Republic Act 7796

TESDA Act of 1994

AN ACT CREATING THE TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY, PROVIDING
FOR ITS POWERS, STRUCTURE AND FOR OTHER PURPOSES

SECTION 1. Title. - This Act shall be known as the "Technical Education and Skills Development Act of
1994" or the "TESDA Act of 1994".

SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to provide relevant,
accessible, high quality and efficient technical education and skills development in support of the
development of high quality Filipino middle-level manpower responsive to and in accordance with
Philippine development goals and priorities.

The State shall encourage active participation of various concerned sectors, particularly private
enterprises, being direct participants in and immediate beneficiaries of a trained and skilled workforce,
in providing technical education and skills development opportunities.

SEC. 3. Statement of Goals and Objectives. - It is the goal and objective of this Act to:

 Promote and strengthen the quality of technical education and skills development programs to
attain international competitiveness;
 Focus technical education and skills development on meeting the changing demands for quality
middle-level manpower;
 Encourage critical and creative thinking by disseminating the scientific and technical
knowledge base of middle-level manpower development programs;
 Recognize and encourage the complementary roles of public and private institutions in technical
education and skills development and training systems; and
 Inculcate desirable values through the development of moral character with emphasis on work
ethic, self-discipline, self-reliance and nationalism.

SEC. 4. Definition of Terms. - As used in this Act:

 "Skill" shall mean the acquired and practiced ability to carry out a task or job;
 "Skills Development" shall mean the process through which learners and workers
are systematically provided with learning opportunities to acquire or upgrade, or both, their
ability, knowledge and behavior pattern required as qualifications for a job or range of jobs in a
given occupational area;
 "Technical Education" shall refer to the education process designed at post-secondary and
lower tertiary levels, officially recognized as non-degree programs aimed at preparing
technicians, para-professionals and other categories of middle-level workers by providing them
with a broad range of general education, theoretical, scientific and technological studies, and
related job skills training;
  "Trade" shall mean any group of interrelated jobs or any occupation which is traditionally or
officially recognized as craft or artisan in nature requiring specific qualifications that can be
acquired through work experience and/or training;
 "Middle-Level Manpower" refers to those:

1.who have acquired practical skills and knowledge through formal or non-formal education and
training equivalent to at least a secondary education but preferably at post-secondary education with a
corresponding degree of diploma; or
2.skilled workers who have become highly competent in their trade or craft as attested by industry;

 "Private Enterprises" refers to an economic system under which property of all kinds can be
privately owned and in which individuals, alone or in association with another, can embark on a
business activity. This includes industrial, agricultural, or agro-industrial establishments engaged
in the production, manufacturing, processing, repacking or assembly of goods including service-
oriented enterprises;
 "Trainers" shall mean persons who direct the practice of skills towards immediate improvement
in some task;
 "Trainors/trainers" shall mean persons who provide training to trainers aimed at developing the
latter's capacities for imparting attitudes, knowledge, skills and behavior patters required for
specific jobs, tasks, occupations or group of related occupations.
 "Trainees" shall mean persons who are participants in a vocational, administrative or technical
training program for the purpose of acquiring and developing job-related skills;
 "Apprenticeship" training within employment with compulsory related theoretical instruction
involving a contract between an apprentice and an employer on an approved apprenticeable
occupation;
 "Apprentice" is a person undergoing training for an approved apprenticeable occupation during
an apprenticeship agreement;
 "Apprenticeship Agreement" is a contract wherein a prospective employer binds himself to
train the apprentice who in turn accepts the terms of training for a recognized apprenticeable
occupation emphasizing the rights, duties and responsibilities of each party;
 "Apprenticeable Occupation" is an occupation officially endorsed by a tripartite body and
approved for apprenticeable by the Authority;
 "Learners" refers to persons hired as trainees in semi-skilled and other industrial occupations
which are non-apprenticeable. Learnership programs must be approved by the Authority;
 "User-Led" or "Market-Driven Strategy" refers to a strategy which promotes strengthened
linkages between educational/training institutions and industry to ensure that appropriate skills
and knowledge are provided by the educational system;
 "Dual System/Training" refers to a delivery system of quality technical and vocational education
which requires training to be carried out alternately in two venues: in-school and in the
production plant. In- school training provides the trainee the theoretical foundation, basic
training, guidance and human formation, while in-plant training develops his skills and
proficiency in actual work conditions as it continues to inculcate personal discipline and work
values;
 "Levy Grant System" refers to a legal contribution from participating employers who would be
beneficiaries of the program (often as a percentage of the payroll) which is subsequently turned
over or rebated to enterprises offering employee training programs.
SEC. 5. Technical Education and Skills Development Authority; Creation. - To implement the policy
declared in this Act, there is hereby created a Technical Education and Skills Development Authority
(TESDA), hereinafter referred to as the Authority, which shall replace and absorb the National
Manpower and Youth Council (NMYC), the Bureau of Technical and Vocational Education (BTVE) and
the personnel and functions pertaining to technical-vocational education in the regional offices of the
Department of Education, Culture and Sports (DECS) and the apprenticeship program of the Bureau
of Local Employment of the Department of Labor and Employment.

SEC. 6. Composition of the Authority. - The Authority shall be composed of the TESDA Board and the
TESDA Secretariat.

SEC. 7. Composition of the TESDA Board. - The TESDA Board shall be composed of the following:

 The Secretary of Labor and Employment

 Chairperson
 Secretary of Education, Culture and Sports
 Co-Chairperson
 Secretary of Trade and Industry
 Co-Chairperson
 Secretary of Agriculture Member
 Secretary of Interior and Local Government
 Member
 Director-General of the TESDA Secretariat
 Member

In addition, the President of the Philippines shall appoint the following members from the private
sector:

two (2) representatives, from the employer/industry organization, one of whom shall be a woman; three
(3) representatives, from the labor sector, one of whom shall be a woman; and two (2)
representatives of the national associations of private technical-vocational education and training
institutions, one of whom shall be a women. As soon as all the members of the private sector are
appointed, they shall so organized themselves that the term of office of one-third (1/3) of their number
shall expire every year. The member from the private sector appointed thereafter to fill vacancies
caused by expiration of terms shall hold office for three (3) years.

The President of the Philippines may, however, revise the membership of the TESDA Board, whenever
the President deems it necessary for the effective performance of the Board's functions through an
administrative order.

The TESDA Board shall meet at least twice a year, or as frequently as may be deemed necessary by
its Chairperson. In the absence of the Chairperson, a Co-Chairperson shall preside. In case any
member of the Board representing the Government cannot attend the meeting, he or she shall be
regularly represented by an undersecretary or deputy-director general, as the case may be, to be
designated by such member for the purpose.

The benefits, privileges and emoluments of the Board shall be consistent with existing laws and rules.
SEC. 8. Powers and Functions of the Board. - The Authority shall primarily be responsible for
formulating, continuing, coordinated and fully integrated technical education and skills development
policies, plans and programs taking into consideration the following:

 The State policy declared herein of giving new direction and thrusts to efforts in developing the
quality of Filipino human resource through technical education and skills development;
 The implementation of the above-mentioned policy requires the coordination and operation of
policies, plans, and programs of different concerned sectors of Philippine society;
 Equal participation of representatives of industry groups, trade associations, employers, workers
and government shall be made the rule in order to ensure that urgent needs and
recommendations are readily addressed; and
 Improved linkages between industry, labor and government shall be given priority in the
formulation of any national-level plan.
 The Board, shall have the following powers:

1. promulgate, after due consultation with industry groups, trade associations, employers, workers,
policies, plans, programs and guidelines as may be necessary for the effective implementation of this
Act;
2. organize and constitute various standing committees, subsidiary groups, or technical working
groups for efficient integration, coordination and monitoring technical education and skills development
programs at the national, regional, and local levels;
3. enter into, make, execute, perform and carry-out domestic and foreign contracts subject to
existing laws, rules and regulations.
4. restructure the entire sub-sector consisting of all institutions and programs involved in the
promotion and development of middle-level manpower through upgrading, merger and/or phase-out
following a user-led strategy;
5. approve trade skills standards and trade tests as established and conducted by private industries;
6. establish and administer a system of accreditation of both public and private institutions;
7. establish, develop and support institutions' trainors' training and/or programs;
8. lend support and encourage increasing utilization of the dual training system as provided for by
Republic Act. No. 7686;
9. exact reasonable fees and charges for such tests and trainings conducted and retain such earnings
for its own use, subject to guidelines promulgated by the Authority;
10. allocate resources, based on the Secretariat's recommendations for the programs and subjects it
shall undertake pursuant to approved National Technical Education and Skills Development Plan;
11. determine and approve systematic funding schemes such as the Levy and Grant scheme
for technical education and skills development purposes;
12. create, when deemed necessary, an Advisory Committee which shall provide expert and technical
advice to the Board to be chosen from the academe and the private sector: Provided, That in case the
Advisory Committee is created, the Board is hereby authorized to set aside a portion of its appropriation
for its operation; and
13. perform such other duties and functions necessary to carry out the provisions of this
Act consistent with the purposes of the creation of TESDA.

SEC. 9. Power to Review and Recommend Action. - The Authority shall review and recommend action
to concerned authorities on proposed technical assistance programs and grants-in-aid for
technical education or skills development, or both, including those which may be entered into between
the Government of the Philippines and other nations, including international and foreign organizations,
both here and abroad.

SEC. 10. The TESDA Secretariat. - There is hereby created a Technical Education and Skills
Development Authority Secretariat which shall have the following functions and responsibilities:

 To establish and maintain a planning process and formulate a national technical education and
skills development plan in which the member-agencies and other concerned entities of the
Authority at various levels participate;
 To provide analytical inputs to policy decision-making of the Authority on allocation of resources
and institutional roles and responsibilities as shall be embodied in annual agencies technical
education and skills development plans, in accordance with the manpower plan for middle-level
skilled worker as approved by the Authority;
 To recommend measures, and implement the same upon approval by the Authority, for the
effective and efficient implementation of the national technical education and skills
development plan;
 To propose to the Authority the specific allocation of resources for the programs and projects it
shall undertake pursuant to approved national technical education and skills development plan;
 To submit to the Authority periodic reports on the progress and accomplishment of work
programs of implementation of plans and policies for technical education and skills
development;
 To prepare for approval by the Authority an annual report to the President on technical
education and skills development;
 To implement and administer the apprenticeship program as provided for in Section 18 of his
Act;
 To prepare and implement upon approval by the Authority a program for the training of
trainers, supervisors, planners and managers as provided for in Section 23 of this Act;
 To enter into agreement to implement approved plans and programs and perform activities as
shall implement the declared policy of this Act; and to perform such other functions and duties
as may be assigned by the Board.

SEC. 11. Director-General. - The TESDA Secretariat shall be headed by a Director-General, who shall
likewise be a member of the TESDA Board. The Director-General shall be appointed by the President of
the Philippines and shall enjoy the benefits, privileges and emoluments equivalent to the rank
of Undersecretary.

As Chief Executive Officer of the TESDA Secretariat, the Director-General shall exercise
general supervision and control over its technical and administrative personnel.

SEC. 12. Deputy Directors-General. - The Director-General shall be assisted by two (2) Deputy Directors-
General to be appointed by the President of the Philippines on recommendation of the TESDA Board.
One to be responsible for Vocational and Technical Education and Training and one to be responsible
for Policies and Planning.

The Deputy Directors-General shall enjoy the benefits, privileges and emoluments equivalent to the
rank of Assistant Secretary.
SEC. 13. Chief of Services for Administration. - The Director-General shall also be assisted by a Chief
of Services for Administration who shall be a Career Civil Service Official to be appointed by the
TESDA Board.

SEC. 14. Structural Organization and Personnel. - The TESDA Secretariat, in addition to the offices
of the Director-General, Deputy Director-General and Chief of Services for Administration shall be
composed of the following offices to be headed by an Executive Director to be appointed by the
Director-General and shall have the rank and emoluments of Director IV.

Planning Office (PO) - The Planning Office shall be under the Office of the Deputy Director-
General and shall have the following functions:

1. To design and establish planning processes and methodologies which will particularly enhance the
efficiency of resource allocation decisions within the technical education and skills development sector;
2. To lead in the preparation and periodic updating of a national plan for technical education and
skills development which shall become the basis for resource allocation decisions within the sector;
3. To conduct researchers, studies and develop information systems for effective and
efficient planning and policy making within the sector;
4. To develop and implement programs and projects aimed at building up planning capabilities
of various institutions within the sector; and
5. To perform such other powers and functions as may be authorized by the Authority.

