1 Javier v.

Fly Ace Corporation

THIRD DIVISION
x -----------------------------------------------------------------------------------
-----x

BITOY JAVIER DECISION

(DANILO P. JAVIER),
Petitioner,

MENDOZA, J.:

- versus -

This is a petition under Rule 45 of the Rules of Civil Procedure

assailing the March 18, 2010 Decision[1] of the Court of Appeals
FLY ACE CORPORATION/ (CA) and its June 7, 2010 Resolution,[2] in CA-G.R. SP No.
FLORDELYN CASTILLO, 109975, which reversed the May 28, 2009 Decision[3] of the
Respondents. National Labor Relations Commission (NLRC) in the case entitled
Bitoy Javier v. Fly Ace/Flordelyn Castillo,[4] holding that petitioner
G.R. No. 192558 Bitoy Javier (Javier) was illegally dismissed from employment and
ordering Fly Ace Corporation (Fly Ace) to pay backwages and
Present: separation pay in lieu of reinstatement.

CARPIO,* J.,
PERALTA,** Acting Chairperson, Antecedent Facts
ABAD,
PEREZ,*** and
MENDOZA, JJ. On May 23, 2008, Javier filed a complaint before the NLRC for
underpayment of salaries and other labor standard benefits. He
alleged that he was an employee of Fly Ace since September
2007, performing various tasks at the respondents warehouse
Promulgated: such as cleaning and arranging the canned items before their
delivery to certain locations, except in instances when he would
February 15, 2012 be ordered to accompany the companys delivery vehicles, as
pahinante; that he reported for work from Monday to Saturday
from 7:00 oclock in the morning to 5:00 oclock in the afternoon;
that during his employment, he was not issued an identification
card and payslips by the company; that on May 6, 2008, he
reported for work but he was no longer allowed to enter the
company premises by the security guard upon the instruction of
Ruben Ong (Mr. Ong), his superior;[5] that after several minutes
of begging to the guard to allow him to enter, he saw Ong whom
he approached and asked why he was being barred from entering
the premises; that Ong replied by saying, Tanungin mo anak mo;
[6] that he then went home and discussed the matter with his
family; that he discovered that Ong had been courting his
daughter Annalyn after the two met at a fiesta celebration in
Malabon City; that Annalyn tried to talk to Ong and convince him
to spare her father from trouble but he refused to accede; that
thereafter, Javier was terminated from his employment without
notice; and that he was neither given the opportunity to refute the
cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one
Bengie Valenzuela who alleged that Javier was a stevedore or
pahinante of Fly Ace from September 2007 to January 2008. The
said affidavit was subscribed before the Labor Arbiter (LA).[7]
For its part, Fly Ace averred that it was engaged in the business
of importation and sales of groceries. Sometime in December
2007, Javier was contracted by its employee, Mr. Ong, as extra
helper on a pakyaw basis at an agreed rate of 300.00 per trip,
which was later increased to 325.00 in January 2008. Mr. Ong
contracted Javier roughly 5 to 6 times only in a month whenever
the vehicle of its contracted hauler, Milmar Hauling Services, was
not available. On April 30, 2008, Fly Ace no longer needed the
services of Javier. Denying that he was their employee, Fly Ace
insisted that there was no illegal dismissal.[8] Fly Ace submitted
a copy of its agreement with Milmar Hauling Services and copies
of acknowledgment receipts evidencing payment to Javier for his
contracted services bearing the words, daily manpower
(pakyaw/piece rate pay) and the latters signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack
of merit on the ground that Javier failed to present proof that he
was a regular employee of Fly Ace. He wrote:
Complainant has no employee ID showing his employment with
the Respondent nor any document showing that he received the
benefits accorded to regular employees of the Respondents. His
contention that Respondent failed to give him said ID and
payslips implies that indeed he was not a regular employee of Fly
Ace considering that complainant was a helper and that
Respondent company has contracted a regular trucking for the
delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in
the importation and sales of groceries. Since there is a regular
hauler to deliver its products, we give credence to Respondents
claim that complainant was contracted on pakiao basis.
As to the claim for underpayment of salaries, the payroll
presented by the Respondents showing salaries of workers on
pakiao basis has evidentiary weight because although the
signature of the complainant appearing thereon are not uniform,
they appeared to be his true signature.
xxxx
Hence, as complainant received the rightful salary as shown by for illegal dismissal of Javier who was likewise entitled to
the above described payrolls, Respondents are not liable for backwages and separation pay in lieu of reinstatement. The
salary differentials. [9] NLRC thus ordered:

