G.R. No. 78090    July 26, 1991 PACIFIC MILLS, INC.,vs.

ZENAIDA
ALONZO, 
From July 30, 1973, Zenaida Alonzo was employed as a ring frame
operator in the Pacific Mills, Inc. until September 30, 1982 when she was
discharged by Management.
The record shows that in the early afternoon of September 22, 1982,
Zenaida challenged Company Inspector Ernesto Tamondong to a fight,
saying: "Putang Ina mo, lumabas ka, tarantado, kalalaki mong tao, duwag
ka . . Ipagugulpi kita sa labas at kaya kitang ipakaladkad dito sa loob ng
compound palabas ng gate sa mga kamag-anak ko." And suiting action to
the word, she thereupon boxed Tamondong in the stomach. The motive for
the assault was Zenaida's resentment at having been reprimanded,
together with other employees, two days earlier by Tamondong for wasting
time by engaging in Idle chatter.1 Tamondong forthwith reported the
incident to the firm's Administrative Manager 2 as well as the Chairman of
Barangay Balombato, Quezon City.3
On September 30, 1982, Zenaida Alonzo was given a Memorandum by the
company's Executive Vice President & General Manager terminating her
employment as of October 1, 1982 on various grounds: poor work, habitual
absences and tardiness, wasting time, insubordination and gross
disrespect. The service of that memorandum of dismissal on her was not
preceded by any complaint, hearing or other formality. These were
apparently considered unnecessary by Management 4 in view of the
provision in the Company Rules and Regulations (embodied in the
Collective Bargaining Agreement between the company and the union
representing the employees) that:
Fighting or attempting to inflict harm to another employee, will render (sic)
the aggressor to outright dismissal.
It was only at the hearing of the complaint for illegal dismissal (and non-
payment of proportionate 13th month pay) instituted by Zenaida on October
4, 1982 in the NCR Arbitration Branch, that evidence was presented by the
company not only of the assault by Zenaida on her superior but also of
many other violations by her of company rules and regulations, in an
attempt to substantiate the validity of her dismissal from work.
The Labor Arbiter found that Alonzo had indeed verbally abused and struck
her superior, Tamondong, and rejected her contention that the assault was
not punishable since it was "not work-connected and was
provoked/instigated by Ernesto Tamondong." 5 The Arbiter also declared as
"fully established the previous infractions of complainant," these being "a
matter of record and not denied by complainant (Zenaida)."
The Arbiter was of the view, however, that Alonzo was entitled to relief,
because (a) the penalty imposed was "harsh and severe and not
commensurate with the offense, . . . suspension of three (3) months . .
(being) the proper, just and reasonable penalty . . .;" and because (b) the
company had failed "to investigate complainant before she was dismissed."
The Arbiter thus ordered Pacific Mills, Inc., Zenaida's employer:
. . . to reinstate complainant without loss of seniority rights and to pay her
backwages from January 1, 1983 until fully reinstated, the period from
October 1, 1982 to December 31, 1982 complainant being under
suspension without pay . . . (as well as) to pay complainant's 13th month
pay in the amount of THREE HUNDRED FIFTY-ONE PESOS ONLY
(P351.00).
Acting on the employer's appeal, the National Labor Relations Commission
rendered judgment on March 23, 1987, sustaining the Labor Arbiter's
findings. It however limited the award of back wages to Zenaida only to
three (3) years, in accordance with this Court's judgment in Feati University
Faculty Club (PAFLU) vs. Feati University, 58 SCRA 396.6
Pacific Mills Inc. has instituted in this Court the special civil action
of certiorari at bar praying for nullification of the judgment of the NLRC for
having been rendered with grave abuse of discretion.
In the comment thereon,7 required of him by the Court, the Solicitor
General opined that:
. . . both the Labor Arbiter and the NLRC apparently failed to take into
consideration the fact that Zenaida Alonzo was dismissed not because of
this isolated act (of assault against her superior) but rather because of
numerous and repeated violations of company rules and regulations. It was
only this last incident which compelled Pacific Mills, Inc. to finally terminate
her services. It is the totality of the infractions committed by the employee
which should have been considered in determining whether or not there is
just cause for her dismissal.
Zenaida Alonzo was caught several times leaving her place of work to chat
with her co-employees.1âwphi1 This is reprehensible conduct since, as
ring frame operator, she must be at her post during work hours to prevent
the occurrence of incidents which could damage the machine. The
company inspector precisely warned her against doing this. She had also
been repeatedly reprimanded for insubordination, habitual tardiness,
wasting time and not wearing the required company uniform, In spite of
these infractions the company bore with her services and did not see fit to
dismiss her. Her assault on the company inspector was apparently the last
straw which compelled Pacific Mills, Inc. to terminate her services.
Accordingly, the Solicitor General recommended "payment of separation
pay equivalent to three (3) years backwages but without reinstatement" and
of "proportionate 13th month pay."
For their part, the Chief Legal Officer of the NLRC, 8 and the private
respondent,9 insist that since the dismissal of Zenaida Alonzo was not
preceded by any notice of the charges and a hearing thereon, the judgment
of the NLRC must be sustained.
Decisive of this controversy is the judgment of the Court en
banc in Wenphil Corporation v. NLRC, promulgated on February 8,
1989,10 in which the following policy pronouncements were made:
The Court holds that the policy of ordering the reinstatement to the service
of an employee without loss of seniority and the payment of his wages
during the period of his separation until his actual reinstatement but not
exceeding three (3) years without qualification or deduction, when it
appears he was not afforded due process, although his dismissal was
found to be for just and authorized cause in an appropriate proceeding in
the Ministry of Labor and Employment, should be re-examined. It will be
highly prejudicial to the interests of the employer to impose on him the
services of an employee who has been shown to be guilty of the charges
that warranted his dismissal from employment. Indeed, it will demoralize
the rank and file if the undeserving, if not undesirable, remains in the
service.
Thus in the present case, where the private respondent, who appears to be
of violent temper, caused trouble during office hours and even defied his
superiors as they tried to pacify him, should not be rewarded with
reemployment and back wages. It may encourage him to do even worse
and will render a mockery of the rules of discipline that employees are
required to observe. Under the circumstances, the dismissal of the private
respondent for just cause should be maintained. He has no right to return
to his former employer.
However, the petitioner (employer) must nevertheless be held to account
for failure to extend to private respondent his right to an investigation
before causing his dismissal. The rule is explicit as above discussed. The
dismissal of an employee must be for just or authorized cause and after
due process (Section 1, Rule XIV, Implementing Regulations of the Labor
Code). Petitioner committed an infraction of the second requirement. Thus,
it must be imposed a sanction for its failure to give a formal notice and
conduct an investigation as required by law before dismissing . . .
(respondent) from employment. Considering the circumstances of this case
petitioner must indemnify the private respondent the amount of P1,000.00.
The measure of tills award depends on the facts of each case and the
gravity of the omission committed by the employer.
The Court perceives no sufficient cause, it has indeed been cited to none
by the respondents, to decline to apply the Wenphil doctrine to the case at
bar.
While it is true that Pacific Mills, Inc. had not complied with the
requirements of due process prior to removing Zenaida Alonzo from
employment, it is also true that subsequently, in the proceedings before the
Labor Arbiter in which Zenaida Alonzo had of course taken active part, it
had succeeded in satisfactorily proving the commission by Zenaida of
many violations of company rules and regulations justifying termination of
her employment. Under the circumstances, it is clear that, as the Solicitor
General has pointed out, the continuance in the service of the latter is
patently inimical to her employer's interests and that, citing San Miguel
Corporation v. NLRC,11 the law, in protecting the rights of the laborer
authorizes neither oppression nor self-destruction of the employer. And it
was oppressive and unjust in the premises to require reinstatement of the
employee.
WHEREFORE, the petition is granted and the challenged decision of the
respondent Commission dated March 23, 1987 and that of the Labor
Arbiter thereby affirmed, are NULLIFIED AND SET ASIDE. However, the
petitioner is ordered to pay private respondent a proportionate part of the
13th month pay due her, amounting to P351.00 as well as to indemnify her
in the sum of P1,000.00. No costs.
SO ORDERED.

G.R. No. L-4758             May 30, 1953

CALTEX [PHIL.] INC.vs. PHILIPPINE LABOR ORGANIZATIONS,
CALTEX C.
In the course of the proceedings in Case No. 112-v of the Court of Industria
Relations, involving an industrial dispute between the Philippine Labor
Organizations, Caltex Chapter, hereinafter referred to as the Union, and
Caltex, (Philippines), Inc., hereinafter referred to as the Company, that
court issued an order on January 2, 1948 containing the following directive:
The laborers involve in this cases, pending the final determination of same,
are enjoined not to stage strike or walk out from their employment without
authority from and without first submitting their grievances to the court. The
respondent companies are likewise enjoined not to lay off, dismiss,
discharge or admit any employees or laborers in their employments during
the pendency of these cases without beforehand notifying and obtaining
the authority of the court. The controversial points involved in the petitions
will be heard separately by this court at the opportune time.
On February 13 and 15, 1950, the Union presented certain demands on the
Company which became the subject of negotiations between the parties.
On March 1, 1950, a strike was declared by the Union, a matter which the
Company submitted to the Court of Industrial Relations in Case No. 112-V
(10). After hearing, the Court of Industrial Relations, thru Presiding Judge
Arsenio C. Roldan rendered a decision dated July 31, 1950, holding as
follows:
1. The prohibition in declaring a strike during the determination of the
dispute, issued in a pending case before the Court, refers to strike over the
same or similar demands or dispute or matters directly connected with
them in the pending case only, and a strike thus declared while there is
such order, is a violation of this injunction and, therefore, illegal;
2. Prohibition not to declare strike during the determination of the dispute in
a pending case before the Court does not prohibit a strike for new
demands;
3. The strike declared by the member of the petitioning union, workers of
the respondent company, on March 1, 1950, was not a violation of the
order given by the Court of Industrial Relations on January 2, 1948;
4. The strike declared by the members of the petitioning union, workers of
the respondent company, on march 1, 1950, was illegal, not only because
the purpose was trivial, unjust or unreasonable but because there was no
good purpose at all.
5. The company did not dismiss the laborers Concha, Silva, Algozo and
Punzal as they abandoned they work, and, therefore, the official of the
management can not be held in contempt of Court; and
6. As this strike was illegal, the Company is authorize to dismiss those
responsible therefor, and may rehire such of the striking employees and
laborers and/or new labor force as in its direction it may see fit.
The Union filed a motion for reconsideration. Under date of January 31,
1951, the Court of Industrial Relations in banc issued a resolution reserving
the decision of Judge Roldan insofar as it declared the strike illegal and
insofar as it authorized the Company to discharge the workers responsible
for the strike. This resolution was by a three-to-two vote.
On March 20, 1951, the Company filed an urgent petition followed on the
next day by an urgent amended petition, praying that the motion for
reconsideration filed against the decision dated July 31, 1950, of Judge
Roldan, be denied, because said decision had become final and
unappealable on August 17, 1950, in view of the fact that, although the
motion for reconsideration was filed by the Union of the Last day of the
reglementary period, no company thereof was serve upon the adverse
party and no proof of service was shown. the amended urgent petition was
denied by the Court of Industrial Relations in banc in its ignominious order
of April 20, 1951. the certiorari, praying the judgment be rendered:
(a) reversing and setting aside the resolution of the Court of Industrial
Relations modifying the decision of July 30, 1950, the latter having become
final and unappealable;
(b) but should this court be of the opinion that the decision had not become
final and unappealable, petitioner prays that this Honorable Court render
judgment reversing the setting aside the decision of July 31, 1950, and
affirming the said decision.
The contention of the company that the decision of the Trial Judge of July
31, 1950 had become final and unappealable, is without merit. Assuming
that copy of the motion for reconsideration filed by the Union was not
served upon the Company, or if it was serve no proof of service was
presented, the Court of Industrial Relations could entertain said motion for
reconsideration as an application by an interested party of the reopening of
a question involved in a decision under section 17 of Commonwealth Act
No. 103, as amended. (Goseco vs. Court of Industrial Relations, 68 Phil.
444)
There is neither merit in the company's contention that the strike stage by
the Union on March 1, 1950 was in violation of the directive of the Court of
Industrial Relation of January 2, 1948, hereinabove quoted. From the very
decision of July 31, 1950, it is clear that the strike was motivated by new
demands or matters not connected with or similar to the demands or
disputes involved in this case in which the ordered of January 2, 1948 were
issued, and therefore could not have been, as correctly held by Judge
Roldan, violative of the directive against tries.
The important question that arises is whether the strike held on March 1,
1950, was illegal. On this we agree with the resolution of the Court of
Industrial Relations in banc. It is noteworthy that on February 13, 1950, the
Union set a letter to the company, containing fourteen demands reffering to
wage differentials, retirement and insurance benefits, free medical
treatment and hospitalization with pay, Christmas bonus, bonus to drivers,
vacation and the sick leave, overtime pay, reinstatement of certain
employees, gratuity to pre-war employees and backpay during the
Japanese occupation. It appears also that in the second letter of February
15, 1950, the Union gave the manager of the Company forty-eight hours to
decide on the demands, with the admonition that the Union would declared
a strike. The resolution of the Court of Industrial Relations in banc of
January 31, 1951 found that "among the factors that motivated the
declaration of the strike was the failure of the respondent to meet the
petitioner's demands." These demands, if granted, would certainly tend to
improve the conditions of the laborers and employees affected, and cannot
be said to trival, much less illegal. But whether the same are unreasonable
or unjust as a matter to be decided after proper consideration. If said
demands cannot be granted for being unjust or unreasonable, the only
consequence, in the appropriate words of the Court of Industrial
Relations in banc, should "be their rejection and not the punishment of the
workers who presented them." To make the legality or illegality of strikes
dependent solely on whether the demands of laborers may or may not be
granted, is in effect to outlaw altogether an effective means of securing
better working conditions.
Wherefore the decision of the Court of Industrial Relations now under
review is hereby affirmed, with costs against the petitioner. So ordered.
Feria, Pablo, Bengzon, Tuason, Jugo and Bautista Angelo, JJ., concur.
G.R. No. 46727           September 27, 1939
PAMBUSCO EMPLOYEES' UNION, INC., petitioner, 
vs. THE COURT OF INDUSTRIAL RELATIONS, composed to
Honorables Francisco Zulueta, Leopoldo Rovira, and Jose Generoso,
and PAMPANGA BUS COMPANY, INC., 
This is a petition for a writ of certiorari to review the decision of the Court of
Industrial Relations promulgated on January 14, 1939, denying the
demands of the Pambusco Employees' Union, Inc.
The following are the pertinent facts which have given occasion to this
industrial dispute: On March 26, 1938, the Pambusco Employees' Union,
Inc., addressed a thirteen- point petition to the management of the
Pampanga Bus Co. Upon the failure of the company officials to act upon
the petition, a strike was declared by the workers on April 14, 1938.
However, through the timely mediation of the Department of Labor, a
provisional agreement was reached, by virtue of which the strike was called
off, eight demands were granted, and the remaining five were submitted to
the Court of Industrial Relations for settlement. One of these demands, in
the language of the petitioner, is that the respondent Pampanga Bus Co.
"pay to all Company drivers affiliated with the Pambusco Employees'
Union, Inc., all the back overtime pay due them under the law." After trial on
the disputed demands, the Court of Industrial Relations decided inter
alia that the claim for back overtime pay could not be allowed.
The pertinent portion of the decision of the respondent Court of Industrial
Relations is as follows:
The evidence is clear that even before the final approval of Act No. 4242
amending Act No. 4123, the Eight Hour Labor Law, by extending the
provisions of the latter to other class of laborers including drivers of public
service vehicles, a petition was addressed by 44 drivers of the company to
the Governor-General asking him to veto the bill amending the law
extending it to drivers for the reason stated in their petition (Exhibit 5 and 5-
a). About the 6th day of September, 1935, a petition was again addressed
by 97 drivers of the company to the Commissioner of Labor requesting
adjustment of working hours to permit them to retain their present status
with the company as nearly as possible under the law (Exhibits 4, 4-a, 4-b,
4-c, 4-d and 4-e). This petition was prepared after a meeting of the
employees was held and was drawn with the help of the manager of the
respondent about the last days of August, 1935. In September, 1937, about
347 employees of the different departments of the company again
addresses a petition to the Director of Labor expressing their satisfaction
with the hours they work and the pay they receive for their labor including
the special bonuses and overtime pay they receive for extra work, and
asking, in view thereof, that the law be not applied to them (Exhibits 6, 6-a
to 6-g).
After the enactment of Act No. 4242 several transportation companies
operating motor buses filed with Commissioner of Labor petitions for a
readjustment of the hours of labor specified in section 1 of the Act on the
basis of maintaining the status quo as to the hours the drivers were
required to be actually on duty in order to enable them to make the
prescribed hours daily that the exigencies of the service required. The
petitions were based on the impracticability of applying the provisions of the
law to drivers of public service vehicles without disrupting the public service
and causing pecuniary loss to both employers and employees alike, and
the resulting difficulties on the part of the drivers. The testimony of Atty.
Carlos Alvear on this point in uncontradicted. He testified that in 1935, he
was president of the Philippine Motor Association composed of bus
operators operating in the Philippines, of which the respondent is a
member. Major Olson, who was at the time the executive secretary of the
association, and himself took up the matter with the Secretary of the
Interior and the Secretary of Labor after the passage of the Act extending
the operation of the Eight Labor Law to drivers. In their conference with the
Commissioner of Labor, they were told to take advantage of the provisions
of the law in which they may apply for the readjustment of the working
hours, and in conformity with that suggestion, the executive secretary of the
association filed a formal petition, Exhibit 10, on September 5, 1935. When
this was filed the Department of Labor further suggested that the drivers of
each company file and address a petition of similar nature designating their
representatives who will represent them in a conference that the
Commissioner of Labor may call for the purpose. With the filing of the
petition, the conferees were assured by the Under-Secretary of Labor that
the enforcement of the Eight Hour Labor Law in so far as the drivers were
concerned, will be held in abeyance until such time as the meeting or
investigations are held. It is not clear as to whether investigations and
hearings were finally made but the evidence indicates that the petition was
never decided and the companies continued its schedule of hours.
Sections 3 and 4 of Act No. 4123 read as follows:
"SEC. 3. The Commissioner of Labor, with the advice of two
representatives of the employers concerned, designated by the latter, and
of two representatives of the laborers concerned, designated by these,
shall, at the request of an interested party, decide in each case whether or
not it is proper to increase or decrease the number of hours of labor fixed in
section one of this Act, either because the organization or nature of the
work require it, or because of lack or insufficiency of competent laborers for
certain work in a locality, or because the relieving of the laborers must be
done under certain conditions, or by reason of any other exceptional
circumstances or conditions of the work or industry concerned; but the
number of hours of labor shall in no case exceed twelve daily or seventy-
two weekly.
"SEC. 4. Employees or laborers desiring an increase or decrease of the
number of hours of labor shall address an application to this effect to the
Commissioner of Labor, stating their reasons. Upon receipt of an
application of this kind, the Commissioner of Labor shall call a meeting of
the employers and laborers of the establishment or industry concerned, for
the designation of advisers as provided in the preceding section hereof.
The Commissioner of Labor or his authorized representative, together with
the advisers, shall make an investigation of the facts, giving special
attention, in the first place, to the human aspect, and in the second place,
to the economic aspect of the matter, and he may for this purpose
administer oaths, take affidavits examine witnesses and documents and
issue subpoenas and subpoenas duces tecum. The decision of the
Commissioner of Labor may be reconsidered by him at any time."
It seems clear that the petitions of both employers and employees for the
non-enforcement of the Eight Hour Labor Law were made in accordance
with these provisions of the law. Exhibit 9 of the respondent which is a
communication addressed by the Under-Secretary of Labor on September
6, 1935, to the A.L. Ammen Transportation Company, Inc., defines the
attitude taken by the Department of Labor in connection with those
petitions. It advises the company to submit an application under sections 3
and 4 of Act No. 4123 above-quoted for an increase of working hours of
such laborers as may fall under the amendment and that pending final
solution of said application, the Department of Labor will not make any
attempt to enforce said amendment. As has already been stated it is not
clear whether final action or decision has been made on the applications
with respect to the drivers of the respondent; that it is undeniable fact that
up to the outbreak of the dispute, the law was not observed nor enforced in
the company; and that upon mutual agreement arrived at by the parties on
April 14, 1938, the company worked out a schedule beginning May 1, 1938,
placing all its employees under an eight-hour schedule.
In view of the foregoing fact, the court is the opinion that the drivers are not
entitled to the overtime pay demanded for the whole period the law was not
observed or enforced in the company. They are entitled to payment of
wages for hours worked in excess of the legal hours only beginning May 1,
1938.
On January 30, 1939, the petitioner filed a motion for reconsideration which
was denied by the Court of Industrial Relations, sitting in banc, with the
following observations:
We have reviewed carefully the evidence on record with regard to the claim
for back overtime pay we find that it amply supports the findings and
conclusions set forth in support of the motion for reconsideration are
virtually a repetition of the reasons advanced in the memorandum of the
petitioner filed before the case was decided and were already discussed
and considered in the decision. The evidence permits no other conclusion
than that the employees were not coerced not intimidated by the
respondent on the repeated occasions they signed and presented to the
Department of Labor their petitions for non-enforcement of the Eight Hour
Labor Law. The employees were indubitably aware of certain hardships the
enforcement of the law at that time would bring to them and these
prompted their attitude of preferring the continuation of the schedule of
hours observed prior to the enactment of the legislation extending the
benefits of the Eight Hour Labor Law to drivers of motor vehicles in public
utility enterprises. Whatever pecuniary advantage they would have gained
by the strict observance of the law by the company should they be made to
work more than eight hours a day was apparently waived or given up by
them in exchange of their personal convenience and of the additional
monthly pay the respondent gave to those employees who were assigned
to routes where the daily working hours exceeded the maximum fixed by
law. The evidence that the company paid additional salaries not only to
drivers but also to its conductors who were assigned to such routes stands
uncontradicted and no attempt even was made by the petitioner to deny it.
Without need of passing on the question as to whether the provisions of the
law are mandatory or not, in the light of the above facts and applying the
rules of equity invoked by the union, we are constrained to hold that the
petitioners are not rightly entitled to the payment sought.
In Kapisanan ng mga Manggagawa sa Pantranco vs. Pangasinan
Transportation Co. (39 Off. Gaz., 1217), we have held that, to be entitled to
the benefits of section 5 of Act No. 4123, fulfillment of the mandate of the
law is necessary, this being a matter of public interest. Where both parties,
as in this case, we have violated the law, this court must decline to extend
the strong arm of equity, as neither party is entitled to its aid. This is
especially true in view of the findings of fact made by the Court of Industrial
Relations which we should not disturb.
We are not, to be sure insensible to the argument that industrial disputes
should be decided with an eye on the welfare of the working class, who, in
the inter-play of economic forces, is said to find itself in the "end of the
stick." In the case at bar, however, we find no reason for disturbing the
action taken by the respondent Court of Industrial Relations, which is a
special court enjoined to "act according to justice and equity and
substantial merits of the case, without regard to technicalities or legal forms
and shall not be bound by any technical rules of legal evidence but may
inform its mind in such manner as it may deem just and equitable" (sec. 20,
Commonwealth Act No. 103).
The petition is dismissed, without pronouncement regarding costs. So
ordered.
G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner, 
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION
and NESTLÉ PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J.:
This labor dispute stems from the exclusion of sales personnel from the
holiday pay award and the change of the divisor in the computation of
benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines,
Inc.) filed with the National Labor Relations Commission (NLRC) a petition
for declaratory relief seeking a ruling on its rights and obligations respecting
claims of its monthly paid employees for holiday pay in the light of the
Court's decision in Chartered Bank Employees Association v. Ople (138
SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit
the case for voluntary arbitration and appointed respondent Benigno Vivar,
Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro
to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the
Code, subject only to the exclusions and limitations specified in Article 82
and such other legal restrictions as are provided for in the Code. (Rollo, 
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award
to three years, (2) the exclusion of salesmen, sales representatives, truck
drivers, merchandisers and medical representatives (hereinafter referred to
as sales personnel) from the award of the holiday pay, and (3) deduction
from the holiday pay award of overpayment for overtime, night differential,
vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp.
138-145)
Petitioner UFE answered that the award should be made effective from the
date of effectivity of the Labor Code, that their sales personnel are not field
personnel and are therefore entitled to holiday pay, and that the use of 251
as divisor is an established employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring
that the effectivity of the holiday pay award shall retroact to November 1,
1974, the date of effectivity of the Labor Code. He adjudged, however, that
the company's sales personnel are field personnel and, as such, are not
entitled to holiday pay. He likewise ruled that with the grant of 10 days'
holiday pay, the divisor should be changed from 251 to 261 and ordered
the reimbursement of overpayment for overtime, night differential, vacation
and sick leave pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial
reconsideration. Respondent Arbitrator treated the two motions as appeals
and forwarded the case to the NLRC which issued a resolution dated May
25, 1987 remanding the case to the respondent arbitrator on the ground
that it has no jurisdiction to review decisions in voluntary arbitration cases
pursuant to Article 263 of the Labor Code as amended by Section 10,
Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules
implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to
take cognizance of the case reasoning that he had no more jurisdiction to
continue as arbitrator because he had resigned from service effective May
1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor
should be changed from 251 to 261 days and whether or not the previous
use of 251 as divisor resulted in overpayment for overtime, night
differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field
personnel under Article 82 of the Labor Code. The respondent company
controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article
defines field personnel as "non-agritultural 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."
The controversy centers on the interpretation of the clause "whose actual
hours of work in the field cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m.
after having reported to the office and come back to the office at 4:00 p.m.
or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30
p.m. comprises the sales personnel's working hours which can be
determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in
the field be reasonably ascertained. The company has no way of
determining whether or not these sales personnel, even if they report to the
office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really
spend the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to
report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is
not within the realm of work in the field as defined in the Code but an
exercise of purely management prerogative of providing administrative
control over such personnel. This does not in any manner provide a
reasonable level of determination on the actual field work of the employees
which can be reasonably ascertained. The theoretical analysis that
salesmen and other similarly-situated workers regularly report for work at
8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the
assumption that their field work is supervised, is surface projection. Actual
field work begins after 8:00 a.m., when the sales personnel follow their field
itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report
back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m.
comprises their hours of work in the field, the extent or scope and result of
which are subject to their individual capacity and industry and which
"cannot be determined with reasonable certainty." This is the reason why
effective supervision over field work of salesmen and medical
representatives, truck drivers and merchandisers is practically a physical
impossibility. Consequently, they are excluded from the ten holidays with
pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be
determined with reasonable certainty" must be read in conjunction with
Rule IV, Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage — This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied)
While contending that such rule added another element not found in the
law (Rollo, p. 13), the petitioner nevertheless attempted to show that its
affected members are not covered by the abovementioned rule. The
petitioner asserts that the company's sales personnel are strictly
supervised as shown by the SOD (Supervisor of the Day) schedule and the
company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-
55).
Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code
definition of field personnel. The clause "whose time and performance is
unsupervised by the employer" did not amplify but merely interpreted and
expounded the clause "whose actual hours of work in the field cannot be
determined with reasonable certainty." The former clause is still within the
scope and purview of Article 82 which defines field personnel. Hence, in
deciding whether or not an employee's actual working hours in the field can
be determined with reasonable certainty, query must be made as to
whether or not such employee's time and performance is constantly
supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least
signify that these sales personnel's time and performance are supervised.
The purpose of this schedule is merely to ensure that the sales personnel
are out of the office not later than 8:00 a.m. and are back in the office not
earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number
of actual hours spent in field work by an employee through the imposition of
sanctions on absenteeism contained in the company circular of March 15,
1984.
The petitioner claims that the fact that these sales personnel are given
incentive bonus every quarter based on their performance is proof that their
actual hours of work in the field can be determined with reasonable
certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding
sales volume based on sales target; (2) good collection performance; (3)
proper compliance with good market hygiene; (4) good merchandising
work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo,
p. 190).
The above criteria indicate that these sales personnel are given incentive
bonuses precisely because of the difficulty in measuring their actual hours
of field work. These employees are evaluated by the result of their work
and not by the actual hours of field work which are hardly susceptible to
determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA
613 [1963]), the Court had occasion to discuss the nature of the job of a
salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118
F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent. Such a
salesman, to a greater extent, works individually. There are no restrictions
respecting the time he shall work and he can earn as much or as little,
within the range of his ability, as his ambition dictates. In lieu of overtime he
ordinarily receives commissions as extra compensation. He works away
from his employer's place of business, is not subject to the personal
supervision of his employer, and his employer has no way of knowing the
number of hours he works per day.
While in that case the issue was whether or not salesmen were entitled to
overtime pay, the same rationale for their exclusion as field personnel from
holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that,
concomitant with the award of holiday pay, the divisor should be changed
from 251 to 261 days to include the additional 10 holidays and the
employees should reimburse the amounts overpaid by Filipro due to the
use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of ten
holidays certainly adds to or accelerates the basis of conversion and
computation by ten days. With the inclusion of ten holidays as paid days,
the divisor is no longer 251 but 261 or 262 if election day is counted. This is
indeed an extremely difficult legal question of interpretation which accounts
for what is claimed as falling within the concept of "solutio indebti."
When the claim of the Union for payment of ten holidays was granted, there
was a consequent need to abandon that 251 divisor. To maintain it would
create an impossible situation where the employees would benefit with
additional ten days with pay but would simultaneously enjoy higher benefits
by discarding the same ten days for purposes of computing overtime and
night time services and considering sick and vacation leave credits.
Therefore, reimbursement of such overpayment with the use of 251 as
divisor arises concomitant with the award of ten holidays with pay. (Rollo,
p. 34)
The divisor assumes an important role in determining whether or not
holiday pay is already included in the monthly paid employee's salary and
in the computation of his daily rate. This is the thrust of our pronouncement
in Chartered Bank Employees Association v. Ople (supra). In that case, We
held:
It is argued that even without the presumption found in the rules and in the
policy instruction, the company practice indicates that the monthly salaries
of the employees are so computed as to include the holiday pay provided
by law. The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the
Chartered Bank, in computing overtime compensation for its employees,
employs a "divisor" of 251 days. The 251 working days divisor is the result
of subtracting all Saturdays, Sundays and the ten (10) legal holidays from
the total number of calendar days in a year. If the employees are already
paid for all non-working days, the divisor should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1,
1980, is as follows:
monthly rate x 12 months
———————————
251 days
Following the criterion laid down in the Chartered Bank case, the use of
251 days' divisor by respondent Filipro indicates that holiday pay is not yet
included in the employee's salary, otherwise the divisor should have been
261.
It must be stressed that the daily rate, assuming there are no intervening
salary increases, is a constant figure for the purpose of computing overtime
and night differential pay and commutation of sick and vacation leave
credits. Necessarily, the daily rate should also be the same basis for
computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261
days would result in a lower daily rate which is violative of the prohibition on
non-diminution of benefits found in Article 100 of the Labor Code. To
maintain the same daily rate if the divisor is adjusted to 261 days, then the
dividend, which represents the employee's annual salary, should
correspondingly be increased to incorporate the holiday pay. To illustrate, if
prior to the grant of holiday pay, the employee's annual salary is P25,100,
then dividing such figure by 251 days, his daily rate is P100.00 After the
payment of 10 days' holiday pay, his annual salary already includes holiday
pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days,
the daily rate is still P100.00. There is thus no merit in respondent Nestle's
claim of overpayment of overtime and night differential pay and sick and
vacation leave benefits, the computation of which are all based on the daily
rate, since the daily rate is still the same before and after the grant of
holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake,
due to its use of 251 days as divisor must fail in light of the Labor Code
mandate that "all doubts in the implementation and interpretation of this
Code, including its implementing rules and regulations, shall be resolved in
favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the
company was on a 6-day working schedule, the divisor used by the
company was 303, indicating that the 10 holidays were likewise not paid.
When Filipro shifted to a 5-day working schebule on September 1, 1980, it
had the chance to rectify its error, if ever there was one but did not do so. It
is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay
should be computed from November 1, 1974. This ruling was not
questioned by the petitioner union as obviously said decision was favorable
to it. Technically, therefore, respondent Nestle should have filed a separate
petition raising the issue of effectivity of the holiday pay award. This Court
has ruled that an appellee who is not an appellant may assign errors in his
brief where his purpose is to maintain the judgment on other grounds, but
he cannot seek modification or reversal of the judgment or affirmative relief
unless he has also appealed. (Franco v. Intermediate Appellate Court, 178
SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine
Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in
order to fully settle the issues so that the execution of the Court's decision
in this case may not be needlessly delayed by another petition, the Court
resolved to take up the matter of effectivity of the holiday pay award raised
by Nestle.
Nestle insists that the reckoning period for the application of the holiday
pay award is 1985 when the Chartered Bank decision, promulgated on
August 28, 1985, became final and executory, and not from the date of
effectivity of the Labor Code. Although the Court does not entirely agree
with Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU)
v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the IBAA case,
the Court declared that Section 2, Rule IV, Book III of the implementing
rules and Policy Instruction No. 9, issued by the then Secretary of Labor on
February 16, 1976 and April 23, 1976, respectively, and which excluded
monthly paid employees from holiday pay benefits, are null and void. The
Court therein reasoned that, in the guise of clarifying the Labor Code's
provisions on holiday pay, the aforementioned implementing rule and policy
instruction amended them by enlarging the scope of their exclusion.
The Chartered Bank case reiterated the above ruling and added the
"divisor" test.
However, prior to their being declared null and void, the implementing rule
and policy instruction enjoyed the presumption of validity and hence,
Nestle's non-payment of the holiday benefit up to the promulgation of the
IBAA case on October 23, 1984 was in compliance with these presumably
valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429
[1971], the Court discussed the effect to be given to a legislative or
executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to
be complied with. This is so as until after the judiciary, in an appropriate
case, declares its invalidity, it is entitled to obedience and respect. Parties
may have acted under it and may have changed their positions. What could
be more fitting than that in a subsequent litigation regard be had to what
has been done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a doctrine that
prior to its being nullified, its existence as a fact must be reckoned with.
This is merely to reflect awareness that precisely because the judiciary is
the government organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have elapsed
before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness
and justice then, if there be no recognition of what had transpired prior to
such adjudication.
In the language of an American Supreme Court decision: "The actual
existence of a statute, prior to such a determination of [unconstitutionality],
is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity may have to be
considered in various aspects, — with respect to particular relations,
individual and corporate, and particular conduct, private and official."
(Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374
[1940]). This language has been quoted with approval in a resolution
in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor
Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is
the opinion of Justice Zaldivar speaking for the Court in Fernandez
v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and
void, undue harshness and resulting unfairness must be avoided. It is now
almost the end of 1991. To require various companies to reach back to
1975 now and nullify acts done in good faith is unduly harsh. 1984 is a
fairer reckoning period under the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched
that Nestle, relying on the implicit validity of the implementing rule and
policy instruction before this Court nullified them, and thinking that it was
not obliged to give holiday pay benefits to its monthly paid employees, may
have been moved to grant other concessions to its employees, especially
in the collective bargaining agreement. This possibility is bolstered by the
fact that respondent Nestle's employees are among the highest paid in the
industry. With this consideration, it would be unfair to impose additional
burdens on Nestle when the non-payment of the holiday benefits up to
1984 was not in any way attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective, not
from the date of promulgation of the Chartered Bank case nor from the date
of effectivity of the Labor Code, but from October 23, 1984, the date of
promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED.
The divisor to be used in computing holiday pay shall be 251 days. The
holiday pay as above directed shall be computed from October 23, 1984. In
all other respects, the order of the respondent arbitrator is hereby
AFFIRMED.
SO ORDERED.
SECOND DIVISION
 
JPL MARKETING G.R. No. 151966
PROMOTIONS,
Petitioner, Present:
 
PUNO, J.,
Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
COURT OF APPEALS, NATIONAL CHICO-NAZARIO, JJ.
LABOR RELATIONS COMMISSION,
NOEL GONZALES, RAMON ABESA
III and FAUSTINO ANINIPOT,
Respondents. Promulgated:
 
July 8, 2005
 
x-------------------------------------------------------------------x
 
 
DECISION
 
TINGA, J.:
 
 
This is a petition for review of the Decision[1] of the Court of Appeals in CA-
G.R. SP No. 62631 dated 03 October 2001 and its Resolution[2] dated 25
January 2002 denying petitioners Motion for Reconsideration, affirming
the Resolution of the National Labor Relations Commission (NLRC),
Second Division, dated 27 July 2000, awarding separation pay, service
incentive leave pay, and 13th month pay to private respondents.
 
JPL Marketing and Promotions (hereinafter referred to as JPL) is a
domestic corporation engaged in the business of recruitment and
placement of workers. On the other hand, private respondents Noel
Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL
as merchandisers on separate dates and assigned at different
establishments in Naga City and Daet, Camarines Norte as attendants to
the display of California Marketing Corporation (CMC), one of petitioners
clients.
 
On 13 August 1996, JPL notified private respondents that CMC would stop
its direct merchandising activity in the Bicol Region, Isabela, and Cagayan
Valley effective 15 August 1996. [3] They were advised to wait for further
notice as they would be transferred to other clients. However, on 17
October 1996,[4] private respondents Abesa and Gonzales filed before the
National Labor Relations Commission Regional Arbitration Branch (NLRC)
Sub V complaints for illegal dismissal, praying for separation pay,
13th month pay, service incentive leave pay and payment for moral
damages.[5] Aninipot filed a similar case thereafter.
 
After the submission of pertinent pleadings by all of the parties and after
some clarificatory hearings, the complaints were consolidated and
submitted for resolution. Executive Labor Arbiter Gelacio L. Rivera, Jr.
dismissed the complaints for lack of merit. [6] The Labor Arbiter found that
Gonzales and Abesa applied with and were employed by the store where
they were originally assigned by JPL even before the lapse of the six (6)-
month period given by law to JPL to provide private respondents a new
assignment. Thus, they may be considered to have unilaterally severed
their relation with JPL, and cannot charge JPL with illegal dismissal. [7] The
Labor Arbiter held that it was incumbent upon private respondents to wait
until they were reassigned by JPL, and if after six months they were not
reassigned, they can file an action for separation pay but not for illegal
dismissal.[8] The claims for 13th month pay and service incentive leave pay
was also denied since private respondents were paid way above the
applicable minimum wage during their employment. [9]
 
Private respondents appealed to the NLRC. In its Resolution,[10] the Second
Division of the NLRC agreed with the Labor Arbiters finding that when
private respondents filed their complaints, the six-month period had not yet
expired, and that CMCs decision to stop its operations in the areas was
beyond the control of JPL, thus, they were not illegally dismissed. However,
it found that despite JPLs effort to look for clients to which private
respondents may be reassigned it was unable to do so, and hence they are
entitled to separation pay.[11] Setting aside the Labor Arbiters decision, the
NLRC ordered the payment of:
1. Separation pay, based on their last salary rate and counted from the first
day of their employment with the respondent JPL up to the finality of this
judgment;
 
2. Service Incentive Leave pay, and 13 th month pay, computed as in No.1
hereof.[12]
 
 
Aggrieved, JPL filed a petition for certiorari under Rule 65 of the Rules of
Court with the Court of Appeals, imputing grave abuse of discretion on the
part of the NLRC. It claimed that private respondents are not by law entitled
to separation pay, service incentive leave pay and 13 th month pay.
 
The Court of Appeals dismissed the petition and affirmed in toto the NLRC
resolution. While conceding that there was no illegal dismissal, it justified
the award of separation pay on the grounds of equity and social justice.
[13]
 The Court of Appeals rejected JPLs argument that the difference in the
amounts of private respondents salaries and the minimum wage in the
region should be considered as payment for their service incentive leave
and 13th month pay.[14] Notwithstanding the absence of a contractual
agreement on the grant of 13th month pay, compliance with the same is
mandatory under the law. Moreover, JPL failed to show that it was exempt
from paying service incentive leave pay. JPL filed a motion for
reconsideration of the said resolution, but the same was denied on 25
January 2002.[15]
 
In the instant petition for review, JPL claims that the Court of Appeals
committed reversible error in rendering the
assailed Decision and Resolution.[16]The instant case does not fall under
any of the instances where separation pay is due, to wit: installation of
labor-saving devices, redundancy, retrenchment or closing or cessation of
business operation,[17] or disease of an employee whose continued
employment is prejudicial to him or co-employees, [18] or illegal dismissal of
an employee but reinstatement is no longer feasible. [19] Meanwhile, an
employee who voluntarily resigns is not entitled to separation unless
stipulated in the employment contract, or the collective bargaining
agreement, or is sanctioned by established practice or policy of the
employer.[20] It argues that private respondents good record and length of
service, as well as the social justice precept, are not enough to warrant the
award of separation pay. Gonzales and Aninipot were employed by JPL for
more than four (4) years, while Abesa rendered his services for more than
two (2) years, hence, JPL claims that such short period could not have
shown their worth to JPL so as to reward them with payment of separation
pay.[21]
In addition, even assuming arguendo that private respondents are entitled
to the benefits awarded, the computation thereof should only be from their
first day of employment with JPL up to 15 August 1996, the date of
termination of CMCs contract, and not up to the finality of the 27 July 2000
resolution of the NLRC.[22] To compute separation pay, 13th month pay, and
service incentive leave pay up to 27 July 2000 would negate the findings of
both the Court of Appeals and the NLRC that private respondents were not
unlawfully terminated.[23] Additionally, it would be erroneous to compute
service incentive leave pay from the first day of their employment up to the
finality of the NLRC resolution since an employee has to render at least
one (1) year of service before he is entitled to the same. Thus, service
incentive leave pay should be counted from the second year of service. [24]
 
On the other hand, private respondents maintain that they are entitled to
the benefits being claimed as per the ruling of this Court in Serrano v.
NLRC, et al.[25] They claim that their dismissal, while not illegal, was tainted
with bad faith.[26] They allege that they were deprived of due process
because the notice of termination was sent to them only two (2) days
before the actual termination.[27] Likewise, the most that JPL offered to them
by way of settlement was the payment of separation pay of seven (7) days
for every year of service.[28]
 
Replying to private respondents allegations, JPL disagrees that the notice it
sent to them was a notice of actual termination. The said memo merely
notified them of the end of merchandising for CMC, and that they will be
transferred to other clients.[29] Moreover, JPL is not bound to observe the
thirty (30)-day notice rule as there was no dismissal to speak of. JPL
counters that it was private respondents who acted in bad faith when they
sought employment with another establishment, without even the courtesy
of informing JPL that they were leaving for good, much less tender their
resignation.[30] In addition, the offer of seven (7) days per year of service as
separation pay was merely an act of magnanimity on its part, even if private
respondents are not entitled to a single centavo of separation pay. [31]
 
The case thus presents two major issues, to wit: whether or not private
respondents are entitled to separation pay, 13 th month pay and service
incentive leave pay, and granting that they are so entitled, what should be
the reckoning point for computing said awards.
 
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized
only in cases of dismissals due to any of these reasons: (a) installation of
labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the
employer's business; and (e) when the employee is suffering from a
disease and his continued employment is prohibited by law or is prejudicial
to his health and to the health of his co-employees. However, separation
pay shall be allowed as a measure of social justice in those cases where
the employee is validly dismissed for causes other than serious misconduct
or those reflecting on his moral character, but only when he was illegally
dismissed.[32] In addition, Sec. 4(b), Rule I, Book VI of the Implementing
Rules to Implement the Labor Code provides for the payment of separation
pay to an employee entitled to reinstatement but the establishment where
he is to be reinstated has closed or has ceased operations or his present
position no longer exists at the time of reinstatement for reasons not
attributable to the employer.
 
The common denominator of the instances where payment of separation
pay is warranted is that the employee was dismissed by the employer. [33] In
the instant case, there was no dismissal to speak of. Private respondents
were simply not dismissed at all, whether legally or illegally. What they
received from JPL was not a notice of termination of employment, but a
memo informing them of the termination of CMCs contract with JPL. More
importantly, they were advised that they were to be reassigned. At that
time, there was no severance of employment to speak of.
 
Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of
the operation of a business or undertaking for a period not exceeding six
(6) months, wherein an employee/employees are placed on the so-called
floating status. When that floating status of an employee lasts for more than
six months, he may be considered to have been illegally dismissed from
the service. Thus, he is entitled to the corresponding benefits for his
separation, and this would apply to suspension either of the entire business
or of a specific component thereof.[34]
 
As clearly borne out by the records of this case, private respondents sought
employment from other establishments even before the expiration of the six
(6)-month period provided by law. As they admitted in their comment, all
three of them applied for and were employed by another establishment
after they received the notice from JPL. [35] JPL did not terminate their
employment; they themselves severed their relations with JPL. Thus, they
are not entitled to separation pay.
The Court is not inclined in this case to award separation pay even on the
ground of compassionate justice. The Court of Appeals relied on the
cases[36]wherein the Court awarded separation pay to legally dismissed
employees on the grounds of equity and social consideration. Said cases
involved employees who were actually dismissed by their employers,
whether for cause or not. Clearly, the principle applies only when the
employee is dismissed by the employer, which is not the case in this
instance. In seeking and obtaining employment elsewhere, private
respondents effectively terminated their employment with JPL.
 
In addition, the doctrine enunciated in the case of Serrano[37] cited by
private respondents has already been abandoned by our ruling in Agabon
v. National Labor Relations Commission.[38] There we ruled that an
employer is liable to pay indemnity in the form of nominal damages to a
dismissed employee if, in effecting such dismissal, the employer failed to
comply with the requirements of due process. However, private
respondents are not entitled to the payment of damages considering that
there was no violation of due process in this case. JPLs memo dated 13
August 1996 to private respondents is not a notice of termination, but a
mere note informing private respondents of the termination of CMCs
contract and their re-assignment to other clients. The thirty (30)-day notice
rule does not apply.
 
Nonetheless, JPL cannot escape the payment of 13 th month pay and
service incentive leave pay to private respondents. Said benefits are
mandated by law and should be given to employees as a matter of right.
 
 
Presidential Decree No. 851, as amended, requires an employer to pay its
rank and file employees a 13th month pay not later than 24 December of
every year. However, employers not paying their employees a 13 th month
pay or its equivalent are not covered by said law. [39] The term its equivalent
was defined by the laws implementing guidelines as including Christmas
bonus, mid-year bonus, cash bonuses and other payment amounting to not
less than 1/12 of the basic salary but shall not include cash and stock
dividends, cost-of-living-allowances and all other allowances regularly
enjoyed by the employee, as well as non-monetary benefits. [40]
 
On the other hand, service incentive leave, as provided in Art. 95 of the
Labor Code, is a yearly leave benefit of five (5) days with pay, enjoyed by
an employee who has rendered at least one year of service. Unless
specifically excepted, all establishments are required to grant service
incentive leave to their employees. The term at least one year of service
shall mean service within twelve (12) months, whether continuous or
broken reckoned from the date the employee started working. [41] The Court
has held in several instances that service incentive leave is clearly
demandable after one year of service.[42]
 
Admittedly, private respondents were not given their 13 th month pay and
service incentive leave pay while they were under the employ of JPL.
Instead, JPL provided salaries which were over and above the minimum
wage. The Court rules that the difference between the minimum wage and
the actual salary received by private respondents cannot be deemed as
their 13th month pay and service incentive leave pay as such difference is
not equivalent to or of the same import as the said benefits contemplated
by law. Thus, as properly held by the Court of Appeals and by the NLRC,
private respondents are entitled to the 13 th month pay and service incentive
leave pay.
 
However, the Court disagrees with the Court of Appeals ruling that the
13th month pay and service incentive leave pay should be computed from
the start of employment up to the finality of the NLRC resolution. While
computation for the 13th month pay should properly begin from the first day
of employment, the service incentive leave pay should start a year after
commencement of service, for it is only then that the employee is entitled to
said benefit. On the other hand, the computation for both benefits should
only be up to 15 August 1996, or the last day that private respondents
worked for JPL. To extend the period to the date of finality of the NLRC
resolution would negate the absence of illegal dismissal, or to be more
precise, the want of dismissal in this case. Besides, it would be unfair to
require JPL to pay private respondents the said benefits beyond 15 August
1996 when they did not render any service to JPL beyond that date. These
benefits are given by law on the basis of the service actually rendered by
the employee, and in the particular case of the service incentive leave, is
granted as a motivation for the employee to stay longer with the employer.
There is no cause for granting said incentive to one who has already
terminated his relationship with the employer.
 
The law in protecting the rights of the employees authorizes neither
oppression nor self-destruction of the employer. It should be made clear
that when the law tilts the scale of justice in favor of labor, it is but
recognition of the inherent economic inequality between labor and
management. The intent is to balance the scale of justice; to put the two
parties on relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interests of management but
never should the scale be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est(Justice is to be denied to none).[43]
 
WHEREFORE, the petition is GRANTED IN PART.
The Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
62631 are hereby MODIFIED. The award of separation pay is deleted.
Petitioner is ordered to pay private respondents their 13 th month pay
commencing from the date of employment up to 15 August 1996, as well as
service incentive leave pay from the second year of employment up to 15
August 1996. No pronouncement as to costs.
 
SO ORDERED
THIRD DIVISION
G.R. No. 157202             March 28, 2007
PHILIPPINE LONG DISTANCE and TELEPHONE COMPANY,
INC., Petitioner, 
vs.
AMPARO BALBASTRO and NATIONAL LABOR RELATIONS
COMMISSION, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari filed by Philippine Long
Distance and Telephone Company, Inc. (petitioner) seeking to annul the
Decision1 dated July 31, 2002 and the Resolution 2 dated February 7, 2003
of the Court of Appeals (CA) in CA-G.R. SP No. 51060.
Amparo Balbastro (private respondent) was employed by petitioner in 1978
as its telephone operator until her questioned dismissal from employment
on October 5, 1989. She was dismissed by petitioner for her absences
without authorized leave due to unconfirmed sick leave on June 28 to July
14, 1989, which constituted her third offense 3 punishable by dismissal
under petitioner’s rules and regulations.4
On October 28, 1991, private respondent filed a Complaint 5 with the Labor
Arbiter against petitioner and its President, Antonio Cojuangco, for illegal
dismissal, non-payment of salary wage, premium pay for rest day, 13th
month pay, and damages. In her position paper, she alleged that she was
dismissed on the ground of unconfirmed sick leave despite her
presentation of medical certificates from her attending physicians which
were not considered by petitioner’s medical doctors; and that she has four
minor children and it was not her intention to habitually absent herself
without reason considering that her loss of job which was based only on
opinions of petitioner’s doctors had caused her great deprivation and moral
suffering. She prayed for reinstatement, backwages, and damages.
Petitioner filed its position paper with Motion to Dismiss 6 alleging that
private respondent’s habitual and unjustified absences was a just and valid
cause for her termination under its rules and regulations; and that her
record of unauthorized absences for 1989 showed the following:
First unauthorized absences, from March 19 to 29, 1989. Private
respondent absented herself from work for nine days excluding rest days
on March 23 to 24, 1989 without notice to petitioner. She gave marital
problem as the reason for her absence. She was penalized with 18 days
suspension for violating petitioner’s rules and regulations regarding
absences.
Second unauthorized absences, from June 11 to 13, 1989. Private
respondent called in sick from Tanauan, Batangas on June 5 that she was
suffering from gastroenteritis. She absented herself from June 5 to 13,
1989. On June 14, 1989, she presented herself to petitioner’s doctor, Dr.
Melissa Musngi and submitted a medical certificate where it was stated that
she was under treatment from June 5 to 8, 1989 of gastroenteritis. Dr.
Musngi confirmed private respondent’s sick leave from June 5 to 10, 1989
but did not confirm her absences from June 11 to 13, 1989 because her
medical certificate covered only the period from June 5 to 8, 1989.
Furthermore, petitioner reasons out that if she really had such illness,
certain normal logical medical procedures should have been taken, such as
stool examinations and hospitalization; and she bore no post-illness
manifestations of gastroenteritis. Private respondent’s unconfirmed leave of
absence was considered by petitioner unauthorized due to her patent
abuse of sick leave privileges and treated it as her second offense and was
penalized with 15 days suspension.
Third unauthorized absences, from June 28 to July 14, 1989. On June 25,
1989, private respondent made a sick call that she had sore eyes and
absented herself from June 25 to July 14, 1989. On July 3, 1989, she was
outvisited at her given address in Makati but was not found home. On July
15, 1989, she reported for work and presented herself to the clinic for
confirmation. She had her medical certificate issued by her attending
physician showing that she had been under his professional treatment from
June 25 to July 12, 1989 for systemic viral infection. Petitioner’s doctor, Dr.
Benito Dungo, confirmed her sick leave from June 25 to 27, 1989 but did
not confirm as to the rest of the dates when she was absent from work.
When asked to explain, private respondent said that she had a viral
infection during the said period; and that she was in Tanauan, Batangas
during the said dates so she was not found in Makati when outvisited.
Petitioner’s doctor did not confirm her leave of absence from June 28 to
July 14, 1989 on the ground that such illness did not warrant a very long
time of rest; certain laboratory examinations should have been conducted
by her attending physician; and there was patent abuse of her sick leave
privileges.
While private respondent’s third leave of absence was being deliberated
upon, she absented herself from August 6 to 12, 1989. She called in sick
on August 6, 1989 informing her supervisor that she had a fever. The
medical certificate issued by her attending physician showed that she was
under treatment from August 7 to 10, 1989 for influenza. Petitioner’s doctor,
Dr. Eduardo Co, confirmed private respondent’s leave of absence from
August 6 to 8, 1989 but did not confirm the rest because her absences from
August 9 to 12, 1989 were not covered by a medical certificate; her illness
did not warrant prolonged absence; and it was medically impossible for her
to contract the same illness which she contracted the previous month since
it is a medical fact that there is no such thing as an immediately recurrent
viral infection.
In view of her repeated absences without authorized leave for the third
time, petitioner terminated private respondent’s service effective October 5,
1989.
The Labor Arbiter conducted a hearing where private respondent testified
on her behalf, while petitioner presented the three medical doctors who did
not confirm portions of private respondent’s leave of absence, and its
Employee Relations and Service Department Manager.
On May 30, 1994, the Labor Arbiter issued its Decision, 7 the dispositive
portion of which reads:
WHEREFORE, all the foregoing premises being considered, judgment is
hereby rendered ordering the respondent Philippine Long Distance [and]
Telephone Co. to reinstate the complainant to her former position as
telephone operator with all the rights, privileges and benefits appertaining
thereto, including seniority, plus backwages equivalent to one (1) year
salary in the sum of ₱78,000.00 (₱6,500.00/mo. x 12 mos.).
SO ORDRED.8
The Labor Arbiter held that private respondent’s first incident of absence
from March 19 to 29, 1989 were unauthorized but not as to the other
succeeding absences. It found that private respondent, on her first day of
absence, called in sick and when she reported for work, she went to
petitioner’s clinic for check-up and submitted her medical certificates, thus
she complied with the standard requirements on matters of sick leave; that
petitioner’s doctors did not confirm some portions of private respondent’s
leave of absence based merely on their medical opinions; that such
justification was not warranted under Department Order No. ADM-79-02
wherein absences due to illness were considered unauthorized and without
pay when the attending doctor’s signature is forged, there is alteration as to
the date and contents of the medical certificate, the certificate is false as to
the facts alleged therein, the doctor issuing the medical certificate is not
qualified to attend to the illness, there are falsities and misrepresentations,
and when there is patent abuse of sick leave privileges; and that these
circumstances were not proven in this case.
The Labor Arbiter gave more credence to the doctor who actually attended
to private respondent rather than to the medical opinion of petitioner’s
doctors. It concluded that petitioner’s doctors should have coordinated with
private respondent’s attending physicians to settle any doubts as to the
medical certificates.
Petitioner filed its appeal with the National Labor Relations Commission
(NLRC).9 On January 19, 1996, the NLRC issued a
Resolution10 affirming the decision of the Labor Arbiter.
The NLRC found that company practice allows leave of absence due to
sickness if supported by a medical certificate issued by the attending
physician; that a difference in opinion by the Medical Director from that of
the attending physician should not prejudice private respondent since the
Medical Director can consider absences unauthorized only in cases of
forgery and patent abuse of sick leave privileges which were not proven in
this case; that if the Medical Director entertained doubts as to the medical
certificate, he should have asked the attending physician to submit himself
for cross-examination and then present an independent physician for an
expert opinion on the matter.
Petitioner’s Motion for Reconsideration was denied in a Resolution 11 dated
March 14, 1996.
Undaunted, petitioner filed with us a Petition for Certiorari with prayer for
the issuance of a Temporary Restraining Order (TRO). A TRO was issued
to enjoin the enforcement of the NLRC Resolution until further orders. 12
In a Resolution dated December 7, 1998, 13 we referred the petition to
the CA in accordance with the St. Martin Funeral Home v. National Labor
Relations Commission14 ruling.
On July 31, 2002, the CA issued its assailed Decision which dismissed the
petition and affirmed the NLRC Decision. The CA held that as long as the
medical certificate presented did not fall under any of the infirmities set
forth in petitioner’s rules and regulations, the unconfirmed leave should be
treated merely as absence without leave and was not subject to disciplinary
action; that petitioner may not rely on the previous absences of
respondents in 1978 and 1982 to show abuse of sick leave privileges
because petitioner had acknowledged that respondent had already been
penalized with suspension, and those absences were committed beyond
the three-year period mentioned in their rules and regulations; that in its
desire to clothe private respondent’s dismissal with a semblance of legality,
petitioner points to private respondent’s fourth unauthorized leave of
absence committed in August 1989 while the third unauthorized leave of
absence was being deliberated upon; and that the notice of dismissal
referred only to her third unauthorized leave, thus she could not be faulted
for an infraction for which she was not charged.
Petitioner’s Motion for Reconsideration was denied in a Resolution dated
February 7, 2003.
Hence, petitioner filed the instant Petition for Review on Certiorari alleging
the following grounds:
I
WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO
CONSIDER THAT THE PETITION HEREIN DOES NOT MERELY
INQUIRE UPON THE RELATIVE WEIGHT OF THE EVIDENCE
PRESENTED BY THE PARTIES, BUT IS ANCHORED ON MANIFESTLY
ERRONEOUS CONCLUSIONS ON THE PART OF THE NLRC ARISING
FROM GROSS MISAPPREHENSION OF THE FACTS OBTAINING IN
THE CASE. AMONG OTHERS, IT WAS GRAVE ERROR TO CONCLUDE
THAT THERE WAS NO PATENT ABUSE OF THE SICK LEAVE
PRIVILEGE ON THE PART OF THE PRIVATE RESPONDENT BECAUSE
THE MEDICAL CERTIFICATES SHE PRESENTED WERE NOT FALSE,
FORGED, OR ALTERED TOTALLY DISREGARDING THE FACT THAT
"ABUSE OF SICK LEAVE PRIVILEGE" IS A CAUSE SEPARATELY
ENUMERATED UNDER THE RULES AS A GROUND FOR
DISCIPLINARY ACTION.
II
WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO
CONSIDER THAT THE CONCLUSIONS OF THE NLRC ARE BEREFT OF
ANY LEGAL OR FACTUAL BASES AS THERE WERE LEGALLY NO
MEDICAL CERTIFICATES TO SPEAK OF, AND THE EXISTENCE
THEREOF ARE PURE AND SIMPLE HEARSAY, HENCE COULD NOT BE
VALIDLY RELIED UPON OR INVOKED BY THE PRIVATE RESPONDENT
TO SUPPORT HER DEFENSE EVEN SUPPOSING TECHNICAL RULES
ON EVIDENCE COULD BE RELAXED IN LABOR PROCEEDINGS. 15
Petitioner argues that the NLRC’s conclusions that private respondent had
not committed a patent abuse of sick leave privileges and that her
dismissal was illegal are utterly without any factual or legal basis; that the
NLRC’s conclusion that the dismissal was illegal was merely based: (1) on
the evidence of private respondent; (2) on medical certificates which are
clearly hearsay and of no probative value whatsoever; and (3) on medical
certificates which, even supposing could be considered, simply failed to
cover the period of the leave requested and set forth implausible
diagnoses.
Petitioner claims that the CA as well as the NLRC failed to resolve the
issue of whether or not the medical certificate should be given any
credence at all; that it had presented four witnesses which included their
three medical doctors who were subjected to cross-examinations, and yet
credence was given to private respondent’s hearsay evidence consisting
merely of a medical certificate by the latter’s attending physician who was
not even presented to testify; that since the content of the medical
certificate had been rebutted and refuted by petitioner’s witnesses, the
burden of evidence is shifted to private respondent to show that the
medical certificate she submitted was competent, proper, and sound which
she failed to do.
Petitioner further claims that the CA erred in not finding that private
respondent committed a patent abuse of sick leave privileges which does
not arise solely from forgery or alteration of the medical certificate, but on
the fact that an employee had frequently and incorrigibly absented herself
and then applied for sick leave with absolute impunity armed with medical
certificates which not only failed to cover the entire length of the leave but
also with implausible diagnoses; that excluding private respondent’s
unauthorized absences in 1989, she had accumulated 93 days of sick
leave from January to July 1989 and 115 days of sick leave in 1988, thus,
how can the conclusion be drawn that there was no patent abuse of sick
leave privileges; and that her unauthorized absence for which she was
terminated all occurred in 1989, thus, the CA erred in saying that petitioner
may not rely on the previous absences of respondent in 1978 and 1982 to
justify private respondent’s dismissal.
We find the petition meritorious. Private respondent was validly dismissed
by petitioner. It must be borne in mind that the basic principle in termination
cases is that the burden of proof rests upon the employer to show that the
dismissal is for just and valid cause and failure to do so would necessarily
mean that the dismissal was not justified and, therefore, was illegal. 16 For
dismissal to be valid, the evidence must be substantial and not arbitrary
and must be founded on clearly established facts. 17 We find that petitioner
had discharged this burden.
Under petitioner’s Department Order No. ADM-79-02, for the absence due
to an alleged illness to be considered unauthorized, without pay, and
subject to disciplinary action, it must be shown that the medical certificate is
forged, altered as to the date and contents, false as to the facts stated
therein, issued by a doctor not qualified to attend to the patient’s illness,
and there is patent abuse of sick leave privileges. The penalty for three
offenses of unauthorized absences committed within the three-year period
is dismissal.
Private respondent’s unconfirmed absences from June 28 to July 14, 1989
is the crucial period in this particular case.
The Labor Arbiter and the NLRC found that private respondent was illegally
dismissed by petitioner. Such finding was affirmed by the CA. They all
concluded that the medical certificate which private respondent presented
did not fall under the circumstances enumerated in Department Order No.
ADM-79-02, and there was no patent abuse of sick leave privileges, thus,
there was no basis for petitioner’s doctors not to confirm her sick leave and
consider the same unauthorized.
The jurisdiction of this Court in a petition for review on certiorari is limited to
reviewing only errors of law, not of fact, unless the factual findings being
assailed are not supported by evidence on record or the impugned
judgment is based on a misapprehension of facts. 18 We find that those
exceptions are present in the instant case.
We find that petitioner had sufficiently established that private respondent
committed a patent abuse of her sick leave privileges which is one of the
grounds listed in Department Order No. ADM-79-02 for disciplinary action.
Private respondent was absent on June 25, 1989 and the reason given was
sore eyes. She was then absent from June 25 to July 14, 1989. When she
reported for work on July 15, 1989, she went to petitioner’s doctor, Dr.
Benito Dungo, for confirmation of her leave of absence and presented a
medical certificate19 from her attending physician, Dr. Manuel C. Damian of
Tanauan Batangas, who certified that she had been under his professional
care from June 25 to July 12, 1989 for systemic viral disease.
Dr. Dungo confirmed private respondent’s leave of absence from June 25
to 27, 1989 only and did not confirm her leave from June 28 to July 14,
1989 for the following reasons: (a) systemic viral disease indicated in the
medical certificate does not warrant such a very long time of rest and
recuperation; (b) if she really had an infection, the logical recourse is for the
attending physician to conduct a chest x-ray and blood examination to
determine the cause of the prolonged fever, but such was not made; (c) if
she was really ill for such a long time, she would have already been
confined in a hospital for treatment as petitioner has standing agreements
with various hospitals to provide immediate medical assistance free of
charge; (d) she displayed no residue of symptoms of flu, thus casting doubt
on the veracity of her claim; (e) she called in sick on June 25, 1989 that she
was suffering from sore eyes but her medical certificate made no mention
of such condition; and (f) her medical records reveal a pattern of abuse of
sick leave privileges.20
Private respondent’s reason for her absence on June 25, 1989 was sore
eyes, however the medical certificate that she presented for her prolonged
absence from June 25 to July 14, 1989 was systemic viral disease and as
correctly observed by Dr. Dungo, sore eyes was never mentioned therein.
Moreover, in the medical progress note21 of Dr. Damian dated October 10,
1989 attached to private respondent’s position paper submitted before the
Labor Arbiter, it was shown that private respondent was seen by Dr.
Damian on June 25, 1989 at 9:00 a.m. and her temperature was 40
degrees and she was complaining of severe headache and body pain. It
would appear that there was a discrepancy between the reason given when
she called in sick on June 25, 1989 and her complaints when she consulted
Dr. Damian on the same day. In fact, when private respondent was asked
on cross-examination why sore eyes was never mentioned in her medical
certificate, all that she could say was "the diagnosis was systemic viral
disease, sama-sama na lahat".22
The medical certificate issued by Dr. Damian showed that private
respondent was under his professional care from June 25 to July 12, 1989.
However, the medical progress note dated October 10, 1989 of the same
doctor showed that private respondent consulted him only on June 25, 27,
and 29, 1989. It was never mentioned that Dr. Damian had seen private
respondent after June 29, 1989. Thus, there was even a discrepancy
between the medical certificate dated July 13, 1989 and the medical
progress note as to the time frame that private respondent was seen by Dr.
Damian. The medical certificate did not cover private respondent’s
absences from July 13 to 14, 1989 and she only reported for work on July
15, 1989.
It bears stressing that from the time private respondent called in sick on
June 25, 1989 due to sore eyes, she never called up petitioner again until
she reported for work on July 15, 1989. She never went to petitioner’s
doctors for them to verify her sickness.
Private respondent had committed the first two offenses of unauthorized
absences in the same year. First, she did not report for work from March 19
to 29, 1989 without notice to petitioner, thus her absence was treated as
unauthorized and considered her first offense for which she was penalized
with suspension. Second, she again did not report for work from June 5 to
13, 1989 and when she reported for work and presented her medical
certificate, it covered the period from June 5 to 8, 1989 only but she did not
report for work until June 14, 1989. Petitioner’s doctor did not confirm her
absences from June 11 to 13, 1989, thus, the same was considered
unauthorized and her second offense for which she was penalized again
with suspension. These two unauthorized absences together with her third
unauthorized absences committed from June 28 to July 14, 1989 are
sufficient bases for petitioner’s finding that private respondent patently
abused her sick leave privileges.
Previous infractions may be used as justification for an employee’s
dismissal from work in connection with a subsequent similar
offense.23 Moreover, it is in petitioner’s rules and regulations that the same
offense committed within the three-year period merits the penalty of
dismissal. The CA’s finding that petitioner may not rely on the previous
absences of private respondent in 1978 and 1982 to show abuse of sick
leave privileges has no basis since private respondent was dismissed for
committing her three unauthorized absences all in 1989.
It had also been established by Dr. Dungo’s testimony that private
respondent’s medical record showed that she did not go to the clinic for
consultation as she would only present a medical certificate and get a
clearance for her sick leave;24 that the same medical record showed her
absences in 1989 as follows: (1) From April 27 to May 4 due to urinary tract
infection and she submitted a medical certificate; 25 (2) From May 5 to 14
due to back pain;26 (3) From May 20 to 21 due to migraine; 27 (4) June 5 to
13 due to gastroenteritis (penalized as her second offense); (5) June 15 to
24 due to conjunctivitis and submitted a medical certificate; 28 and (6) June
25 to July 14, 1989 due to systemic viral disease with medical certificate
(her third offense penalized with dismissal). Private respondent had
incurred a total absence of 85 days from January to October 1989; 29 and
115 days in 1988.30 It had also been established that petitioner’s doctors
confirmed most of her sick leave out of compassion 31 and that her medical
records showed that there were several warnings given her regarding her
unconfirmed sick leave.32
As petitioner stated in its pleadings, it is a telecommunication service
company which provides the country with various telecommunication
services and facilities. Its operations are a vital part to many transactions all
over the country and abroad, and private respondent was one of its
telephone operators who used to connect all these calls. Thus, her patent
abuse of her sick leave privileges is detrimental to petitioner’s business.
While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects
one's source or means of livelihood, it should not be overlooked that the
benefits accorded to labor do not include compelling an employer to retain
the services of an employee who has been shown to be a gross liability to
the employer. The law in protecting the rights of the employees authorizes
neither oppression nor self-destruction of the employer. 33 It should be made
clear that when the law tilts the scale of justice in favor of labor, it is but a
recognition of the inherent economic inequality between labor and
management. The intent is to balance the scale of justice; to put the two
parties on relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interests of management but
never should the scale be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est (Justice is to be denied to none).34
WHEREFORE, the instant petition is GRANTED. The Decision dated July
31, 2002 and the Resolution dated February 7, 2003 of the Court of
Appeals in CA-G.R. SP No. 51060 are hereby REVERSED and SET
ASIDE. The complaint of Amparo Balbastro is DISMISSED.
No costs.
SO ORDERED.

JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING

CORPORATION, respondent.

DECISION
CARPIO, J.:

The Case

Before this Court is a petition for review on certiorari[1] assailing the 26

March 1999 Decision[2] of the Court of Appeals in CA-G.R. SP No. 49190
dismissing the petition filed by Jose Y. Sonza (SONZA). The Court of
Appeals affirmed the findings of the National Labor Relations Commission
(NLRC), which affirmed the Labor Arbiters dismissal of the case for lack of
jurisdiction.

The Facts

In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-

CBN) signed an Agreement (Agreement) with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was represented by
SONZA, as President and General Manager, and Carmela Tiangco
(TIANGCO), as EVP and Treasurer. Referred to in the Agreement as
AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-
CBN as talent for radio and television. The Agreement listed the services
SONZA would render to ABS-CBN, as follows:

a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m.,

Mondays to Fridays;

b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m.,

Sundays.[3]

ABS-CBN agreed to pay for SONZAs services a monthly talent fee

of P310,000 for the first year and P317,000 for the second and third year of
the Agreement. ABS-CBN would pay the talent fees on the 10 th and
25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President,
Eugenio Lopez III, which reads:

Dear Mr. Lopez,

We would like to call your attention to the Agreement dated May 1994
entered into by your goodself on behalf of ABS-CBN with our company
relative to our talent JOSE Y. SONZA.

As you are well aware, Mr. Sonza irrevocably resigned in view of recent
events concerning his programs and career. We consider these acts of the
station violative of the Agreement and the station as in breach thereof. In
this connection, we hereby serve notice of rescission of said Agreement at
our instance effective as of date.

Mr. Sonza informed us that he is waiving and renouncing recovery of the

remaining amount stipulated in paragraph 7 of the Agreement but reserves
the right to seek recovery of the other benefits under said Agreement.

Thank you for your attention.

Very truly yours,

(Sgd.)
JOSE Y. SONZA
President and Gen. Manager[4]
 On 30 April 1996, SONZA filed a complaint against ABS-CBN before
the Department of Labor and Employment, National Capital Region
in Quezon City. SONZA complained that ABS-CBN did not pay his salaries,
separation pay, service incentive leave pay, 13 th month pay, signing bonus,
travel allowance and amounts due under the Employees Stock Option Plan
(ESOP).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that
no employer-employee relationship existed between the parties. SONZA
filed an Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees
through his account at PCIBank, Quezon Avenue Branch, Quezon City. In
July 1996, ABS-CBN opened a new account with the same bank where
ABS-CBN deposited SONZAs talent fees and other payments due him
under the Agreement.
In his Order dated 2 December 1996, the Labor Arbiter[5] denied the
motion to dismiss and directed the parties to file their respective position
papers. The Labor Arbiter ruled:

In this instant case, complainant for having invoked a claim that he was an
employee of respondent company until April 15, 1996 and that he was not
paid certain claims, it is sufficient enough as to confer jurisdiction over the
instant case in this Office. And as to whether or not such claim would entitle
complainant to recover upon the causes of action asserted is a matter to be
resolved only after and as a result of a hearing. Thus, the respondents plea
of lack of employer-employee relationship may be pleaded only as a matter
of defense. It behooves upon it the duty to prove that there really is no
employer-employee relationship between it and the complainant.

The Labor Arbiter then considered the case submitted for resolution.
The parties submitted their position papers on 24 February 1997.
On 11 March 1997, SONZA filed a Reply to Respondents Position
Paper with Motion to Expunge Respondents Annex 4 and Annex 5 from the
Records. Annexes 4 and 5 are affidavits of ABS-CBNs witnesses Soccoro
Vidanes and Rolando V. Cruz. These witnesses stated in their affidavits
that the prevailing practice in the television and broadcast industry is to
treat talents like SONZA as independent contractors.
 The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing
the complaint for lack of jurisdiction. [6] The pertinent parts of the decision
read as follows:

xxx

While Philippine jurisprudence has not yet, with certainty, touched on the
true nature of the contract of a talent, it stands to reason that a talent as
above-described cannot be considered as an employee by reason of the
peculiar circumstances surrounding the engagement of his services.

It must be noted that complainant was engaged by respondent by

reason of his peculiar skills and talent as a TV host and a radio
broadcaster. Unlike an ordinary employee, he was free to perform the
services he undertook to render in accordance with his own style. The
benefits conferred to complainant under the May 1994 Agreement are
certainly very much higher than those generally given to employees. For
one, complainant Sonzas monthly talent fees amount to a
staggering P317,000. Moreover, his engagement as a talent was covered
by a specific contract. Likewise, he was not bound to render eight (8) hours
of work per day as he worked only for such number of hours as may be
necessary.

The fact that per the May 1994 Agreement complainant was accorded
some benefits normally given to an employee is inconsequential. Whatever
benefits complainant enjoyed arose from specific agreement by the
parties and not by reason of employer-employee relationship. As
correctly put by the respondent, All these benefits are merely talent fees
and other contractual benefits and should not be deemed as salaries,
wages and/or other remuneration accorded to an employee,
notwithstanding the nomenclature appended to these benefits. Apropos to
this is the rule that the term or nomenclature given to a stipulated benefit is
not controlling, but the intent of the parties to the Agreement conferring
such benefit.

The fact that complainant was made subject to respondents Rules

and Regulations, likewise, does not detract from the absence of
employer-employee relationship. As held by the Supreme Court, The line
should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or
methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such
means. The first, which aim only to promote the result, create no employer-
employee relationship unlike the second, which address both the result and
the means to achieve it. (Insular Life Assurance Co., Ltd. vs. NLRC, et al.,
G.R. No. 84484, November 15, 1989).

x x x (Emphasis supplied)[7]

SONZA appealed to the NLRC. On 24 February 1998, the NLRC

rendered a Decision affirming the Labor Arbiters decision. SONZA filed a
motion for reconsideration, which the NLRC denied in its Resolution
dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari
before the Court of Appeals assailing the decision and resolution of the
NLRC. On 26 March 1999, the Court of Appeals rendered a Decision
dismissing the case.[8]
Hence, this petition.

The Rulings of the NLRC and Court of Appeals

The Court of Appeals affirmed the NLRCs finding that no employer-

employee relationship existed between SONZA and ABS-CBN. Adopting
the NLRCs decision, the appellate court quoted the following findings of the
NLRC:

x x x the May 1994 Agreement will readily reveal that MJMDC entered into
the contract merely as an agent of complainant Sonza, the principal. By all
indication and as the law puts it, the act of the agent is the act of the
principal itself. This fact is made particularly true in this case, as admittedly
MJMDC is a management company devoted exclusively to managing the
careers of Mr. Sonza and his broadcast partner, Mrs. Carmela C.
Tiangco. (Opposition to Motion to Dismiss)

Clearly, the relations of principal and agent only accrues between

complainant Sonza and MJMDC, and not between ABS-CBN and
MJMDC. This is clear from the provisions of the May 1994 Agreement
which specifically referred to MJMDC as the AGENT. As a matter of fact,
when complainant herein unilaterally rescinded said May 1994 Agreement,
it was MJMDC which issued the notice of rescission in behalf of Mr. Sonza,
who himself signed the same in his capacity as President.

Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the
fact that historically, the parties to the said agreements are ABS-CBN and
Mr. Sonza. And it is only in the May 1994 Agreement, which is the latest
Agreement executed between ABS-CBN and Mr. Sonza, that MJMDC
figured in the said Agreement as the agent of Mr. Sonza.

We find it erroneous to assert that MJMDC is a mere labor-only contractor

of ABS-CBN such that there exist[s] employer-employee relationship
between the latter and Mr. Sonza. On the contrary, We find it indubitable,
that MJMDC is an agent, not of ABS-CBN, but of the talent/contractor Mr.
Sonza, as expressly admitted by the latter and MJMDC in the May 1994
Agreement.

It may not be amiss to state that jurisdiction over the instant controversy
indeed belongs to the regular courts, the same being in the nature of an
action for alleged breach of contractual obligation on the part of
respondent-appellee. As squarely apparent from complainant-appellants
Position Paper, his claims for compensation for services, 13 th month pay,
signing bonus and travel allowance against respondent-appellee are not
based on the Labor Code but rather on the provisions of the May 1994
Agreement, while his claims for proceeds under Stock Purchase
Agreement are based on the latter. A portion of the Position Paper of
complainant-appellant bears perusal:

Under [the May 1994 Agreement] with respondent ABS-CBN, the latter
contractually bound itself to pay complainant a signing bonus consisting of
shares of stockswith FIVE HUNDRED THOUSAND PESOS (P500,000.00).

Similarly, complainant is also entitled to be paid 13 th month pay based on

an amount not lower than the amount he was receiving prior to effectivity of
(the) Agreement.

Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to

a commutable travel benefit amounting to at least One Hundred Fifty
Thousand Pesos (P150,000.00) per year.
Thus, it is precisely because of complainant-appellants own recognition of
the fact that his contractual relations with ABS-CBN are founded on the
New Civil Code, rather than the Labor Code, that instead of merely
resigning from ABS-CBN, complainant-appellant served upon the latter a
notice of rescission of Agreement with the station, per his letter dated April
1, 1996, which asserted that instead of referring to unpaid employee
benefits, he is waiving and renouncing recovery of the remaining amount
stipulated in paragraph 7 of the Agreement but reserves the right to such
recovery of the other benefits under said Agreement. (Annex 3 of the
respondent ABS-CBNs Motion to Dismiss dated July 10, 1996).

Evidently, it is precisely by reason of the alleged violation of the May 1994

Agreement and/or the Stock Purchase Agreement by respondent-appellee
that complainant-appellant filed his complaint. Complainant-appellants
claims being anchored on the alleged breach of contract on the part of
respondent-appellee, the same can be resolved by reference to civil law
and not to labor law. Consequently, they are within the realm of civil law
and, thus, lie with the regular courts. As held in the case of Dai-Chi
Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21 November
1994, an action for breach of contractual obligation is intrinsically a
civil dispute.[9] (Emphasis supplied)

The Court of Appeals ruled that the existence of an employer-employee

relationship between SONZA and ABS-CBN is a factual question that is
within the jurisdiction of the NLRC to resolve. [10] A special civil action for
certiorari extends only to issues of want or excess of jurisdiction of the
NLRC.[11] Such action cannot cover an inquiry into the correctness of the
evaluation of the evidence which served as basis of the NLRCs conclusion.
[12]
 The Court of Appeals added that it could not re-examine the parties
evidence and substitute the factual findings of the NLRC with its own. [13]

The Issue

In assailing the decision of the Court of Appeals, SONZA contends that:

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE

NLRCS DECISION AND REFUSING TO FIND THAT AN EMPLOYER-
EMPLOYEE RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-
CBN, DESPITE THE WEIGHT OF CONTROLLING LAW,
JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING.[14]

The Courts Ruling

We affirm the assailed decision.

No convincing reason exists to warrant a reversal of the decision of the
Court of Appeals affirming the NLRC ruling which upheld the Labor Arbiters
dismissal of the case for lack of jurisdiction.
The present controversy is one of first impression. Although Philippine
labor laws and jurisprudence define clearly the elements of an employer-
employee relationship, this is the first time that the Court will resolve the
nature of the relationship between a television and radio station and one of
its talents. There is no case law stating that a radio and television program
host is an employee of the broadcast station.
The instant case involves big names in the broadcast industry, namely
Jose Jay Sonza, a known television and radio personality, and ABS-CBN,
one of the biggest television and radio networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case
because he was an employee of ABS-CBN. On the other hand, ABS-CBN
insists that the Labor Arbiter has no jurisdiction because SONZA was an
independent contractor.

Employee or Independent Contractor?

The existence of an employer-employee relationship is a question of

fact. Appellate courts accord the factual findings of the Labor Arbiter and
the NLRC not only respect but also finality when supported by substantial
evidence.[15] Substantial evidence means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion. [16] A
party cannot prove the absence of substantial evidence by simply pointing
out that there is contrary evidence on record, direct or circumstantial. The
Court does not substitute its own judgment for that of the tribunal in
determining where the weight of evidence lies or what evidence is credible.
[17]
 SONZA maintains that all essential elements of an employer-employee
relationship are present in this case. Case law has consistently held that
the elements of an employer-employee relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employers power to control the employee on the
means and methods by which the work is accomplished. [18] The last
element, the so-called control test, is the most important element.[19]

A. Selection and Engagement of Employee

ABS-CBN engaged SONZAs services to co-host its television and radio

programs because of SONZAs peculiar skills, talent and celebrity
status. SONZA contends that the discretion used by respondent in
specifically selecting and hiring complainant over other broadcasters of
possibly similar experience and qualification as complainant belies
respondents claim of independent contractorship.
Independent contractors often present themselves to possess unique
skills, expertise or talent to distinguish them from ordinary employees. The
specific selection and hiring of SONZA, because of his unique skills,
talent and celebrity status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive, of an independent contractual
relationship. If SONZA did not possess such unique skills, talent and
celebrity status, ABS-CBN would not have entered into the Agreement with
SONZA but would have hired him through its personnel department just like
any other employee.
In any event, the method of selecting and engaging SONZA does not
conclusively determine his status. We must consider all the circumstances
of the relationship, with the control test being the most important element.

B. Payment of Wages

ABS-CBN directly paid SONZA his monthly talent fees with no part of
his fees going to MJMDC. SONZA asserts that this mode of fee payment
shows that he was an employee of ABS-CBN. SONZA also points out that
ABS-CBN granted him benefits and privileges which he would not have
enjoyed if he were truly the subject of a valid job contract.
 All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBNs
employee, there would be no need for the parties to stipulate on benefits
such as SSS, Medicare, x x x and 13 th month pay[20] which the law
automatically incorporates into every employer-employee contract.
[21]
 Whatever benefits SONZA enjoyed arose from contract and not because
of an employer-employee relationship.[22]
SONZAs talent fees, amounting to P317,000 monthly in the second and
third year, are so huge and out of the ordinary that they indicate more an
independent contractual relationship rather than an employer-employee
relationship. ABS-CBN agreed to pay SONZA such huge talent fees
precisely because of SONZAs unique skills, talent and celebrity status not
possessed by ordinary employees. Obviously, SONZA acting alone
possessed enough bargaining power to demand and receive such huge
talent fees for his services. The power to bargain talent fees way above the
salary scales of ordinary employees is a circumstance indicative, but not
conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does
not negate the status of SONZA as an independent contractor. The parties
expressly agreed on such mode of payment. Under the Agreement,
MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn
over any talent fee accruing under the Agreement.

C. Power of Dismissal

For violation of any provision of the Agreement, either party

may terminate their relationship. SONZA failed to show that ABS-CBN
could terminate his services on grounds other than breach of contract, such
as retrenchment to prevent losses as provided under labor laws. [23]
During the life of the Agreement, ABS-CBN agreed to pay SONZAs
talent fees as long as AGENT and Jay Sonza shall faithfully and completely
perform each condition of this Agreement. [24] Even if it suffered severe
business losses, ABS-CBN could not retrench SONZA because ABS-CBN
remained obligated to pay SONZAs talent fees during the life of the
Agreement. This circumstance indicates an independent contractual
relationship between SONZA and ABS-CBN.
 SONZA admits that even after ABS-CBN ceased broadcasting his
programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN
adhered to its undertaking in the Agreement to continue paying SONZAs
talent fees during the remaining life of the Agreement even if ABS-CBN
cancelled SONZAs programs through no fault of SONZA. [25]
SONZA assails the Labor Arbiters interpretation of his rescission of the
Agreement as an admission that he is not an employee of ABS-CBN. The
Labor Arbiter stated that if it were true that complainant was really an
employee, he would merely resign, instead. SONZA did actually resign
from ABS-CBN but he also, as president of MJMDC, rescinded the
Agreement. SONZAs letter clearly bears this out. [26] However, the manner
by which SONZA terminated his relationship with ABS-CBN is
immaterial. Whether SONZA rescinded the Agreement or resigned from
work does not determine his status as employee or independent contractor.

D. Power of Control

Since there is no local precedent on whether a radio and television

program host is an employee or an independent contractor, we refer to
foreign case law in analyzing the present case. The United States Court of
Appeals, First Circuit, recently held in Alberty-Vlez v. Corporacin De
Puerto Rico Para La Difusin Pblica (WIPR)[27] that a television program
host is an independent contractor. We quote the following findings of
the U.S. court:

Several factors favor classifying Alberty as an independent

contractor. First, a television actress is a skilled position requiring
talent and training not available on-the-job. x x x In this regard, Alberty
possesses a masters degree in public communications and journalism; is
trained in dance, singing, and modeling; taught with the drama department
at the University of Puerto Rico; and acted in several theater and television
productions prior to her affiliation with Desde Mi Pueblo. Second, Alberty
provided the tools and instrumentalities necessary for her to
perform. Specifically, she provided, or obtained sponsors to provide, the
costumes, jewelry, and other image-related supplies and services
necessary for her appearance. Alberty disputes that this factor favors
independent contractor status because WIPR provided the equipment
necessary to tape the show.Albertys argument is misplaced. The
equipment necessary for Alberty to conduct her job as host of Desde Mi
Pueblo related to her appearance on the show. Others provided equipment
for filming and producing the show, but these were not the primary tools
that Alberty used to perform her particular function. If we accepted this
argument, independent contractors could never work on collaborative
projects because other individuals often provide the equipment required for
different aspects of the collaboration. x x x

Third, WIPR could not assign Alberty work in addition to filming

Desde Mi Pueblo. Albertys contracts with WIPR specifically provided that
WIPR hired her professional services as Hostess for the Program Desde Mi
Pueblo. There is no evidence that WIPR assigned Alberty tasks in addition
to work related to these tapings. x x x[28] (Emphasis supplied)

Applying the control test to the present case, we find that SONZA is

not an employee but an independent contractor. The control test is
the most important test our courts apply in distinguishing an employee
from an independent contractor.[29] This test is based on the extent of
control the hirer exercises over a worker. The greater the supervision and
control the hirer exercises, the more likely the worker is deemed an
employee. The converse holds true as well the less control the hirer
exercises, the more likely the worker is considered an independent
contractor.[30]
First, SONZA contends that ABS-CBN exercised control over the
means and methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services
specifically to co-host the Mel & Jay programs. ABS-CBN did not assign
any other work to SONZA. To perform his work, SONZA only needed his
skills and talent. How SONZA delivered his lines, appeared on television,
and sounded on radio were outside ABS-CBNs control. SONZA did not
have to render eight hours of work per day. The Agreement required
SONZA to attend only rehearsals and tapings of the shows, as well as pre-
and post-production staff meetings. [31] ABS-CBN could not dictate the
contents of SONZAs script. However, the Agreement prohibited SONZA
from criticizing in his shows ABS-CBN or its interests. [32] The clear
implication is that SONZA had a free hand on what to say or discuss in his
shows provided he did not attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual performance that
produced the finished product of SONZAs work. [33] ABS-CBN did not
instruct SONZA how to perform his job. ABS-CBN merely reserved the right
to modify the program format and airtime schedule for more effective
programming.[34] ABS-CBNs sole concern was the quality of the shows and
their standing in the ratings.Clearly, ABS-CBN did not exercise control over
the means and methods of performance of SONZAs work.
SONZA claims that ABS-CBNs power not to broadcast his shows
proves ABS-CBNs power over the means and methods of the performance
of his work. Although ABS-CBN did have the option not to broadcast
SONZAs show, ABS-CBN was still obligated to pay SONZAs talent
fees. Thus, even if ABS-CBN was completely dissatisfied with the means
and methods of SONZAs performance of his work, or even with the quality
or product of his work, ABS-CBN could not dismiss or even discipline
SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but
ABS-CBN must still pay his talent fees in full.[35]
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as
it was by the obligation to continue paying in full SONZAs talent fees, did
not amount to control over the means and methods of the performance of
SONZAs work. ABS-CBN could not terminate or discipline SONZA even if
the means and methods of performance of his work - how he delivered his
lines and appeared on television - did not meet ABS-CBNs approval. This
proves that ABS-CBNs control was limited only to the result of SONZAs
work, whether to broadcast the final product or not. In either case, ABS-
CBN must still pay SONZAs talent fees in full until the expiry of the
Agreement.
In Vaughan, et al. v. Warner, et al.,[36] the United States Circuit Court
of Appeals ruled that vaudeville performers were independent contractors
although the management reserved the right to delete objectionable
features in their shows. Since the management did not have control over
the manner of performance of the skills of the artists, it could only control
the result of the work by deleting objectionable features. [37]
SONZA further contends that ABS-CBN exercised control over his work
by supplying all equipment and crew. No doubt, ABS-CBN supplied the
equipment, crew and airtime needed to broadcast the Mel & Jay
programs. However, the equipment, crew and airtime are not the tools and
instrumentalities SONZA needed to perform his job. What SONZA
principally needed were his talent or skills and the costumes necessary for
his appearance. [38] Even though ABS-CBN provided SONZA with the place
of work and the necessary equipment, SONZA was still an independent
contractor since ABS-CBN did not supervise and control his work. ABS-
CBNs sole concern was for SONZA to display his talent during the airing of
the programs.[39]
A radio broadcast specialist who works under minimal supervision is an
independent contractor.[40] SONZAs work as television and radio program
host required special skills and talent, which SONZA admittedly
possesses. The records do not show that ABS-CBN exercised any
supervision and control over how SONZA utilized his skills and talent in his
shows.
Second, SONZA urges us to rule that he was ABS-CBNs employee
because ABS-CBN subjected him to its rules and standards of
performance. SONZA claims that this indicates ABS-CBNs control not only
[over] his manner of work but also the quality of his work.
The Agreement stipulates that SONZA shall abide with the rules and
standards of performance covering talents[41] of ABS-CBN. The
Agreement does not require SONZA to comply with the rules and
standards of performance prescribed for employees of ABS-CBN. The
code of conduct imposed on SONZA under the Agreement refers to the
Television and Radio Code of the Kapisanan ng mga Broadcaster sa
Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as
its Code of Ethics.[42] The KBP code applies to broadcasters, not to
employees of radio and television stations. Broadcasters are not
necessarily employees of radio and television stations. Clearly, the rules
and standards of performance referred to in the Agreement are those
applicable to talents and not to employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former. [43] In this case, SONZA
failed to show that these rules controlled his performance. We find that
these general rules are merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and radio programs
that comply with standards of the industry. We have ruled that:

Further, not every form of control that a party reserves to himself over the
conduct of the other party in relation to the services being rendered may be
accorded the effect of establishing an employer-employee relationship. The
facts of this case fall squarely with the case of Insular Life Assurance Co.,
Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the party hired to the
use of such means. The first, which aim only to promote the result, create
no employer-employee relationship unlike the second, which address both
the result and the means used to achieve it.[44]

The Vaughan case also held that one could still be an independent

contractor although the hirer reserved certain supervision to insure the
attainment of the desired result. The hirer, however, must not deprive the
one hired from performing his services according to his own initiative. [45]
Lastly, SONZA insists that the exclusivity clause in the Agreement is the
most extreme form of control which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent does not by itself
mean that SONZA is an employee of ABS-CBN. Even an independent
contractor can validly provide his services exclusively to the hiring party. In
the broadcast industry, exclusivity is not necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in
the entertainment industry.[46] This practice is not designed to control the
means and methods of work of the talent, but simply to protect the
investment of the broadcast station. The broadcast station normally spends
substantial amounts of money, time and effort in building up its talents as
well as the programs they appear in and thus expects that said talents
remain exclusive with the station for a commensurate period of time.
[47]
 Normally, a much higher fee is paid to talents who agree to work
exclusively for a particular radio or television station. In short, the huge
talent fees partially compensates for exclusivity, as in the present case.

MJMDC as Agent of SONZA

SONZA protests the Labor Arbiters finding that he is a talent of

MJMDC, which contracted out his services to ABS-CBN. The Labor Arbiter
ruled that as a talent of MJMDC, SONZA is not an employee of ABS-
CBN. SONZA insists that MJMDC is a labor-only contractor and ABS-CBN
is his employer.
 In a labor-only contract, there are three parties involved: (1) the labor-
only contractor; (2) the employee who is ostensibly under the employ of the
labor-only contractor; and (3) the principal who is deemed the real
employer. Under this scheme, the labor-only contractor is the agent of
the principal. The law makes the principal responsible to the employees of
the labor-only contractor as if the principal itself directly hired or employed
the employees.[48] These circumstances are not present in this case.
There are essentially only two parties involved under the Agreement,
namely, SONZA and ABS-CBN. MJMDC merely acted as SONZAs
agent. The Agreement expressly states that MJMDC acted as the AGENT
of SONZA. The records do not show that MJMDC acted as ABS-CBNs
agent. MJMDC, which stands for Mel and Jay Management and
Development Corporation, is a corporation organized and owned by
SONZA and TIANGCO. The President and General Manager of MJMDC is
SONZA himself. It is absurd to hold that MJMDC, which is owned,
controlled, headed and managed by SONZA, acted as agent of ABS-CBN
in entering into the Agreement with SONZA, who himself is represented by
MJMDC. That would make MJMDC the agent of both ABS-CBN and
SONZA.
As SONZA admits, MJMDC is a management company
devoted exclusively to managing the careers of SONZA and his broadcast
partner, TIANGCO. MJMDC is not engaged in any other business, not even
job contracting. MJMDC does not have any other function apart from acting
as agent of SONZA or TIANGCO to promote their careers in the broadcast
and television industry.[49]

Policy Instruction No. 40

SONZA argues that Policy Instruction No. 40 issued by then Minister of

Labor Blas Ople on 8 January 1979 finally settled the status of workers in
the broadcast industry. Under this policy, the types of employees in the
broadcast industry are the station and program employees.
Policy Instruction No. 40 is a mere executive issuance which does not
have the force and effect of law. There is no legal presumption that Policy
Instruction No. 40 determines SONZAs status. A mere executive issuance
cannot exclude independent contractors from the class of service providers
to the broadcast industry. The classification of workers in the broadcast
industry into only two groups under Policy Instruction No. 40 is not binding
on this Court, especially when the classification has no basis either in law
or in fact.

Affidavits of ABS-CBNs Witnesses

SONZA also faults the Labor Arbiter for admitting the affidavits of
Socorro Vidanes and Rolando Cruz without giving his counsel the
opportunity to cross-examine these witnesses. SONZA brands these
witnesses as incompetent to attest on the prevailing practice in the radio
and television industry. SONZA views the affidavits of these witnesses as
misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBNs witnesses, he was
never prevented from denying or refuting the allegations in the
affidavits. The Labor Arbiter has the discretion whether to conduct a formal
(trial-type) hearing after the submission of the position papers of the
parties, thus:

Section 3. Submission of Position Papers/Memorandum

xxx

These verified position papers shall cover only those claims and causes of
action raised in the complaint excluding those that may have been
amicably settled, and shall be accompanied by all supporting documents
including the affidavits of their respective witnesses which shall take the
place of the latters direct testimony. x x x

Section 4. Determination of Necessity of Hearing. Immediately after the

submission of the parties of their position papers/memorandum, the Labor
Arbiter shall motu propio determine whether there is need for a formal trial
or hearing. At this stage, he may, at his discretion and for the purpose of
making such determination, ask clarificatory questions to further elicit facts
or information, including but not limited to the subpoena of relevant
documentary evidence, if any from any party or witness. [50]

The Labor Arbiter can decide a case based solely on the position
papers and the supporting documents without a formal trial. [51] The holding
of a formal hearing or trial is something that the parties cannot demand as
a matter of right.[52] If the Labor Arbiter is confident that he can rely on the
documents before him, he cannot be faulted for not conducting a formal
trial, unless under the particular circumstances of the case, the documents
alone are insufficient. The proceedings before a Labor Arbiter are non-
litigious in nature. Subject to the requirements of due process, the
technicalities of law and the rules obtaining in the courts of law do not
strictly apply in proceedings before a Labor Arbiter.

Talents as Independent Contractors

ABS-CBN claims that there exists a prevailing practice in the broadcast

and entertainment industries to treat talents like SONZA as independent
contractors. SONZA argues that if such practice exists, it is void for
violating the right of labor to security of tenure.
The right of labor to security of tenure as guaranteed in the
Constitution[53] arises only if there is an employer-employee relationship
under labor laws. Not every performance of services for a fee creates an
employer-employee relationship. To hold that every person who renders
services to another for a fee is an employee - to give meaning to the
security of tenure clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to
offer their services as independent contractors. The right to life and
livelihood guarantees this freedom to contract as independent
contractors. The right of labor to security of tenure cannot operate to
deprive an individual, possessed with special skills, expertise and talent, of
his right to contract as an independent contractor.An individual like an artist
or talent has a right to render his services without any one controlling the
means and methods by which he performs his art or craft. This Court will
not interpret the right of labor to security of tenure to compel artists and
talents to render their services only as employees. If radio and television
program hosts can render their services only as employees, the station
owners and managers can dictate to the radio and television hosts what
they say in their shows. This is not conducive to freedom of the press.

Different Tax Treatment of Talents and Broadcasters

 The National Internal Revenue Code (NIRC)[54] in relation to Republic
Act No. 7716,[55] as amended by Republic Act No. 8241, [56] treats talents,
television and radio broadcasters differently. Under the NIRC, these
professionals are subject to the 10% value-added tax (VAT) on services
they render. Exempted from the VAT are those under an employer-
employee relationship.[57] This different tax treatment accorded to talents
and broadcasters bolters our conclusion that they are independent
contractors, provided all the basic elements of a contractual relationship
are present as in this case.

Nature of SONZAs Claims

SONZA seeks the recovery of allegedly unpaid talent fees, 13 th month

pay, separation pay, service incentive leave, signing bonus, travel
allowance, and amounts due under the Employee Stock Option Plan. We
agree with the findings of the Labor Arbiter and the Court of Appeals that
SONZAs claims are all based on the May 1994 Agreement and stock
option plan, and not on the Labor Code. Clearly, the present case does
not call for an application of the Labor Code provisions but an interpretation
and implementation of the May 1994 Agreement. In effect, SONZAs cause
of action is for breach of contract which is intrinsically a civil dispute
cognizable by the regular courts.[58]
WHEREFORE, we DENY the petition. The assailed Decision of the
Court of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is
AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 159890. May 28, 2004]

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING &

PARTS CORP. and JOSE LAMADRID, President, respondents.

DECISION
YNARES-SANTIAGO, J.:
 This is a petition for review under Rule 45 of the 1997 Revised Rules of
Civil Procedure assailing the Decision dated March 7, 2003 of the Court of
Appeals in CA-G.R. SP No. 73102 which affirmed the Resolution
dated April 2, 2002 of the National Labor Relations Commission.
Petitioner was employed by respondent company Lamadrid Bearing
and Parts Corporation sometime in June 1985 as a salesman earning a
commission of 3% of the total paid-up sales covering the whole area
of Mindanao. His average monthly income was more or less P16,000.00,
but later was increased to approximately P20,269.50. Aside from selling the
merchandise of respondent corporation, he was also tasked to collect
payments from his various customers. Respondent corporation had
complete control over his work because its President, respondent Jose
Lamadrid, frequently directed him to report to a particular area for his sales
and collection activities, and occasionally required him to go to Manila to
attend conferences regarding product competition, prices, and other market
strategies.
Sometime in 1998, petitioner encountered five customers/clients with
bad accounts, namely:
  Customers/Clients Amount
1 A&B Engineering Services P
) 86,431.20
2 Emmanuel Engineering Services 126,858.50
)
3 Panabo Empire Marketing 226,458.76
)
4 Southern Fortune Marketing 191,208.00
)
5 Alreg Marketing 56, 901.18
)
  Less Returns: 691.02 56, 210.16
  Total Bad Accounts P
687,166.62

Petitioner was confronted by respondent Lamadrid over the bad

accounts and warned that if he does not issue his own checks to cover the
said bad accounts, his commissions will not be released and he will lose
his job. Despite serious misgivings, he issued his personal checks in favor
of respondent corporation on condition that the same shall not be deposited
for clearing and that they shall be offset against his periodic commissions. [1]
Not contented with the issuance of the foregoing checks as security for
the bad accounts, respondents tricked petitioner into signing two
documents, which he later discovered to be a Promissory Note [2] and a
Deed of Real Estate Mortgage.[3]
Pursuant to the parties agreement that the checks would not be
deposited, as their corresponding values would be offset from petitioners
sales commissions, respondents returned the same to petitioner as
evidenced by the undeposited checks and respondent Lamadrids
computations of petitioners commissions.[4]
Due to financial difficulties, petitioner inquired about his membership
with the Social Security System in order to apply for a salary loan. To his
dismay, he learned that he was not covered by the SSS and therefore was
not entitled to any benefit. When he brought the matter of his SSS
coverage to his employer, the latter berated and hurled invectives at him
and, contrary to their agreement, deposited the remaining checks which
were dishonored by the drawee bank due to Account Closed.
On March 22, 2001, counsel for respondent corporation sent a letter to
petitioner demanding that he make good the dishonored checks or pay
their cash equivalent. In response, petitioner sent a letter addressed to
Atty. Meneses, counsel for respondent corporation, which reads: [5]

This has reference to your demand letter dated March 22, 2001 which I

received on March 30, 2001, relative to the checks I issued to my employer
LAMADRID BEARING PARTS CORPORATION.

May I respectfully request for a consideration as to the payment of the

amount covered by the said checks, as follows:

1. I have an earned commission in the amount of P33,412.39 as shown in

the hereto attached Summary of Sales as of February 28, 2001
(P22,748.60) and as of March 31, 2001 (P10,664.79), which I offer to be
charged or deducted as partial payment thereof;

2. I hereby commit One Hundred Percent (100%) of all my commission to

be directly charged or deducted as payment, from date onward, until such
time that payment will be completed;
Sir, kindly convey my good faith to your client and my employer, as is
shown by my willingness to continue working as Commission Salesman,
having served the Company for the last sixteen (16) years.

Im sincerely appealing to my employer, through you, Sir, to settle these

accountabilities which all resulted from the checks issued by my customers
which bounced and later charged to my account, in the manner afore-cited.

May this request merit your kindest consideration, Sirs.

Thank you very much.

On April 2, 2001, petitioner sent another letter to respondent Lamadrid,

to wit:[6]

Dear Mr. Lamadrid,

This is to inform your good office that if you pursue the case against me, I
may refer this problem to Mr. Paul Dominguez and Atty. Jesus Dureza to
solicit proper legal advice. I may also file counter charges against your
company of (sic) unfair labor practice and unfair compensation of 3%
commission to my sales and commissions of more or less 90,000,000.00
(all collected and covered with cleared check payments) for 16 years
working with your company up to the present year 2001.

If I am not wrong your company did not exactly declare the correct amount
of P90,000,000.00 more or less representing my sales and collections (all
collected and covered with cleared check payments to the Bureau of
Internal Revenue [BIR] for tax declaration purposes). In short your
company profited large amount of money to (sic) the above-mentioned
sales and collections of P90,000,000.00 more or less for 16 years working
with your company.

I remember that upon my employment with your company last 1985 up to

the present year 2001 as commission basis salesman, I have not signed
any contract with your company stating that all uncollected accounts
including bounced checks from Lamadrid Bearing & Parts Corp. will be
charged to me. I wonder why your company forcibly instructed me to
secure checking account to pay and issue check payment of P15,000.00
per month to cover your companys bad accounts in which this amount is
too heavy on my part paying a total bad accounts of more than
P650,000.00 for my 16 years employment with your company as
commission basis salesman.

Recalling your visit here at my Davao City residence, located at Zone 1

2nd Avenue, San Vicente Buhangin Davao City, way back 1998, you even
forced me to sign mortgage contract of my house and lot located at Zone 1
2nd Avenue, San Vicente, Buhangin, Davao City, according to Mr. Jose
Lamadrid this mortgage contract of my house and lot will serve as
guarantee to the uncollected and bounced checks from Lamadrid Bearing
and Parts Corp., customers. I have asked 1 copy of the mortgage contract I
have signed but Mr. Jose C. Lamadrid never furnished me a copy.

Very truly yours,

(Sgd) Empermaco B. Abante, Jr.

While doing his usual rounds as commission salesman, petitioner was

handed by his customers a letter from the respondent company warning
them not to deal with petitioner since it no longer recognized him as a
commission salesman.
In the interim, petitioner received a subpoena from the Office of the City
Prosecutor of Manila for violations of Batas Pambansa Blg. 22 filed by
respondent Lamadrid.
Petitioner thus filed a complaint for illegal dismissal with money claims
against respondent company and its president, Jose Lamadrid, before the
NLRC Regional Arbitration Branch No. XI, Davao City.
By way of defense, respondents countered that petitioner was not its
employee but a freelance salesman on commission basis, procuring and
purchasing auto parts and supplies from the latter on credit, consignment
and installment basis and selling the same to his customers for profit and
commission of 3% out of his total paid-up sales. Respondents cite the
following as indicators of the absence of an employer-employee
relationship between them:
(1) petitioner constantly admitted in all his acts, letters,
communications with the respondents that his relationship with
the latter was strictly commission basis salesman;
(2) he does not have a monthly salary nor has he received any
benefits accruing to regular employment;
 (3) he was not required to report for work on a daily basis but would
occasionally drop by the Manila office when he went
to Manila for some other purpose;
(4) he was not given the usual pay-slip to show his monthly gross
compensation;
(5) neither has the respondent withheld his taxes nor was he
enrolled as an employee of the respondent under the Social
Security System and Philhealth;
(6) he was in fact working as commission salesman of five other
companies, which are engaged in the same line of business as
that of respondent, as shown by certifications issued by the said
companies;[7]
(7) if respondent owed petitioner his alleged commissions, he
should not have executed the Promissory Note and the Deed of
Real Estate Mortgage.[8]
Finding no necessity for further hearing the case after the parties
submitted their respective position papers, the Labor Arbiter rendered a
decision dated November 29, 2001, the decretal portion of which reads: [9]

WHEREFORE, premises considered judgment is hereby rendered

DECLARING respondents LAMADRID BEARING & PARTS
CORPORATION AND JOSE LAMADRID to pay jointly and severally
complainant EMPERMACO B. ABANTE, JR., the sum of PESOS ONE
MILLION THREE HUNDRED THIRTY SIX THOUSAND SEVEN
HUNDRED TWENTY NINE AND 62/100 ONLY (P1,336,729.62)
representing his awarded separation pay, back wages (partial) unpaid
commissions, refund of deductions, damages and attorneys fees.

SO ORDERED.

On appeal, the National Labor Relations Commission reversed the

decision of the Labor Arbiter in a Resolution dated April 5, 2002, the
dispositive portion of which reads:[10]

WHEREFORE, the Appeal is GRANTED. Accordingly, the appealed

decision is Set Aside and Vacated. In lieu thereof, a new judgment is
entered dismissing the instant case for lack of cause of action.
SO ORDERED.

Petitioner challenged the decision of the NLRC before the Court of

Appeals, which rendered the assailed judgment on March 7, 2003, the
dispositive portion of which reads:[11]

WHEREFORE, premises considered, petition is hereby DENIED. Let the

supersedeas bond dated 09 January 2002, issued the Philippine Charter
Insurance Corporation be cancelled and released.

SO ORDERED.

Upon denial of his motion for reconsideration, petitioner filed the instant
appeal based on the following grounds:
I

THE HONORABLE COURT OF APPEALS IN GRAVE ABUSE OF

DISCRETION MODIFIED THE IMPORT OF THE RELEVANT
ANTECEDENTS AS ITS PREMISE IN ITS QUESTIONED DECISION
CAUSING IT TO ARRIVE AT ERRONEOUS CONCLUSIONS OF FACT
AND LAW.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

APPRECIATING THE TRUE FACTS OF THIS CASE THEREBY IT MADE
A WRONG CONCLUSION BY STATING THAT THE FOURTH ELEMENT
FOR DETERMINING EMPLOYER-EMPLOYEE RELATIONSHIP, WHICH
IS THE CONTROL TEST, IS WANTING IN THIS CASE.

III

THE HONORABLE COURT OF APPEALS IS AT WAR WITH THE

EVIDENCE PRESENTED IN THIS CASE AS WELL AS WITH THE
APPLICABLE LAW AND ESTABLISHED RULINGS OF THIS
HONORABLE COURT.

Initially, petitioner challenged the statement by the appellate court that

petitioner, who was contracted a 3% of the total gross sales as his
commission, was tasked to sell private respondents merchandise in
the Mindanao area and to collect payments of his sales from the
customers. He argues that this statement, which suggests contracting or
subcontracting under Department Order No. 10-97 Amending the Rules
Implementing Books III and VI of the Labor Code, is erroneous because the
circumstances to warrant such conclusion do not exist. Not being an
independent contractor, he must be a regular employee pursuant to Article
280 of the Labor Code because 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.
Petitioner likewise disputes the finding of the appellate court that no
employer-employee relationship exists between him and respondent
corporation since the power of control, which is the most decisive element
to determine such relationship, is wanting. He argues that the following
circumstances show that he was in truth an employee of the respondent
corporation:

(1) As salesman of the private respondents, petitioner was also the one
collecting payment of his sales from various customers. Thus, he was
bringing with him Provisional Receipts, samples of which are attached to
his Position Paper filed with the Labor Arbiter.

(2) Private respondents had complete control over the work of the

petitioner. From time to time, respondent JOSE LAMADRID was directing
him to report to a particular area in Mindanao for his sales and collection
activities, and sometimes he was required to go to Manila for a conference
regarding competitions, new prices (if any), special offer (if competitors
gave special offer or discounts), and other selling/marketing strategy. In
other words, respondent JOSE LAMADRID was closely monitoring the
sales and collection activities of the petitioner.

Petitioner further contends that it was illogical for the appellate court to
conclude that since he was not required to report for work on a daily basis,
the power of control is absent. He reasons that being a field personnel, as
defined under Article 82 of the Labor Code, who is covering
the Mindanao area, it would be impractical for him to report to the
respondents office in Manila in order to keep tab of his actual working
hours.
Well-entrenched is the doctrine that the existence of an employer-
employee relationship is ultimately a question of fact and that the findings
thereon by the Labor Arbiter and the National Labor Relations Commission
shall be accorded not only respect but even finality when supported by
substantial evidence. The decisive factor in such finality is the presence of
substantial evidence to support said finding, otherwise, such factual
findings cannot be accorded finality by this Court. [12] Considering the
conflicting findings of fact by the Labor Arbiter and the NLRC as well as the
Court of Appeals, there is a need to reexamine the records to determine
with certainty which of the propositions espoused by the contending parties
is supported by substantial evidence.
We are called upon to resolve the issue of whether or not petitioner, as
a commission salesman, is an employee of respondent corporation. To
ascertain the existence of an employer-employee relationship,
jurisprudence has invariably applied the four-fold test, namely: (1) the
manner of selection and engagement; (2) the payment of wages; (3) the
presence or absence of the power of dismissal; and (4) the presence or
absence of the power of control. Of these four, the last one is the most
important.[13] The so-called control test is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an
employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services
are performed reserves the right to control not only the end achieved, but
also the manner and means to be used in reaching that end.
Applying the aforementioned test, an employer-employee relationship is
notably absent in this case. It is undisputed that petitioner Abante was a
commission salesman who received 3% commission of his gross sales. Yet
no quota was imposed on him by the respondent; such that a dismal
performance or even a dead result will not result in any sanction or provide
a ground for dismissal. He was not required to report to the office at any
time or submit any periodic written report on his sales performance and
activities. Although he had the whole of Mindanao as his base of operation,
he was not designated by respondent to conduct his sales activities at any
particular or specific place. He pursued his selling activities without
interference or supervision from respondent company and relied on his own
resources to perform his functions. Respondent company did not prescribe
the manner of selling the merchandise; he was left alone to adopt any style
or strategy to entice his customers. While it is true that he occasionally
reported to the Manila office to attend conferences on marketing strategies,
it was intended not to control the manner and means to be used in reaching
the desired end, but to serve as a guide and to upgrade his skills for a more
efficient marketing performance. As correctly observed by the appellate
court, reports on sales, collection, competitors, market strategies, price
listings and new offers relayed by petitioner during his conferences to
Manila do not indicate that he was under the control of respondent.
[14]
 Moreover, petitioner was free to offer his services to other companies
engaged in similar or related marketing activities as evidenced by the
certifications issued by various customers.[15]
In Encyclopedia Britannica (Philippines), Inc. v. NLRC,[16] we reiterated
the rule that there could be no employer-employee relationship where the
element of control is absent. Where a person who works for another does
so more or less at his own pleasure and is not subject to definite hours or
conditions of work, and in turn is compensated according to the result of his
efforts and not the amount thereof, no relationship of employer-employee
exists.
We do not agree with petitioners contention that Article 280 [17] is a
crucial factor in determining the existence of an employment relationship. It
merely distinguishes between two kinds of employees, i.e., regular
employees and casual employees, for purposes of determining their rights
to certain benefits, such as to join or form a union, or to security of tenure.
Article 280 does not apply where the existence of an employment
relationship is in dispute.[18]
Neither can we subscribe to petitioners misplaced reliance on the case
of Songco v. NLRC.[19] While in that case the term commission under Article
96 of the Labor Code was construed as being included in the definition of
the term wage available to employees, there is no categorical
pronouncement that the payment of compensation on commission basis is
conclusive proof of the existence of an employer-employee
relationship. After all, commission, as a form of remuneration, may be
availed of by both an employee or a non-employee.
Petitioner decried the alleged intimidation and trickery employed by
respondents to obtain from him a Promissory Note and to issue forty-seven
checks as security for the bad accounts incurred by five customers.
While petitioner may have been coerced into executing force to issue
the said documents, it may equally be true that petitioner did so in
recognition of a valid financial obligation. He who claims that force or
intimidation was employed upon him lies the onus probandi. He who
asserts must prove. It is therefore incumbent upon petitioner to overcome
the disputable presumption that private transactions have been prosecuted
fairly and regularly, and that there is sufficient consideration for every
contract.[20] A fortiori, it is difficult to imagine that petitioner, a salesman of
long standing, would accede without raising a protest to the patently
capricious and oppressive demand by respondent of requiring him to
assume bad accounts which, as he contended, he had not incurred. This
lends credence to the respondents assertion that petitioner procured the
goods from the said company on credit, consignment or installment basis
and then sold the same to various customers. In the scheme of things,
petitioner, having directly contracted with the respondent company,
becomes responsible for the amount of merchandise he took from the
respondent, and in turn, the customer/s would be liable for their respective
accounts to the seller, i.e., the petitioner, with whom they contracted the
sale.
All told, we sustain the factual and legal findings of the appellate court
and accordingly, find no cogent reason to overturn the same.
WHEREFORE, in view of the foregoing, the Decision of the Court of
Appeals dated March 7, 2003 in CA-G.R. SP No. 73102, which denied the
petition of Empermaco B. Abante, is AFFIRMED in toto.
SO ORDERED.
Panganiban, (Working Chairman), Carpio, and Azcuna, JJ., concur.

[G.R. No. 159890. May 28, 2004]

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING &

PARTS CORP. and JOSE LAMADRID, President, respondents.

DECISION
YNARES-SANTIAGO, J.:

This is a petition for review under Rule 45 of the 1997 Revised Rules of
Civil Procedure assailing the Decision dated March 7, 2003 of the Court of
Appeals in CA-G.R. SP No. 73102 which affirmed the Resolution
dated April 2, 2002 of the National Labor Relations Commission.
Petitioner was employed by respondent company Lamadrid Bearing
and Parts Corporation sometime in June 1985 as a salesman earning a
commission of 3% of the total paid-up sales covering the whole area
of Mindanao. His average monthly income was more or less P16,000.00,
but later was increased to approximately P20,269.50. Aside from selling the
merchandise of respondent corporation, he was also tasked to collect
payments from his various customers. Respondent corporation had
complete control over his work because its President, respondent Jose
Lamadrid, frequently directed him to report to a particular area for his sales
and collection activities, and occasionally required him to go to Manila to
attend conferences regarding product competition, prices, and other market
strategies.
Sometime in 1998, petitioner encountered five customers/clients with
bad accounts, namely:
  Customers/Clients Amount
1 A&B Engineering Services P
) 86,431.20
2 Emmanuel Engineering Services 126,858.50
)
3 Panabo Empire Marketing 226,458.76
)
4 Southern Fortune Marketing 191,208.00
)
5 Alreg Marketing 56, 901.18
)
  Less Returns: 691.02 56, 210.16
  Total Bad Accounts P
687,166.62

Petitioner was confronted by respondent Lamadrid over the bad

accounts and warned that if he does not issue his own checks to cover the
said bad accounts, his commissions will not be released and he will lose
his job. Despite serious misgivings, he issued his personal checks in favor
of respondent corporation on condition that the same shall not be deposited
for clearing and that they shall be offset against his periodic commissions. [1]
Not contented with the issuance of the foregoing checks as security for
the bad accounts, respondents tricked petitioner into signing two
documents, which he later discovered to be a Promissory Note [2] and a
Deed of Real Estate Mortgage.[3]
 Pursuant to the parties agreement that the checks would not be
deposited, as their corresponding values would be offset from petitioners
sales commissions, respondents returned the same to petitioner as
evidenced by the undeposited checks and respondent Lamadrids
computations of petitioners commissions.[4]
Due to financial difficulties, petitioner inquired about his membership
with the Social Security System in order to apply for a salary loan. To his
dismay, he learned that he was not covered by the SSS and therefore was
not entitled to any benefit. When he brought the matter of his SSS
coverage to his employer, the latter berated and hurled invectives at him
and, contrary to their agreement, deposited the remaining checks which
were dishonored by the drawee bank due to Account Closed.
On March 22, 2001, counsel for respondent corporation sent a letter to
petitioner demanding that he make good the dishonored checks or pay
their cash equivalent. In response, petitioner sent a letter addressed to
Atty. Meneses, counsel for respondent corporation, which reads: [5]

This has reference to your demand letter dated March 22, 2001 which I

received on March 30, 2001, relative to the checks I issued to my employer
LAMADRID BEARING PARTS CORPORATION.

May I respectfully request for a consideration as to the payment of the

amount covered by the said checks, as follows:

1. I have an earned commission in the amount of P33,412.39 as shown in

the hereto attached Summary of Sales as of February 28, 2001
(P22,748.60) and as of March 31, 2001 (P10,664.79), which I offer to be
charged or deducted as partial payment thereof;

2. I hereby commit One Hundred Percent (100%) of all my commission to

be directly charged or deducted as payment, from date onward, until such
time that payment will be completed;

Sir, kindly convey my good faith to your client and my employer, as is

shown by my willingness to continue working as Commission Salesman,
having served the Company for the last sixteen (16) years.

Im sincerely appealing to my employer, through you, Sir, to settle these

accountabilities which all resulted from the checks issued by my customers
which bounced and later charged to my account, in the manner afore-cited.
May this request merit your kindest consideration, Sirs.

Thank you very much.

On April 2, 2001, petitioner sent another letter to respondent Lamadrid,

to wit:[6]

Dear Mr. Lamadrid,

This is to inform your good office that if you pursue the case against me, I
may refer this problem to Mr. Paul Dominguez and Atty. Jesus Dureza to
solicit proper legal advice. I may also file counter charges against your
company of (sic) unfair labor practice and unfair compensation of 3%
commission to my sales and commissions of more or less 90,000,000.00
(all collected and covered with cleared check payments) for 16 years
working with your company up to the present year 2001.

If I am not wrong your company did not exactly declare the correct amount
of P90,000,000.00 more or less representing my sales and collections (all
collected and covered with cleared check payments to the Bureau of
Internal Revenue [BIR] for tax declaration purposes). In short your
company profited large amount of money to (sic) the above-mentioned
sales and collections of P90,000,000.00 more or less for 16 years working
with your company.

I remember that upon my employment with your company last 1985 up to

the present year 2001 as commission basis salesman, I have not signed
any contract with your company stating that all uncollected accounts
including bounced checks from Lamadrid Bearing & Parts Corp. will be
charged to me. I wonder why your company forcibly instructed me to
secure checking account to pay and issue check payment of P15,000.00
per month to cover your companys bad accounts in which this amount is
too heavy on my part paying a total bad accounts of more than
P650,000.00 for my 16 years employment with your company as
commission basis salesman.

Recalling your visit here at my Davao City residence, located at Zone 1

2nd Avenue, San Vicente Buhangin Davao City, way back 1998, you even
forced me to sign mortgage contract of my house and lot located at Zone 1
2nd Avenue, San Vicente, Buhangin, Davao City, according to Mr. Jose
Lamadrid this mortgage contract of my house and lot will serve as
guarantee to the uncollected and bounced checks from Lamadrid Bearing
and Parts Corp., customers. I have asked 1 copy of the mortgage contract I
have signed but Mr. Jose C. Lamadrid never furnished me a copy.

Very truly yours,

(Sgd) Empermaco B. Abante, Jr.

While doing his usual rounds as commission salesman, petitioner was

handed by his customers a letter from the respondent company warning
them not to deal with petitioner since it no longer recognized him as a
commission salesman.
In the interim, petitioner received a subpoena from the Office of the City
Prosecutor of Manila for violations of Batas Pambansa Blg. 22 filed by
respondent Lamadrid.
Petitioner thus filed a complaint for illegal dismissal with money claims
against respondent company and its president, Jose Lamadrid, before the
NLRC Regional Arbitration Branch No. XI, Davao City.
By way of defense, respondents countered that petitioner was not its
employee but a freelance salesman on commission basis, procuring and
purchasing auto parts and supplies from the latter on credit, consignment
and installment basis and selling the same to his customers for profit and
commission of 3% out of his total paid-up sales. Respondents cite the
following as indicators of the absence of an employer-employee
relationship between them:
(1) petitioner constantly admitted in all his acts, letters,
communications with the respondents that his relationship with
the latter was strictly commission basis salesman;
(2) he does not have a monthly salary nor has he received any
benefits accruing to regular employment;
(3) he was not required to report for work on a daily basis but would
occasionally drop by the Manila office when he went
to Manila for some other purpose;
(4) he was not given the usual pay-slip to show his monthly gross
compensation;
 (5) neither has the respondent withheld his taxes nor was he
enrolled as an employee of the respondent under the Social
Security System and Philhealth;
(6) he was in fact working as commission salesman of five other
companies, which are engaged in the same line of business as
that of respondent, as shown by certifications issued by the said
companies;[7]
(7) if respondent owed petitioner his alleged commissions, he
should not have executed the Promissory Note and the Deed of
Real Estate Mortgage.[8]
Finding no necessity for further hearing the case after the parties
submitted their respective position papers, the Labor Arbiter rendered a
decision dated November 29, 2001, the decretal portion of which reads: [9]

WHEREFORE, premises considered judgment is hereby rendered

DECLARING respondents LAMADRID BEARING & PARTS
CORPORATION AND JOSE LAMADRID to pay jointly and severally
complainant EMPERMACO B. ABANTE, JR., the sum of PESOS ONE
MILLION THREE HUNDRED THIRTY SIX THOUSAND SEVEN
HUNDRED TWENTY NINE AND 62/100 ONLY (P1,336,729.62)
representing his awarded separation pay, back wages (partial) unpaid
commissions, refund of deductions, damages and attorneys fees.

SO ORDERED.

On appeal, the National Labor Relations Commission reversed the

decision of the Labor Arbiter in a Resolution dated April 5, 2002, the
dispositive portion of which reads:[10]

WHEREFORE, the Appeal is GRANTED. Accordingly, the appealed

decision is Set Aside and Vacated. In lieu thereof, a new judgment is
entered dismissing the instant case for lack of cause of action.

SO ORDERED.

Petitioner challenged the decision of the NLRC before the Court of

Appeals, which rendered the assailed judgment on March 7, 2003, the
dispositive portion of which reads:[11]
WHEREFORE, premises considered, petition is hereby DENIED. Let the
supersedeas bond dated 09 January 2002, issued the Philippine Charter
Insurance Corporation be cancelled and released.

SO ORDERED.

Upon denial of his motion for reconsideration, petitioner filed the instant
appeal based on the following grounds:
I

THE HONORABLE COURT OF APPEALS IN GRAVE ABUSE OF

DISCRETION MODIFIED THE IMPORT OF THE RELEVANT
ANTECEDENTS AS ITS PREMISE IN ITS QUESTIONED DECISION
CAUSING IT TO ARRIVE AT ERRONEOUS CONCLUSIONS OF FACT
AND LAW.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

APPRECIATING THE TRUE FACTS OF THIS CASE THEREBY IT MADE
A WRONG CONCLUSION BY STATING THAT THE FOURTH ELEMENT
FOR DETERMINING EMPLOYER-EMPLOYEE RELATIONSHIP, WHICH
IS THE CONTROL TEST, IS WANTING IN THIS CASE.

III

THE HONORABLE COURT OF APPEALS IS AT WAR WITH THE

EVIDENCE PRESENTED IN THIS CASE AS WELL AS WITH THE
APPLICABLE LAW AND ESTABLISHED RULINGS OF THIS
HONORABLE COURT.

Initially, petitioner challenged the statement by the appellate court that

petitioner, who was contracted a 3% of the total gross sales as his
commission, was tasked to sell private respondents merchandise in
the Mindanao area and to collect payments of his sales from the
customers. He argues that this statement, which suggests contracting or
subcontracting under Department Order No. 10-97 Amending the Rules
Implementing Books III and VI of the Labor Code, is erroneous because the
circumstances to warrant such conclusion do not exist. Not being an
independent contractor, he must be a regular employee pursuant to Article
280 of the Labor Code because 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.
Petitioner likewise disputes the finding of the appellate court that no
employer-employee relationship exists between him and respondent
corporation since the power of control, which is the most decisive element
to determine such relationship, is wanting. He argues that the following
circumstances show that he was in truth an employee of the respondent
corporation:

(1) As salesman of the private respondents, petitioner was also the one
collecting payment of his sales from various customers. Thus, he was
bringing with him Provisional Receipts, samples of which are attached to
his Position Paper filed with the Labor Arbiter.

(2) Private respondents had complete control over the work of the

petitioner. From time to time, respondent JOSE LAMADRID was directing
him to report to a particular area in Mindanao for his sales and collection
activities, and sometimes he was required to go to Manila for a conference
regarding competitions, new prices (if any), special offer (if competitors
gave special offer or discounts), and other selling/marketing strategy. In
other words, respondent JOSE LAMADRID was closely monitoring the
sales and collection activities of the petitioner.

Petitioner further contends that it was illogical for the appellate court to
conclude that since he was not required to report for work on a daily basis,
the power of control is absent. He reasons that being a field personnel, as
defined under Article 82 of the Labor Code, who is covering
the Mindanao area, it would be impractical for him to report to the
respondents office in Manila in order to keep tab of his actual working
hours.
Well-entrenched is the doctrine that the existence of an employer-
employee relationship is ultimately a question of fact and that the findings
thereon by the Labor Arbiter and the National Labor Relations Commission
shall be accorded not only respect but even finality when supported by
substantial evidence. The decisive factor in such finality is the presence of
substantial evidence to support said finding, otherwise, such factual
findings cannot be accorded finality by this Court. [12] Considering the
conflicting findings of fact by the Labor Arbiter and the NLRC as well as the
Court of Appeals, there is a need to reexamine the records to determine
with certainty which of the propositions espoused by the contending parties
is supported by substantial evidence.
We are called upon to resolve the issue of whether or not petitioner, as
a commission salesman, is an employee of respondent corporation. To
ascertain the existence of an employer-employee relationship,
jurisprudence has invariably applied the four-fold test, namely: (1) the
manner of selection and engagement; (2) the payment of wages; (3) the
presence or absence of the power of dismissal; and (4) the presence or
absence of the power of control. Of these four, the last one is the most
important.[13] The so-called control test is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an
employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services
are performed reserves the right to control not only the end achieved, but
also the manner and means to be used in reaching that end.
Applying the aforementioned test, an employer-employee relationship is
notably absent in this case. It is undisputed that petitioner Abante was a
commission salesman who received 3% commission of his gross sales. Yet
no quota was imposed on him by the respondent; such that a dismal
performance or even a dead result will not result in any sanction or provide
a ground for dismissal. He was not required to report to the office at any
time or submit any periodic written report on his sales performance and
activities. Although he had the whole of Mindanao as his base of operation,
he was not designated by respondent to conduct his sales activities at any
particular or specific place. He pursued his selling activities without
interference or supervision from respondent company and relied on his own
resources to perform his functions. Respondent company did not prescribe
the manner of selling the merchandise; he was left alone to adopt any style
or strategy to entice his customers. While it is true that he occasionally
reported to the Manila office to attend conferences on marketing strategies,
it was intended not to control the manner and means to be used in reaching
the desired end, but to serve as a guide and to upgrade his skills for a more
efficient marketing performance. As correctly observed by the appellate
court, reports on sales, collection, competitors, market strategies, price
listings and new offers relayed by petitioner during his conferences to
Manila do not indicate that he was under the control of respondent.
[14]
 Moreover, petitioner was free to offer his services to other companies
engaged in similar or related marketing activities as evidenced by the
certifications issued by various customers.[15]
In Encyclopedia Britannica (Philippines), Inc. v. NLRC,[16] we reiterated
the rule that there could be no employer-employee relationship where the
element of control is absent. Where a person who works for another does
so more or less at his own pleasure and is not subject to definite hours or
conditions of work, and in turn is compensated according to the result of his
efforts and not the amount thereof, no relationship of employer-employee
exists.
We do not agree with petitioners contention that Article 280 [17] is a
crucial factor in determining the existence of an employment relationship. It
merely distinguishes between two kinds of employees, i.e., regular
employees and casual employees, for purposes of determining their rights
to certain benefits, such as to join or form a union, or to security of tenure.
Article 280 does not apply where the existence of an employment
relationship is in dispute.[18]
Neither can we subscribe to petitioners misplaced reliance on the case
of Songco v. NLRC.[19] While in that case the term commission under Article
96 of the Labor Code was construed as being included in the definition of
the term wage available to employees, there is no categorical
pronouncement that the payment of compensation on commission basis is
conclusive proof of the existence of an employer-employee
relationship. After all, commission, as a form of remuneration, may be
availed of by both an employee or a non-employee.
Petitioner decried the alleged intimidation and trickery employed by
respondents to obtain from him a Promissory Note and to issue forty-seven
checks as security for the bad accounts incurred by five customers.
While petitioner may have been coerced into executing force to issue
the said documents, it may equally be true that petitioner did so in
recognition of a valid financial obligation. He who claims that force or
intimidation was employed upon him lies the onus probandi. He who
asserts must prove. It is therefore incumbent upon petitioner to overcome
the disputable presumption that private transactions have been prosecuted
fairly and regularly, and that there is sufficient consideration for every
contract.[20] A fortiori, it is difficult to imagine that petitioner, a salesman of
long standing, would accede without raising a protest to the patently
capricious and oppressive demand by respondent of requiring him to
assume bad accounts which, as he contended, he had not incurred. This
lends credence to the respondents assertion that petitioner procured the
goods from the said company on credit, consignment or installment basis
and then sold the same to various customers. In the scheme of things,
petitioner, having directly contracted with the respondent company,
becomes responsible for the amount of merchandise he took from the
respondent, and in turn, the customer/s would be liable for their respective
accounts to the seller, i.e., the petitioner, with whom they contracted the
sale.
All told, we sustain the factual and legal findings of the appellate court
and accordingly, find no cogent reason to overturn the same.
WHEREFORE, in view of the foregoing, the Decision of the Court of
Appeals dated March 7, 2003 in CA-G.R. SP No. 73102, which denied the
petition of Empermaco B. Abante, is AFFIRMED in toto.
SO ORDERED.
Panganiban, (Working Chairman), Carpio, and Azcuna, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave.

SECOND DIVISION

[G.R. No. 121605. February 2, 2000]

PAZ MARTIN JO and CESAR JO, petitioners, vs. NATIONAL LABOR

RELATIONS COMMISSION and PETER MEJILA, respondents.

DECISION

QUISUMBING, J.:

This petition for certiorari seeks to set aside the Decision[1] of National

Labor Relations Commission (Fifth Division) promulgated on November 21,
1994, and its Resolution dated June 7, 1995, which denied petitioners
motion for reconsideration.

Private respondent Peter Mejila worked as barber on a piece rate basis at

Dinas Barber Shop. In 1970, the owner, Dina Tan, sold the barbershop to
petitioners Paz Martin Jo and Cesar Jo. All the employees, including
private respondent, were absorbed by the new owners. The name of the
barbershop was changed to Windfield Barber Shop.
The owners and the barbers shared in the earnings of the barber shop. The
barbers got two-thirds (2/3) of the fee paid for every haircut or shaving job
done, while one-third (1/3) went to the owners of the shop.

In 1977, petitioners designated private respondent as caretaker of the shop

because the former caretaker became physically unfit. Private respondents
duties as caretaker, in addition to his being a barber, were: (1) to report to
the owners of the barbershop whenever the airconditioning units
malfunctioned and/or whenever water or electric power supply was
interrupted; (2) to call the laundry woman to wash dirty linen; (3) to
recommend applicants for interview and hiring; (4) to attend to other needs
of the shop. For this additional job, he was given an honorarium equivalent
to one-third (1/3) of the net income of the shop.

When the building occupied by the shop was demolished in 1986, the
barbershop closed. But soon a place nearby was rented by petitioners and
the barbershop resumed operations as Cesars Palace Barbershop and
Massage Clinic. In this new location, private respondent continued to be a
barber and caretaker, but with a fixed monthly honorarium as caretaker, to
wit: from February 1986 to 1990 - P700; from February 1990 to March 1991
- P800; and from July 1992 P1,300.

In November 1992, private respondent had an altercation with his co-

barber, Jorge Tinoy. The bickerings, characterized by constant exchange of
personal insults during working hours, became serious so that private
respondent reported the matter to Atty. Allan Macaraya of the labor
department. The labor official immediately summoned private respondent
and petitioners to a conference. Upon investigation, it was found out that
the dispute was not between private respondent and petitioners; rather, it
was between the former and his fellow barber. Accordingly, Atty. Macaraya
directed petitioners counsel, Atty. Prudencio Abragan, to thresh out the
problem.

During the mediation meeting held at Atty. Abragans office a new twist was
added. Despite the assurance that he was not being driven out as
caretaker-barber, private respondent demanded payment for several
thousand pesos as his separation pay and other monetary benefits. In
order to give the parties enough time to cool off, Atty. Abragan set another
conference but private respondent did not appear in such meeting
anymore.
Meanwhile, private respondent continued reporting for work at the
barbershop. But, on January 2, 1993, he turned over the duplicate keys of
the shop to the cashier and took away all his belongings therefrom. On
January 8, 1993, he began working as a regular barber at the newly
opened Goldilocks Barbershop also in Iligan City.

On January 12, 1993, private respondent filed a complaint [2] for illegal

dismissal with prayer for payment of separation pay, other monetary
benefits, attorneys fees and damages. Significantly, the complaint did not
seek reinstatement as a positive relief.

In a Decision dated June 15, 1993, the Labor Arbiter found that private
respondent was an employee of petitioners, and that private respondent
was not dismissed but had left his job voluntarily because of his
misunderstanding with his co-worker. [3] The Labor Arbiter dismissed the
complaint, but ordered petitioners to pay private respondent his 13th month
pay and attorneys fees.

Both parties appealed to the NLRC. In a Decision dated November 21,

1994, it set aside the labor arbiters judgment. The NLRC sustained the
labor arbiters finding as to the existence of employer-employee relationship
between petitioners and private respondent, but it ruled that private
respondent was illegally dismissed. Hence, the petitioners were ordered to
reinstate private respondent and pay the latters backwages, 13th month
pay, separation pay and attorneys fees, thus:

"For failure of respondents to observe due process before

dismissing the complainant, We rule and hold that he was
illegally terminated. Consequently, he should be reinstated and
paid his backwages starting from January 1, 1993 up to the
time of his reinstatement and payment of separation pay,
should reinstatement not be feasible on account of a strained
employer-employee relationship.

As complainants income was mixed, (commission and

caretaker), he becomes entitled to 13th month pay only in his
capacity as caretaker at the last rate of pay given to him.

With respect to separation pay, even workers paid on

commission are given separation pay as they are considered
employees of the company. Complainant should be adjudged
 entitled to separation pay reckoned from 1970 up to the time he
was dismissed on December 31, 1992 at one-half month pay of
his earning as a barber; and as a caretaker the same should be
reckoned from 1977 up to December 31, 1992.

As complainant has been assisted by counsel not only in the

preparation of the complaint, position paper but in hearings
before the Labor Arbiter a quo, attorneys fees equivalent to
10% of the money awards should likewise be paid to
complainant.

WHEREFORE, the decision appealed from is Vacated and Set

Aside and a new one entered in accordance with the above-
findings and awards.

SO ORDERED."[4]

Its motion for reconsideration having been denied in a Resolution dated

June 7, 1995, petitioners filed the instant petition.

The issues for resolution are as follows:

1. Whether or not there exists an employer-employee

relationship between petitioners and private respondent.

2. Whether or not private respondent was dismissed from or

had abandoned his employment.

Petitioners contend that public respondent gravely erred in declaring that

private respondent was their employee. They claim that private respondent
was their "partner in trade" whose compensation was based on a sharing
arrangement per haircut or shaving job done. They argue that private
respondents task as caretaker could be considered an employment
because the chores are very minimal.

At the outset, we reiterate the doctrine that the existence of an employer-

employee relationship is ultimately a question of fact and that the findings
thereon by the labor arbiter and the NLRC shall be accorded not only
respect but even finality when supported by ample evidence. [5]
In determining the existence of an employer-employee relationship, the
following elements are considered: (1) the selection and engagement of the
workers; (2) power of dismissal; (3) the payment of wages by whatever
means; and (4) the power to control the workers conduct, with the latter
assuming primacy in the overall consideration. The power of control refers
to the existence of the power and not necessarily to the actual exercise
thereof. It is not essential for the employer to actually supervise the
performance of duties of the employee; it is enough that the employer has
the right to wield that power.[6]

Absent a clear showing that petitioners and private respondent had

intended to pursue a relationship of industrial partnership, we entertain no
doubt that private respondent was employed by petitioners as caretaker-
barber. Initially, petitioners, as new owners of the barbershop, hired private
respondent as barber by absorbing the latter in their employ. Undoubtedly,
the services performed by private respondent as barber is related to, and in
the pursuit of the principal business activity of petitioners. Later on,
petitioners tapped private respondent to serve concurrently as caretaker of
the shop. Certainly, petitioners had the power to dismiss private respondent
being the ones who engaged the services of the latter. In fact, private
respondent sued petitioners for illegal dismissal, albeit contested by the
latter. As a caretaker, private respondent was paid by petitioners wages in
the form of honorarium, originally, at the rate of one-third (1/3) of the shops
net income but subsequently pegged at a fixed amount per month. As a
barber, private respondent earned two-thirds (2/3) of the fee paid per
haircut or shaving job done. Furthermore, the following facts indubitably
reveal that petitioners controlled private respondents work performance, in
that: (1) private respondent had to inform petitioners of the things needed in
the shop; (2) he could only recommend the hiring of barbers and
masseuses, with petitioners having the final decision; (3) he had to be at
the shop at 9:00 a.m. and could leave only at 9:00 p.m. because he was
the one who opened and closed it, being the one entrusted with the key.
[7]
 These duties were complied with by private respondent upon instructions
of petitioners. Moreover, such task was far from being negligible as claimed
by petitioners. On the contrary, it was crucial to the business operation of
petitioners as shown in the preceding discussion. Hence, there was enough
basis to declare private respondent an employee of petitioners.
Accordingly, there is no cogent reason to disturb the findings of the labor
arbiter and NLRC on the existence of employer-employee relationship
between herein private parties.
With regard to the second issue, jurisprudence has laid out the rules
regarding abandonment as a just and valid ground for termination of
employment. To constitute abandonment, there must be concurrence of the
intention to abandon and some overt acts from which it may be inferred that
the employee concerned has no more interest in working. [8] In other words,
there must be a clear, deliberate and unjustified refusal to resume
employment and a clear intention to sever the employer-employee
relationship on the part of the employee. [9]

In the case at bar, the labor arbiter was convinced that private respondent
was not dismissed but left his work on his own volition because he could no
longer bear the incessant squabbles with his co-worker. Nevertheless,
public respondent did not give credence to petitioners claim that private
respondent abandoned his job. On this score, public respondent gravely
erred as hereunder discussed.

At the outset, we must stress that where the findings of the NLRC
contradict those of the labor arbiter, the Court, in the exercise of its equity
jurisdiction, may look into the records of the case and reexamine the
questioned findings.[10]

In this case, the following circumstances clearly manifest private

respondents intention to sever his ties with petitioners. First, private
respondent even bragged to his co-workers his plan to quit his job at
Cesars Palace Barbershop and Massage Clinic as borne out by the
affidavit executed by his former co-workers. [11] Second, he surrendered the
shops keys and took away all his things from the shop. Third, he did not
report anymore to the shop without giving any valid and justifiable reason
for his absence. Fourth, he immediately sought a regular employment in
another barbershop, despite previous assurance that he could remain in
petitioners employ. Fifth, he filed a complaint for illegal dismissal without
praying for reinstatement.

Moreover, public respondents assertion that the institution of the complaint

for illegal dismissal manifests private respondents lack of intention to
abandon his job[12] is untenable. The rule that abandonment of work is
inconsistent with the filing of a complaint for illegal dismissal is not
applicable in this case. Such rule applies where the complainant seeks
reinstatement as a relief. Corollarily, it has no application where the
complainant does not pray for reinstatement and just asks for separation
pay instead[13] as in the present case. It goes without saying that the prayer
for separation pay, being the alternative remedy to reinstatement,
[14]
 contradicts private respondents stance. That he was illegally dismissed
is belied by his own pleadings as well as contemporaneous conduct.

We are, therefore, constrained to agree with the findings of the Labor

Arbiter that private respondent left his job voluntarily for reasons not
attributable to petitioners. It was error and grave abuse of discretion for the
NLRC to hold petitioners liable for illegal dismissal of private respondent.

WHEREFORE, the petition is GRANTED. The assailed Decision and

Resolution of public respondent NLRC are reversed and set aside. The
decision of the Labor Arbiter dated June 15, 1993, is hereby reinstated. No
costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 75112 August 17, 1992

FILAMER CHRISTIAN INSTITUTE, petitioner, 

vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P.
SUPLICO, in his capacity as Judge of the Regional Trial Court, Branch
XIV, Roxas City and POTENCIANO KAPUNAN, SR., respondents.

Bedona & Bedona Law Office for petitioner.

Rhodora G. Kapunan for private respondents.

GUTIERREZ, JR., J.:
The private respondents, heirs of the late Potenciano Kapunan, seek
reconsideration of the decision rendered by this Court on October 16, 1990
(Filamer Christian Institute v. Court of Appeals, 190 SCRA 477) reviewing
the appellate court's conclusion that there exists an employer-employee
relationship between the petitioner and its co-defendant Funtecha. The
Court ruled that the petitioner is not liable for the injuries caused by
Funtecha on the grounds that the latter was not an authorized driver for
whose acts the petitioner shall be directly and primarily answerable, and
that Funtecha was merely a working scholar who, under Section 14, Rule
X, Book III of the Rules and Regulations Implementing the Labor Code is
not considered an employee of the petitioner.

The private respondents assert that the circumstances obtaining in the

present case call for the application of Article 2180 of the Civil Code since
Funtecha is no doubt an employee of the petitioner. The private
respondents maintain that under Article 2180 an injured party shall have
recourse against the servant as well as the petitioner for whom, at the time
of the incident, the servant was performing an act in furtherance of the
interest and for the benefit of the petitioner. Funtecha allegedly did not steal
the school jeep nor use it for a joy ride without the knowledge of the school
authorities.

After a re-examination of the laws relevant to the facts found by the trial
court and the appellate court, the Court reconsiders its decision. We
reinstate the Court of Appeals' decision penned by the late Justice
Desiderio Jurado and concurred in by Justices Jose C. Campos, Jr. and
Serafin E. Camilon. Applying Civil Code provisions, the appellate court
affirmed the trial court decision which ordered the payment of the
P20,000.00 liability in the Zenith Insurance Corporation policy, P10,000.00
moral damages, P4,000.00 litigation and actual expenses, and P3,000.00
attorney's fees.

It is undisputed that Funtecha was a working student, being a part-time

janitor and a scholar of petitioner Filamer. He was, in relation to the school,
an employee even if he was assigned to clean the school premises for only
two (2) hours in the morning of each school day.

Having a student driver's license, Funtecha requested the driver, Allan

Masa, and was allowed, to take over the vehicle while the latter was on his
way home one late afternoon. It is significant to note that the place where
Allan lives is also the house of his father, the school president, Agustin
Masa. Moreover, it is also the house where Funtecha was allowed free
board while he was a student of Filamer Christian Institute.

Allan Masa turned over the vehicle to Funtecha only after driving down a
road, negotiating a sharp dangerous curb, and viewing that the road was
clear. (TSN, April 4, 1983, pp. 78-79) According to Allan's testimony, a fast
moving truck with glaring lights nearly hit them so that they had to swerve
to the right to avoid a collision. Upon swerving, they heard a sound as if
something had bumped against the vehicle, but they did not stop to check.
Actually, the Pinoy jeep swerved towards the pedestrian, Potenciano
Kapunan who was walking in his lane in the direction against vehicular
traffic, and hit him. Allan affirmed that Funtecha followed his advise to
swerve to the right. (Ibid., p. 79) At the time of the incident (6:30 P.M.) in
Roxas City, the jeep had only one functioning headlight.

Allan testified that he was the driver and at the same time a security guard
of the petitioner-school. He further said that there was no specific time for
him to be off-duty and that after driving the students home at 5:00 in the
afternoon, he still had to go back to school and then drive home using the
same vehicle.

Driving the vehicle to and from the house of the school president where
both Allan and Funtecha reside is an act in furtherance of the interest of the
petitioner-school. Allan's job demands that he drive home the school jeep
so he can use it to fetch students in the morning of the next school day.

It is indubitable under the circumstances that the school president had

knowledge that the jeep was routinely driven home for the said purpose.
Moreover, it is not improbable that the school president also had
knowledge of Funtecha's possession of a student driver's license and his
desire to undergo driving lessons during the time that he was not in his
classrooms.

In learning how to drive while taking the vehicle home in the direction of
Allan's house, Funtecha definitely was not having a joy ride. Funtecha was
not driving for the purpose of his enjoyment or for a "frolic of his own" but
ultimately, for the service for which the jeep was intended by the petitioner
school. (See L. Battistoni v. Thomas, Can SC 144, 1 D.L.R. 577, 80 ALR
722 [1932]; See also Association of Baptists for World Evangelism, Inc. v.
Fieldmen's Insurance Co., Inc. 124 SCRA 618 [1983]). Therefore, the Court
is constrained to conclude that the act of Funtecha in taking over the
steering wheel was one done for and in behalf of his employer for which act
the petitioner-school cannot deny any responsibility by arguing that it was
done beyond the scope of his janitorial duties. The clause "within the scope
of their assigned tasks" for purposes of raising the presumption of liability of
an employer, includes any act done by an employee, in furtherance of the
interests of the employer or for the account of the employer at the time of
the infliction of the injury or damage. (Manuel Casada, 190 Va 906, 59 SE
2d 47 [1950]) Even if somehow, the employee driving the vehicle derived
some benefit from the act, the existence of a presumptive liability of the
employer is determined by answering the question of whether or not the
servant was at the time of the accident performing any act in furtherance of
his master's business. (Kohlman v. Hyland, 210 NW 643, 50 ALR 1437
[1926]; Jameson v. Gavett, 71 P 2d 937 [1937])

Section 14, Rule X, Book III of the Rules implementing the Labor Code, on
which the petitioner anchors its defense, was promulgated by the Secretary
of Labor and Employment only for the purpose of administering and
enforcing the provisions of the Labor Code on conditions of employment.
Particularly, Rule X of Book III provides guidelines on the manner by which
the powers of the Labor Secretary shall be exercised; on what records
should be kept; maintained and preserved; on payroll; and on the exclusion
of working scholars from, and inclusion of resident physicians in the
employment coverage as far as compliance with the substantive labor
provisions on working conditions, rest periods, and wages, is concerned.

In other words, Rule X is merely a guide to the enforcement of the

substantive law on labor. The Court, thus, makes the distinction and so
holds that Section 14, Rule X, Book III of the Rules is not the decisive law
in a civil suit for damages instituted by an injured person during a vehicular
accident against a working student of a school and against the school itself.

The present case does not deal with a labor dispute on conditions of
employment between an alleged employee and an alleged employer. It
invokes a claim brought by one for damages for injury caused by the
patently negligent acts of a person, against both doer-employee and his
employer. Hence, the reliance on the implementing rule on labor to
disregard the primary liability of an employer under Article 2180 of the Civil
Code is misplaced. An implementing rule on labor cannot be used by an
employer as a shield to avoid liability under the substantive provisions of
the Civil Code.

There is evidence to show that there exists in the present case an extra-
contractual obligation arising from the negligence or reckless imprudence
of a person "whose acts or omissions are imputable, by a legal fiction, to
other(s) who are in a position to exercise an absolute or limited control over
(him)." (Bahia v. Litonjua and Leynes, 30 Phil. 624 [1915])

Funtecha is an employee of petitioner Filamer. He need not have an official

appointment for a driver's position in order that the petitioner may be held
responsible for his grossly negligent act, it being sufficient that the act of
driving at the time of the incident was for the benefit of the petitioner.
Hence, the fact that Funtecha was not the school driver or was not acting
within the scope of his janitorial duties does not relieve the petitioner of the
burden of rebutting the presumption juris tantum that there was negligence
on its part either in the selection of a servant or employee, or in the
supervision over him. The petitioner has failed to show proof of its having
exercised the required diligence of a good father of a family over its
employees Funtecha and Allan.

The Court reiterates that supervision includes the formulation of suitable

rules and regulations for the guidance of its employees and the issuance of
proper instructions intended for the protection of the public and persons
with whom the employer has relations through his employees. (Bahia v.
Litonjua and Leynes, supra, at p. 628; Phoenix Construction, v.
Intermediate Appellate Court, 148 SCRA 353 [1987])

An employer is expected to impose upon its employees the necessary

discipline called for in the performance of any act indispensable to the
business and beneficial to their employer.

In the present case, the petitioner has not shown that it has set forth such
rules and guidelines as would prohibit any one of its employees from taking
control over its vehicles if one is not the official driver or prohibiting the
driver and son of the Filamer president from authorizing another employee
to drive the school vehicle. Furthermore, the petitioner has failed to prove
that it had imposed sanctions or warned its employees against the use of
its vehicles by persons other than the driver.
The petitioner, thus, has an obligation to pay damages for injury arising
from the unskilled manner by which Funtecha drove the vehicle. (Cangco v.
Manila Railroad Co., 38 Phil. 768, 772 [1918]). In the absence of evidence
that the petitioner had exercised the diligence of a good father of a family in
the supervision of its employees, the law imposes upon it the vicarious
liability for acts or omissions of its employees. (Umali v. Bacani, 69 SCRA
263 [1976]; Poblete v. Fabros, 93 SCRA 200 [1979]; Kapalaran Bus Liner
v. Coronado, 176 SCRA 792 [1989]; Franco v. Intermediate Appellate
Court, 178 SCRA 331 [1989]; Pantranco North Express, Inc. v. Baesa, 179
SCRA 384 [1989]) The liability of the employer is, under Article 2180,
primary and solidary. However, the employer shall have recourse against
the negligent employee for whatever damages are paid to the heirs of the
plaintiff.

It is an admitted fact that the actual driver of the school jeep, Allan Masa,
was not made a party defendant in the civil case for damages. This is quite
understandable considering that as far as the injured pedestrian, plaintiff
Potenciano Kapunan, was concerned, it was Funtecha who was the one
driving the vehicle and presumably was one authorized by the school to
drive. The plaintiff and his heirs should not now be left to suffer without
simultaneous recourse against the petitioner for the consequent injury
caused by a janitor doing a driving chore for the petitioner even for a short
while. For the purpose of recovering damages under the prevailing
circumstances, it is enough that the plaintiff and the private respondent
heirs were able to establish the existence of employer-employee
relationship between Funtecha and petitioner Filamer and the fact that
Funtecha was engaged in an act not for an independent purpose of his own
but in furtherance of the business of his employer. A position of
responsibility on the part of the petitioner has thus been satisfactorily
demonstrated.

WHEREFORE, the motion for reconsideration of the decision dated

October 16, 1990 is hereby GRANTED. The decision of the respondent
appellate court affirming the trial court decision is REINSTATED.

SO ORDERED

SECOND DIVISION

G.R. No. 119268           February 23, 2000

ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS,
ROSENDO MARCOS, LUIS DE LOS ANGELES, JOEL ORDENIZA and
AMADO CENTENO, petitioners, 
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN
TAXI (PHILJAMA INTERNATIONAL, INC.) respondents.

QUISUMBING, J.:

This special civil action for certiorari seeks to annul the decision1 of public

respondent promulgated on October 28, 1994, in NLRC NCR CA No.
003883-92, and its resolution2 dated December 13, 1994 which denied
petitioners motion for reconsideration.

Petitioners were drivers of private respondent, Philjama International Inc., a

domestic corporation engaged in the operation of "Goodman Taxi."
Petitioners used to drive private respondent's taxicabs every other day on a
24-hour work schedule under the boundary system. Under this
arrangement, the petitioners earned an average of P400.00 daily.
Nevertheless, private respondent admittedly regularly deducts from
petitioners, daily earnings the amount of P30.00 supposedly for the
washing of the taxi units. Believing that the deduction is illegal, petitioners
decided to form a labor union to protect their rights and interests.

Upon learning about the plan of petitioners, private respondent refused to

let petitioners drive their taxicabs when they reported for work on August 6,
1991, and on succeeding days. Petitioners suspected that they were
singled out because they were the leaders and active members of the
proposed union. Aggrieved, petitioners filed with the labor arbiter a
complaint against private respondent for unfair labor practice, illegal
dismissal and illegal deduction of washing fees. In a decision 3 dated August
31, 1992, the labor arbiter dismissed said complaint for lack of merit.

On appeal, the NLRC (public respondent herein), in a decision dated April

28, 1994, reversed and set aside the judgment of the labor arbiter. The
labor tribunal declared that petitioners are employees of private
respondent, and, as such, their dismissal must be for just cause and after
due process. It disposed of the case as follows:
 WHEREFORE, in view of all the foregoing considerations, the
decision of the Labor Arbiter appealed from is hereby SET ASIDE
and another one entered:

1. Declaring the respondent company guilty of illegal dismissal and

accordingly it is directed to reinstate the complainants, namely,
Alberto A. Gonzales, Joel T. Morato, Gavino Panahon, Demetrio L.
Calagos, Sonny M. Lustado, Romeo Q. Clariza, Luis de los Angeles,
Amado Centino, Angel Jardin, Rosendo Marcos, Urbano Marcos, Jr.,
and Joel Ordeniza, to their former positions without loss of seniority
and other privileges appertaining thereto; to pay the complainants full
backwages and other benefits, less earnings elsewhere, and to
reimburse the drivers the amount paid as washing charges; and

2. Dismissing the charge of unfair [labor] practice for insufficiency of

evidence.

SO ORDERED.4

Private respondent's first motion for reconsideration was denied.

Remaining hopeful, private respondent filed another motion for
reconsideration. This time, public respondent, in its decision 5 dated October
28, 1994, granted aforesaid second motion for reconsideration. It ruled that
it lacks jurisdiction over the case as petitioners and private respondent
have no employer-employee relationship. It held that the relationship of the
parties is leasehold which is covered by the Civil Code rather than the
Labor Code, and disposed of the case as follows:

VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion

under reconsideration is hereby given due course.

Accordingly, the Resolution of August 10, 1994, and the Decision of

April 28, 1994 are hereby SET ASIDE. The Decision of the Labor
Arbiter subject of the appeal is likewise SET ASIDE and a NEW ONE
ENTERED dismissing the complaint for lack of jurisdiction.

No costs.

SO ORDERED.6
Expectedly, petitioners sought reconsideration of the labor tribunal's latest
decision which was denied. Hence, the instant petition.

In this recourse, petitioners allege that public respondent acted without or

in excess of jurisdiction, or with grave abuse of discretion in rendering the
assailed decision, arguing that:

THE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENT'S

SECOND MOTION FOR RECONSIDERATION WHICH IS ADMITTEDLY A
PLEADING PROHIBITED UNDER THE NLRC RULES, AND TO GRANT
THE SAME ON GROUNDS NOT EVEN INVOKED THEREIN.

II

THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP

BETWEEN THE PARTIES IS ALREADY A SETTLED ISSUE
CONSTITUTING RES JUDICATA, WHICH THE NLRC HAS NO MORE
JURISDICTION TO REVERSE, ALTER OR MODIFY.

III

IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER

SUPPORTS THE VIEW THAT PETITIONERS-TAXI DRIVERS ARE
EMPLOYEES OF RESPONDENT TAXI COMPANY. 7

The petition is impressed with merit.

The phrase "grave abuse of discretion amounting to lack or excess of

jurisdiction" has settled meaning in the jurisprudence of procedure. It
means such capricious and whimsical exercise of judgment by the tribunal
exercising judicial or quasi-judicial power as to amount to lack of power. 8 In
labor cases, this Court has declared in several instances that disregarding
rules it is bound to observe constitutes grave abuse of discretion on the
part of labor tribunal.

In Garcia vs. NLRC,9 private respondent therein, after receiving a copy of

the labor arbiter's decision, wrote the labor arbiter who rendered the
decision and expressed dismay over the judgment. Neither notice of appeal
was filed nor cash or surety bond was posted by private respondent.
Nevertheless, the labor tribunal took cognizance of the letter from private
respondent and treated said letter as private respondent's appeal. In
a certiorari action before this Court, we ruled that the labor tribunal acted
with grave abuse of discretion in treating a mere letter from private
respondent as private respondent's appeal in clear violation of the rules on
appeal prescribed under Section 3(a), Rule VI of the New Rules of
Procedure of NLRC.

In Philippine Airlines Inc. vs. NLRC,10 we held that the labor arbiter
committed grave abuse of discretion when he failed to resolve immediately
by written order a motion to dismiss on the ground of lack of jurisdiction and
the supplemental motion to dismiss as mandated by Section 15 of Rule V
of the New Rules of Procedure of the NLRC.

In Unicane Workers Union-CLUP vs. NLRC,11 we held that the NLRC

gravely abused its discretion by allowing and deciding an appeal without an
appeal bond having been filed as required under Article 223 of the Labor
Code.

In Mañebo vs. NLRC,12 we declared that the labor arbiter gravely abused
its discretion in disregarding the rule governing position papers. In this
case, the parties have already filed their position papers and even agreed
to consider the case submitted for decision, yet the labor arbiter still
admitted a supplemental position paper and memorandum, and by taking
into consideration, as basis for his decision, the alleged facts adduced
therein and the documents attached thereto.

In Gesulgon vs. NLRC,13 we held that public respondent gravely abused its
discretion in treating the motion to set aside judgment and writ of execution
as a petition for relief of judgment. In doing so, public respondent had,
without sufficient basis, extended the reglementary period for filing petition
for relief from judgment contrary to prevailing rule and case law.

In this case before us, private respondent exhausted administrative remedy

available to it by seeking reconsideration of public respondent's decision
dated April 28, 1994, which public respondent denied. With this motion for
reconsideration, the labor tribunal had ample opportunity to rectify errors or
mistakes it may have committed before resort to courts of justice can be
had.14 Thus, when private respondent filed a second motion for
reconsideration, public respondent should have forthwith denied it in
accordance with Rule 7, Section 14 of its New Rules of Procedure which
allows only one motion for reconsideration from the same party, thus:

Sec. 14. Motions for Reconsideration. — Motions for reconsideration

of any order, resolution or decision of the Commission shall not be
entertained except when based on palpable or patent errors, provided
that the motion is under oath and filed within ten (10) calendar days
from receipt of the order, resolution or decision with proof of service
that a copy of the same has been furnished within the reglementary
period the adverse party and provided further, that only one such
motion from the same party shall be entertained. [Emphasis supplied]

The rationale for allowing only one motion for reconsideration from the
same party is to assist the parties in obtaining an expeditious and
inexpensive settlement of labor cases. For obvious reasons, delays cannot
be countenanced in the resolution of labor disputes. The dispute may
involve no less than the livelihood of an employee and that of his loved
ones who are dependent upon him for food, shelter, clothing, medicine, and
education. It may as well involve the survival of a business or an industry. 15

As correctly pointed out by petitioner, the second motion for

reconsideration filed by private respondent is indubitably a prohibited
pleading16 which should have not been entertained at all. Public respondent
cannot just disregard its own rules on the pretext of "satisfying the ends of
justice",17 especially when its disposition of a legal controversy ran afoul
with a clear and long standing jurisprudence in this jurisdiction as
elucidated in the subsequent discussion. Clearly, disregarding a settled
legal doctrine enunciated by this Court is not a way of rectifying an error or
mistake. In our view, public respondent gravely abused its discretion in
taking cognizance and granting private respondent's second motion for
reconsideration as it wrecks the orderly procedure in seeking reliefs in labor
cases.

But, there is another compelling reason why we cannot leave untouched

the flip-flopping decisions of the public respondent. As mentioned earlier,
its October 28, 1994 judgment is not in accord with the applicable decisions
of this Court. The labor tribunal reasoned out as follows:

On the issue of whether or not employer-employee relationship

exists, admitted is the fact that complainants are taxi drivers purely on
 the "boundary system". Under this system the driver takes out his unit
and pays the owner/operator a fee commonly called "boundary" for
the use of the unit. Now, in the determination the existence of
employer-employee relationship, the Supreme Court in the case
of Sara, et al., vs. Agarrado, et al. (G.R. No. 73199, 26 October 1988)
has applied the following four-fold test: "(1) the selection and
engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power of control the employees
conduct."

"Among the four (4) requisites", the Supreme Court stresses that
"control is deemed the most important that the other requisites may
even be disregarded". Under the control test, an employer-employee
relationship exists if the "employer" has reserved the right to control
the "employee" not only as to the result of the work done but also as
to the means and methods by which the same is to be accomplished.
Otherwise, no such relationship exists. (Ibid.)

Applying the foregoing parameters to the case herein obtaining, it is

clear that the respondent does not pay the drivers, the complainants
herein, their wages. Instead, the drivers pay a certain fee for the use
of the vehicle. On the matter of control, the drivers, once they are out
plying their trade, are free to choose whatever manner they conduct
their trade and are beyond the physical control of the owner/operator;
they themselves determine the amount of revenue they would want to
earn in a day's driving; and, more significantly aside from the fact that
they pay for the gasoline they consume, they likewise shoulder the
cost of repairs on damages sustained by the vehicles they are
driving.

Verily, all the foregoing attributes signify that the relationship of the
parties is more of a leasehold or one that is covered by a charter
agreement under the Civil Code rather than the Labor Code. 18

The foregoing ratiocination goes against prevailing jurisprudence.

In a number of cases decided by this Court, 19 we ruled that the relationship
between jeepney owners/operators on one hand and jeepney drivers on
the other under the boundary system is that of employer-employee and not
of lessor-lessee. We explained that in the lease of chattels, the lessor loses
complete control over the chattel leased although the lessee cannot be
reckless in the use thereof, otherwise he would be responsible for the
damages to the lessor. In the case of jeepney owners/operators and
jeepney drivers, the former exercise supervision and control over the latter.
The management of the business is in the owner's hands. The owner as
holder of the certificate of public convenience must see to it that the driver
follows the route prescribed by the franchising authority and the rules
promulgated as regards its operation. Now, the fact that the drivers do not
receive fixed wages but get only that in excess of the so-called "boundary"
they pay to the owner/operator is not sufficient to withdraw the relationship
between them from that of employer and employee. We have applied by
analogy the abovestated doctrine to the relationships between bus
owner/operator and bus conductor,20 auto-calesa owner/operator and
driver,21 and recently between taxi owners/operators and taxi
drivers.22 Hence, petitioners are undoubtedly employees of private
respondent because as taxi drivers they perform activities which are
usually necessary or desirable in the usual business or trade of their
employer.

As consistently held by this Court, termination of employment must be

effected in accordance with law. The just and authorized causes for
termination of employment are enumerated under Articles 282, 283 and
284 of the Labor Code. The requirement of notice and hearing is set-out in
Article 277 (b) of the said Code. Hence, petitioners, being employees of
private respondent, can be dismissed only for just and authorized cause,
and after affording them notice and hearing prior to termination. In the
instant case, private respondent had no valid cause to terminate the
employment of petitioners. Neither were there two (2) written notices sent
by private respondent informing each of the petitioners that they had been
dismissed from work. These lack of valid cause and failure on the part of
private respondent to comply with the twin-notice requirement underscored
the illegality surrounding petitioners' dismissal.

Under the law, an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits
or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. 23 It must be
emphasized, though, that recent judicial pronouncements 24 distinguish
between employees illegally dismissed prior to the effectivity of Republic
Act No. 6715 on March 21, 1989, and those whose illegal dismissals were
effected after such date. Thus, employees illegally dismissed prior to March
21, 1989, are entitled to backwages up to three (3) years without deduction
or qualification, while those illegally dismissed after that date are granted
full backwages inclusive of allowances and other benefits or their monetary
equivalent from the time their actual compensation was withheld from them
up to the time of their actual reinstatement. The legislative policy behind
Republic Act No. 6715 points to "full backwages" as meaning exactly
that, i.e., without deducting from backwages the earnings derived
elsewhere by the concerned employee during the period of his illegal
dismissal. Considering that petitioners were terminated from work on
August 1, 1991, they are entitled to full backwages on the basis of their last
daily earnings.

With regard to the amount deducted daily by private respondent from

petitioners for washing of the taxi units, we view the same as not illegal in
the context of the law. We note that after a tour of duty, it is incumbent
upon the driver to restore the unit he has driven to the same clean
condition when he took it out. Car washing after a tour of duty is indeed a
practice in the taxi industry and is in fact dictated by fair play. 25 Hence, the
drivers are not entitled to reimbursement of washing charges.1âwphi1.nêt

WHEREFORE, the instant petition is GRANTED. The assailed DECISION

of public respondent dated October 28, 1994, is hereby SET ASIDE. The
DECISION of public respondent dated April 28, 1994, and its
RESOLUTION dated December 13, 1994, are hereby REINSTATED
subject to MODIFICATION. Private respondent is directed to reinstate
petitioners to their positions held at the time of the complained dismissal.
Private respondent is likewise ordered to pay petitioners their full
backwages, to be computed from the date of dismissal until their actual
reinstatement. However, the order of public respondent that petitioners be
reimbursed the amount paid as washing charges is deleted. Costs against
private respondents.

SO ORDERED.

Bellosillo, Mendoza and De Leon, Jr., JJ., concur.

Buena, on official leave.

G.R. No. 79664 August 11, 1992

ANDRES VILLAVILLA and ESTER GADIENTE VILLAVILLA, petitioners, 
vs.
COURT OF APPEALS, SOCIAL SECURITY COMMISSION, REYNALDO
MERCADO, and MARCELO COSUCO, respondents, SOCIAL
SECURITY SYSTEM, intervenor.

Public Attorney's Office for petitioners.

F.V. Faylona & Associates for Marcelino Casuco.

BELLOSILLO, J.:

This is a petition for review on certiorari of the Decision 1 of the Court of

Appeals dated April 10, 1987, affirming the Order 2 of the Social Security
Commission dated November 28, 1984, dismissing the complaint of herein
petitioners for lack of cause of action, as well as the Resolution 3 of
respondent court denying the motion of petitioners for reconsideration.

The antecedents: Arturo Villavilla, son of petitioners, was employed as

"tripulante" (crew member) of the fishing boat "F/B Saint Theresa" from
1974 until September 11, 1977, when the boat sank off Isla Binatikan,
Taytay, Palawan. Arturo was not among the known survivors of that sinking
and had been missing since then. 4

On November 20, 1979, petitioners Andres Villavilla and Ester Gadiente

Villavilla, parents of Arturo, filed a petition with the Social Security
Commission against Reynaldo Mercado and Marcelino Cosuco, owners of
the ill-fated fishing boat, for death compensation benefits of Arturo whom
respondents failed to register as their employee. 5

On May 29, 1981, the Social Security System (SSS) filed a petition in
intervention alleging that records from the SSS Production Department
showed that "F/B Saint Theresa", owned by Marcelino Cosuco and
operated by Reynaldo Mercado, was a registered member-employer, and
that in the event petitioners succeeded in proving the employment of Arturo
with private respondents, the latter should be held liable in damages
equivalent to the benefits due the petitioners for failure to report Arturo for
coverage pursuant to Sec. 24 (a) of the Social Security Act, as amended. 6
Respondent Cosuco filed his answer denying all allegations in the petition
and claiming that he already sold the fishing boat to respondent Mercado
on December 10, 1975, and from then on he did not participate anymore in
the operation and management of the boat nor in the hiring of its
crewmembers. 7

Meanwhile respondent Mercado was declared in default for failure to file his
answer.

After petitioners had presented their evidence and rested their case,
respondent Cosuco filed a motion to dismiss (demurrer to evidence) on the
ground of res judicata and lack of cause of action. 8

On November 28, 1984, respondent Social Security Commission issued an

Order dismissing the petition for lack of cause of action. 9

On appeal, respondent Court of Appeals in its decision of April 10, 1987,

affirmed the questioned Order of respondent Commission there being no
reversible error. 10

Petitioners are before Us predicating their petition for review on the

following issues: whether there was an employer-employee relationship
between petitioners' deceased son, Arturo Villavilla, and herein private
respondents; whether private respondents are liable for death
compensation benefits of Arturo Villavilla; and, whether there was a
violation of the Social Security Act, as amended, by private respondents for
not registering Arturo Villavilla with the System as their employee as
mandated by law.

Petitioners argue that it was private respondent Reynaldo Mercado who

recruited Arturo Villavilla sometime in 1974 to be a crew member of the
fishing boat "F/B Saint Theresa" with a daily wage of P20.00. The boat was
then owned by private respondent Marcelino Cosuco and operated by
Reynaldo Mercado. On December 10, 1975, Cosuco sold the fishing boat
to Mercado.

Invoking Negre vs. Workmen's Compensation Commission, 11 petitioners

assert that "fishermen-crew members are individual employees and not
industrial partners as in the case at bar" so that the "mere presence of
Arturo Villavilla in the fishing boat of Mercado makes him an employee of
the employer, Mercado." Further citing RJL Martinez Fishing Corporation
vs. NLRC, 12 petitioners posit that "the main factor that determines whether
a person is an employee of the employer is the kind of work being
performed by that person. If the work of the laborer is part of the regular
business or occupation of the employer, the said laborer is a regular
employee of the employer." Petitioners thus contend that since Arturo was
recruited by Mercado himself sometime in 1974 as one of his fishermen-
crew members and that the crew members were uniformly paid by
Mercado, there can be no other conclusion but that Arturo was an
employee of Mercado at the time his fishing boat sank.

A careful and assiduous review of the records, however, completely

undermines the base of petitioners' position. The records disclose that the
relationship between Mercado and the crew members of the ship headed
by its skipper, Capt. Pedro Matibag, is one positively showing the existence
of a joint venture. This is clearly revealed in the testimonies of Capt. Pedro
Matibag and Gil Chua, a crew member, both witnesses for petitioners, to
wit:

Atty. Aganan (to witness Pedro Matibag):

Q Mr. Witness, will you tell us who your employer

is?

A Mr. Cosuco, Ma'am.

x x x           x x x          x x x

Q Who pays your salary?

A The procedure is sharing. It we have a catch, we

share the catch.

Q What is the nature of "partihan" or sharing?

A Upon selling the fish to the market, a certain

portion will be deducted for the expenses and taken
by the checker and the remaining amount will be
shared by the crew-members.

Q By crew-members, you mean, those who are

fishing or who catch fish?
 A Yes, Ma'am.

x x x           x x x          x x x

Q Is the checker also paid and also included in the

sharing?

A Yes, Ma'am. 13

x x x           x x x          x x x

Atty. Riva:

Q Mr. Captain, is Arturo Villavilla a member of the

crew?

A A fisherman.

Q As a fisherman, what is his duty?

A His duty is, he will ride the fishing boat and he will
"mangangawil".

Q By the way, who hired him?

A There was a master whom we talked to.

Q And this master is the one who hired him and

gave him the share for fishing?

A Yes, Sir.

Q So, assuming that Marcelino Cosuco is the

owner, he has nothing to do with Arturo Villavilla?

A Yes, Sir, it was the master.

Q And the same was through (true) with Reynaldo

Mercado that he has nothing to do with the hiring of
Arturo Villavilla because it is the master fisherman
who hired him, is that right?
 A Yes, Sir.

Q And Mr. Mercado only buys fish from them?

A Yes, Sir. 14

x x x           x x x          x x x

Hearing Officer:

Q Do you want to convey to this Honorable

Commission Mr. Matibag, that you went to fishing
venture to fish?

A Yes, Sir.

Q In this fishing venture, do you have any

agreement to (with) the owner of the fishing boat?

A Our agreement with the owner was to go to high

seas for fishing.

Q Do you receive monthly salary from the owner of

the fishing boat?

A None, Sir, because it was a sharing basis.

Q So, what is the contribution of the owner of the

fishing boat to your fishing venture?

A Food and other equipment.

Q Mr. Matibag, who supplied you the gasoline?

A The owner of the fishing boat, Sir.

Q Who gave you provisions or food in your fishing

or during the duration of your fishing?

A The owner.
 Q While you were in high seas, was there anybody
who supervised you?

A None, Sir, there was no radio. I gave the order.

Q Before you go (sic) to the high seas for fishing

purposes, did you receive any instruction from the
owner?

A There was no instruction given. 15

x x x           x x x          x x x

Atty. Agana (to witness Gil Chua):

Q Will you please inform the Honorable Investigator

how much is your salary and where did you get your
salary?

A It was given to us by the captain when there is

(sic) a sale.

Q So, I understand from you, Mr. witness, that

whenever there is a sale of fish, you get a share?

A We received P 200 or P 300, not the same

always.

x x x           x x x          x x x

Atty. Riva:

Q Depending on the volume of sale of fish, is it not?

A That is all I know. 16

x x x           x x x          x x x

Hearing Officer:

Q Was there a time that you did not receive any

share?
 A If we have a trip, we usually receive.

Q How about if there is no trip, did you receive any

salary from Mr. Mercado as owner of fishing boat
St. Theresa?

A No., Sir.

x x x           x x x          x x x

Q So, you are sure Mister Witness, that when your

fishing boat has no catch, you did (sic) not receive
any share?

A Yes, Sir. 17

It is thus clear that the arrangement between the boat owner and the crew
members, one of whom was petitioners' son, partook of the nature of a joint
venture: the crew members did not receive fixed compensation as they only
shared in their catch; they ventured to the sea irrespective of the
instructions of the boat owners, i.e., upon their own best judgment as to
when, how long, and where to go fishing; the boat owners did not hire them
but simply joined the fishing expedition upon invitation of the ship master,
even without the knowledge of the boat owner. In short, there was neither
right of control nor actual exercise of such right on the part of the boat
owner over his crew members.

Consequently, respondent Court of Appeals is correct in upholding the

application by respondent Social Security Commission of the ruling
in Pajarillo v. Social Security System  18 where We held:

. . . an employee is defined as a "person who performs services

for an employer in which either or both mental and physical
efforts are used and who receives compensation for such
services, where there is an employer-employee relationship"
(Sec. 8[d], Rep. Act 1161, as amended by Rep. Act 2658). In
the present case, neither the pilots nor the crew-members
receive compensation from boat-owners. They only share in
their own catch produced by their own efforts. There is no
showing that outside of their one third share, the boat-owners
have anything to do with the distribution of the rest of the catch
 among the pilots and the crew members. The latter perform no
service for the boat-owners, but mainly for their own benefit.

In the undertaking in question, the boat-owners obviously are

not responsible for the wage, salary, or fee of the pilot and
crew-members. Their sole participation in the venture is the
furnishing or delivery of the equipment used for fishing, after
which, they merely wait for the boat's return and receive their
share in the catch, if there is any. For his part, a person who
joins the outfit is entitled to a share or participation in the fruit of
the fishing trip. If it gives no return, the men get nothing. It
appears to us therefore that the undertaking is in the nature of a
joint venture, with the boat-owner supplying the boat and its
equipment (sic), and the pilot and crew-members contributing
the necessary labor, and the parties getting specific shares for
their respective contributions.

xxx xxx xxx

Add to this extreme difficulty, if not impossibility of determining

the monthly wage or earning of these fishermen for the purpose
of fixing the amount of their and the supposed employer's
contributions (See Secs. 18 and 19, Ibid.), and there is every
reason to exempt the parties to this kind of undertaking from
compulsory registration with the Social Security System.

Certainly, petitioners' reliance on Negre v. Workmen's Compensation

Commission, supra, and RJL Fishing Corp. v. NLRC, supra, is misplaced.
The observations of respondent Social Security Commission are more
persuasive and correct. Thus —

The case of Jose Negre vs. Workmen's Compensation, et

al., 135 SCRA 651, invoked by the petitioners-appellants in
support of their claim that there existed an employer-employee
relationship between their son Arturo Villavilla and private
respondent Reynaldo Mercado cannot be applied to the instant
case for the simple reason that the facts in the aforesaid case
are different from those in the case at bar. A look at the Jose
Negre case will show that it made referral to the case of Abong
vs. Workmen's Compensation Commission, 54 SCRA 379,
wherein this Honorable Court stated, and we beg to quote:

x x x           x x x          x x x

In Abong vs. Workmen's Compensation

Commission (54 SCRA 379) we held that fisherman
crew-members Manuel and Miguel are employees
and not industrial partners.

xxx xxx xxx

It is to be noted, however, that in the case of Abong vs.

Workmen's Compensation Commission, this Honorable Court
stated and we again beg to quote:

x x x           x x x          x x x

As pointed by the Commission's finding, the

fundamental bases showing that petitioner Dr.
Agustino R. Abong is the employer, are present,
namely, the selection and engagement of the
employee; the payment of wages; the power of
dismissal and the employer's power to control the
employees conduct. These powers were lodged in
petitioner Abong, thru his agent, Simplicio
Panganiban, whom he alleges to be his partner. On
this score alone, the petition for review must fail. It
is well-settled that employer-employee relationship
involves findings of facts which are conclusive and
binding and not subject to review by this Court.
(emphasis supplied).

xxx xxx xxx

Interestingly, the aforementioned fundamental bases for the

existence of employer-employee relationship are not present in
the case at bar. As mentioned earlier, private respondent
Reynaldo Mercado had no connection with the selection and
engagement of Arturo Villavilla (pp. 38-39, T.S.N. 12-6-83);
exercised no power of dismissal over Arturo Villavilla; neither
 had he any power of control or had reserved the right to control
Arturo Villavilla as to the result of the work to be done as well
as the means and methods by which the same is to be
accomplished, and there was no such uniform salary involved
(pp. 41-43, T.S.N. 12-6-83).

In the case before Us, it is clear that there was no employer-employee

relationship between petitioner's son Arturo and private respondent
Mercado, much less private respondent Cosuco. As such, Arturo could not
be made subject of compulsory coverage under the Social Security Act;
hence, private respondents cannot be said to have violated said law when
they did not register him with the Social Security System. A fortiori,
respondent as well as intervenor are not answerable to petitioners for any
death benefits under the law.

Culled from the foregoing, the inexorable conclusion is that respondent

Court of Appeals did not err in sustaining the judgment of respondent
Social Security Commission.

It may not be amiss to mention that while petitioners merely raise factual
questions which are not proper under Rule 45 of the Rules of Court, We
nevertheless went to great lengths in dissecting the facts of this case if only
to convince Us that petitioners, who are pauper litigants and seeking claims
under a social legislation, have not been denied its benefits. For, We are
not unaware that in this jurisdiction all doubts in the implementation and
interpretation of provisions of social legislations should be resolved in favor
of the working class. But, alas, justice is not fully served by sustaining the
contention of the poor simply because he is poor. Justice is done by
properly applying the law regardless of the station in life of the contending
parties.

WHEREFORE, finding no reversible error in the questioned judgment of

the appellate court, the same is AFFIRMED. No costs.

SO ORDERED.

Cruz, Griño-Aquino and Medialdea, JJ., concur.

Republic of the Philippines
Supreme Court
Baguio City
FIRST DIVISION
 
CHARLIE JAO, G.R. No. 163700
Petitioner,  
  Present:
   
  CORONA, C.J., Chairperson,
- versus - LEONARDO-DE CASTRO,
  BERSAMIN,
  DEL CASTILLO, and
  VILLARAMA, JR., JJ.
   
BCC PRODUCTS SALES INC., Promulgated:
and TERRANCE TY, April 18, 2012
Respondents.
x-----------------------------------------------------------------------------------------x
 
D E C I S I O N
 
BERSAMIN, J.:
 
The issue is whether petitioner was respondents employee or not.
Respondents denied an employer-employee relationship with petitioner,
who insisted the contrary.
 
Through his petition for review on certiorari, petitioner appeals the
decision promulgated by the Court of Appeals (CA) on February 27, 2004,
[1]
 finding no employee-employer relationship between him and
respondents, thereby reversing the ruling by the National Labor Relations
Commission (NLRC) to the effect that he was the employee of
respondents.
 
 
 
Antecedents
 
Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and
its President, respondent Terrance Ty (Ty), employed him as comptroller
starting from September 1995 with a monthly salary of P20,000.00 to
handle the financial aspect of BCCs business; [2] that on October 19,1995,
the security guards of BCC, acting upon the instruction of Ty, barred him
from entering the premises of BCC where he then worked; that his attempts
to report to work in November and December 12, 1995 were frustrated
because he continued to be barred from entering the premises of BCC;
[3]
 and that he filed a complaint dated December 28, 1995 for illegal
dismissal, reinstatement with full backwages, non-payment of wages,
damages and attorneys fees.[4]
 
Respondents countered that petitioner was not their employee but the
employee of Sobien Food Corporation (SFC), the major creditor and
supplier of BCC; and that SFC had posted him as its comptroller in BCC to
oversee BCCs finances and business operations and to look after SFCs
interests or investments in BCC.[5]
 
Although Labor Arbiter Felipe Pati ruled in favor of petitioner on June
24, 1996,[6] the NLRC vacated the ruling and remanded the case for further
proceedings.[7] Thereafter, Labor Arbiter Jovencio Ll. Mayor rendered a
new decision on September 20, 2001, dismissing petitioners complaint for
want of an employer-employee relationship between the parties.
[8]
 Petitioner appealed the September 20, 2001 decision of Labor Arbiter
Mayor.
 
On July 31, 2002, the NLRC rendered a decision reversing Labor
Arbiter Mayors decision, and declaring that petitioner had been illegally
dismissed. It ordered the payment of unpaid salaries, backwages and
13th month pay, separation pay and attorneys fees. [9] Respondents moved
for the reconsideration of the NLRC decision, but their motion for
reconsideration was denied on September 30, 2002.[10] Thence,
respondents assailed the NLRC decision on certiorari in the CA.
 
Ruling of the CA
  
On February 27, 2004, the CA promulgated its assailed decision, [11] holding:
After a judicious review of the records vis--vis the respective
posturing of the contending parties, we agree with the finding
that no employer-employee relationship existed between
petitioner BCC and the private respondent. On this note, the
conclusion of the public respondent must be reversed for being
issued with grave abuse of discretion.
 
Etched in an unending stream of cases are the four (4)
standards in determining the existence of an employer-
employee relationship, namely, (a) the manner of selection and
engagement of the putative employee; (b) the mode of payment
of wages; (c) the presence or absence of power of dismissal;
and, (d) the presence or absence of control of the putative
employees conduct. Of these powers the power of control over
the employees conduct is generally regarded as determinative
of the existence of the relationship.
 
Apparently, in the case before us, all these four elements are
absent. First, there is no proof that the services of the private
respondent were engaged to perform the duties of a comptroller
in the petitioner company. There is no proof that the private
respondent has undergone a selection procedure as a standard
requisite for employment, especially with such a delicate
position in the company. Neither is there any proof of his
appointment nor is there any showing that the parties entered
into an employment contract, stipulating thereof that he will
receive P20,000.00/month salary as comptroller, before the
private respondent commenced with his work as such. Second,
as clearly established on record, the private respondent was
not included in the petitioner companys payroll during the time
of his alleged employment with the former. True, the name of
the private respondent Charlie Jao appears in the payroll
however it does not prove that he has received his
remuneration for his services. Notably, his name was not
among the employees who will receive their salaries as
represented by the payrolls. Instead, it appears therein as a
comptroller who is authorized to approve the same. Suffice it to
state that it is rather obscure for a certified public accountant
doing the functions of a comptroller from September 1995 up to
December 1995 not to receive his salary during the said
period. Verily, such scenario does not conform with the usual
and ordinary experience of man. Coming now to the most
controlling factor, the records indubitably reveal the undisputed
fact that the petitioner company did not have nor did not
exercise the power of control over the private respondent. It did
not prescribe the manner by which the work is to be carried out,
or the time by which the private respondent has to report for
and leave from work. As already stated, the power of control is
such an important factor that other requisites may even be
disregarded. In Sevilla v. Court of Appeals, the Supreme
Court emphatically held, thus:
 
The control test, under which the person for whom
the services are rendered reserves the right to direct
not only the end to be achieved but also the means
for reaching such end, is generally relied on by the
courts.
 
We have carefully examined the evidence submitted by the
private respondent in the formal offer of evidence and
unfortunately, other than the bare assertions of the private
respondent which he miserably failed to substantiate, we find
nothing therein that would decisively indicate that the petitioner
BCC exercised the fundamental power of control over the
private respondent in relation to his employmentnot even the ID
issued to the private respondent and the affidavits executed by
Bertito Jemilla and Rogelio Santias. At best, these pieces of
documents merely suggest the existence of employer-employee
relationship as intimated by the NLRC. On the contrary, it would
appear that the said sworn statement provided a substantial
basis to support the contention that the private respondent
worked at the petitioner BCC as SFCs representative, being its
major creditor and supplier of goods and
merchandise. Moreover, as clearly pointed out by the petitioner
in his Reply to the private respondents Comment, it is unnatural
for SFC to still employ the private respondent to oversee and
supervise collections of account receivables due SFC from its
customers or clients like the herein petitioner BCC on a date
 later than December, 1995 considering that a criminal complaint
has already been instituted against him.
 
Sadly, the private respondent failed to sufficiently discharge the
burden of showing with legal certainty that employee-employer
relationship existed between the parties. On the other hand, it
was clearly shown by the petitioner that it neither exercised
control nor supervision over the conduct of the private
respondents employment. Hence, the allegation that there is
employer-employee relationship must necessarily fail.
 
Consequently, a discussion on the issue of illegal dismissal
therefore becomes unnecessary.
 
WHEREFORE, premises considered, the petition is
GRANTED. The assailed Decision of the public respondent
NLRC dated July 31, 2002 and the Resolution
dated September 30, 2002 are REVERSED and SET ASIDE.
Accordingly, the decision of the Labor Arbiter dated September
20, 2001 is hereby REINSTATED.
 
SO ORDERED.
 
After the CA denied petitioners motion for reconsideration on May 14,
2004,[12] he filed a motion for extension to file petition for review, which the
Court denied through the resolution dated July 7, 2004 for failure to render
an explanation on why the service of copies of the motion for extension on
respondents was not personally made.[13] The denial notwithstanding, he
filed his petition for review on certiorari. The Court denied the petition
on August 18, 2004 in view of the denial of the motion for extension of time
and the continuing failure of petitioner to render the explanation as to the
non-personal service of the petition on respondents. [14] However, upon a
motion for reconsideration, the Court reinstated the petition for review
on certiorariand required respondents to comment.[15]
 
Issue
 
 The sole issue is whether or not an employer-employee relationship
existed between petitioner and BCC. A finding on the existence of an
employer-employee relationship will automatically warrant a finding of
illegal dismissal, considering that respondents did not state any valid
grounds to dismiss petitioner.
 
Ruling
 
The petition lacks merit.
 
The existence of an employer-employee relationship is a question of fact.
Generally, a re-examination of factual findings cannot be done by the Court
acting on a petition for review on certiorari because the Court is not a trier
of facts but reviews only questions of law. Nor may the Court be bound to
analyze and weigh again the evidence adduced and considered in the
proceedings below.[16] This rule is not absolute, however, and admits of
exceptions. For one, the Court may look into factual issues in labor cases
when the factual findings of the Labor Arbiter, the NLRC, and the CA are
conflicting.[17]
 
Here, the findings of the NLRC differed from those of the Labor Arbiter and
the CA. This conflict among such adjudicating offices compels the Courts
exercise of its authority to review and pass upon the evidence presented
and to draw its own conclusions therefrom.
 
To prove his employment with BCC, petitioner offered the following: (a)
BCC Identification Card (ID) issued to him stating his name and his position
as comptroller, and bearing his picture, his signature, and the signature of
Ty; (b) a payroll of BCC for the period of October 1-15, 1996 that petitioner
approved as comptroller; (c) various bills and receipts related to
expenditures of BCC bearing the signature of petitioner; (d) various checks
carrying the signatures of petitioner and Ty, and, in some checks, the
signature of petitioner alone; (e) a court order showing that the issuing
court considered petitioners ID as proof of his employment with BCC; (f) a
letter of petitioner dated March 1, 1997 to the Department of Justice on his
filing of a criminal case for estafa against Ty for non-payment of wages; (g)
affidavits of some employees of BCC attesting that petitioner was their co-
employee in BCC; and (h) a notice of raffle dated December 5, 1995
showing that petitioner, being an employee of BCC, received the notice of
raffle in behalf of BCC.[18]
 
Respondents denied that petitioner was BCCs employee. They affirmed
that SFC had installed petitioner as its comptroller in BCC to oversee and
supervise SFCs collections and the account of BCC to protect SFCs
interest; that their issuance of the ID to petitioner was only for the purpose
of facilitating his entry into the BCC premises in relation to his work of
overseeing the financial operations of BCC for SFC; that the ID should not
be considered as evidence of petitioners employment in BCC;[19] that
petitioner executed an affidavit in March 1996, [20] stating, among others, as
follows:
 
1.      I am a CPA (Certified Public Accountant) by profession
but presently associated with, or employed by, Sobien
Food Corporation with the same business address as
abovestated;
 
2.      In the course of my association with, or employment
by, Sobien Food Corporation (SFC, for short), I have been
entrusted by my employer to oversee and supervise
collections on account of receivables due SFC from its
customers or clients; for instance, certain checks due
and turned over by one of SFCs customers is BCC
Product Sales, Inc., operated or run by one Terrance L.
Ty, (President and General manager), pursuant to, or in
accordance with, arrangements or agreement thereon;
such arrangement or agreement is duly confirmed by
said Terrance Ty, as shown or admitted by him in a public
instrument executed therefor, particularly par. 2 of that
certain Counter-Affidavit executed and subscribed on
December 11, 1995, xerox copy of which is hereto attached,
duly marked as Annex A and made integral part hereof.
 
3.      Despite such admission of an arrangement, or
agreement insofar as BCC-checks were delivered to, or
 turned over in favor of SFC, Mr. Terrance Ty, in a desire to
blemish my reputation or to cause me dishonor as well as to
impute unto myself the commission of a crime, state in
another public instrument executed therefor in that:
 
3. That all the said 158 checks were unlawfully
appropriated by a certain Charlie Jao absolutely
without any authority from BCC and the same were
reportedly turned over by said Mr. Jao to a person who
is not an agent or is not authorized representative of
BCC.
 
xerox copy of which document (Affidavit) is hereto attached,
duly marked as Annex B and made integral part hereof.
(emphasis supplied)
 
and that the affidavit constituted petitioners admission of the arrangement
or agreement between BCC and SFC for the latter to appoint a comptroller
to oversee the formers operations.
 
Petitioner counters, however, that the affidavit did not establish the
absence of an employer-employee relationship between him and
respondents because it had been executed in March 1996, or after his
employment with respondents had been terminated on December 12,
1995; and that the affidavit referred to his subsequent employment by SFC
following the termination of his employment by BCC. [21]
 
We cannot side with petitioner.
 
Our perusal of the affidavit of petitioner compels a conclusion similar
to that reached by the CA and the Labor Arbiter to the effect that the
affidavit actually supported the contention that petitioner had really worked
in BCC as SFCs representative. It does seem more natural and more
believable that petitioners affidavit was referring to his employment by SFC
even while he was reporting to BCC as a comptroller in behalf of SFC. As
respondents pointed out, it was implausible for SFC to still post him to
oversee and supervise the collections of accounts receivables due from
BCC beyond December 1995 if, as he insisted, BCC had already illegally
dismissed him and had even prevented him from entering the premises of
BCC. Given the patent animosity and strained relations between him and
respondents in such circumstances, indeed, how could he still efficiently
perform in behalf of SFC the essential responsibility to oversee and
supervise collections at BCC? Surely, respondents would have vigorously
objected to any arrangement with SFC involving him.
 
We note that petitioner executed the affidavit in March 1996 to refute
a statement Ty himself made in his own affidavit dated December 11, 1995
to the effect that petitioner had illegally appropriated some checks without
authority from BCC.[22] Petitioner thereby sought to show that he had the
authority to receive the checks pursuant to the arrangements between SFC
and BCC. This showing would aid in fending off the criminal charge
respondents filed against him arising from his mishandling of the checks.
Naturally, the circumstances petitioner adverted to in his March 1996
affidavit concerned those occurring before December 11, 1995, the same
period when he actually worked as comptroller in BCC.
 
Further, an affidavit dated September 5, 2000 by Alfredo So, the
President of SFC, whom petitioner offered as a rebuttal witness, lent
credence to respondents denial of petitioners employment. So declared in
that affidavit, among others, that he had known petitioner for being earlier
his retained accountant having his own office but did not hold office in
SFCs premises; that Ty had approached him (So) looking for an
accountant or comptroller to be employed by him (Ty) in [BCCs] distribution
business of SFCs general merchandise, and had later asked him on his
opinion about petitioner; and that he (So) had subsequently learned that Ty
had already employed [petitioner] as his comptroller as of September 1995.
[23]

 
The statements of So really supported respondents position in that
petitioners association with SFC prior to his supposed employment by BCC
went beyond mere acquaintance with So. That So, who had earlier merely
retained petitioner as his accountant, thereafter employed petitioner as a
retained accountant after his supposed illegal dismissal by BCC raised a
doubt as to his employment by BCC, and rather confirmed respondents
assertion of petitioner being an employee of SFC while he worked at BCC.
 
Moreover, in determining the presence or absence of an employer-
employee relationship, the Court has consistently looked for the following
incidents, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power
to control the employee on the means and methods by which the work is
accomplished. The last element, the so-called control test, is the most
important element.[24]
 
Hereunder are some of the circumstances and incidents occurring
while petitioner was supposedly employed by BCC that debunked his claim
against respondents.
 
It can be deduced from the March 1996 affidavit of petitioner that
respondents challenged his authority to deliver some 158 checks to SFC.
Considering that he contested respondents challenge by pointing to the
existing arrangements between BCC and SFC, it should be clear that
respondents did not exercise the power of control over him, because he
thereby acted for the benefit and in the interest of SFC more than of BCC.
 
In addition, petitioner presented no document setting forth the terms of his
employment by BCC. The failure to present such agreement on terms of
employment may be understandable and expected if he was a common or
ordinary laborer who would not jeopardize his employment by demanding
such document from the employer, but may not square well with his actual
status as a highly educated professional.
 
Petitioners admission that he did not receive his salary for the three
months of his employment by BCC, as his complaint for illegal dismissal
and non-payment of wages[25] and the criminal case for estafa he later filed
against the respondents for non-payment of wages [26] indicated, further
raised grave doubts about his assertion of employment by BCC. If the
assertion was true, we are puzzled how he could have remained in BCCs
employ in that period of time despite not being paid the first salary
of P20,000.00/month. Moreover, his name did not appear in the payroll of
BCC despite him having approved the payroll as comptroller.
Lastly, the confusion about the date of his alleged illegal dismissal provides
another indicium of the insincerity of petitioners assertion of employment by
BCC. In the petition for review on certiorari, he averred that he had been
barred from entering the premises of BCC on October 19, 1995,[27] and thus
was illegally dismissed. Yet, his complaint for illegal dismissal stated that
he had been illegally dismissed on December 12, 1995 when respondents
security guards barred him from entering the premises of BCC, [28] causing
him to bring his complaint only on December 29, 1995, and after BCC had
already filed the criminal complaint against him. The wide gap
between October 19, 1995 and December 12, 1995 cannot be dismissed
as a trivial inconsistency considering that the several incidents affecting the
veracity of his assertion of employment by BCC earlier noted herein
transpired in that interval.
 
With all the grave doubts thus raised against petitioners claim, we need not
dwell at length on the other proofs he presented, like the affidavits of some
of the employees of BCC, the ID, and the signed checks, bills and receipts.
Suffice it to be stated that such other proofs were easily explainable by
respondents and by the aforestated circumstances showing him to be the
employee of SFC, not of BCC.
 
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals;
and ORDERS petitioner to pay the costs of suit.
 
SO ORDERED.
 

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 155731             September 3, 2007

LOLITA LOPEZ, petitioner, 
vs.
BODEGA CITY (Video-Disco Kitchen of the Philippines) and/or
ANDRES C. TORRES-YAP, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the

Rules of Court assailing the July 18, 2002 Decision 1 of the Court of Appeals
(CA) in CA-G.R. SP No. 66861, dismissing the petition for certiorari filed
before it and affirming the Decision of the National Labor Relations
Commission (NLRC) in NLRC-NCR Case No. 00-03-01729-95; and its
Resolution dated October 16, 2002, 2 denying petitioner's Motion for
Reconsideration. The NLRC Decision set aside the Decision of the Labor
Arbiter finding that Lolita Lopez (petitioner) was illegally dismissed by
Bodega City and/or Andres C. Torres-Yap (respondents).

Respondent Bodega City (Bodega City) is a corporation duly registered and

existing under and by virtue of the laws of the Republic of the Philippines,
while respondent Andres C. Torres-Yap (Yap) is its owner/ manager.
Petitioner was the "lady keeper" of Bodega City tasked with manning its
ladies' comfort room.

In a letter signed by Yap dated February 10, 1995, petitioner was made to
explain why the concessionaire agreement between her and respondents
should not be terminated or suspended in view of an incident that
happened on February 3, 1995, wherein petitioner was seen to have acted
in a hostile manner against a lady customer of Bodega City who informed
the management that she saw petitioner sleeping while on duty.

In a subsequent letter dated February 25, 1995, Yap informed petitioner

that because of the incident that happened on February 3, 1995,
respondents had decided to terminate the concessionaire agreement
between them.

On March 1, 1995, petitioner filed with the Arbitration Branch of the NLRC,
National Capital Region, Quezon City, a complaint for illegal dismissal
against respondents contending that she was dismissed from her
employment without cause and due process.
In their answer, respondents contended that no employer-employee
relationship ever existed between them and petitioner; that the latter's
services rendered within the premises of Bodega City was by virtue of a
concessionaire agreement she entered into with respondents.

The complaint was dismissed by the Labor Arbiter for lack of merit.
However, on appeal, the NLRC set aside the order of dismissal and
remanded the case for further proceedings. Upon remand, the case was
assigned to a different Labor Arbiter. Thereafter, hearings were conducted
and the parties were required to submit memoranda and other supporting
documents.

On December 28, 1999, the Labor Arbiter rendered judgment finding that
petitioner was an employee of respondents and that the latter illegally
dismissed her.3

Respondents filed an appeal with the NLRC. On March 22, 2001, the
NLRC issued a Resolution, the dispositive portion of which reads as
follows:

WHEREFORE, premises duly considered, the Decision appealed

from is hereby ordered SET ASIDE and VACATED, and in its stead,
a new one entered DISMISSING the above-entitled case for lack of
merit.4

Petitioner filed a motion for reconsideration of the above-quoted NLRC

Resolution, but the NLRC denied the same.

Aggrieved, petitioner filed a Petition for Certiorari with the CA. On July 18,

2002, the CA promulgated the presently assailed Decision dismissing her
special civil action for certiorari. Petitioner moved for reconsideration but
her motion was denied.

Hence, herein petition based on the following grounds:

1. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF

APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN
RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION
DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN
REVERSING THE DECISION OF THE LABOR ARBITER FINDING
 PETITIONER TO HAVE BEEN ILLEGALLY DISMISSED BY
PRIVATE RESPONDENTS.

2. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF

APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN
RULING THAT PETITIONER WAS NOT AN EMPLOYEE OF
PRIVATE RESPONDENTS.5

Petitioner contends that it was wrong for the CA to conclude that even if
she did not sign the document evidencing the concessionaire agreement,
she impliedly accepted and thus bound herself to the terms and conditions
contained in the said agreement when she continued to perform the task
which was allegedly specified therein for a considerable length of time.
Petitioner claims that the concessionaire agreement was only offered to her
during her tenth year of service and after she organized a union and filed a
complaint against respondents. Prior to all these, petitioner asserts that her
job as a "lady keeper" was a task assigned to her as an employee of
respondents.

Petitioner further argues that her receipt of a special allowance from

respondents is a clear evidence that she was an employee of the latter, as
the amount she received was equivalent to the minimum wage at that time.

Petitioner also contends that her identification card clearly shows that she
was not a concessionaire but an employee of respondents; that if
respondents really intended the ID card issued to her to be used simply for
having access to the premises of Bodega City, then respondents could
have clearly indicated such intent on the said ID card.

Moreover, petitioner submits that the fact that she was required to follow
rules and regulations prescribing appropriate conduct while she was in the
premises of Bodega City is clear evidence of the existence of an employer-
employee relationship between her and petitioners.

On the other hand, respondents contend that the present petition was filed
for the sole purpose of delaying the proceedings of the case; the grounds
relied upon in the instant petition are matters that have been exhaustively
discussed by the NLRC and the CA; the present petition raises questions of
fact which are not proper in a petition for review on certiorari under Rule 45
of the Rules of Court; the respective decisions of the NLRC and the CA are
based on evidence presented by both parties; petitioner's compliance with
the terms and conditions of the proposed concessionaire contract for a
period of three years is evidence of her implied acceptance of such
proposal; petitioner failed to present evidence to prove her allegation that
the subject concessionaire agreement was only proposed to her in her
10th year of employment with respondent company and after she organized
a union and filed a labor complaint against respondents; petitioner failed to
present competent documentary and testimonial evidence to prove her
contention that she was an employee of respondents since 1985.

The main issue to be resolved in the present case is whether or not

petitioner is an employee of respondents.

The issue of whether or not an employer-employee relationship exists in a

given case is essentially a question of fact.6

While it is a settled rule that only errors of law are generally reviewed by
this Court in petitions for review on certiorari of CA decisions,7 there are
well-recognized exceptions to this rule, as in this case, when the factual
findings of the NLRC as affirmed by the CA contradict those of the Labor
Arbiter.8 In that event, it is this Court's task, in the exercise of its equity
jurisdiction, to re-evaluate and review the factual issues by looking into the
records of the case and re-examining the questioned findings. 9

It is a basic rule of evidence that each party must prove his affirmative
allegation.10 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 that of his opponent. 11

The test for determining on whom the burden of proof lies is found in the
result of an inquiry as to which party would be successful if no evidence of
such matters were given.12

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. 13 However,
before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established.14

In filing a complaint before the Labor Arbiter for illegal dismissal based on
the premise that she was an employee of respondent, it is incumbent upon
petitioner to prove the employee-employer relationship by substantial
evidence.15

The NLRC and the CA found that petitioner failed to discharge this burden,
and the Court finds no cogent reason to depart from their findings.

The Court applies the four-fold test expounded in Abante v. Lamadrid

Bearing and Parts Corp.,16 to wit:

To ascertain the existence of an employer-employee relationship,

jurisprudence has invariably applied the four-fold test, namely: (1) the
manner of selection and engagement; (2) the payment of wages; (3)
the presence or absence of the power of dismissal; and (4) the
presence or absence of the power of control. Of these four, the last
one is the most important. The so-called "control test" is commonly
regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship. Under
the control test, an employer-employee relationship exists where the
person for whom the services areperformed reserves the right to
control not only the end achieved, but also the manner and means to
be used in reaching that end.17

To prove the element of payment of wages, petitioner presented a petty

cash voucher showing that she received an allowance for five (5)
days.18 The CA did not err when it held that a solitary petty cash voucher
did not prove that petitioner had been receiving salary from respondents or
that she had been respondents' employee for 10 years.

Indeed, if petitioner was really an employee of respondents for that length

of time, she should have been able to present salary vouchers or pay slips
and not just a single petty cash voucher. The Court agrees with
respondents that petitioner could have easily shown other pieces of
evidence such as a contract of employment, SSS or Medicare forms, or
certificates of withholding tax on compensation income; or she could have
presented witnesses to prove her contention that she was an employee of
respondents. Petitioner failed to do so.

Anent the element of control, petitioner's contention that she was an

employee of respondents because she was subject to their control does not
hold water.
Petitioner failed to cite a single instance to prove that she was subject to
the control of respondents insofar as the manner in which she should
perform her job as a "lady keeper" was concerned.

It is true that petitioner was required to follow rules and regulations

prescribing appropriate conduct while within the premises of Bodega City.
However, this was imposed upon petitioner as part of the terms and
conditions in the concessionaire agreement embodied in a 1992 letter of
Yap addressed to petitioner, to wit:

January 6, 1992

Dear Ms. Lolita Lopez,

The new owners of Bodega City, 1121 Food Service Corporation

offers to your goodself the concessionaire/contract to provide
independently, customer comfort services to assist users of the ladies
comfort room of the Club to further enhance its business, under the
following terms and conditions:

1. You will provide at your own expense, all toilet supplies,

useful for the purpose, such as toilet papers, soap, hair pins,
safety pins and other related items or things which in your
opinion is beneficial to the services you will undertake;

2. For the entire duration of this concessionaire contract, and

during the Club's operating hours, you shall maintain the
cleanliness of the ladies comfort room. Provided, that general
cleanliness, sanitation and physical maintenance of said
comfort rooms shall be undertaken by the owners of Bodega
City;

3. You shall at all times ensure satisfaction and good services

in the discharge of your undertaking. More importantly, you
shall always observe utmost courtesy in dealing with the
persons/individuals using said comfort room and shall refrain
from doing acts that may adversely affect the goodwill and
business standing of Bodega City;
 4. All remunerations, tips, donations given to you by
individuals/persons utilizing said comfort rooms and/or guests
of Bodega City shall be waived by the latter to your benefit
provided however, that if concessionaire receives tips or
donations per day in an amount exceeding 200% the prevailing
minimum wage, then, she shall remit fifty percent (50%) of said
amount to Bodega City by way of royalty or concession fees;

5. This contract shall be for a period of one year and shall be

automatically renewed on a yearly basis unless notice of
termination is given thirty (30) days prior to expiration. Any
violation of the terms and conditions of this contract shall be a
ground for its immediate revocation and/or termination.

6. It is hereby understood that no employer-employee

relationship exists between Bodega City and/or 1121
FoodService Corporation and your goodself, as you are an
independent contractor who has represented to us that you
possess the necessary qualification as such including
manpower compliment, equipment, facilities, etc. and that any
person you may engage or employ to work with or assist you in
the discharge of your undertaking shall be solely your own
employees and/or agents.

1121 FoodService Corporation Bodega

City

By: 
(Sgd.) ANDRES C. TORRES-YAP

Conforme:

_______________
LOLITA LOPEZ19

Petitioner does not dispute the existence of the letter; neither does she
deny that respondents offered her the subject concessionaire agreement.
However, she contends that she could not have entered into the said
agreement with respondents because she did not sign the document
evidencing the same.
Settled is the rule that contracts are perfected by mere consent, upon the
acceptance by the offeree of the offer made by the offeror. 20 For a contract,
to arise, the acceptance must be made known to the offeror. 21 Moreover,
the acceptance of the thing and the cause, which are to constitute a
contract, may be express or implied as can be inferred from the
contemporaneous and subsequent acts of the contracting parties. 22 A
contract will be upheld as long as there is proof of consent, subject matter
and cause; it is generally obligatory in whatever form it may have been
entered into.23

In the present case, the Court finds no cogent reason to disregard the
findings of both the CA and the NLRC that while petitioner did not affix her
signature to the document evidencing the subject concessionaire
agreement, the fact that she performed the tasks indicated in the said
agreement for a period of three years without any complaint or question
only goes to show that she has given her implied acceptance of or consent
to the said agreement.

Petitioner is likewise estopped from denying the existence of the subject

concessionaire agreement. She should not, after enjoying the benefits of
the concessionaire agreement with respondents, be allowed to later disown
the same through her allegation that she was an employee of the
respondents when the said agreement was terminated by reason of her
violation of the terms and conditions thereof.

The principle of estoppel in pais applies wherein -- by one's acts,

representations or admissions, or silence when one ought to speak out --
intentionally or through culpable negligence, induces another to believe
certain facts to exist and to rightfully rely and act on such belief, so as to be
prejudiced if the former is permitted to deny the existence of those facts. 24

Moreover, petitioner failed to dispute the contents of the affidavit 25 as well
as the testimony26 of Felimon Habitan (Habitan), the concessionaire of the
men's comfort room of Bodega City, that he had personal knowledge of the
fact that petitioner was the concessionaire of the ladies' comfort room of
Bodega City.

Petitioner also claims that the concessionaire agreement was offered to her
only in her 10th year of service, after she organized a union and filed a
complaint against respondents. However, petitioner's claim remains to be
an allegation which is not supported by any evidence. It is a basic rule in
evidence that each party must prove his affirmative allegation, 27 that mere
allegation is not evidence.28

The Court is not persuaded by petitioner's contention that the Labor Arbiter
was correct in concluding that there existed an employer-employee
relationship between respondents and petitioner. A perusal of the
Decision29 of the Labor Arbiter shows that his only basis for arriving at such
a conclusion are the bare assertions of petitioner and the fact that the latter
did not sign the letter of Yap containing the proposed concessionaire
agreement. However, as earlier discussed, this Court finds no error in the
findings of the NLRC and the CA that petitioner is deemed as having given
her consent to the said proposal when she continuously performed the
tasks indicated therein for a considerable length of time. For all intents and
purposes, the concessionaire agreement had been perfected.

Petitioner insists that her ID card is sufficient proof of her employment.

In Domasig v. National Labor Relations Commission,30 this Court held that
the complainant's ID card and the cash vouchers covering his salaries for
the months indicated therein were substantial evidence that he was an
employee of respondents, especially in light of the fact that the latter failed
to deny said evidence. This is not the situation in the present case. The
only evidence presented by petitioner as proof of her alleged employment
are her ID card and one petty cash voucher for a five-day allowance which
were disputed by respondents.

As to the ID card, it is true that the words "EMPLOYEE'S NAME" appear

printed below petitioner's name. 31However, she failed to dispute
respondents' evidence consisting of Habitan's testimony, 32 that he and the
other "contractors" of Bodega City such as the singers and band
performers, were also issued the same ID cards for the purpose of enabling
them to enter the premises of Bodega City.

The Court quotes, with approval, the ruling of the CA on this matter, to wit:

Nor can petitioners identification card improve her cause any better. It
is undisputed that non-employees, such as Felimon Habitan, an
admitted concessionaire, musicians, singers and the like at Bodega
City are also issued identification cards. Given this premise, it
appears clear to Us that petitioner's I.D. Card is incompetent proof of
 an alleged employer-employee relationship between the herein
parties. Viewed in the context of this case, the card is at best a
"passport" from management assuring the holder thereof of his
unmolested access to the premises of Bodega City. 33

With respect to the petty cash voucher, petitioner failed to refute

respondent's claim that it was not given to her for services rendered or on a
regular basis, but simply granted as financial assistance to help her
temporarily meet her family's needs.

Hence, going back to the element of control, the concessionaire agreement

merely stated that petitioner shall maintain the cleanliness of the ladies'
comfort room and observe courtesy guidelines that would help her obtain
the results they wanted to achieve. There is nothing in the agreement
which specifies the methods by which petitioner should achieve these
results. Respondents did not indicate the manner in which she should go
about in maintaining the cleanliness of the ladies' comfort room. Neither did
respondents determine the means and methods by which petitioner could
ensure the satisfaction of respondent company's customers. In other
words, petitioner was given a free hand as to how she would perform her
job as a "lady keeper." In fact, the last paragraph of the concessionaire
agreement even allowed petitioner to engage persons to work with or assist
her in the discharge of her functions.34

Moreover, petitioner was not subjected to definite hours or conditions of

work. The fact that she was expected to maintain the cleanliness of
respondent company's ladies' comfort room during Bodega City's operating
hours does not indicate that her performance of her job was subject to the
control of respondents as to make her an employee of the latter. Instead,
the requirement that she had to render her services while Bodega City was
open for business was dictated simply by the very nature of her
undertaking, which was to give assistance to the users of the ladies'
comfort room.

In Consulta v. Court of Appeals,35 this Court held:

It should, however, be obvious that not every form of control that the
hiring party reserves to himself over the conduct of the party hired in
relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the
 legal or technical sense of the term. A line must be drawn
somewhere, if the recognized distinction between an employee and
an individual contractor is not to vanish altogether. Realistically, it
would be a rare contract of service that gives untrammeled freedom
to the party hired and eschews any intervention whatsoever in his
performance of the engagement.

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.36

Lastly, the Court finds that the elements of selection and engagement as
well as the power of dismissal are not present in the instant case.

It has been established that there has been no employer-employee

relationship between respondents and petitioner. Their contractual
relationship was governed by the concessionaire agreement embodied in
the 1992 letter. Thus, petitioner was not dismissed by respondents.
Instead, as shown by the letter of Yap to her dated February 15,
1995,37 their contractual relationship was terminated by reason of
respondents' termination of the subject concessionaire agreement, which
was in accordance with the provisions of the agreement in case of violation
of its terms and conditions.

In fine, the CA did not err in dismissing the petition for certiorari filed before
it by petitioner.

WHEREFORE, the instant petition is DENIED. The assailed Decision and

Resolution of the Court of Appeals are AFFIRMED. Costs against
petitioner.

SO ORDERED.

Ynares-Santiago, Chairp