G.R. No.
138051 June 10, 2004 On 1 April 1996, SONZA wrote a letter to ABS-
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING
CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on
certiorari1 assailing the 26 March 1999 Decision2 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.
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. Manager4
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, 13th month pay, signing bonus, travel allowance
and amounts due under the Employees Stock Option
Plan ("ESOP").
On 10 July 1996, ABS-CBN filed a Motion to
Dismiss on the ground that no employer-employee
relationship existed between the parties. SONZA
filed an Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs
monthly talent fees through his account at PCIBank,
Quezon Avenue Branch, Quezon City. In July 1996,
ABS-CBN opened a new account with the same bank
where ABS-CBN deposited SONZAs talent fees and
other payments due him under the Agreement.
In his Order dated 2 December 1996, the Labor
Arbiter5 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, 13th month pay,
signing bonus and travel allowance against
respondent-appellee are not based on the Labor Code
but rather on the provisions of the May 1994
Agreement, while his claims for proceeds under
Stock Purchase Agreement are based on the latter. A
portion of the Position Paper of complainant-
appellant bears perusal:
Under [the May 1994 Agreement] with respondent
ABS-CBN, the latter contractually bound itself to pay
complainant a signing bonus consisting of shares of
stockswith FIVE HUNDRED THOUSAND
PESOS (P500,000.00).
Similarly, complainant is also entitled to be paid 13th
month pay based on an amount not lower than the
amount he was receiving prior to effectivity of (the)
Agreement.
Under paragraph 9 of (the May 1994 Agreement),
complainant is entitled to a commutable travel
benefit amounting to at least One Hundred Fifty
Thousand Pesos (P150,000.00) per year.
Thus, it is precisely because of complainant-
appellants own recognition of the fact that his
contractual relations with ABS-CBN are founded on
the New Civil Code, rather than the Labor Code, that
instead of merely resigning from ABS-CBN,
complainant-appellant served upon the latter a notice
of rescission of Agreement with the station, per his
letter dated April 1, 1996, which asserted that instead
of referring to unpaid employee benefits, he is
waiving and renouncing recovery of the remaining
amount stipulated in paragraph 7 of the Agreement
but reserves the right to such recovery of the other
benefits under said Agreement. (Annex 3 of the
respondent ABS-CBNs Motion to Dismiss dated
July 10, 1996).
Evidently, it is precisely by reason of the alleged
violation of the May 1994 Agreement and/or the
Stock Purchase Agreement by respondent-appellee
that complainant-appellant filed his complaint.
Complainant-appellants claims being anchored on
the alleged breach of contract on the part of
respondent-appellee, the same can be resolved by
reference to civil law and not to labor law.
Consequently, they are within the realm of civil law
and, thus, lie with the regular courts. As held in the
case of Dai-Chi Electronics Manufacturing vs.
Villarama, 238 SCRA 267, 21 November 1994, an
action for breach of contractual obligation is
intrinsically a civil dispute.9 (Emphasis supplied)
The Court of Appeals ruled that the existence of an
employer-employee relationship between SONZA
and ABS-CBN is a factual question that is within the
jurisdiction of the NLRC to resolve.10 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
14
SUPPORT SUCH A FINDING.
The Courts Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of
the decision of the Court of Appeals affirming the
NLRC ruling which upheld the Labor Arbiters
dismissal of the case for lack of jurisdiction.
The present controversy is one of first impression.
Although Philippine labor laws and jurisprudence
define clearly the elements of an employer-employee
relationship, this is the first time that the Court will
resolve the nature of the relationship between a
television and radio station and one of its "talents."
There is no case law stating that a radio and
television program host is an employee of the
broadcast station.
The instant case involves big names in the broadcast
industry, namely Jose "Jay" Sonza, a known
television and radio personality, and ABS-CBN, one
of the biggest television and radio networks in the
country.
SONZA contends that the Labor Arbiter has
jurisdiction over the case because he was an
employee of ABS-CBN. On the other hand, ABS-
CBN insists that the Labor Arbiter has no jurisdiction
because SONZA was an independent contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship
is a question of fact. Appellate courts accord the
factual findings of the Labor Arbiter and the NLRC
not only respect but also finality when supported by
substantial evidence.15 Substantial evidence means
such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. 16 A party
cannot prove the absence of substantial evidence by
simply pointing out that there is contrary evidence on
record, direct or circumstantial. The Court does not
substitute its own judgment for that of the tribunal in
determining where the weight of evidence lies or
what evidence is credible.17
SONZA maintains that all essential elements of an
employer-employee relationship are present in this
case. Case law has consistently held that the elements
of an employer-employee relationship are: (a) the
selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and
(d) the employers power to control the employee on
the means and methods by which the work is
accomplished.18 The last element, the so-called
"control test", is the most important element.19
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAs services to co-host its
television and radio programs because of SONZAs
peculiar skills, talent and celebrity status. SONZA
contends that the "discretion used by respondent in
specifically selecting and hiring complainant over
other broadcasters of possibly similar experience and
qualification as complainant belies respondents
claim of independent contractorship."
Independent contractors often present themselves to
possess unique skills, expertise or talent to
distinguish them from ordinary employees. The
specific selection and hiring of SONZA, because of
his unique skills, talent and celebrity status not
possessed by ordinary employees, is a circumstance
indicative, but not conclusive, of an independent
contractual relationship. If SONZA did not possess
such unique skills, talent and celebrity status, ABS-
CBN would not have entered into the Agreement
with SONZA but would have hired him through its
personnel department just like any other employee.
In any event, the method of selecting and engaging
SONZA does not conclusively determine his status.
We must consider all the circumstances of the
relationship, with the control test being the most
important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent
fees with no part of his fees going to MJMDC.
SONZA asserts that this mode of fee payment shows
that he was an employee of ABS-CBN. SONZA also
points out that ABS-CBN granted him benefits and
privileges "which he would not have enjoyed if he
were truly the subject of a valid job contract."
All the talent fees and benefits paid to SONZA were
the result of negotiations that led to the Agreement. If
SONZA were ABS-CBNs employee, there would be
no need for the parties to stipulate on benefits such as
"SSS, Medicare, x x x and 13th month pay" 20 which
the law automatically incorporates into every
employer-employee contract.21 Whatever benefits
SONZA enjoyed arose from contract and not because
of an employer-employee relationship.22
SONZAs talent fees, amounting to P317,000
monthly in the second and third year, are so huge and
out of the ordinary that they indicate more an
independent contractual relationship rather than an
employer-employee relationship. ABS-CBN agreed
to pay SONZA such huge talent fees precisely
because of SONZAs unique skills, talent and
celebrity status not possessed by ordinary employees.
Obviously, SONZA acting alone possessed enough
bargaining power to demand and receive such huge
talent fees for his services. The power to bargain
talent fees way above the salary scales of ordinary
employees is a circumstance indicative, but not
conclusive, of an independent contractual
relationship.
The payment of talent fees directly to SONZA and
not to MJMDC does not negate the status of SONZA
as an independent contractor. The parties expressly
agreed on such mode of payment. Under the
Agreement, MJMDC is the AGENT of SONZA, to
whom MJMDC would have to turn over any talent
fee accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement,
either party may terminate their relationship. SONZA
failed to show that ABS-CBN could terminate his
services on grounds other than breach of contract,
such as retrenchment to prevent losses as provided
under labor laws.23
During the life of the Agreement, ABS-CBN agreed
to pay SONZAs talent fees as long as "AGENT and
Jay Sonza shall faithfully and completely perform
each condition of this Agreement."24 Even if it
suffered severe business losses, ABS-CBN could not
retrench SONZA because ABS-CBN remained
obligated to pay SONZAs talent fees during the life
of the Agreement. This circumstance indicates an
independent contractual relationship between
SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased
broadcasting his programs, ABS-CBN still paid him
his talent fees. Plainly, ABS-CBN adhered to its
undertaking in the Agreement to continue paying
SONZAs talent fees during the remaining life of the
Agreement even if ABS-CBN cancelled SONZAs
programs through no fault of SONZA.25
SONZA assails the Labor Arbiters interpretation of
his rescission of the Agreement as an admission that
he is not an employee of ABS-CBN. The Labor
Arbiter stated that "if it were true that complainant
was really an employee, he would merely resign,
instead." SONZA did actually resign from ABS-CBN
but he also, as president of MJMDC, rescinded the
Agreement. SONZAs letter clearly bears this
out.26 However, the manner by which SONZA
terminated his relationship with ABS-CBN is
immaterial. Whether SONZA rescinded the
Agreement or resigned from work does not
determine his status as employee or independent
contractor.
D. Power of Control
Since there is no local precedent on whether a radio
and television program host is an employee or an
independent contractor, we refer to foreign case law
in analyzing the present case. The United States
Court of Appeals, First Circuit, recently held
in Alberty-Vlez v. Corporacin De Puerto Rico
Para La Difusin Pblica ("WIPR")27 that a
television program host is an independent contractor.
We quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an
independent contractor. First, a television actress is
a skilled position requiring talent and training not
available on-the-job. x x x In this regard, Alberty
possesses a masters degree in public
communications and journalism; is trained in dance,
singing, and modeling; taught with the drama
department at the University of Puerto Rico; and
acted in several theater and television productions
prior to her affiliation with "Desde Mi
Pueblo." Second, Alberty provided the "tools and
instrumentalities" necessary for her to
perform. Specifically, she provided, or obtained
sponsors to provide, the costumes, jewelry, and other
image-related supplies and services necessary for her
appearance. Alberty disputes that this factor favors
independent contractor status because WIPR
provided the "equipment necessary to tape the show."
Albertys argument is misplaced. The equipment
necessary for Alberty to conduct her job as host of
"Desde Mi Pueblo" related to her appearance on the
show. Others provided equipment for filming and
producing the show, but these were not the primary
tools that Alberty used to perform her particular
function. If we accepted this argument, independent
contractors could never work on collaborative
projects because other individuals often provide the
equipment required for different aspects of the
collaboration. x x x
Third, WIPR could not assign Alberty work in
addition to filming "Desde Mi Pueblo." Albertys
contracts with WIPR specifically provided that WIPR
hired her "professional services as Hostess for the
Program Desde Mi Pueblo." There is no evidence
that WIPR assigned Alberty tasks in addition to work
related to these tapings. x x x28 (Emphasis supplied)
Applying the control test to the present case, we find
that SONZA is not an employee but an independent
contractor. The control test is the most
important test our courts apply in distinguishing an
employee from an independent contractor.29 This test
is based on the extent of control the hirer exercises
over a worker. The greater the supervision and
control the hirer exercises, the more likely the worker
is deemed an employee. The converse holds true as
well the less control the hirer exercises, the more
likely the worker is considered an independent
contractor.30
First, SONZA contends that ABS-CBN exercised
control over the means and methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged
SONZAs services specifically to co-host the "Mel &
Jay" programs. ABS-CBN did not assign any other
work to SONZA. To perform his work, SONZA only
needed his skills and talent. How SONZA delivered
his lines, appeared on television, and sounded on
radio were outside ABS-CBNs control. SONZA did
not have to render eight hours of work per day. The
Agreement required SONZA to attend only rehearsals
and tapings of the shows, as well as pre- and post-
production staff meetings.31 ABS-CBN could not
dictate the contents of SONZAs script. However, the
Agreement prohibited SONZA from criticizing in his
shows ABS-CBN or its interests.32 The clear
implication is that SONZA had a free hand on what
to say or discuss in his shows provided he did not
attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the
actual performance that produced the finished
product of SONZAs work.33 ABS-CBN did not
instruct SONZA how to perform his job. ABS-CBN
merely reserved the right to modify the program
format and airtime schedule "for more effective
programming."34 ABS-CBNs sole concern was the
quality of the shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control over the
means and methods of performance of SONZAs
work.
SONZA claims that ABS-CBNs power not to
broadcast his shows proves ABS-CBNs power over
the means and methods of the performance of his
work. Although ABS-CBN did have the option not to
broadcast SONZAs show, ABS-CBN was still
obligated to pay SONZAs talent fees... Thus, even if
ABS-CBN was completely dissatisfied with the
means and methods of SONZAs performance of his
work, or even with the quality or product of his work,
ABS-CBN could not dismiss or even discipline
SONZA. All that ABS-CBN could do is not to
broadcast SONZAs show but ABS-CBN must still
pay his talent fees in full.35
Clearly, ABS-CBNs right not to broadcast SONZAs
show, burdened as it was by the obligation to
continue paying in full SONZAs talent fees, did not
amount to control over the means and methods of the
performance of SONZAs work. ABS-CBN could not
terminate or discipline SONZA even if the means and
methods of performance of his work - how he
delivered his lines and appeared on television - did
not meet ABS-CBNs approval. This proves that
ABS-CBNs control was limited only to the result of
SONZAs work, whether to broadcast the final
product or not. In either case, ABS-CBN must still
pay SONZAs talent fees in full until the expiry of the
Agreement.
In Vaughan, et al. v. Warner, et al.,36 the United
States Circuit Court of Appeals ruled that vaudeville
performers were independent contractors although
the management reserved the right to delete
objectionable features in their shows. Since the
management did not have control over the manner of
performance of the skills of the artists, it could only
control the result of the work by deleting
objectionable features.37
SONZA further contends that ABS-CBN exercised
control over his work by supplying all equipment and
crew. No doubt, ABS-CBN supplied the equipment,
crew and airtime needed to broadcast the "Mel &
Jay" programs. However, the equipment, crew and
airtime are not the "tools and instrumentalities"
SONZA needed to perform his job. What SONZA
principally needed were his talent or skills and the
costumes necessary for his appearance.38Even though
ABS-CBN provided SONZA with the place of work
and the necessary equipment, SONZA was still an
independent contractor since ABS-CBN did not
supervise and control his work. ABS-CBNs sole
concern was for SONZA to display his talent during
the airing of the programs.39
A radio broadcast specialist who works under
minimal supervision is an independent
contractor.40 SONZAs work as television and radio
program host required special skills and talent, which
SONZA admittedly possesses. The records do not
show that ABS-CBN exercised any supervision and
control over how SONZA utilized his skills and talent
in his shows.
Second, SONZA urges us to rule that he was ABS-
CBNs employee because ABS-CBN subjected him
to its rules and standards of performance. SONZA
claims that this indicates ABS-CBNs control "not
only [over] his manner of work but also the quality of
his work."
The Agreement stipulates that SONZA shall abide
with the rules and standards of performance
"covering talents"41 of ABS-CBN. The Agreement
does not require SONZA to comply with the rules
and standards of performance prescribed for
employees of ABS-CBN. The code of conduct
imposed on SONZA under the Agreement refers to
the "Television and Radio Code of the Kapisanan ng
mga Broadcaster sa Pilipinas (KBP), which has been
adopted by the COMPANY (ABS-CBN) as its Code
of Ethics."42 The KBP code applies to broadcasters,
not to employees of radio and television stations.
Broadcasters are not necessarily employees of radio
and television stations. Clearly, the rules and
standards of performance referred to in the
Agreement are those applicable to talents and not to
employees of ABS-CBN.
In any event, not all rules imposed by the hiring party
on the hired party indicate that the latter is an
employee of the former.43 In this case, SONZA failed
to show that these rules controlled his performance.
We find that these general rules are
merely guidelines towards the achievement of the
mutually desired result, which are top-rating
television and radio programs that comply with
standards of the industry. We have ruled that:
Further, not every form of control that a party
reserves to himself over the conduct of the other
party in relation to the services being rendered may
be accorded the effect of establishing an employer-
employee relationship. The facts of this case fall
squarely with the case of Insular Life Assurance Co.,
Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules
that merely serve as guidelines towards the
achievement of the mutually desired result without
dictating the means or methods to be employed in
attaining it, and those that control or fix the
methodology and bind or restrict the party hired to
the use of such means. The first, which aim only to
promote the result, create no employer-employee
relationship unlike the second, which address both
the result and the means used to achieve it.44
The Vaughan case also held that one could still be an
independent contractor although the hirer reserved
certain supervision to insure the attainment of the
desired result. The hirer, however, must not deprive
the one hired from performing his services according
to his own initiative.45
Lastly, SONZA insists that the "exclusivity clause" in
the Agreement is the most extreme form of control
which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent
does not by itself mean that SONZA is an employee
of ABS-CBN. Even an independent contractor can
validly provide his services exclusively to the hiring
party. In the broadcast industry, exclusivity is not
necessarily the same as control.
The hiring of exclusive talents is a widespread and
accepted practice in the entertainment industry.46 This
practice is not designed to control the means and
methods of work of the talent, but simply to protect
the investment of the broadcast station. The
broadcast station normally spends substantial
amounts of money, time and effort "in building up its
talents as well as the programs they appear in and
thus expects that said talents remain exclusive with
the station for a commensurate period of
time."47 Normally, a much higher fee is paid to talents
who agree to work exclusively for a particular radio
or television station. In short, the huge talent fees
partially compensates for exclusivity, as in the
present case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiters finding that he is
a talent of MJMDC, which contracted out his
services to ABS-CBN. The Labor Arbiter ruled that
as a talent of MJMDC, SONZA is not an employee of
ABS-CBN. SONZA insists that MJMDC is a "labor-
only" contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties
involved: (1) the "labor-only" contractor; (2) the
employee who is ostensibly under the employ of the
"labor-only" contractor; and (3) the principal who is
deemed the real employer. Under this scheme, the
"labor-only" contractor is the agent of the
principal. The law makes the principal responsible to
the employees of the "labor-only contractor" as if the
principal itself directly hired or employed the
employees.48 These circumstances are not present in
this case.
There are essentially only two parties involved under
the Agreement, namely, SONZA and ABS-CBN.
MJMDC merely acted as SONZAs agent. The
Agreement expressly states that MJMDC acted as the
"AGENT" of SONZA. The records do not show that
MJMDC acted as ABS-CBNs agent. MJMDC,
which stands for Mel and Jay Management and
Development Corporation, is a corporation organized
and owned by SONZA and TIANGCO. The
President and General Manager of MJMDC is
SONZA himself. It is absurd to hold that MJMDC,
which is owned, controlled, headed and managed by
SONZA, acted as agent of ABS-CBN in entering into
the Agreement with SONZA, who himself is
represented by MJMDC. That would make MJMDC
the agent of both ABS-CBN and SONZA.
As SONZA admits, MJMDC is a management
company devoted exclusively to managing the
careers of SONZA and his broadcast partner,
TIANGCO. MJMDC is not engaged in any other
business, not even job contracting. MJMDC does not
have any other function apart from acting as agent of
SONZA or TIANGCO to promote their careers in the
broadcast and television industry.49
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued
by then Minister of Labor Blas Ople on 8 January
1979 finally settled the status of workers in the
broadcast industry. Under this policy, the types of
employees in the broadcast industry are the station
and program employees.
Policy Instruction No. 40 is a mere executive
issuance which does not have the force and effect of
law. There is no legal presumption that Policy
Instruction No. 40 determines SONZAs status. A
mere executive issuance cannot exclude independent
contractors from the class of service providers to the
broadcast industry. The classification of workers in
the broadcast industry into only two groups under
Policy Instruction No. 40 is not binding on this
Court, especially when the classification has no basis
either in law or in fact.
Affidavits of ABS-CBNs Witnesses
SONZA also faults the Labor Arbiter for admitting
the affidavits of Socorro Vidanes and Rolando Cruz
without giving his counsel the
opportunity to cross-examine these witnesses.
SONZA brands these witnesses as incompetent to
attest on the prevailing practice in the radio and
television industry. SONZA views the affidavits of
these witnesses as misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBNs
witnesses, he was never prevented from denying or
refuting the allegations in the affidavits. The Labor
Arbiter has the discretion whether to conduct a
formal (trial-type) hearing after the submission of the
position papers of the parties, thus:
Section 3. Submission of Position
Papers/Memorandum
xxx
These verified position papers shall cover only those
claims and causes of action raised in the complaint
excluding those that may have been amicably settled,
and shall be accompanied by all supporting
documents including the affidavits of their respective
witnesses which shall take the place of the latters
direct testimony. x x x
Section 4. Determination of Necessity of Hearing.
Immediately after the submission of the parties of
their position papers/memorandum, the Labor Arbiter
shall motu propio determine whether there is need for
a formal trial or hearing. At this stage, he may, at his
discretion and for the purpose of making such
determination, ask clarificatory questions to further
elicit facts or information, including but not limited
to the subpoena of relevant documentary evidence, if
any from any party or witness.50
The Labor Arbiter can decide a case based solely on
the position papers and the supporting documents
without a formal trial.51 The holding of a formal
hearing or trial is something that the parties cannot
demand as a matter of right.52 If the Labor Arbiter is
confident that he can rely on the documents before
him, he cannot be faulted for not conducting a formal
trial, unless under the particular circumstances of the
case, the documents alone are insufficient. The
proceedings before a Labor Arbiter are non-litigious
in nature. Subject to the requirements of due process,
the technicalities of law and the rules obtaining in the
courts of law do not strictly apply in proceedings
before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing
practice in the broadcast and entertainment industries
to treat talents like SONZA as independent
contractors. SONZA argues that if such practice
exists, it is void for violating the right of labor to
security of tenure.
The right of labor to security of tenure as guaranteed
in the Constitution53 arises only if there is an
employer-employee relationship under labor laws.
Not every performance of services for a fee creates
an employer-employee relationship. To hold that
every person who renders services to another for a
fee is an employee - to give meaning to the security
of tenure clause - will lead to absurd results.
Individuals with special skills, expertise or talent
enjoy the freedom to offer their services as
independent contractors. The right to life and
livelihood guarantees this freedom to contract as
independent contractors. The right of labor to
security of tenure cannot operate to deprive an
individual, possessed with special skills, expertise
and talent, of his right to contract as an independent
contractor. An individual like an artist or talent has a
right to render his services without any one
controlling the means and methods by which he
performs his art or craft. This Court will not interpret
the right of labor to security of tenure to compel
artists and talents to render their services only as
employees. If radio and television program hosts can
render their services only as employees, the station
owners and managers can dictate to the radio and
television hosts what they say in their shows. This is
not conducive to freedom of the press.
Different Tax Treatment of Talents and
Broadcasters
54
The National Internal Revenue Code ("NIRC") in
relation to Republic Act No. 7716,55 as amended by
Republic Act No. 8241,56 treats talents, television and
radio broadcasters differently. Under the NIRC, these
professionals are subject to the 10% value-added tax
("VAT") on services they render. Exempted from the
VAT are those under an employer-employee
relationship.57 This different tax treatment accorded
to talents and broadcasters bolters our conclusion that
they are independent contractors, provided all the
basic elements of a contractual relationship are
present as in this case.
Nature of SONZAs Claims
SONZA seeks the recovery of allegedly unpaid talent
fees, 13th month pay, separation pay, service
incentive leave, signing bonus, travel allowance, and
amounts due under the Employee Stock Option Plan.
We agree with the findings of the Labor Arbiter and
the Court of Appeals that SONZAs claims are all
based on the May 1994 Agreement and stock
option plan, and not on the Labor Code. Clearly,
the present case does not call for an application of the
Labor Code provisions but an interpretation and
implementation of the May 1994 Agreement. In
effect, SONZAs cause of action is for breach of
contract which is intrinsically a civil dispute
cognizable by the regular courts.58
WHEREFORE, we DENY the petition. The
assailed Decision of the Court of Appeals dated 26
March 1999 in CA-G.R. SP No. 49190
is AFFIRMED. Costs against petitioner.
SO ORDERED.
Davide, Jr., Panganiban, Ynares-
Santiago, and Azcuna, JJ., concur.
G.R. No. 185251 October 2, 2009
RAUL G. LOCSIN and EDDIE B.
TOMAQUIN, Petitioners,
vs.
PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, Respondent.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45
seeks the reversal of the May 6, 2008 Decision 1 and
November 4, 2008 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 97398, entitled
Philippine Long Distance Telephone Company v.
National Labor Relations Commission, Raul G.
Locsin and Eddie B. Tomaquin. The assailed decision
set aside the Resolutions of the National Labor
Relations Commission (NLRC) dated October 28,
2005 and August 28, 2006 which in turn affirmed the
Decision dated February 13, 2004 of the Labor
Arbiter. The assailed resolution, on the other hand,
denied petitioners motion for reconsideration of the
assailed decision.
The Facts
On November 1, 1990, respondent Philippine Long
Distance Telephone Company (PLDT) and the
Security and Safety Corporation of the Philippines
(SSCP) entered into a Security Services
Agreement3 (Agreement) whereby SSCP would
provide armed security guards to PLDT to be
assigned to its various offices.
Pursuant to such agreement, petitioners Raul Locsin 2. Eddie B.
