
pay, premium pay, separation pay, holiday pay, service incentive leave pay, over the performance of petitioners work. The duties of petitioner as enumerated
vacation/sick leaves and 13th month pay in NLRC-NCR Case No. 30-12-00985- in her employment contract indicate that ABC had control over the work of
99. She likewise demanded payment for moral, exemplary and actual damages, as petitioner. Aside from control, ABC also dictated the work assignments and
well as for attorneys fees. payment of petitioners wages. ABC also had power to dismiss her. All these being
  present, clearly, there existed an employment relationship between petitioner and
LA dismissed the complaint. NLRC, however, reversed the decision and held that ABC.
there was an Er-Ee relationship between the parties and that the talent contract  
was void. Hence, she was entitled to her claims as she was a regular employee of Concerning regular employment, the law provides for two kinds of employees,
ABC. 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
After its motion for reconsideration was denied, ABC elevated the case to the Court who have rendered at least one year of service, whether continuous or broken, with
of Appeals in a petition for certiorari under Rule 65. The petition was first dismissed respect to the activity in which they are employed.[30] In other words, regular
for failure to attach particular documents, but was reinstated on grounds of the status arises from either the nature of work of the employee or the duration of his
higher interest of justice. employment.
   
In the case at bar, petitioner's work was necessary or desirable in the usual business name M. Basiao and Associates, while concurrently fulfilling his commitments under
or trade of the employer which includes, as a pre-condition for its enfranchisement, the first contract with the Company.
its participation in the governments news and public information dissemination. In  
addition, her work was continuous for a period of four years. This repeated In May, 1979, the Company terminated the Agency Manager's Contract. After vainly
engagement under contract of hire is indicative of the necessity and desirability of seeking a reconsideration, Basiao sued the Company in a civil action and this, he
the petitioners work in private respondent ABCs business. was later to claim, prompted the latter to terminate also his engagement under the
  first contract and to stop payment of his commissions starting April 1, 1980.
The contention of the appellate court that the contract was characterized by a valid  
fixed-period employment is untenable. For such contract to be valid, it should be Basiao then filed a complaint before the Ministry of Labor against the Company and
shown that the fixed period was knowingly and voluntarily agreed upon by the its president. The latter refuted Basiao's claims and alleged that the former was not
parties. There should have been no force, duress or improper pressure brought to an employee of the Company but an independent contractor and that the Company
bear upon the employee; neither should there be any other circumstance that had no obligation to him for unpaid commissions under the terms and conditions of
vitiates the employees consent. Moreover, fixed-term employment will not be his contract.LA held that there was an Er-Ee relationship and was affirmed by the
considered valid where, from the circumstances, it is apparent that periods have NLRC. Hence, this petition for certiorari and prohibition.
been imposed to preclude acquisition of tenurial security by the employee.  
  Issue:
INSULAR LIFE ASSURANCE CO., LTD. v NLRC (1989)  
  W/N Basiao can be deemed a regular employee of the Company, hence his claim for
Facts: unpaid commissions deemed cognizable by the Labor Arbiter
   
On July 2, 1968, Insular Life Assurance Co., Ltd. and Melecio T. Basiao entered into a Ruling:
contract by which:  
  No, Basiao was a commission agent, an independent contractor whose claim for
1. Basiao was "authorized to solicit within the Philippines applications for insurance unpaid commissions should have been litigated in an ordinary civil action. The Labor
policies and annuities in accordance with the existing rules and regulations" of the Arbiter erred in taking cognizance of, and adjudicating, said claim, being without
Company; jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision.
  Thus, he is not entitled to such unpaid commissions.
2. he would receive "compensation, in the form of commissions ... as provided in  
the Schedule of Commissions" of the contract to "constitute a part of the In determining the existence of employer-employee relationship, the following
consideration of ... (said) agreement;" and 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
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all power to control the employees' conduct — although the latter is the most
its circulars ... and those which may from time to time be promulgated by it, ..." important element.
were made part of said contract.  
  It should, however, be obvious that not every form of control that the hiring party
The contract also contained, among others, provisions governing the relations of reserves to himself over the conduct of the party hired in relation to the services
the parties, the duties of the Agent, the acts prohibited to him, and the modes of rendered may be accorded the effect of establishing an employer-employee
termination of the agreement. relationship between them in the legal or technical sense of the term.
 
They then entered into another contract-- an Agency Manager's Contract — and to Logically, the line should be drawn between rules that merely serve as guidelines
implement his end of it Basiao organized an agency or office to which he gave the 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, duties and responsibilities of De los Reyes included the recruitment, training,
which aim only to promote the result, create no employer-employee relationship organization and development within his designated territory of a sufficient number
unlike the second, which address both the result and the means used to achieve it. of qualified, competent and trustworthy underwriters, and to supervise and
  coordinate the sales efforts of the underwriters in the active solicitation of new
Rules and regulations governing the conduct of the business are provided for in the business and in the furtherance of the agencys assigned goals. It was similarly
Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual provided in the management contract that the relation of the acting unit manager
and expected for an insurance company to promulgate a set of rules to guide its and/or the agents of his unit to the company shall be that of independent
commission agents in selling its policies that they may not run afoul of the law and contractor. As in the previous agency contract, De los Reyes together with his unit
what it requires or prohibits. Of such a character are the rules which prescribe the force was granted freedom to exercise judgment as to time, place and means of
qualifications of persons who may be insured, subject insurance applications to soliciting insurance. Aside from being granted override commissions, the acting unit
processing and approval by the Company, and also reserve to the Company the manager was given production bonus, development allowance and a unit
determination of the premiums to be paid and the schedules of payment. None of development financing scheme euphemistically termed financial assistance
these really invades the agent's contractual prerogative to adopt his own selling consisting of payment to him of a free portion of P300.00 per month and a valIdate
methods or to sell insurance at his own time and convenience, hence cannot portion of P1,200.00. While the latter amount was deemed as an advance against
justifiably be said to establish an employer-employee relationship between him and expected commissions, the former was not and would be freely given to the unit
the company. manager by the company only upon fulfillment by him of certain manpower and
  premium quota requirements.
INSULAR LIFE ASSURANCE CO., LTD. v NLRC (1998)  
  Aside from soliciting insurance, De los Reyes was also expressly obliged to
Facts: participate in the companys conservation program, i.e., preservation and
  maintenance of existing insurance policies, and to accept moneys duly receipted on
On 21 August 1992 petitioner entered into an agency contract with respondent agents receipts provided the same were turned over to the company. As long as he
Pantaleon de los Reyes authorizing the latter to solicit within the Philippines was unit manager in an acting capacity, De los Reyes was prohibited from working
applications for life insurance and annuities for which he would be paid for other life insurance companies or with the government. He could not also
compensation in the form of commissions. The contract was prepared by petitioner accept a managerial or supervisory position in any firm doing business in the
in its entirety and De los Reyes merely signed his conformity thereto. It contained Philippines without the written consent of petitioner.
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, Private respondent worked concurrently as agent and Acting Unit Manager until he
place and means of soliciting insurance. De los Reyes however was prohibited by was notified by petitioner on 18 November 1993 that his services were terminated
petitioner from working for any other life insurance company, and violation of this effective 18 December 1993. On 7 March 1994 he filed a complaint before the
stipulation was sufficient ground for termination of the contract. Aside from Labor Arbiter on the ground that he was illegally dismissed and that he was not paid
soliciting insurance for the petitioner, private respondent was required to submit to his salaries and separation pay. Petitioner filed a motion to dismiss the complaint of
the former all completed applications for insurance within ninety (90) consecutive De los Reyes for lack of jurisdiction, citing the absence of employer-employee
days, deliver policies, receive and collect initial premiums and balances of first year relationship.
premiums, renewal premiums, deposits on applications and payments on policy  
loans. Private respondent was also bound to turn over to the company immediately LA dismissed the complaint for lack of jurisdiction. NLRC, however, reversed the
any and all sums of money collected by him. In a written communication by decision and ruled that there was an Er-Eee relationship between the parties.
petitioner to respondent De los Reyes, the latter was urged to register with the Hence, this petition for certiorari.
Social Security System as a self-employed individual as provided under PD No. 1636.  
  Issue:
On 1 March 1993 petitioner and private respondent entered into another  
contract[6]where the latter was appointed as Acting Unit Manager. As such, the W/N there was an Er-Ee relationship between the parties.
  Exclusivity of service, control of assignments and removal of agents under private
Ruling: respondents unit, collection of premiums, furnishing of company facilities and
  materials as well as capital described as Unit Development Fund are but hallmarks
YES, NLRC did not err in ruling that Delos Reyes was a regular employee of the of the management system in which herein private respondent worked. This
petitioner in so far as the management contract is concerned. obtaining, there is no escaping the conclusion that private respondent Pantaleon de
  los Reyes was an employee of herein petitioner.
It is axiomatic that the existence of an employer-employee relationship cannot be  
negated by expressly repudiating it in the management contract and providing AFP MUTUAL BENEFIT ASSOCIATION, INC. v. NLRC and BUSTAMANTE (1997)
therein that the employee is an independent contractor when the terms of  
agreement clearly show otherwise. For, the employment status of a person is Facts:
defined and prescribed by law and not by what the parties say it should be.[7] In  
determining the status of the management contract, the four-fold test on Private respondent Eutiquio Bustamante had been an insurance underwriter of
employment has to be applied. petitioner AFP Mutual Benefit Association, Inc. since 1975. On July 5, 1989,
  petitioner dismissed private respondent for misrepresentation and for
In Basiao, the agent was appointed Agency Manager under an Agency Manager simultaneously selling insurance for another life insurance company in violation of
Contract. To implement his end of the agreement, Melecio Basiao organized an said agreement.
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 At the time of his dismissal, private respondent was entitled to accrued
Agency Contract earlier entered into, and the Court observed that drawn from the commissions equivalent to twenty four (24) months per the Sales Agent Agreement
terms of the contract they had entered into, (which) either expressly or by and as stated in the account summary dated July 5, 1989, approved by Retired Brig.
necessary implication, Basiao (was) made the master of his own time and selling Gen. Rosalino Alquiza, president of petitioner-company. Said summary showed that
methods, left to his own judgment the time, place and means of soliciting private respondent had a total commission receivable of P438,835.00, of which
insurance, set no accomplishment quotas and compensated him on the bases of only P78,039.89 had been paid to him.
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 Private respondent wrote petitioner seeking the release of his commissions for said
and anytime he chose to and was free to adopt the selling methods he deemed 24 months. Petitioner, through Marketing Manager Juan Concepcion, replied that
most effective. Upon these premises, Basiao was considered as agent an he was entitled to only P75,000.00 to P100,000.00. Hence, believing Concepcion's
independent contractor of petitioner INSULAR LIFE. computations, private respondent signed a quitclaim in favor of petitioner.
   
Unlike in the case of Basiao, herein respondent De los Reyes was appointed Acting Sometime in October 1989, private respondent was informed that his check was
Unit Manager, not agency manager. Under the managership contract, De los Reyes ready for release. In collecting his check, he discovered from a document (account
was obliged to work exclusively for petitioner in life insurance solicitation and was summary) attached to said check that his total commissions for the 24 months
imposed premium production quotas. He reported for work at the office and actually amounted to P354,796.09. 
worked there whenever he was not out in the field. De los Reyes could only be  
promoted to permanent unit manager if he met certain requirements and his Private respondent, however, was paid only the amount of P35,000.00.
promotion was recommended by the petitioners District Manager and Regional  
Manager and approved by its Division Manager. As Acting Unit Manager, De los On November 23, 1989, private respondent filed a complaint with the Office of the
Reyes performed functions beyond mere solicitation of insurance business for Insurance Commissioner praying for the payment of the correct amount of his
petitioner. As found by the NLRC, he exercised administrative functions which were commission. He was, however, advised by the Office that it was DOLE that had
necessary and beneficial to the business of INSULAR LIFE. jurisdiction over his complaint.
   
On February 26, 1990, private respondent filed his complaint with the Department independent contractorship is whether one claiming to be an independent
of Labor claiming: (1) commission for 2 years from termination of employment contractor has contracted to do the work according to his own methods and
equivalent to 30% of premiums remitted during employment; (2) P354,796.00 as without being subject to the control of the employer except only as to the result of
commission earned from renewals and old business generated since 1983; the work.[14] Such is exactly the nature of the relationship between petitioner and
(3) P100,000.00 as moral damages; and (4) P100,000.00 as exemplary damages. private respondent.
 
LA dismissed the complaint but granted his money claim except the separation pay. Further, not every form of control that a party reserves to himself over the conduct
NLRC affirmed the decision of LA that there was Er-Ee relationship. Hence, this of the other party in relation to the services being rendered may be accorded the
petition. effect of establishing an employer-employee relationship. 
   