Skills Standards and Certification Office (SSCO) - The Skills Standards and Certification Office shall be
under the office of the Deputy Director-General and shall have the following functions:

1. To develop and establish a national system of skills standardization, testing and certification in the
country;
2. To design, innovate and adopt processes and methodologies whereby industry groups and
workers' guilds take note on progressively the responsibility of setting skills standards for identified
occupational areas, and the local government units actively participate in promoting skills standards,
testing and certification;
3. To establish and implement a system of accrediting private enterprises, workers' associations and
guilds and public institutions to serve as skills testing venues;
4. To conduct research and development on various occupational areas in order to
recommend policies, rules and regulations for effective and efficient skills standardization, testing
and certification system in the country; and
5. To perform such other duties and functions as may be authorized.

National Institute for Technical Vocational and Education Training (NITVET) - The National Institute
for Technical Vocational and Education Training to be under the office of the Deputy Director-General
and shall have the following functions:

1. To serve as the research and development arm of the government in the field of the technical-
vocational education and training;
2. To develop curricula and program standards for various technical-vocational education and
training areas;
3. To develop and implement an integrated program for continuing development of
trainors, teachers and instructors within the technical education and skills development sector;
 4. To develop programs and project which will build up institutional capabilities within the sector;
and
5. To perform such other powers and functions as may be authorized.

Office of Formal Technical Vocational Education and Training (OFTVET) - The Office of Formal
Technical Vocational Education and Training to be under the office of the Deputy Director-General and
shall have the following functions:

1. To provide policies, measures and guidelines for effective and efficient administration of
formal technical-vocational education and training programs implemented by various institutions in the
country;
2. To establish and maintain a system for accrediting, coordinating, integrating, monitoring and
evaluating the different formal technical-vocational education and training programs vis-à-vis the
approved national technical education and skills development plan;
3. To establish and maintain a network of institutions engaged in institutionalized technical-
vocational education and training, particularly with local government units; and
4. To perform such other duties and functions as may be authorized.

Office of the Non-Formal Technical-Vocational Education and Training (ONFTVET) - The Office of the
Non-Formal Technical-Vocational Education and Training to be under the office of the Deputy Director-
General and shall have the following functions:

1. To provide direction, policies and guidelines for effective implementation of non-formal

community-based technical-vocational education and training;
2. To accredit, coordinate, monitor and evaluate various non-formal technical-vocational education
and training programs implemented by various institutions particularly, by local government units;
3. To establish and maintain a network of institutions including local government units, non-
government organizations implementing non-formal, community-based technical-vocational education
and training;
4. To perform such other powers and functions as may be authorized.

Office of Apprenticeship (OA) - The Office of Apprenticeship shall be under the office of the Deputy
Director-General and shall have the following functions:

1. To provide direction, policies and guidelines on the implementation of the apprenticeship system;
2. To accredit, coordinate, monitor and evaluate all apprenticeship schemes and program
implemented by various institutions and enterprises;
3. To establish a network of institutions and enterprises conducting apprenticeship schemes
and programs;
4. To perform such other powers and functions as may be authorized.

Regional TESDA Offices - The Regional TESDA Offices shall be headed by Regional Directors with the
rank and emoluments of Director IV to be appointed by the President. The Regional TESDA Offices shall
be under the direct control of the Director-General and shall have the following functions:

1. To serve as Secretariat to Regional Technical Education Skills Development (TESDA) Committee;

2. To provide effective supervision, coordination and integration of technical education and skills
development programs, projects and related activities in their respective jurisdictions;
 3. To develop and recommend TESDA programs for regional and local-level implementation within
the policies set by the Authority.
4. To perform such other duties and functions as may be deemed necessary.

SEC. 15. The Provincial TESDA Offices. - The Provincial Offices shall be headed by Skill Development
Officers who shall have the rank and emoluments of a Director III.

The Provincial TESDA Offices shall be under the direct control of the Director-General and shall have
the following functions:

1. To serve as Secretariat to Provincial TESDA Committees;

2. To provide technical assistance particularly to local government units for effective supervisions,
coordination, integration and monitoring of technical-vocational education and training
programs within their localities;
3. To review and recommend TESDA Programs for implementation within their localities; and
4. To perform such other duties and functions as may be authorized. Furthermore, the TESDA
Secretariat maybe further composed by such offices as may be deemed necessary by the Authority. The
Director-General shall appoint such personnel necessary to carry out the objectives, policies and
functions of the Authority subject to civil service laws, rules and regulations.

SEC. 16. Compliance with the Salaries Standardization Law. - The compensation and emoluments
of the officials and employees of the Authority shall be in accordance with the salary standardization
law and other applicable laws under the national compensation and classification plan.

SEC. 17. Consultants and Technical Assistance, Publication and Research. - In pursuing its objectives,
the Authority is hereby authorized to set aside a portion of its appropriation for the hiring of services of
qualified consultants, and private organizations for research work and publication in the field of
technical education and skills development. It shall avail itself of the services of other agencies of the
Government as may be required.

SEC. 18. Transfer of the Apprenticeship Program. - The Apprenticeship Program of the Bureau of Local
Employment of the Department of Labor and Employment shall be transferred to the Authority which
shall implement and administer said program in accordance with existing laws, rules and regulations.

SEC. 19. Technical Education and Skills Development Committees. - The Authority shall
establish Technical Education and Skills Development Committees at the regional and local levels to
coordinate and monitor the delivery of all skills development activities by the public and private sectors.
These committees shall likewise serve as the Technical Education and Skills Development Committees
of the Regional and local development councils. The compositions of the Technical Education and
Skills development Committees shall be determined by the Director-General subject to the guidelines to
be
promulgated by the Authority.

SEC. 20. Skills Development Centers. - The Authority shall strengthen the network of national,
regional and local skills training centers for the purpose of promoting skills development. This network
shall include skills training centers in vocational and technical schools, technical institutes, polytechnic
colleges, and all other duly accredited public and private dual system educational institutions. The
technical education and skills development centers shall be administered and operated under such rules
and regulations as may be established by the Authority in accordance with the National Technical
Education and Skills Development Plan.

SEC. 21. Formulation of a Comprehensive Development Plan for Middle-Level Manpower. - The
Authority shall formulate a comprehensive development plan for middle-level manpower based on a
national employment plan or policies for the optimum allocation, development and utilization of skilled
workers for employment entrepreneurship and technology development for economic and social
growth. This plan shall after adoption by the Authority be updated periodically and submitted to the
President of the Philippines for approval. Thereafter, it shall be the plan for the technical education and
skills development for the entire country within the framework of the National Development Plan. The
Authority shall direct the TESDA Secretariat to call on its member-agencies, the private sector and the
academe to assist in this effort. The comprehensive plan shall provide for a reformed industry-based
training program including apprenticeship, dual training system and other similar schemes intended to:

 Promote maximum protection and welfare of the worker-trainee;

 Improve the quality and relevance and social accountability of technical education and skills
development;
 Accelerate the employment-generation effort of the government; and
 Expand the range of opportunities for upward social mobility of the school-going population
beyond the traditional higher levels of formal education. All government and non-government
agencies receiving financial and technical assistance from the government shall be required to
formulate their respective annual agency technical education and skills development plan in line
with the national technical education and skills development plan. The budget to support such
plans shall be subject to review and endorsement by the Authority to the Department of Budget
and Management. The Authority shall evaluate the efficiency and effectiveness of agencies skills
development program and schemes to make them conform with the quantitative and
qualitative objectives of the national technical education and skills development plan.

SEC. 22. Establishment and Administration of National Trade Skills Standards. - There shall be
national occupational skills standards to be established by TESDA-accredited industry committees. The
Authority shall develop and implement a certification and accreditation program in which private
industry groups
and trade associations are accredited to conduct approved trade tests, and the local government units
to promote such trade testing activities in their respective areas in accordance with the guidelines to be
set by the Authority. The Secretary of Labor and Employment shall determine the occupational trades
for mandatory certification. All certificates relating to the national trade skills testing and certification
system shall be issued by the Authority through the TESDA Secretariat.

SEC. 23. Administration of Training Programs. - The Authority shall design and administer
training programs and schemes the will develop the capabilities of public and private institutions to
provide quality and cost-effective technical education and skills development and related opportunities.
Such training programs and schemes shall include teacher's trainors' training, skills training for
entrepreneur development and technology development, cost-effective training in occupational trades
and related fields of employment, and value development as an integral component of all skills training
programs.
SEC. 24. Assistance to Employers and Organizations. - The Authority shall assist any employer
or organization engaged in skills training schemes designed to attain its objectives under rules
and regulations which the Authority shall establish for this purpose.

SEC. 25. Coordination of All Skills Training Schemes. - In order to integrate the national
skills development efforts, all technical education and skills training schemes as provided for in this Act
shall be coordinated with the Authority particularly those having to do with the setting of trade skills
standards. For this purpose, existing technical education and skills training programs in the Government
and in the private sector, specifically those wholly or partly financed with government funds, shall be
reported to the Authority which shall assess and evaluate such programs to ensure their efficiency and
effectiveness.

SEC. 26. Industry Boards. - The Authority shall establish effective and efficient institutional
arrangements with industry boards and such other bodies or associations to provide direct participation
of employers and workers in the design and implementation of skills development schemes, trade skills
standardization and certification and such other functions in the fulfillment of the Authority's objectives.

SEC. 27. Incentives Schemes. - The Authority shall develop and administer appropriate incentive
schemes to encourage government and private industries and institutions to provide high-quality
technical education and skills development opportunities.

SEC. 28. Skills Development Opportunities. - The Authority shall design and implement an effective
and efficient delivery system for quality technical education and skills development opportunities
particularly in disadvantaged sectors, with new tools of wealth creation and with the capability to take
on higher value-added gainful activities and to share equitably in productivity gains.

SEC. 29. Devolution of TESDA's Training Function to Local Governments. - In establishing the
delivery system provided for in the preceding Section, the Authority shall formulate, implement and
finance a specific plan to develop the capability of local government units to assume ultimately the
responsibility for effectively providing community-based technical education and skills development
opportunities: Provided, however, That there shall be formulated and implemented, an effective and
timely retraining of TESDA personnel that would be affected by the devolution to ensure their being
retained if the concerned local government units would not be able to absorb them.

SEC. 30. Skills Olympics. - To promote quality skills development in the country and with the view
of participating in international skills competitions, the Authority, with the active participation of
private industries, shall organize and conduct annual National Skills Olympics. The Authority, through
the
TESDA Secretariat, shall promulgate the necessary rules and guidelines for the effective and
efficient conduct of Annual National Skills Olympics and for the country's participation in internationals
skills
olympics.

SEC. 31. The TESDA Development Fund. - A TESDA Development Fund is hereby established, to be
managed/administered by the Authority, the income from which shall be utilized exclusively in
awarding of grants and providing assistance to training institutions, industries, local government units
for upgrading their capabilities and to develop and implement training and training-related activities.
The contribution to the fund shall be the following:

 A one-time lump sum appropriation from the National Government;

 An annual contribution from the Overseas Workers Welfare Administration Fund, the amount of
which should be part of the study on financing in conjunction with letter (D) of Section 34;
 Donations, grants, endowments, and other bequests or gifts, and any other income generated
by the Authority.

The TESDA Board shall be the administrator of the fund, and as such, shall formulate the necessary
implementing guidelines for the management of the fund, subject to the following:

a) unless otherwise stipulated by the private donor, only earnings of private contributions shall be
used; and b) no part of the seed capital of the fund, including earnings, thereof, shall be used to
underwrite expenses for administration.

The Board shall appoint a reputable government-accredited investment institutions as fund

manager, subject to guidelines promulgated by the Board.

SEC 32. Scholarship Grants. - The authority shall adopt a system of allocation and funding of
scholarship grants which shall be responsive to the technical education and skills development needs
of the different regions in the country.

SEC 33. TESDA Budget. - The amount necessary to finance the initial implementation of this Act shall be
charged against the existing appropriations of the NMYC and the BTVE. Thereafter, such funds as may
be necessary for the continued implementation of this Act shall be included in the annual
General Appropriations Act.

SEC 34. Transitory Provisions. -

a)Within two (2) months after the approval of this Act, the President shall, in consultation with the
Secretary of Labor and Employment and the Secretary of Education, Culture and Sports, appoint the
private sector representatives of the TESDA Board.

Within (3) months after the appointment of the private sector representatives, the President shall,
upon the recommendation of the Board, appoint the General-Director.

Within (4) months after the appointment of the Director General, the Board shall convene
to determine the organizational structure and staffing pattern of the Authority.

Within (1) year after the organization of the Authority, the Board shall commission an expert
group on funding schemes for the TESDA Development Fund, as provided in Section 31, the results of
which shall be used as the basis for appropriate action by the Board.

The personnel of the existing National Manpower and Youth Council (NMYC) of the Department of
Labor and Employment and the Bureau of Technical and Vocational Education (BTVE) of the Department
of Education, Culture and Sports, shall, in a holdover capacity, continue to perform their respective
duties and responsibilities and receive their corresponding salaries and benefits until such time when
the organizational structure and staffing pattern of the Authority shall have been approved by the
Board: Provide, That the preparation and approval of the said new organizational structure and staffing
pattern shall, as far as practicable, respect and ensure the security of tenure and seniority rights
affected government employees. Those personnel whose positions are not included in the new staffing
pattern approved by the Board or who are not reappointed or who choose to be separated as a result of
the reorganization shall be paid their separation or retirement benefits under existing laws.

SEC 35. Automatic review. - Every five (5) years, after the affectivity of this Act, an independent review
panel composed of three (3) persons appointed by the President shall review the performance of
the authority and shall make recommendations, based on its findings to the President shall review
the performance of the Authority and shall make the recommendations, based on the findings to
the President and to both Houses of Congress.

SEC. 36. Implementing Rules and Guidelines. - The TESDA board shall issue, within a period of
ninety (90) days after the affectivity of this Act, the rules and regulations for the effective
implementation of this Act. The TESDA Board shall submit tot he committees on Education, Arts and
Culture of both Houses of Congress copies of the implementing rules and guidelines within (30) days
after its promulgation. Any violation of this Section shall render the official/s concerned liable under R.
A. No. 6713, otherwise knownas the "Code of Conduct and Ethical Standards for Public Officials and
Employees" and other existing administrative and/or criminal laws.

SEC. 37. Repealing Clause. - All laws, presidential decrees, executive orders, presidential
proclamations, rules and regulations or part thereof contrary to or inconsistent with this Act are hereby
repealed or modified accordingly.

SEC. 38. Separability Clause. - If any provision of this Act is declared unconstitutional, the same
shall not affect the validity and effectivity of the other provisions hereof.

SEC. 39. Effectivity. - This Act shall take effect fifteen (15) days after its complete publication in two
(2)newspapers of general circulation.

RA 7277 – An Act Providing For The Rehabilitation, Self-Development And Self-Reliance Of Disabled
Person And Their Integration Into The Mainstream Of Society And For Other Purposes.

TITLE TWO RIGHTS AND PRIVILEGES OF DISABLED PERSONS

CHAPTER I – Employment

SECTION 5. Equal Opportunity for Employment

No disabled persons 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. Five percent (5%) of all casual, emergency and contractual positions in the Department of Social
Welfare and Development; Health; Education, Culture and Sports; and other government agencies,
offices or corporations engaged in social development shall be reserved for disabled persons.
SECTION 6. Sheltered Employment

If suitable employment for disabled persons cannot be found through open employment as provided in
the immediately preceding Section, the State shall endeavor to provide it by means of sheltered
employment. In the placement of disabled persons in sheltered employment, it shall accord due regard
to the individual qualities, vocational goals and inclinations to ensure a good working atmosphere and
efficient production.

SECTION 7. Apprenticeship

Subject to the provision of the Labor Code as amended, disabled persons shall be eligible as apprentices
or learners; Provided, That their handicap is not much as to effectively impede the performance of job
operations in the particular occupation for which they are hired; Provided, further, That after the lapse
of the period of apprenticeship if found satisfactory in the job performance, they shall be eligible for
employment.

SECTION 8. Incentives for Employer

(a) To encourage the active participation of the private sector in promoting the welfare of disabled
persons and to ensure gainful employment for qualified disabled persons, adequate incentives shall be
provided to private entities which employ disabled persons.

(b). Private entities that employ disabled persons who meet the required skills or qualifications, either as
regular employee, apprentice or learner, shall be entitled to an additional deduction, from their gross
income, equivalent to twenty-five percent (25%) of the total amount paid as salaries and wages to
disabled persons: Provided, however, That such entities present proof as certified by the Department of
Labor and Employment that disabled person are under their employ. Provided, further, That the
disabled employee is accredited with the Department of Labor and Employment and the Department of
Health as to his disability, skills and qualifications.

(c). Private entities that improved or modify their physical facilities in order to provide reasonable
accommodation for disabled persons shall also be entitled to an additional deduction from their net
taxable income, equivalent to fifty percent (50%) of the direct costs of the improvements or
modifications. This section, however, does not apply to improvements or modifications of facilities
required under Batas Pambansa Bilang 344.

SECTION 9. Vocational Rehabilitation

Consistent with the principle of equal opportunity for disabled workers and workers in general, the
State shall take appropriate vocational rehabilitation measures that shall serve to develop the skills and
potential of disabled persons and enable them to compete favorably for available productive and
remunerative employment opportunities in the labor market. The State shall also take measures to
ensure the provisions of vocational rehabilitation and livelihood services for disabled persons in the
rural areas. In addition, it shall promote cooperation and coordination between the government and
non-government organization and other private entities engaged in vocational rehabilitation activities.
The Department of Social Welfare and Development shall design and implement training programs that
will provide disabled persons with vocational skills to enable them to engage in livelihood activities or
obtain gainful employment. The Department of Labor and Employment shall likewise design and
conduct training programs geared towards providing disabled persons with skills for livelihood.

SECTION 10. Vocational Guidance and Counselling

The Department of Social Welfare and Development shall implement measures providing and evaluating
vocational guidance and counselling to enable disabled persons to secure, retain and advance in
employment. It shall ensure the availability and training counsellors and other suitability qualified staff
responsible for the vocational guidance and counselling of disabled persons.

SECTION 11. Implementing Rules and Regulations

The Department of Labor and Employment shall in coordination with the Department of Social Welfare
and Development (DSWD) and National Council for the Welfare of Disabled Persons (NCWDP), shall
promulgate the rules and regulations necessary to implement the provision under this Chapter.

Bernardo vs NLRC
G.R. No. 122917, July 12, 1999

Facts:

Petitioners numbering 43 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. Subsequently, they are dismissed.

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." 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 civic-minded 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."

The labor arbiter and, on appeal, the NLRC ruled against herein petitioners. Hence, this recourse.

Issue: Are the petitioners regular employees?

Held:

YES. 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.

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:

Sec. 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 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.

The stipulations in the employment contracts indubitably conform with Article 80 of the Labor code.
Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons), 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.

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, 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 indispensibility of that activity to the business. Hence, the employment is considered regular,
but only with respect to such activity, and while such activity exist.

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 twenty-seven petitioners should be deemed regular 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, these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back
wages and reinstatement without loss of seniority rights and other privileges.

Because the other sixteen worked only for six months, they are not deemed regular employees and
hence not entitled to the same benefits.

“Brotherhood” Labor Unity Movement of the Philippines vs. Hon. Ronald Zamora
G.R. No. L-48645 January 7, 1987
Gutierrez, Jr., J.:

FACTS:
The petitioners are workers who have been employed at the San Miguel Parola Glass Factory as
“pahinantes” or “kargadors” for almost seven years. They worked exclusively at the SMC plant, never
having been assigned to other companies or departments of San Miguel Corp, even when the volume of
work was at its minimum. Their work was neither regular nor continuous, depending on the volume of
bottles to be loaded and unloaded, as well as the business activity of the company. However, work
exceeded the eight-hour day and sometimes, necessitated work on Sundays and holidays. -for this, they
were neither paid overtime nor compensation.

Sometime in 1969, the workers organized and affiliated themselves with Brotherhood Labor Unity
Movement (BLUM). They wanted to be paid to overtime and holiday pay. They pressed the SMC
management to hear their grievances. BLUM filed a notice of strike with the Bureau of Labor Relations
in connection with the dismissal of some of its members. San Miguel refused to bargain with the union
alleging that the workers are not their employees but the employees of an independent labor
contracting firm, Guaranteed Labor Contractor.
The workers were then dismissed from their jobs and denied entrance to the glass factory despite their
regularly reporting for work. A complaint was filed for illegal dismissal and unfair labor practices.

On their part, respondents moved for the dismissal of the complaint on the grounds that the
complainants are not and have never been employees of respondent company but employees of the
independent contractor; that respondent company has never had control over the means and methods
followed by the independent contractor who enjoyed full authority to hire and control said employees;
and that the individual complainants are barred by estoppel from asserting that they are employees of
respondent company.

On February 9, 1976, Labor Arbiter Nestor C. Lim found for complainants which was concurred in by the
NLRC in a decision dated June 28, 1976. The amount of backwages awarded, however, was reduced by
NLRC to the equivalent of one (1) year salary.

On appeal, the Secretary in a decision dated June 1, 1977, set aside the NLRC ruling, stressing the
absence of an employer-employee relationship as borne out by the records of the case. ...

ISSUE:
Is there an employer-employee relationship between petitioners-members of the "Brotherhood Labor
Unit Movement of the Philippines" (BLUM) and respondent San Miguel Corporation?

RULING:
YES.

In determining the existence of an employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect
to the means and methods by which the work is to be accomplished. It is the called "control test" that
is the most important element (Investment Planning Corp. of the Phils. v. The Social Security System, 21
SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72).

In the case, the records fail to show that San Miguel entered into mere oral agreements of employment
with the workers. Considering the length of time that the petitioners have worked with the company,
there is justification to conclude that they were engaged to perform activities necessary in the usual
business or trade. Despite past shutdowns of the glass plant, the workers promptly returned to their
jobs. The term of the petitioner’s employment appears indefinite and the continuity and habituality of
the petitioner’s work bolsters the claim of an employee status.

As for the payment of the workers’ wages, the contention that the independent contractors were paid a
lump sum representing only the salaries the workers where entitled to have no merit. The amount paid
by San Miguel to the contracting firm is no business expense or capital outlay of the latter. What the
contractor receives is a percentage from the total earnings of all the workers plus an additional amount
from the earnings of each individual worker.

The power of dismissal by the employer was evident when the petitioners had already been refused
entry to the premises. It is apparent that the closure of the warehouse was a ploy to get rid of the
petitioners, who were then agitating the company for reforms and benefits.
The inter-office memoranda submitted in evidence prove the company’s control over the workers. That
San Miguel has the power to recommend penalties or dismissal is the strongest indication of the
company’s right of control over the workers as direct employer.

The respondent asserts that the petitioners are employees of the Guaranteed Labor Contractor, an
independent labor contracting firm.

The existence of an independent contractor relationship is generally established by the following

criteria: "whether or not the contractor is carrying on an independent business; the nature and extent of
the work; the skill required; the term and duration of the relationship; the right to assign the
performance of a specified piece of work; the control and supervision of the work to another; the
employer's power with respect to the hiring, firing and payment of the contractor's workers; the control
of the premises; the duty to supply the premises tools, appliances, materials and labor; and the mode,
manner and terms of payment" (56 CJS Master and Servant, Sec. 3(2), 46; See also 27 AM. Jur.
Independent Contractor, Sec. 5, 485 and Annex 75 ALR 7260727)

None of the above criteria exists in this case.

Continental Marble Corp. vs. NLRC

G.R. No. L-43825, May 9, 1988
Padilla, J.:

FACTS:
Rodito Nasayao claimed that sometime in May 1974, he was appointed plant manager of the petitioner
corporation, with an alleged compensation of P3,000.00, a month, or 25% of the monthly net income of
the company, whichever is greater, and when the company failed to pay his salary for the months of
May, June, and July 1974, Rodito Nasayao filed a complaint with the National Labor Relations
Commission, Branch IV, for the recovery of said unpaid varies.

The herein petitioners denied that Rodito Nasayao was employed in the company as plant manager.
They claimed that the undertaking agreed upon by the parties was a joint venture, a sort of partnership,
wherein Rodito Nasayao was to keep the machinery in good working condition and, in return, he would
get the contracts from end-users for the installation of marble products, in which the company would
not interfere. In addition, private respondent Nasayao was to receive an amount equivalent to 25% of
the net profits that the petitioner corporation would realize, should there be any. Petitioners alleged
that since there had been no profits during said period, private respondent was not entitled to any
amount.

Voluntary Arbitrator: Rendered judgment in favor of the complainant, ordering the petitioners to pay
Rodito Nasayao the amount of P9,000.00, within 10 days from notice.

NLRC: Dismissed the appeal, in a resolution, on the ground that the decision appealed from is final,
unappealable and immediately executory, and ordered the herein petitioners to comply with the
decision of the voluntary arbitrator within 10 days from receipt of the resolution.
ISSUE:
Was private respondent Rodito Nasayao employed as plant manager of petitioner Continental Marble
Corporation?

RULING:
NO. The finding of the voluntary arbitrator that Rodito Nasayao was an employee of the petitioner
corporation is not supported by the evidence or by the law.

There is nothing in the record which would support the claim of Rodito Nasayao that he was an
employee of the petitioner corporation. He was not included in the company payroll, nor in the list of
company employees furnished to the Social Security System.

Most of all, the element of control is lacking. In Brotherhood Labor Unity Movement in the Philippines vs.
Zamora, the Court enumerated the factors in determining whether or not an employer-employee
relationship exists, to wit:

In determining the existence of an employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to
the means and methods by which the work is to be accomplished. It is the so-called "control test" that is
the most important element (Investment Planning Corp. of the Phils. vs. The Social Security System, 21
SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72).

In the instant case, it appears that the petitioners had no control over the conduct of Rodito Nasayao in
the performance of his work. He decided for himself on what was to be done and worked at his own
pleasure. He was not subject to definite hours or conditions of work and, in turn, was compensated
according to the results of his own effort. He had a free hand in running the company and its business,
so much so, that the petitioner Felipe David did not know, until very much later, that Rodito Nasayao
had collected old accounts receivables, not covered by their agreement, which he converted to his
own personal use. It was only after Rodito Nasayao had abandoned the plant following discovery of his
wrong- doings, that Felipe David assumed management of the plant.

Absent the power to control the employee with respect to the means and methods by which his work
was to be accomplished, there was no employer-employee relationship between the parties. Hence,
there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.

Sevilla vs. CA
G.R. No. L-41182-3, April 16, 1988
Sarmiento, J.:

FACTS: The petitioners invoke the provisions on human relations of the Civil Code in this appeal
by certiorari. Mrs. Segundina Noguera, party of the first part; the Tourist World Service, Inc.,
represented by Mr. Eliseo Canilao as party of the second part, and hereinafter referred to as
appellants, the Tourist World Service, Inc. leased the premises belonging to the party of the
first part at Mabini St., Manila for the former-s use as a branch office. In the said contract the
party of the third part held herself solidarily liable with the party of the part for the prompt
payment of the monthly rental agreed on. When the branch office was opened, the same was
run by the herein appellant Una 0. Sevilla payable to Tourist World Service Inc. by any airline for
any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was
to be withheld by the Tourist World Service, Inc.

On November 24, 1961 the Tourist World Service, Inc. appears to have been informed that Lina
Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the branch
office was anyhow losing, the Tourist World Service considered closing down its office. On June
17,1963, appellant Lina Sevilla refiled her case against the herein appellees and after the issues
were joined, the reinstated counterclaim of Segundina Noguera and the new complaint of
appellant Lina Sevilla were jointly heard following which the court ordered both cases dismiss
for lack of merit.

In her appeal, Lina Sevilla claims that a joint bussiness venture was entered into by and
between her and appellee TWS with offices at the Ermita branch office and that she was not an
employee of the TWS to the end that her relationship with TWS was one of a joint business
venture appellant made declarations.

ISSUE: Whether or not the padlocking of the premises by the Tourist World Service, Inc.
without the knowledge and consent of the appellant Lina Sevilla entitled the latter to the relief
of damages prayed for and whether or not the evidence for the said appellant supports the
contention that the appellee Tourist World Service, Inc. unilaterally and without the consent of
the appellant disconnected the telephone lines of the Ermita branch office of the appellee
Tourist World Service, Inc.?

HELD: The trial court held for the private respondent on the premise that the private
respondent, Tourist World Service, Inc., being the true lessee, it was within its prerogative to
terminate the lease and padlock the premises. It likewise found the petitioner, Lina Sevilla, to
be a mere employee of said Tourist World Service, Inc. and as such, she was bound by the acts
of her employer. The respondent Court of Appeal rendered an affirmance.

In this jurisdiction, there has been no uniform test to determine the evidence of an employer-
employee relation. In general, we 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." Subsequently, however, we have
considered, 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, in
determining the existence of an employer-employee relationship.

ENCYCLOPEDIA BRITANNICA INC. VS. NLRC

G.R. NO. 87098
NOV. 4, 1996
TORRES, JR., J.
FACTS: Private respondent was a sales division manager of private petitioner and was in charge
of selling the latter’s products through sales representatives. As compensation, private
respondent receive commissions from the products sold by his agents. After resigning from
office to pursue his private business, he filed a complaint against the petitioner, claiming for
non-payment of separation pay and other benefits.

Petitioner alleged that complainant was not its employee but an independent dealer authorized
to promote and sell its products and in return, received commissions therefrom. Petitioner did
not have any salary and his income from petitioner was dependent on the volume of sales
accomplished. He had his own office, financed the business expense, and maintained his own
workforce. Thus petitioner argued that it had no control and supervision over the complainant
as to the manner and means he conducted his business operations. The Labor Arbiter ruled that
complainant was an employee of the petitioner company.

Petioner had control over the complainant since the latter was required to make periodic
reports of his sales activities to the company.

ISSUE: Whether or not there exists an employer-employee relationship.

HELD: No. Control of employee’s conduct is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-employee relationship. Under this, an employer-
employee relationship exists where the person for whom the services are performed reserves the right
to control not only the end to be achieved, but also the manner and means to be used in reaching that
end. The fact that petitioner issued memoranda to private respondent and to other division sales
managers did not prove that petitioner had actual control over them. The different memoranda were
merely guidelines on company policies which the sales managers follow and impose on their respective
agents.

Tirazona vs. CA
G.R. No. 169712, March 14, 2008
Chico-Nazario, J.:

FACTS:

ISSUE:

RULING:

Assailed in this Special Civil Action for Certiorari1 under Rule 65 of the Rules of Court are the Decision2
and Resolution3 of the Court of Appeals dated 24 May 2005 and 7 September 2005, respectively, in CA-
G.R. SP No. 85065. The appellate court’s Decision dismissed petitioner Ma. Wenelita Tirazona’s Special
Civil Action for Certiorari and affirmed the Decision4 dated 30 January 2004 of the National Labor
Relations Commission (NLRC) in NLRC CA No. 034872-03, which ruled that petitioner’s dismissal from
employment was legal; and its Resolution which denied petitioner’s Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows:

Private respondent Philippine EDS-Techno Services Inc. (PET) is a corporation duly registered under
Philippine laws and is engaged in the business of designing automotive wiring harnesses for automobile
manufacturers. Private respondents Ken Kubota, Mamoru Ono and Junichi Hirose are all Japanese
nationals, the first being the President and the latter two being the directors of PET.

On 21 July 1999, PET employed Ma. Wenelita S. Tirazona (Tirazona) as Administrative Manager. Being
the top-ranking Filipino Manager, she acted as the liaison between the Japanese management and the
Filipino staff.

On 15 January 2002, Fe Balonzo, a rank-and-file employee, wrote a letter5 that was addressed to nobody
in particular, but was later acquired by PET management. In her letter, Balonzo complained that
Tirazona humiliated her while she was reporting back to work after recuperating from a bout of
tuberculosis. Balonzo explained that Tirazona insinuated, in a manner loud enough to be heard from the
outside, that Balonzo still had the disease. This allegedly occurred despite Balonzo’s possession of a
medical clearance that proved her fitness to return to work. Balonzo thus requested that the necessary
action be undertaken to address the said incident.

Upon receiving the letter, the PET management directed Tirazona to file her comment. Tirazona replied
accordingly in a letter6 wherein she denied the accusations against her. Tirazona stated that her only
intention was to orient Balonzo about the latter’s rights as a sick employee, i.e., that under the law, if
the latter planned to resign, the company can give her separation pay. Tirazona likewise asked for an
independent investigation and threatened to file a libel case against Balonzo for allegedly trying to
destroy her reputation and credibility.

After weighing the situation, PET director Ono sent a memorandum to Tirazona, which reads:

February 8, 2002

To: Mrs. W. Tirazona

Re: Letter-Complaint of Fe S. Balonzo

This is to advise you that Management is satisfied that you did not intend to humiliate or embarrass Ms.
Balonzo during the incident on January 14, 2002. It also appreciates the concern you profess for the
welfare of PET employees.

Nonetheless, Management finds your handling of the situation less than ideal. Considering the sensitive
nature of the issue, a little more circumspection could have readily avoided the incident which it cannot
be denied caused unnecessary discomfort and hurt feelings to Ms. Balonzo. Certainly, you could have
discussed the matter in private and allowed her to first deliver her piece rather than pre-empt her
declaration. As it turned out, your assumption (that Ms. Balonzo would request for a leave extension)
was in fact wrong and she had a medical certificate attesting her fitness to return to work.
Management therefore would like to remind you of the high expectations of your position.

Management considers this matter closed, and finds it appropriate to convey to you that it does not
view with favor your notice to file legal action. Management believes that you share the idea that issues
regarding employee relations are best threshed out within the Company. Resorting to legal action is
unlikely to solve but on the contrary would only exacerbate such problems.

We trust that, after emotions have calmed down, you would still see it that way.

(Sgd.)
Mamoru Ono
Director7

On 6 March 2002, Tirazona’s counsels sent demand letters8 to PET’s business address, directed
separately to Ono and Balonzo. The letter to Ono states:

February 27, 2002

MR. MAMORU ONO

Director
PET, Inc.
20/F 6788 Ayala Avenue
Oledan Square, Makati City

Dear Mr. Ono:

We are writing in [sic] behalf of our client, Ms. MA. WENELITA S. TIRAZONA, Administrative Manager of
your corporation.

We regret that on February 8, 2002, you delivered to our client a letter containing among others, your
conclusion that Ms. Tirazona was guilty of the unfounded and baseless charges presented by Ms. Fe
Balonzo in her letter-complaint dated January 15, 2002. You may please recall that in Ms. Tirazona’s
letter to Mr. Junichi Hirose, she presented point by point, her side on the allegations made by the
complainant. In the same letter, Ms. Tirazona requested for an independent investigation of the case in
order to thresh out all issues, ferret out the truth and give her the opportunity to be heard and confront
her accuser. These were all denied our client.

As a result of the foregoing, Ms. Tirazona’s constitutional right to due process was violated and
judgment was rendered by you on mere allegations expressed in a letter-complaint to an unknown
addressee.

Considering the position and stature of Mrs. Tirazona in the community and business circles, we are
constrained to formally demand payment of P2,000,000.00 in damages, injured feelings, serious anxiety
and besmirched reputation that she is now suffering.

We are giving you five (5) days from receipt hereof to make favorable response, otherwise, much to our
regret, we will institute legal procedures to protect our client’s interests.
Please give this matter the attention it deserves.

Very truly yours,

PRINCIPE, VILLANO, VILLACORTA & CLEMENTE

By:

(Sgd.)
PEDRO S. PRINCIPE

(Sgd.)
GLICERIO E. VILLANO

The letter sent to Balonzo likewise sought the same amount of damages for her allegedly baseless and
unfounded accusations against Tirazona.

Because of Tirazona’s obstinate demand for compensation, PET sent her a Notice of Charge,9 which
informed her that they were considering her termination from employment by reason of serious
misconduct and breach of trust. According to the management, they found her letter libelous, since it
falsely accused the company of finding her guilty of the charges of Balonzo and depriving her of due
process.

On 26 March 2002, Tirazona explained in a letter10 that her counsels’ demand letter was brought about
by the denial of her repeated requests for reinvestigation of the Balonzo incident, and that the same
was personally addressed to Mamoru Ono and not to the company. She also reiterated her request for
an investigation and/or an open hearing to be conducted on the matter.

The PET management replied11 that the Balonzo incident was already deemed a closed matter, and that
the only issue for consideration was Tirazona’s "ill-advised response to the Management’s disposition to
the Fe Balonzo incident," for which an administrative hearing was scheduled on 4 April 2002.

On 3 April 2002, Tirazona submitted a written demand12 to PET that the Balonzo incident be included in
the scheduled hearing. She further stated that since the management had already prejudged her case,
she would only participate in the proceedings if the investigating panel would be composed of three
employees, one each from the rank-and-file, supervisory, and managerial levels, plus a representative
from the Department of Labor and Employment (DOLE).

The PET management rejected Tirazona’s demands in a letter 13 and informed her that the hearing was
reset to 10 April 2002, which would be presided by PET’s external counsel.

