[14] Phil. Global Communications v.

De Vera
G.R. No. 157214 | June 7, 2005 | Employee-employer relationship- retainer | Sha
his salary was never deducted any contribution for remittance to SSS; he was in
Petitioner: PHILIPPINE GLOBAL COMMUNICATIONS, INC. fact subjected by to the 10% withholding tax for his professional fee; the power to
Respondents: RICARDO DE VERA terminate the parties' relationship was mutually vested on both parties; De Vera
had to bill Philcom for his monthly professional fees
Recit-Ready Facts:
Finally, remarkably absent from the parties' arrangement is the element of control,
whereby the employer has reserved the right to control the employee not only as to
Philcom engaged the services of Dr. De Vera’s as a company physician on retainer
the result of the work done but also as to the means and methods by which the
basis through a Retainership Contract, which was renewed annually from 1982
same is to be accomplished.
until 1996. However, on Dec. 1996, Philcom decided to end the contract for
practical reasons. Hence, De Vera filed a complaint for illegal dismissal before the
NLRC. This was initially dismissed by the Labor Arbiter on the ground that De Vera De Vera could even embark in the private practice of his profession, not to mention
is considered an independent contractor and he is not considered dismissed. On the fact that De Vera's work hours and the additional compensation therefor were
appeal, the NLRC reversed the LA’s decision and considered De Vera a regular negotiated upon by the parties. In 􏰲fine, the parties themselves practically agreed
employee. NLRC’s decision was modified by the CA who also found De Vera a on every terms and conditions of respondent's engagement, which thereby
regular employee based on his duties and under Art. 280 of the Labor Code. On the negates the element of control in their relationship.
other hand, De Vera invoked Art. 157 of the same law. (Check last page for codal
provisions) FACTS:

The issue is WON an employer-employee relationship exists between Philcom and

1. Petitioner Philippine Global Communications, Inc. (PhilCom), is a
De Vera (NO)
corporation engaged in the business of communication services and
allied activities, while respondent Ricardo De Vera is a physician by
Doctrine: profession whom petitioner enlisted to attend to the medical needs of its
employees
In determining the existence of an employer-employee relationship, the Court has 2. De Vera, via a letter, offered his services to the PhilCom, proposing his
adhered to the four-fold test: plan of works required of a practitioner in industrial medicine.
3. Parties agreed and formalized De Vera’s proposal in a document
1. the selection and engagement of the employee; denominated as RETAINERSHIP CONTRACT which will be for a period of
one year subject to renewal.
2. the payment of wages; 4. Said contract was renewed yearly. However, on December 1996 Philcom,
thru a letter bearing on the subject boldly written as "TERMINATION —
3. the power of dismissal; and RETAINERSHIP CONTRACT", informed De Vera of its decision to
discontinue the latter's "retainer's contract with the Company effective at
4. the power to control the employee’s conduct, or "control test" the close of business hours of December 31, 1996" because
management has decided that it would be more practical to provide
medical services to its employees through accredited hospitals near the
The elements are missing in the case for the following reasons:
company premises. jurcd2005
5. De Vera 􏰲filed a complaint for illegal dismissal before the National Labor
PHILCOM did not have control over the schedule who is proposing his own
Relations Commission (NLRC), alleging that that he had been actually
schedule and asking to be paid for the same; If he were an employee he could not
employed by Philcom as its company physician since 1981 and was
negotiate as to his hours of work; De Vera was never included in Philcom’s payroll;
dismissed without due process.
 a. He averred that he was designated as a "company physician on Applying the four-fold test to this case, we initially 􏰲find that it was respondent
retainer basis" for reasons allegedly known only to Philcom. He himself who sets the parameters of what his duties would be in offering his
likewise professed that since he was not conversant with labor services to petitioner.
laws, he did not give much attention to the designation as anyway
he worked on a full-time basis and was paid a basic monthly salary Significantly, the foregoing letter was substantially the basis of the labor arbiter's
plus fringe benefits, like any other regular employees of Philcom. finding that there existed no employer-employee relationship between petitioner
6. Labor Arbiter dismissed De Vera's complaint on the rationale that as a and respondent, in addition to the following factual settings:
"retained physician" under a valid contract mutually agreed upon by the
parties, De Vera was an "independent contractor" and that he "was not The fact that the complainant was not considered an employee was
dismissed but rather his contract with [PHILCOM] ended when said recognized by De Vera himself in a signed letter to the respondent:
contract was not renewed.
7. De Vera's appealed to the NLRC. To carry out your memo effectively and to provide a systematic and
8. NLRC reversed that of the Labor Arbiter and found that De Vera is workable time schedule which will serve the best interests of both the
Philcom's "regular employee" and directed the company to reinstate him present and absent employee, may I propose an extended two-hour
to his former position without loss of seniority rights and privileges and service (1:00-3:00 P.M.) during which period I can devote ample time to
with full backwages from the date of his dismissal until actual both groups depending upon the urgency of the situation. I shall readjust
reinstatement. my private schedule to be available for the herein proposed extended
hours, should you consider this proposal.
a. NLRC denied Philcom’s MR.
9. Court of Appeals modified the decision of the NLRC by deleting the
As regards compensation for the additional time and services that I shall
award of traveling allowance, and ordering payment of separation pay
render to the employees, it is dependent on your evaluation of the merit
to De Vera in lieu of reinstatement.
of my proposal and your confidence on my ability to carry out efficiently
10. Philcom 􏰲filed a MR but was denied by the CA, hence this petition. said proposal.'

