Case Digests

SONZA VS ABS-CBN BROADCASTING, G.R. No. 138051, June 10, 2004

Facts:

In May 1994, respondent Abs-cbn signed an agreement with Mel and Jay Management Development
Corporation (MJMDC). The former was represented by its corporate officers while the latter was
represented by Sonza. In the said agreement, MJMDC, as agent, agreed to provide Sonza’s services
exclusively to Abs Cbn as talent for radio and television. For its part, Abs agreed to pay for Sonza’s services
a monthly talent fee of P310,000. Sometime in 1996, Sonza wrote a letter to Abs, rescinding the
agreement.

Thereafter, Sonza filed a complaint against Abs for recovery of salaries, separation pay, service incentive
leave, 13th month pay, singing bonus, travel allowance among others. Abs filed a Motion to dismiss on the
ground that no EER existed between them. Meanwhile, Abs continued to remit Sonza’s monthly talent
fees though his account.

After consideration of the arguments of both parties, LA rendered a Decision dismissing the complaint.
He held that as a talent, Sonza cannot be considered as an employee of Abs. He noted that Sonza was
engaged by respondent by reason of his peculiar skills and talent as a TV host and a radio broadcaster.
Unlike an ordinary employee, he was free to perform the services he undertook to render in accordance
with his own style. The benefits conferred to complainant under the May 1994 Agreement are certainly
very much higher than those generally given to employees. For one, complainant Sonzas monthly talent
fees amount to a staggering P317,000. Moreover, his engagement as a talent was covered by a specific
contract. Likewise, he was not bound to render eight (8) hours of work per day as he worked only for such
number of hours as may be necessary.

The Decision of the LA was affirmed by both the NLRC and the LA.

The primary issue in this case is whether or not EER existed between Sonza and Abs. The court ruled in
the negative and affirmed the NLRC ruling. Applying the four-fold test, Sonza cannot be considered an
employee of Abs.

1. Selection and Engagement of Employee - ABS-CBN engaged SONZAs services to co-host its
television and radio programs because of SONZAs peculiar skills, talent and celebrity status.
Independent contractors often present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees. The specific selection and hiring of SONZA, because
of his unique skills, talent and celebrity status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA
did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered
into the Agreement with SONZA but would have hired him through its personnel department just
like any other employee.
2. Payment of wages - SONZAs talent fees, amounting to P317,000 monthly in the second and third
year, are so huge and out of the ordinary that they indicate more an independent contractual
relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such
huge talent fees precisely because of SONZAs unique skills, talent and celebrity status not
possessed by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining
 power to demand and receive such huge talent fees for his services. The power to bargain talent
fees way above the salary scales of ordinary employees is a circumstance indicative, but not
conclusive, of an independent contractual relationship.
3. Power of Dismissal - For violation of any provision of the Agreement, either party may terminate
their relationship. SONZA failed to show that ABS-CBN could terminate his services on grounds
other than breach of contract, such as retrenchment to prevent losses as provided under labor
laws. During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as
AGENT and Jay Sonza shall faithfully and completely perform each condition of this
Agreement.[24] Even if it suffered severe business losses, ABS-CBN could not retrench SONZA
because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the Agreement.
This circumstance indicates an independent contractual relationship between SONZA and ABS-
CBN.
4. Power of control - BS-CBN engaged SONZAs services specifically to co-host the Mel & Jay
programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only
needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded
on radio were outside ABS-CBNs control. SONZA did not have to render eight hours of work per
day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well
as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of SONZAs
script. SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power
over the means and methods of the performance of his work. Although ABS-CBN did have the
option not to broadcast SONZAs show, ABS-CBN was still obligated to pay SONZAs talent fees.
Thus, even if ABS-CBN was completely dissatisfied with the means and methods of SONZAs
performance of his work, or even with the quality or product of his work, ABS-CBN could not
dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but
ABS-CBN must still pay his talent fees in full.

*** MJMDC is an agent of Sonza and not with Abs

*** ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment
industries to treat talents like SONZA as independent contractors. SONZA argues that if such
practice exists, it is void for violating the right of labor to security of tenure.

The right of labor to security of tenure as guaranteed in the Constitution[53] arises only if there
is an employer-employee relationship under labor laws. Not every performance of services for a
fee creates an employer-employee relationship. To hold that every person who renders services
to another for a fee is an employee - to give meaning to the security of tenure clause - will lead to
absurd results.

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. This
Court will not interpret the right of labor to security of tenure to compel artists and talents to
render their services only as employees. 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.
Thelma Dumpit-Morillo vs. CA, G.R. No. 164652, June 8, 2007

Facts:

Sometime in 1995, respondent ABC hired petitioner Murillo as newscaster and co-anchor for one of its
early evening news program. The contract was initially for a period of 3 months but was subsequently
renewed. In addition, petitioner’s services were also engaged for respondent’s other programs. On
September 30, 1999, after four years of repeated renewals, petitioner’s talent contract expired. Shortly
after the expiration of the last contract, petitioner sent a letter to Jose Javier, Vice President for News and
Public Affairs of ABC, informing the latter that she was still interested in renewing her contract subject to
a salary increase. Thereafter, petitioner stopped reporting for work. Not receiving any response from
respondent, petitioner sent a demand letter to ABC demanding: (a) reinstatement to her former position;
(b) payment of unpaid wages for services rendered from September 1 to October 20, 1999 and full
backwages; (c) payment of 13th month pay, vacation/sick/service incentive leaves and other monetary
benefits due to a regular employee starting March 31, 1996. ABC replied that a check covering petitioners
talent fees for September 16 to October 20, 1999 had been processed and prepared, but that the other
claims of petitioner had no basis in fact or in law. Aggrieved, petitioner filed a complaint for constructive
dismissal with money claims against respondents.

LA dismissed the complaint.

NLRC reversed the LA. It held that EER existed between petitioner and ABC and that she was a regular
employee of the latter.

CA reversed the NLRC and opined that petitioner should not be allowed to renege from the stipulations
she had voluntarily and knowingly executed by invoking the security of tenure under the Labor Code.
According to the Ca, petitioner was a fixed-term employee because her job as anticipated and agreed
upon, was only for a specified time.

Petitioner appealed. In their defense, respondents argue that the prevailing jurisprudence has recognized
and sustained the absence of EER between a talent and the media entity which engaged the talents
services on a per talent contract basis, invoking the ruling in Sonza vs. Abs.

Issue/s: WON EER existed between the parties. WON petitioner was a regular employee of ABC

Ruling:

SC ruled in favor of petitioner and held that petitioner was a regular employee under the contemplation
of law. The practice of having fixed-term contracts in the industry does not automatically make all talent
contracts valid and compliant with labor law. The assertion that a talent contract exists does not
necessarily prevent a regular employment status.

Sonza case is not applicable. In onza, 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. Sonza had a free hand on what to say or discuss in his shows provided he did not attack
the television station or its interests. Clearly, the television station did not exercise control over the means
and methods of the performance of Sonzas work. 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.

In the present case, 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. All these being present, clearly, there
existed an employment relationship between petitioner and ABC.

As to the employment status of petitioner, the court finds that the requisites for regularity of employment
have been met in the instant case. Gleaned from the description of the scope of services aforementioned,
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 of the petitioners work in
private respondent ABCs business.

The contention of the appellate court that the contract was characterized by a valid fixed-period
employment is untenable. For such contract to be valid, it should be shown that the fixed period was
knowingly and voluntarily agreed upon by the parties. There should have been no force, duress or
improper pressure brought to bear upon the employee; neither should there be any other circumstance
that vitiates the employees consent.] It should satisfactorily appear that the employer and the employee
dealt with each other on more or less equal terms with no moral dominance being exercised by the
employer over the employee. Moreover, fixed-term employment will not be considered valid where, from
the circumstances, it is apparent that periods have been imposed to preclude acquisition of tenurial
security by the employee.
In the case at bar, it does not appear that the employer and employee dealt with each other on equal
terms. Understandably, the petitioner could not object to the terms of her employment contract because
she did not want to lose the job that she loved and the workplace that she had grown accustomed
to,which is exactly what happened when she finally manifested her intention to negotiate. 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.

Television and Production Exponents, Inc. vs. Servaa, G.R. no. 167648, January 28, 2008.

Facts:

Servaa alleged that he was first connected with Agro-Commercial Security but was later on absorbed by
TAPE as a regular company guard detailed at Broadway Centrum. Sometime in 2000, he received a
memorandum from TAPE informing him of his impending dismissal on account of the latter’s decision to
contract the services of a professional security agency. Aggrieved, he filed a complaint for illegal dismissal.
In their defense, TAPE argued that it had no EER with Servaa. Specifically, it asserts (1) that respondent
was initially employed as a security guard for Radio Philippines Network (RPN-9); (2) that he was tasked
to assist TAPE during its live productions, specifically, to control the crowd; (3) that when RPN-9 severed
its relationship with the security agency, TAPE engaged respondents services, as part of the support group
and thus a talent, to provide security service to production staff, stars and guests of Eat Bulaga! as well as
to control the audience during the one-and-a-half hour noontime program; (4) that it was agreed that
complainant would render his services until such time that respondent company shall have engaged the
services of a professional security agency; (5) that in 1995, when his contract with RPN-9 expired,
respondent was retained as a talent and a member of the support group, until such time that TAPE shall
have engaged the services of a professional security agency; (6) that respondent was not prevented from
seeking other employment, whether or not related to security services, before or after attending to his
Eat Bulaga! functions; (7) that sometime in late 1999, TAPE started negotiations for the engagement of a
professional security agency, the Sun Shield Security Agency; and (8) that on 2 March 2000, TAPE issued
memoranda to all talents, whose functions would be rendered redundant by the engagement of the
security agency, informing them of the managements decision to terminate their services. Tape averred
that respondent was an independent contractor falling under the talent group category and was working
under a special arrangement which is recognized in the industry.

LA ruled for theServaa and declared him to be a rgular employee of Tape. The Labor Arbiter relied on the
nature of the work of respondent, which is securing and maintaining order in the studio, as necessary and
desirable in the usual business acti[vity of TAPE.

NLRC reversed the LA and considered Servaa s mere program employee.

CA reversed the NLRC and found Servaa to be a regular employee.

Issue: WON EER existed between Tape and Servaa.

