LABOR LAW II

Notes/Assignment

A. Labor Protection Clause

The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its
just share in the fruits of production and the right of enterprises to reasonable returns to investments, and
to expansion and growth.

B. Employer-Employee Relationship
a. Essence of Employer-Employee Relationship
 Entitlement to labor standards benefits such as minimum wages, hours of work, overtime pay, etc.,
 or to social benefits under laws such as social security law, workmen’s compensation law, etc.,
 or to termination pay,
 or to unionism and other labor relations provisions under the Labor Code
 DETERMINES THE TRIBUNAL TO RESOLVE THE ISSUE which is the NLRC

b. TESTS of Employment Relationship

 Four-fold Test (SWDC)- TO IDENTIFY EE-ER REL.
 Selection and engagement of employees
 Payment of wages
 Power of dismissal
 Power of control over employee’s conduct and over the means and methods by which the work
is to be accomplished
 Economic Reality Test
The Economic Realities Test seeks to determine whether, as a matter of economic reality, the worker
is reliant on the hiring party to earn a living (employee) or is self-reliant and independent
(contractor).

The determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as:
 the extent to which the services performed are an integral part of the employer’s business;
 the extent of the worker’s investment in equipment and facilities;
 the nature and degree of control exercised by the employer;
 the worker’s opportunity for profit and loss;
 the amount of initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise;
 the permanency and duration of the relationship between the worker and the employer; and
 the degree of dependency of the worker upon the employer for his continued employment in
that line of business.

 Control Test (vs Rules and Guidelines)

 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.
 The control test is the most important test our courts apply in distinguishing an employee
from an independent Contractor. This test is based on the extent of control the hirer exercises
over a worker. The greater the supervision and control the hirer exercises, the more likely the
worker is deemed an employee. The converse holds true as well – the less control the hirer
exercises, the more likely the worker is considered an independent contractor.
Reading References:

1. Corporal, Sr. vs. NLRC and Lao Enteng | GR. NO. 129315

FACTS: Petitioners, Osias I. Corporal, Sr., Pedro Tolentino, Manuel Caparas, Elpidio Lacap, Simplicio Pedelos,
Patricia Nas, and Teresita Flores, worked as barbers and manicurists at New Look Barber Shop owned by Lao
Enteng Company, Inc. They were allowed to continue working after the company took over from the previous
owner. However, in 1995, they were informed that their services were no longer needed due to the sale of the
building. The petitioners filed a complaint for illegal dismissal, illegal deduction, separation pay, non-payment
of 13th-month pay, and salary differentials. The company claimed the petitioners were joint venture partners,
not employees, and were paid commissions. The Labor Arbiter and NLRC ruled in favor of the company, finding
no employer-employee relationship due to alleged joint venture and business losses.

ISSUE: Whether the petitioners are regular employees of the respondent company.

HELD: The Supreme Court ruled that the petitioners are regular employees of Lao Enteng Company, Inc. The
court found no documentary evidence supporting the alleged joint venture. The petitioners did not carry on an
independent business and did not have substantial capital or investment. They were under the control and
direction of the company, which is indicative of an employer-employee relationship. The court also noted that
the petitioners were registered with the SSS as employees of the company, and there was no proof that they
solely paid their SSS contributions. Thus, the court held that the petitioners are entitled to the benefits of
regular employees, including separation pay.

Doctrines Invoked:

Control test: The court emphasized that the power to control the worker's conduct is a primary consideration
in determining an employer-employee relationship. The company's control over the petitioners' work
performance indicated an employment relationship.

Independent contractor definition: An independent contractor is one who carries on an independent

business, undertakes contract work under his own responsibility, and has substantial capital. The petitioners
did not meet these criteria and were therefore not independent contractors.

Elements of an employer-employee relationship: The court reiterated the elements of an employer-

employee relationship, including selection and engagement of workers, power of dismissal, payment of wages,
and control of worker's conduct. These elements were used to determine the nature of the petitioners'
relationship with the company.

2. Begino vs ABS-CBN | G.R. 199166

FACTS: Respondent ABS-CBN engaged Petitioners as cameramen, editors, or reporters for TV Broadcasting,
under regularly renewed Talent Contracts and Project Assignment Forms. These documents detailed the
duration, budget, and technical requirements of specific projects, particularly for the TV Patrol Bicol Program.
The Talent Contracts included an exclusivity clause and explicitly stated that they did not establish an
employer-employee relationship.

Petitioners filed a complaint for regularization, claiming they worked under direct control, wearing company
IDs, using provided equipment, receiving daily news assignments, and following company policies on
attendance and punctuality. Respondents argued that Petitioners were hired as talents, not employees, and
were only briefed on project requirements without control over how they worked.

During the case, Petitioners' contracts were terminated, leading to a second complaint for illegal dismissal. The
NLRC ruled in favor of regular employment, ordering reinstatement, which was affirmed by the NLRC but
overturned by the CA.

ISSUE: W/N Petitioners are regular employees of Respondents.

RULING: Yes. Of the criteria to determine whether there is an employer-employee relationship, the so-called
"control test" is generally regarded as the most crucial and determinative indicator of the said relationship.
 Under this test, an employer-employee relationship is said to exist where the person for whom the services are
performed reserves the right to control not only the end result but also the manner and means utilized to
achieve the same.

Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms
and condition embodied therein, petitioners are regular employees of ABS-CBN.

As cameramen, editors and reporters, it appears that Petitioners were subject to the control and supervision of
Respondents which provided them with the equipment essential for the discharge of their functions. The
exclusivity clause and prohibitions in their Talent Contract were likewise indicative of Respondents' control
over them, however obliquely worded.

Also, the presumption is that when the work done is an integral part of the regular business of the employer
and when the worker does not furnish an independent business or professional service, such work is a regular
employment of such employee and not an independent contractor.

3. Orozco vs PDI | G.R. 155207

FACTS: Wilhelmina S. Orozco, a newspaper columnist, filed a complaint for illegal dismissal against the
Philippine Daily Inquirer (PDI). Orozco claimed that she was an employee of PDI and was illegally dismissed as
a columnist. PDI argued that Orozco was an independent contractor and not entitled to illegal dismissal claims.
Orozco had been engaged by PDI in March 1990 to write a weekly column for its Lifestyle section. She received
compensation for every column published.
ISSUE: Whether Orozco is an employee of PDI and if she was illegally dismissed.
HELD: The court ruled in favor of PDI and held that Orozco was an independent contractor, not an employee.
Therefore, she was not entitled to illegal dismissal claims.

The court applied the "four-fold test" to determine the existence of an employer-employee relationship. 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 employer's power to control the employee's conduct.
The court emphasized that the power of control is the most crucial factor in determining an employer-
employee relationship. In this case, the court found that PDI did not exercise control over Orozco's work. While
PDI had guidelines for the column, such as space allocation and length, these were considered general
guidelines and did not dictate the means and methods by which Orozco wrote her articles. PDI only had control
over the result of Orozco's work, not the means by which it was accomplished. The court also considered the
economic reality test and found that Orozco was not economically dependent on PDI for her continued
employment. Based on these findings, the court concluded that Orozco was an independent contractor and not
an employee of PDI. Therefore, she was not entitled to illegal dismissal claims. The court affirmed the decision
of the Court of Appeals, which had reversed the decision of the National Labor Relations Commission (NLRC) in
favor of Orozco.

4. SONZA VS ABS-CBN | G.R. 138051

FACTS: Respondent ABS-CBN signed an Agreement with the Mel and Jay Management Development
Corporation where the latter agreed to provide petitioner Sonza’s services exclusively to ABS-CBN as talent for
radio and television. Later, Sonza tendered a letter rescinding their agreement and filed a complaint before the
DOLE for payment of his labor standard benefits. ABS-CBN contends on the ground that no employer-employee
relationship existed between the parties. The Labor Arbiter found for respondent citing that Sonza as a ‘talent’
cannot be considered an employee of petitioner. Both NLRC and CA affirmed.

ISSUE: Whether or not employer-employee relationship existed between petitioner and ABS-CBN.

HELD: NO. Applying the control test to the present case, we find that SONZA is not an employee but an
independent contractor. The control test is the most important test our courts apply in distinguishing an
employee from an independent Contractor. This test is based on the extent of control the hirer exercises over a
worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an
employee. The converse holds true as well – the less control the hirer exercises, the more likely the worker is
considered an independent contractor.
We find that ABS-CBN was not involved in the actual performance that produced the finished product of
SONZA’s 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-CBN’s 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 SONZA’s work.
In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee
of the former. In this case, SONZA failed to show that these rules controlled his performance. We find that these
general rules are merely guidelines towards the achievement of the mutually desired result, which are top-
rating television and radio programs that comply with standards of the industry.
Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an independent
contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity
is not necessarily the same as control.

*Not every performance of services for a fee creates an employer-employee relationship. To hold that
every person who renders services to another for a fee is an employee – to give meaning to the security of
tenure clause – will lead to absurd results.

5. TENZAS VS VILLEGAS TAXI | G.R. 192298