Labor Law Case on Constructive Dismissal

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FULL TEXT OF CASES || SET 1
1. Francisco v. NLRC August 21, 2006

G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKSEE NOAHASHI,
TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA,
Respondents.
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the
Decision and Resolution of the Court of Appeals dated October 29, 2004 1 and October 7, 2005, 2
respectively, in CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal filed by herein
petitioner Angelina Francisco. The appellate court reversed and set aside the Decision of the National
Labor Relations Commission (NLRC) dated April 15, 2003, 3 in NLRC NCR CA No. 032766-02 which affirmed
with modification the decision of the Labor Arbiter dated July 31, 2002, 4 in NLRC-NCR Case No. 30-10-0489-01, finding that private respondents were liable for constructive dismissal.
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as
Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company.
She was also designated as Liaison Officer to the City of Makati to secure business permits, construction
permits and other licenses for the initial operation of the company. 5
Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared any legal
document and never represented the company as its Corporate Secretary. However, on some occasions,
she was prevailed upon to sign documentation for the company. 6
In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in
lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees and
perform management administration functions; represent the company in all dealings with government
agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System (SSS) and in the city
government of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant
which is owned and operated by Kasei Corporation. 7
For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was
P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. 8
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was
required to sign a prepared resolution for her replacement but she was assured that she would still be
connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all
employees of Kasei Corporation and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters. 9
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to
September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid1|P a g e
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year bonus allegedly because the company was not earning well. On October 2001, petitioner did not
receive her salary from the company. She made repeated follow-ups with the company cashier but she was
advised that the company was not earning well. 10
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was
informed that she is no longer connected with the company. 11
Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that
petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently
as Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion
without control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to
the office any time she wanted. The company never interfered with her work except that from time to
time, the management would ask her opinion on matters relating to her profession. Petitioner did not go
through the usual procedure of selection of employees, but her services were engaged through a Board
Resolution designating her as technical consultant. The money received by petitioner from the corporation
was her professional fee subject to the 10% expanded withholding tax on professionals, and that she was
not one of those reported to the BIR or SSS as one of the companys employees. 12
Petitioners designation as technical consultant depended solely upon the will of management. As such,
her consultancy may be terminated any time considering that her services were only temporary in nature
and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted a list of
employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among
the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which
included petitioner. SSS records were also submitted showing that petitioners latest employer was Seiji
Corporation. 13
The Labor Arbiter found that petitioner was illegally dismissed, thus:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. finding complainant an employee of respondent corporation;
2. declaring complainants dismissal as illegal;
3. ordering respondents to reinstate complainant to her former position without loss of seniority rights
and jointly and severally pay complainant her money claims in accordance with the following computation:
a. Backwages 10/2001 07/2002 275,000.00
(27,500 x 10 mos.)
b. Salary Differentials (01/2001 09/2001) 22,500.00
c. Housing Allowance (01/2001 07/2002) 57,000.00
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d. Midyear Bonus 2001 27,500.00

e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei
Corp. from 1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10% Attorneys fees 87,076.50
P957,742.50
If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with
additional backwages that would accrue up to actual payment of separation pay.
SO ORDERED. 14
On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive
portion of which reads:
PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:
1) Respondents are directed to pay complainant separation pay computed at one month per year of
service in addition to full backwages from October 2001 to July 31, 2002;
2) The awards representing moral and exemplary damages and 10% share in profit in the respective
accounts of P100,000.00 and P361,175.00 are deleted;
3) The award of 10% attorneys fees shall be based on salary differential award only;
4) The awards representing salary differentials, housing allowance, mid year bonus and 13th month pay are
AFFIRMED.
SO ORDERED. 15
On appeal, the Court of Appeals reversed the NLRC decision, thus:
WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations
Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new one is hereby rendered
dismissing the complaint filed by private respondent against Kasei Corporation, et al. for constructive
dismissal.
SO ORDERED. 16
The appellate court denied petitioners motion for reconsideration, hence, the present recourse.
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The core issues to be resolved in this case are (1) whether there was an employer-employee relationship
between petitioner and private respondent Kasei Corporation; and if in the affirmative, (2) whether
petitioner was illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission on
one hand, and the Court of Appeals on the other, there is a need to reexamine the records to determine
which of the propositions espoused by the contending parties is supported by substantial evidence. 17
We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there has been no uniform test to determine
the existence of an employer-employee relation. Generally, courts have relied on the so-called right of
control test where the person for whom the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such end. In addition to the standard of
right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the
employee in the payrolls, can help in determining the existence of an employer-employee relationship.
However, in certain cases the control test is not sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a relationship where several positions have been
held by the worker. There are instances when, aside from the employers power to control the employee
with respect to the means and methods by which the work is to be accomplished, economic realities of the
employment relations help provide a comprehensive analysis of the true classification of the individual,
whether as employee, independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers
power to control the employee with respect to the means and methods by which the work is to be
accomplished; and (2) the underlying economic realities of the activity or relationship.
This two-tiered test would provide us with a framework of analysis, which would take into consideration
the totality of circumstances surrounding the true nature of the relationship between the parties. This is
especially appropriate in this case where there is no written agreement or terms of reference to base the
relationship on; and due to the complexity of the relationship based on the various positions and
responsibilities given to the worker over the period of the latters employment.
The control test initially found application in the case of Viaa v. Al-Lagadan and Piga, 19 and lately in
Leonardo v. Court of Appeals, 20 where we held that there is an employer-employee relationship when the
person for whom the services are performed reserves the right to control not only the end achieved but
also the manner and means used to achieve that end.
In Sevilla v. Court of Appeals, 21 we observed the need to consider the existing economic conditions
prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the
employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, 22 such as: (1) the extent to which the services performed
are an integral part of the employers business; (2) the extent of the workers investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers 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
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and the employer; and (7) the degree of dependency of the worker upon the employer for his continued
employment in that line of business. 23
The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business. 24 In the United States, the touchstone of
economic reality in analyzing possible employment relationships for purposes of the Federal Labor
Standards Act is dependency. 25 By analogy, the benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code ought to be the economic dependence of the
worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because
she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant.
She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical
Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is,
rendering accounting and tax services to the company and performing functions necessary and desirable
for the proper operation of the corporation such as securing business permits and other licenses over an
indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal, receiving
check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as
deductions and Social Security contributions from August 1, 1999 to December 18, 2000. 26 When petitioner
was designated General Manager, respondent corporation made a report to the SSS signed by Irene
Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature
card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line
inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner
and respondent corporation. 27
It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latters line of business.
In Domasig v. National Labor Relations Commission, 28 we held that in a business establishment, an
identification card is provided not only as a security measure but mainly to identify the holder thereof as a
bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners
salaries for the months stated therein, these matters constitute substantial evidence adequate to support
a conclusion that petitioner was an employee of private respondent.
We likewise ruled in Flores v. Nuestro 29 that a corporation who registers its workers with the SSS is proof
that the latter were the formers employees. The coverage of Social Security Law is predicated on the
existence of an employer-employee relationship.
Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner
never acted as Corporate Secretary and that her designation as such was only for convenience. The actual
nature of petitioners job was as Kamuras direct assistant with the duty of acting as Liaison Officer in
representing the company to secure construction permits, license to operate and other requirements
imposed by government agencies. Petitioner was never entrusted with corporate documents of the
company, nor required to attend the meeting of the corporation. She was never privy to the preparation
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of any document for the corporation, although once in a while she was required to sign prepared
documentation for the company. 30
The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has
been allegedly withdrawn by Kamura himself from the records of the case. 31 Regardless of this fact, we
are convinced that the allegations in the first affidavit are sufficient to establish that petitioner is an
employee of Kasei Corporation.
Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally look
with favor on any retraction or recanted testimony, for it could have been secured by considerations other
than to tell the truth and would make solemn trials a mockery and place the investigation of the truth at
the mercy of unscrupulous witnesses. 32 A recantation does not necessarily cancel an earlier declaration,
but like any other testimony the same is subject to the test of credibility and should be received with
caution. 33
Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent
Kasei Corporation. She was selected and engaged by the company for compensation, and is economically
dependent upon respondent for her continued employment in that line of business. Her main job function
involved accounting and tax services rendered to respondent corporation on a regular basis over an
indefinite period of engagement. Respondent corporation hired and engaged petitioner for compensation,
with the power to dismiss her for cause. More importantly, respondent corporation had the power to
control petitioner with the means and methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from
January to September 2001. This amounts to an illegal termination of employment, where the petitioner is
entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence,
and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of
reinstatement. 34
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive
dismissal is an involuntary resignation resulting in cessation of work resorted to when continued
employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee. 35 In Globe Telecom, Inc. v. Florendo-Flores, 36 we ruled that where an employee
ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which
creates an adverse working environment rendering it impossible for such employee to continue working
for her employer. Hence, her severance from the company was not of her own making and therefore
amounted to an illegal termination of employment.
In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex,
race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between
employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code
to a greater number of employees. This would enable employees to avail of the benefits accorded to them
by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting
their welfare and reaffirming it as a primary social economic force in furtherance of social justice and
national development.
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WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated
October 29, 2004 and October 7, 2005, respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE.
The Decision of the National Labor Relations Commission dated April 15, 2003 in NLRC NCR CA No. 03276602, is REINSTATED. The case is REMANDED to the Labor Arbiter for the recomputation of petitioner
Angelina Franciscos full backwages from the time she was illegally terminated until the date of finality of
this decision, and separation pay representing one-half month pay for every year of service, where a
fraction of at least six months shall be considered as one whole year.
SO ORDERED.
2. Sonza v. ABS CBN, June 10, 2004
G.R. No. 138051
June 10, 2004
JOSE Y. SONZA, petitioner,

vs.
ABS-CBN BROADCASTING CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari1 assailing the 26 March 1999 Decision2 of the Court of
Appeals in CA-G.R. SP No. 49190 dismissing the petition filed by Jose Y. Sonza ("SONZA"). The Court of
Appeals affirmed the findings of the National Labor Relations Commission ("NLRC"), which affirmed the
Labor Arbiters dismissal of the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement
("Agreement") with the Mel and Jay Management and Development Corporation ("MJMDC"). ABS-CBN
was represented by its corporate officers while MJMDC was represented by SONZA, as President and
General Manager, and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to in the Agreement
as "AGENT," MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and
television. The Agreement listed the services SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.3
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and
P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th
and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads:
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Dear Mr. Lopez,

We would like to call your attention to the Agreement dated May 1994 entered into by your
goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his
programs and career. We consider these acts of the station violative of the Agreement and the
station as in breach thereof. In this connection, we hereby serve notice of rescission of said
Agreement at our instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount
stipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the other
benefits under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y. SONZA
President and Gen. Manager4
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his
salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and
amounts due under the Employees Stock Option Plan ("ESOP").
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship
existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank,
Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same bank
where ABS-CBN deposited SONZAs talent fees and other payments due him under the Agreement.
In his Order dated 2 December 1996, the Labor Arbiter5 denied the motion to dismiss and directed the
parties to file their respective position papers. The Labor Arbiter ruled:
In this instant case, complainant for having invoked a claim that he was an employee of respondent
company until April 15, 1996 and that he was not paid certain claims, it is sufficient enough as to
confer jurisdiction over the instant case in this Office. And as to whether or not such claim would
entitle complainant to recover upon the causes of action asserted is a matter to be resolved only
after and as a result of a hearing. Thus, the respondents plea of lack of employer-employee
relationship may be pleaded only as a matter of defense. It behooves upon it the duty to prove that
there really is no employer-employee relationship between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution. The parties submitted their position
papers on 24 February 1997.
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On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with Motion to Expunge
Respondents Annex 4 and Annex 5 from the Records. Annexes 4 and 5 are affidavits of ABS-CBNs
witnesses Soccoro Vidanes and Rolando V. Cruz. These witnesses stated in their affidavits that the
prevailing practice in the television and broadcast industry is to treat talents like SONZA as independent
contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction. 6
The pertinent parts of the decision read as follows:
xxx
While Philippine jurisprudence has not yet, with certainty, touched on the "true nature of the
contract of a talent," it stands to reason that a "talent" as above-described cannot be considered as
an employee by reason of the peculiar circumstances surrounding the engagement of his services.
It must be noted that complainant was engaged by respondent by reason of his peculiar skills and
talent as a TV host and a radio broadcaster. Unlike an ordinary employee, he was free to perform
the services he undertook to render in accordance with his own style. The benefits conferred to
complainant under the May 1994 Agreement are certainly very much higher than those generally
given to employees. For one, complainant Sonzas monthly talent fees amount to a staggering
P317,000. Moreover, his engagement as a talent was covered by a specific contract. Likewise, he
was not bound to render eight (8) hours of work per day as he worked only for such number of
hours as may be necessary.
The fact that per the May 1994 Agreement complainant was accorded some benefits normally given
to an employee is inconsequential. Whatever benefits complainant enjoyed arose from specific
agreement by the parties and not by reason of employer-employee relationship. As correctly put
by the respondent, "All these benefits are merely talent fees and other contractual benefits and
should not be deemed as salaries, wages and/or other remuneration accorded to an employee,
notwithstanding the nomenclature appended to these benefits. Apropos to this is the rule that the
term or nomenclature given to a stipulated benefit is not controlling, but the intent of the parties to
the Agreement conferring such benefit."
The fact that complainant was made subject to respondents Rules and Regulations, likewise, does
not detract from the absence of employer-employee relationship. As held by the Supreme Court,
"The line should be drawn between rules that merely serve as guidelines towards the achievement
of the mutually desired result without dictating the means or methods to be employed in attaining
it, and those that control or fix the methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means to achieve it." (Insular
Life Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November 15, 1989).
x x x (Emphasis supplied)7
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the Labor
Arbiters decision. SONZA filed a motion for reconsideration, which the NLRC denied in its Resolution
dated 3 July 1998.
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On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals assailing the
decision and resolution of the NLRC. On 26 March 1999, the Court of Appeals rendered a Decision
dismissing the case.8
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRCs finding that no employer-employee relationship existed
between SONZA and ABS-CBN. Adopting the NLRCs decision, the appellate court quoted the following
findings of the NLRC:
x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as
an agent of complainant Sonza, the principal. By all indication and as the law puts it, the act of the
agent is the act of the principal itself. This fact is made particularly true in this case, as admittedly
MJMDC is a management company devoted exclusively to managing the careers of Mr. Sonza and
his broadcast partner, Mrs. Carmela C. Tiangco. (Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC,
and not between ABS-CBN and MJMDC. This is clear from the provisions of the May 1994
Agreement which specifically referred to MJMDC as the AGENT. As a matter of fact, when
complainant herein unilaterally rescinded said May 1994 Agreement, it was MJMDC which issued
the notice of rescission in behalf of Mr. Sonza, who himself signed the same in his capacity as
President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically, the
parties to the said agreements are ABS-CBN and Mr. Sonza. And it is only in the May 1994
Agreement, which is the latest Agreement executed between ABS-CBN and Mr. Sonza, that MJMDC
figured in the said Agreement as the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN such that
there exist[s] employer-employee relationship between the latter and Mr. Sonza. On the contrary,
We find it indubitable, that MJMDC is an agent, not of ABS-CBN, but of the talent/contractor Mr.
Sonza, as expressly admitted by the latter and MJMDC in the May 1994 Agreement.
It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to the
regular courts, the same being in the nature of an action for alleged breach of contractual
obligation on the part of respondent-appellee. As squarely apparent from complainant-appellants
Position Paper, his claims for compensation for services, 13th month pay, signing bonus and travel
allowance against respondent-appellee are not based on the Labor Code but rather on the
provisions of the May 1994 Agreement, while his claims for proceeds under Stock Purchase
Agreement are based on the latter. A portion of the Position Paper of complainant-appellant bears
perusal:
Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bound
itself to pay complainant a signing bonus consisting of shares of stockswith FIVE
HUNDRED THOUSAND PESOS (P500,000.00).
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Similarly, complainant is also entitled to be paid 13th month pay based on an amount not
lower than the amount he was receiving prior to effectivity of (the) Agreement.
Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable
travel benefit amounting to at least One Hundred Fifty Thousand Pesos (P150,000.00) per
year.
Thus, it is precisely because of complainant-appellants own recognition of the fact that his
contractual relations with ABS-CBN are founded on the New Civil Code, rather than the Labor Code,
that instead of merely resigning from ABS-CBN, complainant-appellant served upon the latter a
notice of rescission of Agreement with the station, per his letter dated April 1, 1996, which
asserted that instead of referring to unpaid employee benefits, he is waiving and renouncing
recovery of the remaining amount stipulated in paragraph 7 of the Agreement but reserves the
right to such recovery of the other benefits under said Agreement. (Annex 3 of the respondent
ABS-CBNs Motion to Dismiss dated July 10, 1996).
Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the
Stock Purchase Agreement by respondent-appellee that complainant-appellant filed his complaint.
Complainant-appellants claims being anchored on the alleged breach of contract on the part of
respondent-appellee, the same can be resolved by reference to civil law and not to labor law.
Consequently, they are within the realm of civil law and, thus, lie with the regular courts. As held in
the case of Dai-Chi Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994, an
action for breach of contractual obligation is intrinsically a civil dispute.9 (Emphasis supplied)
The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA and
ABS-CBN is a factual question that is within the jurisdiction of the NLRC to resolve. 10 A special civil action
for certiorari extends only to issues of want or excess of jurisdiction of the NLRC. 11 Such action cannot
cover an inquiry into the correctness of the evaluation of the evidence which served as basis of the NLRCs
conclusion.12 The Court of Appeals added that it could not re-examine the parties evidence and substitute
the factual findings of the NLRC with its own.13
The Issue
In assailing the decision of the Court of Appeals, SONZA contends that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISION AND REFUSING TO
FIND THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN,
DESPITE THE WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH
A FINDING.14
The Courts Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the
NLRC ruling which upheld the Labor Arbiters dismissal of the case for lack of jurisdiction.
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The present controversy is one of first impression. Although Philippine labor laws and jurisprudence define
clearly the elements of an employer-employee relationship, this is the first time that the Court will resolve
the nature of the relationship between a television and radio station and one of its "talents." There is no
case law stating that a radio and television program host is an employee of the broadcast station.
The instant case involves big names in the broadcast industry, namely Jose "Jay" Sonza, a known television
and radio personality, and ABS-CBN, one of the biggest television and radio networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of ABSCBN. On the other hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction because SONZA was an
independent contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship is a question of fact. Appellate courts accord the
factual findings of the Labor Arbiter and the NLRC not only respect but also finality when supported by
substantial evidence.15 Substantial evidence means such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.16 A party cannot prove the absence of substantial evidence by
simply pointing out that there is contrary evidence on record, direct or circumstantial. The Court does not
substitute its own judgment for that of the tribunal in determining where the weight of evidence lies or
what evidence is credible.17
SONZA maintains that all essential elements of an employer-employee relationship are present in this case.
Case law has consistently held that the elements of an employer-employee relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the employee on the means and methods by which the work is
accomplished.18 The last element, the so-called "control test", is the most important element.19
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAs services to co-host its television and radio programs because of SONZAs
peculiar skills, talent and celebrity status. SONZA contends that the "discretion used by respondent in
specifically selecting and hiring complainant over other broadcasters of possibly similar experience and
qualification as complainant belies respondents claim of independent contractorship."
Independent contractors often present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his
unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative,
but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique
skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but
would have hired him through its personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We
must consider all the circumstances of the relationship, with the control test being the most important
element.
B. Payment of Wages
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ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA
asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out
that ABS-CBN granted him benefits and privileges "which he would not have enjoyed if he were truly the
subject of a valid job contract."
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If
SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as
"SSS, Medicare, x x x and 13th month pay"20 which the law automatically incorporates into every employeremployee contract.21 Whatever benefits SONZA enjoyed arose from contract and not because of an
employer-employee relationship.22
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of
the ordinary that they indicate more an independent contractual relationship rather than an employeremployee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAs
unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting
alone possessed enough bargaining power to demand and receive such huge talent fees for his services.
The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance
indicative, but not conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as
an independent contractor. The parties expressly agreed on such mode of payment. Under the
Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee
accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA
failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such
as retrenchment to prevent losses as provided under labor laws.23
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as "AGENT and Jay
Sonza shall faithfully and completely perform each condition of this Agreement." 24 Even if it suffered
severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay
SONZAs talent fees during the life of the Agreement. This circumstance indicates an independent
contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his
talent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement to continue paying SONZAs
talent fees during the remaining life of the Agreement even if ABS-CBN cancelled SONZAs programs
through no fault of SONZA.25
SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement as an admission that he
is not an employee of ABS-CBN. The Labor Arbiter stated that "if it were true that complainant was really
an employee, he would merely resign, instead." SONZA did actually resign from ABS-CBN but he also, as
president of MJMDC, rescinded the Agreement. SONZAs letter clearly bears this out. 26 However, the
manner by which SONZA terminated his relationship with ABS-CBN is immaterial. Whether SONZA
rescinded the Agreement or resigned from work does not determine his status as employee or
independent contractor.
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D. Power of Control
Since there is no local precedent on whether a radio and television program host is an employee or an
independent contractor, we refer to foreign case law in analyzing the present case. The United States
Court of Appeals, First Circuit, recently held in Alberty-Vlez v. Corporacin De Puerto Rico Para La Difusin
Pblica ("WIPR")27 that a television program host is an independent contractor. We quote the following
findings of the U.S. court:
Several factors favor classifying Alberty as an independent contractor. First, a television actress is a
skilled position requiring talent and training not available on-the-job. x x x In this regard, Alberty
possesses a masters degree in public communications and journalism; is trained in dance, singing,
and modeling; taught with the drama department at the University of Puerto Rico; and acted in
several theater and television productions prior to her affiliation with "Desde Mi Pueblo." Second,
Alberty provided the "tools and instrumentalities" necessary for her to perform. Specifically, she
provided, or obtained sponsors to provide, the costumes, jewelry, and other image-related supplies
and services necessary for her appearance. Alberty disputes that this factor favors independent
contractor status because WIPR provided the "equipment necessary to tape the show." Albertys
argument is misplaced. The equipment necessary for Alberty to conduct her job as host of "Desde
Mi Pueblo" related to her appearance on the show. Others provided equipment for filming and
producing the show, but these were not the primary tools that Alberty used to perform her
particular function. If we accepted this argument, independent contractors could never work on
collaborative projects because other individuals often provide the equipment required for different
aspects of the collaboration. x x x
Third, WIPR could not assign Alberty work in addition to filming "Desde Mi Pueblo." Albertys
contracts with WIPR specifically provided that WIPR hired her "professional services as Hostess for
the Program Desde Mi Pueblo." There is no evidence that WIPR assigned Alberty tasks in addition
to work related to these tapings. x x x28 (Emphasis supplied)
Applying the control test to the present case, we find that SONZA is not an employee but an independent
contractor. The control test is the most important test our courts apply in distinguishing an employee from
an independent contractor.29 This test is based on the extent of control the hirer exercises over a worker.
The greater the supervision and control the hirer exercises, the more likely the worker is deemed an
employee. The converse holds true as well the less control the hirer exercises, the more likely the worker
is considered an independent contractor.30
First, SONZA contends that ABS-CBN exercised control over the means and methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the "Mel &
Jay" programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only
needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio
were outside ABS-CBNs control. SONZA did not have to render eight hours of work per day. The
Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and postproduction staff meetings.31 ABS-CBN could not dictate the contents of SONZAs script. However, the
Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests.32 The clear implication
is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN
or its interests.
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We find that ABS-CBN was not involved in the actual performance that produced the finished product of
SONZAs work.33 ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the
right to modify the program format and airtime schedule "for more effective programming."34 ABS-CBNs
sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not
exercise control over the means and methods of performance of SONZAs work.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means
and methods of the performance of his work. Although ABS-CBN did have the option not to broadcast
SONZAs show, ABS-CBN was still obligated to pay SONZAs talent fees... Thus, even if ABS-CBN was
completely dissatisfied with the means and methods of SONZAs performance of his work, or even with
the quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN
could do is not to broadcast SONZAs show but ABS-CBN must still pay his talent fees in full.35
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue
paying in full SONZAs talent fees, did not amount to control over the means and methods of the
performance of SONZAs work. ABS-CBN could not terminate or discipline SONZA even if the means and
methods of performance of his work - how he delivered his lines and appeared on television - did not meet
ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result of SONZAs work,
whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZAs talent fees in
full until the expiry of the Agreement.
In Vaughan, et al. v. Warner, et al.,36 the United States Circuit Court of Appeals ruled that vaudeville
performers were independent contractors although the management reserved the right to delete
objectionable features in their shows. Since the management did not have control over the manner of
performance of the skills of the artists, it could only control the result of the work by deleting
objectionable features.37
SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and
crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel & Jay"
programs. However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA
needed to perform his job. What SONZA principally needed were his talent or skills and the costumes
necessary for his appearance.38 Even though ABS-CBN provided SONZA with the place of work and the
necessary equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and
control his work. ABS-CBNs sole concern was for SONZA to display his talent during the airing of the
programs.39
A radio broadcast specialist who works under minimal supervision is an independent contractor. 40
SONZAs work as television and radio program host required special skills and talent, which SONZA
admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control over
how SONZA utilized his skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its
rules and standards of performance. SONZA claims that this indicates ABS-CBNs control "not only [over]
his manner of work but also the quality of his work."
The Agreement stipulates that SONZA shall abide with the rules and standards of performance "covering
talents"41 of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of
performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the
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Agreement refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas
(KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics."42 The KBP code applies
to broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily
employees of radio and television stations. Clearly, the rules and standards of performance referred to in
the Agreement are those applicable to talents and not to employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an
employee of the former.43 In this case, SONZA failed to show that these rules controlled his performance.
We find that these general rules are merely guidelines towards the achievement of the mutually desired
result, which are top-rating television and radio programs that comply with standards of the industry. We
have ruled that:
Further, not every form of control that a party reserves to himself over the conduct of the other party in
relation to the services being rendered may be accorded the effect of establishing an employer-employee
relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In
said case, we held that:
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the result and the means
used to achieve it.44
The Vaughan case also held that one could still be an independent contractor although the hirer reserved
certain supervision to insure the attainment of the desired result. The hirer, however, must not deprive the
one hired from performing his services according to his own initiative.45
Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of control
which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an employee of
ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In
the broadcast industry, exclusivity is not necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. 46 This
practice is not designed to control the means and methods of work of the talent, but simply to protect the
investment of the broadcast station. The broadcast station normally spends substantial amounts of
money, time and effort "in building up its talents as well as the programs they appear in and thus expects
that said talents remain exclusive with the station for a commensurate period of time." 47 Normally, a much
higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In
short, the huge talent fees partially compensates for exclusivity, as in the present case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his services
to ABS-CBN. The Labor Arbiter ruled that as a talent of MJMDC, SONZA is not an employee of ABS-CBN.
SONZA insists that MJMDC is a "labor-only" contractor and ABS-CBN is his employer.
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In a labor-only contract, there are three parties involved: (1) the "labor-only" contractor; (2) the employee
who is ostensibly under the employ of the "labor-only" contractor; and (3) the principal who is deemed the
real employer. Under this scheme, the "labor-only" contractor is the agent of the principal. The law makes
the principal responsible to the employees of the "labor-only contractor" as if the principal itself directly
hired or employed the employees.48 These circumstances are not present in this case.
There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-CBN.
MJMDC merely acted as SONZAs agent. The Agreement expressly states that MJMDC acted as the
"AGENT" of SONZA. The records do not show that MJMDC acted as ABS-CBNs agent. MJMDC, which
stands for Mel and Jay Management and Development Corporation, is a corporation organized and owned
by SONZA and TIANGCO. The President and General Manager of MJMDC is SONZA himself. It is absurd to
hold that MJMDC, which is owned, controlled, headed and managed by SONZA, acted as agent of ABS-CBN
in entering into the Agreement with SONZA, who himself is represented by MJMDC. That would make
MJMDC the agent of both ABS-CBN and SONZA.
As SONZA admits, MJMDC is a management company devoted exclusively to managing the careers of
SONZA and his broadcast partner, TIANGCO. MJMDC is not engaged in any other business, not even job
contracting. MJMDC does not have any other function apart from acting as agent of SONZA or TIANGCO to
promote their careers in the broadcast and television industry.49
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979
finally settled the status of workers in the broadcast industry. Under this policy, the types of employees in
the broadcast industry are the station and program employees.
Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law.
There is no legal presumption that Policy Instruction No. 40 determines SONZAs status. A mere executive
issuance cannot exclude independent contractors from the class of service providers to the broadcast
industry. The classification of workers in the broadcast industry into only two groups under Policy
Instruction No. 40 is not binding on this Court, especially when the classification has no basis either in law
or in fact.
Affidavits of ABS-CBNs Witnesses
SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanes and Rolando Cruz
without giving his counsel the
opportunity to cross-examine these witnesses. SONZA brands these witnesses as incompetent to attest on
the prevailing practice in the radio and television industry. SONZA views the affidavits of these witnesses
as misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBNs witnesses, he was never prevented from denying or
refuting the allegations in the affidavits. The Labor Arbiter has the discretion whether to conduct a formal
(trial-type) hearing after the submission of the position papers of the parties, thus:
Section 3. Submission of Position Papers/Memorandum
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xxx
These verified position papers shall cover only those claims and causes of action raised in the
complaint excluding those that may have been amicably settled, and shall be accompanied by all
supporting documents including the affidavits of their respective witnesses which shall take the
place of the latters direct testimony. x x x
Section 4. Determination of Necessity of Hearing. Immediately after the submission of the parties
of their position papers/memorandum, the Labor Arbiter shall motu propio determine whether
there is need for a formal trial or hearing. At this stage, he may, at his discretion and for the
purpose of making such determination, ask clarificatory questions to further elicit facts or
information, including but not limited to the subpoena of relevant documentary evidence, if any
from any party or witness.50
The Labor Arbiter can decide a case based solely on the position papers and the supporting documents
without a formal trial.51 The holding of a formal hearing or trial is something that the parties cannot
demand as a matter of right.52 If the Labor Arbiter is confident that he can rely on the documents before
him, he cannot be faulted for not conducting a formal trial, unless under the particular circumstances of
the case, the documents alone are insufficient. The proceedings before a Labor Arbiter are non-litigious in
nature. Subject to the requirements of due process, the technicalities of law and the rules obtaining in the
courts of law do not strictly apply in proceedings before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to
treat talents like SONZA as independent contractors. SONZA argues that if such practice exists, it is void
for violating the right of labor to security of tenure.
The right of labor to security of tenure as guaranteed in the Constitution53 arises only if there is an
employer-employee relationship under labor laws. Not every performance of services for a fee creates an
employer-employee relationship. To hold that every person who renders services to another for a fee is an
employee - to give meaning to the security of tenure clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent
contractors. The right to life and livelihood guarantees this freedom to contract as independent
contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed
with special skills, expertise and talent, of his right to contract as an independent contractor. An individual
like an artist or talent has a right to render his services without any one controlling the means and
methods by which he performs his art or craft. This Court will not interpret the right of labor to security of
tenure to compel artists and talents to render their services only as employees. If radio and television
program hosts can render their services only as employees, the station owners and managers can dictate
to the radio and television hosts what they say in their shows. This is not conducive to freedom of the
press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code ("NIRC")54 in relation to Republic Act No. 7716,55 as amended by
Republic Act No. 8241,56 treats talents, television and radio broadcasters differently. Under the NIRC, these
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professionals are subject to the 10% value-added tax ("VAT") on services they render. Exempted from the
VAT are those under an employer-employee relationship.57 This different tax treatment accorded to talents
and broadcasters bolters our conclusion that they are independent contractors, provided all the basic
elements of a contractual relationship are present as in this case.
Nature of SONZAs Claims
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service
incentive leave, signing bonus, travel allowance, and amounts due under the Employee Stock Option Plan.
We agree with the findings of the Labor Arbiter and the Court of Appeals that SONZAs claims are all based
on the May 1994 Agreement and stock option plan, and not on the Labor Code. Clearly, the present case
does not call for an application of the Labor Code provisions but an interpretation and implementation of
the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a
civil dispute cognizable by the regular courts.58
WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals dated 26 March 1999 in
CA-G.R. SP No. 49190 is AFFIRMED. Costs against petitioner.
SO ORDERED.
3. Javier v. Flyace Corp. Feb 15, 2012

G.R. No. 192558
February 15, 2012
BITOY JAVIER (DANILO P. JAVIER), Petitioner,

vs.
FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents.
DECISION
MENDOZA, J.:
This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision 1 of the
Court of Appeals (CA) and its June 7, 2010 Resolution,2 in CA-G.R. SP No. 109975, which reversed the May
28, 2009 Decision3 of the National Labor Relations Commission (NLRC) in the case entitled Bitoy Javier v. Fly
Ace/Flordelyn Castillo,4 holding that petitioner Bitoy Javier (Javier) was illegally dismissed from employment
and ordering Fly Ace Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor
standard benefits. He alleged that he was an employee of Fly Ace since September 2007, performing
various tasks at the respondents warehouse such as cleaning and arranging the canned items before their
delivery to certain locations, except in instances when he would be ordered to accompany the companys
delivery vehicles, as pahinante; that he reported for work from Monday to Saturday from 7:00 oclock in
the morning to 5:00 oclock in the afternoon; that during his employment, he was not issued an
identification card and payslips by the company; that on May 6, 2008, he reported for work but he was no
longer allowed to enter the company premises by the security guard upon the instruction of Ruben Ong
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(Mr. Ong), his superior;5 that after several minutes of begging to the guard to allow him to enter, he saw
Ong whom he approached and asked why he was being barred from entering the premises; that Ong
replied by saying, "Tanungin mo anak mo;" 6 that he then went home and discussed the matter with his
family; that he discovered that Ong had been courting his daughter Annalyn after the two met at a fiesta
celebration in Malabon City; that Annalyn tried to talk to Ong and convince him to spare her father from
trouble but he refused to accede; that thereafter, Javier was terminated from his employment without
notice; and that he was neither given the opportunity to refute the cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier
was a stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was
subscribed before the Labor Arbiter (LA).7
For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries.
Sometime in December 2007, Javier was contracted by its employee, Mr. Ong, as extra helper on a pakyaw
basis at an agreed rate of P 300.00 per trip, which was later increased to P 325.00 in January 2008. Mr. Ong
contracted Javier roughly 5 to 6 times only in a month whenever the vehicle of its contracted hauler,
Milmar Hauling Services, was not available. On April 30, 2008, Fly Ace no longer needed the services of
Javier. Denying that he was their employee, Fly Ace insisted that there was no illegal dismissal. 8 Fly Ace
submitted a copy of its agreement with Milmar Hauling Services and copies of acknowledgment receipts
evidencing payment to Javier for his contracted services bearing the words, "daily manpower
(pakyaw/piece rate pay)" and the latters signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to
present proof that he was a regular employee of Fly Ace. He wrote:
Complainant has no employee ID showing his employment with the Respondent nor any document
showing that he received the benefits accorded to regular employees of the Respondents. His contention
that Respondent failed to give him said ID and payslips implies that indeed he was not a regular employee
of Fly Ace considering that complainant was a helper and that Respondent company has contracted a
regular trucking for the delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries. Since
there is a regular hauler to deliver its products, we give credence to Respondents claim that complainant
was contracted on "pakiao" basis.
As to the claim for underpayment of salaries, the payroll presented by the Respondents showing salaries
of workers on "pakiao" basis has evidentiary weight because although the signature of the complainant
appearing thereon are not uniform, they appeared to be his true signature.
xxxx
Hence, as complainant received the rightful salary as shown by the above described payrolls, Respondents
are not liable for salary differentials. 9
Ruling of the NLRC
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On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and
immediately concluded that he was not a regular employee simply because he failed to present proof. It
was of the view that a pakyaw-basis arrangement did not preclude the existence of employer-employee
relationship. "Payment by result x x x is a method of compensation and does not define the essence of the
relation. It is a mere method of computing compensation, not a basis for determining the existence or
absence of an employer-employee relationship.10" The NLRC further averred that it did not follow that a
worker was a job contractor and not an employee, just because the work he was doing was not directly
related to the employers trade or business or the work may be considered as "extra" helper as in this
case; and that the relationship of an employer and an employee was determined by law and the same
would prevail whatever the parties may call it. In this case, the NLRC held that substantial evidence was
sufficient basis for judgment on the existence of the employer-employee relationship. Javier was a regular
employee of Fly Ace because there was reasonable connection between the particular activity performed
by the employee (as a "pahinante") in relation to the usual business or trade of the employer (importation,
sales and delivery of groceries). He may not be considered as an independent contractor because he could
not exercise any judgment in the delivery of company products. He was only engaged as a "helper."
Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For
failing to present proof of a valid cause for his termination, Fly Ace was found to be liable for illegal
dismissal of Javier who was likewise entitled to backwages and separation pay in lieu of reinstatement.
The NLRC thus ordered:
WHEREFORE, premises considered, complainants appeal is partially GRANTED. The assailed Decision of
the labor arbiter is VACATED and a new one is hereby entered holding respondent FLY ACE CORPORATION
guilty of illegal dismissal and non-payment of 13th month pay. Consequently, it is hereby ordered to pay
complainant DANILO "Bitoy" JAVIER the following:
1. Backwages -P 45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -P 59,854.16
All other claims are dismissed for lack of merit.
SO ORDERED.11
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace
and reinstated the dismissal of Javiers complaint as ordered by the LA. The CA exercised its authority to
make its own factual determination anent the issue of the existence of an employer-employee relationship
between the parties. According to the CA:
xxx
In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a
valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship
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must first be established. x x x it is incumbent upon private respondent to prove the employee-employer
relationship by substantial evidence.
xxx
It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of
petitioners, but he failed to discharge his burden. The non-issuance of a company-issued identification card
to private respondent supports petitioners contention that private respondent was not its employee.12
The CA likewise added that Javiers failure to present salary vouchers, payslips, or other pieces of evidence
to bolster his contention, pointed to the inescapable conclusion that he was not an employee of Fly Ace.
Further, it found that Javiers work was not necessary and desirable to the business or trade of the
company, as it was only when there were scheduled deliveries, which a regular hauling service could not
deliver, that Fly Ace would contract the services of Javier as an extra helper. Lastly, the CA declared that
the facts alleged by Javier did not pass the "control test."
He contracted work outside the company premises; he was not required to observe definite hours of
work; he was not required to report daily; and he was free to accept other work elsewhere as there was no
exclusivity of his contracted service to the company, the same being co-terminous with the trip only.13
Since no substantial evidence was presented to establish an employer-employee relationship, the case for
illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER WAS
NOT A REGULAR EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER IS
NOT ENTITLED TO HIS MONETARY CLAIMS.14
The petitioner contends that other than its bare allegations and self-serving affidavits of the other
employees, Fly Ace has nothing to substantiate its claim that Javier was engaged on a pakyaw basis.
Assuming that Javier was indeed hired on a pakyaw basis, it does not preclude his regular employment
with the company. Even the acknowledgment receipts bearing his signature and the confirming receipt of
his salaries will not show the true nature of his employment as they do not reflect the necessary details of
the commissioned task. Besides, Javiers tasks as pahinante are related, necessary and desirable to the line
of business by Fly Ace which is engaged in the importation and sale of grocery items. "On days when there
were no scheduled deliveries, he worked in petitioners warehouse, arranging and cleaning the stored cans
for delivery to clients."15 More importantly, Javier was subject to the control and supervision of the
company, as he was made to report to the office from Monday to Saturday, from 7:00 oclock in the
morning until 5:00 oclock in the afternoon. The list of deliverable goods, together with the corresponding
clients and their respective purchases and addresses, would necessarily have been prepared by Fly Ace.
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Clearly, he was subjected to compliance with company rules and regulations as regards working hours,
delivery schedule and output, and his other duties in the warehouse.16
The petitioner chiefly relied on Chavez v. NLRC,17 where the Court ruled that payment to a worker on a per
trip basis is not significant because "this is merely a method of computing compensation and not a basis
for determining the existence of employer-employee relationship." Javier likewise invokes the rule that,
"in controversies between a laborer and his master, x x x doubts reasonably arising from the evidence
should be resolved in the formers favour. The policy is reflected is no less than the Constitution, Labor
Code and Civil Code."18
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latters
failure to observe substantive and procedural due process. Since his dismissal was not based on any of the
causes recognized by law, and was implemented without notice, Javier is entitled to separation pay and
backwages.
In its Comment,19 Fly Ace insists that there was no substantial evidence to prove employer-employee
relationship. Having a service contract with Milmar Hauling Services for the purpose of transporting and
delivering company products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a
mere "per trip basis." Javier, who was actually a loiterer in the area, only accompanied and assisted the
company driver when Milmar could not deliver or when the exigency of extra deliveries arises for roughly
five to six times a month. Before making a delivery, Fly Ace would turn over to the driver and Javier the
delivery vehicle with its loaded company products. With the vehicle and products in their custody, the
driver and Javier "would leave the company premises using their own means, method, best judgment and
discretion on how to deliver, time to deliver, where and [when] to start, and manner of delivering the
products."20
Fly Ace dismisses Javiers claims of employment as baseless assertions. Aside from his bare allegations, he
presented nothing to substantiate his status as an employee. "It is a basic rule of evidence that each party
must prove his affirmative allegation. If he claims a right granted by law, he must prove his claim by
competent evidence, relying on the strength of his own evidence and not upon the weakness of his
opponent."21 Invoking the case of Lopez v. Bodega City,22 Fly Ace insists that in an illegal dismissal case, the
burden of proof is upon the complainant who claims to be an employee. It is essential that an employeremployee relationship be proved by substantial evidence. Thus, it cites:
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an
employee was for a valid cause. However, before a case for illegal dismissal can prosper, an employeremployee relationship must first be established.
Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, "which
are unfortunately not supported by proof, documentary or otherwise."23 Javier simply assumed that he
was an employee of Fly Ace, absent any competent or relevant evidence to support it. "He performed his
contracted work outside the premises of the respondent; he was not even required to report to work at
regular hours; he was not made to register his time in and time out every time he was contracted to work;
he was not subjected to any disciplinary sanction imposed to other employees for company violations; he
was not issued a company I.D.; he was not accorded the same benefits given to other employees; he was
not registered with the Social Security System (SSS) as petitioners employee; and, he was free to leave,
accept and engage in other means of livelihood as there is no exclusivity of his contracted services with the
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petitioner, his services being co-terminus with the trip only. All these lead to the conclusion that petitioner
is not an employee of the respondents."24
Moreover, Fly Ace claims that it had "no right to control the result, means, manner and methods by which
Javier would perform his work or by which the same is to be accomplished." 25 In other words, Javier and
the company driver were given a free hand as to how they would perform their contracted services and
neither were they subjected to definite hours or condition of work.
Fly Ace likewise claims that Javiers function as a pahinante was not directly related or necessary to its
principal business of importation and sales of groceries. Even without Javier, the business could operate its
usual course as it did not involve the business of inland transportation. Lastly, the acknowledgment
receipts bearing Javiers signature and words "pakiao rate," referring to his earned salaries on a per trip
basis, have evidentiary weight that the LA correctly considered in arriving at the conclusion that Javier was
not an employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged illegal dismissal is anchored on the existence of an
employer-employee relationship between him and Fly Ace. This is essentially a question of fact. Generally,
the Court does not review errors that raise factual questions. However, when there is conflict among the
factual findings of the antecedent deciding bodies like the LA, the NLRC and the CA, "it is proper, in the
exercise of Our equity jurisdiction, to review and re-evaluate the factual issues and to look into the records
of the case and re-examine the questioned findings."26 In dealing with factual issues in labor cases,
"substantial evidence that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion is sufficient."27
As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as wanting
and deficient. The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of
Procedure of the NLRC28 allows a relaxation of the rules of procedure and evidence in labor cases, this rule
of liberality does not mean a complete dispensation of proof. Labor officials are enjoined to use
reasonable means to ascertain the facts speedily and objectively with little regard to technicalities or
formalities but nowhere in the rules are they provided a license to completely discount evidence, or the
lack of it. The quantum of proof required, however, must still be satisfied. Hence, "when confronted with
conflicting versions on factual matters, it is for them in the exercise of discretion to determine which party
deserves credence on the basis of evidence received, subject only to the requirement that their decision
must be supported by substantial evidence."29 Accordingly, the petitioner needs to show by substantial
evidence that he was indeed an employee of the company against which he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and
cheese. It is, therefore, incumbent upon the Court to determine whether the party on whom the burden to
prove lies was able to hurdle the same. "No particular form of evidence is required to prove the existence
of such employer-employee relationship. Any competent and relevant evidence to prove the relationship
may be admitted.http://www.lawphil.net/judjuris/juri2009/may2009/gr_179652_2009.html - fnt31 Hence,
while no particular form of evidence is required, a finding that such relationship exists must still rest on
some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as
well as its qualitative aspects."30 Although substantial evidence is not a function of quantity but rather of
quality, the x x x circumstances of the instant case demand that something more should have been
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proffered. Had there been other proofs of employment, such as x x x inclusion in petitioners payroll, or a
clear exercise of control, the Court would have affirmed the finding of employer-employee relationship."31
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such
claim by the requisite quantum of evidence.32 "Whoever claims entitlement to the benefits provided by law
should establish his or her right thereto x x x."33 Sadly, Javier failed to adduce substantial evidence as basis
for the grant of relief.
In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace.
By way of evidence on this point, all that Javier presented were his self-serving statements purportedly
showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality
requirement to support his claim. Hence, the Court sees no reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in
the company premises during weekdays arranging and cleaning grocery items for delivery to clients, no
other proof was submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was
unsuccessful in strengthening Javiers cause. In said document, all Valenzuela attested to was that he
would frequently see Javier at the workplace where the latter was also hired as stevedore. 34 Certainly, in
gauging the evidence presented by Javier, the Court cannot ignore the inescapable conclusion that his
mere presence at the workplace falls short in proving employment therein. The supporting affidavit could
have, to an extent, bolstered Javiers claim of being tasked to clean grocery items when there were no
scheduled delivery trips, but no information was offered in this subject simply because the witness had no
personal knowledge of Javiers employment status in the company. Verily, the Court cannot accept Javiers
statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to
determine the existence of an employer-employee relationship, viz: (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
employees conduct. Of these elements, the most important criterion is whether the employer controls or
has reserved the right to control the employee not only as to the result of the work but also as to the
means and methods by which the result is to be accomplished.35
In this case, Javier was not able to persuade the Court that the above elements exist in his case.1avvphi1 He
could not submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace
paid his wages as an employee, or that Fly Ace could dictate what his conduct should be while at work. In
other words, Javiers allegations did not establish that his relationship with Fly Ace had the attributes of an
employer-employee relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not
able to refute Fly Aces assertion that it had an agreement with a hauling company to undertake the
delivery of its goods. It was also baffling to realize that Javier did not dispute Fly Aces denial of his
services exclusivity to the company. In short, all that Javier laid down were bare allegations without
corroborative proof.
Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as a stevedore, albeit
on a pakyaw basis. The Court cannot fail to note that Fly Ace presented documentary proof that Javier was
indeed paid on a pakyaw basis per the acknowledgment receipts admitted as competent evidence by the
LA. Unfortunately for Javier, his mere denial of the signatures affixed therein cannot automatically sway us
to ignore the documents because "forgery cannot be presumed and must be proved by clear, positive and
convincing evidence and the burden of proof lies on the party alleging forgery." 36
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Considering the above findings, the Court does not see the necessity to resolve the second issue
presented.
One final note. The Courts decision does not contradict the settled rule that "payment by the piece is just
a method of compensation and does not define the essence of the relation." 37 Payment on a piece-rate
basis does not negate regular employment. "The term wage is broadly defined in Article 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations. Nor does the fact that the petitioner is not
covered by the SSS affect the employer-employee relationship. However, in determining whether the
relationship is that of employer and employee or one of an independent contractor, each case must be
determined on its own facts and all the features of the relationship are to be considered." 38 Unfortunately
for Javier, the attendant facts and circumstances of the instant case do not provide the Court with
sufficient reason to uphold his claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social justice and the protection of the working class,
it should not be supposed that every labor dispute will be automatically decided in favor of labor.
Management also has its rights which are entitled to respect and enforcement in the interest of simple fair
play. Out of its concern for the less privileged in life, the Court has inclined, more often than not, toward
the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not
blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of
the established facts and the applicable law and doctrine.39
WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June 7,
2010 Resolution, in CA-G.R. SP No. 109975, are hereby AFFIRMED.
SO ORDERED.
4. SMCEU v. Judge Bersamira (in Azucena)
G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES,
MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and SAN
MIGUEL CORPORATION, respondents.
Romeo C. Lagman for petitioners.
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.
MELENCIO-HERRERA, J.:
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Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this
special civil action for certiorari and Prohibition for having issued the challenged Writ of Preliminary
Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel Corporation vs. SMCEUPTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of
discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig. for short),
for its part, defends the Writ on the ground of absence of any employer-employee relationship between it
and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon) and D'Rite
Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to represent said
workers for purposes of collective bargaining. The Solicitor General agrees with the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and
D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are independent contractors
duly licensed by the Department of Labor and Employment (DOLE). SanMig entered into those contracts
to maintain its competitive position and in keeping with the imperatives of efficiency, business expansion
and diversity of its operation. In said contracts, it was expressly understood and agreed that the workers
employed by the contractors were to be paid by the latter and that none of them were to be deemed
employees or agents of SanMig. There was to be no employer-employee relation between the contractors
and/or its workers, on the one hand, and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly authorized
representative of the monthly paid rank-and-file employees of SanMig with whom the latter executed a
Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's
Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or contract
employees and workers are excluded from the bargaining unit and, therefore, outside the scope of this
Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some Lipercon and
D'Rite workers had signed up for union membership and sought the regularization of their employment
with SMC. The Union alleged that this group of employees, while appearing to be contractual workers
supposedly independent contractors, have been continuously working for SanMig for a period ranging
from six (6) months to fifteen (15) years and that their work is neither casual nor seasonal as they are
performing work or activities necessary or desirable in the usual business or trade of SanMig. Thus, it was
contended that there exists a "labor-only" contracting situation. It was then demanded that the
employment status of these workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig, the
Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex D,
Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F,
Petition).
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As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the
two (2) notices of strike were consolidated and several conciliation conferences were held to settle the
dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite
workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to
enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE
for the purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers
of LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to
demonstrate and/or picket at the plants and offices of plaintiff within the bargaining unit
referred to in the CBA,...;
d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and
D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or
picket lines and/or barricades which the defendants may set up at the plants and offices of
plaintiff within the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the other employees and/or
contract workers of plaintiff, as well as those persons lawfully transacting business with
plaintiff at the work places within the bargaining unit referred to in the CBA, ..., to compel
plaintiff to hire the employees or workers of LIPERCON and D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and
egress from, the work places within the bargaining unit referred to in the CBA .., to compel
plaintiff to hire the employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work
places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to compel plaintiff
to hire the employees or workers of LIPERCON and D'RITE. (Annex H, Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction for
hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the ground
of lack of jurisdiction over the case/nature of the action, which motion was opposed by SanMig. That
Motion was denied by respondent Judge in an Order dated 11 April 1989.
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After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned Order
(Annex A, Petition) granting the application and enjoining the Union from Committing the acts complained
of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of Preliminary
Injunction after SanMig had posted the required bond of P100,000.00 to answer for whatever damages
petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the existence of labor dispute.
Verily, this court has jurisdiction to take cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts for services with
Lipercon and D'Rite. The application and contract for employment of the defendants'
witnesses are either with Lipercon or D'Rite. What could be discerned is that there is no
employer-employee relationship between plaintiff and the contractual workers employed by
Lipercon and D'Rite. This, however, does not mean that a final determination regarding the
question of the existence of employer-employee relationship has already been made. To
finally resolve this dispute, the court must extensively consider and delve into the manner of
selection and engagement of the putative employee; the mode of payment of wages; the
presence or absence of a power of dismissal; and the Presence or absence of a power to
control the putative employee's conduct. This necessitates a full-blown trial. If the acts
complained of are not restrained, plaintiff would, undoubtedly, suffer irreparable damages.
Upon the other hand, a writ of injunction does not necessarily expose defendants to
irreparable damages.
Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the implementation
of the Injunction issued by respondent Court. The Union construed this to mean that "we can now strike,"
which it superimposed on the Order and widely circulated to entice the Union membership to go on strike.
Upon being apprised thereof, in a Resolution of 24 May 1989, we required the parties to "RESTORE the
status quo ante declaration of strike" (p. 2,62 Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen (13) of
the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation.
The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite employees were recalled,
and discussion on their other demands, such as wage distortion and appointment of coordinators, were
made. Effected eventually was a Memorandum of Agreement between SanMig and the Union that
"without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. 57055 (the case below),
the laid-off individuals ... shall be recalled effective 8 May 1989 to their former jobs or equivalent positions
under the same terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union
would immediately lift the pickets and return to work.
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LABOR LAW 1
After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9 January
1990.
The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over
the present controversy and properly issued the Writ of Preliminary Injunction to the resolution of that
question, is the matter of whether, or not the case at bar involves, or is in connection with, or relates to a
labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of
labor tribunals to the exclusion of the regular Courts.
Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or
arose out of a labor dispute and is directly connected or interwoven with the cases pending with the
NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'
Memo).
On the other hand, SanMig denies the existence of any employer-employee relationship and consequently
of any labor dispute between itself and the Union. SanMig submits, in particular, that "respondent Court is
vested with jurisdiction and judicial competence to enjoin the specific type of strike staged by petitioner
union and its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit cannot strike to compel the
employer to hire and thereby create an employment relationship with contractual workers,
especially were the contractual workers were recognized by the union, under the governing
collective bargaining agreement, as excluded from, and therefore strangers to, the
bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining representative only in the
event of a deadlock in a labor dispute over 'wages, hours of work and all other and of the
employment' of the employees in the unit. The union leaders cannot instigate a strike to
compel the employer, especially on the eve of certification elections, to hire strangers or
workers outside the unit, in the hope the latter will help re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not
arise out of a labor dispute, is an abuse of right, and violates the employer's constitutional
liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476, Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter
concerning terms and conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of employer and employee."
While it is SanMig's submission that no employer-employee relationship exists between itself, on the one
hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can nevertheless
exist "regardless of whether the disputants stand in the proximate relationship of employer and
30 | P a g e
LABOR LAW 1
employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the
terms and conditions of employment or a "change" or "arrangement" thereof (ibid). Put differently, and as
defined by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and
defendants do not stand in the proximate relation of employer and employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks is
to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that they be
absorbed into the working unit of SanMig. This matter definitely dwells on the working relationship
between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the
arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute.
Further, the Union also seeks to represent those workers, who have signed up for Union membership, for
the purpose of collective bargaining. SanMig, for its part, resists that Union demand on the ground that
there is no employer-employee relationship between it and those workers and because the demand
violates the terms of their CBA. Obvious then is that representation and association, for the purpose of
negotiating the conditions of employment are also involved. In fact, the injunction sought by SanMig was
precisely also to prevent such representation. Again, the matter of representation falls within the scope of
a labor dispute. Neither can it be denied that the controversy below is directly connected with the labor
dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-09383).
Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and D'Rite
constitute "labor-only" contracting and, therefore, a regular employer-employee relationship may, in fact,
be said to exist; whether or not the Union can lawfully represent the workers of Lipercon and D'Rite in
their demands against SanMig in the light of the existing CBA; whether or not the notice of strike was valid
and the strike itself legal when it was allegedly instigated to compel the employer to hire strangers outside
the working unit; those are issues the resolution of which call for the application of labor laws, and
SanMig's cause's of action in the Court below are inextricably linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by SanMig is
not controlling as in that case there was no controversy over terms, tenure or conditions, of employment
or the representation of employees that called for the application of labor laws. In that case, what the
petitioning union demanded was not a change in working terms and conditions, or the representation of
the employees, but that its members be hired as stevedores in the place of the members of a rival union,
which petitioners wanted discharged notwithstanding the existing contract of the arrastre company with
the latter union. Hence, the ruling therein, on the basis of those facts unique to that case, that such a
demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21 March
1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original and exclusive
jurisdiction to hear and decide the following cases involving all workers including "1. unfair labor practice
cases; 2. those that workers may file involving wages, hours of work and other terms and conditions of
employment; ... and 5. cases arising from any violation of Article 265 of this Code, including questions
involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code
would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That claim for
damages is interwoven with a labor dispute existing between the parties and would have to be ventilated
31 | P a g e
LABOR LAW 1
before the administrative machinery established for the expeditious settlement of those disputes. To allow
the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly
administration of justice (Philippine Communications, Electronics and Electricity Workers Federation vs.
Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its
best business judgment to determine whether it should contract out the performance of some of its work
to independent contractors. However, the rights of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike in accordance with law
(Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection. Those contending
interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March 1989 and
29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent Judge is enjoined from
taking any further action in Civil Case No. 57055 except for the purpose of dismissing it. The status quo ante
declaration of strike ordered by the Court on 24 May 1989 shall be observed pending the proceedings in
the National Conciliation Mediation Board-Department of Labor and Employment, docketed as NCMB-NCRNS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.
SO ORDERED.
5. Locsin et. al. v. PLDT, October 2, 2009

G.R. No. 185251
October 2, 2009
RAUL G. LOCSIN and EDDIE B. TOMAQUIN, Petitioners,

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the reversal of the May 6, 2008 Decision 1 and
November 4, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 97398, entitled Philippine
Long Distance Telephone Company v. National Labor Relations Commission, Raul G. Locsin and Eddie B.
Tomaquin. The assailed decision set aside the Resolutions of the National Labor Relations Commission
(NLRC) dated October 28, 2005 and August 28, 2006 which in turn affirmed the Decision dated February 13,
2004 of the Labor Arbiter. The assailed resolution, on the other hand, denied petitioners motion for
reconsideration of the assailed decision.
The Facts
On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and the Security
and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement 3 (Agreement)
whereby SSCP would provide armed security guards to PLDT to be assigned to its various offices.
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Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin, among other security guards,
were posted at a PLDT office.
On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the Agreement
effective October 1, 2001.4
Despite the termination of the Agreement, however, petitioners continued to secure the premises of their
assigned office. They were allegedly directed to remain at their post by representatives of respondent. In
support of their contention, petitioners provided the Labor Arbiter with copies of petitioner Locsins pay
slips for the period of January to September 2002.5
Then, on September 30, 2002, petitioners services were terminated.
Thus, petitioners filed a complaint before the Labor Arbiter for illegal dismissal and recovery of money
claims such as overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay,
Emergency Cost of Living Allowance, and moral and exemplary damages against PLDT.
The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was explained in the
Decision that petitioners were found to be employees of PLDT and not of SSCP. Such conclusion was
arrived at with the factual finding that petitioners continued to serve as guards of PLDTs offices. As such
employees, petitioners were entitled to substantive and procedural due process before termination of
employment. The Labor Arbiter held that respondent failed to observe such due process requirements.
The dispositive portion of the Labor Arbiters Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Philippine Long
Distance and Telephone Company (PLDT) to pay complainants Raul E. Locsin and Eddie Tomaquin their
separation pay and back wages computed as follows:
NAME
1. Raul E. Locsin
SEPARATION PAY BACKWAGES

P127,500.00
P240,954.67
2. Eddie B. Tomaquin P127,500.00
P240,954.67
P736,909.34
All other claims are DISMISSED for want of factual basis.

Let the computation made by the Computation and Examination Unit form part of this decision.
SO ORDERED.
PLDT appealed the above Decision to the NLRC which rendered a Resolution affirming in toto the Arbiters
Decision.
Thus, PDLT filed a Motion for Reconsideration of the NLRCs Resolution which was also denied.
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Consequently, PLDT filed a Petition for Certiorari with the CA asking for the nullification of the Resolution
issued by the NLRC as well as the Labor Arbiters Decision. The CA rendered the assailed decision granting
PLDTs petition and dismissing petitioners complaint. The dispositive portion of the CA Decision provides:
WHEREFORE, the instant Petition for Certiorari is GRANTED. The Resolutions dated October 28, 2005 and
August 28, 2006 of the National Labor Relations Commission are ANNULLED and SET ASIDE. Private
respondents complaint against Philippine Long Distance Telephone Company is DISMISSED.
SO ORDERED.
The CA applied the four-fold test in order to determine the existence of an employer-employee
relationship between the parties but did not find such relationship. It determined that SSCP was not a
labor-only contractor and was an independent contractor having substantial capital to operate and
conduct its own business. The CA further bolstered its decision by citing the Agreement whereby it was
stipulated that there shall be no employer-employee relationship between the security guards and PLDT.
Anent the pay slips that were presented by petitioners, the CA noted that those were issued by SSCP and
not PLDT; hence, SSCP continued to pay the salaries of petitioners after the Agreement. This fact allegedly
proved that petitioners continued to be employees of SSCP albeit performing their work at PLDTs
premises.
From such assailed decision, petitioners filed a motion for reconsideration which was denied in the assailed
resolution.
Hence, we have this petition.
The Issues
1. Whether or not; complainants extended services to the respondent for one (1) year from October
1, 2001, the effectivity of the termination of the contract of complainants agency SSCP, up to
September 30, 2002, without a renewed contract, constitutes an employer-employee relationship
between respondent and the complainants.
2. Whether or not; in accordance to the provision of the Article 280 of the Labor Code,
complainants extended services to the respondent for another one (1) year without a contract be
considered as contractual employment.
3. Whether or not; in accordance to the provision of the Article 280 of the Labor Code, does
complainants thirteen (13) years of service to the respondent with manifestation to the respondent
thirteen (13) years renewal of its security contract with the complainant agency SSCP, can be
considered only as "seasonal in nature" or fixed as [specific projects] or undertakings and its
completion or termination can be dictated as [controlled] by the respondent anytime they wanted
to.
4. Whether or not; complainants from being an alleged contractual employees of the respondent
for thirteen (13) years as they were then covered by a contract, becomes regular employees of the
respondent as the one (1) year extended services of the complainants were not covered by a
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contract, and can be considered as direct employment pursuant to the provision of the Article 280
of the Labor Code.
5. Whether or not; the Court of Appeals committed grave abuse of discretion when it set aside and
[annulled] the labor [arbiters] decision and of the NLRCs resolution declaring the dismissal of the
complainant as illegal.6
The Courts Ruling
This petition is hereby granted.
An Employer-Employee
Relationship Existed Between the Parties
It is beyond cavil that there was no employer-employee relationship between the parties from the time of
petitioners first assignment to respondent by SSCP in 1988 until the alleged termination of the Agreement
between respondent and SSCP. In fact, this was the conclusion that was reached by this Court in Abella v.
Philippine Long Distance Telephone Company,7 where we ruled that petitioners therein, including herein
petitioners, cannot be considered as employees of PLDT. It bears pointing out that petitioners were
among those declared to be employees of their respective security agencies and not of PLDT.
The only issue in this case is whether petitioners became employees of respondent after the Agreement
between SSCP and respondent was terminated.
This must be answered in the affirmative.
Notably, respondent does not deny the fact that petitioners remained in the premises of their offices even
after the Agreement was terminated. And it is this fact that must be explained.
To recapitulate, the CA, in rendering a decision in favor of respondent, found that: (1) petitioners failed to
prove that SSCP was a labor-only contractor; and (2) petitioners are employees of SSCP and not of PLDT.
In arriving at such conclusions, the CA relied on the provisions of the Agreement, wherein SSCP undertook
to supply PLDT with the required security guards, while furnishing PLDT with a performance bond in the
amount of PhP 707,000. Moreover, the CA gave weight to the provision in the Agreement that SSCP
warranted that it "carry on an independent business and has substantial capital or investment in the form
of equipment, work premises, and other materials which are necessary in the conduct of its business."
Further, in determining that no employer-employee relationship existed between the parties, the CA
quoted the express provision of the Agreement, stating that no employer-employee relationship existed
between the parties herein. The CA disregarded the pay slips of Locsin considering that they were in fact
issued by SSCP and not by PLDT.
From the foregoing explanation of the CA, the fact remains that petitioners remained at their post after
the termination of the Agreement. Notably, in its Comment dated March 10, 2009,8 respondent never
denied that petitioners remained at their post until September 30, 2002. While respondent denies the
alleged circumstances stated by petitioners, that they were told to remain at their post by respondents
Security Department and that they were informed by SSCP Operations Officer Eduardo Juliano that their
salaries would be coursed through SSCP as per arrangement with PLDT, it does not state why they were
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LABOR LAW 1
not made to vacate their posts. Respondent said that it did not know why petitioners remained at their
posts.
Rule 131, Section 3(y) of the Rules of Court provides:
SEC. 3. Disputable presumptions.The following presumptions are satisfactory if uncontradicted, but may
be contradicted and overcome by other evidence:
xxxx
(y) That things have happened according to the ordinary course of nature and the ordinary habits of life.
In the ordinary course of things, responsible business owners or managers would not allow security guards
of an agency with whom the owners or managers have severed ties with to continue to stay within the
business premises. This is because upon the termination of the owners or managers agreement with the
security agency, the agencys undertaking of liability for any damage that the security guard would cause
has already been terminated. Thus, in the event of an accident or otherwise damage caused by such
security guards, it would be the business owners and/or managers who would be liable and not the
agency. The business owners or managers would, therefore, be opening themselves up to liability for acts
of security guards over whom the owners or managers allegedly have no control.
At the very least, responsible business owners or managers would inquire or learn why such security
guards were remaining at their posts, and would have a clear understanding of the circumstances of the
guards stay. It is but logical that responsible business owners or managers would be aware of the
situation in their premises.
We point out that with respondents hypothesis, it would seem that SSCP was paying petitioners salaries
while securing respondents premises despite the termination of their Agreement. Obviously, it would only
be respondent that would benefit from such a situation. And it is seriously doubtful that a security agency
that was established for profit would allow its security guards to secure respondents premises when the
Agreement was already terminated.
From the foregoing circumstances, reason dictates that we conclude that petitioners remained at their
post under the instructions of respondent. We can further conclude that respondent dictated upon
petitioners that the latter perform their regular duties to secure the premises during operating hours. This,
to our mind and under the circumstances, is sufficient to establish the existence of an employer-employee
relationship. Certainly, the facts as narrated by petitioners are more believable than the irrational denials
made by respondent. Thus, we ruled in Lee Eng Hong v. Court of Appeals:9
Evidence, to be believed, must not only proceed from the mouth of a credible witness, but it must be
credible in itself such as the common experience and observation of mankind can approve as probable
under the circumstances. We have no test of the truth of human testimony, except its conformity to our
knowledge, observation and experience. Whatever is repugnant to these belongs to the miraculous and is
outside judicial cognizance (Castaares v. Court of Appeals, 92 SCRA 568 [1979]).
To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of the
Agreement, petitioners remained at their post securing the premises of respondent while receiving their
salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials proffered by
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respondent do not shed any light to the situation. It is but reasonable to conclude that, with the behest
and, presumably, directive of respondent, petitioners continued with their services. Evidently, such are
indicia of control that respondent exercised over petitioners.
Such power of control has been explained as the "right to control not only the end to be achieved but also
the means to be used in reaching such end."10 With the conclusion that respondent directed petitioners to
remain at their posts and continue with their duties, it is clear that respondent exercised the power of
control over them; thus, the existence of an employer-employee relationship.
In Tongko v. The Manufacturers Life Insurance Co. (Phils.) Inc.,11 we reiterated the oft repeated rule that
control is the most important element in the determination of the existence of an employer-employee
relationship:
In the determination of whether an employer-employee relationship exists between two parties, this Court
applies the four-fold test to determine the existence of the elements of such relationship. In Pacific
Consultants International Asia, Inc. v. Schonfeld, the Court set out the elements of an employer-employee
relationship, thus:
Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute,
four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees
conduct. It is the so-called "control test" which constitutes the most important index of the existence of
the employer-employee relationship that is, whether the employer controls or has reserved the right to
control the employee not only as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship
exists where the person for whom the services are performed reserves the right to control not only the
end to be achieved but also the means to be used in reaching such end.
Furthermore, Article 106 of the Labor Code contains a provision on contractors, to wit:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person
for the performance of the formers work, the employees of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.1avvphi1
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
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LABOR LAW 1
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him. (Emphasis supplied.)
Thus, the Secretary of Labor issued Department Order No. 18-2002, Series of 2002, implementing Art. 106
as follows:
Section 5. Prohibition against labor-only contracting.Labor-only contracting is hereby declared
prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal,
and any of the following elements are present:
(i) The contractor or subcontractor does not have substantial capital or investment which relates to
the job, work or service to be performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are directly related to the main
business of the principal; or
(ii) the contractor does not exercise the right to control over the performance of the work of the
contractual employee.
The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the Labor Code,
as amended.
"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements, machineries and work premises, actually and directly used by
the contractor or subcontractor in the performance or completion of the job, work or service contracted
out.
The "right to control" shall refer to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved, but also the manner
and means to be used in reaching that end.
On the other hand, Sec. 7 of the department order contains the consequence of such labor-only
contracting:
Section 7. Existence of an employer-employee relationship.The contractor or subcontractor shall be
considered the employer of the contractual employee for purposes of enforcing the provisions of the
Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor
in the event of any violation of any provision of the Labor Code, including the failure to pay wages.
The principal shall be deemed the employer of the contractual employee in any of the following cases as
declared by a competent authority:
(a) where there is labor-only contracting; or
(b) where the contracting arrangement falls within the prohibitions provided in Section 6
(Prohibitions) hereof. (Emphasis supplied.)
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Evidently, respondent having the power of control over petitioners must be considered as petitioners
employerfrom the termination of the Agreement onwardsas this was the only time that any evidence
of control was exhibited by respondent over petitioners and in light of our ruling in Abella. 12 Thus, as aptly
declared by the NLRC, petitioners were entitled to the rights and benefits of employees of respondent,
including due process requirements in the termination of their services.
Both the Labor Arbiter and NLRC found that respondent did not observe such due process requirements.
Having failed to do so, respondent is guilty of illegal dismissal.
WHEREFORE, we SET ASIDE the CAs May 6, 2008 Decision and November 4, 2008 Resolution in CA-G.R. SP
No. 97398. We hereby REINSTATE the Labor Arbiters Decision dated February 13, 2004 and the NLRCs
Resolutions dated October 28, 2005 and August 28, 2006.
No costs.
SO ORDERED.
6. Peoples Broadcasting Service v. Sec of Labor, March 6, 2012

G.R. No. 179652
March 6, 2012
PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), Petitioner,

vs.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE
REGION VII, and JANDELEON JUEZAN, Respondents.
RESOLUTION
VELASCO, JR., J.:
In a Petition for Certiorari under Rule 65, petitioner Peoples Broadcasting Service, Inc. (Bombo Radyo
Phils., Inc.) questioned the Decision and Resolution of the Court of Appeals (CA) dated October 26, 2006
and June 26, 2007, respectively, in C.A. G.R. CEB-SP No. 00855.
Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of Labor
and Employment (DOLE) Regional Office No. VII, Cebu City, for illegal deduction, nonpayment of service
incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits,
delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth.1 After the conduct of
summary investigations, and after the parties submitted their position papers, the DOLE Regional Director
found that private respondent was an employee of petitioner, and was entitled to his money claims. 2
Petitioner sought reconsideration of the Directors Order, but failed. The Acting DOLE Secretary dismissed
petitioners appeal on the ground that petitioner submitted a Deed of Assignment of Bank Deposit instead
of posting a cash or surety bond. When the matter was brought before the CA, where petitioner claimed
that it had been denied due process, it was held that petitioner was accorded due process as it had been
given the opportunity to be heard, and that the DOLE Secretary had jurisdiction over the matter, as the
jurisdictional limitation imposed by Article 129 of the Labor Code on the power of the DOLE Secretary
under Art. 128(b) of the Code had been repealed by Republic Act No. (RA) 7730. 3
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In the Decision of this Court, the CA Decision was reversed and set aside, and the complaint against
petitioner was dismissed. The dispositive portion of the Decision reads as follows:
WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the Resolution dated 26
June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET ASIDE. The Order
of the then Acting Secretary of the Department of Labor and Employment dated 27 January 2005 denying
petitioners appeal, and the Orders of the Director, DOLE Regional Office No. VII, dated 24 May 2004 and
27 February 2004, respectively, are ANNULLED. The complaint against petitioner is DISMISSED.4
The Court found that there was no employer-employee relationship between petitioner and private
respondent. It was held that while the DOLE may make a determination of the existence of an employeremployee relationship, this function could not be co-extensive with the visitorial and enforcement power
provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The National Labor Relations
Commission (NLRC) was held to be the primary agency in determining the existence of an employeremployee relationship. This was the interpretation of the Court of the clause "in cases where the
relationship of employer-employee still exists" in Art. 128(b).5
From this Decision, the Public Attorneys Office (PAO) filed a Motion for Clarification of Decision (with
Leave of Court). The PAO sought to clarify as to when the visitorial and enforcement power of the DOLE
be not considered as co-extensive with the power to determine the existence of an employer-employee
relationship.6 In its Comment,7 the DOLE sought clarification as well, as to the extent of its visitorial and
enforcement power under the Labor Code, as amended.
The Court treated the Motion for Clarification as a second motion for reconsideration, granting said
motion and reinstating the petition.8 It is apparent that there is a need to delineate the jurisdiction of the
DOLE Secretary vis--vis that of the NLRC.
Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing officers to hear
and decide any matter involving the recovery of wages and other monetary claims and benefits was
qualified by the proviso that the complaint not include a claim for reinstatement, or that the aggregate
money claims not exceed PhP 5,000. RA 7730, or an Act Further Strengthening the Visitorial and
Enforcement Powers of the Secretary of Labor, did away with the PhP 5,000 limitation, allowing the DOLE
Secretary to exercise its visitorial and enforcement power for claims beyond PhP 5,000. The only
qualification to this expanded power of the DOLE was only that there still be an existing employeremployee relationship.
It is conceded that if there is no employer-employee relationship, whether it has been terminated or it has
not existed from the start, the DOLE has no jurisdiction. Under Art. 128(b) of the Labor Code, as amended
by RA 7730, the first sentence reads, "Notwithstanding the provisions of Articles 129 and 217 of this Code
to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of
Labor and Employment or his duly authorized representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of this Code and other labor legislation based on the
findings of labor employment and enforcement officers or industrial safety engineers made in the course
of inspection." It is clear and beyond debate that an employer-employee relationship must exist for the
exercise of the visitorial and enforcement power of the DOLE. The question now arises, may the DOLE
make a determination of whether or not an employer-employee relationship exists, and if so, to what
extent?
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The first portion of the question must be answered in the affirmative.

The prior decision of this Court in the present case accepts such answer, but places a limitation upon the
power of the DOLE, that is, the determination of the existence of an employer-employee relationship
cannot be co-extensive with the visitorial and enforcement power of the DOLE. But even in conceding the
power of the DOLE to determine the existence of an employer-employee relationship, the Court held that
the determination of the existence of an employer-employee relationship is still primarily within the power
of the NLRC, that any finding by the DOLE is merely preliminary.
This conclusion must be revisited.
No limitation in the law was placed upon the power of the DOLE to determine the existence of an
employer-employee relationship. No procedure was laid down where the DOLE would only make a
preliminary finding, that the power was primarily held by the NLRC. The law did not say that the DOLE
would first seek the NLRCs determination of the existence of an employer-employee relationship, or that
should the existence of the employer-employee relationship be disputed, the DOLE would refer the matter
to the NLRC. The DOLE must have the power to determine whether or not an employer-employee
relationship exists, and from there to decide whether or not to issue compliance orders in accordance with
Art. 128(b) of the Labor Code, as amended by RA 7730.
The DOLE, in determining the existence of an employer-employee relationship, has a ready set of
guidelines to follow, the same guide the courts themselves use. 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; (4) the employers power to control the employees conduct. 9 The use
of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize
the same test, even in the course of inspection, making use of the same evidence that would have been
presented before the NLRC.
The determination of the existence of an employer-employee relationship by the DOLE must be respected.
The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered
nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee
relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a
prima facie showing of the absence of an employer-employee relationship be made to oust the DOLE of
jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will
weigh it, to see if the same does successfully refute the existence of an employer-employee relationship.
If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance
of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employeremployee relationship has already been terminated, or it appears, upon review, that no employeremployee relationship existed in the first place.
The Court, in limiting the power of the DOLE, gave the rationale that such limitation would eliminate the
prospect of competing conclusions between the DOLE and the NLRC. The prospect of competing
conclusions could just as well have been eliminated by according respect to the DOLE findings, to the
exclusion of the NLRC, and this We believe is the more prudent course of action to take.
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This is not to say that the determination by the DOLE is beyond question or review.1avvphi1 Suffice it to
say, there are judicial remedies such as a petition for certiorari under Rule 65 that may be availed of, should
a party wish to dispute the findings of the DOLE.
It must also be remembered that the power of the DOLE to determine the existence of an employeremployee relationship need not necessarily result in an affirmative finding. The DOLE may well make the
determination that no employer-employee relationship exists, thus divesting itself of jurisdiction over the
case. It must not be precluded from being able to reach its own conclusions, not by the parties, and
certainly not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a
determination as to the existence of an employer-employee relationship in the exercise of its visitorial and
enforcement power, subject to judicial review, not review by the NLRC.
There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there is still a threshold
amount set by Arts. 129 and 217 of the Labor Code when money claims are involved, i.e., that if it is for PhP
5,000 and below, the jurisdiction is with the regional director of the DOLE, under Art. 129, and if the
amount involved exceeds PhP 5,000, the jurisdiction is with the labor arbiter, under Art. 217. The view
states that despite the wording of Art. 128(b), this would only apply in the course of regular inspections
undertaken by the DOLE, as differentiated from cases under Arts. 129 and 217, which originate from
complaints. There are several cases, however, where the Court has ruled that Art. 128(b) has been
amended to expand the powers of the DOLE Secretary and his duly authorized representatives by RA 7730.
In these cases, the Court resolved that the DOLE had the jurisdiction, despite the amount of the money
claims involved. Furthermore, in these cases, the inspection held by the DOLE regional director was
prompted specifically by a complaint. Therefore, the initiation of a case through a complaint does not
divest the DOLE Secretary or his duly authorized representative of jurisdiction under Art. 128(b).
To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions
of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing
employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE
finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is
properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter
has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and
other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is
filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is
properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for
certiorari under Rule 65 of the Rules of Court.
In the present case, the finding of the DOLE Regional Director that there was an employer-employee
relationship has been subjected to review by this Court, with the finding being that there was no employeremployee relationship between petitioner and private respondent, based on the evidence presented.
Private respondent presented self-serving allegations as well as self-defeating evidence.10 The findings of
the Regional Director were not based on substantial evidence, and private respondent failed to prove the
existence of an employer-employee relationship. The DOLE had no jurisdiction over the case, as there was
no employer-employee relationship present. Thus, the dismissal of the complaint against petitioner is
proper.
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WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED, with the MODIFICATION
that in the exercise of the DOLEs visitorial and enforcement power, the Labor Secretary or the latters
authorized representative shall have the power to determine the existence of an employer-employee
relationship, to the exclusion of the NLRC.
SO ORDERED.
7. Ymbong v. ABS-CBN, March 7, 2012

G.R. No. 184885
March 7, 2012
ERNESTO G. YMBONG, Petitioner,

vs.
ABS-CBN BROADCASTING CORPORATION, VENERANDA SY AND DANTE LUZON, Respondents.
DECISION
VILLARAMA, JR., J.:
Before us is a Rule 45 Petition seeking to set aside the August 22, 2007 Decision1 and September 18, 2008
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 86206 declaring petitioner to have resigned
from work and not illegally dismissed.
The antecedent facts follow:
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABS-CBN) in 1993 at
its regional station in Cebu as a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in
ABS-CBN later extended to radio when ABS-CBN Cebu launched its AM station DYAB in 1995 where he
worked as drama and voice talent, spinner, scriptwriter and public affairs program anchor.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as talent,
director and scriptwriter for various radio programs aired over DYAB.
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the "Policy on
Employees Seeking Public Office." The pertinent portions read:
1. Any employee who intends to run for any public office position, must file his/her letter of
resignation, at least thirty (30) days prior to the official filing of the certificate of candidacy either
for national or local election.
xxxx
3. Further, any employee who intends to join a political group/party or even with no political
affiliation but who intends to openly and aggressively campaign for a candidate or group of
candidates (e.g. publicly speaking/endorsing candidate, recruiting campaign workers, etc.) must file
a request for leave of absence subject to managements approval. For this particular reason, the
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employee should file the leave request at least thirty (30) days prior to the start of the planned
leave period.
x x x x3 [Emphasis and underscoring supplied.]
Because of the impending May 1998 elections and based on his immediate recollection of the policy at that
time, Dante Luzon, Assistant Station Manager of DYAB issued the following memorandum:
TO : ALL CONCERNED
FROM : DANTE LUZON
DATE : MARCH 25, 1998
SUBJECT : AS STATED
Please be informed that per company policy, any employee/talent who wants to run for any position in the
coming election will have to file a leave of absence the moment he/she files his/her certificate of candidacy.
The services rendered by the concerned employee/talent to this company will then be temporarily
suspended for the entire campaign/election period.
For strict compliance.4 [Emphasis and underscoring supplied.]
Luzon, however, admitted that upon double-checking of the exact text of the policy and subsequent
confirmation with the ABS-CBN Head Office, he saw that the policy actually required suspension for those
who intend to campaign for a political party or candidate and resignation for those who will actually run in
the elections.5
After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon. Luzon claims
that Ymbong approached him and told him that he would leave radio for a couple of months because he
will campaign for the administration ticket. It was only after the elections that they found out that Ymbong
actually ran for public office himself at the eleventh hour. Ymbong, on the other hand, claims that in
accordance with the March 25, 1998 Memorandum, he informed Luzon through a letter that he would take
a few months leave of absence from March 8, 1998 to May 18, 1998 since he was running for councilor of
Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for
Naga, Cebu. According to Luzon, he clarified to Patalinghug that he will be considered resigned and not
just on leave once he files a certificate of candidacy. Thus, Patalinghug wrote Luzon the following letter on
April 13, 1998:
Dear Mr. Luzon,
Im submitting to you my letter of resignation as your Drama Production Chief and Talent due to your
companys policy that every person connected to ABS-CBN that should seek an elected position in the
government will be forced to resigned (sic) from his position. So herewith Im submitting my resignation
with a hard heart. But Im still hoping to be connected again with your prestigious company after the
election[s] should you feel that Im still an asset to your drama production department. Im looking
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forward to that day and Im very happy and proud that I have served for two and a half years the most
stable and the most prestigious Radio and TV Network in the Philippines.
As a friend[,] wish me luck and Pray for me. Thank you.
Very Truly Yours,
(Sgd.)
Leandro "Boy" Patalinghug6
Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections.
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he
informed them that they cannot work there anymore because of company policy. This was stressed even
in subsequent meetings and they were told that the company was not allowing any exceptions. ABS-CBN,
however, agreed out of pure liberality to give them a chance to wind up their participation in the radio
drama, Nagbabagang Langit, since it was rating well and to avoid an abrupt ending. The agreed windingup, however, dragged on for so long prompting Luzon to issue to Ymbong the following memorandum
dated September 14, 1998:
TO : NESTOR YMBONG
FROM : DANTE LUZON
SUBJECT : AS STATED
DATE : 14 SEPT. 1998
Please be reminded that your services as drama talent had already been automatically terminated when
you ran for a local government position last election.
The Management however gave you more than enough time to end your drama participation and other
involvement with the drama department.
It has been decided therefore that all your drama participation shall be terminated effective immediately.
However, your involvement as drama spinner/narrator of the drama "NAGBA[BA]GANG LANGIT" continues
until its writer/director Mr. Leandro Patalinghug wraps it up one week upon receipt of a separate memo
issued to him.7
Ymbong in contrast contended that after the expiration of his leave of absence, he reported back to work
as a regular talent and in fact continued to receive his salary. On September 14, 1998, he received a
memorandum stating that his services are being terminated immediately, much to his surprise. Thus, he
filed an illegal dismissal complaint8 against ABS-CBN, Luzon and DYAB Station Manager Veneranda Sy. He
argued that the ground cited by ABS-CBN for his dismissal was not among those enumerated in the Labor
Code, as amended. And even granting without admitting the existence of the company policy supposed to
have been violated, Ymbong averred that it was necessary that the company policy meet certain
requirements before willful disobedience of the policy may constitute a just cause for termination.
Ymbong further argued that the company policy violates his constitutional right to suffrage.9
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Patalinghug likewise filed an illegal dismissal complaint 10 against ABS-CBN.

ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-employee
relationship between the company and Ymbong and Patalinghug. ABS-CBN contended that they are not
employees but talents as evidenced by their talent contracts. However, notwithstanding their status, ABSCBN has a standing policy on persons connected with the company whenever they will run for public
office.11
On July 14, 1999, the Labor Arbiter rendered a decision12 finding the dismissal of Ymbong and Patalinghug
illegal, thus:
WHEREFORE, in the light of the foregoing, judgment is rendered finding the dismissal of the two
complainants illegal. An order is issued directing respondent ABS[-]CBN to immediately reinstate
complainants to their former positions without loss of seniority rights plus the payment of backwages in
the amount of P200,000.00 to each complainant.
All other claims are dismissed.
SO ORDERED.13
The Labor Arbiter found that there exists an employer-employee relationship between ABS-CBN and
Ymbong and Patalinghug considering the stipulations in their appointment letters/talent contracts. The
Labor Arbiter noted particularly that the appointment letters/talent contracts imposed conditions in the
performance of their work, specifically on attendance and punctuality, which effectively placed them
under the control of ABS-CBN. The Labor Arbiter likewise ruled that although the subject company policy is
reasonable and not contrary to law, the same was not made known to Ymbong and Patalinghug and in fact
was superseded by another one embodied in the March 25, 1998 Memorandum issued by Luzon. Thus,
there is no valid or authorized cause in terminating Ymbong and Patalinghug from their employment.
In its memorandum of appeal14 before the National Labor Relations Commission (NLRC), ABS-CBN
contended that the Labor Arbiter has no jurisdiction over the case because there is no employer-employee
relationship between the company and Ymbong and Patalinghug, and that Sy and Luzon mistakenly
assumed that Ymbong and Patalinghug could just file a leave of absence since they are only talents and not
employees. In its Supplemental Appeal,15 ABS-CBN insisted that Ymbong and Patalinghug were engaged as
radio talents for DYAB dramas and personality programs and their contract is one between a selfemployed contractor and the hiring party which is a standard practice in the broadcasting industry. It also
argued that the Labor Arbiter should not have made much of the provisions on Ymbongs attendance and
punctuality since such requirement is a dictate of the programming of the station, the slating of shows at
regular time slots, and availability of recording studios not an attempt to exercise control over the
manner of his performance of the contracted anchor work within his scheduled spot on air. As for the
pronouncement that the company policy has already been superseded by the March 25, 1998
Memorandum issued by Luzon, the latter already clarified that it was the very policy he sought to enforce.
This matter was relayed by Luzon to Patalinghug when the latter disclosed his plans to join the 1998
elections while Ymbong only informed the company that he was campaigning for the administration ticket
and the company had no inkling that he will actually run until the issue was already moot and academic.
ABS-CBN further contended that Ymbong and Patalinghugs "reinstatement" is legally and physically
impossible as the talent positions they vacated no longer exist. Neither is there basis for the award of back
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wages since they were not earning a monthly salary but paid talent fees on a per production/per script
basis. Attached to the Supplemental Appeal is a Sworn Statement 16 of Luzon.
On March 8, 2004, the NLRC rendered a decision17 modifying the labor arbiters decision. The fallo of the
NLRC decision reads:
WHEREFORE, premises considered, the decision of Labor Arbiter Nicasio C. Aninon dated 14 July 1999 is
MODIFIED, to wit:
Ordering respondent ABS-CBN to reinstate complainant Ernesto G. Ymbong and to pay his full backwages
computed from 15 September 1998 up to the time of his actual reinstatement.
SO ORDERED.18
The NLRC dismissed ABS-CBNs Supplemental Appeal for being filed out of time. The NLRC ruled that to
entertain the same would be to allow the parties to submit their appeal on piecemeal basis, which is
contrary to the agencys duty to facilitate speedy disposition of cases. The NLRC also held that ABS-CBN
wielded the power of control over Ymbong and Patalinghug, thereby proving the existence of an
employer-employee relationship between them.
As to the issue of whether they were illegally dismissed, the NLRC treated their cases differently. In the
case of Patalinghug, it found that he voluntarily resigned from employment on April 21, 1998 when he
submitted his resignation letter. The NLRC noted that although the tenor of the resignation letter is
somewhat involuntary, he knew that it is the policy of the company that every person connected
therewith should resign from his employment if he seeks an elected position in the government. As to
Ymbong, however, the NLRC ruled otherwise. It ruled that the March 25, 1998 Memorandum merely states
that an employee who seeks any elected position in the government will only merit the temporary
suspension of his services. It held that under the principle of social justice, the March 25, 1998
Memorandum shall prevail and ABS-CBN is estopped from enforcing the September 14, 1998 memorandum
issued to Ymbong stating that his services had been automatically terminated when he ran for an elective
position.
ABS-CBN moved to reconsider the NLRC decision, but the same was denied in a Resolution dated June 21,
2004.19
Imputing grave abuse of discretion on the NLRC, ABS-CBN filed a petition for certiorari20 before the CA
alleging that:
I.
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AND SERIOUSLY MISAPPRECIATED THE
FACTS IN NOT HOLDING THAT RESPONDENT YMBONG IS A FREELANCE RADIO TALENT AND MEDIA
PRACTITIONERNOT A "REGULAR EMPLOYEE" OF PETITIONERTO WHOM CERTAIN PRODUCTION
WORK HAD BEEN OUTSOURCED BY ABS-CBN CEBU UNDER AN INDEPENDENT CONTRACTORSHIP
SITUATION, THUS RENDERING THE LABOR COURTS WITHOUT JURISDICTION OVER THE CASE IN THE
ABSENCE OF EMPLOYMENT RELATIONS BETWEEN THE PARTIES.
II.
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RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN DECLARING RESPONDENT YMBONG

TO BE A REGULAR EMPLOYEE OF PETITIONER AS TO CREATE A CONTRACTUAL EMPLOYMENT RELATION
BETWEEN THEM WHEN NONE EXISTS OR HAD BEEN AGREED UPON OR OTHERWISE INTENDED BY THE
PARTIES.
III.
EVEN ASSUMING THE ALLEGED EMPLOYMENT RELATION TO EXIST FOR THE SAKE OF ARGUMENT,
RESPONDENT NLRC IN ANY CASE COMMITTED A GRAVE ABUSE OF DISCRETION IN NOT SIMILARLY
UPHOLDING AND APPLYING COMPANY POLICY NO. HR-ER-016 IN THE CASE OF RESPONDENT YMBONG
AND DEEMING HIM AS RESIGNED AND DISQUALIFIED FROM FURTHER ENGAGEMENT AS A RADIO TALENT
IN ABS-CBN CEBU AS A CONSEQUENCE OF HIS CANDIDACY IN THE 1998 ELECTIONS, AS RESPONDENT
NLRC HAD DONE IN THE CASE OF PATALINGHUG.
IV.
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AND DENIED DUE PROCESS TO
PETITIONER IN REFUSING TO CONSIDER ITS SUPPLEMENTAL APPEAL, DATED OCTOBER 18, 1999, "FOR
BEING FILED OUT OF TIME" CONSIDERING THAT THE FILING OF SUCH A PLEADING IS NOT IN ANY CASE
PROSCRIBED AND RESPONDENT NLRC IS AUTHORIZED TO CONSIDER ADDITIONAL EVIDENCE ON APPEAL;
MOREOVER, TECHNICAL RULES OF EVIDENCE DO NOT APPLY IN LABOR CASES.
V.
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN GRANTING THE RELIEF OF
REINSTATEMENT AND BACKWAGES TO RESPONDENT YMBONG SINCE HE NEVER OCCUPIED ANY
"REGULAR" POSITION IN PETITIONER FROM WHICH HE COULD HAVE BEEN "ILLEGALLY DISMISSED," NOR
ARE ANY OF THE RADIO PRODUCTIONS IN WHICH HE HAD DONE TALENT WORK FOR PETITIONER STILL
EXISTING. INDEED, THERE IS NO BASIS WHATSOEVER FOR THE AWARD OF BACKWAGES TO RESPONDENT
YMBONG IN THE AMOUNT OF P200,000.00 CONSIDERING THAT, AS SHOWN BY THE UNCONTROVERTED
EVIDENCE, HE WAS NOT EARNING A MONTHLY "SALARY" OF "P20,000.00," AS HE FALSELY CLAIMS, BUT
WAS PAID TALENT FEES ON A "PER PRODUCTION/PER SCRIPT" BASIS WHICH AVERAGED LESS THAN
P10,000.00 PER MONTH IN TALENT FEES ALL IN ALL.21
On August 22, 2007, the CA rendered the assailed decision reversing and setting aside the March 8, 2004
Decision and June 21, 2004 Resolution of the NLRC. The CA declared Ymbong resigned from employment
and not to have been illegally dismissed. The award of full back wages in his favor was deleted accordingly.
The CA ruled that ABS-CBN is estopped from claiming that Ymbong was not its employee after applying
the provisions of Policy No. HR-ER-016 to him. It noted that said policy is entitled "Policy on Employees
Seeking Public Office" and the guidelines contained therein specifically pertain to employees and did not
even mention talents or independent contractors. It held that it is a complete turnaround on ABS-CBNs
part to later argue that Ymbong is only a radio talent or independent contractor and not its employee. By
applying the subject company policy on Ymbong, ABS-CBN had explicitly recognized him to be an
employee and not merely an independent contractor.
The CA likewise held that the subject company policy is the controlling guideline and therefore, Ymbong
should be considered resigned from ABS-CBN. While Luzon has policy-making power as assistant radio
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manager, he had no authority to issue a memorandum that had the effect of repealing or superseding a
subsisting policy. Contrary to the findings of the Labor Arbiter, the subject company policy was effective at
that time and continues to be valid and subsisting up to the present. The CA cited Patalinghugs
resignation letter to buttress this conclusion, noting that Patalinghug openly admitted in his letter that his
resignation was in line with the said company policy. Since ABS-CBN applied Policy No. HR-ER-016 to
Patalinghug, there is no reason not to apply the same regulation to Ymbong who was on a similar situation
as the former. Thus, the CA found that the NLRC overstepped its area of discretion to a point of grave
abuse in declaring Ymbong to have been illegally terminated. The CA concluded that there is no illegal
dismissal to speak of in the instant case as Ymbong is considered resigned when he ran for an elective post
pursuant to the subject company policy.
Hence, this petition.
Petitioner argues that the CA gravely erred: (1) in upholding Policy No. HR-ER-016; (2) in upholding the
validity of the termination of Ymbongs services; and (3) when it reversed the decision of the NLRC 4th
Division of Cebu City which affirmed the decision of Labor Arbiter Nicasio C. Anion.22
Ymbong argues that the subject company policy is a clear interference and a gross violation of an
employees right to suffrage. He is surprised why it was easy for the CA to rule that Luzons memorandum
ran counter to an existing policy while on the other end, it did not see that it was in conflict with the
constitutional right to suffrage. He also points out that the issuance of the March 25, 1998 Memorandum
was precisely an exercise of the management power to which an employee like him must respect;
otherwise, he will be sanctioned for disobedience or worse, even terminated. He was not in a position to
know which between the two issuances was correct and as far as he is concerned, the March 25, 1998
Memorandum superseded the subject company policy. Moreover, ABS-CBN cannot disown acts of its
officers most especially since it prejudiced his property rights.23
As to the validity of his dismissal, Ymbong contends that the ground relied upon by ABS-CBN is not among
the just and authorized causes provided in the Labor Code, as amended. And even assuming the subject
company policy passes the test of validity under the pretext of the right of the management to discipline
and terminate its employees, the exercise of such right is not without bounds. Ymbong avers that his
automatic termination was a blatant disregard of his right to due process. He was never asked to explain
why he did not tender his resignation before he ran for public office as mandated by the subject company
policy.24
Ymbong likewise asseverates that both the Labor Arbiter and the NLRC were consistent in their findings
that he was illegally dismissed. It is settled that factual findings of labor administrative officials, if
supported by substantial evidence, are accorded not only great respect but even finality.25
ABS-CBN, for its part, counters that the validity of policies such as Policy No. HR-ER-016 has long been
upheld by this Court which has ruled that a media company has a right to impose a policy providing that
employees who file their certificates of candidacy in any election shall be considered resigned. 26 Moreover,
case law has upheld the validity of the exercise of management prerogatives even if they appear to limit
the rights of employees as long as there is no showing that management prerogatives were exercised in a
manner contrary to law.27 ABS-CBN contends that being the largest media and entertainment company in
the country, its reputation stems not only from its ability to deliver quality entertainment programs but
also because of neutrality and impartiality in delivering news.28
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ABS-CBN further argues that nothing in the company policy prohibits its employees from either accepting a
public appointive position or from running for public office. Thus, it cannot be considered as violative of
the constitutional right of suffrage. Moreover, the Supreme Court has recognized the employers right to
enforce occupational qualifications as long as the employer is able to show the existence of a reasonable
business necessity in imposing the questioned policy. Here, Policy No. HR-ER-016 itself states that it was
issued "to protect the company from any public misconceptions" and "[t]o preserve its objectivity,
neutrality and credibility." Thus, it cannot be denied that it is reasonable under the circumstances. 29
ABS-CBN likewise opposes Ymbongs claim that he was terminated. ABS-CBN argues that on the contrary,
Ymbongs unilateral act of filing his certificate of candidacy is an overt act tantamount to voluntary
resignation on his part by virtue of the clear mandate found in Policy No. HR-ER-016. Ymbong, however,
failed to file his resignation and in fact misled his superiors by making them believe that he was going on
leave to campaign for the administration candidates but in fact, he actually ran for councilor. He also
claims to have fully apprised Luzon through a letter of his intention to run for public office, but he failed to
adduce a copy of the same.30
As to Ymbongs argument that the CA should not have reversed the findings of the Labor Arbiter and the
NLRC, ABS-CBN asseverates that the CA is not precluded from making its own findings most especially if
upon its own review of the case, it has been revealed that the NLRC, in affirming the findings of the Labor
Arbiter, committed grave abuse of discretion amounting to lack or excess of jurisdiction when it failed to
apply the subject company policy in Ymbongs case when it readily applied the same to Patalinghug.31
Essentially, the issues to be resolved in the instant petition are: (1) whether Policy No. HR-ER-016 is valid;
(2) whether the March 25, 1998 Memorandum issued by Luzon superseded Policy No. HR-ER-016; and (3)
whether Ymbong, by seeking an elective post, is deemed to have resigned and not dismissed by ABS-CBN.
Policy No. HR-ER-016 is valid.
This is not the first time that this Court has dealt with a policy similar to Policy No. HR-ER-016. In the case of
Manila Broadcasting Company v. NLRC,32 this Court ruled:
What is involved in this case is an unwritten company policy considering any employee who files a
certificate of candidacy for any elective or local office as resigned from the company. Although 11(b) of
R.A. No. 6646 does not require mass media commentators and announcers such as private respondent to
resign from their radio or TV stations but only to go on leave for the duration of the campaign period, we
think that the company may nevertheless validly require them to resign as a matter of policy. In this case,
the policy is justified on the following grounds:
Working for the government and the company at the same time is clearly disadvantageous and prejudicial
to the rights and interest not only of the company but the public as well. In the event an employee wins in
an election, he cannot fully serve, as he is expected to do, the interest of his employer. The employee has
to serve two (2) employers, obviously detrimental to the interest of both the government and the private
employer.
In the event the employee loses in the election, the impartiality and cold neutrality of an employee as
broadcast personality is suspect, thus readily eroding and adversely affecting the confidence and trust of
the listening public to employers station.33
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ABS-CBN, like Manila Broadcasting Company, also had a valid justification for Policy No. HR-ER-016. Its
rationale is embodied in the policy itself, to wit:
Rationale:
ABS-CBN BROADCASTING CORPORATION strongly believes that it is to the best interest of the company to
continuously remain apolitical. While it encourages and supports its employees to have greater political
awareness and for them to exercise their right to suffrage, the company, however, prefers to remain
politically independent and unattached to any political individual or entity.
Therefore, employees who [intend] to run for public office or accept political appointment should resign
from their positions, in order to protect the company from any public misconceptions. To preserve its
objectivity, neutrality and credibility, the company reiterates the following policy guidelines for strict
implementation.
x x x x34 [Emphasis supplied.]
We have consistently held that so long as a companys management prerogatives are exercised in good
faith for the advancement of the employers interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements, this Court will
uphold them.35 In the instant case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It
is well within its rights to ensure that it maintains its objectivity and credibility and freeing itself from any
appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any
way eroded. Even as the law is solicitous of the welfare of the employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be denied. 361wphi1
It is worth noting that such exercise of management prerogative has earned a stamp of approval from no
less than our Congress itself when on February 12, 2001, it enacted Republic Act No. 9006, otherwise
known as the "Fair Election Act." Section 6.6 thereof reads:
6.6. Any mass media columnist, commentator, announcer, reporter, on-air correspondent or personality
who is a candidate for any elective public office or is a campaign volunteer for or employed or retained in
any capacity by any candidate or political party shall be deemed resigned, if so required by their
employer, or shall take a leave of absence from his/her work as such during the campaign period: Provided,
That any media practitioner who is an official of a political party or a member of the campaign staff of a
candidate or political party shall not use his/her time or space to favor any candidate or political party.
[Emphasis and underscoring supplied.]
Policy No. HR-ER-016 was not superseded by the March 25, 1998 Memorandum
The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABS-CBN, has policymaking powers in relation to his principal task of administering the networks radio station in the Cebu
region, the exercise of such power should be in accord with the general rules and regulations imposed by
the ABS-CBN Head Office to its employees. Clearly, the March 25, 1998 Memorandum issued by Luzon
which only requires employees to go on leave if they intend to run for any elective position is in absolute
contradiction with Policy No. HR-ER-016 issued by the ABS-CBN Head Office in Manila which requires the
resignation, not only the filing of a leave of absence, of any employee who intends to run for public office.
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Having been issued beyond the scope of his authority, the March 25, 1998 Memorandum is therefore void
and did not supersede Policy No. HR-ER-016.
Also worth noting is that Luzon in his Sworn Statement admitted the inaccuracy of his recollection of the
company policy when he issued the March 25, 1998 Memorandum and stated therein that upon doublechecking of the exact text of the policy statement and subsequent confirmation with the ABS-CBN Head
Office in Manila, he learned that the policy required resignation for those who will actually run in elections
because the company wanted to maintain its independence. Since the officer who himself issued the
subject memorandum acknowledged that it is not in harmony with the Policy issued by the upper
management, there is no reason for it to be a source of right for Ymbong.
Ymbong is deemed resigned when he ran for councilor.
As Policy No. HR-ER-016 is the subsisting company policy and not Luzons March 25, 1998 Memorandum,
Ymbong is deemed resigned when he ran for councilor.
We find no merit in Ymbongs argument that "[his] automatic termination x x x was a blatant [disregard]
of [his] right to due process" as he was "never asked to explain why he did not tender his resignation
before he ran for public office as mandated by [the subject company policy]."37 Ymbongs overt act of
running for councilor of Lapu-Lapu City is tantamount to resignation on his part. He was separated from
ABS-CBN not because he was dismissed but because he resigned. Since there was no termination to speak
of, the requirement of due process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not
duty-bound to ask him to explain why he did not tender his resignation before he ran for public office as
mandated by the subject company policy.
In addition, we do not subscribe to Ymbongs claim that he was not in a position to know which of the two
issuances was correct. Ymbong most likely than not, is fully aware that the subsisting policy is Policy No.
HR-ER-016 and not the March 25, 1998 Memorandum and it was for this reason that, as stated by Luzon in
his Sworn Statement, he only told the latter that he will only campaign for the administration ticket and
not actually run for an elective post. Ymbong claims he had fully apprised Luzon by letter of his plan to run
and even filed a leave of absence but records are bereft of any proof of said claim. Ymbong claims that the
letter stating his intention to go on leave to run in the election is attached to his Position Paper as Annex
"A," a perusal of said pleading attached to his petition before this Court, however, show that Annex "A"
was not his letter to Luzon but the September 14, 1998 Memorandum informing Ymbong that his services
had been automatically terminated when he ran for a local government position.
Moreover, as pointed out by ABS-CBN, had Ymbong been truthful to his superiors, they would have been
able to clarify to him the prevailing company policy and inform him of the consequences of his decision in
case he decides to run, as Luzon did in Patalinghugs case.
WHEREFORE, the petition for review on certiorari is DENIED for lack of merit.
With costs against petitioner.
SO ORDERED.
8. Professional Services v. CA, February 11, 2008