Ruling:

Applying the four-fold test, servaa was an employee of Tape. First, The selection and hiring of petitioner
was done by private respondents. In fact, private respondents themselves admitted having engaged the
services of petitioner only in 1995 after TAPE severed its relations. Second, Servaa receives fixed monthly
salary for services rendered, notwithstanding the fact that Tape prefers to designate such amount as
talent fees. Most importantly, Tape exercises control over Srvaa, as evidenced by the bundy cards
submitted by the latter as evidence. He was required to report daily and observe definite work hours.

Srvaa cannot be considered as an independent contractor. Aside from possessing substantial capital or
investment, 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.[25] TAPE failed to
establish that respondent is an independent contractor. As found by the Court of Appeals:

We find the annexes submitted by the private respondents insufficient to prove that herein petitioner is
indeed an independent contractor. None of the above conditions exist in the case at bar. Private
respondents failed to show that petitioner has substantial capital or investment to be qualified as an
independent contractor. They likewise failed to present a written contract which specifies the
performance of a specified piece of work, the nature and extent of the work and the term and duration
of the relationship between herein petitioner and private respondent TAPE.[26]

More importantly, respondent had been continuously under the employ of TAPE from 1995 until his
termination in March 2000, or for a span of 5 years. Regardless of whether or not respondent had been
performing work that is necessary or desirable to the usual business of TAPE, respondent is still considered
a regular employee under Article 280 of the Labor Code.

Begino vs. ABS-CBN

Petitioners were hired by ABS-CBN as Cameramen/Editors. Petitioners filed complaint for regularization
and illegal dismissal.

While their Talent Contract specifically provide that there shall be no employer-employee relationship
between the talent and ABS-CBN, it also contained the following provisions: (a) the talent’s performance
of work shall be in accordance with ABS-CBN’s professional standards and shall comply with its policies
and guidelines; and (b) the talent shall not engage in similar work for a competitor.

ABS-CBN claims that petitioners are independent contractors. It argues that although petitioners were
inevitably subjected to some degree of control, the same was limited to the imposition of general
guidelines on conduct and performance, simply for the purpose of upholding the standards of the
company and the strictures of the industry.

The SC held that complainants are regular employees. It held that the test to determine whether
employment is regular or not is the reasonable connection between the activity performed by the
employee in relation to the business or trade of the employer. As cameramen/editors and reporters,
petitioners were undoubtedly performing functions necessary and essential to ABS-CBN’s business of
broadcasting television and radio content.

It also appears that petitioners were subject to the control and supervision of ABS-CBN. ABS-CBN provided
them with the equipment essential for the discharge of their functions. Further, the talent contracts
provide that ABS-CBN retained “all creative, administrative, financial and legal control” of the program to
which petitioners were assigned. Aside from having the right to require petitioners “to attend and
participate in all promotional or merchandising campaigns, activities or events for the Program,” ABS-CBN
also required petitioners to perform their functions according to the schedule it provided or, subject to
prior notice, as it chose determine, modify or change. Even if they were unable to comply with said
schedule, petitioners were required to give advance notice, subject to respondents’ approval. The
foregoing terms and conditions demonstrate the control ABS-CBN exercised not only over the results of
petitioners’ work but also the means employed to achieve the same.

The ruling in Sonza is not applicable in this case. While possessed of skills for which they were modestly
recompensed by respondents, petitioners lay no claim to fame and/or unique talents for which talents
like actors and personalities are hired and generally compensated in the broadcast industry.

Paguio vs. NLRC, G.R. No. 147816, May 9, 2003.

Facts:
On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an
agreement with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm.
Again, petitioner was to solicit advertisements for "The Manila Times," a newspaper of general circulation,
published by respondent company. Petitioner, for his efforts, was to receive compensation consisting of
a 15% commission on direct advertisements less withholding tax and a 10% commission on agency
advertisements based on gross revenues. Apart from commissions, petitioner was also entitled to a
monthly allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the
contentious points raised by the parties had something to do with the following stipulations of the
agreement; viz:

12. You are not an employee of the Metromedia Times Corporation nor does the company have any
obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any
liability you may incur. The only rights and obligations between us are those set forth in this agreement.
This agreement cannot be amended or modified in any way except with the duly authorized consent in
writing of both parties.

13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30)
days prior to effectivity of termination

On August 15, 1992, he was informed of the company’s decision to terminate his services. Believing that
his dismissal was illegal, he filed a complaint against the respondent.

In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any
agreement with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil
Code of the Philippines.[4] Asserting their right to terminate the contract with petitioner, respondents
pointed to the last provision thereof stating that both parties could opt to end the contract provided that
either party would serve, thirty days prior to the intended date of termination, the corresponding notice
to the other.

LA ruled for the petitioner. On appeal, the NLRC reversed the ruling of the LA and declared the relationship
between the parties as fixed term. he NLRC declared a fixed-term employment to be lawful as long as it
was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure
being brought to bear upon the worker and absent any other circumstances vitiating his consent."[5] The
finding of the NLRC was primarily hinged on the assumption that petitioner, on account of his educated
stature, having indeed personally prepared his pleadings without the aid of counsel, was an unlikely victim
of a lopsided contract.

CA affirmed the ruling of the NLRC.

Issued: WON petitioner was a regular employee of respondent.

