AMWSLAI

vs.
NLRC, et. alG.R. No. 111870 June 30, 1994By Richard Troy A. Colmenares
USA College of Law6/25/14 12:52:46 AM
Nature of the Case
An appeal on decision rendered by NLRC establishing employer-employee relationship.
Facts
Private-respondent was appointed legal counsel of AMWSLAI in 1980. The appointment was renewed for another three years
through an order dated 23 January 1987. Petitioner sent a reminder when the appointment was about to end, prompting the
private respondent to lodge a complaint before the labor arbiter for illegal dismissal and payment of separation benefits.
Petitioner contested lack of jurisdiction by reason that no employer-employee (E2e) existed between the private parties, but the
same was denied, ruling that private-respondent was legally dismissed and was not entitled to separation benefits being a
managerial employee. Petitioner was however ordered to pay notarial fees from 1997 to 1992, as well as 10% attorneys fees.
Appeal affirmed this decision, and thus this petition.
Issue(s)
(1). Is private-respondent an employee of the petitioner?
Held
(1). Yes.The question on E2e is anchored on the following elements: (1) selection and engagement of the employee; (2) payment
ofwages; (3) power of dismissal; and (4) employer's own power to control employee's conduct. This is a question of fact and so is
leftwithin the jurisdiction of the quasi-judicial agency.The petitioner, having reserved the power of dismissal as it may deem
necessary in the terms and conditions attached in the letter dated 23 January 1987, paid private respondent on a monthly basis.
The power of control was also evident in the definition ofprivate respondents duties and functions.Lawyers can be hired as either
in-house counsels or outside counsel, the former having the same classification as regularemployees would. Private respondent
falls on the former category of lawyers, and thus, is an employee of petitioner. However, the decision to award private-respondent
notarial fees from 1987 to 1997 was incorrect. Although money claims arewithin the jurisdiction of the labor arbiter, private-
respondents award for his claim on notarial fees is not substantiated by proof. Thenotarial services actually form part of his
regular function, and thus already covered under his monthly compensation. Attorneysfees is also disallowed

CHAVEZ VS. NLRC

448 SCRA 478. January 17, 2005
FACTS
The respondent company, Supreme Packaging, Inc. engaged the services of the petitioner, Pedro Chavez, as truck driver. The
respondent company furnished the petitioner with a truck. The petitioner expressed to respondent Alvin Lee, respondent companys
plant manager, his
desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift differential pay,
and 13th month pay, among others. Although he promised to extend these benefits to the petitioner, respondent Lee failed to
actually do so. Petitioner filed a complaint for regularization with the Regional Arbitration Branch. Before the case could be
heard, respondent company terminated the services of the petitioner. Consequently, the petitioner filed an amended complaint
against the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay,
and 13thmonth pay, among others. The respondents, for their part, denied the existence of an employer-employee relationship
between the respondent company and the petitioner. They averred that the petitioner was an independent contractor as evidenced
by the contract of service which he and the respondent company entered into. The relationship of the respondent company and the
petitioner was allegedly governed by this contract of service.The respondents insisted that the petitioner had the sole control over
the means and methods by which his work was accomplished. He paid the wages of his helpers and exercised control over them.
As such, the petitioner was not entitled to regularization because he was not an employee of the respondent company. The
respondents, likewise, maintained that they did not dismiss the petitioner. Rather, the severance of his contractual relation with
the respondent company was due to his violation of the terms and conditions of their contract.

ISSUE:
whether or not there existed an employer-employee relationship between the respondent company and the petitioner.
RULING:
Yes. There was an employer-employee relationship in the case at bar. The elements to determine the existence of an employment
relationship are: (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 employees conduct.
All the four elements are present in this case. Of the four elements of the employer-employee relationship,
the control test is the most important. Although the respondents denied that they exercised control over the manner and
methods by which the petitioner accomplished his work, a careful review of the records shows that the latter performed his work
as truck driver under the respondents supervision and control. Their right of control was manifested by the following attendant
circumstances :1. The truck driven by the petitioner belonged to respondent company;2. There was an express instruction from
the respondents that the truck shall be used exclusively to deliver respondent companys goods; 3. Respondents directed the
petitioner, after completion of each delivery, to park the truck in either of two specific places only, to wit: at its office in Metro
Manila at 2320 Osmea Street, Makati City or at BEPZ, Mariveles, Bataan; and4. Respondents determined how, where and when
the petitioner would perform his task by issuing to him gate passes and routing slips.
COSMOPOLITAN FUNERAL HOMES VS. MAALAT, 187 SCRA 773

FACTS: Petitioner Cosmopolitan Funeral Homes, Inc. engaged the services of

private respondent Noli Maalat as a "supervisor" to handle the solicitation of
mortuary arrangements, sales and collections. The funeral services which he sold
refer to the taking of the corpse, embalming, casketing, viewing and delivery. The
private respondent was paid on a commission basis of 3.5% of the amounts actually
collected and remitted. On January 15, 1987, respondent Maalat was dismissed by
the petitioner for commission of several violations despite previous warnings.
Maalat filed a complaint for illegal dismissal and non-payment of commissions. The
Labor Arbiter rendered a decision declaring Maalat's dismissal illegal. On appeal, the
NLRC reversed the Labor Arbiter's decision.

ISSUE: Whether or not a "funeraria" supervisor is an employee or a

commission agent

RULING: Under the "right of control" test, 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. In the case at bar, the fact that the petitioner imposed and
applied its rule prohibiting superiors from engaging in other funeral business which
it considered inimical to company interests proves that it had the right of control
and actually exercised its control over the private respondent. In other words,
Maalat worked exclusively for the petitioner. He was also prohibited from engaging
in part-time embalming business outside of the company and a violation thereof
was cause for dismissal. Incurring absences without leave was likewise subject to
disciplinary action. Moreover, the payment of compensation by way of commission
does not militate against the conclusion that private respondent was an employee.

Insular Life v. NLRC (Nov. 15, 1989)

FACTS:
 Insular Life (company) and Basiao entered into a contract by which Basiao
was authorized to solicit for insurance in accordance with the rules of the company.
He would also receive compensation, in the form of commissions. The contract also
contained the relations of the parties, duties of the agent and the acts prohibited to
him including the modes of termination.

After 4 years, the parties entered into another contract an Agency

Managers Contact and to implement his end of it, Basiao organized an agency
while concurrently fulfilling his commitment under the first contract.

The company terminated the Agency Managers Contract. Basiao sued the
company in a civil action. Thus, the company terminated Basiaos engagement
under the first contract and stopped payment of his commissions.

ISSUE: W/N Basiao had become the companys employee by virtue of the contract,
thereby placing his claim for unpaid commissions

HELD: No.

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.

BROTHERHOOD LABOR UNITY MOVEMENT vs HON. ZAMORA (1991)

FACTS:

Petitioners-members of Brotherhood Labor Unit Movement of the Philippines (BLUM), worked

as cargadores or pahinante since 1961 at the SMC Plant. Sometime in January 1969, the
 petitioner workers numbering 140 organized themselves and engaged in union activities.
Believing that they are entitled to overtime and holiday pay, the petitioners aired their gripes
and grievances but it was not heeded by the respondents. One of the union member was
dismissed from work. Hence, the petitioners filed a complaint of unfair labor practice against
respondent SMC on the ground of illegal dismissal.
On the other hand, SMC argued that the complainant are not or have never been their
employees but they are the employees of the Guaranteed Labor Contractor, an independent labor
contracting firm
Labor Arbiter Nestor Lim rendered a decision in favor of the complainants which was
affirmed by the NLRC
On appeal, the Secretary set aside the NLRC ruling stressing the absence of an employer-
employee relationship
Issue: Whether an employer-employee relationship exists between petitioners and respondent San
Miguel Corporation
HELD: YES

In determining the existence of an employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect
to the means and methods by which the work is to be accomplished. It is the called "control test" that
is the most important element

In the CAB, petitioners worked continuously and exclusively for an average of 7 years for the
company. Considering the length of time that the petitioners have worked, there is justification to
conclude that they were engaged to perform activities necessary or desirable in the usual business of
trade of the respondent. Hence, petitioners are considered regular employees.

Even assuming that there is a contract of employment executed between SMC and the said labor
contractor, the court ruled that Guaranteed and Reliable Labor contractors have neither substantial
capital nor investment to qualify as an independent contractor under the law. The premises, tools and
equipments used by the petitioners in their jobs are all supplied by the respondent SMC. It is only the
manpower or labor force which the alleged contractors supply, suggesting the existence of a "labor
only" contracting scheme prohibited by law

It is important to emphasize that that in a truly independent contractor-contractee relationship, the

fees are paid directly to the manpower agency in lump sum without indicating or implying that the
basis of such lump sum is the salary per worker multiplied by the number of workers assigned to the
company.

In the CAB, the alleged independent contractors were paid a lump sum representing only the
salaries the workers were entitled to, arrived at by adding the salaries of each worker which depend
on the volume of work they had accomplished individually. Therefore, there is no independent
contractor-contractee relationship.

WHEREFORE, PETITION IS GRANTED.

Tongko v. Manufacturers LIfe Insurance Co. (Phils.), Inc.

(570 SCRA 503)
FACTS: The contractual relationship between Tongko and Manulife had two basic phases. The first phase began on
July 1, 1977, under a Career Agents Agreement, which provided that the Agent is an independent contractor and
nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between
the Company and the Agent.
The second phase started in 1983 when Tongko was named Unit Manager in Manulifes Sales Agency
Organization. In 1990, he became a Branch Manager. In 1996), Tongko became a Regional Sales Manager. Tongkos
gross earnings consisted of commissions, persistency income, and management overrides. Since the beginning,
Tongko consistently declared himself self-employed in his income tax returns. Under oath, he declared his gross
business income and deducted his business expenses to arrive at his taxable business income.
Respondent Renato Vergel de Dios, sales manager, wrote Tongko a letter dated November 6, 2001 on
concerns that were brought up during the Metro North Sales Managers Meeting, expressing dissatisfaction of
Tongkos performance in their agent recruiting business, which resulted in some changes on how Tongko would
conduct his duties, including that Tongko hire at his expense a competent assistant to unload him of routine tasks,
which he had been complaining to be too taxing for him.
On December 18, 2001, de Dios wrote Tongko another letter which served as notice of termination of his
Agency Agreement with the company effective fifteen days from the date of the letter. Tongko filed an illegal dismissal
complaint with the National Labor Relations Commission (NLRC), alleging that despite the clear terms of the letter
terminating his Agency Agreement, that he was Manulifes employee before he was illegally dismissed.
The labor arbiter decreed that no employer-employee relationship existed between the parties.
The NLRC reversed the labor arbiters decision on appeal; it found the existence of an employer-employee
relationship and concluded that Tongko had been illegally dismissed.
The Court of Appeals found that the NLRC gravely abused its discretion in its ruling and reverted to the
labor arbiters decision that no employer-employee relationship existed between Tongko and Manulife.

ISSUE: Is there an employer-employee relationship between Tongko and Manulife?

.
HELD: NO. In the determination of whether an employer-employee relationship exists between 2 parties, this court
applies the four-fold test to determine the existence of the elements of such relationship. Jurisprudence is firmly
settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable
yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employers power to control the employees conduct. IT is the so-called control test which constitutes
the most important index of existence of the employer-employee relationship that is, whether the employer controls or
has reserved the right to control the employee not only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship
exists where the person for whom the services are performed reserves the right to control not only the end to be
achieved but also the means to be used in reaching such end. In the case at bar, the absence of evidence showing
Manulifes control over Tongkos contractual duties points to the absence of any employer-employee relationship
between Tongko and Manulife. In the context of the established evidence, Tongko remained an agent all along;
although his subsequent duties made him a lead agent with leadership role, he was nevertheless only an agent
whose basic contract yields no evidence of means-and-manner control. Claimant clearly failed to substantiate his
claim of employment relationship by the quantum of evidence the Labor Code requires.
Tongkos failure to comply with the guidelines of de Dios letter, as a ground for termination of Tongkos
agency, is a matter that the labor tribunals cannot rule upon in the absence of an employer-employee relationship.
Jurisdiction over the matter belongs to the courts applying the laws of insurance, agency and contracts.

Dispositive: We REVERSE our Decision of November 7, 2008, GRANT Manulifes motion for
reconsideration and, accordingly, DISMISS Tongkos petition.

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.

Case Digest: Bernarte v. PBA, et al.

G.R. No.192084 : September 14, 2011

JOSE MEL BERNARTE, Petitioner, v. PHILIPPINE BASKETBALL ASSOCIATION (PBA), JOSE EMMANUEL M.
EALA, and PERRY MARTINEZ, Respondents

CARPIO,J.:

FACTS:

Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join the PBA as referees.
During the leadership of Commissioner Emilio Bernardino, they were made to sign contracts on a year-to-year basis.
During the term of Commissioner Eala, however, changes were made on the terms of their employment.

