FRANCISCO vs.

NLRC
[GR. No.170087 Aug. 31, 2006]
Facts:
Angelina Francisco has held several positions in Kasei
Corporation, to wit: (1) Accountant and Corporate Secretary;
(2) Liaison Officer to the City of Makati; (3) Corporate
Secretary; and (4)Acting Manager.
She performed the work of Acting Manager for five years but
later she was replaced by Liza R. Fuentes as Manager. Then,
Kasei Corporation reduced her salary and was not paid her
mid-year bonus allegedly because the company was not
earning well. She made repeated follow-ups with the
company cashier but she was advised that the company was
not earning well. Ultimately, she did not report for work and
filed an action for constructive dismissal before the labor
arbiter.
Issue:
Was Francisco an employee of Kasei Corporation?
Held:
In certain cases where 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 employerspower 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.
This two-tiered test would provide us with a framework of
analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the relationship
between the parties.This is especially appropriate in this case
where there is no written agreement or terms of reference to
base the relationship on; and due to the complexity of the
relationship based on the various positions and
responsibilities given to the worker over the period of the
latters employment. 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.
The proper standard of economic dependence is whether the
worker is dependent on the alleged 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, 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.
There can be no other conclusion that she 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 the
corporation on a regular basis over an indefinite period of
engagement. The corporation hired and engaged her for
compensation, with the power to dismiss
for cause. More importantly, the corporation had the power
to control her with the means and methods by which the
work is to be accomplished.

Jose Y. Sonza V. ABS-CBN Broadcasting Corporation

G.R. No. 138051, 10 June 2004, First Division, (Carpio,
J.)
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.
In May 1994, respondent ABS-CBN signed an Agreement
with the Mel and Jay Management and Development
Corporation (MJMDC) represented by Jose Y. Sonza and
Carmela Tiangco. Referred to in the Agreement as AGENT,
MJMDC agreed to provide SONZAs services exclusively to
ABS-CBN as talent for radio and television.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs
President, Eugenio Lopez III, saying that he irrevocably
resigns in view of recent events concerning his programs 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.
On 30 April 1996, SONZA filed a complaint against ABS-CBN
before the DOLE-NCR Q.C.. SONZA complained for none
payment of his salaries, separation pay, service incentive
leave pay, 13thmonth pay, signing bonus, travel allowance
and amounts due under the Employees Stock Option
Plan )ESOP). ABS-CBN filed a Motion to Dismiss on the
ground that no employee-employer relationship existed
between the parties.
The Labor Arbirter denied the motion to dismiss by
respondents but later dismissed the complaint for lack of
jurisdiction. SONZA appealed to the NLRC but it affirmed the
Labor Arbiters decision. SONZA filed a motion for
reconsideration, which the NLRC also denied. The Court of
Appeals affirmed the Decision. Hence, this petition.
ISSUE:
Whether or not there exist an employer-employee
relationship between Sonza and ABS-CBN
HELD:

There is no employer-employee relationship between Sonza

and ABS-CBN. Petition denied. Judgment decision affirmed.
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. In any event, the
method of selecting and engaging SONZA does not
conclusively determine his status. The Court must consider
all the circumstances of the relationship, with the control test
being the most important element.
The payment of talent fees directly to SONZA and not to
MJMDC does not negate the status of SONZA as an
independent contractor. The parties expressly agreed on
such mode of payment. Under the RECENT JURISPRUDENCE
LABOR LAW Agreement, MJMDC is the AGENT of SONZA, to
whom MJMDC would have to turn over any talent fee
accruing under the Agreement.
Applying the control test, SONZA is not an employee but an
independent contractor. SONZAs contention that ABS-CBN
exercised control over the means and methods of his work is
misplaced. 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. 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.
ABS-CBNs right not to broadcast SONZAs show, burdened
as it was by the obligation to continue paying in full SONZAs
talent fees, did not amount to control over the means and
methods of the performance of SONZAs work. This proves
that ABS-CBNs control was limited only to the result of
SONZAs work, whether to broadcast the final product or not.
In either case, ABS-CBN must still pay SONZAs talent fees in
full until the expiry of the Agreement.
The equipment, crew and airtime are not the tools and
instrumentalities SONZA needed to perform his job. What
SONZA principally needed were his talent or skills and the
costumes necessary for his appearance. 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. The records do not show that
ABS-CBN exercised any supervision and control over how
SONZA utilized his skills and talent in his shows. 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 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.
SONZA failed to show that Television and Radio Code of the
Kapisanan ng mga Broadcaster sa Pilipinas (KPB), which has
been adopted by the COMPANY (ABS-CBN) as its Code of
Ethics, controlled his performance. The 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.
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 huge talent fees
partially compensates for exclusivity, as in the present case.
There are essentially only two parties involved under the
Agreement, namely, SONZA and ABSCBN. MJMDC merely
acted as SONZAs agent. The Agreement expressly states
that MJMDC acted as the AGENT of SONZA. The records do
not show that MJMDC acted as ABS-CBNs agent. MJMDC,
which stands for Mel and Jay Management and Development
Corporation, is a corporation organized and owned by SONZA
and TIANGCO. The President and General Manager of MJMDC
is SONZA himself.
It is absurd to hold that MJMDC, which is owned, controlled,
headed and managed by SONZA, acted as agent of ABS-CBN
in entering into the Agreement with SONZA, who himself is
represented by MJMDC. That would make MJMDC the agent
of both ABS-CBN and SONZA. RECENT JURISPRUDENCE
LABOR LAW
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. An individual like
an artist or talent has a right to render his services without
any one controlling the means and methods by which he
performs his art or craft. If radio and television program
hosts can render their services only as employees, the
station owners and managers can dictate to the radio and
television hosts what they say in their shows. This is not
conducive to freedom of the press.
SONZAs claims are all based on the May 1994 Agreement
and stock option plan, and not on the Labor Code. Clearly,
the present case does not call for an application of the Labor
Code provisions but an
interpretation and implementation of the May 1994
Agreement. In effect, SONZAs cause of action is for breach
of contract which is intrinsically a civil dispute cognizable by
the regular courts.

Bitoy Javier vs. Fly Ace Corp./Flordelyn Castillo, G.R.

