Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 186621

March 12, 2014

SOUTH EAST INTERNATIONAL RATTAN, INC. and/or ESTANISLAO1 AGBAY, Petitioners,

vs.
JESUS J. COMING, Respondent.
DECISION
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari under Rule 45 to reverse and set aside the
Decision2 dated February 21, 2008 and Resolution3 dated February 9, 2009 of the Court of Appeals (CA)
in CA-GR. CEB-SP No. 02113.
Petitioner South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the
business of manufacturing and exporting furniture to various countries with principal place of business
at Paknaan, Mandaue City, while petitioner Estanislao Agbay, as per records, is the President and
General Manager of SEIRI.4
On November 3, 2003, respondent Jesus J. Coming filed a complaint 5 for illegal dismissal,
underpayment of wages, non-payment of holiday pay, 13th month pay and service incentive leave
pay, with prayer for reinstatement, back wages, damages and attorneys fees.
Respondent alleged that he was hired by petitioners as Sizing Machine Operator on March 17, 1984.
His work schedule is from 8:00 a.m. to 5:00 p.m. Initially, his compensation was on "pakiao" basis but
sometime in June 1984, it was fixed at P150.00 per day which was paid weekly. In 1990, without any
apparent reason, his employment was interrupted as he was told by petitioners to resume work in two
months time. Being an uneducated person, respondent was persuaded by the management as well as
his brother not to complain, as otherwise petitioners might decide not to call him back for work.
Fearing such consequence, respondent accepted his fate. Nonetheless, after two months he reported
back to work upon order of management.6
Despite being an employee for many years with his work performance never questioned by petitioners,
respondent was dismissed on January 1, 2002 without lawful cause. He was told that he will be
terminated because the company is not doing well financially and that he would be called back to work
only if they need his services again. Respondent waited for almost a year but petitioners did not call
him back to work. When he finally filed the complaint before the regional arbitration branch, his
brother Vicente was used by management to persuade him to withdraw the case. 7
On their part, petitioners denied having hired respondent asserting that SEIRI was incorporated only in
1986, and that respondent actually worked for SEIRIs furniture suppliers because when the company
started in 1987 it was engaged purely in buying and exporting furniture and its business operations
were suspended from the last quarter of 1989 to August 1992. They stressed that respondent was not
included in the list of employees submitted to the Social Security System (SSS). Moreover,
respondents brother, Vicente Coming, executed an affidavit 8 in support of petitioners position while
Allan Mayol and Faustino Apondar issued notarized certifications 9that respondent worked for them
instead.10

With the denial of petitioners that respondent was their employee, the latter submitted an
affidavit11 signed by five former co-workers stating that respondent was one of the pioneer employees
who worked in SEIRI for almost twenty years.
In his Decision12 dated April 30, 2004, Labor Arbiter Ernesto F. Carreon ruled that respondent is a
regular employee of SEIRI and that the termination of his employment was illegal. The dispositive
portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent South East
(Intl.) Rattan, Inc. to pay complainant Jesus J. Coming the following:
1. Separation pay

P114,400.00

2. Backwages

P 30,400.00

3. Wage differential

P 15,015.00

4. 13th month pay

P 5,958.00

5. Holiday pay

P 4,000.00

6. Service incentive leave pay

P 2,000.00

Total award

P171,773.00

The other claims and the case against respondent Estanislao Agbay are dismissed for lack of merit.
SO ORDERED.13
Petitioners appealed to the National Labor Relations Commission (NLRC)-Cebu City where they
submitted the following additional evidence: (1) copies of SEIRIs payrolls and individual pay records of
employees;14 (2) affidavit15 of SEIRIs Treasurer, Angelina Agbay; and (3) second affidavit 16 of Vicente
Coming.
On July 28, 2005, the NLRCs Fourth Division rendered its Decision, 17 the dispositive portion of which
states:
WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED
and a new one entered DISMISSING the complaint.
SO ORDERED.18
The NLRC likewise denied respondents motion for reconsideration. 19
Respondent elevated the case to the CA via a petition for certiorari under Rule 65.
By Decision dated February 21, 2008, the CA reversed the NLRC and ruled that there existed an
employer-employee relationship between petitioners and respondent who was dismissed without just
and valid cause.
The CA thus decreed:
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The assailed Decision dated
July 28, 2005 issued by the National Labor Relations Commission (NLRC), Fourth Division, Cebu City in
NLRC Case No. V-000625-2004 is REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated

April 30, 2004 is REINSTATED with MODIFICATION on the computation of backwages which should be
computed from the time of illegal termination until the finality of this decision.
Further, the Labor Arbiter is directed to make the proper adjustment in the computation of the award
of separation pay as well as the monetary awards of wage differential, 13th month pay, holiday pay
and service incentive leave pay.
SO ORDERED.20
Petitioners filed a motion for reconsideration but the CA denied it under Resolution dated February 9,
2009.
Hence, this petition raising the following issues:
6.1
WHETHER UNDER THE FACTS AND EVIDENCE ON RECORD, THE FINDING OF THE HONORABLE COURT
OF APPEALS THAT THERE EXISTS EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PETITIONERS AND
RESPONDENT IS IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THIS HONORABLE COURT.
6.2
WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY APPRECIATED IN ACCORDANCE WITH
APPLICABLE LAW AND JURISPRUDENCE THE EVIDENCE PRESENTED BY BOTH PARTIES.
6.3
WHETHER UNDER THE FACTS AND EVIDENCE PRESENTED, THE FINDING OF THE HONORABLE COURT
OF APPEALS THAT PETITIONERS ARE LIABLE FOR ILLEGAL DISMISSAL OF RESPONDENT IS IN ACCORD
WITH APPLICABLE LAW AND JURISPRUDENCE.
6.4
WHETHER UNDER THE FACTS PRESENTED, THE RULING OF THE HONORABLE COURT OF APPEALS THAT
THE BACKWAGES DUE THE RESPONDENT SHOULD BE COMPUTED FROM THE TIME OF ILLEGAL
TERMINATION UNTIL THE FINALITY OF THE DECISION IS SUPPORTED BY PREVAILING JURISPRUDENCE. 21
Resolution of the first issue is paramount in view of petitioners denial of the existence of employeremployee relationship.
The issue of whether or not an employer-employee relationship exists in a given case is essentially a
question of fact. As a rule, this Court is not a trier of facts and this applies with greater force in labor
cases.22 Only errors of law are generally reviewed by this Court. 23 This rule is not absolute, however,
and admits of exceptions. For one, the Court may look into factual issues in labor cases when the
factual findings of the Labor Arbiter, the NLRC, and the CA are conflicting. 24 Here, the findings of the
NLRC differed from those of the Labor Arbiter and the CA, which compels the Courts exercise of its
authority to review and pass upon the evidence presented and to draw its own conclusions
therefrom.25
To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered
to the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or the socalled "control test."26 In resolving the issue of whether such relationship exists in a given case,
substantial evidence that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion is sufficient. Although no particular form of evidence is required to
prove the existence of the relationship, and any competent and relevant evidence to prove the

relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence.27
In support of their claim that respondent was not their employee, petitioners presented Employment
Reports to the SSS from 1987 to 2002, the Certifications issued by Mayol and Apondar, two affidavits of
Vicente Coming, payroll sheets (1999-2000), individual pay envelopes and employee earnings records
(1999-2000) and affidavit of Angelina Agbay (Treasurer and Human Resources Officer). The payroll and
pay records did not include the name of respondent. The affidavit of Ms. Agbay stated that after SEIRI
started its business in 1986 purely on export trading, it ceased operations in 1989 as evidenced by
Certification dated January 18, 1994 from the Securities and Exchange Commission (SEC); that when
business resumed in 1992, SEIRI undertook only a little of manufacturing; that the company never
hired any workers for varnishing and pole sizing because it bought the same from various suppliers,
including Faustino Apondar; respondent was never hired by SEIRI; and while it is true that Mr.
Estanislao Agbay is the company President, he never dispensed the salaries of workers. 28
In his first affidavit, Vicente Coming averred that:
6. [Jesus Coming] is a furniture factory worker. In 1982 to 1986, he was working with Ben Mayol
as round core maker/splitter.
7. Thereafter, we joined Okay Okay Yard owned by Amelito Montececillo. This is a rattan trader
with business address near Cebu Rattan Factory on a "Pakiao" basis.
8. However, Jesus and I did not stay long at Okay Okay Yard and instead we joined Eleuterio
Agbay in Labogon, Cebu in 1989. In 1991, we went back to Okay Okay located near the
residence of Atty. Vicente de la Serna in Mandaue City. We were on a "pakiao" basis. We stayed
put until 1993 when we resigned and joined Dodoy Luna in Labogon, Mandaue City as classifier
until 1995. In 1996[,] Jesus rested. It was only in 1997 that he worked back. He replaced me, as
a classifier in Rattan Traders owned by Allan Mayol. But then, towards the end of the year, he
left the factory and relaxed in our place of birth, in Sogod, Cebu.
9. It was only towards the end of 1999 that Jesus was taken back by Allan Mayol as sizing
machine operator. However, the work was off and on basis. Not regular in nature, he was
harping a side line job with me knowing that I am now working with Faustino Apondar that
supplies rattan furnitures [sic] to South East (Intl) Rattan, Inc. As a brother, I allowed Jesus to
work with me and collect the proceeds of his services as part of my collectibles from Faustino
Apondar since I was on a "pakiao" basis. He was working at his pleasure. Which means, he
works if he likes to? That will be until 10:00 oclock in the evening.
x x x x29
The Certification dated January 20, 2004 of Allan Mayol reads:
This is to certify that I personally know Jesus Coming, the brother of Vicente Coming. Jesus is a rattan
factory worker and he was working with me as rattan pole sizing/classifier of my business from 1997
up to part of 1998 when he left my factory at will. I took him back towards the end of 1999, this time
as a sizing machine operator. In all these years, his services are not regular. He works only if he likes
to.30
Faustino Apondar likewise issued a Certification which states:
This is to certify that I am a maker/supplier of finished Rattan Furniture. As such, I have several rattan
furniture workers under me, one of whom is Vicente Coming, the brother of Jesus Coming.
That sometime in 1999, Vicente pleaded to me for a side line job of his brother, Jesus who was already
connected with Allan Mayol. Having vouched for the integrity of his brother and knowing that the job is
temporary in character, I allowed Jesus to work with his brother Vicente. However, the proceeds will be

collected together with his brother Vicente since it was the latter who was working with me. He renders
services to his brother work only after the regular working hours but off and on basis. 31
On the other hand, respondent submitted the affidavit executed by Eleoterio Brigoli, Pedro Brigoli,
Napoleon Coming, Efren Coming and Gil Coming who all attested that respondent was their co-worker
at SEIRI.
Their affidavit reads:
We, the undersigned, all of legal ages, Filipino, and resident[s] of Cebu, after having been duly sworn
to in accordance with law, depose and say:
That we are former employees of SOUTH EAST RATTAN which is owned by Estan Eslao Agbay;
That we personally know JESUS COMING considering that we worked together in one company SOUTH
EAST RATTANT [sic];
That we together with JESUS COMING are all under the employ of ESTAN ESLAO AGBAY considering
that the latter is the one directly paying us and holds the absolute control of all aspects of our
employment;
That it is not true that JESUS COMING is under the employ of one person other than ESTAN ESLAO
AGBAY OF SOUTH EAST RATTAN;
That Jesus Coming is one of the pioneer employees of SOUTH EAST RATTAN and had been employed
therein for almost twenty years;
That we executed this affidavit to attest to the truth of the foregoing facts and to deny any contrary
allegation made by the company against his employment with SOUTH EAST RATTAN. 32
In his decision, Labor Arbiter Carreon found that respondents work as sizing machine operator is
usually necessary and desirable to the rattan furniture business of petitioners and their failure to
include respondent in the employment report to SSS is not conclusive proof that respondent is not
their employee. As to the affidavit of Vicente Coming, Labor Arbiter Carreon did not give weight to his
statement that respondent is not petitioners employee but that of one Faustino Apondar. Labor Arbiter
Carreon was not convinced that Faustino Apondar is an independent contractor who has a contractual
relationship with petitioners.
In reversing the Labor Arbiter, the NLRC reasoned as follows:
First complainant alleged that he worked continuously from March 17, 1984 up to January 21,
2002.1wphi1 Records reveal however that South East (Intl.) Rattan, Inc. was incorporated only last
July 18, 1986 (p. 55 records)[.] Moreover, when they started to actually operate in 1987, the company
was engaged purely on "buying and exporting rattan furniture" hence no manufacturing employees
were hired. Furthermore, from the last quarter of 1989 up to August of 1992, the company suspended
operations due to economic reverses as per Certification issued by the Securities and Exchange
Commission (p. 56 records)[.]
Second, for all his insistence that he was a regular employee, complainant failed to present a single
payslip, voucher or a copy of a company payroll showing that he rendered service during the period
indicated therein. x x x
From the above established facts we are inclined to give weight and credence to the Certifications of
Allan Mayol and Faustino Apondar, both suppliers of finished Rattan Furniture (pp. 442-43, records). It
appears that complainant first worked with Allan Mayol and later with Faustino Apondar upon the
proddings of his brother Vicente. Vicentes affidavit as to complainants employment history was more
detailed and forthright. x x x

xxxx
In the case at bar, there is likewise substantial evidence to support our findings that complainant was
not an employee of respondents. Thus:
1. Complainants name does not appear in the list of employees reported to the SSS.
2. His name does not also appear in the sample payrolls of respondents employees.
3. The certification of Allan Mayol and Fasutino Apondar[,] supplier of finished rattan
products[,] that complainant had at one time or another worked with them.
4. The Affidavit of Vicente Coming, complainants full brother[,] attesting that complainant had
never been an employee of respondent. The only connection was that their employer Faustino
Apondar supplies finished rattan products to respondents. 33
On the other hand, the CA gave more credence to the declarations of the five former employees of
petitioners that respondent was their co-worker in SEIRI. One of said affiants is Vicente Comings own
son, Gil Coming. Vicente averred in his second affidavit that when he confronted his son, the latter
explained that he was merely told by their Pastor to sign the affidavit as it will put an end to the
controversy. Vicente insisted that his son did not know the contents and implications of the document
he signed. As to the absence of respondents name in the payroll and SSS employment report, the CA
observed that the payrolls submitted were only from January 1, 1999 to December 29, 2000 and not
the entire period of eighteen years when respondent claimed he worked for SEIRI. It further noted that
the names of the five affiants, whom petitioners admitted to be their former employees, likewise do
not appear in the aforesaid documents. According to the CA, it is apparent that petitioners maintained
a separate payroll for certain employees or willfully retained a portion of the payroll.
x x x As to the "control test", the following facts indubitably reveal that respondents wielded control
over the work performance of petitioner, to wit: (1) they required him to work within the company
premises; (2) they obliged petitioner to report every day of the week and tasked him to usually
perform the same job; (3) they enforced the observance of definite hours of work from 8 oclock in the
morning to 5 oclock in the afternoon; (4) the mode of payment of petitioners salary was under their
discretion, at first paying him on pakiao basis and thereafter, on daily basis; (5) they implemented
company rules and regulations; (6) [Estanislao] Agbay directly paid petitioners salaries and controlled
all aspects of his employment and (7) petitioner rendered work necessary and desirable in the
business of the respondent company. 34
We affirm the CA.
In Tan v. Lagrama,35 the Court held that the fact that a worker was not reported as an employee to the
SSS is not conclusive proof of the absence of employer-employee relationship. Otherwise, an employer
would be rewarded for his failure or even neglect to perform his obligation. 36
Nor does the fact that respondents name does not appear in the payrolls and pay envelope records
submitted by petitioners negate the existence of employer-employee relationship. For a payroll to be
utilized to disprove the employment of a person, it must contain a true and complete list of the
employee.37 In this case, the exhibits offered by petitioners before the NLRC consisting of copies of
payrolls and pay earnings records are only for the years 1999 and 2000; they do not cover the entire
18-year period during which respondent supposedly worked for SEIRI.
In their comment to the petition filed by respondent in the CA, petitioners emphasized that in the
certifications issued by Mayol and Apondar, it was shown that respondent was employed and working
for them in those years he claimed to be working for SEIRI. However, a reading of the certification by
Mayol would show that while the latter claims to have respondent under his employ in 1997, 1998 and
1999, respondents services were not regular and that he works only if he wants to. Apondars
certification likewise stated that respondent worked for him since 1999 through his brother Vicente as
"sideline" but only after regular working hours and "off and on" basis. Even assuming the truth of the

foregoing statements, these do not foreclose respondents regular or full-time employment with SEIRI.
In effect, petitioners suggest that respondent was employed by SEIRIs suppliers, Mayol and Apondar
but no competent proof was presented as to the latters status as independent contractors.
In the same comment, petitioners further admitted that the five affiants who attested to respondents
employment with SEIRI are its former workers whom they describe as "disgruntled workers of SEIRI"
with an axe to grind against petitioners, and that their execution of affidavit in support of respondents
claim is "their very way of hitting back the management of SEIRI after disciplinary measures were
meted against them."38 This allegation though was not substantiated by petitioners. Instead, after the
CA rendered its decision reversing the NLRCs ruling, petitioners subsequently changed their theory by
denying the employment relationship with the five affiants in their motion for reconsideration, thus:
x x x Since the five workers were occupying and working on a leased premises of the private
respondent, they were called workers of SEIRI (private respondent). Such admission however, does not
connote employment. For the truth of the matter, all of the five employees of the supplier assigned at
the leased premises of the private respondent. Because of the recommendation of the private
respondent with regards to the disciplinary measures meted on the five workers, they wanted to hit
back against the private respondent. Their motive to implicate private respondent was to vindicate.
Definitely, they have an axe to grind against the private respondent. Mention has to be made that
despite the dismissal of these five (5) witnesses from their service, none of them ever went to the
National Labor [Relations] Commission and invoked their rights, if any, against their employer or at the
very least against the respondent. The reason is obvious, since they knew pretty well that they were
not employees of SEIRI but rather under the employ of Allan Mayol and Faustino Apondar, working on a
leased premise of respondent. x x x39
Petitioners admission that the five affiants were their former employees is binding upon them. While
they claim that respondent was the employee of their suppliers Mayol and Apondar, they did not
submit proof that the latter were indeed independent contractors; clearly, petitioners failed to
discharge their burden of proving their own affirmative allegation. 40 There is thus no showing that the
five former employees of SEIRI were motivated by malice, bad faith or any ill-motive in executing their
affidavit supporting the claims of respondent.
In any controversy between a laborer and his master, doubts reasonably arising from the evidence are
resolved in favor of the laborer.41
As a regular employee, respondent enjoys the right to security of tenure under Article 279 42 of the
Labor Code and may only be dismissed for a just43 or authorized44 cause, otherwise the dismissal
becomes illegal.
Respondent, whose employment was terminated without valid cause by petitioners, is entitled to
reinstatement without loss of seniority rights and other privileges and to his full back wages, inclusive
of allowances and other benefits or their monetary equivalent, computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. Where reinstatement
is no longer viable as an option, back wages shall be computed from the time of the illegal termination
up to the finality of the decision. Separation pay equivalent to one month salary for every year of
service should likewise be awarded as an alternative in case reinstatement in not possible. 45
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated February 21, 2008 and
Resolution dated February 9, 2009 of the Court of Appeals in CA-G.R. No. CEB-SP No. 02113 are hereby
AFFIRMED and UPHELD.
Petitioners to pay the costs of suit.
SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice

WE CONCUR:
SECOND DIVISION
G.R. No. 195190, July 28, 2014
ROYALE HOMES MARKETING CORPORATION, Petitioner, v. FIDEL P. ALCANTARA [DECEASED],
SUBSTITUTED BY HIS HEIRS, Respondent.
DECISION
DEL CASTILLO, J.:
Not every form of control that a hiring party imposes on the hired party is indicative of employeeemployer relationship. Rules and regulations that merely serve as guidelines towards the achievement
of a mutually desired result without dictating the means and methods of accomplishing it do not
establish employer-employee relationship.1cralawred
This Petition for Review on Certiorari2 assails the June 23, 2010 Decision 3 of the Court of Appeals (CA)
in CA-G.R. SP No. 109998 which (i) reversed and set aside the February 23, 2009 Decision 4 of the
National Labor Relations Commission (NLRC), (ii) ordered petitioner Royale Homes Marketing
Corporation (Royale Homes) to pay respondent Fidel P. Alcantara (Alcantara) backwages and
separation pay, and (iii) remanded the case to the Labor Arbiter for the proper determination and
computation of said monetary awards.
Also assailed in this Petition is the January 18, 2011 Resolution 5 of the CA denying Royale Homes
Motion for Reconsideration,6 as well as its Supplemental7 thereto.
Factual Antecedents
In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its
Marketing Director for a fixed period of one year. His work consisted mainly of marketing Royale
Homes real estate inventories on an exclusive basis. Royale Homes reappointed him for several
consecutive years, the last of which covered the period January 1 to December 31, 2003 where he held
the position of Division 5 Vice-President-Sales.8cralawred
Proceedings before the Labor Arbiter
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal 9 against Royale Homes and its
President Matilde Robles, Executive Vice-President for Administration and Finance Ma. Melinda
Bernardino, and Executive Vice- President for Sales Carmina Sotto. Alcantara alleged that he is a
regular employee of Royale Homes since he is performing tasks that are necessary and desirable to its
business; that in 2003 the company gave him P1.2 million for the services he rendered to it; that in the
first week of November 2003, however, the executive officers of Royale Homes told him that they were
wondering why he still had the gall to come to office and sit at his table; 10 and that the acts of the
executive officers of Royale Homes amounted to his dismissal from work without any valid or just
cause and in gross disregard of the proper procedure for dismissing employees. Thus, he also
impleaded the corporate officers who, he averred, effected his dismissal in bad faith and in an
oppressive manner.
Alcantara prayed to be reinstated to his former position without loss of seniority rights and other
privileges, as well as to be paid backwages, moral and exemplary damages, and attorneys fees. He
further sought that the ownership of the Mitsubishi Adventure with Plate No. WHD-945 be transferred
to his name.
Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued that the
appointment paper of Alcantara is clear that it engaged his services as an independent sales
contractor for a fixed term of one year only. He never received any salary, 13th month pay, overtime
pay or holiday pay from Royale Homes as he was paid purely on commission basis. In addition, Royale

Homes had no control on how Alcantara would accomplish his tasks and responsibilities as he was free
to solicit sales at any time and by any manner which he may deem appropriate and necessary. He is
even free to recruit his own sales personnel to assist him in pursuance of his sales target.
According to Royale Homes, Alcantara decided to leave the company after his wife, who was once
connected with it as a sales agent, had formed a brokerage company that directly competed with its
business, and even recruited some of its sales agents. Although this was against the exclusivity clause
of the contract, Royale Homes still offered to accept Alcantaras wife back so she could continue to
engage in real estate brokerage, albeit exclusively for Royale Homes. In a special management
committee meeting on October 8, 2003, however, Alcantara announced publicly and openly that he
would leave the company by the end of October 2003 and that he would no longer finish the unexpired
term of his contract. He has decided to join his wife and pursue their own brokerage business. Royale
Homes accepted Alcantaras decision. It then threw a despedida party in his honor and, subsequently,
appointed a new independent contractor.
Two months after he relinquished his post, however, Alcantara appeared in Royale Homes and
submitted a letter claiming that he was illegally dismissed.
Ruling of the Labor Arbiter
On September 7, 2005, the Labor Arbiter rendered a Decision 11 holding that Alcantara is an employee
of Royale Homes with a fixed-term employment period from January 1 to December 31, 2003 and that
the pre-termination of his contract was against the law. Hence, Alcantara is entitled to an amount
which he may have earned on the average for the unexpired portion of the contract. With regard to
the impleaded corporate officers, the Labor Arbiter absolved them from any liability.
The dispositive portion of the Labor Arbiters Decision reads:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Royale
Homes Marketing Corp. to pay the complainant the total amount of TWO HUNDRED SEVENTY SEVEN
THOUSAND PESOS (P277,000.00) representing his compensation/commission for the unexpired term of
his contract.
All other claims are dismissed for lack of merit.
SO ORDERED.12chanrobleslaw
Both parties appealed the Labor Arbiters Decision to the NLRC. Royale Homes claimed that the Labor
Arbiter grievously erred in ruling that there exists an employer-employee relationship between the
parties. It insisted that the contract between them expressly states that Alcantara is an independent
contractor and not an ordinary employee. It had no control over the means and methods by which he
performed his work. Royale Homes likewise assailed the award of P277,000.00 for lack of basis as it
did not pre-terminate the contract. It was Alcantara who chose not to finish the contract.
Alcantara, for his part, argued that the Labor Arbiter erred in ruling that his employment was for a
fixed-term and that he is not entitled to backwages, reinstatement, unpaid commissions, and
damages.
Ruling of the National Labor Relations Commission
On February 23, 2009, the NLRC rendered its Decision, 13 ruling that Alcantara is not an employee but a
mere independent contractor of Royale Homes. It based its ruling mainly on the contract which does
not require Alcantara to observe regular working hours. He was also free to adopt the selling methods
he deemed most effective and can even recruit sales agents to assist him in marketing the inventories
of Royale Homes. The NLRC also considered the fact that Alcantara was not receiving monthly salary,
but was being paid on commission basis as stipulated in the contract. Being an independent
contractor, the NLRC concluded that Alcantaras Complaint is cognizable by the regular courts.
The fallo of the NLRC Decision reads:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the Decision of Labor Arbiter Dolores Peralta-Beley dated
September 5, 2005 is REVERSED and SET ASIDE and a NEW ONE rendered dismissing the complaint for
lack of jurisdiction.
SO ORDERED.14
Alcantara moved for reconsideration.15 In a Resolution16 dated May 29, 2009, however, the NLRC
denied his motion.
Alcantara thus filed a Petition for Certiorari17 with the CA imputing grave abuse of discretion on the
part of the NLRC in ruling that he is not an employee of Royale Homes and that it is the regular courts
which have jurisdiction over the issue of whether the pre-termination of the contract is valid.
Ruling of the Court of Appeals
On June 23, 2010, the CA promulgated its Decision18 granting Alcantaras Petition and reversing the
NLRCs Decision. Applying the four-fold and economic reality tests, it held that Alcantara is an
employee of Royale Homes. Royale Homes exercised some degree of control over Alcantara since his
job, as observed by the CA, is subject to company rules, regulations, and periodic evaluations. He was
also bound by the company code of ethics. Moreover, the exclusivity clause of the contract has made
Alcantara economically dependent on Royale Homes, supporting the theory that he is an employee of
said company.
The CA further held that Alcantaras termination from employment was without any valid or just cause,
and it was carried out in violation of his right to procedural due process. Thus, the CA ruled that he is
entitled to backwages and separation pay, in lieu of reinstatement. Considering, however, that the CA
was not satisfied with the proof adduced to establish the amount of Alcantaras annual salary, it
remanded the case to the Labor Arbiter to determine the same and the monetary award he is entitled
to. With regard to the corporate officers, the CA absolved them from any liability for want of clear proof
that they assented to the patently unlawful acts or that they are guilty of bad faith or gross
negligence. Thus:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, the instant PETITION is GRANTED. The assailed decision of the
National Labor Relations Commission in NLRC NCR CASE NO. 00-12-14311-03 NLRC CA NO. 046104-05
dated February 23, 2009 as well as the Resolution dated May 29, 2009 are hereby SET ASIDE and a
new one is entered ordering the respondent company to pay petitioner backwages which shall be
computed from the time of his illegal termination in October 2003 up to the finality of this decision,
plus separation pay equivalent to one month salary for every year of service. This case is REMANDED
to the Labor Arbiter for the proper determination and computation of back wages, separation pay and
other monetary benefits that petitioner is entitled to.
SO ORDERED.19chanrobleslaw
Royale Homes filed a Motion for Reconsideration20 and a Supplemental Motion for Reconsideration.21 In
a Resolution22 dated January 18, 2011, however, the CA denied said motions.
Issues
Hence, this Petition where Royale Homes submits before this Court the following issues for
resolution:chanRoblesvirtualLawlibrary
A.
WHETHER THE COURT OF APPEALS HAS DECIDED THE INSTANT CASE NOT IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT REVERSED THE RULING OF THE NLRC
DISMISSING THE COMPLAINT OF RESPONDENT FOR LACK OF JURISDICTION AND CONSEQUENTLY, IN
FINDING THAT RESPONDENT WAS ILLEGALLY DISMISSED[.]
B.
WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN DISREGARDING THE EN

BANC RULING OF THIS HONORABLE COURT IN THE CASE OF TONGKO VS. MANULIFE, AND IN BRUSHING
ASIDE THE APPLICABLE RULINGS OF SONZA VS. ABS CBN AND CONSULTA V. CA[.]
C.
WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN DENYING THE MOTION
FOR RECONSIDERATION OF PETITIONER AND IN REFUSING TO CORRECT ITSELF[.] 23
Royale Homes contends that its contract with Alcantara is clear and unambiguous - it engaged his
services as an independent contractor. This can be readily seen from the contract stating that no
employer-employee relationship exists between the parties; that Alcantara was free to solicit sales at
any time and by any manner he may deem appropriate; that he may recruit sales personnel to assist
him in marketing Royale Homes inventories; and, that his remunerations are dependent on his sales
performance.
Royale Homes likewise argues that the CA grievously erred in ruling that it exercised control over
Alcantara based on a shallow ground that his performance is subject to company rules and regulations,
code of ethics, periodic evaluation, and exclusivity clause of contract. Royale Homes maintains that it
is expected to exercise some degree of control over its independent contractors, but that does not
automatically result in the existence of employer-employee relationship. For control to be considered
as a proof tending to establish employer-employee relationship, the same must pertain to the means
and method of performing the work; not on the relationship of the independent contractors among
themselves or their persons or their source of living.
Royale Homes further asserts that it neither hired nor wielded the power to dismiss Alcantara. It was
Alcantara who openly and publicly declared that he was pre-terminating his fixed-term contract.
The pivotal issue to be resolved in this case is whether Alcantara was an independent contractor or an
employee of Royale Homes.
Our Ruling
The Petition is impressed with merit.
The determination of whether a party who renders services to another is an employee or an
independent contractor involves an evaluation of factual matters which, ordinarily, is not within the
province of this Court. In view of the conflicting findings of the tribunals below, however, this Court is
constrained to go over the factual matters involved in this case. 24cralawred
The juridical relationship of the parties
based on their written contract
The primary evidence of the nature of the parties relationship in this case is the written contract that
they signed and executed in pursuance of their mutual agreement. While the existence of employeremployee relationship is a matter of law, the characterization made by the parties in their contract as
to the nature of their juridical relationship cannot be simply ignored, particularly in this case where the
parties written contract unequivocally states their intention at the time they entered into it. InTongko
v. The Manufacturers Life Insurance Co. (Phils.), Inc., 25 it was held that:chanRoblesvirtualLawlibrary
To be sure, the Agreements legal characterization of the nature of the relationship cannot be
conclusive and binding on the courts; x x x the characterization of the juridical relationship the
Agreement embodied is a matter of law that is for the courts to determine. At the same time, though,
the characterization the parties gave to their relationship in the Agreement cannot simply be brushed
aside because it embodies their intent at the time they entered the Agreement, and they were
governed by this understanding throughout their relationship. At the very least, the provision on the
absence of employer-employee relationship between the parties can be an aid in considering the
Agreement and its implementation, and in appreciating the other evidence on record. 26
In this case, the contract,27 duly signed and not disputed by the parties, conspicuously provides that
no employer-employee relationship exists between Royale Homes and Alcantara, as well as his sales

