Case no. 1. Dy Khe Beng Vs.

International Labor & Marine Union of the Philippines

G.R. No. L-32245 May 25, 1979
DY KEH BENG, petitioner,
vs.
INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES, ET AL., respondents.
A. M Sikat for petitioner.
D. A. Hernandez for respondents.

DE CASTRO, J.:
Petitioner Dy Keh Beng seeks a review by certiorari of the decision of the Court of Industrial Relations dated March 23, 1970 in Case No. 3019-ULP and the Court's Resolution en banc of
June 10, 1970 affirming said decision. The Court of Industrial Relations in that case found Dy Keh Beng guilty of the unfair labor practice acts alleged and order him to
reinstate Carlos Solano and Ricardo Tudla to their former jobs with backwages from their respective dates of dismissal until fully reinstated without loss to their right
of seniority and of such other rights already acquired by them and/or allowed by law. 1
Now, Dy Keh Beng assigns the following errors 2 as having been committed by the Court of Industrial Relations:
I
RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE EMPLOYEES OF PETITIONERS.
II
RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE DISMISSED FROM THEIR EMPLOYMENT BY PETITIONER.
III
RESPONDENT COURT ERRED IN FINDING THAT THE TESTIMONIES ADDUCED BY COMPLAINANT ARE CONVINCING AND DISCLOSES (SIC) A PATTERN
OF DISCRIMINATION BY THE PETITIONER HEREIN.
IV
RESPONDENT COURT ERRED IN DECLARING PETITIONER GUILTY OF UNFAIR LABOR PRACTICE ACTS AS ALLEGED AND DESCRIBED IN THE
COMPLAINT.
V
RESPONDENT COURT ERRED IN PETITIONER TO REINSTATE RESPONDENTS TO THEIR FORMER JOBS WITH BACKWAGES FROM THEIR RESPECTIVE
DATES OF DISMISSALS UNTIL FINALLY REINSTATED WITHOUT LOSS TO THEIR RIGHT OF SENIORITY AND OF SUCH OTHER RIGHTS ALREADY
ACQUIRED BY THEM AND/OR ALLOWED BY LAW.
The facts as found by the Hearing Examiner are as follows:
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4). Republic
Act No. 875, 3 by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case
was filed in the Court of Industrial Relations for in behalf of the International Labor and Marine Union of the Philippines and two of its members, Solano and Tudla In his answer, Dy Keh
Beng contended that he did not know Tudla and that Solano was not his employee because the latter came to the establishment only when there was work which he did on pakiaw basis,
each piece of work being done under a separate contract. Moreover, Dy Keh Beng countered with a special defense of simple extortion committed by the head of the labor union,
Bienvenido Onayan.
After trial, the Hearing Examiner prepared a report which was subsequently adopted in toto by the Court of Industrial Relations. An employee-employer relationship was found to have
existed between Dy Keh Beng and complainants Tudla and Solano, although Solano was admitted to have worked on piece basis. 4 The issue therefore centered on whether there existed
an employee employer relation between petitioner Dy Keh Beng and the respondents Solano and Tudla .
According to the Hearing Examiner, the evidence for the complainant Union tended to show that Solano and Tudla became employees of Dy Keh Beng from May 2, 1953 and July 15,
1955, 5 respectively, and that except in the event of illness, their work with the establishment was continuous although their services were compensated on piece basis. Evidence likewise
showed that at times the establishment had eight (8) workers and never less than five (5); including the complainants, and that complainants used to receive ?5.00 a day. sometimes less.

According to Dy Keh Beng, however, Solano was not his employee for the following reasons:
(1) Solano never stayed long enought at Dy's establishment;
(2) Solano had to leave as soon as he was through with the
(3) order given him by Dy;
(4) When there were no orders needing his services there was nothing for him to do;
(5) When orders came to the shop that his regular workers could not fill it was then that Dy went to his address in Caloocan and fetched him for these orders; and
(6) Solano's work with Dy's establishment was not continuous. ,

According to petitioner, these facts show that respondents Solano and Tudla are only piece workers, not employees under Republic Act 875, where an employee 8 is referred to as
shall include any employee and shag not be limited to the employee of a particular employer unless the Act explicitly states otherwise and shall include any individual
whose work has ceased as a consequence of, or in connection with any current labor dispute or because of any unfair labor practice and who has not obtained any
other substantially equivalent and regular employment.
while an employer 9
includes any person acting in the interest of an employer, directly or indirectly but shall not include any labor organization (otherwise than when acting as an
employer) or anyone acting in the capacity of officer or agent of such labor organization.
Petitioner really anchors his contention of the non-existence of employee-employer relationship on the control test. He points to the case of Madrigal Shipping Co., Inc. v. Nieves Baens del
Rosario, et al., L-13130, October 31, 1959, where the Court ruled that:
The test ... of the existence of employee and employer relationship is whether there is an understanding between the parties that one is to render personal services
to or for the benefit of the other and recognition by them of the right of one to order and control the other in the performance of the work and to direct the manner and
method of its performance.
Petitioner contends that the private respondents "did not meet the control test in the fight of the ... definition of the terms employer and employee, because there was no evidence to show
that petitioner had the right to direct the manner and method of respondent's work. 10 Moreover, it is argued that petitioner's evidence showed that "Solano worked on a pakiaw basis" and
that he stayed in the establishment only when there was work.
While this Court upholds the control test 11 under which an employer-employee relationship exists "where the person for whom the services are performed reserves a right to control not only
the end to be achieved but also the means to be used in reaching such end, " it finds no merit with petitioner's arguments as stated above. It should be borne in mind that the control test
calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. 12 Considering the finding by the Hearing Examiner that the
establishment of Dy Keh Beng is "engaged in the manufacture of baskets known as kaing, 13 it is natural to expect that those working under Dy would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some control would necessarily be exercised by Dy as the making of the kaing would be subject to Dy's specifications. Parenthetically, since
the work on the baskets is done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise control on the men he employed.
As to the contention that Solano was not an employee because he worked on piece basis, this Court agrees with the Hearing Examiner that
circumstances must be construed to determine indeed if payment by the piece is just a method of compensation and does not define the essence of the relation.
Units of time ... and units of work are in establishments like respondent (sic) just yardsticks whereby to determine rate of compensation, to be applied whenever
agreed upon. We cannot construe payment by the piece where work is done in such an establishment so as to put the worker completely at liberty to turn him out
and take in another at pleasure.
At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief Justice Ricardo Paras who penned the decision in "Sunrise Coconut Products Co. v. Court of Industrial
Relations" (83 Phil..518, 523), opined that
judicial notice of the fact that the so-called "pakyaw" system mentioned in this case as generally practiced in our country, is, in fact, a labor contract -between
employers and employees, between capitalists and laborers.

Insofar as the other assignments of errors are concerned, there is no showing that the Court of Industrial Relations abused its discretion when it concluded that the findings of fact made by
the Hearing Examiner were supported by evidence on the record. Section 6, Republic Act 875 provides that in unfair labor practice cases, the factual findings of the Court of Industrial
Relations are conclusive on the Supreme Court, if supported by substantial evidence. This provision has been put into effect in a long line of decisions where the Supreme Court did not
reverse the findings of fact of the Court of Industrial Relations when they were supported by substantial evidence. 14
Nevertheless, considering that about eighteen (18) years have already elapsed from the time the complainants were dismissed, 15 and that the decision being appealed ordered the
payment of backwages to the employees from their respective dates of dismissal until finally reinstated, it is fitting to apply in this connection the formula for backwages worked out by
Justice Claudio Teehankee in "cases not terminated sooner." 16 The formula cans for fixing the award of backwages without qualification and deduction to three years, "subject to deduction
where there are mitigating circumstances in favor of the employer but subject to increase by way of exemplary damages where there are aggravating circumstances. 17Considering there are
no such circumstances in this case, there is no reason why the Court should not apply the abovementioned formula in this instance.
WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein modified to an award of backwages for three years without qualification and deduction at the
respective rates of compensation the employees concerned were receiving at the time of dismissal. The execution of this award is entrusted to the National Labor Relations Commission.
Costs against petitioner.
SO ORDERED.
Teehankee, Makasiar, Guerrero, and Melencio-Herrera, JJ., concur.
Fernandez, J., took no part.

Case no, 2 Besa Vs. Darajaon

G.R. No. 72409 December 29, 1986
MAMERTO S. BESA, doing business under the name and style of BESA'S CUSTOMBUILT SHOES, petitioner,
vs.
THE HONORABLE CRESENCIANO B. TRAJANO, DIRECTOR OF THE BUREAU OF LABOR RELATIONS, MINISTRY OF LABOR AND EMPLOYMENT, AND KAISAHAN NG
MANGGAGAWANG PILIPINO (KAMPIL-KATIPUNAN), respondents.
De Asis and Hernando Law Office for petitioner.
Estebal M. Mendoza for private respondent.

PARAS, J.:
This petition questions the decision of the Director of the Bureau of Labor Relations in BLR Case No. A-8-165-85, which affirmed the appealed order of the Med-Arbiter, Labor Relations
Division, NCR in NCR-LRD-M-1-044-85, a certification election case. More specifically, petitioner seeks the resolution of the question as to whether or not an employer-employee
relationship exists between herein petitioner and the seventeen (17) shoeshiners-members of the respondent union, who, if the relationship does exist, should be entitled to the rights,
privileges and benefits of an employee as provided in the Labor Code.
Sometime in January, 1985, private respondent Kaisahan ng Mangagawang Pilipino KAMPIL for short) a legitimate labor union duly registered with the Ministry of Labor and Employment
(MOLE, for short), filed a Petition for Certification Election, docketed as NCR-LRD-M-1-044-85 in the National Labor Relations Division of the National Capital Region. Petitioner opposed it
alleging that
1. There is no employer-employee relationship between Besa's and the petitioners-signatories to the petition;
2. The subject of the present petition had previously been decided by the defunct Court of Industrial Relations, and is therefore barred under the principle of res judicata;
3. The petition fails to comply with the mandatory formal requirements under Sec. 2, Book V, of the Omnibus Rules Implementing the Labor Code; and
4. This Hon. Commission has no jurisdiction over the subject matter and parties to the petition.
Acting on the Petition, the Opposition thereto, and the Reply to the Opposition, the Med-Arbiter on June 27, 1985, issued an order declaring that there was an employer-employee
relationship between the parties and directed that an election be conducted.
Petitioner appealed the order to the Director of BLR citing among others the following reasons
1. That the subject of the present petition has previously been decided by the defunct Court of Industrial Relations, and is therefore barred under the principle of res judicata
(CIR Case Nos. 2783, 2751 and 2949 ULP December 21, 1965);
2. That on May 28, 1985, Director Severo Pucan of the Ministry of Labor and Employment, in dismissing the case for underpayment of commissions and non-payment of
ECOLA, filed by the shoeshiners against Besas Custombuilt Shoes, for lack of jurisdiction petition, declared that there was no employer-employee relationship between the
shoeshiners and petitioner Besas (Order in NCR-LSED1-020-85);
Director Pucan's findings were based on a letter-opinion of the Director of the Bureau of Working Conditions of the MOLE (Annex "B-2", Petition for Certiorari). The legal ground
therein cited was res judicata.
xxx xxx xxx
Appeal was dismissed by the Director of BLR as contained in his decision dated Sept. 27, 1985 upholding the finding of the Med-Arbiter that supervisors were appointed to oversee the
bootblacks' performance. It declared that such is a finding of fact that is entitled to respect and that res judicata does not he as the parties and the causes of action in the certification
election case are different from the parties and causes of action in CIR Cases Nos. 2783-ULP 2751-ULP and 2949 ULP
Thus the Petition of the Union (KAMPIL) before the Med-Arbiter for the holding of the certification election was granted. While the pre-election conference was in progress, petitioner herein
BESAS filed with Us with petition for certiorari with Prohibition and simultaneously filed with the Med-Arbiter a motion to suspend the pre-election conference. The petition filed before Us
was dismissed for lack of merit but was reconsidered upon Motion of petitioner. In its Motion for Reconsideration, petitioner raised the following grounds:
I
THE INSTANT PETITION PRESENTS QUESTIONS OF LAW AND SUBSTANCE TO MERIT THE CONSIDERATION OF THIS HONORABLE COURT.
II
THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE AND THE SAME IS PURELY BASED ON
SPECULATIONS, SURMISES AND CONJECTURES.
III
THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR IS CONTRARY TO LAW AND APPLICABLE DECI SIONS OF THE SUPREME COURT ON THE MATTER.
IV
THE PETITION FOR CERTIFICATION ELECTION FILED BY RESPONDENT UNION WITH THE MINISTRY OF LABOR AND EMPLOYMENT FAILED TO COMPLY WITH THE
MANDATORY REQUIREMENTS UNDER ARTICLE 258 OF THE LABOR CODE, AS AMENDED, AND ITS IMPLEMENTING RULES.
V
THE RESPONDENT DIRECTOR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECIDING THAT THERE EXISTS AN
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PETITIONER AND THE SHOESHINER-MEMBERS OF THE RESPONDENT UNION,
VI
THE RESPONDENT DIRECTOR ACTED WITHOUT JURISDICTION IN TAKING COGNIZANCE OF THE BASIC PETITION CONSIDERING THAT THE SUBJECT MATTER
AND THE PARTIES THEREOF HAVE BEEN DECIDED BY THE DEFUNCT COURT OF INDUSTRIAL RELATIONS AND IS THEREFORE BABRED BY THE PRINCIPLE OF
RES ADJUDICATA.
The main thrust of the instant petition is the question of employer-employee relationship between petitioner BESAS and 17 of the members of the herein respondent Union who are
designated as shoeshiners. During the certification election held on Nov. 26, 1985 at BESAS of the 53 eligible voters, 49 cast their votes. 33 voted for the union while 16 voted for no union.
Among the 33 voters who opted for a union 17 persons are shoeshiners while 16 persons are non-shoeshiners.
The question of employer-employee relationship became a primodial consideration in resolving whether or not the subject shoeshiners have the juridical personality and standing to present
a petition for certification election as well as to vote i therein. It is the position of petitioner that if the shoeshiners are not considered as employees of Besa's the basic petition for
certification election must necessarily be dismissed for failure to comply with the mandatory requirements of the Labor Code, as amended, that at least thirty (30%) percent of the
employees must support the petition for certification election and that in order to be certified as the sole and exclusive bargaining agent, the union must be obtained a majority of the valid

votes cast by eligible voters. In the instant case, if the 17 shoeshiners are declared ineligible and their votes are consequently nullified the result of the certification election would be 16
"Yes" votes (33 minus 17) and 16 "No" votes, which is a tie. Since the respondent union did not obtain a clear majority for the "Yes" votes as required under Rule IV Sec. 8(f) of the Omnibus
Rules of the Labor Code, it necessarily follows that the respondent union cannot be certified as the sole and exclusive bargaining agent of the workers of Besa's.
The present petition merits Our consideration. The records of the case reveal that an employer-employee relationship does not exist between the 17 shoeshiners and petitioner.
Be it noted that the defunct CIR in dismissing the cases for unfair labor practice filed by the shoeshiners against herein petitioner BESA declared in its Decision dated December 21, 1965
that:
The shoe shiner is distinct from a piece worker because while the latter is paid for work accomplished, he does not, however, contribute anything to the capital of the employer
other than his service. It is the employer of the piece worker who pays his wages, while the shoe shiner in this instance is paid directly by his customer. The piece worker is paid
for work accomplished without regard or concern to the profit as derived by his employer, but in the case of the shoe shiners, the proceeds derived from the trade are always
divided share and share alike with respondent BESA. The shoe shiner can take his share of the proceeds everyday if he wanted to or weekly as is the practice of qqqBesas The
employer of the piece worker supervises and controls his work, but in the case of the shoe shiner, respondent BESA does not exercise any degree of control or supervision over
their person and their work. All these are not obtaining in the case of a piece worker as he is in fact an employee in contemplation of law, distinct from the shoe shiner in this
instance who, in relation to respondent MAMERTO B. BESA, is a partner in the trade. Consequently, employer-employee relationship between members of the Petitioning union
and respondent MAMERTO B. BESA being absent the latter could not be held guilty of the unfair tabor practice acts imputed against him. (p. 6, Annex "B1 " of said
Decision).<re||an1w>
Then too on Dec. 27, 1983, then Director Augusto Sanchez of the Bureau of Working Conditions, MOLE, in response to a letter of petitioner relative to the implementation of wage Order
No. 2 which provided for an increase both in minimum wage and cost of living allowance, opined as follows:
Entitlement of the minimum requirements of the law particularly on wages and allowances presupposes the existence of employer-employee relationship which is determined by
the concurrence of the following conditions:
1. right to hire
2. payment of wages
3. right to fire; and
4. control and supervision
The most important condition to be considered is the exercise of control and supervision over the employees, per our conversation, the persons concerned under your query are
the shoe shiners and based on the decision rendered by Associate Judge Emiliano Tabigne of the defunct Court of Industrial Relations, these shoe shiners are not employees of
the company, but are partners instead. This is due to the fact that the owner/manager does not exercise control and supervision over the shoe shiners. That the shiners have
their own customers from whom they charge the fee and divide the proceeds equally with the owner, which make the owner categorized them as on purely commission basis.
The attendant circumstances clearly show that there is no employer-employee relationship existing, and such the owner/manager is not by law, under obligation to extend to
those on purely commission basis the benefit of Wage Order No. 2. However, the law does not preclude the employer in giving such benefit to all its employees including those
which may not be covered by the mandate of the law.
(Letter dated December 27, 1985 addressed to petitioner Annex B-2, Petition)
The Office of the Solicitor General as counsel for public respondent agrees that in the present case, no employer-employee relationship exists.
The Supreme Court in the Rosario Brothers case ruled that;
A basic factor underlying the exercise of rights under the Labor Code is the status of employment. It is important in the determination of who shall be included in a proposed
bargaining unit because it is sine qua non. The fundamental and essential condition that a bargaining unit be composed of employees. Failure to establish this juridical
relationship between the union members and the employer affects the legality of the union itself. It means the ineligibility of the union members to present a petition for
certification election as well as to vote therein.
Existence of employer-employee relationship is determined by the following elements, namely, a] selection and engagement of the employee; b] payment of wages; c] powers of
dismissal; and d] power to control the employee's conduct although the latter is the most important element (Rosario Brothers Inc, vs. Ople, 131 SCRA 72, 1984)
WHEREFORE, judgment is hereby rendered giving due course to the Petition and declaring VOID the decision of the Director of the Bureau of Labor Relations dated September 27, 1985.
The Petition in BLR Case No. A-8-165-85 (NCR-LRD-M1-044-85) is therefore hereby DISMISSED.
SO ORDERED.
Feria (Chairman), Fernan, Alampay, Gutierrez, Jr., JJ., concur.

Case no. 3 Jardine Vs. NLRC

G.R. No. 119268

February 23, 2000

ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.) respondents.
QUISUMBING, J.:
This special civil action for certiorari seeks to annul the decision1 of public respondent promulgated on October 28, 1994, in NLRC NCR CA No. 003883-92, and its resolution 2 dated
December 13, 1994 which denied petitioners motion for reconsideration.
Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent's
taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private
respondent admittedly regularly deducts from petitioners, daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners
decided to form a labor union to protect their rights and interests.
Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days.
Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint
against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision 3 dated August 31, 1992, the labor arbiter dismissed said complaint
for lack of merit.
On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside the judgment of the labor arbiter. The labor tribunal declared that petitioners are
employees of private respondent, and, as such, their dismissal must be for just cause and after due process. It disposed of the case as follows:
WHEREFORE, in view of all the foregoing considerations, the decision of the Labor Arbiter appealed from is hereby SET ASIDE and another one entered:
1. Declaring the respondent company guilty of illegal dismissal and accordingly it is directed to reinstate the complainants, namely, Alberto A. Gonzales, Joel T. Morato, Gavino
Panahon, Demetrio L. Calagos, Sonny M. Lustado, Romeo Q. Clariza, Luis de los Angeles, Amado Centino, Angel Jardin, Rosendo Marcos, Urbano Marcos, Jr., and Joel
Ordeniza, to their former positions without loss of seniority and other privileges appertaining thereto; to pay the complainants full backwages and other benefits, less earnings
elsewhere, and to reimburse the drivers the amount paid as washing charges; and
2. Dismissing the charge of unfair [labor] practice for insufficiency of evidence.
SO ORDERED.4
Private respondent's first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for reconsideration. This time, public respondent, in its
decision5 dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no
employer-employee relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code, and disposed of the case as follows:
VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion under reconsideration is hereby given due course.
Accordingly, the Resolution of August 10, 1994, and the Decision of April 28, 1994 are hereby SET ASIDE. The Decision of the Labor Arbiter subject of the appeal is likewise
SET ASIDE and a NEW ONE ENTERED dismissing the complaint for lack of jurisdiction.
No costs.
SO ORDERED.6
Expectedly, petitioners sought reconsideration of the labor tribunal's latest decision which was denied. Hence, the instant petition.
In this recourse, petitioners allege that public respondent acted without or in excess of jurisdiction, or with grave abuse of discretion in rendering the assailed decision, arguing that:
I
THE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENT'S SECOND MOTION FOR RECONSIDERATION WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER THE
NLRC RULES, AND TO GRANT THE SAME ON GROUNDS NOT EVEN INVOKED THEREIN.

II
THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES IS ALREADY A SETTLED ISSUE CONSTITUTING RES JUDICATA, WHICH THE NLRC
HAS NO MORE JURISDICTION TO REVERSE, ALTER OR MODIFY.
III
IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER SUPPORTS THE VIEW THAT PETITIONERS-TAXI DRIVERS ARE EMPLOYEES OF RESPONDENT TAXI COMPANY.7
The petition is impressed with merit.
The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the jurisprudence of procedure. It means such capricious and whimsical exercise
of judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of power. 8 In labor cases, this Court has declared in several instances that disregarding rules it is
bound to observe constitutes grave abuse of discretion on the part of labor tribunal.
In Garcia vs. NLRC,9 private respondent therein, after receiving a copy of the labor arbiter's decision, wrote the labor arbiter who rendered the decision and expressed dismay over the
judgment. Neither notice of appeal was filed nor cash or surety bond was posted by private respondent. Nevertheless, the labor tribunal took cognizance of the letter from private
respondent and treated said letter as private respondent's appeal. In a certiorari action before this Court, we ruled that the labor tribunal acted with grave abuse of discretion in treating a
mere letter from private respondent as private respondent's appeal in clear violation of the rules on appeal prescribed under Section 3(a), Rule VI of the New Rules of Procedure of NLRC.
In Philippine Airlines Inc. vs. NLRC,10 we held that the labor arbiter committed grave abuse of discretion when he failed to resolve immediately by written order a motion to dismiss on the
ground of lack of jurisdiction and the supplemental motion to dismiss as mandated by Section 15 of Rule V of the New Rules of Procedure of the NLRC.
In Unicane Workers Union-CLUP vs. NLRC,11 we held that the NLRC gravely abused its discretion by allowing and deciding an appeal without an appeal bond having been filed as required
under Article 223 of the Labor Code.
In Maebo vs. NLRC,12 we declared that the labor arbiter gravely abused its discretion in disregarding the rule governing position papers. In this case, the parties have already filed their
position papers and even agreed to consider the case submitted for decision, yet the labor arbiter still admitted a supplemental position paper and memorandum, and by taking into
consideration, as basis for his decision, the alleged facts adduced therein and the documents attached thereto.
In Gesulgon vs. NLRC,13 we held that public respondent gravely abused its discretion in treating the motion to set aside judgment and writ of execution as a petition for relief of judgment. In
doing so, public respondent had, without sufficient basis, extended the reglementary period for filing petition for relief from judgment contrary to prevailing rule and case law.
In this case before us, private respondent exhausted administrative remedy available to it by seeking reconsideration of public respondent's decision dated April 28, 1994, which public
respondent denied. With this motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it may have committed before resort to courts of justice can be
had.14 Thus, when private respondent filed a second motion for reconsideration, public respondent should have forthwith denied it in accordance with Rule 7, Section 14 of its New Rules of
Procedure which allows only one motion for reconsideration from the same party, thus:
Sec. 14. Motions for Reconsideration. Motions for reconsideration of any order, resolution or decision of the Commission shall not be entertained except when based on
palpable or patent errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision with proof of service that
a copy of the same has been furnished within the reglementary period the adverse party and provided further, that only one such motion from the same party shall be
entertained. [Emphasis supplied]
The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious
reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are
dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry. 15
As correctly pointed out by petitioner, the second motion for reconsideration filed by private respondent is indubitably a prohibited pleading 16 which should have not been entertained at all.
Public respondent cannot just disregard its own rules on the pretext of "satisfying the ends of justice", 17 especially when its disposition of a legal controversy ran afoul with a clear and long
standing jurisprudence in this jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of rectifying an error
or mistake. In our view, public respondent gravely abused its discretion in taking cognizance and granting private respondent's second motion for reconsideration as it wrecks the orderly
procedure in seeking reliefs in labor cases.
But, there is another compelling reason why we cannot leave untouched the flip-flopping decisions of the public respondent. As mentioned earlier, its October 28, 1994 judgment is not in
accord with the applicable decisions of this Court. The labor tribunal reasoned out as follows:
On the issue of whether or not employer-employee relationship exists, admitted is the fact that complainants are taxi drivers purely on the "boundary system". Under this system
the driver takes out his unit and pays the owner/operator a fee commonly called "boundary" for the use of the unit. Now, in the determination the existence of employeremployee relationship, the Supreme Court in the case of Sara, et al., vs. Agarrado, et al. (G.R. No. 73199, 26 October 1988) has applied the following 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 of control the employees conduct."
"Among the four (4) requisites", the Supreme Court stresses that "control is deemed the most important that the other requisites may even be disregarded". Under the control
test, an employer-employee relationship exists if the "employer" has reserved the right to control the "employee" not only as to the result of the work done but also as to the
means and methods by which the same is to be accomplished. Otherwise, no such relationship exists. (Ibid.)
Applying the foregoing parameters to the case herein obtaining, it is clear that the respondent does not pay the drivers, the complainants herein, their wages. Instead, the drivers
pay a certain fee for the use of the vehicle. On the matter of control, the drivers, once they are out plying their trade, are free to choose whatever manner they conduct their trade
and are beyond the physical control of the owner/operator; they themselves determine the amount of revenue they would want to earn in a day's driving; and, more significantly
aside from the fact that they pay for the gasoline they consume, they likewise shoulder the cost of repairs on damages sustained by the vehicles they are driving.
Verily, all the foregoing attributes signify that the relationship of the parties is more of a leasehold or one that is covered by a charter agreement under the Civil Code rather than
the Labor Code.18
The foregoing ratiocination goes against prevailing jurisprudence.
In a number of cases decided by this Court,19 we ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is
that of employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be
reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision
and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the
route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the
so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. We have applied by analogy the
abovestated doctrine to the relationships between bus owner/operator and bus conductor,20 auto-calesa owner/operator and driver,21 and recently between taxi owners/operators and taxi
drivers.22 Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business
or trade of their employer.
As consistently held by this Court, termination of employment must be effected in accordance with law. The just and authorized causes for termination of employment are enumerated under
Articles 282, 283 and 284 of the Labor Code. The requirement of notice and hearing is set-out in Article 277 (b) of the said Code. Hence, petitioners, being employees of private respondent,
can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, private respondent had no valid cause to terminate
the employment of petitioners. Neither were there two (2) written notices sent by private respondent informing each of the petitioners that they had been dismissed from work. These lack of
valid cause and failure on the part of private respondent to comply with the twin-notice requirement underscored the illegality surrounding petitioners' dismissal.
Under the law, 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. 23 It must be
emphasized, though, that recent judicial pronouncements 24 distinguish between employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989, and those
whose illegal dismissals were effected after such date. Thus, employees illegally dismissed prior to March 21, 1989, are entitled to backwages up to three (3) years without deduction or
qualification, while those illegally dismissed after that date are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual
compensation was withheld from them up to the time of their actual reinstatement. The legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly
that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Considering that petitioners were
terminated from work on August 1, 1991, they are entitled to full backwages on the basis of their last daily earnings.
With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi units, we view the same as not illegal in the context of the law. We note that after a
tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi
industry and is in fact dictated by fair play.25 Hence, the drivers are not entitled to reimbursement of washing charges.1wphi1.nt
WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public respondent dated October 28, 1994, is hereby SET ASIDE. The DECISION of public respondent dated
April 28, 1994, and its RESOLUTION dated December 13, 1994, are hereby REINSTATED subject to MODIFICATION. Private respondent is directed to reinstate petitioners to their
positions held at the time of the complained dismissal. Private respondent is likewise ordered to pay petitioners their full backwages, to be computed from the date of dismissal until their
actual reinstatement. However, the order of public respondent that petitioners be reimbursed the amount paid as washing charges is deleted. Costs against private respondents.
SO ORDERED.
Bellosillo, Mendoza and De Leon, Jr., JJ., concur.
Buena, on official leave.
Case no. 4 Insular Life Insurance Company vs. NLRC
G.R. No. 84484 November 15, 1989

INSULAR LIFE ASSURANCE CO., LTD., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.
Tirol & Tirol for petitioner.
Enojas, Defensor & Teodosio Cabado Law Offices for private respondent.

NARVASA, J.:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered into a contract 1 by which:
1. Basiao was "authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and regulations" of
the Company;
2. he would receive "compensation, in the form of commissions ... as provided in the Schedule of Commissions" of the contract to "constitute a part of the
consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and those which may from time to time be promulgated by it, ..."
were made part of said contract.
The contract also contained, among others, provisions governing the relations of the parties, the duties of the Agent, the acts prohibited to him, and the modes of termination of the
agreement, viz.:
RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. Nothing herein
contained shall therefore be construed to create the relationship of employee and employer between the Agent and the Company. However, the Agent shall observe
and conform to all rules and regulations which the Company may from time to time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly or indirectly, rebates in any form, or from making any misrepresentation or
over-selling, and, in general, from doing or committing acts prohibited in the Agent's Manual and in circulars of the Office of the Insurance Commissioner.
TERMINATION. The Company may terminate the contract at will, without any previous notice to the Agent, for or on account of ... (explicitly specified causes). ...
Either party may terminate this contract by giving to the other notice in writing to that effect. It shall become ipso facto cancelled if the Insurance Commissioner
should revoke a Certificate of Authority previously issued or should the Agent fail to renew his existing Certificate of Authority upon its expiration. The Agent shall not
have any right to any commission on renewal of premiums that may be paid after the termination of this agreement for any cause whatsoever, except when the
termination is due to disability or death in line of service. As to commission corresponding to any balance of the first year's premiums remaining unpaid at the
termination of this agreement, the Agent shall be entitled to it if the balance of the first year premium is paid, less actual cost of collection, unless the termination is
due to a violation of this contract, involving criminal liability or breach of trust.
ASSIGNMENT. No Assignment of the Agency herein created or of commissions or other compensations shall be valid without the prior consent in writing of the
Company. ...
Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and to implement his end of it Basiao organized an agency or office to
which he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments under the first contract with the Company. 2
In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil action and this, he was later to claim,
prompted the latter to terminate also his engagement under the first contract and to stop payment of his commissions starting April 1, 1980. 3
Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its president. Without contesting the termination of the first contract, the complaint sought to
recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's
employee, but an independent contractor and that the Company had no obligation to him for unpaid commissions under the terms and conditions of his contract. 5
The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting agreement had established an employer-employee relationship between him and the
Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said official's decision directed payment of his unpaid commissions "... equivalent to the balance of
the first year's premium remaining unpaid, at the time of his termination, of all the insurance policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees. 6
This decision was, on appeal by the Company, affirmed by the National Labor Relations Commission. 7 Hence, the present petition for certiorari and prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the Company's employee by virtue of the contract invoked by him, thereby placing his claim for
unpaid commissions within the original and exclusive jurisdiction of the Labor Arbiter under the provisions of Section 217 of the Labor Code, 8 or, contrarily, as the Company would have it,
that under said contract Basiao's status was that of an independent contractor whose claim was thus cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an
ordinary civil action.
The Company's thesis, that no employer-employee relation in the legal and generally accepted sense existed between it and Basiao, is drawn from the terms of the contract they had
entered into, which, either expressly or by necessary implication, made Basiao the master of his own time and selling methods, left to his judgment the time, place and means of soliciting
insurance, set no accomplishment quotas and compensated him on the basis of results obtained. He was not bound to observe any schedule of working hours or report to any regular
station; he could seek and work on his prospects anywhere and at anytime he chose to, and was free to adopt the selling methods he deemed most effective.
Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company, the respondents contend that they do not constitute the decisive
determinant of the nature of his engagement, invoking precedents to the effect that the critical feature distinguishing the status of an employee from that of an independent contractor
is control, that is, whether or not the party who engages the services of another has the power to control the latter's conduct in rendering such services. Pursuing the argument, the
respondents draw attention to the provisions of Basiao's contract obliging him to "... observe and conform to all rules and regulations which the Company may from time to time
prescribe ...," as well as to the fact that the Company prescribed the qualifications of applicants for insurance, processed their applications and determined the amounts of insurance cover
to be issued as indicative of the control, which made Basiao, in legal contemplation, an employee of the Company. 9
It is true that the "control test" expressed in the following pronouncement of the Court in the 1956 case of Viana vs. Alejo Al-Lagadan 10
... In determining the existence of employer-employee relationship, the following elements are generally considered, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees' conduct although the latter is the most important
element (35 Am. Jur. 445). ...

has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without question a valid test of the character of a contract or agreement to render service. It should, however,
be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an
employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any
intervention whatsoever in his performance of the engagement.
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the result and the means used to achieve it. The distinction acquires particular relevance in the case of an enterprise
affected with public interest, as is the business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but
also to the internal affairs of the insurance company. 12 Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance
Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of
the law and what it requires or prohibits. Of such a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance applications to processing
and approval by the Company, and also reserve to the Company the determination of the premiums to be paid and the schedules of payment. None of these really invades the agent's
contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee
relationship between him and the company.
There is no dearth of authority holding persons similarly placed as respondent Basiao to be independent contractors, instead of employees of the parties for whom they worked. In Mafinco
Trading Corporation vs. Ople, 13 the Court ruled that a person engaged to sell soft drinks for another, using a truck supplied by the latter, but with the right to employ his own workers, sell
according to his own methods subject only to prearranged routes, observing no working hours fixed by the other party and obliged to secure his own licenses and defray his own selling
expenses, all in consideration of a peddler's discount given by the other party for at least 250 cases of soft drinks sold daily, was not an employee but an independent contractor.
In Investment Planning Corporation of the Philippines us. Social Security System 14 a case almost on all fours with the present one, this Court held that there was no employer-employee
relationship between a commission agent and an investment company, but that the former was an independent contractor where said agent and others similarly placed were: (a) paid
compensation in the form of commissions based on percentages of their sales, any balance of commissions earned being payable to their legal representatives in the event of death or
registration; (b) required to put up performance bonds; (c) subject to a set of rules and regulations governing the performance of their duties under the agreement with the company and
termination of their services for certain causes; (d) not required to report for work at any time, nor to devote their time exclusively to working for the company nor to submit a record of their
activities, and who, finally, shouldered their own selling and transportation expenses.
More recently, in Sara vs. NLRC, 15 it was held that one who had been engaged by a rice miller to buy and sell rice and palay without compensation except a certain percentage of what he
was able to buy or sell, did work at his own pleasure without any supervision or control on the part of his principal and relied on his own resources in the performance of his work, was a
plain commission agent, an independent contractor and not an employee.
The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to
time prescribe. No showing has been made that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or
restricted his choice of methods or the methods themselves of selling insurance. Absent such showing, the Court will not speculate that any exceptions or qualifications were imposed
on the express provision of the contract leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-five years. Whatever this is meant to imply, the obvious reply would
be that what is germane here is Basiao's status under the contract of July 2, 1968, not the length of his relationship with the Company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid
commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the
respondent NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary and premature to consider Basiao's claim for commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside, and that complaint of private respondent Melecio T. Basiao in RAB Case No. VI-0010-83
is dismissed. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.

Case no. 5 Singer Sewing Machine Company Vs. Franklin Drilon

G.R. No. 91307

January 24, 1991

SINGER SEWING MACHINE COMPANY, petitioner

vs.
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE COLLECTORS UNION-BAGUIO (SIMACUB), respondents.
Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for petitioner.
Domogan, Lockey, Orate & Dao-ayan Law Office for private respondent.

GUTIERREZ, JR., J.:

This is a petition for certiorari assailing the order of Med-Arbiter Designate Felix B. Chaguile, Jr., the resolution of then Labor Secretary Franklin M. Drilon affirming said order on appeal and
the order denying the motion for reconsideration in the case entitled "In Re: Petition for Direct Certification as the Sole and Exclusive Collective Bargaining Agent of Collectors of Singer
Sewing Machine Company-Singer Machine Collectors Union-Baguio (SIMACUB)" docketed as OS-MA-A-7-119-89 (IRD Case No. 02-89 MED).
On February 15, 1989, the respondent union filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of the Singer Sewing Machine Company,
Baguio City branch (hereinafter referred to as "the Company").
The Company opposed the petition mainly on the ground that the union members are actually not employees but are independent contractors as evidenced by the collection agency
agreement which they signed.
The respondent Med-Arbiter, finding that there exists an employer-employee relationship between the union members and the Company, granted the petition for certification election. On
appeal, Secretary of Labor Franklin M. Drilon affirmed it. The motion for reconsideration of the Secretary's resolution was denied. Hence, this petition in which the Company alleges that
public respondents acted in excess of jurisdiction and/or committed grave abuse of discretion in that:
a) the Department of Labor and Employment (DOLE) has no jurisdiction over the case since the existence of employer-employee relationship is at issue;
b) the right of petitioner to due process was denied when the evidence of the union members' being commission agents was disregarded by the Labor Secretary;
c) the public respondents patently erred in finding that there exists an employer-employee relationship;
d) the public respondents whimsically disregarded the well-settled rule that commission agents are not employees but are independent contractors.
The respondents, on the other hand, insist that the provisions of the Collection Agency Agreement belie the Company's position that the union members are independent contractors. To
prove that union members are employees, it is asserted that they "perform the most desirable and necessary activities for the continuous and effective operations of the business of the
petitioner Company" (citing Article 280 of the Labor Code). They add that the termination of the agreement by the petitioner pending the resolution of the case before the DOLE "only shows
the weakness of petitioner's stand" and was "for the purpose of frustrating the constitutionally mandated rights of the members of private respondent union to self-organization and collective
organization." They also contend that under Section 8, Rule 8, Book No. III of the Omnibus Rules Implementing the Labor Code, which defines job-contracting, they cannot legally qualify as
independent contractors who must be free from control of the alleged employer, who carry independent businesses and who have substantial capital or investment in the form of equipment,
tools, and the like necessary in the conduct of the business.

The present case mainly calls for the application of the control test, which if not satisfied, would lead us to conclude that no employer-employee relationship exists. Hence, if the union
members are not employees, no right to organize for purposes of bargaining, nor to be certified as such bargaining agent can ever be recognized. The following elements are generally
considered in the determination of the employer-employee relationship; "(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 although the latter is the most important element" (Mafinco Trading Corporation v. Ople, 70 SCRA 139 [1976]; Development Bank of the
Philippines v. National Labor Relations Commission, 175 SCRA 537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 [1984]; Broadway Motors Inc. v. NLRC, 156 SCRA 522 [1987];
Brotherhood Labor Unity Movement in the Philippines v. Zamora, 147 SCRA 49 [1986]).
The Collection Agency Agreement defines the relationship between the Company and each of the union members who signed a contract. The petitioner relies on the following stipulations in
the agreements: (a) a collector is designated as a collecting agent" who is to be considered at all times as an independent contractor and not employee of the Company; (b) collection of all
payments on installment accounts are to be made monthly or oftener; (c) an agent is paid his compensation for service in the form of a commission of 6% of all collections made and turned
over plus a bonus on said collections; (d) an agent is required to post a cash bond of three thousand pesos (P3,000.00) to assure the faithful performance and observance of the terms and
conditions under the agreement; (e) he is subject to all the terms and conditions in the agreement; (f) the agreement is effective for one year from the date of its execution and renewable on
a yearly basis; and (g) his services shall be terminated in case of failure to satisfy the minimum monthly collection performance required, failure to post a cash bond, or cancellation of the
agreement at the instance of either party unless the agent has a pending obligation or indebtedness in favor of the Company.
Meanwhile, the respondents rely on other features to strengthen their position that the collectors are employees. They quote paragraph 2 which states that an agent shall utilize only receipt
forms authorized and issued by the Company. They also note paragraph 3 which states that an agent has to submit and deliver at least once a week or as often as required a report of all
collections made using report forms furnished by the Company. Paragraph 4 on the monthly collection quota required by the Company is deemed by respondents as a control measure over
the means by which an agent is to perform his services.
The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all collecting agents are employees and
neither are all collecting agents independent contractors. The collectors could fall under either category depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as an independent contractor not only because he is explicitly described as such but also because the provisions
permit him to perform collection services for the company without being subject to the control of the latter except only as to the result of his work. After a careful analysis of the contents of
the agreement, we rule in favor of the petitioner.
The requirement that collection agents utilize only receipt forms and report forms issued by the Company and that reports shall be submitted at least once a week is not necessarily an
indication of control over the means by which the job of collection is to be performed. The agreement itself specifically explains that receipt forms shall be used for the purpose of avoiding a
co-mingling of personal funds of the agent with the money collected on behalf of the Company. Likewise, the use of standard report forms as well as the regular time within which to submit
a report of collection are intended to facilitate order in office procedures. Even if the report requirements are to be called control measures, any control is only with respect to the end result
of the collection since the requirements regulate the things to be done after the performance of the collection job or the rendition of the service.
The monthly collection quota is a normal requirement found in similar contractual agreements and is so stipulated to encourage a collecting agent to report at least the minimum amount of
proceeds. In fact, paragraph 5, section b gives a bonus, aside from the regular commission every time the quota is reached. As a requirement for the fulfillment of the contract, it is subject
to agreement by both parties. Hence, if the other contracting party does not accede to it, he can choose not to sign it. From the records, it is clear that the Company and each collecting
agent intended that the former take control only over the amount of collection, which is a result of the job performed.
The respondents' contention that the union members are employees of the Company is based on selected provisions of the Agreement but ignores the following circumstances which
respondents never refuted either in the trial proceedings before the labor officials nor in its pleadings filed before this Court.
1. The collection agents are not required to observe office hours or report to Singer's office everyday except, naturally and necessarily, for the purpose of remitting their
collections.
2. The collection agents do not have to devote their time exclusively for SINGER. There is no prohibition on the part of the collection agents from working elsewhere. Nor are
these agents required to account for their time and submit a record of their activity.
3. The manner and method of effecting collections are left solely to the discretion of the collection agents without any interference on the part of Singer.
4. The collection agents shoulder their transportation expenses incurred in the collections of the accounts assigned to them.
5. The collection agents are paid strictly on commission basis. The amounts paid to them are based solely on the amounts of collection each of them make. They do not receive
any commission if they do not effect any collection even if they put a lot of effort in collecting. They are paid commission on the basis of actual collections.
6. The commissions earned by the collection agents are directly deducted by them from the amount of collections they are able to effect. The net amount is what is then remitted
to Singer." (Rollo, pp. 7-8)
If indeed the union members are controlled as to the manner by which they are supposed to perform their collections, they should have explicitly said so in detail by specifically denying
each of the facts asserted by the petitioner. As there seems to be no objections on the part of the respondents, the Court finds that they miserably failed to defend their position.
A thorough examination of the facts of the case leads us to the conclusion that the existence of an employer-employee relationship between the Company and the collection agents cannot
be sustained.
The plain language of the agreement reveals that the designation as collection agent does not create an employment relationship and that the applicant is to be considered at all times as
an independent contractor. This is consistent with the first rule of interpretation that the literal meaning of the stipulations in the contract controls (Article 1370, Civil Code; La Suerte Cigar
and Cigarette Factory v. Director of Bureau of Labor, Relations, 123 SCRA 679 [1983]). No such words as "to hire and employ" are present. Moreover, the agreement did not fix an amount
for wages nor the required working hours. Compensation is earned only on the basis of the tangible results produced, i.e., total collections made (Sarra v. Agarrado, 166 SCRA 625 [1988]).
In Investment Planning Corp. of the Philippines v. Social Security System, 21 SCRA 924 [1967] which involved commission agents, this Court had the occasion to rule, thus:
We are convinced from the facts that the work of petitioner's agents or registered representatives more nearly approximates that of an independent contractor than that of an
employee. The latter is paid for the labor he performs, that is, for the acts of which such labor consists the former is paid for the result thereof . . . .
xxx

xxx

xxx

Even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans he would not necessarily be entitled to compensation therefor. His right to
compensation depends upon and is measured by the tangible results he produces."
Moreover, the collection agent does his work "more or less at his own pleasure" without a regular daily time frame imposed on him (Investment Planning Corporation of the Philippines v.
Social Security System, supra; See also Social Security System v. Court of Appeals, 30 SCRA 210 [1969]).
The grounds specified in the contract for termination of the relationship do not support the view that control exists "for the causes of termination thus specified have no relation to the means
and methods of work that are ordinarily required of or imposed upon employees." (Investment Planning Corp. of the Phil. v. Social Security System, supra)
The last and most important element of the control test is not satisfied by the terms and conditions of the contracts. There is nothing in the agreement which implies control by the Company
not only over the end to be achieved but also over the means and methods in achieving the end (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).
The Court finds the contention of the respondents that the union members are employees under Article 280 of the Labor Code to have no basis. The definition that regular employees are
those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall render
services for and in behalf of another for a consideration (no matter how necessary for the latter's business) even without being hired as an employee. This is precisely true in the case of an
independent contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument that Article 280 is not the yardstick for determining the existence of an
employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an
employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute.
Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does not apply to this case.1wphi1 Respondents assert that the said provision on job contracting
requires that for one to be considered an independent contractor, he must have "substantial capital or investment in the form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of his business." There is no showing that a collection agent needs tools and machineries. Moreover, the provision must be viewed in relation
to Article 106 of the Labor Code which provides:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the
contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly
employed by him.
xxx

xxx

xxx

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of
such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him." (p. 20)
It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in determining whether the employer is solidarily liable to the employees of an alleged contractor and/or
sub-contractor for unpaid wages in case it is proven that there is a job-contracting situation.
The assumption of jurisdiction by the DOLE over the case is justified as the case was brought on appeal by the petitioner itself which prayed for the reversal of the Order of the Med-Arbiter
on the ground that the union members are not its employees. Hence, the petitioner submitted itself as well as the issue of existence of an employment relationship to the jurisdiction of the
DOLE which was faced with a dispute on an application for certification election.

The Court finds that since private respondents are not employees of the Company, they are not entitled to the constitutional right to join or form a labor organization for purposes of
collective bargaining. Accordingly, there is no constitutional and legal basis for their "union" to be granted their petition for direct certification. This Court made this pronouncement in La
Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations, supra:
. . . The question of whether employer-employee relationship exists is a primordial consideration before extending labor benefits under the workmen's compensation, social
security, medicare, termination pay and labor relations law. It is important in the determination of who shall be included in a proposed bargaining unit because, it is the sine qua
non, the fundamental and essential condition that a bargaining unit be composed of employees. Failure to establish this juridical relationship between the union members and
the employer affects the legality of the union itself. It means the ineligibility of the union members to present a petition for certification election as well as to vote therein . . . . (At
p. 689)
WHEREFORE, the Order dated June 14,1989 of Med-Arbiter Designate Felix B. Chaguile, Jr., the Resolution and Order of Secretary Franklin M. Drilon dated November 2, 1989 and
December 14, 1989, respectively are hereby REVERSED and SET ASIDE. The petition for certification election is ordered dismissed and the temporary restraining order issued by the
Court on December 21, 1989 is made permanent.
SO ORDERED.
Fernan, C.J., Feliciano and Bidin, JJ., concur.

Case no. 6 Manila Golf and Country Club Vs. IAC

G.R. No. 64948 September 27, 1994
MANILA GOLF & COUNTRY CLUB, INC., petitioner,
vs.
INTERMEDIATE APPELLATE COURT and FERMIN LLAMAR, respondents.
Bito, Misa & Lozada for petitioner.
Remberto Z. Evio for private respondent.

NARVASA, C.J.:
The question before the Court here is whether or not persons rendering caddying services for members of golf clubs and their guests in said clubs' courses or premises are the employees
of such clubs and therefore within the compulsory coverage of the Social Security System (SSS).
That question appears to have been involved, either directly or peripherally, in three separate proceedings, all initiated by or on behalf of herein private respondent and his fellow caddies.
That which gave rise to the present petition for review was originally filed with the Social Security Commission (SSC) via petition of seventeen (17) persons who styled themselves "Caddies
of Manila Golf and Country Club-PTCCEA" for coverage and availment of benefits under the Social Security Act as amended, "PTCCEA" being
the acronym of a labor organization, the "Philippine Technical, Clerical, Commercial Employees Association," with which the petitioners claimed to be affiliated. The petition, docketed as
SSC Case No. 5443, alleged in essence that although the petitioners were employees of the Manila Golf and Country Club, a domestic corporation, the latter had not registered them as
such with the SSS.
At about the same time, two other proceedings bearing on the same question were filed or were pending; these were:
(1) a certification election case filed with the Labor Relations Division of the Ministry of Labor by the PTCCEA on behalf of the same caddies of the Manila Golf and
Country Club, the case being titled "Philippine Technical, Clerical, Commercial Association vs. Manila Golf and Country Club" and docketed as Case No. R4-LRDXM-10-504-78; it appears to have been resolved in favor of the petitioners therein by Med-Arbiter Orlando S. Rojo who was thereafter upheld by Director Carmelo S.
Noriel, denying the Club's motion for reconsideration; 1
(2) a compulsory arbitration case initiated before the Arbitration Branch of the Ministry of Labor by the same labor organization, titled "Philippine Technical, Clerical,
Commercial Employees Association (PTCCEA), Fermin Lamar and Raymundo Jomok vs. Manila Golf and Country Club, Inc., Miguel Celdran, Henry Lim and
Geronimo Alejo;" it was dismissed for lack of merit by Labor Arbiter Cornelio T. Linsangan, a decision later affirmed on appeal by the National Labor Relations
Commission on the ground that there was no employer-employee relationship between the petitioning caddies and the respondent Club. 2
In the case before the SSC, the respondent Club filed answer praying for the dismissal of the petition, alleging in substance that the petitioners, caddies by occupation, were allowed into the
Club premises to render services as such to the individual members and guests playing the Club's golf course and who themselves paid for such services; that as such caddies, the
petitioners were not subject to the direction and control of the Club as regards the manner in which they performed their work; and hence, they were not the Club's employees.
Subsequently, all but two of the seventeen petitioners of their own accord withdrew their claim for social security coverage, avowedly coming to realize that indeed there was no employment
relationship between them and the Club. The case continued, and was eventually adjudicated by the SSC after protracted proceedings only as regards the two holdouts, Fermin Llamar and
Raymundo Jomok. The Commission dismissed the petition for lack of merit, 3 ruling:
. . . that the caddy's fees were paid by the golf players themselves and not by respondent club. For instance, petitioner Raymundo Jomok averred that for their
services as caddies a caddy's Claim Stub (Exh. "1-A") is issued by a player who will in turn hand over to management the other portion of the stub known as Caddy
Ticket (Exh. "1") so that by this arrangement management will know how much a caddy will be paid (TSN, p. 80, July 23, 1980). Likewise, petitioner Fermin Llamar
admitted that caddy works on his own in accordance with the rules and regulations (TSN, p. 24, February 26, 1980) but petitioner Jomok could not state any policy of
respondent that directs the manner of caddying (TSN, pp. 76-77, July 23, 1980). While respondent club promulgates rules and regulations on the assignment,
deportment and conduct of caddies (Exh. "C") the same are designed to impose personal discipline among the caddies but not to direct or conduct their actual work.
In fact, a golf player is at liberty to choose a caddy of his preference regardless of the respondent club's group rotation system and has the discretion on whether or
not to pay a caddy. As testified to by petitioner Llamar that their income depends on the number of players engaging their services and liberality of the latter (TSN,
pp. 10-11, Feb. 26, 1980). This lends credence to respondent's assertion that the caddies are never their employees in the absence of two elements, namely, (1)
payment of wages and (2) control or supervision over them. In this connection, our Supreme Court ruled that in the determination of the existence of an employeremployee relationship, the "control test" shall be considered decisive (Philippine Manufacturing Co. vs. Geronimo and Garcia, 96 Phil. 276; Mansal vs. P.P. Coheco
Lumber Co., 96 Phil. 941; Viana vs.
Al-lagadan, et al., 99 Phil. 408; Vda, de Ang, et al. vs. The Manila Hotel Co., 101 Phil. 358, LVN Pictures Inc. vs. Phil. Musicians Guild, et al.,
L-12582, January 28, 1961, 1 SCRA 132. . . . (reference being made also to Investment Planning Corporation Phil. vs. SSS 21 SCRA 925).
Records show the respondent club had reported for SS coverage Graciano Awit and Daniel Quijano, as bat unloader and helper, respectively, including their ground
men, house and administrative personnel, a situation indicative of the latter's concern with the rights and welfare of its employees under the SS law, as amended.
The unrebutted testimony of Col. Generoso A. Alejo (Ret.) that the ID cards issued to the caddies merely intended to identify the holders as accredited caddies of the
club and privilege(d) to ply their trade or occupation within its premises which could be withdrawn anytime for loss of confidence. This gives us a reasonable ground
to state that the defense posture of respondent that petitioners were never its employees is well taken. 4
From this Resolution appeal was taken to the Intermediate appellate Court by the union representing Llamar and Jomok. After the appeal was docketed 5 and some months before decision
thereon was reached and promulgated, Raymundo Jomok's appeal was dismissed at his instance, leaving Fermin Llamar the lone appellant. 6
The appeal ascribed two errors to the SSC:

(1) refusing to suspend the proceedings to await judgment by the Labor Relations Division of National Capital Regional Office in the certification election case (R-4LRD-M-10-504-78) supra, on the precise issue of the existence of employer-employee relationship between the respondent club and the appellants, it being
contended that said issue was "a function of the proper labor office"; and
(2) adjudicating that self same issue a manner contrary to the ruling of the Director of the Bureau of Labor Relations, which "has not only become final but (has been)
executed or (become) res adjudicata." 7
The Intermediate Appellate Court gave short shirt to the first assigned error, dismissing it as of the least importance. Nor, it would appear, did it find any greater merit in the second alleged
error. Although said Court reserved the appealed SSC decision and declared Fermin Llamar an employee of the Manila Gold and Country Club, ordering that he be reported as such for
social security coverage and paid any corresponding benefits, 8 it conspicuously ignored the issue of res adjudicata raised in said second assignment. Instead, it drew basis for the reversal
from this Court's ruling in Investment Planning Corporation of the Philippines vs. Social Security System, supra 9 and declared that upon the evidence, the questioned employer-employee
relationship between the Club and Fermin Llamar passed the so-called "control test," establishment in the case i.e., "whether the employer controls or has reserved the right to control
the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished," the Club's control over the caddies
encompassing:
(a) the promulgation of no less than twenty-four (24) rules and regulations just about every aspect of the conduct that the caddy must observe, or avoid, when
serving as such, any violation of any which could subject him to disciplinary action, which may include suspending or cutting off his access to the club premises;
(b) the devising and enforcement of a group rotation system whereby a caddy is assigned a number which designates his turn to serve a player;
(c) the club's "suggesting" the rate of fees payable to the caddies.
Deemed of title or no moment by the Appellate Court was the fact that the caddies were paid by the players, not by the Club, that they observed no definite working hours and earned no
fixed income. It quoted with approval from an American decision 10 to the effect that: "whether the club paid the caddies and afterward collected in the first instance, the caddies were still
employees of the club." This, no matter that the case which produced this ruling had a slightly different factual cast, apparently having involved a claim for workmen's compensation made
by a caddy who, about to leave the premises of the club where he worked, was hit and injured by an automobile then negotiating the club's private driveway.
That same issue of res adjudicata, ignored by the IAC beyond bare mention thereof, as already pointed out, is now among the mainways of the private respondent's defenses to the petition
for review. Considered in the perspective of the incidents just recounted, it illustrates as well as anything can, why the practice of forum-shopping justly merits censure and punitive sanction.
Because the same question of employer-employee relationship has been dragged into three different fora, willy-nilly and in quick succession, it has birthed controversy as to which of the
resulting adjudications must now be recognized as decisive. On the one hand, there is the certification case [R4-LRDX-M-10-504-78), where the decision of the Med-Arbiter found for the
existence of employer-employee relationship between the parties, was affirmed by Director Carmelo S. Noriel, who ordered a certification election held, a disposition never thereafter
appealed according to the private respondent; on the other, the compulsory arbitration case (NCR Case No. AB-4-1771-79), instituted by or for the same respondent at about the same time,
which was dismissed for lack of merit by the Labor Arbiter, which was afterwards affirmed by the NLRC itself on the ground that there existed no such relationship between the Club and the
private respondent. And, as if matters were not already complicated enough, the same respondent, with the support and assistance of the PTCCEA, saw fit, also contemporaneously, to
initiate still a third proceeding for compulsory social security coverage with the Social Security Commission (SSC Case No. 5443), with the result already mentioned.
Before this Court, the petitioner Club now contends that the decision of the Med-Arbiter in the certification case had never become final, being in fact the subject of three pending and
unresolved motions for reconsideration, as well as of a later motion for early resolution. 11 Unfortunately, none of these motions is incorporated or reproduced in the record before the Court.
And, for his part, the private respondent contends, not only that said decision had been appealed to and been affirmed by the Director of the BLR, but that a certification election had in fact
been held, which resulted in the PTCCEA being recognized as the sole bargaining agent of the caddies of the Manila Golf and Country Club with respect to wages, hours of work, terms of
employment, etc. 12 Whatever the truth about these opposing contentions, which the record before the Court does not adequately disclose, the more controlling consideration would seem to
be that, however, final it may become, the decision in a certification case, by the
very nature of that proceedings, is not such as to foreclose all further dispute between the parties as to the existence, or non-existence, of employer-employee relationship between them.
It is well settled that for res adjudicata, or the principle of bar by prior judgment, to apply, the following essential requisites must concur: (1) there must be a final judgment or order; (2) said
judgment or order must be on the merits; (3) the court rendering the same must have jurisdiction over the subject matter and the parties; and (4) there must be between the two cases
identity of parties, identity of subject matter and identity of cause of action. 13
Clearly implicit in these requisites is that the action or proceedings in which is issued the "prior Judgment" that would operate in bar of a subsequent action between the same parties for the
same cause, be adversarial, or contentious, "one having opposing parties; (is) contested, as distinguished from an ex parte hearing or proceeding. . . . of which the party seeking relief has
given legal notice to the other party and afforded the latter an opportunity to contest it" 14 and a certification case is not such a proceeding, as this Court already ruled:
A certification proceedings is not a "litigation" in the sense in which the term is commonly understood, but mere investigation of a non-adversary, fact-finding
character, in which the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of
their representation. The court enjoys a wide discretion in determining the procedure necessary to insure the fair and free choice of bargaining representatives by the
employees. 15
Indeed, if any ruling or judgment can be said to operate as res adjudicata on the contested issue of employer-employee relationship between present petitioner and the private respondent,
it would logically be that rendered in the compulsory arbitration case (NCR Case No. AB-4-771-79, supra), petitioner having asserted, without dispute from the private respondent, that said
issue was there squarely raised and litigated, resulting in a ruling of the Arbitration Branch (of the same Ministry of Labor) that such relationship did not exist, and which ruling was thereafter
affirmed by the National Labor Relations Commission in an appeal taken by said respondent. 16
In any case, this Court is not inclined to allow private respondent the benefit of any doubt as to which of the conflicting ruling just adverted to should be accorded primacy, given the fact that
it was he who actively sought them simultaneously, as it were, from separate fora, and even if the graver sanctions more lately imposed by the Court for forum-shopping may not be applied
to him retroactively.
Accordingly, the IAC is not to be faulted for ignoring private respondent's invocation of res adjudicata; on contrary, it acted correctly in doing so.
Said Courts holding that upon the facts, there exists (or existed) a relationship of employer and employee between petitioner and private respondent is, however, another matter. The Court
does not agree that said facts necessarily or logically point to such a relationship, and to the exclusion of any form of arrangements, other than of employment, that would make the
respondent's services available to the members and guest of the petitioner.
As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress, language, etc. covered by the petitioner's regulations, does not, in the mind of the
Court, so circumscribe the actions or judgment of the caddies concerned as to leave them little or no freedom of choice whatsoever in the manner of carrying out their services. In the very
nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they
do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufference but, on the other hand, also without having to observe any working
hours, free to leave anytime they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond
barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these
considerations clash frontally with the concept of employment.
The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another indication of the latter's status as employees. It seems to the
Court, however, that the intendment of such fact is to the contrary, showing that the Club has not the measure of control over the incidents of the caddies' work and compensation that an
employer would possess.
The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who is absent
when his turn number is called simply losing his turn to serve and being assigned instead the last number for the day. 17

By and large, there appears nothing in the record to refute the petitioner's claim that:
(Petitioner) has no means of compelling the presence of a caddy. A caddy is not required to exercise his occupation in the premises of petitioner. He may work with
any other golf club or he may seek employment a caddy or otherwise with any entity or individual without restriction by petitioner. . . .
. . . In the final analysis, petitioner has no was of compelling the presence of the caddies as they are not required to render a definite number of hours of work on a
single day. Even the group rotation of caddies is not absolute because a player is at liberty to choose a caddy of his preference regardless of the caddy's order in the
rotation.
It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to work elsewhere. Under such circumstances, he may
then leave the premises of petitioner and go to such other place of work that he wishes (sic). Or a caddy who is on call for a particular day may deliberately absent
himself if he has more profitable caddying, or another, engagement in some other place. These are things beyond petitioner's control and for which it imposes no
direct sanctions on the caddies. . . . 18
WHEREFORE, the Decision of the Intermediate Appellant Court, review of which is sought, is reversed and set aside, it being hereby declared that the private respondent, Fermin Llamar, is
not an employee of petitioner Manila Golf and Country Club and that petitioner is under no obligation to report him for compulsory coverage to the Social Security System. No
pronouncement as to costs.
SO ORDERED.
Regalado and Mendoza, JJ., concur.
Padilla, J., is on leave.
Case no. 7 Encyclopedia Britannica Vs. NLRC

SECOND DIVISION
[G.R. No. 87098. November 4, 1996]
ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L. DOGELIO and
BENJAMIN LIMJOCO, respondents.
DECISION
TORRES, JR., J.:
Encyclopaedia Britannica (Philippines), Inc. filed this petition for certiorari to annul and set aside the resolution of the National Labor Relations Commission, Third Division, in NLRC
Case No. RB IV-5158-76, dated December 28, 1988, the dispositive portion of which reads:
WHEREFORE, in view of all the foregoing, the decision dated December 7, 1982 of then Labor Arbiter Teodorico L. Dogelio is hereby AFFIRMED, and the instant appeal is hereby
DISMISSED for lack of merit.
SO ORDERED.[1]
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannica and was in charge of selling petitioners products through some sales
representatives. As compensation, private respondent received commissions from the products sold by his agents. He was also allowed to use petitioners name, goodwill and logo. It was,
however, agreed upon that office expenses would be deducted from private respondents commissions. Petitioner would also be informed about appointments, promotions, and transfers of
employees in private respondents district.
On June 14, 1974, private respondent Limjoco resigned from office to pursue his private business. Then on October 30, 1975, he filed a complaint against petitioner Encyclopaedia
Britannica with the Department of Labor and Employment, claiming for non-payment of separation pay and other benefits, and also illegal deduction from his sales commissions.
Petitioner Encyclopaedia Britannica alleged that complainant Benjamin Limjoco (Limjoco, for brevity) was not its employee but an independent dealer authorized to promote and sell
its products and in return, received commissions therefrom. Limjoco did not have any salary and his income from the petitioner company was dependent on the volume of sales
accomplished. He also had his own separate office, financed the business expenses, and maintained his own workforce. The salaries of his secretary, utility man, and sales representatives
were chargeable to his commissions. Thus, petitioner argued that it had no control and supervision over the complainant as to the manner and means he conducted his business
operations. The latter did not even report to the office of the petitioner and did not observe fixed office hours. Consequently, there was no employer-employee relationship.
Limjoco maintained otherwise. He alleged that he was hired by the petitioner in July 1970, was assigned in the sales department, and was earning an average of P4,000.00 monthly
as his sales commission.He was under the supervision of the petitioners officials who issued to him and his other personnel, memoranda, guidelines on company policies, instructions and
other orders. He was, however, dismissed by the petitioner when the Laurel-Langley Agreement expired. As a result thereof, Limjoco asserts that in accordance with the established
company practice and the provisions of the collective bargaining agreement, he was entitled to termination pay equivalent to one month salary, the unpaid benefits (Christmas bonus,
midyear bonus, clothing allowance, vacation leave, and sick leave), and the amounts illegally deducted from his commissions which were then used for the payments of office supplies,
office space, and overhead expenses.
On December 7, 1982, Labor Arbiter Teodorico Dogelio, in a decision ruled that Limjoco was an employee of the petitioner company. Petitioner had control over Limjoco since the
latter was required to make periodic reports of his sales activities to the company. All transactions were subject to the final approval of the petitioner, an evidence that petitioner company
had active control on the sales activities. There was therefore, an employer-employee relationship and necessarily, Limjoco was entitled to his claims. The decision also ordered petitioner
company to pay the following:
1. To pay complainant his separation pay in the total amount of P16,000.00;
2. To pay complainant his unpaid Christmas bonus for three years or the amount of P12,000.00;
3. To pay complainant his unpaid mid-year bonus equivalent to one-half month pay or the total amount of P6,000.00;
4. To pay complainant his accrued vacation leave equivalent to 15 days per year of service, or the total amount of P6,000.00;
5. To pay complainant his unpaid clothing allowance in the total amount of P600.00; and
6. To pay complainant his accrued sick leave equivalent to 15 days per year of service or the total amount of P6,000.00.[2]

On appeal, the Third Division of the National Labor Relations Commission affirmed the assailed decision. The Commission opined that there was no evidence supporting the
allegation that Limjoco was an independent contractor or dealer. The petitioner still exercised control over Limjoco through its memoranda and guidelines and even prohibitions on the sale
of products other than those authorized by it. In short, the petitioner company dictated how and where to sell its products. Aside from that fact, Limjoco passed the costs to the petitioner
chargeable against his future commissions. Such practice proved that he was not an independent dealer or contractor for it is required by law that an independent contractor should have
substantial capital or investment.
Dissatisfied with the outcome of the case, petitioner Encyclopaedia Britannica now comes to us in this petition for certiorari and injunction with prayer for preliminary injunction. On
April 3, 1989, this Court issued a temporary restraining order enjoining the enforcement of the decision dated December 7, 1982.
The following are the arguments raised by the petitioner:
I
The respondent NLRC gravely abused its discretion in holding that appellants contention that appellee was an independent contractor is not supported by evidence on record.
II
Respondent NLRC committed grave abuse of discretion in not passing upon the validity of the pronouncement of the respondent Labor Arbiter granting private respondents claim for
payment of Christmas bonus, Mid-year bonus, clothing allowance and the money equivalent of accrued and unused vacation and sick leave.
The NLRC ruled that there existed an employer-employee relationship and petitioner failed to disprove this finding. We do not agree.
In determining the existence of an employer-employee relationship the following elements must be present: 1) selection and engagement of the employee; 2) payment of wages; 3)
power of dismissal; and 4) the power to control the employees conduct. Of the above, control of employees conduct is commonly regarded as the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. [3] Under the control test, an employer-employee relationship exists where the person for whom the services are performed
reserves the right to control not only the end to be achieved, but also the manner and means to be used in reaching that end. [4]
The fact that petitioner issued memoranda to private respondents and to other division sales managers did not prove that petitioner had actual control over them. The different
memoranda were merely guidelines on company policies which the sales managers follow and impose on their respective agents. It should be noted that in petitioners business of selling
encyclopedias and books, the marketing of these products was done through dealership agreements. The sales operations were primarily conducted by independent authorized agents who
did not receive regular compensations but only commissions based on the sales of the products. These independent agents hired their own sales representatives, financed their own office
expenses, and maintained their own staff. Thus, there was a need for the petitioner to issue memoranda to private respondent so that the latter would be apprised of the company policies
and procedures. Nevertheless, private respondent Limjoco and the other agents were free to conduct and promote their sales operations. The periodic reports to the petitioner by the agents
were but necessary to update the company of the latters performance and business income.
Private respondent was not an employee of the petitioner company. While it was true that the petitioner had fixed the prices of the products for reason of uniformity and private
respondent could not alter them, the latter, nevertheless, had free rein in the means and methods for conducting the marketing operations. He selected his own personnel and the only
reason why he had to notify the petitioner about such appointments was for purpose of deducting the employees salaries from his commissions. This he admitted in his testimonies, thus:
Q. Yes, in other words you were on what is known as P&L basis or profit and loss basis?
A. That is right.
Q. If for an instance, just example your sales representative in any period did not produce any sales, you would not get any money from Britannica, would you?
A. No, sir.
Q. In fact, Britannica by doing the accounting for you as division manager was merely making it easy for you to concentrate all your effort in selling and you dont worry about
accounting, isnt that so?
A. Yes, sir.
Q. In fact whenever you hire a secretary or trainer you merely hire that person and notify Britannica so that Encyclopaedia Britannica will give the salaries and deduct it from
your earnings, isnt that so?
A. In certain cases I just hired people previously employed by Encyclopaedia Britannica.
xxx
Q. In this Exhibit 2 you were informing Encyclopaedia Britannica that you have hired a certain person and you were telling Britannica how her salary was going to be taken
cared of, is it not?
A. Yes, sir.
Q. You said here, please be informed that we have appointed Miss Luz Villan as division trainer effective May 1, 1971 at P550.00 per month her salary will be chargeable to
the Katipunan and Bayanihan Districts, signed by yourself. What is the Katipunan and Bayanihan District?
A. Those were districts under my division.
Q. In effect you were telling Britannica that you have hired this person and you should charge her salary to me, is that right?
A. Yes, sir.[5]
Private respondent was merely an agent or an independent dealer of the petitioner. He was free to conduct his work and he was free to engage in other means of livelihood. At the
time he was connected with the petitioner company, private respondent was also a director and later the president of the Farmers Rural Bank. Had he been an employee of the company, he
could not be employed elsewhere and he would be required to devote full time for petitioner. If private respondent was indeed an employee, it was rather unusual for him to wait for more
than a year from his separation from work before he decided to file his claims. Significantly, when Limjoco tendered his resignation to petitioner on June 14, 1974, he stated, thus:
"Re: Resignation
I am resigning as manager of the EB Capitol Division effective 16 June 1974.

This decision was brought about by conflict with other interests which lately have increasingly required my personal attention. I feel that in fairness to the company and to the people under
my supervision I should relinquish the position to someone who can devote full-time to the Division.
I wish to thank you for all the encouragement and assistance you have extended to me and to my group during my long association with Britannica.
Evidently, Limjoco was aware of conflict with other interests which xxx have increasingly required my personal attention (p. 118, Records). At the very least, it would indicate that
petitioner has no effective control over the personal activities of Limjoco, who as admitted by the latter had other conflict of interest requiring his personal attention.
In ascertaining whether the relationship is that of employer-employee or one of independent contractor, each case must be determined by its own facts and all features of the
relationship are to be considered.[6] The records of the case at bar showed that there was no such employer-employee relationship.
As stated earlier, the element of control is absent; where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of
work, and in turn is compensated according to the result of his efforts and not the amount thereof, we should not find that the relationship of employer and employee exists. [7] In fine, there is
nothing in the records to show or would indicate that complainant was under the control of the petitioner in respect of the means and methods [8] in the performance of complainants work.
Consequently, private respondent is not entitled to the benefits prayed for.
In view of the foregoing premises, the petition is hereby GRANTED, and the decision of the NLRC is hereby REVERSED AND SET ASIDE.
SO ORDERED.
Regalado (Chairman), Romero, Puno, and Mendoza, JJ., concur.

Case no. 8 Ramos vs the court of appeals

G.R. No. 124354 December 29, 1999

ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the minors, ROMMEL RAMOS, ROY RODERICK RAMOS and RON RAYMOND
RAMOS, petitioners,
vs.
COURT OF APPEALS, DELOS SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DRA. PERFECTA GUTIERREZ, respondents.

KAPUNAN, J.:
The Hippocratic Oath mandates physicians to give primordial consideration to the health and welfare of their patients. If a doctor fails to live up to this precept, he is made accountable for
his acts. A mistake, through gross negligence or incompetence or plain human error, may spell the difference between life and death. In this sense, the doctor plays God on his patient's
fate. 1
In the case at bar, the Court is called upon to rule whether a surgeon, an anesthesiologist and a hospital should be made liable for the unfortunate comatose condition of a patient
scheduled for cholecystectomy. 2
Petitioners seek the reversal of the decision 3 of the Court of Appeals, dated 29 May 1995, which overturned the decision 4 of the Regional Trial Court, dated 30 January 1992, finding
private respondents liable for damages arising from negligence in the performance of their professional duties towards petitioner Erlinda Ramos resulting in her comatose condition.
The antecedent facts as summarized by the trial court are reproduced hereunder:
Plaintiff Erlinda Ramos was, until the afternoon of June 17, 1985, a 47-year old (Exh. "A") robust woman (TSN, October 19, 1989, p. 10). Except for occasional
complaints of discomfort due to pains allegedly caused by the presence of a stone in her gall bladder (TSN, January 13, 1988, pp. 4-5), she was as normal as any
other woman. Married to Rogelio E. Ramos, an executive of Philippine Long Distance Telephone Company, she has three children whose names are Rommel
Ramos, Roy Roderick Ramos and Ron Raymond Ramos (TSN, October 19, 1989, pp. 5-6).
Because the discomforts somehow interfered with her normal ways, she sought professional advice. She was advised to undergo an operation for the removal of a
stone in her gall bladder (TSN, January 13, 1988, p. 5). She underwent a series of examinations which included blood and urine tests (Exhs. "A" and "C") which
indicated she was fit for surgery.
Through the intercession of a mutual friend, Dr. Buenviaje (TSN, January 13, 1988, p. 7), she and her husband Rogelio met for the first time Dr. Orlino Hozaka
(should be Hosaka; see TSN, February 20, 1990, p. 3), one of the defendants in this case, on June 10, 1985. They agreed that their date at the operating table at the
DLSMC (another defendant), would be on June 17, 1985 at 9:00 A.M.. Dr. Hosaka decided that she should undergo a "cholecystectomy" operation after examining
the documents (findings from the Capitol Medical Center, FEU Hospital and DLSMC) presented to him. Rogelio E. Ramos, however, asked Dr. Hosaka to look for a
good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that he will get a good anesthesiologist. Dr. Hosaka charged a fee of P16,000.00, which was to include
the anesthesiologist's fee and which was to be paid after the operation (TSN, October 19, 1989, pp. 14-15, 22-23, 31-33; TSN, February 27, 1990, p. 13; and TSN,
November 9, 1989, pp. 3-4, 10, 17).
A day before the scheduled date of operation, she was admitted at one of the rooms of the DLSMC, located along E. Rodriguez Avenue, Quezon City (TSN, October
19,1989, p. 11).
At around 7:30 A.M. of June 17, 1985 and while still in her room, she was prepared for the operation by the hospital staff. Her sister-in-law, Herminda Cruz, who was
the Dean of the College of Nursing at the Capitol Medical Center, was also there for moral support. She reiterated her previous request for Herminda to be with her
even during the operation. After praying, she was given injections. Her hands were held by Herminda as they went down from her room to the operating room (TSN,
January 13, 1988, pp. 9-11). Her husband, Rogelio, was also with her (TSN, October 19, 1989, p. 18). At the operating room, Herminda saw about two or three
nurses and Dr. Perfecta Gutierrez, the other defendant, who was to administer anesthesia. Although not a member of the hospital staff, Herminda introduced herself
as Dean of the College of Nursing at the Capitol Medical Center who was to provide moral support to the patient, to them. Herminda was allowed to stay inside the
operating room.
At around 9:30 A.M., Dr. Gutierrez reached a nearby phone to look for Dr. Hosaka who was not yet in (TSN, January 13, 1988, pp. 11-12). Dr. Gutierrez thereafter
informed Herminda Cruz about the prospect of a delay in the arrival of Dr. Hosaka. Herminda then went back to the patient who asked, "Mindy, wala pa ba ang
Doctor"? The former replied, "Huwag kang mag-alaala, darating na iyon" (Ibid.).

Thereafter, Herminda went out of the operating room and informed the patient's husband, Rogelio, that the doctor was not yet around ( id., p. 13). When she returned
to the operating room, the patient told her, "Mindy, inip na inip na ako, ikuha mo ako ng ibang Doctor." So, she went out again and told Rogelio about what the patient
said (id., p. 15). Thereafter, she returned to the operating room.
At around 10:00 A.M., Rogelio E. Ramos was "already dying [and] waiting for the arrival of the doctor" even as he did his best to find somebody who will allow him to
pull out his wife from the operating room (TSN, October 19, 1989, pp. 19-20). He also thought of the feeling of his wife, who was inside the operating room waiting for
the doctor to arrive (ibid.). At almost 12:00 noon, he met Dr. Garcia who remarked that he (Dr. Garcia) was also tired of waiting for Dr. Hosaka to arrive (id., p. 21).
While talking to Dr. Garcia at around 12:10 P.M., he came to know that Dr. Hosaka arrived as a nurse remarked, "Nandiyan na si Dr. Hosaka, dumating na raw."
Upon hearing those words, he went down to the lobby and waited for the operation to be completed (id., pp. 16, 29-30).
At about 12:15 P.M., Herminda Cruz, who was inside the operating room with the patient, heard somebody say that "Dr. Hosaka is already here." She then saw
people inside the operating room "moving, doing this and that, [and] preparing the patient for the operation" (TSN, January 13, 1988, p. 16). As she held the hand of
Erlinda Ramos, she then saw Dr. Gutierrez intubating the hapless patient. She thereafter heard Dr. Gutierrez say, "ang hirap ma-intubate nito, mali yata ang
pagkakapasok. O lumalaki ang tiyan" (id., p. 17). Because of the remarks of Dra. Gutierrez, she focused her attention on what Dr. Gutierrez was doing. She
thereafter noticed bluish discoloration of the nailbeds of the left hand of the hapless Erlinda even as Dr. Hosaka approached her. She then heard Dr. Hosaka issue an
order for someone to call Dr. Calderon, another anesthesiologist (id., p. 19). After Dr. Calderon arrived at the operating room, she saw this anesthesiologist trying to
intubate the patient. The patient's nailbed became bluish and the patient was placed in a trendelenburg position a position where the head of the patient is placed
in a position lower than her feet which is an indication that there is a decrease of blood supply to the patient's brain (Id., pp. 19-20). Immediately thereafter, she went
out of the operating room, and she told Rogelio E. Ramos "that something wrong was . . . happening" (Ibid.). Dr. Calderon was then able to intubate the patient (TSN,
July 25, 1991, p. 9).
Meanwhile, Rogelio, who was outside the operating room, saw a respiratory machine being rushed towards the door of the operating room. He also saw several
doctors rushing towards the operating room. When informed by Herminda Cruz that something wrong was happening, he told her (Herminda) to be back with the
patient inside the operating room (TSN, October 19, 1989, pp. 25-28).
Herminda Cruz immediately rushed back, and saw that the patient was still in trendelenburg position (TSN, January 13, 1988, p. 20). At almost 3:00 P.M. of that
fateful day, she saw the patient taken to the Intensive Care Unit (ICU).
About two days thereafter, Rogelio E. Ramos was able to talk to Dr. Hosaka. The latter informed the former that something went wrong during the intubation.
Reacting to what was told to him, Rogelio reminded the doctor that the condition of his wife would not have happened, had he (Dr. Hosaka) looked for a good
anesthesiologist (TSN, October 19, 1989, p. 31).
Doctors Gutierrez and Hosaka were also asked by the hospital to explain what happened to the patient. The doctors explained that the patient had bronchospasm
(TSN, November 15, 1990, pp. 26-27).
Erlinda Ramos stayed at the ICU for a month. About four months thereafter or on November 15, 1985, the patient was released from the hospital.
During the whole period of her confinement, she incurred hospital bills amounting to P93,542.25 which is the subject of a promissory note and affidavit of undertaking
executed by Rogelio E. Ramos in favor of DLSMC. Since that fateful afternoon of June 17, 1985, she has been in a comatose condition. She cannot do anything.
She cannot move any part of her body. She cannot see or hear. She is living on mechanical means. She suffered brain damage as a result of the absence of oxygen
in her brain for four to five minutes (TSN, November 9, 1989, pp. 21-22). After being discharged from the hospital, she has been staying in their residence, still
needing constant medical attention, with her husband Rogelio incurring a monthly expense ranging from P8,000.00 to P10,000.00 (TSN, October 19, 1989, pp. 3234). She was also diagnosed to be suffering from "diffuse cerebral parenchymal damage" (Exh. "G"; see also TSN, December 21, 1989,
p. 6). 5
Thus, on 8 January 1986, petitioners filed a civil case 6 for damages with the Regional Trial Court of Quezon City against herein private respondents alleging negligence in the management
and care of Erlinda Ramos.
During the trial, both parties presented evidence as to the possible cause of Erlinda's injury. Plaintiff presented the testimonies of Dean Herminda Cruz and Dr. Mariano Gavino to prove that
the sustained by Erlinda was due to lack of oxygen in her brain caused by the faulty management of her airway by private respondents during the anesthesia phase. On the other hand,
private respondents primarily relied on the expert testimony of Dr. Eduardo Jamora, a pulmonologist, to the effect that the cause of brain damage was Erlinda's allergic reaction to the
anesthetic agent, Thiopental Sodium (Pentothal).
After considering the evidence from both sides, the Regional Trial Court rendered judgment in favor of petitioners, to wit:
After evaluating the evidence as shown in the finding of facts set forth earlier, and applying the aforecited provisions of law and jurisprudence to the case at bar, this
Court finds and so holds that defendants are liable to plaintiffs for damages. The defendants were guilty of, at the very least, negligence in the performance of their
duty to plaintiff-patient Erlinda Ramos.
On the part of Dr. Perfecta Gutierrez, this Court finds that she omitted to exercise reasonable care in not only intubating the patient, but also in not repeating the
administration of atropine (TSN, August 20, 1991, pp. 5-10), without due regard to the fact that the patient was inside the operating room for almost three (3) hours.
For after she committed a mistake in intubating [the] patient, the patient's nailbed became bluish and the patient, thereafter, was placed in trendelenburg position,
because of the decrease of blood supply to the patient's brain. The evidence further shows that the hapless patient suffered brain damage because of the absence of
oxygen in her (patient's) brain for approximately four to five minutes which, in turn, caused the patient to become comatose.
On the part of Dr. Orlino Hosaka, this Court finds that he is liable for the acts of Dr. Perfecta Gutierrez whom he had chosen to administer anesthesia on the patient
as part of his obligation to provide the patient a good anesthesiologist', and for arriving for the scheduled operation almost three (3) hours late.
On the part of DLSMC (the hospital), this Court finds that it is liable for the acts of negligence of the doctors in their "practice of medicine" in the operating room.
Moreover, the hospital is liable for failing through its responsible officials, to cancel the scheduled operation after Dr. Hosaka inexcusably failed to arrive on time.
In having held thus, this Court rejects the defense raised by defendants that they have acted with due care and prudence in rendering medical services to plaintiffpatient. For if the patient was properly intubated as claimed by them, the patient would not have become comatose. And, the fact that another anesthesiologist was
called to try to intubate the patient after her (the patient's) nailbed turned bluish, belie their claim. Furthermore, the defendants should have rescheduled the
operation to a later date. This, they should have done, if defendants acted with due care and prudence as the patient's case was an elective, not an emergency case.
xxx xxx xxx
WHEREFORE, and in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendants. Accordingly, the latter are ordered to pay,
jointly and severally, the former the following sums of money, to wit:
1) the sum of P8,000.00 as actual monthly expenses for the plaintiff Erlinda Ramos reckoned from November 15, 1985 or in the total sum of
P632,000.00 as of April 15, 1992, subject to its being updated;
2) the sum of P100,000.00 as reasonable attorney's fees;
3) the sum of P800,000.00 by way of moral damages and the further sum of P200,000,00 by way of exemplary damages; and,

4) the costs of the suit.

SO ORDERED. 7
Private respondents seasonably interposed an appeal to the Court of Appeals. The appellate court rendered a Decision, dated 29 May 1995, reversing the findings of the trial court. The
decretal portion of the decision of the appellate court reads:
WHEREFORE, for the foregoing premises the appealed decision is hereby REVERSED, and the complaint below against the appellants is hereby ordered
DISMISSED. The counterclaim of appellant De Los Santos Medical Center is GRANTED but only insofar as appellees are hereby ordered to pay the unpaid hospital
bills amounting to P93,542.25, plus legal interest for justice must be tempered with mercy.
SO ORDERED. 8
The decision of the Court of Appeals was received on 9 June 1995 by petitioner Rogelio Ramos who was mistakenly addressed as "Atty. Rogelio Ramos." No copy of the decision, however,
was sent nor received by the Coronel Law Office, then counsel on record of petitioners. Rogelio referred the decision of the appellate court to a new lawyer, Atty. Ligsay, only on 20 June
1995, or four (4) days before the expiration of the reglementary period for filing a motion for reconsideration. On the same day, Atty. Ligsay, filed with the appellate court a motion for
extension of time to file a motion for reconsideration. The motion for reconsideration was submitted on 4 July 1995. However, the appellate court denied the motion for extension of time in
its Resolution dated 25 July 1995. 9Meanwhile, petitioners engaged the services of another counsel, Atty. Sillano, to replace Atty. Ligsay. Atty. Sillano filed on 7 August 1995 a motion to
admit the motion for reconsideration contending that the period to file the appropriate pleading on the assailed decision had not yet commenced to run as the Division Clerk of Court of the
Court of Appeals had not yet served a copy thereof to the counsel on record. Despite this explanation, the appellate court still denied the motion to admit the motion for reconsideration of
petitioners in its Resolution, dated 29 March 1996, primarily on the ground that the fifteen-day (15) period for filing a motion for reconsideration had already expired, to wit:
We said in our Resolution on July 25, 1995, that the filing of a Motion for Reconsideration cannot be extended; precisely, the Motion for Extension (Rollo, p. 12) was
denied. It is, on the other hand, admitted in the latter Motion that plaintiffs/appellees received a copy of the decision as early as June 9, 1995. Computation wise, the
period to file a Motion for Reconsideration expired on June 24. The Motion for Reconsideration, in turn, was received by the Court of Appeals already on July 4,
necessarily, the 15-day period already passed. For that alone, the latter should be denied.
Even assuming admissibility of the Motion for the Reconsideration, but after considering the Comment/Opposition, the former, for lack of merit, is hereby DENIED.
SO ORDERED. 10
A copy of the above resolution was received by Atty. Sillano on 11 April 1996. The next day, or on 12 April 1996, Atty. Sillano filed before this Court a motion for extension of time to file the
present petition for certiorari under Rule 45. The Court granted the motion for extension of time and gave petitioners additional thirty (30) days after the expiration of the fifteen-day (15)
period counted from the receipt of the resolution of the Court of Appeals within which to submit the petition. The due date fell on 27 May 1996. The petition was filed on 9 May 1996, well
within the extended period given by the Court.
Petitioners assail the decision of the Court of Appeals on the following grounds:
I
IN PUTTING MUCH RELIANCE ON THE TESTIMONIES OF RESPONDENTS DRA. GUTIERREZ, DRA. CALDERON AND DR. JAMORA;
II
IN FINDING THAT THE NEGLIGENCE OF THE RESPONDENTS DID NOT CAUSE THE UNFORTUNATE COMATOSE CONDITION OF PETITIONER ERLINDA
RAMOS;
III
IN NOT APPLYING THE DOCTRINE OF RES IPSA LOQUITUR. 11
Before we discuss the merits of the case, we shall first dispose of the procedural issue on the timeliness of the petition in relation to the motion for reconsideration filed by petitioners with
the Court of Appeals. In their
Comment, 12 private respondents contend that the petition should not be given due course since the motion for reconsideration of the petitioners on the decision of the Court of Appeals was
validly dismissed by the appellate court for having been filed beyond the reglementary period. We do not agree.
A careful review of the records reveals that the reason behind the delay in filing the motion for reconsideration is attributable to the fact that the decision of the Court of Appeals was not sent
to then counsel on record of petitioners, the Coronel Law Office. In fact, a copy of the decision of the appellate court was instead sent to and received by petitioner Rogelio Ramos on 9
June 1995 wherein he was mistakenly addressed as Atty. Rogelio Ramos. Based on the other communications received by petitioner Rogelio Ramos, the appellate court apparently mistook
him for the counsel on record. Thus, no copy of the decision of the counsel on record. Petitioner, not being a lawyer and unaware of the prescriptive period for filing a motion for
reconsideration, referred the same to a legal counsel only on 20 June 1995.
It is elementary that when a party is represented by counsel, all notices should be sent to the party's lawyer at his given address. With a few exceptions, notice to a litigant without notice to
his counsel on record is no notice at all. In the present case, since a copy of the decision of the appellate court was not sent to the counsel on record of petitioner, there can be no sufficient
notice to speak of. Hence, the delay in the filing of the motion for reconsideration cannot be taken against petitioner. Moreover, since the Court of Appeals already issued a second
Resolution, dated 29 March 1996, which superseded the earlier resolution issued on 25 July 1995, and denied the motion for reconsideration of petitioner, we believed that the receipt of the
former should be considered in determining the timeliness of the filing of the present petition. Based on this, the petition before us was submitted on time.
After resolving the foregoing procedural issue, we shall now look into the merits of the case. For a more logical presentation of the discussion we shall first consider the issue on the
applicability of the doctrine of res ipsa loquitur to the instant case. Thereafter, the first two assigned errors shall be tackled in relation to the res ipsa loquitur doctrine.
Res ipsa loquitur is a Latin phrase which literally means "the thing or the transaction speaks for itself." The phrase "res ipsa loquitur'' is a maxim for the rule that the fact of the occurrence of
an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiff's prima facie case, and present a question of fact
for defendant to meet with an explanation. 13 Where the thing which caused the injury complained of is shown to be under the management of the defendant or his servants and the accident
is such as in ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in the absence of explanation by the
defendant, that the accident arose from or was caused by the defendant's want of care. 14
The doctrine of res ipsa loquitur is simply a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify
an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with
negligence. 15 It is grounded in the superior logic of ordinary human experience and on the basis of such experience or common knowledge, negligence may be deduced from the mere
occurrence of the accident itself. 16 Hence, res ipsa loquitur is applied in conjunction with the doctrine of common knowledge.
However, much has been said that res ipsa loquitur is not a rule of substantive law and, as such, does not create or constitute an independent or separate ground of liability. 17 Instead, it is
considered as merely evidentiary or in the nature of a procedural rule. 18 It is regarded as a mode of proof, or a mere procedural of convenience since it furnishes a substitute for, and
relieves a plaintiff of, the burden of producing specific proof of negligence. 19 In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof
of negligence. It is simply a step in the process of such proof, permitting the plaintiff to present along with the proof of the accident, enough of the attending circumstances to invoke the

doctrine, creating an inference or presumption of negligence, and to thereby place on the defendant the burden of going forward with the proof.
allowed, the following requisites must be satisfactorily shown:

20

Still, before resort to the doctrine may be

1. The accident is of a kind which ordinarily does not occur in the absence of someone's negligence;
2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and
3. The possibility of contributing conduct which would make the plaintiff responsible is eliminated.

21

In the above requisites, the fundamental element is the "control of instrumentality" which caused the damage. 22Such element of control must be shown to be within the dominion of the
defendant. In order to have the benefit of the rule, a plaintiff, in addition to proving injury or damage, must show a situation where it is applicable, and must establish that the essential
elements of the doctrine were present in a particular incident. 23
Medical malpractice 24 cases do not escape the application of this doctrine. Thus, res ipsa loquitur has been applied when the circumstances attendant upon the harm are themselves of
such a character as to justify an inference of negligence as the cause of that harm. 25 The application of res ipsa loquitur in medical negligence cases presents a question of law since it is a
judicial function to determine whether a certain set of circumstances does, as a matter of law, permit a given inference. 26
Although generally, expert medical testimony is relied upon in malpractice suits to prove that a physician has done a negligent act or that he has deviated from the standard medical
procedure, when the doctrine of res ipsa loquitur is availed by the plaintiff, the need for expert medical testimony is dispensed with because the injury itself provides the proof of
negligence. 27 The reason is that the general rule on the necessity of expert testimony applies only to such matters clearly within the domain of medical science, and not to matters that are
within the common knowledge of mankind which may be testified to by anyone familiar with the facts. 28 Ordinarily, only physicians and surgeons of skill and experience are competent to
testify as to whether a patient has been treated or operated upon with a reasonable degree of skill and care. However, testimony as to the statements and acts of physicians and surgeons,
external appearances, and manifest conditions which are observable by any one may be given by non-expert witnesses. 29 Hence, in cases where the res ipsa loquitur is applicable, the
court is permitted to find a physician negligent upon proper proof of injury to the patient, without the aid of expert testimony, where the court from its fund of common knowledge can
determine the proper standard of care. 30 Where common knowledge and experience teach that a resulting injury would not have occurred to the patient if due care had been exercised, an
inference of negligence may be drawn giving rise to an application of the doctrine of res ipsa loquitur without medical evidence, which is ordinarily required to show not only what occurred
but how and why it occurred. 31 When the doctrine is appropriate, all that the patient must do is prove a nexus between the particular act or omission complained of and the injury sustained
while under the custody and management of the defendant without need to produce expert medical testimony to establish the standard of care. Resort to res ipsa loquitur is allowed
because there is no other way, under usual and ordinary conditions, by which the patient can obtain redress for injury suffered by him.
Thus, courts of other jurisdictions have applied the doctrine in the following situations: leaving of a foreign object in the body of the patient after an operation, 32 injuries sustained on a
healthy part of the body which was not under, or in the area, of treatment, 33 removal of the wrong part of the body when another part was intended, 34 knocking out a tooth while a patient's
jaw was under anesthetic for the removal of his tonsils, 35 and loss of an eye while the patient plaintiff was under the influence of anesthetic, during or following an operation for
appendicitis, 36 among others.
Nevertheless, despite the fact that the scope of res ipsa loquitur has been measurably enlarged, it does not automatically apply to all cases of medical negligence as to mechanically shift
the burden of proof to the defendant to show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be
cautiously applied, depending upon the circumstances of each case. It is generally restricted to situations in malpractice cases where a layman is able to say, as a matter of common
knowledge and observation, that the consequences of professional care were not as such as would ordinarily have followed if due care had been
exercised. 37 A distinction must be made between the failure to secure results, and the occurrence of something more unusual and not ordinarily found if the service or treatment rendered
followed the usual procedure of those skilled in that particular practice. It must be conceded that the doctrine of res ipsa loquitur can have no application in a suit against a physician or
surgeon which involves the merits of a diagnosis or of a scientific treatment. 38 The physician or surgeon is not required at his peril to explain why any particular diagnosis was not correct, or
why any particular scientific treatment did not produce the desired result. 39 Thus, res ipsa loquitur is not available in a malpractice suit if the only showing is that the desired result of an
operation or treatment was not accomplished. 40 The real question, therefore, is whether or not in the process of the operation any extraordinary incident or unusual event outside of the
routine performance occurred which is beyond the regular scope of customary professional activity in such operations, which, if unexplained would themselves reasonably speak to the
average man as the negligent cause or causes of the untoward consequence. 41 If there was such extraneous interventions, the doctrine of res ipsa loquitur may be utilized and the
defendant is called upon to explain the matter, by evidence of exculpation, if he could. 42
We find the doctrine of res ipsa loquitur appropriate in the case at bar. As will hereinafter be explained, the damage sustained by Erlinda in her brain prior to a scheduled gall bladder
operation presents a case for the application of res ipsa loquitur.
A case strikingly similar to the one before us is Voss vs. Bridwell, 43 where the Kansas Supreme Court in applying the res ipsa loquitur stated:
The plaintiff herein submitted himself for a mastoid operation and delivered his person over to the care, custody and control of his physician who had complete and
exclusive control over him, but the operation was never performed. At the time of submission he was neurologically sound and physically fit in mind and body, but he
suffered irreparable damage and injury rendering him decerebrate and totally incapacitated. The injury was one which does not ordinarily occur in the process of a
mastoid operation or in the absence of negligence in the administration of an anesthetic, and in the use and employment of an endoctracheal tube. Ordinarily a
person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia in the absence of negligence. Upon these facts
and under these circumstances a layman would be able to say, as a matter of common knowledge and observation, that the consequences of professional treatment
were not as such as would ordinarily have followed if due care had been exercised.
Here the plaintiff could not have been guilty of contributory negligence because he was under the influence of anesthetics and unconscious, and the circumstances
are such that the true explanation of event is more accessible to the defendants than to the plaintiff for they had the exclusive control of the instrumentalities of
anesthesia.
Upon all the facts, conditions and circumstances alleged in Count II it is held that a cause of action is stated under the doctrine of res ipsa loquitur. 44
Indeed, the principles enunciated in the aforequoted case apply with equal force here. In the present case, Erlinda submitted herself for cholecystectomy and expected a routine general
surgery to be performed on her gall bladder. On that fateful day she delivered her person over to the care, custody and control of private respondents who exercised complete and exclusive
control over her. At the time of submission, Erlinda was neurologically sound and, except for a few minor discomforts, was likewise physically fit in mind and body. However, during the
administration of anesthesia and prior to the performance of cholecystectomy she suffered irreparable damage to her brain. Thus, without undergoing surgery, she went out of the operating
room already decerebrate and totally incapacitated. Obviously, brain damage, which Erlinda sustained, is an injury which does not normally occur in the process of a gall bladder operation.
In fact, this kind of situation does not in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Normally, a person being put under
anesthesia is not rendered decerebrate as a consequence of administering such anesthesia if the proper procedure was followed. Furthermore, the instruments used in the administration of
anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in-charge. Likewise, petitioner Erlinda could not have been
guilty of contributory negligence because she was under the influence of anesthetics which rendered her unconscious.
Considering that a sound and unaffected member of the body (the brain) is injured or destroyed while the patient is unconscious and under the immediate and exclusive control of the
physicians, we hold that a practical administration of justice dictates the application of res ipsa loquitur. Upon these facts and under these circumstances the Court would be able to say, as
a matter of common knowledge and observation, if negligence attended the management and care of the patient. Moreover, the liability of the physicians and the hospital in this case is not
predicated upon an alleged failure to secure the desired results of an operation nor on an alleged lack of skill in the diagnosis or treatment as in fact no operation or treatment was ever
performed on Erlinda. Thus, upon all these initial determination a case is made out for the application of the doctrine of res ipsa loquitur.
Nonetheless, in holding that res ipsa loquitur is available to the present case we are not saying that the doctrine is applicable in any and all cases where injury occurs to a patient while
under anesthesia, or to any and all anesthesia cases. Each case must be viewed in its own light and scrutinized in order to be within the res ipsa loquitur coverage.
Having in mind the applicability of the res ipsa loquitur doctrine and the presumption of negligence allowed therein, the Court now comes to the issue of whether the Court of Appeals erred
in finding that private respondents were not negligent in the care of Erlinda during the anesthesia phase of the operation and, if in the affirmative, whether the alleged negligence was the

proximate cause of Erlinda's comatose condition. Corollary thereto, we shall also determine if the Court of Appeals erred in relying on the testimonies of the witnesses for the private
respondents.
In sustaining the position of private respondents, the Court of Appeals relied on the testimonies of Dra. Gutierrez, Dra. Calderon and Dr. Jamora. In giving weight to the testimony of Dra.
Gutierrez, the Court of Appeals rationalized that she was candid enough to admit that she experienced some difficulty in the endotracheal intubation 45 of the patient and thus, cannot be
said to be covering her negligence with falsehood. The appellate court likewise opined that private respondents were able to show that the brain damage sustained by Erlinda was not
caused by the alleged faulty intubation but was due to the allergic reaction of the patient to the drug Thiopental Sodium (Pentothal), a short-acting barbiturate, as testified on by their expert
witness, Dr. Jamora. On the other hand, the appellate court rejected the testimony of Dean Herminda Cruz offered in favor of petitioners that the cause of the brain injury was traceable to
the wrongful insertion of the tube since the latter, being a nurse, was allegedly not knowledgeable in the process of intubation. In so holding, the appellate court returned a verdict in favor of
respondents physicians and hospital and absolved them of any liability towards Erlinda and her family.
We disagree with the findings of the Court of Appeals. We hold that private respondents were unable to disprove the presumption of negligence on their part in the care of Erlinda and their
negligence was the proximate cause of her piteous condition.
In the instant case, the records are helpful in furnishing not only the logical scientific evidence of the pathogenesis of the injury but also in providing the Court the legal nexus upon which
liability is based. As will be shown hereinafter, private respondents' own testimonies which are reflected in the transcript of stenographic notes are replete of signposts indicative of their
negligence in the care and management of Erlinda.
With regard to Dra. Gutierrez, we find her negligent in the care of Erlinda during the anesthesia phase. As borne by the records, respondent Dra. Gutierrez failed to properly intubate the
patient. This fact was attested to by Prof. Herminda Cruz, Dean of the Capitol Medical Center School of Nursing and petitioner's sister-in-law, who was in the operating room right beside the
patient when the tragic event occurred. Witness Cruz testified to this effect:
ATTY. PAJARES:
Q: In particular, what did Dra. Perfecta Gutierrez do, if any on the patient?
A: In particular, I could see that she was intubating the patient.
Q: Do you know what happened to that intubation process administered by Dra. Gutierrez?
ATTY. ALCERA:
She will be incompetent Your Honor.
COURT:
Witness may answer if she knows.
A: As have said, I was with the patient, I was beside the stretcher holding the left hand of the patient and all of a sudden heard some remarks
coming from Dra. Perfecta Gutierrez herself. She was saying "Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan.
xxx xxx xxx
ATTY. PAJARES:
Q: From whom did you hear those words "lumalaki ang tiyan"?
A: From Dra. Perfecta Gutierrez.
xxx xxx xxx
Q: After hearing the phrase "lumalaki ang tiyan," what did you notice on the person of the patient?
A: I notice (sic) some bluish discoloration on the nailbeds of the left hand where I was at.
Q: Where was Dr. Orlino Ho[s]aka then at that particular time?
A: I saw him approaching the patient during that time.
Q: When he approached the patient, what did he do, if any?
A: He made an order to call on the anesthesiologist in the person of Dr. Calderon.
Q: Did Dr. Calderon, upon being called, arrive inside the operating room?
A: Yes sir.
Q: What did [s]he do, if any?
A: [S]he tried to intubate the patient.
Q: What happened to the patient?
A: When Dr. Calderon try (sic) to intubate the patient, after a while the patient's nailbed became bluish and I saw the patient was placed in
trendelenburg position.
xxx xxx xxx
Q: Do you know the reason why the patient was placed in that trendelenburg position?
A: As far as I know, when a patient is in that position, there is a decrease of blood supply to the brain.

46

xxx xxx xxx

The appellate court, however, disbelieved Dean Cruz's testimony in the trial court by declaring that:
A perusal of the standard nursing curriculum in our country will show that intubation is not taught as part of nursing procedures and techniques. Indeed, we take
judicial notice of the fact that nurses do not, and cannot, intubate. Even on the assumption that she is fully capable of determining whether or not a patient is properly
intubated, witness Herminda Cruz, admittedly, did not peep into the throat of the patient. (TSN, July 25, 1991, p. 13). More importantly, there is no evidence that she
ever auscultated the patient or that she conducted any type of examination to check if the endotracheal tube was in its proper place, and to determine the condition
of the heart, lungs, and other organs. Thus, witness Cruz's categorical statements that appellant Dra. Gutierrez failed to intubate the appellee Erlinda Ramos and that
it was Dra. Calderon who succeeded in doing so clearly suffer from lack of sufficient factual bases. 47
In other words, what the Court of Appeals is trying to impress is that being a nurse, and considered a layman in the process of intubation, witness Cruz is not competent to testify on whether
or not the intubation was a success.
We do not agree with the above reasoning of the appellate court. Although witness Cruz is not an anesthesiologist, she can very well testify upon matters on which she is capable of
observing such as, the statements and acts of the physician and surgeon, external appearances, and manifest conditions which are observable by any one. 48 This is precisely allowed
under the doctrine of res ipsa loquitur where the testimony of expert witnesses is not required. It is the accepted rule that expert testimony is not necessary for the proof of negligence in
non-technical matters or those of which an ordinary person may be expected to have knowledge, or where the lack of skill or want of care is so obvious as to render expert testimony
unnecessary. 49 We take judicial notice of the fact that anesthesia procedures have become so common, that even an ordinary person can tell if it was administered properly. As such, it
would not be too difficult to tell if the tube was properly inserted. This kind of observation, we believe, does not require a medical degree to be acceptable.
At any rate, without doubt, petitioner's witness, an experienced clinical nurse whose long experience and scholarship led to her appointment as Dean of the Capitol Medical Center School
at Nursing, was fully capable of determining whether or not the intubation was a success. She had extensive clinical experience starting as a staff nurse in Chicago, Illinois; staff nurse and
clinical instructor in a teaching hospital, the FEU-NRMF; Dean of the Laguna College of Nursing in San Pablo City; and then Dean of the Capitol Medical Center School of
Nursing. 50Reviewing witness Cruz' statements, we find that the same were delivered in a straightforward manner, with the kind of detail, clarity, consistency and spontaneity which would
have been difficult to fabricate. With her clinical background as a nurse, the Court is satisfied that she was able to demonstrate through her testimony what truly transpired on that fateful
day.
Most of all, her testimony was affirmed by no less than respondent Dra. Gutierrez who admitted that she experienced difficulty in inserting the tube into Erlinda's trachea, to wit:
ATTY. LIGSAY:
Q: In this particular case, Doctora, while you were intubating at your first attempt (sic), you did not immediately see the trachea?
DRA. GUTIERREZ:
A: Yes sir.
Q: Did you pull away the tube immediately?
A: You do not pull the . . .
Q: Did you or did you not?
A: I did not pull the tube.
Q: When you said "mahirap yata ito," what were you referring to?
A: "Mahirap yata itong i-intubate," that was the patient.
Q: So, you found some difficulty in inserting the tube?
A: Yes, because of (sic) my first attempt, I did not see right away. 51
Curiously in the case at bar, respondent Dra. Gutierrez made the haphazard defense that she encountered hardship in the insertion of the tube in the trachea of Erlinda because it was
positioned more anteriorly (slightly deviated from the normal anatomy of a person) 52 making it harder to locate and, since Erlinda is obese and has a short neck and protruding teeth, it
made intubation even more difficult.
The argument does not convince us. If this was indeed observed, private respondents adduced no evidence demonstrating that they proceeded to make a thorough assessment of Erlinda's
airway, prior to the induction of anesthesia, even if this would mean postponing the procedure. From their testimonies, it appears that the observation was made only as an afterthought, as
a means of defense.
The pre-operative evaluation of a patient prior to the administration of anesthesia is universally observed to lessen the possibility of anesthetic accidents. Pre-operative evaluation and
preparation for anesthesia begins when the anesthesiologist reviews the patient's medical records and visits with the patient, traditionally, the day before elective surgery. 53 It includes
taking the patient's medical history, review of current drug therapy, physical examination and interpretation of laboratory data. 54 The physical examination performed by the anesthesiologist
is directed primarily toward the central nervous system, cardiovascular system, lungs and upper airway. 55 A thorough analysis of the patient's airway normally involves investigating the
following: cervical spine mobility, temporomandibular mobility, prominent central incisors, diseased or artificial teeth, ability to visualize uvula and the thyromental distance. 56 Thus, physical
characteristics of the patient's upper airway that could make tracheal intubation difficult should be studied. 57 Where the need arises, as when initial assessment indicates possible problems
(such as the alleged short neck and protruding teeth of Erlinda) a thorough examination of the patient's airway would go a long way towards decreasing patient morbidity and mortality.
In the case at bar, respondent Dra. Gutierrez admitted that she saw Erlinda for the first time on the day of the operation itself, on 17 June 1985. Before this date, no prior consultations with,
or pre-operative evaluation of Erlinda was done by her. Until the day of the operation, respondent Dra. Gutierrez was unaware of the physiological make-up and needs of Erlinda. She was
likewise not properly informed of the possible difficulties she would face during the administration of anesthesia to Erlinda. Respondent Dra. Gutierrez' act of seeing her patient for the first
time only an hour before the scheduled operative procedure was, therefore, an act of exceptional negligence and professional irresponsibility. The measures cautioning prudence and
vigilance in dealing with human lives lie at the core of the physician's centuries-old Hippocratic Oath. Her failure to follow this medical procedure is, therefore, a clear indicia of her
negligence.
Respondent Dra. Gutierrez, however, attempts to gloss over this omission by playing around with the trial court's ignorance of clinical procedure, hoping that she could get away with it.
Respondent Dra. Gutierrez tried to muddle the difference between an elective surgery and an emergency surgery just so her failure to perform the required pre-operative evaluation would
escape unnoticed. In her testimony she asserted:
ATTY. LIGSAY:
Q: Would you agree, Doctor, that it is good medical practice to see the patient a day before so you can introduce yourself to establish good
doctor-patient relationship and gain the trust and confidence of the patient?

DRA. GUTIERREZ:
A: As I said in my previous statement, it depends on the operative procedure of the anesthesiologist and in my case, with elective cases and
normal cardio-pulmonary clearance like that, I usually don't do it except on emergency and on cases that have an abnormalities (sic). 58
However, the exact opposite is true. In an emergency procedure, there is hardly enough time available for the fastidious demands of pre-operative procedure so that an anesthesiologist is
able to see the patient only a few minutes before surgery, if at all. Elective procedures, on the other hand, are operative procedures that can wait for days, weeks or even months. Hence, in
these cases, the anesthesiologist possesses the luxury of time to be at the patient's beside to do a proper interview and clinical evaluation. There is ample time to explain the method of
anesthesia, the drugs to be used, and their possible hazards for purposes of informed consent. Usually, the pre-operative assessment is conducted at least one day before the intended
surgery, when the patient is relaxed and cooperative.
Erlinda's case was elective and this was known to respondent Dra. Gutierrez. Thus, she had all the time to make a thorough evaluation of Erlinda's case prior to the operation and prepare
her for anesthesia. However, she never saw the patient at the bedside. She herself admitted that she had seen petitioner only in the operating room, and only on the actual date of the
cholecystectomy. She negligently failed to take advantage of this important opportunity. As such, her attempt to exculpate herself must fail.
Having established that respondent Dra. Gutierrez failed to perform pre-operative evaluation of the patient which, in turn, resulted to a wrongful intubation, we now determine if the faulty
intubation is truly the proximate cause of Erlinda's comatose condition.
Private respondents repeatedly hammered the view that the cerebral anoxia which led to Erlinda's coma was due to bronchospasm 59 mediated by her allergic response to the drug,
Thiopental Sodium, introduced into her system. Towards this end, they presented Dr. Jamora, a Fellow of the Philippine College of Physicians and Diplomate of the Philippine Specialty
Board of Internal Medicine, who advanced private respondents' theory that the oxygen deprivation which led to anoxic encephalopathy, 60 was due to an unpredictable drug reaction to the
short-acting barbiturate. We find the theory of private respondents unacceptable.
First of all, Dr. Jamora cannot be considered an authority in the field of anesthesiology simply because he is not an anesthesiologist. Since Dr. Jamora is a pulmonologist, he could not have
been capable of properly enlightening the court about anesthesia practice and procedure and their complications. Dr. Jamora is likewise not an allergologist and could not therefore properly
advance expert opinion on allergic-mediated processes. Moreover, he is not a pharmacologist and, as such, could not have been capable, as an expert would, of explaining to the court the
pharmacologic and toxic effects of the supposed culprit, Thiopental Sodium (Pentothal).
The inappropriateness and absurdity of accepting Dr. Jamora's testimony as an expert witness in the anesthetic practice of Pentothal administration is further supported by his own
admission that he formulated his opinions on the drug not from the practical experience gained by a specialist or expert in the administration and use of Sodium Pentothal on patients, but
only from reading certain references, to wit:
ATTY. LIGSAY:
Q: In your line of expertise on pulmonology, did you have any occasion to use pentothal as a method of management?
DR. JAMORA:
A: We do it in conjunction with the anesthesiologist when they have to intubate our patient.
Q: But not in particular when you practice pulmonology?
A: No.
Q: In other words, your knowledge about pentothal is based only on what you have read from books and not by your own personal application
of the medicine pentothal?
A: Based on my personal experience also on pentothal.
Q: How many times have you used pentothal?
A: They used it on me. I went into bronchospasm during my appendectomy.
Q: And because they have used it on you and on account of your own personal experience you feel that you can testify on pentothal here with
medical authority?
A: No. That is why I used references to support my claims. 61
An anesthetic accident caused by a rare drug-induced bronchospasm properly falls within the fields of anesthesia, internal medicine-allergy, and clinical pharmacology. The resulting anoxic
encephalopathy belongs to the field of neurology. While admittedly, many bronchospastic-mediated pulmonary diseases are within the expertise of pulmonary medicine, Dr. Jamora's field,
the anesthetic drug-induced, allergic mediated bronchospasm alleged in this case is within the disciplines of anesthesiology, allergology and pharmacology. On the basis of the foregoing
transcript, in which the pulmonologist himself admitted that he could not testify about the drug with medical authority, it is clear that the appellate court erred in giving weight to Dr. Jamora's
testimony as an expert in the administration of Thiopental Sodium.
The provision in the rules of evidence 62 regarding expert witnesses states:
Sec. 49. Opinion of expert witness. The opinion of a witness on a matter requiring special knowledge, skill, experience or training which he is shown to possess,
may be received in evidence.
Generally, to qualify as an expert witness, one must have acquired special knowledge of the subject matter about which he or she is to testify, either by the study of recognized authorities
on the subject or by practical experience. 63 Clearly, Dr. Jamora does not qualify as an expert witness based on the above standard since he lacks the necessary knowledge, skill, and
training in the field of anesthesiology. Oddly, apart from submitting testimony from a specialist in the wrong field, private respondents' intentionally avoided providing testimony by competent
and independent experts in the proper areas.
Moreover, private respondents' theory, that Thiopental Sodium may have produced Erlinda's coma by triggering an allergic mediated response, has no support in evidence. No evidence of
stridor, skin reactions, or wheezing some of the more common accompanying signs of an allergic reaction appears on record. No laboratory data were ever presented to the court.
In any case, private respondents themselves admit that Thiopental induced, allergic-mediated bronchospasm happens only very rarely. If courts were to accept private respondents'
hypothesis without supporting medical proof, and against the weight of available evidence, then every anesthetic accident would be an act of God. Evidently, the Thiopental-allergy theory
vigorously asserted by private respondents was a mere afterthought. Such an explanation was advanced in order to advanced in order to absolve them of any and all responsibility for the
patient's condition.
In view of the evidence at hand, we are inclined to believe petitioners' stand that it was the faulty intubation which was the proximate cause of Erlinda's comatose condition.

Proximate cause has been defined as that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury, and without which the result would not
have occurred. 64 An injury or damage is proximately caused by an act or a failure to act, whenever it appears from the evidence in the case, that the act or omission played a substantial
part in bringing about or actually causing the injury or damage; and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission. 65 It is
the dominant, moving or producing cause.
Applying the above definition in relation to the evidence at hand, faulty intubation is undeniably the proximate cause which triggered the chain of events leading to Erlinda's brain damage
and, ultimately, her comatosed condition.
Private respondents themselves admitted in their testimony that the first intubation was a failure. This fact was likewise observed by witness Cruz when she heard respondent Dra. Gutierrez
remarked, "Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan." Thereafter, witness Cruz noticed abdominal distention on the body of Erlinda. The development
of abdominal distention, together with respiratory embarrassment indicates that the endotracheal tube entered the esophagus instead of the respiratory tree. In other words, instead of the
intended endotracheal intubation what actually took place was an esophageal intubation. During intubation, such distention indicates that air has entered the gastrointestinal tract through
the esophagus instead of the lungs through the trachea. Entry into the esophagus would certainly cause some delay in oxygen delivery into the lungs as the tube which carries oxygen is in
the wrong place. That abdominal distention had been observed during the first intubation suggests that the length of time utilized in inserting the endotracheal tube (up to the time the tube
was withdrawn for the second attempt) was fairly significant. Due to the delay in the delivery of oxygen in her lungs Erlinda showed signs of cyanosis. 66 As stated in the testimony of Dr.
Hosaka, the lack of oxygen became apparent only after he noticed that the nailbeds of Erlinda were already blue. 67 However, private respondents contend that a second intubation was
executed on Erlinda and this one was successfully done. We do not think so. No evidence exists on record, beyond private respondents' bare claims, which supports the contention that the
second intubation was successful. Assuming that the endotracheal tube finally found its way into the proper orifice of the trachea, the same gave no guarantee of oxygen delivery, the
hallmark of a successful intubation. In fact, cyanosis was again observed immediately after the second intubation. Proceeding from this event (cyanosis), it could not be claimed, as private
respondents insist, that the second intubation was accomplished. Even granting that the tube was successfully inserted during the second attempt, it was obviously too late. As aptly
explained by the trial court, Erlinda already suffered brain damage as a result of the inadequate oxygenation of her brain for about four to five minutes. 68
The above conclusion is not without basis. Scientific studies point out that intubation problems are responsible for one-third (1/3) of deaths and serious injuries associated with
anesthesia. 69 Nevertheless, ninety-eight percent (98%) or the vast majority of difficult intubations may be anticipated by performing a thorough evaluation of the patient's airway prior to the
operation. 70 As stated beforehand, respondent Dra. Gutierrez failed to observe the proper pre-operative protocol which could have prevented this unfortunate incident. Had appropriate
diligence and reasonable care been used in the pre-operative evaluation, respondent physician could have been much more prepared to meet the contingency brought about by the
perceived anatomic variations in the patient's neck and oral area, defects which would have been easily overcome by a prior knowledge of those variations together with a change in
technique. 71 In other words, an experienced anesthesiologist, adequately alerted by a thorough pre-operative evaluation, would have had little difficulty going around the short neck and
protruding teeth. 72 Having failed to observe common medical standards in pre-operative management and intubation, respondent Dra. Gutierrez' negligence resulted in cerebral anoxia and
eventual coma of Erlinda.
We now determine the responsibility of respondent Dr. Orlino Hosaka as the head of the surgical team. As the so-called "captain of the ship," 73 it is the surgeon's responsibility to see to it
that those under him perform their task in the proper manner. Respondent Dr. Hosaka's negligence can be found in his failure to exercise the proper authority (as the "captain" of the
operative team) in not determining if his anesthesiologist observed proper anesthesia protocols. In fact, no evidence on record exists to show that respondent Dr. Hosaka verified if
respondent Dra. Gutierrez properly intubated the patient. Furthermore, it does not escape us that respondent Dr. Hosaka had scheduled another procedure in a different hospital at the
same time as Erlinda's cholecystectomy, and was in fact over three hours late for the latter's operation. Because of this, he had little or no time to confer with his anesthesiologist regarding
the anesthesia delivery. This indicates that he was remiss in his professional duties towards his patient. Thus, he shares equal responsibility for the events which resulted in Erlinda's
condition.
We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist staff with attending and visiting
"consultants," 74 who are allegedly not hospital employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is only more
apparent than real.
In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for "consultant"
slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate board (diplomate),
evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the
hospital who either accept or reject the application. 75 This is particularly true with respondent hospital.
After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and
residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of
admitting patients into the hospital. In addition to these, the physician's performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity
statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the
hospital or its peer review committee, is normally politely terminated.
In other words, private hospitals, hire, fire and exercise real control over their attending and visiting "consultant" staff. While "consultants" are not, technically employees, a point which
respondent hospital asserts in denying all responsibility for the patient's condition, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of
an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the
basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their
attending and visiting physicians. This being the case, the question now arises as to whether or not respondent hospital is solidarily liable with respondent doctors for petitioner's
condition. 76
The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his
own acts but also for those of others based on the former's responsibility under a relationship of patria potestas. 77 Such responsibility ceases when the persons or entity concerned prove
that they have observed the diligence of a good father of the family to prevent damage. 78 In other words, while the burden of proving negligence rests on the plaintiffs, once negligence is
shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage.
In the instant case, respondent hospital, apart from a general denial of its responsibility over respondent physicians, failed to adduce evidence showing that it exercised the diligence of a
good father of a family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of supervision which it exercised over its physicians. In neglecting to
offer such proof, or proof of a similar nature, respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed to do this, respondent hospital
is consequently solidarily responsible with its physicians for Erlinda's condition.
Based on the foregoing, we hold that the Court of Appeals erred in accepting and relying on the testimonies of the witnesses for the private respondents. Indeed, as shown by the above
discussions, private respondents were unable to rebut the presumption of negligence. Upon these disquisitions we hold that private respondents are solidarily liable for damages under
Article 2176 79 of the Civil Code.
We now come to the amount of damages due petitioners. The trial court awarded a total of P632,000.00 pesos (should be P616,000.00) in compensatory damages to the plaintiff, "subject
to its being updated" covering the period from 15 November 1985 up to 15 April 1992, based on monthly expenses for the care of the patient estimated at P8,000.00.
At current levels, the P8000/monthly amount established by the trial court at the time of its decision would be grossly inadequate to cover the actual costs of home-based care for a
comatose individual. The calculated amount was not even arrived at by looking at the actual cost of proper hospice care for the patient. What it reflected were the actual expenses incurred
and proved by the petitioners after they were forced to bring home the patient to avoid mounting hospital bills.
And yet ideally, a comatose patient should remain in a hospital or be transferred to a hospice specializing in the care of the chronically ill for the purpose of providing a proper milieu
adequate to meet minimum standards of care. In the instant case for instance, Erlinda has to be constantly turned from side to side to prevent bedsores and hypostatic pneumonia. Feeding
is done by nasogastric tube. Food preparation should be normally made by a dietitian to provide her with the correct daily caloric requirements and vitamin supplements. Furthermore, she
has to be seen on a regular basis by a physical therapist to avoid muscle atrophy, and by a pulmonary therapist to prevent the accumulation of secretions which can lead to respiratory
complications.

Given these considerations, the amount of actual damages recoverable in suits arising from negligence should at least reflect the correct minimum cost of proper care, not the cost of the
care the family is usually compelled to undertake at home to avoid bankruptcy. However, the provisions of the Civil Code on actual or compensatory damages present us with some
difficulties.
Well-settled is the rule that actual damages which may be claimed by the plaintiff are those suffered by him as he has duly proved. The Civil Code provides:
Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly
proved. Such compensation is referred to as actual or compensatory damages.
Our rules on actual or compensatory damages generally assume that at the time of litigation, the injury suffered as a consequence of an act of negligence has been completed and that the
cost can be liquidated. However, these provisions neglect to take into account those situations, as in this case, where the resulting injury might be continuing and possible future
complications directly arising from the injury, while certain to occur, are difficult to predict.
In these cases, the amount of damages which should be awarded, if they are to adequately and correctly respond to the injury caused, should be one which compensates for pecuniary loss
incurred and proved, up to the time of trial; and one which would meet pecuniary loss certain to be suffered but which could not, from the nature of the case, be made with certainty. 80 In
other words, temperate damages can and should be awarded on top of actual or compensatory damages in instances where the injury is chronic and continuing. And because of the unique
nature of such cases, no incompatibility arises when both actual and temperate damages are provided for. The reason is that these damages cover two distinct phases.
As it would not be equitable and certainly not in the best interests of the administration of justice for the victim in such cases to constantly come before the courts and invoke their aid
in seeking adjustments to the compensatory damages previously awarded temperate damages are appropriate. The amount given as temperate damages, though to a certain extent
speculative, should take into account the cost of proper care.
In the instant case, petitioners were able to provide only home-based nursing care for a comatose patient who has remained in that condition for over a decade. Having premised our award
for compensatory damages on the amount provided by petitioners at the onset of litigation, it would be now much more in step with the interests of justice if the value awarded for temperate
damages would allow petitioners to provide optimal care for their loved one in a facility which generally specializes in such care. They should not be compelled by dire circumstances to
provide substandard care at home without the aid of professionals, for anything less would be grossly inadequate. Under the circumstances, an award of P1,500,000.00 in temperate
damages would therefore be reasonable. 81
In Valenzuela vs. Court of Appeals, 82 this Court was confronted with a situation where the injury suffered by the plaintiff would have led to expenses which were difficult to estimate because
while they would have been a direct result of the injury (amputation), and were certain to be incurred by the plaintiff, they were likely to arise only in the future. We awarded P1,000,000.00 in
moral damages in that case.
Describing the nature of the injury, the Court therein stated:
As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic amputation of her left lower extremity at the distal left thigh just above the knee. Because
of this, Valenzuela will forever be deprived of the full ambulatory functions of her left extremity, even with the use of state of the art prosthetic technology. Well beyond
the period of hospitalization (which was paid for by Li), she will be required to undergo adjustments in her prosthetic devise due to the shrinkage of the stump from
the process of healing.
These adjustments entail costs, prosthetic replacements and months of physical and occupational rehabilitation and therapy. During the lifetime, the prosthetic devise
will have to be replaced and readjusted to changes in the size of her lower limb effected by the biological changes of middle-age, menopause and aging. Assuming
she reaches menopause, for example, the prosthetic will have to be adjusted to respond to the changes in bone resulting from a precipitate decrease in calcium
levels observed in the bones of all post-menopausal women. In other words, the damage done to her would not only be permanent and lasting, it would also be
permanently changing and adjusting to the physiologic changes which her body would normally undergo through the years. The replacements, changes, and
adjustments will require corresponding adjustive physical and occupational therapy. All of these adjustments, it has been documented, are painful.
xxx xxx xxx
A prosthetic devise, however technologically advanced, will only allow a reasonable amount of functional restoration of the motor functions of the lower limb. The
sensory functions are forever lost. The resultant anxiety, sleeplessness, psychological injury, mental and physical pain are inestimable. 83
The injury suffered by Erlinda as a consequence of private respondents' negligence is certainly much more serious than the amputation in the Valenzuela case.
Petitioner Erlinda Ramos was in her mid-forties when the incident occurred. She has been in a comatose state for over fourteen years now. The burden of care has so far been heroically
shouldered by her husband and children, who, in the intervening years have been deprived of the love of a wife and a mother.
Meanwhile, the actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to quantify. Even the temperate damages herein awarded would be
inadequate if petitioner's condition remains unchanged for the next ten years.
We recognized, in Valenzuela that a discussion of the victim's actual injury would not even scratch the surface of the resulting moral damage because it would be highly speculative to
estimate the amount of emotional and moral pain, psychological damage and injury suffered by the victim or those actually affected by the victim's condition. 84The husband and the
children, all petitioners in this case, will have to live with the day to day uncertainty of the patient's illness, knowing any hope of recovery is close to nil. They have fashioned their daily lives
around the nursing care of petitioner, altering their long term goals to take into account their life with a comatose patient. They, not the respondents, are charged with the moral responsibility
of the care of the victim. The family's moral injury and suffering in this case is clearly a real one. For the foregoing reasons, an award of P2,000,000.00 in moral damages would be
appropriate.
Finally, by way of example, exemplary damages in the amount of P100,000.00 are hereby awarded. Considering the length and nature of the instant suit we are of the opinion that attorney's
fees valued at P100,000.00 are likewise proper.
Our courts face unique difficulty in adjudicating medical negligence cases because physicians are not insurers of life and, they rarely set out to intentionally cause injury or death to their
patients. However, intent is immaterial in negligence cases because where negligence exists and is proven, the same automatically gives the injured a right to reparation for the damage
caused.
Established medical procedures and practices, though in constant flux are devised for the purpose of preventing complications. A physician's experience with his patients would sometimes
tempt him to deviate from established community practices, and he may end a distinguished career using unorthodox methods without incident. However, when failure to follow established
procedure results in the evil precisely sought to be averted by observance of the procedure and a nexus is made between the deviation and the injury or damage, the physician would
necessarily be called to account for it. In the case at bar, the failure to observe pre-operative assessment protocol which would have influenced the intubation in a salutary way was fatal to
private respondents' case.
WHEREFORE, the decision and resolution of the appellate court appealed from are hereby modified so as to award in favor of petitioners, and solidarily against private respondents the
following: 1) P1,352,000.00 as actual damages computed as of the date of promulgation of this decision plus a monthly payment of P8,000.00 up to the time that petitioner Erlinda Ramos
expires or miraculously survives; 2) P2,000,000.00 as moral damages, 3) P1,500,000.00 as temperate damages; 4) P100,000.00 each as exemplary damages and attorney's fees; and, 5)
the costs of the suit.
SO ORDERED.

Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur

Case no. 9 Tan Vs. Lagrama

SECOND DIVISION
[G.R. No. 151228. August 15, 2002]
ROLANDO Y. TAN, petitioner, vs. LEOVIGILDO LAGRAMA and THE HONORABLE COURT OF APPEALS, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision, [1] dated May 31, 2001, and the resolution, [2] dated November 27, 2001, of the Court of Appeals in C.A.-G.R. SP. No. 63160,
annulling the resolutions of the National Labor Relations Commission (NLRC) and reinstating the ruling of the Labor Arbiter which found petitioner Rolando Tan guilty of illegally dismissing
private respondent Leovigildo Lagrama and ordering him to pay the latter the amount of P136,849.99 by way of separation pay, backwages, and damages.
The following are the facts.
Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo
Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to
October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: Nangihi na naman ka sulod sa imong drawinganan. (You again urinated inside your work
area.) When Lagrama asked what Tan was saying, Tan told him, Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas. (Dont say anything
further. I dont want you to draw anymore.From now on, no more drawing. Get out.)
Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area and that, even if the charge was true, it was a minor infraction to
warrant his dismissal.However, everytime he spoke, Tan shouted Gawas (Get out), leaving him with no other choice but to leave the premises.
Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally
dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages.
Petitioner Tan denied that Lagrama was his employee. He asserted that Lagrama was an independent contractor who did his work according to his methods, while he (petitioner)
was only interested in the result thereof. He cited the admission of Lagrama during the conferences before the Labor Arbiter that he was paid on a fixed piece-work basis, i.e., that he was
paid for every painting turned out as ad billboard or mural for the pictures shown in the three theaters, on the basis of a no mural/billboard drawn, no pay policy. He submitted the affidavits
of other cinema owners, an amusement park owner, and those supervising the construction of a church to prove that the services of Lagrama were contracted by them. He denied having
dismissed Lagrama and alleged that it was the latter who refused to paint for him after he was scolded for his habits.
As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file their position papers. On June 17, 1999, he rendered a decision, the
dispositive portion of which reads:
WHEREFORE, premises considered judgment is hereby ordered:
1. Declaring complainants [Lagramas] dismissal illegal and
2. Ordering respondents [Tan] to pay complainant the following:
A. Separation Pay - P 59,000.00
B. Backwages - 47,200.00
(from 17 October 1998 to 17 June 1999)
C. 13th month pay (3 years) - 17,700.00
D. Service Incentive Leave
Pay (3 years) - 2, 949.99
E. Damages - 10,000.00
TOTAL [P136,849.99]
Complainants other claims are dismissed for lack of merit. [3]
Petitioner Rolando Tan appealed to the NLRC Fifth Division, Cagayan de Oro City, which, on June 30, 2000, rendered a decision [4] finding Lagrama to be an independent contractor,
and for this reason reversing the decision of the Labor Arbiter.
Respondent Lagrama filed a motion for reconsideration, but it was denied for lack of merit by the NLRC in a resolution of September 29, 2000. He then filed a petition for certiorari
under Rule 65 before the Court of Appeals.
The Court of Appeals found that petitioner exercised control over Lagramas work by dictating the time when Lagrama should submit his billboards and murals and setting rules on the
use of the work area and rest room. Although it found that Lagrama did work for other cinema owners, the appeals court held it to be a mere sideline insufficient to prove that he was not an
employee of Tan. The appeals court also found no evidence of any intention on the part of Lagrama to leave his job or sever his employment relationship with Tan. Accordingly, on May 31,
2001, the Court of Appeals rendered a decision, the dispositive portion of which reads:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is hereby GRANTED. The Resolutions of the Public Respondent issued on June 30, 2000 and September 29, 2000 are ANNULLED.
The Decision of the Honorable Labor Arbiter Rogelio P. Legaspi on June 17, 1999 is hereby REINSTATED.

Petitioner moved for a reconsideration, but the Court of Appeals found no reason to reverse its decision and so denied his motion for lack of merit. [5] Hence, this petition for review on
certiorari based on the following assignments of errors:
I. With all due respect, the decision of respondent Court of Appeals in CA-G.R. SP NO. 63160 is bereft of any finding that Public Respondent NLRC, 5th Division, had no jurisdiction or
exceeded it or otherwise gravely abused its discretion in its Resolution of 30 June 2000 in NLRC CA-NO. M-004950-99.
II. With all due respect, respondent Court of Appeals, absent any positive finding on its part that the Resolution of 30 June 2000 of the NLRC is not supported by substantial evidence, is
without authority to substitute its conclusion for that of said NLRC.
III. With all due respect, respondent Court of Appeals discourse on freelance artists and painters in the decision in question is misplaced or has no factual or legal basis in the record.
IV. With all due respect, respondent Court of Appeals opening statement in its decision as to employment, monthly salary of P1,475.00 and work schedule from Monday to Saturday, from
8:00 oclock in the morning up to 5:00 oclock in the afternoon as facts is not supported by the evidence on record.
V. With all due respect, the case of Lambo, et al., v. NLRC, et al., 317 SCRA 420 [G.R. No. 111042 October 26, 1999] relied upon by respondent Court of Appeals is not applicable to the
peculiar circumstances of this case.[6]
The issues raised boil down to whether or not an employer-employee relationship existed between petitioner and private respondent, and whether petitioner is guilty of illegally
dismissing private respondent.We find the answers to these issues to be in the affirmative.
I.
In determining whether there is an employer-employee relationship, we have applied a four-fold test, to wit: (1) whether the alleged employer has the power of selection and
engagement of employees; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to
dismiss; and (4) whether the employee was paid wages. [7]These elements of the employer-employee relationship are present in this case.
First. The existence in this case of the first element is undisputed. It was petitioner who engaged the services of Lagrama without the intervention of a third party. It is the existence of
the second element, the power of control, that requires discussion here.
Of the four elements of the employer-employee relationship, the control test is the most important. Compared to an employee, an independent contractor is one who carries on a
distinct and independent business and undertakes to perform the job, work, or service on its own account and under its own responsibility according to its own manner and method, free
from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. [8] Hence, while an independent contractor enjoys
independence and freedom from the control and supervision of his principal, an employee is subject to the employers power to control the means and methods by which the employees
work is to be performed and accomplished.
In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and never his employee, the evidence shows that the latter performed
his work as painter under the supervision and control of petitioner. Lagrama worked in a designated work area inside the Crown Theater of petitioner, for the use of which petitioner
prescribed rules. The rules included the observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place other than the toilet or the rest rooms.
[9] Petitioners control over Lagramas work extended not only to the use of the work area, but also to the result of Lagramas work, and the manner and means by which the work was to be
accomplished.
Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the materials used for the paintings, because he admitted that he paid Lagrama only
for the latters services.[10]
Private respondent Lagrama claimed that he worked daily, from 8 oclock in the morning to 5 oclock in the afternoon. Petitioner disputed this allegation and maintained that he paid
Lagrama P1,475.00 per week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one week. [11] Even assuming this to be true, the fact that Lagrama
worked for at least 3 to 4 days a week proves regularity in his employment by petitioner.
Second. That petitioner had the right to hire and fire was admitted by him in his position paper submitted to the NLRC, the pertinent portions of which stated:
Complainant did not know how to use the available comfort rooms or toilets in and about his work premises. He was urinating right at the place where he was working when it was so
easy for him, as everybody else did and had he only wanted to, to go to the comfort rooms. But no, the complainant had to make a virtual urinal out of his work place! The place then stunk
to high heavens, naturally, to the consternation of respondents and everyone who could smell the malodor.
...
Given such circumstances, the respondents had every right, nay all the compelling reason, to fire him from his painting job upon discovery and his admission of such
acts. Nonetheless, though thoroughly scolded, he was not fired. It was he who stopped to paint for respondents.[12]
By stating that he had the right to fire Lagrama, petitioner in effect acknowledged Lagrama to be his employee. For the right to hire and fire is another important element of the
employer-employee relationship.[13] Indeed, the fact that, as petitioner himself said, he waited for Lagrama to report for work but the latter simply stopped reporting for work reinforces the
conviction that Lagrama was indeed an employee of petitioner. For only an employee can nurture such an expectancy, the frustration of which, unless satisfactorily explained, can bring
about some disciplinary action on the part of the employer.
Third. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. Wages are defined as remuneration or earnings,
however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered. [14] That
Lagrama worked for Tan on a fixed piece-work basis is of no moment. Payment by result is a method of compensation and does not define the essence of the relation. [15] It is a method of
computing compensation, not a basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work,
and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not. [16]
The Rules Implementing the Labor Code require every employer to pay his employees by means of payroll. [17] The payroll should show among other things, the employees rate of
pay, deductions made, and the amount actually paid to the employee. In the case at bar, petitioner did not present the payroll to support his claim that Lagrama was not his employee,
raising speculations whether his failure to do so proves that its presentation would be adverse to his case.[18]
The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or
business of the employer.[19] In this case, there is such a connection between the job of Lagrama painting billboards and murals and the business of petitioner. To let the people know what
movie was to be shown in a movie theater requires billboards. Petitioner in fact admits that the billboards are important to his business.[20]
The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of whether he was an employee of petitioner. [21] Otherwise, an employer would
be rewarded for his failure or even neglect to perform his obligation.[22]
Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship with petitioner. That he did so only during weekends has not been denied by
petitioner. On the other hand, Samuel Villalba, for whom Lagrama had rendered service, admitted in a sworn statement that he was told by Lagrama that the latter worked for petitioner.[23]

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

Case no. 10 Sonza Vs. ANS-CBN

[G.R. No. 138051. June 10, 2004]
JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari[1] assailing the 26 March 1999 Decision[2] of the Court of Appeals in CA-G.R. SP No. 49190 dismissing the petition filed by Jose
Y. Sonza (SONZA). The Court of Appeals affirmed the findings of the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiters dismissal of the case for lack of
jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an Agreement (Agreement) with the Mel and Jay Management and Development Corporation
(MJMDC). ABS-CBN was represented by its corporate officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela Tiangco (TIANGCO), as EVP
and Treasurer. Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and television. The Agreement listed the
services SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;

b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.[3]
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay
the talent fees on the 10th and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May 1994 entered into by your goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his programs and career. We consider these acts of the station violative of the Agreement and
the station as in breach thereof. In this connection, we hereby serve notice of rescission of said Agreement at our instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the other
benefits under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y. SONZA
President and Gen. Manager[4]
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region in Quezon City. SONZA complained that
ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13 th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan
(ESOP).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties. SONZA filed an Opposition to the motion
on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new
account with the same bank where ABS-CBN deposited SONZAs talent fees and other payments due him under the Agreement.
In his Order dated 2 December 1996, the Labor Arbiter[5] denied the motion to dismiss and directed the parties to file their respective position papers. The Labor Arbiter ruled:
In this instant case, complainant for having invoked a claim that he was an employee of respondent company until April 15, 1996 and that he was not paid certain claims, it is sufficient
enough as to confer jurisdiction over the instant case in this Office. And as to whether or not such claim would entitle complainant to recover upon the causes of action asserted is a matter
to be resolved only after and as a result of a hearing. Thus, the respondents plea of lack of employer-employee relationship may be pleaded only as a matter of defense. It behooves upon it
the duty to prove that there really is no employer-employee relationship between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution. The parties submitted their position papers on 24 February 1997.
On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with Motion to Expunge Respondents Annex 4 and Annex 5 from the Records. Annexes 4 and 5 are
affidavits of ABS-CBNs witnesses Soccoro Vidanes and Rolando V. Cruz. These witnesses stated in their affidavits that the prevailing practice in the television and broadcast industry is to
treat talents like SONZA as independent contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction.[6] The pertinent parts of the decision read as follows:
xxx
While Philippine jurisprudence has not yet, with certainty, touched on the true nature of the contract of a talent, it stands to reason that a talent as above-described cannot be considered as
an employee by reason of the peculiar circumstances surrounding the engagement of his services.
It must be noted that complainant was engaged by respondent by reason of his peculiar skills and talent as a TV host and a radio broadcaster. Unlike an ordinary employee, he
was free to perform the services he undertook to render in accordance with his own style. The benefits conferred to complainant under the May 1994 Agreement are certainly very
much higher than those generally given to employees. For one, complainant Sonzas monthly talent fees amount to a staggering P317,000. Moreover, his engagement as a talent was
covered by a specific contract. Likewise, he was not bound to render eight (8) hours of work per day as he worked only for such number of hours as may be necessary.
The fact that per the May 1994 Agreement complainant was accorded some benefits normally given to an employee is inconsequential. Whatever benefits complainant enjoyed arose
from specific agreement by the parties and not by reason of employer-employee relationship. As correctly put by the respondent, All these benefits are merely talent fees and other
contractual benefits and should not be deemed as salaries, wages and/or other remuneration accorded to an employee, notwithstanding the nomenclature appended to these
benefits. Apropos to this is the rule that the term or nomenclature given to a stipulated benefit is not controlling, but the intent of the parties to the Agreement conferring such benefit.
The fact that complainant was made subject to respondents Rules and Regulations, likewise, does not detract from the absence of employer-employee relationship . As held by
the Supreme Court, The line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods
to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the second, which address both the result and the means to achieve it. (Insular Life Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484,
November 15, 1989).
x x x (Emphasis supplied)[7]
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the Labor Arbiters decision. SONZA filed a motion for reconsideration, which the
NLRC denied in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals assailing the decision and resolution of the NLRC. On 26 March 1999, the Court of
Appeals rendered a Decision dismissing the case. [8]
Hence, this petition.

The Rulings of the NLRC and Court of Appeals

The Court of Appeals affirmed the NLRCs finding that no employer-employee relationship existed between SONZA and ABS-CBN. Adopting the NLRCs decision, the appellate court
quoted the following findings of the NLRC:
x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as an agent of complainant Sonza, the principal. By all indication and as the law puts it, the
act of the agent is the act of the principal itself. This fact is made particularly true in this case, as admittedly MJMDC is a management company devoted exclusively to managing the
careers of Mr. Sonza and his broadcast partner, Mrs. Carmela C. Tiangco. (Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC, and not between ABS-CBN and MJMDC. This is clear from the provisions of the May
1994 Agreement which specifically referred to MJMDC as the AGENT. As a matter of fact, when complainant herein unilaterally rescinded said May 1994 Agreement, it was MJMDC which
issued the notice of rescission in behalf of Mr. Sonza, who himself signed the same in his capacity as President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically, the parties to the said agreements are ABS-CBN and Mr. Sonza. And it is only in the May
1994 Agreement, which is the latest Agreement executed between ABS-CBN and Mr. Sonza, that MJMDC figured in the said Agreement as the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN such that there exist[s] employer-employee relationship between the latter and Mr. Sonza. On the
contrary, We find it indubitable, that MJMDC is an agent, not of ABS-CBN, but of the talent/contractor Mr. Sonza, as expressly admitted by the latter and MJMDC in the May 1994
Agreement.
It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to the regular courts, the same being in the nature of an action for alleged breach of contractual
obligation on the part of respondent-appellee. As squarely apparent from complainant-appellants Position Paper, his claims for compensation for services, 13 th month pay, signing bonus
and travel allowance against respondent-appellee are not based on the Labor Code but rather on the provisions of the May 1994 Agreement, while his claims for proceeds under Stock
Purchase Agreement are based on the latter. A portion of the Position Paper of complainant-appellant bears perusal:
Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bound itself to pay complainant a signing bonus consisting of shares of stockswith FIVE HUNDRED
THOUSAND PESOS (P500,000.00).
Similarly, complainant is also entitled to be paid 13 th month pay based on an amount not lower than the amount he was receiving prior to effectivity of (the) Agreement.
Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel benefit amounting to at least One Hundred Fifty Thousand Pesos ( P150,000.00) per year.
Thus, it is precisely because of complainant-appellants own recognition of the fact that his contractual relations with ABS-CBN are founded on the New Civil Code, rather than the Labor
Code, that instead of merely resigning from ABS-CBN, complainant-appellant served upon the latter a notice of rescission of Agreement with the station, per his letter dated April 1, 1996,
which asserted that instead of referring to unpaid employee benefits, he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but
reserves the right to such recovery of the other benefits under said Agreement. (Annex 3 of the respondent ABS-CBNs Motion to Dismiss dated July 10, 1996).
Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the Stock Purchase Agreement by respondent-appellee that complainant-appellant filed his
complaint. Complainant-appellants claims being anchored on the alleged breach of contract on the part of respondent-appellee, the same can be resolved by reference to civil law and not
to labor law. Consequently, they are within the realm of civil law and, thus, lie with the regular courts. As held in the case of Dai-Chi Electronics Manufacturing vs. Villarama, 238 SCRA
267, 21 November 1994, an action for breach of contractual obligation is intrinsically a civil dispute.[9] (Emphasis supplied)
The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA and ABS-CBN is a factual question that is within the jurisdiction of the NLRC to
resolve.[10] A special civil action for certiorari extends only to issues of want or excess of jurisdiction of the NLRC. [11] Such action cannot cover an inquiry into the correctness of the evaluation
of the evidence which served as basis of the NLRCs conclusion. [12] The Court of Appeals added that it could not re-examine the parties evidence and substitute the factual findings of the
NLRC with its own.[13]
The Issue
In assailing the decision of the Court of Appeals, SONZA contends that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISION AND REFUSING TO FIND THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED
BETWEEN SONZA AND ABS-CBN, DESPITE THE WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING. [14]
The Courts Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the NLRC ruling which upheld the Labor Arbiters dismissal of the case for lack of
jurisdiction.
The present controversy is one of first impression. Although Philippine labor laws and jurisprudence define clearly the elements of an employer-employee relationship, this is the first
time that the Court will resolve the nature of the relationship between a television and radio station and one of its talents. There is no case law stating that a radio and television program
host is an employee of the broadcast station.
The instant case involves big names in the broadcast industry, namely Jose Jay Sonza, a known television and radio personality, and ABS-CBN, one of the biggest television and
radio networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of ABS-CBN. On the other hand, ABS-CBN insists that the Labor Arbiter has no
jurisdiction because SONZA was an independent contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual findings of the Labor Arbiter and the NLRC not only respect but also
finality when supported by substantial evidence. [15] Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. [16] A party
cannot prove the absence of substantial evidence by simply pointing out that there is contrary evidence on record, direct or circumstantial. The Court does not substitute its own judgment
for that of the tribunal in determining where the weight of evidence lies or what evidence is credible. [17]
SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case law has consistently held that the elements of an employeremployee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee
on the means and methods by which the work is accomplished. [18] The last element, the so-called control test, is the most important element.[19]
A. Selection and Engagement of Employee

ABS-CBN engaged SONZAs services to co-host its television and radio programs because of SONZAs peculiar skills, talent and celebrity status. SONZA contends that the discretion
used by respondent in specifically selecting and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant belies respondents claim of
independent contractorship.
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of
SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees , is a circumstance indicative, but not conclusive, of an independent
contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired
him through its personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must consider all the circumstances of the relationship, with the control
test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of
ABS-CBN. SONZA also points out that ABS-CBN granted him benefits and privileges which he would not have enjoyed if he were truly the subject of a valid job contract.
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties
to stipulate on benefits such as SSS, Medicare, x x x and 13 th month pay[20] which the law automatically incorporates into every employer-employee contract. [21] Whatever benefits SONZA
enjoyed arose from contract and not because of an employer-employee relationship. [22]
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual
relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAs unique skills, talent and celebrity status
not possessed by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to
bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an independent contractor. The parties expressly agreed on such mode of
payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show that ABS-CBN could terminate his services on grounds other than
breach of contract, such as retrenchment to prevent losses as provided under labor laws. [23]
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as AGENT and Jay Sonza shall faithfully and completely perform each condition of this
Agreement.[24] Even if it suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the
Agreement. This circumstance indicates an independent contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement to
continue paying SONZAs talent fees during the remaining life of the Agreement even if ABS-CBN cancelled SONZAs programs through no fault of SONZA. [25]
SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement as an admission that he is not an employee of ABS-CBN. The Labor Arbiter stated that if it were
true that complainant was really an employee, he would merely resign, instead. SONZA did actually resign from ABS-CBN but he also, as president of MJMDC, rescinded the
Agreement. SONZAs letter clearly bears this out. [26] However, the manner by which SONZA terminated his relationship with ABS-CBN is immaterial. Whether SONZA rescinded the
Agreement or resigned from work does not determine his status as employee or independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio and television program host is an employee or an independent contractor, we refer to foreign case law in analyzing the present
case. The United StatesCourt of Appeals, First Circuit, recently held in Alberty-Vlez v. Corporacin De Puerto Rico Para La Difusin Pblica (WIPR) [27] that a television program host is an
independent contractor. We quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent contractor. First, a television actress is a skilled position requiring talent and training not available on-the-job. x x x In this
regard, Alberty possesses a masters degree in public communications and journalism; is trained in dance, singing, and modeling; taught with the drama department at the University of
Puerto Rico; and acted in several theater and television productions prior to her affiliation with Desde Mi Pueblo. Second, Alberty provided the tools and instrumentalities necessary
for her to perform. Specifically, she provided, or obtained sponsors to provide, the costumes, jewelry, and other image-related supplies and services necessary for her appearance. Alberty
disputes that this factor favors independent contractor status because WIPR provided the equipment necessary to tape the show. Albertys argument is misplaced. The equipment necessary
for Alberty to conduct her job as host of Desde Mi Pueblo related to her appearance on the show. Others provided equipment for filming and producing the show, but these were not the
primary tools that Alberty used to perform her particular function. If we accepted this argument, independent contractors could never work on collaborative projects because other individuals
often provide the equipment required for different aspects of the collaboration. x x x
Third, WIPR could not assign Alberty work in addition to filming Desde Mi Pueblo. Albertys contracts with WIPR specifically provided that WIPR hired her professional services as
Hostess for the Program Desde Mi Pueblo.There is no evidence that WIPR assigned Alberty tasks in addition to work related to these tapings. x x x[28] (Emphasis supplied)
Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control test is the most important test our courts apply in
distinguishing an employee from an independent contractor.[29] This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is considered an independent
contractor.[30]
First, SONZA contends that ABS-CBN exercised control over the means and methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the Mel & Jay programs. ABS-CBN did not assign any other work to SONZA. To
perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. SONZA did not
have to render eight hours of work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings.