LABOR (W2-W3 DIGESTS)

ON THE FOUR FOLD TEST:

 Brotherhood Labor Unity Movement of the Phils.
v. Zamora
DOCTRINE:
 In determining the existence of an employer-employee relationship, the elements
that are generally considered are the ff: (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 with respect to the means and
methods by which the work is to be accomplished. It is so-called the “control test”
that is the most important element.
FACTS:
 The petitioners are workers who have been employed at the San Miguel Parola
Glass Factory as “pahinantes” or “kargadors” for almost seven years. They
worked exclusively at the SMC plant, never having been assigned to other
companies or departments of San Miguel Corp, even when the volume of work
was at its minimum. Their work was neither regular nor continuous, depending on
the volume of bottles to be loaded and unloaded, as well as the business activity
of the company. However, work exceeded the eight-hour day and sometimes,
necessitated work on Sundays and holidays. -for this, they were neither paid
overtime nor compensation.

 Sometime in 1969, the workers organized and affiliated themselves with

Brotherhood Labor Unity Movement (BLUM). They wanted to be paid to overtime
and holiday pay. They pressed the SMC management to hear their grievances.
BLUM filed a notice of strike with the Bureau of Labor Relations in connection
with the dismissal of some of its members. San Miguel refused to bargain with
the union alleging that the workers are not their employees but the employees of
an independent labor contracting firm, Guaranteed Labor Contractor.

 The workers were then dismissed from their jobs and denied entrance to the
glass factory despite their regularly reporting for work. A complaint was filed for
illegal dismissal and unfair labor practices.
ISSUE:
Whether or not there was employer-employee (ER-EE)relationship between the workers
and San Miguel Corp.
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HELD:
YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold
test was used by the Supreme Court. These are:
· The selection and engagement of the employee
· Payment of wages
· Power of dismissal
· Control Test- the employer’s power to control the employee with respect to the means
and methods by which work is to be accomplished
In the case, the records fail to show that San Miguel entered into mere oral agreements
of employment with the workers. Considering the length of time that the petitioners have
worked with the company, there is justification to conclude that they were engaged to
perform activities necessary in the usual business or trade. Despite past shutdowns of
the glass plant, the workers even promptly returned to their jobs. the petitioners,
thereafter, promptly returned to their jobs, never having been replaced, or assigned
elsewhere. The term of the petitioner’s employment appears indefinite and the
continuity and habituality of the petitioner’s work bolsters the claim of an employee
status. It is apparent that the closure of respondent's warehouse was merely a ploy to
get rid of the petitioners, who were then agitating the respondent company for benefits,
reforms and collective bargaining as a union. There is no showing that petitioners had
been remiss in their obligations and inefficient in their jobs to warrant their separation.

As for the GLC, We find that Guaranteed and Reliable Labor contractors have neither
substantial capital nor investment to qualify as an independent contractor under the law.
The premises, tools, equipment and paraphernalia used by the petitioners in their jobs
are admittedly all supplied by respondent company. It is therefore clear that the alleged
contractors have no capital outlay involved in the conduct of its business, in the
maintenance thereof or in the payment of its workers' salaries. There is no evidence to
show that the alleged labor contractor had such right of control or much less had
been there to supervise or deal with the petitioners.

As for the payment of the workers’ wages, it is a critical factor in determining the
actuality of an employer-employee relationship whether between respondent company
and petitioners or between the alleged independent contractor and petitioners. The
contention that the independent contractors were paid a lump sum representing only the
salaries the workers where entitled to have no merit. The amount paid by San Miguel to
the contracting firm is no business expense or capital outlay of the latter. What the
contractor receives is a percentage from the total earnings of all the workers plus an
additional amount from the earnings of each individual worker.

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The inter-office memoranda submitted in evidence prove the company’s control over the
workers. That San Miguel has the power to recommend penalties or dismissal is the
strongest indication of the company’s right of control over the workers as direct
employer.

*SC ordered San Miguel to reinstate the petitioners with 3 years backwages

ON THE FOUR FOLD TEST:

 CONTINENTAL MARBLE CORP. and FELIPE DAVID,

petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (NLRC); ARBITRATOR JOSE T. COLLADO
and RODITO NASAYAO, respondents.
FACTS:
 Rodito Nasayao claimed that he was appointed plant manager of the corporation
and receiving a compensation of P3,000.00, a month or 25% of the monthly net
income of the company, whichever is greater, when the company failed to give
his salary for the months of May, June and July Nasayo filed a complaint with the
NLRC.
 Continental Marble Corp., denied the claim of Rodito Nasayao, that the latter was
not an employee of the company, an undertaking agreed upon by the parties as
joint venture, a sort of partnership, wherein Rodito Nasayao was to keep the
machinery in good working condition and, in return, he would get the contracts
from end-users for the installation of marble products, in which the company
would not interfere. In addition, private respondent Nasayao was to receive an
amount equivalent to 25% of the net profits that the corporation will earn, should
there be any.
 The case was submitted for voluntary arbitration and the parties selected Jose T.
Collado as voluntary arbitrator. In the course of the proceeding, Continental
Marble Corp., challenged the arbitrator’s capacity to try and decide the case fairly
and judiciously and asked him to desist from further hearing the case. But the
respondent arbitrator refused. Later a judgement was rendered in favor of Rodito
Nasayao.
 Upon receipt of the decision, Continental Marble Corp., appealed to the National
Labor Relations Commission on grounds that the labor arbiter gravely abused his
discretion in persisting to hear and decide the case notwithstanding petitioners’

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 request for him to desist therefrom: and that the appealed decision is not
supported by evidence.
 Rodito Nasayao filed a motion to dismiss the appeal on the ground that the
decision of the voluntary arbitrator is final, unappealable, and immediately
executory; and a motion for the issuance of a writ of execution. The Commission,
dismissed the appeal on the ground that the decision appealed from is final,
unappealable and immediately executory. Continental Marble Corp., seek to
annul and set aside the decision.
ISSUE:
Whether or not there exist an employee-employer relationship between Rodito Nasayao
and Continental Marble Corp.?
HELD:
No. The court relied on the so -called “con trol test” that is the most important element,
in determining the existence of an employer-employee relationship, the elements that
are generally considered are the following: (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 with respect to the means and methods by which the
work is to be accomplished.
In the instant case, it appears that the petitioners had no control over the conduct of
Rodito Nasayao in the performance of his work. He decided for himself on what was to
be done and worked at his own pleasure. He was not subject to definite hours or
conditions of work and, in turn, was compensated according to the results of his own
effort. There is also nothing in the record which would support the claim of Rodito
Nasayao that he was an employee of the petitioner corporation. He was not included in
the company payroll, nor in the list of company employees furnished the Social Security
System.
Absent the power to control the employee with respect to the means and methods by
which his work was to be accomplished, there was no employer- employee relationship
between the parties. Hence, there is no basis for an award of unpaid salaries or wages
to Rodito Nasayao.
The Court has accorded great respect for, and finality to, findings of fact of a voluntary
arbitrator and administrative agencies which have acquired expertise in their respective
fields, like the Labor Department and the National Labor Relations Commission, their
findings of fact and the conclusions drawn therefrom have to be supported by
substantial evidence.
In that instant case, the finding of the voluntary arbitrator that Rodito Nasayao was an
employee of the petitioner corporation is not supported by the evidence or by the law.

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The court finds the version of the petitioners to be more plausible and in accord with
human nature and the ordinary course of things. As pointed out by the petitioners, it was
illogical for them to hire the private respondent Rodito Nasayao as plant manager with a
monthly salary of P3,000.00, an amount which they could ill-afford to pay, considering
that the business was losing, at the time he was hired, and that they were about to close
shop in a few months’ time.

**old receivables

THE CONTROL TEST:

 PAGUIO TRANSPORT CORPORATION v.
NLRC
DOCTRINE:
 The relationship of taxi owners and taxi drivers is the same as that between
jeepney owners and jeepney drivers under the "boundary system." In both cases,
the employer-employee relationship was deemed to exist.
FACTS:
 Complainant Melchor was hired by respondent company as a taxi driver under
the boundary system. He was engaged to drive the taxi unit assigned to him on a
24-hour schedule per trip every two days, for which he used to earn an average
income from P500 to P700 per trip, exclusive of the P650.00 boundary and other
deductions imposed on him.
 The complainant allegedly met a vehicular accident when he accidentally
bumped a car which stopped at the intersection even when the traffic light was
green and go.
 After he submitted the traffic accident report to the office of respondents, he was
allegedly advised to stop working and have a rest. After several days, he
allegedly reported for work only to be told that his service was no longer needed.
Hence, the complaint for illegal dismissal, among others. Respondents for their
part maintained that complainant was not illegally dismissed, there being in the
first place no employer-employee relationship between them. Payment of
boundary allegedly makes the relationship between them of a "wase-agreement"
ISSUE:
Whether or not there is employer-employee relationship
HELD:

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Yes. In Martinez v. National Labor Relations Commission, this Court already ruled that
the relationship between jeepney owners/operators on one hand and jeepney drivers on
the other under the boundary system is that of employer-employee and not of lessor-
lessee. In the lease of chattels, the lessor loses complete control over the chattel
leased. In the case of jeepney owners/operators and jeepney drivers, the former
exercise supervision and control over the latter. The fact that the drivers do not receive
fixed wages but get only the excess of that so-called boundary they pay to the
owner/operator is not sufficient to withdraw the relationship between them from that of
employer and employee. The doctrine is applicable in the present case. Thus, private
respondents were employees. because they had been engaged to perform activities
which were usually necessary or desirable in the usual trade or business of the
employer. Under the "boundary system," private respondent was engaged to drive
petitioner's taxi unit on a 24-hour schedule every two days. On each such trip, private
respondent remitted to petitioner a "boundary" of P650. Whatever he earned in excess
of that amount was considered his income. Petitioner argues that under said
arrangement, he had no control over the number of hours private respondent had to
work and the routes he had to take. Therefore, he concludes that the employer-
employee relationship cannot be deemed to exist. Petitioner's contention is not novel

 INSULAR LIFE INSURANCE v. NLRC

DOCTRINE:
 Rules that merely serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be employed in attaining
it, which aim only to promote the result, create no employer-employee
relationship
FACTS:
 On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the
Company) and Melecio T. Basiao entered into a contract by which: (1) Basiao
was "authorized to solicit within the Philippines applications for insurance policies
and annuities in accordance with the existing rules and regulations" of the
Company; (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 consideration of ... (said) agreement;" and (3) the "rules in ... (the Company's)
Rate Book and its Agent's Manual, as well as all its circulars ... and those which
may from time to time be promulgated by it, ..." were made part of said contract.
 Some four years later, in April 1972, the parties entered into another contract —
an Agency Manager's Contract — and to implement his end of it Basiao
organized an agency or office to which he gave the name M. Basiao and
Associates, while concurrently fulfilling his commitments under the first contract

Page 6 of 21
 with the Company. In May, 1979, the Company terminated the Agency
Manager's Contract.
 Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the
Company and its president. The respondents disputed the Ministry's jurisdiction
over Basiao's claim, asserting that he was not the Company's employee, but an
independent contractor and that the Company had no obligation to him for unpaid
commissions under the terms and conditions of his contract.
 The Labor ruled that the underwriting agreement had established an employer-
employee relationship between him and the Company. The National Labor
Relations Commission affirmed the decision. The Company's thesis, that no
employer-employee relation in the legal and generally accepted sense existed
between it and Basiao, is drawn from the terms of the contract they had entered
into, which, either expressly or by necessary implication, made Basiao the
master of his own time and selling methods, left to his judgment the time, place
and means of soliciting insurance, set no accomplishment quotas and
compensated him on the basis of results obtained. He was not bound to observe
any schedule of working hours or report to any regular station; he could seek and
work on his prospects anywhere and at anytime he chose to, and was free to
adopt the selling methods he deemed most effective.
ISSUE:
Whether or not Basiao was an employee of respondent?
HELD:
NO. Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the means or
methods to be employed in attaining it, and those that control or fix the methodology
and bind or restrict the party hired to the use of such means. The first, which aim only to
promote the result, create no employeremployee relationship unlike the second, which
address both the result and the means used to achieve it.
The respondents limit themselves to pointing out that Basiao's contract with the
Company bound him to observe and conform to such rules and regulations as the latter
might from time to time prescribe. No showing has been made that any such rules or
regulations were in fact promulgated, much less that any rules existed or were issued
which effectively controlled or restricted his choice of methods — or the methods
themselves — of selling insurance.
Absent such showing, the Court will not speculate that any exceptions or qualifications
were imposed on the express provision of the contract leaving Basiao "... free to
exercise his own judgment as to the time, place and means of soliciting insurance."

Page 7 of 21
The Court, therefore, rules that under the contract invoked by him, Basiao was not an
employee of the petitioner, but a commission agent, an independent contractor whose
claim for unpaid commissions should have been litigated in an ordinary civil action

 Manila Golf and Country Club v. Intermediate Appellate Court

and Fermin Llamar
FACTS:
 The petition was made by the seventeen (17) person who styled themselves as
“Caddies of Manila Golf and Country Club-PTCCEA” the petition was filed with
the Social Security Commission (SSC) for coverage and availing of benefits
under the Social Security Act as amended. The petition, docketed as SSC Case
No. 5443, alleged in essence that although the petitioners were employees of the
Manila Golf and Country Club, a domestic corporation, the latter had not
registered them as such with the SSS.
 In the case before the SSC, the respondent Club filed answer praying for the
dismissal of the petition, because the petitioners were not subject to the direction
and control of the Club as regards the manner in which they performed their
work; and hence, they were not the Club's employees.
 Subsequently, all but two of the seventeen petitioners of their own accord
withdrew their claim for social security coverage, avowedly coming to realize that
indeed there was no employment relationship between them and the Club. The
case continued, and was eventually adjudicated by the SSC after protracted
proceedings only as regards the two holdouts, Fermin Llamar and Raymundo
Jomok. The Commission dismissed the petition for lack of merit.
ISSUE:
Whether or not persons rendering caddying services for members of golf clubs and their
guests in said clubs’ courses or premises are the employees and therefore within the
compulsory coverage of the Social Security System(SSS).

RULING:
No, the caddy's fees were paid by the golf players themselves and not by respondent
club. For instance, petitioner Raymundo Jomok averred that for their services as
caddies a caddy's Claim Stub is issued by a player who will in turn hand over to
management the other portion of the stub known as Caddy Ticket so that by this
arrangement management will know how much a caddy will be paid. As testified to by
petitioner Fermin Llamar that their income depends on the number of players engaging
their services and liberality of the latter. This lends credence to respondent's assertion

Page 8 of 21
that the caddies are never their employees in the absence of two elements, namely, (1)
payment of wages and (2) control or supervision over them. In this connection, our
Supreme Court ruled that in the determination of the existence of an employer-
employee relationship, the "control test" shall be considered decisive.
In the final analysis, petitioner has no way of compelling the presence of the caddies as
they are not required to render a definite number of hours of work on a single day. Even
the group rotation of caddies is not absolute because a player is at liberty to choose a
caddy of his preference regardless of the caddy's order in the rotation.
It can happen that a caddy who has rendered services to a player on one day may still
find sufficient time to work elsewhere. Under such circumstances, he may then leave
the premises of petitioner and go to such other place of work that he wishes (sic). Or a
caddy who is on call for a particular day may deliberately absent himself if he has more
profitable caddying, or another, engagement in some other place. These are things
beyond petitioner's control and for which it imposes no direct sanctions on the caddies.
WHEREFORE, the Decision of the Intermediate Appellant Court, review of which is
sought, is reversed and set aside, it being hereby declared that the private respondent,
Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and that
petitioner is under no obligation to report him for compulsory coverage to the Social
Security System. No pronouncement as to costs.

 Dy Keh Beng v. International Labor, Marine

Union of the Ph
FACTS:
 The Court of Industrial Relations in that case found Dy Keh Beng, proprietor of
basket factory, guilty of the unfair labor practice acts alleged and order him to
reinstate Carlos Solano and Ricardo Tudla to their former jobs with back wages
from their respective dates of dismissal until fully reinstated without loss to their
right of seniority and of such other rights already acquired by them and/or
allowed by law.
 After preliminary investigation was conducted, a case was filed in the Court of
Industrial Relations for in behalf of the International Labor and Marine Union of
the Philippines and two of its members, Solano and Tudla.
 In his answer, Dy Keh Beng contended that he did not know Tudla and that
Solano was not his employee because the latter came to the establishment only
when there was work which he did on pakiaw basis, each piece of work being
done under a separate contract.
 According to Dy Keh Beng, Solano was not his employee for the following
reasons:

Page 9 of 21
 1. Solano never stayed long enough at Dy’s establishment;
2. Solano had to leave as soon as he was through with the order given him by
Dy;
3. When there were no orders needing his services there was nothing for him to
do;
4. When orders came to the shop that his regular workers could not fill it was
then that Dy went to his address in Caloocan and fetched him for these
orders; and
5. Solano's work with Dy's establishment was not continuous.
 According to petitioner, these facts show that respondents Solano and Tudla are
only piece workers, not employees under Republic Act 875, where an employee
is referred to as shall include any employee and shall not be limited to the
employee of a particular employer unless the act explicitly states otherwise and
shall include any individual whose work has ceased as a consequence of, or in
connection with any current labor dispute or because of any ulp and who has not
obtained any other substantially equivalent and regular employment. While an
employer includes any person acting in the interest of an employer, directly or
indirectly but shall not include any labor organization (otherwise than when acting
as an employer) or anyone acting in the capacity of officer or agent of such labor
organization. Petitioner contends that the private respondents "did not meet the
control test in the fight of the ... definition of the terms employer and employee,
because there was no evidence to show that petitioner had the right to direct the
manner and method of respondent's work.
 The test ... of the existence of employee and employer relationship is whether
there is an understanding between the parties that one is to render personal
services to or for the benefit of the other and recognition by them of the right of
one to order and control the other in the performance of the work and to direct
the manner and method of its performance.
 According to the Hearing Examiner, the evidence for the complainant Union
tended to show that Solano and Tudla became employees of Dy Keh Beng from
May 2, 1953 and July 15, 1955, 5 respectively, and that except in the event of
illness, their work with the establishment was continuous although their services
were compensated on piece basis. Hence, this petition for certiorari.
ISSUE:
Whether or not an employee employer relation existed between petitioner Dy Keh Beng
and the respondents Solano and Tudla
RULING:
YES.
On the control test: While this court upholds control test 11 under which an employer-
employee relationship exists "where the person for whom the services are performed

Page 10 of 21
reserves a right to control not only the end to be achieved but also the means to be
used in reaching such end, " it finds no merit with petitioner's arguments as stated
above. SC said that “It should be borne in mind that the control test calls merely for the
existence of the right to control the manner of doing the work, not the actual exercise of
the right.” Considering the finding by the Hearing Examiner that the establishment of Dy
Keh Beng is "engaged in the manufacture of baskets known as kaing, it is natural to
expect that those working under Dy would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some control would necessarily be
exercised by Dy as the making of the kaing would be subject to Dy's specifications.
Parenthetically, since the work on the baskets is done at Dy's establishments, it can be
inferred that the proprietor Dy could easily exercise control on the men he employed.
As to the contention that Solano was not an employee because he worked on piece
basis: this Court agrees with the Hearing Examiner that circumstances must be
construed to determine indeed if payment by the piece is just a method of compensation
and does not define the essence of the relation. The SC also noted the decision of
Justice Paras in the case of “Sunrise Coconut Products Co. Vs. CIR (83 Phil 518, 523)
that “judicial notice of the fact that the so-called "pakyaw" system mentioned in this case
as generally practiced in our country, is, in fact, a labor contract -between employers
and employees, between capitalists and laborers.”
On GADALEJ: There is no showing that the Court of Industrial Relations abused its
discretion when it concluded that the findings of fact made by the Hearing Examiner
were supported by evidence on the record.
On the backwages: considering that about eighteen (18) years have already elapsed
from the time the complainants were dismissed, 15 and that the decision being
appealed ordered the payment of backwages to the employees from their respective
dates of dismissal until finally reinstated, it is fitting to apply in this connection the
formula for backwages worked out by Justice Claudio Teehankee in "cases not
terminated sooner." The formula cans for fixing the award of backwages without
qualification and deduction to three years, "subject to deduction where there are
mitigating circumstances in favor of the employer but subject to increase by way of
exemplary damages where there are aggravating circumstances. Considering there are
no such circumstances in this case, there is no reason why the Court should not apply
the abovementioned formula in this instance.
The petition was dismissed. The Court affirmed the decision of the CIR. the award of
backwages granted by the Court of Industrial Relations is herein modified to an award
of backwages for three years without qualification and deduction at the respective rates
of compensation the employees concerned were receiving at the time of dismissal.

