CASES FOR CBL

1. G.R. No. 202015, 13 July 2016

This case concerns the determination of employer-employee relationship between petitioners
Antonio Valeroso and Allan Legatona and respondent Skycable Corporation. The Supreme Court
affirmed the Court of Appeals' decision, finding no employer-employee relationship existed, thus
dismissing the complaint for illegal dismissal and money claims. The Court applied the "right of
control test," emphasizing that Skycable's actions did not dictate the means and methods by
which the petitioners performed their tasks. This ruling reinforces the importance of the control
test in determining employment status and clarifies the distinction between an employee and an
independent contractor in Philippine labor law.
 Petitioner: Antonio Valeroso and Allan Legatona, former account executives tasked to solicit
cable subscriptions.
 Respondent: Skycable Corporation, a cable television service provider.
 Nature of Case: Complaint for illegal dismissal, non-payment of 13th month pay, separation pay,
illegal deduction, regularization, and payment of moral and exemplary damages.
 Key Events:
o Valeroso and Legatona began working as account executives in 1998.
o In 2007, they were transferred to Skill Plus Manpower Services (later Armada Resources
& Marketing Solutions, Inc.).
o In February 2009, they were informed of a reduction in commissions.
o They filed a labor case with the NLRC on February 25, 2009, after which they were
allegedly dropped from the roster of account executives.
 Lower Court Proceedings:
o The Labor Arbiter dismissed the complaint, finding no employer-employee relationship.
o The NLRC reversed the Labor Arbiter's ruling, declaring the petitioners illegally
dismissed.
o The Court of Appeals reversed the NLRC Decision, sustaining the Labor Arbiter's finding.
 How Case Reached Supreme Court: Petition for Review on Certiorari assailing the Court of
Appeals' Decision.

1. LEGAL ISSUE; Primary Issue: Whether the petitioners were regular employees of Skycable
Corporation, whose dismissal from employment was illegal.
2. Secondary Issues: Whether the Court of Appeals erred in reversing the NLRC decision and
finding no employer-employee relationship.

RULING:
Primary Holding: The Supreme Court denied the petition, affirming the Court of Appeals'
decision that no employer-employee relationship existed between the petitioners and
Skycable Corporation.
 Legal Doctrine Applied: The "right of control test" was the most determinative factor in
ascertaining the existence of an employer-employee relationship.
 Statutory Interpretation: Article 280 of the Labor Code was interpreted as not being the
yardstick for determining the existence of an employment relationship when the existence of
such relationship is in dispute.
 Precedent Analysis:
o Francisco v. National Labor Relations Commission, 532 Phil. 399 (2006): The Court
distinguished this case, noting that the two-tiered test was not applicable because there
was a written contract (Sales Agency Agreement) in the present case.
o Abante, Jr. v. Lamadrid Bearing & Parts Corporation, 474 Phil. 414, 426 (2004): Cited as
an example where a commission salesman was held to be an independent contractor.
o Sandigan Savings & Loan Bank, Inc. v. National Labor Relations Commission, 324 Phil.
348, 360 (1996): Cited as an example where a realty sales agent was held to be an
independent contractor.
 Policy Considerations: The Court emphasized the importance of upholding the freedom to
contract and respecting the characterization made by the parties in their contract as to the
nature of their juridical relationship.
Ratio Decidendi (Reasoning)
 Absence of Control: The Court found that Skycable's actions, such as updating petitioners on
new promos, price listings, meetings, and trainings, and imposing quotas and penalties, did not
pertain to the means and methods of how petitioners were to perform their task of soliciting
cable subscriptions. "At most, these indicate that respondent regularly monitors the result of
petitioners' work but in no way dictate upon them the manner in which they should perform
their duties."
 Sales Agency Agreement: The Sales Agency Agreement served as primary evidence of the
nature of the parties' relationship, unequivocally stating their intention to be strictly bound by
independent contractorship. The Court stated, "While the existence of employer-employee
relationship is a matter of law, the characterization made by the parties in their contract as to
the nature of their juridical relationship cannot be simply ignored, particularly in this case where
the parties' written contract unequivocally states their intention."
 Petitioners' Acknowledgment: Petitioner Legatona, in his Release and Quitclaim, acknowledged
that he was performing sales activities as a sales agent/independent contractor and not an
employee of respondent.
 Article 280 Inapplicability: The Court clarified that "Article 280 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 [their rights] to certain benefits."

2. GR NO. 21086
The Supreme Court affirmed the Court of Appeals' decision, holding that Jobcrest
Manufacturing, Incorporated was a legitimate and independent contractor, and therefore, Leo
Mago and Leilanie Colobong were employees of Jobcrest, not Sun Power Manufacturing Limited.
 This decision reinforces the criteria for determining legitimate contracting and the importance of
substantial capital and control in distinguishing it from labor-only contracting.
 Petitioner: Leo V. Mago and Leilanie E. Colobong, former employees of Jobcrest, claiming to be
regular employees of Sunpower and illegally dismissed.
 Respondent: Sun Power Manufacturing Limited, a company engaged in manufacturing
automotive computer and other electronic parts, which contracted Jobcrest for business process
services.
 Key Facts: Jobcrest and Sunpower entered into a Service Contract Agreement. Petitioners were
assigned to Sunpower's plant as Production Operators. Sunpower conducted an operational
alignment, affecting Jobcrest's services. Petitioners filed a complaint for illegal dismissal and
regularization, claiming they were regular employees of Sunpower. Jobcrest offered
reinstatement, which petitioners refused.
 Procedural History: The Labor Arbiter (LA) dismissed the complaint, declaring Jobcrest a
legitimate contractor. The National Labor Relations Commission (NLRC) reversed the LA,
declaring petitioners regular employees of Sunpower. The Court of Appeals (CA) reversed the
NLRC and reinstated the LA's decision. The petitioners appealed to the Supreme Court via a
petition for review on certiorari.

LEGAL ISSUES; Is Jobcrest Manufacturing, Incorporated a legitimate and independent contractor or a

labor-only contractor?

 RULING: Jobcrest possessed substantial capital, with an authorized capital stock of Php
8,000,000.00 and a paid-up capital stock that increased to Php 8,000,000.00 by 2011, exceeding
the Php 3,000,000.00 threshold under DOLE DO No. 18-A. The Court cited *Neri v. NLRC* (296
Phil. 610 (1993)), stating that proof of either substantial capital or investment is sufficient.

 The DOLE Certificate of Registration issued to Jobcrest is presumed to have been issued in the
regular performance of official duty, and the petitioners failed to overcome this presumption.

 The Service Contract Agreement between Jobcrest and Sunpower obligated Jobcrest to observe
all laws, rules, and regulations pertaining to the employment of its employees, ensuring the
observance of contractual employees' rights under the law.

3. G.R 155207

G.R. No. 155207, dated August 13, 2008, in the case of Wilhelmina S. Orozco vs. Court of Appeals, ruled
that Orozco, a columnist for the Philippine Daily Inquirer (PDI), was an independent contractor, not an
employee, and therefore could not claim illegal dismissal. The Supreme Court applied the four-fold test,
concluding that PDI did not have the power to control the means and methods of Orozco's work, only
the results, and that Orozco was not economically dependent on PDI as she also contributed to other
publications.

 Petitioner: Wilhelmina S. Orozco, a newspaper columnist who wrote a weekly column for the
Philippine Daily Inquirer (PDI).
  Respondent: The Fifth Division of the Court of Appeals, Philippine Daily Inquirer (PDI), and
Leticia Jimenez Magsanoc, the Editor-in-Chief of PDI.

 Key Facts: Orozco wrote a weekly column for PDI's Lifestyle section from March 1990 to
November 1992, receiving compensation for each published column. PDI terminated her
column, claiming it failed to meet the newspaper's standards. Orozco filed a complaint for illegal
dismissal, arguing she was an employee of PDI.

 Procedural History: The Labor Arbiter ruled in favor of Orozco, finding her to be an employee of
PDI and illegally dismissed. The NLRC affirmed the Labor Arbiter's decision. The Court of Appeals
reversed the NLRC decision, finding that Orozco was not an employee. Orozco then filed a
Petition for Review with the Supreme Court.

LEGAL ISSUES

1. Is Wilhelmina S. Orozco an employee of the Philippine Daily Inquirer?

2. If Wilhelmina S. Orozco is an employee of the Philippine Daily Inquirer, was she illegally
dismissed?

COURT'S RULING & REASONING

Holding on Issue 1: No, Wilhelmina S. Orozco is not an employee of the Philippine Daily Inquirer.

 The Court applied the "four-fold test" to determine the existence of an employer-employee
relationship, focusing on the element of control. The four elements are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee's conduct.

 The Court emphasized that the "control test" is the most crucial and determinative factor. 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.

 The Court found that PDI's control over Orozco was limited to the finished product of her efforts
(the column itself) by way of either shortening or outright rejection of the column. 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."

 The Court also applied the "economic reality test," noting that Orozco's main occupation was not
as a columnist for PDI but as a women's rights advocate working in various women's
organizations. It could not be said that Orozco was dependent on PDI for her continued
employment in PDI's line of business.

4.G.R NO 186621

FACTUAL BACKGROUND
Petitioner: South East International Rattan, Inc. (SEIRI), a domestic corporation engaged in
furniture manufacturing and exporting, and Estanislao Agbay, the President and General
Manager of SEIRI.
 Respondent: Jesus J. Coming, who claimed to be a Sizing Machine Operator for SEIRI from March
17, 1984, until his alleged illegal dismissal on January 1, 2002.
Key Facts: Coming filed a complaint for illegal dismissal, underpayment of wages, and other
benefits. SEIRI denied employing Coming, asserting he worked for their suppliers. Coming
presented affidavits from former co-workers attesting to his employment with SEIRI. The Labor
Arbiter ruled in favor of Coming, while the NLRC reversed, dismissing the complaint. The CA
reversed the NLRC and reinstated the Labor Arbiter's decision with modifications.
Procedural History: The Labor Arbiter initially ruled in favor of Coming. SEIRI appealed to the
NLRC, which reversed the Labor Arbiter's decision. Coming then filed a petition for certiorari
with the Court of Appeals, which reversed the NLRC and reinstated the Labor Arbiter's decision
with modifications. SEIRI then filed a petition for review on certiorari with the Supreme Court.
LEGAL ISSUES
Whether an employer-employee relationship existed between South East International Rattan,
Inc. and Jesus J. Coming, based on the facts and evidence presented.
Whether South East International Rattan, Inc. was liable for the illegal dismissal of Jesus J.
Coming.
Whether the backwages due to Jesus J. Coming should be computed from the time of illegal
termination until the finality of the decision.
COURT'S RULING & REASONING
Holding on Issue 1: Yes, an employer-employee relationship existed between SEIRI and Coming.
The Court applied the four-fold test: (1) selection and engagement of the employee; (2) payment
of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct.
The Court gave credence to the affidavits of Coming's former co-workers who attested to his
employment with SEIRI, finding that SEIRI admitted these affiants were former employees.
The Court held that the absence of Coming's name on SSS reports and payrolls was not
conclusive proof of the absence of an employer-employee relationship, citing *Tan v. Lagrama*,
436 Phil. 190 (2002). The Court stated that an employer should not be rewarded for failing to
perform their obligation to report employees.
The Court found that SEIRI exercised control over Coming's work performance, requiring him to
work within the company premises, report daily, perform the same job, observe definite hours,
and implement company rules.

5. G.R NO 84448

Petitioner: Insular Life Assurance Co., Ltd., an insurance company.

 Respondent: National Labor Relations Commission (NLRC) and Melecio Basiao, an insurance
agent.

 Key Facts:

o Basiao entered into an agreement with Insular Life in 1968 to solicit insurance
applications.
 o The agreement stipulated that Basiao was free to exercise his own judgment regarding
time, place, and means of soliciting insurance and that the relationship was not one of
employer-employee.

o Insular Life terminated Basiao's Agency Manager's Contract in 1979 and subsequently
terminated the 1968 contract in 1980.

o Basiao filed a complaint with the Ministry of Labor (now DOLE) to recover unpaid
commissions.

 Procedural History: The Labor Arbiter ruled in favor of Basiao, finding an employer-employee
relationship and awarding unpaid commissions. The NLRC affirmed the Labor Arbiter's decision.
Insular Life then filed a petition for certiorari and prohibition with the Supreme Court.

LEGAL ISSUES

1. Did an employer-employee relationship exist between Insular Life and Melecio Basiao under the
1968 contract, thereby conferring jurisdiction on the Labor Arbiter to adjudicate Basiao's claim
for unpaid commissions?

COURT'S RULING & REASONING

Holding on Issue 1: No, an employer-employee relationship did not exist between Insular Life and
Melecio Basiao.

 The contract expressly stated that the relationship was not one of employer-employee, and
Basiao was free to exercise his own judgment as to the time, place, and means of soliciting
insurance.

 While the "control test" is a valid determinant, not every form of control establishes an
employer-employee relationship. The line is drawn between rules that serve as guidelines and
those that dictate the means or methods.

 The rules and regulations imposed by Insular Life, such as prescribing qualifications for insurance
applicants and processing applications, were necessary for the conduct of the insurance business
and did not unduly control Basiao's selling methods.

 The Court cited *Mafinco Trading Corporation vs. Ople, 70 SCRA 139* and *Investment Planning
Corporation of the Philippines vs. Social Security System, 21 SCRA 924* as precedents where
similar commission agents were deemed independent contractors.

JURISPRUDENTIAL IMPACT

 This decision clarifies the application of the "control test" in determining the existence of an
employer-employee relationship, particularly in the context of commission-based agents in the
insurance industry.
 It reinforces the distinction between an employee and an independent contractor, emphasizing
that the freedom to exercise one's own judgment in performing services is a key indicator of an
independent contractor relationship.

 The ruling limits the jurisdiction of labor tribunals to cases where a true employer-employee
relationship exists, preventing them from hearing cases involving independent contractors.

 It reaffirms the principle that the terms of a contract, particularly those granting autonomy in
the performance of services, are crucial in determining the nature of the relationship between
parties.