No. 192558, Feb. 15, 2012
PETITIONER Bitoy Javier alleged that he was an employee of
respondent Fly Ace Corp., performing various tasks at its
warehouse such as cleaning and arranging the canned items
before their delivery to certain locations, except in instances
when he would be ordered to accompany the companys
delivery vehicles as pahinante. To support his claim, Javier
adduced no other evidence except an affidavit executed by
one Bengie Valenzuela, who only attested that he would
frequently see Javier at the workplace where he was also
hired as stevedore. Does Javiers evidence suffice to establish
employer-employee relationship between Fly Ace and him?
Ruling: No.
Expectedly, opposing parties would stand poles apart and
proffer allegations as different as chalk and cheese. It is,
therefore, incumbent upon the Court to determine whether
the party on whom the burden to prove lies was able to
hurdle the same. No particular form of evidence is required
to prove the existence of such employer-employee

relationship. Any competent and relevant evidence to prove

the relationship may be admitted. Hence, while no particular
form of evidence is required, a finding that such relationship
exists must still rest on some substantial evidence. Moreover,
the substantiality of the evidence depends on its quantitative
as well as its qualitative aspects. Although substantial
evidence is not a function of quantity but rather of quality,
the x x x circumstances of the instant case demand that
something more should have been proffered. Had there been
other proofs of employment, such as x x x inclusion in
petitioners payroll, or a clear exercise of control, the Court
would have affirmed the finding of employer-employee
relationship.
In sum, the rule of thumb remains: the onus probandi falls on
petitioner to establish or substantiate such claim by the
requisite quantum of evidence. Whoever claims entitlement
to the benefits provided by law should establish his or her
right thereto x x x.
In this case, the labor arbiter and the Court of Appeals (CA)
both concluded that Javier failed to establish his employment
with Fly Ace. All that Javier presented were his self-serving
statements purportedly showing his activities as an
employee of Fly Ace. He failed to pass the substantiality
requirement to support his claim. Hence, the Court sees no
reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed
stevedore of Fly Ace, he was made to work in the company
premises during weekdays arranging and cleaning grocery
items for delivery to clients, no other proof was submitted.
The lone affidavit executed by one Bengie Valenzuela was
unsuccessful in strengthening Javiers cause. All Valenzuela
attested to was that he would frequently see Javier at the
workplace where the latter was also hired as stevedore. Tthe
Court cannot ignore the inescapable conclusion that Javiers
mere presence at the workplace falls short in proving
employment therein. The affidavit could have bolstered
Javiers claim of being tasked to clean grocery items when
there were no scheduled delivery trips, but no information
was offered simply because the witness had no personal
knowledge of Javiers employment status. The Court cannot
accept Javiers statements, hook, line and sinker. (Bitoy Javier
vs. Fly Ace Corp./Flordelyn Castillo, G.R. No. 192558, Feb. 15,
2012.

Orozco v. CA
Facts:
In March 1990, PDI engaged the services of
petitioner to write a weekly column for its Lifestyle section.
She religiously submitted her articles every week, except for
a six-month stint in New York City when she, nonetheless,
sent several articles through
mail. She received
compensation of P250.00 later increased to P300.00 for
every column published.[5]
On November 7, 1992, petitioners column appeared
in the PDI for the last time. Petitioner claims that her then
editor, Ms. Lita T. Logarta, [6] told her that respondent Leticia
Jimenez Magsanoc, PDI Editor in Chief, wanted to stop
publishing her column for no reason at all and advised
petitioner to talk to Magsanoc herself. Petitioner narrates
that when she talked to Magsanoc, the latter informed her
that it was PDI Chairperson Eugenia Apostol who had asked
to stop publication of her column, but that in a telephone
conversation with Apostol, the latter said that Magsanoc
informed her (Apostol) that the Lifestyle section already had
many columnists.[7]

On the other hand, PDI claims that in June 1991,

Magsanoc met with the Lifestyle section editor to discuss
how to improve said section. They agreed to cut down the
number of columnists by keeping only those whose columns
were well-written, with regular feedback and following. In
their judgment, petitioners column failed to improve,
continued to be superficially and poorly written, and failed to
meet the high standards of the newspaper. Hence, they
decided to terminate petitioners column.[8]
Aggrieved by the newspapers action, petitioner
filed a complaint for illegal dismissal, backwages, moral and
exemplary damages, and other money claims before the
NLRC.
Issue: Whether or not Orozco is an employee of PDI, and is
yes, whether she was illegally dismissed.
We rule for PDI.
The existence of an employer-employee relationship is
essentially a questions of fact. Factual findings of quasijudicial agencies like the NLRC are generally accorded
respect and finality if supported by substantial evidence.
Considering that the CA's findings are in direct conflict with
those of the Labor Arbiter and NLRC, this Court must now
make its own examination and evaluation of the facts of this
case.
It is true the Orozce herself admitted that she was not and
had not been considered respondent's employee because the
terms of works were arbitrarily decided upon by PDI.
This Court has constantly adhered to the FOUR-FOLD TEST to
determine whether there exists an employee-employer
relationship between parties. The four elements of an
employee relationship are the selection and engagement of
the employee; the payment of wages; the power of
dismissal; and the employer's power to control the
employee's conduct.
Of these four elements, it is the power of control which is
most crucial and most determinative factor, so important in
fact the the other elements may even be disregarded. In
other words, the test is whether the employer controls or has
reserved the right to control the employee, not only as to the
work done, but also as to the means and methods by which
the same is accomplished.
Orozco argues that several factors exist to prove that PDI
exercised control over her and her work. But as to whether
this is the form of control that our labor laws contemplate
such as to establish an employer-employee relationship
between Orozco and PDI, it is not.
Orozco has misconstrued the CONTROL TEST as did the
Labor Arbiter and the NLRC.
Not all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former. Rules
which serve as general guidelines towards the achievement
of the mutually desired result are not indicative of the power
of control.
Orozco has not shown the PDI, acting through its editors,
dictated how she was to write or produce her articles each
week. Aside from the constraints presented by the space
allocation of her column, there were no restraints on her
creativity. The perceived constraint on Orozco's column was
dictated by her own choice of her column's perspective.
The newspaper's power to approve or reject publication of
any specific article she wrote for her column cannot be the
control contemplated in the control test as it is but logical
that one who commissions another to do a piece of work
should have the right to accept or reject the product. The

important factor to consider in the control test is still the

elements of control over how the work itself is done, not just
the end result thereof.
Where a person who works for another performs his
job more or less at his own pleasure, in the manner he
sees fit, subject to definite hours or conditions of
work, and is compensated according to the result of
his efforts and not the amount thereof, no employeremployee relationship exists.
Aside from the control test, this Court has also used the
ECONOMIC REALITY TEST. The economic realities prevailing
within the activity or between the parties are examined,
taking into consideration the totality of the circumstances
surrounding the true nature of the relationship between the
parties.
Orozco's main occupation is not as a columnist for
respondent but as a women's rights advocate working in
various womens' organizations. She also contributes articles
to other publications. Thus, it cannot be said that Orozco was
dependent on PDI for her continued employment in PDI's line
of business.
the inevitable conclusion is that Orozco was not PDI's
employee but an INDEPENDENT CONTRACTOR, engaged to
do independent work.

[G.R. No. 167622, November 07, 2008]

GREGORIO V. TONGKO, PETITIONER, VS. THE
MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC.
AND RENATO A. VERGEL DE DIOS, RESPONDENTS.
Facts:
RESPONDENT Manufacturers Life Insurance Co. (Philippines)
Inc. (Manulife) is engaged in life insurance business. On July
1, 1977, petitioner Gregorio V. Tongko entered into a Career
Agents Agreement with respondent. As an agent, Tongko
was to canvass for applications for life insurance, annuities,
group policies and other products of Manulife and collect in
exchange for provisional receipts issued by him money due
or become due to the company.
In a complaint for illegal dismissal filed by Tongko, Manulife
interposed the defense of lack of employer-employee
relationship between them.
Issue: WON employer-employee exist between agent of
insurance of companies?
Ruling: yes.
If the specific rules and regulations that are enforced against
insurance agents or managers are such that would directly
affect the means and methods by which such agents or
managers would achieve the objectives set by the insurance
company, they are employees of insurance company.

Under this provision, an agent of Manulife must comply with

three requirements: (1) compliance with the regulations and
requirements of the company; (2) maintenance of a level of
knowledge of the companys products that is satisfactory to
the company; and (3) compliance with a quota of new
businesses. (Gregorio V. Tongko versus The Manufacturers
Life Insurance Co. (Philippines) Inc., and Renato A. Vergel de
Dios, G.R. No. 167622, Nov. 7, 2008).

Nota Bene: On motion for Reconsideration, Supreme Court

En banc reversed its ruling promulgated on June 29, 2010.
SC declared that NO Employer-employee existed between
Tongko and Manulife.
Ruling in the Motion for Reconsideration
In disposing of this Motion for Reconsideration, the Supreme
Court placed heavy significance on the application of the
Civil Code and Insurance provisions on agency. The original
Agreement of Tongko with the company dictates that he is an
insurance agent. No other documentary evidence was found
to support subsequent stipulations as to their relationship
that would negate the agency, and not employment,
relationship on the original agreement.
It was found by the Court that Tongko declared himself as
business or self-employed person in his income tax return. In
a sense, an independent contractor. This bolsters the content
of the Agreement mentioned above that he was an insurance
agent in the context of the Insurance Code and the Civil
Code. To the Court, this aspect of the evidence was not
considered in its original decision, which had they been given
importance, would have changed the decision as it is an
admission against interest on the part of Tongko.
Another principle that surfaced here is the concept of
estoppel. Tongkos previous admissions in several years of
tax returns as an independent agent, as against his belated
claim that he was all along an employee, are too
diametrically opposed to be simply dismissed or ignored.
As to the value of the Code of Conduct relied upon by Tongko
in claiming that he is an employee, the Court posits:
What, to Tongko, serve as evidence of labor law control are
the codes of conduct that Manulife imposes on its agents in
the sale of insurance. The mere presentation of codes or of
rules and regulations, however, is not per se indicative of
labor law control as the law and jurisprudence teach us.
As already recited above, the Insurance Code imposes
obligations on both the insurance company and its agents in
the performance of their respective obligations under the
Code, particularly on licenses and their renewals, on the
representations to be made to potential customers, the
collection of premiums, on the delivery of insurance policies,
on the matter of compensation, and on measures to ensure
ethical business practice in the industry.

In the instant case, Manulife had the power of control over

Tongko that would make him its employee. Several factors
contribute to this conclusion.

Element of control in principal-agent relationship does

not make the agent an employee of the principal.

In the Agreement dated July 1, 1977 executed between

Tongko and Manulife, it is provided that: The Agent hereby
agrees to comply with all regulations and requirements of the
Company as herein provided as well as maintain a standard
of knowledge and competency in the sale of the Companys
product which satisfies those set by the company and
sufficiently meets the volume of new business required of
Production Club membership.

The general law on agency, on the other hand, expressly

allows the principal an element of control over the agent in a
manner consistent with an agency relationship. In this sense,
these control measures cannot be read as indicative of labor
law control. Foremost among these are the directives that
the principal may impose on the agent to achieve the
assigned tasks, to the extent that they do not involve the
means and manner of undertaking these tasks. The law
likewise obligates the agent to render an account; in this

sense, the principal may impose on the agent specific

instructions on how an account shall be made, particularly on
the matter of expenses and reimbursements. To these
extents, control can be imposed through rules and
regulations without intruding into the labor law concept of
control for purposes of employment.
The Court further held that a commitment to abide by the
rules and regulations of an insurance company does not ipso
facto make the insurance agent an employee. Neither do
guidelines somehow restrictive of the insurance agents
conduct necessarily indicate control as this term is defined
in jurisprudence. Guidelines indicative of labor law control,
should not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the
nature of dictating the means or methods to be employed in
attaining the result, or of fixing the methodology and of
binding or restricting the party hired to the use of these
means. In fact, results-wise, the principal can impose
production quotas and can determine how many agents, with
specific territories, ought to be employed to achieve the
companys objectives. These are management policy
decisions that the labor law element of control cannot reach.
Thus, as will be shown more fully , Manulifes codes of
conduct, all of which do not intrude into the insurance
agents means and manner of conducting their sales and
only control them as to the desired results and Insurance
Code norms, cannot be used as basis for a finding that the
labor law concept of control existed between Manulife and
Tongko.

Facts:

Thus, the Court did not see the existence of such relationship
and reversed its earlier ruling which granted Tongko millions
in backwages and damages, among others.

TAPE v SERVAA | Tinga, J.

GR No. 167648 | January 28, 2008
Nature: Petition for Review on Certiorari of the Decision and
Resolution of the CA
Petitioner: Television and Production Exponents (TAPE),
Antonio Tuviera
Respondent: Roberto Servaa
Quick Summary: Servaa, a security guard of TAPE
stationed at Broadway Centrum, was dismissed due to
redundancy and the companys decision to engage the
services of a professional security agency. The Court held
that although the existence of an employer-employee
relationship is a factual issue, the Court can still assume
jurisdiction especially if the findings of lower courts/ agencies
are conflicting (NLRC with those of CA and Labor Arbiters).
Looking at the following facts, the Court held that Servaa is
an employee of TAPE:

Vis--vis the four fold test

o
Servaa was absorbed by TAPE, thus, he
was hired by TAPE.
o
He received a fixed amount as monthly
compensation for the services he rendered
to TAPE.
o
The Memorandum informing respondent of
the discontinuance of his service proves
that TAPE had the power to dismiss
respondent.
o
Control is manifested in the bundy cards
submitted by respondent in evidence. He
was required to report daily and observe
definite work hours.

Identification card of Servaa shows he is an

employee.
TAPE failed to adduce any evidence to prove that it
complied with the requirements laid down in Policy
Instruction No. 40 for Servaa to qualify as
Independent contractor. (did not present contract ,
did
not
comply
with
contract
registration
requirement)
He had been continuously under the employ of TAPE
from 1995 until his termination in March 2000, or for
a span of 5 years. He is considered a regular
employee under Article 280 of the Labor Code.
Roberto Servaa had served as a security guard for
TAPE from March 1987 until he was terminated on
March 3, 2000.
He was first connected with Agro-Commercial
Security Agency, which assigned him to assist TAPE
in its live productions. When the security agencys
contract with RPN-9 expired in 1995, respondent
was absorbed by TAPE.
The parties have agreed that Servaa would render
his services until such time that TAPE shall have
engaged the services of a professional security
agency.
TAPE started negotiations for the engagement of a
professional security agency, Sun Shield Security
Agency.
TAPE issued a memorandum to Servaa informing
him of his impending dismissal due to TAPEs
decision to contract the services of Sun Shield and
redundancy.
Servaa filed a complaint for illegal dismissal and
non-payment of benefits against TAPE.

Labor Arbiter: declared Servaa regular employee of TAPE

citing nature of his work as necessary and desirable in the
usual business activity of TAPE. Termination was valid on the
ground of redundancy and ordered the payment of
respondents separation pay.
NLRC: reversed the Labor Arbiters decision and considered
Servaa a mere program employee.
CA: regular employee of TAPE.
Issue:
WON an employer-employee relationship exists between
TAPE and Servaa
Held/ Ratio:
YES. Employee-Employer relationship exists. CA decision
modified, exempted Antonio Tuviera from liability absent bad
faith.
The factors to be considered in determining the existence of
employer-employee relationship are:

Selection and engagement of the employee

Payment of wages

Power of dismissal

Employers power to control the employee with

respect to the means and method by which the
work is to be accomplished
The most important factor involves the control test under
which an employer-employee relationship exists 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.
Factual Considerations:

In 1995, Servaa was absorbed by TAPE or, in

TAPEs language, retained as talent. Thus, he was
hired by TAPE.
He presented his identification card to prove that he
is indeed an employee of TAPE. It has been held that
in a business establishment, an identification card is
usually provided not just as a security measure but
to mainly identify the holder thereof as a bona fide
employee of the firm who issues it.
The Memorandum informing Servaa of the
discontinuance of his service proves that TAPE had
the power to dismiss him.
Control is manifested in the Bundy cards submitted
by Servaa in evidence. These showed that he was
required to report daily and observe definite work
hours.
NOT Independent Contractor. Servaa cannot be
considered as an independent contractor 1 as TAPE
alleges.
TAPEs reliance on Dept. of Labor Policy No. 40 in
classifying Servaa as a program employee 2 and
equating him to be an independent contractor is
misplaced. The aforementioned theories of TAPE run
counter to each other. An independent contractor is
not an employee of the employer, while a talent or
program employee is an employee.
Servaa had been continuously under the employ of
TAPE from 1995 until his termination. Regardless of
whether or not Servaa had been performing work
that is necessary or desirable to the usual business
of TAPE, he is still considered a regular employee by
virtue of A280 of LC. As such, he cannot be
terminated except for just cause or when authorized
by law.

Encyclopaedia Britannica (Phil) Inc., vs NLRC (1996)

G.R. 87098
Facts:
Private respondent Benjamin Limjoco was a Sales Division
Manager of petitioner Encyclopaedia Britannica and was in
charge of selling petitioners products through some sales
representatives.
As compensation, private respondent
received commissions from the products sold by his agents.
He was also allowed to use petitioners name, goodwill and
logo. It was, however, agreed upon that office expenses
would be deducted from private respondents commissions.
Petitioner would also be informed about appointments,
promotions, and transfers of employees in private
respondents district.
On June 1974, Limjoco resigned from office to pursue his
private business. He then filed a complaint against petitioner
Encyclopaedia Britannica with DOLE, claiming for non-

A legitimate job contractor or subcontractor carries

on a distinct and independent business and undertakes to
perform the job, work or service on its own account and
under its own responsibility according to its own manner and
method, and free from the control and direction of the
principal in all matters connected with the performance of
the work except as to the results thereof. TAPE failed to show
that Servaa has substantial capital or investment to be
qualified as an independent contractor.
2
Program employees are those whose skills, talents or
services are engaged by the station for a particular or
specific program or undertaking and who are not required to
observe normal working hours.

payment of separation pay and other benefits, and also

illegal deduction from his sales commissions.
Petitioner alleged that Limjoco was not its employee but an
independent dealer authorized to promote and sell its
products and in return, received commissions there from.
Limjoco did not have any salary and his income from the
company was dependent on the volume of sales
accomplished. He also had his own separate office, financed
the business expenses, and maintained his own workforce.
The salaries of his secretary, utility man, and sales
representatives were chargeable to his commissions. Thus,
petitioner argued that it had no control and supervision over
the complainant as to the manner and means he conducted
his business operations, moreover, the latter did not even
report to the office of the petitioner and did not observe fixed
office hours
Issue: WON there exist an employer-employee relationship
and necessarily entitles Limjoco of his claims?
Held: Private respondent was merely an agent or an
independent dealer of the petitioner.
In ascertaining whether the relationship is that of employeremployee or one of independent contractor, each case must
be determined by its own facts and all features of the
relationship are to be considered.
Respondent was free to conduct his work and he was free to
engage in other means of livelihood. At the time he was
connected with the petitioner company, private respondent
was also a director and later the president of the Farmers
Rural Bank. Had he been an employee of the company, he
could not be employed elsewhere and he would be required
to devote full time for petitioner. If private respondent was
indeed an employee, it was rather unusual for him to wait for
more than a year from his separation from work before he
decided to file his claims. As he pointed out in his resignation
letter, Limjoco was aware of conflict with other interests
which xxx have increasingly required my personal
attention. At the very least, it would indicate that petitioner
has no effective control over the personal activities of
Limjoco, who as admitted by the latter had other conflict of
interest requiring his personal attention.
As pointed out the element of control is absent; where a
person who works for another does so more or less at his
own pleasure and is not subject to definite hours or
conditions of work, and in turn is compensated according to
the result of his efforts and not the amount thereof.
Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R.
No. 169510, Aug. 8, 2011
SOMETIME in February 1993, respondent Jesus P. Gison was
engaged as part-time consultant on retainer basis by
petitioner Atok Big Wedge Company, Inc. As consultant,
Gison assisted the petitioners retained legal counsel with
matters pertaining to the prosecution of cases against illegal
surface occupants within the area covered by the companys
mineral claims. He was likewise tasked to perform liaison
work with several government agencies, which he said was
his expertise.
He was not required to report to office on a regular basis,
except when occasionally requested by the management to
discuss matters needing his expertise. For his services, he
received a retainer fee of P3,000 a month which was
delivered to him either at his residence or in a local
restaurant. The parties executed a retainer agreement but

the same was misplaced and can no longer be found. The

arrangement lasted for 11 years.
Was Gison an employee of petitioner Atok Big Wedge
Company, Inc.?
Ruling: No.
To ascertain the existence of an employer-employee
relationship, jurisprudence has invariably adhered to the
four-fold test, to wit: (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. Of these four, the
last one is the most important. The so-called control test is
commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employeremployee relationship. Under the control test, an employeremployee relationship exists where the person for whom the
services are performed reserves the right to control not only
the end achieved, but also the manner and means to be used
in reaching that end.
Applying the aforementioned test, an employer-employee
relationship is apparently absent in the case at bar. Among
other things, respondent was not required to report everyday
during regular office hours of petitioner. Respondents
monthly retainer fees were paid to him either at his
residence or a local restaurant.
More importantly, petitioner did not prescribe the manner in
which respondent would accomplish any of the tasks in which
his expertise as a liaison officer was needed; respondent was
left alone and given the freedom to accomplish the tasks
using his own means and method. Respondent was assigned
tasks to perform, but petitioner did not control the manner
and methods by which respondent performed these tasks.
Verily, the absence of the element of control on the part of
the petitioner engenders a conclusion that he is not an
employee of the petitioner.
Moreover, the absence of the parties retainership agreement
notwithstanding, respondent clearly admitted that petitioner
hired him in a limited capacity only and that there will be no
employer-employee relationship between them. (Atok Big
Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510,
Aug. 8, 2011). (Dominador Almirante, Labor case
digest)

Dumpit-Murillo vs. CA
[GR. No. 164652.June 8, 2007]
Facts:
Murillowas hired under a talent contract, as a newscaster and
co-anchor for ABCs early evening news program. The
contract was for a period of three months. It was renewed
fifteen times within four years. Upon the expiration of her
last talent contract, she informed ABC of her desire to renew.
Not having received a reply, she considered the companys
inaction as constructive dismissal of her services.
Held:
Murillo was not a fixed term employee.
An employer-employee relationship was created when the
private respondents started to merely renew the contracts
repeatedly fifteen times or for four consecutive
years.Petitioner was a regular employee. The practice of
having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant
with labor law.

In the case at bar, it does not appear that the employer and
employee dealt with each other on equal terms. Being one of
the numerous newscasters/broadcasters of ABC and desiring
to keep her job as a broadcasting practitioner, petitioner was
left with no choice but to affix her signature of conformity on
each renewal of her contract as already prepared by private
respondents; otherwise, private respondents would have
simply refused to renew her contract. Patently, the petitioner
occupied a position of weakness vis--vis the employer.
Moreover, private respondents practice of repeatedly
extending petitioners 3-month contract for four years is a
circumvention of the acquisition of regular status. Hence,
there was no valid fixed-term employment between
petitioner and private respondents.
Sonza case is not applicable [i.e. absence of employeremployee relationship between a talent and the media entity
which engaged the talents services on a per talent contract
basis]
In Sonza, the television station did not instruct Sonza how to
perform his job. How Sonza delivered his lines, appeared on
television, and sounded on radio were outside the television
stations control.
In the case at bar, ABC had control over the performance of
petitioners work. Noteworthy too, is the comparatively low
P28,000 monthly pay of petitioner vis the P300,000 a month
salary of Sonza,that all the more bolsters the conclusion that
petitioner was not in the same situation as Sonza. The duties
of petitioner as enumerated in her employment contract
indicate that ABC had control over the work of petitioner.
Aside from control, ABC also dictated the work assignments
and payment of petitioners wages. ABC also had power to
dismiss her.
Murillo was a regular employee
The assertion that a talent contract exists does not
necessarily prevent a regular employment status.Petitioners
work was necessary or desirable in the usual business or
trade of the employer which includes, as a pre-condition for
its enfranchisement, its participation in the governments
news and public information dissemination. In addition, her
work was continuous for a period of four years.
This repeated engagement under contract of hire is
indicative of the necessity and desirability

Jose Mel Bernarte vs. Philippine Basketball

Association (PBA), et. al., G.R. No. 192084, Sept. 14,
2011
PETITIONER Jose Mel Bernate worked as one of the referees
of the Philippine Basketball Association (PBA). He entered
into two contracts as a retainer with the PBA in the year
2003. The first contract was for Jan. 1, 2003 to July 15, 2003;
and the second was for Sept. 1 to December 2003.
After the lapse of the later period, PBA decided not to renew
his contract, citing his unsatisfactory performance on and off
the court.
Maintaining he is a regular employee, Bernate filed a
complaint for illegal dismissal against PBA. Did his case
prosper?
Ruling: No.
We agree with respondents that once on the playing court,
the referees exercise their own independent judgment, based
on the rules of the game, as to when and how a call or
decision is to be made. The referees decide whether an
infraction was committed, and the PBA cannot overrule them
once the decision is made on the playing court.
The referees are the only, absolute, and final authority on the
playing court.

