JOSE Y. SONZA, petitioner, vs.
ABS-CBN BROADCASTING On 30 April 1996, SONZA filed a complaint against ABS-CBN before the
CORPORATION, respondent.
The Case
Before this Court is a petition for review on certiorari[1] assailing the 26
March 1999 Decision[2] of the Court of Appeals in CA-G.R. SP No. 49190
dismissing the petition filed by Jose Y. Sonza (SONZA). The Court of Appeals
affirmed the findings of the National Labor Relations Commission (NLRC), which
affirmed the Labor Arbiters dismissal of the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN)
signed an Agreement (Agreement) with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its
corporate officers while MJMDC was represented by SONZA, as President and
General Manager, and Carmela Tiangco (TIANGCO), as EVP and Treasurer.
Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs
services exclusively to ABS-CBN as talent for radio and television. The
Agreement listed the services SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to
Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.[3]
ABS-CBN agreed to pay for SONZAs services a monthly talent fee
of P310,000 for the first year and P317,000 for the second and third year of the
Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the
month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio
Lopez III, which reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May 1994 entered into by
your goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y.
SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events
concerning his programs and career. We consider these acts of the station violative of the
Agreement and the station as in breach thereof. In this connection, we hereby serve
notice of rescission of said Agreement at our instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining
amount stipulated in paragraph 7 of the Agreement but reserves the right to seek
recovery of the other benefits under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y.
SONZA
President and Gen. Manager[4]
Department of Labor and Employment, National Capital Region in Quezon
City. SONZA complained that ABS-CBN did not pay his salaries, separation pay,
service incentive leave pay, 13th month pay, signing bonus, travel allowance and
amounts due under the Employees Stock Option Plan (ESOP).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no
employer-employee relationship existed between the parties. SONZA filed an
Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees
through his account at PCIBank, Quezon Avenue Branch, Quezon City. In July
1996, ABS-CBN opened a new account with the same bank where ABS-CBN
deposited SONZAs talent fees and other payments due him under the
Agreement.
In his Order dated 2 December 1996, the Labor Arbiter[5] denied the motion
to dismiss and directed the parties to file their respective position papers. The
Labor Arbiter ruled:
In this instant case, complainant for having invoked a claim that he was an employee of
respondent company until April 15, 1996and that he was not paid certain claims, it is
sufficient enough as to confer jurisdiction over the instant case in this Office. And as to
whether or not such claim would entitle complainant to recover upon the causes of
action asserted is a matter to be resolved only after and as a result of a hearing. Thus, the
respondents plea of lack of employer-employee relationship may be pleaded only as a
matter of defense. It behooves upon it the duty to prove that there really is no employer-
employee relationship between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution. The
parties submitted their position papers on 24 February 1997.
On 11 March 1997, SONZA filed a Reply to Respondents Position Paper
with Motion to Expunge Respondents Annex 4 and Annex 5 from the
Records. Annexes 4 and 5 are affidavits of ABS-CBNs witnesses Soccoro
Vidanes and Rolando V. Cruz. These witnesses stated in their affidavits that the
prevailing practice in the television and broadcast industry is to treat talents like
SONZA as independent contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the
complaint for lack of jurisdiction.[6] The pertinent parts of the decision read as
follows:
xxx
While Philippine jurisprudence has not yet, with certainty, touched on the true nature of
the contract of a talent, it stands to reason that a talent as above-described cannot be
considered as an employee by reason of the peculiar circumstances surrounding the
engagement of his services.
It must be noted that complainant was engaged by respondent by reason of his
peculiar skills and talent as a TV host and a radio broadcaster. Unlike an ordinary
employee, he was free to perform the services he undertook to render in accordance
1
with his own style. The benefits conferred to complainant under the May 1994
Agreement are certainly very much higher than those generally given to employees. For
one, complainant Sonzas monthly talent fees amount to a
staggering P317,000. Moreover, his engagement as a talent was covered by a specific
contract. Likewise, he was not bound to render eight (8) hours of work per day as he
worked only for such number of hours as may be necessary.
The fact that per the May 1994 Agreement complainant was accorded some benefits
normally given to an employee is inconsequential. Whatever benefits complainant
enjoyed arose from specific agreement by the parties and not by reason of
employer-employee relationship. As correctly put by the respondent, All these benefits
are merely talent fees and other contractual benefits and should not be deemed as
salaries, wages and/or other remuneration accorded to an employee, notwithstanding the
nomenclature appended to these benefits. Apropos to this is the rule that the term or
nomenclature given to a stipulated benefit is not controlling, but the intent of the parties
to the Agreement conferring such benefit.
The fact that complainant was made subject to respondents Rules and Regulations,
likewise, does not detract from the absence of employer-employee relationship. As
held by the Supreme Court, The line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result without dictating the
means or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The first,
which aim only to promote the result, create no employer-employee relationship unlike
the second, which address both the result and the means to achieve it. (Insular Life
Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November 15, 1989).
x x x (Emphasis supplied)[7]
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered
a Decision affirming the Labor Arbiters decision. SONZA filed a motion for
reconsideration, which the NLRC denied in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before
the Court of Appeals assailing the decision and resolution of the NLRC. On 26
March 1999, the Court of Appeals rendered a Decision dismissing the case.[8]
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRCs finding that no employer-
employee relationship existed between SONZA and ABS-CBN. Adopting the
NLRCs decision, the appellate court quoted the following findings of the NLRC:
x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract
merely as an agent of complainant Sonza, the principal. By all indication and as the law
puts it, the act of the agent is the act of the principal itself. This fact is made particularly
true in this case, as admittedly MJMDC is a management company devoted exclusively
to managing the careers of Mr. Sonza and his broadcast partner, Mrs. Carmela C.
Tiangco. (Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent only accrues between complainant Sonza
and MJMDC, and not between ABS-CBN and MJMDC. This is clear from the
provisions of the May 1994 Agreement which specifically referred to MJMDC as the
AGENT.As a matter of fact, when complainant herein unilaterally rescinded said May
1994 Agreement, it was MJMDC which issued the notice of rescission in behalf of Mr.
Sonza, who himself signed the same in his capacity as President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that
historically, the parties to the said agreements are ABS-CBN and Mr. Sonza. And it is
only in the May 1994 Agreement, which is the latest Agreement executed between ABS-
CBN and Mr. Sonza, that MJMDC figured in the said Agreement as the agent of Mr.
Sonza.
We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN
such that there exist[s] employer-employee relationship between the latter and Mr.
Sonza. On the contrary, We find it indubitable, that MJMDC is an agent, not of ABS-
CBN, but of the talent/contractor Mr. Sonza, as expressly admitted by the latter and
MJMDC in the May 1994 Agreement.
It may not be amiss to state that jurisdiction over the instant controversy indeed belongs
to the regular courts, the same being in the nature of an action for alleged breach of
contractual obligation on the part of respondent-appellee. As squarely apparent from
complainant-appellants Position Paper, his claims for compensation for services,
13th month pay, signing bonus and travel allowance against respondent-appellee are not
based on the Labor Code but rather on the provisions of the May 1994 Agreement, while
his claims for proceeds under Stock Purchase Agreement are based on the latter. A
portion of the Position Paper of complainant-appellant bears perusal:
Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually
bound itself to pay complainant a signing bonus consisting of shares of stockswith FIVE
HUNDRED THOUSAND PESOS (P500,000.00).
Similarly, complainant is also entitled to be paid 13th month pay based on an amount not
lower than the amount he was receiving prior to effectivity of (the) Agreement.
Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a
commutable travel benefit amounting to at least One Hundred Fifty Thousand Pesos
(P150,000.00) per year.
Thus, it is precisely because of complainant-appellants own recognition of the fact that
his contractual relations with ABS-CBN are founded on the New Civil Code, rather than
the Labor Code, that instead of merely resigning from ABS-CBN, complainant-appellant
served upon the latter a notice of rescission of Agreement with the station, per his letter
dated April 1, 1996, which asserted that instead of referring to unpaid employee benefits,
he is waiving and renouncing recovery of the remaining amount stipulated in paragraph
7 of the Agreement but reserves the right to such recovery of the other benefits under
said Agreement. (Annex 3 of the respondent ABS-CBNs Motion to Dismiss dated July
10, 1996).
Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement
and/or the Stock Purchase Agreement by respondent-appellee that complainant-appellant
filed his complaint. Complainant-appellants claims being anchored on the alleged breach
of contract on the part of respondent-appellee, the same can be resolved by reference to
civil law and not to labor law.Consequently, they are within the realm of civil law and,
thus, lie with the regular courts. As held in the case of Dai-Chi Electronics
Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994, an action for breach
of contractual obligation is intrinsically a civil dispute.[9] (Emphasis supplied)
The Court of Appeals ruled that the existence of an employer-employee
relationship between SONZA and ABS-CBN is a factual question that is within
the jurisdiction of the NLRC to resolve.[10] A2 special civil action for certiorari
extends only to issues of want or excess of jurisdiction of the NLRC.[11] Such
action cannot cover an inquiry into the correctness of the evaluation of the
evidence which served as basis of the NLRCs conclusion.[12] The Court of
Appeals added that it could not re-examine the parties evidence and substitute
the factual findings of the NLRC with its own.[13]
The Issue
In assailing the decision of the Court of Appeals, SONZA contends that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS
DECISION AND REFUSING TO FIND THAT AN EMPLOYER-EMPLOYEE
RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE THE
WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO
SUPPORT SUCH A FINDING.[14]
The Courts Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of the
Court of Appeals affirming the NLRC ruling which upheld the Labor Arbiters
dismissal of the case for lack of jurisdiction.
The present controversy is one of first impression. Although Philippine labor
laws and jurisprudence define clearly the elements of an employer-employee
relationship, this is the first time that the Court will resolve the nature of the
relationship between a television and radio station and one of its talents. There
is no case law stating that a radio and television program host is an employee of
the broadcast station.
The instant case involves big names in the broadcast industry, namely Jose
Jay Sonza, a known television and radio personality, and ABS-CBN, one of the
biggest television and radio networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case
because he was an employee of ABS-CBN. On the other hand, ABS-CBN insists
that the Labor Arbiter has no jurisdiction because SONZA was an independent
contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship is a question of
fact. Appellate courts accord the factual findings of the Labor Arbiter and the
NLRC not only respect but also finality when supported by substantial evidence.
[15]Substantial evidence means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.[16] A party cannot prove the
absence of substantial evidence by simply pointing out that there is contrary
evidence on record, direct or circumstantial. The Court does not substitute its
own judgment for that of the tribunal in determining where the weight of
evidence lies or what evidence is credible.[17]
SONZA maintains that all essential elements of an employer-employee
relationship are present in this case. Case law has consistently held that the
elements of an employer-employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employee on the means
and methods by which the work is accomplished.[18] The last element, the so-
called control test, is the most important element.[19]
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAs services to co-host its television and radio
programs because of SONZAs peculiar skills, talent and celebrity
status. SONZA contends that the discretion used by respondent in specifically
selecting and hiring complainant over other broadcasters of possibly similar
experience and qualification as complainant belies respondents claim of
independent contractorship.
Independent contractors often present themselves to possess unique skills,
expertise or talent to distinguish them from ordinary employees. The specific
selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance
indicative, but not conclusive, of an independent contractual relationship. If
SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN
would not have entered into the Agreement with SONZA but would have hired
him through its personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not
conclusively determine his status. We must consider all the circumstances of the
relationship, with the control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his
fees going to MJMDC. SONZA asserts that this mode of fee payment shows that
he was an employee of ABS-CBN. SONZA also points out that ABS-CBN
granted him benefits and privileges which he would not have enjoyed if he were
truly the subject of a valid job contract.
All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBNs employee,
there would be no need for the parties to stipulate on benefits such as SSS,
Medicare, x x x and 13th month pay[20] which the law automatically incorporates
into every employer-employee contract.[21] Whatever benefits SONZA enjoyed
arose from contract and not because of an employer-employee relationship.[22]
SONZAs talent fees, amounting to P317,000 monthly in the second and
third year, are so huge and out of the ordinary that they indicate more an
independent contractual relationship rather than an employer-employee
relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely
because of SONZAs unique skills, talent and celebrity status not possessed by
ordinary employees. Obviously, SONZA acting alone possessed enough
bargaining power to demand and receive such huge talent fees for his
services. The power to bargain talent fees way above the salary scales of
ordinary employees is a circumstance indicative, but not conclusive, of an
3
independent contractual relationship.
 The payment of talent fees directly to SONZA and not to MJMDC does not
negate the status of SONZA as an independent contractor. The parties
expressly agreed on such mode of payment. Under the Agreement, MJMDC is
the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee
accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate
their relationship. SONZA failed to show that ABS-CBN could terminate his
services on grounds other than breach of contract, such as retrenchment to
prevent losses as provided under labor laws.[23]
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent
fees as long as AGENT and Jay Sonza shall faithfully and completely perform
each condition of this Agreement.[24] Even if it suffered severe business losses,
ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to
pay SONZAs talent fees during the life of the Agreement. This circumstance
indicates an independent contractual relationship between SONZA and ABS-
CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his
programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN adhered to
its undertaking in the Agreement to continue paying SONZAs talent fees during
the remaining life of the Agreement even if ABS-CBN cancelled SONZAs
programs through no fault of SONZA.[25]
SONZA assails the Labor Arbiters interpretation of his rescission of the
Agreement as an admission that he is not an employee of ABS-CBN. The Labor
Arbiter stated that if it were true that complainant was really an employee, he
would merely resign, instead. SONZA did actually resign from ABS-CBN but he
also, as president of MJMDC, rescinded the Agreement. SONZAs letter clearly
bears this out.[26] However, the manner by which SONZA terminated his
relationship with ABS-CBN is immaterial. Whether SONZA rescinded the
Agreement or resigned from work does not determine his status as employee or
independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio and television program
host is an employee or an independent contractor, we refer to foreign case law
in analyzing the present case. The United States Court of Appeals, First Circuit,
recently held in Alberty-Vlez v. Corporacin De Puerto Rico Para La Difusin
Pblica (WIPR)[27]that a television program host is an independent contractor. We
quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent contractor. First, a television
actress is a skilled position requiring talent and training not available on-the-job. x
x x In this regard, Alberty possesses a masters degree in public communications and
journalism; is trained in dance, singing, and modeling; taught with the drama department
at the University of Puerto Rico; and acted in several theater and television productions
prior to her affiliation with Desde Mi Pueblo. Second, Alberty provided the tools and
instrumentalities necessary for her to perform. Specifically, she provided, or obtained
sponsors to provide, the costumes, jewelry, and other image-related supplies and
services necessary for her appearance. Alberty disputes that this factor favors
independent contractor status because WIPR provided the equipment necessary to tape
the show. Albertys argument is misplaced. The equipment necessary for Alberty to
conduct her job as host of Desde Mi Pueblo related to her appearance on the
show. Others provided equipment for filming and producing the show, but these were
not the primary tools that Alberty used to perform her particular function. If we accepted
this argument, independent contractors could never work on collaborative projects
because other individuals often provide the equipment required for different aspects of
the collaboration. x x x
Third, WIPR could not assign Alberty work in addition to filming Desde Mi
Pueblo. Albertys contracts with WIPR specifically provided that WIPR hired her
professional services as Hostess for the Program Desde Mi Pueblo. There is no evidence
that WIPR assigned Alberty tasks in addition to work related to these tapings. x x
x[28] (Emphasis supplied)
Applying the control test to the present case, we find that SONZA is not an
employee but an independent contractor. The control test is the most
important test our courts apply in distinguishing an employee from an
independent contractor.[29] This test is based on the extent of control the hirer
exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse
holds true as well the less control the hirer exercises, the more likely the worker
is considered an independent contractor.[30]
First, SONZA contends that ABS-CBN exercised control over the means
and methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services
specifically to co-host the Mel & Jay programs. ABS-CBN did not assign any
other work to SONZA. To perform his work, SONZA only needed his skills and
talent. How SONZA delivered his lines, appeared on television, and sounded on
radio were outside ABS-CBNs control.SONZA did not have to render eight hours
of work per day. The Agreement required SONZA to attend only rehearsals and
tapings of the shows, as well as pre- and post-production staff meetings.
[31] ABS-CBN could not dictate the contents of SONZAs script. However, the
Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its
interests.[32] The clear implication is that SONZA had a free hand on what to say
or discuss in his shows provided he did not attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual performance that
produced the finished product of SONZAs work.[33] ABS-CBN did not instruct
SONZA how to perform his job. ABS-CBN merely reserved the right to modify
the program format and airtime schedule for more effective programming.
[34] ABS-CBNs sole concern was the quality of the shows and their standing in
the ratings. Clearly, ABS-CBN did not exercise control over the means and
methods of performance of SONZAs work.
SONZA claims that ABS-CBNs power not to broadcast his shows proves
4
ABS-CBNs power over the means and methods of the performance of his
work. Although ABS-CBN did have the option not to broadcast SONZAs show,
ABS-CBN was still obligated to pay SONZAs talent fees. Thus, even if ABS-CBN
was completely dissatisfied with the means and methods of SONZAs
performance of his work, or even with the quality or product of his work, ABS-
CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is
not to broadcast SONZAs show but ABS-CBN must still pay his talent fees in
full.[35]
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it
was by the obligation to continue paying in full SONZAs talent fees, did not
amount to control over the means and methods of the performance of SONZAs
work. ABS-CBN could not terminate or discipline SONZA even if the means and
methods of performance of his work - how he delivered his lines and appeared
on television - did not meet ABS-CBNs approval. This proves that ABS-CBNs
control was limited only to the result of SONZAs work, whether to broadcast the
final product or not. In either case, ABS-CBN must still pay SONZAs talent fees
in full until the expiry of the Agreement.
In Vaughan, et al. v. Warner, et al.,[36] the United States Circuit Court of
Appeals ruled that vaudeville performers were independent contractors although
the management reserved the right to delete objectionable features in their
shows. Since the management did not have control over the manner of
performance of the skills of the artists, it could only control the result of the work
by deleting objectionable features.[37]
SONZA further contends that ABS-CBN exercised control over his work by
supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment,
crew and airtime needed to broadcast the Mel & Jay programs. However, the
equipment, crew and airtime are not the tools and instrumentalities SONZA
needed to perform his job. What SONZA principally needed were his talent or
skills and the costumes necessary for his appearance. [38] Even though ABS-
CBN provided SONZA with the place of work and the necessary equipment,
SONZA was still an independent contractor since ABS-CBN did not supervise
and control his work. ABS-CBNs sole concern was for SONZA to display his
talent during the airing of the programs.[39]
A radio broadcast specialist who works under minimal supervision is an
independent contractor.[40] SONZAs work as television and radio program host
required special skills and talent, which SONZA admittedly possesses. The
records do not show that ABS-CBN exercised any supervision and control over
how SONZA utilized his skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBNs employee
because ABS-CBN subjected him to its rules and standards of performance.
SONZA claims that this indicates ABS-CBNs control not only [over] his manner
of work but also the quality of his work.
The Agreement stipulates that SONZA shall abide with the rules and
standards of performance covering talents[41] of ABS-CBN. The Agreement
does not require SONZA to comply with the rules and standards of performance
prescribed for employees of ABS-CBN. The code of conduct imposed on
SONZA under the Agreement refers to the Television and Radio Code of the
Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by
the COMPANY (ABS-CBN) as its Code of Ethics.[42] The KBP code applies to
broadcasters, not to employees of radio and television stations. Broadcasters
are not necessarily employees of radio and television stations. Clearly, the rules
and standards of performance referred to in the Agreement are those applicable
to talents and not to employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former.[43] In this case, SONZA
failed to show that these rules controlled his performance. We find that these
general rules are merely guidelines towards the achievement of the mutually
desired result, which are top-rating television and radio programs that comply
with standards of the industry. We have ruled that:
Further, not every form of control that a party reserves to himself over the conduct of the
other party in relation to the services being rendered may be accorded the effect of
establishing an employer-employee relationship. The facts of this case fall squarely with
the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the means or
methods to be employed in attaining it, and those that control or fix the methodology
and bind or restrict the party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike the second, which
address both the result and the means used to achieve it.[44]
The Vaughan case also held that one could still be an independent
contractor although the hirer reserved certain supervision to insure the
attainment of the desired result. The hirer, however, must not deprive the one
hired from performing his services according to his own initiative.[45]
Lastly, SONZA insists that the exclusivity clause in the Agreement is the
most extreme form of control which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent does not by itself mean
that SONZA is an employee of ABS-CBN. Even an independent contractor can
validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the
entertainment industry.[46] This practice is not designed to control the means and
methods of work of the talent, but simply to protect the investment of the
broadcast station. The broadcast station normally spends substantial amounts of
money, time and effort in building up its talents as well as the programs they
appear in and thus expects that said talents remain exclusive with the station for
a commensurate period of time.[47] Normally, a much higher fee is paid to talents
who agree to work exclusively for a particular radio or television station. In short,
the huge talent fees partially compensates for exclusivity, as in the present case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiters finding that he is a talent of MJMDC,
which contracted out his services to ABS-CBN.5 The Labor Arbiter ruled that as a
talent of MJMDC, SONZA is not an employee of ABS-CBN. SONZA insists that
MJMDC is a labor-only contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the labor-only
contractor; (2) the employee who is ostensibly under the employ of the labor-
only contractor; and (3) the principal who is deemed the real employer. Under
this scheme, the labor-only contractor is the agent of the principal. The law
makes the principal responsible to the employees of the labor-only contractor as
if the principal itself directly hired or employed the employees.[48] These
circumstances are not present in this case.
There are essentially only two parties involved under the Agreement,
namely, SONZA and ABS-CBN. MJMDC merely acted as SONZAs agent. The
Agreement expressly states that MJMDC acted as the AGENT of SONZA. The
records do not show that MJMDC acted as ABS-CBNs agent. MJMDC, which
stands for Mel and Jay Management and Development Corporation, is a
corporation organized and owned by SONZA and TIANGCO. The President and
General Manager of MJMDC is SONZA himself. It is absurd to hold that
MJMDC, which is owned, controlled, headed and managed by SONZA, acted as
agent of ABS-CBN in entering into the Agreement with SONZA, who himself is
represented by MJMDC. That would make MJMDC the agent of both ABS-CBN
and SONZA.
As SONZA admits, MJMDC is a management company
devoted exclusively to managing the careers of SONZA and his broadcast
partner, TIANGCO. MJMDC is not engaged in any other business, not even job
contracting. MJMDC does not have any other function apart from acting as
agent of SONZA or TIANGCO to promote their careers in the broadcast and
television industry.[49]
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued by then Minister of
Labor Blas Ople on 8 January 1979 finally settled the status of workers in the
broadcast industry. Under this policy, the types of employees in the broadcast
industry are the station and program employees.
Policy Instruction No. 40 is a mere executive issuance which does not have
the force and effect of law. There is no legal presumption that Policy Instruction
No. 40 determines SONZAs status. A mere executive issuance cannot exclude
independent contractors from the class of service providers to the broadcast
industry. The classification of workers in the broadcast industry into only two
groups under Policy Instruction No. 40 is not binding on this Court, especially
when the classification has no basis either in law or in fact.
Affidavits of ABS-CBNs Witnesses
SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro
Vidanes and Rolando Cruz without giving his counsel the opportunity to cross-
examine these witnesses. SONZA brands these witnesses as incompetent to
attest on the prevailing practice in the radio and television industry. SONZA
views the affidavits of these witnesses as misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBNs witnesses, he was never
prevented from denying or refuting the allegations in the affidavits. The Labor
Arbiter has the discretion whether to conduct a formal (trial-type) hearing after
the submission of the position papers of the parties, thus:
Section 3. Submission of Position Papers/Memorandum
xxx
These verified position papers shall cover only those claims and causes of action raised in the
complaint excluding those that may have been amicably settled, and shall be accompanied by all
supporting documents including the affidavits of their respective witnesses which shall take the
place of the latters direct testimony. x x x
Section 4. Determination of Necessity of Hearing. Immediately after the submission of the parties
of their position papers/memorandum, the Labor Arbiter shall motu propio determine whether
there is need for a formal trial or hearing. At this stage, he may, at his discretion and for the
purpose of making such determination, ask clarificatory questions to further elicit facts or
information, including but not limited to the subpoena of relevant documentary evidence, if any
from any party or witness.[50]
The Labor Arbiter can decide a case based solely on the position papers and the
supporting documents without a formal trial.[51] The holding of a formal hearing or trial is
something that the parties cannot demand as a matter of right.[52] If the Labor Arbiter is
confident that he can rely on the documents before him, he cannot be faulted for not
conducting a formal trial, unless under the particular circumstances of the case, the
documents alone are insufficient.The proceedings before a Labor Arbiter are non-litigious
in nature. Subject to the requirements of due process, the technicalities of law and the
rules obtaining in the courts of law do not strictly apply in proceedings before a Labor
Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like SONZA as independent contractors.
SONZA argues that if such practice exists, it is void for violating the right of labor
to security of tenure.
The right of labor to security of tenure as guaranteed in the
Constitution[53] arises only if there is an employer-employee relationship under
labor laws. Not every performance of services for a fee creates an employer-
employee relationship. To hold that every person who renders services to
another for a fee is an employee - to give meaning to the security of tenure
clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer
their services as independent contractors. The right to life and livelihood
guarantees this freedom to contract as independent contractors. The right of
labor to security of tenure cannot operate to deprive an individual, possessed
with special skills, expertise and talent, of his right to contract as an independent
contractor. An individual like an artist or talent has a right to render his services
without any one controlling the means and methods by which he performs his
art or craft. This Court will not interpret the right of labor to security of tenure to
compel artists and talents to render their services only as employees. If radio
and television program hosts can render their services only as employees, the
6
station owners and managers can dictate to the radio and television hosts what
they say in their shows. This is not conducive to freedom of the press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code (NIRC)[54] in relation to Republic Act
No. 7716,[55] as amended by Republic Act No. 8241,[56] treats talents, television
and radio broadcasters differently. Under the NIRC, these professionals are
subject to the 10% value-added tax (VAT) on services they render. Exempted
from the VAT are those under an employer-employee relationship.[57] This
different tax treatment accorded to talents and broadcasters bolters our
conclusion that they are independent contractors, provided all the basic
elements of a contractual relationship are present as in this case.
Nature of SONZAs Claims
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay,
separation pay, service incentive leave, signing bonus, travel allowance, and
amounts due under the Employee Stock Option Plan. We agree with the findings
of the Labor Arbiter and the Court of Appeals that SONZAs claims are all based
on the May 1994 Agreement and stock option plan, and not on the Labor
Code. Clearly, the present case does not call for an application of the Labor
Code provisions but an interpretation and implementation of the May 1994
Agreement. In effect, SONZAs cause of action is for breach of contract which is
intrinsically a civil dispute cognizable by the regular courts.[58]
WHEREFORE, we DENY the petition. The assailed Decision of the Court
of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs
against petitioner.
OSCAR VILLAMARIA, JR. G.R. No. 165881
Petitioner,
Present:
PANGANIBAN, C.J.,
Chairperson,
- versus - YNARES-SANTIAGO,
AUSTRIA-MARTINEZ.
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
COURT OF APPEALS and Promulgated:
JERRY V. BUSTAMANTE,
Respondents. April 19, 2006
x-----------------------------------------------------------------------------------------x
DECISION
Before us is a Petition for Review on Certiorari under Rule 65 of the Revised Rules
of Court assailing the Decision[1] and Resolution[2] of the Court of Appeals (CA) in
CA-G.R. SP No. 78720 which set aside the Resolution[3] of the National Labor
Relations Commission (NLRC) in NCR-30-08-03247-00, which in turn affirmed the
Decision[4] of the Labor Arbiter dismissing the complaint filed by respondent Jerry
V. Bustamante.
Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole
proprietorship engaged in assembling passenger jeepneys with a public utility
franchise to operate along the Baclaran-Sucat route. By 1995, Villamaria stopped
assembling jeepneys and retained only nine, four of which he operated by
employing drivers on a boundary basis. One of those drivers was respondent
Bustamante who drove the jeepney with Plate No. PVU-660. Bustamante
remitted P450.00 a day to Villamaria as boundary and kept the residue of his daily
earnings as compensation for driving the vehicle. In August 1997, Villamaria
verbally agreed to sell the jeepney to Bustamante under the boundary-hulog scheme,
where Bustamante would remit to Villarama P550.00 a day for a period of four
years; Bustamante would then become the owner of the vehicle and continue to
drive the same under Villamarias franchise. It was also agreed that Bustamante
would make a downpayment of P10,000.00.
On August 7, 1997, Villamaria executed a contract entitled Kasunduan ng
Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog[5] over the passenger
jeepney with Plate No. PVU-660, Chassis No. EVER95-38168-C and Motor No.
SL-26647. The parties agreed that if Bustamante failed to pay the boundary-
hulog for three days, Villamaria Motors would hold on to the vehicle until
Bustamante paid his arrears, including a penalty of P50.00 a day; in case
7
Bustamante failed to remit the daily boundary-hulog for a period of one week,
the Kasunduan would cease to have legal effect and Bustamante would have to
return the vehicle to Villamaria Motors.
Under the Kasunduan, Bustamante was prohibited from driving the vehicle
without prior authority from Villamaria Motors. Thus, Bustamante was authorized to
operate the vehicle to transport passengers only and not for other purposes. He was
also required to display an identification card in front of the windshield of the
vehicle; in case of failure to do so, any fine that may be imposed by government
authorities would be charged against his account. Bustamante further obliged
himself to pay for the cost of replacing any parts of the vehicle that would be lost or
damaged due to his negligence. In case the vehicle sustained serious damage,
Bustamante was obliged to notify Villamaria Motors before commencing
repairs. Bustamante was not allowed to wear slippers, short pants or undershirts
while driving. He was required to be polite and respectful towards the
passengers. He was also obliged to notify Villamaria Motors in case the vehicle was
leased for two or more days and was required to attend any meetings which may be
called from time to time. Aside from the boundary-hulog, Bustamante was also
obliged to pay for the annual registration fees of the vehicle and the premium for the
vehicles comprehensive insurance. Bustamante promised to strictly comply with the
rules and regulations imposed by Villamaria for the upkeep and maintenance of the
jeepney.
Bustamante continued driving the jeepney under the supervision and control of
Villamaria. As agreed upon, he made daily remittances of P550.00 in payment of the
purchase price of the vehicle. Bustamante failed to pay for the annual registration
fees of the vehicle, but Villamaria allowed him to continue driving the jeepney.
In 1999, Bustamante and other drivers who also had the same arrangement
with Villamaria Motors failed to pay their respective boundary-hulog. This
prompted Villamaria to serve a Paalala,[6] reminding them that under
the Kasunduan, failure to pay the daily boundary-hulog for one week, would mean
their respective jeepneys would be returned to him without any complaints. He
warned the drivers that the Kasunduan would henceforth be strictly enforced and
urged them to comply with their obligation to avoid litigation.
On July 24, 2000, Villamaria took back the jeepney driven by Bustamante
and barred the latter from driving the vehicle.
On August 15, 2000, Bustamante filed a Complaint[7] for Illegal Dismissal
against Villamaria and his wife Teresita. In his Position Paper,[8] Bustamante alleged
that he was employed by Villamaria in July 1996 under the boundary system, where
he was required to remit P450.00 a day. After one year of continuously working for
them, the spouses Villamaria presented the Kasunduan for his signature, with the
assurance that he (Bustamante) would own the jeepney by March 2001 after
paying P550.00 in daily installments and that he would thereafter continue driving
the vehicle along the same route under the same franchise. He further narrated that
in July 2000, he informed the Villamaria spouses that the surplus engine of the
jeepney needed to be replaced, and was assured that it would be done. However, he
was later arrested and his drivers license was confiscated because apparently, the
replacement engine that was installed was taken from a stolen vehicle. Due to
negotiations with the apprehending authorities, the jeepney was not impounded. The
Villamaria spouses took the jeepney from him on July 24, 2000, and he was no
longer allowed to drive the vehicle since then unless he paid them P70,000.00.
Bustamante prayed that judgment be rendered in his favor, thus:
WHEREFORE, in the light of the foregoing, it is most
respectfully prayed that judgment be rendered ordering the
respondents, jointly and severally, the following:
1. Reinstate complainant to his former position without
loss of seniority rights and execute a Deed of Sale in favor of the
complainant relative to the PUJ with Plate No. PVU-660;
2. Ordering the respondents to pay backwages in the
amount of P400.00 a day and other benefits computed from July
24, 2000 up to the time of his actual reinstatement;
3. Ordering respondents to return the amount
of P10,000.00 and P180,000.00 for the expenses incurred by the
complainant in the repair and maintenance of the subject jeep;
4. Ordering the respondents to refund the amount of One
Hundred (P100.00) Pesos per day counted from August 7, 1997 up
to June 2000 or a total of P91,200.00;
5. To pay moral and exemplary damages of not less
than P200,000.00;
6. Attorneys fee[s] of not less than 10% of the monetary
award.
Other just and equitable reliefs under the premises are
also being prayed for.[9]
In their Position Paper,[10] the spouses Villamaria admitted the existence of
the Kasunduan, but alleged that Bustamante failed to pay the P10,000.00
downpayment and the vehicles annual registration fees. They further alleged that
Bustamante eventually failed to remit the requisite boundary-hulog of P550.00 a
day, which prompted them to issue the Paalaala. Instead of complying with his
obligations, Bustamante stopped making his remittances despite his daily trips and
even brought the jeepney to the province without permission. Worse, the jeepney
figured in an accident and its license plate was confiscated; Bustamante even
abandoned the vehicle in a gasoline station in Sucat, Paraaque City for two
weeks. When the security guard at the gasoline station requested that the vehicle be
retrieved and Teresita Villamaria asked Bustamante for the keys, Bustamante told
her: Di kunin ninyo. When the vehicle was finally retrieved, the tires were worn, the
alternator was gone, and the battery was no longer working.
8
 C i t i n g t h e c a s e s o f C a t h e d r a l S c h o o l o f Te c h n o l o g y v.
NLRC[11] and Canlubang Security Agency Corporation v. NLRC,[12] the spouses
Villamaria argued that Bustamante was not illegally dismissed since
the Kasunduan executed on August 7, 1997 transformed the employer-employee
relationship into that of vendor-vendee. Hence, the spouses concluded, there was no
legal basis to hold them liable for illegal dismissal. They prayed that the case be
dismissed for lack of jurisdiction and patent lack of merit.
In his Reply,[13] Bustamante claimed that Villamaria exercised control and
supervision over the conduct of his employment. He maintained that the rulings of
the Court in National Labor Union v. Dinglasan,[14]Magboo v. Bernardo,
[15] and Citizen's League of Free Workers v. Abbas[16] are germane to the issue as
they define the nature of the owner/operator-driver relationship under the boundary
system. He further reiterated that it was the Villamaria spouses who presented
the Kasunduan to him and that he conformed thereto only upon their representation
that he would own the vehicle after four years. Moreover, it appeared that
the Paalala was duly received by him, as he, together with other drivers, was made
to affix his signature on a blank piece of paper purporting to be an attendance sheet.
On March 15, 2002, the Labor Arbiter rendered judgment[17] in favor of the spouses
Villamaria and ordered the complaint dismissed on the following ratiocination:
Respondents presented the contract of Boundary-Hulog, as
well as the PAALALA, to prove their claim that complainant
violated the terms of their contract and afterwards abandoned the
vehicle assigned to him. As against the foregoing, [the] complaints
(sic) mere allegations to the contrary cannot prevail.
Not having been illegally dismissed, complainant is not entitled to
damages and attorney's fees.[18]
Bustamante appealed the decision to the NLRC,[19] insisting that
the Kasunduan did not extinguish the employer-employee relationship between him
and Villamaria. While he did not receive fixed wages, he kept only the excess of the
boundary-hulog which he was required to remit daily to Villamaria under the
agreement.Bustamante maintained that he remained an employee because he was
engaged to perform activities which were necessary or desirable to Villamarias trade
or business.
The NLRC rendered judgment[20] dismissing the appeal for lack of merit,
thus:
WHEREFORE, premises considered, complainant's appeal
is hereby DISMISSED for reasons not stated in the Labor Arbiter's
decision but mainly on a jurisdictional issue, there being none over
the subject matter of the controversy.[21]
The NLRC ruled that under the Kasunduan, the juridical relationship
between Bustamante and Villamaria was that of vendor and vendee, hence, the
Labor Arbiter had no jurisdiction over the complaint. Bustamante filed a Motion for
Reconsideration, which the NLRC resolved to deny on May 30, 2003.[22]
Bustamante elevated the matter to the CA via Petition for Certiorari,
alleging that the NLRC erred
I
IN DISMISSING PETITIONERS APPEAL FOR REASON NOT
STATED IN THE LABOR ARBITERS DECISION, BUT
MAINLY ON JURISDICTIONAL ISSUE;
II
IN DISREGARDING THE LAW AND PREVAILING
JURISPRUDENCE WHEN IT DECLARED THAT THE
RELATIONSHIP WHICH WAS ESTABLISHED BETWEEN
PETITIONER AND THE PRIVATE RESPONDENT WAS
DEFINITELY A MATTER WHICH IS BEYOND THE
PROTECTIVE MANTLE OF OUR LABOR LAWS.[23]
Bustamante insisted that despite the Kasunduan, the relationship between him and
Villamaria continued to be that of employer-employee and as such, the Labor
Arbiter had jurisdiction over his complaint. He further alleged that it is common
knowledge that operators of passenger jeepneys (including taxis) pay their drivers
not on a regular monthly basis but on commission or boundary basis, or even the
boundary-hulog system. Bustamante asserted that he was dismissed from
employment without any lawful or just cause and without due notice.
For his part, Villamaria averred that Bustamante failed to adduce proof of
their employer-employee relationship. He further pointed out that
the Dinglasan case pertains to the boundary system and not the boundary-
hulog system, hence inapplicable in the instant case. He argued that upon the
execution of the Kasunduan, the juridical tie between him and Bustamante was
transformed into a vendor-vendee relationship.Noting that he was engaged in the
manufacture and sale of jeepneys and not in the business of transporting passengers
for consideration, Villamaria contended that the daily fees which Bustmante paid
were actually periodic installments for the the vehicle and were not the same fees as
understood in the boundary system. He added that the boundary-hulog plan was
basically a scheme to help the driver-buyer earn money and eventually pay for the
unit in full, and for the owner to profit not from the daily earnings of the driver-
buyer but from the purchase price of the unit sold. Villamaria further asserted that
the apparently restrictive conditions in the Kasunduan did not mean that the means
and method of driver-buyers conduct was controlled, but were mere ways to
preserve the vehicle for the benefit of both parties: Villamaria would be able to
collect the agreed purchase price, while Bustamante would be assured that the
vehicle would still be in good running condition even after four years. Moreover, the
right of vendor to impose certain conditions on the buyer should be respected until
full ownership of the property is vested on the latter. Villamaria insisted that the
parallel circumstances obtaining in Singer Sewing Machine Company v.
Drilon[24] has analogous application to the instant issue.
In its Decision[25] dated August 30, 2004, the CA reversed and set aside the
NLRC decision. The fallo of the decision reads: 9
 UPON THE VIEW WE TAKE IN THIS CASE,
THUS, the impugned resolutions of the NLRC must be, as they
are hereby are, REVERSED AND SET ASIDE, and judgment
entered in favor of petitioner:
1. Sentencing private respondent Oscar
Villamaria, Jr. to pay petitioner Jerry Bustamante
separation pay computed from the time of his employment
up to the time of termination based on the prevailing
minimum wage at the time of termination; and,
2. Condemning private respondent Oscar
Villamaria, Jr. to pay petitioner Jerry Bustamante back
wages computed from the time of his dismissal up to
March 2001 based on the prevailing minimum wage at the
time of his dismissal.
Without Costs.
SO ORDERED.[26]
The appellate court ruled that the Labor Arbiter had jurisdiction over
Bustamantes complaint. Under the Kasunduan, the relationship between him and
Villamaria was dual: that of vendor-vendee and employer-employee. The CA
ratiocinated that Villamarias exercise of control over Bustamantes conduct in
operating the jeepney is inconsistent with the formers claim that he was not engaged
in the transportation business. There was no evidence that petitioner was allowed to
let some other person drive the jeepney.
The CA further held that, while the power to dismiss was not mentioned in
the Kasunduan, it did not mean that Villamaria could not exercise it. It explained
that the existence of an employment relationship did not depend on how the worker
was paid but on the presence or absence of control over the means and method of
the employees work. In this case, Villamarias directives (to drive carefully, wear an
identification card, don decent attire, park the vehicle in his garage, and to inform
him about provincial trips, etc.) was a means to control the way in which
Bustamante was to go about his work. In view of Villamarias supervision and
control as employer, the fact that the boundary represented installment payments of
the purchase price on the jeepney did not remove the parties employer-employee
relationship.
While the appellate court recognized that a weeks default in paying the
boundary-hulog constituted an additional cause for terminating Bustamantes
employment, it held that the latter was illegally dismissed.According to the CA,
assuming that Bustamante failed to make the required payments as claimed by
Villamaria, the latter nevertheless failed to take steps to recover the unit and waited
for Bustamante to abandon it. It also pointed out that Villamaria neither submitted
any police report to support his claim that the vehicle figured in a mishap nor
presented the affidavit of the gas station guard to substantiate the claim that
Bustamante abandoned the unit.
Villamaria received a copy of the decision on September 8, 2004, and filed,
on September 17, 2004, a motion for reconsideration thereof. The CA denied the
motion in a Resolution[27] dated November 2, 2004, and Villamaria received a copy
thereof on November 8, 2004.
Villamaria, now petitioner, seeks relief from this Court via petition for review
on certiorari under Rule 65 of the Rules of Court, alleging that the CA committed
grave abuse of its discretion amounting to excess or lack of jurisdiction in reversing
the decision of the Labor Arbiter and the NLRC. He claims that the CA erred in
ruling that the juridical relationship between him and respondent under
the Kasunduan was a combination of employer-employee and vendor-vendee
relationships. The terms and conditions of the Kasunduan clearly state that he and
respondent Bustamante had entered into a conditional deed of sale over the jeepney;
as such, their employer-employee relationship had been transformed into that of
vendor-vendee. Petitioner insists that he had the right to reserve his title on the
jeepney until after the purchase price thereof had been paid in full.
In his Comment on the petition, respondent avers that the appropriate remedy of
petitioner was an appeal via a petition for review on certiorari under Rule 45 of the
Rules of Court and not a special civil action of certiorariunder Rule 65. He argues
that petitioner failed to establish that the CA committed grave abuse of its discretion
amounting to excess or lack of jurisdiction in its decision, as the said ruling is in
accord with law and the evidence on record.
Respondent further asserts that the Kasunduan presented to him by
petitioner which provides for a boundary-hulog scheme was a devious
circumvention of the Labor Code of the Philippines. Respondent insists that his
juridical relationship with petitioner is that of employer-employee because he was
engaged to perform activities which were necessary or desirable in the usual
business of petitioner, his employer.
In his Reply, petitioner avers that the Rules of Procedure should be liberally
construed in his favor; hence, it behooves the Court to resolve the merits of his
petition.
We agree with respondents contention that the remedy of petitioner from the CA
decision was to file a petition for review on certiorari under Rule 45 of the Rules of
Court and not the independent action of certiorari under Rule 65. Petitioner had 15
days from receipt of the CA resolution denying his motion for the reconsideration
within which to file the petition under Rule 45.[28] But instead of doing so, he filed
a petition for certiorariunder Rule 65 on November 22, 2004, which did not,
however, suspend the running of the 15-day reglementary period; consequently, the
CA decision became final and executory upon the lapse of the reglementary period
for appeal. Thus, on this procedural lapse, the instant petition stands to be dismissed.
[29]
It must be stressed that the recourse to a special civil action under Rule 65 of the
10
Rules of Court is proscribed by the remedy of appeal under Rule 45. As the Court
elaborated in Tomas Claudio Memorial College, Inc. v. Court of Appeals:[30]