On 10 April 2002, Tirazona and her counsel did not appear at the administrative hearing. The PET
management informed them through a memorandum14 dated 12 April 2002 that the hearing was
carried out despite their absence. Nevertheless, Tirazona was granted a final chance to submit a
supplemental written explanation or additional documents to substantiate her claims.
Tirazona’s written explanation15 dated 17 April 2002 merely reiterated, without further details, her
previous claims, to wit: that Balonzo’s charges were unfounded and baseless; that she had been denied
due process; and that she would not submit herself to an investigating panel that had already prejudged
her case. Tirazona also stated that her claim for damages would be justified at the proper forum, and
that she admitted to reading a confidential letter addressed to PET directors Ono and Fukuoka,
containing the legal opinion of PET’s counsel regarding her case.

After finding the explanations unsatisfactory, PET sent Tirazona a Notice of Termination,16 which found
her guilty of serious misconduct and breach of trust because of her demand against the company and
her invasion of PET’s right to privileged communication.

Tirazona then instituted with the NLRC a complaint for illegal dismissal, non-payment of salaries, and
damages against PET, docketed as NLRC-CA No. 034872-03.

In the Decision17 dated 22 January 2003, Labor Arbiter Veneranda C. Guerrero ruled in favor of Tirazona,
holding that the latter’s termination from employment was illegal.

The Arbiter declared that there was no breach of trust when Tirazona sent the demand letter, as the
same was against Ono in his personal capacity, not against the company. The decision also ruled that
PET failed to discharge the burden of proving that the alleged breach of trust was fraudulent and willful,
and that the company was careless in handling its communications. The Arbiter further stated that
Tirazona was deprived of her right to due process when she was denied a fair hearing.

On appeal by PET, the NLRC reversed the rulings of the Labor Arbiter in a Decision dated 30 January
2004, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered SETTING ASIDE the Decision of the Labor Arbiter dated
January 27, 2003 and a new one is entered DISMISSING the complaint for lack of merit.18

Contrary to the Labor Arbiter’s findings, the NLRC concluded that Tirazona’s termination from
employment was in accordance with law. It ruled that Tirazona’s demand letter addressed to Ono
constituted a just cause for dismissal, as the same was "an openly hostile act" by a high-ranking
managerial employee against the company.19 The NLRC likewise found that PET complied with the
notice and hearing requirements of due process, inasmuch as Tirazona’s demand for a special panel was
without any legal basis. Furthermore, petitioner breached the company’s trust when she read the
confidential legal opinion of PET’s counsel without permission.

The Motion for Reconsideration filed by Tirazona was denied by the NLRC in a Resolution dated 31 May
2004, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, Complainant-Appellee’s Motion for Reconsideration is hereby

DISMISSED for lack of merit and our Decision dated 30 January 2004 is thus AFFIRMED with finality.20

Aggrieved, Tirazona instituted with the Court of Appeals a Special Civil Action for Certiorari under Rule
65, alleging grave abuse of discretion on the part of the NLRC, docketed as CA-G.R. SP No. 85065.

In a Decision dated 24 May 2005, the appellate court affirmed the NLRC and ruled thus:
WHEREFORE, in consideration of the foregoing, the petition is perforce dismissed.21

Her Motion for Reconsideration having been denied by the appellate court in a Resolution dated 7
September 2005, Tirazona now impugns before this Court the Court of Appeals Decision dated 24 May
2005, raising the following issues:

I.

WHETHER THERE WAS BREACH OF TRUST ON THE PART OF PETITIONER TIRAZONA WHEN SHE WROTE
THE TWO MILLION PESO DEMAND LETTER FOR DAMAGES, WARRANTING HER DISMISSAL FROM
EMPLOYMENT.

II.

WHETHER DUE PROCESS WAS SUFFICIENTLY AND FAITHFULLY OBSERVED BY RESPONDENTS IN THE
DISMISSAL OF PETITIONER TIRAZONA FROM EMPLOYMENT.

In essence, the issue that has been brought before this Court for consideration is whether or not
Tirazona was legally dismissed from employment.

Prefatorily, the Court notes that Tirazona elevated her case to this Court via a Petition for Certiorari
under Rule 65 of the Rules of Court. The appropriate remedy would have been for Tirazona to file an
appeal through a Petition for Review on Certiorari under Rule 45.

For a Petition for Certiorari under Rule 65 of the Rules of Court to prosper, the following requisites must
be present: (1) the writ is directed against a tribunal, a board or an officer exercising judicial or quasi-
judicial functions: (2) such tribunal, board or officer has acted without or in excess of jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any
plain, speedy and adequate remedy in the ordinary course of law.22

There is grave abuse of discretion "when there is a capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, such as where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and it must be so patent and gross so as to amount to
an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law."23

The Petition for Certiorari shall be filed not later than sixty (60) days from notice of the judgment, order
or resolution. In case a motion for reconsideration is timely filed, the sixty (60)-day period shall be
counted from notice of the denial of the said motion.24

On the other hand, Rule 45 of the Rules of Court pertains to a Petition for Review on Certiorari whereby
"a party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of
Appeals x x x may file with the Supreme Court a verified petition for review on certiorari. The petition
shall raise only questions of law which must be distinctly set forth."25
The petition shall be filed within fifteen (15) days from notice of the judgment or final order or
resolution appealed from, or of the denial of the petitioner’s motion for new trial or reconsideration
filed in due time after notice of the judgment.26

In the present case, the assailed Decision is the dismissal by the Court of Appeals of Tirazona’s Petition
for Certiorari under Rule 65. Said Decision partakes of the nature of a judgment or final order, thus, is
reviewable only through an appeal by certiorari under Rule 45.

As aptly declared by the Court in National Irrigation Administration v. Court of Appeals27:

[s]ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors
committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable by
timely appeal and not by a special civil action of certiorari. If the aggrieved party fails to do so within
the reglementary period, and the decision accordingly becomes final and executory, he cannot avail
himself of the writ of certiorari, his predicament being the effect of his deliberate inaction. [Emphasis
ours.]

Even just a cursory glance at the issues raised by Tirazona before this Court readily reveals that these
pertain to purported errors of judgment committed by the appellate court in its appreciation of the
allegations, evidence, and arguments presented by the parties. There is no question here of the Court of
Appeals acting on Tirazona’s Petition in CA-G.R. No. 85065 without or in excess of jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction.

A review of the rollo of the Petition at bar divulges even further that Tirazona’s resort to a wrong
remedy was not an innocent mistake but a deliberate choice.

On 5 October 2005, Tirazona filed with this Court a Petition for Extension of Time to File a Petition for
Review on Certiorari.28 Tirazona stated therein that she received the notice of the Court of Appeals
Resolution denying her Motion for Reconsideration on 23 September 2005. Since she only had fifteen
(15) days after the said date to file a Petition for Review on Certiorari, or until 8 October 2005, Tirazona
prayed for an extension of thirty (30) days, with her counsel citing extreme pressures of work.

In a Resolution29 dated 19 October 2005, the Court granted Tirazona’s Motion for Extension. The
extended period was to end on 7 November 2005. However, Tirazona failed to file a Petition for Review
on Certiorari within the said period. Instead, she filed the present Petition for Certiorari on 5 December
2005, seventy-three (73) days after notice of the Court of Appeals Resolution denying her Motion for
Reconsideration.

From the foregoing, it is fairly obvious that Tirazona was aware that she was supposed to file an appeal
through a Petition for Review on Certiorari under Rule 45. That she filed the instant Petition for
Certiorari under Rule 65 and only after an inexplicably long period of time leads to the inescapable
conclusion that the same was merely an afterthought, nothing more than a desperate attempt to revive
a lost appeal.

The special civil action of certiorari under Rule 65 is an independent action that cannot be availed of as a
substitute for the lost remedy of an ordinary appeal, including that under Rule 45, especially if such loss
or lapse was occasioned by one’s own neglect or error in the choice of remedies.30 It also bears to stress
the well-settled principle that the remedies of appeal and certiorari are mutually exclusive and not
alternative or successive. Under Rule 56, Sec. 5(f) of the Revised Rules of Court, a wrong or
inappropriate mode of appeal merits an outright dismissal.31

Tirazona, in her Reply32 before this Court, even admits that although the instant Petition is one of special
civil action of certiorari under Rule 65, her petition is in reality an appeal under Rule 45 as her petition
raises pure questions of law. Tirazona herself acknowledges the formal defects of her own Petition and
attributes the same to the haste and inadvertence of her former counsel, who allegedly prepared the
instant Petition without her participation.33 She thus urges this Court to suspend the application of its
own rules on grounds of equity and substantial justice, considering that it is her employment that is at
stake in this case.

In this regard, it needs to be emphasized that before the Court may treat the present petition as having
been filed under Rule 45, the same must comply with the reglementary period for filing an appeal. This
requirement is not only mandatory but also jurisdictional such that failure to do so renders the assailed
decision final and executory, and deprives this Court of jurisdiction to alter the final judgment, much less
to entertain the appeal.34 Since the instant petition was filed after the lapse of the extended period for
filing an appeal, the same should be dismissed outright.

Nevertheless, the Court finds it essential that we discuss the case on its merits, bearing in mind that the
paramount consideration in this case is an employee’s right to security of tenure, and in order to
provide Tirazona the amplest opportunity to know how the Court arrived at a proper and just
determination of her case.

Even if the Court were to ignore the conspicuous procedural defects committed by Tirazona and treat
her Petition as an appeal under Rule 45, it still finds that the Petition must be denied for lack of merit.

Petitioner contends that, contrary to the findings of the Court of Appeals, her dismissal from
employment was illegal for having lacked both a legal basis and the observance of due process.

In employee termination cases, the well-entrenched policy is that no worker shall be dismissed except
for a just or authorized cause provided by law and after due process. Clearly, dismissals have two facets:
first, the legality of the act of dismissal, which constitutes substantive due process; and second, the
legality in the manner of dismissal, which constitutes procedural due process.35

Under Article 282(c)36 of the Labor Code, loss of trust and confidence is one of the just causes for
dismissing an employee. It is an established principle that loss of confidence must be premised on the
fact that the employee concerned holds a position of trust and confidence. This situation obtains where
a person is entrusted with confidence on delicate matters, such as care and protection, handling or
custody of the employer’s property. But, in order to constitute a just cause for dismissal, the act
complained of must be "work-related" such as would show the employee concerned to be unfit to
continue working for the employer. Besides, for loss of confidence to be a valid ground for dismissal,
such loss of confidence must arise from particular proven facts.37

Tirazona claims that her demand letter was merely an expression of indignation by a disgruntled
employee against a director, not against the company and, by itself, cannot constitute a breach of trust
and confidence. The company’s notice of charge allegedly insinuated Tirazona’s guilt in the Balonzo
incident; hence, the need to defend herself. Tirazona likewise asserts that she is an ordinary rank-and-
file employee as she is not vested with the powers and prerogatives stated in Article 212(m)38 of the
Labor Code. As such, her alleged hostility towards her co-workers and the PET management is not a
violation of trust and confidence that would warrant her termination from employment.

At the outset, the Court notes that the issues set forth above are factual in nature. As the Court is asked
to consider the instant Petition as an appeal under Rule 45, then only pure questions of law will be
entertained.39

A question of law arises when there is doubt as to what the law is on a certain state of facts, while there
is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to
be one of law, the same must not involve an examination of the probative value of the evidence
presented by the litigants or any of them. The resolution of the issue must rest solely on what the law
provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence
presented, the question posed is one of fact.40

In the instant case, Tirazona would have the Court examine the actual wording, tenor, and contextual
background of both her demand letter and the PET’s notice of charge against her. Similarly, the
determination of whether Tirazona is a managerial or rank-and-file employee would require the Court to
review the evidence that pertains to Tirazona’s duties and obligations in the company. Also, in order to
ascertain whether the breach of trust was clearly established against Tirazona, the Court will have to sift
through and evaluate the respective evidence of the parties as well. These tasks are not for the Court to
accomplish.

The Court is not a trier of facts. It is not the function of this Court to analyze or weigh evidence all over
again, unless there is a showing that the findings of the lower court are totally devoid of support or are
glaringly erroneous as to constitute palpable error or grave abuse of discretion.41

In its assailed decision, the Court of Appeals affirmed the ruling of the NLRC and adopted as its own the
latter’s factual findings. Long established is the doctrine that findings of fact of quasi-judicial bodies like
the NLRC are accorded with respect, even finality, if supported by substantial evidence. When passed
upon and upheld by the Court of Appeals, they are binding and conclusive upon the Supreme Court and
will not normally be disturbed.42 Though this doctrine is not without exceptions,43 the Court finds that
none are applicable to the present case.