Issue: OROZCO v FIFTH DIVISION OF CA, PHIL. DAILY INQUIRER (2008)
   
W/N there was an Er-Ee relationship that existed between the parties
  Facts:
Ruling:  
  In March 1990, PDI engaged the services of petitioner to write a weekly column for
No, private respondent was only petitioner's commission agent. As an independent its Lifestyle section. She religiously submitted her articles every week, except for a
contractor, his claim for unpaid commission should have been litigated in an six-month stint in New York City when she, nonetheless, sent several articles
ordinary civil action. through mail. She received compensation of P250.00 – later increased to P300.00 –
  for every column published.5
 
Anent the issue of exclusivity in the case at bar, the fact that private respondent
was required to solicit business exclusively for petitioner could hardly be considered On November 7, 1992, petitioner’s column appeared in the PDI for the last time.
as control in labor jurisprudence. Under Memo Circulars No. 2-81[12] and 2-85, Petitioner claims that her then editor, Ms. Lita T. Logarta,6 told her that respondent
dated December 17, 1981 and August 7, 1985, respectively, issued by the Insurance Leticia Jimenez Magsanoc, PDI Editor in Chief, wanted to stop publishing her column
Commissioner, insurance agents are barred from serving more than one insurance for no reason at all and advised petitioner to talk to Magsanoc herself.
company, in order to protect the public and to enable insurance companies to  
exercise exclusive supervision over their agents in their solicitation work. Thus, the PDI, however, claims that in June 1991, Magsanoc met with the Lifestyle section
exclusivity restriction clearly springs from a regulation issued by the Insurance editor to discuss how to improve said section. They agreed to cut down the number
Commission, and not from an intention by petitioner to establish control over the of columnists by keeping only those whose columns were well-written, with regular
method and manner by which private respondent shall accomplish his work. This feedback and following. In their judgment, petitioner’s column failed to improve,
feature is not meant to change the nature of the relationship between the parties, continued to be superficially and poorly written, and failed to meet the high
nor does it necessarily imbue such relationship with the quality of control standards of the newspaper. Hence, they decided to terminate petitioner’s column
envisioned by the law. So too, the fact that private respondent was bound by  
company policies, memo/circulars, rules and regulations issued from time to time is Petitioner then filed a complaint for illegal dismissal, backwages, moral and
also not indicative of control. exemplary damages, and other money claims before the NLRC. LA ruled in her
  favor and declared that she was considered an employee of PDI. NLRC affirmed LA's
The significant factor in determining the relationship of the parties is the presence decision. CA, however, set aside the decision of the NLRC.
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 Petitioner’s Motion for Reconsideration was denied in a Resolution dated
may intervene to exercise such control. The presence of such power of control is September 11, 2002. She then filed the present Petition for Review.
 
indicative of an employment relationship, while absence thereof is indicative of
independent contractorship. In other words, the test to determine the existence of
In a Resolution dated April 29, 2005, the Court, without giving due course to the when, as in this case, there is no written agreement or contract on which to base
petition, ordered the Labor Arbiter to clarify the amount of the award due the relationship.
petitioner and, thereafter, ordered PDI to post the requisite bond. Upon compliance  
therewith, the petition would be given due course. Labor Arbiter Amansec clarified Petitioner’s main occupation is not as a columnist for respondent but as a women’s
that the award under the Decision amounted to P15,350.00. Thus, PDI posted the rights advocate working in various women’s organizations.39 Likewise, she herself
requisite bond on January 25, 2007. Hence, this petition for review. 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
Issue: employment in respondent’s line of business.
   
W/N petitioner was considered an employee of PDI 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.
Ruling: 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
NO, petitioner was not respondent PDI’s employee but an independent contractor, performance that produced the finished product. It only reserved the right to
engaged to do independent work. shorten petitioner’s articles based on the newspaper’s capacity to accommodate
  the same. This fact, we note, was not unique to petitioner’s column. It is a reality in
The four elements of an employment relationship are: (a) the selection and the newspaper business that space constraints often dictate the length of articles
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and columns, even those that regularly appear therein.
and (d) the employer’s power to control the employee’s conduct; Of these four  
elements, it is the power of control which is the most crucial26 and most Furthermore, respondent PDI did not supply petitioner with the tools and
determinative factor. The test is whether the employer controls or has reserved instrumentalities she needed to perform her work. Petitioner only needed her
the right to control the employee, not only as to the work done, but also as to the talent and skill to come up with a column every week. As such, she had all the tools
means and methods by which the same is accomplished. she needed to perform her work.
  Considering that respondent PDI was not petitioner’s employer, it cannot be held
It is to be noted that not all rules imposed by the hiring party on the hired party guilty of illegal dismissal.
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 FRANCISCO v NLRC (2006)
indicative of the power of control.  
  Facts:
In the case at bar, PDI 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] In 1995, petitioner was hired by Kasei Corporation during its incorporation
herself without any intervention from the Inquirer. The factors enumerated by the stage. She was designated as Accountant and Corporate Secretary and was assigned
petitioner as indicative of control are inherent conditions in running a newspaper. to handle all the accounting needs of the company. She was also designated as
In other words, the so-called control as to time, space, and discipline are dictated by Liaison Officer to the City of Makati to secure business permits, construction
the very nature of the newspaper business itself. The control that PDI exercised permits and other licenses for the initial operation of the company.
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. Although she was designated as Corporate Secretary, she was not entrusted with
  the corporate documents; neither did she attend any board meeting nor required to
Aside from the control test, this Court has also used the economic reality test. The do so. She never prepared any legal document and never represented the company
economic realities prevailing within the activity or between the parties are as its Corporate Secretary. However, on some occasions, she was prevailed upon to
examined, taking into consideration the totality of circumstances surrounding the sign documentation for the company.
true nature of the relationship between the parties.37 This is especially appropriate  
In 1996, petitioner was designated Acting Manager. The corporation also hired W/N there was an Er-Er relationship that existed between the parties
Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was  
assigned to handle recruitment of all employees and perform management Ruling:
administration functions; represent the company in all dealings with government  
agencies and to administer all other matters pertaining to the operation of Kasei Yes, petitioner is an employee of respondent Kasei Corporation. She was selected
Restaurant which is owned and operated by Kasei Corporation. and engaged by the company for compensation, and is economically dependent
  upon respondent for her continued employment in that line of business. Her main
For five years, petitioner performed the duties of Acting Manager. As of December job function involved accounting and tax services rendered to respondent
31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% corporation on a regular basis over an indefinite period of engagement. Respondent
share in the profit of Kasei Corporation.[8] corporation hired and engaged petitioner for compensation, with the power to
  dismiss her for cause. More importantly, respondent corporation had the power to
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner control petitioner with the means and methods by which the work is to be
alleged that she was required to sign a prepared resolution for her replacement but accomplished.
she was assured that she would still be connected with Kasei Corporation.  
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning In this jurisdiction, there has been no uniform test to determine the existence of an
January up to September 2001 for a total reduction of P22,500.00 as of September employer-employee relation. Generally, courts have relied on the so-called right of
2001. Petitioner was not paid her mid-year bonus allegedly because the company control test where the person for whom the services are performed reserves a right
was not earning well. On October 2001, petitioner did not receive her salary from to control not only the end to be achieved but also the means to be used in
the company. She made repeated follow-ups with the company cashier but she was reaching such end. In addition to the standard of right-of-control, the existing
advised that the company was not earning well. economic conditions prevailing between the parties, like the inclusion of the
  employee in the payrolls, can help in determining the existence of an employer-
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the employee relationship.
officers but she was informed that she is no longer connected with the company.  
Since she was no longer paid her salary, petitioner did not report for work and filed However, in certain cases the control test is not sufficient to give a complete picture
an action for constructive dismissal before the labor arbiter. of the relationship between the parties, owing to the complexity of such a
  relationship where several positions have been held by the worker. 
Private respondents averred that petitioner is not an employee of Kasei  
Corporation. They alleged that petitioner was hired in 1995 as one of its technical The better approach would therefore be to adopt a two-tiered test involving: (1) the
consultants on accounting matters and act concurrently as Corporate Secretary. As putative employers power to control the employee with respect to the means and
technical consultant, petitioner performed her work at her own discretion without methods by which the work is to be accomplished; and (2) the underlying economic
control and supervision of Kasei Corporation.  Petitioner did not go through the realities of the activity or relationship.
usual procedure of selection of employees, but her services were engaged through  
a Board Resolution designating her as technical consultant. The money received by This two-tiered test would provide us with a framework of analysis, which would
petitioner from the corporation was her professional fee subject to the 10% take into consideration the totality of circumstances surrounding the true nature of
expanded withholding tax on professionals, and that she was not one of those the relationship between the parties. This is especially appropriate in this case
reported to the BIR or SSS as one of the companys employees. 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
LA found that petitioner was illegally dismissed. NLRC affirmed the decision with and responsibilities given to the worker over the period of the latters employment.
slight modification. However, on appeal, CA reversed the NLRC decision.  
  Thus, the determination of the relationship between employer and employee
Issue: 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.
 
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. It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latters line of
business.
 
*** A diminution of pay is prejudicial to the employee and amounts to constructive
dismissal. Constructive dismissal is an involuntary resignation resulting in cessation
of work resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution in pay;
or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee