1
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 Decision1 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 respondent’s 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 company’s delivery vehicles, as pahinante; that he reported for work from Monday to Saturday from 7:00 o’clock in
the morning to 5:00 o’clock 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 (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 ₱ 300.00 per trip, which was
later increased to ₱ 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 latter’s 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
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 employer’s 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, complainant’s 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 -₱ 45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -₱ 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 Javier’s 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 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 Javier’s 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 Javier’s 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, Javier’s 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 o’clock in the morning until
5:00 o’clock in the afternoon. The list of deliverable goods, together with the corresponding clients and their respective purchases
2
and addresses, would necessarily have been prepared by Fly Ace. 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 former’s 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 latter’s 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 Javier’s 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 employer-employee 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 employer-employee 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 petitioner’s 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 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 Javier’s 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 Javier’s 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 Javier’s 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 Javier’s 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 proffered. Had there been other proofs of employment, such as x x x inclusion in petitioner’s
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 Javier’s 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 Javier’s claim of
being tasked to clean grocery items when there were no scheduled delivery trips, but no information was offered in this subject
3
simply because the witness had no personal knowledge of Javier’s employment status in the company. Verily, the Court cannot accept
Javier’s 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 employee’s 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, Javier’s 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 Ace’s 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 Ace’s 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
Considering the above findings, the Court does not see the necessity to resolve the second issue presented.
One final note. The Court’s 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.

G.R. No. 193493 June 13, 2013
JAIME N. GAPAYAO, Petitioner,
vs.
ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, Respondents.
DECISION
SERENO, CJ.:
This is a Rule 45 Petition1 assailing the Decision2 and Resolution3 of the Court of Appeals (CA) in CA-G.R. SP. No. 101688, affirming
the Resolution4 of the Social Security Commission (SSC). The SSC held petitioner Jaime N. Gapayao liable to pay the unpaid social
security contributions due to the deceased Jaime Fulo, and the Social Security System (SSS) to pay private respondent Rosario L. Fulo,
the widow of the deceased, the appropriate death benefits pursuant to the Social Security Law.
The antecedent facts are as follows:
On 4 November 1997, Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn 70% secondary electrocution"5
while doing repairs at the residence and business establishment of petitioner located at San Julian, Irosin, Sorsogon.
Allegedly moved by his Christian faith, petitioner extended some financial assistance to private respondent. On 16 November 1997,
the latter executed an Affidavit of Desistance6 stating that she was not holding them liable for the death of her late husband, Jaime
Fulo, and was thereby waiving her right and desisting from filing any criminal or civil action against petitioner.
On 14 January 1998, both parties executed a Compromise Agreement,7 the relevant portion of which is quoted below:
We, the undersigned unto this Honorable Regional Office/District Office/Provincial Agency Office respectfully state:
1. The undersigned employer, hereby agrees to pay the sum of FORTY THOUSAND PESOS (₱40,000.00) to the surviving spouse of
JAIME POLO, an employee who died of an accident, as a complete and full payment for all claims due the victim.
2. On the other hand, the undersigned surviving spouse of the victim having received the said amount do [sic] hereby release and
discharge the employer from any and all claims that maybe due the victim in connection with the victim’s employment thereat.
Thereafter, private respondent filed a claim for social security benefits with the Social Security System (SSS)–Sorosogon Branch.8
However, upon verification and evaluation, it was discovered that the deceased was not a registered member of the SSS.9
Upon the insistence of private respondent that her late husband had been employed by petitioner from January 1983 up to his
untimely death on 4 November 1997, the SSS conducted a field investigation to clarify his status of employment. In its field
investigation report,10 it enumerated its findings as follows:
In connection with the complaint filed by Mrs. Rosario Fulo, hereunder are the findings per interview with Mr. Leonor Delgra,
Santiago Bolanos and Amado Gacelo:
1. That Mr. Jaime Fulo was an employee of Jaime Gapayao as farm laborer from 1983 to 1997.
2. Mr. Leonor Delgra and Santiago Bolanos are co-employees of Jaime Fulo.
4
3. Mr. Jaime Fulo receives compensation on a daily basis ranging from ₱5.00 to ₱60.00 from 1983 to 1997.
Per interview from Mrs. Estela Gapayao, please be informed that:
1. Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao on an extra basis.
2. Sometimes Jaime Fulo is allowed to work in the farm as abaca harvester and earn 1/3 share of its harvest as his income.
3. Mr. & Mrs. Gapayao hired the services of Jaime Fulo not only in the farm as well as in doing house repairs whenever it is available.
Mr. Fulo receives his remuneration usually in the afternoon after doing his job.
4. Mr. & Mrs. Gapayao hires 50-100 persons when necessary to work in their farm as laborer and Jaime Fulo is one of them. Jaime
Fulo receives more or less ₱50.00 a day. (Emphases in the original)
Consequently, the SSS demanded that petitioner remit the social security contributions of the deceased. When petitioner denied that
the deceased was his employee, the SSS required private respondent to present documentary and testimonial evidence to refute
petitioner’s allegations.11
Instead of presenting evidence, private respondent filed a Petition12 before the SSC on 17 February 2003. In her Petition, she sought
social security coverage and payment of contributions in order to avail herself of the benefits accruing from the death of her husband.
On 6 May 2003, petitioner filed an Answer13 disclaiming any liability on the premise that the deceased was not the former’s
employee, but was rather an independent contractor whose tasks were not subject to petitioner’s control and supervision.14
Assuming arguendo that the deceased was petitioner’s employee, he was still not entitled to be paid his SSS premiums for the
intervening period when he was not at work, as he was an "intermittent worker who was only summoned every now and then as the
need arose."15 Hence, petitioner insisted that he was under no obligation to report the former’s demise to the SSS for social security
coverage.
Subsequently, on 30 June 2003, the SSS filed a Petition-in-Intervention16 before the SSC, outlining the factual circumstances of the
case and praying that judgment be rendered based on the evidence adduced by the parties.
On 14 March 2007, the SSC rendered a Resolution,17 the dispositive portion of which provides:
WHEREFORE, PREMISES CONSIDERED, this Commission finds, and so holds, that Jaime Fulo, the late husband of petitioner, was
employed by respondent Jaime N. Gapayao from January 1983 to November 4, 1997, working for nine (9) months a year receiving the
minimum wage then prevailing.
Accordingly, the respondent is hereby ordered to pay ₱45,315.95 representing the unpaid SS contributions due on behalf of deceased
Jaime Fulo, the amount of ₱217,710.33 as 3% per month penalty for late remittance thereof, computed as of March 30, 2006, without
prejudice to the collection of additional penalty accruing thereafter, and the sum of ₱230,542.20 (SSS) and ₱166,000.00 (EC) as
damages for the failure of the respondent to report the deceased Jaime Fulo for SS coverage prior to his death pursuant to Section
24(a) of the SS Law, as amended.
The SSS is hereby directed to pay petitioner Rosario Fulo the appropriate death benefit, pursuant to Section 13 of the SS Law, as
amended, as well as its prevailing rules and regulations, and to inform this Commission of its compliance herewith.
SO ORDERED.
On 18 May 2007, petitioner filed a Motion for Reconsideration,18 which was denied in an Order19 dated 16 August 2007.

Aggrieved, petitioner appealed to the CA on 19 December 2007.20 On 17 March 2010, the CA rendered a Decision21 in favor of
private respondent, as follows:
In fine, public respondent SSC had sufficient basis in concluding that private respondent’s husband was an employee of petitioner and
should, therefore, be entitled to compulsory coverage under the Social Security Law.
Having ruled in favor of the existence of employer-employee relationship between petitioner and the late Jaime Fulo, it is no longer
necessary to dwell on the other issues raised.
Resultantly, for his failure to report Jaime Fulo for compulsory social security coverage, petitioner should bear the consequences
thereof. Under the law, an employer who fails to report his employee for social security coverage is liable to [1] pay the benefits of
those who die, become disabled, get sick or reach retirement age; [2] pay all unpaid contributions plus a penalty of three percent per
month; and [3] be held liable for a criminal offense punishable by fine and/or imprisonment. But an employee is still entitled to social
security benefits even is (sic) his employer fails or refuses to remit his contribution to the SSS.
WHEREFORE, premises considered, the Resolution appealed from is AFFIRMED in toto.
SO ORDERED.
In holding thus, the CA gave credence to the findings of the SSC. The appellate court held that it "does not follow that a person who
does not observe normal hours of work cannot be deemed an employee."22 For one, it is not essential for the employer to actually
supervise the performance of duties of the employee; it is sufficient that the former has a right to wield the power. In this case,
petitioner exercised his control through an overseer in the person of Amado Gacelo, the tenant on petitioner’s land.23 Most
important, petitioner entered into a Compromise Agreement with private respondent and expressly admitted therein that he was the
employer of the deceased.24 The CA interpreted this admission as a declaration against interest, pursuant to Section 26, Rule 130 of
the Rules of Court.25
Hence, this petition.
Public respondents SSS26 and SSC27 filed their Comments on 31 January 2011 and 28 February 2011, respectively, while private
respondent filed her Comment on 14 March 2011.28 On 6 March 2012, petitioner filed a "Consolidated Reply to the Comments of the
Public Respondents SSS and SSC and Private Respondent Rosario Fulo."29
ISSUE
The sole issue presented before us is whether or not there exists between the deceased Jaime Fulo and petitioner an employer-
employee relationship that would merit an award of benefits in favor of private respondent under social security laws.
THE COURT’S RULING
In asserting the existence of an employer-employee relationship, private respondent alleges that her late husband had been in the
employ of petitioner for 14 years, from 1983 to 1997.30 During that period, he was made to work as a laborer in the agricultural
landholdings, a harvester in the abaca plantation, and a repairman/utility worker in several business establishments owned by
petitioner.31 To private respondent, the "considerable length of time during which [the deceased] was given diverse tasks by
petitioner was a clear indication of the necessity and indispensability of her late husband’s services to petitioner’s business."32 This
view is bolstered by the admission of petitioner himself in the Compromise Agreement that he was the deceased’s employer.33
5
Private respondent’s position is similarly espoused by the SSC, which contends that its findings are duly supported by evidence on
record.34 It insists that pakyaw workers are considered employees, as long as the employer exercises control over them. In this case,
the exercise of control by the employer was delegated to the caretaker of his farm, Amado Gacelo. The SSC further asserts that the
deceased rendered services essential for the petitioner’s harvest. While these services were not rendered continuously (in the sense
that they were not rendered every day throughout the year), still, the deceased had never stopped working for petitioner from year
to year until the day the former died.35 In fact, the deceased was required to work in the other business ventures of petitioner, such
as the latter’s bakery and grocery store.36 The Compromise Agreement entered into by petitioner with private respondent should not
be a bar to an employee demanding what is legally due the latter.37
The SSS, while clarifying that it is "neither adversarial nor favoring any of the private parties x x x as it is only tasked to carry out the
purposes of the Social Security Law,"38 agrees with both private respondent and SSC. It stresses that factual findings of the lower
courts, when affirmed by the appellate court, are generally conclusive and binding upon the Court.39
Petitioner, on the other hand, insists that the deceased was not his employee. Supposedly, the latter, during the performance of his
function, was not under petitioner’s control. Control is not necessarily present even if the worker works inside the premises of the
person who has engaged his services.40 Granting without admitting that petitioner gave rules or guidelines to the deceased in the
process of the latter’s performing his work, the situation cannot be interpreted as control, because it was only intended to promote
mutually desired results.41
Alternatively, petitioner insists that the deceased was hired by Adolfo Gamba, the contractor whom he had hired to construct their
building;42 and by Amado Gacelo, the tenant whom petitioner instructed to manage the latter’s farm.43 For this reason, petitioner
believes that a tenant is not beholden to the landlord and is not under the latter’s control and supervision. So if a worker is hired to
work on the land of a tenant – such as petitioner – the former cannot be the worker of the landlord, but of the tenant’s.44
Anent the Compromise Agreement, petitioner clarifies that it was executed to buy peace, because "respondent kept on pestering
them by asking for money."45 Petitioner allegedly received threats that if the matter was not settled, private respondent would refer
the matter to the New Peoples’ Army.46 Allegedly, the Compromise Agreement was "extortion camouflaged as an agreement."47
Likewise, petitioner maintains that he shouldered the hospitalization and burial expenses of the deceased to express his "compassion
and sympathy to a distressed person and his family," and not to admit liability.48
Lastly, petitioner alleges that the deceased is a freelance worker. Since he was engaged on a pakyaw basis and worked for a short
period of time, in the nature of a farm worker every season, he was not precluded from working with other persons and in fact
worked for them. Under Article 280 of the Labor Code,49 seasonal employees are not covered by the definitions of regular and casual
employees.50 Petitioner cites Mercado, Sr. v. NLRC,51 in which the Court held that seasonal workers do not become regular
employees by the mere fact that they have rendered at least one year of service, whether continuous or broken.52
We see no cogent reason to reverse the CA.
I
Findings of fact of the SSC are given weight and credence.
At the outset, it is settled that the Court is not a trier of facts and will not weigh evidence all over again. Findings of fact of
administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect but finality when affirmed by the CA.53 For as long as these findings are supported
by substantial evidence, they must be upheld.54
II

Farm workers may be considered regular seasonal employees.
Article 280 of the Labor Code states:
Article 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 services 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.
Jurisprudence has identified the three types of employees mentioned in the provision: (1) regular employees or those who have been
engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer; (2) 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 their engagement, or those whose work or service is seasonal in nature and is performed for the
duration of the season; and (3) casual employees or those who are neither regular nor project employees.55
Farm workers generally fall under the definition of seasonal employees. We have consistently held that seasonal employees may be
considered as regular employees.56 Regular seasonal employees are those called to work from time to time. The nature of their
relationship with the employer is such that during the off season, they are temporarily laid off; but reemployed during the summer
season or when their services may be needed.57 They are in regular employment because of the nature of their job,and not because
of the length of time they have worked.58
The rule, however, is not absolute. In Hacienda Fatima v. National Federation of Sugarcane Workers-Food & General Trade,59 the
Court held that seasonal workers who have worked for one season only may not be considered regular employees. Similarly, in
Mercado, Sr. v. NLRC,60 it was held that when seasonal employees are free to contract their services with other farm owners, then
the former are not regular employees.
For regular employees to be considered as such, the primary standard used is the reasonable connection between the particular
activity they perform and the usual trade or business of the employer.61 This test has been explained thoroughly in De Leon v.
NLRC,62 viz:
The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The 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. Also 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 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 also considered regular, but only with respect to such activity and while such activity exists.
A reading of the records reveals that the deceased was indeed a farm worker who was in the regular employ of petitioner. From year
to year, starting January 1983 up until his death, the deceased had been working on petitioner’s land by harvesting abaca and
coconut, processing copra, and clearing weeds. His employment was continuous in the sense that it was done for more than one
harvesting season. Moreover, no amount of reasoning could detract from the fact that these tasks were necessary or desirable in the
usual business of petitioner.
6
The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of an employer-employee
relationship. As found by the SSC, the deceased was a construction worker in the building and a helper in the bakery, grocery,
hardware, and piggery – all owned by petitioner.63 This fact only proves that even during the off season, the deceased was still in the
employ of petitioner.
The most telling indicia of this relationship is the Compromise Agreement executed by petitioner and private respondent. It is a valid
agreement as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a full understanding of
what he or she was entering into.64 All that is required for the compromise to be deemed voluntarily entered into is personal and
specific individual consent.65 Once executed by the workers or employees and their employers to settle their differences, and done in
good faith, a Compromise Agreement is deemed valid and binding among the parties.66
Petitioner entered into the agreement with full knowledge that he was described as the employer of the deceased.67 This knowledge
cannot simply be denied by a statement that petitioner was merely forced or threatened into such an agreement.1âwphi1 His belated
attempt to circumvent the agreement should not be given any consideration or weight by this Court.
III
Pakyaw workers are regular employees,
provided they are subject to the control of petitioner.
Pakyaw workers are considered employees for as long as their employers exercise control over them. In Legend Hotel Manila v.
Realuyo,68 the Court held that "the power of the employer to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship. This is the so-called control test and is premised on whether the
person for whom the services are performed reserves the right to control both the end achieved and the manner and means used to
achieve that end." It should be remembered that the control test merely calls for the existence of the right to control, and not
necessarily the exercise thereof.69 It is not essential that the employer actually supervises the performance of duties by the
employee. It is enough that the former has a right to wield the power.70
In this case, we agree with the CA that petitioner wielded control over the deceased in the discharge of his functions. Being the owner
of the farm on which the latter worked, petitioner – on his own or through his overseer – necessarily had the right to review the
quality of work produced by his laborers. It matters not whether the deceased conducted his work inside petitioner’s farm or not
because petitioner retained the right to control him in his work, and in fact exercised it through his farm manager Amado Gacelo. The
latter himself testified that petitioner had hired the deceased as one of the pakyaw workers whose salaries were derived from the
gross proceeds of the harvest.71
We do not give credence to the allegation that the deceased was an independent contractor hired by a certain Adolfo Gamba, the
contractor whom petitioner himself had hired to build a building. The allegation was based on the self-serving testimony of Joyce
Gapay Demate,72 the daughter of petitioner. The latter has not offered any other proof apart from her testimony to prove the
contention.
The right of an employee to be covered by the Social Security Act is premised on the existence of an employer-employee
relationship.73 That having been established, the Court hereby rules in h1vor of private respondent.
WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The assailed Decision and resolution of the Court of Appeals in
CA-G.R. SP. No. 101688 dated 17 March 2010 and 13 August 2010, respectively, are hereby AFFIRMED.
SO ORDERED.