Thus, on the matter of Tirazona’s demand letter, this Court is bound by the following findings of the
Court of Appeals:

Clearly, petitioner Tirazona’s letter to respondent Ono dated 27 February 2002, as DIRECTOR of PET was
addressed to an officer and representative of the corporation. The accusations in the aforesaid demand
letter were directed against respondent Ono’s official act as a representative of respondent PET. Suffice
it to stress, an attack on the integrity of his (Ono) corporate act is necessarily aimed at respondent PET
because a corporation can only act through its officers, agents and representatives.

xxxx
A thorough and judicious examination of the facts and evidence obtaining in the instant case as could be
found in the records, would clearly show that petitioner Tirazona has absolutely no basis for a P2 million
demand, coupled with lawsuit if the same was not paid within the five (5) days [sic] period. Her
justification for the demand of money is that she was allegedly found by the respondent PET through
respondent Ono guilty of the charges filed by Ms. Balonzo. As the records would indubitably show,
petitioner Tirazona was never charged of any offense with respect to the Fe Balonzo’s [sic] incident. She
was never issued a Notice of Charge, much less a Notice of Disciplinary Action. What was issued to her
by respondent Ono in his letter x x x was a gentle and sound reminder to be more circumspect in
handling the incident or situation like this [sic]. As fully evidenced in the last paragraph of the said letter,
it states that:

xxxx

Management considers this matter closed, and finds it appropriate to convey to you that it does not
view with favor your notice to file legal action. Management believes that you share the idea that issues
regarding employee relations are best threshed out within the Company. Resorting to legal action is
unlikely to solve but on the contrary would only exacerbate such problems.

But for reasons only known to petitioner Tirazona, she treated respondent Ono’s letter as an affront to
her honor and dignity. This, instead of seeking a dialogue with respondent PET on her felt grievance,
petitioner Tirazona through her lawyer sent the questioned demand letter to respondent Ono. Suffice it
to state, this act of petitioner bared animosity in the company and was definitely not a proper response
of a top level manager like her over a trivial matter.

xxxx

In fine, the confluence of events and circumstances surrounding the petitioner Tirazona’s actions or
omissions affecting her employer’s rights and interest, would undoubtedly show that she is no longer
worthy of being a recipient of the trust and confidence of her employer. x x x.44

Likewise conclusive upon this Court is the Court of Appeals’ pronouncement that Tirazona is in fact a
managerial employee, to wit:

The records would indubitably show that it is only now that petitioner Tirazona is asserting that she is
not a managerial employee of respondent PET. From the very start, her dismissal was premised on the
fact that she is a managerial and confidential employee, and she never denied that fact. It was never an
issue at all before the Labor Arbiter and the public respondent NLRC. Therefore, she is estopped to claim
now that she is [just a] rank and file employee of respondent PET, especially that she herself admitted in
her pleading that she is a managerial employee:

xxxx

If the respondent Company has to protect Respondent Mamoru Ono, the Complainant [petitioner] has
also the right to be protected from the baseless accusations of a Rank and File Employee for she
[petitioner] is a part of the management like Mr. Mamoru Ono" (par. 5, Complainant’s Rejoinder [to
Respondent’s Reply] dated 2 September 2002 (note: unattached to the petitioner [sic]) [attached as
Annex "1" hereof]. (p. 263, Rollo).45
Tirazona next argues that she was deprived of procedural due process as she was neither served with
two written notices, nor was she afforded a hearing with her participation prior to her dismissal.

Tirazona’s arguments are baseless.

Procedural due process is simply defined as giving an opportunity to be heard before judgment is
rendered. The twin requirements of notice and hearing constitute the essential elements of due
process, and neither of those elements can be eliminated without running afoul of the constitutional
guaranty.46

The employer must furnish the employee two written notices before termination may be effected. The
first notice apprises the employee of the particular acts or omissions for which his dismissal is sought,
while the second notice informs the employee of the employer’s decision to dismiss him.47

It is fairly obvious in this case that Tirazona was served with the required twin notices. The first was
embodied in the Notice of Charge dated 25 March 2002 where PET informed Tirazona that it was
considering her termination from employment and required her to submit a written explanation. In the
said Notice, PET apprised Tirazona of the ground upon which it was considering her dismissal: (1) her
letter that contained false accusations against the company, and (2) her demand for two million pesos in
damages, with a threat of a lawsuit if the said amount was not paid. The Notice of Termination dated 22
April 2002 given to Tirazona constitutes the second notice whereby the company informed her that it
found her guilty of breach of trust warranting her dismissal from service.

Equally bereft of merit is Tirazona’s allegation that she was not given the benefit of a fair hearing before
she was dismissed.

It needs to be pointed out that it was Tirazona herself and her counsel who declined to take part in the
administrative hearing set by PET 10 April 2002. Tirazona rejected the company’s appointment of its
external counsel as the investigating panel’s presiding officer, because her own demands on the panel’s
composition were denied. As correctly held by the NLRC and the Court of Appeals, Tirazona’s stance is
without any legal basis. On the contrary, this Court’s ruling in Foster Parents Plan International/Bicol v.
Demetriou48 is controlling:

The right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and valid
cause, pertains in the first place to the employer, as well as the authority to determine the existence of
said cause in accordance with the norms of due process. In the very nature of things, any investigation
by the employer of any alleged cause for disciplinary punishment of an employee will have to be
conducted by the employer himself or his duly designated representative; and the investigation
cannot be thwarted or nullified by arguing that it is the employer who is accuser, prosecutor and
judge at the same time. x x x Of course, the decision of the employer meting out sanctions against an
employee and the evidentiary and procedural bases thereof may subsequently be passed upon by the
corresponding labor arbiter (and the NLRC on appeal) upon the filing by the aggrieved employee of the
appropriate complaint. [Emphasis ours.]1avvphi1

This Court has held that there is no violation of due process even if no hearing was conducted, where
the party was given a chance to explain his side of the controversy. What is frowned upon is the denial
of the opportunity to be heard.49 Tirazona in this case has been afforded a number of opportunities to
defend her actions. Even when Tirazona failed to attend the scheduled hearing, PET still informed
Tirazona about what happened therein and gave her the chance to submit a supplemental written
explanation. Only when Tirazona again failed to comply with the same did PET terminate her
employment.

As a final plea for her case, Tirazona asserts that her dismissal from employment was too harsh and
arbitrary a penalty to mete out for whatever violation that she has committed, if indeed there was one.

Tirazona ought to bear in mind this Court’s pronouncement in Metro Drug Corporation v. NLRC50 that:

When an employee accepts a promotion to a managerial position or to an office requiring full trust and
confidence, she gives up some of the rigid guaranties available to ordinary workers. Infractions which if
committed by others would be overlooked or condoned or penalties mitigated may be visited with more
severe disciplinary action. A company’s resort to acts of self-defense would be more easily justified. x x
x.

Tirazona, in this case, has given PET more than enough reasons to distrust her. The arrogance and
hostility she has shown towards the company and her stubborn, uncompromising stance in almost all
instances justify the company’s termination of her employment. Moreover, Tirazona’s reading of what
was supposed to be a confidential letter between the counsel and directors of the PET, even if it
concerns her, only further supports her employer’s view that she cannot be trusted. In fine, the Court
cannot fault the actions of PET in dismissing petitioner.

WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit and the
Decision of the Court of Appeals dated 24 May 2005 is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

Manila Golf & Country Club vs. IAC

G.R. No. 64948, September 27, 1994
Narvasa, CJ.:

FACTS:

Three separate proceedings were initiated by or on behalf of herein private respondent and his fellow
caddies. That which gave rise to the present petition for review was originally filed with the Social
Security Commission (SSC) via petition of seventeen (17) persons who styled themselves "Caddies of
Manila Golf and Country Club-PTCCEA" for coverage and availment of benefits under the Social Security
Act as amended. The petition alleged in essence that although the petitioners were employees of the
Manila Golf and Country Club, the latter had not registered them as such with the SSS.

In the case before the SSC, the respondent Club filed answer alleging in substance that the petitioners,
caddies by occupation, were allowed into the Club premises to render services as such to the individual
members and guests playing the Club's golf course and who themselves paid for such services; that as
such caddies, the petitioners were not subject to the direction and control of the Club as regards the
manner in which they performed their work; and hence, they were not the Club's employees.
SSC: Dismissed the petition for lack of merit.

IAC: Reserved the appealed SSC decision and declared Fermin Llamar an employee of the Manila Gold
and Country Club, ordering that he be reported as such for social security coverage and paid any
corresponding benefits, it conspicuously ignored the issue of res adjudicata raised in said second
assignment. Instead, it drew basis for the reversal from this Court's ruling in Investment Planning
Corporation of the Philippines vs. Social Security System, supra and declared that upon the evidence, the
questioned employer-employee relationship between the Club and Fermin Llamar passed the so-called
"control test," establishment in the case — i.e., "whether the employer controls or has reserved the
right to control the employee not only as to the result of the work to be done but also as to the means
and methods by which the same is to be accomplished," — the Club's control over the caddies
encompassing:

(a) the promulgation of no less than twenty-four (24) rules and regulations just about every
aspect of the conduct that the caddy must observe, or avoid, when serving as such, any violation
of any which could subject him to disciplinary action, which may include suspending or cutting
off his access to the club premises;

(b) the devising and enforcement of a group rotation system whereby a caddy is assigned a
number which designates his turn to serve a player;

(c) the club's "suggesting" the rate of fees payable to the caddies.

ISSUE:
Are persons rendering caddying services for members of golf clubs and their guests in said clubs' courses
or premises employees of such clubs and therefore within the compulsory coverage of the Social
Security System (SSS)?

RULING:
NO.

As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress,
language, etc. covered by the petitioner's regulations, does not, in the mind of the Court, so
circumscribe the actions or judgment of the caddies concerned as to leave them little or no freedom of
choice whatsoever in the manner of carrying out their services. In the very nature of things, caddies
must submit to some supervision of their conduct while enjoying the privilege of pursuing their
occupation within the premises and grounds of whatever club they do their work in. For all that is made
to appear, they work for the club to which they attach themselves on sufferance but, on the other hand,
also without having to observe any working hours, free to leave anytime they please, to stay away for as
long they like. It is not pretended that if found remiss in the observance of said rules, any discipline may
be meted them beyond barring them from the premises which, it may be supposed, the Club may do in
any case even absent any breach of the rules, and without violating any right to work on their part. All
these considerations clash frontally with the concept of employment.

The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the
caddies as still another indication of the latter's status as employees. It seems to the Court, however,
that the intendment of such fact is to the contrary, showing that the Club has not the measure of
control over the incidents of the caddies' work and compensation that an employer would possess.

The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer
control than an assurance that the work is fairly distributed, a caddy who is absent when his turn
number is called simply losing his turn to serve and being assigned instead the last number for the day.

By and large, there appears nothing in the record to refute the petitioner's claim that:

(Petitioner) has no means of compelling the presence of a caddy. A caddy is not required to exercise
his occupation in the premises of petitioner. He may work with any other golf club or he may seek
employment a caddy or otherwise with any entity or individual without restriction by petitioner. . . .

In the final analysis, petitioner has no way of compelling the presence of the caddies as they are not
required to render a definite number of hours of work on a single day. Even the group rotation of
caddies is not absolute because a player is at liberty to choose a caddy of his preference regardless of
the caddy's order in the rotation.

It can happen that a caddy who has rendered services to a player on one day may still find sufficient
time to work elsewhere. Under such circumstances, he may then leave the premises of petitioner and
go to such other place of work that he wishes (sic). Or a caddy who is on call for a particular day may
deliberately absent himself if he has more profitable caddying, or another, engagement in some other
place. These are things beyond petitioner's control and for which it imposes no direct sanctions on the
caddies. . . .

Dy Keh Beng vs. International Labor and Marine Union of the Philippines
G.R. No. L-32245, May 25, 1979
De Castro, J.:

FACTS:
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, for
discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act No. 875,
by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their
union activities.

After preliminary investigation was conducted, a case was filed in the Court of Industrial Relations for in
behalf of the International Labor and Marine Union of the Philippines and two of its members, Solano
and Tudla

In his answer, Dy Keh Beng contended that he did not know Tudla and that Solano was not his employee
because the latter came to the establishment only when there was work which he did on pakiaw basis,
each piece of work being done under a separate contract. Hence, they are only piece workers.

Dy Keh Beng now seeks a review by certiorari of the decision of the Court of Industrial Relations which
found Dy Keh Beng guilty of the unfair labor practice acts alleged and ordered him to reinstate Carlos
Solano and Ricardo Tudla to their former jobs with backwages from their respective dates of dismissal
until fully reinstated without loss to their right of seniority and of such other rights already acquired by
them and/or allowed by law.

Dy Keh Beng alleges that the respondent court erred in finding that Solano and Tudla were employees of
petitioners.

ISSUE:
Are Solano and Tudla employees of Dy Keh Beng?

RULING:
YES.

Petitioner really anchors his contention of the non-existence of employee-employer relationship on the
control test. He points to the case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-
13130, October 31, 1959, where the Court ruled that:

The test ... of the existence of employee and employer relationship is whether there is an
understanding between the parties that one is to render personal services to or for the benefit
of the other and recognition by them of the right of one to order and control the other in the
performance of the work and to direct the manner and method of its performance.

Petitioner contends that the private respondents "did not meet the control test in the fight of the ...
definition of the terms employer and employee, because there was no evidence to show that petitioner
had the right to direct the manner and method of respondent's work. Moreover, it is argued that
petitioner's evidence showed that "Solano worked on a pakiaw basis" and that he stayed in the
establishment only when there was work.

While this Court upholds the control test under which an employer-employee relationship exists "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, " it finds no merit with petitioner's
arguments as stated above. It should be borne in mind that the control test calls merely for the
existence of the right to control the manner of doing the work, not the actual exercise of the right.
Considering the finding by the Hearing Examiner that the establishment of Dy Keh Beng is "engaged in
the manufacture of baskets known as kaing, it is natural to expect that those working under Dy would
have to observe, among others, Dy's requirements of size and quality of the kaing. Some control would
necessarily be exercised by Dy as the making of the kaing would be subject to Dy's specifications.
Parenthetically, since the work on the baskets is done at Dy's establishments, it can be inferred that the
proprietor Dy could easily exercise control on the men he employed.

As to the contention that Solano was not an employee because he worked on piece basis, this Court
agrees with the Hearing Examiner that circumstances must be construed to determine indeed if
payment by the piece is just a method of compensation and does not define the essence of the relation.
Units of time ... and units of work are in establishments like respondent (sic) just yardsticks whereby to
determine rate of compensation, to be applied whenever agreed upon. We cannot construe payment by
the piece where work is done in such an establishment so as to put the worker completely at liberty to
turn him out and take in another at pleasure.

At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief Justice Ricardo Paras
who penned the decision in "Sunrise Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518,
523), opined that “judicial notice of the fact that the so-called "pakyaw" system mentioned in this case
as generally practiced in our country, is, in fact, a labor contract -between employers and employees,
between capitalists and laborers. “

Nevertheless, considering that about eighteen (18) years have already elapsed from the time the
complainants were dismissed, and that the decision being appealed ordered the payment of backwages
to the employees from their respective dates of dismissal until finally reinstated, it is fitting to apply in
this connection the formula for backwages worked out by Justice Claudio Teehankee in "cases not
terminated sooner." The formula cans for fixing the award of backwages without qualification and
deduction to three years, "subject to deduction where there are mitigating circumstances in favor of the
employer but subject to increase by way of exemplary damages where there are aggravating
circumstances. Considering there are no such circumstances in this case, there is no reason why the
Court should not apply the abovementioned formula in this instance.

Angelina Francisco vs. NLRC

G.R. No. 170087, August 31, 2006
Ynares-Santiago, J.:

FACTS:

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.

In 1996, petitioner was designated Acting Manager. 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. 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.

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.

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.
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. 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. 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 company’s employees.

Labor Arbiter: Found that petitioner was illegally dismissed. 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.

CA: Reversed the NLRC decision and rendered a new decision dismissing the complaint filed by private
respondent against Kasei Corporation, et al. for constructive dismissal.

ISSUE:

Was there an employer-employee relationship between petitioner and private respondent Kasei
Corporation?

RULING:
YES.

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 employer’s 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
employer’s 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 latter’s employment.
In Sevilla v. Court of Appeals, 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, such as: (1) the extent to which the services performed
are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s
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.

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.

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 corporation’s 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. When petitioner was designated General Manager, respondent corporation made a report to
the SSS signed by Irene Ballesteros. Petitioner’s 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.

It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latter’s line of business.

Eddie Domasig vs. NLRC

G.R. No. 118101, September 16, 1996
Padilla, J.:

FACTS:
The complaint was instituted by Eddie Domasig against respondent Cata Garments Corporation, a
company engaged in garments business and its owner/manager Otto Ong and Catalina Co for illegal
dismissal, unpaid commission and other monetary claims. Complainant alleged that he started working
with the respondent on July 6, 1986 as Salesman when the company was still named Cato Garments
Corporation; that three (3) years ago, because of a complaint against respondent by its workers, its
changed its name to Cata Garments Corporation; and that on August 29, 1992, he was dismissed when
respondent learned that he was being pirated by a rival corporation which offer he refused. Prior to his
dismissal, complainant alleged that he was receiving a salary of P1,500.00 a month plus commission. On
September 3, 1992 he filed the instant complaint.

Respondent denied complainant's claim that he is a regular employee contending that he is a mere
commission agent who receives a commission of P5.00 per piece of article sold at regular price and
P2.50 per piece sold in [sic] bargain price; that in addition to commission, complainant received a fixed
allowance of P1,500.00 a month; that he had no regular time schedule; and that the company came into
existence only on September 17, 1991.

Labor Arbiter: Held that complainant was illegally dismissed and entitled to reinstatement and
backwages as well as underpayment of salary; 13th month pay; service incentive leave and legal holiday.
The Arbiter also awarded complainant his claim for unpaid commission in the amount of P143,955.00.

NLRC: Found that the decision of the Labor Arbiter is not supported by evidence on record and
remanded the case to the arbitration branch of origin for further proceedings.

ISSUE:
Did the NLRC gravely abuse its discretion in vacating and setting aside the decision of the labor arbiter
and remanding the case to the arbitration branch of origin for further proceedings?

RULING:
YES.

In essence, respondent NLRC was not convinced that the evidence presented by the petitioner,
consisting of the identification card issued to him by private respondent corporation and the cash
vouchers reflecting his monthly salaries covering the months stated therein, settled the issue of
employer-employee relationship between private respondents and petitioner.

It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is
sufficient as a basis for judgment on the existence of employer-employee relationship. No particular
form of evidence is required is required to prove the existence of such employer-employee relationship.
Any competent and relevant evidence to prove the relationship may be admitted.

Substantial evidence has been defined to be such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary
evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment
or criterion for that of the trial court in determining wherein lies the weight of evidence or what
evidence is entitled to belief.

In a business establishment, an identification card is usually 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 petitioner's salaries for the months stated therein, we agree with the labor
arbiter that these matters constitute substantial evidence adequate to support a conclusion that
petitioner was indeed an employee of private respondent.
It is clear from the law that it is the arbiters who are authorized to determine whether or not there is a
necessity for conducting formal hearings in cases brought before them for adjudication. Such
determination is entitled to great respect in the absence of arbitrariness.

In the case at bar, we do not believe that the labor arbiter acted arbitrarily. Contrary to the finding of
the NLRC, her decision at least on the existence of an employer-employee relationship between private
respondents and petitioner, is supported by substantial evidence on record.

The list of sales collection including computation of commissions due, expenses incurred and cash
advances received (Exhibits "B" and "B-1") which, according to public respondent, the labor arbiter
failed to appreciate in support of private respondents" allegation as regards the nature of petitioner's
employment as a commission agent, cannot overcome the evidence of the ID card and salary vouchers
presented petitioner which private respondents have not denied. The list presented by private
respondents would even support petitioner's allegations that, aside from a monthly salary of P1,500.00,
he also received commissions for his work as a salesman of private respondents.

Having been in the employ of private respondents continuously for more than one year, under the law,
petitioner is considered a regular employee. Proof beyond reasonable doubt is not required as a basis
for judgment on the legality of an employer's dismissal of an employee, nor even preponderance of
evidence for that matter, substantial evidence being sufficient. Petitioner's contention that private
respondents terminated his employment due to their suspicion that he was being enticed by another
firm to work for it was not refuted by private respondents. The labor arbiter's conclusion that
petitioner's dismissal is therefore illegal, is not necessarily arbitrary or erroneous. It is entitled to great
weight and respect.

It was error and grave abuse of discretion for the NLRC to remand the case for further proceedings to
determine whether or not petitioner was private respondents' employee. This would only prolong the
final disposition of the complaint. It is stressed that, in labor cases, simplification of procedures, without
regard to technicalities and without sacrificing the fundamental requisites of due process, is mandated
to ensure the speedy administration of justice.

After all, Article 218 of the Labor Code grants the Commission and the labor arbiter broad powers,
including issuance of subpoena, requiring the attendance and testimony of witnesses or the production
of such documentary evidence as may be material to a just determination of the matter under
investigation.

Additionally, the National Labor Relations Commission and the labor arbiter have authority under the
Labor Code to decide a case based on the position papers and documents submitted without resorting
to the technical rules of evidence.

However, in view of the need for further and correct computation of the petitioner's commissions in the
light of the exhibits presented and the dismissal of the criminal cases filed against petitioner, the labor
arbiter is required to undertake a new computation of the commissions to which petitioner may be
entitled, within thirty (30) days from the submission by the partied of all necessary documents.
Equitable Banking Corporation vs. NLRC and R.L Sadac
G.R. No. 102467, June 13, 1997
Vitug, J.:

FACTS:

Atty. Sadac was appointed as VP for the Legal Department of Equitable. Nine lawyers, members of the
said department, filed a letter-petition for Sadac’s abusive conduct, mismanagement, ineffectiveness
and indecisiveness. They warned that they would resign en masse if Atty. Sadac were retained in his
position. The Board asked Sadac to voluntarily resign rather than conduct a formal hearing to terminate
him. Atty. Sadac filed a complaint for illegal dismissal and damages.

ISSUE:

Whether or not there is employee-employer relationship.

HELD:

Yes. Aside from his work as VP, he was also working under the supervision of the President and Board of
Directors. As employed for 8 years, Atty. Sadac received pay slips for monthly salaries. The bank
withheld his taxes with BIR. The bank also enrolled him as employee under the SSS and Medicare
programs. He contributed to Equitable’s Employees’ Provident Fund. A lawyer, like any other
professional, may work in a company and be employed as a regular employee.

The Court resolved first the issue of employee-employer relationship and ruled in the affirmative on the
ground that private respondent participated as part of management and is one of its senior officers
holding the position of Vice-President. Upon finding that private respondent is an employee of
petitioner, the latter violated the right to due process of private respondent when the latter's request of
full hearing was not granted. While it is true that the essence of due process is simply an opportunity to
be heard or, as applied in administrative proceedings, an opportunity to explain one's side, meetings in
the nature of consultation and conferences such as the case here, however, may not be valid substitutes
for the proper observance of notice and hearing. However, reinstatement, which is the consequence of
illegal dismissal, has markedly been rendered undesirable. Private respondent shall, instead, be entitled
to back wages from the time of his dismissal until reaching sixty years of age and, thereupon, to
retirement benefits in accordance with Article 287 of the Labor Code and Sec 14, Rule 1, Book VI of the
Implementing rules of the Labor Code.

Opulencia Ice Plant vs. NLRC

G.R. No. 98368, December 15, 1993
Bellosillo, J.:

FACTS:
Manuel P. Esita was a compressor operator of Tiongson Ice Plant in San Pablo City (for 20 years). In 1980
he was hired as compressor operator-mechanic 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. In February 1989, for demanding the correct amount of wages due him, Esita was
dismissed from service. Consequently, he filed with Sub-Regional Arbitration in 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.

ISSUE:
Whether or not there was an employee-employer relationship between Opulencia and Esita.

HELD:
Yes. Because 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.

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.

ZAMUDIO VS. NLRC

G.R. NO. 76723, MARCH 25, 1990

FACTS:
Petitioners rendered services essential for the cultivation of respondent’s farm. While the services were
not continuous in the sense that they were not rendered everyday throughout the year, as is the nature
of farm work, petitioners had never stopped working for respondent from year to year from the time he
hired them to the time he dismissed.

ISSUE:
Whether or not the petitioners are considered employees so that employee-employer relationship may
exist.