P127,500.00 P240,954.67
and Eddie Tomaquin, among other security guards, Tomaquin
were posted at a PLDT office.
P736,909.34
On August 30, 2001, respondent issued a Letter dated
August 30, 2001 terminating the Agreement effective
All other claims are DISMISSED for want of factual
October 1, 2001.4
basis.
Despite the termination of the Agreement, however,
Let the computation made by the Computation and
petitioners continued to secure the premises of their
Examination Unit form part of this decision.
assigned office. They were allegedly directed to
remain at their post by representatives of respondent.
SO ORDERED.
In support of their contention, petitioners provided
the Labor Arbiter with copies of petitioner Locsins
PLDT appealed the above Decision to the NLRC
pay slips for the period of January to September
which rendered a Resolution affirming in toto the
2002.5
Arbiters Decision.
Then, on September 30, 2002, petitioners services
Thus, PDLT filed a Motion for Reconsideration of
were terminated.
the NLRCs Resolution which was also denied.
Thus, petitioners filed a complaint before the Labor
Consequently, PLDT filed a Petition for Certiorari
Arbiter for illegal dismissal and recovery of money
with the CA asking for the nullification of the
claims such as overtime pay, holiday pay, premium
Resolution issued by the NLRC as well as the Labor
pay for holiday and rest day, service incentive leave
Arbiters Decision. The CA rendered the assailed
pay, Emergency Cost of Living Allowance, and
decision granting PLDTs petition and dismissing
moral and exemplary damages against PLDT.
petitioners complaint. The dispositive portion of the
CA Decision provides:
The Labor Arbiter rendered a Decision finding PLDT
liable for illegal dismissal. It was explained in the
WHEREFORE, the instant Petition for Certiorari is
Decision that petitioners were found to be employees
GRANTED. The Resolutions dated October 28, 2005
of PLDT and not of SSCP. Such conclusion was
and August 28, 2006 of the National Labor Relations
arrived at with the factual finding that petitioners
Commission are ANNULLED and SET ASIDE.
continued to serve as guards of PLDTs offices. As
Private respondents complaint against Philippine
such employees, petitioners were entitled to
Long Distance Telephone Company is DISMISSED.
substantive and procedural due process before
termination of employment. The Labor Arbiter held
SO ORDERED.
that respondent failed to observe such due process
requirements. The dispositive portion of the Labor
Arbiters Decision reads: The CA applied the four-fold test in order to
determine the existence of an employer-employee
relationship between the parties but did not find such
WHEREFORE, premises considered, judgment is
relationship. It determined that SSCP was not a labor-
hereby rendered ordering respondent Philippine Long
only contractor and was an independent contractor
Distance and Telephone Company (PLDT) to pay
having substantial capital to operate and conduct its
complainants Raul E. Locsin and Eddie Tomaquin
own business. The CA further bolstered its decision
their separation pay and back wages computed as
by citing the Agreement whereby it was stipulated
follows:
that there shall be no employer-employee relationship
between the security guards and PLDT.
NAME SEPARATION PAY BACKWAGES
1. Raul E.
P127,500.00 P240,954.67
Anent the pay slips that were presented by
Locsin petitioners, the CA noted that those were issued by
SSCP and not PLDT; hence, SSCP continued to pay
the salaries of petitioners after the Agreement. This
fact allegedly proved that petitioners continued to be
employees of SSCP albeit performing their work at
PLDTs premises.
From such assailed decision, petitioners filed a
motion for reconsideration which was denied in the
assailed resolution.
Hence, we have this petition.
The Issues
1. Whether or not; complainants extended services to
the respondent for one (1) year from October 1,
2001, the effectivity of the termination of the contract
of complainants agency SSCP, up to September 30,
2002, without a renewed contract, constitutes an
employer-employee relationship between respondent
and the complainants.
2. Whether or not; in accordance to the provision of
the Article 280 of the Labor Code, complainants
extended services to the respondent for another one
(1) year without a contract be considered as
contractual employment.
3. Whether or not; in accordance to the provision of
the Article 280 of the Labor Code, does complainants
thirteen (13) years of service to the respondent with
manifestation to the respondent thirteen (13) years
renewal of its security contract with the complainant
agency SSCP, can be considered only as "seasonal in
nature" or fixed as [specific projects] or undertakings
and its completion or termination can be dictated as
[controlled] by the respondent anytime they wanted
to.
4. Whether or not; complainants from being an
alleged contractual employees of the respondent for
thirteen (13) years as they were then covered by a
contract, becomes regular employees of the
respondent as the one (1) year extended services of
the complainants were not covered by a contract, and
can be considered as direct employment pursuant to
the provision of the Article 280 of the Labor Code.
5. Whether or not; the Court of Appeals committed
grave abuse of discretion when it set aside and
[annulled] the labor [arbiters] decision and of the
NLRCs resolution declaring the dismissal of the
complainant as illegal.6
The Courts Ruling
This petition is hereby granted.
An Employer-Employee
Relationship Existed Between the Parties
It is beyond cavil that there was no employer-
employee relationship between the parties from the
time of petitioners first assignment to respondent by
SSCP in 1988 until the alleged termination of the
Agreement between respondent and SSCP. In fact,
this was the conclusion that was reached by this
Court in Abella v. Philippine Long Distance
Telephone Company,7 where we ruled that petitioners
therein, including herein petitioners, cannot be
considered as employees of PLDT. It bears pointing
out that petitioners were among those declared to be
employees of their respective security agencies and
not of PLDT.
The only issue in this case is whether petitioners
became employees of respondent after the Agreement
between SSCP and respondent was terminated.
This must be answered in the affirmative.
Notably, respondent does not deny the fact that
petitioners remained in the premises of their offices
even after the Agreement was terminated. And it is
this fact that must be explained.
To recapitulate, the CA, in rendering a decision in
favor of respondent, found that: (1) petitioners failed
to prove that SSCP was a labor-only contractor; and
(2) petitioners are employees of SSCP and not of
PLDT.
In arriving at such conclusions, the CA relied on the
provisions of the Agreement, wherein SSCP
undertook to supply PLDT with the required security
guards, while furnishing PLDT with a performance
bond in the amount of PhP 707,000. Moreover, the
CA gave weight to the provision in the Agreement
that SSCP warranted that it "carry on an independent
business and has substantial capital or investment in
the form of equipment, work premises, and other
materials which are necessary in the conduct of its
business."
Further, in determining that no employer-employee
relationship existed between the parties, the CA
quoted the express provision of the Agreement,
stating that no employer-employee relationship
existed between the parties herein. The CA
disregarded the pay slips of Locsin considering that
they were in fact issued by SSCP and not by PLDT.
From the foregoing explanation of the CA, the fact
remains that petitioners remained at their post after
the termination of the Agreement. Notably, in its
Comment dated March 10, 2009,8 respondent never
denied that petitioners remained at their post until
September 30, 2002. While respondent denies the
alleged circumstances stated by petitioners, that they
were told to remain at their post by respondents
Security Department and that they were informed by
SSCP Operations Officer Eduardo Juliano that their
salaries would be coursed through SSCP as per
arrangement with PLDT, it does not state why they
were not made to vacate their posts. Respondent said
that it did not know why petitioners remained at their
posts.
Rule 131, Section 3(y) of the Rules of Court
provides:
SEC. 3. Disputable presumptions.The following
presumptions are satisfactory if uncontradicted, but
may be contradicted and overcome by other
evidence:
xxxx
(y) That things have happened according to the
ordinary course of nature and the ordinary habits of
life.
In the ordinary course of things, responsible business
owners or managers would not allow security guards
of an agency with whom the owners or managers
have severed ties with to continue to stay within the
business premises. This is because upon the
termination of the owners or managers agreement
with the security agency, the agencys undertaking of
liability for any damage that the security guard would
cause has already been terminated. Thus, in the event
of an accident or otherwise damage caused by such
security guards, it would be the business owners
and/or managers who would be liable and not the
agency. The business owners or managers would,
therefore, be opening themselves up to liability for
acts of security guards over whom the owners or
managers allegedly have no control.
At the very least, responsible business owners or
managers would inquire or learn why such security
guards were remaining at their posts, and would have
a clear understanding of the circumstances of the
guards stay. It is but logical that responsible business
owners or managers would be aware of the situation
in their premises.
We point out that with respondents hypothesis, it
would seem that SSCP was paying petitioners
salaries while securing respondents premises despite
the termination of their Agreement. Obviously, it
would only be respondent that would benefit from
such a situation. And it is seriously doubtful that a
security agency that was established for profit would
allow its security guards to secure respondents
premises when the Agreement was already
terminated.
From the foregoing circumstances, reason dictates
that we conclude that petitioners remained at their
post under the instructions of respondent. We can
further conclude that respondent dictated upon
petitioners that the latter perform their regular duties
to secure the premises during operating hours. This,
to our mind and under the circumstances, is sufficient
to establish the existence of an employer-employee
relationship. Certainly, the facts as narrated by
petitioners are more believable than the irrational
denials made by respondent. Thus, we ruled in Lee
Eng Hong v. Court of Appeals:9
Evidence, to be believed, must not only proceed from
the mouth of a credible witness, but it must be
credible in itself such as the common experience
and observation of mankind can approve as probable
under the circumstances. We have no test of the truth
of human testimony, except its conformity to our
knowledge, observation and experience. Whatever is
repugnant to these belongs to the miraculous and is
outside judicial cognizance (Castaares v. Court of
Appeals, 92 SCRA 568 [1979]).
To reiterate, while respondent and SSCP no longer
had any legal relationship with the termination of the
Agreement, petitioners remained at their post
securing the premises of respondent while receiving
their salaries, allegedly from SSCP. Clearly, such a
situation makes no sense, and the denials proffered
by respondent do not shed any light to the situation.
It is but reasonable to conclude that, with the behest
and, presumably, directive of respondent, petitioners
continued with their services. Evidently, such
are indicia of control that respondent exercised over
petitioners.
Such power of control has been explained as the
"right to control not only the end to be achieved but
also the means to be used in reaching such
end."10 With the conclusion that respondent directed
petitioners to remain at their posts and continue with
their duties, it is clear that respondent exercised the
power of control over them; thus, the existence of an
employer-employee relationship.
In Tongko v. The Manufacturers Life Insurance Co.
(Phils.) Inc.,11 we reiterated the oft repeated rule that
control is the most important element in the
determination of the existence of an employer-
employee relationship:
In the determination of whether an employer-
employee relationship exists between two parties,
this Court applies the four-fold test to determine the
existence of the elements of such relationship.
In Pacific Consultants International Asia, Inc. v.
Schonfeld, the Court set out the elements of an
employer-employee relationship, thus:
Jurisprudence is firmly settled that whenever the
existence of an employment relationship is in
dispute, four elements constitute the reliable
yardstick: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employers power to control
the employees conduct. It is the so-called "control
test" which constitutes the most important index of
the existence of the employer-employee relationship
that is, whether the employer controls or has reserved
the right to control the employee not only as to the
result of the work to be done but also as to the means
and methods by which the same is to be
accomplished. Stated otherwise, an employer-
employee relationship exists where the person for
whom the services are performed reserves the right to
control not only the end to be achieved but also the
means to be used in reaching such end.
Furthermore, Article 106 of the Labor Code contains
a provision on contractors, to wit:
Art. 106. Contractor or subcontractor. Whenever an
employer enters into a contract with another person
for the performance of the formers work, the
employees of the contractor and of the latters
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.
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of
workers established under this Code. In so
prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job
contracting as well as differentiations within these
types of contracting and determine who among the
parties involved shall be considered the employer for
purposes of this Code, to prevent any violation or
circumvention of any provision of this
Code.1avvphi1
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
person 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. (Emphasis supplied.)
Thus, the Secretary of Labor issued Department
Order No. 18-2002, Series of 2002, implementing
Art. 106 as follows:
Section 5. Prohibition against labor-only
contracting.Labor-only contracting is hereby
declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies
or places workers to perform a job, work or service
for a principal, and any of the following elements are
present:
(i) The contractor or subcontractor does not have
substantial capital or investment which relates to the
job, work or service to be performed and the
employees recruited, supplied or placed by such
contractor or subcontractor are performing activities
which are directly related to the main business of the
principal; or
(ii) the contractor does not exercise the right to
control over the performance of the work of the
contractual employee.
The foregoing provisions shall be without prejudice
to the application of Article 248 (C) of the Labor
Code, as amended.
"Substantial capital or investment" refers to capital
stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements,
machineries and work premises, actually and directly
used by the contractor or subcontractor in the
performance or completion of the job, work or
service contracted out.
The "right to control" shall refer to the right reserved
to the person for whom the services of the
contractual workers are performed, to determine not
only the end to be achieved, but also the manner and
means to be used in reaching that end.
On the other hand, Sec. 7 of the department order
contains the consequence of such labor-only
contracting:
Section 7. Existence of an employer-employee
relationship.The contractor or subcontractor shall
be considered the employer of the contractual
employee for purposes of enforcing the provisions of
the Labor Code and other social legislation. The
principal, however, shall be solidarily liable with the
contractor in the event of any violation of any
provision of the Labor Code, including the failure to
pay wages.
The principal shall be deemed the employer of the
contractual employee in any of the following cases as
declared by a competent authority:
(a) where there is labor-only contracting; or
(b) where the contracting arrangement falls within
the prohibitions provided in Section 6 (Prohibitions)
hereof. (Emphasis supplied.)
Evidently, respondent having the power of control
over petitioners must be considered as petitioners
employerfrom the termination of the Agreement
onwardsas this was the only time that any evidence
of control was exhibited by respondent over
petitioners and in light of our ruling in Abella.12 Thus,
as aptly declared by the NLRC, petitioners were
entitled to the rights and benefits of employees of
respondent, including due process requirements in
the termination of their services.
Both the Labor Arbiter and NLRC found that
respondent did not observe such due process
requirements. Having failed to do so, respondent is
guilty of illegal dismissal.
WHEREFORE, we SET ASIDE the CAs May 6,
2008 Decision and November 4, 2008 Resolution in
CA-G.R. SP No. 97398. We hereby REINSTATE the
Labor Arbiters Decision dated February 13, 2004
and the NLRCs Resolutions dated October 28, 2005
and August 28, 2006.
No costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice
WE CONCUR:
G.R. No. 184885 March 7, 2012
ERNESTO G. YMBONG, Petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION,
VENERANDA SY AND DANTE
LUZON, Respondents.
DECISION
VILLARAMA, JR., J.:
Before us is a Rule 45 Petition seeking to set aside
the August 22, 2007 Decision1 and September 18,
2008 Resolution2 of the Court of Appeals (CA) in
CA-G.R. SP No. 86206 declaring petitioner to have
resigned from work and not illegally dismissed.
The antecedent facts follow:
Petitioner Ernesto G. Ymbong started working for
ABS-CBN Broadcasting Corporation (ABS-CBN) in
1993 at its regional station in Cebu as a television
talent, co-anchoring Hoy Gising and TV Patrol Cebu.
His stint in ABS-CBN later extended to radio when
ABS-CBN Cebu launched its AM station DYAB in
1995 where he worked as drama and voice talent,
spinner, scriptwriter and public affairs program
anchor.
Like Ymbong, Leandro Patalinghug also worked for
ABS-CBN Cebu. Starting 1995, he worked as talent,
director and scriptwriter for various radio programs
aired over DYAB.
On January 1, 1996, the ABS-CBN Head Office in
Manila issued Policy No. HR-ER-016 or the "Policy
on Employees Seeking Public Office." The pertinent
portions read:
1. Any employee who intends to run for any public
office position, must file his/her letter of resignation,
at least thirty (30) days prior to the official filing of
the certificate of candidacy either for national or
local election.
xxxx
3. Further, any employee who intends to join a
political group/party or even with no political
affiliation but who intends to openly and aggressively
campaign for a candidate or group of candidates (e.g.
publicly speaking/endorsing candidate, recruiting
campaign workers, etc.) must file a request for leave
of absence subject to managements approval. For
this particular reason, the employee should file the
leave request at least thirty (30) days prior to the start
of the planned leave period.
x x x x3 [Emphasis and underscoring supplied.]
Because of the impending May 1998 elections and
based on his immediate recollection of the policy at
that time, Dante Luzon, Assistant Station Manager of
DYAB issued the following memorandum:
TO : ALL CONCERNED
FROM : DANTE LUZON
DATE : MARCH 25, 1998
SUBJECT : AS STATED
Please be informed that per company
policy, any employee/talent who
wants to run for any position in the
coming election will have to file a
leave of absence the moment he/she
files his/her certificate of candidacy.
The services rendered by the
concerned employee/talent to this
company will then be temporarily
suspended for the entire
campaign/election period.
For strict compliance.4 [Emphasis and
underscoring supplied.]
Luzon, however, admitted that upon
double-checking of the exact text of
the policy and subsequent
confirmation with the ABS-CBN Head
Office, he saw that the policy actually
required suspension for those who
intend to campaign for a political
party or candidate and resignation for
those who will actually run in the
elections.5
After the issuance of the March 25,
1998 Memorandum, Ymbong got in
touch with Luzon. Luzon claims that
Ymbong approached him and told him
that he would leave radio for a couple
of months because he will campaign
for the administration ticket. It was
only after the elections that they found
out that Ymbong actually ran for
public office himself at the eleventh
hour. Ymbong, on the other hand,
claims that in accordance with the
March 25, 1998 Memorandum, he
informed Luzon through a letter that
he would take a few months leave of
absence from March 8, 1998 to May
18, 1998 since he was running for
councilor of Lapu-Lapu City.
As regards Patalinghug, Patalinghug
approached Luzon and advised him
that he will run as councilor for Naga,
Cebu. According to Luzon, he
clarified to Patalinghug that he will be
considered resigned and not just on
leave once he files a certificate of
candidacy. Thus, Patalinghug wrote
Luzon the following letter on April
13, 1998:
Dear Mr. Luzon,
Im submitting to you my letter of
resignation as your Drama Production
Chief and Talent due to your
companys policy that every person
connected to ABS-CBN that should
seek an elected position in the
government will be forced to resigned
(sic) from his position. So herewith
Im submitting my resignation with a
hard heart. But Im still hoping to be
connected again with your prestigious
company after the election[s] should
you feel that Im still an asset to your
drama production department. Im
looking forward to that day and Im
very happy and proud that I have
served for two and a half years the
most stable and the most prestigious
Radio and TV Network in the
Philippines.
As a friend[,] wish me luck and Pray
for me. Thank you.
Very Truly Yours,
(Sgd.)
6
Leandro "Boy" Patalinghug
Unfortunately, both Ymbong and Patalinghug lost in
the May 1998 elections.
Later, Ymbong and Patalinghug both tried to come
back to ABS-CBN Cebu. According to Luzon, he
informed them that they cannot work there anymore
because of company policy. This was stressed even in
subsequent meetings and they were told that the
company was not allowing any exceptions. ABS-
CBN, however, agreed out of pure liberality to give
them a chance to wind up their participation in the
radio drama, Nagbabagang Langit, since it was rating
well and to avoid an abrupt ending. The agreed
winding-up, however, dragged on for so long
prompting Luzon to issue to Ymbong the following
memorandum dated September 14, 1998:
TO : NESTOR YMBONG
FROM : DANTE LUZON
SUBJECT : AS STATED
DATE : 14 SEPT. 1998
Please be reminded that your services
as drama talent had already been
automatically terminated when you
ran for a local government position
last election.
The Management however gave you
more than enough time to end your
drama participation and other
involvement with the drama
department.
It has been decided therefore that all
your drama participation shall be
terminated effective immediately.
However, your involvement as drama
spinner/narrator of the drama
"NAGBA[BA]GANG LANGIT"
continues until its writer/director Mr.
Leandro Patalinghug wraps it up one
week upon receipt of a separate memo
issued to him.7
Ymbong in contrast contended that after the
expiration of his leave of absence, he reported back
to work as a regular talent and in fact continued to
receive his salary. On September 14, 1998, he
received a memorandum stating that his services are
being terminated immediately, much to his surprise.
Thus, he filed an illegal dismissal complaint8 against
ABS-CBN, Luzon and DYAB Station Manager
Veneranda Sy. He argued that the ground cited by
ABS-CBN for his dismissal was not among those
enumerated in the Labor Code, as amended. And
even granting without admitting the existence of the
company policy supposed to have been violated,
Ymbong averred that it was necessary that the
company policy meet certain requirements before
willful disobedience of the policy may constitute a
just cause for termination. Ymbong further argued
that the company policy violates his constitutional
right to suffrage.9
Patalinghug likewise filed an illegal dismissal
complaint10 against ABS-CBN.
ABS-CBN prayed for the dismissal of the complaints
arguing that there is no employer-employee
relationship between the company and Ymbong and
Patalinghug. ABS-CBN contended that they are not
employees but talents as evidenced by their talent
contracts. However, notwithstanding their status,
ABS-CBN has a standing policy on persons
connected with the company whenever they will run
for public office.11
On July 14, 1999, the Labor Arbiter rendered a
decision12 finding the dismissal of Ymbong and
Patalinghug illegal, thus:
WHEREFORE, in the light of the foregoing,
judgment is rendered finding the dismissal of the two
complainants illegal. An order is issued directing
respondent ABS[-]CBN to immediately reinstate
complainants to their former positions without loss of
seniority rights plus the payment of backwages in the
amount of P200,000.00 to each complainant.
All other claims are dismissed.
SO ORDERED.13
The Labor Arbiter found that there exists an
employer-employee relationship between ABS-CBN
and Ymbong and Patalinghug considering the
stipulations in their appointment letters/talent
contracts. The Labor Arbiter noted particularly that
the appointment letters/talent contracts imposed
conditions in the performance of their work,
specifically on attendance and punctuality, which
effectively placed them under the control of ABS-
CBN. The Labor Arbiter likewise ruled that although
the subject company policy is reasonable and not
contrary to law, the same was not made known to
Ymbong and Patalinghug and in fact was superseded
by another one embodied in the March 25, 1998
Memorandum issued by Luzon. Thus, there is no
valid or authorized cause in terminating Ymbong and
Patalinghug from their employment.
In its memorandum of appeal14 before the National
Labor Relations Commission (NLRC), ABS-CBN
contended that the Labor Arbiter has no jurisdiction
over the case because there is no employer-employee
relationship between the company and Ymbong and
Patalinghug, and that Sy and Luzon mistakenly
assumed that Ymbong and Patalinghug could just file
a leave of absence since they are only talents and not
employees. In its Supplemental Appeal,15 ABS-CBN
insisted that Ymbong and Patalinghug were engaged
as radio talents for DYAB dramas and personality
programs and their contract is one between a self-
employed contractor and the hiring party which is a
standard practice in the broadcasting industry. It also
argued that the Labor Arbiter should not have made
much of the provisions on Ymbongs attendance and
punctuality since such requirement is a dictate of the
programming of the station, the slating of shows at
regular time slots, and availability of recording
studios not an attempt to exercise control over the
manner of his performance of the contracted anchor
work within his scheduled spot on air. As for the
pronouncement that the company policy has already
been superseded by the March 25, 1998
Memorandum issued by Luzon, the latter already
clarified that it was the very policy he sought to
enforce. This matter was relayed by Luzon to
Patalinghug when the latter disclosed his plans to join
the 1998 elections while Ymbong only informed the
company that he was campaigning for the
administration ticket and the company had no inkling
that he will actually run until the issue was already
moot and academic. ABS-CBN further contended
that Ymbong and Patalinghugs "reinstatement" is
legally and physically impossible as the talent
positions they vacated no longer exist. Neither is
there basis for the award of back wages since they
were not earning a monthly salary but paid talent fees
on a per production/per script basis. Attached to the
Supplemental Appeal is a Sworn Statement 16 of ABS-CBN moved to reconsider the NLRC decision,
Luzon. but the same was denied in a Resolution dated June
21, 2004.19
On March 8, 2004, the NLRC rendered a
decision17 modifying the labor arbiters decision. Imputing grave abuse of discretion on the NLRC,
The fallo of the NLRC decision reads: ABS-CBN filed a petition for certiorari20 before the
CA alleging that:
WHEREFORE, premises considered, the decision of
Labor Arbiter Nicasio C. Aninon dated 14 July 1999 I.
is MODIFIED, to wit:
RESPONDENT NLRC
Ordering respondent ABS-CBN to reinstate COMMITTED A GRAVE ABUSE OF
complainant Ernesto G. Ymbong and to pay his full DISCRETION AND SERIOUSLY
backwages computed from 15 September 1998 up to MISAPPRECIATED THE FACTS IN
the time of his actual reinstatement. NOT HOLDING THAT
RESPONDENT YMBONG IS A
SO ORDERED.18 FREELANCE RADIO TALENT
AND MEDIA PRACTITIONER
The NLRC dismissed ABS-CBNs Supplemental NOT A "REGULAR EMPLOYEE"
Appeal for being filed out of time. The NLRC ruled OF PETITIONERTO WHOM
that to entertain the same would be to allow the CERTAIN PRODUCTION WORK
parties to submit their appeal on piecemeal basis, HAD BEEN OUTSOURCED BY
which is contrary to the agencys duty to facilitate ABS-CBN CEBU UNDER AN
speedy disposition of cases. The NLRC also held that INDEPENDENT
ABS-CBN wielded the power of control over CONTRACTORSHIP SITUATION,
Ymbong and Patalinghug, thereby proving the THUS RENDERING THE LABOR
existence of an employer-employee relationship COURTS WITHOUT
between them. JURISDICTION OVER THE CASE
IN THE ABSENCE OF
As to the issue of whether they were illegally EMPLOYMENT RELATIONS
dismissed, the NLRC treated their cases differently. BETWEEN THE PARTIES.
In the case of Patalinghug, it found that he
voluntarily resigned from employment on April 21, II.
1998 when he submitted his resignation letter. The
NLRC noted that although the tenor of the RESPONDENT NLRC
resignation letter is somewhat involuntary, he knew COMMITTED A GRAVE ABUSE OF
that it is the policy of the company that every person DISCRETION IN DECLARING
connected therewith should resign from his RESPONDENT YMBONG TO BE A
employment if he seeks an elected position in the REGULAR EMPLOYEE OF
government. As to Ymbong, however, the NLRC PETITIONER AS TO CREATE A
ruled otherwise. It ruled that the March 25, 1998 CONTRACTUAL EMPLOYMENT
Memorandum merely states that an employee who RELATION BETWEEN THEM
seeks any elected position in the government will WHEN NONE EXISTS OR HAD
only merit the temporary suspension of his services. BEEN AGREED UPON OR
It held that under the principle of social justice, the OTHERWISE INTENDED BY THE
March 25, 1998 Memorandum shall prevail and PARTIES.
ABS-CBN is estopped from enforcing the September
14, 1998 memorandum issued to Ymbong stating that III.
his services had been automatically terminated when
he ran for an elective position. EVEN ASSUMING THE ALLEGED
EMPLOYMENT RELATION TO
EXIST FOR THE SAKE OF
ARGUMENT, RESPONDENT NLRC
IN ANY CASE COMMITTED A
GRAVE ABUSE OF DISCRETION
IN NOT SIMILARLY UPHOLDING
AND APPLYING COMPANY
POLICY NO. HR-ER-016 IN THE
CASE OF RESPONDENT YMBONG
AND DEEMING HIM AS
RESIGNED AND DISQUALIFIED
FROM FURTHER ENGAGEMENT
AS A RADIO TALENT IN ABS-CBN
CEBU AS A CONSEQUENCE OF
HIS CANDIDACY IN THE 1998
ELECTIONS, AS RESPONDENT
NLRC HAD DONE IN THE CASE
OF PATALINGHUG.
IV.
RESPONDENT NLRC
COMMITTED A GRAVE ABUSE OF
DISCRETION AND DENIED DUE
PROCESS TO PETITIONER IN
REFUSING TO CONSIDER ITS
SUPPLEMENTAL APPEAL, DATED
OCTOBER 18, 1999, "FOR BEING
FILED OUT OF TIME"
CONSIDERING THAT THE FILING
OF SUCH A PLEADING IS NOT IN
ANY CASE PROSCRIBED AND
RESPONDENT NLRC IS
AUTHORIZED TO CONSIDER
ADDITIONAL EVIDENCE ON
APPEAL; MOREOVER,
TECHNICAL RULES OF
EVIDENCE DO NOT APPLY IN
LABOR CASES.
V.
RESPONDENT NLRC
COMMITTED A GRAVE ABUSE OF
DISCRETION IN GRANTING THE
RELIEF OF REINSTATEMENT
AND BACKWAGES TO
RESPONDENT YMBONG SINCE
HE NEVER OCCUPIED ANY
"REGULAR" POSITION IN
PETITIONER FROM WHICH HE
COULD HAVE BEEN "ILLEGALLY
DISMISSED," NOR ARE ANY OF
THE RADIO PRODUCTIONS IN
WHICH HE HAD DONE TALENT
WORK FOR PETITIONER STILL
EXISTING. INDEED, THERE IS NO
BASIS WHATSOEVER FOR THE
AWARD OF BACKWAGES TO
RESPONDENT YMBONG IN THE
AMOUNT OF P200,000.00
CONSIDERING THAT, AS SHOWN
BY THE UNCONTROVERTED
EVIDENCE, HE WAS NOT
EARNING A MONTHLY "SALARY"
OF "P20,000.00," AS HE FALSELY
CLAIMS, BUT WAS PAID TALENT
FEES ON A "PER
PRODUCTION/PER SCRIPT"
BASIS WHICH AVERAGED LESS
THAN P10,000.00 PER MONTH IN
TALENT FEES ALL IN ALL.21
On August 22, 2007, the CA rendered the assailed
decision reversing and setting aside the March 8,
2004 Decision and June 21, 2004 Resolution of the
NLRC. The CA declared Ymbong resigned from
employment and not to have been illegally dismissed.
The award of full back wages in his favor was
deleted accordingly.
The CA ruled that ABS-CBN is estopped from
claiming that Ymbong was not its employee after
applying the provisions of Policy No. HR-ER-016 to
him. It noted that said policy is entitled "Policy on
Employees Seeking Public Office" and the guidelines
contained therein specifically pertain to employees
and did not even mention talents or independent
contractors. It held that it is a complete turnaround on
ABS-CBNs part to later argue that Ymbong is only a
radio talent or independent contractor and not its
employee. By applying the subject company policy
on Ymbong, ABS-CBN had explicitly recognized
him to be an employee and not merely an
independent contractor.
The CA likewise held that the subject company
policy is the controlling guideline and therefore,
Ymbong should be considered resigned from ABS-
CBN. While Luzon has policy-making power as
assistant radio manager, he had no authority to issue
a memorandum that had the effect of repealing or
superseding a subsisting policy. Contrary to the
findings of the Labor Arbiter, the subject company
policy was effective at that time and continues to be
valid and subsisting up to the present. The CA cited
Patalinghugs resignation letter to buttress this
conclusion, noting that Patalinghug openly admitted
in his letter that his resignation was in line with the
said company policy. Since ABS-CBN applied Policy
No. HR-ER-016 to Patalinghug, there is no reason
not to apply the same regulation to Ymbong who was
on a similar situation as the former. Thus, the CA
found that the NLRC overstepped its area of
discretion to a point of grave abuse in declaring
Ymbong to have been illegally terminated. The CA
concluded that there is no illegal dismissal to speak
of in the instant case as Ymbong is considered
resigned when he ran for an elective post pursuant to
the subject company policy.
Hence, this petition.
Petitioner argues that the CA gravely erred: (1) in
upholding Policy No. HR-ER-016; (2) in upholding
the validity of the termination of Ymbongs services;
and (3) when it reversed the decision of the NLRC
4th Division of Cebu City which affirmed the
decision of Labor Arbiter Nicasio C. Anion.22
Ymbong argues that the subject company policy is a
clear interference and a gross violation of an
employees right to suffrage. He is surprised why it
was easy for the CA to rule that Luzons
memorandum ran counter to an existing policy while
on the other end, it did not see that it was in conflict
with the constitutional right to suffrage. He also
points out that the issuance of the March 25, 1998
Memorandum was precisely an exercise of the
management power to which an employee like him
must respect; otherwise, he will be sanctioned for
disobedience or worse, even terminated. He was not
in a position to know which between the two
issuances was correct and as far as he is concerned,
the March 25, 1998 Memorandum superseded the
subject company policy. Moreover, ABS-CBN
cannot disown acts of its officers most especially
since it prejudiced his property rights.23
As to the validity of his dismissal, Ymbong contends
that the ground relied upon by ABS-CBN is not
among the just and authorized causes provided in
the Labor Code, as amended. And even assuming the
subject company policy passes the test of validity
under the pretext of the right of the management to
discipline and terminate its employees, the exercise
of such right is not without bounds. Ymbong avers
that his automatic termination was a blatant disregard
of his right to due process. He was never asked to
explain why he did not tender his resignation before
he ran for public office as mandated by the subject
company policy.24
Ymbong likewise asseverates that both the Labor
Arbiter and the NLRC were consistent in their
findings that he was illegally dismissed. It is settled
that factual findings of labor administrative officials,
if supported by substantial evidence, are accorded not
only great respect but even finality.25
ABS-CBN, for its part, counters that the validity of
policies such as Policy No. HR-ER-016 has long
been upheld by this Court which has ruled that a
media company has a right to impose a policy
providing that employees who file their certificates of
candidacy in any election shall be considered
resigned.26 Moreover, case law has upheld the
validity of the exercise of management prerogatives
even if they appear to limit the rights of employees as
long as there is no showing that management
prerogatives were exercised in a manner contrary to
law.27 ABS-CBN contends that being the largest
media and entertainment company in the country, its
reputation stems not only from its ability to deliver
quality entertainment programs but also because of
neutrality and impartiality in delivering news.28
ABS-CBN further argues that nothing in the
company policy prohibits its employees from either
accepting a public appointive position or from
running for public office. Thus, it cannot be
considered as violative of the constitutional right of
suffrage. Moreover, the Supreme Court has
recognized the employers right to enforce
occupational qualifications as long as the employer is
able to show the existence of a reasonable business
necessity in imposing the questioned policy. Here,
Policy No. HR-ER-016 itself states that it was issued
"to protect the company from any public
misconceptions" and "[t]o preserve its objectivity,
neutrality and credibility." Thus, it cannot be denied
that it is reasonable under the circumstances.29
ABS-CBN likewise opposes Ymbongs claim that he
was terminated. ABS-CBN argues that on the
contrary, Ymbongs unilateral act of filing his
certificate of candidacy is an overt act tantamount to
voluntary resignation on his part by virtue of the
clear mandate found in Policy No. HR-ER-016.
Ymbong, however, failed to file his resignation and
in fact misled his superiors by making them believe
that he was going on leave to campaign for the
administration candidates but in fact, he actually ran
for councilor. He also claims to have fully apprised
Luzon through a letter of his intention to run for
public office, but he failed to adduce a copy of the
same.30
As to Ymbongs argument that the CA should not
have reversed the findings of the Labor Arbiter and
the NLRC, ABS-CBN asseverates that the CA is not
precluded from making its own findings most
especially if upon its own review of the case, it has
been revealed that the NLRC, in affirming the
findings of the Labor Arbiter, committed grave abuse
of discretion amounting to lack or excess of
jurisdiction when it failed to apply the subject
company policy in Ymbongs case when it readily
applied the same to Patalinghug.31
Essentially, the issues to be resolved in the instant
petition are: (1) whether Policy No. HR-ER-016 is
valid; (2) whether the March 25, 1998 Memorandum
issued by Luzon superseded Policy No. HR-ER-016;
and (3) whether Ymbong, by seeking an elective
post, is deemed to have resigned and not dismissed
by ABS-CBN.
Policy No. HR-ER-016 is valid.
This is not the first time that this Court has dealt with
a policy similar to Policy No. HR-ER-016. In the
case of Manila Broadcasting Company v.
NLRC,32 this Court ruled:
What is involved in this case is an unwritten
company policy considering any employee who files
a certificate of candidacy for any elective or local
office as resigned from the company. Although
11(b) of R.A. No. 6646 does not require mass media
commentators and announcers such as private
respondent to resign from their radio or TV stations
but only to go on leave for the duration of the
campaign period, we think that the company may
nevertheless validly require them to resign as a
matter of policy. In this case, the policy is justified on
the following grounds:
Working for the government and the company at the
same time is clearly disadvantageous and prejudicial
to the rights and interest not only of the company but
the public as well. In the event an employee wins in
an election, he cannot fully serve, as he is expected to
do, the interest of his employer. The employee has to
serve two (2) employers, obviously detrimental to the
interest of both the government and the private
employer.
In the event the employee loses in the election, the
impartiality and cold neutrality of an employee as
broadcast personality is suspect, thus readily eroding
and adversely affecting the confidence and trust of
the listening public to employers station.33
ABS-CBN, like Manila Broadcasting Company, also
had a valid justification for Policy No. HR-ER-016.
Its rationale is embodied in the policy itself, to wit:
Rationale:
ABS-CBN BROADCASTING CORPORATION
strongly believes that it is to the best interest of the
company to continuously remain apolitical. While it
encourages and supports its employees to have
greater political awareness and for them to exercise
their right to suffrage, the company, however, prefers
to remain politically independent and unattached to
any political individual or entity.
Therefore, employees who [intend] to run for public
office or accept political appointment should resign
from their positions, in order to protect the company
from any public misconceptions. To preserve its
objectivity, neutrality and credibility, the company
reiterates the following policy guidelines for strict
implementation.
x x x x34 [Emphasis supplied.]
We have consistently held that so long as a
companys management prerogatives are exercised in
good faith for the advancement of the employers
interest and not for the purpose of defeating or
circumventing the rights of the employees under
special laws or under valid agreements, this Court
will uphold them.35 In the instant case, ABS-CBN
validly justified the implementation of Policy No.
HR-ER-016. It is well within its rights to ensure that
it maintains its objectivity and credibility and freeing
itself from any appearance of impartiality so that the
confidence of the viewing and listening public in it
will not be in any way eroded. Even as the law is
solicitous of the welfare of the employees, it must
also protect the right of an employer to exercise what
are clearly management prerogatives. The free will of
management to conduct its own business affairs to
achieve its purpose cannot be denied.361wphi1
It is worth noting that such exercise of management
prerogative has earned a stamp of approval from no
less than our Congress itself when on February 12,
2001, it enacted Republic Act No. 9006, otherwise
known as the "Fair Election Act." Section 6.6 thereof
reads:
6.6. Any mass media columnist, commentator,
announcer, reporter, on-air correspondent or
personality who is a candidate for any elective
public office or is a campaign volunteer for or
employed or retained in any capacity by any
candidate or political party shall be deemed
resigned, if so required by their employer, or shall
take a leave of absence from his/her work as such
during the campaign period: Provided, That any
media practitioner who is an official of a political
party or a member of the campaign staff of a
candidate or political party shall not use his/her time
or space to favor any candidate or political party.
[Emphasis and underscoring supplied.]
Policy No. HR-ER-016 was not superseded by the
March 25, 1998 Memorandum
The CA correctly ruled that though Luzon, as
Assistant Station Manager for Radio of ABS-CBN,
has policy-making powers in relation to his principal
task of administering the networks radio station in
the Cebu region, the exercise of such power should
be in accord with the general rules and regulations
imposed by the ABS-CBN Head Office to its
employees. Clearly, the March 25, 1998
Memorandum issued by Luzon which only requires
employees to go on leave if they intend to run for any
elective position is in absolute contradiction with
Policy No. HR-ER-016 issued by the ABS-CBN
Head Office in Manila which requires the
resignation, not only the filing of a leave of absence,
of any employee who intends to run for public office.
Having been issued beyond the scope of his
authority, the March 25, 1998 Memorandum is
therefore void and did not supersede Policy No. HR-
ER-016.
Also worth noting is that Luzon in his Sworn
Statement admitted the inaccuracy of his recollection
of the company policy when he issued the March 25,
1998 Memorandum and stated therein that upon
double-checking of the exact text of the policy
statement and subsequent confirmation with the
ABS-CBN Head Office in Manila, he learned that the
policy required resignation for those who will
actually run in elections because the company wanted
to maintain its independence. Since the officer who
himself issued the subject memorandum
acknowledged that it is not in harmony with the
Policy issued by the upper management, there is no
reason for it to be a source of right for Ymbong.
Ymbong is deemed resigned when he ran for
councilor.
As Policy No. HR-ER-016 is the subsisting company
policy and not Luzons March 25, 1998
Memorandum, Ymbong is deemed resigned when he
ran for councilor.
We find no merit in Ymbongs argument that "[his]
automatic termination x x x was a blatant [disregard]
of [his] right to due process" as he was "never asked
to explain why he did not tender his resignation
before he ran for public office as mandated by [the
subject company policy]."37 Ymbongs overt act of
running for councilor of Lapu-Lapu City is
tantamount to resignation on his part. He was
separated from ABS-CBN not because he was
dismissed but because he resigned. Since there was
no termination to speak of, the requirement of due
process in dismissal cases cannot be applied to
Ymbong. Thus, ABS-CBN is not duty-bound to ask
him to explain why he did not tender his resignation
before he ran for public office as mandated by the
subject company policy.
In addition, we do not subscribe to Ymbongs claim
that he was not in a position to know which of the
two issuances was correct. Ymbong most likely than
not, is fully aware that the subsisting policy is Policy
No. HR-ER-016 and not the March 25, 1998
Memorandum and it was for this reason that, as
stated by Luzon in his Sworn Statement, he only told
the latter that he will only campaign for the
administration ticket and not actually run for an
elective post. Ymbong claims he had fully apprised
Luzon by letter of his plan to run and even filed a
leave of absence but records are bereft of any proof
of said claim. Ymbong claims that the letter stating
his intention to go on leave to run in the election is
attached to his Position Paper as Annex "A," a
perusal of said pleading attached to his petition
before this Court, however, show that Annex "A" was
not his letter to Luzon but the September 14, 1998
Memorandum informing Ymbong that his services
had been automatically terminated when he ran for a
local government position.
Moreover, as pointed out by ABS-CBN, had Ymbong
been truthful to his superiors, they would have been
able to clarify to him the prevailing company policy
and inform him of the consequences of his decision
in case he decides to run, as Luzon did in
Patalinghugs case.
WHEREFORE, the petition for review on certiorari
is DENIED for lack of merit.
With costs against petitioner.
SO ORDERED.
G.R. No. 167648 January 28, 2008
TELEVISION AND PRODUCTION
EXPONENTS, INC. and/or ANTONIO P.
TUVIERA, petitioners,
vs.
ROBERTO C. SERVAA, respondent.
DECISION
TINGA, J.:
This petition for review under Rule 45 assails the 21
December 2004 Decision1 and 8 April 2005
Resolution2 of the Court of Appeals declaring
Roberto Servaa (respondent) a regular employee of
petitioner Television and Production Exponents, Inc.
(TAPE). The appellate court likewise ordered TAPE
to pay nominal damages for its failure to observe
statutory due process in the termination of
respondents employment for authorized cause.
TAPE is a domestic corporation engaged in the
production of television programs, such as the long-
running variety program, "Eat Bulaga!". Its president
is Antonio P. Tuviera (Tuviera). Respondent Roberto
C. Servaa had served as a security guard for TAPE
from March 1987 until he was terminated on 3 March
2000.
Respondent filed a complaint for illegal dismissal
and nonpayment of benefits against TAPE. He
alleged that he was first connected with Agro-
Commercial Security Agency but was later on
absorbed by TAPE as a regular company guard. He
was detailed at Broadway Centrum in Quezon City
where "Eat Bulaga!" regularly staged its productions.
On 2 March 2000, respondent received a
memorandum informing him of his impending
dismissal on account of TAPEs decision to contract
the services of a professional security agency. At the
time of his termination, respondent was receiving a
monthly salary of P6,000.00. He claimed that the
holiday pay, unpaid vacation and sick leave benefits
and other monetary considerations were withheld
from him. He further contended that his dismissal
was undertaken without due process and violative of
existing labor laws, aggravated by nonpayment of
separation pay.3
In a motion to dismiss which was treated as its
position paper, TAPE countered that the labor arbiter
had no jurisdiction over the case in the absence of an
employer-employee relationship between the parties.
TAPE made the following assertions: (1) that
respondent was initially employed as a security guard
for Radio Philippines Network (RPN-9); (2) that he
was tasked to assist TAPE during its live productions,
specifically, to control the crowd; (3) that when RPN-
9 severed its relationship with the security agency,
TAPE engaged respondents services, as part of the
support group and thus a talent, to provide security
service to production staff, stars and guests of "Eat
Bulaga!" as well as to control the audience during the
one-and-a-half hour noontime program; (4) that it
was agreed that complainant would render his
services until such time that respondent company
shall have engaged the services of a professional
security agency; (5) that in 1995, when his contract
with RPN-9 expired, respondent was retained as a
talent and a member of the support group, until such
time that TAPE shall have engaged the services of a
professional security agency; (6) that respondent was
not prevented from seeking other employment,
whether or not related to security services, before or
after attending to his "Eat Bulaga!" functions; (7) that
sometime in late 1999, TAPE started negotiations for
the engagement of a professional security agency, the
Sun Shield Security Agency; and (8) that on 2 March
2000, TAPE issued memoranda to all talents, whose
functions would be rendered redundant by the
engagement of the security agency, informing them
of the managements decision to terminate their
services.4
TAPE averred that respondent was an independent
contractor falling under the talent group category and
was working under a special arrangement which is
recognized in the industry.5
Respondent for his part insisted that he was a regular
employee having been engaged to perform an
activity that is necessary and desirable to TAPEs
business for thirteen (13) years.6
On 29 June 2001, Labor Arbiter Daisy G. Cauton-
Barcelona declared respondent to be a regular
employee of TAPE. The Labor Arbiter relied on the
nature of the work of respondent, which is securing
and maintaining order in the studio, as necessary and
desirable in the usual business activity of TAPE. The
Labor Arbiter also ruled that the termination was
valid on the ground of redundancy, and ordered the
payment of respondents separation pay equivalent to
one (1)-month pay for every year of service. The
dispositive portion of the decision reads:
WHEREFORE, complainants position is hereby
declared redundant. Accordingly, respondents are
hereby ordered to pay complainant his separation pay
computed at the rate of one (1) month pay for every
year of service or in the total amount of P78,000.00.7
On appeal, the National Labor Relations Commission
(NLRC) in a Decision8 dated 22 April 2002 reversed
the Labor Arbiter and considered respondent a mere
program employee, thus:
We have scoured the records of this case and we find
nothing to support the Labor Arbiters conclusion
that complainant was a regular employee.
xxxx
The primary standard to determine regularity of
employment is the reasonable connection between
the particular activity performed by the employee in
relation to the usual business or trade of the
employer. This connection can be determined by
considering the nature and work performed and its
relation to the scheme of the particular business or
trade in its entirety. x x x Respondent company is
engaged in the business of production of television
shows. The records of this case also show that
complainant was employed by respondent company
beginning 1995 after respondent company transferred
from RPN-9 to GMA-7, a fact which complainant
does not dispute. His last salary was P5,444.44 per
month. In such industry, security services may not be
deemed necessary and desirable in the usual business
of the employer. Even without the performance of
such services on a regular basis, respondents
companys business will not grind to a halt.
xxxx
Complainant was indubitably a program employee of
respondent company. Unlike [a] regular employee, he
did not observe working hours x x x. He worked for
other companies, such as M-Zet TV Production, Inc.
at the same time that he was working for respondent
company. The foregoing indubitably shows that
complainant-appellee was a program employee.
Otherwise, he would have two (2) employers at the
same time.9
Respondent filed a motion for reconsideration but it
was denied in a Resolution10 dated 28 June 2002.
Respondent filed a petition for certiorari with the
Court of Appeals contending that the NLRC acted
with grave abuse of discretion amounting to lack or
excess of jurisdiction when it reversed the decision of
the Labor Arbiter. Respondent asserted that he was a
regular employee considering the nature and length
of service rendered.11
Reversing the decision of the NLRC, the Court of
Appeals found respondent to be a regular employee.
We quote the dispositive portion of the decision:
IN LIGHT OF THE FOREGOING, the petition is
hereby GRANTED. The Decision dated 22 April
2002 of the public respondent NLRC reversing the
Decision of the Labor Arbiter and its Resolution
dated 28 June 2002 denying petitioners motion for
reconsideration are REVERSED and SET ASIDE.
The Decision dated 29 June 2001 of the Labor
Arbiter is REINSTATED with MODIFICATION in
that private respondents are ordered to pay jointly
and severally petitioner the amount of P10,000.00 as
nominal damages for non-compliance with the
statutory due process.
SO ORDERED.12
Finding TAPEs motion for reconsideration without
merit, the Court of Appeals issued a
Resolution13 dated 8 April 2005 denying said motion.
TAPE filed the instant petition for review raising
substantially the same grounds as those in its petition
for certiorari before the Court of Appeals. These
matters may be summed up into one main issue:
whether an employer-employee relationship exists
between TAPE and respondent.
On 27 September 2006, the Court gave due course to
the petition and considered the case submitted for
decision.14
At the outset, it bears emphasis that the existence of
employer-employee relationship is ultimately a
question of fact. Generally, only questions of law are
entertained in appeals by certiorari to the Supreme
Court. This rule, however, is not absolute. Among the
several recognized exceptions is when the findings of
the Court of Appeals and Labor Arbiters, on one
hand, and that of the NLRC, on the other, are
conflicting,15 as obtaining in the case at bar.
Jurisprudence is abound with cases that recite the
factors to be considered in determining the existence
of employer-employee relationship, namely: (a) the
selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and
(d) the employer's power to control the employee
with respect to the means and method by which the
work is to be accomplished.16 The most important
factor involves the control test. Under the control
test, there is an employer-employee relationship
when the person for whom the services are
performed reserves the right to control not only the
end achieved but also the manner and means used to
achieve that end.17
In concluding that respondent was an employee of
TAPE, the Court of Appeals applied the "four-fold
test" in this wise:
First. The selection and hiring of petitioner was done
by private respondents. In fact, private respondents
themselves admitted having engaged the services of
petitioner only in 1995 after TAPE severed its
relations with RPN Channel 9.
By informing petitioner through the Memorandum
dated 2 March 2000, that his services will be
terminated as soon as the services of the newly hired
security agency begins, private respondents in effect
acknowledged petitioner to be their employee. For
the right to hire and fire is another important element
of the employer-employee relationship.
Second. Payment of wages is one of the four factors
to be considered in determining the existence of
employer-employee relation. . . Payment as admitted
by private respondents was given by them on a
monthly basis at a rate of P5,444.44.
Third. Of the four elements of the employer-
employee relationship, the "control test" is the most
important. x x x
The bundy cards representing the time petitioner had
reported for work are evident proofs of private
respondents control over petitioner more particularly
with the time he is required to report for work during
the noontime program of "Eat Bulaga!" If it were not
so, petitioner would be free to report for work
anytime even not during the noontime program of
"Eat Bulaga!" from 11:30 a.m. to 1:00 p.m. and still
gets his compensation for being a "talent." Precisely,
he is being paid for being the security of "Eat
Bulaga!" during the above-mentioned period. The
daily time cards of petitioner are not just for mere
record purposes as claimed by private respondents. It
is a form of control by the management of private
respondent TAPE.18
TAPE asseverates that the Court of Appeals erred in
applying the "four-fold test" in determining the
existence of employer-employee relationship
between it and respondent. With respect to the
elements of selection, wages and dismissal, TAPE
proffers the following arguments: that it never hired
respondent, instead it was the latter who offered his
services as a talent to TAPE; that the Memorandum
dated 2 March 2000 served on respondent was for the
discontinuance of the contract for security services
and not a termination letter; and that the talent fees
given to respondent were the pre-agreed
consideration for the services rendered and should
not be construed as wages. Anent the element of
control, TAPE insists that it had no control over
respondent in that he was free to employ means and
methods by which he is to control and manage the
live audiences, as well as the safety of TAPEs stars
and guests.19
The position of TAPE is untenable. Respondent was
first connected with Agro-Commercial Security
Agency, which assigned him to assist TAPE in its
live productions. When the security agencys contract
with RPN-9 expired in 1995, respondent was
absorbed by TAPE or, in the latters language,
"retained as talent."20 Clearly, respondent was hired
by TAPE. Respondent presented his identification
card21 to prove that he is indeed an employee of
TAPE. It has been in held that in a business
establishment, an identification card is usually
provided not just as a security measure but to mainly
identify the holder thereof as a bona fide employee of
the firm who issues it.22
Respondent claims to have been receiving P5,444.44
as his monthly salary while TAPE prefers to
designate such amount as talent fees. Wages, as
defined in the Labor Code, are 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 service rendered or to
be rendered. It is beyond dispute that respondent
received a fixed amount as monthly compensation
for the services he rendered to TAPE.
The Memorandum informing respondent of the
discontinuance of his service proves that TAPE had
the power to dismiss respondent.
Control is manifested in the bundy cards submitted
by respondent in evidence. He was required to report
daily and observe definite work hours. To negate the
element of control, TAPE presented a certification
from M-Zet Productions to prove that respondent
also worked as a studio security guard for said
company. Notably, the said certificate categorically
stated that respondent reported for work on
Thursdays from 1992 to 1995. It can be recalled that
during said period, respondent was still working for
RPN-9. As admitted by TAPE, it absorbed
respondent in late 1995.23
TAPE further denies exercising control over
respondent and maintains that the latter is an
independent contractor.24 Aside from possessing
substantial capital or investment, a legitimate job
contractor or subcontractor 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, and 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.25 TAPE failed to establish that respondent is
an independent contractor. As found by the Court of
Appeals:
We find the annexes submitted by the private
respondents insufficient to prove that herein
petitioner is indeed an independent contractor. None
of the above conditions exist in the case at bar.
Private respondents failed to show that petitioner has
substantial capital or investment to be qualified as an
independent contractor. They likewise failed to
present a written contract which specifies the
performance of a specified piece of work, the nature
and extent of the work and the term and duration of
the relationship between herein petitioner and private
respondent TAPE.26
TAPE relies on Policy Instruction No. 40, issued by
the Department of Labor, in classifying respondent as
a program employee and equating him to be an
independent contractor.
Policy Instruction No. 40 defines program employees
as
x x x those whose skills, talents or services are
engaged by the station for a particular or specific
program or undertaking and who are not required to
observe normal working hours such that on some
days they work for less than eight (8) hours and on
other days beyond the normal work hours observed
by station employees and are allowed to enter into
employment contracts with other persons, stations,
advertising agencies or sponsoring companies. The
engagement of program employees, including those
hired by advertising or sponsoring companies, shall
be under a written contract specifying, among other
things, the nature of the work to be performed, rates
of pay and the programs in which they will work.
The contract shall be duly registered by the station
with the Broadcast Media Council within three (3)
days from its consummation.27
TAPE failed to adduce any evidence to prove that it
complied with the requirements laid down in the
policy instruction. It did not even present its contract
with respondent. Neither did it comply with the
contract-registration requirement.
Even granting arguendo that respondent is a program
employee, stills, classifying him as an independent
contractor is misplaced. The Court of Appeals had
this to say:
We cannot subscribe to private respondents
conflicting theories. The theory of private
respondents that petitioner is an independent
contractor runs counter to their very own allegation
that petitioner is a talent or a program employee. An
independent contractor is not an employee of the
employer, while a talent or program employee is an
employee. The only difference between a talent or
program employee and a regular employee is the fact
that a regular employee is entitled to all the benefits
that are being prayed for. This is the reason why
private respondents try to seek refuge under the
concept of an independent contractor theory. For if
petitioner were indeed an independent contractor,
private respondents will not be liable to pay the
benefits prayed for in petitioners complaint.28
More importantly, respondent had been continuously
under the employ of TAPE from 1995 until his
termination in March 2000, or for a span of 5 years.
Regardless of whether or not respondent had been
performing work that is necessary or desirable to the
usual business of TAPE, respondent is still
considered a regular employee under Article 280 of
the Labor Code which provides:
Art. 280. Regular and Casual Employment.The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the
employer, except where the employment has been
fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of engagement of the
employee or where the work or service to be
performed is seasonal in nature and employment is
for the duration of the season.
An employment shall be deemed to be casual if it is
not covered by the preceding paragraph. Provided,
that, any employee who has rendered at least one
year of service, whether such service is continuous or
broken, shall be considered a regular employee with
respect to the activity in which he is employed and
his employment shall continue while such activity
exists.
As a regular employee, respondent cannot be
terminated except for just cause or when authorized
by law.29 It is clear from the tenor of the 2 March
2000 Memorandum that respondents termination
was due to redundancy. Thus, the Court of Appeals
correctly disposed of this issue, viz:
Article 283 of the Labor Code provides that the
employer may also terminate the employment of any
employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the
establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this
Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of
termination due to the installation of labor saving
devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1)
month pay for every year or service, whichever is
higher.
xxxx
We uphold the finding of the Labor Arbiter that
"complainant [herein petitioner] was terminated upon
[the] managements option to professionalize the
security services in its operations. x x x" However,
[we] find that although petitioners services [sic] was
for an authorized cause, i.e., redundancy, private
respondents failed to prove that it complied with
service of written notice to the Department of Labor
and Employment at least one month prior to the
intended date of retrenchment. It bears stressing that
although notice was served upon petitioner through a
Memorandum dated 2 March 2000, the effectivity of
his dismissal is fifteen days from the start of the
agencys take over which was on 3 March 2000.
Petitioners services with private respondents were
severed less than the month requirement by the law.
Under prevailing jurisprudence the termination for an
authorized cause requires payment of separation pay.
Procedurally, if the dismissal is based on authorized
causes under Articles 283 and 284, the employer
must give the employee and the Deparment of Labor
and Employment written notice 30 days prior to the
effectivity of his separation. Where the dismissal is
for an authorized cause but due process was not
observed, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not
invalidate the dismissal. However, the employer
should be liable for non-compliance with procedural
requirements of due process.
xxxx
Under recent jurisprudence, the Supreme Court fixed
the amount of P30,000.00 as nominal damages. The
basis of the violation of petitioners right to statutory
due process by the private respondents warrants the
payment of indemnity in the form of nominal
damages. The amount of such damages is addressed
to the sound discretion of the court, taking into
account the relevant circumstances. We believe this
form of damages would serve to deter employer from
future violations of the statutory due process rights of
the employees. At the very least, it provides a
vindication or recognition of this fundamental right
granted to the latter under the Labor Code and its
Implementing Rules. Considering the circumstances
in the case at bench, we deem it proper to fix it
at P10,000.00.30
In sum, we find no reversible error committed by the
Court of Appeals in its assailed decision.
However, with respect to the liability of petitioner
Tuviera, president of TAPE, absent any showing that
he acted with malice or bad faith in terminating
respondent, he cannot be held solidarily liable with
TAPE.31 Thus, the Court of Appeals ruling on this
point has to be modified.
WHEREFORE, the assailed Decision and Resolution
of the Court of Appeals are AFFIRMED with
MODIFICATION in that only petitioner Television
and Production Exponents, Inc. is liable to pay
respondent the amount of P10,000.00 as nominal
damages for non-compliance with the statutory due
process and petitioner Antonio P. Tuviera is
accordingly absolved from liability.
SO ORDERED.
G.R. No. 87098 November 4, 1996
ENCYCLOPAEDIA BRITANNICA
(PHILIPPINES), INC., petitioner,
vs.
NATIONAL LABOR RELATIONS
COMMISSION, HON. LABOR ARBITER
TEODORICO L. ROGELIO and BENJAMIN
LIMJOCO, respondents.
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 petitioner's
products through some sales representatives. As
compensation, private respondent received
commissions from the products sold by his agents.
He was also allowed to use petitioner's name,
goodwill and logo. It was, however, agreed upon that
office expenses would be deducted from private
respondent's commissions. Petitioner would also be
informed about appointments, promotions, and
transfers of employees in private respondent's
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
petitioner's 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 12,000.00;
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 and maintained their own staff. Thus, there was a
The respondent NLRC gravely abused its discretion
in holding that "appellant's 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 respondent's 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 employee's
conduct. Of the above, control of employee's conduct
is commonly regarded as the most crucial and
determinative indicator of the presence or absence of
an employer-employee relationship. 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
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 petitioner's 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,
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
latter's 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
don't worry about accounting, isn't 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, isn't that so?
A. In certain cases I just hired people previously
employed by Encyclopaedia Britannica.
xxx xxx 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 . . . 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 complainant's 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.
G.R. No. 164652 June 8, 2007
THELMA DUMPIT-MURILLO, petitioner,
vs.
COURT OF APPEALS, ASSOCIATED
BROADCASTING COMPANY, JOSE JAVIER
AND EDWARD TAN, respondents.
DECISION
QUISUMBING, J.:
This petition seeks to reverse and set aside both the
Decision1 dated January 30, 2004 of the Court of
Appeals in CA-G.R. SP No. 63125 and its
Resolution2 dated June 23, 2004 denying the motion
for reconsideration. The Court of Appeals had
overturned the Resolution3 dated August 30, 2000 of
the National Labor Relations Commission (NLRC)
ruling that petitioner was illegally dismissed.
The facts of the case are as follows:
On October 2, 1995, under Talent Contract No.
NT95-1805,4 private respondent Associated
Broadcasting Company (ABC) hired petitioner
Thelma Dumpit-Murillo as a newscaster and co-
anchor for Balitang-Balita, an early evening news
program. The contract was for a period of three
months. It was renewed under Talent Contracts Nos.
NT95-1915, NT96-3002, NT98-4984 and NT99-
5649.5 In addition, petitioners services were engaged
for the program "Live on Five." On September 30,
1999, after four years of repeated renewals,
petitioners talent contract expired. Two weeks after
the expiration of the last contract, petitioner sent a
letter to Mr. Jose Javier, Vice President for News and
Public Affairs of ABC, informing the latter that she
was still interested in renewing her contract subject
to a salary increase. Thereafter, petitioner stopped
reporting for work. On November 5, 1999, she wrote
Mr. Javier another letter,6 which we quote verbatim:
xxxx
Dear Mr. Javier:
On October 20, 1999, I wrote you a letter in answer
to your query by way of a marginal note "what terms
and conditions" in response to my first letter dated
October 13, 1999. To date, or for more than fifteen
(15) days since then, I have not received any formal
written reply. xxx
In view hereof, should I not receive any formal
response from you until Monday, November 8, 1999,
I will deem it as a constructive dismissal of my
services.
xxxx
A month later, petitioner sent a demand letter 7 to
ABC, demanding: (a) reinstatement to her former
position; (b) payment of unpaid wages for services
rendered from September 1 to October 20, 1999 and
full backwages; (c) payment of 13th month pay,
vacation/sick/service incentive leaves and other
monetary benefits due to a regular employee starting
March 31, 1996. ABC replied that a check covering
petitioners talent fees for September 16 to October
20, 1999 had been processed and prepared, but that
the other claims of petitioner had no basis in fact or
in law.
On December 20, 1999, petitioner filed a
complaint8 against ABC, Mr. Javier and Mr. Edward
Tan, for illegal constructive dismissal, nonpayment of
salaries, overtime pay, premium pay, separation pay,
holiday pay, service incentive leave pay,
vacation/sick leaves and 13th month pay in NLRC-
NCR Case No. 30-12-00985-99. She likewise
demanded payment for moral, exemplary and actual
damages, as well as for attorneys fees.
The parties agreed to submit the case for resolution
after settlement failed during the mandatory
conference/conciliation. On March 29, 2000, the
Labor Arbiter dismissed the complaint.9
On appeal, the NLRC reversed the Labor Arbiter in a
Resolution dated August 30, 2000. The NLRC held
that an employer-employee relationship existed
between petitioner and ABC; that the subject talent
contract was void; that the petitioner was a regular
employee illegally dismissed; and that she was
entitled to reinstatement and backwages or separation
pay, aside from 13th month pay and service incentive
leave pay, moral and exemplary damages and
attorneys fees. It held as follows:
WHEREFORE, the Decision of the Arbiter dated 29
March 2000 is hereby REVERSED/SET ASIDE and
a NEW ONE promulgated:
1) declaring respondents to have illegally dismissed
complainant from her regular work therein and thus,
ordering them to reinstate her in her former position
without loss of seniority right[s] and other privileges
and to pay her full backwages, inclusive of
allowances and other benefits, including 13th month
pay based on her said latest rate of P28,000.00/mo.
from the date of her illegal dismissal on 21 October
1999 up to finality hereof, or at complainants option,
to pay her separation pay of one (1) month pay per
year of service based on said latest monthly rate,
reckoned from date of hire on 30 September 1995
until finality hereof;
2) to pay complainants accrued SILP [Service
Incentive Leave Pay] of 5 days pay per year and 13th
month pay for the years 1999, 1998 and 1997
of P19,236.00 and P84,000.00, respectively and her
accrued salary from 16 September 1999 to 20
October 1999 of P32,760.00 plus legal interest at
12% from date of judicial demand on 20 December
1999 until finality hereof;
3) to pay complainant moral damages
of P500,000.00, exemplary damages of P350,000.00
and 10% of the total of the adjudged monetary
awards as attorneys fees.
Other monetary claims of complainant are dismissed
for lack of merit.
SO ORDERED.10
After its motion for reconsideration was denied, ABC
elevated the case to the Court of Appeals in a petition
for certiorari under Rule 65. The petition was first
dismissed for failure to attach particular
documents,11 but was reinstated on grounds of the
higher interest of justice.12
Thereafter, the appellate court ruled that the NLRC
committed grave abuse of discretion, and reversed
the decision of the NLRC.13 The appellate court
reasoned that petitioner should not be allowed to
renege from the stipulations she had voluntarily and
knowingly executed by invoking the security of
tenure under the Labor Code. According to the
appellate court, petitioner was a fixed-term employee
and not a regular employee within the ambit of
Article 28014 of the Labor Code because her job, as
anticipated and agreed upon, was only for a specified
time.15
Aggrieved, petitioner now comes to this Court on a
petition for review, raising issues as follows:
I.
THIS HONORABLE COURT CAN REVIEW THE
FINDINGS OF THE HONORABLE COURT OF
APPEALS, THE DECISION OF WHICH IS NOT
IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME
COURT[;]
II.
THE PRO-FORMA TALENT CONTRACTS, AS
CORRECTLY FOUND BY THE NLRC FIRST
DIVISION, ARE "ANTI-REGULARIZATION
DEVICES" WHICH MUST BE STRUCK DOWN
FOR REASONS OF PUBLIC POLICY[;]
III.
BY REASON OF THE CONTINUOUS AND
SUCCESSIVE RENEWALS OF THE THREE-
MONTH TALENT CONTRACTS, AN
EMPLOYER-EMPLOYEE RELATIONSHIP WAS
CREATED AS PROVIDED FOR UNDER ARTICLE
280 OF THE LABOR CODE[;]
IV.
BY THE CONSTRUCTIVE DISMISSAL OF
HEREIN PETITIONER, AS A REGULAR
EMPLOYEE, THERE WAS A DENIAL OF
PETITIONERS RIGHT TO DUE PROCESS THUS
ENTITLING HER TO THE MONEY CLAIMS AS
STATED IN THE COMPLAINT[.]16
The issues for our disposition are: (1) whether or not
this Court can review the findings of the Court of
Appeals; and (2) whether or not under Rule 45 of the
Rules of Court the Court of Appeals committed a
reversible error in its Decision.
On the first issue, private respondents contend that
the issues raised in the instant petition are mainly
factual and that there is no showing that the said
issues have been resolved arbitrarily and without
basis. They add that the findings of the Court of
Appeals are supported by overwhelming wealth of
evidence on record as well as prevailing
jurisprudence on the matter.17
Petitioner however contends that this Court can
review the findings of the Court of Appeals, since the
appellate court erred in deciding a question of
substance in a way which is not in accord with law or
with applicable decisions of this Court.18
We agree with petitioner. Decisions, final orders or
resolutions of the Court of Appeals in any case
regardless of the nature of the action or proceeding
involved may be appealed to this Court through a
petition for review. This remedy is a continuation of
the appellate process over the original case,19 and
considering there is no congruence in the findings of
the NLRC and the Court of Appeals regarding the
status of employment of petitioner, an exception to
the general rule that this Court is bound by the
findings of facts of the appellate court, 20 we can
review such findings.
On the second issue, private respondents contend that
the Court of Appeals did not err when it upheld the
validity of the talent contracts voluntarily entered
into by petitioner. It further stated that prevailing
jurisprudence has recognized and sustained the
absence of employer-employee relationship between
a talent and the media entity which engaged the
talents services on a per talent contract basis, citing
the case of Sonza v. ABS-CBN Broadcasting
Corporation.21
Petitioner avers however that an employer-employee
relationship was created when the private
respondents started to merely renew the contracts
repeatedly fifteen times or for four consecutive
years.22
Again, we agree with petitioner. The Court of
Appeals committed reversible error when it held that
petitioner was a fixed-term employee. Petitioner was
a regular employee under contemplation of law. The
practice of having fixed-term contracts in the
industry does not automatically make all talent
contracts valid and compliant with labor law. The
assertion that a talent contract exists does not
necessarily prevent a regular employment status.23
Further, the Sonza case is not applicable. In Sonza,
the television station did not instruct Sonza how to
perform his job. How Sonza delivered his lines,
appeared on television, and sounded on radio were
outside the television stations control. Sonza had a
free hand on what to say or discuss in his shows
provided he did not attack the television station or its
interests. Clearly, the television station did not
exercise control over the means and methods of the
performance of Sonzas work.24 In the case at bar,
ABC had control over the performance of petitioners
work. Noteworthy too, is the comparatively
low P28,000 monthly pay of
25
petitioner vis the P300,000 a month salary of
Sonza,26 that all the more bolsters the conclusion that
petitioner was not in the same situation as Sonza.
The contract of employment of petitioner with ABC
had the following stipulations:
xxxx
1. SCOPE OF SERVICES TALENT agrees to
devote his/her talent, time, attention and best efforts
in the performance of his/her duties and
responsibilities as Anchor/Program Host/Newscaster
of the Program, in accordance with the direction of
ABC and/or its authorized representatives.
1.1. DUTIES AND RESPONSIBILITIES TALENT
shall:
a. Render his/her services as a newscaster on the
Program;
b. Be involved in news-gathering operations by
conducting interviews on- and off-the-air;
c. Participate in live remote coverages when called
upon;
d. Be available for any other news assignment, such
as writing, research or camera work;
e. Attend production meetings;
f. On assigned days, be at the studios at least one (1)
hour before the live telecasts;
g. Be present promptly at the studios and/or other
place of assignment at the time designated by ABC;
h. Keep abreast of the news;
i. Give his/her full cooperation to ABC and its duly
authorized representatives in the production and
promotion of the Program; and
j. Perform such other functions as may be assigned to
him/her from time to time.
xxxx
1.3 COMPLIANCE WITH STANDARDS,
INSTRUCTIONS AND OTHER RULES AND
REGULATIONS TALENT agrees that he/she will
promptly and faithfully comply with the requests and
instructions, as well as the program standards,
policies, rules and regulations of ABC, the KBP and
the government or any of its agencies and
instrumentalities.27
xxxx
In Manila Water Company, Inc. v. Pena,28 we said
that the elements to determine the existence of an
employment relationship are: (a) the selection and
engagement of the employee, (b) the payment of
wages, (c) the power of dismissal, and (d) the
employers power to control. The most important
element is the employers control of the employees
conduct, not only as to the result of the work to be
done, but also as to the means and methods to
accomplish it.29
The duties of petitioner as enumerated in her
employment contract indicate that ABC had control
over the work of petitioner. Aside from control, ABC
also dictated the work assignments and payment of
petitioners wages. ABC also had power to dismiss
her. All these being present, clearly, there existed an
employment relationship between petitioner and
ABC.
Concerning regular employment, the law provides
for two kinds of employees, namely: (1) those who
are engaged to perform activities which are usually
necessary or desirable in the usual business or trade
of the employer; and (2) those who have rendered at
least one year of service, whether continuous or
broken, with respect to the activity in which they are
employed.30 In other words, regular status arises from
either the nature of work of the employee or the
duration of his employment.31 In Benares v.
Pancho,32 we very succinctly said:
[T]he primary standard for determining regular
employment is the reasonable connection between
the particular activity performed by the
employee vis--vis the usual trade or business of the
employer. This connection can be determined by
considering the nature of the work performed and its
relation to the scheme of the particular business or
trade in its entirety. If the employee has been
performing the job for at least a year, even if the
performance is not continuous and merely
intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the
business. Hence, the employment is considered
regular, but only with respect to such activity and
while such activity exists.33
In our view, the requisites for regularity of
employment have been met in the instant case.
Gleaned from the description of the scope of services
aforementioned, petitioners work was necessary or
desirable in the usual business or trade of the
employer which includes, as a pre-condition for its
enfranchisement, its participation in the governments
news and public information dissemination. In
addition, her work was continuous for a period of
four years. This repeated engagement under contract
of hire is indicative of the necessity and desirability
of the petitioners work in private respondent ABCs
business.34
The contention of the appellate court that the contract
was characterized by a valid fixed-period
employment is untenable. For such contract to be
valid, it should be shown that the fixed period was
knowingly and voluntarily agreed upon by the
parties. There should have been no force, duress or
improper pressure brought to bear upon the
employee; neither should there be any other
circumstance that vitiates the employees consent.35 It
should satisfactorily appear that the employer and the
employee dealt with each other on more or less equal
terms with no moral dominance being exercised by
the employer over the employee. 36 Moreover, fixed-
term employment will not be considered valid where,
from the circumstances, it is apparent that periods
have been imposed to preclude acquisition of tenurial
security by the employee.37
In the case at bar, it does not appear that the
employer and employee dealt with each other on
equal terms. Understandably, the petitioner could not
object to the terms of her employment contract
because she did not want to lose the job that she
loved and the workplace that she had grown
accustomed to,38 which is exactly what happened
when she finally manifested her intention to
negotiate. Being one of the numerous
newscasters/broadcasters of ABC and desiring to
keep her job as a broadcasting practitioner, petitioner
was left with no choice but to affix her signature of
conformity on each renewal of her contract as
already prepared by private respondents; otherwise,
private respondents would have simply refused to
renew her contract. Patently, the petitioner occupied a
position of weakness vis--vis the employer.
Moreover, private respondents practice of repeatedly
extending petitioners 3-month contract for four
years is a circumvention of the acquisition of regular
status. Hence, there was no valid fixed-term
employment between petitioner and private
respondents.
While this Court has recognized the validity of fixed-
term employment contracts in a number of cases, it
has consistently emphasized that when the
circumstances of a case show that the periods were
imposed to block the acquisition of security of
tenure, they should be struck down for being contrary
to law, morals, good customs, public order or public
policy.39
As a regular employee, petitioner is entitled to
security of tenure and can be dismissed only for just
cause and after due compliance with procedural due
process. Since private respondents did not observe
due process in constructively dismissing the
petitioner, we hold that there was an illegal dismissal.
WHEREFORE, the challenged Decision dated
January 30, 2004 and Resolution dated June 23, 2004
of the Court of Appeals in CA-G.R. SP No. 63125,
which held that the petitioner was a fixed-term
employee, are REVERSED and SET ASIDE. The
NLRC decision is AFFIRMED.
Costs against private respondents.
SO ORDERED.
*
LE
G.R. No. 192084 September 14, 2011
JOSE MEL BERNARTE, Petitioner,
vs.
PHILIPPINE BASKETBALL ASSOCIATION
(PBA), JOSE EMMANUEL M. EALA, and
PERRY MARTINEZ, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review 1 of the 17 December
2009 Decision2 and 5 April 2010 Resolution3 of the
Court of Appeals in CA-G.R. SP No. 105406. The
Court of Appeals set aside the decision of the
National Labor Relations Commission (NLRC),
which affirmed the decision of the Labor Arbiter, and
held that petitioner Jose Mel Bernarte is an
independent contractor, and not an employee of
respondents Philippine Basketball Association
(PBA), Jose Emmanuel M. Eala, and Perry Martinez.
The Court of Appeals denied the motion for
reconsideration.
The Facts
The facts, as summarized by the NLRC and quoted
by the Court of Appeals, are as follows:
Complainants (Jose Mel Bernarte and Renato
Guevarra) aver that they were invited to join the PBA
as referees. During the leadership of Commissioner
Emilio Bernardino, they were made to sign contracts
on a year-to-year basis. During the term of
Commissioner Eala, however, changes were made on
the terms of their employment.
Complainant Bernarte, for instance, was not made to
sign a contract during the first conference of the All-
Filipino Cup which was from February 23, 2003 to
June 2003. It was only during the second conference
when he was made to sign a one and a half month
contract for the period July 1 to August 5, 2003.
On January 15, 2004, Bernarte received a letter from
the Office of the Commissioner advising him that his
contract would not be renewed citing his
unsatisfactory performance on and off the court. It
was a total shock for Bernarte who was awarded
Referee of the year in 2003. He felt that the dismissal
was caused by his refusal to fix a game upon order of
Ernie De Leon.
On the other hand, complainant Guevarra alleges that
he was invited to join the PBA pool of referees in
February 2001. On March 1, 2001, he signed a
contract as trainee. Beginning 2002, he signed a
yearly contract as Regular Class C referee. On May
6, 2003, respondent Martinez issued a memorandum
to Guevarra expressing dissatisfaction over his
questioning on the assignment of referees officiating
out-of-town games. Beginning February 2004, he
was no longer made to sign a contract.
Respondents aver, on the other hand, that
complainants entered into two contracts of retainer
with the PBA in the year 2003. The first contract was
for the period January 1, 2003 to July 15, 2003; and
the second was for September 1 to December 2003.
After the lapse of the latter period, PBA decided not
to renew their contracts.
Complainants were not illegally dismissed because
they were not employees of the PBA. Their
respective contracts of retainer were simply not
renewed. PBA had the prerogative of whether or not
to renew their contracts, which they knew were
fixed.4
In her 31 March 2005 Decision,5 the Labor
Arbiter6 declared petitioner an employee whose
dismissal by respondents was illegal. Accordingly,
the Labor Arbiter ordered the reinstatement of
petitioner and the payment of backwages, moral and
exemplary damages and attorneys fees, to wit:
WHEREFORE, premises considered all respondents
who are here found to have illegally dismissed
complainants are hereby ordered to (a) reinstate
complainants within thirty (30) days from the date of
receipt of this decision and to solidarily pay
complainants:
JOSE MEL
BERNARTE
1. backwages from January 1, 2004
up to the finality of this Decision, P536,250.00 making
which to date is
2. moral damages 100,000.00
3. exemplary damages 100,000.00 that said acts refer only to the referees skills. How
4. 10% attorney's fees 68,625.00
TOTAL P754,875.00
or a total of P1,152,250.00
The rest of the claims are hereby dismissed for lack
of merit or basis.
SO ORDERED.7
In its 28 January 2008 Decision,8 the NLRC affirmed
the Labor Arbiters judgment. The dispositive portion
of the NLRCs decision reads:
WHEREFORE, the appeal is hereby DISMISSED.
The Decision of Labor Arbiter Teresita D. Castillon-
Lora dated March 31, 2005 is AFFIRMED.
SO ORDERED.9
Respondents filed a petition for certiorari with the
Court of Appeals, which overturned the decisions of
the NLRC and Labor Arbiter. The dispositive portion
of the Court of Appeals decision reads:
WHEREFORE, the petition is hereby GRANTED.
The assailed Decision dated January 28, 2008
and Resolution dated August 26, 2008 of the National
Labor Relations Commission
are ANNULLED and SET ASIDE. Private
respondents complaint before the Labor Arbiter
is DISMISSED.
SO ORDERED.10
The Court of Appeals Ruling
The Court of Appeals found petitioner an
independent contractor since respondents did not
exercise any form of control over the means and
methods by which petitioner performed his work as a
basketball referee. The Court of Appeals held:
While the NLRC agreed that the PBA has no control
over the referees acts of blowing the whistle and
calls during basketball games, it,
nevertheless, theorized that the said acts refer to the
means and methods employed by the referees in
officiating basketball games for the illogical reason
could a skilled referee perform his job without
blowing a whistle and making calls? Worse, how can
the PBA control the performance of work of a referee
without controlling his acts of blowing the whistle
and making calls?
Moreover, this Court disagrees with the Labor
Arbiters finding (as affirmed by the NLRC) that the
Contracts of Retainer show that petitioners have
control over private respondents.
xxxx
Neither do We agree with the NLRCs affirmance of
the Labor Arbiters conclusion that private
respondents repeated hiring made them regular
employees by operation of law.11
The Issues
The main issue in this case is whether petitioner is an
employee of respondents, which in turn determines
whether petitioner was illegally dismissed.
Petitioner raises the procedural issue of whether the
Labor Arbiters decision has become final and
executory for failure of respondents to appeal with
the NLRC within the reglementary period.
The Ruling of the Court
The petition is bereft of merit.
The Court shall first resolve the procedural issue
posed by petitioner.
Petitioner contends that the Labor Arbiters Decision
of 31 March 2005 became final and executory for
failure of respondents to appeal with the NLRC
within the prescribed period. Petitioner claims that
the Labor Arbiters decision was constructively
served on respondents as early as August 2005 while
respondents appealed the Arbiters decision only on
31 March 2006, way beyond the reglementary period
to appeal. Petitioner points out that service of an
unclaimed registered mail is deemed complete five
days from the date of first notice of the post master.
In this case three notices were issued by the post
office, the last being on 1 August 2005. The
unclaimed registered mail was consequently returned
to sender. Petitioner presents the Postmasters
Certification to prove constructive service of the
Labor Arbiters decision on respondents. The
Postmaster certified:
xxx
That upon receipt of said registered mail matter, our
registry in charge, Vicente Asis, Jr., immediately
issued the first registry notice to claim on July 12,
2005 by the addressee. The second and third notices
were issued on July 21 and August 1, 2005,
respectively.
That the subject registered letter was returned to the
sender (RTS) because the addressee failed to claim it
after our one month retention period elapsed. Said
registered letter was dispatched from this office to
Manila CPO (RTS) under bill #6, line 7, page1,
column 1, on September 8, 2005.12
Section 10, Rule 13 of the Rules of Court provides:
SEC. 10. Completeness of service. Personal service
is complete upon actual delivery. Service by ordinary
mail is complete upon the expiration of ten (10) days
after mailing, unless the court otherwise provides.
Service by registered mail is complete upon actual
receipt by the addressee, or after five (5) days from
the date he received the first notice of the postmaster,
whichever date is earlier.
The rule on service by registered mail contemplates
two situations: (1) actual service the completeness of
which is determined upon receipt by the addressee of
the registered mail; and (2) constructive service the
completeness of which is determined upon expiration
of five days from the date the addressee received the
first notice of the postmaster.13
Insofar as constructive service is concerned, there
must be conclusive proof that a first notice was duly
sent by the postmaster to the addressee. 14 Not only is
it required that notice of the registered mail be issued
but that it should also be delivered to and received by
the addressee.15 Notably, the presumption that official
duty has been regularly performed is not applicable
in this situation. It is incumbent upon a party who
relies on constructive service to prove that the notice
was sent to, and received by, the addressee.16
The best evidence to prove that notice was sent
would be a certification from the postmaster, who
should certify not only that the notice was issued or
sent but also as to how, when and to whom the
delivery and receipt was made. The mailman may
also testify that the notice was actually delivered.17
In this case, petitioner failed to present any concrete
proof as to how, when and to whom the delivery and
receipt of the three notices issued by the post office
was made. There is no conclusive evidence showing
that the post office notices were actually received by
respondents, negating petitioners claim of
constructive service of the Labor Arbiters decision
on respondents. The Postmasters Certification does
not sufficiently prove that the three notices were
delivered to and received by respondents; it only
indicates that the post office issued the three notices.
Simply put, the issuance of the notices by the post
office is not equivalent to delivery to and receipt by
the addressee of the registered mail. Thus, there is no
proof of completed constructive service of the Labor
Arbiters decision on respondents.
At any rate, the NLRC declared the issue on the
finality of the Labor Arbiters decision moot as
respondents appeal was considered in the interest of
substantial justice. We agree with the NLRC. The
ends of justice will be better served if we resolve the
instant case on the merits rather than allowing the
substantial issue of whether petitioner is an
independent contractor or an employee linger and
remain unsettled due to procedural technicalities.
The existence of an employer-employee relationship
is ultimately a question of fact. As a general rule,
factual issues are beyond the province of this Court.
However, this rule admits of exceptions, one of
which is where there are conflicting findings of fact
between the Court of Appeals, on one hand, and the
NLRC and Labor Arbiter, on the other, such as in the
present case.18
To determine the existence of an employer-employee
relationship, case law has consistently applied the
four-fold test, to wit: (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. The so-called "control test" is the
most important indicator of the presence or absence
of an employer-employee relationship.19
In this case, PBA admits repeatedly engaging
petitioners services, as shown in the retainer
contracts. PBA pays petitioner a retainer fee,
exclusive of per diem or allowances, as stipulated in
the retainer contract. PBA can terminate the retainer
contract for petitioners violation of its terms and
conditions.
However, respondents argue that the all-important
element of control is lacking in this case, making
petitioner an independent contractor and not an
employee of respondents.
Petitioner contends otherwise. Petitioner asserts that
he is an employee of respondents since the latter
exercise control over the performance of his work.
Petitioner cites the following stipulations in the
retainer contract which evidence control: (1)
respondents classify or rate a referee; (2) respondents
require referees to attend all basketball games
organized or authorized by the PBA, at least one hour
before the start of the first game of each day; (3)
respondents assign petitioner to officiate ballgames,
or to act as alternate referee or substitute; (4) referee
agrees to observe and comply with all the
requirements of the PBA governing the conduct of
the referees whether on or off the court; (5) referee
agrees (a) to keep himself in good physical, mental,
and emotional condition during the life of the
contract; (b) to give always his best effort and
service, and loyalty to the PBA, and not to officiate
as referee in any basketball game outside of the PBA,
without written prior consent of the Commissioner;
(c) always to conduct himself on and off the court
according to the highest standards of honesty or
morality; and (6) imposition of various sanctions for
violation of the terms and conditions of the contract.
The foregoing stipulations hardly demonstrate
control over the means and methods by which
petitioner performs his work as a referee officiating a
PBA basketball game. The contractual stipulations do
not pertain to, much less dictate, how and when
petitioner will blow the whistle and make calls. On
the contrary, they merely serve as rules of conduct or
guidelines in order to maintain the integrity of the
professional basketball league. As correctly observed
by the Court of Appeals, "how could a skilled referee
perform his job without blowing a whistle and
making calls? x x x [H]ow can the PBA control the
performance of work of a referee without controlling
his acts of blowing the whistle and making calls?"20
In Sonza v. ABS-CBN Broadcasting
21
Corporation, which determined the relationship
between a television and radio station and one of its
talents, the Court held that not all rules imposed by
the hiring party on the hired party indicate that the
latter is an employee of the former. The Court held:
We find that these general rules are merely guidelines
towards the achievement of the mutually desired
result, which are top-rating television and radio
programs that comply with standards of the industry.
We have ruled that:
Further, not every form of control that a party
reserves to himself over the conduct of the other
party in relation to the services being rendered may
be accorded the effect of establishing an employer-
employee relationship. The facts of this case fall
squarely with the case of Insular Life Assurance Co.,
Ltd. v. NLRC. In said case, we held that:
Logically, the line should be drawn between rules
that merely serve as guidelines towards the
achievement of the mutually desired result without
dictating the means or methods to be employed in
attaining it, and those that control or fix the
methodology and bind or restrict the party hired to
the use of such means. The first, which aim only to
promote the result, create no employer-employee
relationship unlike the second, which address both
the result and the means used to achieve it.22
We agree with respondents that once in the playing
court, the referees exercise their own independent
judgment, based on the rules of the game, as to when
and how a call or decision is to be made. The referees
decide whether an infraction was committed, and the
PBA cannot overrule them once the decision is made
on the playing court. The referees are the only,
absolute, and final authority on the playing court.
Respondents or any of the PBA officers cannot and
do not determine which calls to make or not to make
and cannot control the referee when he blows the
whistle because such authority exclusively belongs to
the referees. The very nature of petitioners job of
officiating a professional basketball game
undoubtedly calls for freedom of control by
respondents.
Moreover, the following circumstances indicate that
petitioner is an independent contractor: (1) the
referees are required to report for work only when
PBA games are scheduled, which is three times a
week spread over an average of only 105 playing
days a year, and they officiate games at an average of
two hours per game; and (2) the only deductions
from the fees received by the referees are
withholding taxes.
In other words, unlike regular employees who
ordinarily report for work eight hours per day for five
days a week, petitioner is required to report for work
only when PBA games are scheduled or three times a
week at two hours per game. In addition, there are no
deductions for contributions to the Social Security
System, Philhealth or Pag-Ibig, which are the usual
deductions from employees salaries. These
undisputed circumstances buttress the fact that
petitioner is an independent contractor, and not an
employee of respondents.
Furthermore, the applicable foreign case law declares
that a referee is an independent contractor, whose
special skills and independent judgment are required
specifically for such position and cannot possibly be
controlled by the hiring party.
In Yonan v. United States Soccer Federation,
Inc.,23 the United States District Court of Illinois held
that plaintiff, a soccer referee, is an independent
contractor, and not an employee of defendant which
is the statutory body that governs soccer in the
United States. As such, plaintiff was not entitled to
protection by the Age Discrimination in Employment
Act. The U.S. District Court ruled:
Generally, "if an employer has the right to control
and direct the work of an individual, not only as to
the result to be achieved, but also as to details by
which the result is achieved, an employer/employee
relationship is likely to exist." The Court must be
careful to distinguish between "control[ling] the
conduct of another party contracting party by setting
out in detail his obligations" consistent with the
freedom of contract, on the one hand, and "the
discretionary control an employer daily exercises
over its employees conduct" on the other.
Yonan asserts that the Federation "closely
supervised" his performance at each soccer game he
officiated by giving him an assessor, discussing his
performance, and controlling what clothes he wore
while on the field and traveling. Putting aside that the
Federation did not, for the most part, control what
clothes he wore, the Federation did not supervise
Yonan, but rather evaluated his performance after
matches. That the Federation evaluated Yonan as a
referee does not mean that he was an employee.
There is no question that parties retaining
independent contractors may judge the performance
of those contractors to determine if the contractual
relationship should continue. x x x
It is undisputed that the Federation did not control
the way Yonan refereed his games.1wphi1 He had
full discretion and authority, under the Laws of the
Game, to call the game as he saw fit. x x x In a
similar vein, subjecting Yonan to qualification
standards and procedures like the Federations
registration and training requirements does not create
an employer/employee relationship. x x x
A position that requires special skills and
independent judgment weights in favor of
independent contractor status. x x x Unskilled work,
on the other hand, suggests an employment
relationship. x x x Here, it is undisputed that soccer
refereeing, especially at the professional and
international level, requires "a great deal of skill and
natural ability." Yonan asserts that it was the
Federations training that made him a top referee, and
that suggests he was an employee. Though
substantial training supports an employment
inference, that inference is dulled significantly or
negated when the putative employers activity is the
result of a statutory requirement, not the employers
choice. x x x
In McInturff v. Battle Ground Academy of
Franklin,24 it was held that the umpire was not an
agent of the Tennessee Secondary School Athletic
Association (TSSAA), so the players vicarious
liability claim against the association should be
dismissed. In finding that the umpire is an
independent contractor, the Court of Appeals of
Tennesse ruled:
The TSSAA deals with umpires to achieve a result-
uniform rules for all baseball games played between
TSSAA member schools. The TSSAA does not
supervise regular season games. It does not tell an
official how to conduct the game beyond the
framework established by the rules. The TSSAA does
not, in the vernacular of the case law, control the
means and method by which the umpires work.
In addition, the fact that PBA repeatedly hired
petitioner does not by itself prove that petitioner is an
employee of the former. For a hired party to be
considered an employee, the hiring party must have
control over the means and methods by which the
hired party is to perform his work, which is absent in
this case. The continuous rehiring by PBA of
petitioner simply signifies the renewal of the contract
between PBA and petitioner, and highlights the
satisfactory services rendered by petitioner
warranting such contract renewal. Conversely, if
PBA decides to discontinue petitioners services at
the end of the term fixed in the contract, whether for
unsatisfactory services, or violation of the terms and
conditions of the contract, or for whatever other
reason, the same merely results in the non-renewal of
the contract, as in the present case. The non-renewal
of the contract between the parties does not constitute
illegal dismissal of petitioner by respondents.
WHEREFORE, we DENY the petition
and AFFIRM the assailed decision of the Court of
Appeals.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
G.R. No. 146989 February 7, 2007
MELENCIO GABRIEL, represented by surviving
spouse, FLORDELIZA V. GABRIEL, Petitioner,
vs.
NELSON BILON, ANGEL BRAZIL AND
ERNESTO PAGAYGAY, Respondents.
DECISION
AZCUNA, J.:
This is a petition for review on certiorari 1 assailing
the Decision and Resolution of the Court of Appeals,
respectively dated August 4, 2000 and February 7,
2001, in CA-G.R. SP No. 52001 entitled "Nelson
Bilon, et al. v. National Labor Relations Commission,
et al."
The challenged decision reversed and set aside the
decision2 of the National Labor Relations
Commission (NLRC) dismissing respondents
complaint for illegal dismissal and illegal deductions,
and reinstating the decision of the Labor Arbiter
finding petitioner guilty of illegal dismissal but not of
illegal deductions subject to the modification that
respondents be immediately reinstated to their former
positions without loss of seniority rights and
privileges instead of being paid separation pay.
Petitioner, represented by his surviving spouse,
Flordeliza V. Gabriel, was the owner-operator of a
public transport business, "Gabriel Jeepney," with a
fleet of 54 jeepneys plying the Baclaran-Divisoria-
Tondo route. Petitioner had a pool of drivers, which
included respondents, operating under a "boundary
system" of P400 per day.
The facts3 are as follows:
On November 15, 1995, respondents filed their
separate complaints for illegal dismissal, illegal
deductions, and separation pay against petitioner
with the National Labor Relations Commission
(NLRC). These were consolidated and docketed as
NLRC-NCR Case No. 00-11-07420-95.4
On December 15, 1995, the complaint was amended,
impleading as party respondent the Bacoor Transport
Service Cooperative, Inc., as both parties are
members of the cooperative.
Respondents alleged the following:
1) That they were regular drivers of Gabriel Jeepney,
driving their respective units bearing Plate Nos.
PHW 553, NXU 155, and NWW 557, under a
boundary system of P400 per day, plying Baclaran to
Divisoria via Tondo, and vice versa, since December
1990, November 1984 and November 1991,
respectively, up to April 30, 1995,5 driving five days
a week, with average daily earnings of P400;
2) That they were required/forced to pay
additional P55.00 per day for the following:
a) P20.00 police protection; b) P20.00 washing;
c) P10.00 deposit; and [d)] P5.00 garage fees;
3) That there is no law providing the operator to
require the drivers to pay police protection, deposit,
washing, and garage fees.
4) That on April 30, 1995, petitioner told them not to
drive anymore, and when they went to the garage to
report for work the next day, they were not given a
unit to drive; and
5) That the boundary drivers of passenger jeepneys
are considered regular employees of the jeepney
operators. Being such, they are entitled to security of
tenure. Petitioner, however, dismissed them without
factual and legal basis, and without due process.
On his part, petitioner contended that:
1) He does not remember if the respondents were
ever under his employ as drivers of his passenger
jeepneys. Certain, however, is the fact that neither the
respondents nor other drivers who worked for him
were ever dismissed by him. As a matter of fact,
some of his former drivers just stopped reporting for
work, either because they found some other
employment or drove for other operators, and like the
respondents, the next time he heard from them was
when they started fabricating unfounded complaints
against him;
2) He made sure that none of the jeepneys would stay
idle even for a day so he could collect his earnings;
hence, it had been his practice to establish a pool of
drivers. Had respondents manifested their desire to
drive his units, it would have been immaterial
whether they were his former drivers or not. As long
as they obtained the necessary licenses and
references, they would have been accommodated and
placed on schedule;
3) While he was penalized or made to pay a certain
amount in connection with similar complaints by
other drivers in a previous case before this, it was not
because his culpability was established, but due to
technicalities involving oversight and negligence on
his part by not participating in any stage of the
investigation thereof; and
4) Respondents claim that certain amounts, as
enumerated in the complaint, were deducted from
their days earnings is preposterous. Indeed, there
were times when deductions were made from the
days earnings of some drivers, but such were
installment payments for the amount previously
advanced to them. Most drivers, when they got
involved in accidents or violations of traffic
regulations, managed to settle them, and in the
process they had to spend some money, but most of
the time they did not have the needed amount so they
secured cash advances from him, with the
understanding that the same should be paid back by
installments through deductions from their daily
earnings or boundary.
On the other hand, Bacoor Transport Service
Cooperative, Inc. (BTSCI) declared that it should not
be made a party to the case because: 1) [I]t has
nothing to do with the employment of its member-
drivers. The matter is between the member-operator
and their respective member-drivers. The member-
drivers tenure of employment, compensation, work
conditions, and other aspects of employment are
matters of arrangement between them and the
member-operators concerned, and the BTSCI has
nothing to do with it, as can be inferred from the
Management Agreement between BTSCI and the
member-operators; and 2) [T]he amount allegedly
deducted from respondents and the purpose for
which they were applied were matters that the
cooperative was not aware of, and much less
imposed on them.
On September 17, 1996, respondents filed a motion
to re-raffle the case for the reason that the Labor
Arbiter (Hon. Roberto I. Santos) failed "to render his
decision within thirty (30) calendar days, without
extension, after the submission of the case for
decision."
On September 18, 1996, said Labor Arbiter inhibited
himself from further handling the case due to
"personal reasons."
On November 8, 1996, Labor Arbiter Ricardo C.
Nora, to whom the case was re-raffled, ordered the
parties to file their respective memoranda within ten
days, after which the case was deemed submitted for
resolution.
On March 17, 1997, the Labor Arbiter (Hon. Ricardo
C. Nora) handed down his decision, the dispositive
portion of which is worded as follows:
WHEREFORE, premises considered, judgment is
hereby rendered declaring the illegality of
[respondents] dismissal and ordering [petitioner]
Melencio Gabriel to pay the [respondents] the total
amount of ONE MILLION THIRTY FOUR
THOUSAND PESOS [P1,034,000,] representing
[respondents] backwages and separation pay as
follows:
1. Nelson Bilon
Backwages P 284,800
Separation Pay 26,400 P 321,200
2. Angel Brazil
Backwages P 294,800
Separation Pay 96,800 391,600
3. Ernesto Pagaygay
Backwages P 294,800
Separation Pay 26,400 321,200
P 1,034,000
[Petitioner] Melencio Gabriel is likewise ordered to
pay attorneys fees equivalent to five percent (5%) of
the judgment award or the amount of P51,700 within
ten (10) days from receipt of this Decision.
All other issues are dismissed for lack of merit.
SO ORDERED.6
Incidentally, on April 4, 1997, petitioner passed
away. On April 18, 1997, a copy of the above
decision was delivered personally to petitioners
house. According to respondents, petitioners
surviving spouse, Flordeliza Gabriel, and their
daughter, after reading the contents of the decision
and after they had spoken to their counsel, refused to
receive the same. Nevertheless, Bailiff Alfredo V.
Estonactoc left a copy of the decision with
petitioners wife and her daughter but they both
refused to sign and acknowledge receipt of the
decision.7
The labor arbiters decision was subsequently served
by registered mail at petitioners residence and the
same was received on May 28, 1997.
On May 16, 1997, counsel for petitioner filed an
entry of appearance with motion to dismiss the case
for the reason that petitioner passed away last April
4, 1997.
On June 5, 1997, petitioner appealed the labor
arbiters decision to the National Labor Relations
Commission, First Division, contending that the
labor arbiter erred:
1. In holding that [petitioner] Gabriel dismissed the
complainants, Arb. Nora committed a serious error in
the findings of fact which, if not corrected, would
cause grave or irreparable damage or injury to
[petitioner] Gabriel;
2. In holding that strained relations already exist
between the parties, justifying an award of separation
pay in lieu of reinstatement, Arb. Nora not only
committed a serious error in the findings of fact, but
he also abused his discretion;
3. In computing the amount of backwages allegedly
due [respondents] from 30 April 1995 to 15 March
1997, Arb. Nora abused his discretion, considering
that the case had been submitted for decision as early
as 1 March 1996 and that the same should have been
decided as early as 31 March 1996;
4. In using P400.00 and 22 days as factors in of the case. A decision was rendered by the Labor
computing the amount of backwages allegedly due
[respondents], Arb. Nora abused his discretion and
committed a serious error in the findings of fact,
considering that there was no factual or evidentiary
basis therefor;
5. In using 33.5 months as factor in the computation
of the amount of backwages allegedly due
[respondents], Arb. Nora committed a serious error in
the findings of fact[,] because even if it is assumed
that backwages are due from 30 April 1995 to 15
March 1997, the period between the two dates is only
22 months, and not 33 months as stated in the
appealed decision; and
6. In not dismissing the case[,] despite notice of the
death of [petitioner] Gabriel before final judgment,
Arb. Nora abused his discretion and committed a
serious error of law.8
On July 3, 1997, respondents filed a motion to
dismiss petitioners appeal on the ground that the
"surety bond is defective" and the appeal was "filed
out of time," which move was opposed by petitioner.
Subsequently, on April 28, 1998, the NLRC
promulgated its first decision, the dispositive portion
of which reads:
WHEREFORE, premises considered, the appealed
decision is hereby reversed and set aside. The above-
entitled case is hereby dismissed for lack of
employer-employee relationship.
SO ORDERED.9
Respondents filed a motion for reconsideration. They
claimed that the decision did not discuss the issue of
the timeliness of the appeal. The lack of employer-
employee relationship was mentioned in the
dispositive portion, which issue was not raised before
the labor arbiter or discussed in the body of the
questioned decision. In view of the issues raised by
respondents in their motion, the NLRC rendered its
second decision on October 29, 1998. The pertinent
portions are hereby quoted thus:
In the case at bar, [petitioner] Melencio Gabriel
was not represented by counsel during the pendency
Arbiter a quo on March 17, 1997 while Mr. Gabriel
passed away on April 4, 1997 without having
received a copy thereof during his lifetime. The
decision was only served on April 18, 1997 when he
was no longer around to receive the same. His
surviving spouse and daughter cannot automatically
substitute themselves as party respondents. Thus,
when the bailiff tendered a copy of the decision to
them, they were not in a position to receive them.
The requirement of leaving a copy at the partys
residence is not applicable in the instant case because
this presupposes that the party is still living and is
just not available to receive the decision.
The preceding considered, the decision of the labor
arbiter has not become final because there was no
proper service of copy thereof to [petitioner] .
Undoubtedly, this case is for recovery of money
which does not survive, and considering that the
decision has not become final, the case should have
been dismissed and the appeal no longer
entertained.
WHEREFORE, in view of the foregoing, the
Decision of April 28, 1998 is set aside and vacated.
Furthermore, the instant case is dismissed and
complainants are directed to pursue their claim
against the proceedings for the settlement of the
estate of the deceased Melencio Gabriel.
SO ORDERED.10
Aggrieved by the decision of the NLRC, respondents
elevated the case to the Court of Appeals (CA) by
way of a petition for certiorari. On August 4, 2000,
the CA reversed the decisions of the NLRC:
Article 223 of the Labor Code categorically
mandates that "an appeal by the employer may be
perfected only upon the posting of a cash bond or
surety bond x x x." It is beyond peradventure then
that the non-compliance with the above conditio sine
qua non, plus the fact that the appeal was filed
beyond the reglementary period, should have been
enough reasons to dismiss the appeal.
In any event, even conceding ex gratia that such
procedural infirmity [were] inexistent, this petition
would still be tenable based on substantive aspects.
The public respondents decision, dated April 28,
1998, is egregiously wrong insofar as it was
anchored on the absence of an employer-employee
relationship. Well-settled is the rule that the boundary
system used in jeepney and (taxi) operations
presupposes an employer-employee relationship
(National Labor Union v. Dinglasan, 98 Phil. 649)
. or grounds for the non-application of the above-cited
The NLRC ostensibly tried to redeem itself by
vacating the decision April 28, 1998. By so doing,
however, it did not actually resolve the matter
definitively. It merely relieved itself of such burden
by suggesting that the petitioners "pursue their claim
against the proceedings for the settlement of the
estate of the deceased Melencio Gabriel."
In the instant case, the decision (dated March 17,
1997) of the Labor Arbiter became final and
executory on account of the failure of the private
respondent to perfect his appeal on time.
Thus, we disagree with the ratiocination of the NLRC
that the death of the private respondent on April 4,
1997 ipso facto negates recovery of the money claim
against the successors-in-interest . Rather, this
situation comes within the aegis of Section 3, Rule III
of the NLRC Manual on Execution of Judgment,
which provides:
SECTION 3. Execution in Case of Death of Party.
Where a party dies after the finality of the
decision/entry of judgment of order, execution
thereon may issue or one already issued may be
enforced in the following cases:
a) x x x ;
b) In case of death of the losing party, against his
successor-in-interest, executor or administrator;
c) In case of death of the losing party after execution
is actually levied upon any of his property, the same
may be sold for the satisfaction thereof, and the
sheriff making the sale shall account to his successor-
in-interest, executor or administrator for any surplus
in his hands.
Notwithstanding the foregoing disquisition though,
We are not entirely in accord with the labor arbiters
decision awarding separation pay in favor of the
petitioners. In this regard, it [is] worth mentioning
that in Kiamco v. NLRC,11 citing Globe-Mackay
Cable and Radio Corp. v. NLRC,12 the Supreme
Court qualified the application of the "strained
relations" principle when it held --
"If in the wisdom of the Court, there may be a ground
provision (Art. 279, Labor Code) this should be by
way of exception, such as when the reinstatement
may be inadmissible due to ensuing strained relations
between the employer and employee.
In such cases, it should be proved that the employee
concerned occupies a position where he enjoys the
trust and confidence of his employer, and that it is
likely that if reinstated, an atmosphere of antipathy
and antagonism may be generated as to adversely
affect the efficiency and productivity of the employee
concerned x x x Obviously, the principle of strained
relations cannot be applied indiscriminately.
Otherwise, reinstatement can never be possible
simply because some hostility is invariably II
engendered between the parties as a result of
litigation. That is human nature. THE COURT OF APPEALS ERRED
IN HOLDING THAT THE
Besides, no strained relations should arise from a ALLEGED DEFECTS IN
valid legal act of asserting ones right; otherwise[,] PETITIONERS APPEAL BOND
an employee who shall assert his right could be WERE OF SUCH GRAVITY AS TO
easily separated from the service by merely paying PREVENT THE APPEAL FROM
his separation pay on the pretext that his relationship BEING PERFECTED.
with his employer had already become strained."
III
Anent the award of backwages, the Labor Arbiter
erred in computing the same from the date the THE COURT OF APPEALS ERRED
petitioners were illegally dismissed (i.e. April 30, IN GRANTING RESPONDENTS
1995) up to March 15, 1997, that is two (2) days PETITION FOR CERTIORARI
prior to the rendition of his decision (i.e. March 17, DESPITE THE FACT THAT THE
1997). SAME ASSAILED A DECISION
WHICH HAD BEEN VACATED IN
FAVOR OF A NEW ONE WHICH,
IN TURN, HAS SOLID LEGAL
WHEREFORE, premises considered, the petition is BASIS.
GRANTED, hereby REVERSING and SETTING
ASIDE the assailed decisions of the National Labor IV
Relations Commission, dated April 28, 1998 ans
October 29, 1998. Consequently, the decision of the THE COURT OF APPEALS ERRED
Labor Arbiter, dated March 17, 1997, is hereby IN APPLYING SECTION 3, RULE
REINSTATED, subject to the MODIFICATION that III, OF THE MANUAL ON
the private respondent is ORDERED to immediately EXECUTION OF JUDGMENT OF
REINSTATE petitioners Nelson Bilon, Angel Brazil THE NATIONAL LABOR
and Ernesto Pagaygay to their former position RELATIONS COMMISSION
without loss of seniority rights and privileges, with WHICH, BY ITS OWN EXPRESS
full backwages from the date of their dismissal until TERMS, IS NOT APPLICABLE.
their actual reinstatement. Costs against private
respondent. A resolution of the case requires a brief discussion of
two issues which touch upon the procedural and
SO ORDERED.13 substantial aspects of the case thus: a) whether
petitioners appeal was filed out of time; and b)
Petitioner filed a motion for reconsideration but the whether the claim survives.
same was denied by the CA in a resolution dated
February 7, 2001. As regards the first issue, the Court considers the
service of copy of the decision of the labor arbiter to
Hence, this petition raising the following issues:14 have been validly made on May 28, 1997 when it
was received through registered mail. As correctly
I pointed out by petitioners wife, service of a copy of
the decision could not have been validly effected on
THE COURT OF APPEALS ERRED April 18, 1997 because petitioner passed away on
IN FINDING THAT PETITIONERS April 4, 1997.
APPEAL TO THE NATIONAL
LABOR RELATIONS Section 4, Rule III of the New Rules of Procedure of
COMMISSION WAS FILED OUT the NLRC provides:
OF TIME.
SEC. 4. Service of Notices and Resolutions. (a)
Notices or summons and copies of orders, resolutions
or decisions shall be served on the parties to the case
personally by the bailiff or authorized public officer
within three (3) days from receipt thereof or by
registered mail; Provided, That where a party is
represented by counsel or authorized representative,
service shall be made on such counsel or authorized
representative; Provided further, That in cases of
decision and final awards, copies thereof shall be
served on both parties and their counsel .
For the purpose of computing the period of appeal,
the same shall be counted from receipt of such
decisions, awards or orders by the counsel of record.
(b) The bailiff or officer personally serving the
notice, order, resolution or decision shall submit his
return within two (2) days from date of service
thereof, stating legibly in his return, his name, the
names of the persons served and the date of receipt
which return shall be immediately attached and shall
form part of the records of the case. If no service was
effected, the serving officer shall state the reason
therefore in the return.
Section 6, Rule 13 of the Rules of Court which is
suppletory to the NLRC Rules of Procedure states
that: "[s]ervice of the papers may be made by
delivering personally a copy to the party or his
counsel, or by leaving it in his office with his clerk or
with a person having charge thereof. If no person is
found in his office, or his office is not known, or he
has no office, then by leaving the copy, between the
hours of eight in the morning and six in the evening,
at the partys or counsels residence, if known, with a
person of sufficient age and discretion then residing
therein."
The foregoing provisions contemplate a situation
wherein the party to the action is alive upon the
delivery of a copy of the tribunals decision. In the
present case, however, petitioner died before a copy
of the labor arbiters decision was served upon him.
Hence, the above provisions do not apply. As aptly
stated by the NLRC:
In the case at bar, respondent Melencio Gabriel
was not represented by counsel during the pendency
of the case. A decision was rendered by the Labor
Arbiter a quo on March 17, 1997 while Mr. Gabriel
passed away on April 4, 1997, without having
received a copy thereof during his lifetime. The
decision was only served on April 18, 1997 when he
was no longer around to receive the same. His
surviving spouse and daughter cannot automatically
substitute themselves as party respondents. Thus,
when the bailiff tendered a copy of the decision to
them, they were not in a position to receive them.
The requirement of leaving a copy at the partys
residence is not applicable in the instant case because
this presupposes that the party is still living and is not
just available to receive the decision.
The preceding considered, the decision of the Labor
Arbiter has not become final because there was no
proper service of copy thereof to party
respondent.15
Thus, the appeal filed on behalf of petitioner on June
5, 1997 after receipt of a copy of the
decision via registered mail on May 28, 1997 was
within the ten-day reglementary period prescribed
under Section 223 of the Labor Code.
On the question whether petitioners surety bond was
defective, Section 6, Rule VI of the New Rules of
Procedure of the NLRC provides:
SEC. 6. Bond. In case the decision of a Labor
Arbiter involves monetary award, an appeal by the
employer shall be perfected only upon the posting of
a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission or the
Supreme Court in an amount equivalent to the
monetary award, exclusive of moral and exemplary
damages and attorneys fees.
The employer as well as counsel shall submit a joint
declaration under oath attesting that the surety bond
posted is genuine and that it shall be in effect until
final disposition of the case.
The Commission may, in meritorious cases and upon
Motion of the Appellant, reduce the amount of the
bond. (As amended on Nov. 5, 1993).
The Court believes that petitioner was able to comply
substantially with the requirements of the above
Rule. As correctly pointed out by the NLRC:
While we agree with complainants-appellees that the
posting of the surety bond is jurisdictional, We do not
believe that the "defects" imputed to the surety bond
posted for and in behalf of respondent-appellant
Gabriel are of such character as to affect the
jurisdiction of this Commission to entertain the
instant appeal.
It matters not that, by the terms of the bond posted,
the "Liability of the surety herein shall expire on
June 5, 1998 and this bond shall be automatically
cancelled ten (10) days after the expiration." After
all, the bond is accompanied by the joint declaration
under oath of respondent-appellants surviving
spouse and counsel attesting that the surety bond is
genuine and shall be in effect until the final
disposition of the case.
Anent complainants-appellees contention that the
surety bond posted is defective for being in the name
of BTSCI which did not appeal and for having been
entered into by Mrs. Gabriel without BTSCIs
authority, the same has been rendered moot and
academic by the certification issued by Gil CJ. San
Juan, Vice-President of the bonding company to the
effect that "Eastern Assurance and Surety
Corporation Bond No. 2749 was posted for and on
behalf appellant Melencio Gabriel and/or his heirs"
and that "(T)he name "Bacoor Transport Service
Cooperative, Inc." was indicated in said bond due
merely in (sic) advertence."
At any rate, the Supreme Court has time and again
ruled that while Article 223 of the Labor Code, as
amended requiring a cash or surety bond in the
amount equivalent to the monetary award in the
judgment appealed from for the appeal to be
perfected, may be considered a jurisdictional
requirement, nevertheless, adhering to the principle
that substantial justice is better served by allowing
the appeal on the merits threshed out by this
Honorable Commission, the foregoing requirement
of the law should be given a liberal interpretation
(Pantranco North Express, Inc. v. Sison, 149 SCRA
238; C.W. Tan Mfg. v. NLRC, 170 SCRA 240; YBL
v. NLRC, 190 SCRA 160; Rada v. NLRC, 205 SCRA
69; Star Angel Handicraft v. NLRC, 236 SCRA
580).16
On the other hand, with regard to the substantive
aspect of the case, the Court agrees with the CA that
an employer-employee relationship existed between
petitioner and respondents. In Martinez v. National
Labor Relations Commission,17 citing National
Labor Union v. Dinglasan,18 the Court ruled that:
[T]he relationship between jeepney owners/operators
and jeepney drivers under the boundary system is that
of employer-employee and not of lessor-lessee
because 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 exercises supervision and
control over the latter. The fact that the drivers do not
receive fixed wages but get only that in excess of the
so-called "boundary" [that] they pay to the
owner/operator is not sufficient to withdraw the
relationship between them from that of employer and
employee. Thus, private respondents were employees
because they had been engaged to perform
activities which were usually necessary or desirable
in the usual business or trade of the employer.19
The same principle was reiterated in the case
of Paguio Transport Corporation v. NLRC.20
The Court also agrees with the labor arbiter and the
CA that respondents were illegally dismissed by
petitioner. Respondents were not accorded due
process.21 Moreover, petitioner failed to show that the
cause for termination falls under any of the grounds
enumerated in Article 282
(then Article 283)22 of the Labor
23
Code. Consequently, respondents are entitled to
reinstatement without loss of seniority rights and
other privileges and to their full backwages computed
from the date of dismissal up to the time of their
actual reinstatement in accordance with Article 279
of the Labor Code.
Reinstatement is obtainable in this case because it has
not been shown that there is an ensuing "strained
relations" between petitioner and respondents. This is
pursuant to the principle laid down in Globe-Mackay
Cable and Radio Corporation v. NLRC24 as quoted
earlier in the CA decision.
With regard to respondents monetary claim, the
same shall be governed by Section 20 (then Section
21), Rule 3 of the Rules of Court which
provides:1awphi1.net
SEC. 20. Action on contractual money claims.
When the action is for recovery of money arising
from contract, express or implied, and the defendant
dies before entry of final judgment in the court in
which the action was pending at the time of such
death, it shall not be dismissed but shall instead be
allowed to continue until entry of final judgment. A
favorable judgment obtained by the plaintiff therein
shall be enforced in the manner provided in these
Rules for prosecuting claims against the estate of a
deceased person. (21a)
In relation to this, Section 5, Rule 86 of the Rules of
Court states:
SEC. 5. Claims which must be filed under the notice.
If not filed, barred ; exceptions. All claims for
money against the decedent arising from contract,
express or implied, whether the same be due, not due,
or contingent, ... and judgment for money against the
decedent, must be filed within the time limited in the
notice; otherwise they are barred forever, except that
they may be set forth as counterclaims in any action
that the executor or administrator may bring against
the claimants.
Thus, in accordance with the above Rules, the money
claims of respondents must be filed against the estate
of petitioner Melencio Gabriel.25
WHEREFORE, the petition is DENIED. The
Decision and Resolution of the Court of Appeals
dated August 4, 2000 and February 7, 2001,
respectively, in CA-G.R. SP No. 52001 are
AFFIRMED but with the MODIFICATION that the
money claims of respondents should be filed against
the estate of Melencio Gabriel, within such
reasonable time from the finality of this Decision as
the estate court may fix.
No costs.
SO ORDERED.
ADOLFO S. AZCUNA
Associate Justice
G.R. No. 156367 May 16, 2005
AUTO BUS TRANSPORT SYSTEMS,
INC., petitioner,
vs.
ANTONIO BAUTISTA, respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review
on Certiorari assailing the Decision1 and
Resolution2 of the Court of Appeals affirming the
Decision3 of the National Labor Relations
Commission (NLRC). The NLRC ruling modified
the Decision of the Labor Arbiter (finding respondent
entitled to the award of 13th month pay and service
incentive leave pay) by deleting the award of
13th month pay to respondent.
THE FACTS
Since 24 May 1995, respondent Antonio Bautista has
been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with
travel routes Manila-Tuguegarao via Baguio, Baguio-
Tuguegarao via Manila and Manila-Tabuk via
Baguio. Respondent was paid on commission basis,
seven percent (7%) of the total gross income per
travel, on a twice a month basis.
On 03 January 2000, while respondent was driving
Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the
bus he was driving accidentally bumped the rear
portion of Autobus No. 124, as the latter vehicle
suddenly stopped at a sharp curve without giving any
warning.
Respondent averred that the accident happened
because he was compelled by the management to go
back to Roxas, Isabela, although he had not slept for
almost twenty-four (24) hours, as he had just arrived
in Manila from Roxas, Isabela. Respondent further
alleged that he was not allowed to work until he fully
paid the amount of P75,551.50, representing thirty
percent (30%) of the cost of repair of the damaged
buses and that despite respondents pleas for
reconsideration, the same was ignored by
management. After a month, management sent him a
letter of termination.
Thus, on 02 February 2000, respondent instituted a
Complaint for Illegal Dismissal with Money Claims
for nonpayment of 13th month pay and service
incentive leave pay against Autobus.
Petitioner, on the other hand, maintained that
respondents employment was replete with offenses
involving reckless imprudence, gross negligence, and
dishonesty. To support its claim, petitioner presented
copies of letters, memos, irregularity reports, and
warrants of arrest pertaining to several incidents
wherein respondent was involved.
Furthermore, petitioner avers that in the exercise of
its management prerogative, respondents
employment was terminated only after the latter was
provided with an opportunity to explain his side
regarding the accident on 03 January 2000.
On 29 September 2000, based on the pleadings and
supporting evidence presented by the parties, Labor
Arbiter Monroe C. Tabingan promulgated a
Decision,4 the dispositive portion of which reads:
WHEREFORE, all premises considered, it is hereby
found that the complaint for Illegal Dismissal has no
leg to stand on. It is hereby ordered DISMISSED, as
it is hereby DISMISSED.
However, still based on the above-discussed
premises, the respondent must pay to the complainant
the following:
a. his 13th month pay from the date of his hiring to
the date of his dismissal, presently computed at
P78,117.87;
b. his service incentive leave pay for all the years he
had been in service with the respondent, presently
computed at P13,788.05.
All other claims of both complainant and respondent
are hereby dismissed for lack of merit.5
Not satisfied with the decision of the Labor Arbiter,
petitioner appealed the decision to the NLRC which
rendered its decision on 28 September 2001, the
decretal portion of which reads:
[T]he Rules and Regulations Implementing
Presidential Decree No. 851, particularly Sec. 3
provides:
"Section 3. Employers covered. The Decree shall
apply to all employers except to:
xxx xxx xxx
e) employers of those who are paid on purely
commission, boundary, or task basis, performing a
specific work, irrespective of the time consumed in
the performance thereof. xxx."
Records show that complainant, in his position paper,
admitted that he was paid on a commission basis.
In view of the foregoing, we deem it just and
equitable to modify the assailed Decision by deleting
the award of 13th month pay to the complainant.
WHEREFORE, the Decision dated 29 September
2000 is MODIFIED by deleting the award of
13th month pay. The other findings are AFFIRMED.6
In other words, the award of service incentive leave
pay was maintained. Petitioner thus sought a
reconsideration of this aspect, which was
subsequently denied in a Resolution by the NLRC
dated 31 October 2001.
Displeased with only the partial grant of its appeal to
the NLRC, petitioner sought the review of said
decision with the Court of Appeals which was
subsequently denied by the appellate court in a
Decision dated 06 May 2002, the dispositive portion
of which reads:
WHEREFORE, premises considered, the Petition is
DISMISSED for lack of merit; and the
assailed Decision of respondent Commission in
NLRC NCR CA No. 026584-2000 is hereby
AFFIRMED in toto. No costs.7
Hence, the instant petition.
ISSUES
1. Whether or not respondent is entitled to service
incentive leave;
2. Whether or not the three (3)-year prescriptive
period provided under Article 291 of the Labor Code,
as amended, is applicable to respondents claim of
service incentive leave pay.
