FRANCISCO VS NLRC

Petitioner: Angelina Francisco

Respondents: National Labor Relations Commission, Kasei Corporation, Seiichiro Takahashi, Timoteo Acedo,
Delfin Liza, Irene Ballesteros, Trinidad Liza, Ramon Escueta

Facts:
Francisco was hired as Accountant and Corporate Secretary, she was assigned to handle all the
accounting needs of the company. She was also designated as Liaison Officer.
In 1996, she was designated Acting Manager. In January 2001, she was replaced by Liza R. Fuentes.
Petitioner alleged that she was required to sign a prepared resolution for her replacement but she was
assured that she would still be connected with Kasei Corporation.
Respondent reduced her salary by P2,500.00 a month and was not paid her mid-year bonus because
the company was not earning well. On October 2001, petitioner did not receive her salary from the
company. On October 15, 2001, petitioner asked for her salary she was informed that she is no longer
connected with the company. She filed an action for constructive dismissal before LA.
Respondents averred that petitioner performed her work at her own discretion without control and
supervision of Kasei Corporation. She had no daily time record and she came to the office any time she
wanted. The company never interfered with her work except that from time to time, the management
would ask her opinion on matters relating to her profession. Petitioner did not go through the usual
procedure of selection of employees, but her services were engaged through a Board Resolution
designating her as technical consultant. Franciscos designation as technical consultant depended solely
upon the will of management. As such, her consultancy may be terminated any time considering that
her services were only temporary in nature and dependent on the needs of the corporation.
LA found that petitioner was illegally dismissed.
NLRC affirmed with modification the Decision of the LA

Issue: WON there was an EER between petitioner and private respondent Kasei Corporation
Held: YES. In certain cases the control test is not sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a relationship where several positions have been held by
the worker. There are instances when, aside from the employers power to control the employee with respect
to the means and methods by which the work is to be accomplished, economic realities of the employment
relations help provide a comprehensive analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power
to control the employee with respect to the means and methods by which the work is to be accomplished; and
(2) the underlying economic realities of the activity or relationship.

Thus, the determination of the relationship between employer and employee depends upon the circumstances
of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of
the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature
and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment in that line of
business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she
was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She
reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical
Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is,
rendering accounting and tax services to the company and performing functions necessary and desirable for
the proper operation of the corporation such as securing business permits and other licenses over an
indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent
corporation because she had served the company for six years before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13 th month pay, bonuses and allowances, as well as deductions and
Social Security contributions from August 1, 1999 to December 18, 2000. When petitioner was designated
General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros.

Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei
Corporation. She was selected and engaged by the company for compensation, and is economically dependent
upon respondent for her continued employment in that line of business. Her main job function involved
accounting and tax services rendered to respondent corporation on a regular basis over an indefinite period of
engagement. Respondent corporation hired and engaged petitioner for compensation, with the power to
dismiss her for cause. More importantly, respondent corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.

The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from
January to September 2001. This amounts to an illegal termination of employment, where the petitioner is
entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence, and
under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of
reinstatement.

SONZA VS ABC-CBN
Petitioner: Jose Y. Sonza
Respondent: ABS-CBN Broadcasting Corporation

Facts:
ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation
(MJMDC). MJMDC agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and
television. ABS-CBN agreed to pay Sonza a monthly talent fee of P310k for the first year and P317k for
the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN's President, Eugenio Lopez III, where he irrevocably
resigned in view of the recent events concerning his program and career. The acts of the station are
violative of the Agreement and said letter will serve as notice of rescission of said contract. The letter
also contained the waiver and renunciation for recovery of the remaining amount stipulated but
reserves the right to seek recovery of the other benefits under said Agreement.
Sonza filed with the DOLE a complaint alleging that ABS-CBN did not pay his salaries, separation pay,
service incentive pay,13th month pay, signing bonus, travel allowance and amounts under the
Employees Stock Option Plan (ESOP).
ABS-CBN contended that no EER existed between the parties. However, ABS-CBN continued to remit
Sonzas monthly talent fees but opened another account for the same purpose.
 LA dismissed the complaint and found that there is no employee-employer relationship. The LA ruled
that he is not an employee by reason of his peculiar skill and talent as a TV host and a radio
broadcaster. Unlike an ordinary employee, he was free to perform his services in accordance with his
own style.
NLRC and CA affirmed the LA. Should there be any complaint, it does not arise from an EER but from a
breach of contract.

Issue: WON there was EER between Sonza and ABS-CBN

HELD: There is no EER between Sonza and ABS-CBN. Petition denied. Judgment decision affirmed.

Case law has consistently held that the elements of an employee-employer relationship are selection and
engagement of the employee, the payment of wages, the power of dismissal and the employers power to
control the employee on the means and methods by which the work is accomplished. The last element, the so-
called "control test", is the most important element.