WHEREFORE, premises considered, complainants appeal is

Ruling of the NLRC partially GRANTED. The assailed Decision of the labor arbiter is
VACATED and a new one is hereby entered holding respondent
FLY ACE CORPORATION guilty of illegal dismissal and non-
payment of 13th month pay. Consequently, it is hereby ordered
On appeal with the NLRC, Javier was favored. It ruled that the LA to pay complainant DANILO Bitoy JAVIER the following:
skirted the argument of Javier and immediately concluded that he
was not a regular employee simply because he failed to present
proof. It was of the view that a pakyaw-basis arrangement did not
preclude the existence of employer-employee relationship. 1. Backwages -45,770.83
Payment by result x x x is a method of compensation and does
not define the essence of the relation. It is a mere method of 2. Separation pay, in lieu of reinstatement - 8,450.00
computing compensation, not a basis for determining the
existence or absence of an employer-employee relationship.[10] 3. Unpaid 13th month pay (proportionate) - 5,633.33
The NLRC further averred that it did not follow that a worker was
a job contractor and not an employee, just because the work he
was doing was not directly related to the employers trade or TOTAL -59,854.16
business or the work may be considered as extra helper as in this
case; and that the relationship of an employer and an employee
was determined by law and the same would prevail whatever the
parties may call it. In this case, the NLRC held that substantial All other claims are dismissed for lack of merit.
evidence was sufficient basis for judgment on the existence of the
employer-employee relationship. Javier was a regular employee
of Fly Ace because there was reasonable connection between
the particular activity performed by the employee (as a pahinante) SO ORDERED.[11]
in relation to the usual business or trade of the employer
(importation, sales and delivery of groceries). He may not be
considered as an independent contractor because he could not
exercise any judgment in the delivery of company products. He Ruling of the Court of Appeals
was only engaged as a helper.
On March 18, 2010, the CA annulled the NLRC findings that
Javier was indeed a former employee of Fly Ace and reinstated
Finding Javier to be a regular employee, the NLRC ruled that he the dismissal of Javiers complaint as ordered by the LA. The CA
was entitled to a security of tenure. For failing to present proof of exercised its authority to make its own factual determination
a valid cause for his termination, Fly Ace was found to be liable
anent the issue of the existence of an employer-employee
relationship between the parties. According to the CA:
xxx
In an illegal dismissal case the onus probandi rests on the
employer to prove that its dismissal was for a valid cause.
However, before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established. x x x it
is incumbent upon private respondent to prove the employee-
employer relationship by substantial evidence.
xxx
It is incumbent upon private respondent to prove, by substantial
evidence, that he is an employee of petitioners, but he failed to
discharge his burden. The non-issuance of a company-issued
identification card to private respondent supports petitioners
contention that private respondent was not its employee.[12]
The CA likewise added that Javiers failure to present salary
vouchers, payslips, or other pieces of evidence to bolster his
contention, pointed to the inescapable conclusion that he was not
an employee of Fly Ace. Further, it found that Javiers work was
not necessary and desirable to the business or trade of the
company, as it was only when there were scheduled deliveries,
which a regular hauling service could not deliver, that Fly Ace
would contract the services of Javier as an extra helper. Lastly,
the CA declared that the facts alleged by Javier did not pass the
control test.
He contracted work outside the company premises; he was not
required to observe definite hours of work; he was not required to
report daily; and he was free to accept other work elsewhere as
there was no exclusivity of his contracted service to the company,
the same being co-terminous with the trip only.[13] Since no
substantial evidence was presented to establish an employer-
employee relationship, the case for illegal dismissal could not
prosper.
The petitioners moved for reconsideration, but to no avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED
IN HOLDING THAT THE PETITIONER WAS NOT A REGULAR
EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED
IN HOLDING THAT THE PETITIONER IS NOT ENTITLED TO
HIS MONETARY CLAIMS.[14]
