[G.R. No. 192558. February 15, 2012.

]
BITOY JAVIER (DANILO P. JAVIER), petitioner, vs. FLY ACE
CORPORATION/FLORDELYN CASTILLO, respondents.

DECISION

MENDOZA, J :
p

This is a petition under Rule 45 of the Rules of Civil Procedure assailing the
March 18, 2010 Decision 1 of the Court of Appeals (CA) and its June 7, 2010
Resolution, 2 in CA-G.R. SP No. 109975, which reversed the May 28, 2009
Decision 3 of the National Labor Relations Commission (NLRC) in the case
entitled Bitoy Javier v. Fly Ace/Flordelyn Castillo, 4 holding that petitioner Bitoy
Javier (Javier) was illegally dismissed from employment and ordering Fly Ace
Corporation (Fly Ace) to pay backwages and separation pay in lieu of
reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of
salaries and other labor standard benefits. He alleged that he was an employee
of Fly Ace since September 2007, performing various tasks at the respondent's
warehouse such as cleaning and arranging the canned items before their delivery
to certain locations, except in instances when he would be ordered to accompany
the company's delivery vehicles, as pahinante; that he reported for work from
Monday to Saturday from 7:00 o'clock in the morning to 5:00 o'clock in the
afternoon; that during his employment, he was not issued an identification card
and payslips by the company; that on May 6, 2008, he reported for work but he
was no longer allowed to enter the company premises by the security guard upon
the instruction of Ruben Ong (Mr. Ong), his superior; 5 that after several minutes
of begging to the guard to allow him to enter, he saw Ong whom he approached
and asked why he was being barred from entering the premises; that Ong replied

by saying, "Tanungin mo anak mo;" 6 that he then went home and discussed the
matter with his family; that he discovered that Ong had been courting his
daughter Annalyn after the two met at a fiesta celebration in Malabon City; that
Annalyn tried to talk to Ong and convince him to spare her father from trouble but
he refused to accede; that thereafter, Javier was terminated from his employment
without notice; and that he was neither given the opportunity to refute the cause/s
of his dismissal from work.

IASCTD

To support his allegations, Javier presented an affidavit of one Bengie Valenzuela

who alleged that Javier was a stevedore or pahinante of Fly Ace from September
2007 to January 2008. The said affidavit was subscribed before the Labor
Arbiter (LA). 7
For its part, Fly Ace averred that it was engaged in the business of importation
and sales of groceries. Sometime in December 2007, Javier was contracted by
its employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed rate of
P300.00 per trip, which was later increased to P325.00 in January 2008. Mr. Ong
contracted Javier roughly 5 to 6 times only in a month whenever the vehicle of its
contracted hauler, Milmar Hauling Services, was not available. On April 30, 2008,
Fly Ace no longer needed the services of Javier. Denying that he was their
employee, Fly Ace insisted that there was no illegal dismissal. 8 Fly Ace
submitted a copy of its agreement with Milmar Hauling Services and copies of
acknowledgment receipts evidencing payment to Javier for his contracted
services bearing the words, "daily manpower(pakyaw/piece rate pay)" and the
latter's signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on the
ground that Javier failed to present proof that he was a regular employee of Fly
Ace. He wrote:
Complainant has no employee ID showing his employment with the
Respondent nor any document showing that he received the benefits
accorded to regular employees of the Respondents. His contention that

Respondent failed to give him said ID and payslips implies that indeed
he was not a regular employee of Fly Ace considering that complainant
was a helper and that Respondent company has contracted a regular
trucking for the delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in the
importation and sales of groceries. Since there is a regular hauler to
deliver its products, we give credence to Respondents' claim that
complainant was contracted on "pakiao" basis.
As to the claim for underpayment of salaries, the payroll presented by
the Respondents showing salaries of workers on "pakiao" basis has
evidentiary weight because although the signature of the complainant
appearing thereon are not uniform, they appeared to be his true
signature.
xxx xxx xxx
Hence, as complainant received the rightful salary as shown by the
above described payrolls, Respondents are not liable for salary
differentials. 9

AEDcIH

Ruling of the NLRC

On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the
argument of Javier and immediately concluded that he was not a regular
employee simply because he failed to present proof. It was of the view that
a pakyaw-basis arrangement did not preclude the existence of employeremployee relationship. "Payment by result . . . is a method of compensation and
does not define the essence of the relation. It is a mere method of computing
compensation, not a basis for determining the existence or absence of an
employer-employee relationship." 10 The NLRC further averred that it did not
follow that a worker was a job contractor and not an employee, just because the
work he was doing was not directly related to the employer's trade or business or
the work may be considered as "extra" helper as in this case; and that the
relationship of an employer and an employee was determined by law and the

same would prevail whatever the parties may call it. In this case, the NLRC held
that substantial evidence was sufficient basis for judgment on the existence of the
employer-employee relationship. Javier was a regular employee of Fly Ace
because there was reasonable connection between the particular activity
performed by the employee (as a 'pahinante') in relation to the usual business or
trade of the employer (importation, sales and delivery of groceries). He may not
be considered as an independent contractor because he could not exercise any
judgment in the delivery of company products. He was only engaged as a
"helper."
Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a
security of tenure. For failing to present proof of a valid cause for his termination,
Fly Ace was found to be liable for illegal dismissal of Javier who was likewise
entitled to backwages and separation pay in lieu of reinstatement. The NLRC
thus ordered:
WHEREFORE, premises considered, complainant's appeal is partially
GRANTED. The assailed Decision of the labor arbiter is VACATED and a
new

one

is

hereby

entered

holding

respondent

FLY

ACE

CORPORATION guilty of illegal dismissal and non-payment of 13th

month pay. Consequently, it is hereby ordered to pay complainant
DANILO "Bitoy" JAVIER the following:
1. Backwages - P45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33

TOTAL - P59,854.16
=========
All other claims are dismissed for lack of merit.
SO ORDERED. 11

Ruling of the Court of Appeals

On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a
former employee of Fly Ace and reinstated the dismissal of Javier's complaint as
ordered by the LA. The CA exercised its authority to make its own factual
determination anent the issue of the existence of an employer-employee
relationship between the parties. According to the CA:
xxx xxx xxx
In an illegal dismissal case the onus probandi rests on the employer to
prove that its dismissal was for a valid cause. However, before a case for
illegal dismissal can prosper, an employer-employee relationship must
first be established. . . . it is incumbent upon private respondent to prove
the employee-employer relationship by substantial evidence.
xxx xxx xxx
It is incumbent upon private respondent to prove, by substantial
evidence, that he is an employee of petitioners, but he failed to
discharge his burden. The non-issuance of a company-issued
identification card to private respondent supports petitioners' contention
that private respondent was not its employee.

12

The CA likewise added that Javier's failure to present salary vouchers, payslips,
or other pieces of evidence to bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly Ace. Further, it found that Javier's
work was not necessary and desirable to the business or trade of the company,
as it was only when there were scheduled deliveries, which a regular hauling
service could not deliver, that Fly Ace would contract the services of Javier as an
extra helper. Lastly, the CA declared that the facts alleged by Javier did not pass
the "control test." He contracted work outside the company premises; he was not
required to observe definite hours of work; he was not required to report daily;
and he was free to accept other work elsewhere as there was no exclusivity of his
contracted service to the company, the same being co-terminous with the trip

only. 13 Since no substantial evidence was presented to establish an employeremployee relationship, the case for illegal dismissal could not prosper.

IDEHCa

The petitioners moved for reconsideration, but to no avail.

Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER WAS NOT A REGULAR
EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER IS NOT ENTITLED TO HIS
MONETARY CLAIMS. 14

The petitioner contends that other than its bare allegations and self-serving
affidavits of the other employees, Fly Ace has nothing to substantiate its claim
that Javier was engaged on a pakyaw basis. Assuming that Javier was indeed
hired on a pakyaw basis, it does not preclude his regular employment with the
company. Even the acknowledgment receipts bearing his signature and the
confirming receipt of his salaries will not show the true nature of his employment
as they do not reflect the necessary details of the commissioned task. Besides,
Javier's tasks as pahinante are related, necessary and desirable to the line of
business by Fly Ace which is engaged in the importation and sale of grocery
items. "On days when there were no scheduled deliveries, he worked in
petitioners' warehouse, arranging and cleaning the stored cans for delivery to
clients." 15 More importantly, Javier was subject to the control and supervision of
the company, as he was made to report to the office from Monday to Saturday,
from 7:00 o'clock in the morning until 5:00 o'clock in the afternoon. The list of
deliverable goods, together with the corresponding clients and their respective
purchases and addresses, would necessarily have been prepared by Fly Ace.
Clearly, he was subjected to compliance with company rules and regulations as

regards working hours, delivery schedule and output, and his other duties in the
warehouse. 16

aCSEcA

The petitioner chiefly relied on Chavez v. NLRC, 17 where the Court ruled that
payment to a worker on a per trip basis is not significant because "this is merely a
method of computing compensation and not a basis for determining the existence
of employer-employee relationship." Javier likewise invokes the rule that, "in
controversies between a laborer and his master, . . . doubts reasonably arising
from the evidence should be resolved in the former's favour. The policy is
reflected is no less than the Constitution, Labor Code and Civil Code." 18
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally
dismissed by the latter's failure to observe substantive and procedural due
process. Since his dismissal was not based on any of the causes recognized by
law, and was implemented without notice, Javier is entitled to separation pay and
backwages.
In its Comment, 19 Fly Ace insists that there was no substantial evidence to prove
employer-employee relationship. Having a service contract with Milmar Hauling
Services for the purpose of transporting and delivering company products to
customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere
"per trip basis." Javier, who was actually a loiterer in the area, only accompanied
and assisted the company driver when Milmar could not deliver or when the
exigency of extra deliveries arises for roughly five to six times a month. Before
making a delivery, Fly Ace would turn over to the driver and Javier the delivery
vehicle with its loaded company products. With the vehicle and products in their
custody, the driver and Javier "would leave the company premises using their
own means, method, best judgment and discretion on how to deliver, time to
deliver, where and [when] to start, and manner of delivering the products." 20
Fly Ace dismisses Javier's claims of employment as baseless assertions. Aside
from his bare allegations, he presented nothing to substantiate his status as an
employee. "It is a basic rule of evidence that each party must prove his
affirmative allegation. If he claims a right granted by law, he must prove his claim

by competent evidence, relying on the strength of his own evidence and not upon
the weakness of his opponent." 21 Invoking the case of Lopez v. Bodega
City, 22 Fly Ace insists that in an illegal dismissal case, the burden of proof is
upon the complainant who claims to be an employee. It is essential that an
employer-employee relationship be proved by substantial evidence. Thus, it
cites:

DaEATc

In an illegal dismissal case, the onus probandi rests on the employer to

prove that its dismissal of an employee was for a valid cause. However,
before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established.

Fly Ace points out that Javier merely offers factual assertions that he was an
employee of Fly Ace, "which are unfortunately not supported by proof,
documentary or otherwise." 23 Javier simply assumed that he was an employee
of Fly Ace, absent any competent or relevant evidence to support it. "He
performed his contracted work outside the premises of the respondent; he was
not even required to report to work at regular hours; he was not made to register
his time in and time out every time he was contracted to work; he was not
subjected to any disciplinary sanction imposed to other employees for company
violations; he was not issued a company I.D.; he was not accorded the same
benefits given to other employees; he was not registered with the Social Security
System (SSS) as petitioner's employee; and, he was free to leave, accept and
engage in other means of livelihood as there is no exclusivity of his contracted
services with the petitioner, his services being co-terminus with the trip only. All
these lead to the conclusion that petitioner is not an employee of the
respondents." 24
Moreover, Fly Ace claims that it had "no right to control the result, means, manner
and methods by which Javier would perform his work or by which the same is to
be accomplished." 25 In other words, Javier and the company driver were given a
free hand as to how they would perform their contracted services and neither
were they subjected to definite hours or condition of work.

Fly Ace likewise claims that Javier's function as a pahinante was not directly
related or necessary to its principal business of importation and sales of
groceries. Even without Javier, the business could operate its usual course as it
did not involve the business of inland transportation. Lastly, the acknowledgment
receipts bearing Javier's signature and words "pakiao rate," referring to his
earned salaries on a per trip basis, have evidentiary weight that the LA correctly
considered in arriving at the conclusion that Javier was not an employee of the
company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javier's alleged illegal dismissal is anchored on
the existence of an employer-employee relationship between him and Fly Ace.
This is essentially a question of fact. Generally, the Court does not review errors
that raise factual questions. However, when there is conflict among the factual
findings of the antecedent deciding bodies like the LA, the NLRC and the CA, "it
is proper, in the exercise of Our equity jurisdiction, to review and re-evaluate the
factual issues and to look into the records of the case and re-examine the
questioned findings." 26 In dealing with factual issues in labor cases, "substantial
evidence that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion is sufficient." 27
As the records bear out, the LA and the CA found Javier's claim of employment
with Fly Ace as wanting and deficient. The Court is constrained to agree.
Although Section 10, Rule VII of the New Rules of Procedure of the
NLRC 28 allows a relaxation of the rules of procedure and evidence in labor
cases, this rule of liberality does not mean a complete dispensation of proof.
Labor officials are enjoined to use reasonable means to ascertain the facts
speedily and objectively with little regard to technicalities or formalities but
nowhere in the rules are they provided a license to completely discount evidence,
or the lack of it. The quantum of proof required, however, must still be satisfied.
Hence, "when confronted with conflicting versions on factual matters, it is for
them in the exercise of discretion to determine which party deserves credence on
the basis of evidence received, subject only to the requirement that their decision

must be supported by substantial evidence." 29 Accordingly, the petitioner needs

to show by substantial evidence that he was indeed an employee of the company
against which he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as
different as chalk and cheese. It is, therefore, incumbent upon the Court to
determine whether the party on whom the burden to prove lies was able to hurdle
the same. "No particular form of evidence is required to prove the existence of
such employer-employee relationship. Any competent and relevant evidence to
prove the relationship may be admitted. Hence, while no particular form of
evidence is required, a finding that such relationship exists must still rest on some
substantial evidence. Moreover, the substantiality of the evidence depends on its
quantitative as well as itsqualitative aspects." 30 Although substantial evidence is
not a function of quantity but rather of quality, the . . . circumstances of the instant
case demand that something more should have been proffered. Had there been
other proofs of employment, such as . . . inclusion in petitioner's payroll, or a
clear exercise of control, the Court would have affirmed the finding of employeremployee relationship." 31

EaTCSA

In sum, the rule of thumb remains: the onus probandi falls on petitioner to
establish

or

substantiate

such

claim

by

the

requisite

quantum

of

evidence. 32 "Whoever claims entitlement to the benefits provided by law should

establish his or her right thereto . . . ."

33

Sadly, Javier failed to adduce substantial

evidence as basis for the grant of relief.

In this case, the LA and the CA both concluded that Javier failed to establish his
employment with Fly Ace. By way of evidence on this point, all that Javier
presented were his self-serving statements purportedly showing his activities as
an employee of Fly Ace. Clearly, Javier failed to pass the substantiality
requirement to support his claim. Hence, the Court sees no reason to depart from
the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly
Ace, he was made to work in the company premises during weekdays arranging

and cleaning grocery items for delivery to clients, no other proof was submitted to
fortify his claim. The lone affidavit executed by one Bengie Valenzuela was
unsuccessful in strengthening Javier's cause. In said document, all Valenzuela
attested to was that he would frequently see Javier at the workplace where the
latter was also hired as stevedore.

34

Certainly, in gauging the evidence

presented by Javier, the Court cannot ignore the inescapable conclusion that his
mere presence at the workplace falls short in proving employment therein. The
supporting affidavit could have, to an extent, bolstered Javier's claim of being
tasked to clean grocery items when there were no scheduled delivery trips, but
no information was offered in this subject simply because the witness had no
personal knowledge of Javier's employment status in the company. Verily, the
Court cannot accept Javier's statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies the burden to pass the
well-settled tests to determine the existence of an employer-employee
relationship, viz.: (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
employee's conduct. Of these elements, the most important criterion is whether
the employer controls or has reserved the right to control the employee not only
as to the result of the work but also as to the means and methods by which the
result is to be accomplished. 35
In this case, Javier was not able to persuade the Court that the above elements
exist in his case. He could not submit competent proof that Fly Ace engaged his
services as a regular employee; that Fly Ace paid his wages as an employee, or
that Fly Ace could dictate what his conduct should be while at work. In other
words, Javier's allegations did not establish that his relationship with Fly Ace had
the attributes of an employer-employee relationship on the basis of the abovementioned four-fold test. Worse, Javier was not able to refute Fly Ace's assertion
that it had an agreement with a hauling company to undertake the delivery of its
goods. It was also baffling to realize that Javier did not dispute Fly Ace's denial of
his services' exclusivity to the company. In short, all that Javier laid down were
bare allegations without corroborative proof.

IECAaD

Fly Ace does not dispute having contracted Javier and paid him on a "per trip"
rate as a stevedore, albeit on a pakyaw basis. The Court cannot fail to note that
Fly Ace presented documentary proof that Javier was indeed paid on
a pakyaw basis per the acknowledgment receipts admitted as competent
evidence by the LA. Unfortunately for Javier, his mere denial of the signatures
affixed therein cannot automatically sway us to ignore the documents because
"forgery cannot be presumed and must be proved by clear, positive and
convincing evidence and the burden of proof lies on the party alleging forgery." 36
Considering the above findings, the Court does not see the necessity to resolve
the second issue presented.
One final note. The Court's decision does not contradict the settled rule that
"payment by the piece is just a method of compensation and does not define the
essence of the relation." 37 Payment on a piece-rate basis does not negate
regular employment. "The term 'wage' is broadly defined in Article 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission basis.
Payment by the piece is just a method of compensation and does not define the
essence of the relations. Nor does the fact that the petitioner is not covered by
the SSS affect the employer-employee relationship. However, in determining
whether the relationship is that of employer and employee or one of an
independent contractor, each case must be determined on its own facts and all
the features of the relationship are to be considered."

38

Unfortunately for Javier,

the attendant facts and circumstances of the instant case do not provide the
Court with sufficient reason to uphold his claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor dispute
will be automatically decided in favor of labor. Management also has its rights
which are entitled to respect and enforcement in the interest of simple fair play.
Out of its concern for the less privileged in life, the Court has inclined, more often
than not, toward the worker and upheld his cause in his conflicts with the
employer. Such favoritism, however, has not blinded the Court to the rule that

justice is in every case for the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine. 39
WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the
Court of Appeals and its June 7, 2010 Resolution, in CA-G.R. SP No. 109975,
are herebyAFFIRMED.

aEIADT

SO ORDERED.
Carpio, * Peralta,** Abad and Perez, *** JJ., concur.
|||

(Javier v. Fly Ace Corp., G.R. No. 192558, [February 15, 2012], 682 PHIL 359-

376)

[G.R. No. 173648. January 16, 2012.]

ABDULJUAHID R. PIGCAULAN *, petitioner, vs. SECURITY and
CREDIT

INVESTIGATION,

INC.

and/or

RENE

AMBY

REYES, respondents.

DECISION

DEL CASTILLO, J :
p

It is not for an employee to prove non-payment of benefits to which he is entitled

by law. Rather, it is on the employer that the burden of proving payment of these
claims rests.
This Petition for Review on Certiorari 1 assails the February 24, 2006
Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 85515, which granted
the petition forcertiorari filed therewith, set aside the March 23, 2004 3 and June
14, 2004 4 Resolutions of the National Labor Relations Commission (NLRC), and

dismissed the complaint filed by Oliver R. Canoy (Canoy) and petitioner

Abduljuahid R. Pigcaulan (Pigcaulan) against respondent Security and Credit
Investigation, Inc. (SCII) and its General Manager, respondent Rene Amby
Reyes. Likewise assailed is the June 28, 2006 Resolution 5 denying Canoy's
and Pigcaulan's Motion for Reconsideration. 6
Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were
assigned

to

SCII's

and Pigcaulan filed

different

with

the

clients.
Labor

Subsequently,
Arbiter

separate

however,

Canoy

complaints 7 for

underpayment of salaries and non-payment of overtime, holiday, rest day, service

incentive leave and 13th month pays. These complaints were later on
consolidated as they involved the same causes of action.
Canoy and Pigcaulan, in support of their claim, submitted their respective daily
time records reflecting the number of hours served and their wages for the same.
They likewise presented itemized lists of their claims for the corresponding
periods served.

CTDHSE

Respondents, however, maintained that Canoy and Pigcaulan were paid their just
salaries and other benefits under the law; that the salaries they received were
above the statutory minimum wage and the rates provided by the Philippine
Association of Detective and Protective Agency Operators (PADPAO) for security
guards; that their holiday pay were already included in the computation of their
monthly salaries; that they were paid additional premium of 30% in addition to
their basic salary whenever they were required to work on Sundays and 200% of
their salary for work done on holidays; and, that Canoy and Pigcaulan were paid
the corresponding 13th month pay for the years 1998 and 1999. In support
thereof, copies of payroll listings 8 and lists of employees who received their 13th
month pay for the periods December 1997 to November 1998 and December
1998 to November 1999 9 were presented. In addition, respondents contended
that Canoy's and Pigcaulan's monetary claims should only be limited to the past
three years of employment pursuant to the rule on prescription of claims.

Ruling of the Labor Arbiter

Giving credence to the itemized computations and representative daily time
records submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion
awarded them their monetary claims in his Decision

10

dated June 6, 2002. The

Labor Arbiter held that the payroll listings presented by the respondents did not
prove that Canoy and Pigcaulan were duly paid as same were not signed by the
latter or by any SCII officer. The 13th month payroll was, however, acknowledged
as sufficient proof of payment, for it bears Canoy's and Pigcaulan's signatures.
Thus, without indicating any detailed computation of the judgment award, the
Labor Arbiter ordered the payment of overtime pay, holiday pay, service incentive
leave pay and proportionate 13th month pay for the year 2000 in favor of Canoy
and Pigcaulan, viz.:
WHEREFORE, the respondents are hereby ordered to pay the
complainants: 1) their salary differentials in the amount of P166,849.60
for Oliver Canoy and P121,765.44 for Abduljuahid Pigcaulan; 2) the sum
of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service
incentive leave pay and; [3]) the sum of P1,481.85 for Canoy and
P1,065.35 for Pigcaulan as proportionate 13th month pay for the year
2000. The rest of the claims are dismissed for lack of sufficient basis to
make an award.
SO ORDERED. 11

Ruling of the National Labor Relations Commission

Respondents appealed to the NLRC. They alleged that there was no basis for the
awards made because aside from the self-serving itemized computations, no
representative daily time record was presented by Canoy and Pigcaulan. On the
contrary, respondents asserted that the payroll listings they submitted should
have been given more probative value. To strengthen their cause, they attached
to their Memorandum on Appeal payrolls

12

bearing the individual signatures of

Canoy andPigcaulan to show that the latter have received their salaries, as well

as copies of transmittal letters 13 to the bank to show that the salaries reflected in
the payrolls were directly deposited to the ATM accounts of SCII's employees.
The NLRC, however, in a Resolution 14 dated March 23, 2004, dismissed the
appeal and held that the evidence show underpayment of salaries as well as
non-payment of service incentive leave benefit. Accordingly, the Labor Arbiter's
Decision was sustained. The motion for reconsideration thereto was likewise
dismissed by the NLRC in a Resolution 15 dated June 14, 2004.
Ruling of the Court of Appeals
In respondents' petition for certiorari with prayer for the issuance of a temporary
restraining order and preliminary injunction

16

before the CA, they attributed grave

abuse of discretion on the part of the NLRC in finding that Canoy

and Pigcaulan are entitled to salary differentials, service incentive leave pay and
proportionate 13th month pay and in arriving at amounts without providing
sufficient bases therefor.
The CA, in its Decision 17 dated February 24, 2006, set aside the rulings of both
the Labor Arbiter and the NLRC after noting that there were no factual and legal
bases mentioned in the questioned rulings to support the conclusions made.
Consequently, it dismissed all the monetary claims of Canoy and Pigcaulan on
the following rationale:

ISHCcT

First. The Labor Arbiter disregarded the NLRC rule that, in cases
involving money awards and at all events, as far as practicable, the
decision shall embody the detailed and full amount awarded.
Second. The Labor Arbiter found that the payrolls submitted by SCII
have no probative value for being unsigned by Canoy, when, in fact, said
payrolls, particularly the payrolls from 1998 to 1999 indicate the
individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the substance of the
evidence adduced by Pigcaulan and Canoy as well as the laws or

jurisprudence that would show that the two are indeed entitled to the
salary differential and incentive leave pays.
Fourth. The Labor Arbiter held Reyes liable together with SCII for the
payment of the claimed salaries and benefits despite the absence of
proof that Reyes deliberately or maliciously designed to evade SCII's
alleged financial obligation; hence the Labor Arbiter ignored that SCII
has a corporate personality separate and distinct from Reyes. To justify
solidary liability, there must be an allegation and showing that the officers
of the corporation deliberately or maliciously designed to evade the
financial obligation of the corporation.

18

Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by
the CA in a Resolution 19 dated June 28, 2006.
Hence, the present Petition for Review on Certiorari.
Issues
The petition ascribes upon the CA the following errors:
I.The Honorable Court of Appeals erred when it dismissed the complaint
on mere alleged failure of the Labor Arbiter and the NLRC to observe the
prescribed form of decision, instead of remanding the case for
reformation of the decision to include the desired detailed computation.
II.The Honorable Court of Appeals erred when it [made] complainants
suffer the consequences of the alleged non-observance by the Labor
Arbiter and NLRC of the prescribed forms of decisions considering that
they have complied with all needful acts required to support their claims.
III.The Honorable Court of Appeals erred when it dismissed the
complaint allegedly due to absence of legal and factual [bases] despite
attendance of substantial evidence in the records.

20

It is well to note that while the caption of the petition reflects both the names of
Canoy and Pigcaulan as petitioners, it appears from its body that it is being filed

solely by Pigcaulan. In fact, the Verification and Certification of Non-Forum

Shopping was executed by Pigcaulan alone.
In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not
strictly bound by the rules. And even so, the rules do not mandate that a detailed
computation of how the amount awarded was arrived at should be embodied in
the decision. Instead, a statement of the nature or a description of the amount
awarded and the specific figure of the same will suffice. Besides, his and Canoy's
claims were supported by substantial evidence in the form of the handwritten
detailed computations which the Labor Arbiter termed as "representative daily
time records," showing that they were not properly compensated for work
rendered. Thus, the CA should have remanded the case instead of outrightly
dismissing it.
In their Comment, 21 respondents point out that since it was only Pigcaulan who
filed the petition, the CA Decision has already become final and binding upon
Canoy. As to Pigcaulan's arguments, respondents submit that they were able to
present sufficient evidence to prove payment of just salaries and benefits, which
bits of evidence were unfortunately ignored by the Labor Arbiter and the NLRC.
Fittingly, the CA reconsidered these pieces of evidence and properly appreciated
them. Hence, it was correct in dismissing the claims for failure of Canoy
and Pigcaulan to discharge their burden to disprove payment.
Pigcaulan, this time joined by Canoy, asserts in his Reply

22

cEaCTS

that his filing of the

present petition redounds likewise to Canoy's benefit since their complaints were
consolidated below. As such, they maintain that any kind of disposition made in
favor or against either of them would inevitably apply to the other. Hence, the
institution of the petition solely by Pigcaulan does not render the assailed
Decision final as to Canoy. Nonetheless, in said reply they appended Canoy's
affidavit 23where he verified under oath the contents and allegations of the
petition filed by Pigcaulan and also attested to the authenticity of its annexes.
Canoy, however, failed to certify that he had not filed any action or claim in
another court or tribunal involving the same issues. He likewise explains in said
affidavit that his absence during the preparation and filing of the petition was

caused by severe financial distress and his failure to inform anyone of his
whereabouts.
Our Ruling
The

assailed

CA

Decision

is

considered

final as to Canoy.
We have examined the petition and find that same was filed by Pigcaulan solely
on his own behalf. This is very clear from the petition's prefatory which is phrased
as follows:
COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto
this Honorable Court . . . . (Emphasis supplied.)

Also, under the heading "Parties", only Pigcaulan is mentioned as petitioner and
consistent with this, the body of the petition refers only to a "petitioner" and never
in its plural form "petitioners". Aside from the fact that the Verification and
Certification of Non-Forum Shopping attached to the petition was executed
by Pigcaulan alone, it was plainly and particularly indicated under the name of
the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is
the "Counsel for Petitioner AlbuljuahidPigcaulan" only. In view of these, there is
therefore, no doubt, that the petition was brought only on behalf of Pigcaulan.
Since no appeal from the CA Decision was brought by Canoy, same has already
become final and executory as to him.

caHCSD

Canoy cannot now simply incorporate in his affidavit a verification of the contents
and allegations of the petition as he is not one of the petitioners therein. Suffice it
to state that it would have been different had the said petition been filed in behalf
of both Canoy and Pigcaulan. In such a case, subsequent submission of a
verification may be allowed as non-compliance therewith or a defect therein does
not necessarily render the pleading, or the petition as in this case, fatally
defective. 24 "The court may order its submission or correction, or act on the
pleading if the attending circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of justice may be served
thereby. Further, a verification is deemed substantially complied with when one

who has ample knowledge to swear to the truth of the allegations in the complaint
or petition signs the verification, and when matters alleged in the petition have
been made in good faith or are true and correct."

25

However, even if it were so,

we note that Canoy still failed to submit or at least incorporate in his affidavit a
certificate of non-forum shopping.
The filing of a certificate of non-forum shopping is mandatory so much so that
non-compliance could only be tolerated by special circumstances and compelling
reasons. 26 This Court has held that when there are several petitioners, all of
them must execute and sign the certification against forum shopping; otherwise,
those who did not sign will be dropped as parties to the case.

27

True, we held

that in some cases, execution by only one of the petitioners on behalf of the other
petitioners constitutes substantial compliance with the rule on the filing of a
certificate of non-forum shopping on the ground of common interest or common
cause of action or defense.

28

We, however, find that common interest is not

present in the instant petition. To recall, Canoy's and Pigcaulan's complaints were
consolidated because they both sought the same reliefs against the same
respondents. This does not, however, mean that they share a common interest or
defense. The evidence required to substantiate their claims may not be the same.
A particular evidence which could sustain Canoy's action may not effectively
serve as sufficient to support Pigcaulan's claim.
Besides, assuming that the petition is also filed on his behalf, Canoy failed to
show any reasonable cause for his failure to join Pigcaulan to personally sign the
Certification of Non-Forum Shopping. It is his duty, as a litigant, to be prudent in
pursuing his claims against SCII, especially so, if he was indeed suffering from
financial distress. However, Canoy failed to advance any justifiable reason why
he did not inform anyone of his whereabouts when he knows that he has a
pending case against his former employer. Sadly, his lack of prudence and
diligence cannot merit the court's consideration or sympathy. It must be
emphasized at this point that procedural rules should not be ignored simply
because their non-observance may result in prejudice to a party's substantial

rights. The Rules of Court should be followed except only for the most persuasive
of reasons. 29
Having declared the present petition as solely filed by Pigcaulan, this Court shall
consider the subsequent pleadings, although apparently filed under his and
Canoy's name, as solely filed by the former.
There

was

no

cTAaDC

substantial

evidence

to

support the grant of overtime pay.

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service
incentive leave pay and 13th month pay for the year 2000 in favor of Canoy
andPigcaulan. The Labor Arbiter relied heavily on the itemized computations they
submitted which he considered as representative daily time records to
substantiate the award of salary differentials. The NLRC then sustained the
award on the ground that there was substantial evidence of underpayment of
salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this regard. The
handwritten itemized computations are self-serving, unreliable and unsubstantial
evidence to sustain the grant of salary differentials, particularly overtime pay.
Unsigned and unauthenticated as they are, there is no way of verifying the truth
of the handwritten entries stated therein. Written only in pieces of paper and
solely prepared by Canoy and Pigcaulan, these representative daily time records,
as termed by the Labor Arbiter, can hardly be considered as competent evidence
to be used as basis to prove that the two were underpaid of their salaries. We find
nothing in the records which could substantially support Pigcaulan's contention
that he had rendered service beyond eight hours to entitle him to overtime pay
and during Sundays to entitle him to restday pay. Hence, in the absence of any
concrete proof that additional service beyond the normal working hours and days
had indeed been rendered, we cannot affirm the grant of overtime pay
to Pigcaulan.

DHTECc

Pigcaulan is
service

entitled
incentive

to
leave

holiday
pay

pay,
and

proportionate

13th

month

pay

for

year

2000.
However, with respect to the award for holiday pay, service incentive leave pay
and 13th month pay, we affirm and rule that Pigcaulan is entitled to these
benefits.
Article 94 of the Labor Code provides that:
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 ten (10) workers;
xxx xxx xxx

While Article 95 of the Labor Code provides:

ART. 95.RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every
employee who has rendered at least one year of service shall be entitled
to a yearly service incentive of five days with pay.
xxx xxx xxx

Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if
he does not work. 30 Likewise, express provision of the law entitles him to service
incentive leave benefit for he rendered service for more than a year already.
Furthermore, under Presidential Decree No. 851, 31 he should be paid his 13th
month pay. As employer, SCII has the burden of proving that it has paid these
benefits to its employees. 32
SCII presented payroll listings and transmittal letters to the bank to show that
Canoy and Pigcaulan received their salaries as well as benefits which it claimed
are already integrated in the employees' monthly salaries. However, the
documents presented do not prove SCII's allegation. SCII failed to show any
other concrete proof by means of records, pertinent files or similar documents
reflecting that the specific claims have been paid. With respect to 13th month pay,
SCII presented proof that this benefit was paid but only for the years 1998 and
1999. To repeat, the burden of proving payment of these monetary claims rests

on SCII, being the employer. It is a rule that one who pleads payment has the
burden of proving it. "Even when the plaintiff alleges non-payment, still the
general rule is that the burden rests on the defendant to prove payment, rather
than on the plaintiff to prove non-payment." 33 Since SCII failed to provide
convincing proof that it has already settled the claims, Pigcaulanshould be paid
his holiday pay, service incentive leave benefits and proportionate 13th month
pay for the year 2000.
The
instead
Labor

CA

erred
of

Arbiter

in

dismissing

remanding
for

the
a

case
detailed

the

claims
to

the

computation

of the judgment award.

Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary
awards granted. Such failure, however, should not result in prejudice to the
substantial rights of the party. While we disallow the grant of overtime pay and
restday pay in favor of Pigcaulan, he is nevertheless entitled, as a matter of right,
to his holiday pay, service incentive leave pay and 13th month pay for year 2000.
Hence, the CA is not correct in dismissing Pigcaulan's claims in its entirety.

CITDES

Consistent with the rule that all money claims arising from an employer-employee
relationship shall be filed within three years from the time the cause of action
accrued, 34 Pigcaulan can only demand the amounts due him for the period
within three years preceding the filing of the complaint in 2000. Furthermore,
since the records are insufficient to use as bases to properly compute Pigcaulan's
claims, the case should be remanded to the Labor Arbiter for a detailed
computation of the monetary benefits due to him.
WHEREFORE, the petition is GRANTED. The Decision dated February 24, 2006
and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R. SP No.
85515 areREVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is
hereby declared ENTITLED to holiday pay and service incentive leave pay for the
years 1997-2000 and proportionate 13th month pay for the year 2000.

The case is REMANDEDto the Labor Arbiter for further proceedings to determine
the exact amount and to make a detailed computation of the monetary benefits
due Abduljuahid R. Pigcaulan which Security and Credit Investigation, Inc. should
pay without delay.
SO ORDERED.
Corona, C.J., Leonardo-de Castro, Abad and Villarama, Jr., JJ., concur.
Footnotes
(Pigcaulan v. Security and Credit Investigation, Inc., G.R. No. 173648, [January
|||

16, 2012], 679 PHIL 1-18)

[G.R. No. 173648. January 16, 2012.]

ABDULJUAHID R. PIGCAULAN *, petitioner, vs. SECURITY and
CREDIT

INVESTIGATION,

INC.

and/or

RENE

AMBY

REYES, respondents.

DECISION

DEL CASTILLO, J :
p

It is not for an employee to prove non-payment of benefits to which he is entitled

by law. Rather, it is on the employer that the burden of proving payment of these
claims rests.
This Petition for Review on Certiorari 1 assails the February 24, 2006
Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 85515, which granted
the petition forcertiorari filed therewith, set aside the March 23, 2004 3 and June
14, 2004 4 Resolutions of the National Labor Relations Commission (NLRC), and
dismissed the complaint filed by Oliver R. Canoy (Canoy) and petitioner

Abduljuahid R. Pigcaulan (Pigcaulan) against respondent Security and Credit

Investigation, Inc. (SCII) and its General Manager, respondent Rene Amby
Reyes. Likewise assailed is the June 28, 2006 Resolution 5 denying Canoy's
and Pigcaulan's Motion for Reconsideration. 6
Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were
assigned

to

SCII's

and Pigcaulan filed

different

with

the

clients.
Labor

Subsequently,
Arbiter

separate

however,

Canoy

complaints 7 for

underpayment of salaries and non-payment of overtime, holiday, rest day, service

incentive leave and 13th month pays. These complaints were later on
consolidated as they involved the same causes of action.
Canoy and Pigcaulan, in support of their claim, submitted their respective daily
time records reflecting the number of hours served and their wages for the same.
They likewise presented itemized lists of their claims for the corresponding
periods served.

CTDHSE

Respondents, however, maintained that Canoy and Pigcaulan were paid their just
salaries and other benefits under the law; that the salaries they received were
above the statutory minimum wage and the rates provided by the Philippine
Association of Detective and Protective Agency Operators (PADPAO) for security
guards; that their holiday pay were already included in the computation of their
monthly salaries; that they were paid additional premium of 30% in addition to
their basic salary whenever they were required to work on Sundays and 200% of
their salary for work done on holidays; and, that Canoy and Pigcaulan were paid
the corresponding 13th month pay for the years 1998 and 1999. In support
thereof, copies of payroll listings 8 and lists of employees who received their 13th
month pay for the periods December 1997 to November 1998 and December
1998 to November 1999 9 were presented. In addition, respondents contended
that Canoy's and Pigcaulan's monetary claims should only be limited to the past
three years of employment pursuant to the rule on prescription of claims.
Ruling of the Labor Arbiter

Giving credence to the itemized computations and representative daily time

records submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion
awarded them their monetary claims in his Decision

10

dated June 6, 2002. The

Labor Arbiter held that the payroll listings presented by the respondents did not
prove that Canoy and Pigcaulan were duly paid as same were not signed by the
latter or by any SCII officer. The 13th month payroll was, however, acknowledged
as sufficient proof of payment, for it bears Canoy's and Pigcaulan's signatures.
Thus, without indicating any detailed computation of the judgment award, the
Labor Arbiter ordered the payment of overtime pay, holiday pay, service incentive
leave pay and proportionate 13th month pay for the year 2000 in favor of Canoy
and Pigcaulan, viz.:
WHEREFORE, the respondents are hereby ordered to pay the
complainants: 1) their salary differentials in the amount of P166,849.60
for Oliver Canoy and P121,765.44 for Abduljuahid Pigcaulan; 2) the sum
of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service
incentive leave pay and; [3]) the sum of P1,481.85 for Canoy and
P1,065.35 for Pigcaulan as proportionate 13th month pay for the year
2000. The rest of the claims are dismissed for lack of sufficient basis to
make an award.
SO ORDERED. 11

Ruling of the National Labor Relations Commission

Respondents appealed to the NLRC. They alleged that there was no basis for the
awards made because aside from the self-serving itemized computations, no
representative daily time record was presented by Canoy and Pigcaulan. On the
contrary, respondents asserted that the payroll listings they submitted should
have been given more probative value. To strengthen their cause, they attached
to their Memorandum on Appeal payrolls

12

bearing the individual signatures of

Canoy andPigcaulan to show that the latter have received their salaries, as well
as copies of transmittal letters 13 to the bank to show that the salaries reflected in
the payrolls were directly deposited to the ATM accounts of SCII's employees.

The NLRC, however, in a Resolution 14 dated March 23, 2004, dismissed the
appeal and held that the evidence show underpayment of salaries as well as
non-payment of service incentive leave benefit. Accordingly, the Labor Arbiter's
Decision was sustained. The motion for reconsideration thereto was likewise
dismissed by the NLRC in a Resolution 15 dated June 14, 2004.
Ruling of the Court of Appeals
In respondents' petition for certiorari with prayer for the issuance of a temporary
restraining order and preliminary injunction

16

before the CA, they attributed grave

abuse of discretion on the part of the NLRC in finding that Canoy

and Pigcaulan are entitled to salary differentials, service incentive leave pay and
proportionate 13th month pay and in arriving at amounts without providing
sufficient bases therefor.
The CA, in its Decision 17 dated February 24, 2006, set aside the rulings of both
the Labor Arbiter and the NLRC after noting that there were no factual and legal
bases mentioned in the questioned rulings to support the conclusions made.
Consequently, it dismissed all the monetary claims of Canoy and Pigcaulan on
the following rationale:

ISHCcT

First. The Labor Arbiter disregarded the NLRC rule that, in cases
involving money awards and at all events, as far as practicable, the
decision shall embody the detailed and full amount awarded.
Second. The Labor Arbiter found that the payrolls submitted by SCII
have no probative value for being unsigned by Canoy, when, in fact, said
payrolls, particularly the payrolls from 1998 to 1999 indicate the
individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the substance of the
evidence adduced by Pigcaulan and Canoy as well as the laws or
jurisprudence that would show that the two are indeed entitled to the
salary differential and incentive leave pays.

Fourth. The Labor Arbiter held Reyes liable together with SCII for the
payment of the claimed salaries and benefits despite the absence of
proof that Reyes deliberately or maliciously designed to evade SCII's
alleged financial obligation; hence the Labor Arbiter ignored that SCII
has a corporate personality separate and distinct from Reyes. To justify
solidary liability, there must be an allegation and showing that the officers
of the corporation deliberately or maliciously designed to evade the
financial obligation of the corporation.

18

Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by
the CA in a Resolution 19 dated June 28, 2006.
Hence, the present Petition for Review on Certiorari.
Issues
The petition ascribes upon the CA the following errors:
I.The Honorable Court of Appeals erred when it dismissed the complaint
on mere alleged failure of the Labor Arbiter and the NLRC to observe the
prescribed form of decision, instead of remanding the case for
reformation of the decision to include the desired detailed computation.
II.The Honorable Court of Appeals erred when it [made] complainants
suffer the consequences of the alleged non-observance by the Labor
Arbiter and NLRC of the prescribed forms of decisions considering that
they have complied with all needful acts required to support their claims.
III.The Honorable Court of Appeals erred when it dismissed the
complaint allegedly due to absence of legal and factual [bases] despite
attendance of substantial evidence in the records.

20

It is well to note that while the caption of the petition reflects both the names of
Canoy and Pigcaulan as petitioners, it appears from its body that it is being filed
solely by Pigcaulan. In fact, the Verification and Certification of Non-Forum
Shopping was executed by Pigcaulan alone.

In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not
strictly bound by the rules. And even so, the rules do not mandate that a detailed
computation of how the amount awarded was arrived at should be embodied in
the decision. Instead, a statement of the nature or a description of the amount
awarded and the specific figure of the same will suffice. Besides, his and Canoy's
claims were supported by substantial evidence in the form of the handwritten
detailed computations which the Labor Arbiter termed as "representative daily
time records," showing that they were not properly compensated for work
rendered. Thus, the CA should have remanded the case instead of outrightly
dismissing it.
In their Comment, 21 respondents point out that since it was only Pigcaulan who
filed the petition, the CA Decision has already become final and binding upon
Canoy. As to Pigcaulan's arguments, respondents submit that they were able to
present sufficient evidence to prove payment of just salaries and benefits, which
bits of evidence were unfortunately ignored by the Labor Arbiter and the NLRC.
Fittingly, the CA reconsidered these pieces of evidence and properly appreciated
them. Hence, it was correct in dismissing the claims for failure of Canoy
and Pigcaulan to discharge their burden to disprove payment.
Pigcaulan, this time joined by Canoy, asserts in his Reply

22

cEaCTS

that his filing of the

present petition redounds likewise to Canoy's benefit since their complaints were
consolidated below. As such, they maintain that any kind of disposition made in
favor or against either of them would inevitably apply to the other. Hence, the
institution of the petition solely by Pigcaulan does not render the assailed
Decision final as to Canoy. Nonetheless, in said reply they appended Canoy's
affidavit 23where he verified under oath the contents and allegations of the
petition filed by Pigcaulan and also attested to the authenticity of its annexes.
Canoy, however, failed to certify that he had not filed any action or claim in
another court or tribunal involving the same issues. He likewise explains in said
affidavit that his absence during the preparation and filing of the petition was
caused by severe financial distress and his failure to inform anyone of his
whereabouts.

Our Ruling
The

assailed

CA

Decision

is

considered

final as to Canoy.
We have examined the petition and find that same was filed by Pigcaulan solely
on his own behalf. This is very clear from the petition's prefatory which is phrased
as follows:
COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto
this Honorable Court . . . . (Emphasis supplied.)

Also, under the heading "Parties", only Pigcaulan is mentioned as petitioner and
consistent with this, the body of the petition refers only to a "petitioner" and never
in its plural form "petitioners". Aside from the fact that the Verification and
Certification of Non-Forum Shopping attached to the petition was executed
by Pigcaulan alone, it was plainly and particularly indicated under the name of
the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is
the "Counsel for Petitioner AlbuljuahidPigcaulan" only. In view of these, there is
therefore, no doubt, that the petition was brought only on behalf of Pigcaulan.
Since no appeal from the CA Decision was brought by Canoy, same has already
become final and executory as to him.

caHCSD

Canoy cannot now simply incorporate in his affidavit a verification of the contents
and allegations of the petition as he is not one of the petitioners therein. Suffice it
to state that it would have been different had the said petition been filed in behalf
of both Canoy and Pigcaulan. In such a case, subsequent submission of a
verification may be allowed as non-compliance therewith or a defect therein does
not necessarily render the pleading, or the petition as in this case, fatally
defective. 24 "The court may order its submission or correction, or act on the
pleading if the attending circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of justice may be served
thereby. Further, a verification is deemed substantially complied with when one
who has ample knowledge to swear to the truth of the allegations in the complaint
or petition signs the verification, and when matters alleged in the petition have

been made in good faith or are true and correct."

25

However, even if it were so,

we note that Canoy still failed to submit or at least incorporate in his affidavit a
certificate of non-forum shopping.
The filing of a certificate of non-forum shopping is mandatory so much so that
non-compliance could only be tolerated by special circumstances and compelling
reasons. 26 This Court has held that when there are several petitioners, all of
them must execute and sign the certification against forum shopping; otherwise,
those who did not sign will be dropped as parties to the case.

27

True, we held

that in some cases, execution by only one of the petitioners on behalf of the other
petitioners constitutes substantial compliance with the rule on the filing of a
certificate of non-forum shopping on the ground of common interest or common
cause of action or defense.

28

We, however, find that common interest is not

present in the instant petition. To recall, Canoy's and Pigcaulan's complaints were
consolidated because they both sought the same reliefs against the same
respondents. This does not, however, mean that they share a common interest or
defense. The evidence required to substantiate their claims may not be the same.
A particular evidence which could sustain Canoy's action may not effectively
serve as sufficient to support Pigcaulan's claim.
Besides, assuming that the petition is also filed on his behalf, Canoy failed to
show any reasonable cause for his failure to join Pigcaulan to personally sign the
Certification of Non-Forum Shopping. It is his duty, as a litigant, to be prudent in
pursuing his claims against SCII, especially so, if he was indeed suffering from
financial distress. However, Canoy failed to advance any justifiable reason why
he did not inform anyone of his whereabouts when he knows that he has a
pending case against his former employer. Sadly, his lack of prudence and
diligence cannot merit the court's consideration or sympathy. It must be
emphasized at this point that procedural rules should not be ignored simply
because their non-observance may result in prejudice to a party's substantial
rights. The Rules of Court should be followed except only for the most persuasive
of reasons. 29

Having declared the present petition as solely filed by Pigcaulan, this Court shall
consider the subsequent pleadings, although apparently filed under his and
Canoy's name, as solely filed by the former.
There

was

no

cTAaDC

substantial

evidence

to

support the grant of overtime pay.

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service
incentive leave pay and 13th month pay for the year 2000 in favor of Canoy
andPigcaulan. The Labor Arbiter relied heavily on the itemized computations they
submitted which he considered as representative daily time records to
substantiate the award of salary differentials. The NLRC then sustained the
award on the ground that there was substantial evidence of underpayment of
salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this regard. The
handwritten itemized computations are self-serving, unreliable and unsubstantial
evidence to sustain the grant of salary differentials, particularly overtime pay.
Unsigned and unauthenticated as they are, there is no way of verifying the truth
of the handwritten entries stated therein. Written only in pieces of paper and
solely prepared by Canoy and Pigcaulan, these representative daily time records,
as termed by the Labor Arbiter, can hardly be considered as competent evidence
to be used as basis to prove that the two were underpaid of their salaries. We find
nothing in the records which could substantially support Pigcaulan's contention
that he had rendered service beyond eight hours to entitle him to overtime pay
and during Sundays to entitle him to restday pay. Hence, in the absence of any
concrete proof that additional service beyond the normal working hours and days
had indeed been rendered, we cannot affirm the grant of overtime pay
to Pigcaulan.

DHTECc

Pigcaulan is
service
proportionate
2000.

entitled
incentive
13th

to

holiday

leave
month

pay
pay

pay,
and

for

year

However, with respect to the award for holiday pay, service incentive leave pay
and 13th month pay, we affirm and rule that Pigcaulan is entitled to these
benefits.
Article 94 of the Labor Code provides that:
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 ten (10) workers;
xxx xxx xxx

While Article 95 of the Labor Code provides:

ART. 95.RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every
employee who has rendered at least one year of service shall be entitled
to a yearly service incentive of five days with pay.
xxx xxx xxx

Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if
he does not work. 30 Likewise, express provision of the law entitles him to service
incentive leave benefit for he rendered service for more than a year already.
Furthermore, under Presidential Decree No. 851, 31 he should be paid his 13th
month pay. As employer, SCII has the burden of proving that it has paid these
benefits to its employees. 32
SCII presented payroll listings and transmittal letters to the bank to show that
Canoy and Pigcaulan received their salaries as well as benefits which it claimed
are already integrated in the employees' monthly salaries. However, the
documents presented do not prove SCII's allegation. SCII failed to show any
other concrete proof by means of records, pertinent files or similar documents
reflecting that the specific claims have been paid. With respect to 13th month pay,
SCII presented proof that this benefit was paid but only for the years 1998 and
1999. To repeat, the burden of proving payment of these monetary claims rests
on SCII, being the employer. It is a rule that one who pleads payment has the
burden of proving it. "Even when the plaintiff alleges non-payment, still the

general rule is that the burden rests on the defendant to prove payment, rather
than on the plaintiff to prove non-payment." 33 Since SCII failed to provide
convincing proof that it has already settled the claims, Pigcaulanshould be paid
his holiday pay, service incentive leave benefits and proportionate 13th month
pay for the year 2000.
The
instead
Labor

CA

erred
of

Arbiter

in

dismissing

remanding
for

the
a

case
detailed

the

claims
to

the

computation

of the judgment award.

Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary
awards granted. Such failure, however, should not result in prejudice to the
substantial rights of the party. While we disallow the grant of overtime pay and
restday pay in favor of Pigcaulan, he is nevertheless entitled, as a matter of right,
to his holiday pay, service incentive leave pay and 13th month pay for year 2000.
Hence, the CA is not correct in dismissing Pigcaulan's claims in its entirety.

CITDES

Consistent with the rule that all money claims arising from an employer-employee
relationship shall be filed within three years from the time the cause of action
accrued, 34 Pigcaulan can only demand the amounts due him for the period
within three years preceding the filing of the complaint in 2000. Furthermore,
since the records are insufficient to use as bases to properly compute Pigcaulan's
claims, the case should be remanded to the Labor Arbiter for a detailed
computation of the monetary benefits due to him.
WHEREFORE, the petition is GRANTED. The Decision dated February 24, 2006
and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R. SP No.
85515 areREVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is
hereby declared ENTITLED to holiday pay and service incentive leave pay for the
years 1997-2000 and proportionate 13th month pay for the year 2000.
The case is REMANDEDto the Labor Arbiter for further proceedings to determine
the exact amount and to make a detailed computation of the monetary benefits

due Abduljuahid R. Pigcaulan which Security and Credit Investigation, Inc. should
pay without delay.
SO ORDERED.
Corona, C.J., Leonardo-de Castro, Abad and Villarama, Jr., JJ., concur.
|||

(Pigcaulan v. Security and Credit Investigation, Inc., G.R. No. 173648, [January

16, 2012], 679 PHIL 1-18)

[G.R. No. L-27378. March 31, 1976.]

PHILIPPINE AIR LINES, INC., petitioner, vs. PHILIPPINE AIR
LINES EMPLOYEES ASSOCIATION (PALEA) and the COURT
OF INDUSTRIAL RELATIONS,respondents.
Siguion Reyna, Montecillo, Belo and Ongsiako for petitioner-appellant.
Mariano V. Ampil, Jr. for respondent-appellee.
SYNOPSIS
Petitioner issued to Paul Holganza, an official of respondent association, roundtrip tickets for Holganza and his family. He earned said tickets. However, he was
not able to avail of the tickets, because he had to attend to a strike as an official
of the striking union. Respondent associated filed a petition before the Court of
Industrial Relations (CIR) praying for the renewal of the tickets. The CIR directed
the issuance of the round-trip tickets. Petitioner's motion for reconsideration of
said order having been denied, the case was appealed to the Supreme Court on
the ground that Holganza was no longer entitled thereto since under Sec. 4(e),
Article XVI of the collective bargaining agreement ". . . employees laid off for
cause shall cease to enjoy trip pass . . ." This was premised upon partial decision

rendered in the main case of which the instant petition was an incident wherein
the CIR ordered the union officials "not to return to work in the meantime that the
petition was being heard on the merits."
The Supreme Court held that the "not to return to work" order does not mean
severance from employment and therefor, the status quo between the parties
must be preserved. Petition denied.
SYLLABUS
1. LABOR RELATIONS; TERMINATION OF EMPLOYMENT; "NOT RETURN TO
WORK" DIRECTIVE DOES NOT MEAN SEVERANCE IN INSTANCE CASE.
The directive "not to return to work in the meantime that the instant petition is
being heard on the merits" does not mean severance from employment; for
precisely the case is still to be heard on the merits to determine whether the
union members and its officials are really guilty of the charge against them and
therefore deserve ouster.
2. ID.; UNFAIR LABOR PRACTICE; REFUSAL TO COMPLY WITH TERMS OF
COLLECTIVE BARGAINING AGREEMENT CONSTITUTE UNFAIR LABOR
PRACTICE. Refusal to comply with the terms of collective bargaining
agreement constitute bargaining in bad faith and an unfair labor practice within
the jurisdiction of the industrial court.
3. COURT OF INDUSTRIAL RELATIONS; JURISDICTION OVER MAIN CASE
EXTENDS TO INCIDENTS THEREIN. Where the Court of Industrial Relations
had jurisdiction over the main case, it necessarily must exercise jurisdiction over
all incidents therein.
4. WORDS AND PHRASES; "NON-CUMULATIVE " TRIP PASS PRIVILEGE
DOES NOT SIGNIFY FORFEITURE. The fact that the trip pass privilege was
non-cumulative does not negate the employee's right to the re-issuance of the trip
ticket as the term does not signify forfeiture of the privilege.

DECISION

MAKASIAR, J :
p

On August 1, 1966, PALEA filed a petition with respondent Court of Industrial

Relations praying that PAL be directed to renew plane tickets previously issued to
Mr. & Mrs. Paul Holganza, Sr. (p. 25, rec.).
It is admitted that on August 13, 1964, PAL issued trans-Pacific plane tickets in
favor of Paul Holganza's wife and children as part of Holganza's trip pass
privilege, which he earned in 1964 under the existing PAL-PALEA collective
bargaining agreement. Said plane tickets, pursuant to the terms of the trip pass,
should be used by the wife and children of Paul Holganza not later than March 9,
1965. Only one daughter was able to utilize the ticket as Holganza could not go
abroad with his wife and family because he had to attend to the strike
of PALEA which was declared on January 25, 1965. However, petitioner alleged
that "no plane ticket was issued to Holganza himself because he did not apply for
a trip pass for himself although it would be easy for him to do so." (p. 8, rec.).
PALEA's petition was an incident of Case No. 43-IPA(6), a petition previously filed
by herein petitioner PAL seeking to declare the strike staged by PALEA on
January 25, 1965 illegal. On this main case (43-IPA[6]), respondent CIR, on
February 16, 1965, rendered a Partial Decision, the dispositive portion of which
reads:
"WHEREFORE, the Urgent Petition to Declare Strike Illegal, dated
January 25, 1965, is hereby dismissed insofar as the 1,279 employees
are concerned.
"Reiterating the pertinent provisions of Section 19 of Commonwealth Act
103, as amended, PALEA is hereby directed to lift its picket lines in the
strike-bound PAL. The 1,279 employees, whose names appear in
Exhibits '00 43 IPA(6) through '00-34 43 IPA(6)' are hereby directed to
return to work and PAL is hereby directed to admit them back to work,

under the same terms and conditions of employment as were obtaining

immediately before the strike was declared on January 25, 1965.
"With respect to the case of the union officials and shop stewards who
are out on strike and should not return to work in the meantime that the
instant petition is being heard on the merits, the Clerk of Court is
directed to set the hearings of said petition daily and continuously until
submitted for decision.
"To

do

away

with

an

irritant

that

strained

the

relationship

between PALEA and PAL the latter is hereby directed to deposit with the
Court the amount of Thirty Thousand (P30,000.00) Pesos in cash . . .
"The parties are hereby enjoined with their mutual agreement with
respect to the unpaid salaries and wages for January 16 to 25, 1965.
"The Court hereby reiterates and renews, with full force and effect, all the
dispositive portion of the Order of September 6, 1963, with special
emphasis on the direction that PALEA members shall not strike under
pain of replacement, and PAL officials shall not lockout its employees
under pain of contempt, until the main case, No. 43-IPA, including all the
incidents thereto, including 43-IAP(6) and 43-IPA(6)-(a), shall have been
fully and finally terminated and decided" (pp. 33-34, rec.).

On August 18, 1966, PAL, in an opposition to PALEA's August 1, 1966 petition,

alleged that:
"1. The plane tickets issued in favor of Mr. Paul Holganza, Sr. and his
wife could have been used by them before the expiry date thereof and
there was no valid reason for them, the declaration of the strike on
January 25, 1965 by PALEA notwithstanding, not to have used the
same.
"2. Under company policy, unused trip passes are forfeited, and,
therefore, respondent cannot issue another trip pass in lieu thereof.

"3. No new trip pass can be issued in favor of Mr. Paul Holganza, Sr. and
his wife because Mr. Holganza's present status under the partial decision
of this Honorable Court dated February 16, 1965 is that he shall not
return to work, and since he has not returned to work pursuant to said
decision, he has no earned trip pass that he can use." (P. 36, rec.).

At the hearing of the petition, both parties adopted as their common exhibit a
copy of the existing collective bargaining agreement between PAL and PALEA, in
Article XVI of which are provided the following:
"1) That the trip pass privilege to which PAL employees are entitled
thereunder is non-cumulative [Section 2] (Exhibits 'A-1-PALEA,' '1-A' &
'1-A-1-PAL');
"2) That the trip pass and plane tickets issued in exchange therefor will
not be honored after the date limit indicated thereon [Section 4(b)]
(Exhibit '1-A-2-PAL'); and.
"3) That employees laid off for cause shall cease to enjoy trip pass and
reduced fare privileges, effective on the date of termination [Section 4(e)]
(Exhibit '1-A-3-PAL').

After trial, respondent CIR issued an order dated December 9, 1966 (pp. 37-42,
rec.) with a directive to PAL to comply with its obligations under Article XVI of its
existing collective bargaining agreement with PALEA. Specifically, PAL was
directed to issue Trans-Pacific round-trip plane tickets in favor of Paul Holganza,
Sr. and his wife.
On December 14, 1966, PAL, thru a seasonable petition (p. 43, rec.), moved for
the reconsideration of said order on the ground that the same was repugnant to
elicited evidence and that the CIR is without jurisdiction over PALEA's petition.
On December 19, 1966, PALEA opposed PAL's motion for reconsideration (p. 52,
rec.).
On January 17, 1967, respondent CIR, in a resolution en banc, denied PAL's
motion for reconsideration (p. 57, rec.).

On March 30, 1967, PAL filed with respondent Court of Industrial Relations its
notice of appeal to the Supreme Court (p. 61, rec.).
PAL argues.
(A) That the CIR's finding that Paul Holganza, Sr. is entitled to enjoy his trip pass
privilege while Case No. 43-IPA(6) is still pending decision by the CIR, is contrary
to evidence; and
(B) That the CIR has no jurisdiction over PALEA's petition which is an action for
enforcement of a provision of the PAL-PALEA collective bargaining agreement.
I
In its first argument, petitioner PAL submits that the CIR order dated February 16,
1965 specifically directing some PAL workers among them being respondent
Paul Holganza, Sr. not to return to work, had the effect of automatically
dissolving the force and effect of Holganza's trip pass privilege, by reason of
Section 4(e), Article XVI, of the existing collective bargaining agreement
between PAL and PALEA.
Said Section 4(e) of Article XVI, reads:
"An employee separated from the COMPANY for reasons other than for
cause may take advantage of his earned trip pass or reduced rate
privileges for himself and immediate family within ninety (90) days from
date of termination. Employees laid off for cause shall cease to enjoy trip
pass and reduced rate privileges effective on the date of termination,
except to return to point nearest his home of point of employment
provided this privilege is used within ninety (90) days."

It is true that Holganza, with some others, were directed not to return to work.
However, this directive is only "in the meantime that the instant petition (main
case) is being heard on the merits . . ." (p. 5, CIR Partial Decision; p. 33, rec.).
Definitely, this directive does not mean severance from employment, for precisely
the case is still to be heard on the merits to determine whether, among others,
Holganza and company, are really guilty of the charge against them, and

therefore deserve ouster. Pending final resolution of the main case, therefore, it is
error to consider Holganza as already severed from office. While the main case is
being studied by respondent Court of Industrial Relations, it is but proper that
the status quo between the parties be preserved.

It should be emphasized that Holganza earned a trip pass privilege in 1964. The
other members of his family were not able to enjoy the same before March 9,
1965 because of the strike of January 25, 1965 which PAL sought to be declared
illegal.

It

was

found

by

respondent

CIR

that PAL previously

allowed

a PAL employee to enjoy his trip pass privilege which he failed to enjoy because
of sickness and because of leave of absence. The pendency of the said petition
to declare the strike illegal required Holganza's presence in the country since he
is one of the officials of the striking union. Hence, his inability to enjoy the trip
pass privilege should be considered a forced leave of absence.
As correctly ruled by the respondent Court of Industrial Relations, the fact that
the trip pass privilege was non-cumulative does not negate his right to the reissuance of the trip ticket as the term does not signify forfeiture of the privilege.
PAL likewise believes that pending resolution of the case, Holganza's right "to
enjoy or make use of such trip pass is subject to the final outcome of the decision
in said case. For, if and when PAL's petition to dismiss Holganza for cause is
granted by the CIR, he would automatically lose or forfeit his earned trip pass
privilege . . ." (p. 12, rec.).
To lend sympathy to the above contention is not only counter to the idea of
maintaining the parties' status quo pending final resolution of the case, but will
likewise wreck the fundamental principle involved in interpretation of contracts.
There

is

nothing

in

the

collective

bargaining

agreement

between PAL and PALEA that sanctions the suspension of the trip pass privilege
of an employee who is entitled to and is granted the same once he is on leave.
The language of the collective bargaining agreement between the litigants is
crystal clear. They are not susceptible of different interpretations. In a good

number of cases, particularly the cases of Philippine American General

Insurance Company, Inc. vs. Mutuc (61 SCRA 22), Piczon vs.Piczon (61 SCRA
67), and Cebu Portland Cement Co. vs. Dumon (61 SCRA 218), WE held that:
". . . if the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its interpretation
should control." (Emphasis supplied)

II
Respondent CIR's jurisdiction over Holganza's case cannot be disputed.
Holganza's petition seeks the enforcement of a provision of the collective
bargaining agreement of 1959-1961, modified by respondent Court in its order in
Case No. 43-IPA. This case, which is the main case, is still pending adjudication.
Because it has jurisdiction over the main case, it necessarily must exercise
jurisdiction over all incidents therein. Holganza's petition is merely an incident of
the main case.
Holganza's petition shows a situation where a party to a collective bargaining
agreement, herein petitioner PAL, refuses to comply with the terms of the
collective bargaining agreement it inked with respondent PALEA. In Majestic and
Republic Theaters Employees Association (PAFLU)vs. CIR, et al. (L-1260, Feb.
26, 1962, 4 SCRA 457, 462), and in the more recent case of National
Development Company vs. NDC Employees and Workers' Union and Court of
Industrial Relations (L-32387, Aug. 19, 1975), WE emphasized that.
". . . a refusal to comply with the terms of a collective bargaining
agreement constitutes bargaining in bad faith and an unfair labor
practice."

Therefore, it squarely falls within the jurisdiction of the industrial court.

WHEREFORE, PETITION IS HEREBY DENIED, WITH COSTS AGAINST
PETITIONER.
Teehankee, (Chairman), Esguerra, Muoz Palma and Martin, JJ., concur.

|||

(PAL, Inc. v. PAL Employees Ass'n, G.R. No. L-27378, [March 31, 1976], 162

PHIL 255-264)

[G.R. No. 146881. February 5, 2007.]

COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA,
Manager, petitioners, vs. DR. DEAN N. CLIMACO, respondent.

DECISION

AZCUNA, J :
p

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

Appeals 1 promulgated on July 7, 2000, and its Resolution promulgated on
January 30, 2001, denying petitioner's motion for reconsideration. The Court of
Appeals ruled that an employer-employee relationship exists between respondent
Dr. Dean N. Climacoand petitioner Coca-Cola Bottlers Phils., Inc. (Coca-Cola),
and that respondent was illegally dismissed.
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by
petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement that
stated:
WHEREAS, the COMPANY desires to engage on a retainer basis the
services of a physician and the said DOCTOR is accepting such
engagement upon terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual

agreement hereinafter contained, the parties agree as follows:
1. This Agreement shall only be for a period of one (1) year
beginning January 1, 1988 up to December 31, 1988. The said
term notwithstanding, either party may terminate the contract
upon giving a thirty (30)-day written notice to the other.

HIACac

2. The compensation to be paid by the company for the services of the

DOCTOR is hereby fixed at PESOS: Three Thousand Eight
Hundred (P3,800.00) per month. The DOCTOR may charge
professional fee for hospital services rendered in line with his
specialization. All payments in connection with the Retainer
Agreement shall be subject to a withholding tax of ten percent
(10%) to be withheld by the COMPANY under the Expanded
Withholding Tax System. In the event the withholding tax rate
shall be increased or decreased by appropriate laws, then the rate
herein stipulated shall accordingly be increased or decreased
pursuant to such laws.
3. That in consideration of the above mentioned retainer's fee, the
DOCTOR

agrees

to

perform

the

duties

and

obligations

enumerated in the COMPREHENSIVE MEDICAL PLAN, hereto

attached as Annex "A" and made an integral part of this Retainer
Agreement.
4. That the applicable provisions in the Occupational Safety and Health
Standards, Ministry of Labor and Employment shall be followed.
5. That the DOCTOR shall be directly responsible to the employee
concerned and their dependents for any injury inflicted on, harm
done against or damage caused upon the employee of the
COMPANY or their dependents during the course of his
examination, treatment or consultation, if such injury, harm or

damage was committed through professional negligence or

incompetence or due to the other valid causes for action.
6. That the DOCTOR shall observe clinic hours at the COMPANY'S
premises from Monday to Saturday of a minimum of two (2) hours
each day or a maximum of TWO (2) hours each day or treatment
from 7:30 a.m.

to 8:30 a.m.

and 3:00 p.m.

to 4:00 p.m.,

respectively unless such schedule is otherwise changed by the

COMPANY as [the] situation so warrants, subject to the Labor
Code provisions on Occupational Safety and Health Standards as
the COMPANY may determine. It is understood that the DOCTOR
shall stay at least two (2) hours a day in the COMPANY clinic and
that such two (2) hours be devoted to the workshifts with the most
number of employees. It is further understood that the DOCTOR
shall be on call at all times during the other workshifts to attend to
emergency case[s];
7. That no employee-employer relationship shall exist between the
COMPANY and the DOCTOR whilst this contract is in effect, and
in case of its termination, the DOCTOR shall be entitled only to
such retainer fee as may be due him at the time of termination.

The

Comprehensive

Medical

Plan, 3 which

contains

the

duties

and

responsibilities of respondent, adverted to in the Retainer Agreement, provided:

A. OBJECTIVE
These objectives have been set to give full consideration to [the]
employees' and dependents' health:
1. Prompt and adequate treatment of occupational and nonoccupational injuries and diseases.
2. To protect employees from any occupational health hazard by
evaluating health factors related to working conditions.

3. To encourage employees [to] maintain good personal health by

setting up employee orientation and education on health,
hygiene and sanitation, nutrition, physical fitness, first aid
training, accident prevention and personnel safety.
4. To evaluate other matters relating to health such as
absenteeism, leaves and termination.
5. To give family planning motivations.
B. COVERAGE
1. All employees and their dependents are embraced by this
program.
2. The health program shall cover pre-employment and annual
p.e.,

hygiene

and

sanitation,

immunizations,

family

planning, physical fitness and athletic programs and other

activities such as group health education program, safety
and first aid classes, organization of health and safety
committees.
3. Periodically, this program will be reviewed and adjusted based
on employees' needs.

ECHSDc

C. ACTIVITIES
1. Annual Physical Examination.
2. Consultations, diagnosis and treatment of occupational and
non-occupational illnesses and injuries.
3. Immunizations necessary for job conditions.
4. Periodic inspections for food services and rest rooms.
5. Conduct health education programs and present education
materials.

6. Coordinate with Safety Committee in developing specific

studies and program to minimize environmental health
hazards.
7. Give family planning motivations.
8. Coordinate with Personnel Department regarding physical
fitness and athletic programs.
9. Visiting and follow-up treatment of Company employees and
their dependents confined in the hospital.

The Retainer Agreement, which began on January 1, 1988, was renewed

annually. The last one expired on December 31, 1993. Despite the non-renewal
of the Retainer Agreement, respondent continued to perform his functions as
company doctor to Coca-Cola until he received a letter 4 dated March 9, 1995
from petitioner company concluding their retainership agreement effective 30
days from receipt thereof.
It is noted that as early as September 1992, petitioner was already making
inquiries regarding his status with petitioner company. First, he wrote a letter
addressed to Dr. Willie Sy, the Acting President and Chairperson of the
Committee on Membership, Philippine College of Occupational Medicine. In
response, Dr. Sy wrote a letter 5 to the Personnel Officer of Coca-Cola Bottlers
Phils., Bacolod City, stating that respondent should be considered as a regular
part-time physician, having served the company continuously for four (4) years.
He likewise stated that respondent must receive all the benefits and privileges of
an employee under Article 157 (b) 6 of the Labor Code.
Petitioner company, however, did not take any action. Hence, respondent made
another inquiry directed to the Assistant Regional Director, Bacolod City District
Office of the Department of Labor and Employment (DOLE), who referred the
inquiry to the Legal Service of the DOLE, Manila. In his letter 7 dated May 18,
1993, Director Dennis P. Ancheta, Legal Service, DOLE, stated that he believed
that an employer-employee relationship existed between petitioner and
respondent based on the Retainer Agreement and the Comprehensive Medical

Plan, and the application of the "four-fold" test. However, Director Ancheta
emphasized that the existence of employer-employee relationship is a question of
fact. Hence, termination disputes or money claims arising from employeremployee relations exceeding P5,000 may be filed with the National Labor
Relations Commission (NLRC). He stated that their opinion is strictly advisory.
An inquiry was likewise addressed to the Social Security System (SSS).
Thereafter, Mr. Romeo R. Tupas, OIC-FID of SSS-Bacolod City, wrote a letter 8 to
the Personnel Officer of Coca-Cola Bottlers Phils., Inc. informing the latter that
the legal staff of his office was of the opinion that the services of respondent
partake of the nature of work of a regular company doctor and that he was,
therefore, subject to social security coverage.
Respondent inquired from the management of petitioner company whether it was
agreeable to recognizing him as a regular employee. The management refused
to do so.
On February 24, 1994, respondent filed a Complaint 9 before the NLRC, Bacolod
City, seeking recognition as a regular employee of petitioner company and prayed
for the payment of all benefits of a regular employee, including 13th Month Pay,
Cost of Living Allowance, Holiday Pay, Service Incentive Leave Pay, and
Christmas Bonus. The case was docketed as RAB Case No. 06-02-10138-94.

DSHcTC

While the complaint was pending before the Labor Arbiter, respondent received a
letter dated March 9, 1995 from petitioner company concluding their retainership
agreement effective thirty (30) days from receipt thereof. This prompted
respondent to file a complaint for illegal dismissal against petitioner company with
the NLRC, Bacolod City. The case was docketed as RAB Case No. 06-04-1017795.
In a Decision 10 dated November 28, 1996, Labor Arbiter Jesus N. Rodriguez, Jr.
found that petitioner company lacked the power of control over respondent's
performance of his duties, and recognized as valid the Retainer Agreement
between the parties. Thus, the Labor Arbiter dismissed respondent's complaint in

the first case, RAB Case No. 06-02-10138-94. The dispositive portion of the
Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
dismissing the instant complaint seeking recognition as a regular
employee.
SO ORDERED. 11

In a Decision 12 dated February 24, 1997, Labor Arbiter Benjamin Pelaez

dismissed the case for illegal dismissal (RAB Case No. 06-04-10177-95) in view
of the previous finding of Labor Arbiter Jesus N. Rodriguez, Jr. in RAB Case No.
06-02-10138-94 that complainant therein, Dr. Dean Climaco, is not an employee
of Coca-Cola Bottlers Phils., Inc.

Respondent appealed both decisions to the NLRC, Fourth Division, Cebu City.
In a Decision 13 promulgated on November 28, 1997, the NLRC dismissed the
appeal in both cases for lack of merit. It declared that no employer-employee
relationship existed between petitioner company and respondent based on the
provisions of the Retainer Agreement which contract governed respondent's
employment.
Respondent's motion for reconsideration was denied by the NLRC in a
Resolution 14 promulgated on August 7, 1998.
Respondent filed a petition for review with the Court of Appeals.
In a Decision promulgated on July 7, 2000, the Court of Appeals ruled that an
employer-employee relationship existed between petitioner company and
respondent after applying the four-fold test: (1) the power to hire the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the employer's
power to control the employee with respect to the means and methods by which
the work is to be accomplished.
The Court of Appeals held:

The Retainer Agreement executed by and between the parties, when

read together with the Comprehensive Medical Plan which was made an
integral part of the retainer agreements, coupled with the actual services
rendered by the petitioner, would show that all the elements of the above
test are present.
First, the agreements provide that "the COMPANY desires to engage on
a retainer basis the services of a physician and the said DOCTOR is
accepting such engagement . . ." (Rollo, page 25). This clearly shows
that Coca-Cola exercised its power to hire the services of petitioner.
Secondly, paragraph (2) of the agreements showed that petitioner would
be entitled to a final compensation of Three Thousand Eight Hundred
Pesos per month, which amount was later raised to Seven Thousand
Five Hundred on the latest contract. This would represent the element of
payment of wages.

SEACTH

Thirdly, it was provided in paragraph (1) of the agreements that the same
shall be valid for a period of one year. "The said term notwithstanding,
either party may terminate the contract upon giving a thirty (30) day
written notice to the other." (Rollo, page 25). This would show
that Coca-Cola had the power of dismissing the petitioner, as it later on
did, and this could be done for no particular reason, the sole requirement
being the former's compliance with the 30-day notice requirement.
Lastly, paragraphs (3) and (6) of the agreements reveal that CocaCola exercised the most important element of all, that is, control, over
the conduct of petitioner in the latter's performance of his duties as a
doctor for the company.
It was stated in paragraph (3) that the doctor agrees to perform the
duties and obligations enumerated in the Comprehensive Medical Plan
referred to above. In paragraph (6), the fixed and definite hours during
which the petitioner must render service to the company is laid down.

We say that there exists Coca-Cola's power to control petitioner because

the particular objectives and activities to be observed and accomplished
by the latter are fixed and set under the Comprehensive Medical Plan
which was made an integral part of the retainer agreement. Moreover,
the times for accomplishing these objectives and activities are likewise
controlled and determined by the company. Petitioner is subject to
definite hours of work, and due to this, he performs his duties to CocaCola not at his own pleasure but according to the schedule dictated by
the company.
In addition, petitioner was designated by Coca-Cola to be a member of
its Bacolod Plant's Safety Committee. The minutes of the meeting of the
said committee dated February 16, 1994 included the name of petitioner,
as plant physician, as among those comprising the committee.
It was averred by Coca-Cola in its comment that they exercised no
control over petitioner for the reason that the latter was not directed as to
the procedure and manner of performing his assigned tasks. It went as
far as saying that "petitioner was not told how to immunize, inject, treat
or diagnose the employees of the respondent (Rollo, page 228). We
believe that if the "control test" would be interpreted this strictly, it would
result in an absurd and ridiculous situation wherein we could declare that
an entity exercises control over another's activities only in instances
where the latter is directed by the former on each and every stage of
performance of the particular activity. Anything less than that would be
tantamount to no control at all.
To our minds, it is sufficient if the task or activity, as well as the means of
accomplishing it, is dictated, as in this case where the objectives and
activities were laid out, and the specific time for performing them was
fixed by the controlling party. 15

Moreover, the Court of Appeals declared that respondent should be classified as

a regular employee having rendered six years of service as plant physician by

virtue of several renewed retainer agreements. It underscored the provision in

Article 280 16 of the Labor Code stating that "any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed, and his employment shall continue while such activity exists." Further,
it held that the termination of respondent's services without any just or authorized
cause constituted illegal dismissal.
In addition, the Court of Appeals found that respondent's dismissal was an act
oppressive to labor and was effected in a wanton, oppressive or malevolent
manner which entitled respondent to moral and exemplary damages.

AEITDH

The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing, the Decision of the National
Labor Relations Commission dated November 28, 1997 and its
Resolution dated August 7, 1998 are found to have been issued with
grave abuse of discretion in applying the law to the established facts,
and

are

hereby REVERSED

and

SET

ASIDE,

and

private

respondent Coca-Cola Bottlers, Phils., Inc. is hereby ordered to:

1. Reinstate the petitioner with full backwages without loss of seniority
rights from the time his compensation was withheld up to the time
he is actually reinstated; however, if reinstatement is no longer
possible, to pay the petitioner separation pay equivalent to one (1)
month's salary for every year of service rendered, computed at
the rate of his salary at the time he was dismissed, plus
backwages.
2. Pay petitioner moral damages in the amount of P50,000.00.
3. Pay petitioner exemplary damages in the amount of P50,000.00.
4. Give to petitioner all other benefits to which a regular employee
of Coca-Cola is entitled from the time petitioner became a regular

employee (one year from effectivity date of employment) until the

time of actual payment.
SO ORDERED. 17

Petitioner company filed a motion for reconsideration of the Decision of the Court
of Appeals.
In a Resolution promulgated on January 30, 2001, the Court of Appeals stated
that petitioner company noted that its Decision failed to mention whether
respondent was a full-time or part-time regular employee. It also questioned how
the benefits under their Collective Bargaining Agreement which the Court
awarded to respondent could be given to him considering that such benefits were
given only to regular employees who render a full day's work of not less than
eight hours. It was admitted that respondent is only required to work for two hours
per day.
The Court of Appeals clarified that respondent was a "regular part-time employee
and should be accorded all the proportionate benefits due to this category of
employees of [petitioner] Corporation under the CBA." It sustained its decision on
all other matters sought to be reconsidered.
Hence, this petition filed by Coca-Cola Bottlers Phils., Inc.
The issues are:
1. THAT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE

ERROR,

BASED

ON

SUBSTANTIAL

QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE

LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS
COMMISSION, CONTRARY TO THE DECISIONS OF THE
HONORABLE SUPREME COURT ON THE MATTER.
2. THAT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE

ERROR,

BASED

ON

SUBSTANTIAL

QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE

LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS

COMMISSION, AND HOLDING INSTEAD THAT THE WORK OF

A PHYSICIAN IS NECESSARY AND DESIRABLE TO THE
BUSINESS OF SOFTDRINKS MANUFACTURING, CONTRARY
TO THE RULINGS OF THE SUPREME COURT IN ANALOGOUS
CASES.

IHCacT

3. THAT THE HONORABLE COURT OF APPEALS COMMITTED

REVERSIBLE

ERROR,

BASED

ON

SUBSTANTIAL

QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE

LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS
COMMISSION,

AND

HOLDING

INSTEAD

THAT

THE

PETITIONERS EXERCISED CONTROL OVER THE WORK OF

THE RESPONDENT.
4. THAT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE

ERROR,

BASED

ON

SUBSTANTIAL

QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE

LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS
COMMISSION, AND FINDING THAT THERE IS EMPLOYEREMPLOYEE RELATIONSHIP PURSUANT TO ARTICLE 280 OF
THE LABOR CODE.
5. THAT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE

ERROR,

BASED

ON

SUBSTANTIAL

QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE

LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS
COMMISSION, AND FINDING THAT THERE EXISTED ILLEGAL
DISMISSAL

WHEN

THE

EMPLOYMENT

OF

THE

RESPONDENT WAS TERMINATED WITHOUT JUST CAUSE.

6. THAT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE

ERROR,

BASED

ON

SUBSTANTIAL

QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE

LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS

COMMISSION, AND FINDING THAT THE RESPONDENT IS A

REGULAR PART TIME EMPLOYEE WHO IS ENTITLED TO
PROPORTIONATE BENEFITS AS A REGULAR PART TIME
EMPLOYEE ACCORDING TO THE PETITIONERS' CBA.
7. THAT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE

ERROR,

BASED

ON

SUBSTANTIAL

QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE

LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS
COMMISSION, AND FINDING THAT THE RESPONDENT IS
ENTITLED TO MORAL AND EXEMPLARY DAMAGES.

The main issue in this case is whether or not there exists an employer-employee
relationship between the parties. The resolution of the main issue will determine
whether the termination of respondent's employment is illegal.
The Court, in determining the existence of an employer-employee relationship,
has invariably adhered to the four-fold test: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employee's conduct, or the so-called "control test,"
considered to be the most important element. 18
The Court agrees with the finding of the Labor Arbiter and the NLRC that the
circumstances of this case show that no employer-employee relationship exists
between the parties. The Labor Arbiter and the NLRC correctly found that
petitioner company lacked the power of control over the performance by
respondent of his duties. The Labor Arbiter reasoned that the Comprehensive
Medical Plan, which contains the respondent's objectives, duties and obligations,
does not tell respondent "how to conduct his physical examination, how to
immunize, or how to diagnose and treat his patients, employees of [petitioner]
company, in each case." He likened this case to that of Neri v. National Labor
Relations Commission, 19 which held:

In the case of petitioner Neri, it is admitted that FEBTC issued a job

description which detailed her functions as a radio/telex operator.
However, a cursory reading of the job description shows that what was
sought to be controlled by FEBTC was actually the end result of the task,
e.g., that the daily incoming and outgoing telegraphic transfer of funds
received and relayed by her, respectively, tallies with that of the register.
The guidelines were laid down merely to ensure that the desired end
result was achieved. It did not, however, tell Neri how the radio/telex
machine should be operated.

STADIH

In effect, the Labor Arbiter held that petitioner company, through the
Comprehensive Medical Plan, provided guidelines merely to ensure that the end
result was achieved, but did not control the means and methods by which
respondent performed his assigned tasks.
The NLRC affirmed the findings of the Labor Arbiter and stated that it is precisely
because the company lacks the power of control that the contract provides that
respondent shall be directly responsible to the employee concerned and their
dependents for any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.
The Labor Arbiter also correctly found that the provision in the Retainer
Agreement that respondent was on call during emergency cases did not make
him a regular employee. He explained, thus:
Likewise, the allegation of complainant that since he is on call at anytime
of the day and night makes him a regular employee is off-tangent.
Complainant does not dispute the fact that outside of the two (2) hours
that he is required to be at respondent company's premises, he is not at
all further required to just sit around in the premises and wait for an
emergency to occur so as to enable him from using such hours for his
own benefit and advantage. In fact, complainant maintains his own
private clinic attending to his private practice in the city, where he
services his patients, bills them accordingly and if it is an employee of

respondent company who is attended to by him for special treatment that

needs hospitalization or operation, this is subject to a special billing.
More often than not, an employee is required to stay in the employer's
workplace or proximately close thereto that he cannot utilize his time
effectively and gainfully for his own purpose. Such is not the prevailing
situation here.

In addition, the Court finds that the schedule of work and the requirement to be
on call for emergency cases do not amount to such control, but are necessary
incidents to the Retainership Agreement.
The Court also notes that the Retainership Agreement granted to both parties the
power to terminate their relationship upon giving a 30-day notice. Hence,
petitioner company did not wield the sole power of dismissal or termination.
The Court agrees with the Labor Arbiter and the NLRC that there is nothing
wrong with the employment of respondent as a retained physician of petitioner
company and upholds the validity of the Retainership Agreement which clearly
stated that no employer-employee relationship existed between the parties. The
Agreement also stated that it was only for a period of 1 year beginning January 1,
1988 to December 31, 1998, but it was renewed on a yearly basis.
Considering that there is no employer-employee relationship between the parties,
the termination of the Retainership Agreement, which is in accordance with the
provisions of the Agreement, does not constitute illegal dismissal of respondent.
Consequently, there is no basis for the moral and exemplary damages granted by
the Court of Appeals to respondent due to his alleged illegal dismissal.
WHEREFORE, the petition is GRANTED and the Decision and Resolution of the
Court of Appeals are REVERSED and SET ASIDE. The Decision and Resolution
dated November 28, 1997 and August 7, 1998, respectively, of the National Labor
Relations Commission are REINSTATED.
No costs.
SO ORDERED.

ICcDaA

Puno, C.J., Sandoval-Gutierrez, Corona and Garcia, JJ., concur.

|||

(Coca Cola Bottlers (Phils.), Inc. v. Climaco, G.R. No. 146881, [February 5,

2007], 543 PHIL 151-167)

[G.R. No. 164652. June 8, 2007.]

THELMA DUMPIT-MURILLO, petitioner, vs.

COURT

OF

APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE

JAVIER AND EDWARD TAN,respondents.

DECISION

QUISUMBING, Acting C.J :

p

This petition seeks to reverse and set aside both the Decision 1 dated January
30, 2004 of the Court of Appeals in CA-G.R. SP No. 63125 and its
Resolution 2 dated June 23, 2004 denying the motion for reconsideration. The
Court of Appeals had overturned the Resolution 3 dated August 30, 2000 of the
National Labor Relations Commission (NLRC) ruling that petitioner was illegally
dismissed.
The facts of the case are as follows:
On October 2, 1995, under Talent Contract No. NT95-1805, 4 private respondent
Associated Broadcasting Company (ABC) hired petitioner Thelma DumpitMurillo as a newscaster and co-anchor for Balitang-Balita, an early evening news
program. The contract was for a period of three months. It was renewed under
Talent Contracts Nos. NT95-1915, NT96-3002, NT98-4984 and NT99-5649. 5 In
addition, petitioner's services were engaged for the program "Live on Five." On
September 30, 1999, after four years of repeated renewals, petitioner's talent

contract expired. Two weeks after the expiration of the last contract, petitioner
sent a letter to Mr. Jose Javier, Vice President for News and Public Affairs of
ABC, informing the latter that she was still interested in renewing her contract
subject to a salary increase. Thereafter, petitioner stopped reporting for work. On
November 5, 1999, she wrote Mr. Javier another letter, 6 which we quote
verbatim:

DEICaA

xxx xxx xxx

Dear Mr. Javier:
On October 20, 1999, I wrote you a letter in answer to your query by way
of a marginal note "what terms and conditions" in response to my first
letter dated October 13, 1999. To date, or for more than fifteen (15) days
since then, I have not received any formal written reply . . .
In view hereof, should I not receive any formal response from you until
Monday, November 8, 1999, I will deem it as a constructive dismissal of
my services.
xxx xxx xxx

A month later, petitioner sent a demand letter 7 to ABC, demanding: (a)

reinstatement to her former position; (b) payment of unpaid wages for services
rendered from September 1 to October 20, 1999 and full backwages; (c) payment
of 13th month pay, vacation/sick/service incentive leaves and other monetary
benefits due to a regular employee starting March 31, 1996. ABC replied that a
check covering petitioner's talent fees for September 16 to October 20, 1999 had
been processed and prepared, but that the other claims of petitioner had no basis
in fact or in law.
On December 20, 1999, petitioner filed a complaint 8 against ABC, Mr. Javier and
Mr. Edward Tan, for illegal constructive dismissal, nonpayment of salaries,
overtime pay, premium pay, separation pay, holiday pay, service incentive leave
pay, vacation/sick leaves and 13th month pay in NLRC-NCR Case No. 30-12-

00985-99. She likewise demanded payment for moral, exemplary and actual
damages, as well as for attorney's fees.
The parties agreed to submit the case for resolution after settlement failed during
the mandatory conference/conciliation. On March 29, 2000, the Labor Arbiter
dismissed the complaint. 9
On appeal, the NLRC reversed the Labor Arbiter in a Resolution dated August
30, 2000. The NLRC held that an employer-employee relationship existed
between petitioner and ABC; that the subject talent contract was void; that the
petitioner was a regular employee illegally dismissed; and that she was entitled to
reinstatement and backwages or separation pay, aside from 13th month pay and
service incentive leave pay, moral and exemplary damages and attorney's fees. It
held as follows:

ADEacC

WHEREFORE, the Decision of the Arbiter dated 29 March 2000 is

hereby REVERSED/SET ASIDE and a NEW ONE promulgated:
1) declaring respondents to have illegally dismissed complainant from
her regular work therein and thus, ordering them to reinstate her in her
former position without loss of seniority right[s] and other privileges and
to pay her full backwages, inclusive of allowances and other benefits,
including 13th

month

pay based on her said latest rate

of

P28,000.00/mo. from the date of her illegal dismissal on 21 October

1999 up to finality hereof, or at complainant's option, to pay her
separation pay of one (1) month pay per year of service based on said
latest monthly rate, reckoned from date of hire on 30 September 1995
until finality hereof;
2) to pay complainant's accrued SILP [Service Incentive Leave Pay] of 5
days pay per year and 13th month pay for the years 1999, 1998 and
1997 of P19,236.00 and P84,000.00, respectively and her accrued
salary from 16 September 1999 to 20 October 1999 of P32,760.00 plus
legal interest at 12% from date of judicial demand on 20 December 1999
until finality hereof;

3) to pay complainant moral damages of P500,000.00, exemplary

damages of P350,000.00 and 10% of the total of the adjudged monetary
awards as attorney's fees.
Other monetary claims of complainant are dismissed for lack of merit.

TEcADS

SO ORDERED. 10

After its motion for reconsideration was denied, ABC elevated the case to the
Court of Appeals in a petition for certiorari under Rule 65. The petition was first
dismissed for failure to attach particular documents,

11

but was reinstated on

grounds of the higher interest of justice. 12

Thereafter, the appellate court ruled that the NLRC committed grave abuse of
discretion, and reversed the decision of the NLRC. 13 The appellate court
reasoned that petitioner should not be allowed to renege from the stipulations she
had voluntarily and knowingly executed by invoking the security of tenure under
the Labor Code. According to the appellate court, petitioner was a fixed-term
employee and not a regular employee within the ambit of Article 280

14

of the

Labor Code because her job, as anticipated and agreed upon, was only for a
specified time. 15
Aggrieved, petitioner now comes to this Court on a petition for review, raising
issues as follows:
I.
THIS HONORABLE COURT CAN REVIEW THE FINDINGS OF THE
HONORABLE COURT OF APPEALS, THE DECISION OF WHICH IS
NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS
OF THE SUPREME COURT[;]
II.
THE PRO-FORMA TALENT CONTRACTS, AS CORRECTLY FOUND
BY THE NLRC FIRST DIVISION, ARE "ANTI-REGULARIZATION
DEVICES" WHICH MUST BE STRUCK DOWN FOR REASONS OF
PUBLIC POLICY[;]

III.
BY REASON OF THE CONTINUOUS AND SUCCESSIVE RENEWALS
OF THE THREE-MONTH TALENT CONTRACTS, AN EMPLOYEREMPLOYEE RELATIONSHIP WAS CREATED AS PROVIDED FOR
UNDER ARTICLE 280 OF THE LABOR CODE[;]
IV.
BY THE CONSTRUCTIVE DISMISSAL OF HEREIN PETITIONER, AS A
REGULAR EMPLOYEE, THERE WAS A DENIAL OF PETITIONER'S
RIGHT TO DUE PROCESS THUS ENTITLING HER TO THE MONEY
CLAIMS AS STATED IN THE COMPLAINT[.] 16

The issues for our disposition are: (1) whether or not this Court can review the
findings of the Court of Appeals; and (2) whether or not under Rule 45 of the
Rules of Court the Court of Appeals committed a reversible error in its
Decision.

SITCEA

On the first issue, private respondents contend that the issues raised in the
instant petition are mainly factual and that there is no showing that the said
issues have been resolved arbitrarily and without basis. They add that the
findings of the Court of Appeals are supported by overwhelming wealth of
evidence on record as well as prevailing jurisprudence on the matter. 17
Petitioner however contends that this Court can review the findings of the Court
of Appeals, since the appellate court erred in deciding a question of substance in
a way which is not in accord with law or with applicable decisions of this Court.

18

We agree with petitioner. Decisions, final orders or resolutions of the Court of

Appeals in any case regardless of the nature of the action or proceeding
involved may be appealed to this Court through a petition for review. This
remedy is a continuation of the appellate process over the original case,

19

and

considering there is no congruence in the findings of the NLRC and the Court of
Appeals regarding the status of employment of petitioner, an exception to the

general rule that this Court is bound by the findings of facts of the appellate
court, 20 we can review such findings.
On the second issue, private respondents contend that the Court of Appeals did
not err when it upheld the validity of the talent contracts voluntarily entered into
by petitioner. It further stated that prevailing jurisprudence has recognized and
sustained the absence of employer-employee relationship between a talent and
the media entity which engaged the talent's services on a per talent contract
basis, citing the case of Sonza v. ABS-CBN Broadcasting Corporation. 21
Petitioner avers however that an employer-employee relationship was created
when the private respondents started to merely renew the contracts repeatedly
fifteen times or for four consecutive years. 22
Again, we agree with petitioner. The Court of Appeals committed reversible error
when it held that petitioner was a fixed-term employee. Petitioner was a regular
employee under contemplation of law. The practice of having fixed-term contracts
in the industry does not automatically make all talent contracts valid and
compliant with labor law. The assertion that a talent contract exists does not
necessarily prevent a regular employment status. 23
Further, the Sonza case is not applicable. In Sonza, the television station did not
instruct Sonza how to perform his job. How Sonza delivered his lines, appeared
on television, and sounded on radio were outside the television station's control.
Sonza had a free hand on what to say or discuss in his shows provided he did
not attack the television station or its interests. Clearly, the television station did
not exercise control over the means and methods of the performance of Sonza's
work. 24 In the case at bar, ABC had control over the performance of petitioner's
work. Noteworthy too, is the comparatively low P28,000 monthly pay of
petitioner 25 vis the P300,000 a month salary of Sonza,

26

that all the more

bolsters the conclusion that petitioner was not in the same situation as Sonza.

HCEcAa

The contract of employment of petitioner with ABC had the following stipulations:

xxx xxx xxx

1. SCOPE OF SERVICES TALENT agrees to devote his/her talent,
time, attention and best efforts in the performance of his/her duties and
responsibilities as Anchor/Program Host/Newscaster of the Program, in
accordance

with

the

direction

of

ABC

and/or

its

authorized

representatives.
1.1. DUTIES AND RESPONSIBILITIES TALENT shall:
a. Render his/her services as a newscaster on the
Program;
b. Be involved in news-gathering operations by
conducting interviews on- and off-the-air;
c. Participate in live remote coverages when called
upon;
d. Be available for any other news assignment, such
as writing, research or camera work;
e. Attend production meetings;
f. On assigned days, be at the studios at least one
(1) hour before the live telecasts;
g. Be present promptly at the studios and/or other
place of assignment at the time designated by ABC;
h. Keep abreast of the news;
i. Give his/her full cooperation to ABC and its duly
authorized representatives in the production and promotion
of the Program; and
j. Perform such other functions as may be assigned
to him/her from time to time.
xxx xxx xxx

HTCSDE

1.3 COMPLIANCE WITH STANDARDS, INSTRUCTIONS AND

OTHER RULES AND REGULATIONS TALENT agrees that
he/she will promptly and faithfully comply with the requests and
instructions, as well as the program standards, policies, rules and
regulations of ABC, the KBP and the government or any of its
agencies and instrumentalities.

27

xxx xxx xxx

In Manila Water Company, Inc. v. Pena, 28 we said that the elements to determine
the existence of an employment relationship are: (a) the selection and
engagement of the employee, (b) the payment of wages, (c) the power of
dismissal, and (d) the employer's power to control. The most important element is
the employer's control of the employee's conduct, not only as to the result of the
work to be done, but also as to the means and methods to accomplish it. 29
The duties of petitioner as enumerated in her employment contract indicate that
ABC had control over the work of petitioner. Aside from control, ABC also
dictated the work assignments and payment of petitioner's wages. ABC also had
power to dismiss her. All these being present, clearly, there existed an
employment relationship between petitioner and ABC.
Concerning regular employment, the law provides for two kinds of employees,
namely: (1) those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and (2)
those who have rendered at least one year of service, whether continuous or
broken, with respect to the activity in which they are employed.

30

In other words,

regular status arises from either the nature of work of the employee or the
duration of his employment.
said:

31

InBenares v. Pancho, 32 we very succinctly

IHaCDE

. . . [T]he primary standard for determining regular employment is the

reasonable connection between the particular activity performed by the
employee vis--vis the usual trade or business of the employer. This
connection can be determined by considering the nature of the work

performed and its relation to the scheme of the particular business or

trade in its entirety. If the employee has been performing the job for at
least a year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability
of that activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such activity
exists. 33

In our view, the requisites for regularity of employment have been met in the
instant case. Gleaned from the description of the scope of services
aforementioned, petitioner's work was necessary or desirable in the usual
business or trade of the employer which includes, as a pre-condition for its
enfranchisement, its participation in the government's news and public
information dissemination. In addition, her work was continuous for a period of
four years. This repeated engagement under contract of hire is indicative of the
necessity and desirability of the petitioner's work in private respondent ABC's
business. 34
The contention of the appellate court that the contract was characterized by a
valid fixed-period employment is untenable. For such contract to be valid, it
should be shown that the fixed period was knowingly and voluntarily agreed upon
by the parties. There should have been no force, duress or improper pressure
brought to bear upon the employee; neither should there be any other
circumstance that vitiates the employee's consent.

35

It should satisfactorily

appear that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance being exercised by the employer over the
employee. 36 Moreover, fixed-term employment will not be considered valid
where, from the circumstances, it is apparent that periods have been imposed to
preclude acquisition of tenurial security by the employee. 37
In the case at bar, it does not appear that the employer and employee dealt with
each other on equal terms. Understandably, the petitioner could not object to the
terms of her employment contract because she did not want to lose the job that

she loved and the workplace that she had grown accustomed to,

38

which is

exactly what happened when she finally manifested her intention to negotiate.
Being one of the numerous newscasters/broadcasters of ABC and desiring to
keep her job as a broadcasting practitioner, petitioner was left with no choice but
to affix her signature of conformity on each renewal of her contract as already
prepared by private respondents; otherwise, private respondents would have
simply refused to renew her contract. Patently, the petitioner occupied a position
of weakness vis--vis the employer. Moreover, private respondents' practice of
repeatedly extending petitioner's 3-month contract for four years is a
circumvention of the acquisition of regular status. Hence, there was no valid
fixed-term employment between petitioner and private respondents.
While this Court has recognized the validity of fixed-term employment contracts in
a number of cases, it has consistently emphasized that when the circumstances
of a case show that the periods were imposed to block the acquisition of security
of tenure, they should be struck down for being contrary to law, morals, good
customs, public order or public policy. 39
As a regular employee, petitioner is entitled to security of tenure and can be
dismissed only for just cause and after due compliance with procedural due
process. Since private respondents did not observe due process in constructively
dismissing the petitioner, we hold that there was an illegal dismissal.
WHEREFORE, the challenged Decision dated January 30, 2004 and Resolution
dated June 23, 2004 of the Court of Appeals in CA-G.R. SP No. 63125, which
held that the petitioner was a fixed-term employee, are REVERSED and SET
ASIDE. The NLRC decision is AFFIRMED.
Costs against private respondents.
SO ORDERED.
|||

acCDSH

(Dumpit-Murillo v. Court of Appeals, G.R. No. 164652, [June 8, 2007], 551 PHIL

725-741)

[G.R. No. 168424. June 8, 2007.]

CONSOLIDATED BROADCASTING SYSTEM, INC., petitioner, vs.
DANNY OBERIO, ELNA DE PEDRO, LUISITO VILLAMOR,
WILMA SUGATON, RUFO DEITA, JR., EMILY DE GUZMAN,
CAROLINE

LADRILLO,

JOSE

ROBERTO

REGALADO,

ROSEBEL NARCISO & ANANITA TANGETE, respondents.

DECISION

YNARES-SANTIAGO, J :
p

Assailed in this petition for review is the July 30, 2004 Decision 1 of the Court of
Appeals in CA-G.R. SP No. 77098, which affirmed the December 5, 2001
Decision 2 of the National Labor Relations Commission (NLRC) holding that
respondents were regular employees of petitioner and that they were illegally
dismissed.
Respondents alleged that they were employed as drama talents by DYWBBombo

Radyo,

radio

station

owned

and

operated

by

petitioner Consolidated Broadcasting System, Inc. They reported for work daily
for six days in a week and were required to record their drama production in
advance. Some of them were employed by petitioner since 1974, while the latest
one was hired in 1997. 3 Their drama programs were aired not only in Bacolod
City but also in the sister stations of DYWB in the Visayas and Mindanao areas. 4
Sometime in August 1998, petitioner reduced the number of its drama
productions from 14 to 11, but was opposed by respondents. After the

negotiations failed, the latter sought the intervention of the Department of Labor
and Employment (DOLE), which on November 12, 1998, conducted through its
Regional Office, an inspection of DYWB station. The results thereof revealed that
petitioner is guilty of violation of labor standard laws, such as underpayment of
wages, 13th month pay, non-payment of service incentive leave pay, and noncoverage of respondents under the Social Security System.

aHICDc

Petitioner contended that respondents are not its employees and refused to
submit the payroll and daily time records despite the subpoena duces
tecum issued by the DOLE Regional Director. Petitioner further argued that the
case should be referred to the NLRC because the Regional Director has no
jurisdiction over the determination of the existence of employer-employee
relationship which involves evidentiary matters that are not verifiable in the
normal course of inspection.
Vexed by the respondents' complaint, petitioner allegedly pressured and
intimidated respondents. Respondents Oberio and Delta were suspended for
minor lapses and the payment of their salaries were purportedly delayed.
Eventually, on February 3, 1999, pending the outcome of the inspection case with
the Regional Director, respondents were barred by petitioner from reporting for
work; thus, the former claimed constructive dismissal. 5
On April 8, 1999, the DOLE Regional Director issued an order directing petitioner
to

pay

respondents

total

of

P318,986.74

representing

non-

payment/underpayment of the salary and benefits due them. 6 However, on July

8, 1999, the Regional Director reconsidered the April 8, 1999 order and certified
the records of the case to the NLRC, Regional Arbitration Branch VI, for
determination of employer-employee relationship. 7 Respondents appealed said
order to the Secretary of Labor.
On October 12, 1999, respondents filed a case for illegal dismissal,
underpayment/non-payment of wages and benefits plus damages against
petitioner. On April 10, 2000, the Labor Arbiter dismissed the case without
prejudice while waiting for the decision of the Secretary of Labor on the same

issue of the existence of an employer-employee relationship between petitioner

and respondents.
On appeal to the NLRC, respondents raised the issue of employer-employee
relationship and submitted the following to prove the existence of such
relationship, to wit: time cards, identification cards, payroll, a show cause order of
the station manager to respondent Danny Oberio and memoranda either noted or
issued by said manager. Petitioner, on the other hand, did not present any
documentary evidence in its behalf and merely denied the allegations of
respondents. It claimed that the radio station pays for the drama recorded by
piece and that it has no control over the conduct of respondents.
On December 5, 2001, the NLRC rendered a decision holding that respondents
were regular employees of petitioner who were illegally dismissed by the latter. It
further held that respondents complied with the requirements of the rule on forum
shopping. The decretal portion thereof, provides:
WHEREFORE, premises considered, the decision of Labor Arbiter Ray
Alan T. Drilon dated 10 April 2000 is SET ASIDE and VACATED and a
new one entered.
Ordering respondent Consolidated Broadcasting System, Inc. (Bombo
Radyo Philippines), DYWB to reinstate the complainants without loss of
seniority rights wi[th] full back wages computed from February 1999 up
to the time of actual reinstatement.

TaEIcS

SO ORDERED. 8

Hence, petitioner filed the instant recourse.

The issues for resolution are as follows: (1) Did respondents violate the rule on
forum shopping; (2) whether the NLRC correctly ruled on the merits of the case
instead of remanding the case to the Labor Arbiter; (3) whether respondents were
employees of petitioner; and (4) whether their dismissal was illegal.
Respondents' complaint in the inspection case before the DOLE Regional
Director alleged that they were under the employ of petitioner at the time of the

filing of said complaint. Pending the resolution thereof, they claimed to have been
dismissed; hence, the filing of the present illegal dismissal case before the Labor
Arbiter. The causes of action in these two complaints are different, i.e., one for
violation of labor standard laws, and the other, for illegal dismissal, but the
entitlement of respondents to the reliefs prayed for hinges on the same issue of
the existence of an employer-employee relationship. While the decision on the
said issue by one tribunal may operate as res judicata on the other, dismissal of
the present illegal dismissal case on the ground of forum shopping, would work
injustice to respondents because it is the law itself which provides for two
separate remedies for their distinct causes of action.
Under Article 217 9 of the Labor Code, termination cases fall under the
jurisdiction of Labor Arbiters. Whereas, Article 128

10

of the same Code vests the

Secretary of Labor or his duly authorized representatives with the power to

inspect the employer's records to determine and compel compliance with labor
standard laws. The exercise of the said power by the Secretary or his duly
authorized representatives is exclusive to cases where employer-employee
relationship still exists. Thus, in cases where the complaint for violation of labor
standard laws preceded the termination of the employee and the filing of the
illegal dismissal case, it would not be in consonance with justice to charge the
complainants with engaging in forum shopping when the remedy available to
them at the time their causes of action arose was to file separate cases before
different fora. Besides, in the instant case, respondent Danny Oberio disclosed in
the verification the pendency of the case regarding wage differential.
addition, said case was discussed in detail in the position paper,

12

11

In

evincing the

absence of any intention on the part of respondents to mislead the Labor

Arbiter.

IASEca

Similarly, in Benguet Management Corporation v. Court of Appeals, 13 petitioner

filed separate actions to enjoin the foreclosure of real estate mortgages before
the Regional Trial Courts of San Pablo City and Zambales which has jurisdiction
over the place where the properties were located. In both cases, petitioner
contended, among others, that the loan secured by said mortgages imposed

unauthorized penalties, interest and charges. The Court did not find the
mortgagors guilty of forum shopping considering that since injunction is
enforceable only within the territorial limits of the trial court, the mortgagor is left
without remedy as to the properties located outside the jurisdiction of the issuing
court, unless an application for injunction is made with another court which has
jurisdiction over the latter properties.
By parity of reasoning, it would be unfair to hold respondents in the instant case
guilty of forum shopping because the recourse available to them after their
termination, but pending resolution of the inspection case before the DOLE, was
to file a case for illegal dismissal before the Labor Arbiter who has jurisdiction
over termination disputes.
More importantly, substantial justice dictates that this case be resolved on the
merits considering that the NLRC and the Court of Appeals correctly found that
there existed an employer-employee relationship between petitioner and
respondents and that the latter's dismissal was illegal, as will be discussed
hereunder.
In the same vein, the NLRC correctly ruled on the merits instead of remanding
the case to the Labor Arbiter. Respondents specifically raised the issue of the
existence of employer-employee relationship but petitioner refused to submit
evidence to disprove such relationship on the erroneous contention that to do so
would constitute a waiver of the right to question the jurisdiction of the NLRC to
resolve the case on the merits. 14 This is rather odd because it was the stand of
petitioner in the inspection case before the DOLE that the case should be
certified to the NLRC for the resolution of the issue of employer-employee
relationship. But when the same issue was proffered before the NLRC, it refused
to present evidence and instead sought the dismissal of the case invoking the
pendency of the inspection case before the DOLE. Petitioner refused to meet
head on the substantial aspect of this controversy and resorted to technicalities to
delay its disposition. It must be stressed that labor tribunals are not bound by
technical rules and the Court would sustain the expedient disposition of cases so
long as the parties are not denied due process.

15

The rule is that, due process is

not violated where a person is given the opportunity to be heard, but chooses not
to give his or her side of the case.

16

Significantly, petitioner never claimed that it

was denied due process. Indeed, no such denial exists because it had all the
opportunities to present evidence before the labor tribunals below, the Court of
Appeals, and even before this Court, but chose not to do so for reasons which
will not warrant the sacrifice of substantial justice over technicalities.

EIcSDC

On the third issue, respondents' employment with petitioner passed the "four-fold
test" on employer-employee relations, namely: (1) the selection and engagement
of the employee, or the power to hire; (2) the payment of wages; (3) the power to
dismiss; and (4) the power to control the employee.
Petitioner failed to controvert with substantial evidence the allegation of
respondents that they were hired by the former on various dates from 1974 to
1997. If petitioner did not hire respondents and if it was the director alone who
chose the talents, petitioner could have easily shown, being in possession of the
records, a contract to such effect. However, petitioner merely relied on its
contention that respondents were piece rate contractors who were paid by
results. 17 Note that under Policy Instruction No. 40, petitioner is obliged to
execute the necessary contract specifying the nature of the work to be
performed, rates of pay, and the programs in which they will work. Moreover,
project or contractual employees are required to be apprised of the project they
will undertake under a written contract. This was not complied with by the
petitioner, justifying the reasonable conclusion that no such contracts exist and
that respondents were in fact regular employees.
In ABS-CBN v. Marquez, 18 the Court held that the failure of the employer to
produce the contract mandated by Policy Instruction No. 40 is indicative that the
so called talents or project workers are in reality, regular employees. Thus
Policy Instruction No. 40 pertinently provides:
Program employees are those whose skills, talents or services
are engaged by the station for a particular or specific program or

undertaking and who are not required to observe normal working

hours such that on some days they work for less than eight (8)
hours and on other days beyond the normal work hours observed
by station employees and are allowed to enter into employment
contracts with other persons, stations, advertising agencies or
sponsoring

companies.

The engagement

of

program

employees, including those hired by advertising or sponsoring

companies, shall be under a written contract specifying,
among other things, the nature of the work to be performed,
rates of pay, and the programs in which they will work.
The contract shall be duly registered by the station with the
Broadcast Media Council within three days from its
consummation. (Emphasis supplied)
Ironically, however, petitioner failed to adduce an iota proof that the
requirements for program employment were even complied with by it. It
is basic that project or contractual employees are appraised of the
project they will work under a written contract, specifying, inter alia, the
nature of work to be performed and the rates of pay and the program in
which they will work. Sadly, however, no such written contract was ever
presented by the petitioner. Petitioner is in the best of position to present
these documents. And because none was presented, we have every
reason to surmise that no such written contract was ever accomplished
by the parties, thereby belying petitioner's posture.
Worse, there was no showing of compliance with the requirement that
after every engagement or production of a particular television series,
the required reports were filed with the proper government agency, as
provided no less under the very Policy Instruction invoked by the
petitioner, nor under the Omnibus Implementing Rules of the Labor Code
for project employees. This alone bolsters respondents' contention that
they were indeed petitioner's regular employees since their employment
was not only for a particular program.

CHEDAc

Moreover, the engagement of respondents for a period ranging from 2 to 25 years

and the fact that their drama programs were aired not only in Bacolod City but
also in the sister stations of DYWB in the Visayas and Mindanao areas,
undoubtedly show that their work is necessary and indispensable to the usual
business or trade of petitioner. The test to determine whether employment is
regular or not is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the
employer. Also, if the employee has been performing the job for at least one year,
even if the performance is not continuous or merely intermittent, the law deems
the repeated and continuing need for its performance as sufficient evidence of
the necessity, if not indispensability of that activity to the business. Thus, even
assuming that respondents were initially hired as project/contractual employees
who were paid per drama or per project/contract, the engagement of their
services for 2 to 25 years justify their classification as regular employees, their
services being deemed indispensable to the business of petitioner. 19
As to the payment of wages, it was petitioner who paid the same as shown by the
payroll bearing the name of petitioner company in the heading with the respective
salaries of respondents opposite their names. Anent the power of control,
dismissal, and imposition of disciplinary measures, which are indicative of an
employer-employee relationship, 20 the same were duly proven by the following:
(1) memorandum 21 duly noted by Wilfredo Alejaga, petitioner's station manager,
calling the attention of the "Drama Department" to the late submission of scripts
by writers and the tardiness and absences of directors and talents, as well as the
imposable fines of P100 to P200 for future infractions; (2) the memorandum

22

of

the station manager directing respondent Oberio to explain why no disciplinary

action should be taken against him for punching the time card of a certain Mrs.
Fe Oberio who was not physically present in their office; and (3) the station
manager's memorandum 23suspending respondent Oberio for six days for the
said infraction which constituted violation of petitioner's network policy. All these,
taken together, unmistakably show the existence of an employer-employee
relationship. Not only did petitioner possess the power of control over their work

but also the power to discipline them through the imposition of fines and
suspension for violation of company rules and policies.
Finally, we find that respondents were illegally dismissed. In labor cases, the
employer has the burden of proving that the dismissal was for a just cause; failure
to show this would necessarily mean that the dismissal was unjustified and,
therefore, illegal. To allow an employer to dismiss an employee based on mere
allegations and generalities would place the employee at the mercy of his
employer; and the right to security of tenure, which this Court is bound to protect,
would be unduly emasculated. 24 In this case, petitioner merely contended that it
was respondents who ceased to report to work, and never presented any
substantial evidence to support said allegation. Petitioner therefore failed to
discharge its burden, hence, respondents were correctly declared to have been
illegally dismissed.
Furthermore, if doubts exist between the evidence presented by the employer
and the employee, the scales of justice must be tilted in favor of the latter the
employer must affirmatively show rationally adequate evidence that the dismissal
was for a justifiable cause. It is a time-honored rule that in controversies between
a laborer and his master, doubts reasonably arising from the evidence should be
resolved in the former's favor. The policy is to extend the doctrine to a greater
number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and
protection of labor. 25

cdasia

When a person is illegally dismissed, he is entitled to reinstatement without loss

of seniority rights and other privileges and to his full backwages. In the event,
however, that reinstatement is no longer feasible, or if the employee decides not
to be reinstated, the employer shall pay him separation pay in lieu of
reinstatement. Such a rule is likewise observed in the case of a strained
employer-employee relationship or when the work or position formerly held by the
dismissed employee no longer exists. In sum, an illegally dismissed employee is
entitled to: (1) either reinstatement if viable or separation pay if reinstatement is
no longer viable, and (2) backwages. In the instant controversy, reinstatement is

no longer viable considering the strained relations between petitioner and

respondents. As admitted by the latter, the complaint filed before the DOLE
strained their relations with petitioner who eventually dismissed them from
service. Payment of separation pay instead of reinstatement would thus better
promote the interest of both parties.
Respondents' separation pay should be computed based on their respective one
(1) month pay, or one-half (1/2) month pay for every year of service, whichever is
higher, reckoned from their first day of employment up to finality of this decision.
Full backwages, on the other hand, should be computed from the date of their
dismissal until the finality of this decision. 26
WHEREFORE, the petition is DENIED. The July 30, 2004 Decision of the Court
of Appeals in CA-G.R. SP No. 77098, finding respondents to be regular
employees of petitioner and holding them to be illegally dismissed and directing
petitioner to pay full backwages, is AFFIRMED with the MODIFICATION that
petitioner is ordered to pay respondents their separation pay instead of effecting
their reinstatement.
SO ORDERED.
Austria-Martinez, Chico-Nazario and Nachura, JJ., concur.
|||

(Consolidated Broadcasting System, Inc. v. Oberio, G.R. No. 168424, [June 8,

2007], 551 PHIL 802-818)

[G.R. No. 162833. June 15, 2007.]
LAKAS

SA INDUSTRIYA NG KAPATIRANG HALIGI NG

ALYANSA-PINAGBUKLOD

NG

MANGGAGAWANG

PROMO

NG BURLINGAME, petitioner, vs.BURLINGAME CORPORATION

, respondent.

DECISION

QUISUMBING, J :
p

This is an appeal to reverse and set aside both the Decision 1 dated August 29,
2003 of the Court of Appeals and its Resolution 2 dated March 15, 2004 in CAG.R. SP No. 69639. The appellate court had reversed the decision 3 dated
December 29, 2000 of the Secretary of Labor and Employment which ordered
the holding of a certification election among the rank-and-file promo employees of
respondent Burlingame Corporation.
The facts are undisputed.
On January 17, 2000, the petitioner Lakas sa Industriya ng Kapatirang Haligi ng
Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame (LIKHA-PMPB)
filed a petition for certification election before the Department of Labor and
Employment (DOLE). LIKHA-PMPB sought to represent all rank-and-file promo
employees of respondent numbering about 70 in all. The petitioner claimed that
there was no existing union in the aforementioned establishment representing the
regular rank-and-file promo employees. It prayed that it be voluntarily recognized
by the respondent to be the collective bargaining agent, or, in the alternative, that
a certification/consent election be held among said regular rank-and-file promo
employees.
The respondent filed a motion to dismiss the petition. It argued that there exists
no employer-employee relationship between it and the petitioner's members. It
further alleged that the petitioner's members are actually employees of F. Garil
Manpower Services (F. Garil), a duly licensed local employment agency. To prove
such contention, respondent presented a copy of its contract for manpower
services with F. Garil.
On June 29, 2000, Med-Arbiter Renato D. Parungo dismissed 4 the petition for
lack of employer-employee relationship, prompting the petitioner to file an
appeal 5before the Secretary of Labor and Employment.
On December 29, 2000, the Secretary of Labor and Employment ordered the
immediate conduct of a certification election. 6

A motion for reconsideration of the said decision was filed by the respondent on
January 19, 2001, but the same was denied in the Resolution 7 of February 19,
2002 of the Secretary of Labor and Employment.
Respondent then filed a complaint with the Court of Appeals, which then
reversed 8 the decision of the Secretary. The petitioner then filed a motion for
reconsideration,9 which the Court of Appeals denied 10 on March 15, 2004.
Hence the instant petition for review on certiorari.
The issue raised in the petition is:
WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN DECLARING THAT THERE IS NO EMPLOYER-EMPLOYEE
RELATIONSHIP

BETWEEN

PETITIONER'S

MEMBERS

AND BURLINGAME BECAUSE F. GARIL MANPOWER SERVICES IS

AN INDEPENDENT CONTRACTOR. 11

TaCEHA

Respondent contends that there is no employer-employee relationship between

the parties. 12 Petitioner, on the other hand, insists that there is. 13
The resolution of this issue boils down to a determination of the true status of F.
Garil, i.e., whether it is an independent contractor or a labor-only contractor.
The case of De Los Santos v. NLRC 14 succinctly enunciates the statutory
criteria:
Job contracting is permissible only if the following conditions are met: 1)
the contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according
to his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of
the work except as to the results thereof; and 2) the contractor has
substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in
the conduct of the business. 15

According to Section 5 of DOLE Department Order No. 18-02, Series of 2002: 16

Section 5. Prohibition against labor-only contracting. Labor-only

contracting is hereby declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a
job, work or service for a principal, and any of the following elements are
[is] present:
i) The contractor or sub-contractor does not have substantial
capital or investment which relates to the job, work or
service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main
business of the principal; or
ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
The foregoing provisions shall be without prejudice to the application of
Article 248(C) of the Labor Code, as amended.
"Substantial capital or investment" refers to capital stocks and
subscribed capitalization in the case of corporations, tools, equipment,
implements, machineries and work premises, actually and directly used
by the contractor or subcontractor in the performance or completion of
the job, work or service contracted out.
The "right to control" shall refer to the right reserved to the person for
whom the services of the contractual workers are performed, to
determine not only the end to be achieved, but also the manner and
means to be used in reaching that end.

Given the above criteria, we agree with the Secretary that F. Garil is not an
independent contractor.
First, F. Garil does not have substantial capitalization or investment in the form of
tools, equipment, machineries, work premises, and other materials, to qualify as

an independent contractor. No proof was adduced to show F. Garil's

capitalization.
Second, the work of the promo-girls was directly related to the principal business
or operation of Burlingame. Marketing and selling of products is an essential
activity to the main business of the principal.
Lastly, F. Garil did not carry on an independent business or undertake the
performance of its service contract according to its own manner and method, free
from the control and supervision of its principal, Burlingame.
The "four-fold test" will show that respondent is the employer of petitioner's
members. The elements to determine the existence of an employment
relationship are: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to
control the employee's conduct. The most important element is the employer's
control of the employee's conduct, not only as to the result of the work to be
done, but also as to the means and methods to accomplish it. 17
A perusal of the contractual stipulations between Burlingame and F. Garil shows
the following:
1. The AGENCY shall provide Burlingame Corporation or the CLIENT,
with sufficient number of screened, tested and pre-selected personnel
(professionals, highly-skilled, skilled, semi-skilled and unskilled) who will
be deployed in establishment selling products manufactured by the
CLIENT.
2. The AGENCY shall be responsible in paying its workers under this
contract in accordance with the new minimum wage including the daily
living allowances and shall pay them overtime or remuneration that
which is authorized by law.
3. It is expressly understood and agreed that the worker(s) supplied shall
be considered or treated as employee(s) of the AGENCY. Consequently,
there shall be no employer-employee relationship between the worker(s)

and the CLIENT and as such, the AGENCY shall be responsible to the
benefits mandated by law.
4. For and in consideration of the service to be rendered by the
AGENCY to the CLIENT, the latter shall during the terms of agreement
pay to the AGENCY the sum of Seven Thousand Five Hundred Pesos
Only (P7,500.00) per month per worker on the basis of Eight (8) hours
work payable up-to-date, semi-monthly, every 15th and 30th of each
calendar month. However, these rates may be subject to change
proportionately in the event that there will be revisions in the Minimum
Wage Law or any law related to salaries and wages.
5. The CLIENT shall report to the AGENCY any of its personnel
assigned to it if those personnel are found to be inefficient, troublesome,
uncooperative and not observing the rules and regulations set forth by
the CLIENT. It is understood and agreed that the CLIENT may request
any time the immediate replacement of any personnel(s) assigned to
them. 18

It is patent that the involvement of F. Garil in the hiring process was only with
respect to the recruitment aspect, i.e. the screening, testing and pre-selection of
the personnel it provided to Burlingame. The actual hiring itself was done through
the deployment of personnel to establishments by Burlingame.
The contract states that Burlingame would pay the workers through F. Garil,
stipulating that Burlingame shall pay F. Garil a certain sum per worker on the
basis of eight-hour work every 15th and 30th of each calendar month. This
evinces the fact that F. Garil merely served as conduit in the payment of wages to
the deployed personnel. The interpretation would have been different if the
payment was for the job, project, or services rendered during the month and not
on a per worker basis. In Vinoya v. National Labor Relations Commission, 19 we
held:
The Court takes judicial notice of the practice of employers who, in order
to evade the liabilities under the Labor Code, do not issue payslips

directly to their employees. Under the current practice, a third person,

usually the purported contractor (service or manpower placement
agency), assumes the act of paying the wage. For this reason, the lowly
worker is unable to show proof that it was directly paid by the true
employer. Nevertheless, for the workers, it is enough that they actually
receive their pay, oblivious of the need for payslips, unaware of its legal
implications. Applying this principle to the case at bar, even though the
wages were coursed through PMCI, we note that the funds actually
came from the pockets of RFC. Thus, in the end, RFC is still the one
who paid the wages of petitioner albeit indirectly.

20

The contract also provides that "any personnel found to be inefficient,

troublesome, uncooperative and not observing the rules and regulations set forth
by Burlingameshall be reported to F. Garil and may be replaced upon request."
Corollary to this circumstance would be the exercise of control and supervision
by Burlingame over workers supplied by F. Garil in order to establish the
inefficient, troublesome, and uncooperative nature of undesirable personnel. Also
implied in the provision on replacement of personnel carried upon request
by Burlingame is the power to fire personnel.
These are indications that F. Garil was not left alone in the supervision and
control of its alleged employees. Consequently, it can be concluded that F. Garil
was not an independent contractor since it did not carry a distinct business free
from the control and supervision of Burlingame.
It goes without saying that the contractual stipulation on the nonexistence of an
employer-employee relationship between Burlingame and the personnel provided
by F. Garil has no legal effect. While the parties may freely stipulate terms and
conditions of a contract, such contractual stipulations should not be contrary to
law, morals, good customs, public order or public policy. A contractual stipulation
to the contrary cannot override factual circumstances firmly establishing the legal
existence of an employer-employee relationship.

Under this circumstance, there is no doubt that F. Garil was engaged in labor-only
contracting, and as such, is considered merely an agent of Burlingame. In laboronly contracting, the law creates an employer-employee relationship to prevent a
circumvention of labor laws. The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal
employer. 21Since F. Garil is a labor-only contractor, the workers it supplied
should be considered as employees of Burlingame in the eyes of the law.
WHEREFORE, the challenged Decision of the Court of Appeals dated August 29,
2003 and the Resolution dated March 15, 2004 denying the motion for
reconsideration are REVERSED and SET ASIDE. The decision of the Secretary
of Labor and Employment ordering the holding of a certification election among
the rank-and-file promo employees of Burlingame is reinstated.
Costs against respondent.
SO ORDERED.
Carpio, Tinga and Velasco, Jr., JJ., concur.
Carpio-Morales, J., is on official leave.
|||

(Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng

Manggagawang Promo ng Burlingame v. Burlingame Corp., G.R. No. 162833,

[June 15, 2007], 552 PHIL 58-66)

[G.R. No. 162813. February 12, 2007.]

FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER
UY, petitioners, vs. JIMMY LEBATIQUE and THE HONORABLE
COURT OF APPEALS,respondents.

DECISION

QUISUMBING, J :
p

Before us is a petition for review on certiorari assailing the Decision 1 dated

September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its
Resolution 2dated March 15, 2004 denying the motion for reconsideration. The
appellate court had reversed the Decision 3 dated October 15, 2002 of the
National Labor Relations Commission (NLRC) setting aside the Decision 4 dated
June 27, 2001 of the Labor Arbiter.
Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996
private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50.
He delivered animal feeds to the company's clients.
On January 24, 2000, Lebatique complained of nonpayment of overtime work
particularly on January 22, 2000, when he was required to make a second
delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far
East's

General

Manager

and

petitioner

Alexander

Uy,

suspended Lebatique apparently for illegal use of company vehicle. Even

so, Lebatique reported for work the next day but he was prohibited from entering
the company premises.
On January 26, 2000, Lebatique sought the assistance of the Department of
Labor and Employment (DOLE) Public Assistance and Complaints Unit
concerning the nonpayment of his overtime pay. According to Lebatique, two
days later, he received a telegram from petitioners requiring him to report for
work. When he did the next day, January 29, 2000, Alexander asked him why he
was claiming overtime pay. Lebatique explained that he had never been paid for
overtime work since he started working for the company. He also told Alexander
that

Manuel

had

fired

him.

After

talking

to

terminated Lebatique and told him to look for another job.

Manuel,

Alexander

HCETDS

On March 20, 2000, Lebatique filed a complaint for illegal dismissal and
nonpayment of overtime pay. The Labor Arbiter found that Lebatique was illegally
dismissed, and ordered his reinstatement and the payment of his full back wages,

13th month pay, service incentive leave pay, and overtime pay. The dispositive
portion of the decision is quoted herein in full, as follows:
WHEREFORE, we find the termination of complainant illegal. He should
thus be ordered reinstated with full backwages. He is likewise ordered
paid his 13th month pay, service incentive leave pay and overtime pay as
computed by the Computation and Examination Unit as follows:
a) Backwages:
01/25/00 - 10/31/00 = 9.23 mos.
P223.50 x 26 x 9.23 = P53,635.53
11/01/00 - 06/26/01 = 7.86 mos.
P250.00 x 26 x 7.86 = 51,090.00 P104,725.53
13th Month Pay: 1/12 of P104,725.53 = 8,727.13
Service Incentive Leave Pay
01/25/00 - 10/31/00 = 9.23 mos.
P223.50 x 5/12 x 9.23 = P859.54
11/01/00 - 06/26/01 = 7.86 mos.
P250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95
b) Overtime Pay: (3 hours/day)
03/20/97 - 4/30/97 = 1.36 mos.
P180/8 x 1.25 x 3 x 26 x 1.36 = P2,983.50
05/01/97 - 02/05/98 = 9.16 mos.
P185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
02/06/98 - 10/30/99 = 20.83 mos.
P198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39

10/31/99 - 01/24/00 = 2.80 mos.

P223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77
TOTAL AWARD P196,659.72

SO ORDERED. 5

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for
lack of merit. The NLRC held that there was no dismissal to speak of
since Lebatiquewas merely suspended. Further, it found that Lebatique was a
field personnel, hence, not entitled to overtime pay and service incentive leave
pay. Lebatique sought reconsideration but was denied.
Aggrieved, Lebatique filed a petition for certiorari with the Court of Appeals.
The

Court

of

Appeals,

in

reversing

the

NLRC

decision,

reasoned

that Lebatique was suspended on January 24, 2000 but was illegally dismissed
on January 29, 2000 when Alexander told him to look for another job. It also
found that Lebatique was not a field personnel and therefore entitled to payment
of overtime pay, service incentive leave pay, and 13th month pay.
It reinstated the decision of the Labor Arbiter as follows:
WHEREFORE, premises considered, the decision of the NLRC dated 27
December 2002 is hereby REVERSED and the Labor Arbiter's decision
dated 27 June 2001REINSTATED.
SO ORDERED. 6

Petitioners moved for reconsideration but it was denied.

Hence, the instant petition wherein petitioners assign the following errors:
THE COURT OF APPEALS . . . ERRED IN REVERSING THE
DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION
DATED 15 OCTOBER 2002 AND IN RULING THAT THE PRIVATE
RESPONDENT WAS ILLEGALLY DISMISSED.

THE COURT OF APPEALS . . . ERRED IN REVERSING THE

DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION
DATED 15 OCTOBER 2002 AND IN RULING THAT PRIVATE
RESPONDENT IS NOT A FIELD PERSONNEL AND THER[E]FORE
ENTITLED TO OVERTIME PAY AND SERVICE INCENTIVE LEAVE
PAY.
THE COURT OF APPEALS . . . ERRED IN NOT DISMISSING THE
PETITION

FOR

CERTIORARI

FOR

FAILURE

OF

PRIVATE

RESPONDENT TO ATTACH CERTIFIED TRUE COPIES OF THE

QUESTIONED DECISION AND RESOLUTION OF THE PUBLIC
RESPONDENT. 7

Simply stated, the principal issues in this case are: (1) whether Lebatique was
illegally dismissed; and (2) whether Lebatique was a field personnel, not entitled
to overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from service but merely
suspended for a day due to violation of company rules; (2) Lebatique was not
barred from entering the company premises since he never reported back to
work; and (3) Lebatique is estopped from claiming that he was illegally dismissed
since his complaint before the DOLE was only on the nonpayment of his overtime
pay.
Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime
pay since he is a field personnel whose time outside the company premises
cannot be determined with reasonable certainty. According to petitioners, the
drivers do not observe regular working hours unlike the other office employees.
The drivers may report early in the morning to make their deliveries or in the
afternoon, depending on the production of animal feeds and the traffic conditions.
Petitioners also aver that Lebatique worked for less than eight hours a day. 8
Lebatique for his part insists that he was illegally dismissed and was not merely
suspended. He argues that he neither refused to work nor abandoned his job. He
further contends that abandonment of work is inconsistent with the filing of a

complaint for illegal dismissal. He also claims that he is not a field personnel,
thus, he is entitled to overtime pay and service incentive leave pay.
After consideration of the submission of the parties, we find that the petition lacks
merit. We are in agreement with the decision of the Court of Appeals sustaining
that of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on the employer to
prove that the termination was for a valid cause. 9 In this case, petitioners failed to
discharge such burden. Petitioners aver that Lebatique was merely suspended
for one day but he abandoned his work thereafter. To constitute abandonment as
a just cause for dismissal, there must be: (a) absence without justifiable reason;
and (b) a clear intention, as manifested by some overt act, to sever the employeremployee relationship. 10
The records show that petitioners failed to prove that Lebatique abandoned his
job. Nor was there a showing of a clear intention on the part of Lebatique to sever
the employer-employee relationship. When Lebatique was verbally told by
Alexander

Uy,

the

company's

General

Manager,

to

look

for

another

job, Lebatique was in effect dismissed. Even assuming earlier he was merely
suspended for illegal use of company vehicle, the records do not show that he
was afforded the opportunity to explain his side. It is clear also from the
sequence of the events leading to Lebatique's dismissal that it was Lebatique's
complaint for nonpayment of his overtime pay that provoked the management to
dismiss him, on the erroneous premise that a truck driver is a field personnel not
entitled to overtime pay.

DaEcTC

An employee who takes steps to protest his layoff cannot by any stretch of
imagination be said to have abandoned his work and the filing of the complaint is
proof enough of his desire to return to work, thus negating any suggestion of
abandonment. 11 A contrary notion would not only be illogical but also absurd.
It is immaterial that Lebatique had filed a complaint for nonpayment of overtime
pay the day he was suspended by management's unilateral act. What matters is
that he filed the complaint for illegal dismissal on March 20, 2000, after he was

told not to report for work, and his filing was well within the prescriptive period
allowed under the law.
On the second issue, Article 82 of the Labor Code is decisive on the question of
who are referred to by the term "field personnel." It provides, as follows:
ART. 82. Coverage. The provisions of this title [Working Conditions
and Rest Periods] 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.
xxx xxx xxx
"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.

In Auto Bus Transport Systems, Inc. v. Bautista, 12 this Court emphasized that the
definition of a "field personnel" is not merely concerned with the location where
the employee regularly performs his duties but also with the fact that the
employee's performance is unsupervised by the employer. We held that field
personnel are those who regularly perform their duties away from the principal
place of business of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. Thus, in order to determine
whether an employee is a field employee, it is also necessary to ascertain if
actual hours of work in the field can be determined with reasonable certainty by
the employer. In so doing, an inquiry must be made as to whether or not the
employee's time and performance are constantly supervised by the employer. 13

As correctly found by the Court of Appeals, Lebatique is not a field personnel as

defined

above

for

the

following

reasons:

(1)

company

drivers,

including Lebatique, are directed to deliver the goods at a specified time and
place; (2) they are not given the discretion to solicit, select and contact
prospective clients; and (3) Far East issued a directive that company drivers
should stay at the client's premises during truck-ban hours which is from 5:00 to
9:00 a.m. and 5:00 to 9:00 p.m. 14 Even petitioners admit that the drivers can
report early in the morning, to make their deliveries, or in the afternoon,
depending on the production of animal feeds. 15 Drivers, like Lebatique, are under
the control and supervision of management officers. Lebatique, therefore, is a
regular employee whose tasks are usually necessary and desirable to the usual
trade and business of the company. Thus, he is entitled to the benefits accorded
to regular employees of Far East, including overtime pay and service incentive
leave pay.
Note that all money claims arising from an employer-employee relationship shall
be filed within three years from the time the cause of action accrued; otherwise,
they shall be forever barred. 16 Further, if it is established that the benefits being
claimed have been withheld from the employee for a period longer than three
years, the amount pertaining to the period beyond the three-year prescriptive
period is therefore barred by prescription. The amount that can only be
demanded by the aggrieved employee shall be limited to the amount of the
benefits withheld within three years before the filing of the complaint. 17
Lebatique timely filed his claim for service incentive leave pay, considering that in
this situation, the prescriptive period commences at the time he was
terminated. 18 On the other hand, his claim regarding nonpayment of overtime
pay since he was hired in March 1996 is a different matter. In the case of
overtime pay, he can only demand for the overtime pay withheld for the period
within three years preceding the filing of the complaint on March 20, 2000.
However, we find insufficient the selected time records presented by petitioners to
compute properly his overtime pay. The Labor Arbiter should have required

petitioners to present the daily time records, payroll, or other documents in

management's control to determine the correct overtime pay due Lebatique.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated
September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its
Resolution dated March 15, 2004 are AFFIRMED with MODIFICATION to the
effect that the case is hereby REMANDED to the Labor Arbiter for further
proceedings to determine the exact amount of overtime pay and other monetary
benefits due Jimmy Lebatique which herein petitioners should pay without further
delay.
Costs against petitioners.
SO ORDERED.
Carpio, Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.
|||

(Far East Agricultural Supply, Inc. v. Lebatique, G.R. No. 162813, [February 12,

2007], 544 PHIL 420-430)

[G.R. No. 156146. June 21, 2007.]

OLONGAPO MAINTENANCE SERVICES, INC., petitioner, vs.
EDGARDO

B. CHANTENGCO,

SALVACION

S.

ANIGAN,

POLICARPIO S. ANIGAN, NOEL C. MENDOZA, DANIEL

VALENTIN, MANUEL T. MARIANO, CARLOS PALABYAB,
BETTY B. OLA, SALICIO R. MAGNO, MICHAEL SALAZAR,
LOPE

R.

MAGNO,

GERARDO

G.

AQUINO,

EDWIN

Q.

DAYANDANTE, JOSE P. PRIEL, ROMEO O. CLETE, ERNESTO

O. CLETE, SAMUEL P. MIRALPES, PATERNO R. BERZUELA,
ANTONIO C. VALDEZ, RICARDO L. LOPEZ, MANUEL C.
ABADIEZ, RUTH S. DOMENS, ALVIN P. MANGASIL, TIRSO T.

TISADO, EDMUNDO C. SANTOS, FRANCISCO M. ZAMORA,

EFREN E. ERGINA, DANIEL CASIMIRO, CHARLIE GALVEZ,
EDGARDO REYES, CELSO M. DEL MUNDO, EUGENIA
ILAGAN, RAFAEL CABAIS, DEODERICO GARCIA, VENANCIO
MAGHANOY, ZOSIMO DIMACULANGAN, DULLAS PACOMIO,
MARLON MAGDURULAN, GAUDIOSO BORREL, FORTUNATO
ANZANO, WILFREDO HERNANDEZ, ROLANDO MUCHILLAS,
NOMER MAGNO, NOEL MAGNO, JEREMIAH CONEL, REMIGIO
PAREO, CRISANTO LIVINA, ROGELIO CASIL, VICENTE
INOFINADA, RICKY BETONIO, ERNESTO MARASIGAN, ELSA
MARTINEZ,

ROBERTO

ALEXANDER

MERCANO,

REGANION,

RODERICO

ARNEL

BAYRON,

NEYRA,

WILFRED

BATACAN, SALVADOR CRISOL, JR., EDISON GEMALAYA,

ARNOLD

CAMERGA,

RAMON

BELMONTE,

ERNESTO

IGNACIO, DOMINGO GUADEZ, ROMEO TAADA, FAUSTO

GARCIA, JUANITO DUMAGAT, RODOLFO PIMENTE, ANDRES
SAHURDA, CACAOJ RAMILITO, ARCON MOLINA, ALEX
LIBROJO, respondents.

DECISION

NACHURA, J :
p

This Petition for Review on Certiorari assails the July 29, 2002 Decision 1 of the
Court of Appeals and its Resolution 2 dated November 14, 2002 in CA-G.R. SP
No. 67474, which, respectively, denied the petition for certiorari and the motion
for reconsideration filed by Olongapo Maintenance Services, Inc. (OMSI).
OMSI is a corporation engaged in the business of providing janitorial and
maintenance services to various clients, including government-owned and
controlled corporations. On various dates beginning 1986, OMSI hired the
respondents as janitors, grass cutters, and degreasers, and assigned them at the

Ninoy Aquino International Airport (NAIA). On January 14, 1999, OMSI

terminated respondents' employment.
Claiming termination without just cause and non-payment of labor standard
benefits, respondents filed a complaint for illegal dismissal, underpayment of
wages, and non-payment of holiday and service incentive leave pays, with prayer
for payment of separation pay, against OMSI.
For its part, OMSI denied the allegations in the complaint. It averred that when
Manila International Airport Authority (MIAA) awarded to OMSI the service
contracts for the airport, OMSI hired respondents as janitors, cleaners, and
degreasers to do the services under the contracts. OMSI informed the
respondents that they were hired for the MIAA project and their employments
were coterminous with the contracts. As project employees, they were not
dismissed from work but their employments ceased when the MIAA contracts
were not renewed upon their expiration. The termination of respondents'
employment cannot, thus, be considered illegal.

EcHaAC

In a Decision 3 dated November 19, 1999, the Labor Arbiter dismissed the
complaint, viz.:
WHEREFORE, premises considered, judgment is hereby rendered
DISMISSING for lack of merit the claims for separation pay, wage
differentials and holiday pay except that respondent is hereby ordered to
pay the seventy one (71) complainants listed in pages three and four of
the latter's position paper their service incentive leave pay.
SO ORDERED. 4

On appeal by the respondents, the NLRC modified the Labor Arbiter's ruling. It
held that respondents were regular and not project employees. Hence, they are
entitled to separation pay:
WHEREFORE, the decision appealed from is hereby modified by
granting in addition to the grant of service incentive leave pay, payment

of separation pay equivalent to half-month pay per [every] year of service

or one month pay, whichever is higher.
SO ORDERED. 5

OMSI sought reconsideration of the ruling, but the NLRC denied the motion on
July 30, 2001.
Petitioner went up to the Court of Appeals via a petition for certiorari, imputing
grave abuse of discretion to the NLRC for reversing the factual findings and the
decision of the Labor Arbiter. However, the Court of Appeals dismissed the
petition. The appellate court agreed with the NLRC that the continuous rehiring of
respondents, who performed tasks necessary and desirable in the usual
business of OMSI, was a clear indication that they were regular, not project
employees. The court added that OMSI failed to establish that respondents'
employment had been fixed for a specific project or undertaking, the completion
or termination of which had been determined at the time of their engagement or
hiring. Neither had it shown that respondents were informed of the duration and
scope of their work when they were hired. Furthermore, OMSI did not submit to
the Department of Labor and Employment (DOLE) reports of termination of the
respondents, thereby bolstering respondents' claim of regular employment. OMSI
filed a motion for reconsideration, but the Court of Appeals denied it on
November 14, 2002.

IcHTCS

Aggrieved by the resolutions of the Court of Appeals, OMSI comes to this Court
theorizing that:
THE COURT OF APPEALS COMMITTED GRAVE ERROR AND
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION IN SUSTAINING THE NLRC'S RULING THAT
RESPONDENTS ARE NOT PROJECT EMPLOYEES. CONCOMITANT
THERETO, THERE IS NEITHER FACTUAL NOR LEGAL BASIS FOR
THE AWARD OF SEPARATION PAY. 6

OMSI insists that respondents were project employees. Respondents, on the

other hand, maintain that they were OMSI's regular employees.

Article 280 of the Labor Code provides:

ART. 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season . . . (Italics supplied.)

Without question, respondents, as janitors, grass cutters, and degreasers,

performed work "necessary or desirable" in the janitorial and maintenance
service business of OMSI.
OMSI, however, argues that the respondents' performance of activities necessary
and desirable to its business does not necessarily and conclusively mean that
respondents were regular employees. OMSI asserts that respondents were
project employees and their employment was coterminous with OMSI's service
contracts with the MIAA. Thus, when the service contracts were terminated and
the respondents were not re-assigned to another project, OMSI cannot be held
liable for illegal dismissal.
The argument does not persuade.
The principal test in determining whether an employee is a project employee is
whether he/she is assigned to carry out a "specific project or undertaking," the
duration and scope of which are specified at the time the employee is engaged in
the project, 7 or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season. 8 A true project employee
should be assigned to a project which begins and ends at determined or
determinable times, and be informed thereof at the time of hiring. 9

In the instant case, the record is bereft of proof that the respondents'
engagement as project employees has been predetermined, as required by law.
We agree with the Court of Appeals that OMSI did not provide convincing
evidence that respondents were informed that they were to be assigned to a
"specific project or undertaking" when OMSI hired them. Notably, the
employment contracts for the specific project signed by the respondents were
never presented. All that OMSI submitted in the proceedings a quo are the
service contracts between OMSI and the MIAA. Clearly, OMSI utterly failed to
establish by substantial evidence that, indeed, respondents were project
employees and their employment was coterminous with the MIAA contract.

HcDSaT

Evidently cognizant of such neglect, OMSI attempted to correct the situation by

attaching copies of the application forms

10

of the respondents to its motion for

reconsideration of the Court of Appeals' Decision. Such practice cannot be

tolerated. This practice of submitting evidence late is properly rejected as it
defeats the speedy administration of justice involving poor workers. It is also
unfair. 11
OMSI's

reliance

on Mamansag

v.

National

Labor

Relations

Commission, 12 Cartagenas v. Romago Electric Company, Inc., 13 and Sandoval

Shipyards, Inc. v. National Labor Relations Commission

14

is misplaced. Said

cases are not on all fours with the case at bench.

In Mamansag, Consumer Pulse Inc. duly presented the contract of employment
showing that Mamansag was hired for a specific project and the completion or
termination of said project was determined at the start of the employment.
In Cartagenas, documentary exhibits were offered showing that the employee
had been issued appointments from project to project and was issued a notice of
temporary lay-off when the project was suspended due to lack of funds. Finally, in
the case ofSandoval Shipyards, the termination of the project employees was
duly reported to the then Ministry of Labor and Employment. These
circumstances are not true in OMSI's case. As mentioned, no convincing
evidence was offered to prove that respondents were informed that they were to
be assigned to a "specific project or undertaking." Also, OMSI never reported

respondents' termination to the then Department of Labor and Employment

(DOLE). In Philippine Long Distance Telephone Co. v. Ylagan, 15 we held that the
failure of the employee to file termination reports was an indication that an
employee was not a project but a regular employee.

In termination cases, the burden of proof rests on the employer to show that the
dismissal is for a just cause. Thus, employers who hire project employees are
mandated to state and, once its veracity is challenged, to prove the actual basis
for the latter's dismissal. 16 Unfortunately for OMSI, it failed to discharge the
burden. All that we have is OMSI's self-serving assertion that the respondents
were hired as project employees.
Having been illegally dismissed, the NLRC cannot be considered to have acted
whimsically in granting respondents separation pay in lieu of their reinstatement.
Accordingly, the Court of Appeals committed no reversible error nor grave abuse
of discretion in denying OMSI's petition for certiorari.
WHEREFORE, the petition for review is DENIED and the assailed Decision and
Resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.
Ynares-Santiago, Austria-Martinez and Chico-Nazario, JJ., concur.
|||

(Olongapo Maintenance Services, Inc. v. Chantengco, G.R. No. 156146, [June

21, 2007], 552 PHIL 330-338)

[G.R. No. 167622. November 7, 2008.]

GREGORIO V. TONGKO, petitioner, vs.
THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC.
and RENATO A. VERGEL DE DIOS, respondents.

DECISION

VELASCO, JR., J :
p

The Case
This Petition for Review on Certiorari under Rule 45 seeks the reversal of the
March 29, 2005 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No.
88253, entitled TheManufacturers Life Insurance Co. (Phils.), Inc. v. National
Labor Relations Commission and Gregorio V. Tongko. The assailed decision set
aside the Decision dated September 27, 2004 and Resolution dated December
16, 2004 rendered by the National Labor Relations Commission (NLRC) in NLRC
NCR CA No. 040220-04.

EIAaDC

The Facts
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic
corporation engaged in life insurance business. Renato A. Vergel De Dios was,
during the period material, its President and Chief Executive Officer.
Gregorio V. Tongko started his professional relationship with Manulife on July 1,
1977 by virtue of a Career Agent's Agreement 2 (Agreement) he executed with
Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is an independent contractor
and nothing contained herein shall be construed or interpreted as
creating an employer-employee relationship between the Company and
the Agent.
xxx xxx xxx
a) The Agent shall canvass for applications for Life Insurance, Annuities,
Group policies and other products offered by the Company, and collect,
in exchange for provisional receipts issued by the Agent, money due or
to become due to the Company in respect of applications or policies

obtained by or through the Agent or from policyholders allotted by the

Company to the Agent for servicing, subject to subsequent confirmation
of receipt of payment by the Company as evidenced by an Official
Receipt issued by the Company directly to the policyholder.
xxx xxx xxx
The Company may terminate this Agreement for any breach or violation
of any of the provisions hereof by the Agent by giving written notice to
the Agent within fifteen (15) days from the time of the discovery of the
breach. No waiver, extinguishment, abandonment, withdrawal or
cancellation of the right to terminate this Agreement by the Company
shall be construed for any previous failure to exercise its right under any
provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any
time without cause, by giving to the other party fifteen (15) days notice in
writing. . . .

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency

Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's
gross earnings from his work at Manulife, consisting of commissions, persistency
income, and management overrides, may be summarized as follows:
January to December 10, 2002 - P865,096.07
2001 - 6,214,737.11
2000 - 8,003,180.38
1999 - 6,797,814.05
1998 - 4,805,166.34
1997 - 2,822,620.00

The problem started sometime in 2001, when Manulife instituted manpower

development programs in the regional sales management level. Relative thereto,
De Dios addressed a letter dated November 6, 2001 4 to Tongko regarding an

October 18, 2001 Metro North Sales Managers Meeting. In the letter, De Dios
stated:

ScaHDT

The first step to transforming Manulife into a big league player has been
very clear to increase the number of agents to at least 1,000 strong
for a start. This may seem diametrically opposed to the way Manulife
was run when you first joined the organization. Since then, however,
substantial changes have taken place in the organization, as these have
been influenced by developments both from within and without the
company.
xxx xxx xxx
The issues around agent recruiting are central to the intended objectives
hence the need for a Senior Managers' meeting earlier last month when
Kevin O'Connor, SVP-Agency, took to the floor to determine from our
senior agency leaders what more could be done to bolster manpower
development. At earlier meetings, Kevin had presented information
where evidently, your Region was the lowest performer (on a per
Manager basis) in terms of recruiting in 2000 and, as of today, continues
to remain one of the laggards in this area.
While discussions, in general, were positive other than for certain
comments from your end which were perceived to be uncalled for, it
became clear that a one-on-one meeting with you was necessary to
ensure that you and management, were on the same plane. As gleaned
from some of your previous comments in prior meetings (both in group
and one-on-one), it was not clear that we were proceeding in the same
direction.
Kevin held subsequent series of meetings with you as a result, one of
which I joined briefly. In those subsequent meetings you reiterated
certain views, the validity of which we challenged and subsequently
found as having no basis.

With such views coming from you, I was a bit concerned that the rest of
the Metro North Managers may be a bit confused as to the directions the
company was taking. For this reason, I sought a meeting with everyone
in your management team, including you, to clear the air, so to speak.
This note is intended to confirm the items that were discussed at the said
Metro North Region's Sales Managers meeting held at the 7/F
Conference room last 18 October.

ESITcH

xxx xxx xxx

Issue # 2: "Some Managers are unhappy with their earnings and would
want to revert to the position of agents."
This is an often repeated issue you have raised with me and with Kevin.
For this reason, I placed the issue on the table before the rest of your
Region's Sales Managers to verify its validity. As you must have noted,
no Sales Manager came forward on their own to confirm your statement
and it took you to name Malou Samson as a source of the same, an
allegation that Malou herself denied at our meeting and in your very
presence.
This only confirms, Greg, that those prior comments have no solid basis
at all. I now believe what I had thought all along, that these allegations
were simply meant to muddle the issues surrounding the inability of your
Region to meet its agency development objectives!
Issue # 3: "Sales Managers are doing what the company asks them to
do but, in the process, they earn less."
xxx xxx xxx
All the above notwithstanding, we had your own records checked and we
found that you made a lot more money in the Year 2000 versus 1999. In
addition, you also volunteered the information to Kevin when you said
that you probably will make more money in the Year 2001 compared to
Year 2000. Obviously, your above statement about making "less money"

did not refer to you but the way you argued this point had us almost
believing that you were spouting the gospel of truth when you were
not. . . .
xxx xxx xxx
All of a sudden, Greg, I have become much more worried about your
ability to lead this group towards the new direction that we have been
discussing these past few weeks, i.e., Manulife's goal to become a major
agency-led distribution company in the Philippines. While as you claim,
you have not stopped anyone from recruiting, I have never heard you
proactively push for greater agency recruiting. You have not been
proactive all these years when it comes to agency growth.

SaCIDT

xxx xxx xxx

I cannot afford to see a major region fail to deliver on its developmental
goals next year and so, we are making the following changes in the
interim:
1. You will hire at your expense a competent assistant who can
unload you of much of the routine tasks which can be easily
delegated. This assistant should be so chosen as to complement
your skills and help you in the areas where you feel "may not be
your cup of tea".
You have stated, if not implied, that your work as Regional
Manager may be too taxing for you and for your health. The above
could solve this problem.
xxx xxx xxx
2. Effective immediately, Kevin and the rest of the Agency
Operations will deal with the North Star Branch (NSB) in
autonomous fashion. . . .
I have decided to make this change so as to reduce your span of
control and allow you to concentrate more fully on overseeing the

remaining groups under Metro North, your Central Unit and the
rest of the Sales Managers in Metro North. I will hold you solely
responsible for meeting the objectives of these remaining groups.
xxx xxx xxx
The above changes can end at this point and they need not go any
further. This, however, is entirely dependent upon you. But you have to
understand that meeting corporate objectives by everyone is primary and
will not be compromised. We are meeting tough challenges next year
and I would want everybody on board. Any resistance or holding back by
anyone will be dealt with accordingly.

Subsequently, De Dios wrote Tongko another letter dated December 18,

2001, 5 terminating Tongko's services, thus:
It would appear, however, that despite the series of meetings and
communications, both one-on-one meetings between yourself and SVP
Kevin O'Connor, some of them with me, as well as group meetings with
your Sales Managers, all these efforts have failed in helping you align
your directions with Management's avowed agency growth policy.

cIDHSC

xxx xxx xxx

On account thereof, Management is exercising its prerogative under
Section 14 of your Agents Contract as we are now issuing this notice of
termination of your Agency Agreement with us effective fifteen days from
the date of this letter.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC
against Manulife for illegal dismissal. The case, docketed as NLRC NCR Case
No. 11-10330-02, was raffled to Labor Arbiter Marita V. Padolina.

In the Complaint, Tongko, in a bid to establish an employer-employee

relationship, alleged that De Dios gave him specific directives on how to manage

his area of responsibility in the latter's letter dated November 6, 2001. He further
claimed that Manulife exercised control over him as follows:
Such control was certainly exercised by respondents over the herein
complainant. It was Manulife who hired, promoted and gave various
assignments to him. It was the company who set objectives as regards
productions, recruitment, training programs and all activities pertaining to
its business. Manulife prescribed a Code of Conduct which would govern
in minute detail all aspects of the work to be undertaken by employees,
including the sales process, the underwriting process, signatures,
handling of money, policyholder service, confidentiality, legal and
regulatory requirements and grounds for termination of employment. The
letter of Mr. De Dios dated 06 November 2001 left no doubt as to who
was in control. The subsequent termination letter dated 18 December
2001 again established in no uncertain terms the authority of the herein
respondents to control the employees of Manulife. Plainly, the
respondents wielded control not only as to the ends to be achieved but
the ways and means of attaining such ends.

Tongko bolstered his argument by citing Insular Life Assurance Co., Ltd. v. NLRC
(4th

Division) 7 and Great

Pacific

Life

Assurance

Corporation v.

NLRC, 8 which Tongkoclaimed to be similar to the instant case.

Tongko further claimed that his dismissal was without basis and that he was not
afforded due process. He also cited the Manulife Code of Conduct by which his
actions were controlled by the company.
Manulife then filed a Position Paper with Motion to Dismiss dated February 27,
2003, 9 in which it alleged that Tongko is not its employee, and that it did not
exercise "control" over him. Thus, Manulife claimed that the NLRC has no
jurisdiction over the case.

aIHSEc

In a Decision dated April 15, 2004, Labor Arbiter Marita V. Padolina dismissed
the complaint for lack of an employer-employee relationship. Padolina found that
applying the four-fold test in determining the existence of an employer-employee

relationship, none was found in the instant case. The dispositive portion thereof
states:
WHEREFORE, premises considered, judgment is hereby rendered
DISMISSING the instant complaint for lack of jurisdiction, there being no
employer-employee relationship between the parties.
SO ORDERED.

Tongko appealed the arbiter's Decision to the NLRC which reversed the same
and rendered a Decision dated September 27, 2004 finding Tongko to have been
illegally dismissed.
The NLRC's First Division, while finding an employer-employee relationship
between Manulife and Tongko applying the four-fold test, held Manulife liable for
illegal dismissal. It further stated that Manulife exercised control over Tongko as
evidenced by the letter dated November 6, 2001 of De Dios and wrote:
The above-mentioned letter shows the extent to which respondents
controlled complainant's manner and means of doing his work and
achieving the goals set by respondents. The letter shows how
respondents concerned themselves with the manner complainant
managed the Metro North Region as Regional Sales Manager, to the
point that respondents even had a say on how complainant interacted
with other individuals in the Metro North Region. The letter is in fact
replete with comments and criticisms on how complainant carried out his
functions as Regional Sales Manager.
More importantly, the letter contains an abundance of directives or
orders that are intended to directly affect complainant's authority and
manner of carrying out his functions as Regional Sales Manager.

10

...

Additionally, the First Division also ruled that:

Further evidence of [respondents'] control over complainant can be
found in the records of the case. [These] are the different codes of
conduct such as the Agent Code of Conduct, the Manulife Financial

Code of Conduct, and the Manulife Financial Code of Conduct

Agreement, which serve as the foundations of the power of control
wielded by respondents over complainant that is further manifested in
the different administrative and other tasks that he is required to perform.
These codes of conduct corroborate and reinforce the display of
respondents' power of control in their 06 November 2001 Letter to
complainant. 11

caITAC

The fallo of the September 27, 2004 Decision reads:

WHEREFORE, premises considered, the appealed Decision is hereby
reversed and set aside. We find complainant to be a regular employee of
respondent Manulife and that he was illegally dismissed from
employment by respondents.
In lieu of reinstatement, respondent Manulife is hereby ordered to pay
complainant separation pay as above set forth. Respondent Manulife is
further ordered to pay complainant backwages from the time he was
dismissed on 02 January 2002 up to the finality of this decision also as
indicated above.
xxx xxx xxx
All other claims are hereby dismissed for utter lack of merit.

From this Decision, Manulife filed a motion for reconsideration which was denied
by the NLRC First Division in a Resolution dated December 16, 2004. 12
Thus, Manulife filed an appeal with the CA docketed as CA-G.R. SP No. 88253.
Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding
the absence of an employer-employee relationship between the parties and
deeming the NLRC with no jurisdiction over the case. The CA arrived at this
conclusion while again applying the four-fold test. The CA found that Manulife did
not exercise control over Tongko that would render the latter an employee of
Manulife. The dispositive portion reads:

WHEREFORE, premises considered, the present petition is hereby

GRANTED and the writ prayed for accordingly GRANTED. The assailed
Decision dated September 27, 2004 and Resolution dated December 16,
2004 of the National Labor Relations Commission in NLRC NCR Case
No. 00-11-10330-2002 (NLRC NCR CA No. 040220-04) are hereby
ANNULLED and SET ASIDE. The Decision dated April 15, 2004 of
Labor Arbiter Marita V. Padolina is hereby REINSTATED.

IcAaEH

Hence, Tongko filed this petition and presented the following issues:
A
The Court of Appeals committed grave abuse of discretion in granting
respondents' petition for certiorari.
B
The Court of Appeals committed grave abuse of discretion in annulling
and setting aside the Decision dated September 27, 2004 and
Resolution dated December 16, 2004 in finding that there is no
employer-employee relationship between petitioner and respondent.
C
The Court of Appeals committed grave abuse of discretion in annulling
and setting aside the Decision dated September 27, 2004 and
Resolution dated December 16, 2004 which found petitioner to have
been illegally dismissed and ordered his reinstatement with payment of
backwages. 13

Restated, the issues are: (1) Was there an employer-employee relationship

between Manulife and Tongko? and (2) If yes, was Manulife guilty of illegal
dismissal?
The Court's Ruling
This petition is meritorious.
Tongko Was An Employee of Manulife

The basic issue of whether or not the NLRC has jurisdiction over the case
resolves itself into the question of whether an employer-employee relationship
existed between Manulife and Tongko. If no employer-employee relationship
existed between the two parties, then jurisdiction over the case properly lies with
the Regional Trial Court.

AEDCHc

In the determination of whether an employer-employee relationship exists

between two parties, this Court applies the four-fold test to determine the
existence of the elements of such relationship. In Pacific Consultants
International Asia, Inc. v. Schonfeld, the Court set out the elements of an
employer-employee relationship, thus:
Jurisprudence is firmly settled that whenever the existence of an
employment relationship is in dispute, four elements constitute the
reliable yardstick: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employer's
power to control the employee's conduct. It is the so-called "control test"
which constitutes the most important index of the existence of the
employer-employee relationship that is, whether the employer controls or
has reserved the right to control the employee not only as to the result of
the work to be done but also as to the means and methods by which the
same is to be accomplished. Stated otherwise, an employer-employee
relationship exists where the person for whom the services are
performed reserves the right to control not only the end to be achieved
but also the means to be used in reaching such end.

14

The NLRC, for its part, applied the four-fold test and found the existence of all the
elements and declared Tongko an employee of Manulife. The CA, on the other
hand, found that the element of control as an indicator of the existence of an
employer-employee relationship was lacking in this case. The NLRC and the CA
based their rulings on the same findings of fact but differed in their
interpretations.

The NLRC arrived at its conclusion, first, on the basis of the letter dated
November 6, 2001 addressed by De Dios to Tongko. According to the NLRC, the
letter contained "an abundance of directives or orders that are intended to directly
affect complainant's authority and manner of carrying out his functions as
Regional Sales Manager." It enumerated these "directives" or "orders" as follows:
1. You will hire at your expense a competent assistant who can unload
you of much of the routine tasks which can be easily delegated. . . .
xxx xxx xxx
This assistant should be hired immediately.
2. Effective immediately, Kevin and the rest of the Agency Operations will
deal with the North Star Branch (NSB) in autonomous fashion . . . .

xxx xxx xxx

I have decided to make this change so as to reduce your span of control
and allow you to concentrate more fully on overseeing the remaining
groups under Metro North, your Central Unit and the rest of the Sales
Managers in Metro North. . . .
3. Any resistance or holding back by anyone will be dealt with
accordingly.
4. I have been straightforward in this my letter and I know that we can
continue to work together. . . but it will have to be on my terms. Anything
else is unacceptable!

SaICcT

The NLRC further ruled that the different codes of conduct that were applicable
to Tongko served as the foundations of the power of control wielded by Manulife
overTongko that is further manifested in the different administrative and other
tasks that he was required to perform.
The NLRC also found that Tongko was required to render exclusive service to
Manulife, further bolstering the existence of an employer-employee relationship.

Finally, the NLRC ruled that Tongko was integrated into a management structure
over which Manulife exercised control, including the actions of its officers. The
NLRC held that such integration added to the fact that Tongko did not have his
own agency belied Manulife's claim that Tongko was an independent contractor.
The CA, however, considered the finding of the existence of an employeremployee relationship by the NLRC as far too sweeping having as its only basis
the letter dated November 6, 2001 of De Dios. The CA did not concur with the
NLRC's ruling that the elements of control as pointed out by the NLRC are
"sufficient indicia of control that negates independent contractorship and
conclusively

establish

an

employer-employee

relationship

between" 15 Tongko and Manulife. The CA ruled that there is no employeremployee relationship between Tongko and Manulife.
An impasse appears to have been reached between the CA and the NLRC on the
sole issue of control over an employee's conduct. It bears clarifying that such
control not only applies to the work or goal to be done but also to the means and
methods to accomplish it. 16 In Sonza v. ABS-CBN Broadcasting Corporation, we
explained that not all forms of control would establish an employer-employee
relationship, to wit:
Further, not every form of control that a party reserves to himself over
the conduct of the other party in relation to the services being rendered
may be accorded the effect of establishing an employer-employee
relationship. The facts of this case fall squarely with the case of Insular
Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the second,

which address both the result and the means used to achieve
it. 17 (Emphasis supplied.)

TcSaHC

We ruled in Insular Life Assurance Co., Ltd. v. NLRC (Insular) that:

It is, therefore, usual and expected for an insurance company to
promulgate a set of rules to guide its commission agents in selling its
policies that they may not run afoul of the law and what it requires or
prohibits. Of such a character are the rules which prescribe the
qualifications of persons who may be insured, subject insurance
applications to processing and approval by the Company, and also
reserve to the Company the determination of the premiums to be paid
and the schedules of payment. None of these really invades the agent's
contractual prerogative to adopt his own selling methods or to sell
insurance at his own time and convenience, hence cannot justifiably be
said to establish an employer-employee relationship between him and
the company. 18

Hence, we ruled in Insular that no employer-employee relationship existed

therein. However, such ruling was tempered with the qualification that had there
been evidence that the company promulgated rules or regulations that effectively
controlled or restricted an insurance agent's choice of methods or the methods
themselves in selling insurance, an employer-employee relationship would have
existed. In other words, the Court in Insular in no way definitively held that
insurance agents are not employees of insurance companies, but rather made
the same a case-to-case basis. We held:
The respondents limit themselves to pointing out that Basiao's contract
with the Company bound him to observe and conform to such rules and
regulations as the latter might from time to time prescribe. No showing
has been made that any such rules or regulations were in fact
promulgated, much less that any rules existed or were issued
which effectively controlled or restricted his choice of methods or
the methods themselves of selling insurance. Absent such

showing, the Court will not speculate that any exceptions or

qualifications were imposed on the express provision of the
contract leaving Basiao ". . . free to exercise his own judgment as
to the time, place and means of soliciting insurance."
supplied.)

19

(Emphasis

HECTaA

There is no conflict between our rulings in Insular and in Great Pacific Life
Assurance Corporation. We said in the latter case:
[I]t cannot be gainsaid that Grepalife had control over private
respondents' performance as well as the result of their efforts. A
cursory reading of their respective functions as enumerated in their
contracts reveals that the company practically dictates the manner
by which their jobs are to be carried out. For instance, the District
Manager must properly account, record and document the company's
funds spot-check and audit the work of the zone supervisors, conserve
the company's business in the district through 'reinstatements', follow up
the submission of weekly remittance reports of the debit agents and
zone supervisors, preserve company property in good condition, train
understudies for the position of district manager, and maintain his quota
of sales (the failure of which is a ground for termination). On the other
hand, a zone supervisor must direct and supervise the sales activities of
the debit agents under him, conserve company property through
"reinstatements", undertake and discharge the functions of absentee
debit agents, spot-check the records of debit agents, and insure proper
documentation

of

sales

and

collections

by

the

debit

agents. 20 (Emphasis supplied.)

Based on the foregoing cases, if the specific rules and regulations that are
enforced against insurance agents or managers are such that would directly
affect the means and methods by which such agents or managers would achieve
the objectives set by the insurance company, they are employees of the
insurance company.

In the instant case, Manulife had the power of control over Tongko that would
make him its employee. Several factors contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is
provided that:
The Agent hereby agrees to comply with all regulations and
requirements of the Company as herein provided as well as maintain a
standard of knowledge and competency in the sale of the Company's
products which satisfies those set by the Company and sufficiently
meets the volume of new business required of Production Club
membership. 21

Under this provision, an agent of Manulife must comply with three (3)
requirements: (1) compliance with the regulations and requirements of the
company; (2) maintenance of a level of knowledge of the company's products
that is satisfactory to the company; and (3) compliance with a quota of new
businesses.

cETDIA

Among the company regulations of Manulife are the different codes of conduct
such as the Agent Code of Conduct, Manulife Financial Code of Conduct, and
Manulife Financial Code of Conduct Agreement, which demonstrate the power of
control exercised by the company over Tongko. The fact that Tongko was obliged
to obey and comply with the codes of conduct was not disowned by respondents.
Thus, with the company regulations and requirements alone, the fact
that Tongko was an employee of Manulife may already be established. Certainly,
these requirements controlled the means and methods by which Tongko was to
achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was
tasked to perform administrative duties that establishes his employment with
Manulife.
In its Comment (Re: Petition for Review dated 15 April 2005) dated August 5,
2005, Manulife attached affidavits of its agents purportedly to support its claim

thatTongko, as a Regional Sales Manager, did not perform any administrative

functions. An examination of these affidavits would, however, prove the opposite.
In an Affidavit dated April 28, 2003,

22

John D. Chua, a Regional Sales Manager

of Manulife, stated:
4. On September 1, 1996, my services were engaged by Manulife as an
Agency Regional Sales Manager ("RSM") for Metro South Region
pursuant to an Agency Contract. As such RSM, I have the
following functions:
1. Refer and recommend prospective agents to Manulife
2. Coach agents to become productive
3. Regularly meet with, and coordinate activities of agents
affiliated to my region.

While Amada Toledo, a Branch Manager of Manulife, stated in her Affidavit dated
April 29, 2003 23 that:
3. In January 1997, I was assigned as a Branch Manager ("BM") of
Manulife for the Metro North Sector;
4. As such BM, I render the following services:
a. Refer and recommend prospective agents to Manulife;
b. Train and coordinate activities of other commission
agents;
c. Coordinate activities of Agency Managers who, in turn,
train and coordinate activities of other commission
agents;

d. Achieve agreed production objectives in terms of Net

Annualized Commissions and Case Count and
recruitment goals; and

e. Sell the various products of Manulife to my personal

clients.

While Ma. Lourdes Samson, a Unit Manager of Manulife, stated in her Affidavit
dated April 28, 2003 24 that:
3. In 1977, I was assigned as a Unit Manager ("UM") of North Peaks
Unit, North Star Branch, Metro North Region;
4. As such UM, I render the following services:
a. To render or recommend prospective agents to be
licensed, trained and contracted to sell Manulife
products and who will be part of my Unit;
b. To coordinate activities of the agents under my Unit in
their daily, weekly and monthly selling activities,
making sure that their respective sales targets are
met;
c. To conduct periodic training sessions for my agents to
further enhance their sales skills.

aDTSHc

d. To assist my agents with their sales activities by way of

joint

fieldwork,

consultations

and

one-on-one

evaluation and analysis of particular accounts.

e. To provide opportunities to motivate my agents to
succeed like conducting promos to increase sales
activities and encouraging them to be involved in
company and industry activities.
f. To provide opportunities for professional growth to my
agents by encouraging them to be a member of the
LUCAP

(Life

Philippines).

Underwriters

Association

of

the

A comparison of the above functions and those contained in the Agreement with
those cited in Great Pacific Life Assurance Corporation 25 reveals a striking
similarity that would more than support a similar finding as in that case. Thus,
there was an employer-employee relationship between the parties.
Additionally, it must be pointed out that the fact that Tongko was tasked with
recruiting a certain number of agents, in addition to his other administrative
functions, leads to no other conclusion that he was an employee of Manulife.
In his letter dated November 6, 2001, De Dios harped on the direction of Manulife
of becoming a major agency-led distribution company whereby greater agency
recruitment is required of the managers, including Tongko. De Dios made it clear
that agent recruitment has become the primary means by which Manulife intends
to sell more policies. More importantly, it is Tongko's alleged failure to follow this
principle of recruitment that led to the termination of his employment with
Manulife. With this, it is inescapable that Tongko was an employee of Manulife.
Tongko Was Illegally Dismissed
In its Petition for Certiorari dated January 7, 2005 26 filed before the CA, Manulife
argued that even if Tongko is considered as its employee, his employment was
validly terminated on the ground of gross and habitual neglect of duties,
inefficiency, as well as willful disobedience of the lawful orders of Manulife.
Manulife stated:

DHETIS

In the instant case, private respondent, despite the written reminder from
Mr. De Dios refused to shape up and altogether disregarded the latter's
advice resulting in his laggard performance clearly indicative of his willful
disobedience of the lawful orders of his superior. . . .
xxx xxx xxx
As private respondent has patently failed to perform a very fundamental
duty, and that is to yield obedience to all reasonable rules, orders and
instructions of the Company, as well as gross failure to reach at least

minimum quota, the termination of his engagement from Manulife is

highly warranted and therefore, there is no illegal dismissal to speak of.

It is readily evident from the above-quoted portions of Manulife's petition that it

failed to cite a single iota of evidence to support its claims. Manulife did not even
point out which order or rule that Tongko disobeyed. More importantly, Manulife
did not point out the specific acts that Tongko was guilty of that would constitute
gross and habitual neglect of duty or disobedience. Manulife merely
cited Tongko's alleged "laggard performance", without substantiating such claim,
and equated the same to disobedience and neglect of duty.
We cannot, therefore, accept Manulife's position.
In Quebec, Sr. v. National Labor Relations Commission, we ruled that:
When there is no showing of a clear, valid and legal cause for the
termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination
was for a valid or authorized cause. This burden of proof appropriately
lies on the shoulders of the employer and not on the employee because
a worker's job has some of the characteristics of property rights and is
therefore within the constitutional mantle of protection. No person shall
be deprived of life, liberty or property without due process of law, nor
shall any person be denied the equal protection of the laws.
Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in
explicit terms that the burden of proving the validity of the termination of
employment rests on the employer. Failure to discharge this evidential
burden would necessarily mean that the dismissal was not justified, and,
therefore, illegal. 27

IcTEaC

We again ruled in Times Transportation Co., Inc. v. National Labor Relations

Commission that:
The law mandates that the burden of proving the validity of the
termination of employment rests with the employer. Failure to discharge

this evidentiary burden would necessarily mean that the dismissal was
not

justified,

and,

therefore,

illegal.

Unsubstantiated

suspicions,

accusations and conclusions of employers do not provide for legal

justification for dismissing employees. In case of doubt, such cases
should be resolved in favor of labor, pursuant to the social justice policy
of our labor laws and Constitution. 28

This burden of proof was clarified in Community Rural Bank of San Isidro (N.E.),
Inc. v. Paez to mean substantial evidence, to wit:
The Labor Code provides that an employer may terminate the services
of an employee for just cause and this must be supported by substantial
evidence.

The

settled

rule

in

administrative

and

quasi-judicial

proceedings is that proof beyond reasonable doubt is not required in

determining the legality of an employer's dismissal of an employee, and
not even a preponderance of evidence is necessary as substantial
evidence is considered sufficient. Substantial evidence is more than a
mere scintilla of evidence or relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other minds,
equally reasonable, might conceivably opine otherwise.

29

Here, Manulife failed to overcome such burden of proof. It must be reiterated that
Manulife even failed to identify the specific acts by which Tongko's employment
was terminated much less support the same with substantial evidence. To repeat,
mere conjectures cannot work to deprive employees of their means of livelihood.
Thus, it must be concluded that Tongko was illegally dismissed.
Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons
that Tongko not being its employee is not entitled to such notices. Since we have
ruled

that Tongko is

its

employee,

however,

Manulife

clearly

failed

to

afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal
dismissal. In Quebec, Sr., we also stated:
Furthermore, not only does our legal system dictate that the reasons for
dismissing a worker must be pertinently substantiated, it also mandates

that the manner of dismissal must be properly done, otherwise, the

termination
unlawful. 30

itself

is

gravely

defective

and

may

be

declared

ITECSH

For breach of the due process requirements, Manulife is liable to Tongko in the
amount of PhP30,000 as indemnity in the form of nominal damages. 31
Finally, Manulife raises the issue of the correctness of the computation of the
award to Tongko made by the NLRC by claiming that Songco v. National Labor
Relations Commission 32 is inapplicable to the instant case, considering that
Songco was dismissed on the ground of retrenchment.
An examination of Songco reveals that it may be applied to the present case. In
that case, Jose Songco was a salesman of F.E. Zuellig (M), Inc. which terminated
the services of Songco on the ground of retrenchment due to financial losses.
The issue raised to the Court, however, was whether commissions are
considered as part of wages in order to determine separation pay. Thus, the fact
that Songco was dismissed due to retrenchment does not hamper the application
thereof to the instant case. What is pivotal is that we ruled in Songco that
commissions are part of wages for the determination of separation pay.
Article 279 of the Labor Code on security of tenure pertinently provides that:
In cases of regular employment the employer shall not terminate the
services of an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.

In Triad Security & Allied Services, Inc. v. Ortega, Jr. (Triad), we thus stated that
an illegally dismissed employee shall be entitled to backwages and separation
pay, if reinstatement is no longer viable:

As the law now stands, an illegally dismissed employee is entitled to two

reliefs, namely: backwages and reinstatement. These are separate and
distinct from each other. However, separation pay is granted where
reinstatement is no longer feasible because of strained relations
between the employee and the employer. In effect, an illegally dismissed
employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable and backwages.

33

Taking into consideration the cases of Songco and Triad, we find correct the
computation of the NLRC that the monthly gross wage of Tongko in 2001 was
PhP518,144.76. For having been illegally dismissed, Tongko is entitled to
reinstatement with full backwages under Art. 279 of the Labor Code. Due to the
strained relationship between Manulife and Tongko, reinstatement, however, is no
longer advisable. Thus, Tongko will be entitled to backwages from January 2,
2002 (date of dismissal) up to the finality of this decision. Moreover, Manulife will
pay Tongko separation pay of one (1) month salary for every year of service that
is from 1977 to 2001 amounting to PhP12,435,474.24, considering that
reinstatement is not feasible. Tongko shall also be entitled to an award of
attorney's fees in the amount of ten percent (10%) of the aggregate amount of the
above awards.

EAaHTI

WHEREFORE, the petition is hereby GRANTED. The assailed March 29, 2005
Decision of the CA in CA-G.R. SP No. 88253 is REVERSED and SET ASIDE.
The Decision dated September 27, 2004 of the NLRC is REINSTATED with the
following modifications:
Manulife shall pay Tongko the following:
(1) Full backwages, inclusive of allowances and other benefits or their monetary
equivalent from January 2, 2002 up to the finality of this Decision;
(2) Separation pay of one (1) month salary for every year of service from 1977 up
to 2001 amounting to PhP12,435,474.24;

(3) Nominal damages of PhP30,000 as indemnity for violation of the due process
requirements; and
(4) Attorney's fees equivalent to ten percent (10%) of the aforementioned
backwages and separation pay.
Costs against respondent Manulife.
SO ORDERED.
Carpio-Morales and Brion, JJ., concur.
Quisumbing, J., Pls. see dissenting opinion.
Tinga, J., I join J. Quisumbing's dissent.

Separate Opinions
QUISUMBING, J., dissenting:
With due respect, I cannot concur in the majority opinion. I vote to deny the
petition and affirm the decision of the Court of Appeals holding that the National
Labor Relations Commission had no jurisdiction over this case due to the
absence

of

an

employer-employee

relationship

between

petitioner

Gregorio V. Tongko and respondent Manufacturers Life Insurance Co. (Phils.),

Inc. (Manulife).

HCTaAS

The majority opinion states that Manulife had the power of control over petitioner
that would make him its employee. It advances several reasons that do not
persuade me.
In my view, two points require stressing: (1) Manulife has no power of control over
petitioner in the pursuit of his own business; and (2) petitioner is compensated
through sales agency commissions and not through fixed wages or salary.
Time and again, the Court has indeed applied the "four-fold" test in determining
the existence of an employer-employee relationship. This test considers the
following elements: (1) the power to hire; (2) the payment of wages; (3) the power

to dismiss; and (4) the power to control, the last being the most important
element. 1
The difficulty lies in correctly assessing if certain factors or elements properly
indicate the presence of control. 2 The company's codes of conduct such as the
Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife
Financial Code of Conduct Agreement cannot be justifiably said to establish an
employer-employee relationship. These merely served as general guidelines for
agents in selling Manulife policies in keeping with ethical principles governing the
insurance business and in accordance with the rules promulgated by the
Insurance Commissioner for proper regulation of the industry. None of these
rules and regulations negated petitioner's contractual prerogative to adopt his
own selling methods or to sell insurance at his own time and convenience. 3 Nor
did it overturn company or industry practices. Petitioner made his own strategy on
how to generate more insurance sales. In fact, he derived his income from the
agents under him through their sales volume. He was not bound to observe any
work schedule or any working hours. He had freedom to adopt his own methods
in selling insurance policies, so long as he and his recruited agents meet their
quotas.

EHSCcT

So too, petitioner's administrative functions are not indicative of control. Such

functions which consisted of recruitment of new agents, training, and supervision
were exercised over other sales agents and not employees of Manulife. Such
functions relate to the insurance agents' work in pursuit of their agency's
contractual obligations.
Neither can the Letter dated November 6, 2001 4 addressed by Renato A. Vergel
De Dios, Manulife's President and Chief Executive Officer, to petitioner regarding
greater agency recruitment be considered as control. While the letter reminded
petitioner that his Region was the lowest performer in terms of agency
recruitment, it did not dictate how petitioner would achieve this goal. Contrary to
the finding of the main opinion, 5 the letter did not contain "an abundance of
directives or orders" other than suggesting to petitioner to hire a competent
assistant to whom he could unload routine tasks. It is obvious that said assistant

would be paid by petitioner as part of his agency's staff, not of the company's
office personnel.
Clearly, following industry practice, petitioner had never been an employee of
Manulife. He is an independent contractor as stated in the Career Agent's
Agreement. Although he was eventually promoted as Regional Sales Manager,
the Agreement subsisted since he still received commissions from insurance he
directly sold to third persons aside from the override commissions he received
from his own recruited agents' sales. The Agreement was never changed or
altered by the parties.
Anent petitioner's compensation, he was paid through commissions from
premium payments instead of fixed wages or salary. Petitioner's commissions
varied, based on the computed premiums paid in full and actually received on
policies obtained through his agency. His summary of commission, persistency,
and management overrides constituted the income earned from business
activities, not traditional office employment by Manulife, as follows:
2001 - P6,214,737.11
2000 - P8,003,180.38
1999 - P6,797,814.05
1998 - P4,805,166.34
1997 - P2,822,620.00 6

Indeed, petitioner's earnings by way of commissions varied, depending on the

clientele or those who availed of the insurance policies he procured. As also
noted by the Labor Arbiter, his annual income was duly reflected in petitioner's
income tax returns as agency earnings from which were deducted operating
expenses and taxes withheld at source by Manulife. His returns did not reflect
regular wages or salaries paid by the company.

IcCDAS

Since no employer-employee relationship existed between petitioner and

Manulife, there is no basis to award backwages and separation pay to petitioner.
There

is

no

reason

to

apply Songco v.

National

Labor

Relations

Commission 7 which considered commission as part of the employee's salary in

the computation of separation pay. Here, there exists no employer-employee
relationship. A contrary ruling will reverse an industry practice long accepted in
the insurance business. Such reversal could prove detrimental to the insurance
public.
To reiterate, the present case does not involve an employer-employee
relationship which warrants the application of the Labor Code provisions; rather, it
calls for the implementation of the Career Agent's Agreement that should be
construed in an ordinary civil action.

CaAcSE

I vote to DENY the petition.

|||

(Tongko v. The Manufacturers Life Insurance Co. (Phils.), Inc., G.R. No.

167622, [November 7, 2008], 591 PHIL 476-508)

[G.R. No. 151309. October 15, 2008.]

BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG,
as Union President, JOSELITO LARIO, VIVENCIO B. BARTE,
SATURNINO EGERA and SIMPLICIO AYA-AY, petitioners, vs.
NATIONAL

LABOR

COMMISSION, TRYCO PHARMA

RELATIONS
CORPORATION,

WILFREDO C. RIVERA,respondents.

DECISION

NACHURA, J :
p

and/or

This petition seeks a review of the Decision 1 of the Court of Appeals (CA) dated
July 24, 2001 and Resolution dated December 20, 2001, which affirmed the
finding of the National Labor Relations Commission (NLRC) that the petitioners'
transfer to another workplace did not amount to a constructive dismissal and an
unfair labor practice.

STcHDC

The pertinent factual antecedents are as follows:

Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and
its principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio
Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees,
occupying the positions of helper, shipment helper and factory workers,
respectively, assigned to the Production Department. They are members of Bisig
Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the
rank-and-file employees.
Tryco and the petitioners signed separate Memorand[a] of Agreement 2 (MOA),
providing for a compressed workweek schedule to be implemented in the
company effective May 20, 1996. The MOA was entered into pursuant to
Department of Labor and Employment Department Order (D.O.) No. 21, Series
of 1990, Guidelines on the Implementation of Compressed Workweek. As
provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours. The MOA
specifically stated that the employee waives the right to claim overtime pay for
work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering
that the compressed workweek schedule is adopted in lieu of the regular
workweek schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m., such employee
shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and
Employment of the implementation of a compressed workweek in the company. 3

In January 1997, BMT and Tryco negotiated for the renewal of their collective
bargaining agreement (CBA) but failed to arrive at a new agreement.
Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of
Animal Industry of the Department of Agriculture reminding it that its production
should be conducted in San Rafael, Bulacan, not in Caloocan City:
MR. WILFREDO C. RIVERA
President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
Dear Mr. Rivera:
This is to remind you that your License to Operate as Veterinary Drug
and Product Manufacturer is addressed at San Rafael, Bulacan, and so,
therefore, your production should be done at the above mentioned
address only. Further, production of a drug includes propagation,
processing,

compounding,

finishing,

filling,

repacking,

labeling,

advertising, storage, distribution or sale of the veterinary drug product. In

no instance, therefore, should any of the above be done at your business
office at 117 M. Ponce St., EDSA, Caloocan City.

DISTcH

Please be guided accordingly.

Thank you.
Very truly yours,
(sgd.) EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division

Accordingly, Tryco issued a Memorandum 5 dated April 7, 1997 which directed

petitioner Aya-ay to report to the company's plant site in Bulacan. When petitioner
Aya-ay

refused

to

obey, Tryco reiterated

the

order

on

April

18,

1997. 6 Subsequently, through a Memorandum 7 dated May 9, 1997, Tryco also

directed petitioners Egera, Lario and Barte to report to the company's plant site
in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan, contending
that it constitutes unfair labor practice. In protest, BMT declared a strike on May
26, 1997.
In August 1997, petitioners filed their separate complaints 8 for illegal dismissal,
underpayment of wages, nonpayment of overtime pay and service incentive
leave, and refusal to bargain against Tryco and its President, Wilfredo C. Rivera.
In their Position Paper, 9 petitioners alleged that the company acted in bad faith
during the CBA negotiations because it sent representatives without authority to
bind the company, and this was the reason why the negotiations failed. They
added that the management transferred petitioners Lario, Barte, Egera and Ayaay from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for
the company to pay them their salaries from May 26 to 31, 1997, service
incentive leave, and overtime pay, and to implement Wage Order No. 4.
In their defense, respondents averred that the petitioners were not dismissed but
they refused to comply with the management's directive for them to report to the
company's plant in San Rafael, Bulacan. They denied the allegation that they
negotiated in bad faith, stating that, in fact, they sent the Executive VicePresident and Legal Counsel as the company's representatives to the CBA
negotiations. They claim that the failure to arrive at an agreement was due to the
stubbornness of the union panel.

IEaCDH

Respondents further averred that, long before the start of the negotiations, the
company had already been planning to decongest the Caloocan office to comply
with the government policy to shift the concentration of manufacturing activities
from the metropolis to the countryside. The decision to transfer the company's
production activities to San Rafael, Bulacan was precipitated by the letterreminder of the Bureau of Animal Industry.
On February 27, 1998, the Labor Arbiter dismissed the case for lack of
merit. 10 The Labor Arbiter held that the transfer of the petitioners would not

paralyze or render the union ineffective for the following reasons: (1)
complainants are not members of the negotiating panel; and (2) the transfer was
made pursuant to the directive of the Department of Agriculture.
The Labor Arbiter also denied the money claims, ratiocinating that the
nonpayment of wages was justified because the petitioners did not render work
from May 26 to 31, 1997; overtime pay is not due because of the compressed
workweek agreement between the union and management; and service incentive
leave pay cannot be claimed by the complainants because they are already
enjoying vacation leave with pay for at least five days. As for the claim of
noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue
should be left to the grievance machinery or voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision, dismissing
the case, thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby
AFFIRMED and complainants' appeal therefrom DISMISSED for lack of
merit. Complainants Joselito Lario, Vivencio Barte, Saturnino Egera
and Simplicio Aya-ay are directed to report to work at respondents' San
Rafael Plant, Bulacan but without backwages. Respondents are directed
to accept the complainants back to work.
SO ORDERED. 11

On December 22, 1999, the NLRC denied the petitioners' motion for
reconsideration for lack of merit. 12
Left with no recourse, petitioners filed a petition for certiorari with the CA.
On July 24, 2001, the CA dismissed the petition for certiorari and ruled that the
transfer order was a management prerogative not amounting to a constructive
dismissal or an unfair labor practice. The CA further sustained the enforceability
of the MOA, particularly the waiver of overtime pay in light of this Court's rulings
upholding a waiver of benefits in exchange of other valuable privileges. The
dispositive portion of the said CA decision reads:

WHEREFORE, the instant petition is DISMISSED. The Decision of the

Labor Arbiter dated February 27, 1998 and the Decision and Resolution
of the NLRC promulgated on October 29, 1999 and December 22, 1999,
respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-97 and
08-05920-97, are AFFIRMED.
SO ORDERED. 13

The CA denied the petitioners' motion for reconsideration on December 20,

2001. 14
Dissatisfied, petitioners filed this petition for review raising the following issues:
A
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE
PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER AND
THE COMMISSION THAT THERE WAS NO DISMISSAL, MUCH LESS
ILLEGAL DISMISSAL, OF THE INDIVIDUAL PETITIONERS.

IDcHCS

B
THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND
CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED ACTS
OF UNFAIR LABOR PRACTICE.
C
THE COURT OF APPEALS ERRED

IN

NOT FINDING AND

CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR

MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION
COSTS AND ATTORNEY'S FEES. 15

The petition has no merit.

We have no reason to deviate from the well-entrenched rule that findings of fact
of labor officials, who are deemed to have acquired expertise in matters within
their respective jurisdiction, are generally accorded not only respect but even
finality, and bind us when supported by substantial evidence.

16

This is

particularly true when the findings of the Labor Arbiter, the NLRC and the CA are
in absolute agreement. 17 In this case, the Labor Arbiter, the NLRC, and the CA
uniformly agreed that the petitioners were not constructively dismissed and that
the transfer orders did not amount to an unfair labor practice. But if only to
disabuse the minds of the petitioners who have persistently pursued this case on
the mistaken belief that the labor tribunals and the appellate court committed
grievous errors, this Court will go over the issues raised in this petition.

Petitioners mainly contend that the transfer orders amount to a constructive

dismissal. They maintain that the letter of the Bureau of Animal Industry is not
credible because it is not authenticated; it is only a ploy, solicited by respondents
to give them an excuse to effect a massive transfer of employees. They point out
that the Caloocan City office is still engaged in production activities until now and
respondents even hired new employees to replace them.
We do not agree.
We refuse to accept the petitioners' wild and reckless imputation that the Bureau
of Animal Industry conspired with the respondents just to effect the transfer of the
petitioners. There is not an iota of proof to support this outlandish claim. Absent
any evidence, the allegation is not only highly irresponsible but is grossly unfair to
the government agency concerned. Even as this Court has given litigants and
counsel a relatively wide latitude to present arguments in support of their cause,
we will not tolerate outright misrepresentation or baseless accusation. Let this be
fair warning to counsel for the petitioners.
Furthermore, Tryco's decision to transfer its production activities to San Rafael,
Bulacan, regardless of whether it was made pursuant to the letter of the Bureau
of Animal Industry, was within the scope of its inherent right to control and
manage its enterprise effectively. While the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are
clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied. 18

cDTSHE

This prerogative extends to the management's right to regulate, according to its

own discretion and judgment, all aspects of employment, including the freedom to
transfer and reassign employees according to the requirements of its
business. 19 Management's

prerogative

of

transferring

and

reassigning

employees from one area of operation to another in order to meet the

requirements of the business is, therefore, generally not constitutive of
constructive dismissal. 20 Thus, the consequent transfer of Tryco's personnel,
assigned to the Production Department was well within the scope of its
management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the
employee, and it does not involve a demotion in rank or diminution of salaries,
benefits, and other privileges, the employee may not complain that it amounts to
a constructive dismissal. 21 However, the employer has the burden of proving that
the transfer of an employee is for valid and legitimate grounds. The employer
must 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. 22
Indisputably, in the instant case, the transfer orders do not entail a demotion in
rank or diminution of salaries, benefits and other privileges of the petitioners.
Petitioners, therefore, anchor their objection solely on the ground that it would
cause them great inconvenience since they are all residents of Metro Manila and
they would incur additional expenses to travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not
sufficient to warrant a claim of constructive dismissal.

23

Objection to a transfer

that is grounded solely upon the personal inconvenience or hardship that will be
caused to the employee by reason of the transfer is not a valid reason to disobey
an order of transfer. 24
Incidentally, petitioners cite Escobin v. NLRC 25 where the Court held that the
transfer of the employees therein was unreasonable. However, the distance of the
workplace to which the employees were being transferred can hardly compare to

that of the present case. In that case, the employees were being transferred from
Basilan to Manila; hence, the Court noted that the transfer would have entailed
the separation of the employees from their families who were residing in Basilan
and accrual of additional expenses for living accommodations in Manila. In
contrast, the distance from Caloocan to San Rafael, Bulacan is not considerably
great so as to compel petitioners to seek living accommodations in the area and
prevent them from commuting to Metro Manila daily to be with their families.
Petitioners, however, went further and argued that the transfer orders amounted
to unfair labor practice because it would paralyze and render the union
ineffective.

DHcTaE

To begin with, we cannot see how the mere transfer of its members can paralyze
the union. The union was not deprived of the membership of the petitioners
whose work assignments were only transferred to another location.
More importantly, there was no showing or any indication that the transfer orders
were motivated by an intention to interfere with the petitioners' right to organize.
Unfair labor practice refers to acts that violate the workers' right to organize. With
the exception of Article 248 (f) of the Labor Code of the Philippines, the
prohibited acts are related to the workers' right to self-organization and to the
observance of a CBA. Without that element, the acts, no matter how unfair, are
not unfair labor practices. 26
Finally, we do not agree with the petitioners' assertion that the MOA is not
enforceable as it is contrary to law. The MOA is enforceable and binding against
the petitioners. Where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration
for the quitclaim is credible and reasonable, the transaction must be recognized
as a valid and binding undertaking. 27
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits
that the employees will derive from the adoption of a compressed workweek
scheme, thus:

The compressed workweek scheme was originally conceived for

establishments wishing to save on energy costs, promote greater work
efficiency and lower the rate of employee absenteeism, among others.
Workers favor the scheme considering that it would mean savings on the
increasing cost of transportation fares for at least one (1) day a week;
savings on meal and snack expenses; longer weekends, or an additional
52 off-days a year, that can be devoted to rest, leisure, family
responsibilities, studies and other personal matters, and that it will spare
them for at least another day in a week from certain inconveniences that
are the normal incidents of employment, such as commuting to and from
the workplace, travel time spent, exposure to dust and motor vehicle
fumes, dressing up for work, etc. Thus, under this scheme, the generally
observed workweek of six (6) days is shortened to five (5) days but
prolonging the working hours from Monday to Friday without the
employer being obliged for pay overtime premium compensation for work
performed in excess of eight (8) hours on weekdays, in exchange for the
benefits abovecited that will accrue to the employees.

Moreover, the adoption of a compressed workweek scheme in the company will

help temper any inconvenience that will be caused the petitioners by their transfer
to a farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE, under
D.O. No. 21, to protect the interest of the employees in the implementation of a
compressed workweek scheme:

cCSDaI

1. The employees voluntarily agree to work more than eight (8) hours a
day the total in a week of which shall not exceed their normal
weekly hours of work prior to adoption of the compressed
workweek arrangement;
2. There will not be any diminution whatsoever in the weekly or monthly
take-home pay and fringe benefits of the employees;

3. If an employee is permitted or required to work in excess of his normal

weekly hours of work prior to the adoption of the compressed
workweek scheme, all such excess hours shall be considered
overtime work and shall be compensated in accordance with the
provisions of the Labor Code or applicable Collective Bargaining
Agreement (CBA);
4. Appropriate waivers with respect to overtime premium pay for work
performed in excess of eight (8) hours a day may be devised by
the parties to the agreement.
5. The effectivity and implementation of the new working time
arrangement shall be by agreement of the parties.

PESALA v. NLRC, 28 cited by the petitioners, is not applicable to the present

case. In that case, an employment contract provided that the workday consists of
12 hours and the employee will be paid a fixed monthly salary rate that was
above the legal minimum wage. However, unlike the present MOA which
specifically states that the employee waives his right to claim overtime pay for
work rendered beyond eight hours, the employment contract in that case was
silent on whether overtime pay was included in the payment of the fixed monthly
salary. This necessitated the interpretation by the Court as to whether the fixed
monthly rate provided under the employment contract included overtime pay. The
Court noted that if the employee is paid only the minimum wage but with overtime
pay, the amount is still greater than the fixed monthly rate as provided in the
employment contract. It, therefore, held that overtime pay was not included in the
agreed fixed monthly rate.
Considering that the MOA clearly states that the employee waives the payment of
overtime pay in exchange of a five-day workweek, there is no room for
interpretation and its terms should be implemented as they are written.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July
24, 2001 and Resolution dated December 20, 2001 are AFFIRMED.
SO ORDERED.

Puno, C.J., * Ynares-Santiago, Chico-Nazario and Reyes, JJ., concur.

|||

(Bisig Manggagawa sa Tryco v. NLRC, G.R. No. 151309, [October 15, 2008],

590 PHIL 135-149)

SECOND DIVISION
[G.R. No. 157680. October 8, 2008.]
EQUIPMENT TECHNICAL SERVICES or

JOSEPH

JAMES

DEQUITO, petitioners, vs. COURT OF APPEALS, ALEX ALBINO,

REY

ALBINO,

JULIUS

ABANES,

MIGUEL

ALINAB,

CHRISTOPHER BIOL, NELSON CATONG, RENATO DULOT,

FLORO PACUNDO, MARCELITO GAMAS, REYNALDO LIMA,
SAMMY MESAGAL, ERNESTO PADILLA, and CONRADO
SULIBAGA, respondents.

DECISION

VELASCO, JR., J :
p

This petition for review under Rule 45 assails and seeks the reversal of the
Amended Decision and Resolution dated March 3, 2003 and March 24, 2003,
respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 67568. The
assailed amended decision and resolution effectively set aside and reversed the
consolidated resolutions dated July 30, 2001 and September 24, 2001 rendered
by the National Labor Relations Commission (NLRC) and reinstated the July 24,
2000 Decision of Labor Arbiter Ermita T. Abrasaldo-Cuyuca in NLRC NCR Case
Nos. 00-01-00571-99, 00-02-01429-99, and 00-02-01615-99.

aHATDI

Petitioner Equipment Technical Services (ETS) is primarily engaged in the

business of sub-contracting plumbing works of on-going building construction.
Among its clients was Uniwide Sales, Inc. (Uniwide). Petitioner Joseph James
Dequito was, during the period material, occupying the position of manager of
ETS, 1 albeit the CA referred to him as ETS' president. On various occasions
involving different projects, ETS hired the services of private respondents as pipe
fitters, plumbers, or threaders.
In December 1998, ETS experienced financial difficulties when Uniwide, its client
at the time, failed to pay for the plumbing work being done at its Coastal Mall. As
a result, ETS was only able to pay its employees 13th month pay equivalent to
two weeks' salary.
Unhappy over what they thought was ETS' failure to release the balance of their
13th month pay, private respondents brought their case before the Arbitration
Branch of the NLRC, docketed as NLRC NCR Case No. 00-01-00571-99 and
entitled as Alex Albino, Renato Dulot, Miguel Alinab, Marcelito Gamas, Julius
Abanes, Christopher Biol, Sammy Mesagal, Conrado Sulibaga, Floro Pacundo
v. Equipment Technical Services or Joseph James Dequito.
Later, two other cases were filed against ETS for illegal dismissal and payment of
money claims when the complainants thereat were refused work in another ETS
project, i.e., Richville project, allegedly because they refused to sign individual
employment contracts with ETS. These two other cases were Nelson Catong,
Roger

Lamayon,

Christopher

Lamayon

v. Equipment Technical Services or

Joseph James Dequito, docketed as NLRC NCR Case No. 00-02-01429-99;

and Rey

Albino,

Ernesto

Padilla,

Reynaldo

Lima

v. Equipment Technical Services or Joseph James Dequito, docketed as NLRC

NCR Case No. 00-02-01615-99.
The three cases were consolidated before the labor arbiter. Following failed
conciliation efforts, all concerned, except Roger and Christopher Lamayon,
submitted, as the labor arbiter directed, their respective position papers.

Private respondents' position 2 is summed up as follows: (1) they are regular

employees of ETS; (2) ETS dismissed them without cause and without due
process after they filed cases for money claims against ETS in the arbitration
branch of the NLRC; (3) ETS has not paid them their salaries, 13th month pay,
service incentive leave pay, overtime pay, and premium pay for holidays and rest
days; and (4) they are entitled to reinstatement to their former positions with paid
backwages in addition to their money claims and payment of attorney's fees.

caCSDT

ETS' position 3 may be summed up as follows: (1) private respondents were its
contractual/project employees engaged for different projects of the company; (2)
they were not illegally dismissed, having been hired on a per project basis; (3)
ETS was unable to fully release private respondents' 13th month pay because
Uniwide failed to pay for its contracted plumbing project; (4) ETS was forced to
abandon the Uniwide project and undertake another project, the Richville project,
because the chances of being paid by Uniwide were dim; (5) ETS asked private
respondents to sign employment contracts to formalize their previous agreement
but said private respondents refused; and (6) as a result, ETS was constrained to
deny employment to private respondents as it considered the execution of
employment contracts part of management prerogative before employment
commences.
On July 24, 2000, Labor Arbiter Abrasaldo-Cuyuca issued a Decision, holding
that private respondents were ETS' regular, not merely project, employees.
Accordingly, ETS was adjudged liable for illegal dismissal and directed to pay
private respondents their money claims plus 10% of the total award as attorney's
fees. The fallo of the subject decision reads as follows:
WHEREFORE, judgment is hereby rendered declaring the dismissal of
the complainants illegal.
Further, respondents are further ordered to pay the complainants their
backwages, proportionate 13th month pay, [holiday] and service
incentive leave pay.
Ten percent of the total award as attorney's fees.

Other claims are dismissed for lack of merit.

The complaints of Roger and Christopher all surnamed Lamayon are
dismissed without prejudice.
The computation prepared by the Computation Unit, NCR, this
Commission is attached [sic] forming part of this decision.
SO ORDERED. 4

ETS appealed from the above labor arbiter's decision. On July 30, 2001, the
NLRC rendered a resolution which, while reversing the labor arbiter's holding with
respect to the nature of private respondents' employment and the illegality of their
dismissal, nevertheless upheld the validity of the monetary award extended by
the labor arbiter, part of which included the award of backwages. The pertinent
portion of the modificatory resolution reads as follows:

HcISTE

ACCORDINGLY, premises considered, the decision appealed from is

hereby MODIFIED in that the findings of regularity of employment and
illegal dismissal are hereby VACATED. However, respondents are
ordered to give complainants priority in hiring for present and future
projects. All other dispositions are hereby AFFIRMED in toto.
SO ORDERED.

Following the denial on September 24, 2001 of ETS' motion for reconsideration,
ETS elevated its case to the CA via a petition for certiorari under Rule 65, the
recourse docketed as CA-G.R. SP No. 67568. As its principal contention, ETS
ascribed on the NLRC the commission of grave abuse of discretion in affirming
the monetary award in favor of private respondents, despite its finding that there
was no illegal dismissal in this case.
On January 23, 2002, the CA rendered judgment disposing as follows:
WHEREFORE, premises considered, the assailed resolutions of the
National Labor Relations Commission dated July 30, 2001 and
September 24, 2001 are hereby ANNULLED and SET ASIDE and a new
one rendered ORDERING petitioner Equipment Technical Services to

pay private respondents their holiday pay and service incentive leave pay
for the year 1998 and the balance of their 13th month pay for the year
1999.
The case is hereby REMANDED to Labor Arbiter Ermita T. AbrasaldoCuyuca for the computation of the same.
The complaint against petitioner Joseph James Dequito is hereby
DISMISSED, for lack of merit.
No pronouncement as to costs.
SO ORDERED.

Upon motion of private respondents for reconsideration, the CA issued an

Amended Decision 5 dated March 3, 2003 vacating its earlier January 23, 2002
decision. The CA, in main support of its present disposition, stated that the
NLRC's determination that private respondents are "project workers" is "utterly
unsupported by the evidence on record and is patently erroneous" and, therefore,
is tainted with grave abuse of discretion. 6 The fallo of the Amended Decision
reads:
WHEREFORE,

premises

considered,

the

present

motion

for

reconsideration is hereby GRANTED. The petition is hereby DENIED

DUE COURSE and accordingly DISMISSED, for lack of merit. Our
Decision dated January 23, 2002 is hereby RECONSIDERED and SET
ASIDE and a new one is hereby entered REVERSING and SETTING
ASIDE the assailed Resolutions dated July 30, 2001 and September 24,
2001 of public respondent NLRC in NLRC NCR Case No. 00-01-0057199 (NLRC CA No. 027203-2001), NLRC NCR Case No. 00-02-01429-99
and NLRC NCR Case No. 00-02-01615-99. The Decision dated July 24,
2000 rendered by Labor Arbiter Ermita T. Abrasaldo-Cuyuca is hereby
REINSTATED and AFFIRMED in all respects, including the computation
of the monetary awards in favor of private respondents forming part of
and attached to the same.

SCIcTD

With costs against the petitioners.

SO ORDERED.

Hence, this petition on the submission that, contrary to the findings of the CA, but
conformably with the determination of the NLRC, private respondents are
seasonal or project workers; the duration of their employment is not permanent
but coterminus with the project to which they are assigned and from whose
payroll they are paid. As project employees, private respondents cannot,
according to petitioners, validly maintain an action for illegal dismissal with prayer
for reinstatement and payment of backwages, both reliefs being usually accorded
following a finding of illegal dismissal.
The petition is without merit. As we see it, as did the CA and the NLRC, the
primary question to be resolved and to which all others must yield is whether or
not private respondents are project employees. The CA, siding with the labor
arbiter, as indicated earlier, answered the poser in the affirmative, while the NLRC
resolved it in the negative.
As the Court has consistently held, the service of project employees are
coterminus with the project and may be terminated upon the end or completion of
that project or project phase for which they were hired. Regular employees, in
contrast, enjoy security of tenure and are entitled to hold on to their work or
position until theirservices are terminated by any of the modes recognized under
the Labor Code. 7

The principal test for determining whether an employee is properly characterized

as "project employee", as distinguished from "regular employee", is whether or
not "the project employee" was assigned to carry out "a specific project or
undertaking", the duration and scope of which were specified at the time the
employees were engaged for that project. 8 And as Article 280 of the Labor Code,
defining a regular employee vis--vis a project employee, would have it:

Art. 280. Regular and casual employment. The provisions of written

agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee . . . .

It bears to stress at the outset that ETS admits hiring or employing private
respondents to perform plumbing works for various projects. Given this postulate,
regular employment may reasonably be presumed and it behooves ETS to prove
otherwise, that is, that the employment in question was contractual in nature
ending upon the expiration of the term fixed in the contract or for a specific
project or undertaking. But the categorical finding of the CA, confirmatory for the
most part of that of the labor arbiter, is that not a single written contract of
employment fixing the terms of employment for the duration of the Uniwide
project, or any other project, was submitted by ETS despite the latter's allegations
that private respondents were merely contractual employees. Records of payroll
and other pertinent documents, such as job contracts secured by ETS showing
that private respondents were hired for specific projects, were also not submitted
by ETS. 9

CDEaAI

Moreover, if private respondents were indeed employed as project employees,

petitioners should have had submitted a report of termination every time their
employment was terminated owing to the completion of each plumbing project.
As correctly held by the CA in its Amended Decision, citing Tomas Lao
Construction v. NLRC, 10 ETS' failure to report the employment termination and
file the necessary papers after every project completion tends to support the
claim of private respondents about their not being project employees.
Policy Instruction No. 20, Series of 1977,

12

11

Under

the report must be made to the

nearest public office employment. 13 The decision inVioleta v. NLRC is also

apropos, particularly when it held:

[The employer] should have filed as many reports of termination as there

were construction projects actually finished if petitioners [employees]
were indeed project employees, considering that petitioners were hired
and again [hired] for various projects or phases of work therein. Its failure
to submit reports of termination cannot but sufficiently convince us
further that petitioners are truly regular employees. Just as important, the
fact that petitioners had rendered more than one year of service at the
time of their dismissal overturns private respondent's allegations that
petitioners were hired for a specific or fixed undertaking for a limited
period of time. 14

The Court can allow that, in the instant case, private respondents may have
initially been hired for specific projects or undertaking of petitioner ETS and,
hence, may be classified as project employees. Their repeated rehiring to
perform tasks necessary to the usual trade or business of ETS changed the legal
situation altogether, for in the later instance, their continuous rehiring took them
out from the scope of workers coterminus with specific projects and had made
them regular employees. We said as much in Phesco, Inc. v. NLRC that "where
the employment of project employees is extended long after the supposed project
had been finished, the employees are removed from the scope of project
employees and they shall be considered regular employees." 15
Parenthetically, petitioners' assertion that there can be no illegal dismissal of
project employees inasmuch as they are not entitled to security of tenure is
inaccurate. The constitutionally-protected right of labor to security of tenure
covers both regular and project workers.

16

Their termination must be for lawful

cause and must be done in a way which affords them proper notice and
hearing. 17
In termination disputes, the burden of proving that an employee had been
dismissed for a lawful cause or that the exacting procedural requirements under
the Labor Code had been complied with lies with the employer.

18

Where there is

no showing of a clear, valid, and legal cause for termination of employment, the
law considers the case a matter of illegal dismissal. 19

CcAHEI

Based on the foregoing criteria, the factual findings of the labor arbiter on the
regular nature of private respondents' employment, juxtaposed with ETS' failure
to support its "project-workers theory", impel us to dismiss the instant petition.
This is as it should be for, to paraphrase Asuncion v. NLRC, if doubt exists
between the evidence of the employers and the employees, the scales of justice
must be tilted in favor of the latter the employers must adequately show
rationally adequate evidence that their case is preponderantly superior. 20
As did the CA, the Court holds that private respondents are regular employees
whose services were terminated without lawful cause and effected without the
requisite notice and hearing.
In view of the illegality of the dismissal, the fallo of the Decision of Labor Arbiter
Abrasaldo-Cuyuca, as reinstated by the CA in its assailed Amended Decision,
has to be modified in the sense that private respondents are entitled to
reinstatement to their previous positions as pipe fitters or threaders, as the case
may be, without loss of rank and seniority rights and with full backwages.
At this juncture, the Court wishes to state that it is taking judicial notice of the fact
that no corporation is registered with the Securities and Exchange Commission
under the name "Equipment Technical Services". It is thus but fair that both
petitioners' liability under this Decision be joint and several.
WHEREFORE, the Amended Decision dated March 3, 2003 of the CA in CAG.R. SP No. 67568, reinstating the July 24, 2000 Decision of Labor Arbiter
Abrasaldo-Cuyuca, is AFFIRMED with the MODIFICATION that petitioners are
jointly and severally ordered to reinstate private respondents to their former
positions, without loss of rank and seniority rights, with backwages from the date
of dismissal until reinstated. As modified, the fallo of the labor arbiter's Decision
shall read:
WHEREFORE, judgment is hereby rendered declaring the dismissal
of private respondents illegal.
Petitioners ETS and Joseph James Dequito are ordered jointly and
severally to reinstate private respondents ALEX ALBINO, REY

ALBINO, JULIUS ABANES, MIGUEL ALINAB, CHRISTOPHER BIOL,

NELSON

CATONG,

MARCELITO

GAMAS,

RENATO

DULOT,

REYNALDO

LIMA,

FLORO

PACUNDO,

SAMMY

MESAGAL,

ERNESTO PADILLA, and CONRADO SULIBAGA to their respective

positions without loss of rank and seniority rights with full
backwages from the date of dismissal up to the date of actual
reinstatement. Petitioners are likewise jointly and severally liable to
private respondents for proportionate 13th month pay, holiday pay,
and service incentive leave pay.

SHIcDT

Ten percent of the total award shall be paid to the counsel of private
respondents as attorney's fees.
Other claims are dismissed for lack of merit.
The complaints of Roger and Christopher, both surnamed Lamayon, are
dismissed without prejudice.

Costs against petitioners.

SO ORDERED.
|||

(Equipment Technical Services v. Court of Appeals, G.R. No. 157680, [October

8, 2008], 589 PHIL 116-128)