G.R. No. 173648 January 16, 2012
ABDULJUAHID R. PIGCAULAN,* Petitioner,
vs.
SECURITY and CREDIT NVESTIGATION, INC. and/or RENE AMBY REYES, Respondents.
DECISION
DEL CASTILLO, J.:
It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather, it is on the employer that the
burden of proving payment of these claims rests.
This Petition for Review on Certiorari1 assails the February 24, 2006 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 85515,
which granted the petition for certiorari filed therewith, set aside the March 23, 20043 and June 14, 20044 Resolutions of the
National Labor Relations Commission (NLRC), and dismissed the complaint filed by Oliver R. Canoy (Canoy) and petitioner Abduljuahid
R. Pigcaulan (Pigcaulan) against respondent Security and Credit Investigation, Inc. (SCII) and its General Manager, respondent Rene
Amby Reyes. Likewise assailed is the June 28, 2006 Resolution5 denying Canoy’s and Pigcaulan’s Motion for Reconsideration.6
Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCII’s different clients. Subsequently,
however, Canoy and Pigcaulan filed with the Labor Arbiter separate complaints7 for underpayment of salaries and non-payment of
overtime, holiday, rest day, service incentive leave and 13th month pays. These complaints were later on consolidated as they
involved the same causes of action.
Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records reflecting the number of hours served
and their wages for the same. They likewise presented itemized lists of their claims for the corresponding periods served.
Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and other benefits under the law; that the
salaries they received were above the statutory minimum wage and the rates provided by the Philippine Association of Detective and
Protective Agency Operators (PADPAO) for security guards; that their holiday pay were already included in the computation of their
monthly salaries; that they were paid additional premium of 30% in addition to their basic salary whenever they were required to
work on Sundays and 200% of their salary for work done on holidays; and, that Canoy and Pigcaulan were paid the corresponding
13th month pay for the years 1998 and 1999. In support thereof, copies of payroll listings8 and lists of employees who received their
13th month pay for the periods December 1997 to November 1998 and December 1998 to November 19999 were presented. In
addition, respondents contended that Canoy’s and Pigcaulan’s monetary claims should only be limited to the past three years of
employment pursuant to the rule on prescription of claims.
Ruling of the Labor Arbiter
Giving credence to the itemized computations and representative daily time records submitted by Canoy and Pigcaulan, Labor Arbiter
Manuel P. Asuncion awarded them their monetary claims in his Decision10 dated June 6, 2002. The Labor Arbiter held that the payroll
listings presented by the respondents did not prove that Canoy and Pigcaulan were duly paid as same were not signed by the latter or
by any SCII officer. The 13th month payroll was, however, acknowledged as sufficient proof of payment, for it bears Canoy’s and
7
Pigcaulan’s signatures. Thus, without indicating any detailed computation of the judgment award, the Labor Arbiter ordered the
payment of overtime pay, holiday pay, service incentive leave pay and proportionate 13th month pay for the year 2000 in favor of
Canoy and Pigcaulan, viz:
WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their salary differentials in the amount of ₱166,849.60
for Oliver Canoy and ₱121,765.44 for Abduljuahid Pigcaulan; 2) the sum of ₱3,075.20 for Canoy and ₱2,449.71 for Pigcaulan for
service incentive leave pay and; [3]) the sum of ₱1,481.85 for Canoy and ₱1,065.35 for Pigcaulan as proportionate 13th month pay for
the year 2000. The rest of the claims are dismissed for lack of sufficient basis to make an award.
SO ORDERED.11
Ruling of the National Labor Relations Commission
Respondents appealed to the NLRC. They alleged that there was no basis
for the awards made because aside from the self-serving itemized computations, no representative daily time record was presented
by Canoy and Pigcaulan. On the contrary, respondents asserted that the payroll listings they submitted should have been given more
probative value. To strengthen their cause, they attached to their Memorandum on Appeal payrolls12 bearing the individual
signatures of Canoy and Pigcaulan to show that the latter have received their salaries, as well as copies of transmittal letters13 to the
bank to show that the salaries reflected in the payrolls were directly deposited to the ATM accounts of SCII’s employees.
The NLRC, however, in a Resolution14 dated March 23, 2004, dismissed the appeal and held that the evidence show underpayment of
salaries as well as non-payment of service incentive leave benefit. Accordingly, the Labor Arbiter’s Decision was sustained. The motion
for reconsideration thereto was likewise dismissed by the NLRC in a Resolution15 dated June 14, 2004.
Ruling of the Court of Appeals
In respondents’ petition for certiorari with prayer for the issuance of a temporary restraining order and preliminary injunction16
before the CA, they attributed grave abuse of discretion on the part of the NLRC in finding that Canoy and Pigcaulan are entitled to
salary differentials, service incentive leave pay and proportionate 13th month pay and in arriving at amounts without providing
sufficient bases therefor.
The CA, in its Decision17 dated February 24, 2006, set aside the rulings of
both the Labor Arbiter and the NLRC after noting that there were no factual and legal bases mentioned in the questioned rulings to
support the conclusions made. Consequently, it dismissed all the monetary claims of Canoy and Pigcaulan on the following rationale:
First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money awards and at all events, as far as practicable, the
decision shall embody the detailed and full amount awarded.
Second. The Labor Arbiter found that the payrolls submitted by SCII have no probative value for being unsigned by Canoy, when, in
fact, said payrolls, particularly the payrolls from 1998 to 1999 indicate the individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced by Pigcaulan and Canoy as well as the
laws or jurisprudence that would show that the two are indeed entitled to the salary differential and incentive leave pays.
Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the claimed salaries and benefits despite the
absence of proof that Reyes deliberately or maliciously designed to evade SCII’s alleged financial obligation; hence the Labor Arbiter
ignored that SCII has a corporate personality separate and distinct from Reyes. To justify solidary liability, there must be an allegation

and showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the
corporation.18
Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA in a Resolution19 dated June 28, 2006.
Hence, the present Petition for Review on Certiorari.
Issues
The petition ascribes upon the CA the following errors:
I. The Honorable Court of Appeals erred when it dismissed the complaint on mere alleged failure of the Labor Arbiter and the NLRC to
observe the prescribed form of decision, instead of remanding the case for reformation of the decision to include the desired detailed
computation.
II. The Honorable Court of Appeals erred when it [made] complainants suffer the consequences of the alleged non-observance by the
Labor Arbiter and NLRC of the prescribed forms of decisions considering that they have complied with all needful acts required to
support their claims.
III. The Honorable Court of Appeals erred when it dismissed the complaint allegedly due to absence of legal and factual [bases]
despite attendance of substantial evidence in the records.20
It is well to note that while the caption of the petition reflects both the names of Canoy and Pigcaulan as petitioners, it appears from
its body that it is being filed solely by Pigcaulan. In fact, the Verification and Certification of Non-Forum Shopping was executed by
Pigcaulan alone.
In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not strictly bound by the rules. And even so, the rules do
not mandate that a detailed computation of how the amount awarded was arrived at should be embodied in the decision. Instead, a
statement of the nature or a description of the amount awarded and the specific figure of the same will suffice. Besides, his and
Canoy’s claims were supported by substantial evidence in the form of the handwritten detailed computations which the Labor Arbiter
termed as "representative daily time records," showing that they were not properly compensated for work rendered. Thus, the CA
should have remanded the case instead of outrightly dismissing it.
In their Comment,21 respondents point out that since it was only Pigcaulan who filed the petition, the CA Decision has already
become final and binding upon Canoy. As to Pigcaulan’s arguments, respondents submit that they were able to present sufficient
evidence to prove payment of just salaries and benefits, which bits of evidence were unfortunately ignored by the Labor Arbiter and
the NLRC. Fittingly, the CA reconsidered these pieces of evidence and properly appreciated them. Hence, it was correct in dismissing
the claims for failure of Canoy and Pigcaulan to discharge their burden to disprove payment.
Pigcaulan, this time joined by Canoy, asserts in his Reply22 that his filing of the present petition redounds likewise to Canoy’s benefit
since their complaints were consolidated below. As such, they maintain that any kind of disposition made in favor or against either of
them would inevitably apply to the other. Hence, the institution of the petition solely by Pigcaulan does not render the assailed
Decision final as to Canoy. Nonetheless, in said reply they appended Canoy’s affidavit23 where he verified under oath the contents
and allegations of the petition filed by Pigcaulan and also attested to the authenticity of its annexes. Canoy, however, failed to certify
that he had not filed any action or claim in another court or tribunal involving the same issues. He likewise explains in said affidavit
that his absence during the preparation and filing of the petition was caused by severe financial distress and his failure to inform
anyone of his whereabouts.
Our Ruling
8
The assailed CA Decision is considered final as to Canoy.
We have examined the petition and find that same was filed by Pigcaulan solely on his own behalf. This is very clear from the
petition’s prefatory which is phrased as follows:
COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable Court x x x. (Emphasis supplied.)
Also, under the heading "Parties", only Pigcaulan is mentioned as petitioner and consistent with this, the body of the petition refers
only to a "petitioner" and never in its plural form "petitioners". Aside from the fact that the Verification and Certification of Non-
Forum Shopping attached to the petition was executed by Pigcaulan alone, it was plainly and particularly indicated under the name of
the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is the "Counsel for Petitioner Adbuljuahid Pigcaulan" only. In view
of these, there is therefore, no doubt, that the petition was brought only on behalf of Pigcaulan. Since no appeal from the CA Decision
was brought by Canoy, same has already become final and executory as to him.
Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one of
the petitioners therein. Suffice it to state that it would have been different had the said petition been filed in behalf of both Canoy
and Pigcaulan. In such a case, subsequent submission of a verification may be allowed as non-compliance therewith or a defect
therein does not necessarily render the pleading, or the petition as in this case, fatally defective.24 "The court may order its
submission or correction, or act on the pleading if the attending circumstances are such that strict compliance with the Rule may be
dispensed with in order that the ends of justice may be served thereby. Further, a verification is deemed substantially complied with
when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and
when matters alleged in the petition have been made in good faith or are true and correct."25 However, even if it were so, we note
that Canoy still failed to submit or at least incorporate in his affidavit a certificate of non-forum shopping.
The filing of a certificate of non-forum shopping is mandatory so much so that non-compliance could only be tolerated by special
circumstances and compelling reasons.26 This Court has held that when there are several petitioners, all of them must execute and
sign the certification against forum shopping; otherwise, those who did not sign will be dropped as parties to the case.27 True, we
held that in some cases, execution by only one of the petitioners on behalf of the other petitioners constitutes substantial compliance
with the rule on the filing of a certificate of non-forum shopping on the ground of common interest or common cause of action or
defense.28 We, however, find that common interest is not present in the instant petition. To recall, Canoy’s and Pigcaulan’s
complaints were consolidated because they both sought the same reliefs against the same respondents. This does not, however,
mean that they share a common interest or defense. The evidence required to substantiate their claims may not be the same. A
particular evidence which could sustain Canoy’s action may not effectively serve as sufficient to support Pigcaulan’s claim.
Besides, assuming that the petition is also filed on his behalf, Canoy failed to show any reasonable cause for his failure to join
Pigcaulan to personally sign the Certification of Non-Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims
against SCII, especially so, if he was indeed suffering from financial distress. However, Canoy failed to advance any justifiable reason
why he did not inform anyone of his whereabouts when he knows that he has a pending case against his former employer. Sadly, his
lack of prudence and diligence cannot merit the court’s consideration or sympathy. It must be emphasized at this point that
procedural rules should not be ignored simply because their non-observance may result in prejudice to a party’s substantial rights.
The Rules of Court should be followed except only for the most persuasive of reasons.29
Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the subsequent pleadings, although
apparently filed under his and Canoy’s name, as solely filed by the former.
There was no substantial evidence to support the grant of overtime pay.
 9

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave pay and 13th month pay for the year
2000 in favor of Canoy and Pigcaulan. The Labor Arbiter relied heavily on the itemized computations they submitted which he
considered as representative daily time records to substantiate the award of salary differentials. The NLRC then sustained the award
on the ground that there was substantial evidence of underpayment of salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized computations are self-serving,
unreliable and unsubstantial evidence to sustain the grant of salary differentials, particularly overtime pay. Unsigned and
unauthenticated as they are, there is no way of verifying the truth of the handwritten entries stated therein. Written only in pieces of
paper and solely prepared by Canoy and Pigcaulan, these representative daily time records, as termed by the Labor Arbiter, can hardly
be considered as competent evidence to be used as basis to prove that the two were underpaid of their salaries. We find nothing in
the records which could substantially support Pigcaulan’s contention that he had rendered service beyond eight hours to entitle him
to overtime pay and during Sundays to entitle him to restday pay. Hence, in the absence of any concrete proof that additional service
beyond the normal working hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to Pigcaulan.
Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate 13th month pay for year 2000.
However, with respect to the award for holiday pay, service incentive leave
pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:
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 ten (10) workers;
The CA erred in dismissing the claims instead of remanding the case to the Labor Arbiter for a detailed computation of the judgment
award.
Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary awards granted.lawphi1 Such failure, however, should not
result in prejudice to the substantial rights of the party.1avvphi1 While we disallow the grant of overtime pay and restday pay in favor
of Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service incentive leave pay and 13th month pay for
year 2000. Hence, the CA is not correct in dismissing Pigcaulan’s claims in its entirety.
Consistent with the rule that all money claims arising from an employer-employee relationship shall be filed within three years from
the time the cause of action accrued,34 Pigcaulan can only demand the amounts due him for the period within three years preceding
the filing of the complaint in 2000. Furthermore, since the records are insufficient to use as bases to properly compute Pigcaulan’s
claims, the case should be remanded to the Labor Arbiter for a detailed computation of the monetary benefits due to him.
WHEREFORE, the petition is GRANTED. The Decision dated February 24, 2006 and Resolution dated June 28, 2006 of the Court of
Appeals in CA-G.R. SP No. 85515 are REVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is hereby declared entitled to
holiday pay and service incentive leave pay for the years 1997-2000 and proportionate 13th month pay for the year 2000.
The case is REMANDED to the Labor Arbiter for further proceedings to determine the exact amount and to make a detailed
computation of the monetary benefits due Abduljuahid R. Pigcaulan which Security and Credit Investigation Inc. should pay without
delay.
SO ORDERED.

xxxx

While Article 95 of the Labor Code 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 of five days with pay.

xxxx

Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not work.30 Likewise, express provision of
the law entitles him to service incentive leave benefit for he rendered service for more than a year already. Furthermore, under
Presidential Decree No. 851,31 he should be paid his 13th month pay. As employer, SCII has the burden of proving that it has paid
these benefits to its employees.32

SCII presented payroll listings and transmittal letters to the bank to show that Canoy and Pigcaulan received their salaries as well as
benefits which it claimed are already integrated in the employees’ monthly salaries. However, the documents presented do not prove
SCII’s allegation. SCII failed to show any other concrete proof by means of records, pertinent files or similar documents reflecting that
the specific claims have been paid. With respect to 13th month pay, SCII presented proof that this benefit was paid but only for the
years 1998 and 1999. To repeat, the burden of proving payment of these monetary claims rests on SCII, being the employer. It is a rule
that one who pleads payment has the burden of proving it. "Even when the plaintiff alleges non-payment, still the general rule is that
the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment."33 Since SCII failed to
provide convincing proof that it has already settled the claims, Pigcaulan should be paid his holiday pay, service incentive leave
benefits and proportionate 13th month pay for the year 2000.
 10

On May 23, 1964, the Court of Industrial Relations, through Presiding Judge Jose S. Bautista, issued an order denying the unions'
prayer for a modified wage formula. Pertinent portion of the order reads:

On the issue of rate of pay, PALSA and PALEA seek to change the long standing method in PAL of computing the basic daily and hourly
rate of monthly salaried employees for the purpose of determining overtime pay, Sunday and legal holiday premium pay, night
differential pay, vacation and sick leave pay, to wit, the monthly salary multiplied by 12 and dividing the product thereof by 365 and
G.R. No. L-31341 March 31, 1976 then the quotient by 8. PALEA and PALSA claim that the method of computing the basic daily and hourly rate of monthly salaried
employees of PAL prior to the implementation of the 40-hour week schedule in PAL should be by dividing the monthly salary by 26
PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA) and PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION (PALSA), working days, and after the 40-hour week schedule, by dividing the monthly salary by 20 working days, and then dividing the quotient
petitioners, thereof in each case by 8. From the records, however, it appears that for may years since 1952, and even previously, PAL has been
vs. consistently and regularly determining the basic and hourly rates of monthly salaried employees by multiplying the monthly salary by
PHILIPPINE AIR INES, INC., respondent. 12 momths and dividing the product by 365 days to arive at the basic daily rate, and dividing the quotient by 8 to compute the basic
hourly rate. There has been no attempt to revise this formula notwithstanding the various negotiations PAL and with the unions ever
G.R. No. L-31341-43 March 31, 1976 since its operations, and it was only on July 18, 1962, when PALSA, for the first time, proposed that it be changed in accordance with
what is now alleged in the petition. This, however, was a mere proposal by PALSA for the adoption of a new formula; it was not a
PHILIPPINE AIR LINES, INC., petitioner, demand for the application of a formula claimed to be correct under the law. Under this circumstance, PALSA and PALEA are estopped
vs. from questioning the correctness and propriety of PAL's method of determining the basic hourly and daily rate of pay of its monthly
PHILIPPINE AIR LINES EMPLOYEES' ASSOCIATION, PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION, and the COURT OF salaried personnel, and considering the long period of time that elapsed before they brought their petition, are barred from insisting
INDUSTRIAL RELATIONS, respondents. or demanding a different rate of pay formula.

MAKASIAR, J.: xxx xxx xxx

Before US are consolidated petitions to review the Court of industrial Relations en banc resolution dated October 9, 1969 in CIR Case Upon the foregoing, the Court, therefore, declares PAL's method of computing the basic daily and hourly rate of its monthly salaried
No. 43-IPA. employees as legal and proper, and denies the petition of PALSA and PALEA.

In G.R. No. L-31341 (PALEA vs. PAL), petitioners question the date of effectivity of the adjudicated pay differentials due to the xxx xxx xxx
monthly-salaried employees of Philippine Air Lines, Inc.
(pp. 47-48, 49, rec. G.R. No. L-31343).
In G.R. No. L-31343 (PAL vs. PALEA), petitioner assails the reversal by the Court of Industrial Relations of its earlier resolution on the
method employed by the Philippine Air Lines in computing the basic daily and hourly rate of its monthly salaried employees. On May 30, 1964, complaining unions promptly moved for the reconsideration of the above-sais order (p. 51, rec. G.R. No. L-31343).

On February 14, 1963, the Philippine Air Lines Employees' Association (PALEA) and the Philippine Air Lines Supervisors' Association
(PALSA) — petitioners in G.R. No. L-31341 and respondents in G.R. No. 31343 — commenced an action against the Philippine Air Lines
(PAL) in the Court of Industrial Relations, praying that PAL be ordered to revise its method of computing the basic daily and hourly
rate of its monthly salaried employees, and necessarily, to pay them their accrued sala differentials.
Sought to be revised is PAL's formula in computing wages of its employees:
Monthly salary x 12 365 (No. of calendar = x (Basic dailr rate) days in a year)
x 8 = Basic hourly rate
The unions would like PAL to modify the above formula in this wise:
Monthly salary x 12 No. of actual working = x (Basic daily rate) days
x 8 = Basic hourly rate
On June 9, 1964, the unions filed their memorandum in support of their motion for reconsideration alleging that the questioned
order is (a) contrary to law, and (b) contrary to evidence adduced during the trial (p. 53, ree G.R. No. L-31343).
The unions attributed error to PAL's wage formula, particularly in the use of 365 days as divisor. The unions contended that the use of
365 days as divisor would necessarily include off-days which, under the terms of the collective bargaining agreements entered into
between the parties, were not paid days. This is so since for work done on an off-day, an employee was paid 100% plus 25%, or 100%
plus 37-½ of his regular working hour rate.
On the issue of prescription, the unions pointed out:
With respect to the period of prescription, it is clear that since the claim arises from the written contracts or collective bargaining
agreements between the petitioner unions and the PAL, the action thereon prescribes in ten years from the time the right of action
accrues, in accordance with Article 1144 of the New Civil Code. .... (p. 68, rec., G.R. No. L-31343).
On June 26, 1964, the Philippine Air Lines answered point by point the unions' memorandum, in a prompt reply.
On October 9, 1969, the Court of Industrial Relations, through Presiding Judge Arsenio I. Martinez, ordered the reversal of its decision
dated May 34, 1964 and sustained the unions' method of age computation.

The industrial court, however, ordered the computation of pay differentials in accordance with the sustained method of computation
effective only July 1, 1957.
Said the Court of Industrial Relations in this regard:
... In this connection, however, it will be noted as previously stated, that this case was considered as an incident of Case No. 39-IPA, in
which the issues involved were related to the respondent PAL of the 40-Hour Week Law (Rep. Act 1880) from the date of its effectivity
July 1, 1957. ...
This Cout therefore belives that in justice and equity and substantial merits of the case, the aforesaid pay differentials due to the
employees involved herein by the application of the correct methods of computation of the rate of pay should be paid by the
respondent also beginning July 1, 1957 (p. 117, rec., G.R. No. L-31343).
From the above resolution, both parties appealed to this COURT. The Philippine Air Lines filed its appeal petition on December 13,
1969, while PALEA filed its petition for review on certiorari on January 3, 1970.
I work on such days. This finds support not only in the basic principle in labor that the basis of remuneration or compensation is actual
For easy comprehension, WE start with the Philippine Air Lines, Inc. versus Philippine Air Lines Employees Association, Philippine Air
Lines Supervisors Association, and the Court of Industrial Relations, G.R. No. L-31343.
In this appeal PAL emphasizes three assignments of error, to wit:
1. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE METHOD OF
COMPUTATION USED BY PAL IN DETERMINING TIIE BASIC DAILY OR HOURLY RATE OF ITS MONTLY SALARIED EMPLOYEES WHICH IS:
MONTHLY SALARY x 1 365 (NO. OF CALENDAR DAYS IN YEAR) = x (BASIC DAILY RATE)
x 8 = BASIC HOURLY RATE 8
IS NOT CORRECT, CONSIDERING THAT PAL, A PUBLIC UTILITY WHERE THERE IS WORK EVERYDAY OF THE WEEK FOR MANY YEARS EVEN
BEFORE REPUBLIC ACT 602 AND WITH THE CONSENT AND APPROVAL OF THE EMPLOYEES, CONSISTENT WITH SECTION 19 OF
REPUBLIC ACT 602 PROHIBITING REDUCTION OF WAGES FOR OFF DAYS-WHICH WAS SUSTAINED BY THIS HONORABLE COURT IN
AUTOMOTIVE PARTS & EQUIPMENT CO., INC. VS. JOSE B. LINGAD, G.R. NO. L- 26406, OCTOBER 31, 1969 — HAS BEEN TREATING
OFFSITE DAYS, 11 AS SATURDAYS, SUNDAYS, COMPANY OBSERVED HOLIDAYS OR ANY OTHER DESIGNATED HOLIDAYS AS PAID DAYS.
2. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN NOT FINDING. THAT RESPONDENT UNIONS, BY THEIR
LONG PERIOD OF CONSENT, ACQUIESCENCE, INACTION AND ACCEPTANCE OF BENEFITS THEREUNDER, ARE ESTOPPED AND BARRED
FROM CLAIMING THAT PAL'S FORMULA FOR DETERMINING THE BASIC DAILY AND HOURLY RATE OF PAY IS INCORRECT.
3. RESPONDENT CIR ERED AND ACTED IN EXCESS OF ITS JURISDICTION IN SENTENCING PAL TO PAY DIFFERENTIALS FOR OVERTIME
WORK, NIGHTWORK, HOLIDAY AND SUNDAY PAY FROM JULY 1, 1957 CONSIDERING THAT UNDER THE THREE-YEAR PRESCRIPTIVE
PERIOD PROVIDED IN SECTION 7-a OF COMMONWEALTH ACT NO. 444, AS AMENDED, THE EIGHT-HOUR LABOR LAW, RESPONDENT
UNIONS, ASSUMING THEY HAD ANY CAUSE OF ACTION, COULD RECOVER ONLY FROM FEBRUARY 14, 1960 UP TO THE PRESENT, SINCE
RESPONDENT UNIONS FILED THEIR ACTION ONLY ON FEBRUARY 14, 1963.
A among which certainly is the 25% additional compensation for work on Sundays and legal holidays theretofore enjoyed by said
11
PAL's maiden argument has a strong tendency to mislead. In an effort to emphasize that off-days are paid and therefore should be
reckoned with in determing the divisor for computing daily and hourly rate, PAL leans heavily on what it considers as additional
payment of 125% or 137 ½%, as the case may be, of an employee's basic hourly rate, given to a worker who worked on his off-days.
PAL would like us to believe that the word "Additional" all but accentuates the existence of a regular basic rate; otherwise, the 125%
or 137½% shall be in addition to what?
The industrial court, however, had this to say:
Moreover, it will be noted that before September 4, 1961, a monthly salaried employee of PAL had to work 304 days only in a year,a
nd after said date, he had to work only 258 days in ayear, to be entitled to his equivalent yearly salary. When he worked on his off-day,
he was paid accordingly (125% or 137%), indicating that his off-days were not with pay. It seems illogical for said employe to be paid
125% or 137 ½% of his basic daily rate, if such off-days are already wtih pay, as indicated by the company (p. 107, rec., G.R. No. L-
31343, emphasis supplied).
WE agree.
There should hardly be any doubt that off-days are not paid days, Precisely, off-days are rest days for the worker. He is not required to
service rendered, but in the ever pervading labor spirit aimed at humanizing the conditions of hie working man.
Since during his off-days an employee is not compelled to work he cannot, conversely, demand for his corresponding pay. If, however,
a worker works on his off-day, our welfare laws duly reward him with a premium higher than what he would receive when he works
on his regular working day.
Such being the case, the divisor in computing an employee's basic daily rate should be the actual working days in a yar The number of
off-days are not to be counted precisely because on such off-days, an employee is not required to work.
Simple common sense dictates that should an employee opt not to work — which he can legally do — on an off-day, and for such he
gets no pay, he would be unduly robbed of a portion of his legitimate pay if and when in computing his basic daily and hourly rate,
such off-day is deemed subsumed by the divisor. For it is elementary in the fundamental process of division that with a constant
dividend, the bigger your divisor is, the smaller our quotient will be.
It bears emphasis that OUR view above constitutes the rationale behind the landmark ruling, surprisingly, by the same trial Judge Jose
S. Bautista of the Court of Industrial Relations, in National Waterworks and Sewerage Authority vs. NWSA Consolidated Unions, et al.,
(G.R. No. L-18938, August 31, 1964, 11 SCRA 766, 793-794), to which decision WE gave OUR affirmance.
PAL maintains that the NAWASA doctrine should not apply to a public utility like PAL which, from the nature of its operations, requires
a whole-year-round, uninterrupted work by personnel. What PAL apparently forgets is that just like it, NAWASA is also a public utility
which likewise requires its workers to work the whole year round. Moreover, the NAWASA is a government-owned corporation — to
which PAL is akin, it being a government-controlled corporation.
As will later be stated herein, PAL inked with the representative unions of the employees collective bargaining agreements wherein it
bound itself to duly compensate employer working on their off-days. The same situation obtained in the NAWASA case, wherein WE
held:
And in the collective bargaining agreement entered into between the NAWASA and respondent unions it was agreed that all existing
benefits enjoyed by the employees and laborers prior to its effectivity shall remain in force and shall form part of the agreement,
laborers and employees. It may, therefore, be said that while under Commonwealth Act No. 444 a public utility is not required to pay

additional compensation to its employees and workers for work done on Sundays and legal holidays, there is, however, no prohibition
ofr it to pay such additional compensation if it voluntarily agrees to do so. The NAWASA committed itself to pay this additional
compensation. It must pay not because of compulsion of law but because of contractual obligation (11 SCRA 766, 776).
The settled NAWASA doctrine should not be disturbed.
B case 43-IPA making the payment of the adjudicated pay differentials effective only from July 1, 1957.
PAL also vigorously argues that the unions' longstanding silence with respect, and acquiescence, to PAL's method of computation has
placed them in estoppel to impugn the correctness of the questioned wage formula. PAL furthermore contends that laches has
likewise set in precisely because of stich long-standing inaction.
Our jurisprudence on estoppel is, however, to the effect that:
... (I)t is meet to recall that "mere innocent silence will not work estoppel. There must also be some element of turpitude or
neglignece connected with the silence by which another is misled to his injury" (Civil Code of the philippines by Tolentino, Vol. IV, p.
600) ... [Beronilla vs. GSISK, G.R. No. L-21723, Nov. 26, 1970, 36 SCRA 44, 46, 55, emphasis supplied].
In the case befor US, it is not denied that PAL's formula of determining daily and hourly rate of pay has been decided and adopted by
it unilaterally without the knowedge and express consent of the employees. It was only later on that the employees came to know of
the formula's irregularity and its being violative of the collective bargaining agreements previously executed by PAL and the unions.
Precisely, PALSA immediately proposed that PAL and the unions. Precisely, PALSA immediately proposed that PAL use the correct
method of computation, which proposa PAL chose to ignore.
Clearly, therefore, the alleged long-standing silence by the PAL employees is in truth and in fact innocent silence, which cannot place a
party in estoppel.
The rationale for this is not difficult to see. The doctrine of estoppel had its origin in equity. As such, its applicability depends, to a
large extent, on the circumstances surrounding a particular case. Where, therefore, the neglect or omission alleged to haveplaced a
party in estoppel cannot be invoked. This was the essence of OUR ruling in the case of Mirasol vs. Municipality of Tabaco (43 Phil. 610,
614). And this, in quintessence, was the compelling reason why in Lodovica vs. Court of Appeals (L-29678, July 18, 1975, 65 SCRA 154,
158), WE held that a party who had no knowledge of or gave no consent to a transaction may not be estopped by it.
Furthermore, jurisprudence likewise fortifies the position that in the interest of public policy, estoppel and laches cannot arrest
recover of evertime compensation. The case of Manila Terminal Co. vs. CIR (G.R. NO. L-9265, April 29, 1957, 91 Phil. 625), is squarely
in point. In this case We intoned.
The principle of estoppel and laches cannot well be invoked agains the Association. In the first place, it would be contrary to the spirit
of the Eight-Hour Labor Law, under which, as already seen, the laborers cannot waive their right to extra compensation. In the second
place, the law principally obligates the employer to observe it, as much so that it punishes the employer for its employer for its
violation and leaves the employee or laborer is in such a disadvantageous position as to be naturally reluctant or even apprehensive
in asserting any claim which may cause the employher to devise a way for exercising his right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby the employee or laborer, who cannot
expressly renounce their right to extra compensation under the Eight-Hour Labor Law, may be compelled to accomplish the same
thing by mere silence or lapse of time, thereby frustrating the purpose of the law by indirection (91 Phil. 625, 633, emphasis
supplied).
12
In another count, the unilateral adoption by PAL of an irregular wage formula being an act against public policy, the doctrine of
estoppel cannot give validity to the same (Auyong Hian vs. Court of Tax Appeals, 59 SCRA 110, 112).
II
G.R. No. L-31341 is an appeal from that portion of the en banc resolution of the Court of Industrial Relations dated October 9, 1969 in
In their lone assignment of error, February 14, 1953, or ten (10) years from the date of the filing of their original complaint; because
the claim for pay differentials is based on written contracts — i.e., the collective bargaining agreements between PAL and the
employees' representative uniuons — and under Article 1144(1) of the Civil Code, actions based on written contracts prescribe in ten
(10) years.
PAL, on the other hand, maintains that the employees' claim for pay differential is"an action to enforce a cause of action under the
Eight-Hour Labor Law (CA No. 444, as amended): (p. 592, rec., G.R. No. L-31341). As such, the applicable provision is Section 7-a of CA
No. 4444, which reads:
Sec. 7-a. Any action to enforce any cause of action under this Act shall be commenced within three years after the cause of action
accrued, otherwise such action shall be forever barred; provided, however, that actions already commenced before the effecitve date
of this Act shall not be affected by the period herein prescribed (As amended by Rep. Act No. 1993, approved June 22, 1957,
emphasis supplied).
Moreover, PAL argues that even assuming that the issue calls for the application of Article 1144(1) of the New Civil Code, a general
law, still in case of conflict, Commonwealth ACt No. 444, as amended, should prevail because the latter is a special law.
WE believe that the present case calls for the application of the Civil Code provisions on the prescriptive period in the filing of actions
based on written contracts. The rason should be fairly obvious. Petitioners' claim fundamentally involves the strict compliance by PAL
of the pvosions on wage computation embodied in the collective bargaining agreements inked between it and the employees
representative unions. These collective bargaining agreements were: the PAS-PALEA collective bargaining agreement of 1952-53; the
PAL-PALEA collective bargaining agreement of 1956-59; the PAL-PALEA collective bargaining agreement of 1959-61 (with Article VI as
supplement); the PAL-PALEA agreement of September 4, 1961; the PAL-ACAP collective bargaining agreement of 1952-54; the PAL-
ACAP collective bargaining agreement of September 6, 1955; the PAL-ACAP collective bargaining agreement of 1959-61; the PAL-
PALSA collective bargaining agreement of 1959-62; and the supplementary PAL-PALSA collective bargaining agreement (pp. 54-55,
rec., G.R. No. L-31343).
The three-year prescribed period fixed in the Eight-Hour Labor Law (CA No. 444, as amended) will apply, if the claim for differentials
for overtime work is solely based on said law, and not on a collective bargaining agreement or any other contract. In the instant cases,
the claim for overtime compensation is not so much because of Commonwealth Act No. 444, as amended, but because the claim is a
demandable right of the employees, by reason of the above-mentioned collective bargaining agreements. That is precisely why
petitioners did not make any reference as to the computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA
No. 444), and instead inissited that work computation provided in the collective bargaining agreements between the parties be
observed. Since the claim for pay differentials is principally anchored on the written contracts between the litigants, the ten-year
prescriptive period between the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern. (General Insurance and Surety Corp. vs. Republic, L-13873, January 31, 1963, 7 SCRA 4; Heirs of the Deceased Juan Sindiong
vs. Committee on Burnt Areas and Improvements of Cebu, L-15975, April 30, 1964, 10 SCRA 715; Conde vs. Cuenca and Malaga, L-
9405, July 31, 1956; Veluz vs. Veluz, L-23261, July 31, 1968, 24 SCRA 559).
 13

Finally, granting arguendo that there is doubt as to what labor legislation to apply to the grievances of the employees in the cases at
bar, it is OUR view that that legislation which would enhance the plight of the workers should be followed, consonant with the
express pronouncement of the New Civil Code that:

In case of doubt, all labor legislation and labor contracts should be construed in favor of the safety and decent living of the laborer
(Article 1702).

WHEREFORE, THE APPEALED RESOLUTION IS HEREBY AFFIRMED, WITH THE MODIFICATION THAT PAY DIFFERENTIALS BE PAID
EFFECTIVE FEBRUARY 14, 1953. WITH COSTS AGAINST PHILIPPINE AIR LINES, INC. IN BOTH CASES.

G.R. No. L-63578 July 11, 1985
PHlLIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA) CECILIO V. BAUTISTA, PANTALEON ARAYATA, CATALINO BAÑEZ LUCIO
CANTILLO, ROBERTO ESPINELI, JASMIN A. ILANO, ALFONSO JOSE, ROMULO NERY, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), PHILIPPINE AIRLINES, INC. (PAL), BENIGNO TODA JR. and GOVERNMENT
SERVICE INSURANCE SYSTEM (GSIS), respondents.
MAKASIAR, J.:
This petition for certiorari with preliminary injunction seeks to annul the resolution dated May 31, 1977 of respondent National Labor
Relations Commission, the dispositive portion of which reads as follows:
WHEREFORE, the Commission has resolved, as it hereby resolves, to recall and declare inoperative the Partial Writ of Execution
dated December 6, 1976, and affirm the Order dated March 4, 1977 with modification that only pay differentials beginning
February 14, 1953 up to September 8, 1963 be ordered paid.
SO ORDERED.
It appears that on March 31, 1976 this Court promulgated a decision in L-31341 (Philippine Air Lines Employees Association (PALEA) et
al. vs. Philippine Air Lines Inc.) and L-31-343 (Philippine Air Lines Inc. vs. Philippine Air Lines Employees Association, et al.) affirming
the resolution of the defunct Court of Industrial Relations sustaining PALEA's method of computing the basic daily and hourly rate of
PAL's monthly salaried employees. to wit:
Monthly Salary x 12 = x (Basic daily rate)
No. of Actual Working Days x = Basic hourly rate 8
with modification that the pay differentials be paid effective February 14, 1953 instead of July 1, 1957.
Both parties filed their respective motions for reconsideration. PAL insisted that the method of computation of the basic daily rate of
pay should be—to divide the yearly salary by 365 days, to wit:
Monthly Salary x 12 = x (Basic daily wage)
365 days (No. of calendar
days in a year) x = Basic hourly rate 8
PALEA, on the other hand, prayed that the pay differentials to be paid to the employees involved should bear interest to be fixed by
the Court from the date of the filing of the complaint on February 14,1963.
This Court denied both motions for lack of merit and declared the denial as final in the resolution of August 20, 1976. Entry of
judgment was made on August 29, 1976.
On September 27, 1976 PALEA filed with the NLRC a "motion for immediate execution and payments of benefits under the award and
motion for immediate verification, examination and computation and payment of back differentials."
After hearing, Labor Arbiter Francisco delos Reyes issued a partial writ of execution dated December 6, 1976 directing the Deputy
Sheriff of the NLRC to implement, beginning October 1, 1976, the CIR resolution as affirmed with modification by the Supreme Court.
On March 4, 1977, Labor Arbiter delos Reyes granted the second portion of the motion which was filed on September 27, 1976 "for
immediate verification, examination and computation and payment of back differential," and ordered the computation of differential
from February 14, 1953 up to September 30, 1976.
On March 28,1977 PAL filed with the NLRC an appeal with prayer to quash the order of March 4, 1977, and a motion to stay execution
of the partial writ of execution and the aforesaid order of March 4, 1977.
On May 31, 1977, the NLRC issued the questioned resolution, The NLRC reasoned out that the application of the adjudged correct
method or formula as adopted in the Supreme Court's decision was based on the specific provisions of the collective bargaining
agreement still existing from 1952 until its expiry on September 8, 1963; and that beginning September 9, 1963 the aforesaid formula
ceased to be effective.
On March 29, 1983 or after a lapse of about six (6) years, the present petition for certiorari was filed before this Court assailing the
said resolution.
14
Petitioners maintain that this Court in its decision of March 1976 had already settled the correct method or formula of computation
of the basic daily rate of pay of PAL's monthly salaried employees in determining their overtime pay, night differential pay, holiday
premium pay, vacation and sick leave pay effective from February 14, 1953. Thus, when the NLRC declared that the said method or
formula ceased to be effective on September 8, 1963, the consequence would be to revert to The use of what had been adjudged by
this Court as an erroneous method of computation of the basic daily rate of pay, by dividing the yearly salary by 365 days.
The petition should be dismissed.
Under the terms of the collective bargaining agreements entered into between the parties from 1952 up to September 8, 1963, which
were the subject matter of L-31341 and L-31343, off-days were not paid days. Hence, the unions contested the PAL's wage formula of
computing the basic daily rate of the latter's monthly- salaried employees by using 365 days as divisor thus including even the off-
days, In Our decision of March 31, 1976 in said cases, We categorically ruled that "off-days are not paid days. Such being the case, the
divisor in computing an employee's basic daily rate should be the actual working days in a year. The number of off- days are not to be
counted precisely because on such off-days, an employee is not required to work." It should be made clear, however, that such
pronouncement was based on the provisions of the collective bargaining agreements existing from 1952 until September 8, 1963. As
alleged by the respondents and found out by the respondent Commission and which was not disputed by petitioners, after
September 8, 1963, there was a change of collective bargaining agreement. And the parties incorporated in the subsequent collective
bargaining agreements provisions considering such "off-days" as already "paid". Hence, the method of computing the basic and
hourly rate of respondent PAL's monthly-salaried employees which We decreed in G.R. No. L-31341 and No. L-31343 is no longer
applicable after September 8, 1963.
WE agree with the respondent Commission in limiting the application of Our decision of March 31, 1976 from February 14, 1953 to
September 8, 1963. The respondent Commission ruled in this wise:
To our mind, the change of the CBA provisions interpreted by the Court can lead to no other conclusion than that the Decision
is coterminous with the last CBA containing the interpreted provision. This must be so. For, the set of facts which justified the
assumption that holidays and off days were not paid, no longer obtains. The facts which form the basis of the CIR en bancs
disposition is clear in pages 9 and 10 of the Resolution itself.
xxx xxx xxx
What is more, the Supreme Court final decision in this proceeding, affirming the Resolution of the CIR sitting en banc, in
adopting the correct formula for determining the basic daily and hourly rate of monthly rate of monthly salaried PAL
employees pursuant to specific provisions of the successive CBA's from 1952 up to that which expired on September 8, 1963,
specifically anchored on the assumption that 'off days' are not yet paid, could not possibly have intended to unreasonably
extend the effects of the same Decision to subsequent period of time covered by subsequent CBA's wherein the parties,
obviously to prevent repetition of the same troubles arising from their different interpretations leading to the present dispute,
precisely incorporated provisions clearly considering such 'off days' as already paid
In other words, by any stretch of valid argumentation, logic communes with reason to support the conclusion that the
coverage of the CIR en banc resolution as affirmed by the Supreme Court is Limited to the period from February 14, 1953 to
September 8, 196,3. Clearly then, beginning September 9, 1963, the adjudged formula in computing the daily and hourly rate
of monthly salaried PAL employees ceased to be effective. A fortiori, there exist no valid rationale for the questioned Partial
Writ of Execution (emphasis supplied: pp. 123-127, rec.).
Finally, petitioners' cause of action questioning respondent Commission's resolution of May 31, 1977 is almost six (6) years late as the
present petition for certiorari was filed only on March 29, 1983. The questioned resolution having long become final and executory,
this Court has no jurisdiction to entertain the present petition.
WHEREFORE, THE PETITION FOR certiorari IS HEREBY DISMISSED FOR LACK OF MERIT. NO COSTS.
SO ORDERED.

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 petitioner’s 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 (₱3,800.00) 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 retainer’s 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.
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 COMPANY’S 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
15
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.
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 letter 4 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 employer-employee relationship existed between petitioner and respondent based on the Retainer Agreement and the
 16

Comprehensive Medical Plan, and the application of the "four-fold" test. However, Director Ancheta emphasized that the existence of The Court of Appeals held:
employer-employee relationship is a question of fact. Hence, termination disputes or money claims arising from employer-employee
relations exceeding ₱5,000 may be filed with the National Labor Relations Commission (NLRC). He stated that their opinion is strictly
The Retainer Agreement executed by and between the parties, when read together with the Comprehensive Medical Plan which was
advisory.
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.
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
First, the agreements provide that "the COMPANY desires to engage on a retainer basis the services of a physician and the said
opinion that the services of respondent partake of the nature of work of a regular company doctor and that he was, therefore,
DOCTOR is accepting such engagement x x x" (Rollo, page 25). This clearly shows that Coca-Cola exercised its power to hire the
subject to social security coverage.
services of petitioner.

Respondent inquired from the management of petitioner company whether it was agreeable to recognizing him as a regular
Secondly, paragraph (2) of the agreements showed that petitioner would be entitled to a final compensation of Three Thousand Eight
employee. The management refused to do so.
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.
On February 24, 1994, respondent filed a Complaint 9 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
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
Allowance, Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus. The case was docketed as RAB Case No. 06-02-10138-94.
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
While the complaint was pending before the Labor Arbiter, respondent received a letter dated March 9, 1995 from petitioner reason, the sole requirement being the former’s compliance with the 30-day notice requirement.
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-
Lastly, paragraphs (3) and (6) of the agreements reveal that Coca-Cola exercised the most important element of all, that is, control,
10177-95.
over the conduct of petitioner in the latter’s performance of his duties as a doctor for the company.

In a Decision10 dated November 28, 1996, Labor Arbiter Jesus N. Rodriguez, Jr. found that petitioner company lacked the power of
It was stated in paragraph (3) that the doctor agrees to perform the duties and obligations enumerated in the Comprehensive Medical
control over respondent’s performance of his duties, and recognized as valid the Retainer Agreement between the parties. Thus, the
Plan referred to above. In paragraph (6), the fixed and definite hours during which the petitioner must render service to the company
Labor Arbiter dismissed respondent’s complaint in the first case, RAB Case No. 06-02-10138-94. The dispositive portion of the
is laid down.
Decision reads:

We say that there exists Coca-Cola’s power to control petitioner because the particular objectives and activities to be observed and
WHEREFORE, premises considered, judgment is hereby rendered dismissing the instant complaint seeking recognition as a regular
accomplished by the latter are fixed and set under the Comprehensive Medical Plan which was made an integral part of the retainer
employee.
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
SO ORDERED.11 but according to the schedule dictated by the company.

In a Decision12 dated February 24, 1997, Labor Arbiter Benjamin Pelaez dismissed the case for illegal dismissal (RAB Case No. 06-04- In addition, petitioner was designated by Coca-Cola to be a member of its Bacolod Plant’s Safety Committee. The minutes of the
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 meeting of the said committee dated February 16, 1994 included the name of petitioner, as plant physician, as among those
therein, Dr. Dean Climaco, is not an employee of Coca-Cola Bottlers Phils., Inc. comprising the committee.

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 respondent’s employment.
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 interpreted this strictly, it would result in an absurd and ridiculous situation wherein we could declare that an entity exercises
control over another’s 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.

Respondent’s 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 employer’s power to control the employee with respect to the means and methods by which
the work is to be accomplished.
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 280 16 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 respondent’s services without any just or authorized cause constituted illegal
dismissal.
In addition, the Court of Appeals found that respondent’s 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) month’s 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 ₱50,000.00.
3. Pay petitioner exemplary damages in the amount of ₱50,000.00.
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 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 day’s 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.
2. 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, 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.
3. 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, AND HOLDING INSTEAD THAT THE PETITIONERS EXERCISED CONTROL OVER THE WORK OF THE RESPONDENT.
4. 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, AND FINDING THAT THERE IS EMPLOYER-EMPLOYEE RELATIONSHIP PURSUANT TO ARTICLE 280 OF THE LABOR
CODE.
5. 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, AND FINDING THAT THERE EXISTED ILLEGAL DISMISSAL WHEN THE EMPLOYENT OF THE RESPONDENT WAS
TERMINATED WITHOUT JUST CAUSE.
6. 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, 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.
7. 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, AND FINDING THAT THE RESPONDENT IS ENTITLED TO MORAL AND EXEMPLARY DAMAGES.
17
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 respondent’s 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
employee’s 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 respondent’s 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 company’s
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 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 employer’s 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.
[G.R. NO. 168424 : June 8, 2007]
CONSOLIDATED BROADCASTING SYSTEM, INC., Petitioner, v. DANNY OBERIO, ELNA DE PEDRO, LUISITO VILLAMOR, WILMA
SUGATON, RUFO DEITA, JR., EMILY DE GUZMAN, CAROLINE LADRILLO, JOSE ROBERTO REGALADO, ROSEBEL NARCISO & ANANITA
TANGETE, Respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this Petition for Review is the July 30, 2004 Decision1 of the Court of Appeals in CA-G.R. SP No. 77098, which affirmed the
December 5, 2001 Decision2 of the National Labor Relations Commission (NLRC) holding that respondents were regular employees of
petitioner and that they were illegally dismissed.
Respondents alleged that they were employed as drama talents by DYWB-Bombo Radyo, a radio station owned and operated by
petitioner Consolidated Broadcasting System, Inc. They reported for work daily for six days in a week and were required to record
their drama production in advance. Some of them were employed by petitioner since 1974, while the latest one was hired in 1997.3
Their drama programs were aired not only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas.4
Sometime in August 1998, petitioner reduced the number of its drama productions from 14 to 11, but was opposed by respondents.
After the negotiations failed, the latter sought the intervention of the Department of Labor and Employment (DOLE), which on
November 12, 1998, conducted through its Regional Office, an inspection of DWYB station. The results thereof revealed that
petitioner is guilty of violation of labor standard laws, such as underpayment of wages, 13th month pay, non-payment of service
incentive leave pay, and non-coverage of respondents under the Social Security System.
Petitioner contended that respondents are not its employees and refused to submit the payroll and daily time records despite the
subpoena duces tecum issued by the DOLE Regional Director. Petitioner further argued that the case should be referred to the NLRC
because the Regional Director has no jurisdiction over the determination of the existence of employer-employee relationship which
involves evidentiary matters that are not verifiable in the normal course of inspection.
Vexed by the respondents' complaint, petitioner allegedly pressured and intimidated respondents. Respondents Oberio and Delta
were suspended for minor lapses and the payment of their salaries were purportedly delayed. Eventually, on February 3, 1999,
pending the outcome of the inspection case with the Regional Director, respondents were barred by petitioner from reporting for
work; thus, the former claimed constructive dismissal.5
On April 8, 1999, the DOLE Regional Director issued an order directing petitioner to pay respondents a total of P318,986.74
representing non-payment/underpayment of the salary and benefits due them.6 However, on July 8, 1999, the Regional Director
reconsidered the April 8, 1999 order and certified the records of the case to the NLRC, Regional Arbitration Branch VI, for
determination of employer-employee relationship.7 Respondents appealed said order to the Secretary of Labor.
18
On October 12, 1999, respondents filed a case for illegal dismissal, underpayment/non-payment of wages and benefits plus damages
against petitioner. On April 10, 2000, the Labor Arbiter dismissed the case without prejudice while waiting for the decision of the
Secretary of Labor on the same issue of the existence of an employer-employee relationship between petitioner and respondents.
On appeal to the NLRC, respondents raised the issue of employer-employee relationship and submitted the following to prove the
existence of such relationship, to wit: time cards, identification cards, payroll, a show cause order of the station manager to
respondent Danny Oberio and memoranda either noted or issued by said manager. Petitioner, on the other hand, did not present any
documentary evidence in its behalf and merely denied the allegations of respondents. It claimed that the radio station pays for the
drama recorded by piece and that it has no control over the conduct of respondents.
On December 5, 2001, the NLRC rendered a decision holding that respondents were regular employees of petitioner who were
illegally dismissed by the latter. It further held that respondents complied with the requirements of the rule on forum shopping. The
decretal portion thereof, provides:
WHEREFORE, premises considered, the decision of Labor Arbiter Ray Alan T. Drilon dated 10 April 2000 is SET ASIDE and VACATED and
a new one entered.
Ordering respondent Consolidated Broadcasting System, Inc. (Bombo Radyo Philippines), DYWB to reinstate the complainants without
loss of seniority rights wi[th] full back wages computed from February 1999 up to the time of actual reinstatement.
SO ORDERED.8
Hence, petitioner filed the instant recourse.
The issues for resolution are as follows: (1) Did respondents violate the rule on forum shopping; (2) whether the NLRC correctly ruled
on the merits of the case instead of remanding the case to the Labor Arbiter; (3) whether respondents were employees of petitioner;
and (4) whether their dismissal was illegal.
Respondents' complaint in the inspection case before the DOLE Regional Director alleged that they were under the employ of
petitioner at the time of the filing of said complaint. Pending the resolution thereof, they claimed to have been dismissed; hence, the
filing of the present illegal dismissal case before the Labor Arbiter. The causes of action in these two complaints are different, i.e., one
for violation of labor standard laws, and the other, for illegal dismissal, but the entitlement of respondents to the reliefs prayed for
hinges on the same issue of the existence of an employer-employee relationship. While the decision on the said issue by one tribunal
may operate as res judicata on the other, dismissal of the present illegal dismissal case on the ground of forum shopping, would work
injustice to respondents because it is the law itself which provides for two separate remedies for their distinct causes of action.
Under Article 2179 of the Labor Code, termination cases fall under the jurisdiction of Labor Arbiters. Whereas, Article 12810 of the
same Code vests the Secretary of Labor or his duly authorized representatives with the power to inspect the employer's records to
determine and compel compliance with labor standard laws. The exercise of the said power by the Secretary or his duly authorized
representatives is exclusive to cases where employer-employee relationship still exists. Thus, in cases where the complaint for
violation of labor standard laws preceded the termination of the employee and the filing of the illegal dismissal case, it would not be
in consonance with justice to charge the complainants with engaging in forum shopping when the remedy available to them at the
time their causes of action arose was to file separate cases before different fora. Besides, in the instant case, respondent Danny
Oberio disclosed in the verification the pendency of the case regarding wage differential.11 In addition, said case was discussed in
detail in the position paper,12 evincing the absence of any intention on the part of respondents to mislead the Labor Arbiter.
Similarly, in Benguet Management Corporation v. Court of Appeals,13 petitioner filed separate actions to enjoin the foreclosure of
real estate mortgages before the Regional Trial Courts of San Pablo City and Zambales which has jurisdiction over the place where the
properties were located. In both cases, petitioner contended, among others, that the loan secured by said mortgages imposed

unauthorized penalties, interest and charges. The Court did not find the mortgagors guilty of forum shopping considering that since
injunction is enforceable only within the territorial limits of the trial court, the mortgagor is left without remedy as to the properties
located outside the jurisdiction of the issuing court, unless an application for injunction is made with another court which has
jurisdiction over the latter properties.
By parity of reasoning, it would be unfair to hold respondents in the instant case guilty of forum shopping because the recourse
available to them after their termination, but pending resolution of the inspection case before the DOLE, was to file a case for illegal
dismissal before the Labor Arbiter who has jurisdiction over termination disputes.
More importantly, substantial justice dictates that this case be resolved on the merits considering that the NLRC and the Court of
Appeals correctly found that there existed an employer-employee relationship between petitioner and respondents and that the
latter's dismissal was illegal, as will be discussed hereunder.
In the same vein, the NLRC correctly ruled on the merits instead of remanding the case to the Labor Arbiter. Respondents specifically
raised the issue of the existence of employer-employee relationship but petitioner refused to submit evidence to disprove such
relationship on the erroneous contention that to do so would constitute a waiver of the right to question the jurisdiction of the NLRC
to resolve the case on the merits.14 This is rather odd because it was the stand of petitioner in the inspection case before the DOLE
that the case should be certified to the NLRC for the resolution of the issue of employer-employee relationship. But when the same
issue was proffered before the NLRC, it refused to present evidence and instead sought the dismissal of the case invoking the
pendency of the inspection case before the DOLE. Petitioner refused to meet head on the substantial aspect of this controversy and
resorted to technicalities to delay its disposition. It must be stressed that labor tribunals are not bound by technical rules and the
Court would sustain the expedient disposition of cases so long as the parties are not denied due process.15 The rule is that, due
process is not violated where a person is given the opportunity to be heard, but chooses not to give his or her side of the case.16
Significantly, petitioner never claimed that it was denied due process. Indeed, no such denial exists because it had all the
opportunities to present evidence before the labor tribunals below, the Court of Appeals, and even before this Court, but chose not
to do so for reasons which will not warrant the sacrifice of substantial justice over technicalities.
On the third issue, respondents' employment with petitioner passed the "four-fold test" on employer-employee relations, namely: (1)
the selection and engagement of the employee, or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the
power to control the employee.
Petitioner failed to controvert with substantial evidence the allegation of respondents that they were hired by the former on various
dates from 1974 to 1997. If petitioner did not hire respondents and if it was the director alone who chose the talents, petitioner could
have easily shown, being in possession of the records, a contract to such effect. However, petitioner merely relied on its contention
that respondents were piece rate contractors who were paid by results.17 Note that under Policy Instruction No. 40, petitioner is
obliged to execute the necessary contract specifying the nature of the work to be performed, rates of pay, and the programs in which
they will work. Moreover, project or contractual employees are required to be apprised of the project they will undertake under a
written contract. This was not complied with by the petitioner, justifying the reasonable conclusion that no such contracts exist and
that respondents were in fact regular employees.
In ABS-CBN v. Marquez,18 the Court held that the failure of the employer to produce the contract mandated by Policy Instruction No.
40 is indicative that the so called talents or project workers are in reality, regular employees. Thus'
Policy Instruction No. 40 pertinently provides:
Program employees are 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,
19
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 days from its consummation. (Emphasis supplied)cralawlibrary
Ironically, however, petitioner failed to adduce an iota proof that the requirements for program employment were even complied
with by it. It is basic that project or contractual employees are appraised of the project they will work under a written contract,
specifying, inter alia, the nature of work to be performed and the rates of pay and the program in which they will work. Sadly,
however, no such written contract was ever presented by the petitioner. Petitioner is in the best of position to present these
documents. And because none was presented, we have every reason to surmise that no such written contract was ever accomplished
by the parties, thereby belying petitioner's posture.
Worse, there was no showing of compliance with the requirement that after every engagement or production of a particular
television series, the required reports were filed with the proper government agency, as provided no less under the very Policy
Instruction invoked by the petitioner, nor under the Omnibus Implementing Rules of the Labor Code for project employees. This alone
bolsters respondents' contention that they were indeed petitioner's regular employees since their employment was not only for a
particular program.
Moreover, the engagement of respondents for a period ranging from 2 to 25 years and the fact that their drama programs were aired
not only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas, undoubtedly show that their work
is necessary and indispensable to the usual business or trade of petitioner. The test to determine whether employment is regular or
not is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade
of the employer. Also, 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 and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability of that activity to the business. Thus, even assuming that respondents were initially hired as project/contractual
employees who were paid per drama or per project/contract, the engagement of their services for 2 to 25 years justify their
classification as regular employees, their services being deemed indispensable to the business of petitioner.19
As to the payment of wages, it was petitioner who paid the same as shown by the payroll bearing the name of petitioner company in
the heading with the respective salaries of respondents opposite their names. Anent the power of control, dismissal, and imposition
of disciplinary measures, which are indicative of an employer-employee relationship,20 the same were duly proven by the following:
(1) memorandum21 duly noted by Wilfredo Alejaga, petitioner's station manager, calling the attention of the "Drama Department" to
the late submission of scripts by writers and the tardiness and absences of directors and talents, as well as the imposable fines of
P100 to P200 for future infractions; (2) the memorandum22 of the station manager directing respondent Oberio to explain why no
disciplinary action should be taken against him for punching the time card of a certain Mrs. Fe Oberio who was not physically present
in their office; and (3) the station manager's memorandum23 suspending respondent Oberio for six days for the said infraction which
constituted violation of petitioner's network policy. All these, taken together, unmistakably show the existence of an employer-
employee relationship. Not only did petitioner possess the power of control over their work but also the power to discipline them
through the imposition of fines and suspension for violation of company rules and policies.
Finally, we find that respondents were illegally dismissed. In labor cases, the employer has the burden of proving that the dismissal
was for a just cause; failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal. To allow an
employer to dismiss an employee based on mere allegations and generalities would place the employee at the mercy of his employer;
and the right to security of tenure, which this Court is bound to protect, would be unduly emasculated.24 In this case, petitioner
merely contended that it was respondents who ceased to report to work, and never presented any substantial evidence to support
said allegation. Petitioner therefore failed to discharge its burden, hence, respondents were correctly declared to have been illegally
dismissed.
Furthermore, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted
in favor of the latter - the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable
 20

cause. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence
should be resolved in the former's favor. The policy is to extend the doctrine 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 of labor.25

When a person is illegally dismissed, he is entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages. In the event, however, that reinstatement is no longer feasible, or if the employee decides not to be reinstated, the
employer shall pay him separation pay in lieu of reinstatement. Such a rule is likewise observed in the case of a strained employer-
employee relationship or when the work or position formerly held by the dismissed employee no longer exists. In sum, an illegally
dismissed employee is entitled to: (1) either reinstatement if viable or separation pay if reinstatement is no longer viable, and (2)
backwages. In the instant controversy, reinstatement is no longer viable considering the strained relations between petitioner and
respondents. As admitted by the latter, the complaint filed before the DOLE strained their relations with petitioner who eventually
dismissed them from service. Payment of separation pay instead of reinstatement would thus better promote the interest of both
parties.

Respondents' separation pay should be computed based on their respective one (1) month pay, or one-half (1/2) month pay for every
year of service, whichever is higher, reckoned from their first day of employment up to finality of this decision. Full backwages, on the
other hand, should be computed from the date of their dismissal until the finality of this decision.26

WHEREFORE, the petition is DENIED. The July 30, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 77098, finding respondents
to be regular employees of petitioner and holding them to be illegally dismissed and directing petitioner to pay full backwages, is
AFFIRMED with the MODIFICATION that petitioner is ordered to pay respondents their separation pay instead of effecting their
reinstatement.

SO ORDERED.

G.R. No. 162833 June 15, 2007
LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSA-PINAGBUKLOD NG MANGGAGAWANG PROMO NG BURLINGAME,
petitioner,
vs.
BURLINGAME CORPORATION, respondent.
DECISION
QUISUMBING, J.:
This is an appeal to reverse and set aside both the Decision1 dated August 29, 2003 of the Court of Appeals and its Resolution2 dated
March 15, 2004 in CA-G.R. SP No. 69639. The appellate court had reversed the decision3 dated December 29, 2000 of the Secretary
of Labor and Employment which ordered the holding of a certification election among the rank-and-file promo employees of
respondent Burlingame Corporation.
The facts are undisputed.
On January 17, 2000, the petitioner Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng
Burlingame (LIKHA-PMPB) filed a petition for certification election before the Department of Labor and Employment (DOLE). LIKHA-
PMPB sought to represent all rank-and-file promo employees of respondent numbering about 70 in all. The petitioner claimed that
there was no existing union in the aforementioned establishment representing the regular rank-and-file promo employees. It prayed
that it be voluntarily recognized by the respondent to be the collective bargaining agent, or, in the alternative, that a
certification/consent election be held among said regular rank-and-file promo employees.
The respondent filed a motion to dismiss the petition. It argued that there exists no employer-employee relationship between it and
the petitioner’s members. It further alleged that the petitioner’s members are actually employees of F. Garil Manpower Services (F.
Garil), a duly licensed local employment agency. To prove such contention, respondent presented a copy of its contract for manpower
services with F. Garil.
On June 29, 2000, Med-Arbiter Renato D. Parungo dismissed4 the petition for lack of employer-employee relationship, prompting the
petitioner to file an appeal5 before the Secretary of Labor and Employment.
On December 29, 2000, the Secretary of Labor and Employment ordered the immediate conduct of a certification election.6
A motion for reconsideration of the said decision was filed by the respondent on January 19, 2001, but the same was denied in the
Resolution7 of February 19, 2002 of the Secretary of Labor and Employment.
Respondent then filed a complaint with the Court of Appeals, which then reversed8 the decision of the Secretary. The petitioner then
filed a motion for reconsideration,9 which the Court of Appeals denied10 on March 15, 2004.
Hence the instant petition for review on certiorari.
The issue raised in the petition is:
WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DECLARING THAT THERE IS NO EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN PETITIONER’S MEMBERS AND BURLINGAME BECAUSE F. GARIL MANPOWER SERVICES IS AN INDEPENDENT
CONTRACTOR.11
21
Respondent contends that there is no employer-employee relationship between the parties.12 Petitioner, on the other hand, insists
that there is.13
The resolution of this issue boils down to a determination of the true status of F. Garil, i.e., whether it is an independent contractor or
a labor-only contractor.
The case of De Los Santos v. NLRC14 succinctly enunciates the statutory criteria:
Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and
undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters connected with the performance of the work except as to the
results thereof; and 2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the conduct of the business.15
According to Section 5 of DOLE Department Order No. 18-02, Series of 2002:16
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 [is] present:
i) The contractor or sub-contractor 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.
Given the above criteria, we agree with the Secretary that F. Garil is not an independent contractor.
First, F. Garil does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, and
other materials, to qualify as an independent contractor. No proof was adduced to show F. Garil’s capitalization.
Second, the work of the promo-girls was directly related to the principal business or operation of Burlingame. Marketing and selling
of products is an essential activity to the main business of the principal.
Lastly, F. Garil did not carry on an independent business or undertake the performance of its service contract according to its own
manner and method, free from the control and supervision of its principal, Burlingame.
The "four-fold test" will show that respondent is the employer of petitioner’s members. 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
 22

dismissal; and (d) the employer’s power to control the employee’s conduct. The most important element is the employer’s control of
the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.17
A perusal of the contractual stipulations between Burlingame and F. Garil shows the following:
1. The AGENCY shall provide Burlingame Corporation or the CLIENT, with sufficient number of screened, tested and pre-selected
personnel (professionals, highly-skilled, skilled, semi-skilled and unskilled) who will be deployed in establishment selling products
manufactured by the CLIENT.
2. The AGENCY shall be responsible in paying its workers under this contract in accordance with the new minimum wage including the
daily living allowances and shall pay them overtime or remuneration that which is authorized by law.
3. It is expressly understood and agreed that the worker(s) supplied shall be considered or treated as employee(s) of the AGENCY.
Consequently, there shall be no employer-employee relationship between the worker(s) and the CLIENT and as such, the AGENCY
shall be responsible to the benefits mandated by law.
These are indications that F. Garil was not left alone in the supervision and control of its alleged employees. Consequently, it can be
concluded that F. Garil was not an independent contractor since it did not carry a distinct business free from the control and
supervision of Burlingame.
It goes without saying that the contractual stipulation on the nonexistence of an employer-employee relationship between
Burlingame and the personnel provided by F. Garil has no legal effect. While the parties may freely stipulate terms and conditions of a
contract, such contractual stipulations should not be contrary to law, morals, good customs, public order or public policy. A
contractual stipulation to the contrary cannot override factual circumstances firmly establishing the legal existence of an employer-
employee relationship.
Under this circumstance, there is no doubt that F. Garil was engaged in labor-only contracting, and as such, is considered merely an
agent of Burlingame. In labor-only contracting, the law creates an employer-employee relationship to prevent a circumvention of
labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of
the labor-only contractor as if such employees had been directly employed by the principal employer.21 Since F. Garil is a labor-only
contractor, the workers it supplied should be considered as employees of Burlingame in the eyes of the law.

4. For and in consideration of the service to be rendered by the AGENCY to the CLIENT, the latter shall during the terms of agreement
pay to the AGENCY the sum of Seven Thousand Five Hundred Pesos Only (P7,500.00) per month per worker on the basis of Eight (8)
hours work payable up-to-date, semi-monthly, every 15th and 30th of each calendar month. However, these rates may be subject to
change proportionately in the event that there will be revisions in the Minimum Wage Law or any law related to salaries and wages.
5. The CLIENT shall report to the AGENCY any of its personnel assigned to it if those personnel are found to be inefficient,
troublesome, uncooperative and not observing the rules and regulations set forth by the CLIENT. It is understood and agreed that the
CLIENT may request any time the immediate replacement of any personnel(s) assigned to them.18
WHEREFORE, the challenged Decision of the Court of Appeals dated August 29, 2003 and the Resolution dated March 15, 2004
denying the motion for reconsideration are REVERSED and SET ASIDE. The decision of the Secretary of Labor and Employment
ordering the holding of a certification election among the rank-and-file promo employees of Burlingame is reinstated.
Costs against respondent.
SO ORDERED.

It is patent that the involvement of F. Garil in the hiring process was only with respect to the recruitment aspect, i.e. the screening,
testing and pre-selection of the personnel it provided to Burlingame. The actual hiring itself was done through the deployment of
personnel to establishments by Burlingame.

The contract states that Burlingame would pay the workers through F. Garil, stipulating that Burlingame shall pay F. Garil a certain sum
per worker on the basis of eight-hour work every 15th and 30th of each calendar month. This evinces the fact that F. Garil merely
served as conduit in the payment of wages to the deployed personnel. The interpretation would have been different if the payment
was for the job, project, or services rendered during the month and not on a per worker basis. In Vinoya v. National Labor Relations
Commission,19 we held:

The Court takes judicial notice of the practice of employers who, in order to evade the liabilities under the Labor Code, do not issue
payslips directly to their employees. Under the current practice, a third person, usually the purported contractor (service or
manpower placement agency), assumes the act of paying the wage. For this reason, the lowly worker is unable to show proof that it
was directly paid by the true employer. Nevertheless, for the workers, it is enough that they actually receive their pay, oblivious of the
need for payslips, unaware of its legal implications. Applying this principle to the case at bar, even though the wages were coursed
through PMCI, we note that the funds actually came from the pockets of RFC. Thus, in the end, RFC is still the one who paid the wages
of petitioner albeit indirectly.20

The contract also provides that "any personnel found to be inefficient, troublesome, uncooperative and not observing the rules and
regulations set forth by Burlingame shall be reported to F. Garil and may be replaced upon request." Corollary to this circumstance
would be the exercise of control and supervision by Burlingame over workers supplied by F. Garil in order to establish the inefficient,
troublesome, and uncooperative nature of undesirable personnel. Also implied in the provision on replacement of personnel carried
upon request by Burlingame is the power to fire personnel.
 23

P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95

[G.R. NO. 162813 : February 12, 2007] b) Overtime Pay: (3 hours/day)
03/20/97 - 4/30/97 = 1.36 mos.
FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, Petitioners, v. JIMMY LEBATIQUE and THE HONORABLE COURT OF P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50
APPEALS, Respondents. 05/01/97 - 02/05/98 = 9.16 mos.
P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
DECISION 02/06/98 - 10/30/99 = 20.83 mos.
P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39
QUISUMBING, J.: 10/31/99 - 01/24/00 = 2.80 mos.
P 223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77
Before us is a Petition for Review on Certiorari assailing the Decision1 dated September 30, 2003 of the Court of Appeals in CA-G.R. SP TOTAL AWARD P 196,659.72
No. 76196 and its Resolution2 dated March 15, 2004 denying the motion for reconsideration. The appellate court had reversed the SO ORDERED.5
Decision3 dated October 15, 2002 of the National Labor Relations Commission (NLRC) setting aside the Decision4 dated June 27, 2001
of the Labor Arbiter. On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. The NLRC held that there was no
dismissal to speak of since Lebatique was merely suspended. Further, it found that Lebatique was a field personnel, hence, not
Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver with entitled to overtime pay and service incentive leave pay. Lebatique sought reconsideration but was denied.
a daily wage of P223.50. He delivered animal feeds to the company's clients.
Aggrieved, Lebatique filed a petition for certiorari with the Court of Appeals.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required
to make a second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far East's General Manager and The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January 24, 2000 but was illegally
petitioner Alexander Uy, suspended Lebatique apparently for illegal use of company vehicle. Even so, Lebatique reported for work the dismissed on January 29, 2000 when Alexander told him to look for another job. It also found that Lebatique was not a field personnel
next day but he was prohibited from entering the company premises. and therefore entitled to payment of overtime pay, service incentive leave pay, and 13th month pay.

On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and It reinstated the decision of the Labor Arbiter as follows:
Complaints Unit concerning the nonpayment of his overtime pay. According to Lebatique, two days later, he received a telegram from
petitioners requiring him to report for work. When he did the next day, January 29, 2000, Alexander asked him why he was claiming WHEREFORE, premises considered, the decision of the NLRC dated 27 December 2002 is hereby REVERSED and the Labor Arbiter's
overtime pay. Lebatique explained that he had never been paid for overtime work since he started working for the company. He also decision dated 27 June 2001 REINSTATED.
told Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another
job. SO ORDERED.6

On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor Arbiter found that Petitioners moved for reconsideration but it was denied.
Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13th month pay, service
incentive leave pay, and overtime pay. The dispositive portion of the decision is quoted herein in full, as follows: Hence, the instant petition wherein petitioners assign the following errors:

WHEREFORE, we find the termination of complainant illegal. He should thus be ordered reinstated with full backwages. He is likewise THE COURT OF APPEALS - ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15
ordered paid his 13th month pay, service incentive leave pay and overtime pay as computed by the Computation and Examination OCTOBER 2002 AND IN RULING THAT THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.
Unit as follows:
THE COURT OF APPEALS - ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15
a) Backwages: OCTOBER 2002 AND IN RULING THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED TO OVERTIME
01/25/00 - 10/31/00 = 9.23 mos. PAY AND SERVICE INCENTIVE LEAVE PAY.
P 223.50 x 26 x 9.23 = P 53,635.53
11/01/00 - 06/26/01 = 7.86 mos. THE COURT OF APPEALS - ERRED IN NOT DISMISSING THE PETITION FOR CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO
P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53 ATTACH CERTIFIED TRUE COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE PUBLIC RESPONDENT.7

13th Month Pay: 1/12 of P 104,725.53 = 8,727.13 Simply stated, the principal issues in this case are: (1) whether Lebatique was illegally dismissed; and (2) whether Lebatique was a
Service Incentive Leave Pay field personnel, not entitled to overtime pay.
01/25/00 - 10/31/00 = 9.23 mos.
P 223.50 x 5/12 x 9.23 = P 859.54 Petitioners contend that, (1) Lebatique was not dismissed from service but merely suspended for a day due to violation of company
11/01/00 - 06/26/01 = 7.86 mos. rules; (2) Lebatique was not barred from entering the company premises since he never reported back to work; and (3) Lebatique is

estopped from claiming that he was illegally dismissed since his complaint before the DOLE was only on the nonpayment of his
overtime pay.
Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel whose time outside
the company premises cannot be determined with reasonable certainty. According to petitioners, the drivers do not observe regular
working hours unlike the other office employees. The drivers may report early in the morning to make their deliveries or in the
afternoon, depending on the production of animal feeds and the traffic conditions. Petitioners also aver that Lebatique worked for
less than eight hours a day.8
Lebatique for his part insists that he was illegally dismissed and was not merely suspended. He argues that he neither refused to work
nor abandoned his job. He further contends that abandonment of work is inconsistent with the filing of a complaint for illegal
dismissal. He also claims that he is not a field personnel, thus, he is entitled to overtime pay and service incentive leave pay.
After consideration of the submission of the parties, we find that the petition lacks merit. We are in agreement with the decision of
the Court of Appeals sustaining that of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the termination was for a valid cause.9
In this case, petitioners failed to discharge such burden. Petitioners aver that Lebatique was merely suspended for one day but he
abandoned his work thereafter. To constitute abandonment as a just cause for dismissal, there must be: (a) absence without
justifiable reason; and (b) a clear intention, as manifested by some overt act, to sever the employer-employee relationship.10
The records show that petitioners failed to prove that Lebatique abandoned his job. Nor was there a showing of a clear intention on
the part of Lebatique to sever the employer-employee relationship. When Lebatique was verbally told by Alexander Uy, the
company's General Manager, to look for another job, Lebatique was in effect dismissed. Even assuming earlier he was merely
suspended for illegal use of company vehicle, the records do not show that he was afforded the opportunity to explain his side. It is
clear also from the sequence of the events leading to Lebatique's dismissal that it was Lebatique's complaint for nonpayment of his
overtime pay that provoked the management to dismiss him, on the erroneous premise that a truck driver is a field personnel not
entitled to overtime pay.
An employee who takes steps to protest his layoff cannot by any stretch of imagination be said to have abandoned his work and the
filing of the complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment.11 A contrary
notion would not only be illogical but also absurd.
It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he was suspended by management's
unilateral act. What matters is that he filed the complaint for illegal dismissal on March 20, 2000, after he was told not to report for
work, and his filing was well within the prescriptive period allowed under the law.
On the second issue, Article 82 of the Labor Code is decisive on the question of who are referred to by the term "field personnel." It
provides, as follows:
ART. 82. Coverage. - The provisions of this title [Working Conditions and Rest Periods] 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.
"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.
24
In Auto Bus Transport Systems, Inc. v. Bautista,12 this Court emphasized 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 employee's
performance is unsupervised by the employer. We held that 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 determine 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 employee's time and performance are constantly supervised by the employer.13
As correctly found by the Court of Appeals, Lebatique is not a field personnel as defined above for the following reasons: (1) company
drivers, including Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the discretion to
solicit, select and contact prospective clients; and (3) Far East issued a directive that company drivers should stay at the client's
premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.14 Even petitioners admit that the drivers can
report early in the morning, to make their deliveries, or in the afternoon, depending on the production of animal feeds.15 Drivers, like
Lebatique, are under the control and supervision of management officers. Lebatique, therefore, is a regular employee whose tasks are
usually necessary and desirable to the usual trade and business of the company. Thus, he is entitled to the benefits accorded to
regular employees of Far East, including overtime pay and service incentive leave pay.
Note that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause
of action accrued; otherwise, they shall be forever barred.16 Further, if it is established that the benefits being claimed have been
withheld from the employee for a period longer than three 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 years before the filing of the complaint.17
Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at
the time he was terminated.18 On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996
is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years
preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by
petitioners to compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time
records, payroll, or other documents in management's control to determine the correct overtime pay due Lebatique.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP
No. 76196 and itsResolutiondated March 15, 2004 are AFFIRMED with MODIFICATION to the effect that the case is hereby
REMANDED to the Labor Arbiter for further proceedings to determine the exact amount of overtime pay and other monetary benefits
due Jimmy Lebatique which herein petitioners should pay without further delay.
Costs against petitioners.
SO ORDERED.

[G.R. NO. 156146 : June 21, 2007]
OLONGAPO MAINTENANCE SERVICES, INC., Petitioner, v. EDGARDO B. CHANTENGCO, SALVACION S. ANIGAN, POLICARPIO S.
ANIGAN, NOEL C. MENDOZA, DANIEL VALENTIN, MANUEL T. MARIANO, CARLOS PALABYAB, BETTY B. OLA, SALICIO R. MAGNO,
MICHAEL SALAZAR, LOPE R. MAGNO, GERARDO G. AQUINO, EDWIN Q. DAYANDANTE, JOSE P. PRIEL, ROMEO O. CLETE, ERNESTO O.
CLETE, SAMUEL P. MIRALPES, PATERNO R. BERZUELA, ANTONIO C. VALDEZ, et al Respondents.
DECISION
NACHURA, J.:
This Petition for Review on Certiorari assails the July 29, 2002 Decision1 of the Court of Appeals and its Resolution2 dated November
14, 2002 in CA-G.R. SP No. 67474, which, respectively, denied the Petition for Certiorari and the motion for reconsideration filed by
Olongapo Maintenance Services, Inc. (OMSI).
OMSI is a corporation engaged in the business of providing janitorial and maintenance services to various clients, including
government-owned and controlled corporations. On various dates beginning 1986, OMSI hired the respondents as janitors, grass
cutters, and degreasers, and assigned them at the Ninoy Aquino International Airport (NAIA). On January 14, 1999, OMSI terminated
respondents' employment.
Claiming termination without just cause and non-payment of labor standard benefits, respondents filed a complaint for illegal
dismissal, underpayment of wages, and non-payment of holiday and service incentive leave pays, with prayer for payment of
separation pay, against OMSI.
For its part, OMSI denied the allegations in the complaint. It averred that when Manila International Airport Authority (MIAA)
awarded to OMSI the service contracts for the airport, OMSI hired respondents as janitors, cleaners, and degreasers to do the
services under the contracts. OMSI informed the respondents that they were hired for the MIAA project and their employments were
coterminous with the contracts. As project employees, they were not dismissed from work but their employments ceased when the
MIAA contracts were not renewed upon their expiration. The termination of respondents' employment cannot, thus, be considered
illegal.
In a Decision3 dated November 19, 1999, the Labor Arbiter dismissed the complaint, viz.:
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING for lack of merit the claims for separation pay, wage
differentials and holiday pay except that respondent is hereby ordered to pay the seventy one (71) complainants listed in pages three
and four of the latter's position paper their service incentive leave pay.
SO ORDERED.4
On appeal by the respondents, the NLRC modified the Labor Arbiter's ruling. It held that respondents were regular and not project
employees. Hence, they are entitled to separation pay:
WHEREFORE, the decision appealed from is hereby modified by granting in addition to the grant of service incentive leave pay,
payment of separation pay equivalent to half-month pay per [every] year of service or one month pay, whichever is higher.
SO ORDERED.5
OMSI sought reconsideration of the ruling, but the NLRC denied the motion on July 30, 2001.
25
Petitioner went up to the Court of Appeals via a Petition for Certiorari, imputing grave abuse of discretion to the NLRC for reversing
the factual findings and the decision of the Labor Arbiter. However, the Court of Appeals dismissed the petition. The appellate court
agreed with the NLRC that the continuous rehiring of respondents, who performed tasks necessary and desirable in the usual
business of OMSI, was a clear indication that they were regular, not project employees. The court added that OMSI failed to establish
that respondents' employment had been fixed for a specific project or undertaking, the completion or termination of which had been
determined at the time of their engagement or hiring. Neither had it shown that respondents were informed of the duration and
scope of their work when they were hired. Furthermore, OMSI did not submit to the Department of Labor and Employment (DOLE)
reports of termination of the respondents, thereby bolstering respondents' claim of regular employment. OMSI filed a motion for
reconsideration, but the Court of Appeals denied it on November 14, 2002.
Aggrieved by the resolutions of the Court of Appeals, OMSI comes to this Court theorizing that:
THE COURT OF APPEALS COMMITTED GRAVE ERROR AND GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN SUSTAINING THE NLRC'S RULING THAT RESPONDENTS ARE NOT PROJECT EMPLOYEES. CONCOMITANT THERETO,
THERE IS NEITHER FACTUAL NOR LEGAL BASIS FOR THE AWARD OF SEPARATION PAY.6
OMSI insists that respondents were project employees. Respondents, on the other hand, maintain that they were OMSI's regular
employees.
Article 280 of the Labor Code 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 the
engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season . . . (Italics supplied.)
Without question, respondents, as janitors, grass cutters, and degreasers, performed work "necessary or desirable" in the janitorial
and maintenance service business of OMSI.
OMSI, however, argues that the respondents' performance of activities necessary and desirable to its business does not necessarily
and conclusively mean that respondents were regular employees. OMSI asserts that respondents were project employees and their
employment was coterminous with OMSI's service contracts with the MIAA. Thus, when the service contracts were terminated and
the respondents were not re-assigned to another project, OMSI cannot be held liable for illegal dismissal.
The argument does not persuade.
The principal test in determining whether an employee is a project employee is whether he/she is assigned to carry out a "specific
project or undertaking," the duration and scope of which are specified at the time the employee is engaged in the project,7 or where
the work or service to be performed is seasonal in nature and the employment is for the duration of the season.8 A true project
employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at
the time of hiring.9
In the instant case, the record is bereft of proof that the respondents' engagement as project employees has been predetermined, as
required by law. We agree with the Court of Appeals that OMSI did not provide convincing evidence that respondents were informed
that they were to be assigned to a "specific project or undertaking" when OMSI hired them. Notably, the employment contracts for
the specific project signed by the respondents were never presented. All that OMSI submitted in the proceedings a quo are the
 26

service contracts between OMSI and the MIAA. Clearly, OMSI utterly failed to establish by substantial evidence that, indeed,
respondents were project employees and their employment was coterminous with the MIAA contract.

Evidently cognizant of such neglect, OMSI attempted to correct the situation by attaching copies of the application forms10 of the
respondents to its motion for reconsideration of the Court of Appeals' Decision. Such practice cannot be tolerated. This practice of
submitting evidence late is properly rejected as it defeats the speedy administration of justice involving poor workers. It is also
unfair.11

OMSI's reliance on Mamansag v. National Labor Relations Commission,12 Cartagenas v. Romago Electric Company, Inc.,13 and
Sandoval Shipyards, Inc. v. National Labor Relations Commission14 is misplaced. Said cases are not on all fours with the case at
bench.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

In Mamansag, Consumer Pulse Inc. duly presented the contract of employment showing that Mamansag was hired for a specific
project and the completion or termination of said project was determined at the start of the employment. In Cartagenas,
documentary exhibits were offered showing that the employee had been issued appointments from project to project and was issued
a notice of temporary lay-off when the project was suspended due to lack of funds. Finally, in the case of Sandoval Shipyards, the
termination of the project employees was duly reported to the then Ministry of Labor and Employment. These circumstances are not
true in OMSI's case. As mentioned, no convincing evidence was offered to prove that respondents were informed that they were to
be assigned to a "specific project or undertaking." Also, OMSI never reported respondents' termination to the then Department of
Labor and Employment (DOLE). In Philippine Long Distance Telephone Co. v. Ylagan,15 we held that the failure of the employee to file
termination reports was an indication that an employee was not a project but a regular employee.

In termination cases, the burden of proof rests on the employer to show that the dismissal is for a just cause. Thus, employers who
hire project employees are mandated to state and, once its veracity is challenged, to prove the actual basis for the latter's
dismissal.16 Unfortunately for OMSI, it failed to discharge the burden. All that we have is OMSI's self-serving assertion that the
respondents were hired as project employees.

Having been illegally dismissed, the NLRC cannot be considered to have acted whimsically in granting respondents separation pay in
lieu of their reinstatement. Accordingly, the Court of Appeals committed no reversible error nor grave abuse of discretion in denying
OMSI's petition for certiorari.

WHEREFORE, the Petition for Review is DENIED and the assailed Decision and Resolution of the Court of Appeals are AFFIRMED.

SO ORDERED.
 27

G.R. No. 167622 November 7, 2008

January to December 10, 2002
GREGORIO V. TONGKO, petitioner -
vs. P 865,096.07
THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS, respondents. 2001
-
DECISION 6,214,737.11
2000
VELASCO, JR., J.: -
8,003,180.38
The Case 1999
-
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 6,797,814.05
CA-G.R. SP No. 88253, entitled The Manufacturers Life Insurance Co. (Phils.), Inc. v. National Labor Relations Commission and Gregorio 1998
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. 4,805,166.34
1997
The Facts -
2,822,620.003
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 The problem started sometime in 2001, when Manulife instituted manpower development programs in the regional sales
relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement2 (Agreement) he executed with Manulife. management level. Relative thereto, De Dios addressed a letter dated November 6, 20014 to Tongko regarding an October 18, 2001
Metro North Sales Managers Meeting. In the letter, De Dios stated:
In the Agreement, it is provided that:
The first step to transforming Manulife into a big league player has been very clear - to increase the number of agents to at least
It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or 1,000 strong for a start. This may seem diametrically opposed to the way Manulife was run when you first joined the organization.
interpreted as creating an employer-employee relationship between the Company and the Agent. 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
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 The issues around agent recruiting are central to the intended objectives hence the need for a Senior Managers' meeting earlier last
applications or policies obtained by or through the Agent or from policyholders allotted by the Company to the Agent for servicing, month when Kevin O'Connor, SVP - Agency, took to the floor to determine from our senior agency leaders what more could be done
subject to subsequent confirmation of receipt of payment by the Company as evidenced by an Official Receipt issued by the Company to bolster manpower development. At earlier meetings, Kevin had presented information where evidently, your Region was the
directly to the policyholder. 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.
xxxx
While discussions, in general, were positive other than for certain comments from your end which were perceived to be uncalled for,
The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving written 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
notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment, abandonment, gleaned from some of your previous comments in prior meetings (both in group and one-on-one), it was not clear that we were
withdrawal or cancellation of the right to terminate this Agreement by the Company shall be construed for any previous failure to proceeding in the same direction.
exercise its right under any provision of this Agreement.
Kevin held subsequent series of meetings with you as a result, one of which I joined briefly. In those subsequent meetings you
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15) reiterated certain views, the validity of which we challenged and subsequently found as having no basis.
days notice in writing. x x x
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
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the directions the company was taking. For this reason, I sought a meeting with everyone in your management team, including you, to
CA found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management clear the air, so to speak.
overrides, may be summarized as follows:

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".
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
28
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-on-one 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 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 (4th 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 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
29
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. 00-11-10330-2002 (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. 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 employer-employee relationship existed between the two parties,
then jurisdiction over the case properly lies with the Regional Trial Court.
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 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.
xxx
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 employer-employee 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:
30
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.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.)
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.
While Amada Toledo, a Branch Manager of Manulife, stated in her Affidavit dated April 29, 200323 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;
31
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, 200324 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-on- one 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.
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
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.
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.
32
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 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
(4) Attorney's fees equivalent to ten percent (10%) of the aforementioned backwages and separation pay.
Costs against respondent Manulife. SO ORDERED.
[G.R. NO. 151309 : October 15, 2008]
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President, JOSELITO LARIÑO, VIVENCIO B. BARTE,
SATURNINO EGERA and SIMPLICIO AYA-AY, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C. RIVERA, Respondents.
DECISION
NACHURA, J.:
This petition seeks a review of the Decision1 of the Court of Appeals (CA) dated July 24, 2001 and Resolution dated December 20,
2001, which affirmed the finding of the National Labor Relations Commission (NLRC) that the petitioners' transfer to another
workplace did not amount to a constructive dismissal and an unfair labor practice.
The pertinent factual antecedents are as follows:
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City.
Petitioners Joselito Lariño, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions
of helper, shipment helper and factory workers, respectively, assigned to the Production Department. They are members of Bisig
Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees.
Tryco and the petitioners signed separate Memorand[a] of Agreement2 (MOA), providing for a compressed workweek schedule to be
implemented in the company effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and Employment
Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in the
MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be
due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the
right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed
workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the implementation of a
compressed workweek in the company.3
In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining agreement (CBA) but failed to arrive at a new
agreement.
Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture
reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City:
MR. WILFREDO C. RIVERA
President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
33
Dear Mr. Rivera:
This is to remind you that your License to Operate as Veterinary Drug and Product Manufacturer is addressed at San Rafael, Bulacan,
and so, therefore, your production should be done at the above mentioned address only. Further, production of a drug includes
propagation, processing, compounding, finishing, filling, repacking, labeling, advertising, storage, distribution or sale of the veterinary
drug product. In no instance, therefore, should any of the above be done at your business office at 117 M. Ponce St., EDSA, Caloocan
City.
Please be guided accordingly.
Thank you.
Very truly yours,
(sgd.)
EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division4
Accordingly, Tryco issued a Memorandum5 dated April 7, 1997 which directed petitioner Aya-ay to report to the company's plant site
in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18, 1997.6 Subsequently, through a
Memorandum7 dated May 9, 1997, Tryco also directed petitioners Egera, Lariño and Barte to report to the company's plant site in
Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In protest, BMT
declared a strike on May 26, 1997.
In August 1997, petitioners filed their separate complaints8 for illegal dismissal, underpayment of wages, nonpayment of overtime
pay and service incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C. Rivera. In their Position Paper,9
petitioners alleged that the company acted in bad faith during the CBA negotiations because it sent representatives without authority
to bind the company, and this was the reason why the negotiations failed. They added that the management transferred petitioners
Lariño, Barte, Egera and Aya-ay from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the company to pay
them their salaries from May 26 to 31, 1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4.
In their defense, respondents averred that the petitioners were not dismissed but they refused to comply with the management's
directive for them to report to the company's plant in San Rafael, Bulacan. They denied the allegation that they negotiated in bad
faith, stating that, in fact, they sent the Executive Vice-President and Legal Counsel as the company's representatives to the CBA
negotiations. They claim that the failure to arrive at an agreement was due to the stubbornness of the union panel.
Respondents further averred that, long before the start of the negotiations, the company had already been planning to decongest the
Caloocan office to comply with the government policy to shift the concentration of manufacturing activities from the metropolis to
the countryside. The decision to transfer the company's production activities to San Rafael, Bulacan was precipitated by the letter-
reminder of the Bureau of Animal Industry.
On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit.10 The Labor Arbiter held that the transfer of the
petitioners would not paralyze or render the union ineffective for the following reasons: (1) complainants are not members of the
negotiating panel; and (2) the transfer was made pursuant to the directive of the Department of Agriculture.

The Labor Arbiter also denied the money claims, ratiocinating that the nonpayment of wages was justified because the petitioners did
not render work from May 26 to 31, 1997; overtime pay is not due because of the compressed workweek agreement between the
union and management; and service incentive leave pay cannot be claimed by the complainants because they are already enjoying
vacation leave with pay for at least five days. As for the claim of noncompliance with Wage Order No. 4, the Labor Arbiter held that
the issue should be left to the grievance machinery or voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision, dismissing the case, thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby AFFIRMED and complainants' appeal therefrom DISMISSED for
lack of merit. Complainants Joselito Lariño, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are directed to report to work at
respondents' San Rafael Plant, Bulacan but without backwages. Respondents are directed to accept the complainants back to work.
SO ORDERED.11
On December 22, 1999, the NLRC denied the petitioners' motion for reconsideration for lack of merit.12
Left with no recourse, petitioners filed a Petition for Certiorari with the CA.
On July 24, 2001, the CA dismissed the Petition for Certiorari and ruled that the transfer order was a management prerogative not
amounting to a constructive dismissal or an unfair labor practice. The CA further sustained the enforceability of the MOA, particularly
the waiver of overtime pay in light of this Court's rulings upholding a waiver of benefits in exchange of other valuable privileges. The
dispositive portion of the said CA decision reads:
WHEREFORE, the instant petition is DISMISSED. The Decision of the Labor Arbiter dated February 27, 1998 and the Decision and
Resolution of the NLRC promulgated on October 29, 1999 and December 22, 1999, respectively, in NLRC-NCR Case Nos. 08-05715-97,
08-06115-97 and 08-05920-97, are AFFIRMED.
SO ORDERED.13
The CA denied the petitioners' motion for reconsideration on December 20, 2001.14
Dissatisfied, petitioners filed this Petition for Review raising the following issues:
-A - THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER AND THE
COMMISSION THAT THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL PETITIONERS.
-B - THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED ACTS OF
UNFAIR LABOR PRACTICE.
-C - THE COURT OF APPEALS ERRED IN NOT FINDING AND CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS
AND TO DAMAGES, AS WELL AS LITIGATION COSTS AND ATTORNEY'S FEES.15
The petition has no merit.
We have no reason to deviate from the well-entrenched rule that findings of fact of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when
supported by substantial evidence.16 This is particularly true when the findings of the Labor Arbiter, the NLRC and the CA are in
absolute agreement.17 In this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the petitioners were not
constructively dismissed and that the transfer orders did not amount to an unfair labor practice. But if only to disabuse the minds of
34
the petitioners who have persistently pursued this case on the mistaken belief that the labor tribunals and the appellate court
committed grievous errors, this Court will go over the issues raised in this petition.
Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They maintain that the letter of the Bureau of
Animal Industry is not credible because it is not authenticated; it is only a ploy, solicited by respondents to give them an excuse to
effect a massive transfer of employees. They point out that the Caloocan City office is still engaged in production activities until now
and respondents even hired new employees to replace them.
We do not agree.
We refuse to accept the petitioners' wild and reckless imputation that the Bureau of Animal Industry conspired with the respondents
just to effect the transfer of the petitioners. There is not an iota of proof to support this outlandish claim. Absent any evidence, the
allegation is not only highly irresponsible but is grossly unfair to the government agency concerned. Even as this Court has given
litigants and counsel a relatively wide latitude to present arguments in support of their cause, we will not tolerate outright
misrepresentation or baseless accusation. Let this be fair warning to counsel for the petitioners.
Furthermore, Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant
to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise
effectively. While the law is solicitous of the welfare of 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.18
This prerogative extends to the management's right to regulate, according to its own discretion and judgment, all aspects of
employment, including the freedom to transfer and reassign employees according to the requirements of its business.19
Management's prerogative of transferring and reassigning employees from one area of operation to another in order to meet the
requirements of the business is, therefore, generally not constitutive of constructive dismissal.20 Thus, the consequent transfer of
Tryco's personnel, assigned to the Production Department was well within the scope of its management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or
diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal.21
However, the employer has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The employer
must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank
or a diminution of his salaries, privileges and other benefits.22
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other
privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great
inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to
Bulacan.
The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal.23
Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by
reason of the transfer is not a valid reason to disobey an order of transfer.24
Incidentally, petitioners cite Escobin v. NLRC25 where the Court held that the transfer of the employees therein was unreasonable.
However, the distance of the workplace to which the employees were being transferred can hardly compare to that of the present
case. In that case, the employees were being transferred from Basilan to Manila; hence, the Court noted that the transfer would have
entailed the separation of the employees from their families who were residing in Basilan and accrual of additional expenses for living
accommodations in Manila. In contrast, the distance from Caloocan to San Rafael, Bulacan is not considerably great so as to compel
 35

petitioners to seek living accommodations in the area and prevent them from commuting to Metro Manila daily to be with their 4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised
families. by the parties to the agreement.

Petitioners, however, went further and argued that the transfer orders amounted to unfair labor practice because it would paralyze
and render the union ineffective.
To begin with, we cannot see how the mere transfer of its members can paralyze the union. The union was not deprived of the
membership of the petitioners whose work assignments were only transferred to another location.
More importantly, there was no showing or any indication that the transfer orders were motivated by an intention to interfere with
the petitioners' right to organize. Unfair labor practice refers to acts that violate the workers' right to organize. With the exception of
Article 248(f) of the Labor Code of the Philippines, the prohibited acts are related to the workers' right to self-organization and to the
observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices.26
5. The effectivity and implementation of the new working time arrangement shall be by agreement of the parties.
PESALA v. NLRC,28 cited by the petitioners, is not applicable to the present case. In that case, an employment contract provided that
the workday consists of 12 hours and the employee will be paid a fixed monthly salary rate that was above the legal minimum wage.
However, unlike the present MOA which specifically states that the employee waives his right to claim overtime pay for work
rendered beyond eight hours, the employment contract in that case was silent on whether overtime pay was included in the payment
of the fixed monthly salary. This necessitated the interpretation by the Court as to whether the fixed monthly rate provided under the
employment contract included overtime pay. The Court noted that if the employee is paid only the minimum wage but with overtime
pay, the amount is still greater than the fixed monthly rate as provided in the employment contract. It, therefore, held that overtime
pay was not included in the agreed fixed monthly rate.

Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to law. The MOA is
enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.27
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of
a compressed workweek scheme, thus:
Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek,
there is no room for interpretation and its terms should be implemented as they are written.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001 and Resolution dated December 20, 2001 are
AFFIRMED.
SO ORDERED.

The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater
work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would
mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses;
longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other
personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal
incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle
fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5)
days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium
compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue
to the employees.

Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience that will be caused
the petitioners by their transfer to a farther workplace.

Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the
employees in the implementation of a compressed workweek scheme:

1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal
weekly hours of work prior to adoption of the compressed workweek arrangement;

2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees;

3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of the
compressed workweek scheme, all such excess hours shall be considered overtime work and shall be compensated in accordance
with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA);

G.R. No. 157680 October 8, 2008
EQUIPMENT TECHNICAL SERVICES or JOSEPH JAMES DEQUITO, petitioners,
vs.
COURT OF APPEALS, ALEX ALBINO, REY ALBINO, JULIUS ABANES, MIGUEL ALINAB, CHRISTOPHER BIOL, NELSON CATONG, RENATO
DULOT, FLORO PACUNDO, MARCELITO GAMAS, REYNALDO LIMA, SAMMY MESAGAL, ERNESTO PADILLA, and CONRADO SULIBAGA,
respondents.
DECISION
VELASCO, JR., J.:
This petition for review under Rule 45 assails and seeks the reversal of the Amended Decision and Resolution dated March 3, 2003
and March 24, 2003, respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 67568. The assailed amended decision and
resolution effectively set aside and reversed the consolidated resolutions dated July 30, 2001 and September 24, 2001 rendered by
the National Labor Relations Commission (NLRC) and reinstated the July 24, 2000 Decision of Labor Arbiter Ermita T. Abrasaldo-
Cuyuca in NLRC NCR Case Nos. 00-01-00571-99, 00-02-01429-99, and 00-02-01615-99.
Petitioner Equipment Technical Services (ETS) is primarily engaged in the business of sub-contracting plumbing works of on-going
building construction. Among its clients was Uniwide Sales, Inc. (Uniwide). Petitioner Joseph James Dequito was, during the period
material, occupying the position of manager of ETS,1 albeit the CA referred to him as ETS’ president. On various occasions involving
different projects, ETS hired the services of private respondents as pipe fitters, plumbers, or threaders.
In December 1998, ETS experienced financial difficulties when Uniwide, its client at the time, failed to pay for the plumbing work
being done at its Coastal Mall. As a result, ETS was only able to pay its employees 13th month pay equivalent to two weeks’ salary.
Unhappy over what they thought was ETS’ failure to release the balance of their 13th month pay, private respondents brought their
case before the Arbitration Branch of the NLRC, docketed as NLRC NCR Case No. 00-01-00571-99 and entitled as Alex Albino, Renato
Dulot, Miguel Alinab, Marcelito Gamas, Julius Abanes, Christopher Biol, Sammy Mesagal, Conrado Sulibaga, Floro Pacundo v.
Equipment Technical Services or Joseph James Dequito.
Later, two other cases were filed against ETS for illegal dismissal and payment of money claims when the complainants thereat were
refused work in another ETS project, i.e., Richville project, allegedly because they refused to sign individual employment contracts
with ETS. These two other cases were Nelson Catong, Roger Lamayon, Christopher Lamayon v. Equipment Technical Services or
Joseph James Dequito, docketed as NLRC NCR Case No. 00-02-01429-99; and Rey Albino, Ernesto Padilla, Reynaldo Lima v. Equipment
Technical Services or Joseph James Dequito, docketed as NLRC NCR Case No. 00-02-01615-99.
The three cases were consolidated before the labor arbiter. Following failed conciliation efforts, all concerned, except Roger and
Christopher Lamayon, submitted, as the labor arbiter directed, their respective position papers.
36
Private respondents’ position2 is summed up as follows: (1) they are regular employees of ETS; (2) ETS dismissed them without cause
and without due process after they filed cases for money claims against ETS in the arbitration branch of the NLRC; (3) ETS has not paid
them their salaries, 13th month pay, service incentive leave pay, overtime pay, and premium pay for holidays and rest days; and (4)
they are entitled to reinstatement to their former positions with paid backwages in addition to their money claims and payment of
attorney’s fees.
ETS’ position3 may be summed up as follows: (1) private respondents were its contractual/project employees engaged for different
projects of the company; (2) they were not illegally dismissed, having been hired on a per project basis; (3) ETS was unable to fully
release private respondents’ 13th month pay because Uniwide failed to pay for its contracted plumbing project; (4) ETS was forced to
abandon the Uniwide project and undertake another project, the Richville project, because the chances of being paid by Uniwide
were dim; (5) ETS asked private respondents to sign employment contracts to formalize their previous agreement but said private
respondents refused; and (6) as a result, ETS was constrained to deny employment to private respondents as it considered the
execution of employment contracts part of management prerogative before employment commences.
On July 24, 2000, Labor Arbiter Abrasaldo-Cuyuca issued a Decision, holding that private respondents were ETS’ regular, not merely
project, employees. Accordingly, ETS was adjudged liable for illegal dismissal and directed to pay private respondents their money
claims plus 10% of the total award as attorney’s fees. The fallo of the subject decision reads as follows:
WHEREFORE, judgment is hereby rendered declaring the dismissal of the complainants illegal.
Further, respondents are further ordered to pay the complainants their backwages, proportionate 13th month pay, [holiday] and
service incentive leave pay.
Ten percent of the total award as attorney’s fees.
Other claims are dismissed for lack of merit.
The complaints of Roger and Christopher all surnamed Lamayon are dismissed without prejudice.
The computation prepared by the Computation Unit, NCR, this Commission is attached [sic] forming part of this decision.
SO ORDERED.4
ETS appealed from the above labor arbiter’s decision. On July 30, 2001, the NLRC rendered a resolution which, while reversing the
labor arbiter’s holding with respect to the nature of private respondents’ employment and the illegality of their dismissal,
nevertheless upheld the validity of the monetary award extended by the labor arbiter, part of which included the award of
backwages. The pertinent portion of the modificatory resolution reads as follows:
ACCORDINGLY, premises considered, the decision appealed from is hereby MODIFIED in that the findings of regularity of employment
and illegal dismissal are hereby VACATED. However, respondents are ordered to give complainants priority in hiring for present and
future projects. All other dispositions are hereby AFFIRMED in toto.
SO ORDERED.
Following the denial on September 24, 2001 of ETS’ motion for reconsideration, ETS elevated its case to the CA via a petition for
certiorari under Rule 65, the recourse docketed as CA-G.R. SP No. 67568. As its principal contention, ETS ascribed on the NLRC the
commission of grave abuse of discretion in affirming the monetary award in favor of private respondents, despite its finding that there
was no illegal dismissal in this case.

On January 23, 2002, the CA rendered judgment disposing as follows:
WHEREFORE, premises considered, the assailed resolutions of the National Labor Relations Commission dated July 30, 2001 and
September 24, 2001 are hereby ANNULLED and SET ASIDE and a new one rendered ORDERING petitioner Equipment Technical
Services to pay private respondents their holiday pay and service incentive leave pay for the year 1998 and the balance of their 13th
month pay for the year 1999.
The case is hereby REMANDED to Labor Arbiter Ermita T. Abrasaldo-Cuyuca for the computation of the same.
The complaint against petitioner Joseph James Dequito is hereby DISMISSED, for lack of merit.
No pronouncement as to costs.
SO ORDERED.
Upon motion of private respondents for reconsideration, the CA issued an Amended Decision5 dated March 3, 2003 vacating its
earlier January 23, 2002 decision. The CA, in main support of its present disposition, stated that the NLRC’s determination that private
respondents are "project workers" is "utterly unsupported by the evidence on record and is patently erroneous" and, therefore, is
tainted with grave abuse of discretion.6 The fallo of the Amended Decision reads:
WHEREFORE, premises considered, the present motion for reconsideration is hereby GRANTED. The petition is hereby DENIED DUE
COURSE and accordingly DISMISSED, for lack of merit. Our Decision dated January 23, 2002 is hereby RECONSIDERED and SET ASIDE
and a new one is hereby entered REVERSING and SETTING ASIDE the assailed Resolutions dated July 30, 2001 and September 24,
2001 of public respondent NLRC in NLRC NCR case No. 00-01-00571-99 (NLRC CA No. 027203-2001), NLRC NCR Case No. 00-02-
01429-99 and NLRC NCR Case No. 00-02-01615-99. The Decision dated July 24, 2000 rendered by Labor Arbiter Ermita T. Abrasaldo-
Cuyuca is hereby REINSTATED and AFFIRMED in all respects, including the computation of the monetary awards in favor of private
respondents forming part of and attached to the same.
With costs against the petitioners.
SO ORDERED.
Hence, this petition on the submission that, contrary to the findings of the CA, but conformably with the determination of the NLRC,
private respondents are seasonal or project workers; the duration of their employment is not permanent but coterminus with the
project to which they are assigned and from whose payroll they are paid. As project employees, private respondents cannot,
according to petitioners, validly maintain an action for illegal dismissal with prayer for reinstatement and payment of backwages, both
reliefs being usually accorded following a finding of illegal dismissal.
The petition is without merit. As we see it, as did the CA and the NLRC, the primary question to be resolved and to which all others
must yield is whether or not private respondents are project employees. The CA, siding with the labor arbiter, as indicated earlier,
answered the poser in the affirmative, while the NLRC resolved it in the negative.
As the Court has consistently held, the service of project employees are coterminus with the project and may be terminated upon the
end or completion of that project or project phase for which they were hired. Regular employees, in contrast, enjoy security of tenure
and are entitled to hold on to their work or position until their services are terminated by any of the modes recognized under the
Labor Code.7
The principal test for determining whether an employee is properly characterized as "project employee," as distinguished from
"regular employee," is whether or not "the project employee" was assigned to carry out "a specific project or undertaking," the
37
duration and scope of which were specified at the time the employees were engaged for that project.8 And as Article 280 of the
Labor Code, defining a regular employee vis-à-vis a project employee, would have it:
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 x x x.
It bears to stress at the outset that ETS admits hiring or employing private respondents to perform plumbing works for various
projects. Given this postulate, regular employment may reasonably be presumed and it behooves ETS to prove otherwise, that is, that
the employment in question was contractual in nature ending upon the expiration of the term fixed in the contract or for a specific
project or undertaking. But the categorical finding of the CA, confirmatory for the most part of that of the labor arbiter, is that not a
single written contract of employment fixing the terms of employment for the duration of the Uniwide project, or any other project,
was submitted by ETS despite the latter’s allegations that private respondents were merely contractual employees. Records of payroll
and other pertinent documents, such as job contracts secured by ETS showing that private respondents were hired for specific
projects, were also not submitted by ETS.9
Moreover, if private respondents were indeed employed as project employees, petitioners should have had submitted a report of
termination every time their employment was terminated owing to the completion of each plumbing project. As correctly held by the
CA in its Amended Decision, citing Tomas Lao Construction v. NLRC,10 ETS’ failure to report the employment termination and file the
necessary papers after every project completion tends to support the claim of private respondents about their not being project
employees.11 Under Policy Instruction No. 20, Series of 1977,12 the report must be made to the nearest public office employment.13
The decision in Violeta v. NLRC is also apropos, particularly when it held:
[The employer] should have filed as many reports of termination as there were construction projects actually finished if petitioners
[employees] were indeed project employees, considering that petitioners were hired and again [hired] for various projects or phases
of work therein. Its failure to submit reports of termination cannot but sufficiently convince us further that petitioners are truly
regular employees. Just as important, the fact that petitioners had rendered more than one year of service at the time of their
dismissal overturns private respondent’s allegations that petitioners were hired for a specific or fixed undertaking for a limited period
of time.14
The Court can allow that, in the instant case, private respondents may have initially been hired for specific projects or undertaking of
petitioner ETS and, hence, may be classified as project employees. Their repeated rehiring to perform tasks necessary to the usual
trade or business of ETS changed the legal situation altogether, for in the later instance, their continuous rehiring took them out from
the scope of workers coterminus with specific projects and had made them regular employees. We said as much in Phesco, Inc. v.
NLRC that "where the employment of project employees is extended long after the supposed project had been finished, the
employees are removed from the scope of project employees and they shall be considered regular employees."15
Parenthetically, petitioners’ assertion that there can be no illegal dismissal of project employees inasmuch as they are not entitled to
security of tenure is inaccurate. The constitutionally-protected right of labor to security of tenure covers both regular and project
workers.16 Their termination must be for lawful cause and must be done in a way which affords them proper notice and hearing.17
In termination disputes, the burden of proving that an employee had been dismissed for a lawful cause or that the exacting
procedural requirements under the Labor Code had been complied with lies with the employer.18 Where there is no showing of a
clear, valid, and legal cause for termination of employment, the law considers the case a matter of illegal dismissal.19
Based on the foregoing criteria, the factual findings of the labor arbiter on the regular nature of private respondents’ employment,
juxtaposed with ETS’ failure to support its "project-workers theory," impel us to dismiss the instant petition. This is as it should be for,
 38

to paraphrase Asuncion v. NLRC, if doubt exists between the evidence of the employers and the employees, the scales of justice must
be tilted in favor of the latter––the employers must adequately show rationally adequate evidence that their case is preponderantly
superior.20

As did the CA, the Court holds that private respondents are regular employees whose services were terminated without lawful cause
and effected without the requisite notice and hearing.

In view of the illegality of the dismissal, the fallo of the Decision of Labor Arbiter Abrasaldo-Cuyuca, as reinstated by the CA in its
assailed Amended Decision, has to be modified in the sense that private respondents are entitled to reinstatement to their previous
positions as pipe fitters or threaders, as the case may be, without loss of rank and seniority rights and with full backwages.

At this juncture, the Court wishes to state that it is taking judicial notice of the fact that no corporation is registered with the
Securities and Exchange Commission under the name "Equipment Technical Services." It is thus but fair that both petitioners’ liability
under this Decision be joint and several.

WHEREFORE, the Amended Decision dated March 3, 2003 of the CA in CA-G.R. SP No. 67568, reinstating the July 24, 2000 Decision of
Labor Arbiter Abrasaldo-Cuyuca, is AFFIRMED with the MODIFICATION that petitioners are jointly and severally ordered to reinstate
private respondents to their former positions, without loss of rank and seniority rights, with backwages from the date of dismissal
until reinstated. As modified, the fallo of the labor arbiter’s Decision shall read:

WHEREFORE, judgment is hereby rendered declaring the dismissal of private respondents illegal.

Petitioners ETS and Joseph James Dequito are ordered jointly and severally to reinstate private respondents ALEX ALBINO, REY
ALBINO, JULIUS ABANES, MIGUEL ALINAB, CHRISTOPHER BIOL, NELSON CATONG, RENATO DULOT, FLORO PACUNDO, MARCELITO
GAMAS, REYNALDO LIMA, SAMMY MESAGAL, ERNESTO PADILLA, and CONRADO SULIBAGA to their respective positions without loss
of rank and seniority rights with full backwages from the date of dismissal up to the date of actual reinstatement. Petitioners are
likewise jointly and severally liable to private respondents for proportionate 13th month pay, holiday pay, and service incentive leave
pay.

Ten percent of the total award shall be paid to the counsel of private respondents as attorney’s fees.

Other claims are dismissed for lack of merit.

The complaints of Roger and Christopher, both surnamed Lamayon, are dismissed without prejudice.

Costs against petitioners.

SO ORDERED.

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 attorney’s 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 ₱700.00, which was increased from
₱600.00 in 2007, ₱500.00 in 2006 and ₱400.00 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 of
the delivered hogs; (2) received the fixed amount of ₱700.00 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 David’s 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 Macasio’s 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 Macasio’s request, only for overseas employment purposes. He
pointed to the "Pinagsamang Sinumpaang Salaysay,"14 executed by Presbitero Solano and Christopher (Antonio Macasio’s co-
butchers), to corroborate his claims.
In the April 30, 2009 decision,15 the LA dismissed Macasio’s complaint for lack of merit. The LA gave credence to David’s 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 ₱700.00 for every work done, regardless of the number of hours that he spent in completing the task and of the volume or
39
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 ₱700.00 fixed wage far exceeds the then prevailing daily minimum wage of ₱382.00. The
LA added that the nature of David’s 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 NLRC’s 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 ₱700.00 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 CA’s Ruling
In its November 22, 2010 decision,22 the CA partly granted Macasio’s certiorari petition and reversed the NLRC’s 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 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 Macasio’s case, the elements that characterize a "field personnel" are
evidently lacking as he had been working as a butcher at David’s "Yiels Hog Dealer" business in Sta. Mesa, Manila under David’s
supervision and control, and for a fixed working schedule that starts at 10:00 p.m.
Accordingly, the CA awarded Macasio’s claim for holiday, SIL and 13th month pay for three years, with 10% attorney’s fees on the total
monetary award. The CA, however, denied Macasio’s 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 CA’s January 31, 2011 resolution.25
The Petition
In this petition,26 David maintains that Macasio’s 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 Macasio’s) 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 ₱700.00 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 David’s position, the ₱700.00 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 David’s employee.
Procedurally, Macasio points out that David’s 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 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 CA’s
factual findings bind this Court, absent a showing that such findings are not supported by the evidence or the CA’s 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 Macasio’s 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 Court’s 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 CA’s decision rendered under a Rule 65 proceeding, this Court’s 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 Court’s 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.
40
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 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 Macasio’s 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 employer-employee 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 Macasio’s 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 David’s 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
employee’s conduct. These elements or indicators comprise the so-called "four-fold" test of employment relationship. Macasio’s
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 Macasio’s 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 ₱700.00 each day after the latter had finished the
day’s 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."

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 Macasio’s work schedule, David could regulate Macasio’s 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 Macasio’s 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 day’s task. Also, David would still engage Macasio’s 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 David’s 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 Macasio’s 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 ₱700.00 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 "four-fold" 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 David’s employee, albeit engaged on "pakyaw" or task basis.
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 Macasio’s entitlement to holiday, SIL and 13th month pay
The LA dismissed Macasio’s 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
41
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 Court’s 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 Macasio’s 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 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 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.
42
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 Macasio’s petition.
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 NLRC’s utter disregard of this consistent jurisprudential ruling is a clear act of grave abuse of discretion.52 In other
words, by dismissing Macasio’s 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 worker’s 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.
 43

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 CA’s finding in this regard is supported by the established facts of this case: first, Macasio regularly performed
his duties at David’s 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 NLRC’s ruling dismissing Macasio’s complaint
for holiday and SIL pay for having been rendered with grave abuse of discretion.

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.1âwphi1

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.

ARTURO D. BRION
Associate Justice

WE CONCUR: