No relation

Illegal dismissal presupposes the existence of employer-employee relationship. If there is none, then there is no illegal dismissal to speak of. This case of Carla sets forth the elements of employer-employee relationship.

The case involved rural micro projects in five provinces of the Cordilleras (CECAP), subject of an agreement between the Philippine Government and the European Communities (Commission) launched and implemented by the Department of Agriculture (DA). To provide technical assistance services to said project the DA contracted Travers Morgan Internal Ltd (TMI). In turn, TMI entered into a Sub-Consultancy Agreement with SGV for the latter to undertake part of the technical services requirement of the CECAP. Hence SGV proposed qualified consultants.

The acceptance and appointment of the consultants were subject to the unanimous approval of the TMI, DA and the Commission. For the position of sociologist, SGV proposed Larry. However the DA disputed his qualification and recommended Carla instead.

In reply TMI told DA that it would consider Carla for the sociologist position. Thus the DA volunteered to call Carla and advise her of a possible assignment to the CECAP. Eventually the DA informed SGV that Carla’s nomination had been approved by the Commission and the DA and set the date of the start of her assignment.

Carla accepted the consultancy contract and signed it but requested that the start-up date be moved so that she can finish her assignment in Thailand. Under the letter agreement between the parties, Carla would be paid by SGV retainer fee for everyday of completed service in the project. This fee was part of the fee paid by TMI to SGV aside from benefits like housing and subsistence allowance and medical insurance. The agreement also provides that SGV could terminate Carla’s services only at the end of the contract between DA and TMI or the termination by TMI of the consultancy contract with SGV. It is also provided that if Carla leaves the project for any reason whatsoever other than for causes beyond her control, she shall be liable for liquidated damages. The agreement also required Carla to maintain an accurate time record, notify SGV of delays, secure prior clearance to leave place of assignment and prepare reports.

While CECAP was in progress, TMI received verbal and written complaints from the project staff regarding Carla’s performance and working relations with them. After an investigation, TMI confirmed that Carla’s retention would be counter productive to the progress of the project because a number of staff found it difficult to work with her. Thus TMI directed SGV to withdraw Carla from CECAP.

In compliance with TMI’s instructions, SGV facilitated Carla’s withdrawal from CECAP. This prompted Carla to file a complaint against SGV for illegal dismissal with damages. SGV on the other hand alleged that it could not be liable for illegal dismissal as there was no employer-employee relations between them. Was SGV correct?

Yes. To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (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 on the means and methods by which the work is accomplished or the “control test which is the most important indicator of the presence or absence of such relationship”.

In this case, it is clear that there is no employer-employee relationship between Carla and SGV. Carla is an independent contractor who was engaged by SGV to render services to SGV’s client, TMI and ultimately to DA on the CECAP project regarding matters in the field of her special knowledge and training for a specified period of time. Unlike an ordinary employee, Carla received retainer fees and benefits such as housing and subsistence allowance and medical insurance. Her services could be terminated only on the ground of end of contract between DA and TMI and not on ground under the labor laws. Though the end of said contract was not the ground for Carla’s withdrawal from the CECAP, she was disengaged from the project upon instruction of SGV’s client TMI. Most important of all, SGV did not exercise control over the means and methods by which Carla performed her duties as sociologist. SGV did impose rules on Carla, but these were necessary to ensure SGV’s faithful compliance with the terms and conditions of the Sub-Consultancy Agreement it entered into with TMI.

Hence, there being no employer-employee relationship between SGV and Carla, SGV is not liable for illegal dismissal and damages (Sycip, Gorres, Velayo & Co. vs. De Raedt, G.R. 161366, June 16, 2009)

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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