Labor Cases 3

Labor Cases Batch 3-1
Bernardo vs. NLRC

The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the same terms and conditions of employment as qualified
able-bodied employees. Once they have attained the status of regular workers, they should be accorded all the benefits granted by law, notwithstanding
written or verbal contracts to the contrary. This treatment is rooted not merely on charity or accommodation, but on justice for all.
The Case
Challenged in the Petition for Certiorari[1] before us is the June 20, 1995 Decision [2] of the National Labor Relations Commission (NLRC), [3] which affirmed the
August, 22 1994 ruling of Labor Arbiter Cornelio L. Linsangan. The labor arbiters Decision disposed as follows:[4]
WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint for lack of merit.
Also assailed is the August 4, 1995 Resolution[5] of the NLRC, which denied the Motion for Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise:[6]

Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent Far East Bank and
Trust Co. as Money Sorters and Counters through a uniformly worded agreement called Employment Contract for Handicapped Workers. (pp. 68 & 69,
Records) The full text of said agreement is quoted below:
EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly organized and existing under and by virtue of the laws of the Philippines,
with business address at FEBTC Building, Muralla, Intramuros, Manila, represented herein by its Assistant Vice President, MR. FLORENDO G. MARANAN,
(hereinafter referred to as the BANK);
- and ________________, ________________ years old, of legal age, _____________, and residing at __________________ (hereinafter referred to as the
(EMPLOYEE).
WITNESSETH: That
WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a need to provide disabled and handicapped persons gainful employment
and opportunities to realize their potentials, uplift their socio-economic well being and welfare and make them productive, self-reliant and useful citizens to
enable them to fully integrate in the mainstream of society;
WHEREAS, there are certain positions in the BANK which may be filled-up by disabled and handicapped persons, particularly deaf-mutes, and the BANK
ha[s] been approached by some civic-minded citizens and authorized government agencies [regarding] the possibility of hiring handicapped workers for
these positions;
WHEREAS, the EMPLOYEE is one of those handicapped workers who [were] recommended for possible employment with the BANK;
NOW, THEREFORE, for and in consideration of the foregoing premises and in compliance with Article 80 of the Labor Code of the Philippines as amended,
the BANK and the EMPLOYEE have entered into this Employment Contract as follows:
1.
The BANK agrees to employ and train the EMPLOYEE, and the EMPLOYEE agrees to diligently and faithfully work with the BANK,
as Money Sorter and Counter.
2.
The EMPLOYEE shall perform among others, the following duties and responsibilities:
Sort out bills according to color;
ii.
Count each denomination per hundred, either manually or with the aid of a counting machine;
iii.
Wrap and label bills per hundred;
iv.
Put the wrapped bills into bundles; and
v.
Submit bundled bills to the bank teller for verification.
3.
The EMPLOYEE shall undergo a training period of one (1) month, after which the BANK shall determine whether or not he/she should be allowed to
finish the remaining term of this Contract.
4.
The EMPLOYEE shall be entitled to an initial compensation of P118.00 per day, subject to adjustment in the sole judgment of the BANK, payable
every 15th and end of the month.

5.
The regular work schedule of the EMPLOYEE shall be five (5) days per week, from Mondays thru Fridays, at eight (8) hours a day. The EMPLOYEE
may be required to perform overtime work as circumstance may warrant, for which overtime work he/she [shall] be paid an additional compensation of 125%
of his daily rate if performed during ordinary days and 130% if performed during Saturday or [a] rest day.
6.
The EMPLOYEE shall likewise be entitled to the following benefits:
i.
Proportionate 13th month pay based on his basic daily wage.
ii.
Five (5) days incentive leave.
iii.
SSS premium payment.
7.
The EMPLOYEE binds himself/herself to abide [by] and comply with all the BANK Rules and Regulations and Policies, and to conduct himself/herself
in a manner expected of all employees of the BANK.
8.
The EMPLOYEE acknowledges the fact that he/she had been employed under a special employment program of the BANK, for which reason the
standard hiring requirements of the BANK were not applied in his/her case. Consequently, the EMPLOYEE acknowledges and accepts the fact that the
terms and conditions of the employment generally observed by the BANK with respect to the BANKs regular employee are not applicable to the
EMPLOYEE, and that therefore, the terms and conditions of the EMPLOYEEs employment with the BANK shall be governed solely and exclusively by this
Contract and by the applicable rules and regulations that the Department of Labor and Employment may issue in connection with the employment
of disabled and handicapped workers. More specifically, the EMPLOYEE hereby acknowledges that the provisions of Book Six of the Labor Code of the
Philippines as amended, particularly on regulation of employment and separation pay are not applicable to him/her.
9.
The Employment Contract shall be for a period of six (6) months or from ____ to ____ unless earlier terminated by the BANK for any just or
reasonable cause. Any continuation or extension of this Contract shall be in writing and therefore this Contract will automatically expire at the end of its
terms unless renewed in writing by the BANK.
IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this ____ day of _________________, ____________ at Intramuros, Manila,
Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2); in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993,
twenty-one (21). Their employment[s] were renewed every six months such that by the time this case arose, there were fifty-six (56) deaf-mutes who were
employed by respondent under the said employment agreement. The last one was Thelma Malindoy who was employed in 1992 and whose contract
expired on July 1993.
xxx
xxx
xxx
Disclaiming that complainants were regular employees, respondent Far East Bank and Trust Company maintained that complainants who are a special
class of workers the hearing impaired employees were hired temporarily under [a] special employment arrangement which was a result of overtures made
by some civic and political personalities to the respondent Bank; that complainant[s] were hired due to pakiusap which must be considered in the light of the
context of the respondent Banks corporate philosophy as well as its career and working environment which is to maintain and strengthen a corps of
professionals trained and qualified officers and regular employees who are baccalaureate degree holders from excellent schools which is an unbending
policy in the hiring of regular employees; that in addition to this, training continues so that the regular employee grows in the corporate ladder; that the idea
of hiring handicapped workers was acceptable to them only on a special arrangement basis; that it adopted the special program to help tide over a group of
handicapped workers such as deaf-mutes like the complainants who could do manual work for the respondent Bank; that the task of counting and sorting of
bills which was being performed by tellers could be assigned to deaf-mutes; that the counting and sorting of money are tellering works which were always
logically and naturally part and parcel of the tellers normal functions; that from the beginning there have been no separate items in the respondent Bank
plantilla for sorters or counters; that the tellers themselves already did the sorting and counting chore as a regular feature and integral part of their duties (p.
97, Records); that through the pakiusap of Arturo Borjal, the tellers were relieved of this task of counting and sorting bills in favor of deaf-mutes without
creating new positions as there is no position either in the respondent or in any other bank in the Philippines which deals with purely counting and sorting of
bills in banking operations.
Petitioners specified when each of them was hired and dismissed, viz: [7]
NAME OF PETITIONER
1. MARITES BERNARDO
WORKPLACE
Date Hired
Intramuros
Date Dismissed
12 NOV 90
2. ELVIRA GO DIAMANTE
Intramuros
24 JAN 90
3. REBECCA E. DAVID
Intramuros
16 APR 90
4. DAVID P. PASCUAL
5. RAQUEL ESTILLER
6. ALBERT HALLARE
Bel-Air
Intramuros
West
7. EDMUND M. CORTEZ
Bel-Air
8. JOSELITO O. AGDON
Intramuros
9. GEORGE P. LIGUTAN, JR.

10. CELSO M. YAZAR
Intramuros
Intramuros
17 NOV 93
11 JAN 94
23 OCT 93
15 OCT 88
21 NOV 94
2 JUL 92
4 JAN 94
4 JAN 91
9 JAN 94
15 JAN 91
3 DEC 93
5 NOV 90
17 NOV 93
6 SEPT 89
8 FEB 93
19 JAN 94
8 AUG 93

11. ALEX G. CORPUZ
Intramuros
15 FEB 93
15 AUG 93
12. RONALD M. DELFIN
Intramuros
22 FEB 93
22 AUG 93
13. ROWENA M. TABAQUERO
Intramuros
22 FEB 93
22 AUG 93
14. CORAZON C. DELOS REYES
Intramuros
8 FEB 93
8 AUG 93
15. ROBERT G. NOORA
Intramuros
15 FEB 93
15 AUG 93
16. MILAGROS O. LEQUIGAN
Intramuros
1 FEB 93
1 AUG 93
17. ADRIANA F. TATLONGHARI
Intramuros
22 JAN 93
22 JUL 93
18. IKE CABANDUCOS
Intramuros
24 FEB 93
24 AUG 93
19. COCOY NOBELLO
Intramuros
22 FEB 93
22 AUG 93
20. DORENDA CATIMBUHAN

21. ROBERT MARCELO
22. LILIBETH Q. MARMOLEJO
23. JOSE E. SALES
Intramuros
15 AUG 93
31 JUL 93[8]
West
West
15 JUN 90
West
1 AUG 93
21 NOV 93
6 AUG 92
24. ISABEL MAMAUAG
West
25. VIOLETA G. MONTES
Intramuros
8 MAY 92
26. ALBINO TECSON

27. MELODY V. GRUELA
15 FEB 93
Intramuros
West
12 OCT 93
10 NOV 93
2 FEB 90
15 JAN 94
7 NOV 91
28 OCT 91
10 NOV 93
3 NOV 93
28. BERNADETH D. AGERO
West
29. CYNTHIA DE VERA
Bel-Air
26 JUN 90
30. LANI R. CORTEZ
Bel-Air
15 OCT 88
10 DEC 93
31. MA. ISABEL B. CONCEPCION
West
6 SEPT 90
6 FEB 94
32. DINDO VALERIO

33. ZENAIDA MATA
34. ARIEL DEL PILAR
19 DEC 90
Intramuros
Intramuros
Intramuros
35. MARGARET CECILIA CANOZA
Intramuros
27 DEC 93
3 DEC 93
30 MAY 93
10 FEB 93
24 FEB 93
30 NOV 93
10 AUG 93
24 AUG 93
27 JUL 90
4 FEB 94
36. THELMA SEBASTIAN
Intramuros
12 NOV 90
17 NOV 93
37. MA. JEANETTE CERVANTES
West
6 JUN 92
7 DEC 93
38. JEANNIE RAMIL
Intramuros
23 APR 90
39. ROZAIDA PASCUAL
Bel-Air
40. PINKY BALOLOA

41. ELIZABETH VENTURA
42. GRACE S. PARDO
43. RICO TIMOSA
20 APR 89
West
West
Intramuros
29 OCT 93
3 JUN 91
12 MAR 90
West
12 OCT 93
2 DEC 93
FEB 94 [SIC]
4 APR 90
28 APR 93
13 MAR 94
28 OCT 93
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners. Hence, this recourse to this Court.[9]

The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular employees under Article 280 of the Labor Code, as amended,
Respondent Commission ratiocinated as follows:
We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that complainants were hired as an accommodation to [the]
recommendation of civic oriented personalities whose employment[s] were covered by xxx Employment Contract[s] with special provisions on duration of
contract as specified under Art. 80. Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the law between the parties.[10]
The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, considering the prevailing circumstances/milieu of the case.
Issues
In their Memorandum, petitioners cite the following grounds in support of their cause:
I. The Honorable Commission committed grave abuse of discretion in holding that the petitioners - money sorters and counters working in a bank - were not
regular employees.
II.
The Honorable Commission committed grave abuse of discretion in holding that the employment contracts signed and renewed by the petitioners
- which provide for a period of six (6) months - were valid.
III.
The Honorable Commission committed grave abuse of discretion in not applying the provisions of the Magna Carta for the Disabled (Republic Act
No. 7277), on proscription against discrimination against disabled persons.[11]
In the main, the Court will resolve whether petitioners have become regular employees.
This Courts Ruling
The petition is meritorious. However, only the employees, who worked for more than six months and whose contracts were renewed are deemed
regular. Hence, their dismissal from employment was illegal.
Preliminary Matter: Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the findings of facts of the NLRC is not allowed in a petition for
certiorari. Specifically, it maintains that the Court cannot pass upon the findings of public respondents that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in a certiorari proceeding. In resolving whether the petitioners have
become regular employees, we shall not change the facts found by the public respondent. Our task is merely to determine whether the NLRC committed
grave abuse of discretion in applying the law to the established facts, as above-quoted from the assailed Decision.
Main Issue: Are Petitioners Regular Employees?
Petitioners maintain that they should be considered regular employees, because their task as money sorters and counters was necessary and desirable to
the business of respondent bank. They further allege that their contracts served merely to preclude the application of Article 280 and to bar them from
becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as special workers and should not in any way be considered as part of the
regular complement of the Bank.[12] Rather, they were special workers under Article 80 of the Labor Code. Private respondent contends that it never
solicited the services of petitioners, whose employment was merely an accommodation in response to the requests of government officials and civicminded citizens. They were told from the start, with the assistance of government representatives, that they could not become regular employees because
there were no plantilla positions for money sorters, whose task used to be performed by tellers. Their contracts were renewed several times, not because
of need but merely for humanitarian reasons. Respondent submits that as of the present, the special position that was created for the petitioners no
longer exist[s] in private respondent [bank], after the latter had decided not to renew anymore their special employment contracts.
At the outset, let it be known that this Court appreciates the nobility of private respondents effort to provide employment to physically impaired individuals
and to make them more productive members of society. However, we cannot allow it to elude the legal consequences of that effort, simply because it now
deems their employment irrelevant. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the
petitioners, except sixteen of them, should be deemed regular employees. As such, they have acquired legal rights that this Court is duty-bound to protect
and uphold, not as a matter of compassion but as a consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one month, after which the employer shall determine
whether or not they should be allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a just
and reasonable cause. Unless renewed in writing by the employer, the contract shall automatically expire at the end of the term.
According to private respondent, the employment contracts were prepared in accordance with Article 80 of the Labor Code, which provides:
ART. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an employment agreement with them, which
agreement shall include:
(a) The names and addresses of the handicapped workers to be employed;
(b) The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent of the applicable legal minimum wage;
(c) The duration of employment period; and
(d) The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized representatives.
The stipulations in the employment contracts indubitably conform with the aforecited provision. Succeeding events and the enactment of RA No. 7277 (the
Magna Carta for Disabled Persons),[13] however, justify the application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them
worked from 1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks

were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In
other words, their disability did not render them unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same terms and conditions of
employment as a qualified able-bodied person. Section 5 of the Magna Carta provides:
Section 5. Equal Opportunity for Employment.No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled
employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or
allowances as a qualified able bodied person.
The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna
Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides:
ART. 280. Regular and Casual Employment. -- The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered as regular employee with respect to the activity in which he is employed
and his employment shall continue while such activity exists.
The test of whether an employee is regular was laid down in De Leon v. NLRC,[14] in which this Court held:
The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee
in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of
the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business
or trade in its entirety. Also if the employee has been performing the job for at least one year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to
the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. With the exception of sixteen of them,
petitioners performed these tasks for more than six months. Thus, the following twenty-seven petitioners should be deemed regular employees: Marites
Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan
Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani
R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky
Baloloa, Elizabeth Ventura and Grace S. Pardo.
As held by the Court, Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees by
the simple expedient of extending to them probationary appointments, ad infinitum.[15] The contract signed by petitioners is akin to a probationary
employment, during which the bank determined the employees fitness for the job. When the bank renewed the contract after the lapse of the six-month
probationary period, the employees thereby became regular employees.[16] No employer is allowed to determine indefinitely the fitness of its employees.
As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services may be terminated only for a just or authorized
cause. Because respondent failed to show such cause,[17] these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back
wages and reinstatement without loss of seniority rights and other privileges. [18] Considering the allegation of respondent that the job of money sorting is no
longer available because it has been assigned back to the tellers to whom it originally belonged, [19] petitioners are hereby awarded separation pay in lieu of
reinstatement.[20]
Because the other sixteen worked only for six months, they are not deemed regular employees and hence not entitled to the same benefits.
Applicability of the Brent Ruling
Respondent bank, citing Brent School v. Zamora[21] in which the Court upheld the validity of an employment contract with a fixed term, argues that the parties
entered into the contract on equal footing. It adds that the petitioners had in fact an advantage, because they were backed by then DSWD Secretary Mita
Pardo de Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the petitioners were disabled, and that the bank had to determine their
fitness for the position. Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier, petitioners proved themselves to
be qualified disabled persons who, under the Magna Carta for Disabled Persons, are entitled to terms and conditions of employment enjoyed
by qualified able-bodied individuals; hence, Article 80 does not apply because petitioners are qualified for their positions. The validation of the limit imposed
on their contracts, imposed by reason of their disability, was a glaring instance of the very mischief sought to be addressed by the new law.
Moreover, it must be emphasized that a contract of employment is impressed with public interest. [22] Provisions of applicable statutes are deemed written into
the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply
contracting with each other.[23] Clearly, the agreement of the parties regarding the period of employment cannot prevail over the provisions of the Magna
Carta for Disabled Persons, which mandate that petitioners must be treated as qualified able-bodied employees.
Respondents reason for terminating the employment of petitioners is instructive. Because the Bangko Sentral ng Pilipinas (BSP) required that cash in the
bank be turned over to the BSP during business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of money. Thus, it
reasons that this task could not be done by deaf mutes because of their physical limitations as it is very risky for them to travel at night. [24] We find no basis
for this argument. Travelling at night involves risks to handicapped and able-bodied persons alike. This excuse cannot justify the termination of their
employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely accommodated employees. This fact does not change the nature of their employment. As earlier noted,
an employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them.
Equally unavailing are private respondents arguments that it did not go out of its way to recruit petitioners, and that its plantilla did not contain their
positions. In L. T. Datu v. NLRC,[25] the Court held that the determination of whether employment is casual or regular does not depend on the will or word of
the employer, and the procedure of hiring x x x but on the nature of the activities performed by the employee, and to some extent, the length of performance
and its continued existence.

Private respondent argues that the petitioners were informed from the start that they could not become regular employees. In fact, the bank adds, they
agreed with the stipulation in the contract regarding this point. Still, we are not persuaded. The well-settled rule is that the character of employment is
determined not by stipulations in the contract, but by the nature of the work performed. [26] Otherwise, no employee can become regular by the simple
expedient of incorporating this condition in the contract of employment.
In this light, we iterate our ruling in Romares v. NLRC:[27]
Article 280 was emplaced in our statute books to prevent the circumvention of the employees right to be secure in his tenure by indiscriminately and
completely ruling out all written and oral agreements inconsistent with the concept of regular employment defined therein. Where an employee has been
engaged to perform activities which are usually necessary or desirable in the usual business of the employer, such employee is deemed a regular employee
and is entitled to security of tenure notwithstanding the contrary provisions of his contract of employment.
x x x
xxx
xxx
At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As reaffirmed in subsequent cases, this Court has upheld the legality of
fixed-term employment. It ruled that the decisive determinant in term employment should not be the activities that the employee is called upon to perform
but the day certain agreed upon the parties for the commencement and termination of their employment relationship. But this Court went on to say that
where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be
struck down or disregarded as contrary to public policy and morals.
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the working class, but also the concern of the State for the plight
of the disabled. The noble objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on justice and the equal
treatment of qualified persons, disabled or not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent
proof of this statement is the repeated renewal of their employment contracts. Why then should they be dismissed, simply because they are physically
impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should be treated and granted the same rights like any
other regular employees.
In this light, we note the Office of the Solicitor Generals prayer joining the petitioners cause. [28]
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995 Decision and the August 4, 1995 Resolution of the NLRC
are REVERSED and SET ASIDE. Respondent Far East Bank and Trust Company is hereby ORDERED to pay back wages and separation pay to each of
the following twenty-seven (27) petitioners, namely, Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert
Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino
Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian,
Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is hereby directed to compute
the exact amount due each of said employees, pursuant to existing laws and regulations, within fifteen days from the finality of this Decision. No costs.
Opulencia Ice Plant vs. NLRC

MANUEL P. ESITA was for twenty (20) years a compressor operator of Tiongson Ice Plant in San Pablo City. In 1980 he was hired as compressor operatormechanic for the ice plants of petitioner Dr. Melchor Opulencia located in Tanauan, Batangas, and Calamba, Laguna. Initially assigned at the ice plant in
Tanauan, Esita would work from seven o'clock in the morning to five o'clock in the afternoon receiving a daily wage of P35.00.
In 1986, Esita was transferred to the ice plant in Calamba, which was then undergoing overhauling, taking the place of compressor operator Lorenzo Eseta,
who was relieved because he was already old and weak. For less than a month, Esita helped in the construction-remodeling of Dr. Opulencia's house.
On 6 February 1989, for demanding the correct amount of wages due him, Esita was dismissed from service. Consequently, he filed with Sub-Regional
Arbitration Branch IV, San Pablo City, a complaint for illegal dismissal, underpayment, non-payment for overtime, legal holiday, premium for holiday and rest
day, 13th month, separation/retirement pay and allowances against petitioners.
Petitioners deny that Esita is an employee. They claim that Esita could not have been employed in 1980 because the Tanauan ice plant was not in operation
due to low voltage of electricity and that Esita was merely a helper/peon of one of the contractors they had engaged to do major repairs and renovation of
the Tanauan ice plant in 1986. Petitioners further allege that when they had the Calamba ice plant repaired and expanded, Esita likewise rendered services
in a similar capacity, and thus admitting that he worked as a helper/peon in the repair or remodeling of Dr. Opulencia's residence in Tanauan.
Opulencia likewise maintains that while he refused the insistent pleas of Esita for employment in the ice plants due to lack of vacancy, he nonetheless
allowed him to stay in the premises of the ice plant for free and to collect fees for crushing or loading ice of the customers and dealers of the ice plant.
Opulencia claims that in addition, Esita enjoyed free electricity and water, and was allowed to cultivate crops within the premises of the ice plant to augment
his income. Petitioners however admit that "following the tradition of 'pakikisama' and as a token of gratitude of the part of the complainant (Esita), he helps
in the cleaning of the ice plant premises and engine room whenever he is requested to do so, and this happens only (at) twice a month."
On 8 December 1989, Labor Arbiter Nemeriano D. Villena rendered a decision 1 finding the existence of an employer-employee relationship between
petitioners and Esita and accordingly directed them to pay him P33,518.02 representing separation pay, underpayment of wages, allowances, 13th month,
holiday, premium for holiday, and rest day pays. The claim for overtime pay was however dismissed for lack of basis, i.e., Esita failed to prove that overtime
services were actually rendered.
On 29 November 1990, the Third Division of the National Labor Relations Commission, in Case No. RAB-IV-2-2206-89, affirmed the decision of Labor Arbiter
Villena but reduced the monetary award to P28,344.60 as it was not proven that Esita worked every day including rest days and on the days before the legal
holidays. On 26 March 1991, petitioners' motion for reconsideration was denied.
In this present recourse, petitioners seek reversal of the ruling of public respondents Labor Arbiter and NLRC, raising the following arguments: that public
respondents have no jurisdiction over the instant case; that Esita's work in the repair and construction of Dr. Opulencia's residence could not have ripened
into a regular employment; that petitioners' benevolence in allowing Esita to stay inside the company's premises free of charge for humanitarian reason
deserves commendation rather than imposition of undue penalty; that Esita's name does not appear in the payrolls of the company which necessarily means
that he was not an employee; and, that Esita's statements are inconsistent and deserving of disbelief. On 13 May 1991, petitioners' prayer for a temporary
restraining order to prevent respondents from enforcing the assailed resolutions of NLRC was granted.
The instant petition lacks merit, hence, must be dismissed.

Petitioners allege that there is no employer-employee relationship between them and Esita; consequently, public respondents have no jurisdiction over the
case. Petitioners even go to the extent of asserting that "in case like the one at bar where employer-employee relationship has been questioned from the
very start, Labor Arbiters and the NLRC have no jurisdiction and should not assume jurisdiction therein."
While the Labor Arbiter and the NLRC may subsequently be found without jurisdiction over a case when it would later appear that no employer-employee
relationship existed between the contending parties, such is not the situation in this case where the employer-employee relationship between the petitioners
and Esita was clearly established. If the argument of petitioners were to be allowed, then unscrupulous employers could readily avoid the jurisdiction of the
Labor Arbiters and NLRC, and may even elude compliance with labor laws only on the bare assertion that an employer-employee relationship does not exist.
Petitioners further argue that "complainant miserably failed to present any documentary evidence to prove his employment. There was no time sheet, pay
slip and/or payroll/cash voucher to speak of. Absence of these material documents are necessary fatal to complainant's cause."
We do not agree. No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted. For, if only documentary evidence would be required to show that relationship, no scheming employer
would ever be brought before the bar of justice, as no employer would wish to come out with any trace of the illegality he has authored considering that it
should take much weightier proof to invalidate a written instrument. 2 Thus, as in this case where the employer-employee relationship between petitioners
and Esita was sufficiently proved by testimonial evidence, the absence of time sheet, time record or payroll has become inconsequential.
The petitioners' reliance on Sevilla v. Court of Appeals 3 is misplaced. In that case, we did not consider the inclusion of employer's name in the payroll as an
independently crucial evidence to prove an employer-employee relation. Moreover, for a payroll to be utilized to disprove the employment of a person, it must
contain a true and complete list of the employees. But, in this case, the testimonies of petitioners' witnesses admit that not all the names of the employees
were reflected in the payroll.
In their Consolidated Reply, petitioners assert that "employees who were absent were naturally not included in the weekly payrolls." 4 But this simply
emphasizes the obvious. Petitioners' payrolls do not contain the complete list of the employees, so that the payroll slips cannot be an accurate basis in
determining who are and are not their employees. In addition, as the Solicitor General observes: ". . . . the payroll slips submitted by petitioners do not cover
the entire period of nine years during which private respondent claims to have been employed by them, but only the periods from November 2 to November
29, 1986 and April 26 to May 30, 1987 . . . . It should be noted that petitioners repeatedly failed or refused to submit all payroll slips covering the period
during which private respondent claims to have been employed by them despite repeated directives from the Labor Arbiter . . . ." 5 In this regard, we can
aptly apply the disputable presumption that evidence willfully suppressed would be adverse if produced. 6
Petitioners further contend that the claim of Esita that he worked from seven o'clock in the morning to five o'clock in the afternoon, which is presumed to be
continuous, is hardly credible because otherwise he would not have had the time to tend his crops. 7 As against this positive assertion of Esita, it behooves
petitioners to prove the contrary. It is not enough that they raise the issue of probability, nay, improbability, of the conclusions of public respondents based on
the facts bared before them, for in case of doubt, the factual findings of the tribunal which had the opportunity to peruse the conflicting pieces of evidence
should be sustained.
The petitioners point out that even granting arguendo that Esita was indeed a mechanic, he could never be a regular employee because his presence would
be required only when there was a need for repair. We cannot sustain this argument. This circumstance cannot affect the regular status of employment of
Esita. An employee who is required to remain on call in the employer's premises or so close thereto that he cannot use the time effectively and gainfully for
his own purpose shall be considered as working while on call. 8 In sum, the determination of regular and casual employment 9 is not affected by the fact that
the employee's regular presence in the place of work is not required, the more significant consideration being that the work of the employee is usually
necessary or desirable in the business of the employer. More importantly, Esita worked for 9 years and, under the Labor Code, "any employee who has
rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to that activity in
which he is employed . . . ." 10
The petitioners would give the impression that the repair of the ice plant and the renovation of the residence of Dr. Opulencia were voluntarily extended by
Esita because "[r]espondent did it on their (sic) own." Unfortunately for petitioners, we cannot permit these baseless assertions to prevail against the factual
findings of public respondents which went through the sanitizing process of a public hearing. The same observation may be made of the alleged
inconsistencies in Esita's testimonies. Moreover, on the claim that Esita's construction work could not ripen into a regular employment in the ice plant
because the construction work was only temporary and unrelated to the ice-making business, needless to say, the one month spent by Esita in construction
is insignificant compared to his nine-year service as compressor operator in determining the status of his employment as such, and considering further that it
was Dr. Opulencia who requested Esita to work in the construction of his house.
In allowing Esita to stay in the premises of the ice plant and permitting him to cultivate crops to augment his income, there is no doubt that petitioners should
be commended; however, in view of the existence of an employer-employee relationship as found by public respondents, we cannot treat humanitarian
reasons as justification for emasculating or taking away the rights and privileges of employees granted by law. Benevolence, it is said, does not operate as a
license to circumvent labor laws. If petitioners were genuinely altruistic in extending to their employees privileges that are not even required by law, then
there is no reason why they should not be required to give their employees what they are entitled to receive. Moreover, as found by public respondents, Esita
was enjoying the same privileges granted to the other employees of petitioners, so that in thus treating Esita, he cannot be considered any less than a
legitimate employee of petitioners.
WHEREFORE, there being no grave abuse of discretion on the part of public respondents, the instant petition is DISMISSED. Accordingly, the restraining
order we issued on 13 May 1991 is LIFTED.
Francisco vs. NLRC

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the Decision and Resolution of the Court of Appeals
dated October 29, 2004 1 and October 7, 2005, 2 respectively, in CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal filed by herein
petitioner Angelina Francisco. The appellate court reversed and set aside the Decision of the National Labor Relations Commission (NLRC) dated April 15,

2003, 3 in NLRC NCR CA No. 032766-02 which affirmed with modification the decision of the Labor Arbiter dated July 31, 2002, 4 in NLRC-NCR Case No.
30-10-0-489-01, finding that private respondents were liable for constructive dismissal.
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was
assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company. 5
Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor
required to do so. She never prepared any legal document and never represented the company as its Corporate Secretary. However, on some occasions,
she was prevailed upon to sign documentation for the company. 6
In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner
was assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with
government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation. 7
For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance
and a 10% share in the profit of Kasei Corporation. 8
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a prepared resolution for her
replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting
of all employees of Kasei Corporation and announced that nothing had changed and that petitioner was still connected with Kasei Corporation as Technical
Assistant to Seiji Kamura and in charge of all BIR matters. 9
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of
September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not
receive her salary from the company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning
well. 10
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the
company. 11
Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical
consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion
without control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office any time she wanted. The company
never interfered with her work except that from time to time, the management would ask her opinion on matters relating to her profession. Petitioner did not
go through the usual procedure of selection of employees, but her services were engaged through a Board Resolution designating her as technical
consultant. The money received by petitioner from the corporation was her professional fee subject to the 10% expanded withholding tax on professionals,
and that she was not one of those reported to the BIR or SSS as one of the companys employees. 12
Petitioners designation as technical consultant depended solely upon the will of management. As such, her consultancy may be terminated any time
considering that her services were only temporary in nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for the years 1999 and 2000 duly
received by the BIR showing that petitioner was not among the employees reported to the BIR, as well as a list of payees subject to expanded withholding
tax which included petitioner. SSS records were also submitted showing that petitioners latest employer was Seiji Corporation. 13
The Labor Arbiter found that petitioner was illegally dismissed, thus:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. finding complainant an employee of respondent corporation;
2. declaring complainants dismissal as illegal;
3. ordering respondents to reinstate complainant to her former position without loss of seniority rights and jointly and severally pay complainant her money
claims in accordance with the following computation:
a. Backwages 10/2001 07/2002 275,000.00
(27,500 x 10 mos.)
b. Salary Differentials (01/2001 09/2001) 22,500.00
c. Housing Allowance (01/2001 07/2002) 57,000.00

d. Midyear Bonus 2001 27,500.00
e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei
Corp. from 1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10% Attorneys fees 87,076.50
P957,742.50
If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with additional backwages that would accrue up to actual
payment of separation pay.
SO ORDERED. 14
On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive portion of which reads:
PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:
1) Respondents are directed to pay complainant separation pay computed at one month per year of service in addition to full backwages from October 2001
to July 31, 2002;
2) The awards representing moral and exemplary damages and 10% share in profit in the respective accounts of P100,000.00 and P361,175.00 are deleted;
3) The award of 10% attorneys fees shall be based on salary differential award only;
4) The awards representing salary differentials, housing allowance, mid year bonus and 13th month pay are AFFIRMED.
SO ORDERED. 15
On appeal, the Court of Appeals reversed the NLRC decision, thus:
WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations Commissions dated April 15, 2003 is hereby
REVERSED and SET ASIDE and a new one is hereby rendered dismissing the complaint filed by private respondent against Kasei Corporation, et al. for
constructive dismissal.
SO ORDERED. 16
The appellate court denied petitioners motion for reconsideration, hence, the present recourse.
The core issues to be resolved in this case are (1) whether there was an employer-employee relationship between petitioner and private respondent Kasei
Corporation; and if in the affirmative, (2) whether petitioner was illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission on one hand, and the Court of Appeals on the other,
there is a need to reexamine the records to determine which of the propositions espoused by the contending parties is supported by substantial evidence. 17
We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation.
Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only
the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.
However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a
relationship where several positions have been held by the worker. There are instances when, aside from the employers power to control the employee with
respect to the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the
means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.
This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true
nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base

the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the
latters employment.
The control test initially found application in the case of Viaa v. Al-Lagadan and Piga, 19 and lately in Leonardo v. Court of Appeals, 20 where we held that
there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but
also the manner and means used to achieve that end.
In Sevilla v. Court of Appeals, 21 we observed the need to consider the existing economic conditions prevailing between the parties, in addition to the
standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, 22 such as: (1)
the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and
facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the
worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. 23
The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of
business. 24 In the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor
Standards Act is dependency. 25By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor
Code ought to be the economic dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision
of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer,
Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to
the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other
licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the
company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as
well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. 26 When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS
specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS
evinces the existence of an employer-employee relationship between petitioner and respondent corporation. 27
It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business.
In Domasig v. National Labor Relations Commission, 28 we held that in a business establishment, an identification card is provided not only as a security
measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners
salaries for the months stated therein, these matters constitute substantial evidence adequate to support a conclusion that petitioner was an employee of
private respondent.
We likewise ruled in Flores v. Nuestro 29 that a corporation who registers its workers with the SSS is proof that the latter were the formers employees. The
coverage of Social Security Law is predicated on the existence of an employer-employee relationship.
Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner never acted as Corporate Secretary and that her
designation as such was only for convenience. The actual nature of petitioners job was as Kamuras direct assistant with the duty of acting as Liaison Officer
in representing the company to secure construction permits, license to operate and other requirements imposed by government agencies. Petitioner was
never entrusted with corporate documents of the company, nor required to attend the meeting of the corporation. She was never privy to the preparation of
any document for the corporation, although once in a while she was required to sign prepared documentation for the company. 30
The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has been allegedly withdrawn by Kamura himself from
the records of the case. 31 Regardless of this fact, we are convinced that the allegations in the first affidavit are sufficient to establish that petitioner is an
employee of Kasei Corporation.
Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally look with favor on any retraction or recanted testimony,
for it could have been secured by considerations other than to tell the truth and would make solemn trials a mockery and place the investigation of the truth
at the mercy of unscrupulous witnesses. 32 A recantation does not necessarily cancel an earlier declaration, but like any other testimony the same is subject
to the test of credibility and should be received with caution. 33
Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by
the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job
function involved accounting and tax services rendered to respondent corporation on a regular basis over an indefinite period of engagement. Respondent
corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, respondent corporation had the power
to control petitioner with the means and methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an
illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust and
confidence, and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement. 34

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in
cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution
in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee. 35 In Globe Telecom, Inc. v. FlorendoFlores, 36 we ruled that where an employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which creates
an adverse working environment rendering it impossible for such employee to continue working for her employer. Hence, her severance from the company
was not of her own making and therefore amounted to an illegal termination of employment.
In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to
carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code
to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate
giving maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and
national development.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated October 29, 2004 and October 7, 2005, respectively, in
CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE. The Decision of the National Labor Relations Commission dated April 15, 2003 in NLRC NCR CA
No. 032766-02, isREINSTATED. The case is REMANDED to the Labor Arbiter for the recomputation of petitioner Angelina Franciscos full backwages from
the time she was illegally terminated until the date of finality of this decision, and separation pay representing one-half month pay for every year of service,
where a fraction of at least six months shall be considered as one whole year.
Lopez vs. Bodega City

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the July 18, 2002 Decision1 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 oncertiorari of CA decisions,7 there are wellrecognized 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 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. 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:
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.
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 affidavit25 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 areAFFIRMED. Costs against petitioner.
AFP Mutual Benefit Association vs. NLRC

The determination of the proper forum is crucial because the filing of the petition or complaint in the wrong court or tribunal is fatal, even for a patently
meritorious claim. More specifically, labor arbiters and the National Labor Relations Commission have no jurisdiction to entertain and rule on money claims
where no employer-employee relations is involved. Thus, any such award rendered without jurisdiction is a nullity.
This petition for certiorari under Rule 65, Rules of Court seeks to annul the Resolution [1] of the National Labor Relations Commission, promulgated
September 27, 1991, in NLRC-NCR Case No. 00-02-01196-90, entitled "Eutiquio Bustamante vs. AFP Mutual Benefit Association, Inc.," affirming the
decision of the labor arbiter which ordered payment of the amount of P319,796.00 as insurance commissions to private respondent.
The Antecedent Facts
The facts are simple. Private respondent Eutiquio Bustamante had been an insurance underwriter of petitioner AFP Mutual Benefit Association, Inc. since
1975. The Sales Agent's Agreement between them provided:[2]
"B.
Duties and Obligations:
1.
During the lifetime of this Agreement, the SALES AGENT (private respondent) shall solicit exclusively for AFPMBAI (petitioner), and shall be bound by the latter's
policies, memo circulars, rules and regulations which it may from time to time, revise, modify or cancel to serve its business interests.