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G.R. No. 126297
February 11, 2008
PROFESSIONAL SERVICES, INC., petitioner,

vs.
THE COURT OF APPEALS and NATIVIDAD and ENRIQUE AGANA, respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 126467
February 11, 2008
NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA AGANA
ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, petitioners,
vs.
THE COURT OF APPEALS and JUAN FUENTES, respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 127590
February 11, 2008
MIGUEL AMPIL, petitioner,

vs.
THE COURT OF APPEALS and NATIVIDAD AGANA and ENRIQUE AGANA, respondents.
RESOLUTION
SANDOVAL-GUTIERREZ, J.:
As the hospital industry changes, so must the laws and jurisprudence governing hospital liability. The
immunity from medical malpractice traditionally accorded to hospitals has to be eroded if we are to
balance the interest of the patients and hospitals under the present setting.
Before this Court is a motion for reconsideration filed by Professional Services, Inc. (PSI), petitioner in G.R.
No. 126297, assailing the Courts First Division Decision dated January 31, 2007, finding PSI and Dr. Miguel
Ampil, petitioner in G.R. No. 127590, jointly and severally liable for medical negligence.
A brief revisit of the antecedent facts is imperative.
On April 4, 1984, Natividad Agana was admitted at the Medical City General Hospital (Medical City) because
of difficulty of bowel movement and bloody anal discharge. Dr. Ampil diagnosed her to be suffering from
"cancer of the sigmoid." Thus, on April 11, 1984, Dr. Ampil, assisted by the medical staff1 of Medical City,
performed an anterior resection surgery upon her. During the surgery, he found that the malignancy in her
sigmoid area had spread to her left ovary, necessitating the removal of certain portions of it. Thus, Dr.
Ampil obtained the consent of Atty. Enrique Agana, Natividads husband, to permit Dr. Juan Fuentes,
respondent in G.R. No. 126467, to perform hysterectomy upon Natividad.
Dr. Fuentes performed and completed the hysterectomy. Afterwards, Dr. Ampil took over, completed the
operation and closed the incision. However, the operation appeared to be flawed. In the corresponding
Record of Operation dated April 11, 1984, the attending nurses entered these remarks:
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sponge count lacking 2

announced to surgeon searched done (sic) but to no avail continue for closure.
After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both Dr.
Ampil and Dr. Fuentes about it. They told her that the pain was the natural consequence of the surgical
operation performed upon her. Dr. Ampil recommended that Natividad consult an oncologist to treat the
cancerous nodes which were not removed during the operation.
On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further
treatment. After four (4) months of consultations and laboratory examinations, Natividad was told that
she was free of cancer. Hence, she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two (2) weeks
thereafter, her daughter found a piece of gauze protruding from her vagina. Dr. Ampil was immediately
informed. He proceeded to Natividads house where he managed to extract by hand a piece of gauze
measuring 1.5 inches in width. Dr. Ampil then assured Natividad that the pains would soon vanish.
Despite Dr. Ampils assurance, the pains intensified, prompting Natividad to seek treatment at the
Polymedic General Hospital. While confined thereat, Dr. Ramon Gutierrez detected the presence of a
foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in width. The gauze had badly
infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organ which forced stool
to excrete through the vagina. Another surgical operation was needed to remedy the situation. Thus, in
October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with the Regional Trial Court, Branch 96, Quezon
City a complaint for damages against PSI (owner of Medical City), Dr. Ampil and Dr. Fuentes.
On February 16, 1986, pending the outcome of the above case, Natividad died. She was duly substituted by
her above-named children (the Aganas).
On March 17, 1993, the trial court rendered judgment in favor of spouses Agana finding PSI, Dr. Ampil and
Dr. Fuentes jointly and severally liable. On appeal, the Court of Appeals, in its Decision dated September 6,
1996, affirmed the assailed judgment with modification in the sense that the complaint against Dr. Fuentes
was dismissed.
PSI, Dr. Ampil and the Aganas filed with this Court separate petitions for review on certiorari. On January
31, 2007, the Court, through its First Division, rendered a Decision holding that PSI is jointly and severally
liable with Dr. Ampil for the following reasons: first, there is an employer-employee relationship between
Medical City and Dr. Ampil. The Court relied on Ramos v. Court of Appeals,2 holding that for the purpose of
apportioning responsibility in medical negligence cases, an employer-employee relationship in effect exists
between hospitals and their attending and visiting physicians; second, PSIs act of publicly displaying in the
lobby of the Medical City the names and specializations of its accredited physicians, including Dr. Ampil,
estopped it from denying the existence of an employer-employee relationship between them under the
doctrine of ostensible agency or agency by estoppel; and third, PSIs failure to supervise Dr. Ampil and its
resident physicians and nurses and to take an active step in order to remedy their negligence rendered it
directly liable under the doctrine of corporate negligence.
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In its motion for reconsideration, PSI contends that the Court erred in finding it liable under Article 2180 of
the Civil Code, there being no employer-employee relationship between it and its consultant, Dr. Ampil. PSI
stressed that the Courts Decision in Ramos holding that "an employer-employee relationship in effect
exists between hospitals and their attending and visiting physicians for the purpose of apportioning
responsibility" had been reversed in a subsequent Resolution.3 Further, PSI argues that the doctrine of
ostensible agency or agency by estoppel cannot apply because spouses Agana failed to establish one
requisite of the doctrine, i.e., that Natividad relied on the representation of the hospital in engaging the
services of Dr. Ampil. And lastly, PSI maintains that the doctrine of corporate negligence is misplaced
because the proximate cause of Natividads injury was Dr. Ampils negligence.
The motion lacks merit.
As earlier mentioned, the First Division, in its assailed Decision, ruled that an employer-employee
relationship "in effect" exists between the Medical City and Dr. Ampil. Consequently, both are jointly and
severally liable to the Aganas. This ruling proceeds from the following ratiocination in Ramos:
We now discuss the responsibility of the hospital in this particular incident. The unique practice
(among private hospitals) of filling up specialist staff with attending and visiting "consultants," who
are allegedly not hospital employees, presents problems in apportioning responsibility for
negligence in medical malpractice cases. However, the difficulty is only more apparent than real.
In the first place, hospitals exercise significant control in the hiring and firing of consultants and in
the conduct of their work within the hospital premises. Doctors who apply for "consultant" slots,
visiting or attending, are required to submit proof of completion of residency, their educational
qualifications; generally, evidence of accreditation by the appropriate board (diplomate), evidence
of fellowship in most cases, and references. These requirements are carefully scrutinized by
members of the hospital administration or by a review committee set up by the hospital who either
accept or reject the application. This is particularly true with respondent hospital.
After a physician is accepted, either as a visiting or attending consultant, he is normally required
to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and
residents, moderate grand rounds and patient audits and perform other tasks and responsibilities,
for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of
admitting patients into the hospital. In addition to these, the physicians performance as a
specialist is generally evaluated by a peer review committee on the basis of mortality and
morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant
remiss in his duties, or a consultant who regularly falls short of the minimum standards
acceptable to the hospital or its peer review committee, is normally politely terminated.
In other words, private hospitals hire, fire and exercise real control over their attending and visiting
"consultant" staff. While "consultants" are not, technically employees, a point which respondent
hospital asserts in denying all responsibility for the patients condition, the control exercised, the
hiring, and the right to terminate consultants all fulfill the important hallmarks of an employeremployee relationship, with the exception of the payment of wages. In assessing whether such a
relationship in fact exists, the control test is determining. Accordingly, on the basis of the
foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an
employer-employee relationship in effect exists between hospitals and their attending and
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visiting physicians. This being the case, the question now arises as to whether or not respondent
hospital is solidarily liable with respondent doctors for petitioners condition.
The basis for holding an employer solidarily responsible for the negligence of its employee is found
in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but
also for those of others based on the formers responsibility under a relationship of partia ptetas.
Clearly, in Ramos, the Court considered the peculiar relationship between a hospital and its consultants on
the bases of certain factors. One such factor is the "control test" wherein the hospital exercises control in
the hiring and firing of consultants, like Dr. Ampil, and in the conduct of their work.
Actually, contrary to PSIs contention, the Court did not reverse its ruling in Ramos. What it clarified was
that the De Los Santos Medical Clinic did not exercise control over its consultant, hence, there is no
employer-employee relationship between them. Thus, despite the granting of the said hospitals motion
for reconsideration, the doctrine in Ramos stays, i.e., for the purpose of allocating responsibility in medical
negligence cases, an employer-employee relationship exists between hospitals and their consultants.
In the instant cases, PSI merely offered a general denial of responsibility, maintaining that consultants, like
Dr. Ampil, are "independent contractors," not employees of the hospital. Even assuming that Dr. Ampil is
not an employee of Medical City, but an independent contractor, still the said hospital is liable to the
Aganas.
In Nograles, et al. v. Capitol Medical Center, et al.,4 through Mr. Justice Antonio T. Carpio, the Court held:
The question now is whether CMC is automatically exempt from liability considering that Dr.
Estrada is an independent contractor-physician.
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. (Jones v. Philpott, 702 F. Supp. 1210 [1988]) This exception is also
known as the "doctrine of apparent authority." (Sometimes referred to as the apparent or
ostensible agency theory. [King v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 (2006)].
xxx
The doctrine of apparent authority essentially involves two factors to determine the liability of an
independent contractor-physician.
The first factor focuses on the hospitals manifestations and is sometimes described as an inquiry
whether the hospital acted in a manner which would lead a reasonable person to conclude that the
individual who was alleged to be negligent was an employee or agent of the hospital. (Diggs v.
Novant Health, Inc., 628 S.E.2d 851 (2006) citing Hylton v. Koontz, 138 N.C. App. 629 (2000). In this
regard, the hospital need not make express representations to the patient that the treating
physician is an employee of the hospital; rather a representation may be general and implied. (Id.)
The doctrine of apparent authority is a specie of the doctrine of estoppel. Article 1431 of the Civil
Code provides that "[t]hrough estoppel, an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against the person relying
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thereon." Estoppel rests on this rule: "Whether 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. (De Castro v. Ginete, 137 Phil. 453 [1969], citing Sec. 3, par. A, Rule 131 of the Rules of Court.
See also King v. Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).
xxx
The second factor focuses on the patients reliance. It is sometimes characterized as an inquiry on
whether the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with
ordinary care and prudence. (Diggs v. Novant Health, Inc.)
PSI argues that the doctrine of apparent authority cannot apply to these cases because spouses Agana
failed to establish proof of their reliance on the representation of Medical City that Dr. Ampil is its
employee.
The argument lacks merit.
Atty. Agana categorically testified that one of the reasons why he chose Dr. Ampil was that he knew him
to be a staff member of Medical City, a prominent and known hospital.
Q
Will you tell us what transpired in your visit to Dr. Ampil?
A Well, I saw Dr. Ampil at the Medical City, I know him to be a staff member there, and I told him
about the case of my wife and he asked me to bring my wife over so she could be examined. Prior
to that, I have known Dr. Ampil, first, he was staying in front of our house, he was a neighbor,
second, my daughter was his student in the University of the East School of Medicine at Ramon
Magsaysay; and when my daughter opted to establish a hospital or a clinic, Dr. Ampil was one of
our consultants on how to establish that hospital. And from there, I have known that he was a
specialist when it comes to that illness.
Atty. Agcaoili
On that particular occasion, April 2, 1984, what was your reason for choosing to contact Dr. Ampil in
connection with your wifes illness?
A First, before that, I have known him to be a specialist on that part of the body as a surgeon;
second, I have known him to be a staff member of the Medical City which is a prominent and
known hospital. And third, because he is a neighbor, I expect more than the usual medical service
to be given to us, than his ordinary patients.5
Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of displaying his name and those
of the other physicians in the public directory at the lobby of the hospital amounts to holding out to the
public that it offers quality medical service through the listed physicians. This justifies Atty. Aganas belief
that Dr. Ampil was a member of the hospitals staff. It must be stressed that under the doctrine of
apparent authority, the question in every case is whether the principal has by his voluntary act placed the
agent in such a situation that a person of ordinary prudence, conversant with business usages and the
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nature of the particular business, is justified in presuming that such agent has authority to perform the
particular act in question.6 In these cases, the circumstances yield a positive answer to the question.
The challenged Decision also anchors its ruling on the doctrine of corporate responsibility.7 The duty of
providing quality medical service is no longer the sole prerogative and responsibility of the physician. This
is because the modern hospital now tends to organize a highly-professional medical staff whose
competence and performance need also to be monitored by the hospital commensurate with its inherent
responsibility to provide quality medical care.8 Such responsibility includes the proper supervision of the
members of its medical staff. Accordingly, the hospital has the duty to make a reasonable effort to
monitor and oversee the treatment prescribed and administered by the physicians practicing in its
premises.
Unfortunately, PSI had been remiss in its duty. It did not conduct an immediate investigation on the
reported missing gauzes to the great prejudice and agony of its patient. Dr. Jocson, a member of PSIs
medical staff, who testified on whether the hospital conducted an investigation, was evasive, thus:
Q We go back to the operative technique, this was signed by Dr. Puruganan, was this submitted
to the hospital?
A
Yes, sir, this was submitted to the hospital with the record of the patient.
Was the hospital immediately informed about the missing sponges?
That is the duty of the surgeon, sir.
Q As a witness to an untoward incident in the operating room, was it not your obligation, Dr., to
also report to the hospital because you are under the control and direction of the hospital?
A
The hospital already had the record of the two OS missing, sir.
If you place yourself in the position of the hospital, how will you recover.
You do not answer my question with another question.
Did the hospital do anything about the missing gauzes?
The hospital left it up to the surgeon who was doing the operation, sir.
Did the hospital investigate the surgeon who did the operation?
I am not in the position to answer that, sir.
Q You never did hear the hospital investigating the doctors involved in this case of those
missing sponges, or did you hear something?
xxxxxx
A I think we already made a report by just saying that two sponges were missing, it is up to the
hospital to make the move.
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Atty. Agana
Precisely, I am asking you if the hospital did a move, if the hospital did a move.
A
I cannot answer that.
Court
By that answer, would you mean to tell the Court that you were aware if there was such a move
done by the hospital?
A I cannot answer that, your honor, because I did not have any more follow-up of the case that
happened until now.9
The above testimony obviously shows Dr. Jocsons lack of concern for the patients. Such conduct is
reflective of the hospitals manner of supervision. Not only did PSI breach its duty to oversee or
supervise all persons who practice medicine within its walls, it also failed to take an active step in fixing
the negligence committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil
under Article 2180 of the Civil Code, but also directly liable for its own negligence under Article 2176.
Moreover, there is merit in the trial courts finding that the failure of PSI to conduct an investigation
"established PSIs part in the dark conspiracy of silence and concealment about the gauzes." The
following testimony of Atty. Agana supports such findings, thus:
Q You said you relied on the promise of Dr. Ampil and despite the promise you were not able to
obtain the said record. Did you go back to the record custodian?
A
I did not because I was talking to Dr. Ampil. He promised me.
After your talk to Dr. Ampil, you went to the record custodian?
A I went to the record custodian to get the clinical record of my wife, and I was given a portion
of the records consisting of the findings, among them, the entries of the dates, but not the
operating procedure and operative report.10
In sum, we find no merit in the motion for reconsideration.
WHEREFORE, we DENY PSIs motion for reconsideration with finality.
SO ORDERED.
9. South East International Rattan Inc. v. Coming, March 12, 2014
G.R. No. 186621
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SOUTH EAST INTERNATIONAL RATTAN, INC. and/or ESTANISLAO1 AGBAY, Petitioners,

vs.
JESUS J. COMING, Respondent.
DECISION
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari under Rule 45 to reverse and set aside the Decision2
dated February 21, 2008 and Resolution3 dated February 9, 2009 of the Court of Appeals (CA) in CA-GR.
CEB-SP No. 02113.
Petitioner South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the business
of manufacturing and exporting furniture to various countries with principal place of business at Paknaan,
Mandaue City, while petitioner Estanislao Agbay, as per records, is the President and General Manager of
SEIRI.4
On November 3, 2003, respondent Jesus J. Coming filed a complaint5 for illegal dismissal, underpayment
of wages, non-payment of holiday pay, 13th month pay and service incentive leave pay, with prayer for
reinstatement, back wages, damages and attorneys fees.
Respondent alleged that he was hired by petitioners as Sizing Machine Operator on March 17, 1984. His
work schedule is from 8:00 a.m. to 5:00 p.m. Initially, his compensation was on "pakiao" basis but
sometime in June 1984, it was fixed at P150.00 per day which was paid weekly. In 1990, without any
apparent reason, his employment was interrupted as he was told by petitioners to resume work in two
months time. Being an uneducated person, respondent was persuaded by the management as well as his
brother not to complain, as otherwise petitioners might decide not to call him back for work. Fearing such
consequence, respondent accepted his fate. Nonetheless, after two months he reported back to work
upon order of management.6
Despite being an employee for many years with his work performance never questioned by petitioners,
respondent was dismissed on January 1, 2002 without lawful cause. He was told that he will be terminated
because the company is not doing well financially and that he would be called back to work only if they
need his services again. Respondent waited for almost a year but petitioners did not call him back to work.
When he finally filed the complaint before the regional arbitration branch, his brother Vicente was used by
management to persuade him to withdraw the case.7
On their part, petitioners denied having hired respondent asserting that SEIRI was incorporated only in
1986, and that respondent actually worked for SEIRIs furniture suppliers because when the company
started in 1987 it was engaged purely in buying and exporting furniture and its business operations were
suspended from the last quarter of 1989 to August 1992. They stressed that respondent was not included
in the list of employees submitted to the Social Security System (SSS). Moreover, respondents brother,
Vicente Coming, executed an affidavit8 in support of petitioners position while Allan Mayol and Faustino
Apondar issued notarized certifications9 that respondent worked for them instead.10
With the denial of petitioners that respondent was their employee, the latter submitted an affidavit11
signed by five former co-workers stating that respondent was one of the pioneer employees who worked
in SEIRI for almost twenty years.
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In his Decision12 dated April 30, 2004, Labor Arbiter Ernesto F. Carreon ruled that respondent is a regular
employee of SEIRI and that the termination of his employment was illegal. The dispositive portion of the
decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent South East
(Intl.) Rattan, Inc. to pay complainant Jesus J. Coming the following:
1. Separation pay
P114,400.00
2. Backwages
P 30,400.00
3. Wage differential
P 15,015.00
4. 13th month pay
P 5,958.00
5. Holiday pay
P 4,000.00
6. Service incentive leave pay P 2,000.00

Total award
P171,773.00
The other claims and the case against respondent Estanislao Agbay are dismissed for lack of merit.
SO ORDERED.13
Petitioners appealed to the National Labor Relations Commission (NLRC)-Cebu City where they submitted
the following additional evidence: (1) copies of SEIRIs payrolls and individual pay records of employees;14
(2) affidavit15 of SEIRIs Treasurer, Angelina Agbay; and (3) second affidavit16 of Vicente Coming.
On July 28, 2005, the NLRCs Fourth Division rendered its Decision,17 the dispositive portion of which
states:
WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED
and a new one entered DISMISSING the complaint.
SO ORDERED.18
The NLRC likewise denied respondents motion for reconsideration.19
Respondent elevated the case to the CA via a petition for certiorari under Rule 65.
By Decision dated February 21, 2008, the CA reversed the NLRC and ruled that there existed an employeremployee relationship between petitioners and respondent who was dismissed without just and valid
cause.
The CA thus decreed:
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WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The assailed Decision dated July
28, 2005 issued by the National Labor Relations Commission (NLRC), Fourth Division, Cebu City in NLRC
Case No. V-000625-2004 is REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated April 30,
2004 is REINSTATED with MODIFICATION on the computation of backwages which should be computed
from the time of illegal termination until the finality of this decision.
Further, the Labor Arbiter is directed to make the proper adjustment in the computation of the award of
separation pay as well as the monetary awards of wage differential, 13th month pay, holiday pay and
service incentive leave pay.
SO ORDERED.20
Petitioners filed a motion for reconsideration but the CA denied it under Resolution dated February 9,
2009.
Hence, this petition raising the following issues:
6.1
WHETHER UNDER THE FACTS AND EVIDENCE ON RECORD, THE FINDING OF THE HONORABLE COURT OF
APPEALS THAT THERE EXISTS EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PETITIONERS AND
RESPONDENT IS IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THIS HONORABLE COURT.
6.2
WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY APPRECIATED IN ACCORDANCE WITH
APPLICABLE LAW AND JURISPRUDENCE THE EVIDENCE PRESENTED BY BOTH PARTIES.
6.3
WHETHER UNDER THE FACTS AND EVIDENCE PRESENTED, THE FINDING OF THE HONORABLE COURT OF
APPEALS THAT PETITIONERS ARE LIABLE FOR ILLEGAL DISMISSAL OF RESPONDENT IS IN ACCORD WITH
APPLICABLE LAW AND JURISPRUDENCE.
6.4
WHETHER UNDER THE FACTS PRESENTED, THE RULING OF THE HONORABLE COURT OF APPEALS THAT
THE BACKWAGES DUE THE RESPONDENT SHOULD BE COMPUTED FROM THE TIME OF ILLEGAL
TERMINATION UNTIL THE FINALITY OF THE DECISION IS SUPPORTED BY PREVAILING JURISPRUDENCE.21
Resolution of the first issue is paramount in view of petitioners denial of the existence of employeremployee relationship.
The issue of whether or not an employer-employee relationship exists in a given case is essentially a
question of fact. As a rule, this Court is not a trier of facts and this applies with greater force in labor
cases.22 Only errors of law are generally reviewed by this Court.23 This rule is not absolute, however, and
admits of exceptions. For one, the Court may look into factual issues in labor cases when the factual
findings of the Labor Arbiter, the NLRC, and the CA are conflicting.24 Here, the findings of the NLRC
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differed from those of the Labor Arbiter and the CA, which compels the Courts exercise of its authority to
review and pass upon the evidence presented and to draw its own conclusions therefrom.25
To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to
the four-fold test, to wit: (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 employees conduct, or the so-called "control
test."26 In resolving the issue of whether such relationship exists in a given case, substantial evidence
that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion is sufficient. Although no particular form of evidence is required to prove the existence of the
relationship, and any competent and relevant evidence to prove the relationship may be admitted, a
finding that the relationship exists must nonetheless rest on substantial evidence.27
In support of their claim that respondent was not their employee, petitioners presented Employment
Reports to the SSS from 1987 to 2002, the Certifications issued by Mayol and Apondar, two affidavits of
Vicente Coming, payroll sheets (1999-2000), individual pay envelopes and employee earnings records
(1999-2000) and affidavit of Angelina Agbay (Treasurer and Human Resources Officer). The payroll and pay
records did not include the name of respondent. The affidavit of Ms. Agbay stated that after SEIRI started
its business in 1986 purely on export trading, it ceased operations in 1989 as evidenced by Certification
dated January 18, 1994 from the Securities and Exchange Commission (SEC); that when business resumed
in 1992, SEIRI undertook only a little of manufacturing; that the company never hired any workers for
varnishing and pole sizing because it bought the same from various suppliers, including Faustino Apondar;
respondent was never hired by SEIRI; and while it is true that Mr. Estanislao Agbay is the company
President, he never dispensed the salaries of workers.28
In his first affidavit, Vicente Coming averred that:
6. [Jesus Coming] is a furniture factory worker. In 1982 to 1986, he was working with Ben Mayol as
round core maker/splitter.
7. Thereafter, we joined Okay Okay Yard owned by Amelito Montececillo. This is a rattan trader with
business address near Cebu Rattan Factory on a "Pakiao" basis.
8. However, Jesus and I did not stay long at Okay Okay Yard and instead we joined Eleuterio Agbay
in Labogon, Cebu in 1989. In 1991, we went back to Okay Okay located near the residence of Atty.
Vicente de la Serna in Mandaue City. We were on a "pakiao" basis. We stayed put until 1993 when
we resigned and joined Dodoy Luna in Labogon, Mandaue City as classifier until 1995. In 1996[,]
Jesus rested. It was only in 1997 that he worked back. He replaced me, as a classifier in Rattan
Traders owned by Allan Mayol. But then, towards the end of the year, he left the factory and
relaxed in our place of birth, in Sogod, Cebu.
9. It was only towards the end of 1999 that Jesus was taken back by Allan Mayol as sizing machine
operator. However, the work was off and on basis. Not regular in nature, he was harping a side line
job with me knowing that I am now working with Faustino Apondar that supplies rattan furnitures
[sic] to South East (Intl) Rattan, Inc. As a brother, I allowed Jesus to work with me and collect the
proceeds of his services as part of my collectibles from Faustino Apondar since I was on a "pakiao"
basis. He was working at his pleasure. Which means, he works if he likes to? That will be until 10:00
oclock in the evening.
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x x x x29
The Certification dated January 20, 2004 of Allan Mayol reads:
This is to certify that I personally know Jesus Coming, the brother of Vicente Coming. Jesus is a rattan
factory worker and he was working with me as rattan pole sizing/classifier of my business from 1997 up to
part of 1998 when he left my factory at will. I took him back towards the end of 1999, this time as a sizing
machine operator. In all these years, his services are not regular. He works only if he likes to.30
Faustino Apondar likewise issued a Certification which states:
This is to certify that I am a maker/supplier of finished Rattan Furniture. As such, I have several rattan
furniture workers under me, one of whom is Vicente Coming, the brother of Jesus Coming.
That sometime in 1999, Vicente pleaded to me for a side line job of his brother, Jesus who was already
connected with Allan Mayol. Having vouched for the integrity of his brother and knowing that the job is
temporary in character, I allowed Jesus to work with his brother Vicente. However, the proceeds will be
collected together with his brother Vicente since it was the latter who was working with me. He renders
services to his brother work only after the regular working hours but off and on basis.31
On the other hand, respondent submitted the affidavit executed by Eleoterio Brigoli, Pedro Brigoli,
Napoleon Coming, Efren Coming and Gil Coming who all attested that respondent was their co-worker at
SEIRI.
Their affidavit reads:
We, the undersigned, all of legal ages, Filipino, and resident[s] of Cebu, after having been duly sworn to in
accordance with law, depose and say:
That we are former employees of SOUTH EAST RATTAN which is owned by Estan Eslao Agbay;
That we personally know JESUS COMING considering that we worked together in one company SOUTH
EAST RATTANT [sic];
That we together with JESUS COMING are all under the employ of ESTAN ESLAO AGBAY considering that
the latter is the one directly paying us and holds the absolute control of all aspects of our employment;
That it is not true that JESUS COMING is under the employ of one person other than ESTAN ESLAO AGBAY
OF SOUTH EAST RATTAN;
That Jesus Coming is one of the pioneer employees of SOUTH EAST RATTAN and had been employed
therein for almost twenty years;
That we executed this affidavit to attest to the truth of the foregoing facts and to deny any contrary
allegation made by the company against his employment with SOUTH EAST RATTAN.32
In his decision, Labor Arbiter Carreon found that respondents work as sizing machine operator is usually
necessary and desirable to the rattan furniture business of petitioners and their failure to include
respondent in the employment report to SSS is not conclusive proof that respondent is not their
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employee. As to the affidavit of Vicente Coming, Labor Arbiter Carreon did not give weight to his
statement that respondent is not petitioners employee but that of one Faustino Apondar. Labor Arbiter
Carreon was not convinced that Faustino Apondar is an independent contractor who has a contractual
relationship with petitioners.
In reversing the Labor Arbiter, the NLRC reasoned as follows:
First complainant alleged that he worked continuously from March 17, 1984 up to January 21, 2002.1wphi1
Records reveal however that South East (Intl.) Rattan, Inc. was incorporated only last July 18, 1986 (p. 55
records)[.] Moreover, when they started to actually operate in 1987, the company was engaged purely on
"buying and exporting rattan furniture" hence no manufacturing employees were hired. Furthermore,
from the last quarter of 1989 up to August of 1992, the company suspended operations due to economic
reverses as per Certification issued by the Securities and Exchange Commission (p. 56 records)[.]
Second, for all his insistence that he was a regular employee, complainant failed to present a single payslip,
voucher or a copy of a company payroll showing that he rendered service during the period indicated
therein. x x x
From the above established facts we are inclined to give weight and credence to the Certifications of Allan
Mayol and Faustino Apondar, both suppliers of finished Rattan Furniture (pp. 442-43, records). It appears
that complainant first worked with Allan Mayol and later with Faustino Apondar upon the proddings of his
brother Vicente. Vicentes affidavit as to complainants employment history was more detailed and
forthright. x x x
xxxx
In the case at bar, there is likewise substantial evidence to support our findings that complainant was not
an employee of respondents. Thus:
1. Complainants name does not appear in the list of employees reported to the SSS.
2. His name does not also appear in the sample payrolls of respondents employees.
3. The certification of Allan Mayol and Fasutino Apondar[,] supplier of finished rattan products[,]
that complainant had at one time or another worked with them.
4. The Affidavit of Vicente Coming, complainants full brother[,] attesting that complainant had
never been an employee of respondent. The only connection was that their employer Faustino
Apondar supplies finished rattan products to respondents.33
On the other hand, the CA gave more credence to the declarations of the five former employees of
petitioners that respondent was their co-worker in SEIRI. One of said affiants is Vicente Comings own son,
Gil Coming. Vicente averred in his second affidavit that when he confronted his son, the latter explained
that he was merely told by their Pastor to sign the affidavit as it will put an end to the controversy. Vicente
insisted that his son did not know the contents and implications of the document he signed. As to the
absence of respondents name in the payroll and SSS employment report, the CA observed that the
payrolls submitted were only from January 1, 1999 to December 29, 2000 and not the entire period of
eighteen years when respondent claimed he worked for SEIRI. It further noted that the names of the five
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affiants, whom petitioners admitted to be their former employees, likewise do not appear in the aforesaid
documents. According to the CA, it is apparent that petitioners maintained a separate payroll for certain
employees or willfully retained a portion of the payroll.
x x x As to the "control test", the following facts indubitably reveal that respondents wielded control over
the work performance of petitioner, to wit: (1) they required him to work within the company premises; (2)
they obliged petitioner to report every day of the week and tasked him to usually perform the same job;
(3) they enforced the observance of definite hours of work from 8 oclock in the morning to 5 oclock in
the afternoon; (4) the mode of payment of petitioners salary was under their discretion, at first paying
him on pakiao basis and thereafter, on daily basis; (5) they implemented company rules and regulations;
(6) [Estanislao] Agbay directly paid petitioners salaries and controlled all aspects of his employment and
(7) petitioner rendered work necessary and desirable in the business of the respondent company.34
We affirm the CA.
In Tan v. Lagrama,35 the Court held that the fact that a worker was not reported as an employee to the
SSS is not conclusive proof of the absence of employer-employee relationship. Otherwise, an employer
would be rewarded for his failure or even neglect to perform his obligation.36
Nor does the fact that respondents name does not appear in the payrolls and pay envelope records
submitted by petitioners negate the existence of employer-employee relationship. For a payroll to be
utilized to disprove the employment of a person, it must contain a true and complete list of the
employee.37 In this case, the exhibits offered by petitioners before the NLRC consisting of copies of
payrolls and pay earnings records are only for the years 1999 and 2000; they do not cover the entire 18year period during which respondent supposedly worked for SEIRI.
In their comment to the petition filed by respondent in the CA, petitioners emphasized that in the
certifications issued by Mayol and Apondar, it was shown that respondent was employed and working for
them in those years he claimed to be working for SEIRI. However, a reading of the certification by Mayol
would show that while the latter claims to have respondent under his employ in 1997, 1998 and 1999,
respondents services were not regular and that he works only if he wants to. Apondars certification
likewise stated that respondent worked for him since 1999 through his brother Vicente as "sideline" but
only after regular working hours and "off and on" basis. Even assuming the truth of the foregoing
statements, these do not foreclose respondents regular or full-time employment with SEIRI. In effect,
petitioners suggest that respondent was employed by SEIRIs suppliers, Mayol and Apondar but no
competent proof was presented as to the latters status as independent contractors.
In the same comment, petitioners further admitted that the five affiants who attested to respondents
employment with SEIRI are its former workers whom they describe as "disgruntled workers of SEIRI" with
an axe to grind against petitioners, and that their execution of affidavit in support of respondents claim is
"their very way of hitting back the management of SEIRI after disciplinary measures were meted against
them."38 This allegation though was not substantiated by petitioners. Instead, after the CA rendered its
decision reversing the NLRCs ruling, petitioners subsequently changed their theory by denying the
employment relationship with the five affiants in their motion for reconsideration, thus:
x x x Since the five workers were occupying and working on a leased premises of the private respondent,
they were called workers of SEIRI (private respondent). Such admission however, does not connote
employment. For the truth of the matter, all of the five employees of the supplier assigned at the leased
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premises of the private respondent. Because of the recommendation of the private respondent with
regards to the disciplinary measures meted on the five workers, they wanted to hit back against the
private respondent. Their motive to implicate private respondent was to vindicate. Definitely, they have an
axe to grind against the private respondent. Mention has to be made that despite the dismissal of these
five (5) witnesses from their service, none of them ever went to the National Labor [Relations]
Commission and invoked their rights, if any, against their employer or at the very least against the
respondent. The reason is obvious, since they knew pretty well that they were not employees of SEIRI but
rather under the employ of Allan Mayol and Faustino Apondar, working on a leased premise of
respondent. x x x39
Petitioners admission that the five affiants were their former employees is binding upon them. While they
claim that respondent was the employee of their suppliers Mayol and Apondar, they did not submit proof
that the latter were indeed independent contractors; clearly, petitioners failed to discharge their burden of
proving their own affirmative allegation.40 There is thus no showing that the five former employees of
SEIRI were motivated by malice, bad faith or any ill-motive in executing their affidavit supporting the
claims of respondent.
In any controversy between a laborer and his master, doubts reasonably arising from the evidence are
resolved in favor of the laborer.41
As a regular employee, respondent enjoys the right to security of tenure under Article 27942 of the Labor
Code and may only be dismissed for a just43 or authorized44 cause, otherwise the dismissal becomes
illegal.
Respondent, whose employment was terminated without valid cause by petitioners, is entitled to
reinstatement without loss of seniority rights and other privileges and to his full back wages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time his compensation
was withheld from him up to the time of his actual reinstatement. Where reinstatement is no longer viable
as an option, back wages shall be computed from the time of the illegal termination up to the finality of
the decision. Separation pay equivalent to one month salary for every year of service should likewise be
awarded as an alternative in case reinstatement in not possible.45
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated February 21, 2008 and
Resolution dated February 9, 2009 of the Court of Appeals in CA-G.R. No. CEB-SP No. 02113 are hereby
AFFIRMED and UPHELD.
Petitioners to pay the costs of suit.
SO ORDERED.
10. Tenazas et. al. v. R. Villegas Taxi Transport, April 2, 2014.

G.R. No. 192998
April 2, 2014
BERNARD A. TENAZAS, JAIME M. FRANCISCO and ISIDRO G. ENDRACA, Petitioners,

vs.
R. VILLEGAS TAXI TRANSPORT and ROMUALDO VILLEGAS, Respondents.
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DECISION
REYES, J.:
This is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court, assailing the Decision2
dated March 11, 2010 and Resolution3 dated June 28, 2010 of the Court of Appeals (CA) in CA-G.R. SP No.
111150, which affirmed with modification the Decision4 dated June 23, 2009 of the National Labor Relations
Commission (NLRC) in NLRC LAC Case No. 07-002648-08.
The Antecedent Facts
On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. Francisco (Francisco) filed a complaint for
illegal dismissal against R. Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas
(Andy) (respondents). At that time, a similar case had already been filed by Isidro G. Endraca (Endraca)
against the same respondents. The two (2) cases were subsequently consolidated.5
In their position paper,6 Tenazas, Francisco and Endraca (petitioners) alleged that they were hired and
dismissed by the respondents on the following dates:
Name
Date of Hiring Date of Dismissal Salary
Bernard A. Tenazas 10/1997
07/03/07
Boundary System
Jaime M. Francisco 04/10/04
06/04/07
Boundary System
Isidro G. Endraca
03/06/06
Boundary System7
04/2000
Relaying the circumstances of his dismissal, Tenazas alleged that on July 1, 2007, the taxi unit assigned to
him was sideswiped by another vehicle, causing a dent on the left fender near the driver seat. The cost of
repair for the damage was estimated at P500.00. Upon reporting the incident to the company, he was
scolded by respondents Romualdo and Andy and was told to leave the garage for he is already fired. He
was even threatened with physical harm should he ever be seen in the companys premises again. Despite
the warning, Tenazas reported for work on the following day but was told that he can no longer drive any
of the companys units as he is already fired.8
Francisco, on the other hand, averred that his dismissal was brought about by the companys unfounded
suspicion that he was organizing a labor union. He was instantaneously terminated, without the benefit of
procedural due process, on June 4, 2007.9
Endraca, for his part, alleged that his dismissal was instigated by an occasion when he fell short of the
required boundary for his taxi unit. He related that before he was dismissed, he brought his taxi unit to an
auto shop for an urgent repair. He was charged the amount of P700.00 for the repair services and the
replacement parts. As a result, he was not able to meet his boundary for the day. Upon returning to the
company garage and informing the management of the incident, his drivers license was confiscated and
was told to settle the deficiency in his boundary first before his license will be returned to him. He was no
longer allowed to drive a taxi unit despite his persistent pleas.10
For their part, the respondents admitted that Tenazas and Endraca were employees of the company, the
former being a regular driver and the latter a spare driver. The respondents, however, denied that
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Francisco was an employee of the company or that he was able to drive one of the companys units at any
point in time.11
The respondents further alleged that Tenazas was never terminated by the company. They claimed that on
July 3, 2007, Tenazas went to the company garage to get his taxi unit but was informed that it is due for
overhaul because of some mechanical defects reported by the other driver who takes turns with him in
using the same. He was thus advised to wait for further notice from the company if his unit has already
been fixed. On July 8, 2007, however, upon being informed that his unit is ready for release, Tenazas failed
to report back to work for no apparent reason.12
As regards Endraca, the respondents alleged that they hired him as a spare driver in February 2001. They
allow him to drive a taxi unit whenever their regular driver will not be able to report for work. In July 2003,
however, Endraca stopped reporting for work without informing the company of his reason.
Subsequently, the respondents learned that a complaint for illegal dismissal was filed by Endraca against
them. They strongly maintained, however, that they could never have terminated Endraca in March 2006
since he already stopped reporting for work as early as July 2003. Even then, they expressed willingness to
accommodate Endraca should he wish to work as a spare driver for the company again since he was never
really dismissed from employment anyway.13
On May 29, 2008, the petitioners, by registered mail, filed a Motion to Admit Additional Evidence.14 They
alleged that after diligent efforts, they were able to discover new pieces of evidence that will substantiate
the allegations in their position paper. Attached with the motion are the following: (a) Joint Affidavit of
the petitioners;15 (2) Affidavit of Good Faith of Aloney Rivera, a co-driver;16 (3) pictures of the petitioners
wearing company shirts;17 and (4) Tenazas Certification/Record of Social Security System (SSS)
contributions.18
The Ruling of the Labor Arbiter
On May 30, 2008, the Labor Arbiter (LA) rendered a Decision,19 which pertinently states, thus:
In the case of complainant Jaime Francisco, respondents categorically denied the existence of an
employer-employee relationship. In this situation, the burden of proof shifts to the complainant to prove
the existence of a regular employment. Complainant Francisco failed to present evidence of regular
employment available to all regular employees, such as an employment contract, company ID, SSS,
withholding tax certificates, SSS membership and the like.
In the case of complainant Isidro Endraca, respondents claim that he was only an extra driver who stopped
reporting to queue for available taxi units which he could drive. In fact, respondents offered him in their
Position Paper on record, immediate reinstatement as extra taxi driver which offer he refused.
In case of Bernard Tenazas, he was told to wait while his taxi was under repair but he did not report for
work after the taxi was repaired. Respondents[,] in their Position Paper, on record likewise, offered him
immediate reinstatement, which offer he refused.
We must bear in mind that the complaint herein is one of actual dismissal. But there was no formal
investigations, no show cause memos, suspension memos or termination memos were never issued.
Otherwise stated, there is no proof of overt act of dismissal committed by herein respondents.
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We are therefore constrained to rule that there was no illegal dismissal in the case at bar.
The situations contemplated by law for entitlement to separation pay does [sic] not apply.
WHEREFORE, premises considered, instant consolidated complaints are hereby dismissed for lack of merit.
SO ORDERED.20
The Ruling of the NLRC
Unyielding, the petitioners appealed the decision of the LA to the NLRC. Subsequently, on June 23, 2009,
the NLRC rendered a Decision,21 reversing the appealed decision of the LA, holding that the additional
pieces of evidence belatedly submitted by the petitioners sufficed to establish the existence of employeremployee relationship and their illegal dismissal. It held, thus:
In the challenged decision, the Labor Arbiter found that it cannot be said that the complainants were
illegally dismissed, there being no showing, in the first place, that the respondent [sic] terminated their
services. A portion thereof reads:
"We must bear in mind that the complaint herein is one of actual dismissal. But there were no formal
We are therefore constrained to rule that there was no illegal dismissal in the case at bar."
Issue: [W]hether or not the complainants were illegally dismissed from employment.
It is possible that the complainants Motion to Admit Additional Evidence did not reach the Labor Arbiters
attention because he had drafted the challenged decision even before they submitted it, and thereafter,
his staff attended only to clerical matters, and failed to bring the motion in question to his attention. It is
now up to this Commission to consider the complainants additional evidence. Anyway, if this Commission
must consider evidence submitted for the first time on appeal (Andaya vs. NLRC, G.R. No. 157371, July 15,
2005), much more so must it consider evidence that was simply overlooked by the Labor Arbiter.
Among the additional pieces of evidence submitted by the complainants are the following: (1) joint
affidavit (records, p. 51-52) of the three (3) complainants; (2) affidavit (records, p. 53) of Aloney Rivera y
Aldo; and (3) three (3) pictures (records, p. 54) referred to by the complainant in their joint affidavit
showing them wearing t-shirts bearing the name and logo of the respondents company.
xxxx
WHEREFORE, the decision appealed from is hereby REVERSED. Respondent Rom[u]aldo Villegas doing
business under the name and style Villegas Taxi Transport is hereby ordered to pay the complainants the
following (1) full backwages from the date of their dismissal (July 3, 2007 for Tena[z]as, June 4, 2004 for
Francisco, and March 6, 2006 for Endraca[)] up to the date of the finality of this decision[;] (2) separation
pay equivalent to one month for every year of service; and (3) attorneys fees equivalent to ten percent
(10%) of the total judgment awards.
SO ORDERED.22
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On July 24, 2009, the respondents filed a motion for reconsideration but the NLRC denied the same in its
Resolution23 dated September 23, 2009.
The Ruling of the CA
Unperturbed, the respondents filed a petition for certiorari with the CA. On March 11, 2010, the CA
rendered a Decision,24 affirming with modification the Decision dated June 23, 2009 of the NLRC. The CA
agreed with the NLRCs finding that Tenazas and Endraca were employees of the company, but ruled
otherwise in the case of Francisco for failing to establish his relationship with the company. It also deleted
the award of separation pay and ordered for reinstatement of Tenazas and Endraca. The pertinent
portions of the decision read as follows:
At the outset, We declare that respondent Francisco failed to prove that an employer-employee
relationship exists between him and R. Transport. If there is no employer-employee relationship in the first
place, the duty of R. Transport to adhere to the labor standards provisions of the Labor Code with respect
to Francisco is questionable.
xxxx
Although substantial evidence is not a function of quantity but rather of quality, the peculiar
environmental circumstances of the instant case demand that something more should have been
proffered. Had there been other proofs of employment, such as Franciscos inclusion in R.R.
Transports payroll, this Court would have affirmed the finding of employer-employee relationship.1wphi1
The NLRC, therefore, committed grievous error in ordering R. Transport to answer for Franciscos claims.
We now tackle R. Transports petition with respect to Tenazas and Endraca, who are both admitted to be
R. Transports employees. In its petition, R. Transport puts forth the theory that it did not terminate the
services of respondents but that the latter deliberately abandoned their work. We cannot subscribe to this
theory.
xxxx
Considering that the complaints for illegal dismissal were filed soon after the alleged dates of dismissal, it
cannot be inferred that respondents Tenazas and Endraca intended to abandon their employment. The
complainants for dismissal are, in themselves, pleas for the continuance of employment. They are
incompatible with the allegation of abandonment. x x x.
For R. Transports failure to discharge the burden of proving that the dismissal of respondents Tenazas and
Endraca was for a just cause, We are constrained to uphold the NLRCs conclusion that their dismissal was
not justified and that they are entitled to back wages. Because they were illegally dismissed, private
respondents Tenazas and Endraca are entitled to reinstatement and back wages x x x.
xxxx
However, R. Transport is correct in its contention that separation pay should not be awarded because
reinstatement is still possible and has been offered. It is well[-]settled that separation pay is granted only
in instances where reinstatement is no longer feasible or appropriate, which is not the case here.
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xxxx
WHEREFORE, the Decision of the National Labor Relations Commission dated 23 June 2009, in NLRC LAC
Case No. 07-002648-08, and its Resolution dated 23 September 2009 denying reconsideration thereof are
AFFIRMED with MODIFICATION in that the award of Jaime Franciscos claims is DELETED. The separation
pay granted in favor of Bernard Tenazas and Isidro Endraca is, likewise, DELETED and their reinstatement is
ordered instead.
SO ORDERED.25 (Citations omitted)
On March 19, 2010, the petitioners filed a motion for reconsideration but the same was denied by the CA in
its Resolution26 dated June 28, 2010.
Undeterred, the petitioners filed the instant petition for review on certiorari before this Court on July 15,
2010.
The Ruling of this Court
The petition lacks merit.
Pivotal to the resolution of the instant case is the determination of the existence of employer-employee
relationship and whether there was an illegal dismissal. Remarkably, the LA, NLRC and the CA had varying
assessment on the matters at hand. The LA believed that, with the admission of the respondents, there is
no longer any question regarding the status of both Tenazas and Endraca being employees of the
company. However, he ruled that the same conclusion does not hold with respect to Francisco whom the
respondents denied to have ever employed or known. With the respondents denial, the burden of proof
shifts to Francisco to establish his regular employment. Unfortunately, the LA found that Francisco failed
to present sufficient evidence to prove regular employment such as company ID, SSS membership,
withholding tax certificates or similar articles. Thus, he was not considered an employee of the company.
Even then, the LA held that Tenazas and Endraca could not have been illegally dismissed since there was
no overt act of dismissal committed by the respondents.27
On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners were all employees of the
company. The NLRC premised its conclusion on the additional pieces of evidence belatedly submitted by
the petitioners, which it supposed, have been overlooked by the LA owing to the time when it was
received by the said office. It opined that the said pieces of evidence are sufficient to establish the
circumstances of their illegal termination. In particular, it noted that in the affidavit of the petitioners,
there were allegations about the companys practice of not issuing employment records and this was not
rebutted by the respondents. It underscored that in a situation where doubt exists between evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the employee.
It awarded the petitioners with: (1) full backwages from the date of their dismissal up to the finality of the
decision; (2) separation pay equivalent to one month of salary for every year of service; and (3) attorneys
fees.
On petition for certiorari, the CA affirmed with modification the decision of the NLRC, holding that there
was indeed an illegal dismissal on the part of Tenazas and Endraca but not with respect to Francisco who
failed to present substantial evidence, proving that he was an employee of the respondents. The CA
likewise dismissed the respondents claim that Tenazas and Endraca abandoned their work, asseverating
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that immediate filing of a complaint for illegal dismissal and persistent pleas for continuance of
employment are incompatible with abandonment. It also deleted the NLRCs award of separation pay and
instead ordered that Tenazas and Endraca be reinstated.28
"Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari under Rule 45
of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual
findings complained of are completely devoid of support from the evidence on record, or the assailed
judgment is based on a gross misapprehension of facts."29 The Court finds that none of the mentioned
circumstances is present in this case.
In reviewing the decision of the NLRC, the CA found that no substantial evidence was presented to
support the conclusion that Francisco was an employee of the respondents and accordingly modified the
NLRC decision. It stressed that with the respondents denial of employer-employee relationship, it
behooved Francisco to present substantial evidence to prove that he is an employee before any question
on the legality of his supposed dismissal becomes appropriate for discussion. Francisco, however, did not
offer evidence to substantiate his claim of employment with the respondents. Short of the required
quantum of proof, the CA correctly ruled that the NLRCs finding of illegal dismissal and the monetary
awards which necessarily follow such ruling lacked factual and legal basis and must therefore be deleted.
The action of the CA finds support in Anonas Construction and Industrial Supply Corp., et al. v. NLRC, et
al.,30 where the Court reiterated:
[J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65, as a general rule, is
confined only to issues of lack or excess of jurisdiction and grave abuse of discretion on the part of the
NLRC. The CA does not assess and weigh the sufficiency of evidence upon which the LA and the NLRC
based their conclusions. The issue is limited to the determination of whether or not the NLRC acted
without or in excess of its jurisdiction, or with grave abuse of discretion in rendering the resolution, except
if the findings of the NLRC are not supported by substantial evidence.31 (Citation omitted and emphasis
ours)
It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial proceedings, "the
quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion."32 "[T]he burden of proof rests upon
the party who asserts the affirmative of an issue."33 Corollarily, as Francisco was claiming to be an
employee of the respondents, it is incumbent upon him to proffer evidence to prove the existence of said
relationship.
"[I]n determining the presence or absence of an employer-employee relationship, the Court has
consistently looked for the following incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The last element, the so-called
control test, is the most important element."34
There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant
evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security
registration, appointment letters or employment contracts, payrolls, organization charts, and personnel
lists, serve as evidence of employee status.35
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In this case, however, Francisco failed to present any proof substantial enough to establish his relationship
with the respondents. He failed to present documentary evidence like attendance logbook, payroll, SSS
record or any personnel file that could somehow depict his status as an employee. Anent his claim that he
was not issued with employment records, he could have, at least, produced his social security records
which state his contributions, name and address of his employer, as his co-petitioner Tenazas did. He could
have also presented testimonial evidence showing the respondents exercise of control over the means
and methods by which he undertakes his work. This is imperative in light of the respondents denial of his
employment and the claim of another taxi operator, Emmanuel Villegas (Emmanuel), that he was his
employer. Specifically, in his Affidavit,36 Emmanuel alleged that Francisco was employed as a spare driver
in his taxi garage from January 2006 to December 2006, a fact that the latter failed to deny or question in
any of the pleadings attached to the records of this case. The utter lack of evidence is fatal to Franciscos
case especially in cases like his present predicament when the law has been very lenient in not requiring
any particular form of evidence or manner of proving the presence of employer-employee relationship.
In Opulencia Ice Plant and Storage v. NLRC,37 this Court emphasized, thus:
No particular form of evidence is required to prove the existence of an employer-employee relationship.
Any competent and relevant evidence to prove the relationship may be admitted. For, if only documentary
evidence would be required to show that relationship, no scheming employer would ever be brought
before the bar of justice, as no employer would wish to come out with any trace of the illegality he has
authored considering that it should take much weightier proof to invalidate a written instrument.38
Here, Francisco simply relied on his allegation that he was an employee of the company without any other
evidence supporting his claim. Unfortunately for him, a mere allegation in the position paper is not
tantamount to evidence.39 Bereft of any evidence, the CA correctly ruled that Francisco could not be
considered an employee of the respondents.
The CAs order of reinstatement of Tenazas and Endraca, instead of the payment of separation pay, is also
well in accordance with prevailing jurisprudence. In Macasero v. Southern Industrial Gases Philippines,40
the Court reiterated, thus:
[A]n illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.1wphi1 The two
reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because
of strained relations between the employee and the employer, separation pay is granted. In effect, an
illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement
is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages.41 (Emphasis supplied)
Clearly, it is only when reinstatement is no longer feasible that the payment of separation pay is ordered in
lieu thereof. For instance, if reinstatement would only exacerbate the tension and strained relations
between the parties, or where the relationship between the employer and the employee has been unduly
strained by reason of their irreconcilable differences, it would be more prudent to order payment of
separation pay instead of reinstatement.42
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This doctrine of strained relations, however, should not be used recklessly or applied loosely43 nor be
based on impression alone. "It bears to stress that reinstatement is the rule and, for the exception of
strained relations to apply, it should be proved that it is likely that if reinstated, an atmosphere of
antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the
employee concerned."44
Moreover, the existence of strained relations, it must be emphasized, is a question of fact. In Golden Ace
Builders v. Talde,45 the Court underscored:
Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence
substantial evidence to show that the relationship between the employer and the employee is indeed
strained as a necessary consequence of the judicial controversy.46 (Citations omitted and emphasis ours)
After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of separation
pay to the petitioners. The NLRC decision did not state the facts which demonstrate that reinstatement is
no longer a feasible option that could have justified the alternative relief of granting separation pay
instead.
The petitioners themselves likewise overlooked to allege circumstances which may have rendered their
reinstatement unlikely or unwise and even prayed for reinstatement alongside the payment of separation
pay in their position paper.47 A bare claim of strained relations by reason of termination is insufficient to
warrant the granting of separation pay. Likewise, the filing of the complaint by the petitioners does not
necessarily translate to strained relations between the parties. As a rule, no strained relations should arise
from a valid and legal act asserting ones right.48 Although litigation may also engender a certain degree
of hostility, the understandable strain in the parties relation would not necessarily rule out reinstatement
which would, otherwise, become the rule rather the exception in illegal dismissal cases.49 Thus, it was a
prudent call for the CA to delete the award of separation pay and order for reinstatement instead, in
accordance with the general rule stated in Article 27950 of the Labor Code.
Finally, the Court finds the computation of the petitioners' backwages at the rate of P800.00 daily
reasonable and just under the circumstances. The said rate is consistent with the ruling of this Court in
Hyatt Taxi Services, Inc. v. Catinoy,51 which dealt with the same matter.
WHEREFORE, in view of the foregoing disquisition, the petition for review on certiorari is DENIED. The
Decision dated March 11, 2010 and Resolution dated June 28, 2010 of the Court of Appeals in CA-G.R. SP No.
111150 are AFFIRMED.
SO ORDERED.
11. Tongko v. Manufacturers Life Insurance Co. , November 7, 2008
G.R. No. 167622
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GREGORIO V. TONGKO, petitioner

vs.
THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS, respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the reversal of the March 29, 2005 Decision1 of
the Court of Appeals (CA) in CA-G.R. SP No. 88253, entitled The Manufacturers Life Insurance Co. (Phils.), Inc.
v. National Labor Relations Commission and Gregorio V. Tongko. The assailed decision set aside the Decision
dated September 27, 2004 and Resolution dated December 16, 2004 rendered by the National Labor
Relations Commission (NLRC) in NLRC NCR CA No. 040220-04.
The Facts
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life
insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief
Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by
virtue of a Career Agent's Agreement2 (Agreement) he executed with Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is an independent contractor and nothing contained
herein shall be construed or interpreted as creating an employer-employee relationship between
the Company and the Agent.
xxxx
a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and other
products offered by the Company, and collect, in exchange for provisional receipts issued by the
Agent, money due or to become due to the Company in respect of applications or policies obtained
by or through the Agent or from policyholders allotted by the Company to the Agent for servicing,
subject to subsequent confirmation of receipt of payment by the Company as evidenced by an
Official Receipt issued by the Company directly to the policyholder.
xxxx
The Company may terminate this Agreement for any breach or violation of any of the provisions
hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of
the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation
of the right to terminate this Agreement by the Company shall be construed for any previous failure
to exercise its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by
giving to the other party fifteen (15) days notice in writing. x x x
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In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he
became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting
of commissions, persistency income, and management overrides, may be summarized as follows:
January to December 10, 2002
P 865,096.07
2001
6,214,737.11
2000
8,003,180.38
1999
6,797,814.05
1998
4,805,166.34
1997
2,822,620.003
The problem started sometime in 2001, when Manulife instituted manpower development programs in the
regional sales management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 4 to
Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. In the letter, De Dios stated:
The first step to transforming Manulife into a big league player has been very clear - to increase the
number of agents to at least 1,000 strong for a start. This may seem diametrically opposed to the
way Manulife was run when you first joined the organization. Since then, however, substantial
changes have taken place in the organization, as these have been influenced by developments both
from within and without the company.
xxxx
The issues around agent recruiting are central to the intended objectives hence the need for a
Senior Managers' meeting earlier last month when Kevin O'Connor, SVP - Agency, took to the floor
to determine from our senior agency leaders what more could be done to bolster manpower
development. At earlier meetings, Kevin had presented information where evidently, your Region
was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today,
continues to remain one of the laggards in this area.
While discussions, in general, were positive other than for certain comments from your end which
were perceived to be uncalled for, it became clear that a one-on-one meeting with you was
necessary to ensure that you and management, were on the same plane. As gleaned from some of
your previous comments in prior meetings (both in group and one-on-one), it was not clear that we
were proceeding in the same direction.
Kevin held subsequent series of meetings with you as a result, one of which I joined briefly. In those
subsequent meetings you reiterated certain views, the validity of which we challenged and
subsequently found as having no basis.
With such views coming from you, I was a bit concerned that the rest of the Metro North Managers
may be a bit confused as to the directions the company was taking. For this reason, I sought a
meeting with everyone in your management team, including you, to clear the air, so to speak.
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This note is intended to confirm the items that were discussed at the said Metro North Region's
Sales Managers meeting held at the 7/F Conference room last 18 October.
xxxx
Issue # 2: "Some Managers are unhappy with their earnings and would want to revert to the
position of agents."
This is an often repeated issue you have raised with me and with Kevin. For this reason, I placed the
issue on the table before the rest of your Region's Sales Managers to verify its validity. As you must
have noted, no Sales Manager came forward on their own to confirm your statement and it took
you to name Malou Samson as a source of the same, an allegation that Malou herself denied at our
meeting and in your very presence.
This only confirms, Greg, that those prior comments have no solid basis at all. I now believe what I
had thought all along, that these allegations were simply meant to muddle the issues surrounding
the inability of your Region to meet its agency development objectives!
Issue # 3: "Sales Managers are doing what the company asks them to do but, in the process, they
earn less."
xxxx
All the above notwithstanding, we had your own records checked and we found that you made a
lot more money in the Year 2000 versus 1999. In addition, you also volunteered the information to
Kevin when you said that you probably will make more money in the Year 2001 compared to Year
2000. Obviously, your above statement about making "less money" did not refer to you but the
way you argued this point had us almost believing that you were spouting the gospel of truth when
you were not. x x x
xxxx
All of a sudden, Greg, I have become much more worried about your ability to lead this group
towards the new direction that we have been discussing these past few weeks, i.e., Manulife's goal
to become a major agency-led distribution company in the Philippines. While as you claim, you have
not stopped anyone from recruiting, I have never heard you proactively push for greater agency
recruiting. You have not been proactive all these years when it comes to agency growth.
xxxx
I cannot afford to see a major region fail to deliver on its developmental goals next year and so, we
are making the following changes in the interim:
1. You will hire at your expense a competent assistant who can unload you of much of the
routine tasks which can be easily delegated. This assistant should be so chosen as to
complement your skills and help you in the areas where you feel "may not be your cup of
tea".
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You have stated, if not implied, that your work as Regional Manager may be too taxing for
you and for your health. The above could solve this problem.
xxxx
2. Effective immediately, Kevin and the rest of the Agency Operations will deal with the
North Star Branch (NSB) in autonomous fashion. x x x
I have decided to make this change so as to reduce your span of control and allow you to
concentrate more fully on overseeing the remaining groups under Metro North, your Central
Unit and the rest of the Sales Managers in Metro North. I will hold you solely responsible for
meeting the objectives of these remaining groups.
xxxx
The above changes can end at this point and they need not go any further. This, however, is entirely
dependent upon you. But you have to understand that meeting corporate objectives by everyone is
primary and will not be compromised. We are meeting tough challenges next year and I would
want everybody on board. Any resistance or holding back by anyone will be dealt with accordingly.
Subsequently, De Dios wrote Tongko another letter dated December 18, 2001, 5 terminating Tongko's
services, thus:
It would appear, however, that despite the series of meetings and communications, both one-onone meetings between yourself and SVP Kevin O'Connor, some of them with me, as well as group
meetings with your Sales Managers, all these efforts have failed in helping you align your directions
with Management's avowed agency growth policy.
xxxx
On account thereof, Management is exercising its prerogative under Section 14 of your Agents
Contract as we are now issuing this notice of termination of your Agency Agreement with us
effective fifteen days from the date of this letter.
Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal
dismissal. The case, docketed as NLRC NCR Case No. 11-10330-02, was raffled to Labor Arbiter Marita V.
Padolina.
In the Complaint, Tongko, in a bid to establish an employer-employee relationship, alleged that De Dios
gave him specific directives on how to manage his area of responsibility in the latter's letter dated
November 6, 2001. He further claimed that Manulife exercised control over him as follows:
Such control was certainly exercised by respondents over the herein complainant. It was Manulife
who hired, promoted and gave various assignments to him. It was the company who set objectives
as regards productions, recruitment, training programs and all activities pertaining to its business.
Manulife prescribed a Code of Conduct which would govern in minute detail all aspects of the work
to be undertaken by employees, including the sales process, the underwriting process, signatures,
handling of money, policyholder service, confidentiality, legal and regulatory requirements and
grounds for termination of employment. The letter of Mr. De Dios dated 06 November 2001 left no
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doubt as to who was in control. The subsequent termination letter dated 18 December 2001 again
established in no uncertain terms the authority of the herein respondents to control the employees
of Manulife. Plainly, the respondents wielded control not only as to the ends to be achieved but the
ways and means of attaining such ends.6
Tongko bolstered his argument by citing Insular Life Assurance Co., Ltd. v. NLRC (4 th Division)7 and Great
Pacific Life Assurance Corporation v. NLRC,8 which Tongko claimed to be similar to the instant case.
Tongko further claimed that his dismissal was without basis and that he was not afforded due process. He
also cited the Manulife Code of Conduct by which his actions were controlled by the company.
Manulife then filed a Position Paper with Motion to Dismiss dated February 27, 2003, 9 in which it alleged
that Tongko is not its employee, and that it did not exercise "control" over him. Thus, Manulife claimed
that the NLRC has no jurisdiction over the case.
In a Decision dated April 15, 2004, Labor Arbiter Marita V. Padolina dismissed the complaint for lack of an
employer-employee relationship. Padolina found that applying the four-fold test in determining the
existence of an employer-employee relationship, none was found in the instant case. The dispositive
portion thereof states:
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the instant complaint
for lack of jurisdiction, there being no employer-employee relationship between the parties.
SO ORDERED.
Tongko appealed the arbiter's Decision to the NLRC which reversed the same and rendered a Decision
dated September 27, 2004 finding Tongko to have been illegally dismissed.
The NLRC's First Division, while finding an employer-employee relationship between Manulife and Tongko
applying the four-fold test, held Manulife liable for illegal dismissal. It further stated that Manulife
exercised control over Tongko as evidenced by the letter dated November 6, 2001 of De Dios and wrote:
The above-mentioned letter shows the extent to which respondents controlled complainant's
manner and means of doing his work and achieving the goals set by respondents. The letter shows
how respondents concerned themselves with the manner complainant managed the Metro North
Region as Regional Sales Manager, to the point that respondents even had a say on how
complainant interacted with other individuals in the Metro North Region. The letter is in fact
replete with comments and criticisms on how complainant carried out his functions as Regional
Sales Manager.
More importantly, the letter contains an abundance of directives or orders that are intended to
directly affect complainant's authority and manner of carrying out his functions as Regional Sales
Manager.10 x x x
Additionally, the First Division also ruled that:
Further evidence of [respondents'] control over complainant can be found in the records of the
case. [These] are the different codes of conduct such as the Agent Code of Conduct, the Manulife
Financial Code of Conduct, and the Manulife Financial Code of Conduct Agreement, which serve as
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the foundations of the power of control wielded by respondents over complainant that is further
manifested in the different administrative and other tasks that he is required to perform. These
codes of conduct corroborate and reinforce the display of respondents' power of control in their 06
November 2001 Letter to complainant.11
The fallo of the September 27, 2004 Decision reads:
WHEREFORE, premises considered, the appealed Decision is hereby reversed and set aside. We find
complainant to be a regular employee of respondent Manulife and that he was illegally dismissed
from employment by respondents.
In lieu of reinstatement, respondent Manulife is hereby ordered to pay complainant separation pay
as above set forth. Respondent Manulife is further ordered to pay complainant backwages from
the time he was dismissed on 02 January 2002 up to the finality of this decision also as indicated
above.
xxxx
All other claims are hereby dismissed for utter lack of merit.
From this Decision, Manulife filed a motion for reconsideration which was denied by the NLRC First
Division in a Resolution dated December 16, 2004.12
Thus, Manulife filed an appeal with the CA docketed as CA-G.R. SP No. 88253. Thereafter, the CA issued the
assailed Decision dated March 29, 2005, finding the absence of an employer-employee relationship
between the parties and deeming the NLRC with no jurisdiction over the case. The CA arrived at this
conclusion while again applying the four-fold test. The CA found that Manulife did not exercise control
over Tongko that would render the latter an employee of Manulife. The dispositive portion reads:
WHEREFORE, premises considered, the present petition is hereby GRANTED and the writ prayed for
accordingly GRANTED. The assailed Decision dated September 27, 2004 and Resolution dated
December 16, 2004 of the National Labor Relations Commission in NLRC NCR Case No. 00-11-103302002 (NLRC NCR CA No. 040220-04) are hereby ANNULLED and SET ASIDE. The Decision dated April
15, 2004 of Labor Arbiter Marita V. Padolina is hereby REINSTATED.
Hence, Tongko filed this petition and presented the following issues:
A
The Court of Appeals committed grave abuse of discretion in granting respondents' petition for
certiorari.
B
The Court of Appeals committed grave abuse of discretion in annulling and setting aside the
Decision dated September 27, 2004 and Resolution dated December 16, 2004 in finding that there is
no employer-employee relationship between petitioner and respondent.
C
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The Court of Appeals committed grave abuse of discretion in annulling and setting aside the
Decision dated September 27, 2004 and Resolution dated December 16, 2004 which found
petitioner to have been illegally dismissed and ordered his reinstatement with payment of
backwages.13
Restated, the issues are: (1) Was there an employer-employee relationship between Manulife and Tongko?
and (2) If yes, was Manulife guilty of illegal dismissal?
The Court's Ruling
This petition is meritorious.
Tongko Was An Employee of Manulife
The basic issue of whether or not the NLRC has jurisdiction over the case resolves itself into the question
of whether an employer-employee relationship existed between Manulife and Tongko. If no employeremployee relationship existed between the two parties, then jurisdiction over the case properly lies with
the Regional Trial Court.
relationship, thus:
Jurisprudence is firmly settled that whenever the existence of an employment relationship is in
dispute, four elements constitute the reliable yardstick: (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. It is the so-called "control test" which constitutes the most
important index of the existence of the employer-employee relationship that is, whether the
employer controls or has reserved the right to control the employee not only as to the result of the
work to be done but also as to the means and methods by which the same is to be accomplished.
Stated otherwise, an employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end to be achieved but also the
means to be used in reaching such end.14
The NLRC, for its part, applied the four-fold test and found the existence of all the elements and declared
Tongko an employee of Manulife. The CA, on the other hand, found that the element of control as an
indicator of the existence of an employer-employee relationship was lacking in this case. The NLRC and the
CA based their rulings on the same findings of fact but differed in their interpretations.
The NLRC arrived at its conclusion, first, on the basis of the letter dated November 6, 2001 addressed by De
Dios to Tongko. According to the NLRC, the letter contained "an abundance of directives or orders that are
intended to directly affect complainant's authority and manner of carrying out his functions as Regional
Sales Manager." It enumerated these "directives" or "orders" as follows:
1. You will hire at your expense a competent assistant who can unload you of much of the routine
tasks which can be easily delegated. x x x
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xxxx
This assistant should be hired immediately.
2. Effective immediately, Kevin and the rest of the Agency Operations will deal with the North Star
Branch (NSB) in autonomous fashion x x x.
xxxx
I have decided to make this change so as to reduce your span of control and allow you to
concentrate more fully on overseeing the remaining groups under Metro North, your Central Unit
and the rest of the Sales Managers in Metro North. x x x
3. Any resistance or holding back by anyone will be dealt with accordingly.
4. I have been straightforward in this my letter and I know that we can continue to work together
but it will have to be on my terms. Anything else is unacceptable!
The NLRC further ruled that the different codes of conduct that were applicable to Tongko served as the
foundations of the power of control wielded by Manulife over Tongko that is further manifested in the
different administrative and other tasks that he was required to perform.
The NLRC also found that Tongko was required to render exclusive service to Manulife, further bolstering
the existence of an employer-employee relationship.
Finally, the NLRC ruled that Tongko was integrated into a management structure over which Manulife
exercised control, including the actions of its officers. The NLRC held that such integration added to the
fact that Tongko did not have his own agency belied Manulife's claim that Tongko was an independent
contractor.
The CA, however, considered the finding of the existence of an employer-employee relationship by the
NLRC as far too sweeping having as its only basis the letter dated November 6, 2001 of De Dios. The CA did
not concur with the NLRC's ruling that the elements of control as pointed out by the NLRC are "sufficient
indicia of control that negates independent contractorship and conclusively establish an employeremployee relationship between"15 Tongko and Manulife. The CA ruled that there is no employer-employee
relationship between Tongko and Manulife.
An impasse appears to have been reached between the CA and the NLRC on the sole issue of control over
an employee's conduct. It bears clarifying that such control not only applies to the work or goal to be done
but also to the means and methods to accomplish it.16 In Sonza v. ABS-CBN Broadcasting Corporation, we
explained that not all forms of control would establish an employer-employee relationship, to wit:
Further, not every form of control that a party reserves to himself over the conduct of the other
party in relation to the services being rendered may be accorded the effect of establishing an
employer-employee relationship. The facts of this case fall squarely with the case of Insular Life
Assurance Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve as guidelines towards
the achievement of the mutually desired result without dictating the means or methods to
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be employed in attaining it, and those that control or fix the methodology and bind or
restrict the party hired to the use of such means. The first, which aim only to promote the
result, create no employer-employee relationship unlike the second, which address both
the result and the means used to achieve it.17 (Emphasis supplied.)
We ruled in Insular Life Assurance Co., Ltd. v. NLRC (Insular) that:
It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide
its commission agents in selling its policies that they may not run afoul of the law and what it
requires or prohibits. Of such a character are the rules which prescribe the qualifications of persons
who may be insured, subject insurance applications to processing and approval by the Company,
and also reserve to the Company the determination of the premiums to be paid and the schedules
of payment. None of these really invades the agent's contractual prerogative to adopt his own
selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be
said to establish an employer-employee relationship between him and the company.18
Hence, we ruled in Insular that no employer-employee relationship existed therein. However, such ruling
was tempered with the qualification that had there been evidence that the company promulgated rules or
regulations that effectively controlled or restricted an insurance agent's choice of methods or the
methods themselves in selling insurance, an employer-employee relationship would have existed. In other
words, the Court in Insular in no way definitively held that insurance agents are not employees of
insurance companies, but rather made the same a case-to-case basis. We held:
The respondents limit themselves to pointing out that Basiao's contract with the Company bound
him to observe and conform to such rules and regulations as the latter might from time to time
prescribe. No showing has been made that any such rules or regulations were in fact
promulgated, much less that any rules existed or were issued which effectively controlled or
restricted his choice of methods or the methods themselves of selling insurance. Absent such
showing, the Court will not speculate that any exceptions or qualifications were imposed on the
express provision of the contract leaving Basiao "... free to exercise his own judgment as to the
time, place and means of soliciting insurance."19 (Emphasis supplied.)
There is no conflict between our rulings in Insular and in Great Pacific Life Assurance Corporation. We said
in the latter case:
[I]t cannot be gain said that Grepalife had control over private respondents' performance as well as
the result of their efforts. A cursory reading of their respective functions as enumerated in their
contracts reveals that the company practically dictates the manner by which their jobs are to be
carried out. For instance, the District Manager must properly account, record and document the
company's funds spot-check and audit the work of the zone supervisors, conserve the company's
business in the district through reinstatements', follow up the submission of weekly remittance
reports of the debit agents and zone supervisors, preserve company property in good condition,
train understudies for the position of district manager, and maintain his quota of sales (the failure
of which is a ground for termination). On the other hand, a zone supervisor must direct and
supervise the sales activities of the debit agents under him, conserve company property through
"reinstatements", undertake and discharge the functions of absentee debit agents, spot-check the
records of debit agents, and insure proper documentation of sales and collections by the debit
agents.20 (Emphasis supplied.)
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Based on the foregoing cases, if the specific rules and regulations that are enforced against insurance
agents or managers are such that would directly affect the means and methods by which such agents or
managers would achieve the objectives set by the insurance company, they are employees of the
insurance company.
In the instant case, Manulife had the power of control over Tongko that would make him its employee.
Several factors contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:
The Agent hereby agrees to comply with all regulations and requirements of the Company as herein
provided as well as maintain a standard of knowledge and competency in the sale of the Company's
products which satisfies those set by the Company and sufficiently meets the volume of new
business required of Production Club membership. 21
Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with
the regulations and requirements of the company; (2) maintenance of a level of knowledge of the
company's products that is satisfactory to the company; and (3) compliance with a quota of new
businesses.
Among the company regulations of Manulife are the different codes of conduct such as the Agent Code of
Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement, which
demonstrate the power of control exercised by the company over Tongko. The fact that Tongko was
obliged to obey and comply with the codes of conduct was not disowned by respondents.
Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of
Manulife may already be established. Certainly, these requirements controlled the means and methods by
which Tongko was to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform
administrative duties that establishes his employment with Manulife.
In its Comment (Re: Petition for Review dated 15 April 2005) dated August 5, 2005, Manulife attached
affidavits of its agents purportedly to support its claim that Tongko, as a Regional Sales Manager, did not
perform any administrative functions. An examination of these affidavits would, however, prove the
opposite.
In an Affidavit dated April 28, 2003,22 John D. Chua, a Regional Sales Manager of Manulife, stated:
4. On September 1, 1996, my services were engaged by Manulife as an Agency Regional Sales
Manager ("RSM") for Metro South Region pursuant to an Agency Contract. As such RSM, I have the
following functions:
1. Refer and recommend prospective agents to Manulife
2. Coach agents to become productive
3. Regularly meet with, and coordinate activities of agents affiliated to my region.
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While Amada Toledo, a Branch Manager of Manulife, stated in her Affidavit dated April 29, 2003 23 that:
3. In January 1997, I was assigned as a Branch Manager ("BM") of Manulife for the Metro North
Sector;
4. As such BM, I render the following services:
a. Refer and recommend prospective agents to Manulife;
b. Train and coordinate activities of other commission agents;
c. Coordinate activities of Agency Managers who, in turn, train and coordinate activites of
other commission agents;
d. Achieve agreed production objectives in terms of Net Annualized Commissions and Case
Count and recruitment goals; and
e. Sell the various products of Manulife to my personal clients.
While Ma. Lourdes Samson, a Unit Manager of Manulife, stated in her Affidavit dated April 28, 2003 24 that:
3. In 1977, I was assigned as a Unit Manager ("UM") of North Peaks Unit, North Star Branch, Metro
North Region;
4. As such UM, I render the following services:
a. To render or recommend prospective agents to be licensed, trained and contracted to sell
Manulife products and who will be part of my Unit;
b. To coordinate activities of the agents under my Unit in their daily, weekly and monthly
selling activities, making sure that their respective sales targets are met;
c. To conduct periodic training sessions for my agents to further enhance their sales skills.
d. To assist my agents with their sales activities by way of joint fieldwork, consultations and
one-onone evaluation and analysis of particular accounts.
e. To provide opportunities to motivate my agents to succeed like conducting promos to
increase sales activities and encouraging them to be involved in company and industry
activities.
f. To provide opportunities for professional growth to my agents by encouraging them to be
a member of the LUCAP (Life Underwriters Association of the Philippines).
A comparison of the above functions and those contained in the Agreement with those cited in Great
Pacific Life Assurance Corporation25 reveals a striking similarity that would more than support a similar
finding as in that case. Thus, there was an employer-employee relationship between the parties.
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Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number
of agents, in addition to his other administrative functions, leads to no other conclusion that he was an
employee of Manulife.
In his letter dated November 6, 2001, De Dios harped on the direction of Manulife of becoming a major
agency-led distribution company whereby greater agency recruitment is required of the managers,
including Tongko. De Dios made it clear that agent recruitment has become the primary means by which
Manulife intends to sell more policies. More importantly, it is Tongko's alleged failure to follow this
principle of recruitment that led to the termination of his employment with Manulife. With this, it is
inescapable that Tongko was an employee of Manulife.
Tongko Was Illegally Dismissed
In its Petition for Certiorari dated January 7, 200526 filed before the CA, Manulife argued that even if
Tongko is considered as its employee, his employment was validly terminated on the ground of gross and
habitual neglect of duties, inefficiency, as well as willful disobedience of the lawful orders of Manulife.
Manulife stated:
In the instant case, private respondent, despite the written reminder from Mr. De Dios refused to
shape up and altogether disregarded the latter's advice resulting in his laggard performance clearly
indicative of his willful disobedience of the lawful orders of his superior. x x x
xxxx
As private respondent has patently failed to perform a very fundamental duty, and that is to yield
obedience to all reasonable rules, orders and instructions of the Company, as well as gross failure
to reach at least minimum quota, the termination of his engagement from Manulife is highly
warranted and therefore, there is no illegal dismissal to speak of.
It is readily evident from the above-quoted portions of Manulife's petition that it failed to cite a single iota
of evidence to support its claims. Manulife did not even point out which order or rule that Tongko
disobeyed. More importantly, Manulife did not point out the specific acts that Tongko was guilty of that
would constitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's
alleged "laggard performance," without substantiating such claim, and equated the same to disobedience
and neglect of duty.
We cannot, therefore, accept Manulife's position.
In Quebec, Sr. v. National Labor Relations Commission, we ruled that:
When there is no showing of a clear, valid and legal cause for the termination of employment, the
law considers the matter a case of illegal dismissal and the burden is on the employer to prove that
the termination was for a valid or authorized cause. This burden of proof appropriately lies on the
shoulders of the employer and not on the employee because a worker's job has some of the
characteristics of property rights and is therefore within the constitutional mantle of protection. No
person shall be deprived of life, liberty or property without due process of law, nor shall any person
be denied the equal protection of the laws.
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Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of
proving the validity of the termination of employment rests on the employer. Failure to discharge
this evidential burden would necessarily mean that the dismissal was not justified, and, therefore,
illegal.27
We again ruled in Times Transportation Co., Inc. v. National Labor Relations Commission that:
The law mandates that the burden of proving the validity of the termination of employment rests
with the employer. Failure to discharge this evidentiary burden would necessarily mean that the
dismissal was not justified, and, therefore, illegal. Unsubstantiated suspicions, accusations and
conclusions of employers do not provide for legal justification for dismissing employees. In case of
doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of our
labor laws and Constitution.28
This burden of proof was clarified in Community Rural Bank of San Isidro (N.E.), Inc. v. Paez to mean
substantial evidence, to wit:
The Labor Code provides that an employer may terminate the services of an employee for just
cause and this must be supported by substantial evidence. The settled rule in administrative and
quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the
legality of an employer's dismissal of an employee, and not even a preponderance of evidence is
necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere
scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support
a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. 29
Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed to
identify the specific acts by which Tongko's employment was terminated much less support the same with
substantial evidence. To repeat, mere conjectures cannot work to deprive employees of their means of
livelihood. Thus, it must be concluded that Tongko was illegally dismissed.
Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its
employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however,
Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal
dismissal. In Quebec, Sr., we also stated:
Furthermore, not only does our legal system dictate that the reasons for dismissing a worker must
be pertinently substantiated, it also mandates that the manner of dismissal must be properly done,
otherwise, the termination itself is gravely defective and may be declared unlawful.30
For breach of the due process requirements, Manulife is liable to Tongko in the amount of PhP 30,000 as
indemnity in the form of nominal damages.31
Finally, Manulife raises the issue of the correctness of the computation of the award to Tongko made by
the NLRC by claiming that Songco v. National Labor Relations Commission32 is inapplicable to the instant
case, considering that Songco was dismissed on the ground of retrenchment.
An examination of Songco reveals that it may be applied to the present case. In that case, Jose Songco was
a salesman of F.E. Zuellig (M), Inc. which terminated the services of Songco on the ground of
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retrenchment due to financial losses. The issue raised to the Court, however, was whether commissions
are considered as part of wages in order to determine separation pay. Thus, the fact that Songco was
dismissed due to retrenchment does not hamper the application thereof to the instant case. What is
pivotal is that we ruled in Songco that commissions are part of wages for the determination of separation
pay.
Article 279 of the Labor Code on security of tenure pertinently provides that:
In cases of regular employment the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
In Triad Security & Allied Services, Inc. v. Ortega, Jr. (Triad), we thus stated that an illegally dismissed
employee shall be entitled to backwages and separation pay, if reinstatement is no longer viable:
As the law now stands, an illegally dismissed employee is entitled to two reliefs, namely: backwages
and reinstatement. These are separate and distinct from each other. However, separation pay is
granted where reinstatement is no longer feasible because of strained relations between the
employee and the employer. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer viable and backwages. 33
Taking into consideration the cases of Songco and Triad, we find correct the computation of the NLRC that
the monthly gross wage of Tongko in 2001 was PhP 518,144.76. For having been illegally dismissed, Tongko
is entitled to reinstatement with full backwages under Art. 279 of the Labor Code. Due to the strained
relationship between Manulife and Tongko, reinstatement, however, is no longer advisable. Thus, Tongko
will be entitled to backwages from January 2, 2002 (date of dismissal) up to the finality of this decision.
Moreover, Manulife will pay Tongko separation pay of one (1) month salary for every year of service that is
from 1977 to 2001 amounting to PhP 12,435,474.24, considering that reinstatement is not feasible. Tongko
shall also be entitled to an award of attorney's fees in the amount of ten percent (10%) of the aggregate
amount of the above awards.
WHEREFORE, the petition is hereby GRANTED. The assailed March 29, 2005 Decision of the CA in CA-G.R.
SP No. 88253 is REVERSED and SET ASIDE. The Decision dated September 27, 2004 of the NLRC is
REINSTATED with the following modifications:
Manulife shall pay Tongko the following:
(1) Full backwages, inclusive of allowances and other benefits or their monetary equivalent from
January 2, 2002 up to the finality of this Decision;
(2) Separation pay of one (1) month salary for every year of service from 1977 up to 2001 amounting
to PhP 12,435,474.24;
(3) Nominal damages of PhP 30,000 as indemnity for violation of the due process requirements;
and
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(4) Attorney's fees equivalent to ten percent (10%) of the aforementioned backwages and
separation pay.
Costs against respondent Manulife.
SO ORDERED.
12. TAPE Inc. v. Servana, January 28, 2008

.R. No. 167648
January 28, 2008
TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P. TUVIERA, petitioners,

vs.
ROBERTO C. SERVAA, respondent.
DECISION
TINGA, J.:
This petition for review under Rule 45 assails the 21 December 2004 Decision1 and 8 April 2005 Resolution2
of the Court of Appeals declaring Roberto Servaa (respondent) a regular employee of petitioner
Television and Production Exponents, Inc. (TAPE). The appellate court likewise ordered TAPE to pay
nominal damages for its failure to observe statutory due process in the termination of respondents
employment for authorized cause.
TAPE is a domestic corporation engaged in the production of television programs, such as the long-running
variety program, "Eat Bulaga!". Its president is Antonio P. Tuviera (Tuviera). Respondent Roberto C.
Servaa had served as a security guard for TAPE from March 1987 until he was terminated on 3 March
2000.
Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged
that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a
regular company guard. He was detailed at Broadway Centrum in Quezon City where "Eat Bulaga!"
regularly staged its productions. On 2 March 2000, respondent received a memorandum informing him of
his impending dismissal on account of TAPEs decision to contract the services of a professional security
agency. At the time of his termination, respondent was receiving a monthly salary of P6,000.00. He
claimed that the holiday pay, unpaid vacation and sick leave benefits and other monetary considerations
were withheld from him. He further contended that his dismissal was undertaken without due process and
violative of existing labor laws, aggravated by nonpayment of separation pay. 3
In a motion to dismiss which was treated as its position paper, TAPE countered that the labor arbiter had
no jurisdiction over the case in the absence of an employer-employee relationship between the parties.
TAPE made the following assertions: (1) that respondent was initially employed as a security guard for
Radio Philippines Network (RPN-9); (2) that he was tasked to assist TAPE during its live productions,
specifically, to control the crowd; (3) that when RPN-9 severed its relationship with the security agency,
TAPE engaged respondents services, as part of the support group and thus a talent, to provide security
service to production staff, stars and guests of "Eat Bulaga!" as well as to control the audience during the
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one-and-a-half hour noontime program; (4) that it was agreed that complainant would render his services
until such time that respondent company shall have engaged the services of a professional security
agency; (5) that in 1995, when his contract with RPN-9 expired, respondent was retained as a talent and a
member of the support group, until such time that TAPE shall have engaged the services of a professional
security agency; (6) that respondent was not prevented from seeking other employment, whether or not
related to security services, before or after attending to his "Eat Bulaga!" functions; (7) that sometime in
late 1999, TAPE started negotiations for the engagement of a professional security agency, the Sun Shield
Security Agency; and (8) that on 2 March 2000, TAPE issued memoranda to all talents, whose functions
would be rendered redundant by the engagement of the security agency, informing them of the
managements decision to terminate their services.4
TAPE averred that respondent was an independent contractor falling under the talent group category and
was working under a special arrangement which is recognized in the industry.5
Respondent for his part insisted that he was a regular employee having been engaged to perform an
activity that is necessary and desirable to TAPEs business for thirteen (13) years. 6
On 29 June 2001, Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a regular employee
of TAPE. The Labor Arbiter relied on the nature of the work of respondent, which is securing and
maintaining order in the studio, as necessary and desirable in the usual business activity of TAPE. The Labor
Arbiter also ruled that the termination was valid on the ground of redundancy, and ordered the payment
of respondents separation pay equivalent to one (1)-month pay for every year of service. The dispositive
portion of the decision reads:
WHEREFORE, complainants position is hereby declared redundant. Accordingly, respondents are
hereby ordered to pay complainant his separation pay computed at the rate of one (1) month pay
for every year of service or in the total amount of P78,000.00.7
On appeal, the National Labor Relations Commission (NLRC) in a Decision8 dated 22 April 2002 reversed the
Labor Arbiter and considered respondent a mere program employee, thus:
We have scoured the records of this case and we find nothing to support the Labor Arbiters
conclusion that complainant was a regular employee.
xxxx
The primary standard to determine regularity of employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or
trade of the employer. This connection can be determined by considering the nature and work
performed and its relation to the scheme of the particular business or trade in its entirety. x x x
Respondent company is engaged in the business of production of television shows. The records of
this case also show that complainant was employed by respondent company beginning 1995 after
respondent company transferred from RPN-9 to GMA-7, a fact which complainant does not dispute.
His last salary was P5,444.44 per month. In such industry, security services may not be deemed
necessary and desirable in the usual business of the employer. Even without the performance of
such services on a regular basis, respondents companys business will not grind to a halt.
xxxx
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Complainant was indubitably a program employee of respondent company. Unlike [a] regular
employee, he did not observe working hours x x x. He worked for other companies, such as M-Zet
TV Production, Inc. at the same time that he was working for respondent company. The foregoing
indubitably shows that complainant-appellee was a program employee. Otherwise, he would have
two (2) employers at the same time.9
Respondent filed a motion for reconsideration but it was denied in a Resolution10 dated 28 June 2002.
Respondent filed a petition for certiorari with the Court of Appeals contending that the NLRC acted with
grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the
Labor Arbiter. Respondent asserted that he was a regular employee considering the nature and length of
service rendered.11
Reversing the decision of the NLRC, the Court of Appeals found respondent to be a regular employee. We
quote the dispositive portion of the decision:
IN LIGHT OF THE FOREGOING, the petition is hereby GRANTED. The Decision dated 22 April 2002 of
the public respondent NLRC reversing the Decision of the Labor Arbiter and its Resolution dated 28
June 2002 denying petitioners motion for reconsideration are REVERSED and SET ASIDE. The
Decision dated 29 June 2001 of the Labor Arbiter is REINSTATED with MODIFICATION in that private
respondents are ordered to pay jointly and severally petitioner the amount of P10,000.00 as
nominal damages for non-compliance with the statutory due process.
SO ORDERED.12
Finding TAPEs motion for reconsideration without merit, the Court of Appeals issued a Resolution 13 dated
8 April 2005 denying said motion.
TAPE filed the instant petition for review raising substantially the same grounds as those in its petition for
certiorari before the Court of Appeals. These matters may be summed up into one main issue: whether an
employer-employee relationship exists between TAPE and respondent.
On 27 September 2006, the Court gave due course to the petition and considered the case submitted for
decision.14
At the outset, it bears emphasis that the existence of employer-employee relationship is ultimately a
question of fact. Generally, only questions of law are entertained in appeals by certiorari to the Supreme
Court. This rule, however, is not absolute. Among the several recognized exceptions is when the findings
of the Court of Appeals and Labor Arbiters, on one hand, and that of the NLRC, on the other, are
conflicting,15 as obtaining in the case at bar.
Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of
employer-employee relationship, namely: (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 with
respect to the means and method by which the work is to be accomplished.16 The most important factor
involves the control test. Under the control test, there is an employer-employee relationship when the
person for whom the services are performed reserves the right to control not only the end achieved but
also the manner and means used to achieve that end.17
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In concluding that respondent was an employee of TAPE, the Court of Appeals applied the "four-fold test"
in this wise:
First. The selection and hiring of petitioner was done by private respondents. In fact, private
respondents themselves admitted having engaged the services of petitioner only in 1995 after TAPE
severed its relations with RPN Channel 9.
By informing petitioner through the Memorandum dated 2 March 2000, that his services will be
terminated as soon as the services of the newly hired security agency begins, private respondents
in effect acknowledged petitioner to be their employee. For the right to hire and fire is another
important element of the employer-employee relationship.
Second. Payment of wages is one of the four factors to be considered in determining the existence
of employer-employee relation. . . Payment as admitted by private respondents was given by them
on a monthly basis at a rate of P5,444.44.
Third. Of the four elements of the employer-employee relationship, the "control test" is the most
important. x x x
The bundy cards representing the time petitioner had reported for work are evident proofs of
private respondents control over petitioner more particularly with the time he is required to report
for work during the noontime program of "Eat Bulaga!" If it were not so, petitioner would be free
to report for work anytime even not during the noontime program of "Eat Bulaga!" from 11:30 a.m.
to 1:00 p.m. and still gets his compensation for being a "talent." Precisely, he is being paid for being
the security of "Eat Bulaga!" during the above-mentioned period. The daily time cards of petitioner
are not just for mere record purposes as claimed by private respondents. It is a form of control by
the management of private respondent TAPE.18
TAPE asseverates that the Court of Appeals erred in applying the "four-fold test" in determining the
existence of employer-employee relationship between it and respondent. With respect to the elements of
selection, wages and dismissal, TAPE proffers the following arguments: that it never hired respondent,
instead it was the latter who offered his services as a talent to TAPE; that the Memorandum dated 2 March
2000 served on respondent was for the discontinuance of the contract for security services and not a
termination letter; and that the talent fees given to respondent were the pre-agreed consideration for the
services rendered and should not be construed as wages. Anent the element of control, TAPE insists that it
had no control over respondent in that he was free to employ means and methods by which he is to
control and manage the live audiences, as well as the safety of TAPEs stars and guests. 19
The position of TAPE is untenable. Respondent was first connected with Agro-Commercial Security
Agency, which assigned him to assist TAPE in its live productions. When the security agencys contract with
RPN-9 expired in 1995, respondent was absorbed by TAPE or, in the latters language, "retained as
talent."20 Clearly, respondent was hired by TAPE. Respondent presented his identification card21 to prove
that he is indeed an employee of TAPE. It has been in held that in a business establishment, an
identification card is usually provided not just as a security measure but to mainly identify the holder
thereof as a bona fide employee of the firm who issues it.22
Respondent claims to have been receiving P5,444.44 as his monthly salary while TAPE prefers to designate
such amount as talent fees. Wages, as defined in the Labor Code, are remuneration or earnings, however
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designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task,
piece or commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for
service rendered or to be rendered. It is beyond dispute that respondent received a fixed amount as
monthly compensation for the services he rendered to TAPE.
The Memorandum informing respondent of the discontinuance of his service proves that TAPE had the
power to dismiss respondent.
Control is manifested in the bundy cards submitted by respondent in evidence. He was required to report
daily and observe definite work hours. To negate the element of control, TAPE presented a certification
from M-Zet Productions to prove that respondent also worked as a studio security guard for said company.
Notably, the said certificate categorically stated that respondent reported for work on Thursdays from
1992 to 1995. It can be recalled that during said period, respondent was still working for RPN-9. As
admitted by TAPE, it absorbed respondent in late 1995.23
TAPE further denies exercising control over respondent and maintains that the latter is an independent
contractor.24 Aside from possessing substantial capital or investment, a legitimate job contractor or
subcontractor carries on a distinct and independent business and undertakes to perform the job, work or
service on its own account and under its own responsibility according to its own manner and method, and
free from the control and direction of the principal in all matters connected with the performance of the
work except as to the results thereof.25 TAPE failed to establish that respondent is an independent
contractor. As found by the Court of Appeals:
We find the annexes submitted by the private respondents insufficient to prove that herein
petitioner is indeed an independent contractor. None of the above conditions exist in the case at
bar. Private respondents failed to show that petitioner has substantial capital or investment to be
qualified as an independent contractor. They likewise failed to present a written contract which
specifies the performance of a specified piece of work, the nature and extent of the work and the
term and duration of the relationship between herein petitioner and private respondent TAPE.26
TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in classifying respondent as a
program employee and equating him to be an independent contractor.
Policy Instruction No. 40 defines program employees as
x x x those whose skills, talents or services are engaged by the station for a particular or specific
program or undertaking and who are not required to observe normal working hours such that on
some days they work for less than eight (8) hours and on other days beyond the normal work hours
observed by station employees and are allowed to enter into employment contracts with other
persons, stations, advertising agencies or sponsoring companies. The engagement of program
employees, including those hired by advertising or sponsoring companies, shall be under a written
contract specifying, among other things, the nature of the work to be performed, rates of pay and
the programs in which they will work. The contract shall be duly registered by the station with the
Broadcast Media Council within three (3) days from its consummation.27
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TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in the policy
instruction. It did not even present its contract with respondent. Neither did it comply with the contractregistration requirement.
Even granting arguendo that respondent is a program employee, stills, classifying him as an independent
contractor is misplaced. The Court of Appeals had this to say:
We cannot subscribe to private respondents conflicting theories. The theory of private
respondents that petitioner is an independent contractor runs counter to their very own allegation
that petitioner is a talent or a program employee. An independent contractor is not an employee of
the employer, while a talent or program employee is an employee. The only difference between a
talent or program employee and a regular employee is the fact that a regular employee is entitled
to all the benefits that are being prayed for. This is the reason why private respondents try to seek
refuge under the concept of an independent contractor theory. For if petitioner were indeed an
independent contractor, private respondents will not be liable to pay the benefits prayed for in
petitioners complaint.28
More importantly, respondent had been continuously under the employ of TAPE from 1995 until his
termination in March 2000, or for a span of 5 years. Regardless of whether or not respondent had been
performing work that is necessary or desirable to the usual business of TAPE, respondent is still considered
a regular employee under Article 280 of the Labor Code which provides:
Art. 280. Regular and Casual Employment.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable 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 engagement of the employee or where the work or
service to be performed is seasonal in nature and employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph.
Provided, that, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exists.
As a regular employee, respondent cannot be terminated except for just cause or when authorized by
law.29 It is clear from the tenor of the 2 March 2000 Memorandum that respondents termination was due
to redundancy. Thus, the Court of Appeals correctly disposed of this issue, viz:
Article 283 of the Labor Code provides that the employer may also terminate the employment of
any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least
his one (1) month pay or to at least one (1) month pay for every year or service, whichever is higher.
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xxxx
We uphold the finding of the Labor Arbiter that "complainant [herein petitioner] was terminated
upon [the] managements option to professionalize the security services in its operations. x x x"
However, [we] find that although petitioners services [sic] was for an authorized cause, i.e.,
redundancy, private respondents failed to prove that it complied with service of written notice to
the Department of Labor and Employment at least one month prior to the intended date of
retrenchment. It bears stressing that although notice was served upon petitioner through a
Memorandum dated 2 March 2000, the effectivity of his dismissal is fifteen days from the start of
the agencys take over which was on 3 March 2000. Petitioners services with private respondents
were severed less than the month requirement by the law.
Under prevailing jurisprudence the termination for an authorized cause requires payment of
separation pay. Procedurally, if the dismissal is based on authorized causes under Articles 283 and
284, the employer must give the employee and the Deparment of Labor and Employment written
notice 30 days prior to the effectivity of his separation. Where the dismissal is for an authorized
cause but due process was not observed, the dismissal should be upheld. While the procedural
infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be
liable for non-compliance with procedural requirements of due process.
xxxx
Under recent jurisprudence, the Supreme Court fixed the amount of P30,000.00 as nominal
damages. The basis of the violation of petitioners right to statutory due process by the private
respondents warrants the payment of indemnity in the form of nominal damages. The amount of
such damages is addressed to the sound discretion of the court, taking into account the relevant
circumstances. We believe this form of damages would serve to deter employer from future
violations of the statutory due process rights of the employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to the latter under the Labor Code and
its Implementing Rules. Considering the circumstances in the case at bench, we deem it proper to
fix it at P10,000.00.30
In sum, we find no reversible error committed by the Court of Appeals in its assailed decision.
However, with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that he
acted with malice or bad faith in terminating respondent, he cannot be held solidarily liable with TAPE. 31
Thus, the Court of Appeals ruling on this point has to be modified.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with
MODIFICATION in that only petitioner Television and Production Exponents, Inc. is liable to pay
respondent the amount of P10,000.00 as nominal damages for non-compliance with the statutory due
process and petitioner Antonio P. Tuviera is accordingly absolved from liability.
SO ORDERED.
13. Encyclopedia Britannica v NLRC, November 4, 1996

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G.R. No. 87098 November 4, 1996

ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L. ROGELIO and
BENJAMIN LIMJOCO, respondents.
TORRES, JR., J.:

Encyclopaedia Britannica (Philippines), Inc. filed this petition for certiorari to annul and set aside the
resolution of the National Labor Relations Commission, Third Division, in NLRC Case No. RB IV-5158-76,
dated December 28, 1988, the dispositive portion of which reads:
WHEREFORE, in view of all the foregoing, the decision dated December 7, 1982 of then
Labor Arbiter Teodorico L. Dogelio is hereby AFFIRMED, and the instant appeal is hereby
DISMISSED for lack of merit.
SO ORDERED. 1
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannica
and was in charge of selling petitioner's products through some sales representatives. As compensation,
private respondent received commissions from the products sold by his agents. He was also allowed to use
petitioner's name, goodwill and logo. It was, however, agreed upon that office expenses would be
deducted from private respondent's commissions. Petitioner would also be informed about appointments,
promotions, and transfers of employees in private respondent's district.
On June 14, 1974, private respondent Limjoco resigned from office to pursue his private business. Then on
October 30, 1975, he filed a complaint against petitioner Encyclopaedia Britannica with the Department of
Labor and Employment, claiming for non-payment of separation pay and other benefits, and also illegal
deduction from his sales commissions.
Petitioner Encyclopaedia Britannica alleged that complainant Benjamin Limjoco (Limjoco, for brevity) was
not its employee but an independent dealer authorized to promote and sell its products and in return,
received commissions therefrom. Limjoco did not have any salary and his income from the petitioner
company was dependent on the volume of sales accomplished. He also had his own separate office,
financed the business expenses, and maintained his own workforce. The salaries of his secretary, utility
man, and sales representatives were chargeable to his commissions. Thus, petitioner argued that it had no
control and supervision over the complainant as to the manner and means he conducted his business
operations. The latter did not even report to the office of the petitioner and did not observe fixed office
hours. Consequently, there was no employer-employee relationship.
Limjoco maintained otherwise. He alleged that he was hired by the petitioner in July 1970, was assigned in
the sales department, and was earning an average of P4,000.00 monthly as his sales commission. He was
under the supervision of the petitioner's officials who issued to him and his other personnel, memoranda,
guidelines on company policies, instructions and other orders. He was, however, dismissed by the
petitioner when the Laurel-Langley Agreement expired. As a result thereof, Limjoco asserts that in
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accordance with the established company practice and the provisions of the collective bargaining
agreement, he was entitled to termination pay equivalent to one month salary, the unpaid benefits
(Christmas bonus, midyear bonus, clothing allowance, vacation leave, and sick leave), and the amounts
illegally deducted from his commissions which were then used for the payments of office supplies, office
space, and overhead expenses.
On December 7, 1982, Labor Arbiter Teodorico Dogelio, in a decision ruled that Limjoco was an employee
of the petitioner company. Petitioner had control over Limjoco since the latter was required to make
periodic reports of his sales activities to the company. All transactions were subject to the final approval of
the petitioner, an evidence that petitioner company had active control on the sales activities. There was
therefore, an employer-employee relationship and necessarily, Limjoco was entitled to his claims. The
decision also ordered petitioner company to pay the following:
1. To pay complainant his separation pay in the total amount of P16,000.00;
2. To pay complainant his unpaid Christmas bonus for three years or the amount of
12,000.00;
3. To pay complainant his unpaid mid-year bonus equivalent to one-half month pay or the
total amount of P6,000.00;
4. To pay complainant his accrued vacation leave equivalent to 15 days per year of service, or
the total amount of P6,000.00;
5. To pay complainant his unpaid clothing allowance in the total amount of P600.00; and
6. To pay complainant his accrued sick leave equivalent to 15 days per year of service or the
total amount of P6,000.00. 2
On appeal, the Third Division of the National Labor Relations Commission affirmed the assailed decision.
The Commission opined that there was no evidence supporting the allegation that Limjoco was an
independent contractor or dealer. The petitioner still exercised control over Limjoco through its
memoranda and guidelines and even prohibitions on the sale of products other than those authorized by
it. In short, the petitioner company dictated how and where to sell its products. Aside from that fact,
Limjoco passed the costs to the petitioner chargeable against his future commissions. Such practice
proved that he was not an independent dealer or contractor for it is required by law that an independent
contractor should have substantial capital or investment.
Dissatisfied with the outcome of the case, petitioner Encyclopaedia Britannica now comes to us in this
petition for certiorari and injunction with prayer for preliminary injunction. On April 3, 1989, this Court
issued a temporary restraining order enjoining the enforcement of the decision dated December 7, 1982.
The following are the arguments raised by the petitioner:
I
The respondent NLRC gravely abused its discretion in holding that "appellant's contention
that appellee was an independent contractor is not supported by evidence on record".
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II
Respondent NLRC committed grave abuse of discretion in not passing upon the validity of
the pronouncement of the respondent Labor Arbiter granting private respondent's claim for
payment of Christmas bonus, Mid-year bonus, clothing allowance and the money equivalent
of accrued and unused vacation and sick leave.
The NLRC ruled that there existed an employer-employee relationship and petitioner failed to disprove this
finding. We do not agree.
In determining the existence of an employer-employee relationship the following elements must be
present: 1) selection and engagement of the employee; 2) payment of wages; 3) power of dismissal; and 4)
the power to control the employee's conduct. Of the above, control of employee's conduct is commonly
regarded as the most crucial and determinative indicator of the presence or absence of an employeremployee relationship. 3 Under the control test, an employer-employee relationship exists where the
person for whom the services are performed reserves the right to control not only the end to be achieved,
but also the manner and means to used in reaching that end. 4
The fact that petitioner issued memoranda to private respondents and to other division sales managers did
not prove that petitioner had actual control over them. The different memoranda were merely guidelines
on company policies which the sales managers follow and impose on their respective agents. It should be
noted that in petitioner's business of selling encyclopedias and books, the marketing of these products
was done through dealership agreements. The sales operations were primarily conducted by independent
authorized agents who did not receive regular compensations but only commissions based on the sales of
the products. These independent agents hired their own sales representatives, financed their own office
expenses, and maintained their own staff. Thus, there was a need for the petitioner to issue memoranda
to private respondent so that the latter would be apprised of the company policies and procedures.
Nevertheless, private respondent Limjoco and the other agents were free to conduct and promote their
sales operations. The periodic reports to the petitioner by the agents were but necessary to update the
company of the latter's performance and business income.
Private respondent was not an employee of the petitioner company. While it was true that the petitioner
had fixed the prices of the products for reason of uniformity and private respondent could not alter them,
the latter, nevertheless, had free rein in the means and methods for conducting the marketing operations.
He selected his own personnel and the only reason why he had to notify the petitioner about such
appointments was for purpose of deducting the employees' salaries from his commissions. This he
admitted in his testimonies, thus:
Q. Yes, in other words you were on what is known as P&L basis or profit and
loss basis?
A. That is right.
Q. If for an instance, just example your sales representative in any period did
not produce any sales, you would not get any money from Britannica, would
you?
A. No, sir.
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Q. In fact, Britannica by doing the accounting for you as division manager was
merely making it easy for you to concentrate all your effort in selling and you
don't worry about accounting, isn't that so?
A. Yes, sir.
Q. In fact whenever you hire a secretary or trainer you merely hire that person
and notify Britannica so that Encyclopaedia Britannica will give the salaries
and deduct it from your earnings, isn't that so?
A. In certain cases I just hired people previously employed by Encyclopaedia
Britannica.
xxx xxx xxx
Q. In this Exhibit "2" you were informing Encyclopaedia Britannica that you
have hired a certain person and you were telling Britannica how her salary was
going to be taken cared of, is it not?
A. Yes, sir.
Q. You said here, "please be informed that we have appointed Miss Luz Villan
as division trainer effective May 1, 1971 at P550.00 per month her salary will be
chargeable to the Katipunan and Bayanihan Districts", signed by yourself.
What is the Katipunan and Bayanihan District?
A. Those were districts under my division.
Q. In effect you were telling Britannica that you have hired this person and
"you should charge her salary to me," is that right?
A. Yes, sir. 5
Private respondent was merely an agent or an independent dealer of the petitioner. He was free to
conduct his work and he was free to engage in other means of livelihood. At the time he was connected
with the petitioner company, private respondent was also a director and later the president of the
Farmers' Rural Bank. Had he been an employee of the company, he could not be employed elsewhere and
he would be required to devote full time for petitioner. If private respondent was indeed an employee, it
was rather unusual for him to wait for more than a year from his separation from work before he decided
to file his claims. Significantly, when Limjoco tendered his resignation to petitioner on June 14, 1974, he
stated, thus:
Re: Resignation
I am resigning as manager of the EB Capitol Division effective 16 June 1974.
This decision was brought about by conflict with other interests which lately have
increasingly required my personal attention. I feel that in fairness to the company and to the
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people under my supervision I should relinquish the position to someone who can devote
full-time to the Division.
I wish to thank you for all the encouragement and assistance you have extended to me and
to my group during my long association with Britannica.
Evidently, Limjoco was aware of "conflict with other interests which . . . have increasingly required my
personal attention" (p. 118, Records). At the very least, it would indicate that petitioner has no effective
control over the personal activities of Limjoco, who as admitted by the latter had other "conflict of
interest" requiring his personal attention.
In ascertaining whether the relationship is that of employer-employee or one of independent contractor,
each case must be determined by its own facts and all features of the relationship are to be considered. 6
The records of the case at bar showed that there was no such employer-employee relationship.
As stated earlier, "the element of control is absent; where a person who works for another does so more
or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is
compensated according to the result of his efforts and not the amount thereof, we should not find that
the relationship of employer and employee exists. 7 In fine, there is nothing in the records to show or
would "indicate that complainant was under the control of the petitioner" in respect of the means and
methods 8 in the performance of complainant's work.
Consequently, private respondent is not entitled to the benefits prayed for.
In view of the foregoing premises, the petition is hereby GRANTED, and the decision of the NLRC is hereby
REVERSED AND SET ASIDE.
SO ORDERED.
14. Atok Big Wedge Co. Inc. v. Gison, August 2011

G.R. No. 169510
August 8, 2011
ATOK BIG WEDGE COMPANY, INC., Petitioner,

vs.
JESUS P. GISON, Respondent.
DECISION
PERALTA, J.:
This is a petition for review on certiorari seeking to reverse and set aside the Decision1 dated May 31, 2005
of the Court of Appeals (CA) in CA-G.R. SP No. 87846, and the Resolution2 dated August 23, 2005 denying
petitioners motion for reconsideration.
The procedural and factual antecedents are as follows:
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Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time consultant on retainer
basis by petitioner Atok Big Wedge Company, Inc. through its then Asst. Vice-President and Acting
Resident Manager, Rutillo A. Torres. As a consultant on retainer basis, respondent assisted petitioner's
retained legal counsel with matters pertaining to the prosecution of cases against illegal surface occupants
within the area covered by the company's mineral claims. Respondent was likewise tasked to perform
liaison work with several government agencies, which he said was his expertise.
Petitioner did not require respondent to report to its office on a regular basis, except when occasionally
requested by the management to discuss matters needing his expertise as a consultant. As payment for his
services, respondent received a retainer fee of P3,000.00 a month,3 which was delivered to him either at
his residence or in a local restaurant. The parties executed a retainer agreement, but such agreement was
misplaced and can no longer be found.
The said arrangement continued for the next eleven years.
Sometime thereafter, since respondent was getting old, he requested that petitioner cause his registration
with the Social Security System (SSS), but petitioner did not accede to his request. He later reiterated his
request but it was ignored by respondent considering that he was only a retainer/consultant. On February
4, 2003, respondent filed a Complaint4 with the SSS against petitioner for the latter's refusal to cause his
registration with the SSS.
On the same date, Mario D. Cera, in his capacity as resident manager of petitioner, issued a Memorandum 5
advising respondent that within 30 days from receipt thereof, petitioner is terminating his retainer
contract with the company since his services are no longer necessary.
On February 21, 2003, respondent filed a Complaint6 for illegal dismissal, unfair labor practice,
underpayment of wages, non-payment of 13th month pay, vacation pay, and sick leave pay with the
National Labor Relations Commission (NLRC), Regional Arbitration Branch (RAB), Cordillera Administrative
Region, against petitioner, Mario D. Cera, and Teofilo R. Asuncion, Jr. The case was docketed as NLRC Case
No. RAB-CAR-02-0098-03.
Respondent alleged that:
x x x [S]ometime in January 1992, Rutillo A. Torres, then the resident manager of respondent Atok Big
Wedge Co., Inc., or Atok for brevity, approached him and asked him if he can help the companys problem
involving the 700 million pesos crop damage claims of the residents living at the minesite of Atok. He
participated in a series of dialogues conducted with the residents. Mr. Torres offered to pay him P3,000.00
per month plus representation expenses. It was also agreed upon by him and Torres that his participation
in resolving the problem was temporary and there will be no employer-employee relationship between
him and Atok. It was also agreed upon that his compensation, allowances and other expenses will be paid
through disbursement vouchers.
On February 1, 1992 he joined Atok. One week thereafter, the aggrieved crop damage claimants barricaded
the only passage to and from the minesite. In the early morning of February 1, 1992, a dialogue was made
by Atok and the crop damage claimants. Unfortunately, Atoks representatives, including him, were
virtually held hostage by the irate claimants who demanded on the spot payment of their claims. He was
able to convince the claimants to release the company representatives pending referral of the issue to
higher management.
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A case was filed in court for the lifting of the barricades and the court ordered the lifting of the barricade.
While Atok was prosecuting its case with the claimants, another case erupted involving its partner,
Benguet Corporation. After Atok parted ways with Benguet Corporation, some properties acquired by the
partnership and some receivables by Benguet Corporation was the problem. He was again entangled with
documentation, conferences, meetings, planning, execution and clerical works. After two years, the
controversy was resolved and Atok received its share of the properties of the partnership, which is about 5
million pesos worth of equipment and condonation of Atoks accountabilities with Benguet Corporation in
the amount of P900,000.00.
In the meantime, crop damage claimants lost interest in pursuing their claims against Atok and Atok was
relieved of the burden of paying 700 million pesos. In between attending the problems of the crop damage
issue, he was also assigned to do liaison works with the SEC, Bureau of Mines, municipal government of
Itogon, Benguet, the Courts and other government offices.
After the crop damage claims and the controversy were resolved, he was permanently assigned by Atok to
take charge of some liaison matters and public relations in Baguio and Benguet Province, and to report
regularly to Atoks office in Manila to attend meetings and so he had to stay in Manila at least one week a
month.
Because of his length of service, he invited the attention of the top officers of the company that he is
already entitled to the benefits due an employee under the law, but management ignored his requests.
However, he continued to avail of his representation expenses and reimbursement of company-related
expenses. He also enjoyed the privilege of securing interest free salary loans payable in one year through
salary deduction.
In the succeeding years of his employment, he was designated as liaison officer, public relation officer and
legal assistant, and to assist in the ejection of illegal occupants in the mining claims of Atok.
Since he was getting older, being already 56 years old, he reiterated his request to the company to cause
his registration with the SSS. His request was again ignored and so he filed a complaint with the SSS. After
filing his complaint with the SSS, respondents terminated his services.7
On September 26, 2003, after the parties have submitted their respective pleadings, Labor Arbiter Rolando
D. Gambito rendered a Decision8 ruling in favor of the petitioner. Finding no employer-employee
relationship between petitioner and respondent, the Labor Arbiter dismissed the complaint for lack of
merit.
Respondent then appealed the decision to the NLRC.
On July 30, 2004, the NLRC, Second Division, issued a Resolution9 affirming the decision of the Labor
Arbiter. Respondent filed a Motion for Reconsideration, but it was denied in the Resolution10 dated
September 30, 2004.
Aggrieved, respondent filed a petition for review under Rule 65 of the Rules of Court before the CA
questioning the decision and resolution of the NLRC, which was later docketed as CA-G.R. SP No. 87846. In
support of his petition, respondent raised the following issues:
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a) Whether or not the Decision of the Honorable Labor Arbiter and the subsequent Resolutions of
the Honorable Public Respondent affirming the same, are in harmony with the law and the facts of
the case;
b) Whether or not the Honorable Labor Arbiter Committed a Grave Abuse of Discretion in
Dismissing the Complaint of Petitioner and whether or not the Honorable Public Respondent
Committed a Grave Abuse of Discretion when it affirmed the said Decision.11
On May 31, 2005, the CA rendered the assailed Decision annulling and setting aside the decision of the
NLRC, the decretal portion of which reads:
WHEREFORE, the petition is GRANTED. The assailed Resolution of the National Labor Relations
Commission dismissing petitioner's complaint for illegal dismissal is ANNULLED and SET ASIDE. Private
respondent Atok Big Wedge Company Incorporated is ORDERED to reinstate petitioner Jesus P. Gison to
his former or equivalent position without loss of seniority rights and to pay him full backwages, inclusive of
allowances and other benefits or their monetary equivalent computed from the time these were withheld
from him up to the time of his actual and effective reinstatement. This case is ordered REMANDED to the
Labor Arbiter for the proper computation of backwages, allowances and other benefits due to petitioner.
Costs against private respondent Atok Big Wedge Company Incorporated.
SO ORDERED.12
In ruling in favor of the respondent, the CA opined, among other things, that both the Labor Arbiter and
the NLRC may have overlooked Article 280 of the Labor Code,13 or the provision which distinguishes
between two kinds of employees, i.e., regular and casual employees. Applying the provision to the
respondent's case, he is deemed a regular employee of the petitioner after the lapse of one year from his
employment. Considering also that respondent had been performing services for the petitioner for eleven
years, respondent is entitled to the rights and privileges of a regular employee.
The CA added that although there was an agreement between the parties that respondent's employment
would only be temporary, it clearly appears that petitioner disregarded the same by repeatedly giving
petitioner several tasks to perform. Moreover, although respondent may have waived his right to attain a
regular status of employment when he agreed to perform these tasks on a temporary employment status,
still, it was the law that recognized and considered him a regular employee after his first year of rendering
service to petitioner. As such, the waiver was ineffective.
Hence, the petition assigning the following errors:
I. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE CONTRARY TO LAW
AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT GAVE DUE COURSE TO THE PETITION
FOR CERTIORARI DESPITE THE FACT THAT THERE WAS NO SHOWING THAT THE NATIONAL LABOR
RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION.
II. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE CONTRARY TO THE
LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT BASED ITS FINDING THAT
RESPONDENT IS ENTITLED TO REGULAR EMPLOYMENT ON A PROVISION OF LAW THAT THIS HONORABLE
COURT HAS DECLARED TO BE INAPPLICABLE IN CASE THE EXISTENCE OF AN EMPLOYER-EMPLOYEE
RELATIONSHIP IS IN DISPUTE OR IS THE FACT IN ISSUE.
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III. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE CONTRARY TO LAW
AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT ERRONEOUSLY FOUND THAT
RESPONDENT IS A REGULAR EMPLOYEE OF THE COMPANY.
IV. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE CONTRARY TO LAW
AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT ERRONEOUSLY DIRECTED
RESPONDENT'S REINSTATEMENT DESPITE THE FACT THAT THE NATURE OF THE SERVICES HE PROVIDED
TO THE COMPANY WAS SENSITIVE AND CONFIDENTIAL.14
Petitioner argues that since the petition filed by the respondent before the CA was a petition for certiorari
under Rule 65 of the Rules of Court, the CA should have limited the issue on whether or not there was
grave abuse of discretion on the part of the NLRC in rendering the resolution affirming the decision of the
Labor Arbiter.
Petitioner also posits that the CA erred in applying Article 280 of the Labor Code in determining whether
there was an employer-employee relationship between the petitioner and the respondent. Petitioner
contends that where the existence of an employer-employee relationship is in dispute, Article 280 of the
Labor Code is inapplicable. The said article only set the distinction between a casual employee from a
regular employee for purposes of determining the rights of an employee to be entitled to certain benefits.
Petitioner insists that respondent is not a regular employee and not entitled to reinstatement.
On his part, respondent maintains that he is an employee of the petitioner and that the CA did not err in
ruling in his favor.
The petition is meritorious.
At the outset, respondent's recourse to the CA was the proper remedy to question the resolution of the
NLRC. It bears stressing that there is no appeal from the decision or resolution of the NLRC. As this Court
enunciated in the case of St. Martin Funeral Home v. NLRC,15 the special civil action of certiorari under Rule
65 of the Rules of Civil Procedure, which is filed before the CA, is the proper vehicle for judicial review of
decisions of the NLRC. The petition should be initially filed before the Court of Appeals in strict observance
of the doctrine on hierarchy of courts as the appropriate forum for the relief desired. 16 This Court not being
a trier of facts, the resolution of unclear or ambiguous factual findings should be left to the CA as it is
procedurally equipped for that purpose. From the decision of the Court of Appeals, an ordinary appeal
under Rule 45 of the Rules of Civil Procedure before the Supreme Court may be resorted to by the parties.
Hence, respondent's resort to the CA was appropriate under the circumstances.
Anent the primordial issue of whether or not an employer-employee relationship exists between petitioner
and respondent.
Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a
question of fact and that the findings thereon by the Labor Arbiter and the NLRC shall be accorded not
only respect but even finality when supported by substantial evidence. 17 Being a question of fact, the
determination whether such a relationship exists between petitioner and respondent was well within the
province of the Labor Arbiter and the NLRC. Being supported by substantial evidence, such determination
should have been accorded great weight by the CA in resolving the issue.
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To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to

the four-fold test, to wit: (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, or the so-called "control
test."18 Of these four, the last one is the most important.19 The so-called "control test" is commonly
regarded as the most crucial and determinative indicator of the presence or absence of an employeremployee relationship. Under the control test, an employer-employee relationship exists 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.20
Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at
bar. Among other things, respondent was not required to report everyday during regular office hours of
petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a local
restaurant. More importantly, petitioner did not prescribe the manner in which respondent would
accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent was left
alone and given the freedom to accomplish the tasks using his own means and method. Respondent was
assigned tasks to perform, but petitioner did not control the manner and methods by which respondent
performed these tasks. Verily, the absence of the element of control on the part of the petitioner
engenders a conclusion that he is not an employee of the petitioner.
Moreover, the absence of the parties' retainership agreement notwithstanding, respondent clearly
admitted that petitioner hired him in a limited capacity only and that there will be no employer-employee
relationship between them. As averred in respondent's Position Paper:21
2. For the participation of complainant regarding this particular problem of Atok, Mr. Torres offered him a
pay in the amount of Php3,000.00 per month plus representation expenses. It was also agreed by Mr.
Torres and the complainant that his participation on this particular problem of Atok will be temporary since
the problem was then contemplated to be limited in nature, hence, there will be no employer-employee
relationship between him and Atok. Complainant agreed on this arrangement. It was also agreed that
complainant's compensations, allowances, representation expenses and reimbursement of companyrelated expenses will be processed and paid through disbursement vouchers;22
Respondent was well aware of the agreement that he was hired merely as a liaison or consultant of the
petitioner and he agreed to perform tasks for the petitioner on a temporary employment status only.
However, respondent anchors his claim that he became a regular employee of the petitioner based on his
contention that the "temporary" aspect of his job and its "limited" nature could not have lasted for eleven
years unless some time during that period, he became a regular employee of the petitioner by continually
performing services for the company.
Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee of
petitioner. 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. In fact, 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.23 Hence, respondent's length
of service and petitioner's repeated act of assigning respondent some tasks to be performed did not result
to respondent's entitlement to the rights and privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years, he
still cannot be considered as a regular employee of petitioner. Article 280 of the Labor Code, in which the
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lower court used to buttress its findings that respondent became a regular employee of the petitioner, is
not applicable in the case at bar. Indeed, the Court has ruled that said provision 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 the right of
an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where
the existence of an employment relationship is in dispute.24 It is, therefore, erroneous on the part of the
Court of Appeals to rely on Article 280 in determining whether an employer-employee relationship exists
between respondent and the petitioner
Considering that there is no employer-employee relationship between the parties, the termination of
respondent's services by the petitioner after due notice did not constitute illegal dismissal warranting his
reinstatement and the payment of full backwages, allowances and other benefits.
WHEREFORE, premises considered, the petition is GRANTED. The Decision and the Resolution of the Court
of Appeals in CA-G.R. SP No. 87846, are REVERSED and SET ASIDE. The Resolutions dated July 30, 2004 and
September 30, 2004 of the National Labor Relations Commission are REINSTATED.
SO ORDERED.
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15. Dumpit Murillo v. CA, June 28, 2011
G.R. No. 164652
June 8, 2007
THELMA DUMPIT-MURILLO, petitioner,

vs.
COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE JAVIER AND EDWARD TAN,
respondents.
DECISION
QUISUMBING, J.:
This petition seeks to reverse and set aside both the Decision1 dated January 30, 2004 of the Court of
Appeals in CA-G.R. SP No. 63125 and its Resolution2 dated June 23, 2004 denying the motion for
reconsideration. The Court of Appeals had overturned the Resolution 3 dated August 30, 2000 of the
National Labor Relations Commission (NLRC) ruling that petitioner was illegally dismissed.
The facts of the case are as follows:
On October 2, 1995, under Talent Contract No. NT95-1805,4 private respondent Associated Broadcasting
Company (ABC) hired petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor for Balitang-Balita,
an early evening news program. The contract was for a period of three months. It was renewed under
Talent Contracts Nos. NT95-1915, NT96-3002, NT98-4984 and NT99-5649.5 In addition, petitioners services
were engaged for the program "Live on Five."
On September 30, 1999, after four years of repeated renewals, petitioners talent contract expired. Two
weeks after the expiration of the last contract, petitioner sent a letter to Mr. Jose Javier, Vice President for
News and Public Affairs of ABC, informing the latter that she was still interested in renewing her contract
subject to a salary increase. Thereafter, petitioner stopped reporting for work. On November 5, 1999, she
wrote Mr. Javier another letter,6 which we quote verbatim:
xxxx
Dear Mr. Javier:
On October 20, 1999, I wrote you a letter in answer to your query by way of a marginal note "what terms
and conditions" in response to my first letter dated October 13, 1999. To date, or for more than fifteen (15)
days since then, I have not received any formal written reply. xxx
In view hereof, should I not receive any formal response from you until Monday, November 8, 1999, I will
deem it as a constructive dismissal of my services.
xxxx
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A month later, petitioner sent a demand letter7 to ABC, demanding: (a) reinstatement to her former
position; (b) payment of unpaid wages for services rendered from September 1 to October 20, 1999 and
full backwages; (c) payment of 13th month pay, vacation/sick/service incentive leaves and other monetary
benefits due to a regular employee starting March 31, 1996.
ABC replied that a check covering petitioners talent fees for September 16 to October 20, 1999 had been
processed and prepared, but that the other claims of petitioner had no basis in fact or in law.
On December 20, 1999, petitioner filed a complaint8 against ABC, Mr. Javier and Mr. Edward Tan, for illegal
constructive dismissal, nonpayment of salaries, overtime pay, premium pay, separation pay, holiday pay,
service incentive leave pay, vacation/sick leaves and 13th month pay in NLRC-NCR Case No. 30-12-00985-99.
She likewise demanded payment for moral, exemplary and actual damages, as well as for attorneys fees.
The parties agreed to submit the case for resolution after settlement failed during the mandatory
conference/conciliation. On March 29, 2000, the Labor Arbiter dismissed the complaint.9
On appeal, the NLRC reversed the Labor Arbiter in a Resolution dated August 30, 2000. The NLRC held that
an employer-employee relationship existed between petitioner and ABC; that the subject talent contract
was void; that the petitioner was a regular employee illegally dismissed; and that she was entitled to
reinstatement and backwages or separation pay, aside from 13th month pay and service incentive leave
pay, moral and exemplary damages and attorneys fees. It held as follows:
WHEREFORE, the Decision of the Arbiter dated 29 March 2000 is hereby REVERSED/SET ASIDE and a NEW
ONE promulgated:
1) declaring respondents to have illegally dismissed complainant from her regular work therein and
thus, ordering them to reinstate her in her former position without loss of seniority right[s] and other
privileges and to pay her full backwages, inclusive of allowances and other benefits, including 13th
month pay based on her said latest rate of P28,000.00/mo. from the date of her illegal dismissal on 21
October 1999 up to finality hereof, or at complainants option, to pay her separation pay of one (1)
month pay per year of service based on said latest monthly rate, reckoned from date of hire on 30
September 1995 until finality hereof;
2) to pay complainants accrued SILP [Service Incentive Leave Pay] of 5 days pay per year and 13th
month pay for the years 1999, 1998 and 1997 of P19,236.00 and P84,000.00, respectively and her
accrued salary from 16 September 1999 to 20 October 1999 of P32,760.00 plus legal interest at 12% from
date of judicial demand on 20 December 1999 until finality hereof;
3) to pay complainant moral damages of P500,000.00, exemplary damages of P350,000.00 and 10% of
the total of the adjudged monetary awards as attorneys fees.
Other monetary claims of complainant are dismissed for lack of merit.
SO ORDERED.10
After its motion for reconsideration was denied, ABC elevated the case to the Court of Appeals in a
petition for certiorari under Rule 65. The petition was first dismissed for failure to attach particular
documents,11 but was reinstated on grounds of the higher interest of justice.12
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Thereafter, the appellate court ruled that the NLRC committed grave abuse of discretion, and reversed the
decision of the NLRC.13 The appellate court reasoned that petitioner should not be allowed to renege from
the stipulations she had voluntarily and knowingly executed by invoking the security of tenure under the
Labor Code. According to the appellate court, petitioner was a fixed-term employee and not a regular
employee within the ambit of Article 28014 of the Labor Code because her job, as anticipated and agreed
upon, was only for a specified time.15
Aggrieved, petitioner now comes to this Court on a petition for review, raising issues as follows:
I.
THIS HONORABLE COURT CAN REVIEW THE FINDINGS OF THE HONORABLE COURT OF APPEALS, THE
DECISION OF WHICH IS NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE
SUPREME COURT[;]
II.
THE PRO-FORMA TALENT CONTRACTS, AS CORRECTLY FOUND BY THE NLRC FIRST DIVISION, ARE "ANTIREGULARIZATION DEVICES" WHICH MUST BE STRUCK DOWN FOR REASONS OF PUBLIC POLICY[;]
III.
BY REASON OF THE CONTINUOUS AND SUCCESSIVE RENEWALS OF THE THREE-MONTH TALENT
CONTRACTS, AN EMPLOYER-EMPLOYEE RELATIONSHIP WAS CREATED AS PROVIDED FOR UNDER
ARTICLE 280 OF THE LABOR CODE[;]
IV.
BY THE CONSTRUCTIVE DISMISSAL OF HEREIN PETITIONER, AS A REGULAR EMPLOYEE, THERE WAS A
DENIAL OF PETITIONERS RIGHT TO DUE PROCESS THUS ENTITLING HER TO THE MONEY CLAIMS AS
STATED IN THE COMPLAINT[.]16
The issues for our disposition are: (1) whether or not this Court can review the findings of the Court of
Appeals; and (2) whether or not under Rule 45 of the Rules of Court the Court of Appeals committed a
reversible error in its Decision.
On the first issue, private respondents contend that the issues raised in the instant petition are mainly
factual and that there is no showing that the said issues have been resolved arbitrarily and without basis.
They add that the findings of the Court of Appeals are supported by overwhelming wealth of evidence on
record as well as prevailing jurisprudence on the matter.17
Petitioner however contends that this Court can review the findings of the Court of Appeals, since the
appellate court erred in deciding a question of substance in a way which is not in accord with law or with
applicable decisions of this Court.18
We agree with petitioner. Decisions, final orders or resolutions of the Court of Appeals in any case
regardless of the nature of the action or proceeding involved may be appealed to this Court through a
petition for review. This remedy is a continuation of the appellate process over the original case, 19 and
considering there is no congruence in the findings of the NLRC and the Court of Appeals regarding the
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status of employment of petitioner, an exception to the general rule that this Court is bound by the
findings of facts of the appellate court,20 we can review such findings.
On the second issue, private respondents contend that the Court of Appeals did not err when it upheld the
validity of the talent contracts voluntarily entered into by petitioner. It further stated that prevailing
jurisprudence has recognized and sustained the absence of employer-employee relationship between a
talent and the media entity which engaged the talents services on a per talent contract basis, citing the
case of Sonza v. ABS-CBN Broadcasting Corporation.21
Petitioner avers however that an employer-employee relationship was created when the private
respondents started to merely renew the contracts repeatedly fifteen times or for four consecutive years.
Again, we agree with petitioner. The Court of Appeals committed reversible error when it held that
petitioner was a fixed-term employee. Petitioner was a regular employee under contemplation of law.
The practice of having fixed-term contracts in the industry does not automatically make all talent
contracts valid and compliant with labor law. The assertion that a talent contract exists does not
necessarily prevent a regular employment status.
Further, the Sonza case is not applicable. In Sonza, the television station did not instruct Sonza how to
perform his job. How Sonza delivered his lines, appeared on television, and sounded on radio were outside
the television stations control. Sonza had a free hand on what to say or discuss in his shows provided he
did not attack the television station or its interests. Clearly, the television station did not exercise control
over the means and methods of the performance of Sonzas work. 24 In the case at bar, ABC had control
over the performance of petitioners work. Noteworthy too, is the comparatively low P28,000 monthly pay
of petitioner25 vis the P300,000 a month salary of Sonza,26 that all the more bolsters the conclusion that
petitioner was not in the same situation as Sonza.
The contract of employment of petitioner with ABC had the following stipulations:
xxxx
1. SCOPE OF SERVICES TALENT agrees to devote his/her talent, time, attention and best efforts in the
performance of his/her duties and responsibilities as Anchor/Program Host/Newscaster of the Program, in
accordance with the direction of ABC and/or its authorized representatives.
1.1. DUTIES AND RESPONSIBILITIES TALENT shall:
a. Render his/her services as a newscaster on the Program;
b. Be involved in news-gathering operations by conducting interviews on- and off-the-air;
c. Participate in live remote coverages when called upon;
d. Be available for any other news assignment, such as writing, research or camera work;
e. Attend production meetings;
f. On assigned days, be at the studios at least one (1) hour before the live telecasts;
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g. Be present promptly at the studios and/or other place of assignment at the time designated by ABC;
h. Keep abreast of the news;
i. Give his/her full cooperation to ABC and its duly authorized representatives in the production and
promotion of the Program; and
j. Perform such other functions as may be assigned to him/her from time to time.
xxxx
1.3 COMPLIANCE WITH STANDARDS, INSTRUCTIONS AND OTHER RULES AND REGULATIONS TALENT
agrees that he/she will promptly and faithfully comply with the requests and instructions, as well as the
program standards, policies, rules and regulations of ABC, the KBP and the government or any of its
agencies and instrumentalities.27
xxxx
In Manila Water Company, Inc. v. Pena,28 we said that the elements to determine the existence of an
employment relationship are:
(a) the selection and engagement of the employee,
(b) the payment of wages,
(c) the power of dismissal, and
(d) the employers power to control.
The most important element is the employers control of the employees conduct, not only as to the
result of the work to be done, but also as to the means and methods to accomplish it.
The duties of petitioner as enumerated in her employment contract indicate that ABC had control over
the work of petitioner. Aside from control, ABC also dictated the work assignments and payment of
petitioners wages. ABC also had power to dismiss her. All these being present, clearly, there existed an
employment relationship between petitioner and ABC.
Concerning regular employment, the law provides for two kinds of employees, namely: (1) those who are
engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed.30 In other words, regular status arises from either
the nature of work of the employee or the duration of his employment. 31 In Benares v. Pancho,32 we very
succinctly said:
[T]he primary standard for determining regular employment is the reasonable connection between the
particular activity performed by the employee vis--vis the usual trade or business of the employer. This
connection can be determined by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. If the employee has been performing the job for
at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated
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and continuing need for its performance as sufficient evidence of the necessity if not indispensability of
that activity to the business. Hence, the employment is considered regular, but only with respect to such
activity and while such activity exists.33
In our view, the requisites for regularity of employment have been met in the instant case. Gleaned from
the description of the scope of services aforementioned, petitioners work was necessary or desirable in
the usual business or trade of the employer which includes, as a pre-condition for its enfranchisement, its
participation in the governments news and public information dissemination. In addition, her work was
continuous for a period of four years. This repeated engagement under contract of hire is indicative of the
necessity and desirability of the petitioners work in private respondent ABCs business.34
The contention of the appellate court that the contract was characterized by a valid fixed-period
employment is untenable. For such contract to be valid, it should be shown that the fixed period was
knowingly and voluntarily agreed upon by the parties. There should have been no force, duress or
improper pressure brought to bear upon the employee; neither should there be any other circumstance
that vitiates the employees consent.35 It should satisfactorily appear that the employer and the employee
dealt with each other on more or less equal terms with no moral dominance being exercised by the
employer over the employee.36 Moreover, fixed-term employment will not be considered valid where,
from the circumstances, it is apparent that periods have been imposed to preclude acquisition of tenurial
security by the employee.37
In the case at bar, it does not appear that the employer and employee dealt with each other on equal
terms. Understandably, the petitioner could not object to the terms of her employment contract because
she did not want to lose the job that she loved and the workplace that she had grown accustomed to,38
which is exactly what happened when she finally manifested her intention to negotiate. Being one of the
numerous newscasters/broadcasters of ABC and desiring to keep her job as a broadcasting practitioner,
petitioner was left with no choice but to affix her signature of conformity on each renewal of her contract
as already prepared by private respondents; otherwise, private respondents would have simply refused to
renew her contract. Patently, the petitioner occupied a position of weakness vis--vis the employer.
Moreover, private respondents practice of repeatedly extending petitioners 3-month contract for four
years is a circumvention of the acquisition of regular status. Hence, there was no valid fixed-term
employment between petitioner and private respondents.
While this Court has recognized the validity of fixed-term employment contracts in a number of cases, it
has consistently emphasized that when the circumstances of a case show that the periods were imposed
to block the acquisition of security of tenure, they should be struck down for being contrary to law,
morals, good customs, public order or public policy.
As a regular employee, petitioner is entitled to security of tenure and can be dismissed only for just cause
and after due compliance with procedural due process. Since private respondents did not observe due
process in constructively dismissing the petitioner, we hold that there was an illegal dismissal.
WHEREFORE, the challenged Decision dated January 30, 2004 and Resolution dated June 23, 2004 of the
Court of Appeals in CA-G.R. SP No. 63125, which held that the petitioner was a fixed-term employee, are
REVERSED and SET ASIDE. The NLRC decision is AFFIRMED.
Costs against private respondents.
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16. Bernarte v. PBA, September 14, 2011
G.R. No. 192084
September 14, 2011
JOSE MEL BERNARTE, Petitioner,

vs.
PHILIPPINE BASKETBALL ASSOCIATION (PBA), JOSE EMMANUEL M. EALA, and PERRY MARTINEZ,
Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 17 December 2009 Decision2 and 5 April 2010 Resolution3 of the Court of
Appeals in CA-G.R. SP No. 105406. The Court of Appeals set aside the decision of the National Labor
Relations Commission (NLRC), which affirmed the decision of the Labor Arbiter, and held that petitioner
Jose Mel Bernarte is an independent contractor, and not an employee of respondents Philippine
Basketball Association (PBA), Jose Emmanuel M. Eala, and Perry Martinez. The Court of Appeals denied the
motion for reconsideration.
The Facts
The facts, as summarized by the NLRC and quoted by the Court of Appeals, are as follows:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join the PBA as
referees. During the leadership of Commissioner Emilio Bernardino, they were made to sign contracts on a
year-to-year basis. During the term of Commissioner Eala, however, changes were made on the terms of
their employment.
Complainant Bernarte, for instance, was not made to sign a contract during the first conference of the AllFilipino Cup which was from February 23, 2003 to June 2003. It was only during the second conference
when he was made to sign a one and a half month contract for the period July 1 to August 5, 2003.
On January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him that his
contract would not be renewed citing his unsatisfactory performance on and off the court. It was a total
shock for Bernarte who was awarded Referee of the year in 2003. He felt that the dismissal was caused by
his refusal to fix a game upon order of Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of referees in
February 2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly
contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to
Guevarra expressing dissatisfaction over his questioning on the assignment of referees officiating out-oftown games. Beginning February 2004, he was no longer made to sign a contract.
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Respondents aver, on the other hand, that complainants entered into two contracts of retainer with the
PBA in the year 2003. The first contract was for the period January 1, 2003 to July 15, 2003; and the second
was for September 1 to December 2003. After the lapse of the latter period, PBA decided not to renew
their contracts.
Complainants were not illegally dismissed because they were not employees of the PBA. Their respective
contracts of retainer were simply not renewed. PBA had the prerogative of whether or not to renew their
contracts, which they knew were fixed.4
In her 31 March 2005 Decision,5 the Labor Arbiter6 declared petitioner an employee whose dismissal by
respondents was illegal. Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and the
payment of backwages, moral and exemplary damages and attorneys fees, to wit:
WHEREFORE, premises considered all respondents who are here found to have illegally
dismissed complainants are hereby ordered to (a) reinstate complainants within thirty (30)
days from the date of receipt of this decision and to solidarily pay complainants:
JOSE MEL
BERNARTE
RENATO
GUEVARRA
1. backwages from January 1, 2004 up

to the finality of this Decision, which to
date is
P536,250.00
P211,250.00
2. moral damages
100,000.00
50,000.00
3. exemplary damages
100,000.00
50,000.00
4. 10% attorney's fees
68,625.00
36,125.00
TOTAL
P754,875.00
P397,375.00
or a total of P1,152,250.00
The rest of the claims are hereby dismissed for lack of merit or basis.
SO ORDERED.7
In its 28 January 2008 Decision,8 the NLRC affirmed the Labor Arbiters judgment. The dispositive portion
of the NLRCs decision reads:
WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor Arbiter Teresita D.
Castillon-Lora dated March 31, 2005 is AFFIRMED.
SO ORDERED.9
Respondents filed a petition for certiorari with the Court of Appeals, which overturned the decisions of the
NLRC and Labor Arbiter. The dispositive portion of the Court of Appeals decision reads:
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WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated January 28, 2008
and Resolution dated August 26, 2008 of the National Labor Relations Commission are
ANNULLED and SET ASIDE. Private respondents complaint before the Labor Arbiter is
DISMISSED.
SO ORDERED.10
The Court of Appeals Ruling
The Court of Appeals found petitioner an independent contractor since respondents did not exercise any
form of control over the means and methods by which petitioner performed his work as a basketball
referee. The Court of Appeals held:
While the NLRC agreed that the PBA has no control over the referees acts of blowing the whistle and
making calls during basketball games, it, nevertheless, theorized that the said acts refer to the means and
methods employed by the referees in officiating basketball games for the illogical reason that said acts
refer only to the referees skills. How could a skilled referee perform his job without blowing a whistle and
making calls? Worse, how can the PBA control the performance of work of a referee without controlling
his acts of blowing the whistle and making calls?
Moreover, this Court disagrees with the Labor Arbiters finding (as affirmed by the NLRC) that the
Contracts of Retainer show that petitioners have control over private respondents.
xxxx
Neither do We agree with the NLRCs affirmance of the Labor Arbiters conclusion that private
respondents repeated hiring made them regular employees by operation of law.11
The Issues
The main issue in this case is whether petitioner is an employee of respondents, which in turn determines
whether petitioner was illegally dismissed.
Petitioner raises the procedural issue of whether the Labor Arbiters decision has become final and
executory for failure of respondents to appeal with the NLRC within the reglementary period.
The Ruling of the Court
The petition is bereft of merit.
The Court shall first resolve the procedural issue posed by petitioner.
Petitioner contends that the Labor Arbiters Decision of 31 March 2005 became final and executory for
failure of respondents to appeal with the NLRC within the prescribed period. Petitioner claims that the
Labor Arbiters decision was constructively served on respondents as early as August 2005 while
respondents appealed the Arbiters decision only on 31 March 2006, way beyond the reglementary period
to appeal. Petitioner points out that service of an unclaimed registered mail is deemed complete five days
from the date of first notice of the post master. In this case three notices were issued by the post office,
the last being on 1 August 2005. The unclaimed registered mail was consequently returned to sender.
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Petitioner presents the Postmasters Certification to prove constructive service of the Labor Arbiters
decision on respondents. The Postmaster certified:
xxx
That upon receipt of said registered mail matter, our registry in charge, Vicente Asis, Jr., immediately
issued the first registry notice to claim on July 12, 2005 by the addressee. The second and third notices
were issued on July 21 and August 1, 2005, respectively.
That the subject registered letter was returned to the sender (RTS) because the addressee failed to claim it
after our one month retention period elapsed. Said registered letter was dispatched from this office to
Manila CPO (RTS) under bill #6, line 7, page1, column 1, on September 8, 2005.12
Section 10, Rule 13 of the Rules of Court provides:
SEC. 10. Completeness of service. Personal service is complete upon actual delivery. Service by ordinary
mail is complete upon the expiration of ten (10) days after mailing, unless the court otherwise provides.
Service by registered mail is complete upon actual receipt by the addressee, or after five (5) days from the
date he received the first notice of the postmaster, whichever date is earlier.
The rule on service by registered mail contemplates two situations: (1) actual service the completeness of
which is determined upon receipt by the addressee of the registered mail; and (2) constructive service the
completeness of which is determined upon expiration of five days from the date the addressee received
the first notice of the postmaster.13
Insofar as constructive service is concerned, there must be conclusive proof that a first notice was duly
sent by the postmaster to the addressee.14 Not only is it required that notice of the registered mail be
issued but that it should also be delivered to and received by the addressee.15 Notably, the presumption
that official duty has been regularly performed is not applicable in this situation. It is incumbent upon a
party who relies on constructive service to prove that the notice was sent to, and received by, the
addressee.16
The best evidence to prove that notice was sent would be a certification from the postmaster, who should
certify not only that the notice was issued or sent but also as to how, when and to whom the delivery and
receipt was made. The mailman may also testify that the notice was actually delivered. 17
In this case, petitioner failed to present any concrete proof as to how, when and to whom the delivery and
receipt of the three notices issued by the post office was made. There is no conclusive evidence showing
that the post office notices were actually received by respondents, negating petitioners claim of
constructive service of the Labor Arbiters decision on respondents. The Postmasters Certification does
not sufficiently prove that the three notices were delivered to and received by respondents; it only
indicates that the post office issued the three notices. Simply put, the issuance of the notices by the post
office is not equivalent to delivery to and receipt by the addressee of the registered mail. Thus, there is no
proof of completed constructive service of the Labor Arbiters decision on respondents.
At any rate, the NLRC declared the issue on the finality of the Labor Arbiters decision moot as
respondents appeal was considered in the interest of substantial justice. We agree with the NLRC. The
ends of justice will be better served if we resolve the instant case on the merits rather than allowing the
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substantial issue of whether petitioner is an independent contractor or an employee linger and remain
unsettled due to procedural technicalities.
The existence of an employer-employee relationship is ultimately a question of fact. As a general rule,
factual issues are beyond the province of this Court. However, this rule admits of exceptions, one of which
is where there are conflicting findings of fact between the Court of Appeals, on one hand, and the NLRC
and Labor Arbiter, on the other, such as in the present case.18
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 employers power to control the employee on the means and methods by
which the work is accomplished. The so-called "control test" is the most important indicator of the
presence or absence of an employer-employee relationship.19
In this case, PBA admits repeatedly engaging petitioners services, as shown in the retainer contracts. PBA
pays petitioner a retainer fee, exclusive of per diem or allowances, as stipulated in the retainer contract.
PBA can terminate the retainer contract for petitioners violation of its terms and conditions.
However, respondents argue that the all-important element of control is lacking in this case, making
petitioner an independent contractor and not an employee of respondents.
Petitioner contends otherwise. Petitioner asserts that he is an employee of respondents since the latter
exercise control over the performance of his work. Petitioner cites the following stipulations in the
retainer contract which evidence control: (1) respondents classify or rate a referee; (2) respondents require
referees to attend all basketball games organized or authorized by the PBA, at least one hour before the
start of the first game of each day; (3) respondents assign petitioner to officiate ballgames, or to act as
alternate referee or substitute; (4) referee agrees to observe and comply with all the requirements of the
PBA governing the conduct of the referees whether on or off the court; (5) referee agrees (a) to keep
himself in good physical, mental, and emotional condition during the life of the contract; (b) to give always
his best effort and service, and loyalty to the PBA, and not to officiate as referee in any basketball game
outside of the PBA, without written prior consent of the Commissioner; (c) always to conduct himself on
and off the court according to the highest standards of honesty or morality; and (6) imposition of various
sanctions for violation of the terms and conditions of the contract.
The foregoing stipulations hardly demonstrate control over the means and methods by which petitioner
performs his work as a referee officiating a PBA basketball game. The contractual stipulations do not
pertain to, much less dictate, how and when petitioner will blow the whistle and make calls. On the
contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity of the
professional basketball league. As correctly observed by the Court of Appeals, "how could a skilled
referee perform his job without blowing a whistle and making calls? x x x [H]ow can the PBA control the
performance of work of a referee without controlling his acts of blowing the whistle and making calls?" 20
In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined the relationship between a television
and radio station and one of its talents, the Court held that not all rules imposed by the hiring party on the
hired party indicate that the latter is an employee of the former. The Court held:
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We find that these general rules are merely guidelines towards the achievement of the mutually desired
result, which are top-rating television and radio programs that comply with standards of the industry. We
have ruled that:
Further, not every form of control that a party reserves to himself over the conduct of the other party in
relation to the services being rendered may be accorded the effect of establishing an employer-employee
relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. v. NLRC. In
said case, we held that:
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use
of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it. 22
We agree with respondents that once in the playing court, the referees exercise their own independent
judgment, based on the rules of the game, as to when and how a call or decision is to be made. The
referees decide whether an infraction was committed, and the PBA cannot overrule them once the
decision is made on the playing court. The referees are the only, absolute, and final authority on the
playing court. Respondents or any of the PBA officers cannot and do not determine which calls to make or
not to make and cannot control the referee when he blows the whistle because such authority exclusively
belongs to the referees. The very nature of petitioners job of officiating a professional basketball game
undoubtedly calls for freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the
referees are required to report for work only when PBA games are scheduled, which is three times a week
spread over an average of only 105 playing days a year, and they officiate games at an average of two
hours per game; and (2) the only deductions from the fees received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per day for five days a
week, petitioner is required to report for work only when PBA games are scheduled or three times a week
at two hours per game. In addition, there are no deductions for contributions to the Social Security
System, Philhealth or Pag-Ibig, which are the usual deductions from employees salaries. These undisputed
circumstances buttress the fact that petitioner is an independent contractor, and not an employee of
respondents.
Furthermore, the applicable foreign case law declares that a referee is an independent contractor, whose
special skills and independent judgment are required specifically for such position and cannot possibly be
controlled by the hiring party.
In Yonan v. United States Soccer Federation, Inc.,23 the United States District Court of Illinois held that
plaintiff, a soccer referee, is an independent contractor, and not an employee of defendant which is the
statutory body that governs soccer in the United States. As such, plaintiff was not entitled to protection by
the Age Discrimination in Employment Act. The U.S. District Court ruled:
Generally, "if an employer has the right to control and direct the work of an individual, not only as to the
result to be achieved, but also as to details by which the result is achieved, an employer/employee
relationship is likely to exist." The Court must be careful to distinguish between "control[ling] the conduct
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of another party contracting party by setting out in detail his obligations" consistent with the freedom of
contract, on the one hand, and "the discretionary control an employer daily exercises over its employees
conduct" on the other.
Yonan asserts that the Federation "closely supervised" his performance at each soccer game he officiated
by giving him an assessor, discussing his performance, and controlling what clothes he wore while on the
field and traveling. Putting aside that the Federation did not, for the most part, control what clothes he
wore, the Federation did not supervise Yonan, but rather evaluated his performance after matches. That
the Federation evaluated Yonan as a referee does not mean that he was an employee. There is no question
that parties retaining independent contractors may judge the performance of those contractors to
determine if the contractual relationship should continue. x x x
It is undisputed that the Federation did not control the way Yonan refereed his games.1wphi1 He had full
discretion and authority, under the Laws of the Game, to call the game as he saw fit. x x x In a similar vein,
subjecting Yonan to qualification standards and procedures like the Federations registration and training
requirements does not create an employer/employee relationship. x x x
A position that requires special skills and independent judgment weights in favor of independent
contractor status. x x x Unskilled work, on the other hand, suggests an employment relationship. x x x
Here, it is undisputed that soccer refereeing, especially at the professional and international level, requires
"a great deal of skill and natural ability." Yonan asserts that it was the Federations training that made him
a top referee, and that suggests he was an employee. Though substantial training supports an
employment inference, that inference is dulled significantly or negated when the putative employers
activity is the result of a statutory requirement, not the employers choice. x x x
In McInturff v. Battle Ground Academy of Franklin,24 it was held that the umpire was not an agent of the
Tennessee Secondary School Athletic Association (TSSAA), so the players vicarious liability claim against
the association should be dismissed. In finding that the umpire is an independent contractor, the Court of
Appeals of Tennesse ruled:
The TSSAA deals with umpires to achieve a result-uniform rules for all baseball games played between
TSSAA member schools. The TSSAA does not supervise regular season games. It does not tell an official
how to conduct the game beyond the framework established by the rules. The TSSAA does not, in the
vernacular of the case law, control the means and method by which the umpires work.
In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an
employee of the former. For a hired party to be considered an employee, the hiring party must have
control over the means and methods by which the hired party is to perform his work, which is absent in
this case. The continuous rehiring by PBA of petitioner simply signifies the renewal of the contract
between PBA and petitioner, and highlights the satisfactory services rendered by petitioner warranting
such contract renewal. Conversely, if PBA decides to discontinue petitioners services at the end of the
term fixed in the contract, whether for unsatisfactory services, or violation of the terms and conditions of
the contract, or for whatever other reason, the same merely results in the non-renewal of the contract, as
in the present case. The non-renewal of the contract between the parties does not constitute illegal
dismissal of petitioner by respondents.
WHEREFORE, we DENY the petition and AFFIRM the assailed decision of the Court of Appeals.
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17. Jardin v. NLRC, February 23, 2000

.R. No. 119268
February 23, 2000
ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES,
JOEL ORDENIZA and AMADO CENTENO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL,
INC.) respondents.
QUISUMBING, J.:
This special civil action for certiorari seeks to annul the decision1 of public respondent promulgated on
October 28, 1994, in NLRC NCR CA No. 003883-92, and its resolution2 dated December 13, 1994 which
denied petitioners motion for reconsideration.
Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation
engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent's taxicabs every
other day on a 24-hour work schedule under the boundary system. Under this arrangement, the
petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly
deducts from petitioners, daily earnings the amount of P30.00 supposedly for the washing of the taxi
units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their
rights and interests.
Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their
taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected
that they were singled out because they were the leaders and active members of the proposed union.
Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor
practice, illegal dismissal and illegal deduction of washing fees. In a decision3 dated August 31, 1992, the
labor arbiter dismissed said complaint for lack of merit.
On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside
the judgment of the labor arbiter. The labor tribunal declared that petitioners are employees of private
respondent, and, as such, their dismissal must be for just cause and after due process. It disposed of the
case as follows:
WHEREFORE, in view of all the foregoing considerations, the decision of the Labor Arbiter
appealed from is hereby SET ASIDE and another one entered:
1. Declaring the respondent company guilty of illegal dismissal and accordingly it is directed to
reinstate the complainants, namely, Alberto A. Gonzales, Joel T. Morato, Gavino Panahon,
Demetrio L. Calagos, Sonny M. Lustado, Romeo Q. Clariza, Luis de los Angeles, Amado Centino,
Angel Jardin, Rosendo Marcos, Urbano Marcos, Jr., and Joel Ordeniza, to their former positions
without loss of seniority and other privileges appertaining thereto; to pay the complainants full
backwages and other benefits, less earnings elsewhere, and to reimburse the drivers the
amount paid as washing charges; and
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2. Dismissing the charge of unfair [labor] practice for insufficiency of evidence.

SO ORDERED.4
Private respondent's first motion for reconsideration was denied. Remaining hopeful, private respondent
filed another motion for reconsideration. This time, public respondent, in its decision5 dated October 28,
1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case
as petitioners and private respondent have no employer-employee relationship. It held that the
relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code, and
disposed of the case as follows:
VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion under reconsideration is hereby given due
course.
Accordingly, the Resolution of August 10, 1994, and the Decision of April 28, 1994 are hereby SET ASIDE.
The Decision of the Labor Arbiter subject of the appeal is likewise SET ASIDE and a NEW ONE ENTERED
dismissing the complaint for lack of jurisdiction.
No costs.
SO ORDERED.6
Expectedly, petitioners sought reconsideration of the labor tribunal's latest decision which was denied.
Hence, the instant petition.
In this recourse, petitioners allege that public respondent acted without or in excess of jurisdiction, or with
grave abuse of discretion in rendering the assailed decision, arguing that:
I
THE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENT'S SECOND MOTION FOR
RECONSIDERATION WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER THE NLRC RULES, AND TO
GRANT THE SAME ON GROUNDS NOT EVEN INVOKED THEREIN.
II
THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES IS ALREADY A
SETTLED ISSUE CONSTITUTING RES JUDICATA, WHICH THE NLRC HAS NO MORE JURISDICTION TO
REVERSE, ALTER OR MODIFY.
III
IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER SUPPORTS THE VIEW THAT PETITIONERS-TAXI
DRIVERS ARE EMPLOYEES OF RESPONDENT TAXI COMPANY.7
The petition is impressed with merit.
The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in
the jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by the
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tribunal exercising judicial or quasi-judicial power as to amount to lack of power.8 In labor cases, this Court
has declared in several instances that disregarding rules it is bound to observe constitutes grave abuse of
discretion on the part of labor tribunal.
In Garcia vs. NLRC,9 private respondent therein, after receiving a copy of the labor arbiter's decision, wrote
the labor arbiter who rendered the decision and expressed dismay over the judgment. Neither notice of
appeal was filed nor cash or surety bond was posted by private respondent. Nevertheless, the labor
tribunal took cognizance of the letter from private respondent and treated said letter as private
respondent's appeal. In a certiorari action before this Court, we ruled that the labor tribunal acted with
grave abuse of discretion in treating a mere letter from private respondent as private respondent's appeal
in clear violation of the rules on appeal prescribed under Section 3(a), Rule VI of the New Rules of
Procedure of NLRC.
In Philippine Airlines Inc. vs. NLRC,10 we held that the labor arbiter committed grave abuse of discretion
when he failed to resolve immediately by written order a motion to dismiss on the ground of lack of
jurisdiction and the supplemental motion to dismiss as mandated by Section 15 of Rule V of the New Rules
of Procedure of the NLRC.
In Unicane Workers Union-CLUP vs. NLRC,11 we held that the NLRC gravely abused its discretion by allowing
and deciding an appeal without an appeal bond having been filed as required under Article 223 of the
Labor Code.
In Maebo vs. NLRC,12 we declared that the labor arbiter gravely abused its discretion in disregarding the
rule governing position papers. In this case, the parties have already filed their position papers and even
agreed to consider the case submitted for decision, yet the labor arbiter still admitted a supplemental
position paper and memorandum, and by taking into consideration, as basis for his decision, the alleged
facts adduced therein and the documents attached thereto.
In Gesulgon vs. NLRC,13 we held that public respondent gravely abused its discretion in treating the motion
to set aside judgment and writ of execution as a petition for relief of judgment. In doing so, public
respondent had, without sufficient basis, extended the reglementary period for filing petition for relief
from judgment contrary to prevailing rule and case law.
In this case before us, private respondent exhausted administrative remedy available to it by seeking
reconsideration of public respondent's decision dated April 28, 1994, which public respondent denied. With
this motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it
may have committed before resort to courts of justice can be had.14 Thus, when private respondent filed a
second motion for reconsideration, public respondent should have forthwith denied it in accordance with
Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from
the same party, thus:
Sec. 14. Motions for Reconsideration. Motions for reconsideration of any order, resolution or
decision of the Commission shall not be entertained except when based on palpable or patent
errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt
of the order, resolution or decision with proof of service that a copy of the same has been furnished
within the reglementary period the adverse party and provided further, that only one such motion
from the same party shall be entertained. [Emphasis supplied]
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The rationale for allowing only one motion for reconsideration from the same party is to assist the parties
in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot
be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of
an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine,
and education. It may as well involve the survival of a business or an industry. 15
As correctly pointed out by petitioner, the second motion for reconsideration filed by private respondent
is indubitably a prohibited pleading16 which should have not been entertained at all. Public respondent
cannot just disregard its own rules on the pretext of "satisfying the ends of justice",17 especially when its
disposition of a legal controversy ran afoul with a clear and long standing jurisprudence in this jurisdiction
as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this
Court is not a way of rectifying an error or mistake. In our view, public respondent gravely abused its
discretion in taking cognizance and granting private respondent's second motion for reconsideration as it
wrecks the orderly procedure in seeking reliefs in labor cases.
But, there is another compelling reason why we cannot leave untouched the flip-flopping decisions of the
public respondent. As mentioned earlier, its October 28, 1994 judgment is not in accord with the applicable
decisions of this Court. The labor tribunal reasoned out as follows:
On the issue of whether or not employer-employee relationship exists, admitted is the fact that
complainants are taxi drivers purely on the "boundary system". Under this system the driver takes out
his unit and pays the owner/operator a fee commonly called "boundary" for the use of the unit. Now,
in the determination the existence of employer-employee relationship, the Supreme Court in the case
of Sara, et al., vs. Agarrado, et al. (G.R. No. 73199, 26 October 1988) has applied the following four-fold
test: "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power of control the employees conduct."
"Among the four (4) requisites", the Supreme Court stresses that "control is deemed the most
important that the other requisites may even be disregarded". Under the control test, an employeremployee relationship exists if the "employer" has reserved the right to control the "employee" 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. Otherwise, no such relationship exists. (Ibid.)
Applying the foregoing parameters to the case herein obtaining, it is clear that the respondent does
not pay the drivers, the complainants herein, their wages. Instead, the drivers pay a certain fee for the
use of the vehicle. On the matter of control, the drivers, once they are out plying their trade, are free
to choose whatever manner they conduct their trade and are beyond the physical control of the
owner/operator; they themselves determine the amount of revenue they would want to earn in a day's
driving; and, more significantly aside from the fact that they pay for the gasoline they consume, they
likewise shoulder the cost of repairs on damages sustained by the vehicles they are driving.
Verily, all the foregoing attributes signify that the relationship of the parties is more of a leasehold or
one that is covered by a charter agreement under the Civil Code rather than the Labor Code.18
The foregoing ratiocination goes against prevailing jurisprudence.
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In a number of cases decided by this Court,19 we ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers on the other under the boundary system is that of
employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses
complete control over the chattel leased although the lessee cannot be reckless in the use thereof,
otherwise he would be responsible for the damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The
management of the business is in the owner's hands. The owner as holder of the certificate of public
convenience must see to it that the driver follows the route prescribed by the franchising authority and
the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages
but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and employee. We have applied by
analogy the abovestated doctrine to the relationships between bus owner/operator and bus conductor, 20
auto-calesa owner/operator and driver,21 and recently between taxi owners/operators and taxi drivers.22
Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they
perform activities which are usually necessary or desirable in the usual business or trade of their
employer.
As consistently held by this Court, termination of employment must be effected in accordance with law.
The just and authorized causes for termination of employment are enumerated under Articles 282, 283 and
284 of the Labor Code. The requirement of notice and hearing is set-out in Article 277 (b) of the said Code.
Hence, petitioners, being employees of private respondent, can be dismissed only for just and authorized
cause, and after affording them notice and hearing prior to termination. In the instant case, private
respondent had no valid cause to terminate the employment of petitioners. Neither were there two (2)
written notices sent by private respondent informing each of the petitioners that they had been dismissed
from work. These lack of valid cause and failure on the part of private respondent to comply with the twinnotice requirement underscored the illegality surrounding petitioners' dismissal.
Under the law, an employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.23 It must be emphasized, though, that recent judicial
pronouncements24 distinguish between employees illegally dismissed prior to the effectivity of Republic
Act No. 6715 on March 21, 1989, and those whose illegal dismissals were effected after such date. Thus,
employees illegally dismissed prior to March 21, 1989, are entitled to backwages up to three (3) years
without deduction or qualification, while those illegally dismissed after that date are granted full
backwages inclusive of allowances and other benefits or their monetary equivalent from the time their
actual compensation was withheld from them up to the time of their actual reinstatement. The legislative
policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without
deducting from backwages the earnings derived elsewhere by the concerned employee during the period
of his illegal dismissal. Considering that petitioners were terminated from work on August 1, 1991, they are
entitled to full backwages on the basis of their last daily earnings.
With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi
units, we view the same as not illegal in the context of the law. We note that after a tour of duty, it is
incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it
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out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair
play.25 Hence, the drivers are not entitled to reimbursement of washing charges.1wphi1.nt
WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public respondent dated October
28, 1994, is hereby SET ASIDE. The DECISION of public respondent dated April 28, 1994, and its
RESOLUTION dated December 13, 1994, are hereby REINSTATED subject to MODIFICATION. Private
respondent is directed to reinstate petitioners to their positions held at the time of the complained
dismissal. Private respondent is likewise ordered to pay petitioners their full backwages, to be computed
from the date of dismissal until their actual reinstatement. However, the order of public respondent that
petitioners be reimbursed the amount paid as washing charges is deleted. Costs against private
respondents.
SO ORDERED.
18. Professional Services Inc. v. CA, February 11, 2008 (SEE CASE NO. 8)
19. Locsin v. PLDT, October 2, 2009

G.R. No. 185251
October 2, 2009
RAUL G. LOCSIN and EDDIE B. TOMAQUIN, Petitioners,

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the reversal of the May 6, 2008 Decision1 and
November 4, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 97398, entitled Philippine
Long Distance Telephone Company v. National Labor Relations Commission, Raul G. Locsin and Eddie B.
Tomaquin. The assailed decision set aside the Resolutions of the National Labor Relations Commission
(NLRC) dated October 28, 2005 and August 28, 2006 which in turn affirmed the Decision dated February 13,
2004 of the Labor Arbiter. The assailed resolution, on the other hand, denied petitioners motion for
reconsideration of the assailed decision.
The Facts
On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and the Security
and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement3 (Agreement)
whereby SSCP would provide armed security guards to PLDT to be assigned to its various offices.
Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin, among other security guards,
were posted at a PLDT office.
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On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the Agreement
effective October 1, 2001.4
Despite the termination of the Agreement, however, petitioners continued to secure the premises of their
assigned office. They were allegedly directed to remain at their post by representatives of respondent. In
support of their contention, petitioners provided the Labor Arbiter with copies of petitioner Locsins pay
slips for the period of January to September 2002.5
Then, on September 30, 2002, petitioners services were terminated.
Thus, petitioners filed a complaint before the Labor Arbiter for illegal dismissal and recovery of money
claims such as overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay,
Emergency Cost of Living Allowance, and moral and exemplary damages against PLDT.
The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was explained in the
Decision that petitioners were found to be employees of PLDT and not of SSCP. Such conclusion was
arrived at with the factual finding that petitioners continued to serve as guards of PLDTs offices. As such
employees, petitioners were entitled to substantive and procedural due process before termination of
employment. The Labor Arbiter held that respondent failed to observe such due process requirements.
The dispositive portion of the Labor Arbiters Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Philippine Long
Distance and Telephone Company (PLDT) to pay complainants Raul E. Locsin and Eddie Tomaquin their
separation pay and back wages computed as follows:
NAME
1. Raul E. Locsin
SEPARATION PAY BACKWAGES

P127,500.00
P240,954.67
2. Eddie B. Tomaquin P127,500.00
P240,954.67
P736,909.34
All other claims are DISMISSED for want of factual basis.

Let the computation made by the Computation and Examination Unit form part of this decision.
SO ORDERED.
PLDT appealed the above Decision to the NLRC which rendered a Resolution affirming in toto the Arbiters
Decision.
Thus, PDLT filed a Motion for Reconsideration of the NLRCs Resolution which was also denied.
Consequently, PLDT filed a Petition for Certiorari with the CA asking for the nullification of the Resolution
issued by the NLRC as well as the Labor Arbiters Decision. The CA rendered the assailed decision granting
PLDTs petition and dismissing petitioners complaint. The dispositive portion of the CA Decision provides:
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WHEREFORE, the instant Petition for Certiorari is GRANTED. The Resolutions dated October 28, 2005 and
August 28, 2006 of the National Labor Relations Commission are ANNULLED and SET ASIDE. Private
respondents complaint against Philippine Long Distance Telephone Company is DISMISSED.
SO ORDERED.
The CA applied the four-fold test in order to determine the existence of an employer-employee
relationship between the parties but did not find such relationship. It determined that SSCP was not a
labor-only contractor and was an independent contractor having substantial capital to operate and
conduct its own business. The CA further bolstered its decision by citing the Agreement whereby it was
stipulated that there shall be no employer-employee relationship between the security guards and PLDT.
Anent the pay slips that were presented by petitioners, the CA noted that those were issued by SSCP and
not PLDT; hence, SSCP continued to pay the salaries of petitioners after the Agreement. This fact allegedly
proved that petitioners continued to be employees of SSCP albeit performing their work at PLDTs
premises.
From such assailed decision, petitioners filed a motion for reconsideration which was denied in the assailed
resolution.
Hence, we have this petition.
The Issues
1. Whether or not; complainants extended services to the respondent for one (1) year from October
1, 2001, the effectivity of the termination of the contract of complainants agency SSCP, up to
September 30, 2002, without a renewed contract, constitutes an employer-employee relationship
between respondent and the complainants.
2. Whether or not; in accordance to the provision of the Article 280 of the Labor Code,
complainants extended services to the respondent for another one (1) year without a contract be
considered as contractual employment.
3. Whether or not; in accordance to the provision of the Article 280 of the Labor Code, does
complainants thirteen (13) years of service to the respondent with manifestation to the respondent
thirteen (13) years renewal of its security contract with the complainant agency SSCP, can be
considered only as "seasonal in nature" or fixed as [specific projects] or undertakings and its
completion or termination can be dictated as [controlled] by the respondent anytime they wanted
to.
4. Whether or not; complainants from being an alleged contractual employees of the respondent
for thirteen (13) years as they were then covered by a contract, becomes regular employees of the
respondent as the one (1) year extended services of the complainants were not covered by a
contract, and can be considered as direct employment pursuant to the provision of the Article 280
of the Labor Code.
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5. Whether or not; the Court of Appeals committed grave abuse of discretion when it set aside and
[annulled] the labor [arbiters] decision and of the NLRCs resolution declaring the dismissal of the
complainant as illegal.6
The Courts Ruling
This petition is hereby granted.
An Employer-Employee
Relationship Existed Between the Parties
It is beyond cavil that there was no employer-employee relationship between the parties from the time of
petitioners first assignment to respondent by SSCP in 1988 until the alleged termination of the Agreement
between respondent and SSCP. In fact, this was the conclusion that was reached by this Court in Abella v.
Philippine Long Distance Telephone Company,7 where we ruled that petitioners therein, including herein
petitioners, cannot be considered as employees of PLDT. It bears pointing out that petitioners were
among those declared to be employees of their respective security agencies and not of PLDT.
The only issue in this case is whether petitioners became employees of respondent after the Agreement
between SSCP and respondent was terminated.
This must be answered in the affirmative.
Notably, respondent does not deny the fact that petitioners remained in the premises of their offices even
after the Agreement was terminated. And it is this fact that must be explained.
To recapitulate, the CA, in rendering a decision in favor of respondent, found that: (1) petitioners failed to
prove that SSCP was a labor-only contractor; and (2) petitioners are employees of SSCP and not of PLDT.
In arriving at such conclusions, the CA relied on the provisions of the Agreement, wherein SSCP undertook
to supply PLDT with the required security guards, while furnishing PLDT with a performance bond in the
amount of PhP 707,000. Moreover, the CA gave weight to the provision in the Agreement that SSCP
warranted that it "carry on an independent business and has substantial capital or investment in the form
of equipment, work premises, and other materials which are necessary in the conduct of its business."
Further, in determining that no employer-employee relationship existed between the parties, the CA
quoted the express provision of the Agreement, stating that no employer-employee relationship existed
between the parties herein. The CA disregarded the pay slips of Locsin considering that they were in fact
issued by SSCP and not by PLDT.
From the foregoing explanation of the CA, the fact remains that petitioners remained at their post after
the termination of the Agreement. Notably, in its Comment dated March 10, 2009,8 respondent never
denied that petitioners remained at their post until September 30, 2002. While respondent denies the
alleged circumstances stated by petitioners, that they were told to remain at their post by respondents
Security Department and that they were informed by SSCP Operations Officer Eduardo Juliano that their
salaries would be coursed through SSCP as per arrangement with PLDT, it does not state why they were
not made to vacate their posts. Respondent said that it did not know why petitioners remained at their
posts.
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Rule 131, Section 3(y) of the Rules of Court provides:

SEC. 3. Disputable presumptions.The following presumptions are satisfactory if uncontradicted, but may
be contradicted and overcome by other evidence:
xxxx
(y) That things have happened according to the ordinary course of nature and the ordinary habits of life.
In the ordinary course of things, responsible business owners or managers would not allow security guards
of an agency with whom the owners or managers have severed ties with to continue to stay within the
business premises. This is because upon the termination of the owners or managers agreement with the
security agency, the agencys undertaking of liability for any damage that the security guard would cause
has already been terminated. Thus, in the event of an accident or otherwise damage caused by such
security guards, it would be the business owners and/or managers who would be liable and not the
agency. The business owners or managers would, therefore, be opening themselves up to liability for acts
of security guards over whom the owners or managers allegedly have no control.
At the very least, responsible business owners or managers would inquire or learn why such security
guards were remaining at their posts, and would have a clear understanding of the circumstances of the
guards stay. It is but logical that responsible business owners or managers would be aware of the
situation in their premises.
We point out that with respondents hypothesis, it would seem that SSCP was paying petitioners salaries
while securing respondents premises despite the termination of their Agreement. Obviously, it would only
be respondent that would benefit from such a situation. And it is seriously doubtful that a security agency
that was established for profit would allow its security guards to secure respondents premises when the
Agreement was already terminated.
From the foregoing circumstances, reason dictates that we conclude that petitioners remained at their
post under the instructions of respondent. We can further conclude that respondent dictated upon
petitioners that the latter perform their regular duties to secure the premises during operating hours. This,
to our mind and under the circumstances, is sufficient to establish the existence of an employer-employee
relationship. Certainly, the facts as narrated by petitioners are more believable than the irrational denials
made by respondent. Thus, we ruled in Lee Eng Hong v. Court of Appeals:9
Evidence, to be believed, must not only proceed from the mouth of a credible witness, but it must be
credible in itself such as the common experience and observation of mankind can approve as probable
under the circumstances. We have no test of the truth of human testimony, except its conformity to our
knowledge, observation and experience. Whatever is repugnant to these belongs to the miraculous and is
outside judicial cognizance (Castaares v. Court of Appeals, 92 SCRA 568 [1979]).
To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of the
Agreement, petitioners remained at their post securing the premises of respondent while receiving their
salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials proffered by
respondent do not shed any light to the situation. It is but reasonable to conclude that, with the behest
and, presumably, directive of respondent, petitioners continued with their services. Evidently, such are
indicia of control that respondent exercised over petitioners.
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Such power of control has been explained as the "right to control not only the end to be achieved but also
the means to be used in reaching such end."10 With the conclusion that respondent directed petitioners to
remain at their posts and continue with their duties, it is clear that respondent exercised the power of
control over them; thus, the existence of an employer-employee relationship.
In Tongko v. The Manufacturers Life Insurance Co. (Phils.) Inc.,11 we reiterated the oft repeated rule that
control is the most important element in the determination of the existence of an employer-employee
relationship:
relationship, thus:
Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute,
four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees
conduct. It is the so-called "control test" which constitutes the most important index of the existence of
the employer-employee relationship that is, whether the employer controls or has reserved the right to
control the employee not only as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship
exists where the person for whom the services are performed reserves the right to control not only the
end to be achieved but also the means to be used in reaching such end.
Furthermore, Article 106 of the Labor Code contains a provision on contractors, to wit:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person
for the performance of the formers work, the employees of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.1avvphi1
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him. (Emphasis supplied.)
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Thus, the Secretary of Labor issued Department Order No. 18-2002, Series of 2002, implementing Art. 106
as follows:
Section 5. Prohibition against labor-only contracting.Labor-only contracting is hereby declared
prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal,
and any of the following elements are present:
(i) The contractor or subcontractor does not have substantial capital or investment which relates to
the job, work or service to be performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are directly related to the main
business of the principal; or
(ii) the contractor does not exercise the right to control over the performance of the work of the
contractual employee.
The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the Labor Code,
as amended.
"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements, machineries and work premises, actually and directly used by
the contractor or subcontractor in the performance or completion of the job, work or service contracted
out.
The "right to control" shall refer to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved, but also the manner
and means to be used in reaching that end.
On the other hand, Sec. 7 of the department order contains the consequence of such labor-only
contracting:
Section 7. Existence of an employer-employee relationship.The contractor or subcontractor shall be
considered the employer of the contractual employee for purposes of enforcing the provisions of the
Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor
in the event of any violation of any provision of the Labor Code, including the failure to pay wages.
The principal shall be deemed the employer of the contractual employee in any of the following cases as
declared by a competent authority:
(a) where there is labor-only contracting; or
(b) where the contracting arrangement falls within the prohibitions provided in Section 6
(Prohibitions) hereof. (Emphasis supplied.)
Evidently, respondent having the power of control over petitioners must be considered as petitioners
employerfrom the termination of the Agreement onwardsas this was the only time that any evidence
of control was exhibited by respondent over petitioners and in light of our ruling in Abella. 12 Thus, as aptly
declared by the NLRC, petitioners were entitled to the rights and benefits of employees of respondent,
including due process requirements in the termination of their services.
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Both the Labor Arbiter and NLRC found that respondent did not observe such due process requirements.
Having failed to do so, respondent is guilty of illegal dismissal.
WHEREFORE, we SET ASIDE the CAs May 6, 2008 Decision and November 4, 2008 Resolution in CA-G.R. SP
No. 97398. We hereby REINSTATE the Labor Arbiters Decision dated February 13, 2004 and the NLRCs
Resolutions dated October 28, 2005 and August 28, 2006.
No costs.
SO ORDERED.
20. Ymbong v. ABS-CBN, March 7, 2012 (SEE CASE NO. 7)
21. Chavez v. NLRC, January 17, 2005

G.R. No. 146530
January 17, 2005
PEDRO CHAVEZ, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. and ALVIN LEE, Plant Manager,
respondents.
DECISION
CALLEJO, SR., J.:
Before the Court is the petition for review on certiorari of the Resolution1 dated December 15, 2000 of the
Court of Appeals (CA) reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485. The assailed
resolution reinstated the Decision dated July 10, 1998 of the National Labor Relations Commission (NLRC),
dismissing the complaint for illegal dismissal filed by herein petitioner Pedro Chavez. The said NLRC
decision similarly reversed its earlier Decision dated January 27, 1998 which, affirming that of the Labor
Arbiter, ruled that the petitioner had been illegally dismissed by respondents Supreme Packaging, Inc. and
Mr. Alvin Lee.
The case stemmed from the following facts:
The respondent company, Supreme Packaging, Inc., is in the business of manufacturing cartons and other
packaging materials for export and distribution. It engaged the services of the petitioner, Pedro Chavez, as
truck driver on October 25, 1984. As such, the petitioner was tasked to deliver the respondent companys
products from its factory in Mariveles, Bataan, to its various customers, mostly in Metro Manila. The
respondent company furnished the petitioner with a truck. Most of the petitioners delivery trips were
made at nighttime, commencing at 6:00 p.m. from Mariveles, and returning thereto in the afternoon two
or three days after. The deliveries were made in accordance with the routing slips issued by respondent
company indicating the order, time and urgency of delivery. Initially, the petitioner was paid the sum of
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P350.00 per trip. This was later adjusted to P480.00 per trip and, at the time of his alleged dismissal, the
petitioner was receiving P900.00 per trip.
Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent companys plant
manager, his (the petitioners) desire to avail himself of the benefits that the regular employees were
receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others. Although he
promised to extend these benefits to the petitioner, respondent Lee failed to actually do so.
On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration
Branch No. III of the NLRC in San Fernando, Pampanga.
Before the case could be heard, respondent company terminated the services of the petitioner.
Consequently, on May 25, 1995, the petitioner filed an amended complaint against the respondents for
illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, 13th
month pay, among others. The case was docketed as NLRC Case No. RAB-III-02-6181-95.
The respondents, for their part, denied the existence of an employer-employee relationship between the
respondent company and the petitioner. They averred that the petitioner was an independent contractor
as evidenced by the contract of service which he and the respondent company entered into. The said
contract provided as follows:
That the Principal [referring to Supreme Packaging, Inc.], by these presents, agrees to hire and the
Contractor [referring to Pedro Chavez], by nature of their specialized line or service jobs, accepts the
services to be rendered to the Principal, under the following terms and covenants heretofore
mentioned:
1. That the inland transport delivery/hauling activities to be performed by the contractor to the
principal, shall only cover travel route from Mariveles to Metro Manila. Otherwise, any change
to this travel route shall be subject to further agreement by the parties concerned.
2. That the payment to be made by the Principal for any hauling or delivery transport services
fully rendered by the Contractor shall be on a per trip basis depending on the size or
classification of the truck being used in the transport service, to wit:
a) If the hauling or delivery service shall require a truck of six wheeler, the payment on a
per trip basis from Mariveles to Metro Manila shall be THREE HUNDRED PESOS (P300.00)
and EFFECTIVE December 15, 1984.
b) If the hauling or delivery service require a truck of ten wheeler, the payment on a per
trip basis, following the same route mentioned, shall be THREE HUNDRED FIFTY
(P350.00) Pesos and Effective December 15, 1984.
3. That for the amount involved, the Contractor will be to [sic] provide for [sic] at least two (2)
helpers;
4. The Contractor shall exercise direct control and shall be responsible to the Principal for the
cost of any damage to, loss of any goods, cargoes, finished products or the like, while the same
are in transit, or due to reckless [sic] of its men utilized for the purpose above mentioned;
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5. That the Contractor shall have absolute control and disciplinary power over its men working
for him subject to this agreement, and that the Contractor shall hold the Principal free and
harmless from any liability or claim that may arise by virtue of the Contractors non-compliance
to the existing provisions of the Minimum Wage Law, the Employees Compensation Act, the
Social Security System Act, or any other such law or decree that may hereafter be enacted, it
being clearly understood that any truck drivers, helpers or men working with and for the
Contractor, are not employees who will be indemnified by the Principal for any such claim,
including damages incurred in connection therewith;
6. This contract shall take effect immediately upon the signing by the parties, subject to
renewal on a year-to-year basis.2
This contract of service was dated December 12, 1984. It was subsequently renewed twice, on July 10, 1989
and September 28, 1992. Except for the rates to be paid to the petitioner, the terms of the contracts were
substantially the same. The relationship of the respondent company and the petitioner was allegedly
governed by this contract of service.
The respondents insisted that the petitioner had the sole control over the means and methods by which
his work was accomplished.
He paid the wages of his helpers and exercised control over them. As such, the petitioner was not entitled
to regularization because he was not an employee of the respondent company. The respondents, likewise,
maintained that they did not dismiss the petitioner. Rather, the severance of his contractual relation with
the respondent company was due to his violation of the terms and conditions of their contract. The
petitioner allegedly failed to observe the minimum degree of diligence in the proper maintenance of the
truck he was using, thereby exposing respondent company to unnecessary significant expenses of
overhauling the said truck.
After the parties had filed their respective pleadings, the Labor Arbiter rendered the Decision dated
February 3, 1997, finding the respondents guilty of illegal dismissal. The Labor Arbiter declared that the
petitioner was a regular employee of the respondent company as he was performing a service that was
necessary and desirable to the latters business. Moreover, it was noted that the petitioner had discharged
his duties as truck driver for the respondent company for a continuous and uninterrupted period of more
than ten years.
The contract of service invoked by the respondents was declared null and void as it constituted a
circumvention of the constitutional provision affording full protection to labor and security of tenure. The
Labor Arbiter found that the petitioners dismissal was anchored on his insistent demand to be
regularized. Hence, for lack of a valid and just cause therefor and for their failure to observe the due
process requirements, the respondents were found guilty of illegal dismissal. The dispositive portion of the
Labor Arbiters decision states:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring respondent
SUPREME PACKAGING, INC. and/or MR. ALVIN LEE, Plant Manager, with business address at BEPZ,
Mariveles, Bataan guilty of illegal dismissal, ordering said respondent to pay complainant his
separation pay equivalent to one (1) month pay per year of service based on the average monthly pay
of P10,800.00 in lieu of reinstatement as his reinstatement back to work will not do any good between
the parties as the employment relationship has already become strained and full backwages from the
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time his compensation was withheld on February 23, 1995 up to January 31, 1997 (cut-off date) until
compliance, otherwise, his backwages shall continue to run. Also to pay complainant his 13th month
pay, night shift differential pay and service incentive leave pay hereunder computed as follows:
a) Backwages .. P248,400.00
b) Separation Pay .... P140,400.00
c) 13th month pay .P 10,800.00
d) Service Incentive Leave Pay .. 2,040.00
TOTAL P401,640.00
Respondent is also ordered to pay ten (10%) of the amount due the complainant as attorneys fees.
SO ORDERED.3
The respondents seasonably interposed an appeal with the NLRC. However, the appeal was dismissed by
the NLRC in its Decision4 dated January 27, 1998, as it affirmed in toto the decision of the Labor Arbiter. In
the said decision, the NLRC characterized the contract of service between the respondent company and
the petitioner as a "scheme" that was resorted to by the respondents who, taking advantage of the
petitioners unfamiliarity with the English language and/or legal niceties, wanted to evade the effects and
implications of his becoming a regularized employee.5
The respondents sought reconsideration of the January 27, 1998 Decision of the NLRC. Acting thereon, the
NLRC rendered another Decision6 dated July 10, 1998, reversing its earlier decision and, this time, holding
that no employer-employee relationship existed between the respondent company and the petitioner. In
reconsidering its earlier decision, the NLRC stated that the respondents did not exercise control over the
means and methods by which the petitioner accomplished his delivery services. It upheld the validity of the
contract of service as it pointed out that said contract was silent as to the time by which the petitioner was
to make the deliveries and that the petitioner could hire his own helpers whose wages would be paid from
his own account. These factors indicated that the petitioner was an independent contractor, not an
employee of the respondent company.
The NLRC ruled that the contract of service was not intended to circumvent Article 280 of the Labor Code
on the regularization of employees. Said contract, including the fixed period of employment contained
therein, having been knowingly and voluntarily entered into by the parties thereto was declared valid
citing Brent School, Inc. v. Zamora.7 The NLRC, thus, dismissed the petitioners complaint for illegal
dismissal.
The petitioner sought reconsideration of the July 10, 1998 Decision but it was denied by the NLRC in its
Resolution dated September 7, 1998. He then filed with this Court a petition for certiorari, which was
referred to the CA following the ruling in St. Martin Funeral Home v. NLRC .8
The appellate court rendered the Decision dated April 28, 2000, reversing the July 10, 1998 Decision of the
NLRC and reinstating the decision of the Labor Arbiter. In the said decision, the CA ruled that the petitioner
was a regular employee of the respondent company because as its truck driver, he performed a service
that was indispensable to the latters business. Further, he had been the respondent companys truck
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driver for ten continuous years. The CA also reasoned that the petitioner could not be considered an
independent contractor since he had no substantial capital in the form of tools and machinery. In fact, the
truck that he drove belonged to the respondent company. The CA also observed that the routing slips that
the respondent company issued to the petitioner showed that it exercised control over the latter. The
routing slips indicated the chronological order and priority of delivery, the urgency of certain deliveries and
the time when the goods were to be delivered to the customers.
The CA, likewise, disbelieved the respondents claim that the petitioner abandoned his job noting that he
just filed a complaint for regularization. This actuation of the petitioner negated the respondents
allegation that he abandoned his job. The CA held that the respondents failed to discharge their burden to
show that the petitioners dismissal was for a valid and just cause. Accordingly, the respondents were
declared guilty of illegal dismissal and the decision of the Labor Arbiter was reinstated.
In its April 28, 2000 Decision, the CA denounced the contract of service between the respondent company
and the petitioner in this wise:
In summation, we rule that with the proliferation of contracts seeking to prevent workers from
attaining the status of regular employment, it is but necessary for the courts to scrutinize with
extreme caution their legality and justness. Where from the circumstances it is apparent that a
contract has been entered into to preclude acquisition of tenurial security by the employee, they
should be struck down and disregarded as contrary to public policy and morals. In this case, the
"contract of service" is just another attempt to exploit the unwitting employee and deprive him of the
protection of the Labor Code by making it appear that the stipulations of the parties were governed by
the Civil Code as in ordinary transactions.9
However, on motion for reconsideration by the respondents, the CA made a complete turn around as it
rendered the assailed Resolution dated December 15, 2000 upholding the contract of service between the
petitioner and the respondent company. In reconsidering its decision, the CA explained that the extent of
control exercised by the respondents over the petitioner was only with respect to the result but not to the
means and methods used by him. The CA cited the following circumstances: (1) the respondents had no say
on how the goods were to be delivered to the customers; (2) the petitioner had the right to employ workers
who would be under his direct control; and (3) the petitioner had no working time.
The fact that the petitioner had been with the respondent company for more than ten years was,
according to the CA, of no moment because his status was determined not by the length of service but by
the contract of service. This contract, not being contrary to morals, good customs, public order or public
policy, should be given the force and effect of law as between the respondent company and the
petitioner. Consequently, the CA reinstated the July 10, 1998 Decision of the NLRC dismissing the
petitioners complaint for illegal dismissal.
Hence, the recourse to this Court by the petitioner. He assails the December 15, 2000 Resolution of the
appellate court alleging that:
(A)
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF
JURISDICTION IN GIVING MORE CONSIDERATION TO THE "CONTRACT OF SERVICE" ENTERED INTO BY
PETITIONER AND PRIVATE RESPONDENT THAN ARTICLE 280 OF THE LABOR CODE OF THE PHILIPPINES
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WHICH CATEGORICALLY DEFINES A REGULAR EMPLOYMENT NOTWITHSTANDING ANY WRITTEN

AGREEMENT TO THE CONTRARY AND REGARDLESS OF THE ORAL AGREEMENT OF THE PARTIES;
(B)
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF
JURISDICTION IN REVERSING ITS OWN FINDINGS THAT PETITIONER IS A REGULAR EMPLOYEE AND IN
HOLDING THAT THERE EXISTED NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PRIVATE
RESPONDENT AND PETITIONER IN AS MUCH AS THE "CONTROL TEST" WHICH IS CONSIDERED THE MOST
ESSENTIAL CRITERION IN DETERMINING THE EXISTENCE OF SAID RELATIONSHIP IS NOT PRESENT. 10
The threshold issue that needs to be resolved is whether there existed an employer-employee relationship
between the respondent company and the petitioner. We rule in the affirmative.
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
employers power to control the employees conduct.11 The most important element is the employers
control of the employees conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it.12 All the four elements are present in this case.
First. Undeniably, it was the respondents who engaged the services of the petitioner without the
intervention of a third party.
Second. Wages are defined as "remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or
other method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for service rendered or to be
rendered."13 That the petitioner was paid on a per trip basis is not significant. This is merely a method of
computing compensation and not a basis for determining the existence or absence of employer-employee
relationship. One may be paid on the basis of results or time expended on the work, and may or may not
acquire an employment status, depending on whether the elements of an employer-employee relationship
are present or not.14 In this case, it cannot be gainsaid that the petitioner received compensation from the
respondent company for the services that he rendered to the latter.
Moreover, under the Rules Implementing the Labor Code, every employer is required to pay his employees
by means of payroll.15 The payroll should show, among other things, the employees rate of pay,
deductions made, and the amount actually paid to the employee. Interestingly, the respondents did not
present the payroll to support their claim that the petitioner was not their employee, raising speculations
whether this omission proves that its presentation would be adverse to their case. 16
Third. The respondents power to dismiss the petitioner was inherent in the fact that they engaged the
services of the petitioner as truck driver. They exercised this power by terminating the petitioners services
albeit in the guise of "severance of contractual relation" due allegedly to the latters breach of his
contractual obligation.
Fourth. As earlier opined, of the four elements of the employer-employee relationship, the "control test" is
the most important. Compared to an employee, an independent contractor is one who carries on a distinct
and independent business and undertakes to perform the job, work, or service on its own account and
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under its own responsibility according to its own manner and method, free from the control and direction
of the principal in all matters connected with the performance of the work except as to the results
thereof.17 Hence, while an independent contractor enjoys independence and freedom from the control and
supervision of his principal, an employee is subject to the employers power to control the means and
methods by which the employees work is to be performed and accomplished.18
Although the respondents denied that they exercised control over the manner and methods by which the
petitioner accomplished his work, a careful review of the records shows that the latter performed his work
as truck driver under the respondents supervision and control. Their right of control was manifested by
the following attendant circumstances:
1. The truck driven by the petitioner belonged to respondent company;
2. There was an express instruction from the respondents that the truck shall be used exclusively to
deliver respondent companys goods; 19
3. Respondents directed the petitioner, after completion of each delivery, to park the truck in either of
two specific places only, to wit: at its office in Metro Manila at 2320 Osmea Street, Makati City or at
BEPZ, Mariveles, Bataan;20 and
4. Respondents determined how, where and when the petitioner would perform his task by issuing to
him gate passes and routing slips. 21
a. The routing slips indicated on the column REMARKS, the chronological order and priority of
delivery such as 1st drop, 2nd drop, 3rd drop, etc. This meant that the petitioner had to deliver
the same according to the order of priority indicated therein.
b. The routing slips, likewise, showed whether the goods were to be delivered urgently or not
by the word RUSH printed thereon.
c. The routing slips also indicated the exact time as to when the goods were to be delivered to
the customers as, for example, the words "tomorrow morning" was written on slip no. 2776.
These circumstances, to the Courts mind, prove that the respondents exercised control over the means
and methods by which the petitioner accomplished his work as truck driver of the respondent company.
On the other hand, the Court is hard put to believe the respondents allegation that the petitioner was an
independent contractor engaged in providing delivery or hauling services when he did not even own the
truck used for such services. Evidently, he did not possess substantial capitalization or investment in the
form of tools, machinery and work premises. Moreover, the petitioner performed the delivery services
exclusively for the respondent company for a continuous and uninterrupted period of ten years.
The contract of service to the contrary notwithstanding, the factual circumstances earlier discussed
indubitably establish the existence of an employer-employee relationship between the respondent
company and the petitioner. It bears stressing that the existence of an employer-employee relationship
cannot be negated by expressly repudiating it in a contract and providing therein that the employee is an
independent contractor when, as in this case, the facts clearly show otherwise. Indeed, the employment
status of a person is defined and prescribed by law and not by what the parties say it should be.22
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Having established that there existed an employer-employee relationship between the respondent
company and the petitioner, the Court shall now determine whether the respondents validly dismissed the
petitioner.
As a rule, the employer bears the burden to prove that the dismissal was for a valid and just cause. 23 In this
case, the respondents failed to prove any such cause for the petitioners dismissal. They insinuated that
the petitioner abandoned his job. To constitute abandonment, these two factors must concur: (1) the
failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever
employer-employee relationship.24 Obviously, the petitioner did not intend to sever his relationship with
the respondent company for at the time that he allegedly abandoned his job, the petitioner just filed a
complaint for regularization, which was forthwith amended to one for illegal dismissal. A charge of
abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so
when it includes a prayer for reinstatement.25
Neither can the respondents claim that the petitioner was guilty of gross negligence in the proper
maintenance of the truck constitute a valid and just cause for his dismissal. Gross negligence implies a
want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid them. 26 The negligence, to
warrant removal from service, should not merely be gross but also habitual.27 The single and isolated act of
the petitioners negligence in the proper maintenance of the truck alleged by the respondents does not
amount to "gross and habitual neglect" warranting his dismissal.
The Court agrees with the following findings and conclusion of the Labor Arbiter:
As against the gratuitous allegation of the respondent that complainant was not dismissed from the
service but due to complainants breach of their contractual relation, i.e., his violation of the terms and
conditions of the contract, we are very much inclined to believe complainants story that his dismissal from
the service was anchored on his insistent demand that he be considered a regular employee. Because
complainant in his right senses will not just abandon for that reason alone his work especially so that it is
only his job where he depends chiefly his existence and support for his family if he was not aggrieved by
the respondent when he was told that his services as driver will be terminated on February 23, 1995. 28
Thus, the lack of a valid and just cause in terminating the services of the petitioner renders his dismissal
illegal. Under Article 279 of the Labor Code, an employee who is unjustly dismissed is entitled to
reinstatement, without loss of seniority rights and other privileges, and to the payment of full backwages,
inclusive of allowances, and other benefits or their monetary equivalent, computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. 29 However, as found by
the Labor Arbiter, the circumstances obtaining in this case do not warrant the petitioners reinstatement.
A more equitable disposition, as held by the Labor Arbiter, would be an award of separation pay equivalent
to one month for every year of service from the time of his illegal dismissal up to the finality of this
judgment in addition to his full backwages, allowances and other benefits.
WHEREFORE, the instant petition is GRANTED. The Resolution dated December 15, 2000 of the Court of
Appeals reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485 is REVERSED and SET ASIDE.
The Decision dated February 3, 1997 of the Labor Arbiter in NLRC Case No. RAB-III-02-6181-5, finding the
respondents guilty of illegally terminating the employment of petitioner Pedro Chavez, is REINSTATED.
SO ORDERED.
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22. Coca-cola Bottlers Inc. v. Climaco, February 2007

G.R. No. 146881
February 5, 2007
COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager, Petitioners,

vs.
DR. DEAN N. CLIMACO, Respondent.
DECISION
AZCUNA, J.:
This is a petition for review on certiorari of the Decision of the Court of Appeals 1 promulgated on July 7,
2000, and its Resolution promulgated on January 30, 2001, denying petitioners motion for
reconsideration. The Court of Appeals ruled that an employer-employee relationship exists between
respondent Dr. Dean N. Climaco and petitioner Coca-Cola Bottlers Phils., Inc. (Coca-Cola), and that
respondent was illegally dismissed.
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils.,
Inc. by virtue of a Retainer Agreement that stated:
WHEREAS, the COMPANY desires to engage on a retainer basis the services of a physician and the said
DOCTOR is accepting such engagement upon terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreement hereinafter contained,
the parties agree as follows:
1. This Agreement shall only be for a period of one (1) year beginning January 1, 1988 up to
December 31, 1988. The said term notwithstanding, either party may terminate the contract
upon giving a thirty (30)-day written notice to the other.
2. The compensation to be paid by the company for the services of the DOCTOR is hereby fixed
at PESOS: Three Thousand Eight Hundred (P3,800.00) per month. The DOCTOR may charge
professional fee for hospital services rendered in line with his specialization. All payments in
connection with the Retainer Agreement shall be subject to a withholding tax of ten percent
(10%) to be withheld by the COMPANY under the Expanded Withholding Tax System. In the
event the withholding tax rate shall be increased or decreased by appropriate laws, then the
rate herein stipulated shall accordingly be increased or decreased pursuant to such laws.
3. That in consideration of the above mentioned retainers fee, the DOCTOR agrees to perform
the duties and obligations enumerated in the COMPREHENSIVE MEDICAL PLAN, hereto attached
as Annex "A" and made an integral part of this Retainer Agreement.
4. That the applicable provisions in the Occupational Safety and Health Standards, Ministry of
Labor and Employment shall be followed.
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5. That the DOCTOR shall be directly responsible to the employee concerned and their
dependents for any injury inflicted on, harm done against or damage caused upon the
employee of the COMPANY or their dependents during the course of his examination,
treatment or consultation, if such injury, harm or damage was committed through professional
negligence or incompetence or due to the other valid causes for action.
6. That the DOCTOR shall observe clinic hours at the COMPANYS premises from Monday to
Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each day or
treatment from 7:30 a.m. to 8:30 a.m. and 3:00 p.m. to 4:00 p.m., respectively unless such
schedule is otherwise changed by the COMPANY as [the] situation so warrants, subject to the
Labor Code provisions on Occupational Safety and Health Standards as the COMPANY may
determine. It is understood that the DOCTOR shall stay at least two (2) hours a day in the
COMPANY clinic and that such two (2) hours be devoted to the workshift with the most number
of employees. It is further understood that the DOCTOR shall be on call at all times during the
other workshifts to attend to emergency case[s];
7. That no employee-employer relationship shall exist between the COMPANY and the DOCTOR
whilst this contract is in effect, and in case of its termination, the DOCTOR shall be entitled only
to such retainer fee as may be due him at the time of termination. 2
The Comprehensive Medical Plan,3 which contains the duties and responsibilities of respondent, adverted
to in the Retainer Agreement, provided:
A. OBJECTIVE
These objectives have been set to give full consideration to [the] employees and dependents health:
1. Prompt and adequate treatment of occupational and non-occupational injuries and diseases.
2. To protect employees from any occupational health hazard by evaluating health factors
related to working conditions.
3. To encourage employees [to] maintain good personal health by setting up employee
orientation and education on health, hygiene and sanitation, nutrition, physical fitness, first aid
training, accident prevention and personnel safety.
4. To evaluate other matters relating to health such as absenteeism, leaves and termination.
5. To give family planning motivations.
B. COVERAGE
1. All employees and their dependents are embraced by this program.
2. The health program shall cover pre-employment and annual p.e., hygiene and sanitation,
immunizations, family planning, physical fitness and athletic programs and other activities such
as group health education program, safety and first aid classes, organization of health and
safety committees.
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3. Periodically, this program will be reviewed and adjusted based on employees needs.
C. ACTIVITIES
1. Annual Physical Examination.
2. Consultations, diagnosis and treatment of occupational and non-occupational illnesses and
injuries.
3. Immunizations necessary for job conditions.
4. Periodic inspections for food services and rest rooms.
5. Conduct health education programs and present education materials.
6. Coordinate with Safety Committee in developing specific studies and program to minimize
environmental health hazards.
7. Give family planning motivations.
8. Coordinate with Personnel Department regarding physical fitness and athletic programs.
9. Visiting and follow-up treatment of Company employees and their dependents confined in
the hospital.
The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired on
December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform
his functions as company doctor to Coca-Cola until he received a letter4 dated March 9, 1995 from
petitioner company concluding their retainership agreement effective 30 days from receipt thereof.
It is noted that as early as September 1992, petitioner was already making inquiries regarding his status
with petitioner company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting President and
Chairperson of the Committee on Membership, Philippine College of Occupational Medicine. In response,
Dr. Sy wrote a letter5 to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating that
respondent should be considered as a regular part-time physician, having served the company
continuously for four (4) years. He likewise stated that respondent must receive all the benefits and
privileges of an employee under Article 157 (b)6 of the Labor Code.
Petitioner company, however, did not take any action. Hence, respondent made another inquiry directed
to the Assistant Regional Director, Bacolod City District Office of the Department of Labor and
Employment (DOLE), who referred the inquiry to the Legal Service of the DOLE, Manila. In his letter7 dated
May 18, 1993, Director Dennis P. Ancheta, Legal Service, DOLE, stated that he believed that an employeremployee relationship existed between petitioner and respondent based on the Retainer Agreement and
the Comprehensive Medical Plan, and the application of the "four-fold" test. However, Director Ancheta
emphasized that the existence of employer-employee relationship is a question of fact. Hence, termination
disputes or money claims arising from employer-employee relations exceeding P5,000 may be filed with
the National Labor Relations Commission (NLRC). He stated that their opinion is strictly advisory.
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An inquiry was likewise addressed to the Social Security System (SSS). Thereafter, Mr. Romeo R. Tupas,
OIC-FID of SSS-Bacolod City, wrote a letter8 to the Personnel Officer of Coca-Cola Bottlers Phils., Inc.
informing the latter that the legal staff of his office was of the opinion that the services of respondent
partake of the nature of work of a regular company doctor and that he was, therefore, subject to social
security coverage.
Respondent inquired from the management of petitioner company whether it was agreeable to
recognizing him as a regular employee. The management refused to do so.
On February 24, 1994, respondent filed a Complaint9 before the NLRC, Bacolod City, seeking recognition as
a regular employee of petitioner company and prayed for the payment of all benefits of a regular
employee, including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive Leave Pay,
and Christmas Bonus. The case was docketed as RAB Case No. 06-02-10138-94.
While the complaint was pending before the Labor Arbiter, respondent received a letter dated March 9,
1995 from petitioner company concluding their retainership agreement effective thirty (30) days from
receipt thereof. This prompted respondent to file a complaint for illegal dismissal against petitioner
company with the NLRC, Bacolod City. The case was docketed as RAB Case No. 06-04-10177-95.
In a Decision10 dated November 28, 1996, Labor Arbiter Jesus N. Rodriguez, Jr. found that petitioner
company lacked the power of control over respondents performance of his duties, and recognized as
valid the Retainer Agreement between the parties. Thus, the Labor Arbiter dismissed respondents
complaint in the first case, RAB Case No. 06-02-10138-94. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered dismissing the instant complaint
seeking recognition as a regular employee.
SO ORDERED.11
In a Decision12 dated February 24, 1997, Labor Arbiter Benjamin Pelaez dismissed the case for illegal
dismissal (RAB Case No. 06-04-10177-95) in view of the previous finding of Labor Arbiter Jesus N.
Rodriguez, Jr. in RAB Case No. 06-02-10138-94 that complainant therein, Dr. Dean Climaco, is not an
employee of Coca-Cola Bottlers Phils., Inc.
Respondent appealed both decisions to the NLRC, Fourth Division, Cebu City.
In a Decision13 promulgated on November 28, 1997, the NLRC dismissed the appeal in both cases for lack of
merit. It declared that no employer-employee relationship existed between petitioner company and
respondent based on the provisions of the Retainer Agreement which contract governed respondents
employment.
Respondents motion for reconsideration was denied by the NLRC in a Resolution14 promulgated on
August 7, 1998.
Respondent filed a petition for review with the Court of Appeals.
In a Decision promulgated on July 7, 2000, the Court of Appeals ruled that an employer-employee
relationship existed between petitioner company and respondent after applying the four-fold test: (1) the
power to hire the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employers
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power to control the employee with respect to the means and methods by which the work is to be
accomplished.
The Court of Appeals held:
The Retainer Agreement executed by and between the parties, when read together with the
Comprehensive Medical Plan which was made an integral part of the retainer agreements, coupled
with the actual services rendered by the petitioner, would show that all the elements of the above test
are present.
First, the agreements provide that "the COMPANY desires to engage on a retainer basis the services of
a physician and the said DOCTOR is accepting such engagement x x x" (Rollo, page 25). This clearly
shows that Coca-Cola exercised its power to hire the services of petitioner.
Secondly, paragraph (2) of the agreements showed that petitioner would be entitled to a final
compensation of Three Thousand Eight Hundred Pesos per month, which amount was later raised to
Seven Thousand Five Hundred on the latest contract. This would represent the element of payment of
wages.
Thirdly, it was provided in paragraph (1) of the agreements that the same shall be valid for a period of
one year. "The said term notwithstanding, either party may terminate the contract upon giving a
thirty (30) day written notice to the other." (Rollo, page 25). This would show that Coca-Cola had the
power of dismissing the petitioner, as it later on did, and this could be done for no particular reason,
the sole requirement being the formers compliance with the 30-day notice requirement.
Lastly, paragraphs (3) and (6) of the agreements reveal that Coca-Cola exercised the most important
element of all, that is, control, over the conduct of petitioner in the latters performance of his duties
as a doctor for the company.
It was stated in paragraph (3) that the doctor agrees to perform the duties and obligations
enumerated in the Comprehensive Medical Plan referred to above. In paragraph (6), the fixed and
definite hours during which the petitioner must render service to the company is laid down.
We say that there exists Coca-Colas power to control petitioner because the particular objectives and
activities to be observed and accomplished by the latter are fixed and set under the Comprehensive
Medical Plan which was made an integral part of the retainer agreement. Moreover, the times for
accomplishing these objectives and activities are likewise controlled and determined by the company.
Petitioner is subject to definite hours of work, and due to this, he performs his duties to Coca-Cola not
at his own pleasure but according to the schedule dictated by the company.
In addition, petitioner was designated by Coca-Cola to be a member of its Bacolod Plants Safety
Committee. The minutes of the meeting of the said committee dated February 16, 1994 included the
name of petitioner, as plant physician, as among those comprising the committee.
It was averred by Coca-Cola in its comment that they exercised no control over petitioner for the
reason that the latter was not directed as to the procedure and manner of performing his assigned
tasks. It went as far as saying that "petitioner was not told how to immunize, inject, treat or diagnose
the employees of the respondent (Rollo, page 228). We believe that if the "control test" would be
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interpreted this strictly, it would result in an absurd and ridiculous situation wherein we could declare
that an entity exercises control over anothers activities only in instances where the latter is directed
by the former on each and every stage of performance of the particular activity. Anything less than
that would be tantamount to no control at all.
To our minds, it is sufficient if the task or activity, as well as the means of accomplishing it, is dictated,
as in this case where the objectives and activities were laid out, and the specific time for performing
them was fixed by the controlling party.15
Moreover, the Court of Appeals declared that respondent should be classified as a regular employee
having rendered six years of service as plant physician by virtue of several renewed retainer agreements. It
underscored the provision in Article 28016 of the Labor Code stating that "any employee who has rendered
at least one year of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed, and his employment shall continue while
such activity exists." Further, it held that the termination of respondents services without any just or
authorized cause constituted illegal dismissal.
In addition, the Court of Appeals found that respondents dismissal was an act oppressive to labor and was
effected in a wanton, oppressive or malevolent manner which entitled respondent to moral and exemplary
damages.
The dispositive portion of the Decision reads:
WHEREFORE, in view of the foregoing, the Decision of the National Labor Relations Commission
dated November 28, 1997 and its Resolution dated August 7, 1998 are found to have been issued
with grave abuse of discretion in applying the law to the established facts, and are hereby
REVERSED and SET ASIDE, and private respondent Coca-Cola Bottlers, Phils.. Inc. is hereby
ordered to:
1. Reinstate the petitioner with full backwages without loss of seniority rights from the
time his compensation was withheld up to the time he is actually reinstated; however, if
reinstatement is no longer possible, to pay the petitioner separation pay equivalent to
one (1) months salary for every year of service rendered, computed at the rate of his
salary at the time he was dismissed, plus backwages.
2. Pay petitioner moral damages in the amount of P50,000.00.
3. Pay petitioner exemplary damages in the amount of P50,000.00.
4. Give to petitioner all other benefits to which a regular employee of Coca-Cola is
entitled from the time petitioner became a regular employee (one year from effectivity
date of employment) until the time of actual payment.
SO ORDERED.17
Petitioner company filed a motion for reconsideration of the Decision of the Court of Appeals.
In a Resolution promulgated on January 30, 2001, the Court of Appeals stated that petitioner company
noted that its Decision failed to mention whether respondent was a full-time or part-time regular
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employee. It also questioned how the benefits under their Collective Bargaining Agreement which the
Court awarded to respondent could be given to him considering that such benefits were given only to
regular employees who render a full days work of not less that eight hours. It was admitted that
respondent is only required to work for two hours per day.
The Court of Appeals clarified that respondent was a "regular part-time employee and should be accorded
all the proportionate benefits due to this category of employees of [petitioner] Corporation under the
CBA." It sustained its decision on all other matters sought to be reconsidered.
Hence, this petition filed by Coca-Cola Bottlers Phils., Inc.
The issues are:
1. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND
THE NATIONAL LABOR RELATIONS COMMISSION, CONTRARY TO THE DECISIONS OF THE
HONORABLE SUPREME COURT ON THE MATTER.
THE NATIONAL LABOR RELATIONS COMMISSION, AND HOLDING INSTEAD THAT THE WORK OF A
PHYSICIAN IS NECESSARY AND DESIRABLE TO THE BUSINESS OF SOFTDRINKS MANUFACTURING,
CONTRARY TO THE RULINGS OF THE SUPREME COURT IN ANALOGOUS CASES.
THE NATIONAL LABOR RELATIONS COMMISSION, AND HOLDING INSTEAD THAT THE PETITIONERS
EXERCISED CONTROL OVER THE WORK OF THE RESPONDENT.
THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THERE IS EMPLOYEREMPLOYEE RELATIONSHIP PURSUANT TO ARTICLE 280 OF THE LABOR CODE.
THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THERE EXISTED ILLEGAL
DISMISSAL WHEN THE EMPLOYENT OF THE RESPONDENT WAS TERMINATED WITHOUT JUST
CAUSE.
THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THE RESPONDENT IS A
REGULAR PART TIME EMPLOYEE WHO IS ENTITLED TO PROPORTIONATE BENEFITS AS A REGULAR
PART TIME EMPLOYEE ACCORDING TO THE PETITIONERS CBA.
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THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THE RESPONDENT IS
ENTITLED TO MORAL AND EXEMPLARY DAMAGES.
The main issue in this case is whether or not there exists an employer-employee relationship between the
parties. The resolution of the main issue will determine whether the termination of respondents
employment is illegal.
The Court, in determining the existence of an employer-employee relationship, has invariably adhered to
the four-fold test: (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 employees conduct, or the so-called "control test,"
considered to be the most important element.18
The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case
show that no employer-employee relationship exists between the parties.
The Labor Arbiter and the NLRC correctly found that petitioner company lacked the power of control over
the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical
Plan, which contains the respondents objectives, duties and obligations, does not tell respondent "how to
conduct his physical examination, how to immunize, or how to diagnose and treat his patients, employees
of [petitioner] company, in each case."
He likened this case to that of Neri v. National Labor Relations Commission,19 which held:
In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed her
functions as a radio/telex operator. However, a cursory reading of the job description shows that what was
sought to be controlled by FEBTC was actually the end result of the task, e.g., that the daily incoming and
outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the
register. The guidelines were laid down merely to ensure that the desired end result was achieved. It did
not, however, tell Neri how the radio/telex machine should be operated.
In effect, the Labor Arbiter held that petitioner company, through the Comprehensive Medical Plan,
provided guidelines merely to ensure that the end result was achieved, but did not control the means and
methods by which respondent performed his assigned tasks.
The NLRC affirmed the findings of the Labor Arbiter and stated that it is precisely because the company
lacks the power of control that the contract provides that respondent shall be directly responsible to the
employee concerned and their dependents for any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.
The Labor Arbiter also correctly found that the provision in the Retainer Agreement that respondent was
on call during emergency cases did not make him a regular employee. He explained, thus:
Likewise, the allegation of complainant that since he is on call at anytime of the day and night makes him a
regular employee is off-tangent. Complainant does not dispute the fact that outside of the two (2) hours
that he is required to be at respondent companys premises, he is not at all further required to just sit
around in the premises and wait for an emergency to occur so as to enable him from using such hours for
his own benefit and advantage. In fact, complainant maintains his own private clinic attending to his
private practice in the city, where he services his patients, bills them accordingly -- and if it is an employee
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of respondent company who is attended to by him for special treatment that needs hospitalization or
operation, this is subject to a special billing. More often than not, an employee is required to stay in the
employers workplace or proximately close thereto that he cannot utilize his time effectively and gainfully
for his own purpose. Such is not the prevailing situation here.1awphi1.net
In addition, the Court finds that the schedule of work and the requirement to be on call for emergency
cases do not amount to such control, but are necessary incidents to the Retainership Agreement.
The Court also notes that the Retainership Agreement granted to both parties the power to terminate
their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of
dismissal or termination.
The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of
respondent as a retained physician of petitioner company and upholds the validity of the Retainership
Agreement which clearly stated that no employer-employee relationship existed between the parties. The
Agreement also stated that it was only for a period of 1 year beginning January 1, 1988 to December 31,
1998, but it was renewed on a yearly basis.
Considering that there is no employer-employee relationship between the parties, the termination of the
Retainership Agreement, which is in accordance with the provisions of the Agreement, does not constitute
illegal dismissal of respondent. Consequently, there is no basis for the moral and exemplary damages
granted by the Court of Appeals to respondent due to his alleged illegal dismissal.
WHEREFORE, the petition is GRANTED and the Decision and Resolution of the Court of Appeals are
REVERSED and SET ASIDE. The Decision and Resolution dated November 28, 1997 and August 7, 1998,
respectively, of the National Labor Relations Commission are REINSTATED.
No costs.
SO ORDERED.
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23. Gabriel v. Bilon, February 2007

G.R. No. 146989
February 7, 2007
MELENCIO GABRIEL, represented by surviving spouse, FLORDELIZA V. GABRIEL, Petitioner,

vs.
NELSON BILON, ANGEL BRAZIL AND ERNESTO PAGAYGAY, Respondents.
DECISION
AZCUNA, J.:
This is a petition for review on certiorari1 assailing the Decision and Resolution of the Court of Appeals,
respectively dated August 4, 2000 and February 7, 2001, in CA-G.R. SP No. 52001 entitled "Nelson Bilon, et
al. v. National Labor Relations Commission, et al."
The challenged decision reversed and set aside the decision2 of the National Labor Relations Commission
(NLRC) dismissing respondents complaint for illegal dismissal and illegal deductions, and reinstating the
decision of the Labor Arbiter finding petitioner guilty of illegal dismissal but not of illegal deductions
subject to the modification that respondents be immediately reinstated to their former positions without
loss of seniority rights and privileges instead of being paid separation pay.
Petitioner, represented by his surviving spouse, Flordeliza V. Gabriel, was the owner-operator of a public
transport business, "Gabriel Jeepney," with a fleet of 54 jeepneys plying the Baclaran-Divisoria-Tondo
route. Petitioner had a pool of drivers, which included respondents, operating under a "boundary system"
of P400 per day.
The facts3 are as follows:
On November 15, 1995, respondents filed their separate complaints for illegal dismissal, illegal deductions,
and separation pay against petitioner with the National Labor Relations Commission (NLRC). These were
consolidated and docketed as NLRC-NCR Case No. 00-11-07420-95.4
On December 15, 1995, the complaint was amended, impleading as party respondent the Bacoor Transport
Service Cooperative, Inc., as both parties are members of the cooperative.
Respondents alleged the following:
1) That they were regular drivers of Gabriel Jeepney, driving their respective units bearing Plate
Nos. PHW 553, NXU 155, and NWW 557, under a boundary system of P400 per day, plying Baclaran
to Divisoria via Tondo, and vice versa, since December 1990, November 1984 and November 1991,
respectively, up to April 30, 1995,5 driving five days a week, with average daily earnings of P400;
2) That they were required/forced to pay additional P55.00 per day for the following: a) P20.00
police protection; b) P20.00 washing; c) P10.00 deposit; and [d)] P5.00 garage fees;
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3) That there is no law providing the operator to require the drivers to pay police protection,
deposit, washing, and garage fees.
4) That on April 30, 1995, petitioner told them not to drive anymore, and when they went to the
garage to report for work the next day, they were not given a unit to drive; and
5) That the boundary drivers of passenger jeepneys are considered regular employees of the
jeepney operators. Being such, they are entitled to security of tenure. Petitioner, however,
dismissed them without factual and legal basis, and without due process.
On his part, petitioner contended that:
1) He does not remember if the respondents were ever under his employ as drivers of his passenger
jeepneys. Certain, however, is the fact that neither the respondents nor other drivers who worked
for him were ever dismissed by him. As a matter of fact, some of his former drivers just stopped
reporting for work, either because they found some other employment or drove for other
operators, and like the respondents, the next time he heard from them was when they started
fabricating unfounded complaints against him;
2) He made sure that none of the jeepneys would stay idle even for a day so he could collect his
earnings; hence, it had been his practice to establish a pool of drivers. Had respondents manifested
their desire to drive his units, it would have been immaterial whether they were his former drivers
or not. As long as they obtained the necessary licenses and references, they would have been
accommodated and placed on schedule;
3) While he was penalized or made to pay a certain amount in connection with similar complaints by
other drivers in a previous case before this, it was not because his culpability was established, but
due to technicalities involving oversight and negligence on his part by not participating in any stage
of the investigation thereof; and
4) Respondents claim that certain amounts, as enumerated in the complaint, were deducted from
their days earnings is preposterous. Indeed, there were times when deductions were made from
the days earnings of some drivers, but such were installment payments for the amount previously
advanced to them. Most drivers, when they got involved in accidents or violations of traffic
regulations, managed to settle them, and in the process they had to spend some money, but most
of the time they did not have the needed amount so they secured cash advances from him, with the
understanding that the same should be paid back by installments through deductions from their
daily earnings or boundary.
On the other hand, Bacoor Transport Service Cooperative, Inc. (BTSCI) declared that it should not be made
a party to the case because: 1) [I]t has nothing to do with the employment of its member-drivers. The
matter is between the member-operator and their respective member-drivers. The member-drivers tenure
of employment, compensation, work conditions, and other aspects of employment are matters of
arrangement between them and the member-operators concerned, and the BTSCI has nothing to do with
it, as can be inferred from the Management Agreement between BTSCI and the member-operators; and 2)
[T]he amount allegedly deducted from respondents and the purpose for which they were applied were
matters that the cooperative was not aware of, and much less imposed on them.
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On September 17, 1996, respondents filed a motion to re-raffle the case for the reason that the Labor
Arbiter (Hon. Roberto I. Santos) failed "to render his decision within thirty (30) calendar days, without
extension, after the submission of the case for decision."
On September 18, 1996, said Labor Arbiter inhibited himself from further handling the case due to
"personal reasons."
On November 8, 1996, Labor Arbiter Ricardo C. Nora, to whom the case was re-raffled, ordered the parties
to file their respective memoranda within ten days, after which the case was deemed submitted for
resolution.
On March 17, 1997, the Labor Arbiter (Hon. Ricardo C. Nora) handed down his decision, the dispositive
portion of which is worded as follows:
WHEREFORE, premises considered, judgment is hereby rendered declaring the illegality of
[respondents] dismissal and ordering [petitioner] Melencio Gabriel to pay the [respondents]
the total amount of ONE MILLION THIRTY FOUR THOUSAND PESOS [P1,034,000,] representing
[respondents] backwages and separation pay as follows:
1. Nelson Bilon
Backwages P 284,800
Separation Pay 26,400 P 321,200
2. Angel Brazil
Backwages P 294,800
Separation Pay 96,800 391,600
3. Ernesto Pagaygay
Backwages P 294,800
Separation Pay 26,400 321,200
P 1,034,000
[Petitioner] Melencio Gabriel is likewise ordered to pay attorneys fees equivalent to five
percent (5%) of the judgment award or the amount of P51,700 within ten (10) days from receipt
of this Decision.
All other issues are dismissed for lack of merit.
SO ORDERED.6
Incidentally, on April 4, 1997, petitioner passed away. On April 18, 1997, a copy of the above decision was
delivered personally to petitioners house. According to respondents, petitioners surviving spouse,
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Flordeliza Gabriel, and their daughter, after reading the contents of the decision and after they had spoken
to their counsel, refused to receive the same. Nevertheless, Bailiff Alfredo V. Estonactoc left a copy of the
decision with petitioners wife and her daughter but they both refused to sign and acknowledge receipt of
the decision.7
The labor arbiters decision was subsequently served by registered mail at petitioners residence and the
same was received on May 28, 1997.
On May 16, 1997, counsel for petitioner filed an entry of appearance with motion to dismiss the case for
the reason that petitioner passed away last April 4, 1997.
On June 5, 1997, petitioner appealed the labor arbiters decision to the National Labor Relations
Commission, First Division, contending that the labor arbiter erred:
1. In holding that [petitioner] Gabriel dismissed the complainants, Arb. Nora committed a serious
error in the findings of fact which, if not corrected, would cause grave or irreparable damage or
injury to [petitioner] Gabriel;
2. In holding that strained relations already exist between the parties, justifying an award of
separation pay in lieu of reinstatement, Arb. Nora not only committed a serious error in the findings
of fact, but he also abused his discretion;
3. In computing the amount of backwages allegedly due [respondents] from 30 April 1995 to 15
March 1997, Arb. Nora abused his discretion, considering that the case had been submitted for
decision as early as 1 March 1996 and that the same should have been decided as early as 31 March
1996;
4. In using P400.00 and 22 days as factors in computing the amount of backwages allegedly due
[respondents], Arb. Nora abused his discretion and committed a serious error in the findings of
fact, considering that there was no factual or evidentiary basis therefor;
5. In using 33.5 months as factor in the computation of the amount of backwages allegedly due
[respondents], Arb. Nora committed a serious error in the findings of fact[,] because even if it is
assumed that backwages are due from 30 April 1995 to 15 March 1997, the period between the two
dates is only 22 months, and not 33 months as stated in the appealed decision; and
6. In not dismissing the case[,] despite notice of the death of [petitioner] Gabriel before final
judgment, Arb. Nora abused his discretion and committed a serious error of law.8
On July 3, 1997, respondents filed a motion to dismiss petitioners appeal on the ground that the "surety
bond is defective" and the appeal was "filed out of time," which move was opposed by petitioner.
Subsequently, on April 28, 1998, the NLRC promulgated its first decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, the appealed decision is hereby reversed and set aside. The aboveentitled case is hereby dismissed for lack of employer-employee relationship.
SO ORDERED.9
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Respondents filed a motion for reconsideration. They claimed that the decision did not discuss the issue of
the timeliness of the appeal. The lack of employer-employee relationship was mentioned in the dispositive
portion, which issue was not raised before the labor arbiter or discussed in the body of the questioned
decision. In view of the issues raised by respondents in their motion, the NLRC rendered its second
decision on October 29, 1998. The pertinent portions are hereby quoted thus:
In the case at bar, [petitioner] Melencio Gabriel was not represented by counsel during the
pendency of the case. A decision was rendered by the Labor Arbiter a quo on March 17, 1997
while Mr. Gabriel passed away on April 4, 1997 without having received a copy thereof during
his lifetime. The decision was only served on April 18, 1997 when he was no longer around to
receive the same. His surviving spouse and daughter cannot automatically substitute
themselves as party respondents. Thus, when the bailiff tendered a copy of the decision to
them, they were not in a position to receive them. The requirement of leaving a copy at the
partys residence is not applicable in the instant case because this presupposes that the party is
still living and is just not available to receive the decision.
The preceding considered, the decision of the labor arbiter has not become final because there
was no proper service of copy thereof to [petitioner] .
Undoubtedly, this case is for recovery of money which does not survive, and considering that
the decision has not become final, the case should have been dismissed and the appeal no
longer entertained.
WHEREFORE, in view of the foregoing, the Decision of April 28, 1998 is set aside and vacated.
Furthermore, the instant case is dismissed and complainants are directed to pursue their claim
against the proceedings for the settlement of the estate of the deceased Melencio Gabriel.
SO ORDERED.10
Aggrieved by the decision of the NLRC, respondents elevated the case to the Court of Appeals (CA) by way
of a petition for certiorari. On August 4, 2000, the CA reversed the decisions of the NLRC:
Article 223 of the Labor Code categorically mandates that "an appeal by the employer may be perfected only
upon the posting of a cash bond or surety bond x x x." It is beyond peradventure then that the noncompliance with the above conditio sine qua non, plus the fact that the appeal was filed beyond the
reglementary period, should have been enough reasons to dismiss the appeal.
In any event, even conceding ex gratia that such procedural infirmity [were] inexistent, this petition would
still be tenable based on substantive aspects.
The public respondents decision, dated April 28, 1998, is egregiously wrong insofar as it was anchored on the
absence of an employer-employee relationship. Well-settled is the rule that the boundary system used in
jeepney and (taxi) operations presupposes an employer-employee relationship (National Labor Union v.
Dinglasan, 98 Phil. 649) .
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The NLRC ostensibly tried to redeem itself by vacating the decision April 28, 1998. By so doing, however, it
did not actually resolve the matter definitively. It merely relieved itself of such burden by suggesting that the
petitioners "pursue their claim against the proceedings for the settlement of the estate of the deceased
Melencio Gabriel."
In the instant case, the decision (dated March 17, 1997) of the Labor Arbiter became final and executory on
account of the failure of the private respondent to perfect his appeal on time.
Thus, we disagree with the ratiocination of the NLRC that the death of the private respondent on April 4, 1997
ipso facto negates recovery of the money claim against the successors-in-interest . Rather, this situation
comes within the aegis of Section 3, Rule III of the NLRC Manual on Execution of Judgment, which provides:
SECTION 3. Execution in Case of Death of Party. Where a party dies after the finality of the decision/entry of
judgment of order, execution thereon may issue or one already issued may be enforced in the following cases:
a) x x x ;
b) In case of death of the losing party, against his successor-in-interest, executor or administrator;
c) In case of death of the losing party after execution is actually levied upon any of his property, the
same may be sold for the satisfaction thereof, and the sheriff making the sale shall account to his
successor-in-interest, executor or administrator for any surplus in his hands.
Notwithstanding the foregoing disquisition though, We are not entirely in accord with the labor arbiters
decision awarding separation pay in favor of the petitioners. In this regard, it [is] worth mentioning that in
Kiamco v. NLRC,11 citing Globe-Mackay Cable and Radio Corp. v. NLRC,12 the Supreme Court qualified the
application of the "strained relations" principle when it held -"If in the wisdom of the Court, there may be a ground or grounds for the non-application of the above-cited
provision (Art. 279, Labor Code) this should be by way of exception, such as when the reinstatement may be
inadmissible due to ensuing strained relations between the employer and employee.
In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust
and confidence of his employer, and that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency and productivity of the employee
concerned x x x Obviously, the principle of strained relations cannot be applied indiscriminately. Otherwise,
reinstatement can never be possible simply because some hostility is invariably engendered between the
parties as a result of litigation. That is human nature.
Besides, no strained relations should arise from a valid legal act of asserting ones right; otherwise[,] an
employee who shall assert his right could be easily separated from the service by merely paying his separation
pay on the pretext that his relationship with his employer had already become strained."
Anent the award of backwages, the Labor Arbiter erred in computing the same from the date the petitioners
were illegally dismissed (i.e. April 30, 1995) up to March 15, 1997, that is two (2) days prior to the rendition of
his decision (i.e. March 17, 1997).
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WHEREFORE, premises considered, the petition is GRANTED, hereby REVERSING and SETTING ASIDE the
assailed decisions of the National Labor Relations Commission, dated April 28, 1998 ans October 29, 1998.
Consequently, the decision of the Labor Arbiter, dated March 17, 1997, is hereby REINSTATED, subject to the
MODIFICATION that the private respondent is ORDERED to immediately REINSTATE petitioners Nelson Bilon,
Angel Brazil and Ernesto Pagaygay to their former position without loss of seniority rights and privileges, with
full backwages from the date of their dismissal until their actual reinstatement. Costs against private
respondent.
SO ORDERED.13
Petitioner filed a motion for reconsideration but the same was denied by the CA in a resolution dated
February 7, 2001.
Hence, this petition raising the following issues:14
I
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONERS APPEAL TO THE NATIONAL LABOR
RELATIONS COMMISSION WAS FILED OUT OF TIME.
II
THE COURT OF APPEALS ERRED IN HOLDING THAT THE ALLEGED DEFECTS IN PETITIONERS APPEAL
BOND WERE OF SUCH GRAVITY AS TO PREVENT THE APPEAL FROM BEING PERFECTED.
III
THE COURT OF APPEALS ERRED IN GRANTING RESPONDENTS PETITION FOR CERTIORARI DESPITE THE
FACT THAT THE SAME ASSAILED A DECISION WHICH HAD BEEN VACATED IN FAVOR OF A NEW ONE
WHICH, IN TURN, HAS SOLID LEGAL BASIS.
IV
THE COURT OF APPEALS ERRED IN APPLYING SECTION 3, RULE III, OF THE MANUAL ON EXECUTION OF
JUDGMENT OF THE NATIONAL LABOR RELATIONS COMMISSION WHICH, BY ITS OWN EXPRESS TERMS, IS
NOT APPLICABLE.
A resolution of the case requires a brief discussion of two issues which touch upon the procedural and
substantial aspects of the case thus: a) whether petitioners appeal was filed out of time; and b) whether
the claim survives.
As regards the first issue, the Court considers the service of copy of the decision of the labor arbiter to
have been validly made on May 28, 1997 when it was received through registered mail. As correctly
pointed out by petitioners wife, service of a copy of the decision could not have been validly effected on
April 18, 1997 because petitioner passed away on April 4, 1997.
Section 4, Rule III of the New Rules of Procedure of the NLRC provides:
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SEC. 4. Service of Notices and Resolutions. (a) Notices or summons and copies of orders, resolutions or
decisions shall be served on the parties to the case personally by the bailiff or authorized public officer
within three (3) days from receipt thereof or by registered mail; Provided, That where a party is
represented by counsel or authorized representative, service shall be made on such counsel or authorized
representative; Provided further, That in cases of decision and final awards, copies thereof shall be served
on both parties and their counsel .
For the purpose of computing the period of appeal, the same shall be counted from receipt of such
decisions, awards or orders by the counsel of record.
(b) The bailiff or officer personally serving the notice, order, resolution or decision shall submit his return
within two (2) days from date of service thereof, stating legibly in his return, his name, the names of the
persons served and the date of receipt which return shall be immediately attached and shall form part of
the records of the case. If no service was effected, the serving officer shall state the reason therefore in
the return.
Section 6, Rule 13 of the Rules of Court which is suppletory to the NLRC Rules of Procedure states that:
"[s]ervice of the papers may be made by delivering personally a copy to the party or his counsel, or by
leaving it in his office with his clerk or with a person having charge thereof. If no person is found in his
office, or his office is not known, or he has no office, then by leaving the copy, between the hours of eight
in the morning and six in the evening, at the partys or counsels residence, if known, with a person of
sufficient age and discretion then residing therein."
The foregoing provisions contemplate a situation wherein the party to the action is alive upon the delivery
of a copy of the tribunals decision. In the present case, however, petitioner died before a copy of the labor
arbiters decision was served upon him. Hence, the above provisions do not apply. As aptly stated by the
NLRC:
In the case at bar, respondent Melencio Gabriel was not represented by counsel during the pendency of
the case. A decision was rendered by the Labor Arbiter a quo on March 17, 1997 while Mr. Gabriel passed
away on April 4, 1997, without having received a copy thereof during his lifetime. The decision was only
served on April 18, 1997 when he was no longer around to receive the same. His surviving spouse and
daughter cannot automatically substitute themselves as party respondents. Thus, when the bailiff
tendered a copy of the decision to them, they were not in a position to receive them. The requirement of
leaving a copy at the partys residence is not applicable in the instant case because this presupposes that
the party is still living and is not just available to receive the decision.
The preceding considered, the decision of the Labor Arbiter has not become final because there was no
proper service of copy thereof to party respondent.15
Thus, the appeal filed on behalf of petitioner on June 5, 1997 after receipt of a copy of the decision via
registered mail on May 28, 1997 was within the ten-day reglementary period prescribed under Section 223
of the Labor Code.
On the question whether petitioners surety bond was defective, Section 6, Rule VI of the New Rules of
Procedure of the NLRC provides:
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SEC. 6. Bond. In case the decision of a Labor Arbiter involves monetary award, an appeal by the
employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission or the Supreme Court in an amount equivalent to the
monetary award, exclusive of moral and exemplary damages and attorneys fees.
The employer as well as counsel shall submit a joint declaration under oath attesting that the surety bond
posted is genuine and that it shall be in effect until final disposition of the case.
The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the
bond. (As amended on Nov. 5, 1993).
The Court believes that petitioner was able to comply substantially with the requirements of the above
Rule. As correctly pointed out by the NLRC:
While we agree with complainants-appellees that the posting of the surety bond is jurisdictional, We do
not believe that the "defects" imputed to the surety bond posted for and in behalf of respondentappellant Gabriel are of such character as to affect the jurisdiction of this Commission to entertain the
instant appeal.
It matters not that, by the terms of the bond posted, the "Liability of the surety herein shall expire on June
5, 1998 and this bond shall be automatically cancelled ten (10) days after the expiration." After all, the
bond is accompanied by the joint declaration under oath of respondent-appellants surviving spouse and
counsel attesting that the surety bond is genuine and shall be in effect until the final disposition of the
case.
Anent complainants-appellees contention that the surety bond posted is defective for being in the name
of BTSCI which did not appeal and for having been entered into by Mrs. Gabriel without BTSCIs authority,
the same has been rendered moot and academic by the certification issued by Gil CJ. San Juan, VicePresident of the bonding company to the effect that "Eastern Assurance and Surety Corporation Bond No.
2749 was posted for and on behalf appellant Melencio Gabriel and/or his heirs" and that "(T)he name
"Bacoor Transport Service Cooperative, Inc." was indicated in said bond due merely in (sic) advertence."
At any rate, the Supreme Court has time and again ruled that while Article 223 of the Labor Code, as
amended requiring a cash or surety bond in the amount equivalent to the monetary award in the judgment
appealed from for the appeal to be perfected, may be considered a jurisdictional requirement,
nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal on
the merits threshed out by this Honorable Commission, the foregoing requirement of the law should be
given a liberal interpretation (Pantranco North Express, Inc. v. Sison, 149 SCRA 238; C.W. Tan Mfg. v. NLRC,
170 SCRA 240; YBL v. NLRC, 190 SCRA 160; Rada v. NLRC, 205 SCRA 69; Star Angel Handicraft v. NLRC, 236
SCRA 580).16
On the other hand, with regard to the substantive aspect of the case, the Court agrees with the CA that an
employer-employee relationship existed between petitioner and respondents
. In Martinez v. National Labor Relations Commission,17 citing National Labor Union v. Dinglasan,18 the Court
ruled that:
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The relationship between jeepney owners/operators and jeepney drivers under the boundary system is
that of employer-employee and not of lessor-lessee because in the lease of chattels the lessor loses
complete control over the chattel leased although the lessee cannot be reckless in the use thereof,
otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators
and jeepney drivers, the former exercises supervision and control over the latter. The fact that the drivers
do not receive fixed wages but get only that in excess of the so-called "boundarythat they pay to the
owner/operator is not sufficient to withdraw the relationship between them from that of employer and
employee. Thus, private respondents were employees because they had been engaged to perform
activities which were usually necessary or desirable in the usual business or trade of the employer.
The same principle was reiterated in the case of Paguio Transport Corporation v. NLRC.20
The Court also agrees with the labor arbiter and the CA that respondents were illegally dismissed by
petitioner. Respondents were not accorded due process.21 Moreover, petitioner failed to show that the
cause for termination falls under any of the grounds enumerated in Article 282
(then Article 283)22 of the Labor Code.23 Consequently, respondents are entitled to reinstatement without
loss of seniority rights and other privileges and to their full backwages computed from the date of
dismissal up to the time of their actual reinstatement in accordance with Article 279 of the Labor Code.
Reinstatement is obtainable in this case because it has not been shown that there is an ensuing "strained
relations" between petitioner and respondents. This is pursuant to the principle laid down in Globe-Mackay
Cable and Radio Corporation v. NLRC 24 as quoted earlier in the CA decision.
With regard to respondents monetary claim, the same shall be governed by Section 20 (then Section 21),
Rule 3 of the Rules of Court which provides:1awphi1.net
SEC. 20. Action on contractual money claims. When the action is for recovery of money arising from
contract, express or implied, and the defendant dies before entry of final judgment in the court in which
the action was pending at the time of such death, it shall not be dismissed but shall instead be allowed to
continue until entry of final judgment. A favorable judgment obtained by the plaintiff therein shall be
enforced in the manner provided in these Rules for prosecuting claims against the estate of a deceased
person. (21a)
In relation to this, Section 5, Rule 86 of the Rules of Court states:
SEC. 5. Claims which must be filed under the notice. If not filed, barred ; exceptions. All claims for money
against the decedent arising from contract, express or implied, whether the same be due, not due, or
contingent, ... and judgment for money against the decedent, must be filed within the time limited in the
notice; otherwise they are barred forever, except that they may be set forth as counterclaims in any action
that the executor or administrator may bring against the claimants.
Thus, in accordance with the above Rules, the money claims of respondents must be filed against the
estate of petitioner Melencio Gabriel.25
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated August 4,
2000 and February 7, 2001, respectively, in CA-G.R. SP No. 52001 are AFFIRMED but with the
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MODIFICATION that the money claims of respondents should be filed against the estate of Melencio
Gabriel, within such reasonable time from the finality of this Decision as the estate court may fix.
No costs.
SO ORDERED.
24. Felix v. Buenaseda, January 7, 1995

G.R. No. 109704 January 17, 1995
ALFREDO B. FELIX, petitioner,
vs.
DR. BRIGIDA BUENASEDA, in her capacity as Director, and ISABELO BAEZ, JR., in his capacity as
Administrator, both of the National Center for Mental Health, and the CIVIL SERVICE COMMISSION,
respondents.
KAPUNAN, J.:
Taking advantage of this Court's decisions involving the removal of various civil servants pursuant to the
general reorganization of the government after the EDSA Revolution, petitioner assails his dismissal as
Medical Specialist I of the National Center for Mental Health (formerly the National Mental Hospital) as
illegal and violative of the constitutional provision on security of tenure allegedly because his removal was
made pursuant to an invalid reorganization.
In Mendoza vs. Quisumbing 1 and the consolidated cases involving the reorganization of various
government departments and agencies we held:
We are constrained to set aside the reorganizations embodied in these consolidated
petitions because the heads of departments and agencies concerned have chosen to rely on
their own concepts of unlimited discretion and "progressive" ideas on reorganization
instead of showing that they have faithfully complied with the clear letter and spirit of the
two Constitutions and the statutes affecting reorganization. 2
In De Guzman vs. CSC 3, we upheld the principle, laid down by Justice J.B.L. Reyes in Cruz vs. Primicias 4 that a
valid abolition of an office neither results in a separation or removal, likewise upholding the corollary
principle that "if the abolition is void, the incumbent is deemed never to have ceased to hold office," in
sustaining therein petitioner's right to the position she held prior to the reorganization.
The instant petition on its face turns on similar facts and issues, which is, that petitioner's removal from a
permanent position in the National Center for Mental Health as a result of the reorganization of the
Department of Health was void.
However, a closer look at the facts surrounding the instant petition leads us to a different conclusion.
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After passing the Physician's Licensure Examinations given by the Professional Regulation Commission in
June of 1979, petitioner, Dr. Alfredo B. Felix, joined the National Center for Mental Health (then the
National Mental Hospital) on May 26, 1980 as a Resident Physician with an annual salary of P15,264.00. 5 In
August of 1983, he was promoted to the position of Senior Resident Physician 6 a position he held until the
Ministry of Health reorganized the National Center for Mental Health (NCMH) in January of 1988, pursuant
to Executive Order No. 119.
Under the reorganization, petitioner was appointed to the position of Senior Resident Physician in a
temporary capacity immediately after he and other employees of the NCMH allegedly tendered their
courtesy resignations to the Secretary of Health. 7 In August of 1988, petitioner was promoted to the
position of Medical Specialist I (Temporary Status), which position was renewed the following year. 8
In 1988, the Department of Health issued Department Order No. 347 which required board certification as
a prerequisite for renewal of specialist positions in various medical centers, hospitals and agencies of the
said department. Specifically, Department Order No. 347 provided that specialists working in various
hospitals and branches of the Department of Health be recognized as "Fellows" of their respective
specialty societies and/or "Diplomates" of their specialty boards or both. The Order was issued for the
purpose of upgrading the quality of specialties in DOH hospitals by requiring them to pass rigorous
theoretical and clinical (bedside) examinations given by recognized specialty boards, in keeping up with
international standards of medical practice.
Upon representation of the Chiefs of Hospitals of various government hospitals and medical centers,
(then) Secretary of Health Alfredo Bengzon issued Department Order No. 347 providing for an extension
of appointments of Medical Specialist positions in cases where the termination of medical specialist who
failed to meet the requirement for board certification might result in the disruption of hospital services.
Department Order No. 478 issued the following guidelines:
1. As a general policy, the provision of Department Order No. 347, Sec. 4 shall apply unless
the Chief of Hospital requests for exemption, certifies that its application will result in the
disruption of the delivery service together with the steps taken to implement Section 4, and
submit a plan of action, lasting no more than 3-years, for the eventual phase out of nonBoard certified medical specialties.
2. Medical specialist recommended for extension of appointment shall meet the following
minimum criteria:
a. DOH medical specialist certified
b. Has been in the service of the Department at least three (3) years prior to
December 1988.
c. Has applied or taken the specialty board examination.
3. Each recommendation for extension of appointment must be individually justified to show
not only the qualification of the recommendee, but also what steps he has taken to be
board certified.
4. Recommendation for extension of appointment shall be evaluated on a case to case basis.
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5. As amended, the other provisions of Department Order No. 34/s. 1988 stands.
Petitioner was one of the hundreds of government medical specialist who would have been adversely
affected by Department Order No. 347 since he was no yet accredited by the Psychiatry Specialty Board.
Under Department Order No. 478, extension of his appointment remained subject to the guidelines set by
the said department order. On August 20, 1991, after reviewing petitioner's service record and
performance, the Medical Credentials Committee of the National Center for Mental Health recommended
non-renewal of his appointment as Medical Specialist I, informing him of its decision on August 22, 1991. He
was, however, allowed to continue in the service, and receive his salary, allowances and other benefits
even after being informed of the termination of his appointment.
On November 25, 1991, an emergency meeting of the Chiefs of Service was held to discuss, among other
matters, the petitioner's case. In the said meeting Dr. Vismindo de Grecia, petitioner's immediate
supervisor, pointed out petitioner's poor performance, frequent tardiness and inflexibility as among the
factors responsible for the recommendation not to renew his appointment. 9 With one exception, other
department heads present in the meeting expressed the same opinion, 10 and the overwhelming
concensus was for non-renewal. The matter was thereafter referred to the Civil Service Commission, which
on February 28, 1992 ruled that "the temporary appointment (of petitioner) as Medical Specialist I can be
terminated at any time . . ." and that "[a]ny renewal of such appointment is within the discretion of the
appointing authority." 11 Consequently, in a memorandum dated March 25, 1992 petitioner was advised by
hospital authorities to vacate his cottage since he was no longer with said memorandum petitioner filed a
petition with the Merit System Protection Board (MSPB) complaining about the alleged harassment by
respondents and questioning the non-renewal of his appointment. In a Decision rendered on July 29, 1992,
the (MSPB) dismissed petitioner's complaint for lack of merit, finding that:
As an apparent incident of the power to appoint, the renewal of a temporary appointment
upon or after its expiration is a matter largely addressed to the sound discretion of the
appointing authority. In this case, there is no dispute that Complainant was a temporary
employee and his appointment expired on August 22, 1991. This being the case, his reappointment to his former position or the renewal of his temporary appointment would be
determined solely by the proper appointing authority who is the Secretary, Department of
Health upon the favorable recommendation of the Chief of Hospital III, NCMH. The Supreme
Court in the case of Central Bank vs. Civil Service Commission G.R. Nos. 80455-56 dated April
10, 1989, held as follows:
The power of appointment is essentially a political question involving considerations of
wisdom which only the appointing authority can decide.
In this light, Complainant therefore, has no basis in law to assail the non-renewal of his
expired temporary appointment much less invoke the aid of this Board cannot substitute its
judgment to that of the appointing authority nor direct the latter to issue an appointment in
the complainant's favor.
Regarding the alleged Department Order secured by the complainant from the Department
of Health (DOH), the Board finds the same inconsequential. Said Department Order merely
allowed the extension of tenure of Medical Specialist I for a certain period but does not
mandate the renewal of the expired appointment.
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The Board likewise finds as baseless complainant's allegation of harassment. It should be noted that the
subsistence, quarters and laundry benefits provided to the Complainant were in connection with his
employment with the NCMH. Now that his employment ties with the said agency are severed, he
eventually loses his right to the said benefits. Hence, the Hospital Management has the right to take steps
to prevent him from the continuous enjoyment thereof, including the occupancy of the said cottage, after
his cessation form office.
In sum, the actuations of Dr. Buenaseda and Lt. Col. Balez are not shown to have been tainted with any
legal infirmity, thus rendering as baseless, this instant complaint.
Said decision was appealed to the Civil Service Commission which dismissed the same in its Resolution
dated December 1, 1992. Motion for Reconsideration was denied in CSC Resolution No. 93-677 dated
February 3, 1993, hence this appeal, in which petitioner interposes the following assignments of errors:
I
THE PUBLIC RESPONDENT CIVIL SERVICE COMMISSION ERRED IN HOLDING THAT BY
SUBMITTING HIS COURTESY RESIGNATION AND ACCEPTING HIS TEMPORARY
APPOINTMENT PETITIONER HAD EFFECTIVELY DIVESTED HIMSELF OF HIS SECURITY OF
TENURE, CONSIDERING THE CIRCUMSTANCES OF SUCH COURTESY RESIGNATION AND
ACCEPTANCE OF APPOINTMENT.
II
THE RESPONDENT COMMISSION IN NOT DECLARING THAT THE CONVERSION OF THE
PERMANENT APPOINTMENT OF PETITIONER TO TEMPORARY WAS DONE IN BAD FAITH IN
THE GUISE OF REORGANIZATION AND THUS INVALID, BEING VIOLATIVE OF THE
PETITIONER'S RIGHT OF SECURITY OF TENURE.
Responding to the instant petition, 12 the Solicitor General contends that 1) the petitioner's temporary
appointment after the reorganization pursuant to E.O. No. 119 were valid and did not violate his
constitutional right of security of tenure; 13 2) petitioner is guilty of estoppel or laches, having acquiesced
to such temporary appointments from 1988 to 1991; 14 and 3) the respondent Commission did not act with
grave abuse of discretion in affirming the petitioner's non-renewal of his appointment at the National
Center for Mental Hospital. 15
We agree.
The patent absurdity of petitioner's posture is readily obvious. A residency or resident physician position in
a medical specialty is never a permanent one. Residency connotes training and temporary status. It is the
step taken by a physician right after post-graduate internship (and after hurdling the Medical Licensure
Examinations) prior to his recognition as a specialist or sub-specialist in a given field.
A physician who desires to specialize in Cardiology takes a required three-year accredited residency in
Internal Medicine (four years in DOH hospitals) and moves on to a two or three-year fellowship or
residency in Cardiology before he is allowed to take the specialty examinations given by the appropriate
accrediting college. In a similar manner, the accredited Psychiatrist goes through the same stepladder
process which culminates in his recognition as a fellow or diplomate (or both) of the Psychiatry Specialty
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Board. 16 This upward movement from residency to specialist rank, institutionalized in the residency
training process, guarantees minimum standards and skills and ensures that the physician claiming to be a
specialist will not be set loose on the community without the basic knowledge and skills of his specialty.
Because acceptance and promotion requirements are stringent, competitive, and based on merit.
acceptance to a first year residency program is no guaranty that the physician will complete the program.
Attribution rates are high. Some programs are pyramidal. Promotion to the next post-graduate year is
based on merit and performance determined by periodic evaluations and examinations of knowledge,
skills and bedside manner. 17 Under this system, residents, specialty those in university teaching hospitals 18
enjoy their right to security of tenure only to the extent that they periodically make the grade, making the
situation quite unique as far as physicians undergoing post-graduate residencies and fellowships are
concerned. While physicians (or consultants) of specialist rank are not subject to the same stringent
evaluation procedures, 19 specialty societies require continuing education as a requirement for
accreditation for good standing, in addition to peer review processes based on performance, mortality and
morbidity audits, feedback from residents, interns and medical students and research output. The nature
of the contracts of resident physicians meet traditional tests for determining employer-employee
relationships, but because the focus of residency is training, they are neither here nor there. Moreover,
stringent standards and requirements for renewal of specialist-rank positions or for promotion to the next
post-graduate residency year are necessary because lives are ultimately at stake.
Petitioner's insistence on being reverted back to the status quo prior to the reorganizations made pursuant
to Executive Order No. 119 would therefore be akin to a college student asking to be sent back to high
school and staying there. From the position of senior resident physician, which he held at the time of the
government reorganization, the next logical step in the stepladder process was obviously his promotion to
the rank of Medical Specialist I, a position which he apparently accepted not only because of the increase
in salary and rank but because of the prestige and status which the promotion conferred upon him in the
medical community. Such status, however, clearly carried with it certain professional responsibilities
including the responsibility of keeping up with the minimum requirements of specialty rank, the
responsibility of keeping abreast with current knowledge in his specialty rank, the responsibility of
completing board certification requirements within a reasonable period of time. The evaluation made by
the petitioner's peers and superiors clearly showed that he was deficient in a lot of areas, in addition to the
fact that at the time of his non-renewal, he was not even board-certified.
It bears emphasis that at the time of petitioner's promotion to the position of Medical Specialist I
(temporary) in August of 1988, no objection was raised by him about the change of position or the
temporary nature of designation. The pretense of objecting to the promotion to specialist rank apparently
came only as an afterthought, three years later, following the non-renewal of his position by the
Department of Health.
We lay stress to the fact that petitioner made no attempt to oppose earlier renewals of his temporary
Specialist I contracts in 1989 and 1990, clearly demonstrating his acquiescence to if not his unqualified
acceptance of the promotion (albeit of a temporary nature) made in 1988. Whatever objections petitioner
had against the earlier change from the status of permanent senior resident physician to temporary senior
physician were neither pursued nor mentioned at or after his designation as Medical Specialist I
(Temporary). He is therefore estopped from insisting upon a right or claim which he had plainly abandoned
when he, from all indications, enthusiastically accepted the promotion. His negligence to assert his claim
within a reasonable time, coupled with his failure to repudiate his promotion to a temporary position,
warrants a presumption, in the words of this Court in Tijam vs. Sibonghanoy, 20 that he "either abandoned
(his claim) or declined to assert it."
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There are weighty reasons of public policy and convenience which demand that any claim to any position
in the civil service, permanent, temporary of otherwise, or any claim to a violation of the constitutional
provision on security of tenure be made within a reasonable period of time. An assurance of some degree
of stability in the civil service is necessary in order to avoid needless disruptions in the conduct of public
business. Delays in the statement of a right to any position are strongly discouraged. 21 In the same token,
the failure to assert a claim or the voluntary acceptance of another position in government, obviously
without reservation, leads to a presumption that the civil servant has either given up his claim of has
already settled into the new position. This is the essence of laches which is the failure or neglect, for an
unreasonable and unexplained length of time to do that which, by exercising due diligence, could or
should have been done earlier; it is the negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert
it. 22
In fine, this petition, on its surface, seems to be an ordinary challenge against the validity of the conversion
of petitioner's position from permanent resident physician status to that of a temporary resident physician
pursuant to the government reorganization after the EDSA Revolution. What is unique to petitioner's
averments is the fact that he hardly attempts to question the validity of his removal from his position of
Medical Specialist I (Temporary) of the National Center for Mental Health, which is plainly the pertinent
issue in the case at bench. The reason for this is at once apparent, for there is a deliberate and dishonest
attempt to a skirt the fundamental issue first, by falsely claiming that petitioner was forced to submit his
courtesy resignation in 1987 when he actually did not; and second, by insisting on a right of claim clearly
abandoned by his acceptance of the position of Medical Specialist I (Temporary), which is hence barred by
laches.
The validity of the government reorganization of the Ministry of Health pursuant to E.O. 119 not being the
real issue in the case at bench, we decline to make any further pronouncements relating to petitioner's
contentions relating to the effect on him of the reorganization except to say that in the specific case of the
change in designation from permanent resident physician to temporary resident physician, a change was
necessary, overall, to rectify a ludicrous situation whereby some government resident physicians were
erroneously being classified as permanent resident physicians in spite of the inherently temporary nature
of the designation. The attempts by the Department of Health not only to streamline these positions but
to make them conform to current standards of specialty practice is a step in a positive direction. The
patient who consults with a physician of specialist rank should at least be safe in the assumption that the
government physician of specialist rank: 1.) has completed all necessary requirements at least assure the
public at large that those in government centers who claim to be specialists in specific areas of Medicine
possess the minimum knowledge and skills required to fulfill that first and foremost maxim, embodied in
the Hippocratic Oath, that they do their patients no harm. Primium non nocere.
Finally, it is crystal clear, from the facts of the case at bench, that the petitioner accepted a temporary
appointment (Medical Specialist I). As respondent Civil Service Commission has correctly pointed out 23,
the appointment was for a definite and renewable period which, when it was not renewed, did not involve
a dismissal but an expiration of the petitioner's term.
ACCORDINGLY, the petition is hereby DISMISSED, for lack of merit.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug and
Mendoza, JJ., concur.
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25. Autobus Transport v. Bautista
G.R. No. 156367
May 16, 2005
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner,

vs.
ANTONIO BAUTISTA, respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari assailing the Decision1 and Resolution2 of the Court of
Appeals affirming the Decision3 of the National Labor Relations Commission (NLRC). The NLRC ruling
modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13 th month pay and
service incentive leave pay) by deleting the award of 13 th month pay to respondent.
THE FACTS
Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, BaguioTuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven
percent (7%) of the total gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus
he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly
stopped at a sharp curve without giving any warning.
Respondent averred that the accident happened because he was compelled by the management to go
back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived
in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully
paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged
buses and that despite respondents pleas for reconsideration, the same was ignored by management.
After a month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for
nonpayment of 13th month pay and service incentive leave pay against Autobus.
Petitioner, on the other hand, maintained that respondents employment was replete with offenses
involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner
presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several
incidents wherein respondent was involved.
Furthermore, petitioner avers that in the exercise of its management prerogative, respondents
employment was terminated only after the latter was provided with an opportunity to explain his side
regarding the accident on 03 January 2000.
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On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor
Arbiter Monroe C. Tabingan promulgated a Decision,4 the dispositive portion of which reads:
WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has
no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED.
However, still based on the above-discussed premises, the respondent must pay to the complainant
the following:
a. his 13th month pay from the date of his hiring to the date of his dismissal, presently
computed at P78,117.87;
b. his service incentive leave pay for all the years he had been in service with the respondent,
presently computed at P13,788.05.
All other claims of both complainant and respondent are hereby dismissed for lack of merit. 5
Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which
rendered its decision on 28 September 2001, the decretal portion of which reads:
[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides:
"Section 3. Employers covered. The Decree shall apply to all employers except to:
xxx
xxx
xxx
e) employers of those who are paid on purely commission, boundary, or task basis,
performing a specific work, irrespective of the time consumed in the performance thereof.
xxx."
Records show that complainant, in his position paper, admitted that he was paid on a commission
basis.
In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting
the award of 13th month pay to the complainant.
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13 th
month pay. The other findings are AFFIRMED.6
In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a
reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31
October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said
decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision
dated 06 May 2002, the dispositive portion of which reads:
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WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed
Decision of respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto.
No costs.7
Hence, the instant petition.
ISSUES
1. Whether or not respondent is entitled to service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as
amended, is applicable to respondents claim of service incentive leave pay.
RULING OF THE COURT
The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code
vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which
provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission
basis, or those who are paid in a fixed amount for performing work irrespective of the time
consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to
those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other
employees whose performance is unsupervised by the employer" must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined with reasonable certainty." 8
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely
commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they
follow.9 Hence, employees engaged on task or contract basis or paid on purely commission basis are not
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automatically exempted from the grant of service incentive leave, unless, they fall under the classification
of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave
just because he was paid on purely commission basis is misplaced. What must be ascertained in order to
resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a
field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable certainty. This
definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine
Technical-Clerical Commercial Employees Association10 which states that:
As a general rule, [field personnel] are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or performing specific work. If required
to be at specific places at specific times, employees including drivers cannot be said to be field
personnel despite the fact that they are performing work away from the principal office of the
employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no
employee would ever be considered a field personnel because every employer, in one way or another,
exercises control over his employees. Petitioner further argues that the only criterion that should be
considered is the nature of work of the employee in that, if the employees job requires that he works
away from the principal office like that of a messenger or a bus driver, then he is inevitably a field
personnel.
We are not persuaded. At this point, it is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs his duties but also with the
fact that the employees performance is unsupervised by the employer. As discussed above, field
personnel are those who regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus,
in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual
hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an
inquiry must be made as to whether or not the employees time and performance are constantly
supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus companies, there are its
inspectors assigned at strategic places who board the bus and inspect the passengers, the punched
tickets, and the conductors reports. There is also the mandatory once-a-week car barn or shop day,
where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or
not there are problems thereon as reported by the driver and/or conductor. They too, must be at
specific place as [sic] specified time, as they generally observe prompt departure and arrival from
their point of origin to their point of destination. In each and every depot, there is always the
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Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at
specific times and arrive at the estimated proper time. These, are present in the case at bar. The
driver, the complainant herein, was therefore under constant supervision while in the performance
of this work. He cannot be considered a field personnel.11
We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is
not a field personnel but a regular employee who performs tasks usually necessary and desirable to the
usual trade of petitioners business. Accordingly, respondent is entitled to the grant of service incentive
leave.
The question now that must be addressed is up to what amount of service incentive leave pay respondent
is entitled to.
The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year
prescriptive period under Article 291 of the Labor Code is applicable to respondents claim of service
incentive leave pay.
Article 291 of the Labor Code states that all money claims arising from employer-employee relationship
shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be
forever barred.
In the application of this section of the Labor Code, the pivotal question to be answered is when does the
cause of action for money claims accrue in order to determine the reckoning date of the three-year
prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of
the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such
defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant
to the plaintiff.12
To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third
element of a cause of action transpired. Stated differently, in the computation of the three-year
prescriptive period, a determination must be made as to the period when the act constituting a violation of
the workers right to the benefits being claimed was committed. For if the cause of action accrued more
than three (3) years before the filing of the money claim, said cause of action has already prescribed in
accordance with Article 291.13
Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that
the benefits being claimed have been withheld from the employee for a period longer than three (3) years,
the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the
amount of the benefits withheld within three (3) years before the filing of the complaint. 14
It is essential at this point, however, to recognize that the service incentive leave is a curious animal in
relation to other benefits granted by the law to every employee. In the case of service incentive leave, the
employee may choose to either use his leave credits or commute it to its monetary equivalent if not
exhausted at the end of the year.15 Furthermore, if the employee entitled to service incentive leave does
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not use or commute the same, he is entitled upon his resignation or separation from work to the
commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC:16
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules
and Regulations provides that "[e]very employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days with pay." Service incentive leave is a
right which accrues to every employee who has served "within 12 months, whether continuous or
broken reckoned from the date the employee started working, including authorized absences and
paid regular holidays unless the working days in the establishment as a matter of practice or policy,
or that provided in the employment contracts, is less than 12 months, in which case said period shall
be considered as one year." It is also "commutable to its money equivalent if not used or exhausted
at the end of the year." In other words, an employee who has served for one year is entitled to it. He
may use it as leave days or he may collect its monetary value. To limit the award to three years, as the
solicitor general recommends, is to unduly restrict such right.17 [Italics supplied]
Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to
claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its
monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its
commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from employment, his cause of action to claim the whole
amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount
at the time of his resignation or separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can
conclude that the three (3)-year prescriptive period commences, not at the end of the year when the
employee becomes entitled to the commutation of his service incentive leave, but from the time when the
employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the
employees services, as the case may be.
The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the
rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code
and its implementing regulations, the workingmans welfare should be the primordial and paramount
consideration.18 The policy is to extend the applicability of the decree to a greater number of employees
who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to
give maximum aid and protection to labor.19
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its
commutation until his employment was terminated by petitioner. Neither did petitioner compensate his
accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a
complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from
his former employer commutation of his accumulated leave credits. His cause of action to claim the
payment of his accumulated service incentive leave thus accrued from the time when his employer
dismissed him and failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced
from the time the employer failed to compensate his accumulated service incentive leave pay at the time
of his dismissal. Since respondent had filed his money claim after only one month from the time of his
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dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291
of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the
Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.
SO ORDERED.
26. David v. Macasio, July 4, 2014.
G.R. No. 195466
July 2, 2014
ARIEL L. DAVID, doing business under the name and style "YIELS HOG DEALER," Petitioner,
vs.
JOHN G. MACASIO, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the November 22, 2010 decision2 and
the January 31, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 116003. The CA decision
annulled and set aside the May 26, 2010 decision4 of the National Labor Relations Commission (NLRC)5
which, in turn, affirmed the April 30, 2009 Decision6 of the Labor Arbiter (LA). The LA's decision dismissed
respondent John G. Macasio's monetary claims.
The Factual Antecedents
In January 2009, Macasio filed before the LA a complaint7 against petitioner Ariel L. David, doing business
under the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday pay and 13th
month pay. He also claimed payment for moral and exemplary damages and attorneys fees. Macasio also
claimed payment for service incentive leave (SIL).8
Macasio alleged9 before the LA that he had been working as a butcher for David since January 6, 1995.
Macasio claimed that David exercised effective control and supervision over his work, pointing out that
David: (1) set the work day, reporting time and hogs to be chopped, as well as the manner by which he was
to perform his work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that
David owned the hogs delivered for chopping, as well as the work tools and implements; the latter also
rented the workplace. Macasio further claimed that David employs about twenty-five (25) butchers and
delivery drivers.
In his defense,10 David claimed that he started his hog dealer business in 2005 and that he only has ten
employees. He alleged that he hired Macasio as a butcher or chopper on "pakyaw" or task basis who is,
therefore, not entitled to overtime pay, holiday pay and 13th month pay pursuant to the provisions of the
Implementing Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1) usually
starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier, depending on the volume
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of the delivered hogs; (2) received the fixed amount of P700.00 per engagement, regardless of the actual
number of hours that he spent chopping the delivered hogs; and (3) was not engaged to report for work
and, accordingly, did not receive any fee when no hogs were delivered.
Macasio disputed Davids allegations.11 He argued that, first, David did not start his business only in 2005.
He pointed to the Certificate of Employment12 that David issued in his favor which placed the date of his
employment, albeit erroneously, in January 2000. Second, he reported for work every day which the
payroll or time record could have easily proved had David submitted them in evidence.
Refuting Macasios submissions,13 David claims that Macasio was not his employee as he hired the latter
on "pakyaw" or task basis. He also claimed that he issued the Certificate of Employment, upon Macasios
request, only for overseas employment purposes. He pointed to the "Pinagsamang Sinumpaang
Salaysay,"14 executed by Presbitero Solano and Christopher (Antonio Macasios co-butchers), to
corroborate his claims.
In the April 30, 2009 decision,15 the LA dismissed Macasios complaint for lack of merit. The LA gave
credence to Davids claim that he engaged Macasio on "pakyaw" or task basis. The LA noted the following
facts to support this finding: (1) Macasio received the fixed amount of P700.00 for every work done,
regardless of the number of hours that he spent in completing the task and of the volume or number of
hogs that he had to chop per engagement; (2) Macasio usually worked for only four hours, beginning from
10:00 p.m. up to 2:00 a.m. of the following day; and (3) the P700.00 fixed wage far exceeds the then
prevailing daily minimum wage of P382.00. The LA added that the nature of Davids business as hog dealer
supports this "pakyaw" or task basis arrangement.
The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime,
holiday, SIL and 13th month pay.
The NLRCs Ruling
In its May 26, 2010 decision,16 the NLRC affirmed the LA ruling.17 The NLRC observed that David did not
require Macasio to observe an eight hour work schedule to earn the fixed P700.00 wage; and that Macasio
had been performing a non-time work, pointing out that Macasio was paid a fixed amount for the
completion of the assigned task, irrespective of the time consumed in its performance. Since Macasio was
paid by result and not in terms of the time that he spent in the workplace, Macasio is not covered by the
Labor Standards laws on overtime, SIL and holiday pay, and 13th month pay under the Rules and
Regulations Implementing the 13th month pay law.18
Macasio moved for reconsideration19 but the NLRC denied his motion in its August 11, 2010 resolution,20
prompting Macasio to elevate his case to the CA via a petition for certiorari.21
The CAs Ruling
In its November 22, 2010 decision,22 the CA partly granted Macasios certiorari petition and reversed the
NLRCs ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LAand the NLRC that Macasio was a task basis employee, it nevertheless
found Macasio entitled to his monetary claims following the doctrine laid down in Serrano v. Severino
Santos Transit.23 The CA explained that as a task basis employee, Macasio is excluded from the coverage
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of holiday, SIL and 13th month pay only if he is likewise a "field personnel." As defined by the Labor Code, a
"field personnel" is one who performs the work away from the office or place of work and whose regular
work hours cannot be determined with reasonable certainty. In Macasios case, the elements that
characterize a "field personnel" are evidently lacking as he had been working as a butcher at Davids "Yiels
Hog Dealer" business in Sta. Mesa, Manila under Davids supervision and control, and for a fixed working
schedule that starts at 10:00 p.m.
Accordingly, the CA awarded Macasios claim for holiday, SIL and 13th month pay for three years, with 10%
attorneys fees on the total monetary award. The CA, however, denied Macasios claim for moral and
exemplary damages for lack of basis.
David filed the present petition after the CA denied his motion for reconsideration24 in the CAs January 31,
2011 resolution.25
The Petition
In this petition,26 David maintains that Macasios engagement was on a "pakyaw" or task basis. Hence, the
latter is excluded from the coverage of holiday, SIL and 13th month pay. David reiterates his submissions
before the lower tribunals27 and adds that he never had any control over the manner by which Macasio
performed his work and he simply looked on to the "end-result." He also contends that he never
compelled Macasio to report for work and that under their arrangement, Macasio was at liberty to choose
whether to report for work or not as other butchers could carry out his tasks. He points out that Solano
and Antonio had, in fact, attested to their (David and Macasios) established "pakyawan" arrangement
that rendered a written contract unnecessary. In as much as Macasio is a task basis employee who is paid
the fixed amount of P700.00 per engagement regardless of the time consumed in the performance
David argues that Macasio is not entitled to the benefits he claims. Also, he posits that because he
engaged Macasio on "pakyaw" or task basis then no employer-employee relationship exists between
them.
Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain finality especially
when, as in this case, they are supported by substantial evidence. Hence, David posits that the CA erred in
reversing the labor tribunals findings and granting the prayed monetary claims.
The Case for the Respondent
Macasio counters that he was not a task basis employee or a "field personnel" as David would have this
Court believe.28 He reiterates his arguments before the lower tribunals and adds that, contrary to Davids
position, the P700.00 fee that he was paid for each day that he reported for work does not indicate a
"pakyaw" or task basis employment as this amount was paid daily, regardless of the number or pieces of
hogs that he had to chop. Rather, it indicates a daily-wage method of payment and affirms his regular
employment status. He points out that David did not allege or present any evidence as regards the quota
or number of hogs that he had to chop as basis for the "pakyaw" or task basis payment; neither did David
present the time record or payroll to prove that he worked for less than eight hours each day. Moreover,
David did not present any contract to prove that his employment was on task basis. As David failed to
prove the alleged task basis or "pakyawan" agreement, Macasio concludes that he was Davids employee.
Procedurally, Macasio points out that Davids submissions in the present petition raise purely factual issues
that are not proper for a petition for review on certiorari. These issues whether he (Macasio) was paid by
result or on "pakyaw" basis; whether he was a "field personnel"; whether an employer-employee
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relationship existed between him and David; and whether David exercised control and supervision over his
work are all factual in nature and are, therefore, proscribed in a Rule 45 petition. He argues that the CAs
factual findings bind this Court, absent a showing that such findings are not supported by the evidence or
the CAs judgment was based on a misapprehension of facts. He adds that the issue of whether an
employer-employee relationship existed between him and David had already been settled by the LA29 and
the NLRC30 (as well as by the CA per Macasios manifestation before this Court dated November 15,
2012),31 in his favor, in the separate illegal case that he filed against David.
The Issue
The issue revolves around the proper application and interpretation of the labor law provisions on holiday,
SIL and 13th month pay to a worker engaged on "pakyaw" or task basis. In the context of the Rule 65
petition before the CA, the issue is whether the CA correctly found the NLRC in grave abuse of discretion in
ruling that Macasio is entitled to these labor standards benefits.
The Courts Ruling
We partially grant the petition.
Preliminary considerations: the Montoya ruling and the factual-issue-bar rule
In this Rule 45 petition for review on certiorari of the CAs decision rendered under a Rule 65 proceeding,
this Courts power of review is limited to resolving matters pertaining to any perceived legal errors that the
CA may have committed in issuing the assailed decision. This is in contrast with the review for jurisdictional
errors, which we undertake in an original certiorari action. In reviewing the legal correctness of the CA
decision, we examine the CA decision based on how it determined the presence or absence of grave abuse
of discretion in the NLRC decision before it and not on the basis of whether the NLRC decision on the
merits of the case was correct.32 In other words, we have to be keenly aware that the CA undertook a Rule
65 review, not a review on appeal, of the NLRC decision challenged before it.33
Moreover, the Courts power in a Rule 45 petition limits us to a review of questions of law raised against
the assailed CA decision.34
In this petition, David essentially asks the question whether Macasio is entitled to holiday, SIL and 13th
month pay. This one is a question of law. The determination of this question of law however is intertwined
with the largely factual issue of whether Macasio falls within the rule on entitlement to these claims or
within the exception. In either case, the resolution of this factual issue presupposes another factual
matter, that is, the presence of an employer-employee relationship between David and Macasio.
In insisting before this Court that Macasio was not his employee, David argues that he engaged the latter
on "pakyaw" or task basis. Very noticeably, David confuses engagement on "pakyaw" or task basis with
the lack of employment relationship. Impliedly, David asserts that their "pakyawan" or task basis
arrangement negates the existence of employment relationship.
At the outset, we reject this assertion of the petitioner. Engagement on "pakyaw" or task basis does not
characterize the relationship that may exist between the parties, i.e., whether one of employment or
independent contractorship. Article 97(6) of the Labor Code defines wages as "xxx the remuneration or
earnings, however designated, capable of being expressed in terms of money, whether fixed or
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ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten contract of employment for work
done or to be done, or for services rendered or to be rendered[.]"35 In relation to Article 97(6), Article
10136 of the Labor Code speaks of workers paid by results or those whose pay is calculated in terms of the
quantity or quality of their work output which includes "pakyaw" work and other non-time work.
More importantly, by implicitly arguing that his engagement of Macasio on "pakyaw" or task basis negates
employer-employee relationship, David would want the Court to engage on a factual appellate review of
the entire case to determine the presence or existence of that relationship. This approach however is not
authorized under a Rule 45 petition for review of the CA decision rendered under a Rule 65 proceeding.
First, the LA and the NLRC denied Macasios claim not because of the absence of an employer-employee
but because of its finding that since Macasio is paid on pakyaw or task basis, then he is not entitled to SIL,
holiday and 13th month pay. Second, we consider it crucial, that in the separate illegal dismissal case
Macasio filed with the LA, the LA, the NLRC and the CA uniformly found the existence of an employeremployee relationship.37
In other words, aside from being factual in nature, the existence of an employer-employee relationship is
in fact a non-issue in this case. To reiterate, in deciding a Rule 45 petition for review of a labor decision
rendered by the CA under 65, the narrow scope of inquiry is whether the CA correctly determined the
presence or absence of grave abuse of discretion on the part of the NLRC. In concrete question form, "did
the NLRC gravely abuse its discretion in denying Macasios claims simply because he is paid on a non-time
basis?"
At any rate, even if we indulge the petitioner, we find his claim that no employer-employee relationship
exists baseless. Employing the control test,38 we find that such a relationship exist in the present case.
Even a factual review shows that Macasio is Davids employee
To determine the existence of an employer-employee relationship, four elements generally need to be
considered, namely: (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 employees conduct. These elements or indicators
comprise the so-called "four-fold" test of employment relationship. Macasios relationship with David
satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element of "selection and engagement of
the employee." David categorically confirmed this fact when, in his "Sinumpaang Salaysay," he stated that
"nag apply po siya sa akin at kinuha ko siya na chopper[.]"39 Also, Solano and Antonio stated in their
"Pinagsamang Sinumpaang Salaysay"40 that "[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel
David bilang butcher" and "kilalanamin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama namin
siya sa aming trabaho."
Second, David paid Macasios wages.Both David and Macasio categorically stated in their respective
pleadings before the lower tribunals and even before this Court that the former had been paying the latter
P700.00 each day after the latter had finished the days task. Solano and Antonio also confirmed this fact
of wage payment in their "Pinagsamang Sinumpaang Salaysay."41 This satisfies the element of "payment
of wages."
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Third, David had been setting the day and time when Macasio should report for work. This power to
determine the work schedule obviously implies power of control. By having the power to control
Macasios work schedule, David could regulate Macasios work and could even refuse to give him any
assignment, thereby effectively dismissing him.
And fourth, David had the right and power to control and supervise Macasios work as to the means and
methods of performing it. In addition to setting the day and time when Macasio should report for work,
the established facts show that David rents the place where Macasio had been performing his tasks.
Moreover, Macasio would leave the workplace only after he had finished chopping all of the hog meats
given to him for the days task. Also, David would still engage Macasios services and have him report for
work even during the days when only few hogs were delivered for butchering.
Under this overall setup, all those working for David, including Macasio, could naturally be expected to
observe certain rules and requirements and David would necessarily exercise some degree of control as
the chopping of the hog meats would be subject to his specifications. Also, since Macasio performed his
tasks at Davids workplace, David could easily exercise control and supervision over the former.
Accordingly, whether or not David actually exercised this right or power to control is beside the point as
the law simply requires the existence of this power to control 4243 or, as in this case, the existence of the
right and opportunity to control and supervise Macasio.44
In sum, the totality of the surrounding circumstances of the present case sufficiently points to an
employer-employee relationship existing between David and Macasio.
Macasio is engaged on "pakyaw" or task basis
At this point, we note that all three tribunals the LA, the NLRC and the CA found that Macasio was
engaged or paid on "pakyaw" or task basis. This factual finding binds the Court under the rule that factual
findings of labor tribunals when supported by the established facts and in accord with the laws, especially
when affirmed by the CA, is binding on this Court.
A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage
payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on
the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of
the number of time spent in the completion of work.45 Once the work or task is completed, the worker
receives a fixed amount as wage, without regard to the standard measurements of time generally used in
pay computation.
In Macasios case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter,
regardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to
him for chopping, Macasio would receive the fixed amount of P700.00 once he had completed his task.
Clearly, these circumstances show a "pakyaw" or task basis engagement that all three tribunals uniformly
found.
In sum, the existence of employment relationship between the parties is determined by applying the "fourfold" test; engagement on "pakyaw" or task basis does not determine the parties relationship as it is
simply a method of pay computation. Accordingly, Macasio is Davids employee, albeit engaged on
"pakyaw" or task basis.
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As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether Macasio is
entitled to holiday, 13th month, and SIL pay.
On the issue of Macasios entitlement to holiday, SIL and 13th month pay
The LA dismissed Macasios claims pursuant to Article 94 of the Labor Code in relation to Section 1, Rule IV
of the IRR of the Labor Code, and Article 95 of the Labor Code, as well as Presidential Decree (PD) No. 851.
The NLRC, on the other hand, relied on Article 82 of the Labor Code and the Rules and Regulations
Implementing PD No. 851. Uniformly, these provisions exempt workers paid on "pakyaw" or task basis
from the coverage of holiday, SIL and 13th month pay.
In reversing the labor tribunals rulings, the CA similarly relied on these provisions, as well as on Section 1,
Rule V of the IRR of the Labor Code and the Courts ruling in Serrano v. Severino Santos Transit.46 These
labor law provisions, when read together with the Serrano ruling, exempt those engaged on "pakyaw" or
task basis only if they qualify as "field personnel."
In other words, what we have before us is largely a question of law regarding the correct interpretation of
these labor code provisions and the implementing rules; although, to conclude that the worker is
exempted or covered depends on the facts and in this sense, is a question of fact: first, whether Macasio is
a "field personnel"; and second, whether those engaged on "pakyaw" or task basis, but who are not "field
personnel," are exempted from the coverage of holiday, SIL and 13th month pay.
To put our discussion within the perspective of a Rule 45 petition for review of a CA decision rendered
under Rule 65 and framed in question form, the legal question is whether the CA correctly ruled that it was
grave abuse of discretion on the part of the NLRC to deny Macasios monetary claims simply because he is
paid on a non-time basis without determining whether he is a field personnel or not.
To resolve these issues, we need tore-visit the provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor
Code - provisions governing working conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and SIL
pay (under Article 95 of the Labor Code). Under Article 82,"field personnel" on one hand and "workers
who are paid by results" on the other hand, are not covered by the Title I provisions. The wordings of
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Article82 of the Labor Code additionally categorize workers "paid by results" and "field personnel" as
separate and distinct types of employees who are exempted from the Title I provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR47 reads:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than (10) workers[.] [emphasis ours]
xxxx
SECTION 1. Coverage. This Rule shall apply to all employees except:
xxxx
(e)Field personnel and other employees whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are paid
a fixed amount for performing work irrespective of the time consumed in the performance thereof.
[emphases ours]
On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR48 pertinently
provides:
Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and those employed in establishments regularly
employing less than ten employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or financial condition of such
establishment. [emphases ours]
xxxx
Section 1. Coverage. This rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the performance thereof. [emphasis
ours]
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To be
excluded from their coverage, an employee must be one of those that these provisions expressly exempt,
strictly in accordance with the exemption. Under the IRR, exemption from the coverage of holiday and SIL
pay refer to "field personnel and other employees whose time and performance is unsupervised by the
employer including those who are engaged on task or contract basis[.]" Note that unlike Article 82 of the
Labor Code, the IRR on holiday and SIL pay do not exclude employees "engaged on task basis" as a
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separate and distinct category from employees classified as "field personnel." Rather, these employees are
altogether merged into one classification of exempted employees.
Because of this difference, it may be argued that the Labor Code may be interpreted to mean that those
who are engaged on task basis, per se, are excluded from the SIL and holiday payment since this is what
the Labor Code provisions, in contrast with the IRR, strongly suggest. The arguable interpretation of this
rule may be conceded to be within the discretion granted to the LA and NLRC as the quasi-judicial bodies
with expertise on labor matters.
However, as early as 1987 in the case of Cebu Institute of Technology v. Ople49 the phrase "those who are
engaged on task or contract basis" in the rule has already been interpreted to mean as follows:
[the phrase] should however, be related with "field personnel" applying the rule on ejusdem generis that
general and unlimited terms are restrained and limited by the particular terms that they follow xxx Clearly,
petitioner's teaching personnel cannot be deemed field personnel which refers "to non-agricultural
employees who regularly perform their duties away from the principal place of business or branch office of
the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.
[Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim that private respondents are not
entitled to the service incentive leave benefit cannot therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the
coverage of SIL and holiday pay. They are exempted from the coverage of Title I (including the holiday and
SIL pay) only if they qualify as "field personnel." The IRR therefore validly qualifies and limits the general
exclusion of "workers paid by results" found in Article 82 from the coverage of holiday and SIL pay. This is
the only reasonable interpretation since the determination of excluded workers who are paid by results
from the coverage of Title I is "determined by the Secretary of Labor in appropriate regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc., v.
Bautista:
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to
those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other
employees whose performance is unsupervised by the employer" must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely
commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they
follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support of
granting Macasios petition.
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In Serrano, the Court, applying the rule on ejusdem generis50 declared that "employees engaged on task
or contract basis xxx are not automatically exempted from the grant of service incentive leave, unless,
they fall under the classification of field personnel."51 The Court explained that the phrase "including those
who are engaged on task or contract basis, purely commission basis" found in Section 1(d), Rule V of Book
III of the IRR should not be understood as a separate classification of employees to which SIL shall not be
granted. Rather, as with its preceding phrase - "other employees whose performance is unsupervised by
the employer" - the phrase "including those who are engaged on task or contract basis" serves to amplify
the interpretation of the Labor Code definition of "field personnel" as those "whose actual hours of work
in the field cannot be determined with reasonable certainty."
In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the Labor
Code provisions and the IRR as exempting an employee from the coverage of Title I of the Labor Code
based simply and solely on the mode of payment of an employee. The NLRCs utter disregard of this
consistent jurisprudential ruling is a clear act of grave abuse of discretion.52 In other words, by dismissing
Macasios complaint without considering whether Macasio was a "field personnel" or not, the NLRC
proceeded based on a significantly incomplete consideration of the case. This action clearly smacks of
grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had only taken
counsel from Serrano and earlier cases, they would have correctly reached a similar conclusion regarding
the payment of holiday pay since the rule exempting "field personnel" from the grant of holiday pay is
identically worded with the rule exempting "field personnel" from the grant of SIL pay. To be clear, the
phrase "employees engaged on task or contract basis "found in the IRR on both SIL pay and holiday pay
should be read together with the exemption of "field personnel."
In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL
pay, the presence (or absence) of employer supervision as regards the workers time and performance is
the key: if the worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled
to a holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article95 (SIL pay) of the Labor Code. However, if the worker engaged on pakyaw or
task basis also falls within the meaning of "field personnel" under the law, then he is not entitled to these
monetary benefits.
Macasio does not fall under the classification of "field personnel"
Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not fall
under the definition of "field personnel." The CAs finding in this regard is supported by the established
facts of this case: first, Macasio regularly performed his duties at Davids principal place of business;
second, his actual hours of work could be determined with reasonable certainty; and, third, David
supervised his time and performance of duties. Since Macasio cannot be considered a "field personnel,"
then he is not exempted from the grant of holiday, SIL pay even as he was engaged on "pakyaw" or task
basis.
Not being a "field personnel," we find the CA to be legally correct when it reversed the NLRCs ruling
dismissing Macasios complaint for holiday and SIL pay for having been rendered with grave abuse of
discretion.
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Entitlement to 13th month pay

With respect to the payment of 13th month pay however, we find that the CA legally erred in finding that
the NLRC gravely abused its discretion in denying this benefit to Macasio.1wphi1
The governing law on 13th month pay is PD No. 851.53
As with holiday and SIL pay, 13th month pay benefits generally cover all employees; an employee must be
one of those expressly enumerated to be exempted. Section 3 of the Rules and Regulations Implementing
P.D. No. 85154 enumerates the exemptions from the coverage of 13th month pay benefits. Under Section
3(e), "employers of those who are paid on xxx task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed in the performance thereof"55 are
exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and
Regulations Implementing PD No. 851 exempts employees "paid on task basis" without any reference to
"field personnel." This could only mean that insofar as payment of the 13th month pay is concerned, the
law did not intend to qualify the exemption from its coverage with the requirement that the task worker
be a "field personnel" at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition insofar as the
payment of 13th month pay to respondent is concerned. In all other aspects, we AFFIRM the decision
dated November 22, 2010 and the resolution dated January 31, 2011 of the Court of Appeals in CA-G.R. SP
No. 116003.
SO ORDERED.
27. South East International Rattan Inc. v. Coming, March 12, 2014 (SEE CASE NO. 9)
28. Tenazas et. al. v. R. Villegas Taxi Transport, April 2, 2014.
.R. No. 192998
April 2, 2014
BERNARD A. TENAZAS, JAIME M. FRANCISCO and ISIDRO G. ENDRACA, Petitioners,

vs.
R. VILLEGAS TAXI TRANSPORT and ROMUALDO VILLEGAS, Respondents.
DECISION
REYES, J.:
This is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court, assailing the Decision2
dated March 11, 2010 and Resolution3 dated June 28, 2010 of the Court of Appeals (CA) in CA-G.R. SP No.
111150, which affirmed with modification the Decision4 dated June 23, 2009 of the National Labor Relations
Commission (NLRC) in NLRC LAC Case No. 07-002648-08.
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The Antecedent Facts

On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. Francisco (Francisco) filed a complaint for
illegal dismissal against R. Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas
(Andy) (respondents). At that time, a similar case had already been filed by Isidro G. Endraca (Endraca)
against the same respondents. The two (2) cases were subsequently consolidated.5
In their position paper,6 Tenazas, Francisco and Endraca (petitioners) alleged that they were hired and
dismissed by the respondents on the following dates:
Name
Date of Hiring Date of Dismissal Salary
Bernard A. Tenazas 10/1997
07/03/07
Boundary System
Jaime M. Francisco 04/10/04
06/04/07
Boundary System
Isidro G. Endraca
03/06/06
Boundary System7
04/2000
Relaying the circumstances of his dismissal, Tenazas alleged that on July 1, 2007, the taxi unit assigned to
him was sideswiped by another vehicle, causing a dent on the left fender near the driver seat. The cost of
repair for the damage was estimated at P500.00. Upon reporting the incident to the company, he was
scolded by respondents Romualdo and Andy and was told to leave the garage for he is already fired. He
was even threatened with physical harm should he ever be seen in the companys premises again. Despite
the warning, Tenazas reported for work on the following day but was told that he can no longer drive any
of the companys units as he is already fired.8
Francisco, on the other hand, averred that his dismissal was brought about by the companys unfounded
suspicion that he was organizing a labor union. He was instantaneously terminated, without the benefit of
procedural due process, on June 4, 2007.9
Endraca, for his part, alleged that his dismissal was instigated by an occasion when he fell short of the
required boundary for his taxi unit. He related that before he was dismissed, he brought his taxi unit to an
auto shop for an urgent repair. He was charged the amount of P700.00 for the repair services and the
replacement parts. As a result, he was not able to meet his boundary for the day. Upon returning to the
company garage and informing the management of the incident, his drivers license was confiscated and
was told to settle the deficiency in his boundary first before his license will be returned to him. He was no
longer allowed to drive a taxi unit despite his persistent pleas.10
For their part, the respondents admitted that Tenazas and Endraca were employees of the company, the
former being a regular driver and the latter a spare driver. The respondents, however, denied that
Francisco was an employee of the company or that he was able to drive one of the companys units at any
point in time.11
The respondents further alleged that Tenazas was never terminated by the company. They claimed that on
July 3, 2007, Tenazas went to the company garage to get his taxi unit but was informed that it is due for
overhaul because of some mechanical defects reported by the other driver who takes turns with him in
using the same. He was thus advised to wait for further notice from the company if his unit has already
been fixed. On July 8, 2007, however, upon being informed that his unit is ready for release, Tenazas failed
to report back to work for no apparent reason.12
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As regards Endraca, the respondents alleged that they hired him as a spare driver in February 2001. They
allow him to drive a taxi unit whenever their regular driver will not be able to report for work. In July 2003,
however, Endraca stopped reporting for work without informing the company of his reason.
Subsequently, the respondents learned that a complaint for illegal dismissal was filed by Endraca against
them. They strongly maintained, however, that they could never have terminated Endraca in March 2006
since he already stopped reporting for work as early as July 2003. Even then, they expressed willingness to
accommodate Endraca should he wish to work as a spare driver for the company again since he was never
really dismissed from employment anyway.13
On May 29, 2008, the petitioners, by registered mail, filed a Motion to Admit Additional Evidence.14 They
alleged that after diligent efforts, they were able to discover new pieces of evidence that will substantiate
the allegations in their position paper. Attached with the motion are the following: (a) Joint Affidavit of
the petitioners;15 (2) Affidavit of Good Faith of Aloney Rivera, a co-driver;16 (3) pictures of the petitioners
wearing company shirts;17 and (4) Tenazas Certification/Record of Social Security System (SSS)
contributions.18
The Ruling of the Labor Arbiter
On May 30, 2008, the Labor Arbiter (LA) rendered a Decision,19 which pertinently states, thus:
In the case of complainant Jaime Francisco, respondents categorically denied the existence of an
employer-employee relationship. In this situation, the burden of proof shifts to the complainant to prove
the existence of a regular employment. Complainant Francisco failed to present evidence of regular
employment available to all regular employees, such as an employment contract, company ID, SSS,
withholding tax certificates, SSS membership and the like.
In the case of complainant Isidro Endraca, respondents claim that he was only an extra driver who stopped
reporting to queue for available taxi units which he could drive. In fact, respondents offered him in their
Position Paper on record, immediate reinstatement as extra taxi driver which offer he refused.
In case of Bernard Tenazas, he was told to wait while his taxi was under repair but he did not report for
work after the taxi was repaired. Respondents[,] in their Position Paper, on record likewise, offered him
immediate reinstatement, which offer he refused.
We must bear in mind that the complaint herein is one of actual dismissal. But there was no formal
We are therefore constrained to rule that there was no illegal dismissal in the case at bar.
The situations contemplated by law for entitlement to separation pay does [sic] not apply.
WHEREFORE, premises considered, instant consolidated complaints are hereby dismissed for lack of merit.
SO ORDERED.20
The Ruling of the NLRC
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Unyielding, the petitioners appealed the decision of the LA to the NLRC. Subsequently, on June 23, 2009,
the NLRC rendered a Decision,21 reversing the appealed decision of the LA, holding that the additional
pieces of evidence belatedly submitted by the petitioners sufficed to establish the existence of employeremployee relationship and their illegal dismissal. It held, thus:
In the challenged decision, the Labor Arbiter found that it cannot be said that the complainants were
illegally dismissed, there being no showing, in the first place, that the respondent [sic] terminated their
services. A portion thereof reads:
"We must bear in mind that the complaint herein is one of actual dismissal. But there were no formal
We are therefore constrained to rule that there was no illegal dismissal in the case at bar."
Issue: [W]hether or not the complainants were illegally dismissed from employment.
It is possible that the complainants Motion to Admit Additional Evidence did not reach the Labor Arbiters
attention because he had drafted the challenged decision even before they submitted it, and thereafter,
his staff attended only to clerical matters, and failed to bring the motion in question to his attention. It is
now up to this Commission to consider the complainants additional evidence. Anyway, if this Commission
must consider evidence submitted for the first time on appeal (Andaya vs. NLRC, G.R. No. 157371, July 15,
2005), much more so must it consider evidence that was simply overlooked by the Labor Arbiter.
Among the additional pieces of evidence submitted by the complainants are the following: (1) joint
affidavit (records, p. 51-52) of the three (3) complainants; (2) affidavit (records, p. 53) of Aloney Rivera y
Aldo; and (3) three (3) pictures (records, p. 54) referred to by the complainant in their joint affidavit
showing them wearing t-shirts bearing the name and logo of the respondents company.
xxxx
WHEREFORE, the decision appealed from is hereby REVERSED. Respondent Rom[u]aldo Villegas doing
business under the name and style Villegas Taxi Transport is hereby ordered to pay the complainants the
following (1) full backwages from the date of their dismissal (July 3, 2007 for Tena[z]as, June 4, 2004 for
Francisco, and March 6, 2006 for Endraca[)] up to the date of the finality of this decision[;] (2) separation
pay equivalent to one month for every year of service; and (3) attorneys fees equivalent to ten percent
(10%) of the total judgment awards.
SO ORDERED.22
On July 24, 2009, the respondents filed a motion for reconsideration but the NLRC denied the same in its
Resolution23 dated September 23, 2009.
The Ruling of the CA
Unperturbed, the respondents filed a petition for certiorari with the CA. On March 11, 2010, the CA
rendered a Decision,24 affirming with modification the Decision dated June 23, 2009 of the NLRC. The CA
agreed with the NLRCs finding that Tenazas and Endraca were employees of the company, but ruled
otherwise in the case of Francisco for failing to establish his relationship with the company. It also deleted
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the award of separation pay and ordered for reinstatement of Tenazas and Endraca. The pertinent
portions of the decision read as follows:
At the outset, We declare that respondent Francisco failed to prove that an employer-employee
relationship exists between him and R. Transport. If there is no employer-employee relationship in the first
place, the duty of R. Transport to adhere to the labor standards provisions of the Labor Code with respect
to Francisco is questionable.
xxxx
Although substantial evidence is not a function of quantity but rather of quality, the peculiar
environmental circumstances of the instant case demand that something more should have been
proffered. Had there been other proofs of employment, such as Franciscos inclusion in R.R.
Transports payroll, this Court would have affirmed the finding of employer-employee relationship.1wphi1
The NLRC, therefore, committed grievous error in ordering R. Transport to answer for Franciscos claims.
We now tackle R. Transports petition with respect to Tenazas and Endraca, who are both admitted to be
R. Transports employees. In its petition, R. Transport puts forth the theory that it did not terminate the
services of respondents but that the latter deliberately abandoned their work. We cannot subscribe to this
theory.
xxxx
Considering that the complaints for illegal dismissal were filed soon after the alleged dates of dismissal, it
cannot be inferred that respondents Tenazas and Endraca intended to abandon their employment. The
complainants for dismissal are, in themselves, pleas for the continuance of employment. They are
incompatible with the allegation of abandonment. x x x.
For R. Transports failure to discharge the burden of proving that the dismissal of respondents Tenazas and
Endraca was for a just cause, We are constrained to uphold the NLRCs conclusion that their dismissal was
not justified and that they are entitled to back wages. Because they were illegally dismissed, private
respondents Tenazas and Endraca are entitled to reinstatement and back wages x x x.
xxxx
However, R. Transport is correct in its contention that separation pay should not be awarded because
reinstatement is still possible and has been offered. It is well[-]settled that separation pay is granted only
in instances where reinstatement is no longer feasible or appropriate, which is not the case here.
xxxx
WHEREFORE, the Decision of the National Labor Relations Commission dated 23 June 2009, in NLRC LAC
Case No. 07-002648-08, and its Resolution dated 23 September 2009 denying reconsideration thereof are
AFFIRMED with MODIFICATION in that the award of Jaime Franciscos claims is DELETED. The separation
pay granted in favor of Bernard Tenazas and Isidro Endraca is, likewise, DELETED and their reinstatement is
ordered instead.
SO ORDERED.25 (Citations omitted)
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On March 19, 2010, the petitioners filed a motion for reconsideration but the same was denied by the CA in
its Resolution26 dated June 28, 2010.
Undeterred, the petitioners filed the instant petition for review on certiorari before this Court on July 15,
2010.
The Ruling of this Court
The petition lacks merit.
Pivotal to the resolution of the instant case is the determination of the existence of employer-employee
relationship and whether there was an illegal dismissal. Remarkably, the LA, NLRC and the CA had varying
assessment on the matters at hand. The LA believed that, with the admission of the respondents, there is
no longer any question regarding the status of both Tenazas and Endraca being employees of the
company. However, he ruled that the same conclusion does not hold with respect to Francisco whom the
respondents denied to have ever employed or known. With the respondents denial, the burden of proof
shifts to Francisco to establish his regular employment. Unfortunately, the LA found that Francisco failed
to present sufficient evidence to prove regular employment such as company ID, SSS membership,
withholding tax certificates or similar articles. Thus, he was not considered an employee of the company.
Even then, the LA held that Tenazas and Endraca could not have been illegally dismissed since there was
no overt act of dismissal committed by the respondents.27
On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners were all employees of the
company. The NLRC premised its conclusion on the additional pieces of evidence belatedly submitted by
the petitioners, which it supposed, have been overlooked by the LA owing to the time when it was
received by the said office. It opined that the said pieces of evidence are sufficient to establish the
circumstances of their illegal termination. In particular, it noted that in the affidavit of the petitioners,
there were allegations about the companys practice of not issuing employment records and this was not
rebutted by the respondents. It underscored that in a situation where doubt exists between evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the employee.
It awarded the petitioners with: (1) full backwages from the date of their dismissal up to the finality of the
decision; (2) separation pay equivalent to one month of salary for every year of service; and (3) attorneys
fees.
On petition for certiorari, the CA affirmed with modification the decision of the NLRC, holding that there
was indeed an illegal dismissal on the part of Tenazas and Endraca but not with respect to Francisco who
failed to present substantial evidence, proving that he was an employee of the respondents. The CA
likewise dismissed the respondents claim that Tenazas and Endraca abandoned their work, asseverating
that immediate filing of a complaint for illegal dismissal and persistent pleas for continuance of
employment are incompatible with abandonment. It also deleted the NLRCs award of separation pay and
instead ordered that Tenazas and Endraca be reinstated.28
"Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari under Rule 45
of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual
findings complained of are completely devoid of support from the evidence on record, or the assailed
judgment is based on a gross misapprehension of facts."29 The Court finds that none of the mentioned
circumstances is present in this case.
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In reviewing the decision of the NLRC, the CA found that no substantial evidence was presented to
support the conclusion that Francisco was an employee of the respondents and accordingly modified the
NLRC decision. It stressed that with the respondents denial of employer-employee relationship, it
behooved Francisco to present substantial evidence to prove that he is an employee before any question
on the legality of his supposed dismissal becomes appropriate for discussion. Francisco, however, did not
offer evidence to substantiate his claim of employment with the respondents. Short of the required
quantum of proof, the CA correctly ruled that the NLRCs finding of illegal dismissal and the monetary
awards which necessarily follow such ruling lacked factual and legal basis and must therefore be deleted.
The action of the CA finds support in Anonas Construction and Industrial Supply Corp., et al. v. NLRC, et
al.,30 where the Court reiterated:
[J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65, as a general rule, is
confined only to issues of lack or excess of jurisdiction and grave abuse of discretion on the part of the
NLRC. The CA does not assess and weigh the sufficiency of evidence upon which the LA and the NLRC
based their conclusions. The issue is limited to the determination of whether or not the NLRC acted
without or in excess of its jurisdiction, or with grave abuse of discretion in rendering the resolution, except
if the findings of the NLRC are not supported by substantial evidence.31 (Citation omitted and emphasis
ours)
It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial proceedings, "the
quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion."32 "[T]he burden of proof rests upon
the party who asserts the affirmative of an issue."33 Corollarily, as Francisco was claiming to be an
employee of the respondents, it is incumbent upon him to proffer evidence to prove the existence of said
relationship.
"[I]n determining the presence or absence of an employer-employee relationship, the Court has
consistently looked for the following incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The last element, the so-called
control test, is the most important element."34
There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant
evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security
registration, appointment letters or employment contracts, payrolls, organization charts, and personnel
lists, serve as evidence of employee status.35
In this case, however, Francisco failed to present any proof substantial enough to establish his relationship
with the respondents. He failed to present documentary evidence like attendance logbook, payroll, SSS
record or any personnel file that could somehow depict his status as an employee. Anent his claim that he
was not issued with employment records, he could have, at least, produced his social security records
which state his contributions, name and address of his employer, as his co-petitioner Tenazas did. He could
have also presented testimonial evidence showing the respondents exercise of control over the means
and methods by which he undertakes his work. This is imperative in light of the respondents denial of his
employment and the claim of another taxi operator, Emmanuel Villegas (Emmanuel), that he was his
employer. Specifically, in his Affidavit,36 Emmanuel alleged that Francisco was employed as a spare driver
in his taxi garage from January 2006 to December 2006, a fact that the latter failed to deny or question in
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any of the pleadings attached to the records of this case. The utter lack of evidence is fatal to Franciscos
case especially in cases like his present predicament when the law has been very lenient in not requiring
any particular form of evidence or manner of proving the presence of employer-employee relationship.
In Opulencia Ice Plant and Storage v. NLRC,37 this Court emphasized, thus:
No particular form of evidence is required to prove the existence of an employer-employee relationship.
Any competent and relevant evidence to prove the relationship may be admitted. For, if only documentary
evidence would be required to show that relationship, no scheming employer would ever be brought
before the bar of justice, as no employer would wish to come out with any trace of the illegality he has
authored considering that it should take much weightier proof to invalidate a written instrument.38
Here, Francisco simply relied on his allegation that he was an employee of the company without any other
evidence supporting his claim. Unfortunately for him, a mere allegation in the position paper is not
tantamount to evidence.39 Bereft of any evidence, the CA correctly ruled that Francisco could not be
considered an employee of the respondents.
The CAs order of reinstatement of Tenazas and Endraca, instead of the payment of separation pay, is also
well in accordance with prevailing jurisprudence. In Macasero v. Southern Industrial Gases Philippines,40
the Court reiterated, thus:
[A]n illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.1wphi1 The two
reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because
of strained relations between the employee and the employer, separation pay is granted. In effect, an
illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement
is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages.41 (Emphasis supplied)
Clearly, it is only when reinstatement is no longer feasible that the payment of separation pay is ordered in
lieu thereof. For instance, if reinstatement would only exacerbate the tension and strained relations
between the parties, or where the relationship between the employer and the employee has been unduly
strained by reason of their irreconcilable differences, it would be more prudent to order payment of
separation pay instead of reinstatement.42
This doctrine of strained relations, however, should not be used recklessly or applied loosely43 nor be
based on impression alone. "It bears to stress that reinstatement is the rule and, for the exception of
strained relations to apply, it should be proved that it is likely that if reinstated, an atmosphere of
antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the
employee concerned."44
Moreover, the existence of strained relations, it must be emphasized, is a question of fact. In Golden Ace
Builders v. Talde,45 the Court underscored:
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Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence

substantial evidence to show that the relationship between the employer and the employee is indeed
strained as a necessary consequence of the judicial controversy.46 (Citations omitted and emphasis ours)
After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of separation
pay to the petitioners. The NLRC decision did not state the facts which demonstrate that reinstatement is
no longer a feasible option that could have justified the alternative relief of granting separation pay
instead.
The petitioners themselves likewise overlooked to allege circumstances which may have rendered their
reinstatement unlikely or unwise and even prayed for reinstatement alongside the payment of separation
pay in their position paper.47 A bare claim of strained relations by reason of termination is insufficient to
warrant the granting of separation pay. Likewise, the filing of the complaint by the petitioners does not
necessarily translate to strained relations between the parties. As a rule, no strained relations should arise
from a valid and legal act asserting ones right.48 Although litigation may also engender a certain degree
of hostility, the understandable strain in the parties relation would not necessarily rule out reinstatement
which would, otherwise, become the rule rather the exception in illegal dismissal cases.49 Thus, it was a
prudent call for the CA to delete the award of separation pay and order for reinstatement instead, in
accordance with the general rule stated in Article 27950 of the Labor Code.
Finally, the Court finds the computation of the petitioners' backwages at the rate of P800.00 daily
reasonable and just under the circumstances. The said rate is consistent with the ruling of this Court in
Hyatt Taxi Services, Inc. v. Catinoy,51 which dealt with the same matter.
WHEREFORE, in view of the foregoing disquisition, the petition for review on certiorari is DENIED. The
Decision dated March 11, 2010 and Resolution dated June 28, 2010 of the Court of Appeals in CA-G.R. SP No.
111150 are AFFIRMED.
SO ORDERED.
29. Begino v. Abs-Cbn, April 20, 2015.
G.R. No. 199166
April 20, 2015
NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN AND MA. CRISTINA SUMAYAO,
Petitioners,
vs.
ABS-CBN CORPORATION (FORMERLY, ABS-CBN BROADCASTING CORPORATION) AND AMALIA
VILLAFUERTE, Respondents.
DECISION
PEREZ, J.:
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The existence of an employer-employee relationship is at the heart of this Petition for Review on Certiorari
filed pursuant to Rule 45 of the Rules of Court, primarily assailing the 29 June 2011 Decision1 rendered by
the Fourth Division of the Court of Appeals (CA) in CA-G.R. SP No. 116928 which ruled out said relationship
between the parties.
The Facts
Respondent ABS-CBN Corporation (formerly ABS-CBN Broadcasting Corporation) is a television and radio
broadcasting corporation which, for its Regional Network Group in Naga City, employed respondent
Amalia Villafuerte (Villafuerte) as Manager. There is no dispute regarding the fact that, thru Villafuerte,
ABS-CBN engaged the services of petitioners Nelson Begino (Begino) and Gener Del Valle (Del Valle)
sometime in 1996 as Cameramen/Editors for TV Broadcasting. Petitioners Ma. Cristina Sumayao (Sumayao)
and Monina Avila-Llorin (Llorin) were likewise similarly engaged as reporters sometime in 1996 and 2002,
respectively. With their services engaged by respondents thru Talent Contracts which, though regularly
renewed over the years, provided terms ranging from three (3) months to one (1) year, petitioners were
given Project Assignment Forms which detailed, among other matters, the duration of a particular project
as well as the budget and the daily technical requirements thereof. In the aforesaid capacities, petitioners
were tasked with coverage of news items for subsequent daily airings in respondents TV Patrol Bicol
Program.2
While specifically providing that nothing therein shall be deemed or construed to establish an employeremployee relationship between the parties, the aforesaid Talent Contracts included, among other matters,
provisions on the following matters: (a) the Talents creation and performance of work in accordance with
the ABS-CBNs professional standards and compliance with its policies and guidelines covering intellectual
property creators, industry codes as well as the rules and regulations of the Kapisanan ng mga
Broadcasters sa Pilipinas (KBP) and other regulatory agencies; (b) the Talents non-engagement in similar
work for a person or entity directly or indirectly in competition with or adverse to the interests of ABS-CBN
and non-promotion of any product or service without prior written consent; and (c) the results-oriented
nature of the talents work which did not require them to observe normal or fixed working hours.3
Subjected to contractors tax, petitioners remunerations were denominated as Talent Fees which, as of
last renewal, were admitted to be pegged per airing day at P273.35 for Begino, P 302.92 for Del Valle, P
323.08 for Sumayao and P 315.39 for Llorin.4
Claiming that they were regular employees of ABS-CBN, petitioners filed against respondents the
complaint5 docketed as Sub-RAB 05-04- 00041-07 before the National Labor Relations Commissions
(NLRC) Sub-Regional Arbitration Branch No. 5, Naga City. In support of their claims for regularization,
underpayment of overtime pay, holiday pay, 13th month pay, service incentive leave pay, damages and
attorney's fees, petitioners alleged that they performed functions necessary and desirable in ABS-CBN's
business. Mandated to wear company IDs and provided all the equipment they needed, petitioners
averred that they worked under the direct control and supervision of Villafuerte and, at the end of each
day, were informed about the news to be covered the following day, the routes they were to take and,
whenever the subject of their news coverage is quite distant, even the start of their workday. Due to the
importance of the news items they covered and the necessity of their completion for the success of the
program, petitioners claimed that, under pain of immediate termination, they were bound by the
companys policy on, among others, attendance and punctuality.6
Aside from the constant evaluation of their actions, petitioners were reportedly subjected to an annual
competency assessment alongside other ABS-CBN employees, as condition for their continued
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employment. Although their work involved dealing with emergency situations at any time of the day or
night, petitioners claimed that they were not paid the labor standard benefits the law extends to regular
employees. To avoid paying what is due them, however, respondents purportedly resorted to the simple
expedient of using said Talent Contracts and/or Project Assignment Forms which denominated petitioners
as talents, despite the fact that they are not actors or TV hosts of special skills. As a result of this iniquitous
situation, petitioners asseverated that they merely earned an average of P7,000.00 to P8,000.00 per
month, or decidedly lower than the P21,773.00 monthly salary ABS-CBN paid its regular rank-and-file
employees. Considering their repeated re-hiring by respondents for ostensible fixed periods, this situation
had gone on for years since TV Patrol Bicol has continuously aired from 1996 onwards.7
In refutation of the foregoing assertions, on the other hand, respondents argued that, although it
occasionally engages in production and generates programs thru various means, ABS-CBN is primarily
engaged in the business of broadcasting television and radio content. Not having the full manpower
complement to produce its own program, the company had allegedly resorted to engaging independent
contractors like actors, directors, artists, anchormen, reporters, scriptwriters and various production and
technical staff, who offered their services in relation to a particular program. Known in the industry as
talents, such independent contractors inform ABSCBN of their availability and were required to accomplish
Talent Information Forms to facilitate their engagement for and appearance on designated project days.
Given the unpredictability of viewer preferences, respondents argued that the company cannot afford to
provide regular work for talents with whom it negotiates specific or determinable professional fees on a
per project, weekly or daily basis, usually depending on the budget allocation for a project.8
Respondents insisted that, pursuant to their Talent Contracts and/or Project Assignment Forms,
petitioners were hired as talents, to act as reporters and/or cameramen for TV Patrol Bicol for designated
periods and rates. Fully aware that they were not considered or to consider themselves as employees of a
particular production or film outfit, petitioners were supposedly engaged on the basis of the skills,
knowledge or expertise they already possessed and, for said reason, required no further training from
ABS-CBN. Although petitioners were inevitably subjected to some degree of control, the same was
allegedly limited to the imposition of general guidelines on conduct and performance, simply for the
purpose of upholding the standards of the company and the strictures of the industry. Never subjected to
any control or restrictions over the means and methods by which they performed or discharged the tasks
for which their services were engaged, petitioners were, at most, briefed whenever necessary regarding
the general requirements of the project to be executed.9
Having been terminated during the pendency of the case, Petitioners filed on 10 July 2007 a second
complaint against respondents, for regularization, payment of labor standard benefits, illegal dismissal and
unfair labor practice, which was docketed as Sub-RAB 05-08-00107-07. Upon respondents motion, this
complaint was dismissed for violation of the rules against forum shopping in view of the fact that the
determination of the issues in the second case hinged on the resolution of those raised in the first.10 On 19
December 2007, however, Labor Arbiter Jesus Orlando Quiones (Labor Arbiter Quiones) resolved SubRAB 05-04-00041-07 in favor of petitioners who, having rendered services necessary and related to ABSCBNs business for more than a year, were determined to be its regular employees. With said conclusion
found to be buttressed by, among others, the exclusivity clause and prohibitions under petitioners Talent
Contracts and/or Project Assignment Forms which evinced respondents control over them,11 Labor
Arbiter Quiones disposed of the case in the following wise:
WHEREFORE, finding merit in the causes of action set forth by the complainants, judgment is hereby
rendered declaring complainants MONINA AVILA-LLORIN, GENER L. DEL VALLE, NELSON V. BEGINO and
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MA. CRISTINA V. SUMAYAO, as regular employees of respondent company, ABS-CBN BROADCASTING

CORPORATION.
Accordingly, respondent ABS-CBN Broadcasting Corporation is hereby ORDERED to pay complainants,
subject to the prescriptive period provided under Article 291 of the Labor Code, however applicable, the
total amount of Php2,440,908.36, representing salaries/wage differentials, holiday pay, service incentive
leave pay and 13th month pay, to include 10% of the judgment award as attorneys fees of the judgment
award (computation of the monetary awards are attached hereto as integral part of this decision).
Moreover, respondents are directed to admit back complainants to work under the same terms and
conditions prevailing prior to their separation or, at respondents' option, merely reinstated in the payroll.
Other than the above, all other claims and charges are ordered DISMISSED for lack of merit.12
Aggrieved by the foregoing decision, respondents elevated the case on appeal before the NLRC, during
the pendency of which petitioners filed a third complaint against the former, for illegal dismissal,
regularization, nonpayment of salaries and 13th month pay, unfair labor practice, damages and attorneys
fees. In turn docketed as NLRC Case No. Sub-RAB-V-05-03-00039-08, the complaint was raffled to Labor
Arbiter Quiones who issued an Order dated 30 April 2008, inhibiting himself from the case and denying
respondents motion to dismiss on the grounds of res judicata and forum shopping.13 Finding that
respondents control over petitioners was indeed manifest from the exclusivity clause and prohibitions in
the Talent Contracts and/or Project Assignment Forms, on the other hand, the NLRC rendered a Decision
dated 31 March 2010, affirming said Labor Arbiters appealed decision.14 Undeterred by the NLRCs 31
August 2010 denial of their motion for reconsideration,15 respondents filed the Rule 65 petition for
certiorari docketed before the CA as CA-G.R. SP No. 116928 which, in addition to taking exceptions to the
findings of the assailed decision, faulted petitioners for violating the rule against forum shopping.16
On 29 June 2011, the CA rendered the herein assailed decision, reversing the findings of the Labor Arbiter
and the NLRC. Ruling out the existence of forum shopping on the ground that petitioners' second and
third complaints were primarily anchored on their termination from employment after the filing of their
first complaint, the CA nevertheless discounted the existence of an employer-employee relation between
the parties upon the following findings and conclusions: (a) petitioners, were engaged by respondents as
talents for periods, work and the program specified in the Talent Contracts and/or Project Assignment
Forms concluded between them; (b) instead of fixed salaries, petitioners were paid talent fees depending
on the budget allocated for the program to which they were assigned; (c) being mainly concerned with the
result, respondents did not exercise control over the manner and method by which petitioner
accomplished their work and, at most, ensured that they complied with the standards of the company, the
KBP and the industry; and, (d) the existence of an employer-employee relationship is not necessarily
established by the exclusivity clause and prohibitions which are but terms and conditions on which the
parties are allowed to freely stipulate.17
Petitioners motion for reconsideration of the foregoing decision was denied in the CA's 3 October 2011
Resolution,18 hence, this petition.
The Issues
Petitioners seek the reversal of the CAs assailed Decision and Resolution on the affirmative of the
following issues:
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1. Whether or not the CA seriously and reversibly erred in not dismissing respondents petition for
certiorari in view of the fact that they did file a Notice of Appeal at the NLRC level and did not, by
themselves or through their duly authorized representative, verify and certify the Memorandum of Appeal
they filed thereat, in accordance with the NLRC Rules of Procedure; and 2. Whether or not the CA seriously
and reversibly erred in brushing aside the determination made by both the Labor Arbiter and the NLRC of
the existence of an employer-employee relationship between the parties, despite established
jurisprudence supporting the same.
The Court's Ruling
The Court finds the petition impressed with merit.
Petitioners preliminarily fault the CA for not dismissing respondents Rule 65 petition for certiorari in view
of the fact that the latter failed to file a Notice of Appeal from the Labor Arbiters decision and to verify
and certify the Memorandum of Appeal they filed before the NLRC. While concededly required under the
NLRC Rules of Procedure, however, these matters should have been properly raised during and addressed
at the appellate stage before the NLRC. Instead, the record shows that the NLRC took cognizance of
respondents appeal and proceeded to resolve the same in favor of petitioners by affirming the Labor
Arbiters decision. Not having filed their own petition for certiorari to take exception to the liberal attitude
the NLRC appears to have adopted towards its own rules of procedure, petitioners were hardly in the
proper position to raise the same before the CA or, for that matter, before this Court at this late stage.
Aside from the settled rule that a party who has not appealed is not entitled to affirmative relief other than
the ones granted in the decision19 rendered, liberal interpretation of procedural rules on appeal had, on
occasion, been favored in the interest of substantive justice.20
Although the existence of an employer-employee relationship is, on the other hand, a question of fact21
which is ordinarily not the proper subject of a Rule 45 petition for review on certiorari like the one at bar,
the conflicting findings between the labor tribunals and the CA justify a further consideration of the
matter.22 To determine the existence of said relation, 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.23 Of these criteria, the so-called "control test" is generally regarded as the most
crucial and determinative indicator of the presence or absence of an employer-employee relationship.
Under this test, an employer-employee relationship is said to exist where the person for whom the
services are performed reserves the right to control not only the end result but also the manner and
means utilized to achieve the same.24
In discounting the existence of said relationship between the parties, the CA ruled that Petitioners'
services were, first and foremost, engaged thru their Talent Contracts and/or Project Assignment Forms
which specified the work to be performed by them, the project to which they were assigned, the duration
thereof and their rates of pay according to the budget therefor allocated. Because they are imbued with
public interest, it cannot be gainsaid, however, that labor contracts are subject to the police power of the
state and are placed on a higher plane than ordinary contracts. The recognized supremacy of the law over
the nomenclature of the contract and the stipulations contained therein is aimed at bringing life to the
policy enshrined in the Constitution to afford protection to labor.25 Insofar as the nature of ones
employment is concerned, Article 280 of the Labor Code of the Philippines also provides as follows:
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ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable 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 or service to be performed is seasonal in nature
and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such actually exists.
It has been ruled that the foregoing provision contemplates four kinds of employees, namely: (a) regular
employees or those who have been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer; (b) project employees or those whose 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; (c) seasonal employees or those who work or
perform services which are seasonal in nature, and the employment is for the duration of the season; and
(d) casual employees or those who are not regular, project, or seasonal employees.26 To the foregoing
classification of employee, jurisprudence has added that of contractual or fixed term employee which, if
not for the fixed term, would fall under the category of regular employment in view of the nature of the
employees engagement, which is to perform activity usually necessary or desirable in the employers
business.27
The Court finds that, notwithstanding the nomenclature of their Talent Contracts and/or Project
Assignment Forms and the terms and condition embodied therein, petitioners are regular employees of
ABS-CBN. Time and again, it has been ruled that the test to determine whether employment is regular or
not is the reasonable connection between the activity performed by the employee in relation to the
business or trade of the employer.28 As cameramen/editors and reporters, petitioners were undoubtedly
performing functions necessary and essential to ABS-CBNs business of broadcasting television and radio
content. It matters little that petitioners services were engaged for specified periods for TV Patrol Bicol
and that they were paid according to the budget allocated therefor. Aside from the fact that said program
is a regular weekday fare of the ABS-CBNs Regional Network Group in Naga City, the record shows that,
from their initial engagement in the aforesaid capacities, petitioners were continuously re-hired by
respondents over the years. To the mind of the Court, respondents repeated hiring of petitioners for its
long-running news program positively indicates that the latter were ABS-CBNs regular employees.
If the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated or continuing performance as sufficient
evidence of the necessity, if not indispensability of that activity in the business.29 Indeed, an employment
stops being co-terminous with specific projects where the employee is continuously re-hired due to the
demands of the employers business.30 When circumstances show, moreover, that contractually
stipulated periods of employment have been imposed to preclude the acquisition of tenurial security by
the employee, this Court has not hesitated in striking down such arrangements as contrary to public policy,
morals, good customs or public order.31 The nature of the employment depends, after all, on the nature of
the activities to be performed by the employee, considering the nature of the employers business, the
duration and scope to be done, and, in some cases, even the length of time of the performance and its
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continued existence.32 In the same manner that the practice of having fixed-term contracts in the industry
does not automatically make all talent contracts valid and compliant with labor law, it has, consequently,
been ruled that the assertion that a talent contract exists does not necessarily prevent a regular
employment status.33
As cameramen/editors and reporters, it also appears that petitioners were subject to the control and
supervision of respondents which, first and foremost, provided them with the equipments essential for the
discharge of their functions. Prepared at the instance of respondents, petitioners Talent Contracts
tellingly provided that ABS-CBN retained "all creative, administrative, financial and legal control" of the
program to which they were assigned. Aside from having the right to require petitioners "to attend and
participate in all promotional or merchandising campaigns, activities or events for the Program," ABS-CBN
required the former to perform their functions "at such locations and Performance/Exhibition Schedules"
it provided or, subject to prior notice, as it chose determine, modify or change. Even if they were unable to
comply with said schedule, petitioners were required to give advance notice, subject to respondents
approval.34 However obliquely worded, the Court finds the foregoing terms and conditions demonstrative
of the control respondents exercised not only over the results of petitioners work but also the means
employed to achieve the same.
In finding that petitioners were regular employees, the NLRC further ruled that the exclusivity clause and
prohibitions in their Talent Contracts and/or Project Assignment Forms were likewise indicative of
respondents control over them. Brushing aside said finding, however, the CA applied the ruling in Sonza v.
ABS-CBN Broadcasting Corporation35 where similar restrictions were considered not necessarily
determinative of the existence of an employer-employee relationship. Recognizing that independent
contractors can validly provide his exclusive services to the hiring party, said case enunciated that
guidelines for the achievement of mutually desired results are not tantamount to control. As correctly
pointed out by petitioners, however, parallels cannot be expediently drawn between this case and that of
Sonza case which involved a well-known television and radio personality who was legitimately considered
a talent and amply compensated as such. While possessed of skills for which they were modestly
recompensed by respondents, petitioners lay no claim to fame and/or unique talents for which talents like
actors and personalities are hired and generally compensated in the broadcast industry.
Later echoed in Dumpit-Murillo v. Court of Appeals,36 this Court has rejected the application of the ruling
in the Sonza case to employees similarly situated as petitioners in ABS-CBN Broadcasting Corporation v.
Nazareno.37 The following distinctions were significantly observed between employees like petitioners
and television or radio personalities like Sonza, to wit:
First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status
was required from them because they were merely hired through petitioners personnel department just
like any ordinary employee.
Second. The so-called "talent fees" of respondents correspond to wages given as a result of an employeremployee relationship.1wphi1 Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work.
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LABOR LAW 1
Fourth. The degree of control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work 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.38 (Emphasis omitted)
Rather than the project and/or independent contractors respondents claim them to be, it is evident from
the foregoing disquisition that petitioners are regular employees of ABS-CBN. This conclusion is borne out
by the ineluctable showing that petitioners perform functions necessary and essential to the business of
ABS-CBN which repeatedly employed them for a long-running news program of its Regional Network
Group in Naga City. In the course of said employment, petitioners were provided the equipments they
needed, were required to comply with the Company's policies which entailed prior approval and
evaluation of their performance. Viewed from the prism of these considerations, we find and so hold that
the CA reversibly erred when it overturned the NLRC's affirmance of the Labor Arbiter's finding that an
employer-employee relationship existed between the parties. Given the fact, however, that Sub-RAB-V-0503-00039-08 had not been consolidated with this case and appears, for all intents and purposes, to be
pending still, the Court finds that the reinstatement of petitioners ordered by said labor officer and
tribunal should, as a relief provided in case of illegal dismissal, be left for determination in said case.
WHEREFORE, the Court of Appeals' assailed Decision dated 29 June 2011 and Resolution dated 3 October
2011 in CA-G.R. SP No. 116928 are REVERSED and SET ASIDE. Except for the reinstatement of Nelson V.
Begino, Gener Del Valle, Monina Avila-Llorin and Ma. Cristina Sumayao, the National Labor and Relations
Commission's 31 March 2010 Decision is, accordingly, REINSTATED.
SO ORDERED.
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Labor Law Case on Constructive Dismissal

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LABOR LAW 1

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1. Francisco v. NLRC August 21, 2006

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d. Midyear Bonus 2001 27,500.00

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2. Sonza v. ABS CBN, June 10, 2004

G.R. No. 138051

June 10, 2004

JOSE Y. SONZA, petitioner,

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Dear Mr. Lopez,

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3. Javier v. Flyace Corp. Feb 15, 2012

February 15, 2012

BITOY JAVIER (DANILO P. JAVIER), Petitioner,

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4. SMCEU v. Judge Bersamira (in Azucena)

G.R. No. 87700 June 13, 1990

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5. Locsin et. al. v. PLDT, October 2, 2009

RAUL G. LOCSIN and EDDIE B. TOMAQUIN, Petitioners,

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SEPARATION PAY BACKWAGES

2. Eddie B. Tomaquin P127,500.00

All other claims are DISMISSED for want of factual basis.

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6. Peoples Broadcasting Service v. Sec of Labor, March 6, 2012

PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), Petitioner,

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The first portion of the question must be answered in the affirmative.