We agree that the remedy of the aggrieved party from a decision or
final resolution of the CA is to file a petition for review
on certiorari under Rule 45 of the Rules of Court, as amended, on
questions of facts or issues of law within fifteen days from notice
of the said resolution. Otherwise, the decision of the CA shall
become final and executory. The remedy under Rule 45 of the
Rules of Court is a mode of appeal to this Court from the decision
of the CA. It is a continuation of the appellate process over the
original case. A review is not a matter of right but is a matter of
judicial discretion. The aggrieved party may, however, assail the
decision of the CA via a petition for certiorariunder Rule 65 of the
Rules of Court within sixty days from notice of the decision of the
CA or its resolution denying the motion for reconsideration of the
same. This is based on the premise that in issuing the assailed
decision and resolution, the CA acted with grave abuse of
discretion, amounting to excess or lack of jurisdiction and there is
no plain, speedy and adequate remedy in the ordinary course of
law. A remedy is considered plain, speedy and adequate if it will
promptly relieve the petitioner from the injurious effect of the
judgment and the acts of the lower court.
The aggrieved party is proscribed from filing a petition
for certiorari if appeal is available, for the remedies of appeal
and certiorari are mutually exclusive and not alternative or
successive. The aggrieved party is, likewise, barred from filing a
petition for certiorari if the remedy of appeal is lost through his
negligence. A petition for certiorari is an original action and does
not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued
against the public respondent from further proceeding. A petition
for certiorari must be based on jurisdictional grounds because, as
long as the respondent court acted within its jurisdiction, any error
committed by it will amount to nothing more than an error of
judgment which may be corrected or reviewed only by appeal.[31]
However, we have also ruled that a petition for certiorari under Rule 65
may be considered as filed under Rule 45, conformably with the principle that rules
of procedure are to be construed liberally, provided that the petition is filed within
the reglementary period under Section 2, Rule 45 of the Rules of Court, and where
valid and compelling circumstances warrant that the petition be resolved on its
merits.[32] In this case, the petition was filed within the reglementary period and
petitioner has raised an issue of substance: whether the existence of a boundary-
hulog agreement negates the employer-employee relationship between the vendor
and vendee, and, as a corollary, whether the Labor Arbiter has jurisdiction over a
complaint for illegal dismissal in such case.
We resolve these issues in the affirmative.
The rule is that, the nature of an action and the subject matter thereof, as
well as, which court or agency of the government has jurisdiction over the same, are
determined by the material allegations of the complaint in relation to the law
involved and the character of the reliefs prayed for, whether or not the complainant/
plaintiff is entitled to any or all of such reliefs.[33] A prayer or demand for relief is
not part of the petition of the cause of action; nor does it enlarge the cause of action
stated or change the legal effect of what is alleged.[34] In determining which body
has jurisdiction over a case, the better policy is to consider not only the status or
relationship of the parties but also the nature of the action that is the subject of their
controversy.[35]
Article 217 of the Labor Code, as amended, vests on the Labor Arbiter
exclusive original jurisdiction only over the following:
x x x (a) Except as otherwise provided under this Code,
the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for
reinstatement, those cases that workers may file
involving wage, rates of pay, hours of work, and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary
and other forms of damages arising from the
employer-employee relations;
5. Cases arising from violation of
Article 264 of this Code, including questions
involving the legality of strikes and lockouts;
and
6. Except claims for Employees
Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from
employer-employee relationship, including
those of persons in domestic or household
service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for
reinstatement.
(b) The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation
of collective bargaining agreements, and those arising from the
interpretation or enforcement of company 11 personnel policies shall
be disposed of by the Labor Arbiter by referring the same to the
 grievance machinery and voluntary arbitration as may be provided
in said agreements.
In the foregoing cases, an employer-employee relationship is an
indispensable jurisdictional requisite.[36]The jurisdiction of Labor Arbiters and the
NLRC under Article 217 of the Labor Code is limited to disputes arising from an
employer-employee relationship which can only be resolved by reference to the
Labor Code, other labor statutes or their collective bargaining agreement.[37] Not
every dispute between an employer and employee involves matters that only the
Labor Arbiter and the NLRC can resolve in the exercise of their adjudicatory or
quasi-judicial powers. Actions between employers and employees where the
employer-employee relationship is merely incidental is within the exclusive original
jurisdiction of the regular courts.[38] When the principal relief is to be granted under
labor legislation or a collective bargaining agreement, the case falls within the
exclusive jurisdiction of the Labor Arbiter and the NLRC even though a claim for
damages might be asserted as an incident to such claim.[39]
We agree with the ruling of the CA that, under the boundary-hulog scheme
incorporated in the Kasunduan, a dual juridical relationship was created between
petitioner and respondent: that of employer-employee and vendor-
vendee. The Kasunduan did not extinguish the employer-employee relationship of
the parties extant before the execution of said deed.
As early as 1956, the Court ruled in National Labor Union v.
Dinglasan[40] that the jeepney owner/operator-driver relationship under the boundary
system is that of employer-employee and not lessor-lessee. This doctrine was
affirmed, under similar factual settings, in Magboo v. Bernardo[41] and Lantaco, Sr.
v. Llamas,[42] and was analogously applied to govern the relationships between auto-
calesa owner/operator and driver,[43] bus owner/operator and conductor,[44] and taxi
owner/operator and driver.[45]
The boundary system is a scheme by an owner/operator engaged in
transporting passengers as a common carrier to primarily govern the compensation
of the driver, that is, the latters daily earnings are remitted to the owner/operator less
the excess of the boundary which represents the drivers compensation. Under this
system, the owner/operator exercises control and supervision over the driver. It is
unlike in lease of chattels where the lessor loses complete control over the chattel
leased but the lessee is still ultimately responsible for the consequences of its use.
The management of the business is still in the hands of the owner/operator, who,
being the holder of the certificate of public convenience, must see to it that the
driver follows the route prescribed by the franchising and regulatory authority, and
the rules promulgated with regard to the business operations. The fact that the driver
does not receive fixed wages but only the excess of the boundary given to the
owner/operator is not sufficient to change the relationship between
them. Indubitably, the driver performs activities which are usually necessary or
desirable in the usual business or trade of the owner/operator.[46]
Under the Kasunduan, respondent was required to remit P550.00 daily to
petitioner, an amount which represented the boundary of petitioner as well as
respondents partial payment (hulog) of the purchase price of the jeepney. 
 nakakabit ang ID card sa wastong lugar o anuman
Respondent was entitled to keep the excess of his daily earnings as his daily wage.
Thus, the daily remittances also had a dual purpose: that of petitioners boundary and
respondents partial payment (hulog) for the vehicle. This dual purpose was
expressly stated in the Kasunduan. The well-settled rule is that an obligation is not
novated by an instrument that expressly recognizes the old one, changes only the
terms of payment, and adds other obligations not incompatible with the old
provisions or where the new contract merely supplements the previous one. [47] The
two obligations of the respondent to remit to petitioner the boundary-hulog can
stand together.
In resolving an issue based on contract, this Court must first examine the
contract itself, keeping in mind that when the terms of the agreement are clear and
leave no doubt as to the intention of the contracting parties, the literal meaning of its
stipulations shall prevail.[48] The intention of the contracting parties should be
ascertained by looking at the words used to project their intention, that is, all the
words, not just a particular word or two or more words standing alone. The various
stipulations of a contract shall be interpreted together, attributing to the doubtful
ones that sense which may result from all of them taken jointly.[49] The parts and
clauses must be interpreted in relation to one another to give effect to the whole. The
legal effect of a contract is to be determined from the whole read together.[50]
Under the Kasunduan, petitioner retained supervision and control over the
conduct of the respondent as driver of the jeepney, thus:
Ang mga patakaran, kaugnay ng bilihang ito sa pamamagitan ng
boundary hulog ay ang mga sumusunod:
1. Pangangalagaan at pag-iingatan ng TAUHAN NG
IKALAWANG PANIG ang sasakyan ipinagkatiwala sa kanya ng TAUHAN
NG UNANG PANIG.
2. Na ang sasakyan nabanggit ay gagamitin lamang ng TAUHAN
NG IKALAWANG PANIG sa paghahanapbuhay bilang pampasada o
pangangalakal sa malinis at maayos na pamamaraan.
3. Na ang sasakyan nabanggit ay hindi gagamitin ng TAUHAN NG
IKALAWANG PANIG sa mga bagay na makapagdudulot ng kahihiyan,
kasiraan o pananagutan sa TAUHAN NG UNANG PANIG.
4. Na hindi ito mamanehohin ng hindi awtorisado ng opisina ng
UNANG PANIG.
5. Na ang TAUHAN NG IKALAWANG PANIG ay kinakailangang
maglagay ng ID Card sa harap ng windshield upang sa pamamagitan nito ay
madaliang malaman kung ang nagmamaneho ay awtorisado ng
VILLAMARIA MOTORS o hindi.
6. Na sasagutin ng TAUHAN NG IKALAWANG PANIG ang
[halaga ng] multa kung sakaling mahuli ang sasakyang ito na hindi
12 kasalanan o kapabayaan.
 7. Na sasagutin din ng TAUHAN NG IKALAWANG PANIG ang
materyales o piyesa na papalitan ng nasira o nawala ito dahil sa kanyang
kapabayaan.
8. Kailangan sa VILLAMARIA MOTORS pa rin ang garahe
habang hinuhulugan pa rin ng TAUHAN NG IKALAWANG PANIG ang
nasabing sasakyan.
9. Na kung magkaroon ng mabigat na kasiraan ang sasakyang
ipinagkaloob ng TAUHAN NG UNANG PANIG, ang TAUHAN NG
IKALAWANG PANIG ay obligadong itawag ito muna sa VILLAMARIA
MOTORS bago ipagawa sa alin mang Motor Shop na awtorisado ng
VILLAMARIA MOTORS.
10. Na hindi pahihintulutan ng TAUHAN NG IKALAWANG PANIG
sa panahon ng pamamasada na ang nagmamaneho ay naka-tsinelas, naka
short pants at nakasando lamang. Dapat ang nagmamaneho ay laging nasa
maayos ang kasuotan upang igalang ng mga pasahero.
11. Na ang TAUHAN NG IKALAWANG PANIG o ang awtorisado
niyang driver ay magpapakita ng magandang asal sa mga pasaheros at hindi
dapat magsasalita ng masama kung sakali man may pasaherong pilosopo
upang maiwasan ang anumang kaguluhan na maaaring kasangkutan.
12. Na kung sakaling hindi makapagbigay ng BOUNDARY
HULOG ang TAUHAN NG IKALAWANG PANIG sa loob ng tatlong (3) araw
ay ang opisina ng VILLAMARIA MOTORS ang may karapatang mangasiwa
ng nasabing sasakyan hanggang matugunan ang lahat ng 
 The parties expressly agreed that petitioner, as vendor, and respondent, as
responsibilidad. Ang halagang dapat bayaran sa opisina ay may
karagdagang multa ng P50.00 sa araw-araw na ito ay nasa pangangasiwa
ng VILLAMARIA MOTORS.
13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi
makapagbigay ng BOUNDARY HULOG sa loob ng isang linggo ay
nangangahulugan na ang kasunduang ito ay wala ng bisa at kusang ibabalik
ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan sa TAUHAN
NG UNANG PANIG.
14. Sasagutin ng TAUHAN NG IKALAWANG PANIG ang bayad sa
rehistro, comprehensive insurance taon-taon at kahit anong uri ng aksidente
habang ito ay hinuhulugan pa sa TAUHAN NG UNANG PANIG.
15. Na ang TAUHAN NG IKALAWANG PANIG ay obligadong
dumalo sa pangkalahatang pagpupulong ng VILLAMARIA MOTORS sa
tuwing tatawag ang mga tagapangasiwa nito upang maipaabot ang
anumang mungkahi sa ikasusulong ng samahan.
16. Na ang TAUHAN NG IKALAWANG PANIG ay makikiisa sa
lahat ng mga patakaran na magkakaroon ng pagbabago o karagdagan sa
mga darating na panahon at hindi magiging hadlang sa lahat ng mga
balakin ng VILLAMARIA MOTORS sa lalo pang ipagtatagumpay at
ikakatibay ng Samahan.
17. Na ang TAUHAN NG IKALAWANG PANIG ay hindi magiging
buwaya sa pasahero upang hindi kainisan ng kapwa driver at maiwasan ang
pagkakasangkot sa anumang gulo.
18. Ang nasabing sasakyan ay hindi kalilimutang siyasatin ang
kalagayan lalo na sa umaga bago pumasada, at sa hapon o gabi naman ay
sisikapin mapanatili ang kalinisan nito.
19. Na kung sakaling ang nasabing sasakyan ay maaarkila at
aabutin ng dalawa o higit pang araw sa lalawigan ay dapat lamang na
ipagbigay alam muna ito sa VILLAMARIA MOTORS upang maiwasan ang
mga anumang suliranin.
20. Na ang TAUHAN NG IKALAWANG PANIG ay iiwasan ang
pakikipag-unahan sa kaninumang sasakyan upang maiwasan ang aksidente.
21. Na kung ang TAUHAN NG IKALAWANG PANIG ay mayroon
sasabihin sa VILLAMARIA MOTORS mabuti man or masama ay iparating
agad ito sa kinauukulan at iwasan na iparating ito kung [kani-kanino]
lamang upang maiwasan ang anumang usapin. Magsadya agad sa opisina
ng VILLAMARIA MOTORS.
22. Ang mga nasasaad sa KASUNDUAN ito ay buong galang at
puso kong sinasang-ayunan at buong sikap na pangangalagaan ng TAUHAN
NG IKALAWANG PANIG ang nasabing sasakyan at gagamitin lamang ito sa
paghahanapbuhay at wala nang iba pa.[51]
vendee, entered into a contract to sell the jeepney on a daily installment basis
of P550.00 payable in four years and that petitioner would thereafter become its
owner. A contract is one of conditional sale, oftentimes referred to as contract to sell,
if the ownership or title over the

