II. EMPLOYER-EMPLOYEE RELATIONSHIP
A. What Determines Existence of Employer-Employee
Relationship
Case 1: GMA Network, Inc. v. Pabriga, G.R. No.
176419, November 27, 2013
FACTS: Private respondents are engaged in the
petitioner’s business in manning technical operations;
VTR men; maintenance staff; and as cameramen. Due
to miserable working conditions, private respondents
were forced to file a complaint against petitioner before
the NLRC. Private respondents were barred from
entering and reporting for work without any notice stating
the reasons therefor. Private respondents filed an
amended complaint raising the following additional
issues: 1) Unfair Labor Practice; 2) Illegal dismissal; and
3) Damages and Attorney’s fees. A mandatory
conference was set to amicably settle the dispute
between the parties, however, the same proved to be
futile.
The Labor Arbiter dismissed the complaint of
respondents for illegal dismissal and unfair labor
practice, but held petitioner liable for 13th month pay.
The NLRC reversed the Decision of the Labor Arbiter,
and held:
a) All complainants are regular employees with respect
to the particular activity to which they were assigned,
until it ceased to exist. As such, they are entitled to
payment of separation pay computed at one (1) month
salary for every year of service;
b) They are not entitled to overtime pay and holiday pay;
and
c) They are entitled to 13th month pay, night shift
differential and service incentive leave pay.
ISSUE: WON respondents are project or fixed-term
employees
RULING:
At the outset, we should note that the nature of the
employment is determined by law (Labor Code of the
Philippines, Art. 295) regardless of any contract
expressing otherwise. The supremacy of the law over
the nomenclature of the contract and the stipulations
contained therein is to bring to life the policy enshrined in
the Constitution to afford full protection to labor. Labor
contracts, being imbued with public interest, are placed
on a higher plane than ordinary contracts and are
subject to the police power of the State.
The respondents are regular employees and not project
employees. Pursuant to Article 295 of the Labor Code,
employees performing activities which are usually
necessary or desirable in the employer’s usual business
or trade can either be regular, project or seasonal
employees, while, as a general rule, those performing
activities not usually necessary or desirable in the
employer’s usual business or trade are casual
employees.
ARTICLE 295. Regular and casual employment. – The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the
employer, (in this case, television technician is
considered necessary and desirable job for a
broadcasting company; GMA) except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or services to be performed
is seasonal in nature and employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That,
any employee who has rendered at least one year of
service, whether such service is continuous or broken,
shall be considered a regular employee with respect to
the activity in which he is employed and his employment
shall continue while such activity actually exists.
A fifth classification, that of a fixed term employment, is
not expressly mentioned in the Labor Code.
Nevertheless, this Court ruled in Brent School, Inc. v.
Zamora, that such a contract, which specifies that
employment will last only for a definite period, is not per
se illegal or against public policy.
Case 2: Regala v. Manila Hotel Corporation, G.R. No.
204684, October 5, 2020
FACTS: Petitioner is engaged in the
respondent’s operation as a waiter assigned Food and
Beverage
Department.
Petitioner’s
duties
and
responsibilities includes preparing the mise en place,
taking of orders, and serving food and beverages to
hotel guests at tables and inside MHC's dining
establishments. Petitioner was later assigned as cook
helper, worked six (6) days a week, and paid a daily
salary of P382.00. He alleged that he was not
recognized as a regular rank-and-file employee despite
having rendered services to MHC for several years.
Regala also claimed that MHC constructively dismissed
him from employment when it allegedly reduced his
regular work days to two (2) days from the normal five
(5)-day work week starting December 2, 2009, which
resulted in the diminution of his take home salary.
Respondent denied that petitioner is its regular
employee, and claimed that he is a mere freelance or
"extra waiter" engaged by MHC on a short-term basis. It
explained that it employs extra waiters at fixed and/or
determinable periods particularly when there are
temporary spikes in the volume of its business.
ISSUE: (1) WON Petitioner is a regular employee of
MHC or a fixed-term employee; (2) Regala was
constructively dismissed from employment
RULING: Yes. Regala is performing activities which are
necessary and desirable, if not indispensable, in the
business of MHC. Moreover, Regala has been working
for MHC for several years since February 2000. The
employment status of a person is defined and prescribed
by law and not by what the parties say it should be.
The employment status of a person is defined and
prescribed by law and not by what the parties say it
should be. In this regard, Article 295 of the Labor Code
“provides for two types of regular employees,
namely: (a) those who are engaged to perform
activities which are usually necessary or desirable in
the usual business or trade of the employer (first
category); and (b) those who have rendered at least
one year of service, whether continuous or broken,
with respect to the activity in which they are
employed (second category). While MHC insists that
Regala was engaged under a fixed-term employment
agreement, the circumstances and evidence on record,
and provision of law, however, dictate that Regala is its
regular employee.
First, Regala is performing activities which are usually
necessary or desirable in the business or trade of MHC.
This connection can be determined by considering the
nature of the work performed by Regala and its relation
to the nature of the particular business or trade of MHC
in its entirety. Being part of the hotel and food industry,
MHC, as a service-oriented business enterprise,
depends largely on its manpower complement to carry
out or perform services relating to food and beverage
operations, event planning and hospitality. As such, it is
essential, if at all necessary, that it retains in its employ
waiting staff, such as Regala, specifically tasked to
attend to its guests at its various dining establishments.
Notably, the desirability of his functions is bolstered by
the fact that MHC retains in its employ regular staff of
waiters charged with like duties or functions as those of
Regala's.
Second, the fact alone that Regala was allowed to work
for MHC on several occasions for several years under
various Service Agreements is indicative of the regularity
and necessity of his functions to its business. Moreover,
it bears to emphasize that MHC has admitted, albeit
implicitly, that it renewed Regala's Service Agreements
on various occasions, i.e., during temporary spikes in the
volume of its business since February 2000. Thus, the
continuing need for his services for the past several
years is also sufficient evidence of the indispensability of
his duties as waiter to MHC's business. Additionally,
Regala has already been working with the hotel for many
years when he was supposedly constructively dismissed
from employment on December 2, 2009.
In any event, it is worth noting that MHC failed to deny
that Regala's work as waiter is necessary and desirable
to its business.
B. Test to Determine Existence of Employer-Employee
Relationship
CASE 3: Tan v. Lagrama, G.R. No. 151228, August 15,
2002
FACTS: On October 17, 1998, private
respondent Lagrama was summoned by Tan and
upbraided him for urinating in his workplace. Lagrama
denied the charge against him. He claimed that he was
not the only one who entered the drawing area and that,
even if the charge was true, it was a minor infraction to
warrant his dismissal. Lagrama filed a complaint with the
(NLRC) in Butuan City and alleged that he had been
illegally dismissed and sought reinvestigation and
payment of 13th month pay, service incentive leave pay,
salary differential, and damages.
Petitioner Tan denied that Lagrama was his employee.
He asserted that Lagrama was an independent
contractor who did his work according to his methods,
while he (petitioner) was only interested in the result
thereof. The Court of Appeals found that petitioner
exercised control over Lagrama’s work by dictating the
time when Lagrama should submit his billboards and
murals and setting rules on the use of the work area and
rest room. Although it found that Lagrama did work for
other cinema owners, the appeals court held it to be a
mere sideline insufficient to prove that he was not an
employee of Tan.
ISSUE: WON Lagrama was an independent contractor
or if there is EE-ER relationship existed between
petitioner and private respondent.
RULING: Yes, EE-ER relationship existed between
petitioner and private respondent. In determining
whether there is an employer-employee relationship, we
have applied a “four-fold test”.
First. The existence in this case of the first element is
undisputed. It was petitioner who engaged the services
of Lagrama without the intervention of a third party. It is
the existence of the second element, the power of
control, that requires discussion here.
Of the four elements of the employer-employee
relationship, the "control test" is the most important.
Compared to an employee, an independent contractor
is one who carries on a distinct and independent
business and undertakes to perform the job, work, or
service on its own account and under its own
responsibility according to its 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. Hence, while an
independent contractor enjoys independence and
freedom from the control and supervision of his principal,
an employee is subject to the employer's power to
control the means and methods by which the
employee's work is to be performed and
accomplished.
Constructive dismissal was considered illegal because
there is no just or authorized cause.
In the case at bar, albeit petitioner Tan claims that private
respondent Lagrama was an independent contractor and
never his employee, the evidence shows that the latter
performed his work as painter under the supervision and
control of petitioner. Lagrama worked in a designated
work area inside the Crown Theater of petitioner, for the
use of which petitioner prescribed rules. The rules
included the observance of cleanliness and hygiene and
a prohibition against urinating in the work area and any
place other than the toilet or the rest rooms. Petitioner's
control over Lagrama's work extended not only to
the use of the work area, but also to the result of
Lagrama's work, and the manner and means by
which the work was to be accomplished. Moreover, it
would appear that petitioner not only provided the
workplace, but supplied as well the materials used for
the paintings, because he admitted that he paid
Lagrama only for the latter's services.
CASE 4: Legend Hotel v. Realuyo, G.R. No. 153511,
July 18, 2012
FACTS: Respondent Realuyo filed a complaint
for alleged unfair labor practice, constructive illegal
dismissal, and the underpayment/nonpayment of his
premium pay for holidays, separation pay, service
incentive leave pay, and 13th month pay. During his
employment, he could not choose the time of
performance, which had been fixed from 7:00 pm to
10:00 pm for three to six times/week. He added that the
Legend Hotel’s restaurant manager had required him to
conform with the venue’s motif; that he had been
subjected to the rules on employees’ representation
checks and chits, a privilege granted to other
employees. As a cost-cutting measure, respondent’s
service would no longer be a pianist would no longer be
required effective July 30, 1999.
Petitioner denied that denied the existence of an
employer-employee relationship with respondent,
insisting that he had been only a talent engaged to
provide live music at Legend Hotel’s Madison Coffee
Shop for three hours/day on two days each week.
The Labor Arbiter (LA) dismissed the complaint for lack
of merit upon finding that the parties had no employeremployee relationship. Respondent appealed, but the
National Labor Relations Commission (NLRC) affirmed
the LA. Respondent assailed the decision of the NLRC
in the Court of Appeals (CA); the CA set aside the
decision of the NLRC.
ISSUE: WON there is ER-EE relationship; WON Roa
was validly terminated.
RULING: Yes. A review of the circumstances reveals
that respondent was, indeed, petitioner’s employee. He
was undeniably employed as a pianist in petitioner’s
Madison Coffee Shop/Tanglaw Restaurant from
September 1992 until his services were terminated on
July 9, 1999.
A review of the records shows, however, that respondent
performed his work as a pianist under petitioner’s
supervision and control. Specifically, petitioner’s control
of both the end achieved and the manner and means
used to achieve that end.
Petitioner wielded the power of selection at the time it
entered into the service contract dated September 1,
1992 with respondent. This is true, notwithstanding
petitioner’s insistence that respondent had only offered
his services to provide live music at petitioner’s Tanglaw
Restaurant, and despite petitioner’s position that what
had really transpired was a negotiation of his rate and
time of availability.
The law affords protection to an employee, and does not
countenance any attempt to subvert its spirit and intent.
Any stipulation in writing can be ignored when the
employer utilizes the stipulation to deprive the employee
of his security of tenure. The inequality that
characterizes employer-employee relations generally
tips the scales in favor of the employer, such that the
employee is often scarcely provided real and better
options.
Respondent’s remuneration, albeit denominated as
talent fees, was still considered as included in the term
wage in the sense and context of the Labor Code,
regardless of how petitioner chose to designate the
remuneration, as stipulated in Article 97(f) of the Labor
Code.
… wage paid to any employee shall mean the
remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis,
or other method of calculating the same, which is
payable by an employer to an employee under a written
or unwritten contract of employment for work done or to
be done, or for services rendered or to be rendered
Clearly, respondent received compensation for
the services he rendered as a pianist in petitioner’s
hotel. Petitioner cannot use the service contract to rid
itself of the consequences of its employment of
respondent. There is no denying that whatever amounts
he received for his performance, howsoever designated
by petitioner, were his wages.
The records show, however, that respondent
performed his work as a pianist under petitioner’s
supervision and control. Petitioner had fixed the
respondent’s time of performance from 7 PM to 10 PM
which happens three to six times a week. He could not
choose the place of his performance and was required to
perform only Tagalog songs or music and wear barong
Tagalog to conform the Filipiniana motif. He was
subjected to the rules on employees’ representation
check and chits, a privilege granted to other employees.
Relevantly, it is worth remembering that the
employer need not actually supervise the performance of
duties by the employee, for it sufficed that the employer
has the right to wield that power.
Lastly, petitioner claims that it had no power to
dismiss respondent due to his not being even subject to
its Code of Discipline, and that the power to terminate
the working relationship was mutually vested in the
parties, in that either party might terminate at will, with or
without cause.
CASE 5: Royale Homes Marketing Corporation v.
Alcantara, G.R. No. 195190, July 28, 2014
FACTS: In 1994, Royale Homes appointed
Alcantara as its Marketing Director for a fixed period of
one year. His work consisted mainly of marketing Royale
Homes' real estate inventories on an exclusive basis.
Royale Homes reappointed him for several consecutive
years, the last of which covered the period Jan. 1 to Dec.
31, 2003 where he held the position of Division 5 VicePresident-Sales.
Alcantara filed a Complaint for Illegal Dismissal
against Royale Homes. He alleged that he is a regular
employee of Royale Homes since he is performing tasks
that are necessary and desirable to its business and that
the acts of executive officers of Royale Homes
amounted to his dismissal without any valid or just cause
and in gross disregard of the proper procedure of
dismissing employees. Thus, he also impleaded the
corporate officers who, he averred, effected his dismissal
in bad faith and in an oppressive manner.
Royale Homes vehemently denied that Alcantara
is its employee. They argued that his appointment is
clear that he is engaging his services as an independent
sales contractor for a fixed term of one year only.
Petitioner said Alcantara left the company however 2
months later appeared in Royal Homes and submitted a
letter that he was illegally dismissed.
ISSUE: WON respondent Alcantara is an
independent contractor or an employee of petitioner
RULING:
It was held that Alcantara is not an employee
of Royal Homes, but a mere independent contractor.
The primary evidence of the nature of the parties’
relationship in this case is the written contract that they
signed and executed in pursuance of their mutual
agreement. While the existence of employeremployee relationship is a matter of law, the
characterization made by the parties in their contract
as to the nature of their juridical relationship cannot
be simply ignored.
In this case, the contract, duly signed and not
disputed by the parties conspicuously stated the nonexistence employer-employee relationship. Although
power of control is the most important element of the
four-fold rest, however, not every control is indicative
of employer-employee relationship. As long as the
level of control does not interfere with the means and
method of accomplishing the assigned task, the rules
imposed by the hiring party do not amount to the labor
law concept of control that is indicative of employeremployee relationship.
In this case, the Court agrees with Royale
Homes that the rules, regulations, code of ethics, and
periodic evaluation alluded to by Alcantara do not involve
control over the means and methods by which he was to
perform his job. Understandably, Royale Homes has to
fix the... price, impose requirements on prospective
buyers, and lay down the terms and conditions of the
sale, including the mode of payment, which the
independent contractors must follow. But to the mind of
this Court, these do not pertain to the means and
methods... of how Alcantara was to perform and
accomplish his task of soliciting sales. They do not
dictate upon him the details of how he would solicit sales
or the manner as to how he would transact business with
prospective clients.
Neither does the repeated hiring of Alcantara
prove the existence of employer-employee relationship.
As discussed above, the absence of control over the
means and methods disproves employer-employee
relationship. The continuous rehiring of Alcantara
simply signifies the renewal of his contract with Royale
Homes, and highlights his satisfactory services
warranting the renewal of such contract.
The element of payment of wages is also absent
in thisx case. As provided in the contract, Alcantara's
remunerations consist only of commission override of
0.5%, budget allocation, sales incentive and other forms
of company support. There is no proof of fixed monthly
salary. This Court is, therefore, convinced that Alcantara
is not an employee of Royale Homes, but a mere
independent contractor.
Alcantara is not entirely subjected to the control of
employer as he has full control and liberty over the
means and methods by which he is to accomplish
his work.
CASE 6: Bulanon v. Mendco Development
Corporation, G.R. No. 219637, April 26, 2023
FACTS: Petitioner alleged that he was hired as
a welder/fabricator in the furniture business of
respondent, Eric Mendoza. He is the owner of Mendco
and other companies. Petitioner initially filed a complaint
for non-payment of his 13th-month pay, legal holiday
pay, service, incentive leave, and overtime pay. DOLE
found petitioner was not paid his claims.
On Jan. 14, 2006, Bulanon reported for work,
but the HR representative, Raquel, allegedly gave his
salary and instructed him not to report for work anymore.
On Jan. 16, 2006 he went back, but the security guard
prevented this entrance to the premises. This prompted
petitioner to file complaint against respondents before
the NLRC for illegal suspension with claims for payment
of backwages, separation pay, attorney's fee, and moral
and exemplary damages Respondents denied the
petitioner's allegations and claimed that Bulanon was not
their employee.
ISSUE: Whether or not petitioner was able to prove by
substantial evidence his employment with respondents.
Dismissal – legal.
RULING:
No. At the outset, it must be noted that the
issue of petitioner's alleged illegal dismissal is
anchored on the existence of an employer-employee
relationship between him and respondents. However,
in the case at bench, a scrutiny of the record reveals that
petitioner failed to substantiate his claim that he was a
regular employee of respondents.
He relied solely on his DTRs which are neither originals
nor certified true copies. These did not prove the
existence of ER-EE relationship.
Petitioner was legally dismissal because he was not an
employee.
…
The Supreme Court denied the petition of Bulanon and
upheld the decision of the Court of Appeals, which
affirmed the resolution of the NLRC reversing the ruling
of the Labor Arbitrer in favor of Bulanon. The court found
that Bulanon was not illegally dismissed by Mendco
Development Corporation and that he failed to prove that
he was entitled to his monetary claims. Petitioner fails to
establish
the
existence
of
employer-employee
relationship between him and Mendco Development
Corporation. It is ruled that petitioner was a mere
neighborhood carpenter engaged on task basis as
shown in the irregular nature of his work. Bulanon is not
a regular employee. There is no EE-ER relationship. He
was merely a neighborhood carpenter engaged on task
basis as shown in the irregular nature of his work.
Bulanon is not a regular employee. There is no EEER relationship. He was merely a neighborhood
carpenter engaged on task basis as shown in the
irregular nature of his work.
SUMMARY
The present Book III of the Labor Code deals with
conditions and standards of employment, which only
apply if there exists between the parties the relationship
of employer and employee.
It is the court decisions that give some guides in
determining the existence of employer-employee
relationship by applying the four-fold test.
The “control test” is the most important element. In
the absence of the power to control the employee with
respect to the means and methods by which his work
was to be accomplished, there is no employer-employee
relationship between parties.
Not every form of control has the effect of establishing
an employer-employee relationship. A line should be
drawn between:
1. Rules that merely serve as guidelines, which
only promote the result, and (NO ER-EE)
2. Rules that fix the methodology and bind or
restrict the party hired to the use of such means
or methods. These address both the result and
the means employed to achieve the desired
result. (THERE IS ER-EE)
These are some of the examples when non-regular
employees are deemed regular employees by law:
1. Probationary employees who have been made
or allowed to work after the probationary period;
2. Probationary employees who have not been
informed of the criteria or standards for
regularization;
3. Casual employees who have been made or
allowed to work after the casual employment
period or beyond the 12-month period limitation;
4. Casual employees who are performing activities
which are usually necessary or desirable in the
usual business or trade of the employer;
5. Project employees who are not working for a
project;
6. Project employees who work for a project but
has no completion date or it is undeterminable;
7. Project employees who have been continuously
and repeatedly rehired for the same project and
the work they do is necessary or indispensable;
8. Seasonal employees who have been made or
allowed to work after the season;
9. Fixed-term employees who have been made or
allowed to work after the fixed-term or period;
10. Fixed-term employees: (a) who did not willfully
and voluntarily entered into the fixed-term
employment (due to duress, force, intimidation,
or undue influence from the employer); and (b)
who did not bargain on equal footing with the
employer on the terms and conditions of
employment.
MODULE 3: SUBCONTRACTING