Respondents or any of the PBA officers cannot and do not

determine which calls to make or not to make and cannot
control the referee when he blows the whistle because such
authority exclusively belongs to the referees. The very nature
of petitioners job of officiating a professional basketball
game undoubtedly calls for freedom of control by
respondents.
Moreover, the following circumstances indicate that
petitioner is an independent contractor: (1) the referees are
required to report for work only when PBA games are
scheduled, which is three times a week spread over an
average of only 105 playing days a year, and they officiate
games at an average of two hours per game; and (2) the only
deductions from the fees received by the referees are
withholding taxes.
In other words, unlike regular employees who ordinarily
report for work eight hours per day for five days a week,
petitioner is required to report for work only when PBA
games are scheduled or three times a week at two hours per
game. In addition, there are no deductions for contributions
to the Social Security System, Philhealth or Pag-Ibig, which
are the usual deductions from employees salaries. These
undisputed circumstances buttress the fact that petitioner is
an independent contractor, and not an employee of
respondents. (Jose Mel Bernarte vs. Philippine Basketball
Association (PBA), et. al., G.R. No. 192084, Sept. 14, 2011)

GRN 119268 FEBRUARY 23, 2000

JARDIN VS NLRC
QUISUMBING, J.:
FACTS:
Petitioners were drivers of Goodman Taxi and were collected
average of PhP400 as boundary plus 30pesos for car wash.
They do not agree with the car wash fee and planned to form
a union. Upon learning of their plan, private respondent
refused to let petitioners drive their taxicab for few days.
Petitioners filed illegal dismissal and illegal collection of wash
fee. Labor Arbiter dismissed the complaint while NLRC
reversed the decision ratiocinating that as employees, their
dismissal must be for just cause and after due process.
ISSUE:
Whether or not an employer-employee relationship exists.
RULING:
Complainants ate taxi drivers on boundary system but in
determining if employer-employee relationship exists, the
four-fold test is applied: power of selection; payment of
wages; power of dismissal, and; power to control the
employees. Petitioners are undoubtedly employees of the
respondent because taxi drivers perform activities which are
necessary or desirable in the usual business or trade of the
employer. Thus an employee illegally dismissed shall be
entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of
allowances an to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.

Professional Services Inc. v. Agana

11 Feb 2008
As the hospital industry changes, so must the laws and
jurisprudence governing hospital liability. The immunity from
medical malpractice traditionally accorded to hospitals has to
be eroded if we are to balance the interest of the patients
and hospitals under the present setting.

Before this Court is a motion for reconsideration filed by

Professional Services, Inc. (PSI), petitioner in G.R. No.
126297, assailing the Courts First Division Decision dated
January 31, 2007, finding PSI and Dr. Miguel Ampil, petitioner
in G.R. No. 127590, jointly and severally liable for medical
negligence.
A brief revisit of the antecedent facts is imperative.
On April 4, 1984, Natividad Agana was admitted at the
Medical City General Hospital (Medical City) because of
difficulty of bowel movement and bloody anal discharge. Dr.
Ampil diagnosed her to be suffering from "cancer of the
sigmoid." Thus, on April 11, 1984, Dr. Ampil, assisted by the
medical staff1 of Medical City, performed an anterior
resection surgery upon her. During the surgery, he found that
the malignancy in her sigmoid area had spread to her left
ovary, necessitating the removal of certain portions of it.
Thus, Dr. Ampil obtained the consent of Atty. Enrique Agana,
Natividads husband, to permit Dr. Juan Fuentes, respondent
in G.R. No. 126467, to perform hysterectomy upon Natividad.
Dr. Fuentes performed and completed the hysterectomy.
Afterwards, Dr. Ampil took over, completed the operation and
closed the incision. However, the operation appeared to be
flawed. In the corresponding Record of Operation dated April
11, 1984, the attending nurses entered these remarks:
sponge count lacking 2
announced to surgeon searched done (sic) but to no
avail continue for closure.
After a couple of days, Natividad complained of excruciating
pain in her anal region. She consulted both Dr. Ampil and Dr.
Fuentes about it. They told her that the pain was the natural
consequence of the surgical operation performed upon her.
Dr. Ampil recommended that Natividad consult an oncologist
to treat the cancerous nodes which were not removed during
the operation.
On May 9, 1984, Natividad, accompanied by her husband,
went to the United States to seek further treatment. After
four (4) months of consultations and laboratory
examinations, Natividad was told that she was free of cancer.
Hence, she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines,
still suffering from pains. Two (2) weeks thereafter, her
daughter found a piece of gauze protruding from her vagina.
Dr. Ampil was immediately informed. He proceeded to
Natividads house where he managed to extract by hand a
piece of gauze measuring 1.5 inches in width. Dr. Ampil then
assured Natividad that the pains would soon vanish.
Despite Dr. Ampils assurance, the pains intensified,
prompting Natividad to seek treatment at the Polymedic
General Hospital. While confined thereat, Dr. Ramon
Gutierrez detected the presence of a foreign object in her
vagina -- a foul-smelling gauze measuring 1.5 inches in
width. The gauze had badly infected her vaginal vault. A
recto-vaginal fistula had formed in her reproductive organ
which forced stool to excrete through the vagina. Another
surgical operation was needed to remedy the situation. Thus,
in October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with
the Regional Trial Court, Branch 96, Quezon City a complaint
for damages against PSI (owner of Medical City), Dr. Ampil
and Dr. Fuentes.

On February 16, 1986, pending the outcome of the above

case, Natividad died. She was duly substituted by her abovenamed children (the Aganas).
On March 17, 1993, the trial court rendered judgment in
favor of spouses Agana finding PSI, Dr. Ampil and Dr. Fuentes
jointly and severally liable. On appeal, the Court of Appeals,
in its Decision dated September 6, 1996, affirmed the
assailed judgment with modification in the sense that the
complaint against Dr. Fuentes was dismissed.
PSI, Dr. Ampil and the Aganas filed with this Court separate
petitions for review on certiorari. On January 31, 2007, the
Court, through its First Division, rendered a Decision holding
that PSI is jointly and severally liable with Dr. Ampil for the
following reasons: first, there is an employer-employee
relationship between Medical City and Dr. Ampil. The Court
relied on Ramos v. Court of Appeals,2 holding that for the
purpose of apportioning responsibility in medical negligence
cases, an employer-employee relationship in effect
exists between hospitals and their attending and visiting
physicians; second, PSIs act of publicly displaying in the
lobby of the Medical City the names and specializations of its
accredited physicians, including Dr. Ampil, estopped it from
denying the existence of an employer-employee relationship
between them under the doctrine of ostensible agency
or agency by estoppel; and third, PSIs failure to supervise
Dr. Ampil and its resident physicians and nurses and to take
an active step in order to remedy their negligence rendered
it directly liable under the doctrine of corporate
negligence.
In its motion for reconsideration, PSI contends that the Court
erred in finding it liable under Article 2180 of the Civil Code,
there being no employer-employee relationship between it
and its consultant, Dr. Ampil. PSI stressed that the Courts
Decision in Ramos holding that "an employer-employee
relationship in effect exists between hospitals and their
attending and visiting physicians for the purpose of
apportioning responsibility" had been reversed in a
subsequent Resolution.3 Further, PSI argues that the
doctrine of ostensible agency or agency by
estoppelcannot apply because spouses Agana failed to
establish one requisite of the doctrine, i.e., that Natividad
relied on the representation of the hospital in engaging the
services of Dr. Ampil. And lastly, PSI maintains that
thedoctrine of corporate negligence is misplaced
because the proximate cause of Natividads injury was Dr.
Ampils negligence.
The motion lacks merit.
As earlier mentioned, the First Division, in its assailed
Decision, ruled that an employer-employee relationship "in
effect" exists between the Medical City and Dr. Ampil.
Consequently, both are jointly and severally liable to the
Aganas. This ruling proceeds from the following ratiocination
in Ramos:
We now discuss the responsibility of the hospital in
this particular incident. The unique practice (among
private hospitals) of filling up specialist staff with
attending and visiting "consultants," who are
allegedly not hospital employees, presents problems
in apportioning responsibility for negligence in
medical malpractice cases. However, the
difficulty is only more apparent than real.
In the first place, hospitals exercise significant
control in the hiring and firing of consultants
and in the conduct of their work within the
hospital premises. Doctors who apply for

"consultant" slots, visiting or attending, are required

to submit proof of completion of residency, their
educational qualifications; generally, evidence of
accreditation by the appropriate board (diplomate),
evidence of fellowship in most cases, and
references. These requirements are carefully
scrutinized by members of the hospital
administration or by a review committee set up by
the hospital who either accept or reject the
application. This is particularly true with respondent
hospital.
After a physician is accepted, either as a
visiting or attending consultant, he is
normally required to attend clinicopathological conferences, conduct bedside
rounds for clerks, interns and residents,
moderate grand rounds and patient audits
and perform other tasks and responsibilities,
for the privilege of being able to maintain a
clinic in the hospital, and/or for the privilege
of admitting patients into the hospital. In
addition to these, the physicians performance
as a specialist is generally evaluated by a
peer review committee on the basis of
mortality and morbidity statistics, and
feedback from patients, nurses, interns and
residents. A consultant remiss in his duties, or
a consultant who regularly falls short of the
minimum standards acceptable to the hospital
or its peer review committee, is normally
politely terminated.
In other words, private hospitals hire, fire and
exercise real control over their attending and
visiting "consultant" staff. While "consultants" are
not, technically employees, a point which
respondent hospital asserts in denying all
responsibility for the patients condition, the
control exercised, the hiring, and the right to
terminate consultants all fulfill the important
hallmarks of an employer-employee
relationship, with the exception of the
payment of wages. In assessing whether such
a relationship in fact exists, the control test is
determining. Accordingly, on the basis of the
foregoing, we rule that for the purpose of
allocating responsibility in medical negligence
cases, an employer-employee relationship in
effect exists between hospitals and their
attending and visiting physicians. This being
the case, the question now arises as to whether or
not respondent hospital is solidarily liable with
respondent doctors for petitioners condition.
The basis for holding an employer solidarily
responsible for the negligence of its employee is
found in Article 2180 of the Civil Code which
considers a person accountable not only for his own
acts but also for those of others based on the
formers responsibility under a relationship of partia
ptetas.
Clearly, in Ramos, the Court considered the peculiar
relationship between a hospital and its consultants on the
bases of certain factors. One such factor is the "control test"
wherein the hospital exercises control in the hiring and firing
of consultants, like Dr. Ampil, and in the conduct of their
work.
Actually, contrary to PSIs contention, the Court did not
reverse its ruling in Ramos. What it clarified was that the De
Los Santos Medical Clinic did not exercise control over its

consultant, hence, there is no employer-employee

relationship between them. Thus, despite the granting of the
said hospitals motion for reconsideration, the doctrine
in Ramos stays, i.e., for the purpose of allocating
responsibility in medical negligence cases, an employeremployee relationship exists between hospitals and their
consultants.
In the instant cases, PSI merely offered a general denial of
responsibility, maintaining that consultants, like Dr. Ampil,
are "independent contractors," not employees of the
hospital. Even assuming that Dr. Ampil is not an employee of
Medical City, but an independent contractor, still the said
hospital is liable to the Aganas.
In Nograles, et al. v. Capitol Medical Center, et al.,4 through
Mr. Justice Antonio T. Carpio, the Court held:
The question now is whether CMC is automatically
exempt from liability considering that Dr. Estrada is
an independent contractor-physician.
In general, a hospital is not liable for the negligence
of an independent contractor-physician. There is,
however, an exception to this principle. The hospital
may be liable if the physician is the "ostensible"
agent of the hospital. (Jones v. Philpott, 702 F. Supp.
1210 [1988]) This exception is also known as the
"doctrine of apparent authority." (Sometimes
referred to as the apparent or ostensible agency
theory. [King v. Mitchell, 31 A.D.3rd 958, 819 N.Y.
S.2d 169 (2006)].
xxx
The doctrine of apparent authority essentially
involves two factors to determine the liability of an
independent contractor-physician.
The first factor focuses on the hospitals
manifestations and is sometimes described as an
inquiry whether the hospital acted in a manner
which would lead a reasonable person to conclude
that the individual who was alleged to be negligent
was an employee or agent of the hospital. (Diggs v.
Novant Health, Inc., 628 S.E.2d 851 (2006)
citing Hylton v. Koontz, 138 N.C. App. 629 (2000). In
this regard, the hospital need not make
express representations to the patient that
the treating physician is an employee of the
hospital; rather a representation may be
general and implied. (Id.)
The doctrine of apparent authority is a specie of the
doctrine of estoppel. Article 1431 of the Civil Code
provides that "[t]hrough estoppel, an admission or
representation is rendered conclusive upon the
person making it, and cannot be denied or
disproved as against the person relying thereon."
Estoppel rests on this rule: "Whether a party has, by
his own declaration, act, or omission, intentionally
and deliberately led another to believe a particular
thing true, and to act upon such belief, he cannot, in
any litigation arising out of such declaration, act or
omission, be permitted to falsify it. (De Castro v.
Ginete, 137 Phil. 453 [1969], citing Sec. 3, par. A,
Rule 131 of the Rules of Court. See also King v.
Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).
xxx

The second factor focuses on the patients reliance.