The petitioner contends that other than its bare allegations and
self-serving affidavits of the other employees, Fly Ace has nothing
to substantiate its claim that Javier was engaged on a pakyaw
basis. Assuming that Javier was indeed hired on a pakyaw basis,
it does not preclude his regular employment with the company.
Even the acknowledgment receipts bearing his signature and the
confirming receipt of his salaries will not show the true nature of
his employment as they do not reflect the necessary details of the
commissioned task. Besides, Javiers tasks as pahinante are
related, necessary and desirable to the line of business by Fly
Ace which is engaged in the importation and sale of grocery
items. On days when there were no scheduled deliveries, he
worked in petitioners warehouse, arranging and cleaning the
stored cans for delivery to clients.[15] More importantly, Javier
was subject to the control and supervision of the company, as he
was made to report to the office from Monday to Saturday, from
7:00 oclock in the morning until 5:00 oclock in the afternoon. The
list of deliverable goods, together with the corresponding clients
and their respective purchases and addresses, would necessarily
have been prepared by Fly Ace. Clearly, he was subjected to
compliance with company rules and regulations as regards
working hours, delivery schedule and output, and his other duties
in the warehouse.[16]
The petitioner chiefly relied on Chavez v. NLRC,[17] where the
Court ruled that payment to a worker on a per trip basis is not
significant because this is merely a method of computing
compensation and not a basis for determining the existence of
employer-employee relationship. Javier likewise invokes the rule
that, in controversies between a laborer and his master, x x x
doubts reasonably arising from the evidence should be resolved
in the formers favour. The policy is reflected is no less than the
Constitution, Labor Code and Civil Code.[18]
Claiming to be an employee of Fly Ace, petitioner asserts that he
was illegally dismissed by the latters failure to observe
substantive and procedural due process. Since his dismissal was
not based on any of the causes recognized by law, and was
implemented without notice, Javier is entitled to separation pay
and backwages.
In its Comment,[19] Fly Ace insists that there was no substantial
evidence to prove employer-employee relationship. Having a
service contract with Milmar Hauling Services for the purpose of
transporting and delivering company products to customers, Fly
Ace contracted Javier as an extra helper or pahinante on a mere
per trip basis. Javier, who was actually a loiterer in the area, only
accompanied and assisted the company driver when Milmar
could not deliver or when the exigency of extra deliveries arises
for roughly five to six times a month. Before making a delivery,
Fly Ace would turn over to the driver and Javier the delivery
vehicle with its loaded company products. With the vehicle and
products in their custody, the driver and Javier would leave the
company premises using their own means, method, best
judgment and discretion on how to deliver, time to deliver, where
and [when] to start, and manner of delivering the products.[20]
Fly Ace dismisses Javiers claims of employment as baseless
assertions. Aside from his bare allegations, he presented nothing
to substantiate his status as an employee. It is a basic rule of
evidence that each party must prove his affirmative allegation. If
he claims a right granted by law, he must prove his claim by
competent evidence, relying on the strength of his own evidence
and not upon the weakness of his opponent.[21] Invoking the
case of Lopez v. Bodega City,[22] Fly Ace insists that in an illegal
dismissal case, the burden of proof is upon the complainant who
claims to be an employee. It is essential that an employer-
employee relationship be proved by substantial evidence. Thus,
it cites:
In an illegal dismissal case, the onus probandi rests on the
employer to prove that its dismissal of an employee was for a
valid cause. However, before a case for illegal dismissal can
prosper, an employer-employee relationship must first be
established.
Fly Ace points out that Javier merely offers factual assertions that
he was an employee of Fly Ace, which are unfortunately not
supported by proof, documentary or otherwise.[23] Javier simply
assumed that he was an employee of Fly Ace, absent any
competent or relevant evidence to support it. He performed his
contracted work outside the premises of the respondent; he was
not even required to report to work at regular hours; he was not
made to register his time in and time out every time he was