 DOMASIG V. NLRC.
Page 11 of 21
FACTS:
 This petition for certiorari under Rule 65 of the Rules of Court seeks to nullify and
set aside the Resolution 1 of respondent National Labor Relations Commission.
 The complaint was instituted by Eddie Domasig against respondent Cata
Garments Corporation, a company engaged in garments business and its
owner/manager Otto Ong and Catalina Co for illegal dismissal, unpaid
commission and other monetary claim[s].
 Complainant alleged that he started working with the respondent on July 6, 1986
as Salesman when the company was still named Cato Garments Corporation;
that three (3) years ago, because of a complaint against respondent by its
workers, its changed its name to Cata Garments Corporation; and that on August
29, 1992, he was dismissed when respondent learned that he was being pirated
by a rival corporation which offer he refused. Prior to his dismissal, complainant
alleged that he was receiving a salary of P1,500.00 a month plus commission.
On September 3, 1992 he filed the instant complaint.
 Respondent denied complainant's claim that he is a regular employee contending
that he is a mere commission agent who receives a commission of P5.00 per
piece of article sold at regular price and P2.50 per piece sold in [sic] bargain
price; that in addition to commission, complainant received a fixed allowance of
P1,500.00 a month; that he had no regular time schedule; and that the company
come [sic] into existence only on September 17, 1991. In support of its claim that
complainant is a commission agent, respondent submitted as Annexes "B" and
"B-1" the List of Sales Collections, Computation of Commission due, expenses
incurred, cash advances received for the month of January and March 1992
(Rollo, p. 22-27). Respondent further contends that complainant failed to turn
over to the respondent his collection from two (2) buyers as per affidavit
executed by these buyers (Rollo p. 28-29) and for which, according to
respondent it initiated criminal proceedings against the complainant.
 Labor Arbiter held that complainant was illegally dismissed and entitled to
reinstatement and backwages as well as underpayment of salary; 13th month
pay; service incentive leave and legal holiday. The Arbiter also awarded
complainant his claim for unpaid commission in the amount of P143,955.00.
 Private respondents appealed the decision of the labor arbiter to public
respondent. As aforesaid, the NLRC resolved to remand the case to the labor
arbiter for further proceeding. It found that decision of the Labor Arbiter not
supported by evidence on record. The issue of whether or not complainant was a
commission agent was not fully resolved in the assailed decision. The resolution
of the nature of complainant's employment is vital to the case at bar considering
that it would be determinative to his entitlement of monetary benefits. NLRC was
not convinced that the evidence presented by the petitioner, consisting of the
identification card issued to him by private respondent corporation and the cash
vouchers reflecting his monthly salaries covering the months stated therein,

Page 12 of 21
 settled the issue of employer-employee relationship between private respondents
and petitioner.
ISSUE:
whether or not the NLRC gravely abused its discretion in vacating and setting aside the
decision of the labor arbiter and remanding the case to the arbitration branch of origin
for further proceedings.
Whether or not there was an employer-employee relationship
RULING:
It has long been established that in administrative and quasi-judicial proceedings,
substantial evidence is sufficient as a basis for judgment on the existence of employer-
employee relationship. No particular form of evidence is required is required to prove
the existence of such employer-employee relationship. Substantial evidence has been
defined to be such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, and its absence is not shown by stressing that there is contrary
evidence on record.
Court agrees with the labor arbiter that these matters (identification card, cash
vouchers) constitute substantial evidence adequate to support a conclusion that
petitioner was indeed an employee of private respondent.
Court however, do not believe that the labor arbiter acted arbitrarily. Contrary to the
finding of the NLRC, her decision at least on the existence of an employer-employee
relationship between private respondents and petitioner, is supported by substantial
evidence on record. The list of sales collection including computation of commissions
due, expenses incurred, and cash advances received (Exhibits "B" and "B-1") which,
according to public respondent, the labor arbiter failed to appreciate in support of private
respondents" allegation as regards the nature of petitioner's employment as a
commission agent, cannot overcome the evidence of the ID card and salary vouchers
presented petitioner which private respondents have not denied.
Having been in the employ of private respondents continuously for more than one year,
under the law, petitioner is considered a regular employee. Petitioner's contention that
private respondents terminated his employment due to their suspicion that he was being
enticed by another firm to work for it was not refuted by private respondents. The labor
arbiter's conclusion that petitioner's dismissal is therefore illegal, is not necessarily
arbitrary or erroneous. It is entitled to great weight and respect. It was error and grave
abuse of discretion for the NLRC to remand the case for further proceedings to
determine whether or not petitioner was private respondents' employee. This would only
prolong the final disposition of the complaint. It is stressed that, in labor cases,
simplification of procedures, without regard to technicalities and without sacrificing the
fundamental requisites of due process, is mandated to ensure the speedy
administration of justice.

Page 13 of 21
In view of the need for further and correct computation of the petitioner's commissions in
the light of the exhibits presented and the dismissal of the criminal cases filed against
petitioner, the labor arbiter is required to undertake a new computation of the
commissions to which petitioner may be entitled, within thirty (30) days from the
submission by the partied of all necessary documents.

 VILLAMARIA, JR. V. CA
FACTS:
 This is a petition for review on certiorari of the decision of the CA which set aside
the Resolution of the NLRC which in turn affirmed the Decision of the Labor
Arbiter dismissing the complaint filed by respondent Bustamante.
 Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole
proprietorship engaged in assembling passenger jeepneys with a public utility
franchise to operate along the Baclaran-Sucat route. By 1995, Villamaria stopped
assembling jeepneys and retained only nine, four of which he operated by
employing drivers on a “boundary basis.” One of those drivers was respondent.
Bustamante remitted P450 a day to Villamaria as boundary and kept the residue
of his daily earnings as compensation for driving the vehicle. In August 1997,
Villamaria verbally agreed to sell the jeepney to Bustamante under the
“boundary-hulog scheme,” where Bustamante would remit to Villarama P550 a
day for a period of 4 years; Bustamante would then become the owner of the
vehicle and continue to drive the same under Villamaria’s franchise. It was also
agreed that Bustamante would make a downpayment of P10,000.
 On August 7, 1997, Villamaria executed a contract entitled “Kasunduan ng
Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog” over the passenger
jeepney. The parties agreed that if Bustamante failed to pay the boundary-hulog
for 3 days, Villamaria Motors would hold on to the vehicle until Bustamante paid
his arrears, including a penalty of P50 a day; in case Bustamante failed to remit
the daily boundary-hulog for a period of one week, the Kasunduan would cease
to have legal effect and Bustamante would have to return the vehicle to
Villamaria Motors.
 Bustamante continued driving the jeepney under the supervision and control of
Villamaria. As agreed upon, he made daily remittances of P550 in payment of the
purchase price of the vehicle. Bustamante failed to pay for the annual registration
fees of the vehicle, but Villamaria allowed him to continue driving the jeepney.
 In 1999, Bustamante and other drivers who also had the same arrangement with
Villamaria Motors failed to pay their respective boundary-hulog. This prompted
Villamaria to serve a “Paalala,” reminding them that under the Kasunduan, failure
to pay the daily boundary-hulog for one week, would mean their respective
jeepneys would be returned to him without any complaints. He warned the

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 drivers that the Kasunduan would henceforth be strictly enforced and urged them
to comply with their obligation to avoid litigation. On July 24, 2000, Villamaria
took back the jeepney driven by Bustamante and barred the latter from driving
the vehicle.
 Bustamante filed a Complaint for Illegal Dismissal against Villamaria and his wife
Teresita. He narrated that in July 2000, he informed the Villamaria spouses that
the surplus engine of the jeepney needed to be replaced, and was assured that it
would be done. However, he was later arrested and his driver’s license was
confiscated because apparently, the replacement engine that was installed was
taken from a stolen vehicle. He was no longer allowed to drive the vehicle unless
he paid them P70,000.
ISSUES:
1. WON the existence of a boundary-hulog agreement negates the employer-employee
relationship between the vendor and vendee
2. As a corollary, WON the Labor Arbiter has jurisdiction over a complaint for illegal
dismissal in such a case.

RULING:
1. NO.

Ratio: Under the boundary-hulog scheme, a dual juridical relationship is created: that
of employer-employee and vendor-vendee. The Kasunduan did not extinguish the
employer employee relationship of the parties extant before the execution of said
deed.

Reasoning: The boundary system is a scheme by an owner/operator engaged in

transporting passengers as a common carrier to primarily govern the compensation
of the driver, that is, the latter’s daily earnings are remitted to the owner/operator
less the excess of the boundary which represents the driver’s compensation. Under
this system, the owner/operator exercises control and supervision over the driver. It
is unlike in lease of chattels where the lessor loses complete control over the chattel
leased but the lessee is still ultimately responsible for the consequences of its use.
The management of the business is still in the hands of the owner/operator, who,
being the holder of the certificate of public convenience, must see to it that the driver
follows the route prescribed by the franchising and regulatory authority, and the rules
promulgated with regard to the business operations. The fact that the driver does not
receive fixed wages but only the excess of the “boundary” given to the
owner/operator is not sufficient to change the relationship between them.
Indubitably, the driver performs activities which are usually necessary or desirable in
the usual business or trade of the owner/operator.

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 Under the Kasunduan, respondent was required to remit P550 daily to petitioner, an
amount which represented the boundary of petitioner as well as respondent’s partial
payment (hulog) of the purchase price of the jeepney. Thus, the daily remittances
also had a dual purpose: that of petitioner’s boundary and respondent’s partial
payment (hulog) for the vehicle. This dual purpose was expressly stated in the
Kasunduan. The well-settled rule is that an obligation is not novated by an
instrument that expressly recognizes the old one, changes only the terms of
payment, and adds other obligations not incompatible with the old provisions or
where the new contract merely supplements the previous one. The two obligations
of the respondent to remit to petitioner the boundary-hulog can stand together.

The existence of an employment relation is not dependent on how the worker is paid
but on the presence or absence of control over the means and method of the work .
The amount earned in excess of the “boundary hulog” is equivalent to wages and
the fact that the power of dismissal was not mentioned in the Kasunduan did not
mean that private respondent never exercised such power, or could not exercise
such power.