SC ruled for the petitioner. a regular employee is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as against those which are
undertaken for a specific project or are seasonal. Even in these latter cases, where such person has
rendered at least one year of service, regardless of the nature of the activity performed or of whether it
is continuous or intermittent, the employment is considered regular as long as the activity exists, it not
being indispensable that he be first issued a regular appointment or be formally declared as such before
acquiring a regular status.[11]

That petitioner performed activities which were necessary and desirable to the business of the employer,
and that the same went on for more than a year, could hardly be denied. Petitioner was an account
executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued
operation of the business of respondent corporation. Robina Gokongwei, its President, herself admitted
that the income generated from paid advertisements was the lifeblood of the newspaper's existence.
Implicitly, respondent corporation recognized petitioners invaluable contribution to the business when it
renewed, not just once but five times, its contract with petitioner.

Respondent company cannot seek refuge under the terms of the agreement it has entered into with
petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon
the terms of their written or oral contract, but also on the basis of the nature of the work petitioner has
been called upon to perform.[12] The law affords protection to an employee, and it will not countenance
any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it
is utilized to deprive the employee of his security of tenure.[13] The sheer inequality that characterizes
employer-employee relations, where the scales generally tip against the employee, often scarcely
provides him real and better options.

Tongko vs. Manulife, G.R. No. 167622, January 25, 2011

Manufacturers Life Insurance, Co a domestic corporation engaged in life insurance business. is Petitioner
Tongko started his relationship with Manulife in 1977 by virtue of a Career Agent's Agreement.

Pertinent provisions of the agreement state that:

It is understood and agreed 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.

a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and other products
offered by the Company, and collect, in exchange for provisional receipts issued by the Agent, money due
or to become due to the Company in respect of applications or policies obtained by or through the Agent
or from policyholders allotted by the Company to the Agent for servicing, subject to subsequent
confirmation of receipt of payment by the Company as evidenced by an Official Receipt issued by the
Company directly to the policyholder.

b) The Company may terminate this Agreement for any breach or violation of any of the provisions hereof
by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery
of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to
terminate this Agreement by the Company shall be construed for any previous failure to exercise its right
under any provision of this Agreement.

c) Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving
to the other party fifteen (15) days notice in writing.
Sometime in 2001, De Dios addressed a letter to Tongko, then one of the Metro North Managers,
regarding meetings wherein De Dios found Tongko's views and comments to be unaligned with the
directions the company was taking. De Dios also expressed his concern regarding the Metro North
Managers' interpretation of the company's goals. He maintains that Tongko's allegations are unfounded.
Some allegations state that some Managers are unhappy with their earnings, that they're earning less
than what they deserve and that these are the reasons why Tonko's division is unable to meet agency
development objectives. However, not a single Manager came forth to confirm these allegations. Finally,
De Dios related his worries about Tongko's inability to push for company development and growth.

De Dios subsequently sent Tongko a letter of termination in accordance with Tongko's Agents Contract.
Tongko filed a complaint with the NLRC against Manulife for illegal dismissal, alleging that he had an
employer-employee relationship with De Dios instead of a revocable agency by pointing out that the latter
exercised control over him through directives regarding how to manage his area of responsibility and
setting objectives for him relating to the business. Tongko also claimed that his dismissal was without
basis and he was not afforded due process. The NLRC ruled that there was an employer-employee
relationship as evidenced by De Dios's letter which contained the manner and means by which Tongko
should do his work. The NLRC ruled in favor of Tongko, affirming the existence of the employer-employee
relationship.

The Court of Appeals, however, set aside the NLRC's ruling. It applied the four-fold test for determining
control and found the elements in this case to be lacking, basing its decision on the same facts used by
the NLRC. It found that Manulife did not exert control over Tongko, there was no employer-employee
relationship and thus the NLRC did not have jurisdiction over the case.

The Supreme Court reversed the ruling of the Court of Appeals and ruled in favor of Tongko. However,
the Supreme Court issued another Resolution dated June 29, 2010, reversing its decision. Tongko filed a
motion for reconsideration, which is now the subject of the instant case.

ISSUE: Did the Supreme Court err in issuing the June 29, 2010 resolution, reversing its earlier decision that
an employer-employee relationship existed?

HELD: The Supreme Court finds no reason to reverse the June 29, 2010 decision. Control over the
performance of the task of one providing service both with respect to the means and manner, and the
results of the service is the primary element in determining whether an employment relationship exists.
The Supreme Court ruled petitioners Motion against his favor since he failed to show that the control
Manulife exercised over him was the control required to exist in an employer-employee relationship;
Manulifes control fell short of this norm and carried only the characteristic of the relationship between
an insurance company and its agents, as defined by the Insurance Code and by the law of agency under
the Civil Code.

In the Supreme Courts June 29, 2010 Resolution, they noted that there are built-in elements of control
specific to an insurance agency, which do not amount to the elements of control that characterize an
employment relationship governed by the Labor Code.The Insurance Code provides definite parameters
in the way an agent negotiates for the sale of the companys insurance products, his collection activities
and his delivery of the insurance contract or policy. They do not reach the level of control into the means
and manner of doing an assigned task that invariably characterizes an employment relationship as defined
by labor law.
To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable
result intended by the contractual relationship; they must have the nature of dictating the means and
methods to be employed in attaining the result. Tested by this norm, Manulifes instructions regarding the
objectives and sales targets, in connection with the training and engagement of other agents, are among
the directives that the principal may impose on the agent to achieve the assigned tasks.They are targeted
results that Manulife wishes to attain through its agents. Manulifes codes of conduct, likewise, do not
necessarily intrude into the insurance agents means and manner of conducting their sales. Codes of
conduct are norms or standards of behavior rather than employer directives into how specific tasks are
to be done.

In sum, the Supreme Court found absolutely no evidence of labor law control. DENIED.

Tongko vs. Manufacturers Life Insurance Co. Inc.

January 25, 2011 Motion for Reconsideration

FACTS

 Motion for Reconsideration to set aside the June 29, 2010 Resolution that reversed the
decision of the Supreme Court in November 7, 2008.
 In his MR, Tongko reiterates the arguments he raised in his petition and various other
submissions.
o For 19 years, he performed administrative functions and exercised supervisory
authority over employees and agents of Manulife, in addition to his insurance agent
functions.
o He was designated as a Unit Manager, Branch Manager and Regional Sales
Manager.
o He was not only an insurance agent of Manulife but it was an employee as well.
HELD: Court finds no basis or error to merit the reconsideration of its June 29, 2010 Resolution.
RATIO
I. LABOR LAW CONTROL = EMPLOYMENT RELATIONSHIP
 Control over the performance of the task of one providing service – both with respect to
the means and manner, and the results of the service – is the primary element in
determining whether an employment relationship exists.
 Petitioner failed to show that control Manulife exercised over him was the control required
to exist in an employer – employee relationship.
 Manulife’s carried out only the characteristic of the relationship between an insurance
company and its agents, as defined by the Insurance Code and by the law of agency under
the Civil Code.
 Petitioner asserts in his Motion that Manulife’s labor law control over him was
demonstrated
o When it set the objectives and sales targets regarding production, recruitment and
training programs
o When it prescribed the Code of Conduct for Agents and the Manulife Financial
Code of Conduct to govern its activities.
 No merit in this contention.
 There are built-in elements of control specific to an insurance agency, which do not
amount to the elements of control that characterize an employment relationship governed
by the Labor Code.
o The Insurance Code provides definite parameters in the way an agent negotiates
for the sale of the company’s insurance products, his collection activities and his
delivery of the insurance contract or policy.
 The Civil Code defines an agent as a person who binds himself to do something in behalf
of another, with consent or authority of the latter.
 These are controls aimed only at specific results in undertaking an insurance agency, and
are parameters set by law in defining an insurance agency and the attendant duties and
responsibilities an insurance agent must observe and undertake.
 Manulife’s instructions regarding the objectives and sales targets, in connection with the
training and engagement of other agents, are among the directives that the principal ay
impose on the agent to achieve the assigned tasks. They are targeted results that Manulife
wishes to attain through its agents.
 The duties that Tongko enumerated in his Motion are not supported by evidence and
therefore, deserve scant consideration. Even assuming their existence, however, mostly
pertain to the duties of an insurance agent such as remitting insurance fees to Manulife,
delivering policies to the insured, and after-sale services.
 That Manulife exercise the power to assign and remove agents under Tongko’s
supervision is in keeping with its role as principal in an agency relationship.
 Tongko also questions Manulife’s act of investing him with different titles and positions in
the course of their relationship. He also consideres it an unjust and inequitable situation
that he would be unrewarded for the years he spent as a unit manager, branch manager
and regional sales manager.
 Based on the evidence on record, Tongko’s occupation was to sell Manulife’s insurance
policies and products until the termination of the Career Agent’s Agreement. The evidence
also shows that through the years, Manulife permitted him to exercise guiding authority
over other agents. Under this scheme, an arrangement that pervades the insurance
industry, Tongko in effect became a lead agent. His designation also changed from unit
manager to branch manager then to regional sales manager.
o These arrangements, and the titles and positions the petitioner was invested with,
did not change his status from insurance agent that he had always been in.

II. NO RESULTING INEQUITY

 Records show that Tongko was very amply paid for his services as an insurance agent,
who also shared in the commissions of the other agents under his guidance.
 All these he earned as an insurance agent as he failed to prove that he earned these sums
as an employee.
 What would be unjust is an award of back wages and separation pay – amounts that are
not due him because he was never an employee.
 Court cannot and should not fill in the evidentiary gaps in a party’s case.

III. EARNINGS WERE COMMISSIONS

 That his earnings were agent’s commissions arising from his work as an insurance agent
is a matter that Tongko cannot deny, as these are the declarations and representations
 he stated in his income tax returns through the years. It would be doubly unjust to the
government if he be allowed at this late point to turn around and successfully claim that
he was merely an employee after he declared himself as an independent self-employed
insurance agent with the privilege of deducting business expense.

IV. THE DISSENT’S SOLUTION

 The dissent proposes that Tongko should be considered as part employee (manager) and
part insurance agent; hence, the original decision should be modified to pertain only to the
termination of his employment as a manager and not as an insurance agent. This is legally
unrealistic, as it goes against the basic principles of judicial operation.
o There is no legal basis, whether statutory or jurisprudential, for the part employee
part insurance agent status under an essentially principal agent contractual
relation,
o If the Dissent intends to establish one, this is highly objectionable for this would
amount to judicial legislation. A legal relationship, be it one of employment or one
based on a contract other than employment, exists as a matter of law pursuant to
the facts, incidents and legal consequences of the relationship; it cannot exist
devoid of these legally defined underlying facts and legal consequences unless
the law itself creates the relationship – an act that is beyond the authority of the
Court to do.
 DOMINANT relationship in this case is agency and no other.

V. DISSENT’S CITED CASES & THE POSITION OF THE MAJORITY

Social Security System vs. Court of Appeals
DISSENTING OPINION MAJORITY POSITION
In this case, Court was faced with the Dissent cited this case to support its
conflicting claims of the worker and the allegation that labor laws and
proprietor on the issue of whether an jurisprudence should be applied in this
employer-employee relationship exists. case, to the exclusion of other laws such
Carreon and the Tobacco Corporation as the Civil Code or Insurance Code,
entered into an agreement whereby even when the latter are also applicable.
Carreon would allegedly purchase and
sell products. Court used the four fold The legal relationships involved
test to determine the existence of (employees or independent contractors)
employer-employee relationship. are both labor law concepts and make no
reference to the Civil or Insurance Code.
Algon Engineering Construction Corporation vs. NLRC
DISSENTING OPINION MAJORITY POSITION
Court did not consider the Civil Code The cited case lacks complexity of the of
provisions on lease when it ruled upon the present case; Civil Code provisions
the existence of an employer-employee on lease do not prescribe that lessees
relationship. Court held that no particular exercise control over their lessors in the
evidence is required to prove the way that the Insurance Code and the
existence of an employer-employee Civil Code provide that insurance
relationship. All that is necessary is to companies and principals exercised
show that the employer is capable of control over their agents.
exercising control over the employee. In
labor disputes, it suffices that there be a
causal connection between the claim
asserted and the employer-employee
relations. In this case, there is no doubt
the petitioner exercised control over
Espinosa’s conduct, as shown by the
fact that, rather than address the loss of
batteries as a breach of the purported
contract of lease, a memorandum
instead emphasized the rules and
regulations and the fact that Espinosa
was “on duty” at the time of the said loss.

Equitable Banking Corporation vs. NLRC

DISSENTING OPINION MAJORITY POSITION
Court still employed the control test to Whether a lawyer-client relationship or
determine the existence of an employer- an employment relationship governs the
employee relationship. legal relation between parties. This case
is inapplicable as it does not illustrate the
predominance of labor laws and
jurisprudence over other laws, in
general, and the Insurance Code and
Civil Code, in particular. It merely
weighed the evidence in favor of an
employment relationship over that of a
lawyer-client relationship. Present case
is attended by totally different factual
considerations as the petitioner had not
offered any evidence of the company’s
control in the means and manner of the
performance of his work.
Lazaro vs. Social Security Commission
DISSENTING OPINION MAJORITY POSITION
In this case, Laudato was a sales This case is not applicable to the present
supervisor who claimed that the case which is attended by totally
company failed to report her and remit different factual considerations as
her contributions as an employee, to petitioner had not offered any evidence
SSS. Lazaro claimed that Laudato was of the company’s control in the means
only a sales agent earning on a and manner of the performance of his
commission basis, and did not maintain work.
definite hours of work and therefore
could not be considered as an employee
of Royal Star Marketing. Court ruled that
the fact that Laudato was paid by
commission does not preclude the
establishment of an employer-employee
relationship. Laudato oversaw and
supervised the sales agents of the
company, and thus was subject to the
control of management as to how she
 implements its policies and its end
results.

Abante vs. Lamadrid Bearing & Parts Corporation

DISSENTING OPINION MAJORITY POSITION
In this case, despite the allegation that Court finds it strange that the dissent
the worker was a commission salesman, cites this case as a precedent, since the
the Court still used the four fold test to Court held that an employee-employer
determine the existence of an employer relationship is notably absent in this case
employee relationship. as the complainant was a sales agent.
This case better supports the majority’s
position that a sales agent, who fails to
show control in the concept of labor law,
cannot be considered an employee,
even if the company exercised control in
the concept of a sales agent.

 Cases turn and are decided on the basis of their own unique facts; the ruling in one case
cannot simply be bodily lifted and applied to another, particularly when notable differences
exist.
 Ruling in this case is not about which law has primacy over the other, but what should be
done to be able to reconcile these laws. Where the law makes it mandatory for a company
to exercise control over its agents, the complainant in an illegal dismissal case cannot rely
on these legally prescribed control devices as indicators of employer-employee
relationship.

OTHER POINTS RAISED IN JUSTICE VELASCO’S DISSENTING OPINION

 Manulife is part of a Canada based multinational financial company claiming to be the
largest insurance company in North America. On the other hand, Tongko is but a single
Filipino agent/manager of Manulife.
 It is but just, it is but right that the Court interpret the relationship as one of employment
under labor laws and to uphold his constitutionally protected rights as an employee, to
security of tenure and an entitlement to monetary award should such right be infringed.
This right cannot be diminished by mere contract, or however the parties choose to call
their true working relationship.
 Jurisprudence teaches that, given the doubt as to the applicable law in the instant case,
labor law shall govern.
 If Tongko were indeed not an employee of Manulife, the company would not set the means
and methods to achieve such goal. As long as Tongko was able to recruit the set number
of agents, there would be no reason for Manulife to terminate his services as an
independent contractor. However, that is not the case here. The letter of De Dios directed
Tongko to clamor more actively his peers and his agents to recruit other agents. It was
not sufficient that Tongko, by himself, recruit agents. This directive certainly shows that
Manulife sought to prescribe the means and methods to achieve its goals.
 By limiting the area of responsibility of Tongko, this is akin to a transfer or reassignment,
an exercise of control by Manulife over Tongko that must necessarily determine the
existence of an employer-employee relationship.
  Manulife’s decision not to execute a management contract with petitioner was well within
its prerogative. However, this bare fact did not reduce the petitioner to a mere lead agent.
Other evidence was adduced to show other duties and responsibilities.
o For one, De Dios addressed petitioner as sales manager in a letter.
 While the Court allows the presentation of inconsistent defenses, Manulife’s
argumentation would destroy its position that Tongko is not an employee. Manulife
essentially pointed out the facts that would show that it abided by the requirements of the
Labor Code on the dismissal of an employee, citing Article 282.
o Such requirements are only required of employers with regard to its employees.
Manulife had no reason to comply with this provision of law if it did not consider
Tongko as an employee. There is an implied admission.
 Petitioner’s peculiar circumstances as unit manager, branch manager and ultimately
regional sales manager, with exclusivity feature of his engagement and duties as such
manager, indicate at the very least, a prima facie existence of an employer employee
relationship, following the control test.

Atok Big Wedge vs. Gizon

Facts:
Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time consultant on
retainer basis by petitioner Atok Big Wedge Company, Inc. As a consultant on retainer basis,
respondent assisted petitioner's retained legal counsel with matters pertaining to the prosecution
of cases against illegal surface occupants within the area covered by the company's mineral
claims. Respondent was likewise tasked to perform liaison work with several government
agencies, which he said was his expertise.

Petitioner did not require respondent to report to its office on a regular basis, except when
occasionally requested by the management to discuss matters needing his expertise as a
consultant. As payment for his services, respondent received a retainer fee of P3,000.00 a
month,which was delivered to him either at his residence or in a local restaurant. The parties
executed a retainer agreement, but such agreement was misplaced and can no longer be found.

The said arrangement continued for the next eleven years.

Sometime thereafter, since respondent was getting old, he requested that petitioner cause his
registration with the Social Security System (SSS), but petitioner did not accede to his request.
He later reiterated his request but it was ignored by respondent considering that he was only a
retainer/consultant. On February 4, 2003, respondent filed a Complaint[4] with the SSS against
petitioner for the latter's refusal to cause his registration with the SSS.
On the same date, the company issued petitioner a Memorandum advising him that within 30
days from receipt thereof, it is terminating his retainer contract since his services are no longer
necessary.
On February 21, 2003, respondent filed a Complaintfor illegal dismissal, unfair labor practice,
underpayment of wages, non-payment of 13th month pay, vacation pay, and sick leave pay with
the National Labor Relations Commission (NLRC), Regional Arbitration Branch (RAB).
LA ruled for Atok and found no EER between the parties. NLRC affirmed the LA.
CA set aside the decision of NLRC and declared respondent as regular employee. (casual who
has rendered services for more than one year)
SC reversed the ruling of the CA. Applying the four-fold 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. Respondent's 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.
Respondent was well aware of the agreement that he was hired merely as a liaison or consultant
of the petitioner and he agreed to perform tasks for the petitioner on a temporary employment
status only. However, respondent anchors his claim that he became a regular employee of the
petitioner based on his contention that the temporary aspect of his job and its limited nature could
not have lasted for eleven years unless some time during that period, he became a regular
employee of the petitioner by continually performing services for the company.

Contrary to the conclusion of the CA, respondent is not an employee, much more a regular
employee of petitioner. The appellate court's premise that regular employees are those who
perform activities which are desirable and necessary for the business of the employer is not
determinative in this case. In fact, any agreement may provide that one party shall render services
for and in behalf of another, no matter how necessary for the latter's business, even without being
hired as an employee.[23] Hence, respondent's length of service and petitioner's repeated act of
assigning respondent some tasks to be performed did not result to respondent's entitlement to
the rights and privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for eleven
years, he still cannot be considered as a regular employee of petitioner. Article 280 of the Labor
Code, in which the lower court used to buttress its findings that respondent became a regular
employee of the petitioner, is not applicable in the case at bar. Indeed, the Court has ruled that
said provision is not the yardstick for determining the existence of an employment relationship
because it merely distinguishes between two kinds of employees, i.e., regular employees and
casual employees, for purposes of determining the right of an employee to certain benefits, to join
or form a union, or to security of tenure; it does not apply where the existence of an employment
relationship is in dispute.[24] It is, therefore, erroneous on the part of the Court of Appeals to rely
on Article 280 in determining whether an employer-employee relationship exists between
respondent and the petitioner.

Ashmor Tesoro vs. Metro Manila Retreaders

Petitioners were all hired by respondent as salesmen for Metro Manila Retreaders, Northern
Luzon Retraders and Rubber corporation, collectively called Bandag. Bandag offered repair and
retread services for used tires. In 1998, however, Bandag developed a franchising scheme that
would enable others to operate tire and retreading businesses using its trade name and service
system. Petitioners quit their jobs as salesmen and entered into separate Service Franchise
Agreements (SFAs) with Bandag for the operation of their respective franchises. Under the SFAs,
Bandag would provide funding support to the petitioners subject to a regular or periodic liquidation
of their revolving funds .At first, petitioners managed and operated their respective franchises
without any problem. After a length of time, however, they began to default on their obligations to
submit periodic liquidations of their operational expenses in relation to the revolving funds Bandag
provided them. Consequently, Bandag terminated their respective SFA. Aggrieved, petitioners
filed a complaint for constructive dismissal, non-payment of wages, incentive pay, 13th month pay
and damages against Bandag.
In its defense, Bandag pointed out that petitioners freely resigned from their employment and
decided to avail themselves of the opportunity to be independent entrepreneurs under the
franchise scheme that Bandag had. Thus, no employer-employee relationship existed between
petitioners and Bandag.

The only issue presented in this case is whether or not petitioners remained to be Bandag’s
salesmen under the franchise scheme it entered into with them.

Ruling:
When petitioners agreed to operate Bandag’s franchise branches in different parts of the country,
they knew that this substantially changed their former relationships. They were to cease working
as Bandag’s salesmen, the positions they occupied before they ventured into running separate
Bandag branches. They were to cease receiving salaries or commissions. Their incomes were to
depend on the profits they made. Yet, petitioners did not then complain of constructive dismissal.
They took their chances, ran their branches, Gregorio Sharp in La Union for several months and
Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their belated
claim of constructive dismissal is quite hollow.
As a further argument, petitioners pointed out that Bandag continued, like an employer, to
exercise control over petitioners’ work. It points out that Bandag: (a) retained the right to adjust
the price rates of products and services; (b) imposed minimum processed tire requirement (MPR);
(c) reviewed and regulated credit applications; and (d) retained the power to suspend petitioners’
services for failure to meet service standards.
But uniformity in prices, quality of services, and good business practices are the essence of all
franchises. A franchisee will damage the franchisor’s business if he sells at different prices,
renders different or inferior services, or engages in bad business practices. These business
constraints are needed to maintain collective responsibility for faultless and reliable service to the
same class of customers for the same prices.
This is not the "control" contemplated in employer-employee relationships. Control in such
relationships addresses the details of day to day work like assigning the particular task that has
to be done, monitoring the way tasks are done and their results, and determining the time during
which the employee must report for work or accomplish his assigned task.
Franchising involves the use of an established business expertise, trademark, knowledge, and
training. As such, the franchisee is required to follow a certain established system. Accordingly,
the franchisors may impose guidelines that somehow restrict the petitioners’ conduct which do
not necessarily indicate "control." The important factor to consider is still the element of control
over how the work itself is done, not just its end result.
The Labor Arbiter, the NLRC, and the CA, are unanimous that petitioners were no longer "route
salesmen, bringing previously ordered supplies and goods to dealers, taking back returned items,
collecting payments, remitting them, etc. They were themselves then the dealers, getting their
own supply and bringing these to their own customers and sub- dealers, if any."
Reading Response No. 1

Submitted by: Kim Marie Roque

IR 207.1

“Every person who renders work for another has a right to be compensated for his labor.
But not every situation where a person renders work for compensation can give rise to
an employer-employee relationship.”

In our jurisdiction, labor laws provide for certain guidelines in determining the
existence of employer-employee relationship. However, this does not necessarily
preclude one from entering into arrangements or contracts of services other than those
that fall within the ambit of employer-employee relationship. The right to life and
livelihood does not only refer to the right to render services to another for a fee as an
employee. It also guarantees the freedom of a person possessed with special skills,
expertise or talent to offer his or her services as an independent contractor, outside the
concept of an employee.1
Nevertheless, while the law recognizes the right of every person to contract freely
and offer his or her services to another, it also recognizes the sheer inequality that often
characterizes employment relations due to the inherent economic inequality between
labor and management. Thus, when it appears that the agreement was not entered into
by the parties in equal footing and was obviously devised to circumvent the tenurial rights
of the employee, the law steps in to ascertain the real nature of the contract so as to
accord the latter of his rights and benefits. Corollary thereto, it can be said that the
purpose of determining the existence of employer-employee relationship is not to limit
other types of valid service arrangements, but to protect the rights of workers from

1 Sonza vs. ABS-CBN Broadcasting, G.R. No. 138051, June 10, 2004.
schemes or machinations that may be employed by their more financially entrenched
employers, intended to exploit them and deprive them of the protection of the Labor
Code. This is precisely because of the reality that labor and capital are, more often, not
in equal footing when bargaining with each other; the former being the weaker in
economic power and resources. Such stand of the law is pursuant to the constitutional
mandate to provide full protection to labor and promote their welfare. Impliedly, however,
when the agreement is not violative of workers’ rights and was entered into knowingly
and voluntarily by the parties, without any force, duress, or improper pressure and absent
any circumstance vitiating the consent of any of them, then the same should be upheld
and respected.