It is sometimes characterized as an inquiry on
whether the plaintiff acted in reliance upon the
conduct of the hospital or its agent, consistent with
ordinary care and prudence. (Diggs v. Novant
Health, Inc.)
PSI argues that the doctrine of apparent authority cannot
apply to these cases because spouses Agana failed to
establish proof of their reliance on the representation of
Medical City that Dr. Ampil is its employee.
The argument lacks merit.
Atty. Agana categorically testified that one of the reasons
why he chose Dr. Ampil was that he knew him to be a
staff member of Medical City, a prominent and known
hospital.
Q
Will you tell us what transpired in your visit to
Dr. Ampil?
A
Well, I saw Dr. Ampil at the Medical City, I
know him to be a staff member there, and I told
him about the case of my wife and he asked me to
bring my wife over so she could be examined. Prior
to that, I have known Dr. Ampil, first, he was staying
in front of our house, he was a neighbor, second, my
daughter was his student in the University of the
East School of Medicine at Ramon Magsaysay; and
when my daughter opted to establish a hospital or a
clinic, Dr. Ampil was one of our consultants on how
to establish that hospital. And from there, I have
known that he was a specialist when it comes to
that illness.
Atty. Agcaoili
On that particular occasion, April 2, 1984, what was
your reason for choosing to contact Dr. Ampil in
connection with your wifes illness?
A First, before that, I have known him to be a
specialist on that part of the body as a
surgeon; second, I have known him to be a
staff member of the Medical City which is a
prominent and known hospital.And third,
because he is a neighbor, I expect more than the
usual medical service to be given to us, than his
ordinary patients.5
Clearly, PSI is estopped from passing the blame solely to Dr.
Ampil. Its act of displaying his name and those of the other
physicians in the public directory at the lobby of the hospital
amounts to holding out to the public that it offers quality
medical service through the listed physicians. This justifies
Atty. Aganas belief that Dr. Ampil was a member of the
hospitals staff. It must be stressed that under the
doctrine of apparent authority, the question in every
case is whether the principal has by his voluntary act
placed the agent in such a situation that a person of
ordinary prudence, conversant with business usages
and the nature of the particular business, is justified
in presuming that such agent has authority to perform
the particular act in question.6 In these cases, the
circumstances yield a positive answer to the question.
The challenged Decision also anchors its ruling on
the doctrine of corporate responsibility.7 The duty of
providing quality medical service is no longer the sole
prerogative and responsibility of the physician. This is

10

because the modern hospital now tends to organize

a highly-professional medical staff whose competence
and performance need also to be monitored by the hospital
commensurate with its inherent responsibility to provide
quality medical care.8 Such responsibility includes the
proper supervision of the members of its medical
staff. Accordingly, the hospital has the duty to make a
reasonable effort to monitor and oversee the
treatment prescribed and administered by the
physicians practicing in its premises.

A
I think we already made a report by just
saying that two sponges were missing, it is up
to the hospital to make the move.
Atty. Agana
Precisely, I am asking you if the hospital did a
move, if the hospital did a move.
A

Unfortunately, PSI had been remiss in its duty. It did not

conduct an immediate investigation on the reported
missing gauzes to the great prejudice and agony of its
patient. Dr. Jocson, a member of PSIs medical staff, who
testified on whether the hospital conducted an investigation,
was evasive, thus:
Q
We go back to the operative technique,
this was signed by Dr. Puruganan, was this
submitted to the hospital?
A
Yes, sir, this was submitted to the
hospital with the record of the patient.
Q
Was the hospital immediately informed
about the missing sponges?
A

That is the duty of the surgeon, sir.

Q
As a witness to an untoward incident in
the operating room, was it not your
obligation, Dr., to also report to the hospital
because you are under the control and
direction of the hospital?
A
The hospital already had the record of the
two OS missing, sir.
Q
If you place yourself in the position of the
hospital, how will you recover.
A
You do not answer my question with
another question.
Q
Did the hospital do anything about the
missing gauzes?
A
The hospital left it up to the surgeon who
was doing the operation, sir.
Q
Did the hospital investigate the surgeon
who did the operation?
A
I am not in the position to answer that,
sir.
Q
You never did hear the hospital
investigating the doctors involved in this case
of those missing sponges, or did you hear
something?

I cannot answer that.

Court
By that answer, would you mean to tell the
Court that you were aware if there was such a
move done by the hospital?
A
I cannot answer that, your honor, because
I did not have any more follow-up of the case
that happened until now.9
The above testimony obviously shows Dr. Jocsons lack of
concern for the patients. Such conduct is reflective of
the hospitals manner of supervision. Not only did PSI
breach its duty to oversee or supervise all persons
who practice medicine within its walls, it also failed to
take an active step in fixing the negligence
committed. This renders PSI, not only vicariously liable for
the negligence of Dr. Ampil under Article 2180 of the Civil
Code, but also directly liable for its own negligence under
Article 2176.
Moreover, there is merit in the trial courts finding that the
failure of PSI to conduct an investigation "established PSIs
part in the dark conspiracy of silence and
concealment about the gauzes." The following testimony
of Atty. Agana supports such findings, thus:
Q
You said you relied on the promise of Dr. Ampil
and despite the promise you were not able to obtain
the said record. Did you go back to the record
custodian?
A
I did not because I was talking to Dr.
Ampil. He promised me.
Q
After your talk to Dr. Ampil, you went to
the record custodian?
A
I went to the record custodian to get the
clinical record of my wife, and I was given a
portion of the records consisting of the
findings, among them, the entries of the
dates, but not the operating procedure and
operative report.10
In sum, we find no merit in the motion for reconsideration.
WHEREFORE, we DENY PSIs motion for
reconsideration with finality.

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11