HELD:
The nature of their employment, i.e. “Pakyao” basis, does not make petitioner independent contractors.
Pakyao workers are considered employees as long as the employer exercises control over the means by
which such workers are to perform their work inside private respondents farm, the latter necessarily
exercised control over the performed by petitioners.

The seasonal nature of petitioner’s work does not detract from the conclusion that employer –
employee relationship exits. Seasonal workers whose work is not merely for the duration of the season,
but who are rehired every working season are considered regular employees. The circumstances that
petitioners do not appear in respondent’s payroll do not destroy the employer – employee relationship
between them. Omission of petitioners in the payroll was not within their control; they had no hand in
the preparation of the payroll. This circumstance, even if true, cannot be taken against petitioners.

Paguio vs NLRC
G.R. No. 147816, May 9, 2003
Vitug, J.:

FACTS:

On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an
agreement with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm.
Again, petitioner was to solicit advertisements for "The Manila Times." Petitioner, for his efforts, was to
receive compensation consisting of a 15% commission on direct advertisements less withholding tax and
a 10% commission on agency advertisements based on gross revenues less agency commission and the
corresponding withholding tax. The commissions, released every fifteen days of each month, were to be
given to petitioner only after the clients would have paid for the advertisements. Apart from
commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the
P30,000.00-monthly quota.

Basically, the contentious points raised by the parties had something to do with the following
stipulations of the agreement:

"12. You are not an employee of the Metromedia Times Corporation nor does the company have any
obligations towards anyone you may employ, nor any responsibility for your operating expenses or for
any liability you may incur. The only rights and obligations between us are those set forth in this
agreement. This agreement cannot be amended or modified in any way except with the duly authorized
consent in writing of both parties.

"13. Either party may terminate this agreement at any time by giving written notice to the other, thirty
(30) days prior to effectivity of termination."2
On 15 August 1992, barely two months after the renewal of his contract, petitioner received a notice of
termination from the respondent firm.

Apart from vague allegations of misconduct on which he was not given the opportunity to defend
himself, i.e., pirating clients from his co-executives and failing to produce results, no definite cause for
petitioner's termination was given. Aggrieved, petitioner filed a case before the labor arbiter.

Labor Arbiter: Found for petitioner and declared his dismissal illegal.

NLRC: Reversed the ruling of the labor arbiter and declared the contractual relationship between the
parties as being for a fixed-term employment. The NLRC declared a fixed-term employment to be lawful
as long as "it was agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the worker and absent any other circumstances vitiating
his consent."

CA: Upheld in toto the findings of the commission.

ISSUE:

Is the nature of the contractual relationship between the parties that of a regular employment?

RULING:
YES.

A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-
concurrence, of the following factors - a) the manner of selection and engagement of the putative
employee, b) the mode of payment of wages, c) the presence or absence of the power of dismissal; and
d) the presence or absence of the power to control the conduct of the putative employee or the power
to control the employee with respect to the means or methods by which his work is to be
accomplished.8 The "control test" assumes primacy in the overall consideration. Under this test, an
employment relation obtains where work is performed or services are rendered under the control and
supervision of the party contracting for the service, not only as to the result of the work but also as to
the manner and details of the performance desired.9

An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation
by respondent Metromedia Times Corporation not only of the right to control the results to be achieved
but likewise the manner and the means used in reaching that end.10 Metromedia Times Corporation
exercised such control by requiring petitioner, among other things, to submit a daily sales activity report
and also a monthly sales report as well. Various solicitation letters would indeed show that Robina
Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising
director, directed and monitored the sales activities of petitioner.

The Labor Code, in Article 280 thereof, 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 proceeding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists."

Thus defined, a regular employee is one who is engaged to perform activities which are necessary and
desirable in the usual business or trade of the employer as against those which are undertaken for a
specific project or are seasonal. Even in these latter cases, where such person has rendered at least one
year of service, regardless of the nature of the activity performed or of whether it is continuous or
intermittent, the employment is considered regular as long as the activity exists, it not being
indispensable that he be first issued a regular appointment or be formally declared as such before
acquiring a regular status.11

That petitioner performed activities which were necessary and desirable to the business of the
employer, and that the same went on for more than a year, could hardly be denied. Petitioner was an
account executive in soliciting advertisements, clearly necessary and desirable, for the survival and
continued operation of the business of respondent corporation. Robina Gokongwei, its President,
herself admitted that the income generated from paid advertisements was the lifeblood of the
newspaper's existence. Implicitly, respondent corporation recognized petitioner's invaluable
contribution to the business when it renewed, not just once but five times, its contract with petitioner.

Respondent company cannot seek refuge under the terms of the agreement it has entered into with
petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively
upon the terms of their written or oral contract, but also on the basis of the nature of the work
petitioner has been called upon to perform. The law affords protection to an employee, and it will not
countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored
as and when it is utilized to deprive the employee of his security of tenure. The sheer inequality that
characterizes employer-employee relations, where the scales generally tip against the employee, often
scarcely provides him real and better options.

Great Pacific Life Assurance Corporation vs. Judico

G.R. No. 73887, December 21, 1989
Paras, J.:

FACTS:

ISSUE:

RULING:

Before us is a Petition for certiorari to review the decision of the National Labor Relations Commission
(NLRC, for brevity) dated September 9, 1985 reversing the decision of Labor Arbiter Vito J. Minoria,
dated June 9, 1983, by 1) ordering petitioner insurance company, Great Pacific Life Assurance
Corporation (Grepalife, for brevity) to recognize private respondent Honorato Judico, as its regular
employee as defined under Art. 281 of the Labor Code and 2) remanding the case to its origin for the
determination of private respondent Judico's money claims.

The records of the case show that Honorato Judico filed a complaint for illegal dismissal against
Grepalife, a duly organized insurance firm, before the NLRC Regional Arbitration Branch No. VII, Cebu
City on August 27, 1982. Said complaint prayed for award of money claims consisting of separation pay,
unpaid salary and 13th month pay, refund of cash bond, moral and exemplary damages and attorney's
fees.

Both parties appealed to the NLRC when a decision was rendered by the Labor Arbiter dismissing the
complaint on the ground that the employer-employee relations did not exist between the parties but
ordered Grepalife to pay complainant the sum of Pl,000.00 by reason of Christian Charity.

On appeal, said decision was reversed by the NLRC ruling that complainant is a regular employee as
defined under Art. 281 of the Labor Code and declaring the appeal of Grepalife questioning the legality
of the payment of Pl,000.00 to complainant moot and academic. Nevertheless, for the purpose of
revoking the supersedeas bond of said company it ruled that the Labor Arbiter erred in awarding
Pl,000.00 to complainant in the absence of any legal or factual basis to support its payment.

Petitioner company moved to reconsider, which was denied, hence this petition for review raising four
legal issues to wit:

I. Whether the relationship between insurance agents and their principal, the insurance company, is that
of agent and principal to be governed by the Insurance Code and the Civil Code provisions on agency, or
one of employer-employee, to be governed by the Labor Code.

II. Whether insurance agents are entitled to the employee benefits prescribed by the Labor Code.

III. Whether the public respondent NLRC has jurisdiction to take cognizance of a controversy between
insurance agent and the insurance company, arising from their agency relations.

IV. Whether the public respondent acted correctly in setting aside the decision of Labor Arbiter Vito J.
Minoria and in ordering the case remanded to said Labor Arbiter for further proceedings.(p. 159, Rollo)

The crux of these issues boil down to the question of whether or not employer-employee relationship
existed between petitioner and private respondent.

Petitioner admits that on June 9, 1976, private respondent Judico entered into an agreement of agency
with petitioner Grepalife to become a debit agent attached to the industrial life agency in Cebu City.
Petitioner defines a debit agent as "an insurance agent selling/servicing industrial life plans and policy
holders. Industrial life plans are those whose premiums are payable either daily, weekly or monthly and
which are collectible by the debit agents at the home or any place designated by the policy holder" (p.
156, Rollo). Such admission is in line with the findings of public respondent that as such debit agent,
private respondent Judico had definite work assignments including but not limited to collection of
premiums from policy holders and selling insurance to prospective clients. Public respondent NLRC also
found out that complainant was initially paid P 200. 00 as allowance for thirteen (13) weeks regardless
of production and later a certain percentage denominated as sales reserve of his total collections but
not lesser than P 200.00. Sometime in September 1981, complainant was promoted to the position of
Zone Supervisor and was given additional (supervisor's) allowance fixed at P110.00 per week. During the
third week of November 1981, he was reverted to his former position as debit agent but, for unknown
reasons, not paid so-called weekly sales reserve of at least P 200.00. Finally on June 28, 1982,
complainant was dismissed by way of termination of his agency contract.

Petitioner assails the findings of the NLRC that private respondent is an employee of the former.
Petitioner argues that Judico's compensation was not based on any fixed number of hours he was
required to devote to the service of petitioner company but rather it was the production or result of his
efforts or his work that was being compensated and that the so-called allowance for the first thirteen
weeks that Judico worked as debit agent, cannot be construed as salary but as a subsidy or a way of
assistance for transportation and meal expenses of a new debit agent during the initial period of his
training which was fixed for thirteen (13) weeks. Stated otherwise, petitioner contends that Judico's
compensation, in the form of commissions and bonuses, was based on actual production, (insurance
plans sold and premium collections).

Said contentions of petitioner are strongly rejected by private respondent. He maintains that he
received a definite amount as his Wage known as "sales reserve" the failure to maintain the same would
bring him back to a beginner's employment with a fixed weekly wage of P 200.00 regardless of
production. He was assigned a definite place in the office to work on when he is not in the field; and in
addition to canvassing and making regular reports, he was burdened with the job of collection and to
make regular weekly report thereto for which an anemic performance would mean dismissal. He earned
out of his faithful and productive service, a promotion to Zone Supervisor with additional supervisor's
allowance, (a definite or fixed amount of P110.00) that he was dismissed primarily because of anemic
performance and not because of the termination of the contract of agency substantiate the fact that he
was indeed an employee of the petitioner and not an insurance agent in the ordinary meaning of the
term.

That private respondent Judico was an agent of the petitioner is unquestionable. But, as We have held in
Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance company may have two classes of agents
who sell its insurance policies: (1) salaried employees who keep definite hours and work under the
control and supervision of the company; and (2) registered representatives who work on commission
basis. The agents who belong to the second category are not required to report for work at anytime,
they do not have to devote their time exclusively to or work solely for the company since the time and
the effort they spend in their work depend entirely upon their own will and initiative; they are not
required to account for their time nor submit a report of their activities; they shoulder their own selling
expenses as well as transportation; and they are paid their commission based on a certain percentage of
their sales. One salient point in the determination of employer-employee relationship which cannot be
easily ignored is the fact that the compensation that these agents on commission received is not paid by
the insurance company but by the investor (or the person insured). After determining the commission
earned by an agent on his sales the agent directly deducts it from the amount he received from the
investor or the person insured and turns over to the insurance company the amount invested after such
deduction is made. The test therefore is whether the "employer" controls or has reserved the right to
control the "employee" not only as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished.
Applying the aforementioned test to the case at bar, We can readily see that the element of control by
the petitioner on Judico was very much present. The record shows that petitioner Judico received a
definite minimum amount per week as his wage known as "sales reserve" wherein the failure to
maintain the same would bring him back to a beginner's employment with a fixed weekly wage of P
200.00 for thirteen weeks regardless of production. He was assigned a definite place in the office to
work on when he is not in the field; and in addition to his canvassing work he was burdened with the job
of collection. In both cases he was required to make regular report to the company regarding these
duties, and for which an anemic performance would mean a dismissal. Conversely faithful and
productive service earned him a promotion to Zone Supervisor with additional supervisor's allowance, a
definite amount of P110.00 aside from the regular P 200.00 weekly "allowance". Furthermore, his
contract of services with petitioner is not for a piece of work nor for a definite period.

On the other hand, an ordinary commission insurance agent works at his own volition or at his own
leisure without fear of dismissal from the company and short of committing acts detrimental to the
business interest of the company or against the latter, whether he produces or not is of no moment as
his salary is based on his production, his anemic performance or even dead result does not become a
ground for dismissal. Whereas, in private respondent's case, the undisputed facts show that he was
controlled by petitioner insurance company not only as to the kind of work; the amount of results, the
kind of performance but also the power of dismissal. Undoubtedly, private respondent, by nature of his
position and work, had been a regular employee of petitioner and is therefore entitled to the protection
of the law and could not just be terminated without valid and justifiable cause.

Premises considered, the appealed decision is hereby AFFIRMED in toto.

SO ORDERED.