The tenor of this letter indicates that the complainant was proposing to
ISSUES: WON an employer-employee relationship exists between Philcom and extend his time with the respondent and seeking additional compensation
De Vera (NO) for said extension. This shows that the respondent PHILCOM did not have
control over the schedule who is proposing his own schedule and asking to
RATIO: be paid for the same. This is proof that the complainant understood that his
relationship with the respondent PHILCOM was a retained physician and not
The elements of an employer-employee relationship are wanting in this case. as an employee. If he were an employee he could not negotiate as to his
hours of work.
In a long line of decisions, the Court, in determining the existence of an
employer- employee relationship, has invariably adhered to the four-fold test, to The labor arbiter added the indicia, not disputed by respondent, that from the
wit: time he started to work with Philcom, he never was included in its payroll; was
never deducted any contribution for remittance to the Social Security System
1. The selection and engagement of the employee; (SSS); and was in fact subjected by petitioner to the ten (10%) percent
2. The payment of wages; withholding tax for his professional fee, matters which are simply inconsistent
3. The power of dismissal; and with an employer-employee relationship.
4. The power to control the employee's conduct or "control test"
(considered to be the most important element) Clearly, the elements of an employer-employee relationship are wanting in this
case. We may add that the records are replete with evidence showing that
respondent had to bill petitioner for his monthly professional fees. It simply
runs against the grain of common experience to imagine that an ordinary Buttressing his contention that he is a regular employee of petitioner, De Vera
employee has yet to bill his employer to receive his salary. invokes Article 1572 of the Labor Code, and argues that he satisfies all the
requirements thereunder. Had only respondent read carefully the very statutory
We note, too, that the power to terminate the parties' relationship was mutually provision invoked by him, he would have noticed that in non-hazardous
vested on both. Either may terminate the arrangement at will, with or without workplaces, the employer may engage the services of a physician "on retained
cause. basis." De Vera takes no issue on the fact that petitioner's business of
telecommunications is not hazardous in nature. As such, what applies here is the
Finally, remarkably absent from the parties' arrangement is the element of last paragraph of Article 157 which, to stress, provides that the employer may
control, whereby the employer has reserved the right to control the employee engage the services of a physician and dentist "on retained basis".
not only as to the result of the work done but also as to the means and methods
by which the same is to be accomplished . 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
Philcom had no control over the means and methods by which respondent went retained basis", revolts against the idea that this engagement gives rise to an
about performing his work at the company premises. De Vera could even employer-employee relationship.
embark in the private practice of his profession, not to mention the fact that De
Vera's work hours and the additional compensation therefor were negotiated Disposition of the Court
upon by the parties. In 􏰲fine, the parties themselves practically agreed on every WHEREFORE, the petition is GRANTED and the challenged decision of the Court
terms and conditions of respondent's engagement, which thereby negates the of Appeals REVERSED and SET ASIDE. The 21 December 1998 decision of the
element of control in their relationship. labor arbiter is REINSTATED.

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. For, we take it that 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.
This set-up is precisely true in the case of an independent contractorship as well
as in an agency agreement. Article 280 1 of the Labor Code, quoted by the
appellate court, is not the yardstick for determining the existence of an
employment relationship. As it is, the provision merely distinguishes between
two (2) kinds of employees, i.e., regular and casual.

1
The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform in the usual business or trade of the employer, except where the
employment has been 􏰲fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the work 2
XXXX Where the undertaking is nonhazardous in nature, the physician and dentist may be
or services to be performed is seasonal in nature and the employment is for the duration of the
engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe
season.
to insure immediate availability of medical and dental treatment and attendance in case of
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
emergency.
Provided, That, any employee who has rendered at least one (1) year of service, whether such is
continuous or broken, shall be considered a regular with respect to the activity in which he is
employed and his employment shall continue while such activity exists.'