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PHILIPPINE GLOBAL COMMUNICATIONS v. RICARDO DE VERA

FACTS:

Petitioner Philippine Global Communications, Inc. (PhilCom) and respondent Ricardo De Vera entered into a Retainership Contract in 1981, where De Vera offered his medical services as a company physician to PhilCom. The contract was renewed yearly until 1994, and verbally renewed for the years 1995 and 1996. In December 1996, PhilCom notified De Vera that their contract was being terminated, stating it would be more practical to provide medical services through accredited hospitals near the company premises. De Vera filed a complaint for illegal dismissal, claiming that he had been actually employed by PhilCom since 1981. The Labor Arbiter dismissed De Vera's complaint, viewing him as an independent contractor and ruling that the contract ended when it was not renewed after December 1996. De Vera appealed to the NLRC, which declared him as PhilCom's regular employee and ordered his reinstatement with full backwages. PhilCom filed a petition for certiorari with the Court of Appeals, seeking to reverse the NLRC's decision. The Court of Appeals partially modified the NLRC's decision, deleting the award of traveling allowance and ordering the payment of separation pay instead of reinstatement.

The dispute at hand involves the existence of an employer-employee relationship between PhilCom Corporation and Dr. Ricardo De Vera. Respondent had been providing medical services to PhilCom since 1981, as stated in his letter offering his services as a company physician. The labor arbiter found no employer-employee relationship based on the letter, but the NLRC concluded the opposite and ordered PhilCom to pay backwages, separation pay, and 13th-month pay. PhilCom appealed to the Supreme Court, arguing that the Court of Appeals erred in sustaining the NLRC's decision. The Supreme Court agreed to review the case and applied the four-fold test to determine the existence of an employer-employee relationship. The Court noted that the parameters of respondent's duties and the compensation were set in the letter he sent to PhilCom, supporting the labor arbiter's finding. However, due to the conflicting findings, the Court conducted further analysis to ascertain the true nature of the relationship.

ISSUES:

  1. Whether an employer-employee relationship exists between the petitioner and the respondent.

  2. Whether the absence of control, the power to terminate, and the need for billing are indicative of the absence of an employer-employee relationship.

  3. Whether or not the respondent is the petitioner's regular employee at the time of his separation.

  4. Whether or not the presence of a physician is necessary and desirable in the petitioner's premises.

  5. Whether the employer is required to hire the services of a physician on a retained basis in non-hazardous workplaces.

  6. Whether the engagement of a physician on a retained basis creates an employer-employee relationship.

RULING:

  1. The Supreme Court held that there is no employer-employee relationship between the petitioner and respondent. The absence of an employer-employee relationship was established by the following facts and circumstances: the complainant himself recognized in a letter that he was not considered an employee; the complainant proposed his own schedule and sought additional compensation for the same; the complainant renewed the retainer contract every year; no deductions were made for contributions to the Social Security System (SSS); the complainant was subjected to a 10% withholding tax; the complainant had to bill the respondent for his professional fees; the power to terminate the relationship was mutually vested in both parties; and there was no control by the respondent over the means and methods by which the complainant carried out his work.

  2. The Court disagrees with the ruling of the NLRC and the Court of Appeals that the respondent is the petitioner's regular employee. The existence of a written or oral agreement wherein one party renders services for and in behalf of another, even if necessary for the latter's business, does not necessarily create an employment relationship. Article 280 of the Labor Code, which distinguishes between regular and casual employees, does not apply in cases where the existence of an employment relationship is in dispute.

  3. The presence of a physician in the petitioner's premises is necessary and desirable. Article 157 of the Labor Code requires employers to provide free medical and dental attendance and facilities for their employees. The need for medical attention for employees cannot be foreseen, making it necessary to have a physician readily available. The importance and desirability of a physician in a company premises is recognized by the Labor Code.

  4. The employer is allowed to engage the services of a physician on a retained basis in non-hazardous workplaces, as stated in the last paragraph of Article 157 of the Labor Code.

  5. The engagement of a physician on a retained basis does not create an employer-employee relationship, as it is explicitly stated in the law that they may be engaged "on retained basis" and not as regular employees.

PRINCIPLES:

  • The absence of control, the power to terminate, and the need for billing are factors indicating the absence of an employer-employee relationship.

  • An employer-employee relationship is characterized by control, both as to the result of the work and as to the means and methods by which the work is accomplished.

  • The existence of an employment relationship is determined by the agreement between the parties, regardless of whether the activities performed are necessary and desirable for the employer's business.

  • Article 280 of the Labor Code does not apply in cases where the existence of an employment relationship is in dispute.

  • Employers are required to provide free medical and dental attendance and facilities for their employees, and the presence of a physician in the company premises may be necessary and desirable.

  • Courts must interpret a statute as it is written when it is clear and unambiguous.

  • The engagement of a physician on a retained basis in non-hazardous workplaces is allowed under Article 157 of the Labor Code.

  • The engagement of a physician on a retained basis does not create an employer-employee relationship.