agents. It is clear that they did not want to be bound by employer-employee relationship at the time of
the signing of the contract. Thus:chanRoblesvirtualLawlibrary
January 24, 2003
MR. FIDEL P. ALCANTARA
13 Rancho I
Marikina City
Dear Mr. Alcantara,
This will confirm your appointment as Division 5 VICE[-]PRESIDENT-SALES of ROYALE HOMES
MARKETING CORPORATION effective January 1, 2003 to December 31, 2003.
Your appointment entails marketing our real estate inventories on an EXCLUSIVE BASIS under such
price, terms and condition to be provided to you from time to time.
As such, you can solicit sales at any time and by any manner which you deem appropriate and
necessary to market our real estate inventories subject to rules, regulations and code of ethics
promulgated by the company. Further, you are free to recruit sales personnel/agents to assist you in
marketing of our inventories provided that your personnel/agents shall first attend the required
seminars and briefing to be conducted by us from time to time for the purpose of familiarizing them of
terms and conditions of sale, the nature of property sold, etc., attendance of which shall be a condition
precedent for their accreditation by us.
That as such Division 5 VICE[-]PRESIDENT-SALES you shall be entitled to:chanRoblesvirtualLawlibrary
1. Commission override of 0.5% for all option sales beginning January 1, 2003 booked by your sales
agents.
2. Budget allocation depending on your divisions sale performance as per our budget guidelines.
3. Sales incentive and other forms of company support which may be granted from time to time.
It is understood, however, that no employer-employee relationship exists between us, that
of your sales personnel/agents, and that you shall hold our company x x x, its officers and
directors, free and harmless from any and all claims of liability and damages arising from and/or
incident to the marketing of our real estate inventories.
We reserve, however, our right to terminate this agreement in case of violation of any company rules
and regulations, policies and code of ethics upon notice for justifiable reason.
Your performance shall be subject to periodic evaluation based on factors which shall be determined by
the management.
If you are amenable to the foregoing terms and conditions, please indicate your conformity by signing
on the space provided below and return [to] us a duplicate copy of this letter, duly accomplished, to
constitute as our agreement on the matter. (Emphasis ours)
Since the terms of the contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations should control. 28 No construction is even needed as they
already expressly state their intention. Also, this Court adopts the observation of the NLRC that it is
rather strange on the part of Alcantara, an educated man and a veteran sales broker who claimed to
be receiving P1.2 million as his annual salary, not to have contested the portion of the contract
expressly indicating that he is not an employee of Royale Homes if their true intention were otherwise.
The juridical relationship of the
parties based on Control Test
In determining the existence of an employer-employee relationship, this Court has generally relied on
the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages;

(3) the power of dismissal; and (4) the employers power to control the employee with respect to the
means and methods by which the work is to be accomplished. 29 Among the four, the most
determinative factor in ascertaining the existence of employer-employee relationship is the right of
control test.30 It is deemed to be such an important factor that the other requisites may even be
disregarded.31 This holds true where the issues to be resolved is whether a person who performs work
for another is the latters employee or is an independent contractor, 32 as in this case. For where the
person for whom the services are performed reserves the right to control not only the end to be
achieved, but also the means by which such end is reached, employer-employee relationship is
deemed to exist.33cralawred
In concluding that Alcantara is an employee of Royale Homes, the CA ratiocinated that since the
performance of his tasks is subject to company rules, regulations, code of ethics, and periodic
evaluation, the element of control is present.
The Court disagrees.
Not every form of control is indicative of employer-employee relationship. A person who performs work
for another and is subjected to its rules, regulations, and code of ethics does not necessarily become
an employee.34 As long as the level of control does not interfere with the means and methods of
accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party do not
amount to the labor law concept of control that is indicative of employer-employee relationship.
In Insular Life Assurance Co., Ltd. v. National Labor Relations Commission 35 it was pronounced
that:chanRoblesvirtualLawlibrary
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. x x x 36
In this case, the Court agrees with Royale Homes that the rules, regulations, code of ethics, and
periodic evaluation alluded to by Alcantara do not involve control over the means and methods by
which he was to perform his job. Understandably, Royale Homes has to fix the price, impose
requirements on prospective buyers, and lay down the terms and conditions of the sale, including the
mode of payment, which the independent contractors must follow. It is also necessary for Royale
Homes to allocate its inventories among its independent contractors, determine who has priority in
selling the same, grant commission or allowance based on predetermined criteria, and regularly
monitor the result of their marketing and sales efforts. But to the mind of this Court, these do not
pertain to the means and methods of how Alcantara was to perform and accomplish his task of
soliciting sales. They do not dictate upon him the details of how he would solicit sales or the manner
as to how he would transact business with prospective clients. In Tongko, this Court held that
guidelines or rules and regulations that do not pertain to the means or methods to be employed in
attaining the result are not indicative of control as understood in labor law.
Thus:chanRoblesvirtualLawlibrary
From jurisprudence, an important lesson that the first Insular Life case teaches us is that a
commitment to abide by the rules and regulations of an insurance company does not ipso facto make
the insurance agent an employee. Neither do guidelines somehow restrictive of the insurance agents
conduct necessarily indicate control as this term is defined in jurisprudence. Guidelines indicative
of labor law control, as thefirst Insular Life case tells us, should not merely relate to the
mutually desirable result intended by the contractual relationship; they must have the
nature of dictating the means or methods to be employed in attaining the result, or of
fixing the methodology and of binding or restricting the party hired to the use of these
means. In fact, results-wise, the principal can impose production quotas and can determine how
many agents, with specific territories, ought to be employed to achieve the companys objectives.
These are management policy decisions that the labor law element of control cannot reach. Our ruling
in these respects in the first Insular Life case was practically reiterated in Carungcong. Thus, as will be
shown more fully below, Manulifes codes of conduct, all of which do not intrude into the insurance
agents means and manner of conducting their sales and only control them as to the desired results
and Insurance Code norms, cannot be used as basis for a finding that the labor law concept of control
existed between Manulife and Tongko. 37 (Emphases in the original)

As the party claiming the existence of employer-employee relationship, it behoved upon Alcantara to
prove the elements thereof, particularly Royale Homes power of control over the means and methods
of accomplishing the work.38 He, however, failed to cite specific rules, regulations or codes of ethics
that supposedly imposed control on his means and methods of soliciting sales and dealing with
prospective clients. On the other hand, this case is replete with instances that negate the element of
control and the existence of employer-employee relationship. Notably, Alcantara was not required to
observe definite working hours.39 Except for soliciting sales, Royale Homes did not assign other tasks
to him. He had full control over the means and methods of accomplishing his tasks as he can solicit
sales at any time and by any manner which [he may] deem appropriate and necessary. He performed
his tasks on his own account free from the control and direction of Royale Homes in all matters
connected therewith, except as to the results thereof.40cralawred
Neither does the repeated hiring of Alcantara prove the existence of employer-employee
relationship.41 As discussed above, the absence of control over the means and methods disproves
employer-employee relationship. The continuous rehiring of Alcantara simply signifies the renewal of
his contract with Royale Homes, and highlights his satisfactory services warranting the renewal of such
contract. Nor does the exclusivity clause of contract establish the existence of the labor law concept
of control. In Consulta v. Court of Appeals,42 it was held that exclusivity of contract does not
necessarily result in employer-employee relationship, viz:chanRoblesvirtualLawlibrary
x x x However, the fact that the appointment required Consulta to solicit business exclusively for
Pamana did not mean that Pamana exercised control over the means and methods of Consultas work
as the term control is understood in labor jurisprudence. Neither did it make Consulta an employee of
Pamana. Pamana did not prohibit Consulta from engaging in any other business, or from being
connected with any other company, for as long as the business [of the] company did not compete with
Pamanas business.43
The same scenario obtains in this case. Alcantara was not prohibited from engaging in any other
business as long as he does not sell projects of Royale Homes competitors. He can engage in selling
various other products or engage in unrelated businesses.
Payment of Wages
The element of payment of wages is also absent in this case. As provided in the contract, Alcantaras
remunerations consist only of commission override of 0.5%, budget allocation, sales incentive and
other forms of company support. There is no proof that he received fixed monthly salary. No payslip or
payroll was ever presented and there is no proof that Royale Homes deducted from his supposed
salary withholding tax or that it registered him with the Social Security System, Philippine Health
Insurance Corporation, or Pag-Ibig Fund. In fact, his Complaint merely states a ballpark figure of his
alleged salary of P100,000.00, more or less. All of these indicate an independent contractual
relationship.44 Besides, if Alcantara indeed considered himself an employee of Royale Homes, then he,
an experienced and professional broker, would have complained that he was being denied statutorily
mandated benefits. But for nine consecutive years, he kept mum about it, signifying that he has
agreed, consented, and accepted the fact that he is not entitled to those employee benefits because
he is an independent contractor.
This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere
independent contractor. The NLRC is, therefore, correct in concluding that the Labor Arbiter has no
jurisdiction over the case and that the same is cognizable by the regular courts.
WHEREFORE, the instant Petition is hereby GRANTED. The June 23, 2010 Decision of the Court of
Appeals in CA-G.R. SP No. 109998 is REVERSED and SET ASIDE. The February 23, 2009 Decision of
the National Labor Relations Commission is REINSTATED and AFFIRMED.
SO ORDERED.