Neither is such juridical relationship negated by petitioner’s claim that the terms and
conditions in the Kasunduan relative to respondent’s behavior and deportment as
driver was for his and respondent’s benefit: to insure that respondent would be able
to pay the requisite daily installment of P550, and that the vehicle would still be in
good condition despite the lapse of 4 years. What is primordial is that petitioner
retained control over the conduct of the respondent as driver of the jeepney.

As respondent’s employer, it was the burden of petitioner to prove that respondent’s

termination from employment was for a lawful or just cause, or, at the very least, that
respondent failed to make his daily remittances of P550 as boundary. However,
petitioner failed to do so. Well-settled is the rule that, the employer has the burden of
proving that the dismissal of an employee is for a just cause. The failure of the
employer to discharge this burden means that the dismissal is not justified and that
the employee is entitled to reinstatement and back wages.

2. YES.
Reasoning: The jurisdiction of Labor Arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an employer-employee relationship
which can only be resolved by reference to the Labor Code, other labor statutes or
their collective bargaining agreement.

Disposition: Petition is DENIED. Decision of the CA is AFFIRMED

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 MAKATI HABERDASHERY, INC. VS.
NLRC
FACTS:
 Individual complainants have been working for petitioner Makati Haberdashery,
Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They
are paid on a piece-rate basis. In addition to their piece-rate, they are given a
daily allowance of three (P 3.00) pesos provided they report for work before 9:30
a.m. everyday.
 On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization
of the respondent workers, filed a complaint with the NLRC for (a) underpayment
of the basic wage; (b) underpayment of living allowance; (c) non-payment of
overtime work; (d) nonpayment of holiday pay; (e) non-payment of service
incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage
Orders Nos. 1, 2, 3, 4 and 5.
 During the pendency of NLRC Case, private respondent Dioscoro Pelobello left
with Salvador Rivera, a salesman of petitioner Haberdashery, an open package
which was discovered to contain a "jusi" barong tagalog. When confronted,
Pelobello replied that the same was ordered by respondent Casimiro Zapata for
his customer. Zapata allegedly admitted that he copied the design of petitioner
Haberdashery. Both respondents allegedly did not submit their explanation and
did not report for work. Hence, they were dismissed by petitioners on February 4,
1985. They countered by filing a complaint for illegal dismissal. LA declared
petitioners guilty of illegal dismissal and ordered to reinstate Pelobello and
Zapata and found petitioners violating decrees of COLA, service incentive and
13th month pay. Commission analyst was directed to compute the monetary
awards which retroacts to three years prior to filing of case. NLRC affirmed but
limited backwages to one year.
ISSUES:
Whether an employee-employer relationship exists between petitioner Haberdashery
and respondent workers.
RULING:
We have repeatedly held that the test of employer- employee relationship is four-fold:
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee's conduct. It is the so
called "control test" that is the most important element. This simply means the
determination of whether the employer controls or has reserved the right to control the
employee not only as to the result of the work but also as to the means and method by
which the same is to be accomplished.

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The facts at bar indubitably reveal that the most important requisite of control is present.
As gleaned from the operations of petitioner, when a customer enters into a contract
with the haberdashery or its proprietor, the latter directs an employee who may be a
tailor, pattern maker, sewer or "plantsadora" to take the customer's measurements, and
to sew the pants, coat or shirt as specified by the customer. Supervision is actively
manifested in all these aspects — the manner and quality of cutting, sewing and ironing.
Furthermore, the presence of control is immediately evident in a memorandum issued
by Assistant Manager Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to
Topper's Makati Tailors. From said memorandum alone, it is evident that petitioner has
reserved the right to control its employees not only as to the result but also the means
and methods by which the same are to be accomplished. Unlike independent
contractors who generally rely on their own resources, the equipment, tools,
accessories, and paraphernalia used by private respondents are supplied and owned by
petitioners. Private respondents are totally dependent on petitioners in all these
aspects.

CAURDANETAAN VS. LAGUESMA

FACTS:
 The 92 members of the petitioners, Caurdanetaan Piece Workers Union serving
as Corfarms Grains, Inc.’s, private respondent’s cargadoes are compensated on
a piece rate basis. They unload, pack and pile the "palay" sacks from the
warehouse to the freight trucks, and from the truck to the shipped location.
Corfarm refused these cargadores any benefits, consequently, the cargadores
organized a union.
 Corfarm barred its union members from serving with them after learning about its
formation and replaced them with non-union members.
 The Union filed a petition for the certification election and a complaint for illegal
dismissal with the Department of Labor and Employment.
 When the petition for certification election was pending, the complainant also
filed a complaint against the private respondent for illegal dismissal, unfair labor
practice, compensation of illegal deductions, payment of wage differentials, and
various monetary benefits offered by legislation, penalties, legal interest,
reinstatement and attorney's fees.
 The power of control was rejected by Corfarm on the basis that there is no
employer-employee relationship and instead a contractual relationship exists.
They contended that petitioner's members "were 'street-hired' workers engaged
from time to time to do loading and unloading work .There was no
superintendent-in-charge to give orders and there were no gate passes issued,
nor tools, equipment and paraphernalia issued by Corfarm for loading/unloading.

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 They further argued that the relationship between employer and employee is
negated by the fact that they offer and perform loading and unloading work for
different rice mills in Pangasinan.
 Labor Arbiter Rolando D. Gambito issued his decision finding the dismissal of
petitioner's members illegal. Public Respondent Laguesma premised the
dismissal of the petition for certification election on the absence of an employer-
employee relationship between petitioner's members and private respondent

ISSUE:
The present controversy hinges on whether or not an employer-employee relationship
between the CPWU members and Respondent Corfarm exist.
RULING:
Yes there is employer-emploee relationship. To determine the existence of an
employer-employee relation, this Court has consistently applied the "four-fold" test
which has the following elements: (1) the power to hire, (2) the payment of wages, (3)
the power to dismiss, and (4) the power to control - the last being the most important
element.
Our examination of the case records indubitably shows the presence of an employer-
employee relationship. Relying on the evidence adduced by the petitioners, Respondent
Laguesma himself affirmed the presence of such connection. The absence of a written
contract which specifies the performance of a specified piece of work, the nature and
extent of the work and the term and duration of the relationship between herein
petitioner and respondent company belies the latters [sic] allegation that the former is
indeed and [sic] independent contractor. Also, respondent failed to show by clear and
convincing proof that herein respondent has the substantial capital or investment to
qualify as an independent contractor under the law.
Caurdanetaan Piece Workers Union members (petitioners) performed work which is
directly related, necessary and vital to the operations of Corfarm. Moreover, Corfarm did
not even allege, much less prove, that petitioner's members have "substantial capital or
investment in the form of tools, equipment, machineries, [and] work premises, among
others. Furthermore, said respondent did not contradict petitioner's allegation that it paid
wages directly to these workers without any means of using an independent contractor.
It also wielded the power of dismissal over petitioners; in fact, its exercise of this power
was the progenitor of the illegal dismissal case/second case. Clearly, the workers are
not independent contractors. Assuming arguendo that they did work with other rice
mills, this was required by the imperative of meeting their basic needs.

ORLANDO FARM GROWERS INC. VS. NLRC

Page 19 of 21
FACTS:
 Petitioner: Orlando Farms Growers Association, with co-petitioner Glicerio
Añover as its President, is an association of landowners, an (UNREGISTERED)
ASSOCIATION, AND DID NOT HAVE ANY LEGAL PERSONALITY. It was
engaged in the production of export quality bananas located in Kinamayan, Sto.
Tomas, Davao del Norte, established for the sole purpose of dealing collectively
with Stanfilco on matters concerning technical services, canal maintenance,
irrigation and pest control, among others.
 Respondents, on the other hand, about 20 complainants, were hired as farm
workers by several member-landowners but, nonetheless, were made to perform
functions as packers and harvesters in the plantation of petitioner association.
 January 8, 1993- July 30, 1994 , respondents were dismissed on various dates
that resulted to several complaints for illegal dismissal and monetary benefits. In
which, the same were consolidated in the office of Labor Arbiter
 LA: 20 above-named complainants were ILLEGALLY DISMISSED , and ordering
respondents Orlando Farms Growers Association/Glicerio Añover to
REINSTATE them immediately to their former or equivalent positions, and to
PAY individual complainants their respective backwages and other benefits
(wage differentials, 13th month pay and holiday pay). 2 complainants eventually
dropped their case (Loran Paquit and LovillaDorlones) because they were able to
amicably settle their claims.
 NLRC: Affirmed the decision.
 Petitioner contends that being an unregistered association and having been
formed solely to serve as an effective medium for dealing collectively with
Stanfilco and not existing in law, it cannot be considered an employer.
ISSUE:
WHETHER OR NOT PETITIONERS CAN BE VALIDLY CONSIDERED AS
EMPLOYERS, GIVEN THE FACT THAT THE ASSOCIATION WAS UNREGISTERED
WHETHER OR NOT PETITIONER HAD A VALID GROUND TO DISMISS
RESPONDENTS FROM THEIR RESPECTIVE EMPLOYMENT.
RULING:
YES. PETITIONERS CAN BE CONSIDERED AS EMPLOYERS EVEN IF
UNREGISTERED.
Labor code defines an employer as any person who acts in the interest of an employer
directly or indirectly. The law does not require an employer to be registered in order to
be considered as an employer. Otherwise, it would bring about a situation where
employees are denied not only redress of their grievances but also protection and
benefits accorded to them by law if their employer happens to be simply an Unregisted

Page 20 of 21
Association. An employer employee relationship can be determined using the four fold
test.
In this case, it was the Association which issued memoranda and circulars regarding
employees’ conduct and their identification cards. The association was vested with
powers to settle and pay the claims of workers, making them the employers of the
workers.
In termination disputes, the employer bears the burden of proving that the dismissal is
for just cause, failing which it would mean that the dismissal is not justified and the
employer is entitled to reinstatement.The dismissal of employees must be made within
the parameters of the law and pursuant to the basic tenets of equity, justice and fair
play.
2 FACETS OF VALID TERMINATION OF EMPLOYMENT:
a. The legality of the act of dismissal- dismissal must be under any of the
just causes provided under Art. 2829 of the Labor Code
b. The legality of the manner of dismissal- there must be observance of
the requirements of due process, otherwise known as the two-notice rule.
In the instant case, petitioner severed employment relations when it whimsically
dismissed the respondents in utter disregard of the safeguards underscored in the
Constitution, as well as in the Labor Code. For having been dismissed without a valid
cause and for non-observance of the due process requirement, respondents are entitled
to receive full backwages from the date of their dismissal up to the time of their
reinstatement.

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