Complainants were not illegally dismissed because they were not employees of the PBA. Their respective contracts
of retainer were simply not renewed. PBA had the prerogative of whether or not to renew their contracts, which they
knew were fixed.\
The Labor Arbiter declared petitioner an employee whose dismissal by respondents was illegal.Tthe NLRC affirmed
the Labor Arbiter's judgment. The Court of Appeals, which overturned the decisions of the NLRC and Labor Arbiter.
The Court of Appeals found petitioner an independent contractor since respondents did not exercise any form of
control over the means and methods by which petitioner performed his work as a basketball referee.

ISSUE:

Whether petitioner is an employee of respondents, which in turn determines whether petitioner was illegally
dismissed.

HELD: The petitioners are not employees of respondents.

LABOR LAW:

The existence of an employer-employee relationship is ultimately a question of fact. As a general rule, factual issues
are beyond the province of this Court. However, this rule admits of exceptions, one of which is where there are
conflicting findings of fact between the Court of Appeals, on one hand, and the NLRC and Labor Arbiter, on the other,
such as in the present case.

To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold
test, to wit:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the employee on the means and methods by which the work is accomplished.
The so-called"control test"is the most important indicator of the presence or absence of an employer-employee
relationship.

The fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an employee of the former. For
a hired party to be considered an employee, the hiring party must have control over the means and methods by
which the hired party is to perform his work, which is absent in this case. The continuous rehiring by PBA of petitioner
simply signifies the renewal of the contract between PBA and petitioner, and highlights the satisfactory services
rendered by petitioner warranting such contract renewal. Conversely, if PBA decides to discontinue petitioner's
services at the end of the term fixed in the contract, whether for unsatisfactory services, or violation of the terms and
conditions of the contract, or for whatever other reason, the same merely results in the non-renewal of the contract,
as in the present case. The non-renewal of the contract between the parties does not constitute illegal dismissal of
petitioner by respondents.

DENIED

OROZCO V. CA

Wilhelmina Orozco was hired as a writer by the Philippine Daily Inquirer (PDI) in 1990. She was the columnist of Feminist
Reflections under the Lifestyle section of the publication. She writes on a weekly basis and on a per article basis (P250-300/article).

In 1991, Magsanoc as the editor-in-chief sought to improve the Lifestyle section of the paper. She said there were too many Lifestyle
writers and that it was time to reduce the number of writers. Orozcos column was eventually dropped.

Orozco filed for a case for Illegal Dismissal against PDI and Magsanoc. Orozco won in the Labor Arbiter. The LA ruled that there
exists an employer-employee relationship between PDI and Orozco hence Orozco is entitled to receive backwages, reinstatement,
and 13th month pay.

PDI appealed to the National Labor Relations Commission. The NLRC denied the appeal because of the failure of PDI to post a
surety bond as required by Article 223 of the Labor Code. The Court of Appeals reversed the NLRC.

ISSUE: Whether or not there exists an employer-employee relationship between PDI and Orozco. Whether or not PDIs appeal will
prosper.
HELD: Under Article 223 of the Labor Code:

ART. 223. Appeal. Decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to the Commission
by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders.

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary
award in the judgment appealed from.

The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to assure the workers
that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employers appeal. It
was intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees just
and lawful claims.

But in this case, this principle is relaxed by the Supreme Court considering the fact that the Labor Arbiter, in ruling that the Orozco is
entitled to backwages, did not provide any computation.

The case is then remanded to the Labor Arbiter for the computation. This necessarily pended the resolution of the other issue of
whether or not there exists an employer-employee relationship between PDI and Orozco.

CONSULTA vs CA Case Digest

[G.R. No. 145443. March 18, 2005]

RAQUEL P. CONSULTA, petitioner, vs. COURT OF APPEALS, PAMANA
PHILIPPINES, INC., RAZUL Z. REQUESTO, and ALETA TOLENTINO, respondents.

FACTS: Consulta was Managing Associate of Pamana. On 1987 she was issued a
certification authorizing her to negotiate for and in behalf of PAMANA with the
Federation of Filipino Civilian Employees Association. Consulta was able to secure an
account with FFCEA in behalf of PAMANA. However, Consulta claimed that PAMANA
did not pay her commission for the PPCEA account and filed a complaint for unpaid
wages or commission.

ISSUE: Whether or not Consulta was an employee of PAMANA.

HELD: The SC held that Pamana was an independent agent and not an employee.

The power of control in the four fold test is missing. The manner in which Consulta was
to pursue her tasked activities was not subject to the control of PAMANA. Consulta
failed to show that she worked definite hours. The amount of time, the methods and
means, the management and maintenance of her sales division were left to her sound
judgment.

Finally, Pamana paid Consulta not for labor she performed but only for the results of her
labor. Without results, Consultas labor was her own burden and loss. Her right to
compensation, or to commission, depended on the tangible results of her work -
whether she brought in paying recruits.
The fact that the appointment required Consulta to solicit business exclusively for
Pamana did not mean Pamana exercised control over the means and methods of
Consultas work as the term control is understood in labor jurisprudence. Neither did it
make Consulta an employee of Pamana. Pamana did not prohibit Consulta from
engaging in any other business, or from being connected with any other company, for
as long as the business or company did not compete with Pamanas business. The
exclusivity clause was a reasonable restriction to prevent similar acts prejudicial to
Pamanas business interest. Article 1306 of the Civil Code provides that [t]he
contracting parties may establish such stipulation, clauses, terms and conditions as they
may deem convenient, provided that they are not contrary to law, morals, good
customs, public order, or public policy.

There being no employer-employee relationship between Pamana and Consulta, the

Labor Arbiter and the NLRC had no jurisdiction to entertain and rule on Consultas
money claim. Consultas remedy is to file an ordinary civil action to litigate her claim

Petition is dismissed.

LEONARDO vs CA

FACTS:

BALTEL holds the franchise from the Municipality of Balagtas, Bulacan

to operate a telephone service in the municipality. BALTEL also has
authority from the National Telecommunications Commission (NTC) to
operate in the municipality.

It hired Emelita Leonardo and others for various positions in the

company.

BALTEL6 and DIGITEL entered into a management contract, under the

terms of the contract, DIGITEL was to provide:

o personnel, consultancy and technical expertise in the

management, administration, and operation of BALTELs
telephone service in Balagtas, Bulacan.

o undertook to improve the internal and external plants of

BALTELs telephone system and to handle customer relations.

o Handle other matters necessary for the efficient management

and operation of the telephone system.
 1994, BALTEL informed the NTC that it would cease to operate effective
28 February 1994 because it was no longer in a financial position to
continue its operations. It assigned to DIGITEL its buildings and other
improvements on a parcel of land in Balagtas, Bulacan where BALTEL
conducted its business operations, whish assignment was in partial
payment of BALTELs obligation to DIGITEL.

Leonardos employment ceased.

They executed separate, undated and similarly worded quitclaims

acknowledging receipt of various amounts representing their claims
from BALTEL.

o In their quitclaims, petitioners absolved and released BALTEL

from all monetary claims that arose out of their employer-
employee relationship with the company.

o Petitioners also acknowledged that BALTEL closed its operations

due to serious business losses.

Leonardo filed a compalaint against BALTEL for recovery of salary

differential and attorneys fees. It also included illegal dismissal as
additional cause of action and to implead DIGITEL as additional
respondent.

o DIGITEL denied having any liability on the ground that it was not
petitioners employer.

LABOR ARBITER RULED:

o Decision favored Leonardo. Instructed DIGITEL to pay for salary

differential and to reinstate all the complainants to their former
or equivalent positions.

DIGITEL appealed to NLRC but it denied the motion for

recommendation.

CA RULED:

o Reversed the decision of NLRC insofar as it held DIGITEL

severally liable with BALTEL.
 o DIGITEL is not the successor in interest of BALTEL nor did it
become the absolute owner of BALTEL or that DIGITEL absorbed
the employess of BALTEl.

o No showing of DIGITEL acquiring franchise of BALTEL.

ISSUE:

Whether an employer-employee relationship exists between petitioners and

DIGITEL?

HELD:

NO, the decision of Court of Appeals is affirmed.

RATIO:

To determine the existence of employer-employee relationship, it has to be

resolved who has the power to select employees, pay for their wages, etc.
The most important element is the CONTROL TEST. There is employer-
employee relationship when the person for whom the services are
performed reserves the right to control not only the end achieved but also the
manner and means used to achieve the end.
DIGITEL has the power to control, however, this power flows from the
management contract which includes providing for personnel, consultancy,
etc. the control test cannot be applied.
DIGITEL did not hire petitioners. BALTEL had already employed them when it
entered into an agreement with DIGITEL. Hence, it has no power to dismiss
BALTELs employees.