SECOND DIVISION
G.R. No. 195466, July 02, 2014
ARIEL L. DAVID, DOING BUSINESS UNDER THE NAME AND STYLE YIELS HOG DEALER,
PETITIONER, VS. JOHN G. MACASIO, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the November 22, 2010 decision2and the
January 31, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 116003. The CA decision
annulled and set aside the May 26, 2010 decision 4 of the National Labor Relations
Commission (NLRC)5 which, in turn, affirmed the April 30, 2009 decision 6 of the Labor Arbiter (LA). The LAs
decision dismissed respondent John G. Macasios monetary claims.
The Factual Antecedents
In January 2009, Macasio filed before the LA a complaint 7 against petitioner Ariel L. David, doing business
under the name and style Yiels Hog Dealer, for non-payment of overtime pay, holiday
pay and 13th month pay. He also claimed payment for moral and exemplary damages andattorneys
fees. Macasio also claimed payment for service incentive leave (SIL).8
Macasio alleged9 before the LA that he had been working as a butcher for David since January 6, 1995.
Macasio claimed that David exercised effective control and supervision over his work, pointing out that
David: (1) set the work day, reporting time and hogs to be chopped, as well as the manner by which he was
to perform his work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that
David owned the hogs delivered for chopping, as well as the work tools and implements; the latter also
rented the workplace. Macasio further claimed that David employs about twenty-five (25) butchers and
delivery drivers.
In his defense,10 David claimed that he started his hog dealer business in 2005 and that he only has ten
employees. He alleged that he hired Macasio as a butcher or chopper on pakyaw or task basis who is,
therefore, not entitled to overtime pay, holiday pay and 13 th month pay pursuant to the provisions of the
Implementing Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1) usually
starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier, depending on the volume
of the delivered hogs; (2) received the fixed amount of P700.00 per engagement, regardless of the actual
number of hours that he spent chopping the delivered hogs; and (3) was not engaged to report for work
and, accordingly, did not receive any fee when no hogs were delivered.
Macasio disputed Davids allegations.11 He argued that, first, David did not start his business only in 2005.
He pointed to the Certificate of Employment12 that David issued in his favor which placed the date of his
employment, albeit erroneously, in January 2000. Second, he reported for work every day which the payroll
or time record could have easily proved had David submitted them in evidence.
Refuting Macasios submissions,13 David claims that Macasio was not his employee as he hired the latter on
pakyaw or task basis. He also claimed that he issued the Certificate of Employment, upon Macasios
request, only for overseas employment purposes. He pointed to the Pinagsamang Sinumpaang
Salaysay,14 executed by Presbitero Solano and Christopher (Antonio Macasios co-butchers), to corroborate
his claims.
In the April 30, 2009 decision,15 the LA dismissed Macasios complaint for lack of merit. The LA gave
credence to Davids claim that he engaged Macasio on pakyaw or task basis. The LA noted the following
facts to support this finding: (1) Macasio received the fixed amount of P700.00 for every work done,
regardless of the number of hours that he spent in completing the task and of the volume or number of hogs
that he had to chop per engagement; (2) Macasio usually worked for only four hours, beginning from 10:00
p.m. up to 2:00 a.m. of the following day; and (3) the P700.00 fixed wage far exceeds the then prevailing
daily minimum wage of P382.00. The LA added that the nature of Davids business as hog dealer supports

this pakyaw or task basis arrangement.

The LA concluded that as Macasio was engaged on pakyaw or task basis, he is not entitled to overtime,
holiday, SIL and 13th month pay.
The NLRCs Ruling
In its May 26, 2010 decision,16 the NLRC affirmed the LA ruling.17 The NLRC observed that David did not
require Macasio to observe an eight-hour work schedule to earn the fixed P700.00 wage; and that Macasio
had been performing a non-time work, pointing out that Macasio was paid a fixed amount for the completion
of the assigned task, irrespective of the time consumed in its performance. Since Macasio was paid by result
and not in terms of the time that he spent in the workplace, Macasio is not covered by the Labor Standards
laws on overtime, SIL and holiday pay, and 13th month pay under the Rules and Regulations Implementing
the 13th month pay law.18
Macasio moved for reconsideration19 but the NLRC denied his motion in its August 11, 2010
resolution,20 prompting Macasio to elevate his case to the CA via a petition for certiorari.21
The CAs Ruling
In its November 22, 2010 decision,22 the CA partly granted Macasios certiorari petition and reversed the
NLRCs ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task basis employee, it nevertheless
found Macasio entitled to his monetary claims following the doctrine laid down inSerrano v. Severino Santos
Transit.23 The CA explained that as a task basis employee, Macasio is excluded from the coverage of holiday,
SIL and 13th month pay only if he is likewise a field personnel. As defined by the Labor Code, a field
personnel is one who performs the work away from the office or place of work and whose regular work
hours cannot be determined with reasonable certainty. In Macasios case, the elements that characterize a
field personnel are evidently lacking as he had been working as a butcher at Davids Yiels Hog Dealer
business in Sta. Mesa, Manila under Davids supervision and control, and for a fixed working schedule that
starts at 10:00 p.m.
Accordingly, the CA awarded Macasios claim for holiday, SIL and 13th month pay for three years, with 10%
attorneys fees on the total monetary award. The CA, however, denied Macasios claim for moral and
exemplary damages for lack of basis.
David filed the present petition after the CA denied his motion for reconsideration 24 in the CAs January 31,
2011 resolution.25
The Petition
In this petition,26 David maintains that Macasios engagement was on a pakyaw or task basis. Hence, the
latter is excluded from the coverage of holiday, SIL and 13 th month pay.
David reiterates his submissions before the lower tribunals27 and adds that he never had any control over
the manner by which Macasio performed his work and he simply looked on to the end-result. He also
contends that he never compelled Macasio to report for work and that under their arrangement, Macasio was
at liberty to choose whether to report for work or not as other butchers could carry out his tasks. He points
out that Solano and Antonio had, in fact, attested to their (David and Macasios) established pakyawan
arrangement that rendered a written contract unnecessary. In as much as Macasio is a task basis employee
who is paid the fixed amount of P700.00 per engagement regardless of the time consumed in the
performance David argues that Macasio is not entitled to the benefits he claims. Also, he posits that
because he engaged Macasio on pakyaw or task basis then no employer-employee relationship exists
between them.
Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain finality especially
when, as in this case, they are supported by substantial evidence. Hence, David posits that the CA erred in
reversing the labor tribunals findings and granting the prayed monetary claims.
The Case for the Respondent

Macasio counters that he was not a task basis employee or a field personnel as David would have this
Court believe.28 He reiterates his arguments before the lower tribunals and adds that, contrary to Davids
position, the P700.00 fee that he was paid for each day that he reported for work does not indicate a
pakyaw or task basis employment as this amount was paid daily, regardless of the number or pieces of
hogs that he had to chop. Rather, it indicates a daily-wage method of payment and affirms his regular
employment status. He points out that David did not allege or present any evidence as regards the quota or
number of hogs that he had to chop as basis for the pakyaw or task basis payment; neither did David
present the time record or payroll to prove that he worked for less than eight hours each day. Moreover,
David did not present any contract to prove that his employment was on task basis. As David failed to prove
the alleged task basis or pakyawan agreement, Macasio concludes that he was Davids employee.
Procedurally, Macasio points out that Davids submissions in the present petition raise purely factual issues
that are not proper for a petition for review on certiorari. These issues whether he (Macasio) was paid by
result or on pakyaw basis; whether he was a field personnel; whether an employer-employee
relationship existed between him and David; and whether David exercised control and supervision over his
work are all factual in nature and are, therefore, proscribed in a Rule 45 petition. He argues that the CAs
factual findings bind this Court, absent a showing that such findings are not supported by the evidence or
the CAs judgment was based on a misapprehension of facts. He adds that the issue of whether an
employer-employee relationship existed between him and David had already been settled by the LA 29 and
the NLRC30 (as well as by the CA per Macasios manifestation before this Court dated November 15,
2012),31 in his favor, in the separate illegal case that he filed against David.
The Issue
The issue revolves around the proper application and interpretation of the labor law provisions on holiday,
SIL and 13th month pay to a worker engaged on pakyaw or task basis. In the context of the Rule 65
petition before the CA, the issue is whether the CA correctly found the NLRC in grave abuse of discretion in
ruling that Macasio is entitled to these labor standards benefits.
The Courts Ruling
We partially grant the petition.
Preliminary considerations: the
Montoya ruling and the factualissue-bar rule
In this Rule 45 petition for review on certiorari of the CAs decision rendered under a Rule 65 proceeding,
this Courts power of review is limited to resolving matters pertaining to any perceived legal errors that the
CA may have committed in issuing the assailed decision. This is in contrast with the review for jurisdictional
errors, which we undertake in an original certiorari action. In reviewing the legal correctness of the CA
decision, we examine the CA decision based on how it determined the presence or absence of grave abuse
of discretion in the NLRC decision before it and not on the basis of whether the NLRC decision on the merits
of the case was correct.32 In other words, we have to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision challenged before it.33
Moreover, the Courts power in a Rule 45 petition limits us to a review of questions of law raised against the
assailed CA decision.34
In this petition, David essentially asks the question whether Macasio is entitled to holiday, SIL and
13th month pay. This one is a question of law. The determination of this question of law however is
intertwined with the largely factual issue of whether Macasio falls within the rule on entitlement to these
claims or within the exception. In either case, the resolution of this factual issue presupposes another
factual matter, that is, the presence of an employer-employee relationship between David and Macasio.
In insisting before this Court that Macasio was not his employee, David argues that he engaged the latter on
pakyaw or task basis. Very noticeably, David confuses engagement on pakyaw or task basis with the
lack of employment relationship. Impliedly, David asserts that their pakyawan or task basis arrangement
negates the existence of employment relationship.
At the outset, we reject this assertion of the petitioner. Engagement on pakyaw or task basis does not