contracted to work; he was not subjected to any disciplinary
sanction imposed to other employees for company violations; he
was not issued a company I.D.; he was not accorded the same
benefits given to other employees; he was not registered with the
Social Security System (SSS) as petitioners employee; and, he
was free to leave, accept and engage in other means of livelihood
as there is no exclusivity of his contracted services with the
petitioner, his services being co-terminus with the trip only. All
these lead to the conclusion that petitioner is not an employee of
the respondents.[24]
Moreover, Fly Ace claims that it had no right to control the result,
means, manner and methods by which Javier would perform his
work or by which the same is to be accomplished.[25] In other
words, Javier and the company driver were given a free hand as
to how they would perform their contracted services and neither
were they subjected to definite hours or condition of work.
Fly Ace likewise claims that Javiers function as a pahinante was
not directly related or necessary to its principal business of
importation and sales of groceries. Even without Javier, the
business could operate its usual course as it did not involve the
business of inland transportation. Lastly, the acknowledgment
receipts bearing Javiers signature and words pakiao rate,
referring to his earned salaries on a per trip basis, have
evidentiary weight that the LA correctly considered in arriving at
the conclusion that Javier was not an employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged illegal dismissal
is anchored on the existence of an employer-employee
relationship between him and Fly Ace. This is essentially a
question of fact. Generally, the Court does not review errors that
raise factual questions. However, when there is conflict among
the factual findings of the antecedent deciding bodies like the LA,
the NLRC and the CA, it is proper, in the exercise of Our equity
jurisdiction, to review and re-evaluate the factual issues and to
look into the records of the case and re-examine the questioned
findings.[26] In dealing with factual issues in labor cases,
substantial evidence that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion
is sufficient.[27]
As the records bear out, the LA and the CA found Javiers claim
of employment with Fly Ace as wanting and deficient. The Court
is constrained to agree. Although Section 10, Rule VII of the New
Rules of Procedure of the NLRC[28] allows a relaxation of the
rules of procedure and evidence in labor cases, this rule of
liberality does not mean a complete dispensation of proof. Labor
officials are enjoined to use reasonable means to ascertain the
facts speedily and objectively with little regard to technicalities or
formalities but nowhere in the rules are they provided a license to
completely discount evidence, or the lack of it. The quantum of
proof required, however, must still be satisfied. Hence, when
confronted with conflicting versions on factual matters, it is for
them in the exercise of discretion to determine which party
deserves credence on the basis of evidence received, subject
only to the requirement that their decision must be supported by
substantial evidence.[29] Accordingly, the petitioner needs to
show by substantial evidence that he was indeed an employee of
the company against which he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer
allegations as different as chalk and cheese. It is, therefore,
incumbent upon the Court to determine whether the party on
whom the burden to prove lies was able to hurdle the same. No
particular form of evidence is required to prove the existence of
such employer-employee relationship. Any competent and
relevant evidence to prove the relationship may be admitted.
Hence, while no particular form of evidence is required, a finding
that such relationship exists must still rest on some substantial
evidence. Moreover, the substantiality of the evidence depends
on its quantitative as well as its qualitative aspects.[30] Although
substantial evidence is not a function of quantity but rather of
quality, the x x x circumstances of the instant case demand that
something more should have been proffered. Had there been
other proofs of employment, such as x x x inclusion in petitioners
payroll, or a clear exercise of control, the Court would have
affirmed the finding of employer-employee relationship.[31]
In sum, the rule of thumb remains: the onus probandi falls on
petitioner to establish or substantiate such claim by the requisite
quantum of evidence.[32] Whoever claims entitlement to the
benefits provided by law should establish his or her right thereto
x x x.[33] Sadly, Javier failed to adduce substantial evidence as
basis for the grant of relief.
In this case, the LA and the CA both concluded that Javier failed
to establish his employment with Fly Ace. By way of evidence on
this point, all that Javier presented were his self-serving
statements purportedly showing his activities as an employee of
Fly Ace. Clearly, Javier failed to pass the substantiality
requirement to support his claim. Hence, the Court sees no
reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed
stevedore of Fly Ace, he was made to work in the company
premises during weekdays arranging and cleaning grocery items
for delivery to clients, no other proof was submitted to fortify his
claim. The lone affidavit executed by one Bengie Valenzuela was
unsuccessful in strengthening Javiers cause. In said document,
all Valenzuela attested to was that he would frequently see Javier
at the workplace where the latter was also hired as stevedore.[34]
Certainly, in gauging the evidence presented by Javier, the Court
cannot ignore the inescapable conclusion that his mere presence
at the workplace falls short in proving employment therein. The
supporting affidavit could have, to an extent, bolstered Javiers
claim of being tasked to clean grocery items when there were no
scheduled delivery trips, but no information was offered in this
subject simply because the witness had no personal knowledge
of Javiers employment status in the company. Verily, the Court
cannot accept Javiers statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies the
burden to pass the well-settled tests to determine the existence
of an employer-employee relationship, viz: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employees
conduct. Of these elements, the most important criterion is
whether the employer controls or has reserved the right to control
the employee not only as to the result of the work but also as to
the means and methods by which the result is to be
accomplished.[35]
In this case, Javier was not able to persuade the Court that the
above elements exist in his case. He could not submit competent
proof that Fly Ace engaged his services as a regular employee;
that Fly Ace paid his wages as an employee, or that Fly Ace could
dictate what his conduct should be while at work. In other words,
Javiers allegations did not establish that his relationship with Fly
Ace had the attributes of an employer-employee relationship on
the basis of the above-mentioned four-fold test. Worse, Javier
was not able to refute Fly Aces assertion that it had an agreement
with a hauling company to undertake the delivery of its goods. It
was also baffling to realize that Javier did not dispute Fly Aces
denial of his services exclusivity to the company. In short, all that
Javier laid down were bare allegations without corroborative
proof.
Fly Ace does not dispute having contracted Javier and paid him
on a per trip rate as a stevedore, albeit on a pakyaw basis. The
Court cannot fail to note that Fly Ace presented documentary
proof that Javier was indeed paid on a pakyaw basis per the
acknowledgment receipts admitted as competent evidence by the
LA. Unfortunately for Javier, his mere denial of the signatures
affixed therein cannot automatically sway us to ignore the
documents because forgery cannot be presumed and must be
proved by clear, positive and convincing evidence and the burden
of proof lies on the party alleging forgery.[36]
Considering the above findings, the Court does not see the
necessity to resolve the second issue presented.
One final note. The Courts decision does not contradict the
settled rule that payment by the piece is just a method of
compensation and does not define the essence of the
relation.[37] Payment on a piece-rate basis does not negate
regular employment. The term wage is broadly defined in Article
97 of the Labor Code as remuneration or earnings, capable of
being expressed in terms of money whether fixed or ascertained
on a time, task, piece or commission basis. Payment by the piece
is just a method of compensation and does not define the
essence of the relations. Nor does the fact that the petitioner is
not covered by the SSS affect the employer-employee
relationship. However, in determining whether the relationship is
that of employer and employee or one of an independent
contractor, each case must be determined on its own facts and
all the features of the relationship are to be considered.[38]
Unfortunately for Javier, the attendant facts and circumstances of
the instant case do not provide the Court with sufficient reason to
uphold his claimed status as employee of Fly Ace.

While the Constitution is committed to the policy of social justice

and the protection of the working class, it should not be supposed
that every labor dispute will be automatically decided in favor of
labor. Management also has its rights which are entitled to
respect and enforcement in the interest of simple fair play. Out of
its concern for the less privileged in life, the Court has inclined,
more often than not, toward the worker and upheld his cause in
his conflicts with the employer. Such favoritism, however, has not
blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts
and the applicable law and doctrine.[39]

WHEREFORE, the petition is DENIED. The March 18, 2010

Decision of the Court of Appeals and its June 7, 2010 Resolution,
in CA-G.R. SP No. 109975, are hereby AFFIRMED.

SO ORDER.
2. Gapayao v. Fulo
G.R. No. 193493 June 13, 2013
JAIME N. GAPAYAO, Petitioner,
vs.
ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL
SECURITY COMMISSION, Respondents.
DECISION
SERENO, CJ.:
This is a Rule 45 Petition1 assailing the Decision2 and
Resolution3 of the Court of Appeals (CA) in CA-G.R. SP. No.
101688, affirming the Resolution4 of the Social Security
Commission (SSC). The SSC held petitioner Jaime N. Gapayao
liable to pay the unpaid social security contributions due to the
deceased Jaime Fulo, and the Social Security System (SSS) to
pay private respondent Rosario L. Fulo, the widow of the
deceased, the appropriate death benefits pursuant to the Social
Security Law.
The antecedent facts are as follows:
On 4 November 1997, Jaime Fulo (deceased) died of "acute renal
failure secondary to 1st degree burn 70% secondary
electrocution"5 while doing repairs at the residence and business
establishment of petitioner located at San Julian, Irosin,
Sorsogon.
Allegedly moved by his Christian faith, petitioner extended some
financial assistance to private respondent. On 16 November
1997, the latter executed an Affidavit of Desistance6 stating that
she was not holding them liable for the death of her late husband,
Jaime Fulo, and was thereby waiving her right and desisting from
filing any criminal or civil action against petitioner.
On 14 January 1998, both parties executed a Compromise
Agreement,7 the relevant portion of which is quoted below:
We, the undersigned unto this Honorable Regional Office/District
Office/Provincial Agency Office respectfully state:
1. The undersigned employer, hereby agrees to pay the sum of
FORTY THOUSAND PESOS (P40,000.00) to the surviving
spouse of JAIME POLO, an employee who died of an accident,
as a complete and full payment for all claims due the victim.
2. On the other hand, the undersigned surviving spouse of the
victim having received the said amount do [sic] hereby release
and discharge the employer from any and all claims that maybe
due the victim in connection with the victims employment thereat.
Thereafter, private respondent filed a claim for social security
benefits with the Social Security System (SSS)Sorosogon
Branch.8 However, upon verification and evaluation, it was
discovered that the deceased was not a registered member of the
SSS.9
Upon the insistence of private respondent that her late husband
had been employed by petitioner from January 1983 up to his
untimely death on 4 November 1997, the SSS conducted a field
investigation to clarify his status of employment. In its field
investigation report,10 it enumerated its findings as follows:
In connection with the complaint filed by Mrs. Rosario Fulo,
hereunder are the findings per interview with Mr. Leonor Delgra,
Santiago Bolanos and Amado Gacelo:
1. That Mr. Jaime Fulo was an employee of Jaime Gapayao as
farm laborer from 1983 to 1997.
2. Mr. Leonor Delgra and Santiago Bolanos are co-employees of
Jaime Fulo.
3. Mr. Jaime Fulo receives compensation on a daily basis ranging
from P5.00 to P60.00 from 1983 to 1997.
Per interview from Mrs. Estela Gapayao, please be informed that:
1. Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao on
an extra basis.
2. Sometimes Jaime Fulo is allowed to work in the farm as abaca
harvester and earn 1/3 share of its harvest as his income.
3. Mr. & Mrs. Gapayao hired the services of Jaime Fulo not only
in the farm as well as in doing house repairs whenever it is
available. Mr. Fulo receives his remuneration usually in the
afternoon after doing his job.
4. Mr. & Mrs. Gapayao hires 50-100 persons when necessary to
work in their farm as laborer and Jaime Fulo is one of them. Jaime
Fulo receives more or less P50.00 a day. (Emphases in the
original)
Consequently, the SSS demanded that petitioner remit the social
security contributions of the deceased. When petitioner denied
that the deceased was his employee, the SSS required private
respondent to present documentary and testimonial evidence to
refute petitioners allegations.11
Instead of presenting evidence, private respondent filed a
Petition12 before the SSC on 17 February 2003. In her Petition,
she sought social security coverage and payment of contributions
in order to avail herself of the benefits accruing from the death of
her husband.
On 6 May 2003, petitioner filed an Answer13 disclaiming any
liability on the premise that the deceased was not the formers
employee, but was rather an independent contractor whose tasks
were not subject to petitioners control and supervision.14
Assuming arguendo that the deceased was petitioners
employee, he was still not entitled to be paid his SSS premiums
for the intervening period when he was not at work, as he was an
"intermittent worker who was only summoned every now and then
as the need arose."15 Hence, petitioner insisted that he was
under no obligation to report the formers demise to the SSS for
social security coverage.
Subsequently, on 30 June 2003, the SSS filed a Petition-in-
Intervention16 before the SSC, outlining the factual
circumstances of the case and praying that judgment be rendered
based on the evidence adduced by the parties.
On 14 March 2007, the SSC rendered a Resolution,17 the
dispositive portion of which provides:
WHEREFORE, PREMISES CONSIDERED, this Commission
finds, and so holds, that Jaime Fulo, the late husband of
petitioner, was employed by respondent Jaime N. Gapayao from
January 1983 to November 4, 1997, working for nine (9) months
a year receiving the minimum wage then prevailing.
Accordingly, the respondent is hereby ordered to pay P45,315.95
representing the unpaid SS contributions due on behalf of
deceased Jaime Fulo, the amount of P217,710.33 as 3% per
month penalty for late remittance thereof, computed as of March
30, 2006, without prejudice to the collection of additional penalty
accruing thereafter, and the sum of P230,542.20 (SSS) and
P166,000.00 (EC) as damages for the failure of the respondent
to report the deceased Jaime Fulo for SS coverage prior to his
death pursuant to Section 24(a) of the SS Law, as amended.
The SSS is hereby directed to pay petitioner Rosario Fulo the
appropriate death benefit, pursuant to Section 13 of the SS Law,
as amended, as well as its prevailing rules and regulations, and
to inform this Commission of its compliance herewith.
SO ORDERED.
On 18 May 2007, petitioner filed a Motion for Reconsideration,18
which was denied in an Order19 dated 16 August 2007.

