The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employee's conduct.
[Pedro Chaves vs. NLRC, G.R. No. 146530, January 17, 2005; Sally Miguel vs. JCT Group, Inc., G.R. No. 157752, March 16, 2005; Philippine Global Communications, Inc. vs. de Vera, G.R. No. 157214, June 7, 2005; Dealco Farms vs. NLRC, G.R. No. 153192, January 30, 2009; Pacific Consultants International Asia vs. Schonfeld, supra]
Selection/Hiring
Hiring has not presented so much question.
Payment of Wages
A person paid by result is NOT an employee. [Continental Marble Corporation vs. NLRC, 161 SCRA 151, 158]
A bus driver paid on commission basis is an employee. Commission is part of wage as defined in Art. 97(f), LC. [R. Transport vs. Ejandra, May 20, 2004]
BUT,
A salesman who is paid 3% commission of his gross sales is not an employee, even if commission is part of wage under Art. 97(f). Commission as a form of remuneration, may be availed of by both an employee or non- employee. [Abante vs. La Madrid Bearing Parts Corp., May 28, 2004]
Likewise, one who receives 4% commission from proceeds solicited out of their principal-agency relationship is NOT an employee. [Sevilla vs. Court of Appeals, 160 SCRA 171]
An insurance agent who is paid on purely commission basis is NOT an employee. [Grepalife vs. Judico, December 21, 1989]
BUT,
An insurance agent who is paid with salary plus commission is an employee. [Grepalife vs. Judico, December 21, 1989]
BUT,
An insurance agent who does not have any license to work as an insurance agent is NOT an employee. [Grepalife vs. NLRC, 150 SCRA 601, 608 (1987)]
STILL,
absence of license should not be considered a legal obstacle as what applies here is the Labor Code, and not the Insurance Code. [Grepalife vs. NLRC, 187 SCRA 694 (1990)]
Dismissal
The allegation that a person was legally dismissed for abandonment admits of a fact that said person was an employee. [R. Transport vs. Ejandra, supra] Likewise, an allegation that the employee's position was found redundant to justify his dismissal, notwithstanding the employer allegation of a valid job contracting. [Fulache, supra]
On the other hand, direct application for employment to the principal upon the termination of the service contract between the alleged employer and the principal, clearly shows that employment relationship exists between the employees and the job contractor. [S.I.P. Food House, et al. vs. Batolina, et al., G.R. No. 192473, October 11, 2010, Brion, J.]
Control
Among the 4 principal tests used in the determination of an EER, the so- called control test is commonly regarded as the most crucial and determinative indicator. Such element is present 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. [Abante vs. La Madrid, supra]
BUT,
conduct of the party hire in relation to the services rendered maybe accorded the effect of establishing an EER.
Company rules designed to promote the result create no EER
Only those rules that are intended to address both the result and the means used to achieve it establish EER. [Insular Life Assurance vs. NLRC, 179 SCRA 459, 464-65 (1989), citing Mafinco Trading Corp. vs. Ople, 70 SCRA 139; Investment Planning Corp. vs. SSS, 21 SCRA 924; Sara vs. NLRC, 166 SCRA 625, 630; Tongko vs. Manulife, 570 SCRA 503, 518, November 7, 2008, citing Insular Life Assurance Co., Ltd vs. NLRC, 431 SCRA 583, 604 (2004); Manila Electric Company vs. Benamira, G.R. No. 145271, July 14, 2005; Arsenio T. Mendiola vs. Court of Appeals, G.R. No. 159333, July 31, 2006]
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. [Tongko vs. The Manufacturers Life Insurance Co. (Phils.), Inc., et al., G.R. No. 167622, January 25, 2011, Brion, J.] The concept of control in an insurance agency must be understood outside the context of an employer-employee relationship, since the kind of control wielded is only as to the desired results and according to Insurance Code norms. [Tongko vs. The Manufacturers Life Insurance Co. (Phils.), Inc., G.R. No. 167622, June 29, 2010, Brion, J.]
NOTE:
The Grepalife case wherein the agent brothers appointed as zone supervisor and district manager were considered as “employees” of Grepalife, because of the presence of the element of control in their contract of engagement, a fact which is not attendant in the Tongko case. The Insular Life case is neither in point, since in the Tongko case no other contract was presented apart from the “Agency Agreement” executed at the beginning of engagement, and was never superseded by any other agreement even when the complainant became an area manager of Manulife. [Tongko, June 2010, supra]
Secondary Tests:
SSS registration as employee. [Flores vs. Funeraria Nuestro, 160 SCRA 568; Bautista vs. Inciong, 158 SCRA 665; Corporal vs. NLRC, 341 SCRA 658 (2000)].
“A company physician who billed professional fees every month, who never complained “since 1981” that he was not covered by SSS, who was subjected to 10% withholding tax not as employee but as “professional fee”, whose relationship is terminable at will by either parties, and who was not subjected to control of company – is NOT an employee.” [Phil. Global Communications, Inc. vs. Ricardo de Vera, G.R. No. 157214, June 7, 2005]
Withholding Tax (W-2)
Payment of ECC (State Insurance Fund) under Arts. 168, Labor Code, which is “compulsory upon all employers and their employees not over sixty (60) years of age” [also, Art. 183(a), L.C.; in fact 183 (c) of L.C. Requires the employer to pay the employee
contribution].
Pag-Ibig Fund
COMMENT: I likewise disagree with the ponencia in Tongko.
Work performed and required of the alleged insurance agent as concurrent branch/unit manager, which is beyond the provisions of the “Agency Agreement” he previously executed with the insurance company give rise to work that establishes employer-employee relationship.
In Justice Velasco's dissenting opinion, he opined thus: “the mere fact that no management contract (as in Insular Life case) was reduced into writing does not make the duties and undertaking performed by a branch manager still within the sphere of the 'Agency Agreement'.”
Employment Contract
Under the Omnibus Rules Implementing the Labor Code, one of the requirements for the issuance of an employment permit is an employment contract. (Section 5, Rule XIV) [Pacific Consultants International Asia, Inc. vs. Schonfeld, G.R. No. 166920, February 19, 2007]
Not Proof of EER
ID cards, even with “employee's name”, if used on to obtain entrance. [Lopez vs. Bodega City, 532 SCRA 56 (2007)]
A solitary petty cash voucher.
A public corporation's ownership of stocks in a private corporation does not create employer-employee relationship between the public corporation and the employees of the private corporation. [Hugo, et al. vs. Light Rail Transit Authority, G.R. No. 181866, March 18, 2010, Carpio Morales, J.]
CASES:
If the parties themselves practically agreed on every terms and conditions of the worker’s services in the company, it negates the element of control in their relationship, and thereby negating the existence of EER. [Philippine Global Communications, Inc. vs. de Vera, G.R. No. 157214, June 7, 2005, Garcia, J.]
Article 157 of the Labor Code clearly and unequivocally allows employers in non- hazardous establishments to engage ‘on retained basis’ the service of a dentist or physician. Nowhere does the law provide that the physician or dentist so engaged thereby becomes a regular employee. The very phrase that they may be engaged ‘on retained basis’, revolts against the idea that this engagement gives rise to an employer-employee relationship. [Philippine Global Communications, Inc. vs. de Vera, G.R. No. 157214, June 7, 2005, Garcia, J.]
It is a standard stipulation in security service agreements that the client may request the replacement of the guards to it. Service-oriented enterprises [Manila Electric Company vs. Benamira, et al., G.R. No. 145271, July 14, 2005, Austria-Martinez, J.]
An employee occupies no office and generally is employed not by the action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee. [Easycall Communications Phils., Inc. vs. King, G.R. No. 145901, December 15, 2005, Corona, J.]
Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no employer- employee relationship exists. In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of the worker on his employer. [Wilhelmina S. Orozco vs. The Honorable Court of Appeals, Philippine Daily Inquirer, and Leticia Jimenez Magsanoc, G.R. No. 155207, August 13, 2008]
Under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship was created between petitioner and respondent: that of employer-employee and vendor-vendee. The Kasunduan did not extinguish the employer-employee relationship of the parties extant before the execution of said deed. [Villarama, Jr. vs. Court of Appeals, G.R. No. 165881, April 19, 2006, Callejo, Sr., J.]
An owner-member of a cooperative can be its own employee. [Republic of the Philippines, represented by Social Security System and Social Security Commission vs. Asiapro Cooperative, G.R. No. 172107, November 23, 2007]
Concept of “Whole Economic Activity”
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 employer’s business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s 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. (Angelina Francisco v. NLRC, G..R No. 170087, August 31, 2006)
The presumption is that when the work is done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor. The Court will peruse beyond any such agreement to examine the facts that typify the parties’ actual relationship. (ABS-CBN Broadcasting Corporation v. Nazareno, G.R. No. 164156, September 26, 2006)
Doctrine of Apparent Authority
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. This exception is also known as the “doctrine of apparent authority”. [Rogelio P. Nograles v. Capitol Medical Center, G.R. No. 142625, December 19, 2006; Professional Services, Inc. vs. CA, G.R. Nos. 126297, 126467, and 127590, February 2, 2010, Corona, J.]
The doctrine of apparent authority is a species of the doctrine of estoppel. Estoppel rests on the rule: “Whenever 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.” [Rogelio P. Nograles v. Capitol Medical Center, supra]