characterize the relationship that may exist between the parties, i.e., whether one of employment or
independent contractorship. Article 97(6) of the Labor Code defines wages as xxx theremuneration or
earnings, however designated, capable of being expressed in terms of money,whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a written or unwritten contract of employment
for work done or to be done, or for services rendered or to be rendered[.] 35 In relation to Article 97(6),
Article 10136 of the Labor Code speaks of workers paid by results or those whose pay is calculated in terms
of the quantity or quality of their work output which includes pakyaw work and other non-time work.
More importantly, by implicitly arguing that his engagement of Macasio on pakyaw or task basis negates
employer-employee relationship, David would want the Court to engage on a factual appellate review of the
entire case to determine the presence or existence of that relationship. This approach however is not
authorized under a Rule 45 petition for review of the CA decision rendered under a Rule 65 proceeding.
First, the LA and the NLRC denied Macasios claim not because of the absence of an employer-employee but
because of its finding that since Macasio is paid on pakyaw or task basis, then he is not entitled to SIL,
holiday and 13th month pay. Second, we consider it crucial, that in the separate illegal dismissal case
Macasio filed with the LA, the LA, the NLRC and the CA uniformly found the existence of an employeremployee relationship.37
In other words, aside from being factual in nature, the existence of an employer-employee relationship is in
fact a non-issue in this case. To reiterate, in deciding a Rule 45 petition for review of a labor decision
rendered by the CA under 65, the narrow scope of inquiry is whether the CA correctly determined the
presence or absence of grave abuse of discretion on the part of the NLRC. In concrete question form, did
the NLRC gravely abuse its discretion in denying Macasios claims simply because he is paid on a non-time
basis?
At any rate, even if we indulge the petitioner, we find his claim that no employer-employee relationship
exists baseless. Employing the control test,38 we find that such a relationship exist in the present case.
Even a factual review shows that
Macasio is Davids employee
To determine the existence of an employer-employee relationship, four elements generally need to be
considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employees conduct. These elements or indicators
comprise the so-called four-fold test of employment relationship. Macasios relationship with David satisfies
this test.
First, David engaged the services of Macasio, thus satisfying the element of selection and engagement of
the employee. David categorically confirmed this fact when, in his Sinumpaang Salaysay, he stated that
nag apply po siya sa akin at kinuha ko siya na chopper[.]39 Also, Solano and Antonio stated in their
Pinagsamang Sinumpaang Salaysay40 that [k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel
David bilang butcher and kilala namin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama
namin siya sa aming trabaho.
Second, David paid Macasios wages. Both David and Macasio categorically stated in their respective
pleadings before the lower tribunals and even before this Court that the former had been paying the latter
P700.00 each day after the latter had finished the days task. Solano and Antonio also confirmed this fact of
wage payment in their Pinagsamang Sinumpaang Salaysay.41 This satisfies the element of payment of
wages.
Third, David had been setting the day and time when Macasio should report for work. This power to
determine the work schedule obviously implies power of control. By having the power to control Macasios
work schedule, David could regulate Macasios work and could even refuse to give him any assignment,
thereby effectively dismissing him.
And fourth, David had the right and power to control and supervise Macasios work as to the means and
methods of performing it. In addition to setting the day and time when Macasio should report for work, the
established facts show that David rents the place where Macasio had been performing his tasks. Moreover,
Macasio would leave the workplace only after he had finished chopping all of the hog meats given to him for
the days task. Also, David would still engage Macasios services and have him report for work even during

the days when only few hogs were delivered for butchering.
Under this overall setup, all those working for David, including Macasio, could naturally be expected to
observe certain rules and requirements and David would necessarily exercise some degree of control as the
chopping of the hog meats would be subject to his specifications. Also, since Macasio performed his tasks at
Davids workplace, David could easily exercise control and supervision over the former. Accordingly, whether
or not David actually exercised this right or power to control is beside the point as the law simply requires
the existence of this power to control 4243 or, as in this case, the existence of the right and opportunity to
control and supervise Macasio.44
In sum, the totality of the surrounding circumstances of the present case sufficiently points to an employeremployee relationship existing between David and Macasio.
Macasio is engaged on pakyaw or task basis
At this point, we note that all three tribunals the LA, the NLRC and the CA found that Macasio was
engaged or paid on pakyaw or task basis. This factual finding binds the Court under the rule that factual
findings of labor tribunals when supported by the established facts and in accord with the laws, especially
when affirmed by the CA, is binding on this Court.
A distinguishing characteristic of pakyaw or task basis engagement, as opposed to straight-hour wage
payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on the
task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of the
number of time spent in the completion of work. 45 Once the work or task is completed, the worker receives a
fixed amount as wage, without regard to the standard measurements of time generally used in pay
computation.
In Macasios case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter,
regardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to
him for chopping, Macasio would receive the fixed amount of P700.00 once he had completed his task.
Clearly, these circumstances show a pakyaw or task basis engagement that all three tribunals uniformly
found.
In sum, the existence of employment relationship between the parties is determined by applying the fourfold test; engagement on pakyaw or task basis does not determine the parties relationship as it is simply
a method of pay computation. Accordingly, Macasio is Davids employee, albeit engaged on pakyaw or
task basis.
As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether Macasio is
entitled to holiday, 13th month, and SIL pay.
On the issue of Macasios
entitlement to holiday, SIL
and 13th month pay
The LA dismissed Macasios claims pursuant to Article 94 of the Labor Code in relation to Section 1, Rule IV
of the IRR of the Labor Code, and Article 95 of the Labor Code, as well as Presidential Decree (PD) No. 851.
The NLRC, on the other hand, relied on Article 82 of the Labor Code and the Rules and Regulations
Implementing PD No. 851. Uniformly, these provisions exempt workers paid on pakyaw or task basis from
the coverage of holiday, SIL and 13th month pay.
In reversing the labor tribunals rulings, the CA similarly relied on these provisions, as well as on Section 1,
Rule V of the IRR of the Labor Code and the Courts ruling in Serrano v. Severino Santos Transit.46 These
labor law provisions, when read together with the Serrano ruling, exempt those engaged on pakyaw or
task basis only if they qualify as field personnel.
In other words, what we have before us is largely a question of law regarding the correct interpretation of
these labor code provisions and the implementing rules; although, to conclude that the worker is exempted
or covered depends on the facts and in this sense, is a question of fact: first, whether Macasio is a field
personnel; and second, whether those engaged on pakyaw or task basis, but who are not field
personnel, are exempted from the coverage of holiday, SIL and 13th month pay.

To put our discussion within the perspective of a Rule 45 petition for review of a CA decision rendered under
Rule 65 and framed in question form, the legal question is whether the CA correctly ruled that it was grave
abuse of discretion on the part of the NLRC to deny Macasios monetary claims simply because he is paid on
a non-time basis without determining whether he is a field personnel or not.
To resolve these issues, we need to re-visit the provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor Code
- provisions governing working conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations.
xxxx
Field personnel shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and SIL
pay (under Article 95 of the Labor Code). Under Article 82, field personnel on one hand and workers who
are paid by results on the other hand, are not covered by the Title I provisions. The wordings of Article 82
of the Labor Code additionally categorize workers paid by results and field personnel as separate and
distinct types of employees who are exempted from the Title I provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR 47reads:

chanroble svirtuallawlibrary

Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than (10) workers[.] [emphasis ours]
xxxx
SECTION 1. Coverage. This Rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis, or
those who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof. [emphases ours]
On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR 48pertinently
provides:
chanroblesvirtuallawlibrary

Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and those employed in establishments regularly
employing less than ten employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or financial condition of such
establishment. [emphases ours]
xxxx
Section 1. Coverage. This rule shall apply to all employees except:

xxxx
(e) Field personnel and other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis, or
those who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof. [emphasis ours]
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To be
excluded from their coverage, an employee must be one of those that these provisions expressly exempt,
strictly in accordance with the exemption.
Under the IRR, exemption from the coverage of holiday and SIL pay refer to field personnel andother
employees whose time and performance is unsupervised by the employer including those who are engaged
on task or contract basis[.] Note that unlike Article 82 of the Labor Code, the IRR on holiday and SIL
pay do not exclude employees engaged on task basis as a separate and distinct category from employees
classified as field personnel. Rather, these employees are altogether merged into one classification of
exempted employees.
Because of this difference, it may be argued that the Labor Code may be interpreted to mean that those
who are engaged on task basis, per se, are excluded from the SIL and holiday payment since this is what
the Labor Code provisions, in contrast with the IRR, strongly suggest. The arguable interpretation of this
rule may be conceded to be within the discretion granted to the LA and NLRC as the quasi-judicial bodies
with expertise on labor matters.
However, as early as 1987 in the case of Cebu Institute of Technology v. Ople49 the phrase those who are
engaged on task or contract basis in the rule has already been interpreted to mean as follows:
chanroblesvirtuallawlibrary

[the phrase] should however, be related with "field personnel" applying the rule onejusdem generis that
general and unlimited terms are restrained and limited by the particular terms that they follow xxx Clearly,
petitioner's teaching personnel cannot be deemed field personnel which refers "to non-agricultural
employees who regularly perform their duties away from the principal place of business or branch office of
the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.
[Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim that private respondents are not entitled
to the service incentive leave benefit cannot therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the
coverage of SIL and holiday pay. They are exempted from the coverage of Title I (including the holiday and
SIL pay) only if they qualify as field personnel. The IRR therefore validly qualifies and limits the general
exclusion of workers paid by results found in Article 82 from the coverage of holiday and SIL pay. This is
the only reasonable interpretation since the determination of excluded workers who are paid by results from
the coverage of Title I is determined by the Secretary of Labor in appropriate regulations.
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc., v.
Bautista:
chanroble svirtuallawlibrary

A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to
those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as field personnel. The phrase other
employees whose performance is unsupervised by the employer must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as those whose
actual hours of work in the field cannot be determined with reasonable certainty.
The same is true with respect to the phrase those who are engaged on task or contract basis, purely
commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support of
granting Macasios petition.
In Serrano, the Court, applying the rule on ejusdem generis50 declared that employees engaged on task

or contract basis xxx are not automatically exempted from the grant of service incentive
leave, unless, they fall under the classification of field personnel.51 The Court explained that the
phrase including those who are engaged on task or contract basis, purely commission basis found in
Section 1(d), Rule V of Book III of the IRR should not be understood as a separate classification of
employees to which SIL shall not be granted. Rather, as with its preceding phrase - other
employees whose performance is unsupervised by the employer - the phrase including those who are
engaged on task or contract basis serves to amplify the interpretation of the Labor Code definition of field
personnel as those whose actual hours of work in the field cannot be determined with reasonable
certainty.
In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the Labor
Code provisions and the IRR as exempting an employee from the coverage of Title I of the Labor Code based
simply and solely on the mode of payment of an employee. The NLRCs utter disregard of this
consistent jurisprudential ruling is a clear act of grave abuse of discretion.52 In other words, by
dismissing Macasios complaint without considering whether Macasio was a field personnel or not,
the NLRC proceeded based on a significantly incomplete consideration of the case. This action
clearly smacks of grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had only taken
counsel from Serrano and earlier cases, they would have correctly reached a similar conclusion regarding
the payment of holiday pay since the rule exempting field personnel from the grant of holiday pay is
identically worded with the rule exempting field personnel from the grant of SIL pay. To be clear, the
phrase employees engaged on task or contract basis found in the IRR on both SIL pay and holiday pay
should be read together with the exemption of field personnel.
In short, in determining whether workers engaged on pakyaw or task basis is entitled to holiday and SIL
pay, the presence (or absence) of employer supervision as regards the workers time and performance is the
key: if the worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to
a holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker engaged on pakyaw or task
basis also falls within the meaning of field personnel under the law, then he is not entitled to these
monetary benefits.
Macasio does not fall under the
classification of field personnel
Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not fall
under the definition of field personnel. The CAs finding in this regard is supported by the established facts
of this case: first, Macasio regularly performed his duties at Davids principal place of business; second, his
actual hours of work could be determined with reasonable certainty; and,third, David supervised his time
and performance of duties. Since Macasio cannot be considered a field personnel, then he is not exempted
from the grant of holiday, SIL pay even as he was engaged on pakyaw or task basis.
Not being a field personnel, we find the CA to be legally correct when it reversed the NLRCs ruling
dismissing Macasios complaint for holiday and SIL pay for having been rendered with grave abuse of
discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month pay however, we find that the CA legally erred in finding that the
NLRC gravely abused its discretion in denying this benefit to Macasio.
The governing law on 13th month pay is PD No. 851.53 As with holiday and SIL pay, 13th month pay benefits
generally cover all employees; an employee must be one of those expressly enumerated to be exempted.
Section 3 of the Rules and Regulations Implementing P.D. No. 851 54 enumerates the exemptions from the
coverage of 13th month pay benefits. Under Section 3(e), employers of those who are paid on xxx task
basis, and those who are paid a fixed amount for performing a specific work, irrespective of the
time consumed in the performance thereof55 are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations

Implementing PD No. 851 exempts employees paid on task basis without any reference to field
personnel. This could only mean that insofar as payment of the 13th month pay is concerned, the law did
not intend to qualify the exemption from its coverage with the requirement that the task worker be a field
personnel at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition insofar as the
payment of 13th month pay to respondent is concerned. In all other aspects, we AFFIRM the decision dated
November 22, 2010 and the resolution dated January 31, 2011 of the Court of Appeals in CA-G.R. SP No.
116003.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 198534

July 3, 2013

JENNY F. PECKSON, Petitioner,

vs.
ROBINSONS SUPERMARKET CORPORATION, JODY GADIA, ROENA SARTE, and RUBY
ALEX, Respondents.
DECISION
REYES, J.:
For resolution is the Petition for Review on Certiorari1 of the Decision2 dated June 8, 2011 of the
Court of Appeals (CA) in CA-G.R. SP No. 109604 affirming the Decision 3 dated February 25, 2009 of
the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-11-09316-06/NLRC
LAC No. 002020-07, which upheld the Dismissal4 by the Labor Arbiter (LA) on May 30, 2007 of
Jenny F. Peckson's (petitioner) complaint for constructive dismissal.
Antecedent Facts and Proceedings
The petitioner first joined the Robinsons Supermarket Corporation (RSC) as a Sales Clerk on
November 3, 1987. On October 26, 2006, she was holding the position of Category Buyer when
respondent Roena Sarte (Sarte), RSCs Assistant Vice-President for Merchandising, reassigned her
to the position of Provincial Coordinator, effective November 1, 2006. Claiming that her new
assignment was a demotion because it was non-supervisory and clerical in nature, the petitioner
refused to turn over her responsibilities to the new Category Buyer, or to accept her new
responsibilities as Provincial Coordinator. Jody Gadia (Gadia) and Ruby Alex (Alex) were impleaded
because they were corporate officers of the RSC.

In a memorandum to the petitioner dated November 13, 2006,6 the RSC, through Sarte, demanded
an explanation from her within 48 hours for her refusal to accept her new assignment despite written
and verbal demands. Sarte cited a company rule, Offenses Subject to Disciplinary Action No. 4.07,
which provided that "[d]isobedience, refusal or failure to do assigned task or to obey
superiors/officials orders/instructions, or to follow established procedures or practices without valid
reason" would be meted the penalty of suspension.
The petitioner ignored the 48-hour deadline to explain imposed by Sarte. On November 23, 2006,
Sarte issued her another memorandum,7 reiterating her demand to explain in writing within 48 hours
why she persistently refused to assume her new position, and warning her that this could be her final
chance to present her side or be deemed to have waived her right to be heard.
In her one-paragraph reply submitted on November 27, 2006, 8 the petitioner stated that she could
not accept the position of Provincial Coordinator since she saw it as a demotion. As it turned out,
however, on November 9, 2006, the petitioner had already filed a complaint for constructive
dismissal9 against RSC, Sarte, Gadia and Alex (respondents).
On November 30, 2006, Sarte issued an instruction to the petitioner to report to RSCs Metroeast
Depot to help prepare all shipping manifests for Cagayan de Oro and Bacolod, but as witnessed by
RSC employees Raquel Torrechua and Alex, she did not obey as instructed. 10 Again on December 8,
2006, Sarte issued a similar instruction, citing the need for certain tasks from the petitioner in
preparation for the coming Christmas holidays, but the petitioner again refused to heed. 11
As culled from the assailed appellate court decision,12 the petitioner argued before the LA that the
true organizational chart of the RSC showed that the position of Category Buyer was one level
above that of the Provincial Coordinator, and that moreover, the job description of a Provincial
Coordinator was largely clerical and did not require her to analyze stock levels and order points, or
source new local and international suppliers, or monitor stock level per store and recommend items
for replenishment, or negotiate better items and discounts from suppliers, duties which only a
Category Buyer could perform. She also claimed that she was instructed to file a courtesy
resignation in exchange for a separation pay of one-half salary per year of service.
The respondents in their position paper denied the correctness of the organizational chart presented
by the petitioner. They maintained that her transfer was not a demotion since the Provincial
Coordinator occupied a "Level 5" position like the Category Buyer, with the same work conditions,
salary and benefits. But while both positions had no significant disparity in the required skill,
experience and aptitude, the position of Category Buyer demanded the traits of punctuality, diligence
and attentiveness because it is a frontline position in the day-to-day business operations of RSC
which the petitioner, unfortunately, did not possess.
The respondents also raised the petitioners record of habitual tardiness as far back as 1999, as well
as poor performance rating in 2005. In addition to her performance rating of "2.8" out of "4.0" in 2005
equivalent to "below expectation," the petitioner was found to be tardy in June and July 2005, 13
times, and for the entire 2005, 57 times; that she was suspended twice in 2006 for 20 instances of
tardiness and absences from July to September 2006 alone. 13 We also note that the petitioner was

suspended for seven (7) days in September and October 2005 for deliberately violating a company
policy after she was seen having lunch with a company supplier.14
In her affidavit,15 respondent Sarte denied that the reassignment of the petitioner as Provincial
Coordinator was motivated by a desire to besmirch the name of the latter. She asserted that it was
made in the exercise of management prerogative and sound discretion, in view of the nsitive position
occupied by the Category Buyer in RSCs daily operations, vis--vis the petitioners "below
expectation" performance rating and habitual tardiness.
In dismissing the petitioners complaint, the LA in its Decision16 dated May 30, 2007 ruled that job
reassignment or classification is a strict prerogative of the employer, and that the petitioner cannot
refuse her transfer from Category Buyer to Provincial Coordinator since both positions commanded
the same salary structure, high degree of responsibility and impeccable honesty and integrity.
Upholding the employers right not to retain an employee in a particular position to prevent losses or
to promote profitability, the LA found no showing of any illegal motive on the part of the respondents
in reassigning the petitioner. The transfer was dictated by the need for punctuality, diligence and
attentiveness in the position of Category Buyer, which the petitioner clearly lacked. Moreover, the LA
ruled that her persistent refusal to accept her new position amounted to insubordination, entitling the
RSC to dismiss her from employment.
A month after the above ruling, or on June 22, 2007, the petitioner tendered her written "forced"
resignation,17wherein she complained that she was being subjected to ridicule by clients and coemployees alike on account of her floating status since the time she refused to accept her transfer.
She likewise claimed that she was being compelled to accept the position of Provincial Coordinator
without due process.
On appeal, the NLRC in its Decision18 dated February 25, 2009 sustained the findings of the LA. It
agreed that the lateral transfer of the petitioner from Category Buyer to Provincial Coordinator was
not a demotion amounting to constructive dismissal, since both positions belonged to Job Level 5
and between them there is no significant disparity in terms of the requirements of skill, experience
and aptitude. Contrary to the petitioners assertion, the NLRC found that the position of Provincial
Coordinator is not a rank-and-file position but in fact requires the exercise of discretion and
independent judgment, as well as appropriate recommendations to management to ensure the
faithful implementation of its policies and programs; that it even exercises influence over the
Category Buyer in that it includes performing a recommendatory function to guide the Category
Buyer in making decisions on the right assortment, price and quantity of the items, articles or
merchandise to be sold by the store.
The NLRC then reiterated the settled rule that management may transfer an employee from one
office to another within the business establishment, provided there is no demotion in rank or
diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination
or bad faith or effected as a form of punishment without sufficient cause. It ruled that the
respondents were able to show that the petitioners transfer was not unreasonable, inconvenient or
prejudicial, but was prompted by her failure to meet the demands of punctuality, diligence, and
personal attention of the position of Category Buyer; that management wanted to give the petitioner
a chance to improve her work ethic, but her obstinate refusal to assume her new position has

prejudiced respondent RSC, even while she continued to receive her salaries and benefits as
Provincial Coordinator.
On petition for certiorari to the CA, the petitioner insisted that her transfer from Category Buyer to
Provincial Coordinator was a form of demotion without due process, and that the respondents
unjustifiably depicted her as remiss in her duties, flawed in her character, and unduly obstinate in her
refusal to accept her new post.
In its Decision19 dated June 8, 2011, the CA found no basis to deviate from the oft-repeated tenet that
the findings of fact and conclusions of the NLRC when supported by substantial evidence are
generally accorded not only great weight and respect but even finality, and are thus deemed
binding.20
Petition for Review in the Supreme Court
Now on petition for review to this Court, the petitioner maintains that her lateral transfer from
Category Buyer to Provincial Coordinator was a demotion amounting to constructive dismissal
because her reassignment was not a valid exercise of management prerogative, but was done in
bad faith and without due process. She claims that the respondents manipulated the facts to show
that she was tardy; that they even surreptitiously drew up a new organizational chart of the
Merchandising Department of RSC, soon after she filed her complaint for illegal dismissal, to show
that the position of Provincial Coordinator belonged to Job Level 5 as the Category Buyer, and not
one level below; that the company deliberately embarrassed her when it cut off her email access;
that they sent memoranda to her clients that she was no longer a Category Buyer, and to the various
Robinsons branches that she was now a Provincial Coordinator, while Milo Padilla (Padilla) was
taking over her former position as Category Buyer; that for seven (7) months, they placed her on
floating status and subjected her to mockery and ridicule by the suppliers and her co-employees;
that not only was there no justification for her transfer, but the respondents clearly acted in bad faith
and with discrimination, insensibility and disdain to make her stay with the company intolerable for
her.
Our Ruling
We find no merit in the petition.
This Court has consistently refused to interfere with the exercise by management of its prerogative
to regulate the employees work assignments, the working methods and the place and manner of
work.
As we all know, there are various laws imposing all kinds of burdens and obligations upon the
employer in relation to his employees, and yet as a rule this Court has always upheld the employers
prerogative to regulate all aspects of employment relating to the employees work assignment, the
working methods and the place and manner of work. Indeed, labor laws discourage interference with
an employers judgment in the conduct of his business. 21

In Rural Bank of Cantilan, Inc. v. Julve,22 the Court had occasion to summarize the general
jurisprudential guidelines affecting the right of the employer to regulate employment, including the
transfer of its employees:
Under the doctrine of management prerogative, every employer has the inherent right to regulate,
according to his own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, the time, place and manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations
to the exercise of this prerogative are those imposed by labor laws and the principles of equity and
substantial justice.
While the law imposes many obligations upon the employer, nonetheless, it also protects the
employers right to expect from its employees not only good performance, adequate work, and
diligence, but also good conduct and loyalty. In fact, the Labor Code does not excuse employees
from complying with valid company policies and reasonable regulations for their governance and
guidance.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a
transfer is a movement from one position to another of equivalent rank, level or salary without break
in the service or a lateral movement from one position to another of equivalent rank or salary; (b) the
employer has the inherent right to transfer or reassign an employee for legitimate business
purposes; (c) a transfer becomes unlawful where it is motivated by discrimination or bad faith or is
effected as a form of punishment or is a demotion without sufficient cause; (d) the employer must be
able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee.23 (Citations omitted)
In Philippine Japan Active Carbon Corporation v. NLRC,24 it was held that the exercise of
managements prerogative concerning the employees work assignments is based on its assessment
of the qualifications, aptitudes and competence of its employees, and by moving them around in the
various areas of its business operations it can ascertain where they will function with maximum
benefit to the company.
1wphi1

It is the employers prerogative, based on its assessment and perception of its employees
qualifications, aptitudes, and competence, to move them around in the various areas of its business
operations in order to ascertain where they will function with maximum benefit to the company. An
employees right to security of tenure does not give him such a vested right in his position as would
deprive the company of its prerogative to change his assignment or transfer him where he will be
most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it
does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the
employee may not complain that it amounts to a constructive dismissal. 25
As a privilege inherent in the employers right to control and manage its enterprise effectively, its
freedom to conduct its business operations to achieve its purpose cannot be denied. 26 We agree with
the appellate court that the respondents are justified in moving the petitioner to another equivalent
position, which presumably would be less affected by her habitual tardiness or inconsistent

attendance than if she continued as a Category Buyer, a "frontline position" in the day-to-day
business operations of a supermarket such as Robinsons.
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him, and it does
not involve a demotion in rank or a diminution of his salaries, benefits and other privileges, the
employee may not complain that it amounts to a constructive dismissal.
As we have already noted, the respondents had the burden of proof that the transfer of the petitioner
was not tantamount to constructive dismissal, which as defined in Blue Dairy Corporation v.
NLRC,27 is a quitting because continued employment is rendered impossible, unreasonable or
unlikely, or an offer involving a demotion in rank and diminution of pay:
The managerial prerogative to transfer personnel must be exercised without grave abuse of
discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be
confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by
the employer to rid himself of an undesirable worker. In particular, the employer must be able to
show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the
employer fail to overcome this burden of proof, the employees transfer shall be tantamount to
constructive dismissal, which has been defined as a quitting because continued employment is
rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and
diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination,
insensibility or disdain by an employer has become so unbearable to the employee leaving him with
no option but to forego with his continued employment.
Thus, as further held in Philippine Japan Active Carbon Corporation, 28 when the transfer of an
employee is not unreasonable, or inconvenient, or prejudicial to him, and it does not involve a
demotion in rank or a diminution of his salaries, benefits and other privileges, the employee may not
complain that it amounts to a constructive dismissal. 29
But like all other rights, there are limits to the exercise of managerial prerogative to transfer
personnel, and on the employer is laid the burden to show that the same is without grave abuse of
discretion, bearing in mind the basic elements of justice and fair play.30 Indeed, management
prerogative may not be used as a subterfuge by the employer to rid himself of an undesirable
worker.31
Interestingly, although the petitioner claims that she was constructively dismissed, yet until the
unfavorable decision of the LA on May 30, 2007, for seven (7) months she continued to collect her
salary while also adamantly refusing to heed the order of Sarte to report to the Metroeast Depot. It
was only on June 22, 2007, after the LAs decision, that she filed her "forced" resignation. Her
deliberate and unjustified refusal to assume her new assignment is a form of neglect of duty, and
according to the LA, an act of insubordination. We saw how the company sought every chance to
hear her out on her grievances and how she ignored the memoranda of Sarte asking her to explain
her refusal to accept her transfer. All that the petitioner could say was that it was a demotion and that
her floating status embarrassed her before the suppliers and her co-employees.

The respondents have discharged the burden of proof that the transfer of the petitioner was not
tantamount to constructive dismissal.
In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC,32 a machinist who had been employed with
the petitioner company for 16 years was reduced to the service job of transporting filling materials
after he failed to report for work for one (1) day on account of an urgent family matter. This is one
instance where the employees demotion was rightly held to be an unlawful constructive dismissal
because the employer failed to show substantial proof that the employees demotion was for a valid
and just cause:
In case of a constructive dismissal, the employer has the burden of proving that the transfer and
demotion of an employee are for valid and legitimate grounds such as genuine business necessity.
Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able
to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.
Failure of the employer to overcome this burden of proof, the employees demotion shall no doubt be
tantamount to unlawful constructive dismissal. x x x. 33 (Citation omitted)
In the case at bar, we agree with the appellate court that there is substantial showing that the
transfer of the petitioner from Category Buyer to Provincial Coordinator was not unreasonable,
inconvenient, or prejudicial to her. The petitioner failed to dispute that the job classifications of
Category Buyer and Provincial Coordinator are similar, or that they command a similar salary
structure and responsibilities. We agree with the NLRC that the Provincial Coordinators position
does not involve mere clerical functions but requires the exercise of discretion from time to time, as
well as independent judgment, since the Provincial Coordinator gives appropriate recommendations
to management and ensures the faithful implementation of policies and programs of the company. It
even has influence over a Category Buyer because of its recommendatory function that enables the
Category Buyer to make right decisions on assortment, price and quantity of the items to be sold by
the store.34
We also cannot sustain the petitioners claim that she was not accorded due process and that the
respondents acted toward her with discrimination, insensibility, or disdain as to force her to forego
her continued employment. In addition to verbal reminders from Sarte, the petitioner was asked in
writing twice to explain within 48 hours her refusal to accept her transfer. In the first, she completely
remained silent, and in the second, she took four (4) days to file a mere one-paragraph reply,
wherein she simply said that she saw the Provincial Coordinator position as a demotion, hence she
could not accept it. Worse, she may even be said to have committed insubordination when she
refused to turn over her responsibilities to the new Category Buyer, Padilla, and to assume her new
responsibilities as Provincial Coordinator and report to the Metroeast Depot as directed. This was
precisely the reason why the petitioner was kept on floating status. To her discredit, her defiance
constituted a neglect of duty, or an act of insubordination, per the LA.
Neither can we consider tenable the petitioners contention that the respondents deliberately held
her up to mockery and ridicule when they cut off her email access, sent memoranda to her clients
that she was no longer a Category Buyer, and to the various Robinsons branches that she was now
a Provincial Coordinator on floating status and that Padilla was taking over her position as the new

Category Buyer. It suffices to state that these measures are the logical steps to take for the
petitioners unjustified resistance to her transfer, and were not intended to subject her to public
embarrassment.
Judicial review of labor cases does not go beyond the evaluation of the sufficiency of the evidence
upon which labor officials findings rest.
Finally, as reiterated in Acebedo Optical,35 this Court is not a trier of facts, and only errors of law are
generally reviewed in petitions for review on certiorari criticizing decisions of the CA. Questions of
fact are not entertained, and in labor cases, this doctrine applies with greater force.
Factual questions are for labor tribunals to resolve. 36 Thus:
Judicial Review or labor cases does not go beyond the evaluation of the sufficiency of the evidence
upon which its labor officials' findings rest. As such, the findings of facts and conclusion of the NLRC
are generally accorded not only great weight and respect but even clothed with finality and deemed
binding on this Court as long as they are supported by substantial evidence. This Court finds no
basis for deviating from said doctrine without any clear showing that the findings of the Labor Arbiter,
as affirmed by the NLRC, are bereft of substantiation. Particularly when passed upon and upheld by
the Court of Appeals, they are binding and conclusive upon the Supreme Court and will not normally
be disturbed.
xxxx
As earlier stated, we find no basis for deviating from the oft espoused legal tenet that findings of
facts and conclusion of the labor arbiter are generally accorded not only great weight and respect
but even clothed with finality and deemed binding on this Court as long as they are supported by
substantial evidence, without any clear showing that such findings of fact, as affirmed by the NLRC,
are bereft of substantiation. More so, when passed upon and upheld by the Com1 of Appeals, they
are binding and conclusive upon us and will not normally be disturbed; x x x. 37 (Citations omitted)
It is our ruling, that the findings of fact and conclusion of the LA, as affirmed by the NLRC, are
supported by substantial evidence, as found by the CA.
WHEREFORE, the premises considered, the Decision of the Court of Appeals dated June 8, 2011 in
CA-G.R. SP No. 109604 is AFFIRMED.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice
WE CONCUR: