LABOR LAW (PART 2)

(PRE-BAR REVIEW SYLLABUS BASED OUTLINE 2013)

With Survey of SC Decisions Up to 2013

COMPILED BY: MARTIN MARTEL FROM: THE PRE-BAR NOTES OF ATTY. CHAN

CASE LAWS ON EMPLYOYER-EMPLOYEE RELATIONSHIP

I. Coverage of Emplyoyer-Employee Relationship 1. LVN v. Phil. Musicians Guid 1 SCRA 132: DEFINITION

Facts: PMG (Phil. Musicians Guild) applied for certification as the sole and exclusive bargaining agency for all musicians working in LVN and Sampaguita Pictures. LVN et al, are engaged in the making of motion pictures and in the processing and distribution thereof. LVN opposed the application stating that PMG are not their employees, they are merely (under the CC) lessors of services. Issue: Was there Employer-Employee relationship? Ruling: The musical directors above referred to have no such control over the musicians involved in the present case. Said musical directors control neither the music to be played, nor the musicians playing it. The film companies summon the musicians to work, through the musical directors. The film companies, through the musical directors, fix the date, the time and the place of work. The film companies, not the musical directors, provide the transportation to and from the studio. The film companies furnish meal at dinner time. "during the recording sessions, the motion picture director who is an employee of the company" not the musical director "supervises the recording of the musicians and tells them what to do in every detail". The motion picture director not the musical director "solely directs and performance of the musicians before the camera". It is well settled that "an employer-employee relationship exists . . .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 . . . ." (Alabama Highway Express Co., Express Co., v. Local 612, 108S. 2d. 350.) 2. Perez v. Pomar, 2 Phil. 682 (1903): ELEMENTS OF E-E Relationship

Facts: Perez, on various occasions render Don Eugenio Pomar services as interpreter of English and that he obtained passes and accompanied the defendant upon his journeys to some of the towns in the Province of Laguna. It does not appear from the evidence, however, that the plaintiff was constantly at the disposal of the defendant during the period of six months, or that he rendered services as such interpreter continuously and daily during that period of time. Don Eugenio Pomar, as general agent of the Compaia General de Tabacos in the said province, verbally requested the plaintiff on the 8th of December, 1901, to act as interpreter between himself and the military authorities; that after the date mentioned the plaintiff continued to render such services up to and including May 31, 1902; that he had accompanied the defendant, Pomar, during that time at conferences between the latter and the colonel commanding the local garrison, and with various officers and doctors residing in the capital, and at conferences with Captain Lemen in the town of Pilar, and with the major in command at the town of Pagsanjan, concerning the shipment of goods from Manila, and with respect to goods shipped from the towns of Santa Cruz, Pilar, and Pagsanjan to this city; that the plaintiff during this period of time was at the disposal of the defendant, Pomar, and held himself in readiness to render services whenever required; that on this account his private business, and especially a soap factory established in the capital, was entirely abandoned; that to the end that such services might be punctually rendered. Issue: Was he hired and compensation owing to the one who rendered service absent any written or verbal agreement entitle as to that compensation? Ruling: Whether the plaintiff's services were solicited or whether they were offered to the defendant for his assistance, inasmuch as these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent as to the rendition of the services. This gives rise to the obligation upon the person benefited by the services to make compensation therefor, since the bilateral obligation to render services as interpreter, on the one hand, and on the other to pay for the services rendered, is thereby incurred. (Arts. 1088, 1089, and 1262 of the Civil Code). Thus, where one has rendered services to another, and these services are accepted by the latter, in the absence of proof that the service was rendered gratuitously, an obligation results to pay the reasonable worth of the services rendered upon the implied contract of hiring. Although no fixed amount may have been determined as the consideration for the contract of hiring, the contract is nevertheless valid if the amount of the implied compensation can be determined by custom or frequent use in the place where the services were rendered. 3. Sterling Products v. Sol, 7 SCRA 466 (1963): Location as separation of Control

Facts: Loreta C. Sol charged the herein petitioners Sterling Products International and its Radio Director V. San Pedro with having committed an unfair labor practice act. In her complaint she alleged among others that she has been a regular Radio Monitor of respondents-petitioners; that on January 8, 1960, she filed a complaint against the said firm for underpayment, money equivalent of her vacation leave from 1952 to 1959, and Christmas bonus for 1959, equivalent to one month salary. The complaint resulted in her dismissal, without just cause, on December 16, 1960.

Petitioners alleged that Sol is an independent contractor whose services were restrained by petitioners to submit reports of radio monitoring work performed outside of their office. Because the petitioners no longer need such services, they gave Sol notice of termination and executed it. In their petition, it is urged that respondent Sol was an independent contractor because in the performance of her work, the elements of control and direction are lacking, hence, no relationship of employer and employee must have existed, citing in support of this contention Section 3, 35 Am. Jur. 445-446; and that since respondent was employed to work according to her own methods and without being subject to control except as to its final result, she may not be considered as an employee. Issue: Was Loreta C. Sol an employee of Sterling Products International? Was there Employer-Employee relationship? Ruling: Yes. Respondent Sol was directed to listen to certain broadcasts, directing her, in the instructions given her, when to listen and what to listen, petitioners herein naming the stations to be listened to, the hours of broadcasts, and the days when listening was to be done. Respondent Sol had to follow these directions. The mere fact that while performing the duties assigned to her she was not under the supervision of the petitioners does not render her a contractor, because what she has to do, the hours that she has to work and the report that she has to submit all these are according to instructions given by the employer. It is not correct to say, therefore, that she was an independent contractor, for an independent contractor is one who does not receive instructions as to what to do, how to do, without specific instructions. The very act of respondent Sol in demanding vacation leave, Christmas bonus and additional wages shows that she considered herself an employee. A contractor is not entitled to a vacation leave or to a bonus nor to a minimum wage. This act of hers in demanding these privileges are inconsistent with the claim that she was an independent contractor. The control test is met even if you are physically separated from the employer. There are three corroborating evidences that led the SC to say that there was power of control, i.e. Sol was given an ID that says she was an employee; he was given a certification that she was an employee when she applied to buy a lot; she was allowed to apply for a loan. Finally, the company not only hired and fired Mrs. Sol, without third party intervention, but also reserved to itself, possessed and exercised its right to control 'the end' to be achieved and 'the means' to be used in reaching such end, namely, the schedule and other instructions by which the monitor shall be guided, and the reports with specifications by which the company observes and verifies the performance of her work. These are indications of control. Doctrine: Physical Proximity to the employer is not essential for control because that can be surmounted by predetermined instructions. 4. Dy Keh Beng v. International Labor, ET. Al., 90 SCRA 162: Actual Exercise of Control

Facts: Beng, a proprietor of a basket factory, dismissed Carlos Solano and Recardo Tudla because of their union activities. A case was filed for in behalf of the International Labor and Marine Union of the Philippines and two of its members, Solano and Tudla. 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 pakiao basis, each piece of work being done under a separate contract. The CIR held that an employee-employer relationship was found to have existed between Dy Keh Beng and complainants, although Solano was admitted to have worked on piece basis. Petitioner really anchors his contention of the non-existence of employee-employer relationship on the control test that the private respondents "did not meet the control test in the light 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." Moreover, it is argued that petitioner's evidence showed that "Solano worked on a pakiao basis" and that he stayed in the establishment only when there was work. Issue: Whether or Not there existed E-E relationship between Beng and the two respondents. Is Beng in "control"? Ruling: Yes! While this Court upholds the control test under which an employer-employee relationship exists "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," it finds no merit with petitioner's arguments. 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. The establishment of Dy 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. 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. It is worthy to note that Justice Perfecto, concurring with Chief Justice Ricardo Paras who penned the decision in "Sunrise Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518, 523), opined 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.

5.

RJL MARTINEZ FISHING CORPORATION and/or PENINSULA FISHING CORPORATION vs. NLRC and Boticario et. al., 127 SCRA 455 (1984): Continuity of Control

Facts: Petitioners are principally engaged in deep-sea fishing business. Since 1978, private respondents were employed by them as stevedores at Navotas Fish Port for the unloading of tuna fish catch from petitioners' vessels and then loading them on refrigerated vans for shipment abroad. Respondents Boticario, and 30 others, upon the premise that they are petitioners' regular employees, filed a complaint against petitioners for non-payment of overtime pay, premium pay, legal holiday pay, emergency allowance, service incentive leave pay and night shift differential. They were dismissed afterwards by the Petitioners. Petitioners contend that private respondents are contract laborers whose work terminated upon completion of each unloading, and that in the absence of any boat arrivals, private respondents did not work for petitioners but were free to work or seek employment with other fishing boat operators. The Labor Arbiter upheld petitioners' position ruling that the latter are extra workers, who were hired to perform specific tasks on contractual basis; that their work is intermittent depending on the arrival of fishing vessels; that if there are no fish to unload and load, they work for some other fishing boat operators; that private respondent Antonio Boticario had executed an employment contract under which he agreed to act as a labor contractor and that the other private respondents are his men; that even assuming that private respondents are employees of petitioners, their employeremployee relation is co-terminous with each unloading and loading job; that in the same manner, petitioners are not under any obligation to hire petitioners exclusively, hence, when they were not given any job on March 29, 1981, no dismissal was effected but that they were merely not rehired. Issue: Was there in Fact Employer-Employee Relationship? Ruling: Yes. It may be that private respondents alternated their employment on different vessels when they were not assigned to petitioners' boats, that did not affect their employee status. The employer-employee relationship between the parties herein is not co-terminous with each loading and unloading job. As earlier shown, respondents are engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation, respondents' activity of catching fish is a continuous process and could hardly be considered as seasonal in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish from respondents' vessel and then loading the same to refrigerated vans, are necessary or desirable in the business of respondents. This circumstances makes the employment of complainants a regular one, in the sense that it does not depend on any specific project or seasonal activity. Therefore, that the employer-employee relationship existed between the parties notwithstanding evidence to the fact that petitioners Visayas and Bergado, even during the time that they worked with respondent company alternated their employment on different vessels when they were not assigned on the company's vessels. For, as was stressed in the above-quoted case of Industrial-Commercial-Agricultural Workers Organization vs. CIR, 16 SCRA 562 [1966], "that during the temporary layoff the laborers are considered free to seek other employment is natural, since the laborers are not being paid, yet must find means of support" and such temporary cessation of operations "should not mean starvation for employees and their families." Considering the length of time that private respondents have worked for petitioner, there is justification to conclude that they were engaged to perform activities usually necessary or desirable in the usual business or trade of petitioners and are, therefore, regular employees. As such, they are entitled to the benefits awarded them by respondent NLRC. 6. II. The Unltimate but not Exclusive Test (Santos Case)

Distinction 1. From Independent Construction Contractor:

a) Carro vs. Rillaroza, 102 Phil. 61 (1957) Facts: Caro was sentenced to pay one Rilloraza for the injuries he suffered while constructiong the window of the building managed by the former (as the building belonged to Caro's wife, Ramon Caro being only the administrator) Caro maintains that Rilloraza was not his employee within the purview of the Workmen's Compensation Act (WCA) as the latter was hired by one Daniel de la Cruz, who allegedly, is an independent contractor. Caro insists that relationship between him and Rillaroza was casual. Caro maintains that there was a contract entered into between him and dela Cruiz wherein the latter assumed all responsibility for whatever accident that may happen to his laborers engaged in the jobs. Issue: Was there Employer-Employee Relationship as to render Caro liable under Workmen's Compensation Act (WCA)? Ruling; There exists an ER-EE relationship because Caro's business was to rent out the building and he necessarily has to maintain them (bldgs.) in habitable conditions. The contracts entered into by dela Cruz and Caro pertains only to Dela Cruz as the window railing constructed by Rillaroza was not covered by said contract. Evidence indicates that dela Cruz was not an independent contractor. The general nature of the work indicates that the floor joists mentioned in the contract were to be changed under the direction

and control of Dela Cruz does not appear to have any office or business establishment, or even a license to engage in business as a building contractor. He would seem to be merely a free lancing carpenter. Anent the issue of contractual relationship between Caro and Rillaroza, it has been defined and described by Larson in his book Workmen's Compensation Law cited in the majority opinion as follows: that employment is causal when it is irregular, unpredictable, sporadic and brief in nature. Under this test, most maintenance and repair activities, as well as even remodeling and incidental construction, have been held to be within the usual course of a business. In that case of Mansal vs. P. P. Gocheco Lumber Co., supra, this Court through Mr. Justice Labrador, defined "casual" as follows: "Casual" means occasional, coming without regularity. The following authorities are enlightening: Carpenter employed by merchant on work of converting warehouse into apartment and garage held engaged in 'casual employment' at time of his death, so that his widow was not entitled to compensation, 77 P.S. Sec. 22. Fedak vs. Dzialdowski, 172 A. 187, 188, 113 Pa. Super. 104. (Words & Phrases, Vol. 6. p. 291). Carpenter engaged by butchers on work of enlarging storeroom and constructing apartments for renting purposes held engaged in 'casual employment,' and not in 'regular course of the business of the employers,' at time of injury, and not entitled to compensation. 77 P.S. Sec. 22. Quick vs. E.B. Kintner & Son, 172 A. 189, 113 Pa. Super. 108. (Ibid.). Employment by hotel manager of painter on hourly salary basis to do some painting in hotel, the work being apparently of limited scope, held 'casual employment' within provision of Workmen's Compensation Law, excepting such employment from operation of compensation law. Rev. St. 1931, Sec. 124-101 et seq., and Sec. 124-106-7. In re Lamont, 41 P. 2d 497, 499, 48 Wy. 56. (Ibid.) Hence in the case at bar, the building in which Rilloraza worked was found to be intended or used for rental purposes. Caro had control of such building as manager and administrator. Obviously, the repair of said building his part of the usual business of the administration of the properties. Even if Rilloraza, who did the repair work thereof, were a casual laborer, engaged directly by De la Cruz, acting as an independent contractor, which he is not, the former would still be an employee of petitioner herein, within the purview of the Workmen's Compensation Act, and, hence, would be entitled to demand compensation from him. b) Uy Chao Vs Aguilar and Ramos, 103 Phil. 219 (1958) Facts: In trying to maintain the beauty of his store, Petitioner hired Ramos as independent contractor to fix the eaves of the store of the former who in turn sent Aguilar to do the job. It appears that at about 10:00 o'clock in the evening of 24 November 1953, respondent Aguilar suffered physical injury as a result of the sudden fall of the whole eave of a glassware store known as La Boda de Plata and owned by the petitioner Uy Chao, while he (respondent Aguilar) together with two other laborers was on top of said eave removing the galvanized iron sheets covering the frame of the eave. Aguilar asked for Workmans Compensation and the Commission granted the same. Issue: Was there in Fact Employer-Employee Relationship? Ruling: None. The employment of respondent Aguilar to help in the repair or replacement of the eave of a commercial store owned by petitioner Uy Chao was purely casual, because such work would occur only when the said structure should be damaged or broken. When it would be broken and repaired, nobody could foresee. It may safely be stated that the work on the eave would not be made at fixed intervals. The employment of a carpenter and a tinsmith for its repair or replacement was therefore only occasional, sporadic and for a short time. It is clear that the repair or dismantlement of the eave was not for the purpose of the petitioner's occupation or business. The petitioner was a glassware dealer. He bought and sold glassware. It is difficult, to see the connection of the repair or dismantlement with the buying and selling of glassware. Even if the services of respondent Aguilar were engaged by petitioner Uy Chao directly or through an agent or contractor, still respondent Aguilar, the injured laborer, is not entitled to compensation for the simple reason that his employment was purely casual and was not for the purposes of the petitioner's business or occupation. Aguilar is not covered by the Workman's Compensation act with respect to Uy. Because: Section 39 (b) of Act No. 342S as amended, known as the workmen's Compensation Act, provides that (b) 'Laborer' is used as a synonym of 'Employee' and means every person who has entered the employment of, or works under a service or apprenticeship contract for an employer. It does not include a person whose employment is purely casual and is 'not for the, purposes of occupation or business of the employer. c) Cabe v. Tumang, 135 SCRA 389 (1985) (Art. 107, Indirect Employer)

Facts: Tamayo agreed to construct for the spouses Cabe their residential house in accordance with the plans and specifications prepared by an architect. Tamayo started the work. The Cabes dispensed with his services when he allegedly made certain deviations from the plans. The house was finished by other persons. Tamayo sued the Cabes for the recovery of P7,000 as payment of labor and materials. He filed the case as head carpenter of his 18 co-workers, whose wages he had advanced and for reimbursement of materials which he had purchased. Issue: Is Cabe liable for the labor and materials? Ruling: No. Tamayo was an independent contractor and not an employee of the Cabes. He was an independent contractor because he assumed some of the materials. The Labor Regional Office and the National Labor Relations Commission had no jurisdiction over his claim. Their jurisdiction is confined to claims arising from employer-employee relationship (Art. 217, Labor Code; Mafinco Trading Corporation vs. Ople, L-37790, March 25, 1976, 70 SCRA 139; Aguda vs. Vallejos, G.R. No. 58133, March 26, 1982, 113 SCRA 69). Tamayo's claim is cognizable by the municipal trial court. 2. Roving Independent Peddlers: a) Snow White Ice Cream and Ice Drop Factory vs Garcia,42 SCRA 295 (1971)

Facts: Emilio Garcia began working with the respondent as an ice drop vendor in 1953. He was paid on commission basis of P0.02 per ice drop that he sold, thereby earning approximately P7.00 a day, seven days a week. As such vendor, his duties consisted mainly of breaking into small pieces the block of ice given to him, and placing them in the ice drop pushcart to prevent the ice drops from melting. Claimant, when not selling ice drops, repaired broken down pushcarts belonging to the respondents, being also a carpenter by occupation. It appears that on July 27, 1960, while preparing the pushcart assigned to him for peddling, a block of the ice he was carrying fell on his right foot, smashing three of his [toes]. After a week of medication, he resumed his work despite the fact that he was still limping; that while pushing the ice drop pushcart along Solis Street, Tondo, Manila, his swollen right foot was hit by a barbed wire. Claimant, however, continued working until August 27, 1960 when he stopped as he could no longer withstand the pain and chilling sensation that he suffered. He was brought to the North General Hospital where his right foot was amputated below the knee, the abscess having already become gangrenous. He remained in said hospital until September 16, 1960. Dr. V. Roldan, a private physician, continued treatment on the claimant while at home until the amputation wound was completely healed nine months thereafter. Claimant alleged that he spent the total amount of P700.00 for said treatment. Issue: Whether or Not ER-EE relationship existed between Garcia and Snow White Ice cream Factory? Ruling: Yes. Under the controlling test as clarified by Justice Makalintal in the aforesaid Social Security System v. Court of Appeals, the criterion is whether the person or firm alleged to be the employer can direct or require the party assertedly enjoying the employee status to do a certain kind of work and to specify the means and methods by which the same is to be accomplished. "The logic of the situation indeed dictates that where the element of control is absent; where a person who works, for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, we should not find that the relationship of employer and employee exists." From Larson's authoritative treatise on Workmen's Compensation Law: "Just as the employer may buy his raw materials outright from an independent businessman, so he can distribute his product by turning it over completely to a jobber who is an independent businessman. But, since disposition of the product is normally an inherent part of any business, there is an increasing tendency to indulge a presumption that salesman, distributors, and deliverymen who fall short of the status of businessmen holding themselves out to the public as such are employees. The circumstance that the salesman is devoting his entire time to the distribution of the one employer's product is, in most lines, an indication that he is an employee."1 In the case at bar, there is ER-EE relationship because: Who owns the cart? Who owns the ice? SW. Who provided the ice pick? Finally up to issue Whether or not the ice drops that has been sold, was it Garcias or SW? SW, because he could still return it if it were unsold. If it was really his and there were still ice drops at the end of the day, he could no longer return it. The fact that he can return it means that the title does not pass to him, it remains with SW. Now, corroborating evidence, when Garcia could no longer push the cart anymore because his foot is injured, he was repairing the push carts, it means that he is an employee of SW. This is the corroborating evidence which convinced the court that he was an employee of SW. b) Mafinco Trading vs Ople, 70 SCRA 139 (1976) Facts: Rodrigo Repomanta and Rey Moralde entered into peddling contracts with MAFINCO, sole distributor of Cosmos soft drinks. One of the stipulations of the contracts was that either party might terminate it upon five days prior notice to the

1A Larson. The Law of Workmen's Compensation, 708 (1970).

other. In accordance with this stipulation, MAFINCO terminated the aforesaid contracts, in view of' which, Moralde and Repomanta, thru their union, filed a complaint with the National Labor Relations Commission (NLRC). MAFINCO filed a motion to dismiss on the ground that the NLRC had no jurisdiction because complainants were not its employees but were independent contractors. When referred to a fact finder, the latter recommended dismissal of the complaint on the ground that complainants were indeed not employees. By reason thereof, the NLRC dismissed the complaint. The Secretary of Labor reversed the order of NLRC, holding that complainants were employees of MAFINCO and therefore NLRC had jurisdiction. Issue: Whether or Not ER-EE relationship exists? Ruling: No. An independent contractor is one who exercises independent employment and contracts to do a piece of work according to his own methods and without being subject to control of his employer except as to the result of the work. A person who has no capital or money of his own to pay his laborers or to comply with his obligations to them, who files no bond to answer for the fulfillment of his contract with his employer, falls short of the requisites or conditions necessary to classify him an independent contractor. Those tests to determine the existence of an employer-employee relationship or whether the person doing a particular work for another is an independent contractor cannot be satisfactorily applied in the instant case. It should be obvious by now that the instant case is a penumbral, sui generis case lying on the shadowy borderline that separates an employee from an independent contractor. In determining whether the relationship is that of employer and employee or whether one is an independent contractor, "each case must be determined on its own facts and all the features of the relationship are to be considered" (56 C.J.S. 45). We are convinced that on the basis of the peddling contract, no employer-employee relationship was created. Hence, the old NLRC had no jurisdiction over the termination of the peddling contract. The Supreme Court held that the complainants were independent businessmen. The SC set aside the order and resolution of the Secretary of Labor and affirmed the order of the NLRC dismissing the case for lack of jurisdiction. c) SSS vs CA and quality Tobacco Corp., 156 SCRA 383 (1987) Facts: QTC, formerly U.S. Tobacco Corporation, is a firm engaged in the manufacture and sale of cigarettes. On August 12, 1972, QTC, as VENDOR, entered into an agreement with CARREON, as VENDEE. The contract with CARREON was terminated by QTC on December 18, 1972. On April 29, 1974, CARREON filed a petition with the Social Security Commission alleging that he was an employee of QTC, and asking that QTC be ordered to report him for coverage under the Social Security Law. QTC answered claiming that CARREON has not been an employee but was an 'Independent businessman.' The Social Security System intervened and, taking the side of CARREON, also asked that QTC be ordered to pay Social Security contributions in respect of CARREON. On January 21, 1976, the Social Security Commission resolved CARREON's petition, finding him to be an employee of QTC. The CA reversed the decision of SS Commission. Issue: Whether or not Romeo Carreon is an employee or an independent contractor? Ruling: Yes! The elements to be generally considered in determining the existence of an employer-employee relationship, as follows: a) 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 method by which the work is to be accomplished. The last which is the "control test" is the most important element. Where the element of control is absent; where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his effort, the relationship of employeremployee does not exist. Thus, after a study of the records and applying the "control tests," there appears to be no question that the existence of an employer-employee relationship between Romeo Carreon and QTC has been established, based on the following "undisputed" facts as pointed out by the Solicitor General, to wit: a) QTC assigned a definite sales territory for Romeo Carreon; b) QTC provided Romeo Carreon with a delivery truck for the exclusive use of the latter in his sales activities; c) QTC dictated the price of the cigarettes sold by Romeo Carreon; d) QTC prescribed what brand of cigarettes Romeo Carreon could sell; e) QTC determined the persons to whom Romeo Carreon could sell; f) QTC issued circulars and memoranda relative to Romeo Carreon's sales activities; g) QTC required Romeo Carreon to submit to it daily, weekly and monthly reports; h) QTC grounded Romeo Carreon for six months in 1966; i) Romeo Carreon was supervised by sales coordinators of QTC;

Romeo Carreon was subject to payment of damages and loss even of accrued rights for any violation of instructions made by QTC in relation to his sales activities; and k) Romeo Carreon was paid an allowance by QTC. All these indicate control and supervision over Carreon's work. 3. Independent Salesman (Peddler Cases) a) JUAN YSMAEL & COMPANY, INC. vs. CIR, YC Salesmen's Union, 108 Phil. 407 (1960) Facts: YC Salesmen's Union, filed a petition praying for a certification, upon the ground that it is a labor organization composed of all the salesmen working for the Ysmael Steel Manufacturing, operated by the Company, as a subsidiary thereof, both of which are employers of the mentioned salesmen; that there are in the Company two other labor unions, namely, PAFLU, composed mainly of manual factory workers (non- supervisors), and the Ysmael Steel Employees Union, the composed of supervisors, non-supervisors who are technical employees, office non-technical employees and clerical factory workers, and that the members of petitioning Union are not included in or represented by any of said two unions in their collective bargaining agreement with the Company, for the economic factors affecting the members of petitioning Union are different and they constitute a separate and distinct union for an appropriate bargaining unit. The Company maintains the negative upon the ground that the members of petitioning Union are mere commission agents or sales representatives, whose form of selection and engagement is different from that of the employees of the Company, for unlike such employees, commission agents are not required to undergo physical examination, to submit a police clearance, and to punch the Bundy clock, and are not provided with identification cards. It is further urged that commission agents are paid neither wages nor salaries, but are granted commissions, the amount of which depends on their sales, and that their conduct as agents is not subject to the control or supervision of the Company, which, moreover, has no power of dismissal over them. Issue: Whether the members of petitioning Union are employees of the Company? Ruling: Yes. The aforementioned difference in the manner of "selection and engagement" does not prove, however, the alleged absence of employer-employee relationship. Most business enterprises have employees of different classes, necessarily requiring different methods of selection and contracts of services of various types, without detracting from the existence of said relationship. The distinction that they were not given medical check up may be otherwise explained by the fact that they do not expose themselves with the factory conditions that may be the cause of contagious disease or aggravation of an existing disease. There is no need for them to undergo regular check up before they are regularized. The fact that there is no basic wage does not mean that there is no ER-EE relationship, because they are paid on a commission basis. And in fact, they are controlled as to the particular means by the withdrawal of their transportation allowance. That is how that employer controls the behavior of the salesmen under it. And finally, the fact that they have to make a report is an index of control. b) Investment Planning Corp of the Phil. vs SSS, 21 SCRA 924 (1967) Facts: These representatives are in reality commission agents, The uncontradicted testimony of petitioner's lone witness, who was its assistant sales director, is that these agents are recruited and trained by him particularly for the job of selling "Filipinas Mutual Fund" shares, made to undergo a test after such training and, if successful, are given license to practice by the Securities and Exchange Commission. They then execute an agreement with petitioner with respect to the sale of FMF shares to the general public. Among the features of said agreement which respondent Commission considered pertinent to the issue are: (a. an agent is paid compensation for services in the form of commission; (b. in the event of death or resignation lie or his legal representative shall be paid the balance of the commission corresponding to him; (c. he is subject to a set of rules and regulations governing the performance of his duties under the agreement; (d. he is required to put up a performance bond: and (e. his services may be terminated for certain causes. That the agents "are not required to report (for work) at any time; they do not have to devote their time exclusively to or work solely for petitioner; the time and the effort they spend in their work depend entirely upon their own will and initiative; they are not required to account for their time nor submit a record of their activities; they shoulder their own selling expenses as well as transportation; and they are paid their commission based on a certain percentage of their sales." The record also reveals that the commission earned by an agent on his sales is directly deducted by him from the amount he receives from the investor and turns over to the company the amount invested after such deduction is made. The majority of the agents are regularly employed elsewhere - either in the government or in private enterprises. On August 27, 1960 petitioner, through counsel, applied to respondent Social Security Commission for exemption of its so-called registered representatives from the compulsory coverage of the Social Security Act. The application was denied in a letter signed by the Secretary to the Commission on January 16, 1961. Petitioner submits that its commission agents, engaged under the terms and conditions already enumerated and are not employees but independent contractors.

j)

Issue: Whether or not petitioner's registered representatives are employees within the meaning of the Social Security Act defining the term "employee" - "any person who performs services for an 'employer' in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer-employee relationship."? Ruling: No. It must be noted that even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans he would not necessarily be entitled to compensation therefor. His right to compensation depends upon and is measured by the tangible results he produces. The significant factor in determining the relationship of the parties is the presence or absence of a supervisory power to control the method and detail of performance of the service, and the degree to which the principal may intervene to exercise such control, the presence of such power of control being indicative of an employment relationship and the absence of such power being indicative of the relationship of independent contractor. The logic of the situation indeed dictates that where the element of control is absent; where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, we should not find that the relationship of employer and employee exists. c) Dr. Sara & Romeo Arana vs. Agarrado & NLRC, 166 SCRA 625 (1988) Facts: Private respondent Cerila Agarrado was an attendant in the clinic of petitioner Dr. Renato Sara. She quit her job in 1973. Four years later, petitioners Dr. Sara and Romeo Araa, being owners of a rice mill and having begun to engage in the buy and sell of palsy and nee, entered into a verbal agreement with private respondent Agarrado whereby it was agreed that the latter would be paid P2.00 commission per sack of milled rice sold as well as a commission of 10% per kilo of palsy purchased. It was further agreed that private respondent would spend her own money for the undertaking, but to enable her to carry out the agreement more effectively, she was authorized to borrow money from other persons, as in fact she did, subject to reimbursement by petitioners. In 1982, private respondent filed with the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. XI, Cotabato City, a complaint against petitioners for unpaid commission of P4,598.00 on milled rice sold, P2,982.80 on palsy sold, reimbursement of P17,500.00 which she had borrowed from various persons and P1,749.00 of her own money which petitioners allegedly had not reimbursed On January 17, 1973, Labor Arbiter Magna C. Cruz rendered a decision in favor of private respondent ordering petitioners to pay all the claims amounting to P26,397.80. which was affirmed by NlRC. Issue: W/N an employer-employee relationship exists between petitioners and private respondent as to warrant cognizance by the Labor Arbiter? Ruling: No. Private respondent was an independent contractor, who exercising independent employment, contracted to do a piece of work according to her own method and without being subject to the control of her employer except as to the result of her work. She was paid for the result of her labor, unlike an employee who is paid for the labor he performs. To determine the existence of an employer-employee relationship, this Court in a long line of decisions has invariably applied the following four-fold test: [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. In the case at bar, the arrangement thus was explicitly on a commission basis dependent on the volume of sale or purchase. Private respondent was not guaranteed any minimum compensation nor was she allowed any drawing account or advance of any kind against unearned commissions. The power to terminate the relationship was mutually vested upon the parties. Either may terminate the business arrangement at will, with or without cause. - We observe that the means and methods of purchasing and selling rice or Palay by private respondent were totally independent of petitioners' control. The absence of control is made more evident by the fact that private respondent was not even obliged to sell the palay she purchased to petitioners. She was at liberty to sell the palay to any trader offering higher buying rates. She was thus free to sell it to anybody whom she pleased. Moreover, private respondent worked for petitioners at her own pleasure and was not subject to definite hours or conditions of work. She could even delegate the task of buying and selling to others, if she so desired, or simultaneously engaged in other means of livelihood while selling and purchasing rice or palay.

4.

a) Guardex Enterprises vs. NLRC, 191 SCRA 487 (1990) Facts: Escandor was engaged, under the name of Guardex, in the manufacture and sale of fire-fighting equipment and the building or fabrication of fire trucks; while Orbeta was a "freelance" salesman. Orbeta learned that Escandor had offered to fabricate a fire truck for Rubberworld (Phil.) Inc. He wrote to Escandor inquiring about the amount of commission for the sale of a fire truck. Escandor wrote back on the same day to advice that it was P15, 000.00 per unit. Four days later, Orbeta offered to follow-up Escandor's pending proposal to sell a fire truck to Rubberworld, and asked for P250.00 as representation expenses. Escandor agreed and gave him the money. When no word was received from Orbeta after 3 days, she herself inquired in writing from Rubberworld about her offer of sale of a fire truck. In the meantime, Orbeta sold to other individuals some of Escandor's fire extinguishers, receiving traveling expenses as well as the corresponding commissions. He then dropped out of sight. About 7 months afterwards, Escandor herself finally concluded a contract with Rubberworld for the purchase of a fire truck. Orbeta suddenly reappeared and asked for his commission for the sale of the fire truck to Rubberworld. Escandor refused, saying that he had had nothing to do with the offer, negotiation and consummation of the sale. Issue: W/N an er-ee relationship exists? NO W/N Orbeta is Escandor's agent as regards the sale of a fire truck to Rubberworld? NO

Agency:

Ruling: Months prior to Orbeta's approaching Escandor, the latter had already made a written offer of a fire truck to Rubberworld. All that she consented to was for Orbeta to "follow up" that pending offer. It was Escandor who determinedly pushed the Rubberworld deal. Even if Orbeta is considered to have been Escandor's agent for the time he was supposed to "follow up" the offer to sell, such agency would have been deemed revoked upon the resumption of direct negotiations between Escandor and Rubberworld, Orbeta having in the meantime abandoned all efforts to secure the deal in Escandor's behalf. How can you distinguish it from ER-EE relationship? The common denominator is services; in agency services are rendered for purposes of representation. In ER-EE relationship, services are rendered for the enterprise of the employer. In the first case, the rendition of services in agency is reparatory to further contracts because you do really represent your employer. But the services rendered in ER-EE relationship are an end in themselves. You render the service to the enterprise to the owner who is your employer. Services in agency is rendered in representation, services in ER-EE relationship is rendered according to the purpose of the enterprise of the employer. That is that main difference between agency and ER-EE relationship.