RULING OF THE COURT
The disposition of the first issue revolves around the
proper interpretation of Article 95 of the Labor
Code vis--vis Section 1(D), Rule V, Book III of the
Implementing Rules and Regulations of the Labor
Code which provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one
year of service shall be entitled to a yearly service
incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all
employees except:
(d) Field personnel and other employees whose
performance is unsupervised by the employer
including those who are engaged on task or contract
basis, purely commission basis, or those who are paid
in a fixed amount for performing work irrespective of
the time consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result
in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules
and Regulations of the Labor Code to apply only to
those employees not explicitly excluded by Section 1
of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees
classified as "field personnel." The phrase "other
employees whose performance is unsupervised by
the employer" must not be understood as a separate
classification of employees to which service
incentive leave shall not be granted. Rather, it serves
as an amplification of the interpretation of the
definition of field personnel under the Labor Code as
those "whose actual hours of work in the field cannot
be determined with reasonable certainty."8
The same is true with respect to the phrase "those
who are engaged on task or contract basis, purely
commission basis." Said phrase should be related
with "field personnel," applying the rule on ejusdem
generis that general and unlimited terms are
restrained and limited by the particular terms that
they follow.9 Hence, employees engaged on task or
contract basis or paid on purely commission basis are
not automatically exempted from the grant of service
incentive leave, unless, they fall under the
classification of field personnel.
Therefore, petitioners contention that respondent is
not entitled to the grant of service incentive leave just
because he was paid on purely commission basis is
misplaced. What must be ascertained in order to
resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is a
field personnel.
According to Article 82 of the Labor Code, "field
personnel" shall refer to non-agricultural employees
who regularly perform their duties away from the
principal place of business or branch office of the
employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. This
definition is further elaborated in the Bureau of
Working Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial
Employees Association10 which states that:
As a general rule, [field personnel] are those whose
performance of their job/service is not supervised by
the employer or his representative, the workplace
being away from the principal office and whose
hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific
amount for rendering specific service or performing
specific work. If required to be at specific places at
specific times, employees including drivers cannot be
said to be field personnel despite the fact that they
are performing work away from the principal office
of the employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs
and postulates that under said advisory opinion, no
employee would ever be considered a field personnel
because every employer, in one way or another,
exercises control over his employees. Petitioner
further argues that the only criterion that should be
considered is the nature of work of the employee in
that, if the employees job requires that he works
away from the principal office like that of a
messenger or a bus driver, then he is inevitably a
field personnel.
We are not persuaded. At this point, it is necessary to
stress that the definition of a "field personnel" is not
merely concerned with the location where the
employee regularly performs his duties but also with
the fact that the employees performance is
unsupervised by the employer. As discussed above,
field personnel are those who regularly perform their
duties away from the principal place of business of
the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a
field employee, it is also necessary to ascertain if
actual hours of work in the field can be determined
with reasonable certainty by the employer. In so
doing, an inquiry must be made as to whether or not
the employees time and performance are constantly
supervised by the employer.
As observed by the Labor Arbiter and concurred in
by the Court of Appeals:
It is of judicial notice that along the routes that are
plied by these bus companies, there are its inspectors
assigned at strategic places who board the bus and
inspect the passengers, the punched tickets, and the
conductors reports. There is also the mandatory
once-a-week car barn or shop day, where the bus is
regularly checked as to its mechanical, electrical, and
hydraulic aspects, whether or not there are problems
thereon as reported by the driver and/or conductor.
They too, must be at specific place as [sic] specified
time, as they generally observe prompt departure and
arrival from their point of origin to their point of
destination. In each and every depot, there is always
the Dispatcher whose function is precisely to see to it
that the bus and its crew leave the premises at
specific times and arrive at the estimated proper time.
These, are present in the case at bar. The driver, the
complainant herein, was therefore under constant
supervision while in the performance of this work.
He cannot be considered a field personnel.11
We agree in the above disquisition. Therefore, as
correctly concluded by the appellate court,
respondent is not a field personnel but a regular
employee who performs tasks usually necessary and
desirable to the usual trade of petitioners business.
Accordingly, respondent is entitled to the grant of
service incentive leave.
The question now that must be addressed is up to
what amount of service incentive leave pay
respondent is entitled to.
The response to this query inevitably leads us to the
correlative issue of whether or not the three (3)-year
prescriptive period under Article 291 of the Labor
Code is applicable to respondents claim of service
incentive leave pay.
Article 291 of the Labor Code states that all money
claims arising from employer-employee relationship
shall be filed within three (3) years from the time the
cause of action accrued; otherwise, they shall be
forever barred.
In the application of this section of the Labor Code,
the pivotal question to be answered is when does the
cause of action for money claims accrue in order to
determine the reckoning date of the three-year
prescriptive period.
It is settled jurisprudence that a cause of action has
three elements, to wit, (1) a right in favor of the
plaintiff by whatever means and under whatever law
it arises or is created; (2) an obligation on the part of
the named defendant to respect or not to violate such
right; and (3) an act or omission on the part of such
defendant violative of the right of the plaintiff or
constituting a breach of the obligation of the
defendant to the plaintiff.12
To properly construe Article 291 of the Labor Code,
it is essential to ascertain the time when the third
element of a cause of action transpired. Stated
differently, in the computation of the three-year
prescriptive period, a determination must be made as
to the period when the act constituting a violation of
the workers right to the benefits being claimed was
committed. For if the cause of action accrued more
than three (3) years before the filing of the money
claim, said cause of action has already prescribed in
accordance with Article 291.13
Consequently, in cases of nonpayment of allowances
and other monetary benefits, if it is established that
the benefits being claimed have been withheld from
the employee for a period longer than three (3) years,
the amount pertaining to the period beyond the three-
year prescriptive period is therefore barred by
prescription. The amount that can only be demanded
by the aggrieved employee shall be limited to the
amount of the benefits withheld within three (3)
years before the filing of the complaint.14
It is essential at this point, however, to recognize that
the service incentive leave is a curious animal in
relation to other benefits granted by the law to every
employee. In the case of service incentive leave, the
employee may choose to either use his leave credits
or commute it to its monetary equivalent if not
exhausted at the end of the year.15 Furthermore, if the
employee entitled to service incentive leave does not
use or commute the same, he is entitled upon his
resignation or separation from work to the
commutation of his accrued service incentive leave.
As enunciated by the Court in Fernandez v. NLRC:16
The clear policy of the Labor Code is to grant service
incentive leave pay to workers in all establishments,
subject to a few exceptions. Section 2, Rule V, Book
III of the Implementing Rules and Regulations
provides that "[e]very employee who has rendered at
least one year of service shall be entitled to a yearly
service incentive leave of five days with pay."
Service incentive leave is a right which accrues to
every employee who has served "within 12 months,
whether continuous or broken reckoned from the date
the employee started working, including authorized
absences and paid regular holidays unless the
working days in the establishment as a matter of
practice or policy, or that provided in the
employment contracts, is less than 12 months, in
which case said period shall be considered as one
year." It is also "commutable to its money equivalent
if not used or exhausted at the end of the year." In
other words, an employee who has served for one
year is entitled to it. He may use it as leave days or
he may collect its monetary value. To limit the award
to three years, as the solicitor general recommends, is
to unduly restrict such right.17 [Italics supplied]
Correspondingly, it can be conscientiously deduced
that the cause of action of an entitled employee to
claim his service incentive leave pay accrues from
the moment the employer refuses to remunerate its
monetary equivalent if the employee did not make
use of said leave credits but instead chose to avail of
its commutation. Accordingly, if the employee
wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from
employment, his cause of action to claim the whole
amount of his accumulated service incentive leave
shall arise when the employer fails to pay such
amount at the time of his resignation or separation
from employment.
Applying Article 291 of the Labor Code in light of
this peculiarity of the service incentive leave, we can
conclude that the three (3)-year prescriptive period
commences, not at the end of the year when the
employee becomes entitled to the commutation of his
service incentive leave, but from the time when the
employer refuses to pay its monetary equivalent after
demand of commutation or upon termination of the
employees services, as the case may be.
The above construal of Art. 291, vis--vis the rules on
service incentive leave, is in keeping with the
rudimentary principle that in the implementation and
interpretation of the provisions of the Labor Code
and its implementing regulations, the workingmans
welfare should be the primordial and paramount
consideration.18 The policy is to extend the
applicability of the decree to a greater number of
employees who can avail of the benefits under the
law, which is in consonance with the avowed policy
of the State to give maximum aid and protection to
labor.19
In the case at bar, respondent had not made use of his
service incentive leave nor demanded for its
commutation until his employment was terminated
by petitioner. Neither did petitioner compensate his
accumulated service incentive leave pay at the time
of his dismissal. It was only upon his filing of a
complaint for illegal dismissal, one month from the
time of his dismissal, that respondent demanded from
his former employer commutation of his accumulated
leave credits. His cause of action to claim the
payment of his accumulated service incentive leave
thus accrued from the time when his employer
dismissed him and failed to pay his accumulated
leave credits.
Therefore, the prescriptive period with respect to his
claim for service incentive leave pay only
commenced from the time the employer failed to
compensate his accumulated service incentive leave
pay at the time of his dismissal. Since respondent had
filed his money claim after only one month from the
time of his dismissal, necessarily, his money claim
was filed within the prescriptive period provided for
by Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant
petition is hereby DENIED. The assailed Decision of
the Court of Appeals in CA-G.R. SP. No. 68395 is
hereby AFFIRMED. No Costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr.,
and Tinga, JJ., concur.
G.R. No. 199166 April 20, 2015
NELSON V. BEGINO, GENER DEL VALLE,
MONINA A VILA-LLORIN AND MA.
CRISTINA SUMAYAO,Petitioners,
vs.
ABS-CBN CORPORATION (FORMERLY, ABS-
CBN BROADCASTING CORPORATION) AND
AMALIA VILLAFUERTE, Respondents.
DECISION
PEREZ, J.:
The existence of an employer-employee relationship
is at the heart of this Petition for Review on
Certiorari filed pursuant to Rule 45 of the Rules of
Court, primarily assailing the 29 June 2011
Decision1 rendered by the Fourth Division of the
Court of Appeals (CA) in CA-G.R. SP No. 116928
which ruled out said relationship between the parties.
The Facts
Respondent ABS-CBN Corporation (formerly ABS-
CBN Broadcasting Corporation) is a television and
radio broadcasting corporation which, for its
Regional Network Group in Naga City, employed
respondent Amalia Villafuerte (Villafuerte) as
Manager. There is no dispute regarding the fact that,
thru Villafuerte, ABS-CBN engaged the services of
petitioners Nelson Begino (Begino) and Gener Del
Valle (Del Valle) sometime in 1996 as
Cameramen/Editors for TV Broadcasting. Petitioners
Ma. Cristina Sumayao (Sumayao) and Monina Avila-
Llorin (Llorin) were likewise similarly engaged as
reporters sometime in 1996 and 2002, respectively.
With their services engaged by respondents thru
Talent Contracts which, though regularly renewed
over the years, provided terms ranging from three (3)
months to one (1) year, petitioners were given Project
Assignment Forms which detailed, among other
matters, the duration of a particular project as well as
the budget and the daily technical requirements
thereof. In the aforesaid capacities, petitioners were
tasked with coverage of news items for subsequent
daily airings in respondents TV Patrol Bicol
Program.2
While specifically providing that nothing therein
shall be deemed or construed to establish an
employer-employee relationship between the parties,
the aforesaid Talent Contracts included, among other
matters, provisions on the following matters: (a) the
Talents creation and performance of work in
accordance with the ABS-CBNs professional
standards and compliance with its policies and
guidelines covering intellectual property creators,
industry codes as well as the rules and regulations of
the Kapisanan ng mga Broadcasters sa Pilipinas
(KBP) and other regulatory agencies; (b) the Talents
non-engagement in similar work for a person or
entity directly or indirectly in competition with or
adverse to the interests of ABS-CBN and non-
promotion of any product or service without prior
written consent; and (c) the results-oriented nature of
the talents work which did not require them to
observe normal or fixed working hours.3 Subjected to
contractors tax, petitioners remunerations were
denominated as Talent Fees which, as of last renewal,
were admitted to be pegged per airing day at P273.35
for Begino, P 302.92 for Del Valle, P 323.08 for
Sumayao and P 315.39 for Llorin.4
Claiming that they were regular employees of ABS-
CBN, petitioners filed against respondents the
complaint5docketed as Sub-RAB 05-04- 00041-07
before the National Labor Relations Commissions
(NLRC) Sub-Regional Arbitration Branch No. 5,
Naga City. In support of their claims for
regularization, underpayment of overtime pay,
holiday pay, 13th month pay, service incentive leave
pay, damages and attorney's fees, petitioners alleged
that they performed functions necessary and desirable
in ABS-CBN's business. Mandated to wear company
IDs and provided all the equipment they needed,
petitioners averred that they worked under the direct
control and supervision of Villafuerte and, at the end
of each day, were informed about the news to be
covered the following day, the routes they were to
take and, whenever the subject of their news
coverage is quite distant, even the start of their
workday. Due to the importance of the news items
they covered and the necessity of their completion
for the success of the program, petitioners claimed
that, under pain of immediate termination, they were
bound by the companys policy on, among others,
attendance and punctuality.6
Aside from the constant evaluation of their actions,
petitioners were reportedly subjected to an annual
competency assessment alongside other ABS-CBN
employees, as condition for their continued
employment. Although their work involved dealing
with emergency situations at any time of the day or
night, petitioners claimed that they were not paid the
labor standard benefits the law extends to regular
employees. To avoid paying what is due them,
however, respondents purportedly resorted to the
simple expedient of using said Talent Contracts
and/or Project Assignment Forms which
denominated petitioners as talents, despite the fact
that they are not actors or TV hosts of special skills.
As a result of this iniquitous situation, petitioners
asseverated that they merely earned an average
of P7,000.00 to P8,000.00 per month, or decidedly
lower than the P21,773.00 monthly salary ABS-CBN
paid its regular rank-and-file employees. Considering
their repeated re-hiring by respondents for ostensible
fixed periods, this situation had gone on for years
since TV Patrol Bicol has continuously aired from
1996 onwards.7
In refutation of the foregoing assertions, on the other
hand, respondents argued that, although it
occasionally engages in production and generates
programs thru various means, ABS-CBN is primarily
engaged in the business of broadcasting television
and radio content. Not having the full manpower
complement to produce its own program, the
company had allegedly resorted to engaging
independent contractors like actors, directors, artists,
anchormen, reporters, scriptwriters and various
production and technical staff, who offered their
services in relation to a particular program. Known in
the industry as talents, such independent contractors
inform ABSCBN of their availability and were
required to accomplish Talent Information Forms to
facilitate their engagement for and appearance on
designated project days. Given the unpredictability of
viewer preferences, respondents argued that the
company cannot afford to provide regular work for
talents with whom it negotiates specific or
determinable professional fees on a per project,
weekly or daily basis, usually depending on the
budget allocation for a project.8
Respondents insisted that, pursuant to their Talent
Contracts and/or Project Assignment Forms,
petitioners were hired as talents, to act as reporters
and/or cameramen for TV Patrol Bicol for designated
periods and rates. Fully aware that they were not
considered or to consider themselves as employees of
a particular production or film outfit, petitioners were
supposedly engaged on the basis of the skills,
knowledge or expertise they already possessed and,
for said reason, required no further training from
ABS-CBN. Although petitioners were inevitably
subjected to some degree of control, the same was
allegedly limited to the imposition of general
guidelines on conduct and performance, simply for
the purpose of upholding the standards of the
company and the strictures of the industry. Never
subjected to any control or restrictions over the
means and methods by which they performed or
discharged the tasks for which their services were
engaged, petitioners were, at most, briefed whenever
necessary regarding the general requirements of the
project to be executed.9
Having been terminated during the pendency of the
case, Petitioners filed on 10 July 2007 a second
complaint against respondents, for regularization,
payment of labor standard benefits, illegal dismissal
and unfair labor practice, which was docketed as
Sub-RAB 05-08-00107-07. Upon respondents
motion, this complaint was dismissed for violation of
the rules against forum shopping in view of the fact
that the determination of the issues in the second case
hinged on the resolution of those raised in the
first.10 On 19 December 2007, however, Labor
Arbiter Jesus Orlando Quiones (Labor Arbiter
Quiones) resolved Sub-RAB 05-04-00041-07 in
favor of petitioners who, having rendered services
necessary and related to ABS-CBNs business for
more than a year, were determined to be its regular
employees. With said conclusion found to be
buttressed by, among others, the exclusivity clause
and prohibitions under petitioners Talent Contracts
and/or Project Assignment Forms which evinced
respondents control over them,11 Labor Arbiter
Quiones disposed of the case in the following wise:
WHEREFORE, finding merit in the causes of action
set forth by the complainants, judgment is hereby
rendered declaring complainants MONINA AVILA-
LLORIN, GENER L. DEL VALLE, NELSON V.
BEGINO and MA. CRISTINA V. SUMAYAO, as
regular employees of respondent company, ABS-
CBN BROADCASTING CORPORATION.
Accordingly, respondent ABS-CBN Broadcasting
Corporation is hereby ORDERED to pay
complainants, subject to the prescriptive period
provided under Article 291 of the Labor Code,
however applicable, the total amount of
Php2,440,908.36, representing salaries/wage
differentials, holiday pay, service incentive leave pay
and 13th month pay, to include 10% of the judgment
award as attorneys fees of the judgment award
(computation of the monetary awards are attached
hereto as integral part of this decision).
Moreover, respondents are directed to admit back
complainants to work under the same terms and
conditions prevailing prior to their separation or, at
respondents' option, merely reinstated in the payroll.
Other than the above, all other claims and charges are
ordered DISMISSED for lack of merit.12
Aggrieved by the foregoing decision, respondents
elevated the case on appeal before the NLRC, during
the pendency of which petitioners filed a third
complaint against the former, for illegal dismissal,
regularization, nonpayment of salaries and 13th
month pay, unfair labor practice, damages and
attorneys fees. In turn docketed as NLRC Case No.
Sub-RAB-V-05-03-00039-08, the complaint was
raffled to Labor Arbiter Quiones who issued an
Order dated 30 April 2008, inhibiting himself from
the case and denying respondents motion to dismiss
on the grounds of res judicata and forum
shopping.13 Finding that respondents control over
petitioners was indeed manifest from the exclusivity
clause and prohibitions in the Talent Contracts and/or
Project Assignment Forms, on the other hand, the
NLRC rendered a Decision dated 31 March 2010,
affirming said Labor Arbiters appealed
14
decision. Undeterred by the NLRCs 31 August
2010 denial of their motion for
15
reconsideration, respondents filed the Rule 65
petition for certiorari docketed before the CA as CA-
G.R. SP No. 116928 which, in addition to taking
exceptions to the findings of the assailed decision,
faulted petitioners for violating the rule against
forum shopping.16
On 29 June 2011, the CA rendered the herein assailed
decision, reversing the findings of the Labor Arbiter
and the NLRC. Ruling out the existence of forum
shopping on the ground that petitioners' second and
third complaints were primarily anchored on their
termination from employment after the filing of their
first complaint, the CA nevertheless discounted the
existence of an employer-employee relation between
the parties upon the following findings and
conclusions: (a) petitioners, were engaged by
respondents as talents for periods, work and the
program specified in the Talent Contracts and/or
Project Assignment Forms concluded between them;
(b) instead of fixed salaries, petitioners were paid
talent fees depending on the budget allocated for the
program to which they were assigned; (c) being
mainly concerned with the result, respondents did not
exercise control over the manner and method by
which petitioner accomplished their work and, at
most, ensured that they complied with the standards
of the company, the KBP and the industry; and, (d)
the existence of an employer-employee relationship
is not necessarily established by the exclusivity
clause and prohibitions which are but terms and
conditions on which the parties are allowed to freely
stipulate.17
Petitioners motion for reconsideration of the
foregoing decision was denied in the CA's 3 October
2011 Resolution,18 hence, this petition.
The Issues
Petitioners seek the reversal of the CAs assailed
Decision and Resolution on the affirmative of the
following issues:
1. Whether or not the CA seriously and reversibly
erred in not dismissing respondents petition for
certiorari in view of the fact that they did file a
Notice of Appeal at the NLRC level and did not, by
themselves or through their duly authorized
representative, verify and certify the Memorandum of
Appeal they filed thereat, in accordance with the
NLRC Rules of Procedure; and 2. Whether or not the
CA seriously and reversibly erred in brushing aside
the determination made by both the Labor Arbiter
and the NLRC of the existence of an employer-
employee relationship between the parties, despite
established jurisprudence supporting the same.
The Court's Ruling
The Court finds the petition impressed with merit.
Petitioners preliminarily fault the CA for not
dismissing respondents Rule 65 petition for
certiorari in view of the fact that the latter failed to
file a Notice of Appeal from the Labor Arbiters
decision and to verify and certify the Memorandum
of Appeal they filed before the NLRC. While
concededly required under the NLRC Rules of
Procedure, however, these matters should have been
properly raised during and addressed at the appellate
stage before the NLRC. Instead, the record shows
that the NLRC took cognizance of respondents
appeal and proceeded to resolve the same in favor of
petitioners by affirming the Labor Arbiters decision.
Not having filed their own petition for certiorari to
take exception to the liberal attitude the NLRC
appears to have adopted towards its own rules of
procedure, petitioners were hardly in the proper
position to raise the same before the CA or, for that
matter, before this Court at this late stage. Aside from
the settled rule that a party who has not appealed is
not entitled to affirmative relief other than the ones
granted in the decision19 rendered, liberal
interpretation of procedural rules on appeal had, on
occasion, been favored in the interest of substantive
justice.20
Although the existence of an employer-employee
relationship is, on the other hand, a question of
fact21 which is ordinarily not the proper subject of a
Rule 45 petition for review on certiorari like the one
at bar, the conflicting findings between the labor
tribunals and the CA justify a further consideration of
the matter.22 To determine the existence of said
relation, case law has consistently applied the four-
fold test, to wit: (a) the selection and engagement of
the employee; (b) the payment of wages;(c) the
power of dismissal; and (d) the employer's power to
control the employee on the means and methods by
which the work is accomplished.23 Of these criteria,
the so-called "control test" is generally regarded as
the most crucial and determinative indicator of the
presence or absence of an employer-employee
relationship. Under this test, an employer-employee
relationship is said to exist where the person for
whom the services are performed reserves the right to
control not only the end result but also the manner
and means utilized to achieve the same.24
In discounting the existence of said relationship
between the parties, the CA ruled that Petitioners'
services were, first and foremost, engaged thru their
Talent Contracts and/or Project Assignment Forms
which specified the work to be performed by them,
the project to which they were assigned, the duration
thereof and their rates of pay according to the budget
therefor allocated. Because they are imbued with
public interest, it cannot be gainsaid, however, that
labor contracts are subject to the police power of the
state and are placed on a higher plane than ordinary
contracts. The recognized supremacy of the law over
the nomenclature of the contract and the stipulations
contained therein is aimed at bringing life to the
policy enshrined in the Constitution to afford
protection to labor.25 Insofar as the nature of ones
employment is concerned, Article 280 of the Labor
Code of the Philippines also provides as follows:
ART. 280. Regular and Casual Employment. The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the
employer, except where the employment has been
fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee or where the work or service to be
performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is
not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one
year of service, whether such service is continuous or
broken, shall be considered a regular employee with
respect to the activity in which he is employed and
his employment shall continue while such actually
exists.
It has been ruled that the foregoing provision
contemplates four kinds of employees, namely: (a)
regular employees or those who have been engaged
to perform activities which are usually necessary or
desirable in the usual business or trade of the
employer; (b) project employees or those whose
employment has been fixed for a specific project or
undertaking, the completion or termination of which
has been determined at the time of the engagement of
the employee; (c) seasonal employees or those who
work or perform services which are seasonal in
nature, and the employment is for the duration of the
season; and (d) casual employees or those who are
not regular, project, or seasonal employees.26 To the
foregoing classification of employee, jurisprudence
has added that of contractual or fixed term employee
which, if not for the fixed term, would fall under the
category of regular employment in view of the nature
of the employees engagement, which is to perform
activity usually necessary or desirable in the
employers business.27
The Court finds that, notwithstanding the
nomenclature of their Talent Contracts and/or Project
Assignment Forms and the terms and condition
embodied therein, petitioners are regular employees
of ABS-CBN. Time and again, it has been ruled that
the test to determine whether employment is regular
or not is the reasonable connection between the
activity performed by the employee in relation to the
business or trade of the employer.28 As
cameramen/editors and reporters, petitioners were
undoubtedly performing functions necessary and
essential to ABS-CBNs business of broadcasting
television and radio content. It matters little that
petitioners services were engaged for specified
periods for TV Patrol Bicol and that they were paid
according to the budget allocated therefor. Aside
from the fact that said program is a regular weekday
fare of the ABS-CBNs Regional Network Group in
Naga City, the record shows that, from their initial
engagement in the aforesaid capacities, petitioners
were continuously re-hired by respondents over the
years. To the mind of the Court, respondents
repeated hiring of petitioners for its long-running
news program positively indicates that the latter were
ABS-CBNs regular employees.
If the employee has been performing the job for at
least one year, even if the performance is not
continuous or merely intermittent, the law deems the
repeated or continuing performance as sufficient
evidence of the necessity, if not indispensability of
that activity in the business.29 Indeed, an employment
stops being co-terminous with specific projects
where the employee is continuously re-hired due to
the demands of the employers business. 30When
circumstances show, moreover, that contractually
stipulated periods of employment have been imposed
to preclude the acquisition of tenurial security by the
employee, this Court has not hesitated in striking
down such arrangements as contrary to public policy,
morals, good customs or public order.31 The nature of
the employment depends, after all, on the nature of
the activities to be performed by the employee,
considering the nature of the employers business, the
duration and scope to be done, and, in some cases,
even the length of time of the performance and its
continued existence.32 In the same manner that the
practice of having fixed-term contracts in the
industry does not automatically make all talent
contracts valid and compliant with labor law, it has,
consequently, been ruled that the assertion that a
talent contract exists does not necessarily prevent a
regular employment status.33
As cameramen/editors and reporters, it also appears
that petitioners were subject to the control and
supervision of respondents which, first and foremost,
provided them with the equipments essential for the
discharge of their functions. Prepared at the instance
of respondents, petitioners Talent Contracts tellingly
provided that ABS-CBN retained "all creative,
administrative, financial and legal control" of the
program to which they were assigned. Aside from
having the right to require petitioners "to attend and
participate in all promotional or merchandising
campaigns, activities or events for the Program,"
ABS-CBN required the former to perform their
functions "at such locations and
Performance/Exhibition Schedules" it provided or,
subject to prior notice, as it chose determine, modify
or change. Even if they were unable to comply with
said schedule, petitioners were required to give
advance notice, subject to respondents
34
approval. However obliquely worded, the Court
finds the foregoing terms and conditions
demonstrative of the control respondents exercised
not only over the results of petitioners work but also
the means employed to achieve the same.
In finding that petitioners were regular employees,
the NLRC further ruled that the exclusivity clause
and prohibitions in their Talent Contracts and/or
Project Assignment Forms were likewise indicative
of respondents control over them. Brushing aside
said finding, however, the CA applied the ruling in
Sonza v. ABS-CBN Broadcasting
35
Corporation where similar restrictions were
considered not necessarily determinative of the
existence of an employer-employee relationship.
Recognizing that independent contractors can validly
provide his exclusive services to the hiring party, said
case enunciated that guidelines for the achievement
of mutually desired results are not tantamount to
control. As correctly pointed out by petitioners,
however, parallels cannot be expediently drawn
between this case and that of Sonza case which
involved a well-known television and radio
personality who was legitimately considered a talent
and amply compensated as such. While possessed of
skills for which they were modestly recompensed by
respondents, petitioners lay no claim to fame and/or
unique talents for which talents like actors and
personalities are hired and generally compensated in
the broadcast industry.
Later echoed in Dumpit-Murillo v. Court of
Appeals,36 this Court has rejected the application of
the ruling in the Sonza case to employees similarly
situated as petitioners in ABS-CBN Broadcasting
Corporation v. Nazareno.37The following distinctions
were significantly observed between employees like
petitioners and television or radio personalities like
Sonza, to wit:
First. In the selection and engagement of
respondents, no peculiar or unique skill, talent or
celebrity status was required from them because they
were merely hired through petitioners personnel
department just like any ordinary employee.
Second. The so-called "talent fees" of respondents
correspond to wages given as a result of an
employer-employee
relationship.1wphi1 Respondents did not have the
power to bargain for huge talent fees, a circumstance
negating independent contractual relationship.
Third. Petitioner could always discharge respondents
should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner
for continued work.
Fourth. The degree of control and supervision
exercised by petitioner over respondents through its
supervisors negates the allegation that respondents
are independent contractors.
The presumption is that when the work done is an
integral part of the regular business of the employer
and when the worker, relative to the employer, does
not furnish an independent business or professional
service, such work is a regular employment of such
employee and not an independent contractor. The
Court will peruse beyond any such agreement to
examine the facts that typify the parties actual
relationship.38 (Emphasis omitted)
Rather than the project and/or independent
contractors respondents claim them to be, it is
evident from the foregoing disquisition that
petitioners are regular employees of ABS-CBN. This
conclusion is borne out by the ineluctable showing
that petitioners perform functions necessary and
essential to the business of ABS-CBN which
repeatedly employed them for a long-running news
program of its Regional Network Group in Naga
City. In the course of said employment, petitioners
were provided the equipments they needed, were
required to comply with the Company's policies
which entailed prior approval and evaluation of their
performance. Viewed from the prism of these
considerations, we find and so hold that the CA
reversibly erred when it overturned the NLRC's
affirmance of the Labor Arbiter's finding that an
employer-employee relationship existed between the
parties. Given the fact, however, that Sub-RAB-V-
05-03-00039-08 had not been consolidated with this
case and appears, for all intents and purposes, to be
pending still, the Court finds that the reinstatement of
petitioners ordered by said labor officer and tribunal
should, as a relief provided in case of illegal
dismissal, be left for determination in said case.
WHEREFORE, the Court of Appeals' assailed
Decision dated 29 June 2011 and Resolution dated 3
October 2011 in CA-G.R. SP No. 116928 are
REVERSED and SET ASIDE. Except for the
reinstatement of Nelson V. Begino, Gener Del Valle,
Monina Avila-Llorin and Ma. Cristina Sumayao, the
National Labor and Relations Commission's 31
March 2010 Decision is, accordingly, REINSTATED.
SO ORDERED.
JOSE PORTUGAL PEREZ
Associate Justice
WE CONCUR:
THIRD DIVISION
G.R. No. 186114, October 07, 2015
 CHEVRON (PHILS.),
INC., Petitioner, v. VITALIANO C GALIT, SJS
AND SONS CONSTRUCTION CORPORATION
AND MR. REYNALDO
SALOMON, Respondents.
DECISION
PERALTA J.:*
Before the Court is a petition for review
on certiorari under Rule 45 of the Rules of Court
seeking the reversal and setting aside of the
Decision1 and Resolution2 of the Court of Appeals
(CA), dated December 8, 2008 and January 20,
2009, respectively, in CA-G.R. SP No. 104713. The
assailed CA Decision reversed and set aside the
Decision dated January 31, 2008 and the
Resolution dated May 27, 2008 of the National
Labor Relations Commission (NLRC), Second
Division in NLRC NCR (Case No.) 00-03-02399-06
(CA No. 051468-07), while the questioned CA
Resolution denied petitioner's Motion for
Reconsideration.
The factual and procedural antecedents of the
case are as follows:chanRoblesvirtualLawlibrary
On March 20, 2006, herein respondent (Galit) filed
against Caltex Philippines, Inc., now Chevron
(Phils.), Inc., SJS and Sons Construction
Corporation (SJS), and its president, Reynaldo
Salomon (Salomon),3 a Complaint4 for illegal
dismissal, underpayment/non-payment of
13th month pay, separation pay and emergency
cost of living allowance. The Complaint was filed
with the NLRC National Capital Region, North
Sector Branch in Quezon City.
In his Position Paper,5 Galit alleged that: he is a
regular and permanent employee of Chevron since
1982, having been assigned at the company's
Pandacan depot; he is an "all-around employee"
whose job consists of cleaning the premises of the
depot, changing malfunctioning oil gaskets,
transferring oil from containers and other tasks
that management would assign to him; in the
performance of his duties, he was directly under
the control and supervision of Chevron
supervisors; on January 15, 2005, he was verbally
informed that his employment is terminated but
was promised that he will be reinstated soon; for
several months, he followed up his reinstatement
but was not given back his job.
In its Position Paper,6 SJS claimed that: it is a
company which was established in 1993 and was
engaged in the business of providing manpower to
its clients on a "per project/contract" basis; Galit
was hired by SJS in 1993 as a project employee
and was assigned to Chevron, as a janitor, based
on a contract between the two companies;
contrary to Galit's allegation, he started working
for SJS only in 1993; the manpower contract
between SJS and Chevron eventually ended on
November 30, 2004 which resulted in the
severance of Galit's employment; SJS finally closed
its business operations in December 2004; it
retired from doing business in Manila on January
21, 2005; Galit was paid separation pay of
P11,000.00.
On the other hand, petitioner contended in its
Position Paper with Motion to Dismiss 7 that: it
entered into two (2) contracts for-janitorial services
with SJS from May 1, 2001 to April 30, 2003 and
from June 1, 2003 to June 1, 2004; under these
contracts, SJS undertook to "assign such number of
its employees, upon prior .agreement with
[petitioner], as would be sufficient to fully and
effectively render the work and services
undertaken" and to "supply the equipment, tools
and materials, which shall, by all means, be
effective and efficient, at its own expense,
necessary for the performance" of janitorial
services; Galit, who was employed by SJS, was
assigned to petitioner's Pandacan depot as a
janitor; his wages and all employment benefits
were paid by SJS; he was subject to the
supervision, discipline and control of SJS; on
November 30, 2004, the extended contract
between petitioner and SJS expired; subsequently,
a new contract for janitorial services was awarded
by petitioner to another independent contractor;
petitioner was surprised that Galit filed an action
impleading it; despite several conferences, the
parties were not able to arrive at an amicable
settlement.
On October 31, 2006, the Labor Arbiter (LA)
assigned to the case rendered a Decision,8 the
dispositive portion of which reads as
follows:cralawlawlibrary
WHEREFORE, judgment is hereby
rendered DISMISSING the Complaint
against respondent Chevron for lack
of jurisdiction, and against
respondents SJS and Reynaldo
Salomon for lack of merit. For equity
and compassionate consideration,
however, respondent SJS is hereby
ordered to pay the complainant a
separation pay at the rate of a half-
month salary for every year of
service that the complainant had
with respondent SJS.
SO ORDERED.9
chanrobleslaw

The LA found that SJS is a legitimate contractor
and that it was Galit's employer, not petitioner.
The LA dismissed Galit's complaint for illegal
dismissal against petitioner for lack of jurisdiction
on the ground that there was no employer-
employee relationship between petitioner and
Galit. The LA likewise dismissed the complaint
against SJS and Salomon for lack of merit on the
basis of his finding that Galit's employment with
SJS simply expired as a result of the completion of
the project for which he was engaged.
Aggrieved, herein respondent filed an
appeal10 with the NLRC.
On January 31, 2008, the NLRC rendered its
Decision11 and disposed as follows:cralawlawlibrary
WHEREFORE, premises considered,
the decision under review is hereby,
MODIFIED.
Respondent SJS and Sons
Construction Corporation is ordered
to pay the complainant, severance
compensation, at the rate of one (1)
month salary for every year of
service. In all other respects, the
appealed decision so stands as
AFFIRMED.
SO ORDERED.12
chanrobleslaw
are REVERSED and SET ASIDE.
Judgment is rendered declaring
private respondent Chevron Phils,
guilty of illegal dismissal and
ordering petitioner Galit's
reinstatement without loss of
seniority rights and other privileges
and payment of his full backwages,
inclusive of allowances and to other
benefits or their monetary
equivalents computed from the time
compensation was withheld up to
the time of actual reinstatement.
Private respondent Chevron Phils, is
also hereby ordered to pay 10% of
the amount due petitioner Galit as
attorney's fees.
SO ORDERED.15
chanrobleslaw
Contrary to the- findings of the LA and the NLRC,
the CA held that SJS was a labor-only contractor,
that petitioner is Galit's actual employer and that
the latter was unjustly dismissed from his
employment.
Herein petitioner filed a motion for reconsideration,
but the CA denied it in its Resolution dated January
20, 2009.
Hence, the present petition for review
on certiorari based on the following
grounds:cralawlawlibrary

The NLRC affirmed the findings of the LA that SJS I.

was a legitimate job contractor and that it was
Galit's employer. However,"the NLRC found that WITH ALL DUE
Gal it was a regular, and not a project employee, of RESPECT, THE
SJS, whose employment was effectively terminated HONORABLE COURT
when SJS ceased to operate. OF APPEALS
SERIOUSLY ERRED IN
Herein respondent tiled a Motion for DECLARING THAT THE
Reconsideration,13 but the NLRC denied it in its DISMISSAL OF
Resolution14 dated May 27, 2008. RESPONDENT WAS
ILLEGAL CONSIDERING
Respondent then filed a petition for certiorari with THAT:chanRoblesvirtu
the CA assailing the above NLRC Decision and alLawlibrary
Resolution.
A. THE FINDINGS OF
On December 8, 2008, the CA promulgated its FACT OF TFIE LABOR
assailed Decision, the dispositive portion of which ARBITER A QUO AND
reads, thus:cralawlawlibrary THE NATIONAL LABOR
RELATIONS
WHEREFORE, premises considered, COMMISSION ARE
the petition is GRANTED. The ALREADY BINDING
Decision dated January 31, 2008 and UPON THE
the Resolution dated May 27, 2008 HONORABLE COURT
of the NLRC, Second Division in OF APPEALS.
NLRC NCR [Cast No.] 00-03-02399-
06 (CA No. 051468-07) B. THERE IS NO
 EMPLOYER-EMPLOYEE
RELATIONSHIP
BETWEEN THE
COMPANY AND
RESPONDENT HEREIN.
C. PETITIONER SJS IS
A. LEGITIMATE
INDEPENDENT
CONTRACTOR.
II.
CONSIDERING THAT THERE IS NO
EMPLOYER-EMPLOYEE RELATIONSHIP
BETWEEN THE COMPANY AND
RESPONDENT HEREIN, THE
HONORABLE COURT OF APPEALS'
AWARD OF REINSTATEMENT,
BACKWAGES, AND ATTORNEY'S FEES
AGAINST THE COMPANY HAS NO
LEGAL BASIS.16chanrobleslaw
On September 19, 2012, this Court issued a
Resolution17 directing petitioner to implead SJS as
party-respondent on the ground that it is an
indispensable party without whom no final
determination can be had of this case.
In a Motion18 dated November 21, 2012, petitioner
manifested its compliance with this Court's
September 19, 2012 Resolution. In addition, it
prayed that Salomon be also impleaded as party-
respondent
Acting on petitioner's above Motion, this Court
issued another Resolution19 on June 19, 2013,
stating that SJS and Salomon are impleaded as
parties-respondents and are required to comment
on the petition for review on certiorari.
However, despite due notice sent to SJS and
Salomon at their last known addresses, copies of
the above Resolution were returned unserved.
Hence, on October 20, 2014, the Court, acting on
Galit's plea for early resolution of the case,
promulgated a Resolution20 resolving to dispense
with the filing by SJS and Salomon of their
respective comments.
The Court will, thus, proceed to resolve the instant
petition.
At the outset, the Court notes that the first ground
raised by petitioner consists of factual issues. It is
settled that this Court is not a trier of facts, and
this applies with greater force in labor
cases.21 Corollary thereto, this Court has held in a
number of cases that factual findings of
administrative or quasi-judicial bodies, which are
deemed to have acquired expertise in matters
within their respective jurisdictions, are generally
accorded not only respect but even finality, and
bind the Court when supported by substantial
evidence.22 However, it is equally settled that
the.foregoing principles admit of certain
exceptions, to wit: (1) the findings are grounded
entirely on speculation, surmises or conjectures;
(2) the inference made is manifestly mistaken,
absurd or impossible; (3) there is grave abuse of
discretion; (4) the judgment is based on a
misapprehension of facts; (5) the findings of fact
are conflicting; (6) in making its findings, the Court
of Appeals went beyond the issues of the case, or
its findings are contrary to the admissions of both
appellant and appellee; (7) the findings are
contrary to those of the trial court; (8) the findings
are conclusions without citation of specific
evidence on which they are based; (9) the facts set
forth in the petition, as well as in petitioners main
and reply briefs, are not disputed by respondent;
(10) the findings of fact are premised on the
supposed absence of evidence and contradicted by
the evidence on record; and (11) the Court of
Appeals manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly
considered, would justify a different conclusion. 23 In
the instant case, the Court gives due course to the
instant petition considering that the findings of fact
and conclusions of law of the LA and the NLRC
differ from those of the CA.
Thus, the primordial question that confronts the
Court is whether there existed an employer-
employee relationship between petitioner and
Galit, and whether the former is liable to the latter
for the termination of his employment. Corollary to
this, is the issue of whether or not SJS is an
independent contractor or a labor only contractor.
To ascertain the existence of an employer-
employee relationship, jurisprudence has
invariably adhered to the four-fold test, to wit: (1)
the selection and engagement of the employee;
(2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the
employee's conduct, or the so-called "control
test."24 Of these four, the last one is the most
important.25 The so-called "control test" is
commonly regarded as the most crucial and
determinative indicator of the presence or absence
of an employer-employee relationship.26 Under the
control test, an employer-employee relationship
exists where the person for whom the services are
performed reserves the right to control not only
the end achieved, but also the manner and means
to be used in reaching that end.27
In the instant case, the true nature of Galit's
employment is evident from the Job Contract
between petitioner and SJS, pertinent portions of
which are reproduced hereunder:cralawlawlibrary
xxxx
1.1 The CONTRACTOR [SJS] shall
provide the following specific
services to the COMPANY
[petitioner]:
xxxx
1. Scooping of slop of
oil water separator
2. Cleaning of truck
parking area/drum
storage area and pier
xxxx
4.1 In the fulfillment of its
obligations to the COMPANY, the
CONTRACTOR shall select and hire
its workers. The CONTRACTOR alone
shall be responsible for the payment
of their wages and other
employment benefits and likewise
for the safeguarding of their health
and safety in accordance with
existing laws- and regulations.
Likewise, the CONTRACTOR shall be
responsible for the discipline and/or
dismissal of these workers.
4.2 The CONTRACTOR shall retain
the right to control the manner and
the means of performing the work,
with the COMPANY having the
control or direction only as to the
results to be accomplished.
xxxx
4.4 It is understood that, for the
above reasons, these workers shall
be considered as the employees of
the CONTRACTOR. Under no
circumstances, shall these workers
be deemed directly or indirectly as
the employees of the COMPANY.
xxxx
5.1 The CONTRACTOR shall maintain
efficient and effective discipline over
any and all employees it may utilize
in performing its obligations under
this CONTRACT, x x x
5.2 The COMPANY shall in no
manner be answerable or
accountable for any incident or
injury which may occur to any
worker or personnel of .the
CONTRACTOR during the time and
consequent upon the performance
of the work and services under this
Agreement, nor for any injury, loss
or damage arising from fault,
negligence or carelessness of the
CONTRACTOR or anyone of its
workers to any person or persons or
to his or their property; and the
CONTRACTOR covenants and agrees
to assume, as it does hereby
assume, all liabilities for any such
injury, loss or damage and to make
the COMPANY free and blameless
therefrom, x x x
5.3. The CONTRACTOR shall be
responsible for any loss or damage
that may be incurred upon the
products, properties and installations
of the COMPANY during the
effectivity of this Contract which are
due to the unreasonable or negligent
act of the CONTRACTOR, its agents
or its workers.
xxxx
6.1 The CONTRACTOR shall at its
own expense maintain with a
reputable insurance company,
acceptable to the CQMPANY, a
comprehensive liability insurance in
the amount required by the
COMPANY to cover claims for bodily
injury, death or property damage
caused to any person or persons by
an act or omission of the
CONTRACTOR or any of its
employees, agents or
representatives.
xxxx
x x x [T]he CONTRACTOR agrees and
undertakes:chanRoblesvirtualLawlibr
ary
xxxx
b. To submit satisfactory proof to the
COMPANY that it has registered its
personnel/workers assigned to
perform the work and services
herein required with the Social
Security System, Medicare and other
appropriate agencies for purposes of
the Labor Code as well as other
laws, decrees, rules and regulations.
c. To pay the wages or salaries of its
personnel/workers as well as
benefits, premia and protection in
 accordance with the provisions of
the Labor Code and other applicable
laws, decrees, rules and regulations
promulgated by competent
authority, xxx
d. To assign such number of its
employees, upon prior agreement
with the COMPANY, as would be
sufficient to fully and effectively
render the work and services herein
undertaken, xxx
e. To supply the equipment, tools
and materials, which shall, by all
means, be effective and efficient, at
its own expense, necessary for the
performance of the services under
this Contract.28chanrobleslaw
The foregoing provisions of the Job Contract
between petitioner and SJS demonstrate that the
latter possessed the following earmarks of an
employer, to wit: (1) the power of selection and
engagement of employees, under.Sections 4.1 and
6.1(d); (2) the payment of wages, under Sections
4.1 and 6.1(c); (3) the power to discipline and
dismiss, under Section 4.1; and, (4) the power to
control the employee's conduct, under Sections
4.1, 4.2, and 5.1.
As to SJS' power of selection and engagement,
Galit himself admitted in his own affidavit that it
was SJS which assigned him to work at Chevron's
Pandacan depot.29 As such, there is no question
that it was SJS which selected and engaged Galit
as its employee.
With respect to the payment of wages, the Court
finds no error in the findings of the LA that Galit
admitted that it was SJS which paid his wages.
While Galit claims that petitioner was the one
which actually paid his wages and that SJS was
merely used as a conduit, Galit failed to present
evidence to this effect. Galit, likewise, failed to
present sufficient proof to back up his claim that it
was petitioner, and not SJS, which actually paid his
SSS, Philhealth and Pag-IBIG premiums. On the
contrary, it is .unlikely that SJS would report Galit
as its worker, pay his SSS, Philhealth and Pag-IBIG
premiums, as well as his wages, if it were not true
that he was indeed its employee.30 In the same
manner, the Quitclaim and Release,31 which was
undisputedly signed by Galit, acknowledging
receipt of his separation pay from SJS, is an
indirect admission or recognition of the fact that
the latter was indeed his employer. Again, it would
be unlikely for SJS to pay Galit his separation pay if
it is not the latter's employer.
Galit also did not dispute the fact that he was
dismissed from employment by reason of the
termination of the service contract between SJS
and petitioner. In other words, it was not petitioner
which ended his employment. He was dismissed
therefrom because petitioner no longer renewed its
contract with SJS and that the latter subsequently
ceased to operate.
Anent the power of control, the Court again finds
no cogent reason to depart from the findings of the
NLRC that in case of matters that needed to be
addressed with respect to employee performance,
petitioner dealt directly with SJS and not with the
employee concerned. In any event, it is settled
that such power merely calls for the existence of
the right to control and not necessarily the
exercise thereof. In the' present case, the Job
Contract between petitioner and SJS clearly
provided that SJS "shall retain the right to control
the manner and the means of performing the work,
with [petitioner] having the control or direction
only as to the results to be accomplished."32
In addition, it would bear to point out that contrary
to the ruling of the CA, the work performed by
Galit, which is the "scooping of slop of oil water
separator,"33 has no direct relation to petitioner's
business, which is the importation, refining and
manufacture of petroleum products. The Court
defers to the findings of both the LA and the NLRC
that the job performed by Galit, which essentially
consists of janitorial services, may be incidental or
desirable to petitioner's main activity but it is not
necessary and directly related to it.
As to whether or not SJS is an independent
contractor, jurisprudence has invariably ruled that
an independent contractor carries on an
independent business and undertakes the contract
work on his own account, under his own
responsibility, according to his own manner and
method, and free from the control and direction of
his employer or principal in all matters connected
with the performance of the work except as to the
results thereof.34 This embodies what has long
been jurisprudentially recognized as the control
test, as discussed above. In the instant case, SJS
presented evidence to show that it had an
independent business by paying business taxes
and fees and that it was registered as an employer
with the Social Security System. Moreover, there
was no evidence to show that SJS and its
employees were ever subject to the control of
petitioner. On the contrary, as shown above, SJS
possessed the right to control its employees'
manner and means of performing their work ,
including herein respondent Galit.
As to its capital, there is no dispute that SJS
generated an income of P1,523,575.81 for the year
2004.35In Neri v. National Labor Relations
Commission,36 this Court held that a business
venture which had a capitalization of
P1,000,000.00 was considered as highly
capitalized and cannot be deemed engaged in
labor-only contracting. In the present case, while
SJS' income of more than P1,500,000.00 was not
shown to be equivalent to its authorized capital
stock, such income is an indication of how much
capital was put into its business to generate such
amount of revenue. Thus, the Court finds no
sufficient reason to disturb the findings of the LA
and the NLRC that SJS had substantial capital.

WHEREFORE, the instant petition is GRANTED.

The assailed Decision and Resolution of the Court
of Appeals, dated December 8, 2008 and January
20, 2009, respectively, are REVERSED and SET
ASIDE. The Decision of the National Labor
Relations Commission, dated January 31, 2008 in
NLRC NCR' [Case No.] 00-03-02399-06 (CA No.
051468-07) is REINSTATED.

SO ORDERED.chanroblesvirtuallawlibrary
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