2.
The SALES AGENT shall confine his business activities for AFPMBAI while inside any military camp, installation or residence of military personnel. He is free to
solicit in the area for which he/she is licensed and as authorized, provided however, that AFPMBAI may from time to time, assign him a specific area of responsibility and a
production quota on a case to case basis.
xxx
C.
xxx
xxx
Commission
1.
The SALES AGENT shall be entitled to the commission due for all premiums actually due and received by AFPMBAI out of life insurance policies solicited and
obtained by the SALES AGENT at the rates set forth in the applicant's commission schedules hereto attached.
xxx
xxx
xxx
D.
General Provisions
1.
There shall be no employer-employee relationship between the parties, the SALES AGENT being hereby deemed an independent contractor."
As compensation, he received commissions based on the following percentages of the premiums paid:[3]
"30% of premium paid within the first year;
10% of premium paid with the second year;
5% of the premium paid during the third year;
3% of the premium paid during the fourth year; and
1% of the premium paid during the fifth year up-to the tenth year.
On July 5, 1989, petitioner dismissed private respondent for misrepresentation and for simultaneously selling insurance for another life insurance company in
violation of said agreement.
At the time of his dismissal, private respondent was entitled to accrued commissions equivalent to twenty four (24) months per the Sales Agent Agreement
and as stated in the account summary dated July 5, 1989, approved by Retired Brig. Gen. Rosalino Alquiza, president of petitioner-company. Said summary
showed that private respondent had a total commission receivable of P438,835.00, of which onlyP78,039.89 had been paid to him.
Private respondent wrote petitioner seeking the release of his commissions for said 24 months. Petitioner, through Marketing Manager Juan Concepcion,
replied that he was entitled to only P75,000.00 toP100,000.00. Hence, believing Concepcion's computations, private respondent signed a quitclaim in favor
of petitioner.
Sometime in October 1989, private respondent was informed that his check was ready for release. In collecting his check, he discovered from a document
(account summary) attached to said check that his total commissions for the 24 months actually amounted to P354,796.09. Said document stated:[4]
"6.
The total receivable for Mr. Bustamante out of the renewals and old business generated since 1983 grosses P438,835.00 less his outstanding obligation in the amount
of P78,039.89 as of June 30, 1989, total expected commission would amount to P354,796.09. From that figure at a 15% compromise settlement this would
mean P53,219.41 due him to settle his claim."
Private respondent, however, was paid only the amount of P35,000.00.
On November 23, 1989, private respondent filed a complaint with the Office of the Insurance Commissioner praying for the payment of the correct amount of
his commission. Atty. German C. Alejandria, Chief of the Public Assistance and Information Division, Office of the Insurance Commissioner, advised private
respondent that it was the Department of Labor and Employment that had jurisdiction over his complaint.
On February 26, 1990, private respondent filed his complaint with the Department of Labor claiming: (1) commission for 2 years from termination of
employment equivalent to 30% of premiums remitted during employment; (2) P354,796.00 as commission earned from renewals and old business generated
since 1983; (3) P100,000.00 as moral damages; and (4) P100,000.00 as exemplary damages.
After submission of position papers, Labor Arbiter Jose G. de Vera rendered his decision, dated August 24, 1990, the dispositive portion of which reads: [5]
"WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered declaring the dismissal of the complainant as just and valid, and consequently,
his claim for separation pay is denied. On his money claim, the respondent company is hereby ordered to pay complainant the sum of P319,796.00 plus attorney's fees in the
amount of P31,976.60.
All other claims of the complainant are dismissed for want of merit."

The labor arbiter relied on the Sales Agent's Agreement proviso that petitioner could assign private respondent a specific area of responsibility and a
production quota, and read it as signaling the existence of employer-employee relationship between petitioner and private respondent.
On appeal, the Second Division [6] of the respondent Commission affirmed the decision of the Labor Arbiter. In the assailed Resolution, respondent
Commission found no reason to disturb said ruling of the labor arbiter and ruled:[7]
"WHEREFORE, in view of the foregoing considerations, the subject appeal should be as it is hereby, denied and the decision appealed from affirmed.
SO ORDERED."
Hence, this petition.
The Issue
Petitioner contends that respondent Commission committed grave abuse of discretion in ruling that the labor arbiter had jurisdiction over this case. At the
heart of the controversy is the issue of whether there existed an employer-employee relationship between petitioner and private respondent.
Petitioner argues that, despite provisions B(1) and (2) of the Sales Agent's Agreement, there is no employer-employee relationship between private
respondent and itself. Hence, respondent commission gravely abused its discretion when it held that the labor arbiter had jurisdiction over the case.
The Court's Ruling
The petition is meritorious.
First Issue: Not All That Glitters Is Control
Well-settled 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.[8] The
determinative factor in such finality is the presence of substantial evidence to support said finding, otherwise, such factual findings cannot bind this Court.
Respondent Commission concurred with the labor arbiter's findings that: [9]
"x x x The complainant's job as sales insurance agent is usually necessary and desirable in the usual business of the respondent company. Under the Sales Agents
Agreement, the complainant was required to solicit exclusively for the respondent company, 'and he was bound by the company policies, memo circulars, rules and
regulations which were issued from time to time. By such requirement to follow strictly management policies, orders, circulars, rules and regulations, it only shows that the
respondent had control or reserved the right to control the complainant's work as solicitor. Complainant was not an independent contractor as he did not carry on an
independent business other than that of the company's x x x."
To this, respondent Commission added that the Sales Agent's Agreement specifically provided that petitioner may assign private respondent a specific area
of responsibility and a production quota. From there, it concluded that apparently there is that exercise of control by the employer which is the most
important element in determining employer-employee relationship. [10]
We hold, however, that respondent Commission misappreciated the facts of the case. Time and again, the Court has applied the "four-fold" test in
determining the existence of employer-employee relationship. This test considers the following elements: (1) the power to hire; (2) the payment of wages;
(3) the power to dismiss; and (4) the power to control, the last being the most important element. [11]
The difficulty lies in correctly assessing if certain factors or elements properly indicate the presence of control. Anent the issue of exclusivity in the case at
bar, the fact that private respondent was required to solicit business exclusively for petitioner could hardly be considered as control in labor
jurisprudence. Under Memo Circulars No. 2-81[12] and 2-85, dated December 17, 1981 and August 7, 1985, respectively, issued by the Insurance
Commissioner, insurance agents are barred from serving more than one insurance company, in order to protect the public and to enable insurance
companies to exercise exclusive supervision over their agents in their solicitation work. Thus, the exclusivity restriction clearly springs from a regulation
issued by the Insurance Commission, and not from an intention by petitioner to establish control over the method and manner by which private respondent
shall accomplish his work. This feature is not meant to change the nature of the relationship between the parties, nor does it necessarily imbue such
relationship with the quality of control envisioned by the law.
So too, the fact that private respondent was bound by company policies, memo/circulars, rules and regulations issued from time to time is also not indicative
of control. In its Reply to Complainant's Position Paper,[13] petitioner alleges that the policies, memo/circulars, and rules and regulations referred to in
provision B(1) of the Sales Agent's Agreement are only those pertaining to payment of agents' accountabilities, availment by sales agents of cash advances
for sorties, circulars on incentives and awards to be given based on production, and other matters concerning the selling of insurance, in accordance with the
rules promulgated by the Insurance Commission. According to the petitioner, insurance solicitors are never affected or covered by the rules and regulations
concerning employee conduct and penalties for violations thereof, work standards, performance appraisals, merit increases, promotions,
absenteeism/attendance, leaves of absence, management-union matters, employee benefits and the like. Since private respondent failed to rebut these
allegations, the same are deemed admitted, or at least proven, thereby leaving nothing to support the respondent Commission's conclusion that the
foregoing elements signified an employment relationship between the parties.
In regard to the territorial assignments given to sales agents, this too cannot be held as indicative of the exercise of control over an employee. First of all,
the place of work in the business of soliciting insurance does not figure prominently in the equation. And more significantly, private respondent failed to rebut

petitioner's allegation that it had never issued him any territorial assignment at all. Obviously, this Court cannot draw the same inference from this feature as
did the respondent Commission.
To restate, the significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and
the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control. The presence of
such power of control is indicative of an employment relationship, while absence thereof is indicative of independent contractorship. In other words, the test
to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according
to his own methods and without being subject to the control of the employer except only as to the result of the work. [14] Such is exactly the nature of the
relationship between petitioner and private respondent.
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. The distinction acquires
particular relevance in the case of an enterprise affected with public interest, as is the business of insurance, and is on that account subject to regulation by the State with
respect, not only to the relations between insurer and insured but also to the internal affairs of the insurance company. Rules and regulations governing the conduct of the
business are provided for in the Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a
set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. xxxx None of these really invades
the agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an
employer-employee relationship between him and the company." [15]
Private respondent's contention that he was petitioner's employee is belied by the fact that he was free to sell insurance at any time as he was not subject to
definite hours or conditions of work and in turn was compensated according to the result of his efforts. By the nature of the business of soliciting insurance,
agents are normally left free to devise ways and means of persuading people to take out insurance. There is no prohibition, as contended by petitioner, for
private respondent to work for as long as he does not violate the Insurance Code. As petitioner explains:
"(Private respondent) was free to solicit life insurance anywhere he wanted and he had free and unfettered time to pursue his business. He did not have to punch in and
punch out the bundy clock as he was not required to report to the (petitioner's) office regularly. He was not covered by any employee policies or regulations and not subject
to the disciplinary action of management on the basis of the Employee Code of Conduct. He could go out and sell insurance at his own chosen time. He was entirely left to
his own choices of areas or territories, with no definite, much less supervised, time schedule.
(Private respondent) had complete control over his occupation and (petitioner) did not exercise any right of Control and Supervision over his performance except as to the
payment of commission the amount of which entirely depends on the sole efforts of (private respondent). He was free to engage in other occupation or practice other
profession for as long as he did not commit any violation of the ethical standards prescribed in the Sales Agent's Agreement." [16]
Although petitioner could have, theoretically, disapproved any of private respondent's transactions, what could be disapproved was only the result of the
work, and not the means by which it was accomplished.
The "control" which the above factors indicate did not sum up to the power to control private respondent's conduct in and mode of soliciting insurance. On
the contrary, they clearly indicate that the juridical element of control had been absent in this situation. Thus, the Court is constrained to rule that no
employment relationship had ever existed between the parties.
Second Issue: Jurisdiction of Respondent Commission & Labor Arbiter
Under the contract invoked, private respondent had never been petitioner's employee, but only its commission agent. As an independent contractor, his
claim for unpaid commission should have been litigated in an ordinary civil action.[17]
The jurisdiction of labor arbiters and respondent Commission is set forth in Article 217 of the Labor Code. [18] The unifying element running through
paragraphs (1) - (6) of said provision is the consistent reference to cases or disputes arising out of or in connection with an employer-employee
relationship. Prior to its amendment by Batas Pambansa Blg. 227 on June 1, 1982, this point was clear as the article included "all other cases arising from
employer-employee relation unless expressly excluded by this Code." [19] Without this critical element of employment relationship, the labor arbiter and
respondent Commission can never acquire jurisdiction over a dispute. As in the case at bar. It was serious error on the part of the labor arbiter to have
assumed jurisdiction and adjudicated the claim. Likewise, the respondent Commission's affirmance thereof.
Such lack of jurisdiction of a court or tribunal may be raised at any stage of the proceedings, even on appeal. The doctrine of estoppel cannot be properly
invoked by respondent Commission to cure this fatal defect as it cannot confer jurisdiction upon a tribunal that to begin with, was bereft of jurisdiction over a
cause of action.[20] Moreover, in the proceedings below, petitioner consistently challenged the jurisdiction of the labor arbiter [21] and respondent Commission.
[22]
It remains a basic fact in law that the choice of the proper forum is crucial as the decision of a court or tribunal without jurisdiction is a total nullity. [23] A void
judgment for want of jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of any obligation. All acts performed pursuant to it
and all claims emanating from it have no legal effect. Hence, it can never become final. "x x x (I)t may be said to be a lawless thing which can be treated as
an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head."[24]
The way things stand, it becomes unnecessary to consider the merits of private respondent's claim for unpaid commission. Be that as it may, this ruling is
without prejudice to private respondent's right to file a suit for collection of unpaid commissions against petitioner with the proper forum and within the proper
period.

WHEREFORE, the petition is hereby GRANTED, and the assailed Resolution is hereby SET ASIDE.
Insular Life Assurance Co. vs. NLRC

On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered into a contract 1 by which:
1. Basiao was "authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and
regulations" of the Company;
2. he would receive "compensation, in the form of commissions ... as provided in the Schedule of Commissions" of the contract to "constitute a part of the
consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and those which may from time to time be promulgated by
it, ..." were made part of said contract.
The contract also contained, among others, provisions governing the relations of the parties, the duties of the Agent, the acts prohibited to him, and the
modes of termination of the agreement, viz.:
RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. Nothing herein
contained shall therefore be construed to create the relationship of employee and employer between the Agent and the Company. However, the Agent shall
observe and conform to all rules and regulations which the Company may from time to time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly or indirectly, rebates in any form, or from making any
misrepresentation or over-selling, and, in general, from doing or committing acts prohibited in the Agent's Manual and in circulars of the Office of the
Insurance Commissioner.
TERMINATION. The Company may terminate the contract at will, without any previous notice to the Agent, for or on account of ... (explicitly specified
causes). ...
Either party may terminate this contract by giving to the other notice in writing to that effect. It shall become ipso facto cancelled if the Insurance
Commissioner should revoke a Certificate of Authority previously issued or should the Agent fail to renew his existing Certificate of Authority upon its
expiration. The Agent shall not have any right to any commission on renewal of premiums that may be paid after the termination of this agreement for any
cause whatsoever, except when the termination is due to disability or death in line of service. As to commission corresponding to any balance of the first
year's premiums remaining unpaid at the termination of this agreement, the Agent shall be entitled to it if the balance of the first year premium is paid, less
actual cost of collection, unless the termination is due to a violation of this contract, involving criminal liability or breach of trust.
ASSIGNMENT. No Assignment of the Agency herein created or of commissions or other compensations shall be valid without the prior consent in writing of
the Company. ...
Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and to implement his end of it Basiao
organized an agency or office to which he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments under the first contract with
the Company. 2
In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil action
and this, he was later to claim, prompted the latter to terminate also his engagement under the first contract and to stop payment of his commissions starting
April 1, 1980. 3
Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its president. Without contesting the termination of the first
contract, the complaint sought to recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed the Ministry's jurisdiction
over Basiao's claim, asserting that he was not the Company's employee, but an independent contractor and that the Company had no obligation to him for
unpaid commissions under the terms and conditions of his contract. 5
The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting agreement had established an employer-employee
relationship between him and the Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said official's decision directed
payment of his unpaid commissions "... equivalent to the balance of the first year's premium remaining unpaid, at the time of his termination, of all the
insurance policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees. 6
This decision was, on appeal by the Company, affirmed by the National Labor Relations Commission. 7 Hence, the present petition for certiorari and
prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the Company's employee by virtue of the contract invoked by him,
thereby placing his claim for unpaid commissions within the original and exclusive jurisdiction of the Labor Arbiter under the provisions of Section 217 of the
Labor Code, 8 or, contrarily, as the Company would have it, that under said contract Basiao's status was that of an independent contractor whose claim was
thus cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an ordinary civil action.
The Company's thesis, that no employer-employee relation in the legal and generally accepted sense existed between it and Basiao, is drawn from the
terms of the contract they had entered into, which, either expressly or by necessary implication, made Basiao the master of his own time and selling
methods, left to his judgment the time, place and means of soliciting insurance, set no accomplishment quotas and compensated him on the basis of results

obtained. He was not bound to observe any schedule of working hours or report to any regular station; he could seek and work on his prospects anywhere
and at anytime he chose to, and was free to adopt the selling methods he deemed most effective.
Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company, the respondents contend that they do
not constitute the decisive determinant of the nature of his engagement, invoking precedents to the effect that the critical feature distinguishing the status of
an employee from that of an independent contractor is control, that is, whether or not the party who engages the services of another has the power to control
the latter's conduct in rendering such services. Pursuing the argument, the respondents draw attention to the provisions of Basiao's contract obliging him to
"... observe and conform to all rules and regulations which the Company may from time to time prescribe ...," as well as to the fact that the Company
prescribed the qualifications of applicants for insurance, processed their applications and determined the amounts of insurance cover to be issued as
indicative of the control, which made Basiao, in legal contemplation, an employee of the Company. 9
It is true that the "control test" expressed in the following pronouncement of the Court in the 1956 case of Viana vs. Alejo Al-Lagadan 10
... In determining the existence of employer-employee relationship, the following elements are generally considered, namely: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees' conduct although the
latter is the most important element (35 Am. Jur. 445). ...
has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without question a valid test of the character of a contract or agreement to
render service. 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 untrammelled freedom to the party hired and eschews any intervention whatsoever in his
performance of the engagement.
means used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the business of
insurance, and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but also to the internal
affairs of the insurance company. 12 Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the
Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling
its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribe the qualifications of
persons who may be insured, subject insurance applications to processing and approval by the Company, and also reserve to the Company the
determination of the premiums to be paid and the schedules of payment. None of these really invades the agent's contractual prerogative to adopt his own
selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee relationship
between him and the company.
There is no dearth of authority holding persons similarly placed as respondent Basiao to be independent contractors, instead of employees of the parties for
whom they worked. In Mafinco Trading Corporation vs. Ople,13 the Court ruled that a person engaged to sell soft drinks for another, using a truck supplied by
the latter, but with the right to employ his own workers, sell according to his own methods subject only to prearranged routes, observing no working hours
fixed by the other party and obliged to secure his own licenses and defray his own selling expenses, all in consideration of a peddler's discount given by the
other party for at least 250 cases of soft drinks sold daily, was not an employee but an independent contractor.
In Investment Planning Corporation of the Philippines us. Social Security System 14 a case almost on all fours with the present one, this Court held that there
was no employer-employee relationship between a commission agent and an investment company, but that the former was an independent contractor where
said agent and others similarly placed were: (a) paid compensation in the form of commissions based on percentages of their sales, any balance of
commissions earned being payable to their legal representatives in the event of death or registration; (b) required to put up performance bonds; (c) subject to
a set of rules and regulations governing the performance of their duties under the agreement with the company and termination of their services for certain
causes; (d) not required to report for work at any time, nor to devote their time exclusively to working for the company nor to submit a record of their
activities, and who, finally, shouldered their own selling and transportation expenses.
More recently, in Sara vs. NLRC, 15 it was held that one who had been engaged by a rice miller to buy and sell rice and palay without compensation except a
certain percentage of what he was able to buy or sell, did work at his own pleasure without any supervision or control on the part of his principal and relied
on his own resources in the performance of his work, was a plain commission agent, an independent contractor and not an employee.
The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations
as the latter might from time to time prescribe. No showing has been made that any such rules or regulations were in fact promulgated, much less that any
rules existed or were issued which effectively controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent
such showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "... free
to exercise his own judgment as to the time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-five years. Whatever this is meant to
imply, the obvious reply would be that what is germane here is Basiao's status under the contract of July 2, 1968, not the length of his relationship with the
Company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent
contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and
adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it
unnecessary and premature to consider Basiao's claim for commissions on its merits.

WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside, and that complaint of private respondent Melecio T.
Basiao in RAB Case No. VI-0010-83 is dismissed. No pronouncement as to costs.
Tongko vs. Manufacturers Life Insurance Company Inc.

We resolve petitioner Gregorio V. Tongkos bid, through his Motion for Reconsideration,[1] to set aside our June 29, 2010 Resolution that reversed our Decision of
November 7, 2008.[2] With the reversal, the assailed June 29, 2010 Resolution effectively affirmed the Court of Appeals ruling [3] in CA-G.R. SP No. 88253 that the
petitioner was an insurance agent, not the employee, of the respondent The Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife).
In his Motion for Reconsideration, petitioner reiterates the arguments he had belabored in his petition and various other submissions. He argues that for 19 years, he
performed administrative functions and exercised supervisory authority over employees and agents of Manulife, in addition to his insurance agent functions. [4] In these 19
years, he was designated as a Unit Manager, a Branch Manager and a Regional Sales Manager, and now posits that he was not only an insurance agent for Manulife but was
its employee as well.
We find no basis or any error to merit the reconsideration of our June 29, 2010 Resolution.
A.
Labor Law Control = Employment Relationship
Control over the performance of the task of one providing service both with respect to the means and manner, and the results of the service is the primary element in
determining whether an employment relationship exists. We resolve the petitioners Motion against his favor since he failed to show that the control Manulife exercised
over him was the control required to exist in an employer-employee relationship; Manulifes control fell short of this norm and carried only the characteristic of the
relationship between an insurance company and its agents, as defined by the Insurance Code and by the law of agency under the Civil Code.
The petitioner asserts in his Motion that Manulifes labor law control over him was demonstrated (1) when it set the objectives and sales targets regarding production,
recruitment and training programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial Code of Conduct to govern his activities. [5] We
find no merit in these contentions.
In our June 29, 2010 Resolution, we noted that there are built-in elements of control specific to an insurance agency, which do not amount to the elements of control that
characterize an employment relationship governed by the Labor Code. The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the
companys insurance products, his collection activities and his delivery of the insurance contract or policy. [6] In addition, the Civil Code defines an agent as a person who
binds himself to do something in behalf of another, with the consent or authority of the latter. [7] Article 1887 of the Civil Code also provides that in the execution of the
agency, the agent shall act in accordance with the instructions of the principal.
All these, read without any clear understanding of fine legal distinctions, appear to speak of control by the insurance company over its agents. They are, however, controls
aimed only at specific results in undertaking an insurance agency, and are, in fact, parameters set by law in defining an insurance agency and the attendant duties and
responsibilities an insurance agent must observe and undertake. They do not reach the level of control into the means and manner of doing an assigned task that invariably
characterizes an employment relationship as defined by labor law. From this perspective, the petitioners contentions cannot prevail.
To reiterate, guidelines indicative of labor law control do not merely relate to the mutually desirable result intended by the contractual relationship; they must have the
nature of dictating the means and methods to be employed in attaining the result. [8] Tested by this norm, Manulifes instructions regarding the objectives and sales targets,
in connection with the training and engagement of other agents, are among the directives that the principal may impose on the agent to achieve the assigned tasks. They are
targeted results that Manulife wishes to attain through its agents. Manulifes codes of conduct, likewise, do not necessarily intrude into the insurance agents means and
manner of conducting their sales. Codes of conduct are norms or standards of behavior rather than employer directives into how specific tasks are to be done. These codes,
as well as insurance industry rules and regulations, are not per se indicative of labor law control under our jurisprudence.[9]
The duties[10] that the petitioner enumerated in his Motion are not supported by evidence and, therefore, deserve scant consideration. Even assuming their existence,
however, they mostly pertain to the duties of an insurance agent such as remitting insurance fees to Manulife, delivering policies to the insured, and after-sale services. For
agents leading other agents, these include the task of overseeing other insurance agents, the recruitment of other insurance agents engaged by Manulife as principal, and
ensuring that these other agents comply with the paperwork necessary in selling insurance. That Manulife exercises the power to assign and remove agents under the
petitioners supervision is in keeping with its role as a principal in an agency relationship; they are Manulife agents in the same manner that the petitioner had all along been
a Manulife agent.
The petitioner also questions Manulifes act of investing him with different titles and positions in the course of their relationship, given the respondents position that he
simply functioned as an insurance agent.[11] He also considers it an unjust and inequitable situation that he would be unrewarded for the years he spent as a unit manager, a
branch manager, and a regional sales manager.[12]
Based on the evidence on record, the petitioners occupation was to sell Manulifes insurance policies and products from 1977 until the termination of the Career Agents
Agreement (Agreement). The evidence also shows that through the years, Manulife permitted him to exercise guiding authority over other agents who operate under their
own agency agreements with Manulife and whose commissions he shared. [13] Under this scheme an arrangement that pervades the insurance industry petitioner in
effect became a lead agent and his own commissions increased as they included his share in the commissions of the other agents; [14] he also received greater
reimbursements for expenses and was allowed to use Manulifes facilities. His designation also changed from unit manager to branch manager and then to regional sales
manager, to reflect the increase in the number of agents he recruited and guided, as well as the increase in the area where these agents operated.
As our assailed Resolution concluded and as we now similarly conclude, these arrangements, and the titles and positions the petitioner was invested with, did not change his
status from the insurance agent that he had always been (as evidenced by the Agreement that governed his relationship with Manulife from the start to its disagreeable
end). The petitioner simply progressed from his individual agency to being a lead agent who could use other agents in selling insurance and share in the earnings of these
other agents.
In sum, we find absolutely no evidence of labor law control, as extensively discussed in our Resolution of June 29, 2010, granting Manulifes motion for
reconsideration. The Dissent, unfortunately, misses this point.
B.
No Resulting Inequity
We also do not agree that our assailed Resolution has the effect of fostering an inequitable or unjust situation. The records show that the petitioner was very amply paid for
his services as an insurance agent, who also shared in the commissions of the other agents under his guidance. In 1997, his income was P2,822,620; in 1998, P4,805,166.34;
in 1999, P6,797,814.05; in 2001,P6,214,737.11; and in 2002, P8,003,180.38. All these he earned as an insurance agent, as he failed to ever prove that he earned these sums
as an employee. In technical terms, he could not have earned all these as an employee because he failed to provide the substantial evidence required in administrative cases
to support the finding that he was a Manulife employee. No inequity results under this legal situation; what would be unjust is an award of backwages and separation pay
amounts that are not due him because he was never an employee.
The Dissents discussion on this aspect of the case begins with the wide disparity in the status of the parties that Manulife is a big Canadian insurance company while
Tongko is but a single agent of Manulife. The Dissent then went on to say that [i]f is but just, it is but right, that the Court interprets the relationship between Tongko and
Manulife as one of employment under labor laws and to uphold his constitutionally protected right, as an employee, to security of tenure and entitlement to monetary award

should such right be infringed. [15] We cannot simply invoke the magical formula by creating an employment relationship even when there is none because of the
unavoidable and inherently weak position of an individual over a giant corporation.
The Dissent likewise alluded to an ambiguity in the true relationship of the parties after Tongkos successive appointments. We already pointed out that the legal
significance of these appointments had not been sufficiently explained and that it did not help that Tongko never bothered to present evidence on this point. The Dissent
recognized this but tried to excuse Tongko from this failure in the subsequent discussion, as follows:
[o]ther evidence was adduced to show such duties and responsibilities. For one, in his letter of November 6, 2001, respondent De Dios addressed petitioner as sales
manager. And as I wrote in my Dissent to the June 29, 2010 Resolution, it is difficult to imagine that Manulife did not issue promotional appointments to petitioner as unit
manager, branch manager, and, eventually, regional sales manager. Sound management practice simply requires an appointment for any upward personnel movement,
particularly when additional functions and the corresponding increase in compensation are involved. Then, too, the adverted affidavits of the managers of Manulife as to the
duties and responsibilities of a unit manager, such as petitioner, point to the conclusion that these managers were employees of Manulife, applying the four-fold test. [16]
This Court (and all adjudicators for that matter) cannot and should not fill in the evidentiary gaps in a partys case that the party failed to support; we cannot and should
not take the cudgels for any party. Tongko failed to support his cause and we should simply view him and his case as they are; our duty is to sit as a judge in the case that
he and the respondent presented.
To support its arguments on equity, the Dissent uses the Constitution and the Civil Code, using provisions and principles that are all motherhood statements. The mandate of
the Court, of course, is to decide cases based on the facts and the law, and not to base its conclusions on fundamental precepts that are far removed from the particular
case presented before it. When there is no room for their application, of capacity of principles, reliance on the application of these fundamental principles is misplaced.
C. Earnings were Commissions
That his earnings were agents commissions arising from his work as an insurance agent is a matter that the petitioner cannot deny, as these are the declarations and
representations he stated in his income tax returns through the years. It would be doubly unjust, particularly to the government, if he would be allowed at this late point to
turn around and successfully claim that he was merely an employee after he declared himself, through the years, as an independent self-employed insurance agent with the
privilege of deducting business expenses. This aspect of the case alone considered together with the probative value of income tax declarations and returns filed prior to
the present controversy should be enough to clinch the present case against the petitioners favor.
D. The Dissents Solution:
Unwieldy and Legally Infirm
The Dissent proposes that Tongko should be considered as part employee (as manager) and part insurance agent; hence, the original decision should be modified to pertain
only to the termination of his employment as a manager and not as an insurance agent. Accordingly, the backwages component of the original award to him should not
include the insurance sales commissions. This solution, according to the line taken by the Dissent then, was justified on the view that this was made on a case-to-case basis.
Decisions of the Supreme Court, as the Civil Code provides, form part of the law of the land. When the Court states that the determination of the existence of an
employment relationship should be on a case-to-case basis, this does not mean that there will be as many laws on the issue as there are cases. In the context of this case, the
four-fold test is the established standard for determining employer-employee relationship and the existence of these elements, most notably control, is the basis upon which
a conclusion on the absence of employment relationship was anchored. This simply means that a conclusion on whether employment relationship exists in a particular case
largely depends on the facts and, in no small measure, on the parties evidence vis--vis the clearly defined jurisprudential standards. Given that the parties
control what and how the facts will be established in a particular case and/or how a particular suit is to be litigated, deciding the issues on a case-to-case basis becomes an
imperative.
Another legal reality, a more important one, is that the duty of a court is to say what the law is. [17] This is the same duty of the Supreme Court that underlies the stare
decisis principle. This is how the public, in general and the insurance industry in particular, views the role of this Court and courts in general in deciding cases. The lower
courts and the bar, most specially, look up to the rulings of this Court for guidance. Unless extremely unavoidable, the Court must, as a matter of sound judicial policy,
resist the temptation of branding its ruling pro hac vice.
The compromise solution of declaring Tongko both an employee and an agent is legally unrealistic, unwieldy and is, in fact, legally infirm, as it goes against the above basic
principles of judicial operation. Likewise, it does not and cannot realistically solve the problem/issue in this case; it actually leaves more questions than answers.
As already pointed out, there is no legal basis (be it statutory or jurisprudential) for the part-employee/part-insurance agent status under an essentially principal-agent
contractual relation which the Dissent proposes to accord to Tongko. If the Dissent intends to establish one, this is highly objectionable for this would amount to judicial
legislation. A legal relationship, be it one of employment or one based on a contract other than employment, exists as a matter of law pursuant to the facts, incidents and
legal consequences of the relationship; it cannot exist devoid of these legally defined underlying facts and legal consequences unless the law itself creates the relationship
an act that is beyond the authority of this Court to do.
Additionally, the Dissents conclusion completely ignores an unavoidable legal reality that the parties are bound by a contract of agency that clearly subsists
notwithstanding the successive designation of Tongko as a unit manager, a branch manager and a regional sales manager. (As already explained in our Resolution granting
Manulifes motion for reconsideration, no evidence on record exists to provide the Court with clues as to the precise impact of all these designations on the contractual
agency relationship.) The Dissent, it must be pointed out, concludes that Tongkos employment as manager was illegally terminated; thus, he should be accordingly afforded
relief therefor. But, can Tongko be given the remedies incidental to his dismissal as manager separately from his status as an insurance agent? In other words, since the
respondents terminated all relationships with Tongko through the termination letter, can we simply rule that his role as a manager was illegally terminated without touching
on the consequences of this ruling on his status as an insurance agent? Expressed in these terms, the inseparability of his contract as agent with any other relationship that
springs therefrom can thus be seen as an insurmountable legal obstacle.
The Dissents compromise approach would also sanction split jurisdiction. The labor tribunals shall have jurisdiction over Tongkos employment as manager while another
entity shall decide the issues/cases arising from the agency relationship. If the managerial employment is anchored on the agency, how will the labor tribunals decide an
issue that is inextricably linked with a relationship that is outside the loop of their jurisdiction? As already mentioned in the Resolution granting Manulifes reconsideration,
the DOMINANT relationship in this case is agency and no other.
E. The Dissents Cited Cases
The Dissent cites the cases of Great Pacific Life Assurance Corporation v. National Labor Relations Commission [18] and Insular Life Assurance Co., Ltd. v. National Labor
Relations Commission[19] to support the allegation that Manulife exercised control over the petitioner as an employer.
In considering these rulings, a reality that cannot but be recognized is that cases turn and are decided on the basis of their own unique facts; the ruling in one case cannot
simply be bodily lifted and applied to another, particularly when notable differences exist between the cited cases and the case under consideration; their respective facts
must be strictly examined to ensure that the ruling in one applies to another. This is particularly true in a comparison of the cited cases with the present case. Specifically,
care should be taken in reading the cited cases and applying their rulings to the present case as the cited cases all dealt with the proper legal characterization of subsequent
management contracts that superseded the original agency contract between the insurance company and the agent.

In Great Pacific Life, the Ruiz brothers were appointed to positions different from their original positions as insurance agents, whose duties were clearly defined in a
subsequent contract. Similarly, in Insular, de los Reyes, a former insurance agent, was appointed as acting unit manager based on a subsequent contract. In both cases, the
Court anchored its findings of labor control on the stipulations of these subsequent contracts.
In contrast, the present case is remarkable for the absence of evidence of any change in the nature of the petitioners employment with Manulife. As previously stated above
and in our assailed Resolution, the petitioner had always been governed by the Agreement from the start until the end of his relationship with Manulife. His agency status
never changed except to the extent of being a lead agent. Thus, the cited cases where changes in company-agent relationship expressly changed and where the subsequent
contracts were the ones passed upon by the Court cannot be totally relied upon as authoritative.
We cannot give credit as well to the petitioners claim of employment based on the affidavits executed by other Manulife agents describing their duties, because these same
affidavits only affirm their status as independent agents, not as employees. To quote these various claims:[20]
1.a. I have no fixed wages or salary since my services are compensated by way of commissions based on the computed premiums paid in full on the policies obtained
thereat;
1.b. I have no fixed working hours and employ my own method in soliciting insurance at a time and place I see fit;
1.c. I have my own assistant and messenger who handle my daily work load;
1.d. I use my own facilities, tools, materials and supplies in carrying out my business of selling insurance;
x x x x
6. I have my own staff that handles day to day operations of my office;
7. My staff are my own employees and received salaries from me;
x x x x
9. My commission and incentives are all reported to the Bureau of Internal Revenue (BIR) as income by a self-employed individual or professional with a ten (10) percent
creditable withholding tax. I also remit monthly for professionals.
The petitioner cannot also rely on the letter written by respondent Renato Vergel de Dios to prove that Manulife exercised control over him. As we already explained in the
assailed Resolution:
Even de Dios letter is not determinative of control as it indicates the least amount of intrusion into Tongkos exercise of his role as manager in guiding the sales
agents. Strictly viewed, de Dios directives are merely operational guidelines on how Tongko could align his operations with Manulifes re-directed goal of being a big
league player. The method is to expand coverage through the use of more agents. This requirement for the recruitment of more agents is not a means-and-method control
as it relates, more than anything else, and is directly relevant, to Manulifes objective of expanded business operations through the use of a bigger sales force whose
members are all on a principal-agent relationship. An important point to note here is that Tongko was not supervising regular full-time employees of Manulife engaged in
the running of the insurance business; Tongko was effectively guiding his corps of sales agents, who are bound to Manulife through the same agreement that he had with
manulife, all the while sharing in these agents commissions through his overrides. [21]
Lastly, in assailing the Agreement between him and Manulife, the petitioner cites Paguio v. National Labor Relations Commission [22] on the claim that the agreement that the
parties signed did not conclusively indicate the legal relationship between them.
The evidentiary situation in the present case, however, shows that despite the petitioners insistence that the Agreement was no longer binding between him and Manulife, no
evidence was ever adduced to show that their relationship changed so that Manulife at some point controlled the means and method of the petitioners work. In fact, his
evidence only further supports the conclusion that he remained an independent insurance agent a status he admits, subject only to the qualification that he is at the same
time an employee. Thus, we can only conclude that the Agreement governed his relations with Manulife.
Additionally, it is not lost on us that Paguio is a ruling based on a different factual setting; it involves a publishing firm and an account executive, whose repeated
engagement was considered as an indication of employment. Our ruling in the present case is specific to the insurance industry, where the law permits an insurance company
to exercise control over its agents within the limits prescribed by law, and to engage independent agents for several transactions and within an unlimited period of time
without the relationship amounting to employment. In light of these realities, the petitioners arguments on his last argument must also fail.
The dissent also erroneously cites eight other cases Social Security System v. Court of Appeals,[23] Cosmopolitan Funeral Homes, Inc. v. Maalat,[24] Algon
Engineering Construction Corporation v. National Labor Relations Commission,[25] Equitable Banking Corporation v. National Labor Relations Commission,[26] Lazaro v.
Social Security Commission,[27] Dealco Farms, Inc. v. National Labor Relations Commission,[28] South Davao Development Company, Inc. v. Gamo,[29] and Abante, Jr. v.
Lamadrid Bearing & Parts Corporation.[30] The dissent cited these cases to support its allegation that labor laws and jurisprudence should be applied in cases, to the
exclusion of other laws such as the Civil Code or the Insurance Code, even when the latter are also applicable.
In Social Security System, Cosmopolitan Funeral Homes, Dealco Farms, and South Davao Development, the issue that repeats itself is whether complainants were
employees or independent contractors; the legal relationships involved are both labor law concepts and make no reference to the Civil Code (or even the Insurance
Code). The provisions cited in the Dissent Articles 1458-1637 of the Civil Code [31] and Articles 1713-1720 of the Civil Code [32] do not even appear in the decisions
cited.
In Algon, the issue was whether the lease contract should dictate the legal relationship between the parties, when there was proof of an employer-employee relationship. In
the cited case, the lease provisions on termination were thus considered irrelevant because of a substantial evidence of an employment relationship. The cited case lacks the
complexity of the present case; Civil Code provisions on lease do not prescribe that lessees exercise control over their lessors in the way that the Insurance Code and the
Civil provide that insurance companies and principals exercised control over their agents.
The issue in Equitable, on the other hand, is whether a lawyer-client relationship or an employment relationship governs the legal relation between parties. Again, this case
is inapplicable as it does not illustrate the predominance of labor laws and jurisprudence over other laws, in general, and the Insurance Code and Civil Code, in particular. It
merely weighed the evidence in favor of an employment relationship over that of a lawyer-client relationship. Similarly in Lazaro, the Court found ample proof of control
determinative of an employer-employee relationship. Both cases are not applicable to the present case, which is attended by totally different factual considerations as the
petitioner had not offered any evidence of the companys control in the means and manner of the performance of his work.
On the other hand, we find it strange that the dissent cites Abante as a precedent, since the Court, in this case, held that an employee-employer relationship is notably absent
in this case as the complainant was a sales agent. This case better supports the majoritys position that a sales agent, who fails to show control in the concept of labor law,
cannot be considered an employee, even if the company exercised control in the concept of a sales agent. [33]
It bears stressing that our ruling in this case is not about which law has primacy over the other, but that we should be able to reconcile these laws. We are merely saying that
where the law makes it mandatory for a company to exercise control over its agents, the complainant in an illegal dismissal case cannot rely on these legally prescribed

control devices as indicators of an employer-employee relationship. As shown in our discussion, our consideration of the Insurance Code and Civil Code provisions does not
negate the application of labor laws and jurisprudence; ultimately, we dismissed the petition because of its failure to comply with the control test.
WHEREFORE, premises considered, we hereby DENY the Motion for Reconsideration WITH FINALITY for lack of merit. No further pleadings shall be entertained.
Let entry of judgment proceed in due course.
Sonza vs. ABS-CBN

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 10thand 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,
13th month pay, signing bonus and travel allowance against respondent-appellee are not based on the Labor Code but rather on the provisions of the May 1994 Agreement,
while his claims for proceeds under Stock Purchase Agreement are based on the latter. A portion of the Position Paper of complainant-appellant bears perusal:

Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bound itself to pay complainant a signing bonus consisting of shares of stockswith
FIVE HUNDRED THOUSAND PESOS (P500,000.00).
Similarly, complainant is also entitled to be paid 13th month pay based on an amount not lower than the amount he was receiving prior to effectivity of (the) Agreement.
Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel benefit amounting to at least One Hundred Fifty Thousand Pesos
(P150,000.00) per year.
Thus, it is precisely because of complainant-appellants own recognition of the fact that his contractual relations with ABS-CBN are founded on the New Civil Code, rather
than the Labor Code, that instead of merely resigning from ABS-CBN, complainant-appellant served upon the latter a notice of rescission of Agreement with the station,
per his letter dated April 1, 1996, which asserted that instead of referring to unpaid employee benefits, he is waiving and renouncing recovery of the remaining amount
stipulated in paragraph 7 of the Agreement but reserves the right to such recovery of the other benefits under said Agreement. (Annex 3 of the respondent ABS-CBNs
Motion to Dismiss dated July 10, 1996).
Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the Stock Purchase Agreement by respondent-appellee that complainantappellant 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 socalled 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, ABSCBN 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 ABSCBN.
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 StatesCourt 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-thejob. 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] ABSCBNs 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 ABSCBN was completely dissatisfied with the means and methods of SONZAs performance of his work, or even with the quality or product of his work, ABSCBN 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 ABSCBNs 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 ABSCBN 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 laboronly 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 crossexamine 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.
Orozco vs. Court of Appeals

The case before this Court raises a novel question never before decided in our jurisdiction whether a newspaper columnist is an employee of the
newspaper which publishes the column.
In this Petition for Review under Rule 45 of the Revised Rules on Civil Procedure, petitioner Wilhelmina S. Orozco assails the Decision 1 of the Court of
Appeals (CA) in CA-G.R. SP No. 50970 dated June 11, 2002 and its Resolution2 dated September 11, 2002 denying her Motion for Reconsideration. The CA
reversed and set aside the Decision3 of the National Labor Relations Commission (NLRC), which in turn had affirmed the Decision 4 of the Labor Arbiter
finding that Orozco was an employee of private respondent Philippine Daily Inquirer (PDI) and was illegally dismissed as columnist of said newspaper.
In March 1990, PDI engaged the services of petitioner to write a weekly column for its Lifestyle section. She religiously submitted her articles every week,
except for a six-month stint in New York City when she, nonetheless, sent several articles through mail. She received compensation of P250.00 later
increased to P300.00 for every column published.5
On November 7, 1992, petitioners column appeared in the PDI for the last time. Petitioner claims that her then editor, Ms. Lita T. Logarta, 6 told her that
respondent Leticia Jimenez Magsanoc, PDI Editor in Chief, wanted to stop publishing her column for no reason at all and advised petitioner to talk to
Magsanoc herself. Petitioner narrates that when she talked to Magsanoc, the latter informed her that it was PDI Chairperson Eugenia Apostol who had
asked to stop publication of her column, but that in a telephone conversation with Apostol, the latter said that Magsanoc informed her (Apostol) that the
Lifestyle section already had many columnists.7
On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to discuss how to improve said section. They agreed to cut
down the number of columnists by keeping only those whose columns were well-written, with regular feedback and following. In their judgment, petitioners
column failed to improve, continued to be superficially and poorly written, and failed to meet the high standards of the newspaper. Hence, they decided to
terminate petitioners column.8
Aggrieved by the newspapers action, petitioner filed a complaint for illegal dismissal, backwages, moral and exemplary damages, and other money claims
before the NLRC.
On October 29, 1993, Labor Arbiter Arthur Amansec rendered a Decision in favor of petitioner, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered, finding complainant to be an employee of respondent company; ordering respondent company to reinstate her
to her former or equivalent position, with backwages.

Respondent company is also ordered to pay her 13th month pay and service incentive leave pay.
Other claims are hereby dismissed for lack of merit.
SO ORDERED.9
The Labor Arbiter found that:
[R]espondent company exercised full and complete control over the means and method by which complainants work that of a regular columnist had to
be accomplished. This control might not be found in an instruction, verbal or oral, given to complainant defining the means and method she should write her
column. Rather, this control is manifested and certained (sic) in respondents admitted prerogative to reject any article submitted by complainant for
publication.
By virtue of this power, complainant was helplessly constrained to adopt her subjects and style of writing to suit the editorial taste of her editor. Otherwise, off
to the trash can went her articles.
Moreover, this control is already manifested in column title, "Feminist Reflection" allotted complainant. Under this title, complainants writing was controlled
and limited to a womans perspective on matters of feminine interests. That respondent had no control over the subject matter written by complainant is
strongly belied by this observation. Even the length of complainants articles were set by respondents.
Inevitably, respondents would have no control over when or where complainant wrote her articles as she was a columnist who could produce an article in
thirty (3) (sic) months or three (3) days, depending on her mood or the amount of research required for an article but her actions were controlled by her
obligation to produce an article a week. If complainant did not have to report for work eight (8) hours a day, six (6) days a week, it is because her task was
mainly mental. Lastly, the fact that her articles were (sic) published weekly for three (3) years show that she was respondents regular employee, not a oncein-a-blue-moon contributor who was not under any pressure or obligation to produce regular articles and who wrote at his own whim and leisure. 10
PDI appealed the Decision to the NLRC. In a Decision dated August 23, 1994, the NLRC Second Division dismissed the appeal thereby affirming the Labor
Arbiters Decision. The NLRC initially noted that PDI failed to perfect its appeal, under Article 223 of the Labor Code, due to non-filing of a cash or surety
bond. The NLRC said that the reason proffered by PDI for not filing the bond that it was difficult or impossible to determine the amount of the bond since
the Labor Arbiter did not specify the amount of the judgment award was not persuasive. It said that all PDI had to do was compute based on the amount it
was paying petitioner, counting the number of weeks from November 7, 1992 up to promulgation of the Labor Arbiters decision. 11
The NLRC also resolved the appeal on its merits. It found no error in the Labor Arbiters findings of fact and law. It sustained the Labor Arbiters reasoning
that respondent PDI exercised control over petitioners work.
PDI then filed a Petition for Review12 before this Court seeking the reversal of the NLRC Decision. However, in a Resolution 13 dated December 2, 1998, this
Court referred the case to the Court of Appeals, pursuant to our ruling in St. Martin Funeral Homes v. National Labor Relations Commission.14
The CA rendered its assailed Decision on June 11, 2002. It set aside the NLRC Decision and dismissed petitioners Complaint. It held that the NLRC
misappreciated the facts and rendered a ruling wanting in substantial evidence. The CA said:
The Court does not agree with public respondent NLRCs conclusion. First, private respondent admitted that she was and [had] never been considered by
petitioner PDI as its employee. Second, it is not disputed that private respondent had no employment contract with petitioner PDI. In fact, her engagement to
contribute articles for publication was based on a verbal agreement between her and the petitioners Lifestyle Section Editor. Moreover, it was evident that
private respondent was not required to report to the office eight (8) hours a day. Further, it is not disputed that she stayed in New York for six (6) months
without petitioners permission as to her leave of absence nor was she given any disciplinary action for the same. These undisputed facts negate private
respondents claim that she is an employee of petitioner.
Moreover, with regards (sic) to the control test, the public respondent NLRCs ruling that the guidelines given by petitioner PDI for private respondent to
follow, e.g. in terms of space allocation and length of article, is not the form of control envisioned by the guidelines set by the Supreme Court. The length of
the article is obviously limited so that all the articles to be featured in the paper can be accommodated. As to the topic of the article to be published, it is but
logical that private respondent should not write morbid topics such as death because she is contributing to the lifestyle section. Other than said given
limitations, if the same could be considered limitations, the topics of the articles submitted by private respondent were all her choices. Thus, the petitioner
PDI in deciding to publish private respondents articles only controls the result of the work and not the means by which said articles were written.
As such, the above facts failed to measure up to the control test necessary for an employer-employee relationship to exist. 15
Petitioners Motion for Reconsideration was denied in a Resolution dated September 11, 2002. She then filed the present Petition for Review.
In a Resolution dated April 29, 2005, the Court, without giving due course to the petition, ordered the Labor Arbiter to clarify the amount of the award due
petitioner and, thereafter, ordered PDI to post the requisite bond. Upon compliance therewith, the petition would be given due course. Labor Arbiter Amansec
clarified that the award under the Decision amounted to P15,350.00. Thus, PDI posted the requisite bond on January 25, 2007.16
We shall initially dispose of the procedural issue raised in the Petition.
Petitioner argues that the CA erred in not dismissing outright PDIs Petition for Certiorari for PDIs failure to post a cash or surety bond in violation of Article
223 of the Labor Code.

This issue was settled by this Court in its Resolution dated April 29, 2005.17 There, the Court held:
But while the posting of a cash or surety bond is jurisdictional and is a condition sine qua non to the perfection of an appeal, there is a plethora of
jurisprudence recognizing exceptional instances wherein the Court relaxed the bond requirement as a condition for posting the appeal.
xxxx
In the case of Taberrah v. NLRC, the Court made note of the fact that the assailed decision of the Labor Arbiter concerned did not contain a computation of
the monetary award due the employees, a circumstance which is likewise present in this case. In said case, the Court stated,
As a rule, compliance with the requirements for the perfection of an appeal within the reglamentary (sic) period is mandatory and jurisdictional. However, in
National Federation of Labor Unions v. Ladrido as well as in several other cases, this Court relaxed the requirement of the posting of an appeal bond within
the reglementary period as a condition for perfecting the appeal. This is in line with the principle that substantial justice is better served by allowing the
appeal to be resolved on the merits rather than dismissing it based on a technicality.
The judgment of the Labor Arbiter in this case merely stated that petitioner was entitled to backwages, 13 th month pay and service incentive leave pay
without however including a computation of the alleged amounts.
xxxx
In the case of NFLU v. Ladrido III, this Court postulated that "private respondents cannot be expected to post such appeal bond equivalent to the amount of
the monetary award when the amount thereof was not included in the decision of the labor arbiter." The computation of the amount awarded to petitioner not
having been clearly stated in the decision of the labor arbiter, private respondents had no basis for determining the amount of the bond to be posted.
Thus, while the requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions against needless delays
and for orderly discharge of judicial business, the law does admit of exceptions when warranted by the circumstances. Technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and obligations of the parties. But while this Court may relax the observance of
reglementary periods and technical rules to achieve substantial justice, it is not prepared to give due course to this petition and make a pronouncement on
the weighty issue obtaining in this case until the law has been duly complied with and the requisite appeal bond duly paid by private respondents. 18
Records show that PDI has complied with the Courts directive for the posting of the bond;19 thus, that issue has been laid to rest.
We now proceed to rule on the merits of this case.
The main issue we must resolve is whether petitioner is an employee of PDI, and if the answer be in the affirmative, whether she was illegally dismissed.
We rule for the respondents.
The existence of an employer-employee relationship is essentially a question of fact. 20 Factual findings of quasi-judicial agencies like the NLRC are generally
accorded respect and finality if supported by substantial evidence.21
Considering, however, that the CAs findings are in direct conflict with those of the Labor Arbiter and NLRC, this Court must now make its own examination
and evaluation of the facts of this case.
It is true that petitioner herself admitted that she "was not, and [had] never been considered respondents employee because the terms of works were
arbitrarily decided upon by the respondent."22 However, the employment status of a person is defined and prescribed by law and not by what the parties say
it should be.23
This Court has constantly adhered to the "four-fold test" to determine whether there exists an employer-employee relationship between parties. 24 The four
elements of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employers power to control the employees conduct. 25
Of these four elements, it is the power of control which is the most crucial26 and most determinative factor,27 so important, in fact, that the other elements may
even be disregarded.28 As this Court has previously held:
the significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and the details of
performance of the service being rendered, and the degree to which the principal may intervene to exercise such control. 29
In other words, the test is whether the employer controls or has reserved the right to control the employee, not only as to the work done, but also as to the
means and methods by which the same is accomplished.30
Petitioner argues that several factors exist to prove that respondents exercised control over her and her work, namely:
a. As to the Contents of her Column The PETITIONER had to insure that the contents of her column hewed closely to the objectives of its Lifestyle Section
and the over-all principles that the newspaper projects itself to stand for. As admitted, she wanted to write about death in relation to All Souls Day but was
advised not to.

b. As to Time Control The PETITIONER, as a columnist, had to observe the deadlines of the newspaper for her articles to be published. These deadlines
were usually that time period when the Section Editor has to "close the pages" of the Lifestyle Section where the column in located. "To close the pages"
means to prepare them for printing and publication.
As a columnist, the PETITIONERs writings had a definite day on which it was going to appear. So she submitted her articles two days before the designated
day on which the column would come out.
This is the usual routine of newspaper work. Deadlines are set to fulfill the newspapers obligations to the readers with regard to timeliness and freshness of
ideas.
c. As to Control of Space The PETITIONER was told to submit only two or three pages of article for the column, (sic) "Feminist Reflections" per week. To
go beyond that, the Lifestyle editor would already chop off the article and publish the rest for the next week. This shows that PRIVATE RESPONDENTS had
control over the space that the PETITIONER was assigned to fill.
d. As to Discipline Over time, the newspaper readers eyes are trained or habituated to look for and read the works of their favorite regular writers and
columnists. They are conditioned, based on their daily purchase of the newspaper, to look for specific spaces in the newspapers for their favorite write-ups/or
opinions on matters relevant and significant issues aside from not being late or amiss in the responsibility of timely submission of their articles.
The PETITIONER was disciplined to submit her articles on highly relevant and significant issues on time by the PRIVATE RESPONDENTS who have a say
on whether the topics belong to those considered as highly relevant and significant, through the Lifestyle Section Editor. The PETITIONER had to discuss
the topics first and submit the articles two days before publication date to keep her column in the newspaper space regularly as expected or without miss by
its readers.31
Given this discussion by petitioner, we then ask the question: Is this the form of control that our labor laws contemplate such as to establish an employeremployee relationship between petitioner and respondent PDI?
It is not.
Petitioner has misconstrued the "control test," as did the Labor Arbiter and the NLRC.
Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. Rules which serve as general
guidelines towards the achievement of the mutually desired result are not indicative of the power of control. 32 Thus, this Court has explained:
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 untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the
engagement.
means used to achieve it. x x x.33
The main determinant therefore is whether the rules set by the employer are meant to control not just the results of the work but also the means and method
to be used by the hired party in order to achieve such results. Thus, in this case, we are to examine the factors enumerated by petitioner to see if these are
merely guidelines or if they indeed fulfill the requirements of the control test.
Petitioner believes that respondents acts are meant to control how she executes her work. We do not agree. A careful examination reveals that the factors
enumerated by the petitioner are inherent conditions in running a newspaper. In other words, the so-called control as to time, space, and discipline are
dictated by the very nature of the newspaper business itself.
We agree with the observations of the Office of the Solicitor General that:
The Inquirer is the publisher of a newspaper of general circulation which is widely read throughout the country. As such, public interest dictates that every
article appearing in the newspaper should subscribe to the standards set by the Inquirer, with its thousands of readers in mind. It is not, therefore, unusual
for the Inquirer to control what would be published in the newspaper. What is important is the fact that such control pertains only to the end result, i.e., the
submitted articles. The Inquirer has no control over [petitioner] as to the means or method used by her in the preparation of her articles. The articles are
done by [petitioner] herself without any intervention from the Inquirer.34
Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce her articles each week. Aside from the constraints
presented by the space allocation of her column, there were no restraints on her creativity; petitioner was free to write her column in the manner and style
she was accustomed to and to use whatever research method she deemed suitable for her purpose. The apparent limitation that she had to write only on
subjects that befitted the Lifestyle section did not translate to control, but was simply a logical consequence of the fact that her column appeared in that
section and therefore had to cater to the preference of the readers of that section.
The perceived constraint on petitioners column was dictated by her own choice of her columns perspective. The column title "Feminist Reflections" was of
her own choosing, as she herself admitted, since she had been known as a feminist writer.35 Thus, respondent PDI, as well as her readers, could reasonably
expect her columns to speak from such perspective.

Contrary to petitioners protestations, it does not appear that there was any actual restraint or limitation on the subject matter within the Lifestyle section
that she could write about. Respondent PDI did not dictate how she wrote or what she wrote in her column. Neither did PDIs guidelines dictate the kind of
research, time, and effort she put into each column. In fact, petitioner herself said that she received "no comments on her articlesexcept for her to shorten
them to fit into the box allotted to her column." Therefore, the control that PDI exercised over petitioner was only as to the finished product of her efforts, i.e.,
the column itself, by way of either shortening or outright rejection of the column.
The newspapers power to approve or reject publication of any specific article she wrote for her column cannot be the control contemplated in the "control
test," as it is but logical that one who commissions another to do a piece of work should have the right to accept or reject the product. The important factor to
consider in the "control test" is still the element of control over how the work itself is done, not just the end result thereof.
In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We note the common practice in the newspaper business of
assigning its regular reporters to cover specific subjects, geographical locations, government agencies, or areas of concern, more commonly referred to as
"beats." A reporter must produce stories within his or her particular beat and cannot switch to another beat without permission from the editor. In most
newspapers also, a reporter must inform the editor about the story that he or she is working on for the day. The story or article must also be submitted to the
editor at a specified time. Moreover, the editor can easily pull out a reporter from one beat and ask him or her to cover another beat, if the need arises.
This is not the case for petitioner. Although petitioner had a weekly deadline to meet, she was not precluded from submitting her column ahead of time or
from submitting columns to be published at a later time. More importantly, respondents did not dictate upon petitioner the subject matter of her columns, but
only imposed the general guideline that the article should conform to the standards of the newspaper and the general tone of the particular section.
Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no employer-employee relationship exists. 36
Aside from the control test, this Court has also used the economic reality test. The economic realities prevailing within the activity or between the parties are
examined, taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. 37 This is especially
appropriate when, as in this case, there is no written agreement or contract on which to base the relationship. In our jurisdiction, the benchmark of economic
reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of the worker on his
employer.38
Petitioners main occupation is not as a columnist for respondent but as a womens rights advocate working in various womens organizations. 39 Likewise,
she herself admits that she also contributes articles to other publications. 40 Thus, it cannot be said that petitioner was dependent on respondent PDI for her
continued employment in respondents line of business.41
The inevitable conclusion is that petitioner was not respondent PDIs employee but an independent contractor, engaged to do independent work.
There is no inflexible rule to determine if a person is an employee or an independent contractor; thus, the characterization of the relationship must be made
based on the particular circumstances of each case.42There are several factors43 that may be considered by the courts, but as we already said, the right to
control is the dominant factor in determining whether one is an employee or an independent contractor.44
In our jurisdiction, the Court has held that an independent contractor is one who carries on a distinct and independent business and undertakes to perform
the job, work, or service on ones own account and under ones own responsibility according to ones own manner and method, free from the control and
direction of the principal in all matters connected with the performance of the work except as to the results thereof. 45
On this point, Sonza v. ABS-CBN Broadcasting Corporation46 is enlightening. In that case, the Court found, using the four-fold test, that petitioner, Jose Y.
Sonza, was not an employee of ABS-CBN, but an independent contractor. Sonza was hired by ABS-CBN due to his "unique skills, talent and celebrity status
not possessed by ordinary employees," a circumstance that, the Court said, was indicative, though not conclusive, of an independent contractual
relationship. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary
employees.47The Court also found that, as to payment of wages, Sonzas talent fees were the result of negotiations between him and ABS-CBN. 48 As to the
power of dismissal, the Court found that the terms of Sonzas engagement were dictated by the contract he entered into with ABS-CBN, and the same
contract provided that either party may terminate the contract in case of breach by the other of the terms thereof.49However, the Court held that the foregoing
are not determinative of an employer-employee relationship. Instead, it is still the power of control that is most important.
On the power of control, the Court found that in performing his work, Sonza only needed his skills and talent how he delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBNs control.50 Thus:
We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs work. 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." 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.
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 ABSCBNs 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., 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.
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. 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.
A radio broadcast specialist who works under minimal supervision is an independent contractor. 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.51
The instant case presents a parallel to Sonza. Petitioner was engaged as a columnist for her talent, skill, experience, and her unique viewpoint as a feminist
advocate. How she utilized all these in writing her column was not subject to dictation by respondent. As in Sonza, respondent PDI was not involved in the
actual performance that produced the finished product. It only reserved the right to shorten petitioners articles based on the newspapers capacity to
accommodate the same. This fact, we note, was not unique to petitioners column. It is a reality in the newspaper business that space constraints often
dictate the length of articles and columns, even those that regularly appear therein.
Furthermore, respondent PDI did not supply petitioner with the tools and instrumentalities she needed to perform her work. Petitioner only needed her talent
and skill to come up with a column every week. As such, she had all the tools she needed to perform her work.
Considering that respondent PDI was not petitioners employer, it cannot be held guilty of illegal dismissal.
WHEREFORE, the foregoing premises considered, the Petition is DISMISSED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
50970 are hereby AFFIRMED.
Fulache vs. ABS-CBN

The petition for review on certiorari[1] now before us seeks to set aside the decision [2] and resolution[3] of the Court of Appeals, Nineteenth Division (CA) promulgated
on March 25, 2008and July 8, 2008, respectively, in CA- G.R. SP No. 01838.[4]
The Antecedents
The Regularization Case.
In June 2001, petitioners Farley Fulache, Manolo Jabonero, David Castillo, Jeffrey Lagunzad, Magdalena Malig-on Bigno, Francisco Cabas, Jr., Harvey Ponce and
Alan C. Almendras (petitioners) and Cresente Atinen (Atinen) filed two separate complaints for regularization, unfair labor practice and several money claims
(regularization case) against ABS-CBN Broadcasting Corporation-Cebu (ABS-CBN). Fulache and Castillo were drivers/cameramen; Atinen, Lagunzad and Jabonero were
drivers; Ponce and Almendras were cameramen/editors; Bigno was a PA/Teleprompter Operator-Editing, and Cabas was a VTR man/editor. The complaints (RAB VII Case
Nos. 06-1100-01 and 06-1176-01) were consolidated and were assigned to Labor Arbiter Julie C. Rendoque.
The petitioners alleged that on December 17, 1999, ABS-CBN and the ABS-CBN Rank-and-File Employees Union (Union) executed a collective bargaining
agreement (CBA) effective December 11, 1999 to December 10, 2002; they only became aware of the CBA when they obtained copies of the agreement; they learned that
they had been excluded from its coverage as ABS-CBN considered them temporary and not regular employees, in violation of the Labor Code. They claimed they had
already rendered more than a year of service in the company and, therefore, should have been recognized as regular employees entitled to security of tenure and to the
privileges and benefits enjoyed by regular employees. They asked that they be paid overtime, night shift differential, holiday, rest day and service incentive leave pay. They
also prayed for an award of moral damages and attorneys fees.
ABS-CBN explained the nature of the petitioners employment within the framework of its operations. It claimed that: it operates in several divisions, one of which is
the Regional Network Group (RNG). The RNG exercises control and supervision over all the ABS-CBN local stations to ensure that ABS-CBN programs are extended to
the provinces. A local station, like the Cebustation, can resort to cost-effective and cost-saving measures to remain viable; local stations produced shows and programs that
were constantly changing because of the competitive nature of the industry, the changing public demand or preference, and the seasonal nature of media broadcasting
programs. ABS-CBN claimed, too, that the production of programs per se is not necessary or desirable in its business because it could generate profits by selling airtime to
block-timers or through advertising.
ABS-CBN further claimed that to cope with fluctuating business conditions, it contracts on a case-to-case basis the services of persons who possess the necessary
talent, skills, training, expertise or qualifications to meet the requirements of its programs and productions. These contracted persons are called talents and are considered
independent contractors who offer their services to broadcasting companies.
Instead of salaries, ABS-CBN pointed out that talents are paid a pre-arranged consideration called talent fee taken from the budget of a particular program and
subject to a ten percent (10%) withholding tax. Talents do not undergo probation. Their services are engaged for a specific program or production, or a segment
thereof. Their contracts are terminated once the program, production or segment is completed.
ABS-CBN alleged that the petitioners services were contracted on various dates by its Cebu station as independent contractors/off camera talents, and they were not
entitled to regularization in these capacities.
On January 17, 2002, Labor Arbiter Rendoque rendered his decision [5] holding that the petitioners were regular employees of ABS-CBN, not independent contractors, and
are entitled to the benefits and privileges of regular employees.
ABS-CBN appealed the ruling to the National Labor Relations Commission (NLRC) Fourth Division, mainly contending that the petitioners were independent
contractors, not regular employees.[6]

The Illegal Dismissal Case.
While the appeal of the regularization case was pending, ABS-CBN dismissed Fulache, Jabonero, Castillo, Lagunzad and Atinen (all drivers) for their refusal to sign
up contracts of employment with service contractor Able Services. The four drivers and Atinen responded by filing a complaint for illegal dismissal (illegal dismissal
case). The case (RAB VII Case No. 07-1300-2002) was likewise handled by Labor Arbiter Rendoque.
In defense, ABS-CBN alleged that even before the labor arbiter rendered his decision of January 17, 2002 in the regularization case, it had already undertaken a
comprehensive review of its existing organizational structure to address its operational requirements. It then decided to course through legitimate service contractors all
driving, messengerial, janitorial, utility, make-up, wardrobe and security services for both the Metro Manila and provincial stations, to improve its operations and to make
them more economically viable. Fulache, Jabonero, Castillo, Lagunzad and Atinen were not singled out for dismissal; as drivers, they were dismissed because they
belonged to a job category that had already been contracted out. It argued that even if the petitioners had been found to have been illegally dismissed, their reinstatement
had become a physical impossibility because their employer-employee relationships had been strained and that Atinen had executed a quitclaim and release.
In her April 21, 2003 decision in the illegal dismissal case, [7] Labor Arbiter Rendoque upheld the validity of ABS-CBN's contracting out of certain work or services in
its operations. The labor arbiter found that petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen had been dismissed due to redundancy, an authorized cause under
the law.[8] He awarded them separation pay of one (1) months salary for every year of service.
Again, ABS-CBN appealed to the NLRC which rendered on December 15, 2004 a joint decision on the regularization and illegal dismissal cases. [9] The NLRC ruled
that there was an employer-employee relationship between the petitioners and ABS-CBN as the company exercised control over the petitioners in the performance of their
work; the petitioners were regular employees because they were engaged to perform activities usually necessary or desirable in ABS-CBN's trade or business;
they cannot be considered contractual employees since they were not paid for the result of their work, but on a monthly basis and were required to do their work in
accordance with the companys schedule. The NLRC thus affirmed with modification the labor arbiter's regularization decision of January 17, 2002, additionally granting
the petitioners CBA benefits and privileges.
The NLRC reversed the labor arbiters ruling in the illegal dismissal case; it found that petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen had been illegally
dismissed and awarded them backwages and separation pay in lieu of reinstatement. Under both cases, the petitioners were awarded CBA benefits and privileges from the
time they became regular employees up to the time of their dismissal.
The petitioners moved for reconsideration, contending that Fulache, Jabonero, Castillo and Lagunzad are entitled to reinstatement and full backwages, salary increases
and other CBA benefits as well as 13 th month pay, cash conversion of sick and vacation leaves, medical and dental allowances, educational benefits and service
awards. Atinen appeared to have been excluded from the motion and there was no showing that he sought reconsideration on his own.
ABS-CBN likewise moved for the reconsideration of the decision, reiterating that Fulache, Jabonero, Castillo and Lagunzad were independent contractors, whose
services had been terminated due to redundancy; thus, no backwages should have been awarded. It further argued that the petitioners were not entitled to the CBA benefits
because they never claimed these benefits in their position paper before the labor arbiter while the NLRC failed to make a clear and positive finding that that they were part
of the bargaining unit; neither was there evidence to support this finding.
The NLRC resolved the motions for reconsideration on March 24, 2006[10] by reinstating the two separate decisions of the labor arbiter dated January 17, 2002,
and April 21, 2003,[12]respectively. Thus, on the regularization issue, the NLRC stood by the ruling that the petitioners were regular employees entitled to the benefits and
privileges of regular employees. On the illegal dismissal case, the petitioners, while recognized as regular employees, were declared dismissed due to redundancy. The
NLRC denied the petitioners second motion for reconsideration in its order of May 31, 2006 for being a prohibited pleading. [13]
[11]
The CA Petition and Decision

The petitioners went to the CA through a petition for certiorari under Rule 65 of the Rules of Court. [14] They charged the NLRC with grave abuse of discretion in: (1)
denying them the benefits under the CBA; (2) finding no evidence that they are part of the companys bargaining unit; (3) not reinstating and awarding backwages to
Fulache, Jabonero, Castillo and Lagunzad; and (4) ruling that they are not entitled to damages and attorneys fees.
ABS-CBN, on the other hand, questioned the propriety of the petitioners use of a certiorari petition. It argued that the proper remedy for the petitioners was an
appeal from the reinstated decisions of the labor arbiter.
In its decision of March 25, 2008, [15] the appellate court brushed aside ABS-CBNs procedural question, holding that the petition was justified because there is no plain,
speedy or adequate remedy from a final decision, order or resolution of the NLRC; the reinstatement of the labor arbiters decisions did not mean that the proceedings
reverted back to the level of the arbiter. It likewise affirmed the NLRC ruling that the petitioners second motion for reconsideration is a prohibited pleading under the
NLRC rules.[16]
On the merits of the case, the CA ruled that the petitioners failed to prove their claim to CBA benefits since they never raised the issue in the compulsory arbitration
proceedings, and did not appeal the labor arbiters decision which was silent on their entitlement to CBA benefits. The CA found that the petitioners failed to show with
specificity how Section 1 (Appropriate Bargaining Unit) and the other provisions of the CBA applied to them.
On the illegal dismissal issue, the CA upheld the NLRC decision reinstating the labor arbiters April 21, 2003 ruling.[17] Thus, the drivers Fulache, Jabonero, Castillo
and Lagunzad were not illegally dismissed as their separation from the service was due to redundancy; they had not presented any evidence that ABS-CBN abused its
prerogative in contracting out the services of drivers. Except for separation pay, the CA denied the petitioners claim for backwages, moral and exemplary damages, and
attorneys fees.
The petitioners moved for reconsideration, but the CA denied the motion in a resolution promulgated on July 8, 2008.[18] Hence, the present petition.
The Petition
The petitioners challenge the CA ruling on both procedural and substantive grounds. As procedural questions, they submit that the CA erred in: (1) affirming the
NLRC resolution which reversed its own decision; (2) sustaining the NLRC ruling that their second motion for reconsideration is a prohibited pleading; (3) not ruling that
ABS-CBN admitted in its position paper before the labor arbiter that they were members of the bargaining unit as the matter was not raised in its appeal to the NLRC; and,
(4) not ruling that notwithstanding their failure to appeal from the first decision of the Labor Arbiter, they can still participate in the appeal filed by ABS-CBN regarding
their employment status.
On the substantive aspect, the petitioners contend that the CA gravely erred in: (1) not considering the evidence submitted to the NLRC on appeal to bolster their
claim that they were members of the bargaining unit and therefore entitled to the CBA benefits; (2) not ordering ABS-CBN to pay the petitioners salaries, allowances and
CBA benefits after the NLRC has declared that they were regular employees of ABS-CBN; (3) not ruling that under existing jurisprudence, the position of driver cannot be
declared redundant, and that the petitioners-drivers were illegally dismissed; and, (4) not ruling that the petitioners were entitled to damages and attorneys fees.
The petitioners argue that the NLRC resolution of March 24, 2006[19] which set aside its joint decision of December 15, 2004[20] and reinstated the twin decisions of
the labor arbiter,[21]had the effect of promulgating a new decision based on issues that were not raised in ABS-CBNs partial appeal to the NLRC. They submit that the
NLRC should have allowed their second motion for reconsideration so that it may be able to equitably evaluate the parties conflicting versions of the facts instead of
denying the motion on a mere technicality.

On the question of their CBA coverage, the petitioners contend that the CA erred in not considering that ABS-CBN admitted their membership in the bargaining unit,
for nowhere in its partial appeal from the labor arbiters decision in the regularization case did it allege that the petitioners failed to prove that they are members of the
bargaining unit; instead, the company stood by its position that the petitioners were not entitled to the CBA benefits since they were independent contractors/program
employees.
The petitioners submit that while they did not appeal the labor arbiters decision in the regularization case, ABS-CBN raised the employment status issue in its own
appeal to the NLRC; this appeal laid this issue open for review. They argue that they could still participate in the appeal proceedings at the NLRC; pursue their position on
the issue; and introduce evidence as they did in their reply to the companys appeal. [22] They bewail the appellate courts failure to consider the evidence they presented to
the NLRC (consisting of documents and sworn statements enumerating the activities they are performing) clearly indicating that they are part of the rank-and-file bargaining
unit at ABS-CBN.
The petitioners then proceeded to describe the work they render for the company. Collectively, they claim that they work as assistants in the production of the
Cebuano news program broadcast daily over ABS-CBN Channel 3, as follows: Fulache, Jabonero, Castillo and Lagunzad as production assistants to drive the news team;
Ponce and Almendras, to shoot scenes and events with the use of cameras owned by ABS-CBN; Malig-on Bigno, as studio production assistant and assistant
editor/teleprompter operator; and Cabas, Jr., as production assistant for video editing and operating the VTR machine recorder. As production assistants, the petitioners
submit that they are rank-and-file employees (citing in support of their position the Courts ruling in ABS-CBN Broadcasting Corp. v. Nazareno[23]) who are entitled to salary
increases and other benefits under the CBA. Relying on the Courts ruling in New Pacific Timber and Supply Company, Inc. v. NLRC, [24] they posit that to exclude them
from the CBA would constitute undue discrimination and would deprive them of monetary benefits they would otherwise be entitled to.
As their final point, the petitioners argue that even if they were not able to prove that they were members of the bargaining unit, the CA should not have dismissed
their petition. When the CA affirmed the rulings of both the labor arbiter and the NLRC that they are regular employees, the CA should have ordered ABS-CBN to
recognize their regular employee status and to give them the salaries, allowances and other benefits and privileges under the CBA.
On the dismissal of Fulache, Jabonero, Castillo and Lagunzad, the petitioners impute bad faith on ABS-CBN when it abolished the positions of drivers claiming that
the company failed to comply with the requisites of a valid redundancy action. They maintain that ABS-CBN did not present any evidence on the new staffing pattern as
approved by the management of the company, and did not even bother to show why it considered the positions of drivers superfluous and unnecessary; it is not true that the
positions of drivers no longer existed because these positions were contracted out to an agency that, in turn, recruited four drivers to take the place of Fulache, Jabonero,
Castillo and Lagunzad. As further indication that the redundancy action against the four drivers was done in bad faith, the petitioners call attention to ABS-CBNs abolition
of the position of drivers after the labor arbiter rendered her decision declaring Fulache, Jabonero, Castillo and Lagunzad regular company employees. The petitioners object
to the dismissal of the four drivers when they refused to sign resignation letters and join Able Services, a contracting agency, contending that the four had no reason to resign
after the labor arbiter declared them regular company employees.
Since their dismissal was illegal and attended by bad faith, the petitioners insist that they should be reinstated with backwages, and should likewise be awarded moral
and exemplary damages, and attorney's fees.
The Case for ABS-CBN
In its Comment filed on January 28, 2009,[25] ABS-CBN presents several grounds which may be synthesized as follows:
1.
2.
The petition raises questions of fact and not of law.

The CA committed no error in affirming the resolution of the NLRC reinstating the decisions of the labor arbiter.
ABS-CBN submits that the petition should be dismissed for having raised questions of fact and not of law in violation of Rule 45 of the Rules of Court. It argues that
the question of whether the petitioners were covered by the CBA (and therefore entitled to the CBA benefits) and whether the petitioners were illegally dismissed because of
redundancy, are factual questions that cannot be reviewed on certiorari because the Court is not a trier of facts.
ABS-CBN dismisses the petitioners issues and arguments as mere rehash of what they raised in their pleadings with the CA and as grounds that do not warrant further
consideration. It further contends that because the petitioners did not appeal the labor arbiter decisions, these decisions had lapsed to finality and could no longer be the
subject of a petition for certiorari; the petitioners cannot obtain from the appellate court affirmative relief other than those granted in the appealed decision. It also argues
that the NLRC did not commit any grave abuse of discretion in reinstating the twin decisions of the labor arbiter, thereby affirming that no CBA benefits can be awarded to
the petitioners; in the absence of any illegal dismissal, the petitioners were not entitled to reinstatement, backwages, damages, and attorney's fees.
The Court's Ruling
We first resolve the parties procedural questions.
ABS-CBN wants the petition to be dismissed outright for its alleged failure to comply with the requirement of Rule 45 of the Rules of Court that the petition raises
only questions of law.[26]
We find no impropriety in the petition from the standpoint of Rule 45. The petitioners do not question the findings of facts of the assailed decisions. They question
the misapplication of the law and jurisprudence on the facts recognized by the decisions. For example, they question as contrary to law their exclusion from the CBA after
they were recognized as regular rank-and-file employees of ABS-CBN. They also question the basis in law of the dismissal of the four drivers and the legal propriety of the
redundancy action taken against. To reiterate the established distinctions between questions of law and questions of fact, we quote hereunder our ruling in New Rural Bank
of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan:[27]
We reiterate the distinction between a question of law and a question of fact. A question of law exists when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the
truth or falsehood of the facts being admitted. A question of fact exists when a doubt or difference arises as to the truth or falsehood of facts or when the query
invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as
well as their relation to each other and to the whole, and the probability of the situation.
We also find no error in the CAs affirmation of the denial of the petitioners second motion for reconsideration of the March 24, 2006 resolution of the NLRC
reinstating the labor arbiters twin decisions. The petitioners second motion for reconsideration was a prohibited pleading under the NLRC rules of procedure. [28]
The parties other procedural questions directly bear on the merits of their positions and are discussed and resolved below, together with the core substantive issues of:
(1) whether the petitioners, as regular employees, are members of the bargaining unit entitled to CBA benefits; and (2) whether petitioners Fulache, Jabonero, Castillo and
Lagunzad were illegally dismissed.
The Claim for CBA Benefits
We find merit in the petitioners positions.

As regular employees, the petitioners fall within the coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of law and contract. In the root
decision (the labor arbiters decision of January 17, 2002) that the NLRC and CA affirmed, the labor arbiter declared:
WHEREFORE, IN THE LIGHT OF THE FOREGOING, taking into account the factual scenario and the evidence adduced by both parties, it is declared that
complainants in these cases are REGULAR EMPLOYEES of respondent ABS-CBN and not INDEPENDENT CONTRACTORS and thus henceforth they are entitled to
the benefits and privileges attached to regular status of their employment.
This declaration unequivocally settled the petitioners employment status: they are ABS-CBNs regular employees entitled to the benefits and privileges of regular
employees. These benefits and privileges arise from entitlements under the law (specifically, the Labor Code and its related laws), and from their employment contract as
regular ABS-CBN employees, part of which is the CBA if they fall within the coverage of this agreement. Thus, what only needs to be resolved as an issue for purposes of
implementation of the decision is whether the petitioners fall within CBA coverage.
The parties 1999-2002 CBA provided in its Article I (Scope of the Agreement) that:[29]
Section 1. APPROPRIATE BARGAINING UNIT. The parties agree that the appropriate bargaining unit shall be regular rank-and-file employees of ABS-CBN
BROADCASTING CORPORATION but shall not include:
a) Personnel classified as Supervisor and Confidential employees;
b) Personnel who are on casual or probationary status as defined in Section 2 hereof;
c) Personnel who are on contract status or who are paid for specified units of work such as writer-producers, talent-artists, and singers.
The inclusion or exclusion of new job classifications into the bargaining unit shall be subject of discussion between the COMPANY and the UNION. [emphasis supplied]
Under these terms, the petitioners are members of the appropriate bargaining unit because they are regular rank-and-file employees and do not belong to any of the excluded
categories. Specifically, nothing in the records shows that they are supervisory or confidential employees; neither are they casual nor probationary employees. Most
importantly, the labor arbiters decision ofJanuary 17, 2002 affirmed all the way up to the CA level ruled against ABS-CBNs submission that they are independent
contractors. Thus, as regular rank-and-file employees, they fall within CBA coverage under the CBAs express terms and are entitled to its benefits.
We see no merit in ABS-CBNs arguments that the petitioners are not entitled to CBA benefits because: (1) they did not claim these benefits in their position paper; (2) the
NLRC did not categorically rule that the petitioners were members of the bargaining unit; and (3) there was no evidence of this membership. To further clarify what we
stated above, CBA coverage is not only a question of fact, but of law and contract. The factual issue is whether the petitioners are regular rank-and-file employees of ABSCBN. The tribunals below uniformly answered this question in the affirmative. From this factual finding flows legal effects touching on the terms and conditions of the
petitioners regular employment. This was what the labor arbiter meant when he stated in his decision that henceforth they are entitled to the benefits and privileges
attached to regular status of their employment. Significantly, ABS-CBN itself posited before this Court that the Court of Appeals did not gravely err nor gravely abuse
its discretion when it affirmed the resolution of the NLRC dated March 24, 2006 reinstating and adopting in toto the decision of the Labor Arbiter dated January 17, 2002 x
x x.[30] This representation alone fully resolves all the objections procedural or otherwise ABS-CBN raised on the regularization issue.
The Dismissal of Fulache, Jabonero,
Castillo and Lagunzad
The termination of employment of the four drivers occurred under highly questionable circumstances and with plain and unadulterated bad faith.
The records show that the regularization case was in fact the root of the resulting bad faith as this case gave rise and led to the dismissal case. First, the regularization case
was filed leading to the labor arbiters decision [31] declaring the petitioners, including Fulache, Jabonero, Castillo and Lagunzad, to be regular employees. ABS-CBN
appealed the decision and maintained its position that the petitioners were independent contractors.
In the course of this appeal, ABS-CBN took matters into its own hands and terminated the petitioners services, clearly disregarding its own appeal then pending with the
NLRC. Notably, this appeal posited that the petitioners were not employees (whose services therefore could be terminated through dismissal under the Labor Code); they
were independent contractors whose services could be terminated at will, subject only to the terms of their contracts. To justify the termination of service, the company cited
redundancy as its authorized cause but offered no justificatory supporting evidence. It merely claimed that it was contracting out the petitioners activities in the exercise of
its management prerogative.
ABS-CBNs intent, of course, based on the records, was to transfer the petitioners and their activities to a service contractor without paying any attention to the requirements
of our labor laws; hence, ABS-CBN dismissed the petitioners when they refused to sign up with the service contractor. [32] In this manner, ABS-CBN fell into a downward
spiral of irreconcilable legal positions, all undertaken in the hope of saving itself from the decision declaring its talents to be regular employees.
By doing all these, ABS-CBN forgot labor law and its realities.
It forgot that by claiming redundancy as authorized cause for dismissal, it impliedly admitted that the petitioners were regular employees whose services, by law, can only be
terminated for the just and authorized causes defined under the Labor Code.
Likewise ABS-CBN forgot that it had an existing CBA with a union, which agreement must be respected in any move affecting the security of tenure of affected employees;
otherwise, it ran the risk of committing unfair labor practice both a criminal and an administrative offense. [33] It similarly forgot that an exercise of management
prerogative can be valid only if it is undertaken in good faith and with no intent to defeat or circumvent the rights of its employees under the laws or under valid agreements.
[34]
Lastly, it forgot that there was a standing labor arbiters decision that, while not yet final because of its own pending appeal, cannot simply be disregarded. By implementing
the dismissal action at the time the labor arbiters ruling was under review, the company unilaterally negated the effects of the labor arbiters ruling while at the same time
appealling the same ruling to the NLRC. This unilateral move is a direct affront to the NLRCs authority and an abuse of the appeal process.
All these go to show that ABS-CBN acted with patent bad faith. A close parallel we can draw to characterize this bad faith is the prohibition against forum-shopping under
the Rules of Court. In forum-shopping, the Rules characterize as bad faith the act of filing similar and repetitive actions for the same cause with the intent of somehow
finding a favorable ruling in one of the actions filed.[35] ABS-CBNs actions in the two cases, as described above, are of the same character, since its obvious intent was to
defeat and render useless, in a roundabout way and other than through the appeal it had taken, the labor arbiters decision in the regularization case. Forum-shopping is
penalized by the dismissal of the actions involved. The penalty against ABS-CBN for its bad faith in the present case should be no less.
The errors and omissions do not belong to ABS-CBN alone. The labor arbiter himself who handled both cases did not see the totality of the companys actions for what they
were. He appeared to have blindly allowed what he granted the petitioners with his left hand, to be taken away with his right hand, unmindful that the company already
exhibited a badge of bad faith in seeking to terminate the services of the petitioners whose regular status had just been recognized. He should have recognized the bad faith
from the timing alone of ABS-CBNs conscious and purposeful moves to secure the ultimate aim of avoiding the regularization of its so-called talents.

The NLRC, for its part, initially recognized the presence of bad faith when it originally ruled that:
While notice has been made to the employees whose positions were declared redundant, the element of good faith in abolishing the positions of the complainants appear to
be wanting. In fact, it remains undisputed that herein complainants were terminated when they refused to sign an employment contract with Able Services which would
make them appear as employees of the agency and not of ABS-CBN. Such act by itself clearly demonstrates bad faith on the part of the respondent in carrying out the
companys redundancy program x x x.[36]
On motion for reconsideration by both parties, the NLRC reiterated its pronouncement that complainants were illegally terminated as extensively discussed in our Joint
Decision dated December 15, 2004.[37] Yet, in an inexplicable turnaround, it reconsidered its joint decision and reinstated not only the labor arbiters decision of January
17, 2002 in the regularization case, but also his illegal dismissal decision of April 21, 2003.[38] Thus, the NLRC joined the labor arbiter in his error that we cannot but
characterize as grave abuse of discretion.
The Court cannot leave unchecked the labor tribunals patent grave abuse of discretion that resulted, without doubt, in a grave injustice to the petitioners who were
claiming regular employment status and were unceremoniously deprived of their employment soon after their regular status was recognized. Unfortunately, the CA failed to
detect the labor tribunals gross errors in the disposition of the dismissal issue. Thus, the CA itself joined the same errors the labor tribunals committed.
The injustice committed on the petitioners/drivers requires rectification. Their dismissal was not only unjust and in bad faith as the above discussions abundantly show. The
bad faith in ABS-CBNs move toward its illegitimate goal was not even hidden; it dismissed the petitioners already recognized as regular employees for refusing to sign
up with its service contractor. Thus, from every perspective, the petitioners were illegally dismissed.
By law,[39] illegally dismissed employees are entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and
to other benefits or their monetary equivalent from the time their compensation was withheld from them up to the time of their actual reinstatement. The four dismissed
drivers deserve no less.
Moreover, they are also entitled to moral damages since their dismissal was attended by bad faith. [40] For having been compelled to litigate and to incur expenses to protect
their rights and interest, the petitioners are likewise entitled to attorneys fees.[41]
WHEREFORE, premises considered, we hereby GRANT the petition. The decision dated March 25, 2008 and the resolution dated July 8, 2008 of the Court of Appeals in
CA-G.R. SP No. 01838 are hereby REVERSED and SET ASIDE. Accordingly, judgment is hereby rendered as follows:
1. Confirming that petitioners FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO, JEFFREY LAGUNZAD, MAGDALENA MALIG-ON BIGNO,
FRANCISCO CABAS, JR., HARVEY PONCE and ALAN C. ALMENDRAS are regular employees of ABS-CBN BROADCASTING CORPORATION, and declaring
them entitled to all the rights, benefits and privileges, including CBA benefits, from the time they became regular employees in accordance with existing company practice
and the Labor Code;
2. Declaring illegal the dismissal of Fulache, Jabonero, Castillo and Lagunzad, and ordering ABS-CBN to immediately reinstate them to their former positions
without loss of seniority rights with full backwages and all other monetary benefits, from the time they were dismissed up to the date of their actual reinstatement;
3. Awarding moral damages of P100,000.00 each to Fulache, Jabonero, Castillo and Lagunzad; and,
4. Awarding attorneys fees of 10% of the total monetary award decreed in this Decision.
Costs against the respondent.
Tan vs. Lagrama

This is a petition for review on certiorari of the decision, [1] dated May 31, 2001, and the resolution, [2] dated November 27, 2001, of the Court of Appeals in
C.A.-G.R. SP. No. 63160, annulling the resolutions of the National Labor Relations Commission (NLRC) and reinstating the ruling of the Labor Arbiter which
found petitioner Rolando Tan guilty of illegally dismissing private respondent Leovigildo Lagrama and ordering him to pay the latter the amount
of P136,849.99 by way of separation pay, backwages, and damages.
The following are the facts.
Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private
respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters
for more than 10 years, from September 1, 1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: Nangihi na naman ka sulod sa imong drawinganan. (You again
urinated inside your work area.) When Lagrama asked what Tan was saying, Tan told him, Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka
pa. Guikan karon, wala nay drawing. Gawas. (Dont say anything further. I dont want you to draw anymore. From now on, no more drawing. Get out.)
Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area and that, even if the charge was true, it was
a minor infraction to warrant his dismissal. However, everytime he spoke, Tan shouted Gawas (Get out), leaving him with no other choice but to leave the
premises.
Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the National Labor Relations Commission (NLRC) in Butuan City. He alleged
that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and
damages.
Petitioner Tan denied that Lagrama was his employee. He asserted that Lagrama was an independent contractor who did his work according to his
methods, while he (petitioner) was only interested in the result thereof. He cited the admission of Lagrama during the conferences before the Labor Arbiter
that he was paid on a fixed piece-work basis, i.e., that he was paid for every painting turned out as ad billboard or mural for the pictures shown in the three
theaters, on the basis of a no mural/billboard drawn, no pay policy. He submitted the affidavits of other cinema owners, an amusement park owner, and
those supervising the construction of a church to prove that the services of Lagrama were contracted by them. He denied having dismissed Lagrama and
alleged that it was the latter who refused to paint for him after he was scolded for his habits.

As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file their position papers. On June 17, 1999, he
rendered a decision, the dispositive portion of which reads:
WHEREFORE, premises considered judgment is hereby ordered:
1. Declaring complainants [Lagramas] dismissal illegal and
2. Ordering respondents [Tan] to pay complainant the following:
A.
Separation Pay
P 59,000.00
B.
Backwages
47,200.00
(from 17 October 1998 to 17 June 1999)

C.
13th month pay (3 years)
D.
Service Incentive Leave
E.
17,700.00
Pay (3 years)
2, 949.99
Damages
TOTAL
10,000.00
[P136,849.99]
Complainants other claims are dismissed for lack of merit. [3]

Petitioner Rolando Tan appealed to the NLRC Fifth Division, Cagayan de Oro City, which, on June 30, 2000, rendered a decision [4] finding Lagrama to be an
independent contractor, and for this reason reversing the decision of the Labor Arbiter.
Respondent Lagrama filed a motion for reconsideration, but it was denied for lack of merit by the NLRC in a resolution of September 29, 2000. He then filed
a petition for certiorari under Rule 65 before the Court of Appeals.
The Court of Appeals found that petitioner exercised control over Lagramas work by dictating the time when Lagrama should submit his billboards and
murals and setting rules on the use of the work area and rest room. Although it found that Lagrama did work for other cinema owners, the appeals court
held it to be a mere sideline insufficient to prove that he was not an employee of Tan. The appeals court also found no evidence of any intention on the part
of Lagrama to leave his job or sever his employment relationship with Tan. Accordingly, on May 31, 2001, the Court of Appeals rendered a decision, the
dispositive portion of which reads:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is hereby GRANTED. The Resolutions of the Public Respondent issued on June 30, 2000 and September 29,
2000 are ANNULLED. The Decision of the Honorable Labor Arbiter Rogelio P. Legaspi on June 17, 1999 is hereby REINSTATED.
Petitioner moved for a reconsideration, but the Court of Appeals found no reason to reverse its decision and so denied his motion for lack of merit. [5] Hence,
this petition for review on certiorari based on the following assignments of errors:
I. With all due respect, the decision of respondent Court of Appeals in CA-G.R. SP NO. 63160 is bereft of any finding that Public Respondent NLRC, 5th Division, had no
jurisdiction or exceeded it or otherwise gravely abused its discretion in its Resolution of 30 June 2000 in NLRC CA-NO. M-004950-99.
II. With all due respect, respondent Court of Appeals, absent any positive finding on its part that the Resolution of 30 June 2000 of the NLRC is not supported by substantial
evidence, is without authority to substitute its conclusion for that of said NLRC.
III. With all due respect, respondent Court of Appeals discourse on freelance artists and painters in the decision in question is misplaced or has no factual or legal basis in
the record.
IV. With all due respect, respondent Court of Appeals opening statement in its decision as to employment, monthly salary of P1,475.00 and work schedule from
Monday to Saturday, from 8:00 oclock in the morning up to 5:00 oclock in the afternoon as facts is not supported by the evidence on record.
V. With all due respect, the case of Lambo, et al., v. NLRC, et al., 317 SCRA 420 [G.R. No. 111042 October 26, 1999] relied upon by respondent Court of Appeals is not
applicable to the peculiar circumstances of this case.[6]
The issues raised boil down to whether or not an employer-employee relationship existed between petitioner and private respondent, and whether petitioner
is guilty of illegally dismissing private respondent. We find the answers to these issues to be in the affirmative.
I.

In determining whether there is an employer-employee relationship, we have applied a four-fold test, to wit: (1) whether the alleged employer has the power
of selection and engagement of employees; (2) whether he has control of the employee with respect to the means and methods by which work is to be
accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. [7]These elements of the employer-employee
relationship are present in this case.
First. The existence in this case of the first element is undisputed. It was petitioner who engaged the services of Lagrama without the intervention of a third
party. It is the existence of the second element, the power of control, that requires discussion here.
Of the four elements of the employer-employee relationship, the control test is the most important. Compared to an employee, an independent contractor is
one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under its own
responsibility according to its own manner and method, free from the control and direction of the principal in all matters connected with the performance of
the work except as to the results thereof. [8] Hence, while an independent contractor enjoys independence and freedom from the control and supervision of
his principal, an employee is subject to the employers power to control the means and methods by which the employees work is to be performed and
accomplished.
In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and never his employee, the evidence shows
that the latter performed his work as painter under the supervision and control of petitioner. Lagrama worked in a designated work area inside the Crown
Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the observance of cleanliness and hygiene and a prohibition against
urinating in the work area and any place other than the toilet or the rest rooms. [9] Petitioners control over Lagramas work extended not only to the use of the
work area, but also to the result of Lagramas work, and the manner and means by which the work was to be accomplished.
Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the materials used for the paintings, because he
admitted that he paid Lagrama only for the latters services.[10]
Private respondent Lagrama claimed that he worked daily, from 8 oclock in the morning to 5 oclock in the afternoon. Petitioner disputed this allegation and
maintained that he paid Lagrama P1,475.00 per week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one week.
[11]
Even assuming this to be true, the fact that Lagrama worked for at least 3 to 4 days a week proves regularity in his employment by petitioner.
Second. That petitioner had the right to hire and fire was admitted by him in his position paper submitted to the NLRC, the pertinent portions of which stated:
Complainant did not know how to use the available comfort rooms or toilets in and about his work premises. He was urinating right at the place where he was
working when it was so easy for him, as everybody else did and had he only wanted to, to go to the comfort rooms. But no, the complainant had to make a virtual urinal out
of his work place! The place then stunk to high heavens, naturally, to the consternation of respondents and everyone who could smell the malodor.
...
Given such circumstances, the respondents had every right, nay all the compelling reason, to fire him from his painting job upon discovery and his admission of such
acts. Nonetheless, though thoroughly scolded, he was not fired. It was he who stopped to paint for respondents.[12]
By stating that he had the right to fire Lagrama, petitioner in effect acknowledged Lagrama to be his employee. For the right to hire and fire is another
important element of the employer-employee relationship. [13] Indeed, the fact that, as petitioner himself said, he waited for Lagrama to report for work but the
latter simply stopped reporting for work reinforces the conviction that Lagrama was indeed an employee of petitioner. For only an employee can nurture such
an expectancy, the frustration of which, unless satisfactorily explained, can bring about some disciplinary action on the part of the employer.
Third. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. Wages are defined as
remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for services rendered or to be rendered. [14] That Lagrama worked for Tan on a fixed piece-work basis is of no
moment. Payment by result is a method of compensation and does not define the essence of the relation. [15] It is a method of computing compensation, not a
basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work,
and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not. [16]
The Rules Implementing the Labor Code require every employer to pay his employees by means of payroll. [17] The payroll should show among other things,
the employees rate of pay, deductions made, and the amount actually paid to the employee. In the case at bar, petitioner did not present the payroll to
support his claim that Lagrama was not his employee, raising speculations whether his failure to do so proves that its presentation would be adverse to his
case.[18]
The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation
to the usual trade or business of the employer.[19]In this case, there is such a connection between the job of Lagrama painting billboards and murals and the
business of petitioner. To let the people know what movie was to be shown in a movie theater requires billboards. Petitioner in fact admits that the billboards
are important to his business.[20]
The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of whether he was an employee of petitioner.
[21]
Otherwise, an employer would be rewarded for his failure or even neglect to perform his obligation. [22]
Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship with petitioner. That he did so only during weekends
has not been denied by petitioner. On the other hand, Samuel Villalba, for whom Lagrama had rendered service, admitted in a sworn statement that he was
told by Lagrama that the latter worked for petitioner.[23]

Lagrama had been employed by petitioner since 1988. Under the law, therefore, he is deemed a regular employee and is thus entitled to security of tenure,
as provided in Art. 279 of Labor Code:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.
This Court has held that if the employee has been performing the job for at least one year, even if not continuously but intermittently, the repeated and
continuing need for its performance is sufficient evidence of the necessity, if not indispensability, of that activity to the business of his employer. Hence, the
employment is also considered regular, although with respect only to such activity, and while such activity exists. [24]
It is claimed that Lagrama abandoned his work. There is no evidence to show this. Abandonment requires two elements: (1) the failure to report for work or
absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more
determinative factor and being manifested by some overt acts. [25] Mere absence is not sufficient. What is more, the burden is on the employer to show a
deliberate and unjustified refusal on the part of the employee to resume his employment without any intention of returning. [26] In the case at bar, the Court of
Appeals correctly ruled:
Neither do we agree that Petitioner abandoned his job. In order for abandonment to be a just and valid ground for dismissal, the employer must show, by clear proof, the
intention of the employee to abandon his job. . . .
In the present recourse, the Private Respondent has not established clear proof of the intention of the Petitioner to abandon his job or to sever the employment relationship
between him and the Private Respondent. On the contrary, it was Private Respondent who told Petitioner that he did not want the latter to draw for him and thereafter
refused to give him work to do or any mural or billboard to paint or draw on.
More, after the repeated refusal of the Private Respondent to give Petitioner murals or billboards to work on, the Petitioner filed, with the Sub-Regional Arbitration Branch
No. X of the National Labor Relations Commission, a Complaint for Illegal Dismissal and Money Claims. Such act has, as the Supreme Court declared, negate any
intention to sever employment relationship. . . .[27]
II.
The second issue is whether private respondent Lagrama was illegally dismissed. To begin, the employer has the burden of proving the lawfulness of his
employees dismissal.[28] The validity of the charge must be clearly established in a manner consistent with due process. The Implementing Rules of the
Labor Code[29] provide that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. This provision has two
aspects: (1) the legality of the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in the
manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal
without due process.[30]
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the latter tried to explain his side, petitioner made it
plain that Lagrama was dismissed. Urinating in a work place other than the one designated for the purpose by the employer constitutes violation of
reasonable regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code for purposes of terminating employment, but the
same must be shown by evidence. Here there is no evidence that Lagrama did urinate in a place other than a rest room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found that the relationship between the employer and the
employee has been so strained that the latters reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the grant of
separation pay in lieu of reinstatement is appropriate. This is of course in addition to the payment of backwages which, in accordance with the ruling
in Bustamante v. NLRC,[31] should be computed from the time of Lagramas dismissal up to the time of the finality of this decision, without any deduction or
qualification.
The Bureau of Working Conditions[32] classifies workers paid by results into two groups, namely; (1) those whose time and performance is supervised by the
employer, and (2) those whose time and performance is unsupervised by the employer. The first involves an element of control and supervision over the
manner the work is to be performed, while the second does not. If a piece worker is supervised, there is an employer-employee relationship, as in this case.
However, such an employee is not entitled to service incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC[33] and Mark Roche
International v. NLRC,[34] he is paid a fixed amount for work done, regardless of the time he spent in accomplishing such work.
WHEREFORE, based on the foregoing, the petition is DENIED for lack of showing that the Court of Appeals committed any reversible error. The decision of
the Court of Appeals, reversing the decision of the National Labor Relations Commission and reinstating the decision of the Labor Arbiter, is AFFIRMED with
the MODIFICATION that the backwages and other benefits awarded to private respondent Leovigildo Lagrama should be computed from the time of his
dismissal up to the time of the finality of this decision, without any deduction and qualification. However, the service incentive leave pay awarded to him is
DELETED.

Labor Cases 3

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Labor Cases 3

Uploaded by

Copyright:

Available Formats

Labor Cases Batch 3-1

Bernardo vs. NLRC

The facts were summarized by the NLRC in this wise:[6]

Sort out bills according to color;

Wrap and label bills per hundred;

Put the wrapped bills into bundles; and

Submit bundled bills to the bank teller for verification.

Labor Cases Batch 3-2

The EMPLOYEE shall likewise be entitled to the following benefits:

Proportionate 13th month pay based on his basic daily wage.

Five (5) days incentive leave.

SSS premium payment.

9. GEORGE P. LIGUTAN, JR.

Labor Cases Batch 3-3

12. RONALD M. DELFIN

13. ROWENA M. TABAQUERO

14. CORAZON C. DELOS REYES

15. ROBERT G. NOORA

16. MILAGROS O. LEQUIGAN

17. ADRIANA F. TATLONGHARI

18. IKE CABANDUCOS

19. COCOY NOBELLO

20. DORENDA CATIMBUHAN

24. ISABEL MAMAUAG

25. VIOLETA G. MONTES

26. ALBINO TECSON

28. BERNADETH D. AGERO

29. CYNTHIA DE VERA

30. LANI R. CORTEZ

31. MA. ISABEL B. CONCEPCION

32. DINDO VALERIO

35. MARGARET CECILIA CANOZA

36. THELMA SEBASTIAN

37. MA. JEANETTE CERVANTES

38. JEANNIE RAMIL

39. ROZAIDA PASCUAL

40. PINKY BALOLOA

Labor Cases Batch 3-4

Labor Cases Batch 3-5

Labor Cases Batch 3-6

Opulencia Ice Plant vs. NLRC

Labor Cases Batch 3-7

Francisco vs. NLRC

Labor Cases Batch 3-8

Labor Cases Batch 3-9

Labor Cases Batch 3-10

Labor Cases Batch 3-11

Lopez vs. Bodega City

Labor Cases Batch 3-12

Labor Cases Batch 3-13

Dear Ms. Lolita Lopez,

Labor Cases Batch 3-14

AFP Mutual Benefit Association vs. NLRC

Duties and Obligations:

Labor Cases Batch 3-15

Labor Cases Batch 3-16

Labor Cases Batch 3-17

Labor Cases Batch 3-18

Insular Life Assurance Co. vs. NLRC

Labor Cases Batch 3-19

Labor Cases Batch 3-20

Tongko vs. Manufacturers Life Insurance Company Inc.

Labor Law Control = Employment Relationship

Labor Cases Batch 3-21