3.

How does the employer- employee relationship manifest in a trilateral

employment relationship on the basis of (a) Principal-employee relation and (b)
Independent Contractor/sub-contractor employee relationship
It is imperative that the study should dwell with the present situation vis a vis
the mandates of the local and international laws as well as the construction of the
Supreme Court.
3.a. Principal-employee relation
Personal observation of the researchers in one of the institutions in the
province is given weight in this study. The said institution farms out the services of
utility workers from a registered subcontractor in the province. In the said observation
of the researchers, the said institution conducted public bidding to all subcontractors
and upon determination of the lowest calculated bid, a Contract between the
institution and the subcontractor was entered into. During the entire duration of the
Contract, the institution and the subcontractor has the following scheme: the workers
shall work with the institution for eight (8) hours a day, five (5) times a week; as a
consideration of the services, the institution shall pay total amount according to the
rate of each worker and the same shall be remitted to the contractor. It was the
contractor who remits the payment of benefits of the workers (e.g. Phil. Health). It
was also the contractor who made necessary deductions. Further, the contractor is
made responsible to pay the workers based on the total amount paid by the
institution.
It is therefore apparent from the above that with regard to the payment of
wages, there is no question. What bears analysis is the right to control. It is worth
reiterating that right to control refers to the right reserved to the person for whom the
service of the contractual workers are performed, to determine not only the end to be
achieved, but also the manner and means to be used in reaching that end.
Who actually dictates how the work should be done?

Utility workers employed by the contractor and farmed out by the institution,
when asked by the above question, said that the person they consider to have the
authority to dictate how the work should be done is the institution. The main reason
for that is because what they are primarily tasked to is to maintain, among others, the
orderliness and cleanliness of the institutions premises. Even without regard to the
workers position, the same instance is evident on their routine tasks.
What is then the role of the contractor in the instant case on the exercise of
control?
Observations reveal that consultations and meetings between the institutions
representatives and the supervisor of the workers coming from the contractor were
occasionally held. Most often than not, what is being involved in the said meeting are
matters relating to the performance of the workers. Said evaluation of performance of
course shall primarily come from the institution. The same shall be relayed to the
workers by the contractor. It can be gleaned however that despite direct orders from
the contractor, the one who actually ordered the manner on how the work should be
done is the institution. This is where the puzzle on who really has the right to control
begins.
Notwithstanding the foregoing, a deeper analysis of the facts should be made.
The subject institution never intended to cover the said workers on the formers
employee manual. Further, no memorandum was directly addressed to the workers
nor any penalty was imposed to the workers. Mere control of the desired result of the
work indicates a contracting arrangement and not employment. It is the manner or
method of doing the work which characterizes employment. Manner and method
transcends control of desired result.
Important also to note is the existence or non-existence of a contract. The
subject workers never entered into a contract with the institution; the subcontractor
was the only one who entered the same with the institution.

Considering the four-fold test the selection and engagement of the employee,
the payment of wages and the power to dismiss still lie within the ambit of the
subcontractors powers. What is tricky is in the determination of employment
relationship is the existence of the power to control. Without proving that the manner
or method of doing work is exercised by the principal, the subcontractor is still
considered as the employer. Hence, the principals act on ordering the worker of the
desired result does not in any way diminishes the rules on legitimate contracting.
Stating the facts otherwise shall tantamount to labor-only contracting which present
jurisprudence rules principal as the employer.

3.b. Independent Contractor/sub-contractor employee relationship

On a study conducted by one of the researchers on 2013 1, statistical analysis
show that there was no difference between the actual control of contractual
employees and who should have control over contractual employees. This means
that if the workers are to choose, the present provisions on who must have the right
to control should be sustainedthat is the independent contractor. The study, which
was conducted in Tuguegarao City, Cagayan, also revealed that the party exercising
the actual control is the subcontractor. This is different from observations in Batangas
City where the opposite exists. In addition to the above, the study also revealed that
the core labor standards are being under the direct responsibility of the subcontractor.
In a trilateral employment relationship, as stated elsewhere in this study, the one
considered to be the employer is the independent contractor. As an effect, all
mandates of the labor law and related laws are under the direct responsibility of the
independent contractor. If the elements of the four fold test is present, more
importantly the power to control, there is no gainsaying that the system adopted is a
trilateral one.
1 Omandap et.al. The Trilateral Employment Relationship in Tuguegarao City, Cagayan. Cagayan State
University. March 2013.