LABOR LAW NOTES

1. GENERAL PROVISIONS
ART. 1. NAME OF DECREE
This Decree shall be known as the "Labor Code of the Philippines."

ART. 2. DATE OF EFFECTIVITY

This Code shall take effect six (6) months after its promulgation.
- Promulgated on May 1, 1974 and took effect on November 1, 1974.

LABOR LEGISLATION – consists of statutes, regulations and jurisprudence governing

the relations between capital and labor, by providing for certain employment
standards and a legal framework for negotiating, adjusting and administering
those standards and other incidents of employment.

LABOR STANDARDS LABOR RELATIONS

sets out the least or basic terms, conditions defines the status, rights and duties, and
and benefits of employment that employers the institutional mechanisms that
must provide or comply with and to which govern the individual and collective
employees are entitled as a matter of legal interactions of employers, employees or
right their representatives
SUBSTANCE to be processed MECHANISM that processes the
substance
Book One to Four Book Five and Six
NOTE: Issues about employment tenure and termination fall under labor relations.

SOCIAL LEGISLATION – those laws that provide particular kinds of protection or

benefits to society or segments thereof in furtherance of social justice.
NOTE: Labor laws are social legislation but not all social legislation are labor laws.

ART. 3. DECLARATION OF BASIC POLICY

The State shall afford protection to labor, promote full employment, ensure equal
work opportunities regardless of sex, race or creed, and regulate the relations
between workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane
conditions of work.

ART. 4. CONSTRUCTION IN FAVOR OF LABOR

All doubts in the implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in favor of labor.

ART. 5. RULES AND REGULATIONS

The Department of Labor and other government agencies charged with the administration
and enforcement of this Code or any of its parts shall promulgate the necessary
implementing rules and regulations.

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 Such rules and regulations shall become effective fifteen (15) days after announcement of
their adoption in newspapers of general circulation.

ART. 6. APPLICABILITY
All rights and benefits granted to workers under this Code shall, except as may otherwise
be provided herein, apply alike to all workers, whether agricultural or non-agricultural.

GENERAL RULE: The provisions of the Labor Code shall apply to all employees whether:
a. Agricultural or non-agricultural
b. Industrial or commercial
c. For profit or not unless otherwise provided by law

EXCEPTIONS:
a. Government employees – governed by Civil Service Law, rules and regulations
NOTE: GOCCs without original charter governed by Labor Code
NOTE: Water districts are quasi-GOCCs and are governed by the Civil Service Law
b. Employees of International Organizations and Inter-governmental bodies – file a
complaint before the DFA
c. Corporate officers – court of general jurisdiction or the appropriate RTC

2. CONSTITUTIONAL BASIS
SEC. 3, ART. XIII
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.

3. PRINCIPLE OF SOCIAL JUSTICE IN RELATION TO LABOR LAW

The aim and the reason and, therefore, the justification of labor laws is social justice.

SOCIAL JUSTICE – neither communism, nor despotism, nor atomism nor anarchy, but
the humanization of laws and the equalization of social and economic forces by the State

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 so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the
adoption by the Government of measures calculated to insure economic stability of all
the component elements of society through the maintenance of proper economic and
social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-
constitutionally, through the
exercise of powers underlying the existence of all governments, on the time-honored
principle of salus populi est suprema lex.
 As a juridical principle, it prescribes equality of the people, rich or poor, before the
law.
 As a societal goal, it means the attainment of decent quality of life of the masses
through humane productive efforts.

Guido vs. Rural Progress Administration, L-2089, October 31, 1949

Social justice does not champion division of property or equality of economic status;
what it and the Constitution do guaranty are equality of opportunity, equality of political
rights, equality before the law, equality between values given and received, and equitable
sharing of the social and material goods on the basis of efforts exerted in their
production.
Cabatan vs. Court of Appeals, GR Nos. L-44875, January 22, 1980
For while it is true that RA 3844 and its amendment - as are all agricultural tenancy and
agrarian reform acts - were enacted as social justice measures "(t)he promotion of social
justice, however in the very words of Justice Laurel, " ... is to be achieved not thru a
mistaken sympathy towards any given group." For "social justice means ... the
promotion of the welfare of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the competent elements of society, through
the maintenance of a proper economic and social equilibrium in the interrelations of (an)
the members of the community, constitutionally, through the adoption of measures
legally justifiable, or extra-constitutionally through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est supreme
lex. It "... must be founded on the recognition of the necessity of interdependence among
divers and diverse units of a society and of the protection that should be equally and
evenly extended to all groups as a combined force in our social and economic life,
consistent with the fundamental and paramount objective of the state of promoting the
health comfort, and quiet of all person, and of bringing about the greatest good to the
greatest number.
PLDT vs NLRC GR No. L-80609, August 23, 1988
The policy of social justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best it may mitigate the penalty
but it certainly will not condone the offense. Compassion for the poor is an imperative of
every humane society but only when the recipient is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can
equity be an impediment to the punishment of the guilty. Those who invoke social justice
may do so only if their hands are clean and their motives blameless and not simply

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because they happen to be poor. This great policy of our Constitution is not meant for the
protection of those who have proved they are not worthy of it, like the workers who have
tainted the cause of labor with the blemishes of their own character.

UST vs. NLRC; as cited in Metrolab Industries, 254 SCRA 182; 1992
All this points to the conclusion that the exercise of managerial prerogatives is not
unlimited. It is circumscribed by limitations found in law, a collective bargaining
agreement, or the general principles of fair play and justice
DOLE Phil., Inc., G.R. No. 146650, January 13, 2003
Petitioner also invokes the well-entrenched principle of management prerogative that
"the power to grant benefits over and beyond the minimum standards of law, or the
Labor Code for that matter, belongs to the employer x x x". According to this principle,
even if the law is solicitous of the welfare of the employees, it must also protect the right
of the employer to exercise what clearly are management prerogatives. Petitioner claims
that, being the employer, it has the right to determine whether it will grant a "free meal"
benefit to its employees and, if so, under what conditions. To see it otherwise would
amount to an impairment of its rights as an employer. However, the exercise of
management prerogative is not unlimited. It is subject to the limitations found in
law, a collective bargaining agreement or the general principles of fair play and
justice. This situation constitutes one of the limitations. The CBA is the norm of conduct
between petitioner and private respondent and compliance therewith is mandated by
the express policy of the law.
GANDARA MILL SUPPLY and MILAGROS SY vs. THE NATIONAL LABOR RELATIONS
COMMISSION AND SILVESTRE GERMANO, G.R. No. 126703, December 29, 1998
In holding the constitutional mandate of protection to labor, the rigid rules of procedure
may sometimes be dispensed with to give room for compassion. The doctrine of
"compassionate justice" is applicable under the premises, private respondent being the
breadwinner of his family. "The Social Justice policy mandates a compassionate
attitude toward the working class in its relation to management. In calling for the
protection to labor, the Constitution does not condone wrongdoing by the
employee, it nevertheless urges a moderation of the sanctions that may be applied
to him in the light of the many disadvantages that weigh heavily on him like an
albatross on his neck.
IMASEN PHILIPPINE MANUFACTURING CORPORATION vs. RAMONCHITO T. ALCON
and JOANN S. PAPA, G.R. No. 194884, October 22, 2014
In protecting the rights of the workers, the law, however, does not authorize the
oppression or self-destruction of the employer. The constitutional commitment to the
policy of social justice cannot be understood to mean that every labor dispute shall
automatically be decided in favor of labor. The constitutional and legal protection
equally recognize the employer’s right and prerogative to manage its operation
according to reasonable standards and norms of fair play. Accordingly, except as limited
by special law, an employer is free to regulate, according to his own judgment and
discretion, all aspects of employment, including hiring, work assignments, working
methods, time, place and manner of work, tools to be used, processes to be followed,
supervision of workers, working regulations, transfer of employees, worker supervision,

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layoff of workers and the discipline, dismissal and recall of workers. As a general
proposition, an employer has free reign over every aspect of its business, including the
dismissal of his employees as long as the exercise of its management prerogative is done
reasonably, in good faith, and in a manner not otherwise intended to defeat or
circumvent the rights of workers.
FELIX B. PEREZ and AMANTE G. DORIA vs. PHILIPPINE TELEGRAPH AND TELEPHONE
COMPANY and JOSE LUIS SANTIAGO, G.R. No. 152048, April 7, 2009
The burden of proof rests on the employer to establish that the dismissal is for cause in
view of the security of tenure that employees enjoy under the Constitution and the Labor
Code. The employer’s evidence must clearly and convincingly show the facts on which
the loss of confidence in the employee may be fairly made to rest. It must be adequately
proven by substantial evidence.
Respondents’ illegal act of dismissing petitioners was aggravated by their failure to
observe due process. To meet the requirements of due process in the dismissal of an
employee, an employer must furnish the worker with two written notices: (1) a written
notice specifying the grounds for termination and giving to said employee a reasonable
opportunity to explain his side and (2) another written notice indicating that, upon due
consideration of all circumstances, grounds have been established to justify the
employer's decision to dismiss the employee.
FRANCISCO T. DUQUE III, in his capacity as Chairman of the CIVIL SERVICE
COMMISSION, vs. FLORENTINO VELOSO, G.R. No. 196201, June 19, 2012
The principle of social justice cannot be properly applied in the respondent’s case to
shield him from the full consequences of his dishonesty. The policy of social justice is
not intended to countenance wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it certainly will not condone the
offense. Compassion for the poor is an imperative of every humane society but only when
the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be [the] refuge of scoundrels any more than can equity be an impediment to
the punishment of the guilty. Those who invoke social justice may do so only if their
hands are clean and their motives blameless and not simply because they happen to be
poor. This great policy of our Constitution is not meant for the protection of those who
have proved they are not worthy of it, like the workers who have tainted the cause of
labor with the blemishes of their own character.
ORO ENTERPRISES, INC., vs. NATIONAL LABOR RELATIONS COMMISSION and LORETO
L. CECILIO, G.R. No. 110861, November 14, 1994
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor
protection measure and as a curative statute that — absent a retirement plan devised by,
an agreement with, or a voluntary grant from, an employer — can respond, in part at
least, to the financial well-being of workers during their twilight years soon following
their life of labor. There should be little doubt about the fact that the law can apply to
labor contracts still existing at the time the statute has taken effect, and that its benefits
can be reckoned not only from the date of the law's enactment but retroactively to the
time said employment contracts have started.

4. THE FOUR-FOLD TEST (EMPLOYER-EMPLOYEE RELATIONSHIP)

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Pacific Consultants International Asia, Inc. vs Shonfeld, GR No. 166920, Feb 19, 2007
We agree with the conclusion of the CA that there was an employer-employee
relationship between petitioner PPI and respondent using the four-fold test.
Jurisprudence is firmly settled that whenever the existence of an employment
relationship is in dispute, four elements constitute the reliable yardstick: (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. It is the so-called "control test" which constitutes the most important index of
the existence of the employer-employee relationship–that is, whether the employer
controls or has reserved the right to control the employee not only as to the result of the
work to be done but also as to the means and methods by which the same is to be
accomplished. Stated otherwise, an employer-employee relationship exists where the
person for whom the services are performed reserves the right to control not only the
end to be achieved but also the means to be used in reaching such end.
Sonza vs. ABS-CBN Broadcasting Corp, GR No. 138051, June 10, 2004
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.
Zanotte Shoes vs. NLRC, GR No. 100665, Feb. 13, 1995
The work of private respondents is clearly related to, and in the pursuit of, the principal
business activity of petitioners. The indicia used for determining the existence of an
employer-employee relationship, all extant in the case at bench, include (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 result of the
work to be done and to the means and methods by which the work to be done and to the
means and methods by which the work is to be accomplished. The requirement, so
herein posed as an issue, refers to the existence of the right to control and not
necessarily to the actual exercise of the right.
Coca Cola Bottlers Phil., Inc. vs. Climaco, GR No. 146881, Feb. 5, 2007
The Court agrees with the finding of the Labor Arbiter and the NLRC that the
circumstances of this case show that no employer-employee relationship exists between
the parties. The Labor Arbiter and the NLRC correctly found that petitioner company
lacked the power of control over the performance by respondent of his duties. The
Labor Arbiter reasoned that the Comprehensive Medical Plan, which contains the
respondent’s objectives, duties and obligations, does not tell respondent "how to conduct
his physical examination, how to immunize, or how to diagnose and treat his patients,
employees of [petitioner] company, in each case."
Insurance Life Assurance Co. Ltd v NLRC, GR No. 84484, November 15, 1989
Indeed, it is without question a valid test of the character of a contract or agreement to
render service. It should, however, be obvious that not every form of control that the

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hiring party reserves to himself over the conduct of the party hired in relation to the
services rendered may be accorded the effect of establishing an employer-employee
relationship between them in the legal or technical sense of the term. A line must be
drawn somewhere, if the recognized distinction between an employee and an individual
contractor is not to vanish altogether.
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 employer-employee relationship unlike the second, which
address both the result and the means used to achieve it.
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. The
Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without
jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This
conclusion renders it unnecessary and premature to consider Basiao's claim for
commissions on its merits.
Sorreda vs. Cambridge Electronics Corporation, GR No. 172927, Feb 11, 2010
A labor arbiter may only take cognizance of a case and award damages where the claim
for such damages arises out of an employer-employee relationship.
While there was an employer-employee relationship between the parties under their
five-month per-project contract of employment, the present dispute is neither rooted in
the aforestated contract nor is it one inherently linked to it. Petitioner insists on a right
to be employed again in respondent company and seeks a determination of the existence
of a new and separate contract that established that right. As such, his case is within the
jurisdiction not of the labor arbiter but of the regular courts. The NLRC and the CA were
therefore correct in ruling that the labor arbiter erroneously took cognizance of the case.
GREAT PACIFIC LIFE VS JUDICO; 180 SCRA 445
The test therefore is whether the "employer" controls or has reserved the right to control
the "employee" not only as to the result of the work to be done but also as to the means
and methods by which the same is to be accomplished.
We can readily see that the element of control by the petitioner on Judico was very much
present. The record shows that petitioner Judico received a definite minimum amount
per week as his wage known as "sales reserve" wherein the failure to maintain the same
would bring him back to a beginner’s employment with a fixed weekly wage of P200.00
for thirteen weeks regardless of production. He was assigned a definite place in the office
to work on when he is not in the field; and in addition to his canvassing work he was
burdened with the job of collection. In both cases he was required to make regular report
to the company regarding these duties, and for which an anemic performance would
mean a dismissal. Conversely faithful and productive service earned him a promotion to
Zone Supervisor with additional supervisor’s allowance, a definite amount of P110.00
aside from the regular P200.00 weekly "allowance." Furthermore, his contract of services
with petitioner is not for a piece of work nor for a definite period. On the other hand, an
ordinary commission insurance agent works at his own volition or at his own leisure

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without fear of dismissal from the company and short of committing acts detrimental to
the business interest of the company or against the latter, whether he produces or not is
of no moment as his salary is based on his production, his anemic performance or even
dead result does not become a ground for dismissal. Whereas, in private-respondent’s
case, the undisputed facts show that he was controlled by petitioner insurance company
not only as to the kind of work; the amount of results, the kind of performance but also
the power of dismissal. Undoubtedly, private respondent, by nature of his position and
work, had been a regular employee of petitioner and is therefore entitled to the
protection of the law and could not just be terminated without valid and justifiable cause.
RUGA VS NLRC; 181 SCRA 266
We have consistently ruled that 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. The employment relation
arises from contract of hire, express or implied. In the absence of hiring, no actual
employer-employee relation could exist.
From the four (4) elements mentioned, We have generally relied on the so-called right-
of-control test where the person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be used in reaching such
end. The test calls merely for the existence of the right to control the manner of doing the
work, not the actual exercise of the right.
The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for the
ruling that a "joint fishing venture" existed between private respondent and petitioners
is not applicable in the instant case. There is neither light of control nor actual exercise of
such right on the part of the boat-owners in the Pajarillo case, where the Court found that
the pilots therein are not under the order of the boat-owners as regards their
employment; that they go out to sea not upon directions of the boat-owners, but upon
their own volition as to when, how long and where to go fishing; that the boat-owners do
not in any way control the crew-members with whom the former have no relationship
whatsoever; that they simply join every trip for which the pilots allow them, without any
reference to the owners of the vessel; and that they only share in their own catch
produced by their own efforts.
The aforementioned circumstances obtaining in Pajarillo case do not exist in the instant
case. The conduct of the fishing operations was undisputably shown by the testimony of
Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under the control and
supervision of private respondent's operations manager. Matters dealing on the fixing of
the schedule of the fishing trip and the time to return to the fishing port were shown to
be the prerogative of private respondent. 12 While performing the fishing operations,
petitioners received instructions via a single-side band radio from private respondent's
operations manager who called the patron/pilot in the morning. They are told to report
their activities, their position, and the number of tubes of fish-catch in one day. 13 Clearly
thus, the conduct of the fishing operations was monitored by private respondent thru the
patron/pilot of 7/B Sandyman II who is responsible for disseminating the instructions to
the crew members.

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JO VS. NLRC; 324 SCRA 47
In determining the existence of an employer-employee relationship, the following
elements are considered: (1) the selection and engagement of the workers; (2) power of
dismissal; (3) the payment of wages by whatever means; and (4) the power to control
the worker’s conduct, with the latter assuming primacy in the overall consideration. The
power of control refers to the existence of the power and not necessarily to the actual
exercise thereof. It is not essential for the employer to actually supervise the
performance of duties of the employee; it is enough that the employer has the right to
wield that power.
Initially, petitioners, as new owners of the barbershop, hired private respondent as
barber by absorbing the latter in their employ. Undoubtedly, the services performed by
private respondent as barber is related to, and in the pursuit of the principal business
activity of petitioners. Later on, petitioners tapped private respondent to serve
concurrently as caretaker of the shop. Certainly, petitioners had the power to dismiss
private respondent being the ones who engaged the services of the latter. In fact, private
respondent sued petitioners for illegal dismissal, albeit contested by the latter. As a
caretaker, private respondent was paid by petitioners wages in the form of honorarium,
originally, at the rate of one-third (1/3) of the shop’s net income but subsequently
pegged at a fixed amount per month. As a barber, private respondent earned two- thirds
(2/3) of the fee paid per haircut or shaving job done. Furthermore, the following facts
indubitably reveal that petitioners controlled private respondent’s work performance, in
that: (1) private respondent had to inform petitioners of the things needed in the shop;
(2). he could only recommend the hiring of barbers and masseuses, with petitioners
having the final decision; (3) he had to be at the shop at 9:00 a.m. and could leave only at
9:00 p.m. because he was the one who opened and closed it, being the one entrusted with
the key.[7] These duties were complied with by private respondent upon instructions of
petitioners. Moreover, such task was far from being negligible as claimed by petitioners.
On the contrary, it was crucial to the business operation of petitioners as shown in the
preceding discussion. Hence, there was enough basis to declare private respondent an
employee of petitioners. Accordingly, there is no cogent reason to disturb the findings of
the labor arbiter and NLRC on the existence of employer-employee relationship between
herein private parties.
Paguio Transport Corp. vs NLRC; 294 SCRA 657
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.
BESA VS. TRAJANO; 146 SCRA 501
The employer of the piece worker supervises and controls his work, but in the case of the

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shoe shiner, respondent BESA does not exercise any degree of control or supervision
over their person and their work. All these are not obtaining in the case of a piece worker
as he is in fact an employee in contemplation of law, distinct from the shoe shiner in this
instance who, in relation to respondent MAMERTO B. BESA, is a partner in the trade.
Consequently, employer-employee relationship between members of the Petitioning
union and respondent MAMERTO B. BESA being absent the latter could not be held guilty
of the unfair labor practice acts imputed against him.
Encyclopedia Britanica vs NLRC; 264 SCRA 1
The fact that petitioner issued memoranda to private respondents and to other division
sales managers did not prove that petitioner had actual control over them. The different
memoranda were merely guidelines on company policies which the sales managers
follow and impose on their respective agents. It should be noted that in petitioner's
business of selling encyclopedias and books, the marketing of these products was done
through dealership agreements. The sales operations were primarily conducted by
independent authorized agents who did not receive regular compensations but only
commissions based on the sales of the products. These independent agents hired their
own sales representatives, financed their own office expenses, and maintained their own
staff. Thus, there was a need for the petitioner to issue memoranda to private respondent
so that the latter would be apprised of the company policies and procedures.
Nevertheless, private respondent Limjoco and the other agents were free to conduct and
promote their sales operations. The periodic reports to the petitioner by the agents were
but necessary to update the company of the latter's performance and business income.
Private respondent was not an employee of the petitioner company. While it was true
that the petitioner had fixed the prices of the products for reason of uniformity and
private respondent could not alter them, the latter, nevertheless, had free rein in the
means and methods for conducting the marketing operations. He selected his own
personnel and the only reason why he had to notify the petitioner about such
appointments was for purpose of deducting the employees' salaries from his
commissions.
PHIL. BROADCASTING NETWORK VS NLRC; 287 SCRA 348
The most crucial test — the control test — demonstrates all too clearly the absence of an
employer-employee relationship. No one at the DZRC had the power to regulate or
control private respondents' activities or inputs. Unlike the regular reporters, he was not
subject to any supervision by petitioner or its officials. Regular reporters "are required
by the petitioner to adhere to a program schedule which delineates the time when they
are to render their reports, as well as the topic to be reported upon. The substance of
their reports are [sic] oftentimes screened by the station prior to [their] actual airing. In
contrast, volunteer reporters are never given such a program schedule but are merely
advised to inform the station of the reports they would make from time to time."
Indeed, DZRC, the petitioner's radio station, exercised no editorial rights over his reports.
He had no fixed day or time for making his reports; in fact, he was not required to report
anything at all. Whether he would air anything depended entirely on him and his
convenience.

5. CASES WHERE EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS

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Villamaria vs. CA; GR No. 165881, April 19, 2006
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. Not every dispute between an employer and employee
involves matters that only the Labor Arbiter and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. Actions between employers
and employees where the employer-employee relationship is merely incidental is within
the exclusive original jurisdiction of the regular courts. When the principal relief is to be
granted under labor legislation or a collective bargaining agreement, the case falls within
the exclusive jurisdiction of the Labor Arbiter and the NLRC even though a claim for
damages might be asserted as an incident to such claim.
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.
The juridical relationship of employer-employee between petitioner and respondent was
not negated by the foregoing stipulation in the Kasunduan, considering that petitioner
retained control of respondent’s conduct as driver of the vehicle.
Alhambra Industries vs. CIR; GR No. L-25984; Oct. 30, 1970
The duties and obligations of the driver or helper do not come from the salesman or
propagandist but are expressly stated by the respondent corporation in the
“memorandum of instructions.” He does not only accompany the salesman or
propagandist in all the trips, but also drives or watches the truck which is the property of
the respondent corporation. He assists the salesman in making deliveries, to different
stores and in the preparation of inventories. These duties are the dictates of respondent
corporation and not of the salesman or propagandist. It is therefore clear that the terms
and conditions of employment of the driver or helper are those fixed and determined by
the respondent corporation. From all the foregoing consideration we are convinced that
the driver and helper is an “employee” of respondent corporation.”
Orlando Farm Growers vs. NLRC, GR No. 129076, Nov. 25, 1998
Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Añ over as its
President, is an association of landowners engaged in the production of export quality
bananas located in Kinamayan, Sto. Tomas, Davao del Norte, established for the sole

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purpose of dealing collectively with Stanfilco on matters concerning technical services,
canal maintenance, irrigation and pest control, among others. Respondents, on the other
hand, 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.
In the instant case, the following circumstances which support the existence of employer-
employee relations cannot be denied. During the subsistence of the association, several
circulars and memoranda were issued concerning, among other things, absences without
formal request, loitering in the work area and disciplinary measures with which every
worker is enjoined to comply. Furthermore, the employees were issued identification
cards which the Court, in the case of Domasig v. NLRC, construed, not only as a security
measure but mainly to identify the holder as a bonafide employee of the firm. However,
what makes the relationship explicit is the power of the petitioner to enter into
compromise agreements involving money claims filed by three of its employees, namely:
Lorna Paquit, Lovella Dorlones and Jasmine Espanola.
n spite of the overwhelming evidence sufficient to justify a conclusion that respondents
were indeed employees of petitioner, the latter, nevertheless, maintain the preposterous
claim that the ID card, circulars and memoranda were issued merely to facilitate the
efficient use of common resources, as well as to promote uniform rules in the work
establishment. On this score, we defer to the observations made by the NLRC when it
ruled that, while the original purpose of the formation of the association was merely to
provide the landowners a unified voice in dealing with Stanfilco, petitioner however
exceeded its avowed intentions when its subsequent actions reenforced only too clearly
its admitted role of employer. As reiterated all too often, factual findings of the NLRC,
particularly when they coincide with those of the Labor Arbiter, are accorded
respect, even finality, and will not be disturbed for as long as such findings are
supported by substantial evidence.
Caurdanetaan Piece Workers Union vs. Laguesma, GR NO. 113542, Feb. 24, 1998
It is undeniable that petitioner’s members worked as cargadores for private respondent.
They loaded, unloaded and piled sacks of palay from the warehouses to the cargo trucks
and from the cargo trucks to the buyers. This work 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 the intervention of any third-party independent contractor. It also
wielded the power of dismissal over petitioners; in fact, its exercise of this power was the
progenitor of the Second Case. Clearly, the workers are not independent contractors.
Maraguinot vs. NLRC, GR No. 120969, Jan. 22, 1998
The relationship between VIVA and its producers or associate producers seems to be
that of agency, as the latter make movies on behalf of VIVA, whose business is to "make"
movies. As such, the employment relationship between petitioners and producers is
actually one between petitioners and VIVA, with the latter being the direct employer.
The employer-employee relationship between petitioners and VIVA can further be
established by the "control test." While four elements are usually considered in

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determining the existence of an employment relationship, namely: (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 of the employee's conduct, the most important
element is the employer's control of the employee's conduct, not only as to the result of
the work to be done but also as to the means and methods to accomplish the same. These
four elements are present here.
VIVA's control is evident in its mandate that the end result must be a "quality film
acceptable to the company." The means and methods to accomplish the result are
likewise controlled by VIVA, viz., the movie project must be finished within schedule
without exceeding the budget, and additional expenses must be justified; certain scenes
are subject to change to suit the taste of the company; and the Supervising Producer, the
"eyes and ears" of VIVA and del Rosario, intervenes in the movie-making process by
assisting the associate producer in solving problems encountered in making the film.
Makati Haberdashery vs. NLRC, GR Nos. 83380-83, Nov. 15, 1989
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 this memorandum issued
by Assistant Manager Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to Topper's
Makati Tailors. From this 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. That private respondents are
regular employees is further proven by the fact that they have to report for work
regularly from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional allowance of P
3.00 daily if they report for work before 9:30 a.m. and which is forfeited when they arrive
at or after 9:30 a.m.
Hydro Resources Contractors Corp vs. Pagalilauan, GR. No. L-62909, April 18, 1989
A lawyer, like any other professional, may very well be an employee of a private
corporation or even of the government. It is not unusual for a big corporation to hire a
staff of lawyers as its in-house counsel, pay them regular salaries, rank them in its table
of organization, and otherwise treat them like its other officers and employees. At the
same time, it may also contract with a law firm to act as outside counsel on a retainer
basis. The two classes of lawyers often work closely together but one group is made up of
employees while the other is not. A similar arrangement may exist as to doctors, nurses,
dentists, public relations practitioners, and other professionals.
Aban worked solely for the petitioner and dealt only with legal matters involving the said
corporation and its employees. He also assisted the Personnel Officer in processing
appointment papers of employees. This latter duty is not an act of a lawyer in the
exercise of his profession but rather a duty for the benefit of the corporation.
The above-mentioned facts show that the petitioner paid Aban's wages, exercised its
power to hire and fire the respondent employee and more important, exercised control
over Aban by defining the duties and functions of his work.

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Citizens League of Free Workers vs. Abbas, GR No. L-21212, Sept. 23, 1966
The only features that would make the relationship of lessor and lessee between the
respondent, owner of the jeeps, and the drivers, members of the petitioner union, are the
fact that he does not pay them any fixed wage but their compensation is the excess of the
total amount of fares earned or collected by them over and above the amount of P7.50
which they agreed to pay to the respondent, and the fact that the gasoline burned by the
jeeps is for the account of the drivers. These two features are not, however, sufficient to
withdraw the relationship, between them from that of employer-employee, because the
estimated earnings for fares must be over and above the amount they agreed to pay to
the respondent for a ten-hour shift or ten-hour a day operation of the jeeps. Not having
any interest in the business because they did not invest anything in the acquisition of the
jeeps and did not participate in the management thereof, their service as drivers of the
jeeps being their only contribution to the business, the relationship of lessor and lessee
cannot be sustained.
ARIEL L. DAVID, doing business under the name and style "YIELS HOG DEALER," vs.
JOHN G. MACASIO, G.R. No. 195466, July 2, 2014
To determine the existence of an employer-employee relationship, four elements
generally need to be considered, namely: (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. These elements or indicators comprise the so-called
"four-fold" test of employment relationship. Macasio’s relationship with David satisfies
this test.
First, David engaged the services of Macasio, thus satisfying the element of "selection and
engagement of the employee." Second, David paid Macasio’s wages. This satisfies the
element of "payment of wages." Third, David had been setting the day and time when
Macasio should report for work. This power to determine the work schedule obviously
implies power of control. By having the power to control Macasio’s work schedule, David
could regulate Macasio’s work and could even refuse to give him any assignment, thereby
effectively dismissing him. And fourth, David had the right and power to control and
supervise Macasio’s work as to the means and methods of performing it. In addition to
setting the day and time when Macasio should report for work, the established facts
show that David rents the place where Macasio had been performing his tasks. Moreover,
Macasio would leave the workplace only after he had finished chopping all of the hog
meats given to him for the day’s task. Also, David would still engage Macasio’s services
and have him report for work even during the days when only few hogs were delivered
for butchering. Under this overall setup, all those working for David, including Macasio,
could naturally be expected to observe certain rules and requirements and David would
necessarily exercise some degree of control as the chopping of the hog meats would be
subject to his specifications. Also, since Macasio performed his tasks at David’s
workplace, David could easily exercise control and supervision over the former.
Accordingly, whether or not David actually exercised this right or power to control is
beside the point as the law simply requires the existence of this power to control or, as in
this case, the existence of the right and opportunity to control and supervise Macasio. In
sum, the totality of the surrounding circumstances of the present case sufficiently points
to an employer-employee relationship existing between David and Macasio.

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EXPEDITION CONSTRUCTION CORPORATION, SIMON LEE PAZ, and JORDAN JIMENEZ,*
vs. ALEXANDER M. AFRICA, ET.AL, December 14, 2017; G.R. No. 228671
At the outset, it bears emphasis that the question of whether or not respondents were
employees of Expedition is a factual issue. It is settled that only questions of law may be
raised in a petition for review on certiorari tiled under Rule 45. However, there are also
recognized exceptions to this rule, one of which is when the factual findings of the labor
tribunals are contradictory to each other, such as obtaining in the case at bar.
First, as clearly admitted, respondents were engaged/hired by Expedition as garbage
truck drivers. Second, it is undeniable that respondents received compensation from
Expedition for the services that they rendered to the latter. The fact that respondents
were paid on a per trip basis is irrelevant in determining the existence of an employer-
employee relationship because this was merely the method of computing the proper
compensation due to respondents. Third, Expedition's power to dismiss was apparent
when work was withheld from respondents as a result of the termination of the contracts
with Quezon City and Caloocan City. Finally, Expedition has the power of control over
respondents in the performance of their work. It was held that "the power of control
refers merely to the existence of the power and not to the actual exercise thereof.'' As
aptly observed by the CA, the agreements for the collection of garbage were between
Expedition and the various LGUs, and respondents needed the instruction and
supervision of Expedition to effectively perform their work in accordance with the
stipulations of the agreements.

6. CASES WHERE THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP

Victorias Milling Co., Inc. vs. NLRC, GR No. 116347, October 3, 1996
As early as 1981 in the case of Federation of Free Farmers v. Court of Appeals, this Court
had ruled that a sugar central does not have any privity of any kind with the sugar farm
workers. Sugar farm workers/laborers were the direct responsibility of their respective
planters and the central did not deal with the planter’s workers but only with the planter.
R.A. 809 did not create any employer-employee relationship between the planters’
workers and the sugar centrals. In fact, the law affirmed the old practice of the central
dealing only with the planter by directly issuing to it the planter’s share of the unrefined
sugar per their milling contracts.
Accordingly, the only obligation of the centrals, like VICTORIAS, is to give to the
respective planters, like the PLANTERS herein, the planters’ share of the proceeds of the
milled sugar in the promotion stipulated in the milling contract which would necessarily
include the portion of 60% pertaining to the laborers. Once this has been done, the
central is already out of the picture, and thereafter, the matter of paying the plantation
laborers of the respective planters becomes exclusively the concern of the planters, the
laborers and the Department of Labor. Under no principle of law or equity can We
impose on the central — here VICTORIAS — any liability to the plantation laborers,
should any of their respective planters-employers fail to pay their legal share.
Filamer Christian Institute vs. IAC; GR No. 75112, August 17, 1992
The present case does not deal with a labor dispute on conditions of employment
between an alleged employee and an alleged employer. It invokes a claim brought by one

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for damages for injury caused by the patently negligent acts of a person, against both
doer-employee and his employer. Hence, the reliance on the implementing rule on labor
to disregard the primary liability of an employer under Article 2180 of the Civil Code is
misplaced. An implementing rule on labor cannot be used by an employer as a shield to
void liability under the substantive provisions of the Civil Code.
Funtecha is an employee of petitioner Filamer. He need not have an official appointment
for a driver’s position in order that the petitioner may be held responsible for his grossly
negligent act, it being sufficient that the act of driving at the time of the incident was for
the benefit of the petitioner. Hence, the fact that Funtecha was not the school driver or
was not acting with the scope of his janitorial duties does not relieve the petitioner of the
burden of rebutting the presumption juris tantum that there was negligence on its part
either in the selection of a servant or employee, or in the supervision over him. The
petitioner has failed to show proof of its having exercised the required diligence of a
good father of a family over its employees Funtecha and Allan.
Singer Sewing Machine Com vs. Drilon, GR No. 91307, Jan. 24, 1991
The present case mainly calls for the application of the control test, which if not satisfied,
would lead us to conclude that no employer-employee relationship exists. Hence, if the
union members are not employees, no right to organize for purposes of bargaining, nor
to be certified as such bargaining agent can ever be recognized.
The nature of the relationship between a company and its collecting agents depends on
the circumstances of each particular relationship. Not all collecting agents are employees
and neither are all collecting agents independent contractors. The collectors could fall
under either category depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as an independent
contractor not only because he is explicitly described as such but also because the
provisions permit him to perform collection services for the company without being
subject to the control of the latter except only as to the result of his work. After a careful
analysis of the contents of the agreement, we rule in favor of the petitioner.
The requirement that collection agents utilize only receipt forms and report forms issued
by the Company and that reports shall be submitted at least once a week is not
necessarily an indication of control over the means by which the job of collection is to be
performed. The agreement itself specifically explains that receipt forms shall be used for
the purpose of avoiding a co-mingling of personal funds of the agent with the money
collected on behalf of the Company. Likewise, the use of standard report forms as well as
the regular time within which to submit a report of collection are intended to facilitate
order in office procedures. Even if the report requirements are to be called control
measures, any control is only with respect to the end result of the collection since the
requirements regulate the things to be done after the performance of the collection job
or the rendition of the service.
MARSMAN & COMPANY, INC. vs RODIL C. STA. RITA, April 23, 2018; G.R. No. 194765
Sta. Rita also failed to satisfy the four-fold test which determines the existence of an
employer-employee relationship. The elements of the four-fold test are: 1) the selection
and engagement of the employees; 2) the payment of wages; 3) the power of dismissal;
and 4) the power to control the employee's conduct. There is no hard and fast rule
designed to establish the aforesaid elements. Any competent and relevant evidence to

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prove the relationship may be admitted. Identification cards, cash vouchers, social
security registration, appointment letters or employment contracts, payrolls,
organization charts, and personnel lists, serve as evidence of employee status.
Sta. Rita failed to prove that Marsman had the power of control over his employment at
the time of his dismissal. The power of an employer to control the work of the employee
is considered the most significant determinant of the existence of an employer-employee
relationship. Control in such relationships addresses the details of day to day work like
assigning the particular task that has to be done, monitoring the way tasks are done and
their results, and determining the time during which the employee must report for work
or accomplish his/her assigned task. The Court likewise takes notice of the company IDs
attached in Sta. Rita's pleading. The "old" ID bore Marsman's logo while the "new" ID
carried Metro Drug's logo. The Court has held that in a business establishment, an
identification card is usually provided not only as a security measure but mainly to
identify the holder thereof as a bona fide employee of the firm that issues it. Thus the
"new" ID confirmed that Sta. Rita was an employee of Metro Drug, which, to reiterate,
later changed its name to CPDSI.
ROYALE HOMES MARKETING CORPORATION, vs. FIDEL P. ALCANTARA [deceased],
substituted by his heirs, G.R. No. 195190; July 28, 2014
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 employer-employee 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, particularly in this case where the parties’ written contract
unequivocally states their intention at the time they entered into it.
Not every form of control is indicative of employer-employee relationship. A person who
performs work for another and is subjected to its rules, regulations, and code of ethics
does not necessarily become an employee. As long as the level of control does not
interfere with the means and methods of accomplishing the assigned tasks, the rules
imposed by the hiring party on the hired party do not amount to the labor law concept of
control that is indicative of employer-employee 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. It is also necessary for Royale Homes to allocate its inventories
among its independent contractors, determine who has priority in selling the same, grant
commission or allowance based on predetermined criteria, and regularly monitor the
result of their marketing and sales efforts. 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.
The element of payment of wages is also absent in this 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 that he
received fixed monthly salary. No payslip or payroll was ever presented and there is no

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proof that Royale Homes deducted from his supposed salary withholding tax or that it
registered him with the Social Security System, Philippine Health Insurance Corporation,
or Pag-Ibig Fund. In fact, his Complaint merely states a ballpark figure of his alleged
salary of ₱100,000.00, more or less. All of these indicate an independent contractual
relationship.
ATOK BIG WEDGE COMPANY, INC. vs. JESUS P. GISON, G.R. No. 169510, August 8, 2011
Applying the four-fold test, an employer-employee relationship is apparently absent in
the case at bar. Among other things, respondent was not required to report everyday
during regular office hours of petitioner. Respondent's monthly retainer fees were paid
to him either at his residence or a local restaurant. More importantly, petitioner did not
prescribe the manner in which respondent would accomplish any of the tasks in which
his expertise as a liaison officer was needed; respondent was left alone and given the
freedom to accomplish the tasks using his own means and method. Respondent was
assigned tasks to perform, but petitioner did not control the manner and methods by
which respondent performed these tasks. Verily, the absence of the element of control on
the part of the petitioner engenders a conclusion that he is not an employee of the
petitioner.
JESUS G. REYES vs. GLAUCOMA RESEARCH FOUNDATION, INC., EYE REFERRAL CENTER
and MANUEL B. AGULTO, G.R. No. 189255, June 17, 2015
Well settled is the rule that where a person who works for another performs his job
more or less at his own pleasure, in the manner he sees fit, not subject to definite hours
or conditions of work, and is compensated according to the result of his efforts and not
the amount thereof, no employer-employee relationship exists.
What was glaring in the present case is the undisputed fact that petitioner was never
subject to definite working hours. He never denied that he goes to work and leaves
therefrom as he pleases. In fact, on December 1-31, 2004, he went on leave without
seeking approval from the officers of respondent company. On the contrary, his letter
simply informed respondents that he will be away for a month and even advised them
that they have the option of appointing his replacement during his absence. This Court
has held that there is no employer-employee relationship where the supposed employee
is not subject to a set of rules and regulations governing the performance of his duties
under the agreement with the company and is not required to report for work at any
time, nor to devote his time exclusively to working for the company.

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