A. Selection and Engagement of Employee - ABS-CBN engaged SONZAs services to co-host its television and
radio programs because of SONZAs peculiar skills, talent and celebrity status. SONZA contends that the
discretion used by respondent in specifically selecting and hiring complainant over other broadcasters of
possibly similar experience and qualification as complainant belies respondents claim of independent
contractorship. However, independent contractors often present themselves to possess unique skills,
expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA,
because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance
indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such
unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but
would have hired him through its personnel department just like any other employee.

B. Payment of Wages - ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to
MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA
also points out that ABS-CBN granted him benefits and privileges which he would not have enjoyed if he were
truly the subject of a valid job contract.

All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If
SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as SSS,
Medicare, x x x and 13th month pay which the law automatically incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee
relationship. In addition, SONZAs talent fees are so huge and out of the ordinary that they indicate more an
independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay
SONZA such huge talent fees precisely because of SONZAs unique skills, talent and celebrity status not
possessed by ordinary employees.

C. Power of Dismissal - For violation of any provision of the Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-CBN could terminate his services on grounds other than breach of
contract, such as retrenchment to prevent losses as provided under labor laws.

During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as AGENT and Jay Sonza
shall faithfully and completely perform each condition of this Agreement. Even if it suffered severe business
losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent fees
during the life of the Agreement. This circumstance indicates an independent contractual relationship
between SONZA and ABS-CBN.

SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent
fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement to continue paying SONZAs talent fees
during the remaining life of the Agreement even if ABS-CBN cancelled SONZAs programs through no fault of
SONZA.

D. Power of Control - First, SONZA contends that ABS-CBN exercised control over the means and methods of
his work. SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the Mel
& Jay programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed
his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were
outside ABS-CBNs control. SONZA did not have to render eight hours of work per day. The Agreement
required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff
meetings. ABS-CBN could not dictate the contents of SONZAs script. However, the Agreement prohibited
SONZA from criticizing in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free
hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests.

Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules
and standards of performance. SONZA claims that this indicates ABS-CBNs control not only [over] his manner
of work but also the quality of his work." The Agreement stipulates that SONZA shall abide with the rules and
standards of performance covering talents of ABS-CBN. The Agreement does not require SONZA to comply
with the rules and standards of performance prescribed for employees of ABS-CBN. The code of conduct
imposed on SONZA under the Agreement refers to the Television and Radio Code of the Kapisanan ng mga
Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics. The
KBP code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not
necessarily employees of radio and television stations. Clearly, the rules and standards of performance
referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN.

In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee
of the former. In this case, SONZA failed to show that these rules controlled his performance. We find that
these general rules are merely guidelines towards the achievement of the mutually desired result, which are
top-rating television and radio programs that comply with standards of the industry.

Lastly, SONZA insists that the exclusivity clause in the Agreement is the most extreme form of control which
ABS-CBN exercised over him. This argument is futile. Being an exclusive talent does not by itself mean that
SONZA is an employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively
to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control.

The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. This
practice is not designed to control the means and methods of work of the talent, but simply to protect the
investment of the broadcast station. The broadcast station normally spends substantial amounts of money,
time and effort in building up its talents as well as the programs they appear in and thus expects that said
talents remain exclusive with the station for a commensurate period of time. Normally, a much higher fee is
paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge
talent fees partially compensates for exclusivity, as in the present case.
INSULAR LIFE ASSURANCE vs. NLRC

FACTS:
Since 1968, respondent Basiao has been an agent for Insular Life Assurance, and is authorized to solicit
within the Philippines applications for insurance policies and annuities in accordance with the existing
rules and regulations of the company. In return, he would receive compensation, in the form of
commissions.
In April 1972, the parties entered into another contract (Agency Manager's Contract) and to implement
his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates,
while concurrently fulfilling his commitments under the first contract with the Company.
In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a
reconsideration, Basiao sued the Company in a civil action and this, he was later to claim, prompted the
latter to terminate also his engagement under the first contract and to stop payment of his
commissions starting April 1, 1980.
Basiao thereafter filed with the then Ministry of Labor a complaint against the Company and its
president. The complaint sought to recover commissions allegedly unpaid thereunder, plus attorney's
fees.
The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the
Company's employee, but an independent contractor.

Issue: WON there was EER between Basiao and Insular Life.

Held: No. The SC ruled in favor of Insular Life. Rules and regulations governing the conduct of the business are
provided for in the Insurance Code. These rules merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it. Its aim is only
to promote the result, thereby creating no employer-employee relationship. It is usual and expected for an
insurance company to promulgate a set of rules to guide its commission agents in selling its policies which
prescribe the qualifications of persons who may be insured. None of these really invades the agents
contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience,
hence cannot justifiable be said to establish an employer-employee relationship between Basiao and the
company.

The respondents limit themselves to pointing out that Basiaos contract with the company bound him to
observe and conform to such rules. No showing that such rules were in fact promulgated which effectively
controlled or restricted his choice of methods of selling insurance.

Therefore, Basiao was not an employee of the petitioner, but a commission agent, an independent contract
whose claim for unpaid commissions should have been litigated in an ordinary civil action. Wherefore, the
complain of Basiao is dismissed.