property sold is retained by the vendor, and is not passed to the vendee unless and
until there is full payment of the purchase price and/or upon faithful compliance
with the other terms and conditions that may lawfully be stipulated.[52] Such
payment or satisfaction of other preconditions, as the case may be, is a positive
suspensive condition, the failure of which is not a breach of contract, casual or
serious, but simply an event that would prevent the obligation of the vendor to
convey title from acquiring binding force.[53] Stated differently, the efficacy or
obligatory force of the vendor's obligation to transfer title is subordinated to the
happening of a future and uncertain event so that if the suspensive condition does
not take place, the parties would stand as if the conditional obligation had never
existed.[54] The vendor may extrajudicially terminate the operation of the contract,
refuse conveyance, and retain the sums or installments already received, where such
rights are expressly provided for.[55]
Under the boundary-hulog scheme, petitioner retained ownership of the
jeepney although its material possession was vested in respondent as its driver. In
case respondent failed to make his P550.00 daily installment payment for a week,
the agreement would be of no force and effect and respondent would have to return
the jeepney to petitioner; the employer-employee
13 relationship would likewise be
terminated unless petitioner would allow respondent to continue driving the jeepney
on a boundary basis of P550.00 daily despite the termination of their vendor-vendee
relationship.
The juridical relationship of employer-employee between petitioner and
respondent was not negated by the foregoing stipulation in the Kasunduan,
considering that petitioner retained control of respondents conduct as driver of the
vehicle. As correctly ruled by the CA:
The exercise of control by private respondent over
petitioners conduct in operating the jeepney he was driving is
inconsistent with private respondents claim that he is, or was, not
engaged in the transportation business; that, even if petitioner was
allowed to let some other person drive the unit, it was not shown
that he did so; that the existence of an employment relation is not
dependent on how the worker is paid but on the presence or
absence of control over the means and method of the work; that the
amount earned in excess of the boundary hulog is equivalent to
wages; and that the fact that the power of dismissal was not
mentioned in the Kasunduan did not mean that private respondent
never exercised such power, or could not exercise such power.
Moreover, requiring petitioner to drive the unit for
commercial use, or to wear an identification card, or to don a
decent attire, or to park the vehicle in Villamaria Motors garage, or
to inform Villamaria Motors about the fact that the unit would be
going out to the province for two days of more, or to drive the unit
carefully, etc. necessarily related to control over the means by
which the petitioner was to go about his work; that the ruling
applicable here is not Singer Sewing Machine but National Labor
Union since the latter case involved jeepney owners/operators and
jeepney drivers, and that the fact that the boundary here
represented installment payment of the purchase price on the
jeepney did not withdraw the relationship from that of employer-
employee, in view of the overt presence of supervision and control
by the employer.[56]
Neither is such juridical relationship negated by petitioners claim that the
terms and conditions in theKasunduan relative to respondents behavior and
deportment as driver was for his and respondents benefit: to insure that respondent
would be able to pay the requisite daily installment of P550.00, and that the vehicle
would still be in good condition despite the lapse of four years. What is primordial is
that petitioner retained control over the conduct of the respondent as driver of the
jeepney.
Indeed, petitioner, as the owner of the vehicle and the holder of the
franchise, is entitled to exercise supervision and control over the respondent, by
seeing to it that the route provided in his franchise, and the rules and regulations of
the Land Transportation Regulatory Board are duly complied with. Moreover, in a
business establishment, an identification card is usually provided not just as a
security measure but to mainly identify the holder thereof as a bona fide employee
of the firm who issues it.[57]
As respondents employer, it was the burden of petitioner to prove that
respondents termination from employment was for a lawful or just cause, or, at the
very least, that respondent failed to make his daily remittances of P550.00 as
boundary. However, petitioner failed to do so. As correctly ruled by the appellate
court:
It is basic of course that termination of employment must
be effected in accordance with law. The just and authorized causes
for termination of employment are enumerated under Articles 282,
283 and 284 of the Labor Code.
Parenthetically, given the peculiarity of the situation of the
parties here, the default in the remittance of the boundary hulog for
one week or longer may be considered an additional cause for
termination of employment. The reason is because
the Kasunduan would be of no force and effect in the event that the
purchaser failed to remit the boundary hulog for one
week. The Kasunduan in this case pertinently stipulates:
13. Na kung ang TAUHAN NG IKALAWANG
PANIG ay hindi makapagbigay ng BOUNDARY HULOG
sa loob ng isang linggo ay NANGANGAHULUGAN na
ang kasunduang ito ay wala ng bisa at kusang ibabalik
ng TAUHAN NG IKALAWANG PANIG ang nasabing
sasakyan sa TAUHAN NG UNANG PANIG na wala ng
paghahabol pa.
Moreover, well-settled is the rule that, the employer has the burden
of proving that the dismissal of an employee is for a just cause. The
failure of the employer to discharge this burden means that the
dismissal is not justified and that the employee is entitled to
reinstatement and back wages.
In the case at bench, private respondent in his position
paper before the Labor Arbiter, alleged that petitioner failed to pay
the miscellaneous fee of P10,000.00 and the yearly registration of
the unit; that petitioner also stopped remitting the boundary hulog,
prompting him (private respondent) to issue a Paalala, which
petitioner however ignored; that petitioner even brought the unit to
his (petitioners) province without informing him (private
respondent) about it; and that petitioner eventually abandoned the
vehicle at a gasoline station after figuring in an accident. But
private respondent failed to substantiate these allegations with
solid, sufficient proof. Notably, private respondents allegation viz,
that he retrieved the vehicle from the gas station, where petitioner
abandoned it, contradicted his statement 14 in the Paalala that he
would enforce the provision (in the Kasunduan) to the effect that
 default in the remittance of the boundary hulog for one week would CORAZON ALMIREZ, G.R. No. 162401
result in the forfeiture of the unit. The Paalalareads as follows: Petitioner,
Sa lahat ng mga kumukuha ng sasakyan Present:
Sa pamamagitan ng BOUNDARY HULOG
- versus - QUISUMBING, J., Chairperson,
Nais ko pong ipaalala sa inyo ang Kasunduan na inyong CARPIO,
pinirmahan particular na ang paragrapo 13 na nagsasaad na kung CARPIO MORALES, and
hindi kayo makapagbigay ng Boundary Hulog sa loob ng isang INFINITE LOOP TECHNOLOGY TINGA, JJ.
linggo ay kusa ninyong ibabalik and nasabing sasakyan na inyong C O R P O R AT I O N , E D W I N R .
hinuhulugan ng wala ng paghahabol pa. RABINO and COURT OF Promulgated:
APPEALS,
Mula po sa araw ng inyong pagkatanggap ng Paalala na ito ay Respondents. January 31, 2006
akin na pong ipatutupad ang nasabing Kasunduan kayat aking
pinaaalala sa inyong lahat na tuparin natin ang nakalagay sa
kasunduan upang maiwasan natin ito.

Hinihiling ko na sumunod kayo sa hinihingi ng paalalang ito

upang hindi na tayo makaabot pa sa korte kung sakaling hindi
ninyo isasauli ang inyong sasakyan na hinuhulugan na ang mga x--------------------------------------------------x
magagastos ay kayo pa ang magbabayad sapagkat ang hindi ninyo
pagtupad sa kasunduan ang naging dahilan ng pagsampa ng kaso. DECISION
Sumasainyo
CARPIO MORALES, J.:

Attendance: 8/27/99
(The Signatures appearing herein
include (sic) that of petitioners) (Sgd.)
OSCAR VILLAMARIA, JR.
If it were true that petitioner did not remit the boundary hulog for
one week or more, why did private respondent not forthwith take
steps to recover the unit, and why did he have to wait for petitioner
to abandon it?
On another point, private respondent did not submit any police
report to support his claim that petitioner really figured in a
vehicular mishap. Neither did he present the affidavit of the guard
from the gas station to substantiate his claim that petitioner
abandoned the unit there.[58]
Petitioners claim that he opted not to terminate the employment of
respondent because of magnanimity is negated by his (petitioners) own evidence
that he took the jeepney from the respondent only on July 24, 2000.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The
decision of the Court of Appeals in CA-G.R. SP No. 78720 is AFFIRMED. Costs
against petitioner.
SO ORDERED.
Corazon Almirez (petitioner) was hired as a Refinery Senior Process Design
Engineer for a specific project by respondent Infinite Loop Technology
Corporation (Infinite Loop) through its General Manager/President-co-
respondent Edwin R. Rabino (Rabino) who, by letter[1] dated September 30,
1999 to petitioner, furnished the details of the employment of her services as
follows:
Subject: Acceptance of Professional Services
Refinery Senior Process Design Engineer
Dear Ms. Almirez
This is to confirm acceptance of your services as per
attached Terms and Conditions. Your services will commence
effective October 18, 1999 up to the completion of the scope of
services and continuation thereof with a guaranty of 12
continuous months as outlined in the attachment or until a
mutually agreed date.
We thank you for considering our company as a valued
partner in the advancement of 15Petroleum Processing
Technology in our country.

x x x x (Emphasis and underscoring supplied)
As indicated in the above-quoted portion of Rabinos letter, the terms and
conditions attendant to the acceptance of petitioners Professional
Services[2] were attached to it reading:
Scope of Professional Services
The Senior Process Design Engineer shall work together with
the Process Design Consultant in performing the scope of
services below which includes but are not limited to the
following:
1. Prepare the Process Design Terms of Reference or Basis of
Design and other data required for the proposed 1,200,000
BPSD Petroleum Refinery. These data are to be used in
securing the services of a Basic Design Engineering Company
as well as part of Project Accomplishment of Infinite Loop
Technology Corp.
2. Review and revise/improve as necessary the existing
conceptual process block diagram or Process Flow Scheme of
the proposed petroleum refinery. Various capacity combinations
are to be considered to develop process design modules of
1,200,000 BPSD total capacity.
3. Implement new process technologies that can meet the
requirements of Japanese, Australian and US petroleum product
standard by the year 2004. As well as the Philippine Clean Air
Act provisions applicable to the proposed 1,200,000 BPSD
petroleum refinery. Petroleum Product Standards required shall
be researched and be part of the Basis of Design or Term of
Reference.
4. Participate in discussions during the solicitation of proposals
from Basic Design Engineering Companies.
5. Review the progress of work being done by the Basic Design
Engineering Company and coordinate with the company
management team for an efficient and effective project
implementation.
6. Make reports and recommendations to the company
management team regarding work progress, revisions and
improvement of process design on a regular basis as required by
company management team.
7. Represent the Company in technical meetings to be held
locally or abroad.
8. Perform other related works that are necessary in completing
the Engineering Procurement and Construction (EPC) bid
documents and progress reports relevant to schedules of
deliveries to the Project Proponent as required by the company.
9. Continue related works when the construction stage of this
Proposed Refinery will push through.
10. Serve as technical consultant to Infinite Loop Technology
Corp. on other relevant works or projects when required.
x x x x (Emphasis in the original; underscoring supplied)
Terms of Payments
Professional Fee: US$ 2,000.00 per month (net of tax)
To be paid 50/50 split in US Dollars or
equivalent Peso every 15th and 30th of the
month
Length of Service: Guaranteed minimum of 12 continuous
months
or up to completion of services, or until a
mutually agreed date.
Reimbursable Expenses:
Work related expenses which include but not
limited to the following:
- Communication Expenses
(Cellular
phone, fax, tels)
- Representation Expenses
- Out of town travel expenses
Other Benefits:
- US$ 300.00 per month as
transportation
allowance (Engineer to use her
personal car in16the performance of
work) to be paid in equivalent pesos
 every end of the month.
- Project Bonus at the end of the
contract
to be mutually agreed upon by
both parties.
Others:
Infinite Loop Technology Corporation to provide
the ff:
- Laptop Computer (Pentium III
or best
available model with modems etc.)
- Printer/ Scanner
- Process Simulation Softwares to
be identified later (Emphasis in the
original; underscoring supplied)
The letter, as well as the attached documents, bore the signature of
petitioner and Rabino.
By letter[4] dated February 2, 2000, petitioner conveyed to Infinite Loop through
Rabino her disappointment with the salary she was receiving in this wise:
x x x When I agreed with a salary of P30,000.00 monthly, my
understanding is that, this amount is already net of tax x x
x. However, when I received my salary for the month of
January which is only partial, (P25,000) and even less because
[of] SSS and tax deductions x x x
I understand that tax should be deducted from my salary for
your Accounting records but I would like to ask you not to
deduct it from the P30,000.00 salary I am supposed to be
receiving. Currently I am paying my SSS contributions
voluntarily so there is no need for the company to pay my
monthly contributions.
I would like to render my service at Infinite Loop based on the
contract that I signed and I am willing to serve astechnical
consultant to Infinite Loop on other relevant works or
projects while we are waiting for the Masbaterefinery
project.

For her services, petitioner received the following amounts on the dates x x x x (Emphasis and underscoring supplied)
indicated:[3]

Voucher date Amount Responding,[5] Rabino stated that petitioners letter was totally different [from]
what [they] verbally agreed [upon] in her house; that like any other proposed
11/23/99 Salary for Nov. 1-15, 1999 P20,000.00 project, [the Proposed 1,200,000 BPSD Petroleum Refinery] can be deferred
like its present status; and that since the financial side for the engineering design
12/02/99 Salary for Nov. 15-30, 1999 8,000.00 for the proposed [project] is not yet available x x x it would be prudent to
12/15/99 Full payment for Nov. 15-30 2,000.00 SUSPEND her professional services as Senior Process Design Engineer
salary effective February 7, 2000. Rabino assured petitioner that her professional
services would be resumed once they are provided with the initial payment
Salary for Dec. 1-15, 1999 10,000.00 requested from the project proponent.
1/17/00 Salary for Jan. 1-15, 2000 12,000.00
1/16/00 Salary for Jan. 16-31, 2000 12,500.00 By letter[6] dated August 9, 2000, petitioner, through counsel, wrote Rabino to
compensate [her with] the total amount of her contract, thus:
1/20/00 Salary for Jan. 1-15, 2000 12,500.00
---------------
Our client MS. CORAZON S. ALMIREZ has referred to us for
Total P77,000.00 appropriate legal action concerning her contract with your
company as a refinery process design engineer.
17
In the said contract, which was accepted by our said client
on September 30, 1999, you stated that our clients services
will commence effective October 18, 1999 up to the
completion of the scope of the services and continuation
thereof with a guaranty of 12 continuous months as outlined
in the attachment or until a mutually agreed date.However,
despite your guarantee of at least 12 continuous months of
service, you suspended her professional
services effective February 7, 2000. The same is a clear
violation of the terms and conditions of the
contract.Moreover, you have paid her only a total amount of
SEVENTY FOUR THOUSAND TWO HUNDRED
TWENTY NINE & 17/100 PESOS (P74,229.17), which
is way below than the agreed professional fee of US
$2,000.00 a month net of tax. On account of your blatant
violation of the terms and conditions of the contract, our
client suffered sleepless nights, anxiety and besmirched
reputation. She was constrained to resign from her job as an
engineer at the Technoserve International Co., Inc., in view of
her contract with your company.
In view thereof, formal demand is hereby made on you to compensate
our client the total amount of her contract or the amount of
US DOLLARS: twenty thousand ($ 20,000.00), MORE OR
LESS, within five (5) days from your receipt hereof, failing
which we shall, much to our regret, be constrained to file the
necessary action in court.
x x x x (Underscoring supplied)
Rabino later wrote petitioner, by letter of November 15, 2000,[7] as follows:
Thank you for reminding us about our agreement about this possible
landmark project. You all know that Infinite Loop Tech. Corp. is
the lead company in this undertaking in association with other
companies forming a consortium to cope up with the huge
financial and technical requirement of this project. We all have
invested a lot of group resources for this, but unfortunately the
Project Proponent, Arrox Resources Corp., have encountered
re-organization and have not yet paid us for this project.
At the moment, the former Chairman of Arrox Resources Corp. is still
in contact with us. We all hope that this project will push thru
after our country would overcome all the peace and order,
economic and political crisis we are encountering now.
We all hope that you would bear with us. We would inform you soonest
once any development from the project proponent would be
relayed to us.
On December 12, 2000, petitioner filed a complaint against Infinite Loop and
Rabino before the National Labor Relations Commission (NLRC) for breach of
contract of employment, praying that judgment be rendered in her favor ordering
Infinite Loop to pay:
(1) $22,000.00 or its peso equivalent representing salaries and
wages;
(2) P300,000.00 as and for moral damages;
(3) P100,000.00 as and for exemplary damages; and
(4) 10% of the total claim as and for attorneys fees.
Infinite Loop moved to dismiss[8] petitioners complaint on the ground that the
NLRC has no jurisdiction over the parties and the subject matter, there being no
employee-employer relationship between them as the contract they entered into
was one of services and not of employment.
By Resolution of November 14, 2001, the Labor Arbiter, finding that paragraph
No. 6 of the Scope of Professional Services of petitioner showed that the
companys management team exercises control over the means and methods in
the performance of [petitioners] duties as Refinery Process Design Engineer,
held that there existed an employer-employee relationship between the parties.
The Labor Arbiter thus ordered Infinite Loop and Rabino to jointly and
severally pay petitioner the sum of US$ 24,000.00 in its peso equivalent at the
date of payment less advances in the amount of P77,000.00 plus 5% thereof by
way of attorneys fees. It dismissed petitioners claim for damages, however.[9]
Infinite Loop and Rabino (hereafter respondents) appealed to the NLRC. By
Resolution[10] dated September 19, 2002, the NLRC, finding that employer-
employee relation between the parties indeed existed, dismissed respondents
appeal.
Before the Court of Appeals to which respondents elevated the case, they argued
that the NLRC:
I.
x x x ABUSED ITS DISCRETION AMOUNTING TO LACK
OF JURISDICTION AND ERRED IN18 NOT FINDING THAT
THE LABOR ARBITER HAS NO JURISDICTION OVER THE
 CAUSES OF ACTION PLEADED IN THE COMPLAINT, I.E.,
NON PAYMENT OF PROFESSIONAL FEE AND BREACH OF
CONTRACT.
II.
x x x C O M M I T T E D G R AV E A B U S E O F
DISCRETION AMOUNTING TO LACK OF JURISDICTION
AND COMMITTED REVERSIBLE ERROR IN NOT
FINDING THAT [PETITIONER] IS NOT AN EMPLOYEE OF
[INFINITE LOOP].
III.
x x x SERIOUSLY ERRED IN NOT FINDING THE
ENVISIONED ENGAGEMENT OF [PETITIONER] AS A
REFINERY PROCESS ENGINEER IS CO-TERMINOUS
WITH THE PROJECT, WHICH PROJECT DID NOT
MATERIALIZE.[11] (Underscoring supplied)
The appellate court, finding that [petitioner] was hired to render professional
services for a specific project and her primary cause of action is for a sum of
money on account of [Infinite Loops] alleged breach of contractual obligation to
pay her agreed professional fee, held by Decision[12] dated October 20, 2003 that
no employer-employee relationship existed between the parties, hence, the
NLRC and the Labor Arbiter have no jurisdiction over the complaint. It
accordingly reversed the NLRC decision and dismissed petitioners complaint.
Hence, the present petition, petitioner contending that the appellate court erred
when it:
A.
x x x INCONSISTENTLY RULED THAT THERE WAS NO
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE
PARTIES BUT AT THE SAME TIME IT CITED THAT
[PETITIONER] IS A PROJECT EMPLOYEE. MOREOVER,
THE ASSAILED JUDGMENT IS BASED ON
MISAPPRECIATION OF FACTS.
B.
x x x FAILED TO CONSIDER THE RELIEF MENTIONED
IN [PETITIONERS] COMPLAINT FOR PAYMENT OF
SALARY x x x
C.
x x x RULED THAT THE SEPARATION FROM SERVICE
OF [PETITIONER] BECAUSE OF THE PROJECTS
DISCONTINUANCE DID NOT RESULT TO ILLEGAL
DISMISSAL.[13]
To ascertain the existence of an employer-employee relationship, jurisprudence
has invariably applied the four-fold test, to wit: (1) the manner of selection and
engagement; (2) the payment of wages; (3) the presence or absence of the power
of dismissal; and (4) the presence or absence of the power of control. Of these
four, the last one, the so called control test is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an employer-
employee relationship.[14]
Under the control test, an employer-employee relationship exists where the
person for whom the services are performed reserves the right to control not
only the end achieved, but also the manner and means to be used in reaching that
end.[15]
From the earlier-quoted scope of petitioners professional services, there is no
showing of a power of control over petitioner. The services to be performed by
her specified what she needed to achieve but not on how she was to go about it.
Contrary to the finding of the Labor Arbiter, as affirmed by the NLRC, above-
quoted paragraph No. 6 of the Scope of [petitioners] Professional Services
requiring her to [m]ake reports and recommendations to the company
management team regarding work progress, revisions and improvement of
process design on a regular basis as required by company management team
does not show that the companys management team exercises control over the
means and methods in the performance of her duties as Refinery Process Design
Engineer. Having hired petitioners professional services on account of her
expertise and qualifications as petitioner herself proffers in her Position Paper,
[16] the company naturally expected to be updated regularly of her work
progress, if any, on the project for which she was specifically hired.
In bolstering her contention that there was an employer-employee
relationship, petitioner draws attention to the pay slips and Infinite Loops
19
deduction of her SSS, Philhealth, and withholding tax, and to the designation
of the payments to her as salaries.
 LOLITA R. LACUESTA, G.R. No. 152777
The deduction from petitioners remuneration of amounts representing Petitioner,
SSS premiums, Philhealth contributions and withholding tax, was made in the
only payslip issued to petitioner, that for the period of January 16-31, 2000, Present:
[17] the other amounts of remuneration having been documented by cash

vouchers. Such payslip cannot prove the existence of an employer-employee Davide, Jr., C.J.,
relationship between the parties. (Chairman),
- versus - Quisumbing,
The cases of Equitable Banking Corp. v. NLRC[18] and Nagusara v. Ynares-Santiago,
NLRC [19] should be differentiated from the present case, as the employers in Carpio, and
these two cases did not only regularly make similar deductions from the therein Azcuna, JJ.
complainants remuneration but also registered and declared the complainants
with the SSS and Medicare (Philhealth) as their employees.
A T E N E O Promulgated:
As for the designation of the payments to petitioner as salaries, it is not DE MANILAUNIVERSITY,
determinative of the existence of an employer-employee relationship. Salary is a DR. LEOVINO MA. GARCIA December 9, 2005
general term defined as a remuneration for services given. It is the above-quoted and DR. MARIJO RUIZ,
contract of engagement of services-letter dated September 30, 1999, together Respondents.
with its attachments, which is the law between the parties. Even petitioner x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
concedes rendering service based on the contract,[20] which, as reflected earlier,
is bereft of a showing of power of control, the most crucial and determinative
DECISION
indicator of the presence of an employer-employee relationship.

WHEREFORE, the petition is DENIED for lack of merit.

This petition for review on certiorari assails the Decision[1] dated October 12,
Costs against petitioner. SO ORDERED.
2001 of the Court of Appeals in CA-G.R. SP No. 61173 and
its Resolution[2] dated February 21, 2002, denying the motion for
reconsideration. The appellate court affirmed the Decision[3] dated February 24,
2000 of the National Labor Relations Commission (NLRC), which had reversed
the Decision dated March 20, 1998 of the Labor Arbiter.
The facts are undisputed.

Respondent Ateneo de Manila University (Ateneo) hired, on a contractual basis,

petitioner Lolita R. Lacuesta as a part-time lecturer in its English Department for
the second semester of school year 1988-1989. She was re-hired, still on a
contractual basis, for the first and second semesters of school year 1989-1990.

On July 13, 1990, the petitioner was first appointed as full-time instructor on
probation, in the same department effective June 1, 1990 until March 31, 1991.
Thereafter, her contract as faculty on probation was renewed effective April 1,
1991 until March 31, 1992. She was again hired for a third year effective April
1, 1992 until March 31, 1993. During these three years she was on probation
status.
20
In a letter dated January 27, 1993, respondent Dr. Leovino Ma. Garcia, Dean of
Ateneos Graduate School and College of Arts and Sciences, notified petitioner
that her contract would no longer be renewed because she did not integrate well
with the English Department. Petitioner then appealed to the President of the
Ateneo at the time, Fr. Joaquin Bernas, S.J.
In a letter dated February 11, 1993, Fr. Bernas explained to petitioner that she
was not being terminated, but her contract would simply expire. He also stated
that the university president makes a permanent appointment only upon
recommendation of the Dean and confirmation of the Committee on Faculty
Rank and Permanent Appointment. He added that any appointment he might
extend would be tantamount to a midnight appointment.
In another letter dated March 11, 1993, Fr. Bernas offered petitioner the job as
book editor in the University Press under terms comparable to that of a faculty
member.
On March 26, 1993, petitioner applied for clearance to collect her final salary as
instructor. Petitioner also signed a Quitclaim, Discharge and Release on April
16, 1993.[4]
Petitioner worked as editor in the University Press from April 1, 1993 to March
31, 1994 including an extension of two months after her contract expired. Upon
expiry of her contract, petitioner applied for clearance to collect her final salary
as editor. Later, she agreed to extend her contract from June 16, 1994 to October
31, 1994. Petitioner decided not to have her contract renewed due to a severe
back problem. She did not report back to work, but she submitted her clearance
on February 20, 1995.
On December 23, 1996, petitioner filed a complaint for illegal dismissal with
prayer for reinstatement, back wages, and moral and exemplary damages. Dr.
Leovino Ma. Garcia and Dr. Marijo Ruiz were sued in their official capacities as
the previous and present deans of the College of Arts and Sciences, respectively.
Labor Arbiter Manuel P. Asuncion held that petitioner may not be
terminated by mere lapse of the probationary period but only for just cause or
failure to meet the employers standards. Moreover, said the Labor Arbiter, the
quitclaim, discharge and release executed by petitioner was not a bar to filing a
complaint for illegal dismissal.[5] Thus, he ordered reinstatement with payment
of full back wages.
The NLRC upon appeal of respondents reversed the Labor Arbiters decision and
ruled that petitioner was not illegally dismissed, and that her quitclaim was
valid. Petitioner sought reconsideration but it was denied. She then filed a
petition for certiorari before the Court of Appeals assailing the NLRC decision.
The appellate court dismissed the petition saying there was no grave abuse of
discretion and affirmed the NLRC decision. It ruled:
WHEREFORE, the petition is hereby denied and
accordingly DISMISSED.[6]
Hence, this instant petition where petitioner assigns the following as errors:
1. The Court of Appeals erred in ruling that it is the
Manual of Regulations For Private Schools, not the Labor Code,
that determines the acquisition of regular or permanent status of
faculty members in an educational institution;
2. The Court of Appeals erred in upholding the
Quitclaim that was signed by the Petitioner and in taking that
against her claims for illegal dismissal and for moral and
exemplary damages against the respondents.[7]
Simply put, the issue in this case is whether the petitioner was illegally
dismissed.
Petitioner contends that Articles 280 and 281 of the Labor Code,[8] not
the Manual of Regulations for Private Schools, is the applicable law to
determine whether or not an employee in an educational institution has acquired
regular or permanent status. She argues that (1) under Article 281, probationary
employment shall not exceed six (6) months from date of employment unless a
longer period had been stipulated by an apprenticeship agreement; (2) under
Article 280, if the apprenticeship agreement stipulates a period longer than one
year and the employee rendered at least one year of service, whether continuous
or broken, the employee shall be considered as regular employee with respect to
the activity in which he is employed while such activity exists; and (3) it is with
more reason that petitioner be made regular since she had rendered services as
part-time and full-time English teacher for four and a half years, services which
are necessary and desirable to the usual business of Ateneo.[9]
Furthermore, the petitioner contends that her clearance was granted and
completed only after she signed the quitclaim on April 16, 1993. She contends
also that the respondents failed to show that her quitclaim was voluntary.
Respondents, for their part, contend that the Manual of Regulations for Private
Schools is controlling. In the Manual, full-time teachers who have rendered
three consecutive years of satisfactory service shall be considered permanent.
Respondents also claim that the petitioner21 was not terminated but her
employment contract expired at the end of the probationary period. Further,
institutions of higher learning, such as respondent Ateneo, enjoy the freedom to
choose who may teach according to its standards. Respondents also argue that
the quitclaim, discharge and release by petitioner is binding and should bar her
complaint for illegal dismissal.
After considering the contentions of the parties in the light of the circumstances
in this case, we find for respondents.
The Manual of Regulations for Private Schools, and not the Labor Code,
determines whether or not a faculty member in an educational institution has
attained regular or permanent status.[10] In University of Santo Tomas v. National
Labor Relations Commission the Court en banc said that under Policy
Instructions No. 11 issued by the Department of Labor and Employment, the
probationary employment of professors, instructors and teachers shall be subject
to the standards established by the Department of Education and Culture. Said
standards are embodied in paragraph 75[11] (now Section 93) of the Manual of
Regulations for Private Schools.[12]
Section 93[13] of the 1992 Manual of Regulations for Private Schools provides
that full-time teachers who have satisfactorily completed their probationary
period shall be considered regular or permanent.[14] Moreover, for those teaching
in the tertiary level, the probationary period shall not be more than six
consecutive regular semesters of satisfactory service.[15] The requisites to
acquire permanent employment, or security of tenure, are (1) the teacher is a
full-time teacher; (2) the teacher must have rendered three consecutive years of
service; and (3) such service must have been satisfactory.[16]
As previously held, a part-time teacher cannot acquire permanent status.[17] Only
when one has served as a full-time teacher can he acquire permanent or regular
status. The petitioner was a part-time lecturer before she was appointed as a full-
time instructor on probation. As a part-time lecturer, her employment as such
had ended when her contract expired. Thus, the three semesters she served as
part-time lecturer could not be credited to her in computing the number of years
she has served to qualify her for permanent status.
Petitioner posits that after completing the three-year probation with an above-
average performance, she already acquired permanent status. On this point, we
are unable to agree with petitioner.
Completing the probation period does not automatically qualify her to
become a permanent employee of the university. Petitioner could only qualify to
become a permanent employee upon fulfilling the reasonable standards for
permanent employment as faculty member.[18] Consistent with academic
freedom and constitutional autonomy, an institution of higher learning has the
prerogative to provide standards for its teachers and determine whether these
standards have been met.[19] At the end of the probation period, the decision to
re-hire an employee on probation, belongs to the university as the employer
alone.
We reiterate, however, that probationary employees enjoy security of tenure, but
only within the period of probation. Likewise, an employee on probation can
only be dismissed for just cause or when he fails to qualify as a regular
employee in accordance with the reasonable standards made known by the
employer at the time of his hiring. Upon expiration of their contract of
employment, academic personnel on probation cannot automatically claim
security of tenure and compel their employers to renew their employment
contracts.[20] In the instant case, petitioner, did not attain permanent status and
was not illegally dismissed. As found by the NLRC, her contract merely expired.
Lastly, we find that petitioner had already signed a valid quitclaim, discharge
and release which bars the present action. This Court has held that not all
quitclaims are per se invalid or against public policy, except (1) where there is
clear proof that the waiver was wangled from an unsuspecting or gullible
person, or (2) where the terms of settlement are unconscionable on their face.
[21] In this case, there is no showing that petitioner was coerced into signing the
quitclaim. In her sworn quitclaim, she freely declared that she received to her
full satisfaction all that is due her by reason of her employment and that she was
voluntarily releasing respondent Ateneo from all claims in relation to her
employment.[22] Nothing on the face of her quitclaim has been shown as
unconscionable.
WHEREFORE, the petition is DENIED for lack of merit. The Decision
dated October 12, 2001 of the Court of Appeals in CA-G.R. SP No. 61173 and
its Resolution dated February 21, 2002 are AFFIRMED.
SO ORDERED.
22
 AMELIA J. DELOS SANTOS, G.R. No. 154185
Petitioner,
Present:
PANGANIBAN, J., Chairman
SANDOVAL-GUTIERREZ,
- versus - CORONA,
CARPIO MORALES, and
GARCIA, JJ.
Promulgated:
JEBSEN MARITIME, INC.,
Respondent. November 22, 2005
x---------------------------------------------------------------------------------x
DECISION
Petitioner Amelia J. Delos Santos seeks in this petition for review
on certiorari under Rule 45 of the Rules of Court to nullify and set aside the
decision and resolution dated 21 March 2002[1] and 03 July 2002[2], respectively,
of the Court of Appeals in CA-G.R. SP No. 62229.
From the petition and its annexes, the respondents comment thereto, and the
parties respective memoranda, the Court gathers the following factual
antecedents:
On 10 August 1995, or thereabout, herein respondent Jebsen Maritime,
Inc., for and in behalf of Aboitiz Shipping Co. (Aboitiz Shipping, for short), hired
petitioners husband, Gil R. Delos Santos (hereinafter, Delos Santos) as third
engineer of MV Wild Iris. The corresponding contract of employment, as
approved by the Philippine Overseas Employment Administration (POEA), was
for a fixed period of one (1) month and for a specific undertaking of conducting
said vessel to and from Japan. It quoted Delos Santos basic monthly salary and
other monetary benefits in US currency. Under POEA rules, all employers and
principals are required to adopt the POEA - standard employment contract
(POEA-SEC) without prejudice to their adoption of terms and conditions over
and above the minimum prescribed by that agency.[3]
On the vessels return to the Philippines a month after, Delos Santos
remained on board, respondent having opted to retain his services while the
vessel underwent repairs in Cebu. After its repair, MV Wild Iris, this time
renamed/registered as MV Super RoRo 100, sailed within domestic waters,
having been meanwhile issued by the Maritime Industry Authority a Certificate
of Vessel Registry and a permit to engage in coastwise trade on the Manila-
Cebu-Manila-Zamboanga-General Santos-Manila route.[4] During this period of
employment, Delos Santos was paid by and received from respondent his salary
in Philippine peso thru a payroll-deposit arrangement with the Philippine
Commercial & Industrial Bank.[5]
Some five months into the vessels inter-island voyages, Delos Santos
experienced episodes of chest pain, numbness and body weakness which
eventually left him temporarily paralyzed. On 17 February 1996, he was brought
to the Manila Doctors Hospital a duly accredited hospital of respondent - where
he underwent a spinal column operation. Respondent shouldered all operation-
related expenses, inclusive of his post operation confinement.
As narrated in the assailed decision of the Court of Appeals, the
following events next transpired:
1. After his discharge from the Manila Doctors, Delos Santos
was made to undergo physical therapy sessions at the same hospital,
which compelled the Batangas-based Delos Santoses to rent a room
near the hospital at P3,000.00 a month;
2. Delos Santos underwent a second spinal operation at the
non-accredited Lourdes Hospital at the cost of P119, 536.00; and
3. After Lourdes, Delos Santos was confined in a clinic in San
Juan, Batangas where P20,000.00 in hospitalization expenses was
incurred.
It would appear that the spouses Delos Santos paid all the expenses
attendant the second spinal operation as well as for the subsequent medical
treatment. Petitioners demand for reimbursement of these expenses was
rejected by respondent for the reason that all the sickness benefits of Delos
Santos under the Social Security System (SSS) Law had already been paid.
Thus, on 25 January 1997, petitioner filed a complaint[6] with the
Arbitration Branch of the National Labor Relations Commission (NLRC) against
respondent and Aboitiz Shipping for recovery of disability benefits, and sick
wage allowance and reimbursement of hospital and medical expenses. She also
sought payment of moral damages and attorneys fees.
After due proceedings, the labor arbiter rendered, on 08 January 1999,
[7]
judgment finding for petitioner and ordering respondent and Aboitiz Shipping
to jointly and severally pay the former the following:
23
 (1) P119,536.01, representing reimbursement of
medical, surgical and hospital expenses;
(2) P9,000, representing reasonable cost of board
and lodging;
(3) P500,000, representing moral damages;
(4) US$60,000, representing disability benefits
corresponding to Total Permanent Disability;
(5) US$2,452, representing Sick Wage allowance;
(6) P62,853.60, representing attorneys fees; and,
(7) US$6,245.20, also representing attorneys fees.
On appeal, the NLRC, in a decision[8] dated 29 August 2000, modified that of the
labor arbiter, as follows:
WHEREFORE, the decision appealed from is MODIFIED to
the extent that respondents Jebsen Maritime, Inc., and Aboitiz
Shipping Company are hereby ordered jointly and severally liable to
pay Gil delos Santos through Amelia delos Santos the Philippine peso
equivalent at the time of actual payment of US DOLLARS SIXTY
THOUSAND (US$60,000.00) and US DOLLARS TWO
THOUSAND FOUR HUNDRD (sic) FIFTY TWO (US$2,452.00)
representing total disability compensation benefits and sickness
wages, and the amount of ONE HUNDRED THREE THOUSAND
EGHT (sic) HUNDRED FOUR AND 87/100 PHILIPPINE PESOS
(P103,804.87) representing reimbursement of surgical, medical and
hospital expenses, plus the equivalent of five percent (5%) of the
aggregate award as and for attorneys fees.
All other dispositions are SET ASIDE.
SO ORDERED.
Like the labor arbiter, the NLRC predicated its ruling mainly on the theory that
the POEA-approved contract of employment continued to govern Delos Santos
employment when he contracted his illness. In specific terms, the NLRC states
that the same contract was still effective when Delos Santos fell ill, thus entitling
him to the payment of disability and like benefits provided in and required under
the POEA-SEC.
Following the denial of its motion for reconsideration per NLRC
Resolution[9] of 31 October 2000, respondent went to the Court of Appeals on a
petition for certiorari, thereat docketed as CA-G.R. No. 62229, imputing on the
NLRC grave abuse of discretion. In its petition, respondent scored the NLRC for,
among other things, extending the application of the expired POEA-approved
employment contract beyond the one-month limit stipulated therein.
On 21 March 2002, the Court of Appeals rendered judgment[10],
modifying the NLRCs decision by deleting altogether the award of disability
compensation benefits, sickness wages and attorneys fees, thus:
WHEREFORE, premises considered, the instant petition for
certiorari is hereby DENIED, finding no grave abuse of discretion on
the part of the NLRC. The Decision of the National Labor Relations
Commission (NLRC) dated August 29, 2000 and the Resolution of
October 31, 2000 denying petitioners Motion for Reconsideration are
hereby AFFIRMED with MODIFICATION, that the disability
compensation benefits of US$60,000.00 and the sickness wages of
US$2,452.00 are hereby deleted, without prejudice to claiming the
same from the proper government agency. The award of attorneys fees
is likewise deleted.
In time, petitioner moved for reconsideration, but the appellate court
denied the motion per its resolution of 03 July 2002.[11]
Hence, petitioners present recourse on the grounds that the Court of
Appeals seriously erred:[12]
I
IN DELETING THE AWARD OF US$60,000.00 REPRESENTING
THE MAXIMUM DISABILITY BENEFITS APPLYING THE
PROVISIONS OF THE POEA STANDARD EMPLOYMENT
CONTRACT.
(A) PRIOR TO HIS ACCIDENT, THE EMPLOYMENT
CONTRACT OF SEAFARER DELOS SANTOS HAS NOT YET
BEEN TERMINATED, IN RELATION TO SECTION 2,
PARAGRAPHS (A) AND (B) AND SECTION 18 (A), POEA
STANDARD EMPLOYMENT CONTRACT.
(B) THE CONTRACT OF EMPLOYMENT AT THE TIME OF
SEAFARER DELOS SANTOS ACCIDENT HAS NOT YET
EXPIRED BECAUSE IT WAS MUTUALLY EXTENDED BY THE
PARTIES WHEN DELOS SANTOS WAS NOT SIGNED OFF AND
24
REPATRIATED PRIOR TO SAID ACCIDENT.

II
I N C O N C L U D I N G T H AT N O T W I T H S TA N D I N G T H E
CONTINUATION OF DELOS SANTOS EMPLOYMENT ON
BOARD THE SAME VESSEL AND UNDER THE SAME
CONTRACT, IT IS THE PROVISIONS OF THE LABOR CODE, AS
AMENDED, THAT SHALL GOVERN HIS EMPLOYMENT
RELATIONS.
III
IN DELETING THE AWARD OF SICKNESS ALLOWANCE IN
THE AMOUNT OF US$2,452.00.
(A) THERE IS NO BASIS IN THE DELETION OF THE
AWARD OF SICKNESS ALOWANCE (sic) SINCE PAYMENT OF
SOCIAL SECURITY SYSTEM SICK LEAVE BENEFIT IS
INDEPENDENT, SEPARATE AND DISTINCT FROM THE
SICKNESS ALLOWANCE PROVIDED FOR UNDER THE POEA
STANDARD EMPLOYMENT CONTRACT.
The petition is devoid of merit.
As a rule, stipulations in an employment contract not contrary to statutes, public
policy, public order or morals have the force of law between the contracting
parties.[13] An employment with a period is generally valid, unless the term was
purposely intended to circumvent the employees right to his security of tenure.
[14]
Absent a covering specific agreement and unless otherwise provided by law,
the terms and conditions of employment of all employees in the private sector
shall be governed by the Labor Code[15] and such rules and regulations as may
be issued by the Department of Labor and Employment and such agencies
charged with the administration and enforcement of the Code.
The differing conclusions arrived at by the NLRC, finding for the herein
petitioner, and the Court of Appeals, siding in part with the herein respondent,
on Delos Santos entitlement to disability benefits and sickness allowance are
veritably attributable to the question of applicability, under the premises, of the
POEA-SEC. The principal issue to be resolved here, therefore, boils down to:
which, between the POEA-SEC and the Labor Code, governs the employer-
employee relationship between Delos Santos and respondent after MV Wild
Iris, as later renamed Super RoRo 100, returned to the country from its one-
month conduction voyage to and from Japan.
The Court of Appeals ruled against the governing applicability of the
POEA-SEC and, on that basis, deleted the NLRCs award of US$60,000.00 and
US$2,452.00 by way of disability benefits and sickness allowance, respectively.
An excerpt of the appellate courts explanation:
xxx Both parties do not dispute the existence of the POEA
approved contract signed by the parties. The said contract is the law
between the contracting parties and absent any showing that its
provisions are wholly or in part contrary to law, morals, good policy, it
shall be enforced to the letter by the contracting parties (Metropolitan
Bank and Trust Co. vs. Wong, G.R. No. 120859, June 26, 2001). The
contract in question is for a duration of one (1) month. Being a valid
contract between Delos Santos and the [respondent], the provisions
thereof, specifically with respect to the one (1) month period of
employment has the force of law between them (D.M. Consunji vs.
NLRC, G.R. No. 116572, December 18, 2000). Perforce, the said
contract has already expired and is no longer in effect.
The fact that Delos Santos continued to work in the same
vessel which sailed within Philippine waters does not mean that the
POEA standard employment contract continues to be enforced
between the parties. The employment of Delos Santos is within the
Philippines, and not on a foreign shore. As correctly pointed out by
[respondent], the provisions of the Labor Code shall govern their
employer-employee relationship. xxx. (Words in bracket added.)
The Court agrees with the conclusion of the Court of Appeals for two
(2) main reasons. First, we the start with something elementary, i.e., POEA was
created primarily to undertake a systematic program for overseas employment
of Filipino workers and to protect their rights to fair and equitable employment
practices.[16] And to ensure that overseas workers, including seafarers on board
ocean-going vessels, are amply protected, the POEA is authorized to formulate
employment standards in accordance with welfare objectives of the overseas
employment program.[17] Given this consideration, the Court is at a loss to
understand why the POEA-SEC should be made to continue to apply to domestic
employment, as here, involving a Filipino seaman on board an inter-island
vessel.
Just as basic as the first reason is the fact that Delos Santos POEA-
approved employment contract was for a definite term of one (1) month only,
doubtless fixed to coincide with the pre-determined one-month long Philippines-
Japan-Philippines conduction-voyage run. After the lapse of the said period, his
employment under the POEA-approved contract may be deemed as functus
oficio and Delos Santos employment pursuant thereto considered automatically
terminated, there being no mutually-agreed renewal or extension of the expired
contract.[18] This is as it should be. For, as we have held in the landmark case
of Millares v. National Labor Relations Commission:[19]
25
 From the foregoing cases, it is clear that seafarers
are considered contractual employees. Their employment is governed
by the contracts they sign every time they are rehired and their
employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time. They
fall under the exception of Article 280 [of the Labor Code] whose
employment has been fixed for a specific project or undertaking . . .
We need not depart from the rulings of the Court in the two
aforementioned cases which indeed constitute stare decisiswith respect
to the employment status of seafarers. (Underscoring and words in
bracket added)
Petitioners posture, citing Section 2 (A)[20] in relation to Section 18[21] of
the POEA-SEC about the POEA approved contract still subsisting since Delos
Santos was never signed off from the vessel and repatriated to Manila, the point
of hire, is untenable. With the view we have of things, Delos Santos is deemed
to have been signed off when he acceded to a new employment arrangement
offered by the respondent. A seaman need not physically disembarked from a
vessel at the expiration of his employment contract to have such contract
considered terminated. And the repatriation aspect of the contract assumes
significance only where the vessel remains in a foreign port. For, repatriation
presupposes a return to ones country of origin or citizenship.[22] In the case at
bar, however, there can be quibbling that MV Wild Iris returned to the port of
Cebu with Delos Santos on board. Parenthetically, while the parties are agreed
that their underlying contract was executed in the country, the records do not
indicate what city or province of the Philippines is the specific point of hire.
While petitioner says it is Manila, she did not bother to attach to her petition a
copy of the contract of employment in question.
Petitioner next submits, echoing the NLRCs holding, that the POEA-approved
contract remained in full force and effect even after the expiry thereof owing to
the interplay of the following circumstances: 1) Delos Santos, after such
contract expiration, did not conclude another contract of employment with
respondent, but was asked to remain and work on board the same vessel just
the same; and 2) If the parties intended their employer-employee relationship
to be under the aegis of a new contract, such intention should have been
embodied in a new agreement.
Contract extension or continuation by mutual consent appears to be
petitioners thesis.
We are not persuaded.
The fact that respondent retained Delos Santos and allowed him to
remain on board the vessel cannot plausibly be interpreted, in context, as
evidencing an intention on its part to continue with the POEA-SEC. In the
practical viewpoint, there could have been no sense in consenting to renewal
since the rationale for the execution of the POEA-approved contract had already
been served and achieved.
At any rate, factors obtain arguing against the notion that respondent
consented to contract extension under the same terms and conditions prevailing
when the original contract expired. Stated a bit differently, there are compelling
reasons to believe that respondent retained the services of the acceding Delos
Santos, as the Court of Appeals aptly observed, but under domestic terms and
conditions. We refer first to the reduced salary of Delos Santos payable in
Philippine peso[23] which, significantly enough, he received without so much of a
protest. As respondent stated in its Comment, without any controverting
response from petitioner, Delos Santos, for the period ending October 31, 1995,
was drawing a salary at the rate of P8,475.00 a month, whereas the
compensation package stipulated under the POEA-approved contract provided
for a US$613 basic monthly salary and a US$184 fixed monthly overtime pay.
And secondly, MV Super RoRo 100 was no longer engaged in foreign trading as
it was no longer intended as an ocean-going ship. Accordingly, it does not make
sense why a seafarer of goodwill or a manning agency of the same disposition
would insist on being regulated by an overseas employment agency under its
standard employment contract, which governs employment of Filipino seamen
on board ocean-going vessels.[24]
Petitioners submission about the parties not having entered into another
employment contract after the expiration of the POEA-approved employment
contract, ergo, the extension of the expired agreement, is flawed by the logic
holding it together. For, it presupposes that an agreement to do or to give does
not bind, unless it is embodied in a written instrument. It is elementary,
however, that, save in very rare instances where certain formal requisites go
into its validity, a contract, to be valid and binding between the parties, need not
be in writing. A contract is perfected when the contracting minds agree on the
object and cause thereof. [25] And, as earlier discussed, several
circumstantial indicia tended to prove that a new arrangement under domestic
terms was agreed upon by the principal players to govern the employment of
Delos Santos after the return of MV Wild Iris to the country to engage in
coastwise trading.
Given the foregoing perspective, the disallowance under the decision subject of
review of the petitioners claim for maximum disability benefits and sickness
allowance is legally correct. As it were, Delos Santos right to such benefits is
predicated on the continued enforceability of POEA-SEC when he contracted his
illness, which, needless to stress, was not the case.
Likewise legally correct is the deletion of the award of attorneys fees, the NLRC
having failed to explain petitioners entitlement thereto. As a matter of sound
policy, an award of attorneys fee remains the 26 exception rather than the rule. It
must be stressed, as aptly observed by the appellate court, that it is necessary UNIVERSAL ROBINA G.R. No. 164736
for the trial court, the NLRC in this case, to make express findings of facts and CORPORATION and/or
law that would bring the case within the exception. In fine, the factual, legal or RANDY GREGORIO,
equitable justification for the award must be set forth in the text of the decision. Petitioners,
[26]
The matter of attorneys fees cannot be touched once and only in the fallo of
- versus -
the decision, else, the award should be thrown out for being speculative and BENITO CATAPANG, CARLOS
conjectural.[27] In the absence of a stipulation, attorneys fees are ordinarily not ARARAO, ALVIN ALCANTARA, Present:
recoverable; otherwise a premium shall be placed on the right to litigate. RESTY ALCORAN, REYNALDO
[28]
They are not awarded every time a party wins a suit. ARARAO, JUAN ARISTADO, PUNO, J., Chairman,
LITO CABRERA, ONOFRE AUSTRIA-MARTINEZ,
WHEREFORE, the petition is DENIED and the assailed Decision and CASANO, BEN CERVAS, CALLEJO, SR.,
Resolution of the Court of Appeals AFFIRMED. JOSEPH CHUIDIAN, IRENEO TINGA, and
COMENDADOR, ANGELITO CHICO-NAZARIO, JJ.
CONCHADA, RICHARD
No pronouncement as to costs. CORONADO, ELMER HILING,
RAMON JOYOSA, JOSE
LORIA, JR., VICTORIANO
SO ORDERED. LORIA, RUEL MARIKIT,
RODERICK PANG-AO, QUIRINO
PLATERO, PABLITO REDONDO,
RAMIL ROXAS, RESTY SALAZAR,
NOEL TRINIDAD, FELICISIMO
VARELA, BALTAZAR
VILLANUEVA, ELPIDIO Promulgated:
VILLANUEVA, JOEL
VILLANUEVA, JONATHAN October 14, 2005
VILLANUEVA, and JAIME
VILLEGAS,
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

Petitioner Universal Robina Corporation is a corporation duly organized and

existing under the Philippine laws, while petitioner Randy Gregorio is the manager of
the petitioner companys duck farm in Calauan, Laguna.[1]
The individual respondents were hired by the petitioner company on various
dates from 1991 to 1993 to work at its duck farm in Barangay Sto. Tomas, Calauan,
Laguna. The respondents were hired under an employment contract which provided for a
five-month period. After the expiration of the said employment contracts, the petitioner
company would renew them and re-employ the respondents. This practice continued
until sometime in 1996, when the petitioners informed the respondents that they were no
longer renewing their employment contracts.[2]
In October 1996, the respondents filed separate complaints for illegal dismissal,
reinstatement, backwages, damages and attorneys fees against the petitioners. The
complaints were later consolidated.
On March 30, 1999, after due proceedings, the Labor Arbiter rendered a
decision in favor of the respondents: 27
 WHEREFORE, premises considered, judgment is hereby
rendered declaring that complainants have indeed been illegally Furthermore, it appearing from the records that several individuals in
dismissed from their employment. this case were inadvertently omitted as party-complainants in the
Accordingly, respondents are hereby ordered to reinstate aforesaid Decision, clarification is hereby made that the complainants
individual complainants to their former positions without loss of hereinbelow set forth are to be deemed included in the coverage of the
seniority rights and to pay them their backwages as follows: said decision with the corresponding right(s) to their backwages, to
wit:
Complainants Amount
1. Reynaldo Ararao P113,703.20 1. Alvin Alcantara - P129,126.40
2. Carlos Ararao P100,372.48 2. Onofre Casano - P106,917.20
3. Resty Alcoran P100,372.48 3. Joseph Chuidian - P104,165.10
4. Richard Coronado P113,703.20 4. Ramon Joyosa - P128,029.20
5. Quirino Platero P113,703.20 5. Pablito Redondo - P105,409.20
6. Benito Catapang P113,703.20 6. Ramil Roxas - P109,330.00
7. Jose Loria, Jr. P100,372.48 7. Resty Salazar - P105,296.10
8. Elpidio Villanueva P113,703.20 8. Noel Trinidad - P108,312.10
9. Jonathan Villanueva P113,703.20 9. Felicisimo Varela - P119,358.20
10. Baltazar Villanueva P113,703.20 TOTAL - P1,015,943.50
11. Victoriano Loria P144,881.10
12. Roderick Pangao P100,372.48 SO ORDERED.[4]
13. Lito Cabrera P113,703.20
14. Elmer Hiling P113,703.20 On June 21, 1999, the Labor Arbiter issued a Writ of Execution enforcing the
15. Jaime Villegas P113,703.20 immediate reinstatement of the respondents as mandated in the March 30, 1999
16. Angelito Conchada P119,192.20 Decision.
17. Juan Aristado P113,703.20 On July 13, 1999, the petitioners manifested to the Labor Arbiter that they can
18. Joel Villanueva P113,703.20 reinstate only 17 of the 30 employees in view of the phase out of the petitioner
19. Ben Cervas P113,703.20 companys Agricultural Section as early as 1996. They averred that there were no other
20. Ruel Marikit P113,703.20 available positions substantially similar to the positions previously occupied by the other
21. Ireneo Comendador P113,703.20 13 respondents, but that 10 of them could be accommodated at the farms Duck Dressing
Total ------------------------ P2,339,933.44 Section which operates at an average of three days a week only.[5]

Respondents are likewise ordered to pay fifteen percent

(15%) of the total amount due, or P 350,990.01, as and by way of
attorneys fees.
SO ORDERED.[3]
On May 17, 1999, the petitioners filed an Appeal Memorandum with the National Labor
Relations Commission (NLRC) on the ground that the Labor Arbiter erred in ruling that
the respondents are the petitioner companys regular employees.
Meanwhile, on May 18, 1999, the respondents filed a Motion for Enforcement
of Reinstatement Order with the Labor Arbiter. On June 3, 1999, the latter issued an
Order, which reads in full:
Finding the Motion for Enforcement of Reinstatement Order
dated 18 May 1999, filed by the complainants to be in order,
respondents are hereby directed to immediately comply in good faith
to the reinstatement aspect of the Decision of this Office dated 30
March 1999.
On August 2, 1999, the Sheriff filed a Report stating that the petitioners had not
yet reinstated the respondents.[6] The respondents then urged the Labor Arbiter to order
their physical or payroll reinstatement and to cite the petitioners in contempt. On
November 26, 1999, the Labor Arbiter issued an Order[7] directing the petitioners, under
pain of contempt, to comply with the March 30, 1999 Decision.
On December 16, 1999, 17 employees were reinstated to their former positions.
Thereafter, the respondents moved for the immediate reinstatement of the remaining 13
respondents. In the meantime, the petitioners manifested to the Labor Arbiter about the
closure of the duck farm effective March 15, 2000.[8]
On February 9, 2000, the Labor Arbiter issued an Order[9] directing the petitioners to
immediately effect the actual or payroll reinstatement of the remaining 13 respondents.
In the said Order, the petitioners were likewise directed to settle whatever financial
accountabilities they may have with the said respondents due to the delay in complying
with the reinstatement aspect of the March 30, 1999 Decision.
28 that the petitioners still failed and
On February 16, 2000, the respondents manifested
refused to comply with the February 9, 2000 Order. That same day, the Labor Arbiter
issued an Alias Writ of Execution commanding the Sheriff to cause the immediate
reinstatement of the 13 respondents and to collect their withheld salaries.[10]
On February 21, 2000, the respondents moved for the issuance of a notice of
garnishment to collect the accumulated withheld wages of the 17 respondents who were
reinstated on December 16, 1999 amounting to P649,400.00. The Labor Arbiter granted
the motion and issued a Second Alias Writ of Execution directing the Sheriff to proceed
to collect the said amount plus execution fees.[11]
Thereafter, the petitioners filed an urgent motion to reconsider the February 9,
2000 Order and to quash the Alias Writ of Execution. They reiterated their previous
contention that they are unable to comply with the order either because the section to
which the 13 respondents were previously assigned had been phased out or the positions
previously held by them have already been filled up.[12]
On March 1, 2000, the Labor Arbiter issued an Order[13] denying the petitioners
motion to quash insofar as the reinstatement aspect is concerned as well as the motion to
reconsider and set aside the February 9, 2000 Order. In case of failure to comply with
the reinstatement of the 13 respondents, the Labor Arbiter directed the petitioner
company to pay them separation pay instead.[14]
On March 13, 2000, the petitioners filed a Memorandum and Notice of Appeal with
Prayer for the Issuance of a Temporary Restraining Order[15] with the NLRC, assailing
the February 9, 2000 and March 1, 2000 Orders and the two Alias Writs of Execution
issued by the Labor Arbiter.
On November 22, 2000, the NLRC affirmed the decision of the Labor Arbiter
with the modification that the award of attorneys fees was reduced to 10% of the total
monetary award.[16]
Aggrieved, the petitioners filed a petition for certiorari with the Court of
Appeals (CA). On August 21, 2003, the CA denied the petition for lack of merit.[17] The
CA held that after rendering more than one year of continuous service, the respondents
became regular employees of the petitioners by operation of law. Moreover, the
petitioners used the five-month contract of employment as a convenient subterfuge to
prevent the respondents from becoming regular employees and such contractual
arrangement should be struck down or disregarded as contrary to public policy or
morals. The petitioners act of repeatedly and continuously hiring the respondents in a
span of three to five years to do the same kind of work negates their assertion that the
respondents were hired for a specific project or undertaking only. As to the issue of the
failure to reinstate the 13 respondents pending appeal, the CA opined that the petitioners
should have at least reinstated them in the payroll if there were indeed no longer any
available positions for which they could be accommodated.[18]Finally, the CA did not
believe that the petitioners counsel was not furnished with copies of the assailed orders
and the alias writs of execution considering that, after the issuance of the said orders, the
petitioners were able to file several pleadings questioning the same.[19]
On September 23, 2003, the petitioners filed a Manifestation and Motion for
Additional Time to File a Motion for Reconsideration of the CA Decision.[20] They
alleged therein that they received a copy of the decision on September 8, 2003 and had
until September 23, 2003 to file a motion for reconsideration. They then prayed for an
extension of 10 days, or until October 3, 2003, to submit a motion for reconsideration.
Realizing their error, the petitioners filed their Motion for Reconsideration two
days later. In a Resolution[21] dated September 30, 2003, the CA denied the petitioners
earlier motion for extension of time for being a prohibited pleading. Subsequently, the
petitioners filed their Urgent Motion to Admit Petitioners Motion for Reconsideration,
but the CA merely noted the petitioners motion for reconsideration in its April 15, 2004
Resolution. This prompted the petitioners to file a Motion to Resolve Petitioners Motion
for Reconsideration.[22] Finding no cogent reason to depart from its previous resolution
denying the motion for extension of time to file a motion for reconsideration, the CA
denied the said motion for lack of merit on July 19, 2004.[23]
Hence, this petition for review wherein the petitioners raise the following
grounds:
I.
THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT
RULED THAT THE RESPONDENTS ATTAINED THE STATUS OF
REGULAR EMPLOYMENT AFTER THE LAPSE OF ONE YEAR
FROM THE DATE OF THEIR EMPLOYMENT.
II.
THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT
RULED THAT DESPITE THE UNAVAILABILITY OF POSITIONS
WHERE THE THIRTEEN (13) RESPONDENTS ARE TO BE
REINSTATED THEY SHOULD STILL BE REINSTATED
THROUGH PAYROLL.
III.
THE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO
RESOLVE THE ISSUE OF WHETHER OR NOT THE
PETITIONERS SHOULD BE HELD LIABLE FOR THE PAYMENT
OF THE ALLEGED WITHHELD SALARIES OF THE
RESPONDENTS FROM THE DATE OF ISSUANCE OF THE WRIT
DESPITE THAT RESPONDENTS BELATED OR NON-
REINSTATEMENT CANNOT BE ATTRIBUTED TO THE
PETITIONERS.
IV.
THE COURT OF APPEALS SHOULD HAVE RESOLVED
P E T I T I O N E R S M O T I O N F O R R E C O N S I D E R AT I O N
CONSIDERING THAT THE DELAY WAS ONLY FOR TWO (2)
DAYS AND WAS THE RESULT OF AN HONEST MISTAKE.[24]
The petitioners submit that the respondents are not regular employees. They aver that it
is of no moment that the respondents have rendered service for more than a year since
29
they were covered by the five-month individual contracts to which they duly acquiesced.
The petitioners contend that they were free to terminate the services of the respondents
at the expiration of
their individual contracts. The petitioners maintain that, in doing so, they merely
implemented the terms of the contracts.[25]
The petitioners assert that the respondents contracts of employment were not
intended to circumvent security of tenure. They point out that the respondents knowingly
and voluntarily agreed to sign the contracts without the petitioners having exercised any
undue advantage over them. Moreover, there is no evidence showing that the petitioners
exerted moral dominance on the respondents.[26]
The petitioners further assert that they cannot be compelled to actually
reinstate, or merely reinstate in the payroll the 13 respondents considering there are no
longer any available positions in the company. They submit that reinstatement
presupposes that the previous positions from which the respondents had been removed
still exist or that there are unfilled positions, more or less, of similar nature as the ones
previously occupied by the said employees. Consequently, they cannot be made to pay
the salaries of these employees from the time the writ of execution was issued.[27]
Finally, the petitioners aver that their motion for reconsideration of the CA Decision
should have been admitted by the CA considering that the delay was only for two days
and such delay was due to an honest mistake. They maintain that the ends of substantial
justice would have been better served if the motion for reconsideration was resolved
since it raised critical issues previously raised in the petition but not resolved by the CA.
[28]
For their part, the respondents aver that the instant petition should be dismissed outright
because the CA Decision has already become final since the petitioners filed their
motion for reconsideration beyond the reglementary 15-day period. They also aver that
the motion for extension of time to file a motion for reconsideration, a prohibited
pleading, did not suspend the running of the period to file a motion for reconsideration,
which is also the period for filing an appeal with this Court. Hence, at the time the
present petition was filed with this Court, the period for filing the appeal had already
lapsed.[29] The respondents further aver that the petition should likewise be dismissed for
lack of a verified statement of material dates. They assert that the Rules of Court
requires a separate verified statement of material dates and its incorporation in the body
of the petition is not substantial compliance of such requirement.[30]
The respondents aver that they acquired the status as regular employees after
rendering one year of service to the petitioner company. They contend that the contracts
providing for a fixed period of employment should be struck down as contrary to public
policy, morals, good customs or public order as it was designed to preclude the
acquisition of tenurial security.[31]
The respondents contend that the order directing their payroll reinstatement was
proper considering that the petitioners have failed to actually reinstate them.[32] They
assert that the delay in the reinstatement of the 13 respondents could only be attributed
to the petitioners; hence, they are liable for withheld salaries to these employees.[33]
It appears that the present petition has, indeed, been filed beyond the
reglementary period for filing a petition for review under Rule 45 of the Rules of Court.
This period is set forth in Section 2, Rule 45, which provides as follows:
SEC. 2. Time for filing; extension. 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 petitioners motion for
new trial or reconsideration filed in due time after notice of judgment.
(Emphasis supplied.)
In conjunction with the said provision, Section 1, Rule 52 of the same Rules
provides:
SEC. 1. Period for filing. A party may file a motion for
reconsideration of a judgment or final resolution within fifteen (15)
days from notice threof, with proof of service on the adverse party.
Clearly, the period for filing a motion for reconsideration and a petition for
review with this Court are the same, that is, 15 days from notice of the judgment. When
an aggrieved party files a motion for reconsideration within the said period, the period
for filing an appeal is suspended. If the motion is denied, the aggrieved party is given
another 15-day period from notice of such denial within which to file a petition for
review under Rule 45. It must be stressed that the aggrieved party will be given a fresh
15-day period only when he has filed his motion for reconsideration in due time on or
before the expiration of the original 15-day period. Otherwise, if the motion for
reconsideration is filed out of time and no appeal has been filed, the subject decision
becomes final and executory.[34] As such, it becomes immutable and can no longer be
attacked by any of the parties or be modified, directly or indirectly, even by the highest
court of the land.[35]
The petitioners received the CA Decision on September 8, 2003; hence, they
had until September 23, 2003 within which to file a motion for reconsideration, or an
appeal, through a petition for review, with this Court. Instead, the petitioners filed a
motion for extension of time to file a motion for reconsideration on September 23, 2003,
which is a prohibited pleading.[36] Thus, it did not suspend the running of the period for
filing an appeal. Consequently, the period to file a petition for review with this Court
also expired on September 23, 2003. Instead of going straight to this Court to attempt to
file a petition for review (which had already expired), the petitioners pursued recourse in
the CA by filing their motion for reconsideration two days later, or on September 25,
2003. The CA merely noted the same. Dissatisfied, the petitioners subsequently filed a
motion to resolve their motion for reconsideration. The CA acted on this motion only on
July 19, 2004 and denied the same for lack of merit.
In filing their petition for review with this Court, the petitioners counted the 15-
day period from their receipt of the July 19, 2004 CA Resolution on August 4, 2004.
Hence, according to their Motion for Extension of Time to File Petition for Review
which they filed on August 19, 2004, they had until that day within which to file a
petition for review. They then asked the Court that30they be granted an extension of 30
days, or until September 21, 2004 within which to file their petition. The Court granted
the motion on the belief that the petitioners motion for reconsideration before the CA Petitioners act of repeatedly and continuously hiring private
was duly filed and that the assailed July 19, 2004 CA Resolution had denied the said respondents in a span of 3 to 5 years to do the same kind of work
motion. Thereafter, the petitioners filed their petition for review on September 20, 2004. negates their contention that private respondents were hired for a
specific project or undertaking only.[42]
It is, therefore, evident from the foregoing that the present petition was filed
way beyond the reglementary period. Hence, its outright dismissal would be proper. The
perfection of an appeal in the manner and within the period prescribed by law is not only Further, factual findings of labor officials who are deemed to have acquired
mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering expertise in matters within their respective jurisdiction are generally accorded not only
the judgment final and executory.[37] Just as a losing party has the privilege to file an respect but even finality, and bind us when supported by substantial evidence.[43]
appeal within the prescribed period, so does the winner also have the correlative right to
enjoy the finality of the decision.[38] WHEREFORE, premises considered, the petition is DENIED DUE
COURSE. The Decision of the Court of Appeals is AFFIRMED.
Anyone seeking exemption from the application of the reglementary period for
filing an appeal has the burden of proving the existence of exceptionally meritorious SO ORDERED.
instances warranting such deviation.[39] In this case, the petitioners failed to prove the
existence of any fact which would warrant the relaxation of the rules. In fact, they have
not even acknowledged that their petition was filed beyond the reglementary period.
In any case, we find that the CA, the NLRC and the Labor Arbiter correctly
categorized the respondents as regular employees of the petitioner company. In Abasolo
v. National Labor Relations Commission,[40] the Court reiterated the test in determining
whether one is a regular employee:

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 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 a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for
its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such
activity and while such activity exists.[41]

Thus, we quote with approval the following excerpt from the decision of the
CA:

It is obvious that the said five-month contract of employment

was used by petitioners as a convenient subterfuge to prevent private
respondents from becoming regular employees. Such contractual
arrangement should be struck down or disregarded as contrary to
public policy or morals. To uphold the same would, in effect, permit
petitioners to avoid hiring permanent or regular employees by simply
hiring them on a temporary or casual basis, thereby violating the
employees security of tenure in their jobs. 31
[G.R. No. 152427. August 9, 2005]
INTEGRATED CONTRACTOR AND PLUMBING WORKS,
INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION
and GLEN SOLON, respondents.
DECISION
QUISUMBING, J.:
This petition for review assails the Decision[1] dated October 30,
2001 of the Court of Appeals and its Resolution[2] dated February 28,
2002 in CA-G.R. SP No. 60136, denying the petitioners motion for
reconsideration for lack of merit. The decision affirmed the National
Labor Relations Commission (NLRC) which declared private respondent
Glen Solon a regular employee of the petitioner and awarded him
13th month pay, service incentive leave pay, reinstatement to his former
position with full backwages from the time his salary was withheld until
his reinstatement.
Petitioner is a plumbing contractor. Its business depends on the
number and frequency of the projects it is able to contract with its clients.
[3]
Private respondent Solon worked for petitioner. His employment
records is as follows:
December 14, 1994 up to January 14, 1995 St. Charbel Warehouse
February 1, 1995 up to April 30, 1995 St. Charbel Warehouse
May 23, 1995 up to June 23, 1995 St. Charbel Warehouse
August 15, 1995 up to October 31, 1995 St. Charbel Warehouse
November 2, 1995 up to January 31, 1996 St. Charbel Warehouse
May 13, 1996 up to June 15, 1996 Ayala Triangle
August 27, 1996 up to November 30, 1996 St. Charbel Warehouse[4]
July 14, 1997 up to November 1997 ICPWI Warehouse
November 1997 up to January 5, 1998 Cathedral Heights
January 6, 1998 Rockwell Center[5]
On February 23, 1998, while private respondent was about to log out
from work, he was informed by the warehouseman that the main office
had instructed them to tell him it was his last day of work as he had been
terminated. When private respondent went to the petitioners office on
February 24, 1998 to verify his status, he found out that indeed, he had
been terminated. He went back to petitioners office on February 27, 1998
to sign a clearance so he could claim his 13th month pay and tax refunds.
However, he had second thoughts and refused to sign the clearance
when he read the clearance indicating he had resigned. On March 6,
1998, he filed a complaint alleging that he was illegally dismissed without
just cause and without due process.[6]
In a Decision dated February 26, 1999, the Labor Arbiter ruled that
private respondent was a regular employee and could only be removed
for cause. Petitioner was ordered to reinstate private respondent to his
former position with full backwages from the time his salary was withheld
until his actual reinstatement, and pay him service incentive leave pay,
and 13th month pay for three years in the amount of P2,880
and P14,976, respectively.
Petitioner appealed to the National Labor Relations Commission
(NLRC), which ruled:
WHEREFORE, prescinding from the foregoing and in the interest of justice, the
decision of the Labor Arbiter is hereby AFFIRMED with a MODIFICATION
that the 13th month pay should be given only for the year 1997 and portion of
1998. Backwages shall be computed from the time he was illegally dismissed up
to the time of his actual reinstatement. Likewise, service incentive leave pay for
three (3) years is also awarded to appellee in the amount of P2,880.00.
SO ORDERED.[7]
Petitioners Motion for Reconsideration was denied.[8]
Petitioner appealed to the Court of Appeals, alleging that the NLRC
committed grave abuse of discretion in finding that the private
respondent was a regular employee and in awarding 13th month pay,
service incentive leave pay, and holiday pay to the private respondent
despite evidence of payment. The said petition was dismissed for lack of
merit.[9]
Before us now, petitioner raises the following issues: (1) Whether the
respondent is a project employee of the petitioner or a regular employee;
and (2) Whether the Court of Appeals erred seriously in awarding
13th month pay for the entire year of 1997 and service incentive leave
pay to the respondent and without taking cognizance of the evidence
presented by petitioner.[10]
The petitioner asserts that the private respondent was a project
employee. Thus, when the project was completed and private
respondent was not re-assigned to another project, petitioner did not
violate any law since it was petitioners discretion to re-assign the private
respondent to other projects.[11]
Article 280 of the Labor Code states:
The provisions of written agreement of the contrary notwithstanding and
regardless of the oral agreement of the parties, 32
an employment shall be deemed
to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season (Italics supplied.)
We held in Tomas Lao Construction v. NLRC[12] that the principal test
in determining whether an employee is a project employee or regular
employee, is, whether he is assigned to carry out a specific project or
undertaking, the duration (and scope) of which are specified at the time
the employee is engaged in the project.[13] Project refers to a particular
job or undertaking that is within the regular or usual business of the
employer, but which is distinct and separate and identifiable from the
undertakings of the company. Such job or undertaking begins and ends
at determined or determinable times.[14]
In our review of the employment contracts of private respondent, we
are convinced he was initially a project employee. The services he
rendered, the duration and scope of each project are clear indications
that he was hired as a project employee.
We concur with the NLRC that while there were several employment
contracts between private respondent and petitioner, in all of them,
private respondent performed tasks which were usually necessary or
desirable in the usual business or trade of petitioner. A review of private
respondents work assignments patently showed he belonged to a work
pool tapped from where workers are and assigned whenever their
services were needed. In a work pool, the workers do not receive
salaries and are free to seek other employment during temporary breaks
in the business. They are like regular seasonal workers insofar as the
effect of temporary cessation of work is concerned. This arrangement is
beneficial to both the employer and employee for it prevents the unjust
situation of coddling labor at the expense of capital and at the same time
enables the workers to attain the status of regular employees.
[15] Nonetheless, the pattern of re-hiring and the recurring need for his
services are sufficient evidence of the necessity and indispensability of
such services to petitioners business or trade.[16]
In Maraguinot, Jr. v. NLRC[17] we ruled that once a project or work
pool employee has been: (1) continuously, as opposed to intermittently,
re-hired by the same employer for the same tasks or nature of tasks; and
(2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a
regular employee.
In this case, did the private respondent become a regular employee
then?
The test to determine whether employment is regular or not is the
reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. Also,
if the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems
the repeated and continuing need for its performance as sufficient
evidence of the necessity, if not indispensability of that activity to the
business.[18] Thus, we held that where the employment of project
employees is extended long after the supposed project has been
finished, the employees are removed from the scope of project
employees and are considered regular employees.[19]
While length of time may not be the controlling test for project
employment, it is vital in determining if the employee was hired for a
specific undertaking or tasked to perform functions vital, necessary and
indispensable to the usual business or trade of the employer. Here,
private respondent had been a project employee several times over. His
employment ceased to be coterminous with specific projects when he
was repeatedly re-hired due to the demands of petitioners business.
[20] Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee,
they should be struck down as contrary to public policy, morals, good
customs or public order.[21]
Further, Policy Instructions No. 20 requires employers to submit a
report of an employees termination to the nearest public employment
office every time his employment was terminated due to a completion of
a project. The failure of the employer to file termination reports is an
indication that the employee is not a project employee.[22]Department
Order No. 19 superseding Policy Instructions No. 20 also expressly
provides that the report of termination is one of the indications of project
employment.[23] In the case at bar, there was only one list of terminated
workers submitted to the Department of Labor and Employment.[24] If
private respondent was a project employee, petitioner should have
submitted a termination report for every completion of a project to which
the former was assigned.
Juxtaposing private respondents employment history, vis the
requirements in the test to determine if he is a regular worker, we are
constrained to say he is.
As a regular worker, private respondent is entitled to security of
tenure under Article 279 of the Labor Code[25] and can only be removed
for cause. We found no valid cause attending to private respondents
dismissal and found also that his dismissal was without due process.
Additionally, Article 277(b) of the Labor33Code provides that
... Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just and authorized cause and
without prejudice to the requirement of notice under Article 283 of this Code,
the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination
and shall afford the latter ample opportunity to be heard and to defend himself
with the assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment
The failure of the petitioner to comply with these procedural
guidelines renders its dismissal of private respondent, illegal. An illegally
dismissed employee is entitled to reinstatement with full backwages,
inclusive of allowances, and to his other benefits computed from the time
his compensation was withheld from him up to the time of his actual
reinstatement, pursuant to Article 279 of the Labor Code.
However, we note that the private respondent had been paid his
13th month pay for the year 1997. The Court of Appeals erred in granting
the same to him.
Article 95(a) of the Labor Code governs the award of service
incentive leave. It provides that every employee who has rendered at
least one year of service shall be entitled to a yearly service incentive
leave of five days with pay, and Section 3, Rule V, Book III of the
Implementing Rules and Regulations, defines the term at least one year
of service to mean service within 12 months, whether continuous or
broken reckoned from the date the employee started working, including
authorized absences and paid regular holidays, unless the working days
in the establishment as a matter of practice or policy, or that provided in
the employment contract is less than 12 months, in which case said
period shall be considered as one year. Accordingly, private respondents
service incentive leave credits of five days for every year of service,
based on the actual service rendered to the petitioner, in accordance
with each contract of employment should be computed up to the date of
reinstatement pursuant to Article 279 of the Labor Code.[26]
WHEREFORE, the assailed Decision dated October 30, 2001 and
the Resolution dated February 28, 2002 of the Court of Appeals in CA-
G.R. SP No. 60136, are AFFIRMED with MODIFICATION. The petitioner
is hereby ORDERED to (1) reinstate the respondent with no loss of
seniority rights and other privileges; and (2) pay respondent his
backwages, 13th month pay for the year 1998 and Service Incentive
Leave Pay computed from the date of his illegal dismissal up to the date
of his actual reinstatement. Costs against petitioner.
SO ORDERED. 34