ANTONIO M. SERRANOVS.GALLANT MARITIME SERVICES, INC.

FACTS:

Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per month.

On the date of his departure, Serrano was constrained to accept a downgraded employment contract upon the assurance and representation of respondents that he would be Chief Officer by the end of April 1998.

Respondents did not deliver on their promise to make Serrano Chief Officer.

Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines, serving only two months and 7 days, leaving an unexpired portion of nine months and twenty-three days.

Upon complaint filed by Serrano before the Labor Arbiter (LA), the dismissal was declared illegal.

On appeal, the NLRC modified the LA decision based on the provision of RA 8042.

Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th paragraph of Section 10 of RA 8042.

ISSUES:

1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-impairment of contracts;

2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3, Article XIII on labor as a protected sector.

HELD:

On the first issue.

The answer is in the negative. Petitioners claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will receive is not tenable.

The subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed.

On the second issue.

The answer is in the affirmative.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:

First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or more;

Second, among OFWs with employment contracts of more than one year; and

Third, OFWs vis--vis local workers with fixed-period employment;

The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal protection.

The subject clause or for three months for every year of the unexpired term, whichever is less in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL.

GREAT PACIFIC LIFE ASSURANCE CORPORATION (GREPALIFE) VS. JUDICO HONORATO (GR NO. 73887 DECEMEBER 21, 1989)

FACTS:

Petition for certiorari to review the decision NLRC dated September 9, 1985

Ordering petitioner Grepalife to recognize private respondent HonoratoJudico, as its regular employee as defined under Art. 281 of the Labor Code.

Remanding the case to its origin for the determination of private respondent Judico's money claims.

HonoratoJudico filed a complaint for illegal dismissal against Grepalife, a duly organized insurance firm.

Said complaint prayed for award of money claims consisting of:

Separation pay,

Unpaid salary and 13th month pay,

Refund of cash bond,

Moral and exemplary damages and attorney's fees.

Grepalife admits that Judico entered into an agreement of agency with them to become a debit agent attached in Cebu City.

Grepalife defines a debit agent as "an insurance agent selling/servicing industrial life plans and policy holders.

As a debit agent, Judico had definite work assignments including but not limited to collection of premiums from policyholders and selling insurance to prospective clients.

Public respondent NLRC also found out that complainant was initially paid P 200. 00 as allowance for thirteen (13) weeks regardless of production and later a certain percentage denominated as sales reserve of his total collections but not lesser than P 200.00.

Judicowas promoted to the position of Zone Supervisor and was given additional (supervisor's) allowance fixed at P110.00 per week.

During the third week of November 1981, he was reverted to his former position as debit agent but, for unknown reasons, not paid so-called weekly sales reserve of at least P 200.00.

Finally on June 28, 1982, complainant was dismissed by way of termination of his agency contract.

Petitioner assails and argues that the respondent is not an employee and that his compensation was not based on any fixed number of hours he was required to devote to the service of company but rather it was the production or result of his efforts or his work that was being compensated

That the so-called allowance for the first thirteen weeks that Judico worked as debit agent, cannot be construed as salary but as a subsidy or a way of assistance for transportation and meal expenses of a new debit agent during the initial period of his training which was fixed for thirteen (13) weeks.

Said contentions of petitioner were strongly rejected by respondent he maintains that he received a definite amount as his wage known as "sales reserve" the failure to maintain the same would bring him back to a beginner's employment with a fixed weekly wage of P 200.00 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 canvassing and making regular reports.

He was burdened with the job of collection and to make regular weekly report thereto for which an anemic performance would mean dismissal.

He earned out of his faithful and productive service, a promotion to Zone Supervisor with additional supervisor's allowance, (a definite or fixed amount of P110.00) that he was dismissed primarily because of anemic performance and not because of the termination of the contract of agency substantiate the fact that he was indeed an employee of the petitioner and not an insurance agent in the ordinary meaning of the term.

Both parties appealed to the NLRC and decision was rendered by the Labor Arbiter dismissing the complaint on the ground that:

The employer-employee relations did not exist between the parties.

But ordered Grepalife to pay complainant the sum of Pl,000.00 by reason of Christian Charity.

On appeal, decision was reversed by the NLRC ruling that:

Complainant is a regular employee as defined under Art. 281 of the Labor Code.

Declaring the appeal of Grepalife questioning the legality of the payment of Pl,000.00 to complainant moot and academic.

Petitioner company moved to reconsider, which was denied, hence this petition.

ISSUE:

Whether or not employer-employee relationship existed between petitioner and private respondent.

HELD:

That Judico was an agent of the petitioner is unquestionable.

As held in (Investment Planning Corp. vs. SSS, 21 SCRA 294), an insurance company may have two classes of agents who sell its insurance policies:

Salaried employees who keep definite hours and work under the control and supervision of the company.

Registered representatives who work on commission basis.

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.

Applying the test to the case at bar, 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".

He was assigned a definite place in the office to work on when he is not in the field.

In addition to his canvassing work he was burdened with the job of collection.

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 and additional supervisor's allowance, a definite amount of P110.00 aside from the regular P 200.00 weekly "allowance".

His contract of services with petitioner is not for a piece of work nor for a definite period.

In the instant case the 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.

Ratio:

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.

Premises considered, the appealed decision is hereby AFFIRMED

GR. NO. 119500 AUGUST 28, 1998 PAGUIO TRANSPORT CORPORATION (petitioner) Vs. NLRC and WILFREDO MELCHOR (respondents)

FACTS:

Complainant Melchor was hired by PTC as a taxi driver under the boundary system. He was advised to stop working and have a rest after a car accident involving the taxi unit he was driving. He was told by the PTC that his service was no longer needed. Then the complaint for illegal dismissal was raised. The petitioner concludes that he had no control over the number of hours private respondent had to work and the routes he had to take; therefore no employer-employee relationship exists.

ISSUE:

Whether or not employer-employee relationship exists.

FACTS:

Boundary system is that of employer-employee and not of lessor-lessee. Under the boundary system the drivers do not receive fixed wages; all the excess in the amount of boundary was considered his income but it is not sufficient to withdraw the relationship between them from that of employer and employee. 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.

The petition was dismissed, the private respondent was entitled for the claim of damages and illegal dismissal.

Besa v. Trajano

FACTS:

Respondent KAMPI filed a Petition for Certification Election. Petitioner opposed alleging that there is no ER-EE relationship between Besa and petitioners. These petitioners are shoe shiners paid on a commission basis. The question of ER-EE relationship became a primordial consideration in resolving whether or not the subject shoe shiners have the juridical personality and standing to present a petition for certification as well as to vote therein.

ISSUE: W/N ER-EE relationship exists betweem shoe shiners and Besa

HELD: No.

Shoe shiner is different from a piece worjer:

Piece Woker

1. paid for work accomplished

2. the employer pays his wages

3. paid for work accomplished without concern to the profit derived by employer

4. the employer supervises and controls his work

Shoe shiner

1. contributes anything to the capital of the employer

2. paid directly by his customer

3. the proceeds derived from the trade are divided share with respondent BESA

4. respondent does not exercise control

Thus, shoe shiners are not employees of the company, but are partners, because there is no control by the owner and shoe shiners have their own customers whom they charge a fee and divide the proceeds equally with the owner.

Encyclopaedia Britannica, Inc vs. NLRC, G.R. No. 87098, November 4, 1996; 264 SCRA1

Facts: Private respondent was a sales division manager of private petitioner and was in charge of selling the latters products through sales representatives. As compensation, private respondent receive commissions from the products sold by his agents. After resigning from office to pursue his private business, he filed a complaint against the petitioner, claiming for non-payment of separation pay and other benefits.

Petitioner alleged that complainant was not its employee but an independent dealer authorized to promote and sell its products and in return, received commissions therefrom. Petitioner did not have any salary and his income from petitioner was dependent on the volume of sales accomplished. He had his own office, financed the business expense, and maintained his own workforce. Thus petitioner argued that it had no control and supervision over the complainant as to the manner and means he conducted his business operations.

The Labor Arbiter ruled that complainant was an employee of the petitioner company. Petioner had control over the complainant since the latter was required to make periodic reports of his sales activities to the company.

Issue: Whether or not there exists an employer-employee relationship.

Held: No. Control of employees conduct is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under this, 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 manner and means to be used in reaching that end.

The fact that petitioner issued memoranda to private respondent 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.

SONZA vs. ABS-CBN Case Digest

JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 138051

June 10, 2004

Facts:In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while MJMDC was represented by Sonza, as President and general manager, and Tiangco as its EVP and treasurer. Referred to in the agreement as agent, 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 P310, 000 for the first year and P317, 000 for the second and third year.

On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent events concerning his program and career. After the said letter, Sonza filed with the Department of Labor and Employment 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 employee-employer relationship existed between the parties. However, ABS-CBN continued to remit Sonzas monthly talent fees but opened another account for the same purpose.

The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC affirmed the decision of the Labor Arbiter. CA also affirmed the decision of NLRC.

Issue:Whether or not there was employer-employee relationship between the parties.

Ruling: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.

Sonzas services to co-host its television and radio programs are because of his peculiar talents, skills and celebrity status. 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. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. For violation of any provision of the Agreement, either party may terminate their relationship. 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. 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. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule "for more effective programming." ABS-CBNs sole concern was the quality of the shows and their standing in the ratings.

Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonzas work. A radio broadcast specialist who works under minimal supervision is an independent contractor. Sonzas work as television and radio program host required special skills and talent, which SONZA admittedly possesses.

ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents like Sonza as independent contractors. The right of labor to security of tenure as guaranteed in the Constitution arises only if there is an employer-employee relationship under labor laws. Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor.

ZANOTTE SHOES V. NLRC

241 SCRA 261

VITUG, J.

FACTS

1. Private respondents Joseph Lluz, et. al averred that they started to work for petitioners Zanotte Shoes/ Leonardo Lorenzo between 1975 to 1987. They alleged that they worked for a minimum of 12 hours daily, including Sundays and holidays

when needed and that they were paid on piece-work basis.

2. Private respondents claimed that it angered petitioner Lorenzo when they requested to be made members of the SSS and that when they demanded an increase in their pay rates, they were prevented from entering the work premises. Private respondents filed a complaint for illegal discharge against petitioners.

3. Petitioners, in their Answer, claim that their business operations were only seasonal, normally twice a year- one in June and another in December, when heavy job orders would come in. They contend that private respondents were engaged on purely contractual basis and paid the rates conformably with their respective agreements.

4. The Labor Arbiter rendered judgment in favor of private respondents. He declared that there was an employer-employee relationship between petitioners and private respondents and that the latter were regular employees of the former. The Labor Arbiter concluded that there is neither dismissal nor abandonment, but ordered petitioners to pay the private respondents their separation pay.

5. The NLRC, on appeal, affirmed the Labor Arbiters decision

ISSUE

Whether or not there is an employer-employee relationship between petitioners and private respondents.

HELD

YES. There is an employer-employee relationship between petitioners and private respondents. The work of private respondents is clearly related to and in the pursuit of the principal activity of the petitioners. The indicia used for determining the existence of an employer-employee relationship, all extant in the case at bench, include: (1) the selection and engagement of the employee, (2) the payment of wages, (3) the power of dismissal, and (4) the employers 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 is to be accomplished. The last 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.

The Court, however, finds the award of separation pay to be unwarranted.The Labor

Arbiter, sustained by the NLRC, concluded that there was neither dismissal nor abandonment. The fact of the matter is that petitioners have repeatedly indicated their willingness to accept the private respondents, but the latter have steadfastly refused the offer. For being without any clear legal basis, the award of separation pay must thus be set aside. There is nothing, however, that prevents petitioners from voluntarily giving private respondents some amounts on ex gratia basis.

G.R. No. 166920, February 19, 2007]

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. AND JENS PETER HENRICHSEN, PETITIONERS, VS. KLAUS K. SCHONFELD, RESPONDENT.

FACTS

Respondent is a Canadian citizen and was a resident of New Westminster, British Columbia, Canada. He had been a consultant in the field of environmental engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established and incorporated in accordance with the laws of the Philippines. The primary purpose of PPI was to engage in the business of providing specialty and technical services both in and out of the Philippines. It is a subsidiary of Pacific Consultants International of Japan (PCIJ). The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan.

On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in Canada, requesting him to accept the same and affix his conformity thereto. Respondent made some revisions in the letter of employment and signed the contract. He then sent a copy to Henrichsen. The letter of employment contains among others a stipulation which states:

Any question of interpretation, understanding or fulfillment of the conditions of employment, as well as any question arising between the Employee and the Company which is in consequence of or connected with his employment with the Company and which can not be settled amicably, is to be finally settled, binding to both parties through written submissions, by the Court of Arbitration in London.

Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was accorded the status of a resident alien.

As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the Department of Labor and Employment (DOLE).

On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI had not been successful in the water and sanitation sector in the Philippines. However, on July 24, 1999, Henrichsen, by electronic mail, requested respondent to stay put in his job after August 5, 1999, until such time that he would be able to report on certain projects and discuss all the opportunities he had developed. Respondent continued his work with PPI until the end of business hours on October 1, 1999.

Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest.

On December 5, 2000, respondent filed a Complaint for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor Arbiter. In his Complaint, respondent alleged that he was illegally dismissed; PPI had not notified the DOLE of its decision to close one of its departments, which resulted in his dismissal; and they failed to notify him that his employment was terminated after August 4, 1999. Respondent also claimed for separation pay and other unpaid benefits. He alleged that the company acted in bad faith and disregarded his rights.

Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly laid. It averred that respondent was a Canadian citizen, a transient expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a foreign corporation with principal office in Tokyo, Japan. Since respondents cause of action was based on his letter of employment executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci contractus, the complaint should have been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer any justification for filing his complaint against PPI before the NLRC in the Philippines. Moreover, under Section 12 of the General Conditions of Employment appended to the letter of employment dated January 7, 1998, complainant and PCIJ had agreed that any employment-related dispute should be brought before the London Court of Arbitration. Since even the Supreme Court had already ruled that such an agreement on venue is valid, Philippine courts have no jurisdiction.

The Labor Arbiter rendered a decision granting petitioners Motion to Dismiss. The Labor Arbiter found, among others, that the January 7, 1998 contract of employment between respondent and PCIJ was controlling; the Philippines was only the duty station where Schonfeld was required to work under the General Conditions of Employment. PCIJ remained respondents employer despite his having been sent to the Philippines. Since the parties had agreed that any differences regarding employer-employee relationship should be submitted to the jurisdiction of the court of arbitration in London, this agreement is controlling.

9On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed the latters decision in toto.

Respondent then filed a petition for certiorari under Rule 65 with the CA. The CA found the petition meritorious. Applying the four-fold test of determining an employer-employee relationship, the CA declared that respondent was an employee of PPI. On the issue of venue, the appellate court declared that, even under the January 7, 1998 contract of employment, the parties were not precluded from bringing a case related thereto in other venues. While there was, indeed, an agreement that issues between the parties were to be resolved in the London Court of Arbitration, the venue is not exclusive, since there is no stipulation that the complaint cannot be filed in any other forum other than in the Philippines. It ordered the remand of the case to the Labor Arbiter for disposition of the merits of the case.

ISSUE

Whether or not the Philippine Labor Arbiter can take cognizance over the case notwithstanding what was stated in the Employment Contract?

RULING

The settled rule on stipulations regarding venue, as held by this Court in the vintage case of Philippine Banking Csaorporation v. Tensuan, is that while they are considered valid and enforceable, venue stipulations in a contract do not, as a rule, supersede the general rule set forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words. They should be considered merely as an agreement or additional forum, not as limiting venue to the specified place. They are not exclusive but, rather permissive. If the intention of the parties were to restrict venue, there must be accompanying language clearly and categorically expressing their purpose and design that actions between them be litigated only at the place named by them.

In the instant case, no restrictive words like only, solely, exclusively in this court, in no other court save , particularly, nowhere else but/except , or words of equal import were stated in the contract. It cannot be said that the court of arbitration in London is an exclusive venue to bring forth any complaint arising out of the employment contract.

Petitioners contend that respondent should have filed his Complaint in his place of permanent residence, or where the PCIJ holds its principal office, at the place where the contract of employment was signed, in London as stated in their contract. By enumerating possible venues where respondent could have filed his complaint, however, petitioners themselves admitted that the provision on venue in the employment contract is indeed merely permissive.

Petitioners insistence on the application of the principle of forum non conveniens must be rejected. The bare fact that respondent is a Canadian citizen and was a repatriate does not warrant the application of the principle for the following reasons:

First. The Labor Code of the Philippines does not include forum non conveniens as a ground for the dismissal of the complaint.

Second. The propriety of dismissing a case based on this principle requires a factual determination; hence, it is properly considered as defense.

Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals, this Court held that:

x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision. x x x

Admittedly, all the foregoing requisites are present in this case.

WHEREFORE, the petition is DENIED.

G.R. No. 146881 February 5, 2007]

COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager, Petitioners, vs. DR. DEAN N. CLIMACO, Respondent.

FACTS

Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola by virtue of a Retainer Agreement. The compensation to be paid is fixed at P3,000.00 per month. He may charge professional fee for hospital services rendered in line with his specialization. He is to observe clinic hours at the company premises from Monday to Saturday at least two (2) hours each day unless such schedule is otherwise changed by the company as the situation so warrants, subject to the labor Code provisions on Occupational Safety and Health Standards as the Company may determine. It was also expressly stated in the contract that no employer-employee relationship shall exist between the retainer and the company. The doctor also agrees to perform the duties and obligations enumerated in the Comprehensive Medical Plan. After the expiration of the 1-year retainer agreement, respondent continued to perform his functions as a company doctor to Coca-Cola until he received a letter from the latter concluding their retainership agreement effective 30 days from receipt thereof.

Respondent then filed a complaint before the NLRC, seeking recognition as a regular employee of petitioner company and prayed for the payment of all benefits of a regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus. This was later amended to include illegal dismissal.

ISSUE

W/n there existed an employee-employer relationship between Climaco and Coca Cola.

HELD

The SC held that there is no employer-employee relationship between petitioner and respondent company. The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the 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 employees conduct, or the so-called control test, considered to be the most important element.

The circumstances of this case show that no employer-employee relationship exists between the parties because the company lacked the power of control over the performance by respondent of his duties. The company in providing a Comprehensive Medical Plan, merely issued guidelines in order to ensue that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks. The company lacks the power of control that the contract provides that the respondent shall be directly responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence, or other valid causes of action. The Court also finds that the schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement. The Court also notes that the Retainership Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termination. There is nothing wrong with the employment of respondent as a retained physician of petitioner company and upholds the validity of the retainership agreement which clearly states that no employer-employee relationship existed between the parties.

Petition is granted.

[G.R. No. 84484 November 15, 1989]

INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.

FACTS

Since 1968, respondent Basiao has been an agent for petitioner company, 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.

Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and to implement his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments under the first contract 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

Whether or not there exist an employer-employee relationship between Basiao and Insular Life.

HELD

The SC ruled in favor of Insular Life.

Not every form of control that the 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 distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but also to the internal affairs of the insurance company. Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance applications to processing and approval by the Company, and also reserve to the Company the determination of the premiums to be paid and the schedules of payment. None of these really invades the agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee relationship between him and the company.

The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to time prescribe. No showing has been made that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance."

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.

NLRC Decision set aside.

Daniel Funtecha was a working student at the FilamerChristian Institute. He was assigned as the school janitor to clean the school 2 hours every morning. Allan Masa was the son of the school president and at the same time he was the schools jeepney service driver. On October 20, 1977 at about 6:30pm, after driving the students to their homes, Masa returned to the school to report and thereafter have to go home with the jeep so that he could fetch the students early in the morning. Masa and Funtecha live in the same place so they usually go home together. Funtecha had a student drivers license so Masa let him take the drivers seat. While Funtecha was driving, he accidentally hit an elderly Kapunan which led to his hospitalization for 20 days. Kapunan filed a criminal case and an independent civil action based on Article 2180 against Funtecha.

In the independent civil action, the lower court ruled that Filamer is subsidiarily liable for the tortious act of Funcheta and was compelled to pay for damages based on Article 2180 which provides that employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks. Filamer assailed the decision and it argued that under Section 14, Rule X, Book III of the Labor Code IRR, working scholars are excluded from the employment coverage hence there is no employer-employee relations between Filamer and Funcheta; that the negligent act of Funcheta was due to negligence only attributable to him alone as it is outside his assigned task of being the school janitor. The CA denied Filamers appeal but the Supreme Court agreed with Filamer. Kapunan filed for a motion for reconsideration.

ISSUE:Whether or not Filamer should be held subsidiarily liable.

HELD:Yes. This time, the SC ruled in favor of Kapunan (actually his heirs cause by this time Kapunan was already dead). The provisions of Section 14, Rule X, Book III of the Labor Code IRR was only meant to provide guidelines as compliance with labor provisions on working conditions, rest periods, and wages is concerned. This does not in any way affect the provisions of any other laws like the civil code. The IRR cannot defeat the provisions of the Civil Code. In other words, Rule X is merely a guide to the enforcement of the substantive law on labor. There is a distinction hence Section 14, Rule X, Book III of the Rules is not the decisive law in a civil suit for damages instituted by an injured person during a vehicular accident against a working student of a school and against the school itself.

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 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 Filamer. He need not have an official appointment for a driverspositionin order that Filamer 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 Filamer (the act of driving the jeep from the school to Masas house is beneficial to the school because this enables Masa to do a timely school transportation service in the morning). Hence, the fact that Funtecha was not the school driver or was not acting with the scope of his janitorial duties does not relieve Filamer 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. Filamer 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.

Daniel Funtecha was a working student at the FilamerChristian Institute. He was assigned as the school janitor to clean the school 2 hours every morning. Allan Masa was the son of the school president and at the same time he was the schools jeepney service driver. On October 20, 1977 at about 6:30pm, after driving the students to their homes, Masa returned to the school to report and thereafter have to go home with the jeep so that he could fetch the students early in the morning. Masa and Funtecha live in the same place so they usually go home together. Funtecha had a student drivers license so Masa let him take the drivers seat. While Funtecha was driving, he accidentally hit an elderly Kapunan which led to his hospitalization for 20 days. Kapunan filed a criminal case and an independent civil action based on Article 2180 against Funtecha.

In the independent civil action, the lower court ruled that Filamer is subsidiarily liable for the tortious act of Funcheta and was compelled to pay for damages based on Article 2180 which provides that employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks. Filamer assailed the decision and it argued that under Section 14, Rule X, Book III of the Labor Code IRR, working scholars are excluded from the employment coverage hence there is no employer-employee relations between Filamer and Funcheta; that the negligent act of Funcheta was due to negligence only attributable to him alone as it is outside his assigned task of being the school janitor. The CA denied Filamers appeal but the Supreme Court agreed with Filamer. Kapunan filed for a motion for reconsideration.

ISSUE:Whether or not Filamer should be held subsidiarily liable.

HELD:Yes. This time, the SC ruled in favor of Kapunan (actually his heirs cause by this time Kapunan was already dead). The provisions of Section 14, Rule X, Book III of the Labor Code IRR was only meant to provide guidelines as compliance with labor provisions on working conditions, rest periods, and wages is concerned. This does not in any way affect the provisions of any other laws like the civil code. The IRR cannot defeat the provisions of the Civil Code. In other words, Rule X is merely a guide to the enforcement of the substantive law on labor. There is a distinction hence Section 14, Rule X, Book III of the Rules is not the decisive law in a civil suit for damages instituted by an injured person during a vehicular accident against a working student of a school and against the school itself.

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 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 Filamer. He need not have an official appointment for a driverspositionin order that Filamer 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 Filamer (the act of driving the jeep from the school to Masas house is beneficial to the school because this enables Masa to do a timely school transportation service in the morning). Hence, the fact that Funtecha was not the school driver or was not acting with the scope of his janitorial duties does not relieve Filamer 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. Filamer 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.