Aggrieved, petitioner appealed to the CA on 19 December
2007.20 On 17 March 2010, the CA rendered a Decision21 in
favor of private respondent, as follows:
In fine, public respondent SSC had sufficient basis in concluding
that private respondents husband was an employee of petitioner
and should, therefore, be entitled to compulsory coverage under
the Social Security Law.
Having ruled in favor of the existence of employer-employee
relationship between petitioner and the late Jaime Fulo, it is no
longer necessary to dwell on the other issues raised.
Resultantly, for his failure to report Jaime Fulo for compulsory
social security coverage, petitioner should bear the
consequences thereof. Under the law, an employer who fails to
report his employee for social security coverage is liable to [1] pay
the benefits of those who die, become disabled, get sick or reach
retirement age; [2] pay all unpaid contributions plus a penalty of
three percent per month; and [3] be held liable for a criminal
offense punishable by fine and/or imprisonment. But an employee
is still entitled to social security benefits even is (sic) his employer
fails or refuses to remit his contribution to the SSS.
WHEREFORE, premises considered, the Resolution appealed
from is AFFIRMED in toto.
SO ORDERED.
In holding thus, the CA gave credence to the findings of the SSC.
The appellate court held that it "does not follow that a person who
does not observe normal hours of work cannot be deemed an
employee."22 For one, it is not essential for the employer to
actually supervise the performance of duties of the employee; it
is sufficient that the former has a right to wield the power. In this
case, petitioner exercised his control through an overseer in the
person of Amado Gacelo, the tenant on petitioners land.23 Most
important, petitioner entered into a Compromise Agreement with
private respondent and expressly admitted therein that he was
the employer of the deceased.24 The CA interpreted this
admission as a declaration against interest, pursuant to Section
26, Rule 130 of the Rules of Court.25
Hence, this petition.
Public respondents SSS26 and SSC27 filed their Comments on
31 January 2011 and 28 February 2011, respectively, while
private respondent filed her Comment on 14 March 2011.28 On
6 March 2012, petitioner filed a "Consolidated Reply to the
Comments of the Public Respondents SSS and SSC and Private
Respondent Rosario Fulo."29
ISSUE
The sole issue presented before us is whether or not there exists
between the deceased Jaime Fulo and petitioner an employer-
employee relationship that would merit an award of benefits in
favor of private respondent under social security laws.
THE COURTS RULING
In asserting the existence of an employer-employee relationship,
private respondent alleges that her late husband had been in the
employ of petitioner for 14 years, from 1983 to 1997.30 During
that period, he was made to work as a laborer in the agricultural
landholdings, a harvester in the abaca plantation, and a
repairman/utility worker in several business establishments
owned by petitioner.31 To private respondent, the "considerable
length of time during which [the deceased] was given diverse
tasks by petitioner was a clear indication of the necessity and
indispensability of her late husbands services to petitioners
business."32 This view is bolstered by the admission of petitioner
himself in the Compromise Agreement that he was the
deceaseds employer.33
Private respondents position is similarly espoused by the SSC,
which contends that its findings are duly supported by evidence
on record.34 It insists that pakyaw workers are considered
employees, as long as the employer exercises control over them.
In this case, the exercise of control by the employer was
delegated to the caretaker of his farm, Amado Gacelo. The SSC
further asserts that the deceased rendered services essential for
the petitioners harvest. While these services were not rendered
continuously (in the sense that they were not rendered every day
throughout the year), still, the deceased had never stopped
working for petitioner from year to year until the day the former
died.35 In fact, the deceased was required to work in the other
business ventures of petitioner, such as the latters bakery and
grocery store.36 The Compromise Agreement entered into by
petitioner with private respondent should not be a bar to an
employee demanding what is legally due the latter.37
The SSS, while clarifying that it is "neither adversarial nor favoring
any of the private parties x x x as it is only tasked to carry out the
purposes of the Social Security Law,"38 agrees with both private
respondent and SSC. It stresses that factual findings of the lower
courts, when affirmed by the appellate court, are generally
conclusive and binding upon the Court.39
Petitioner, on the other hand, insists that the deceased was not
his employee. Supposedly, the latter, during the performance of
his function, was not under petitioners control. Control is not
necessarily present even if the worker works inside the premises
of the person who has engaged his services.40 Granting without
admitting that petitioner gave rules or guidelines to the deceased
in the process of the latters performing his work, the situation
cannot be interpreted as control, because it was only intended to
promote mutually desired results.41
Alternatively, petitioner insists that the deceased was hired by
Adolfo Gamba, the contractor whom he had hired to construct
their building;42 and by Amado Gacelo, the tenant whom
petitioner instructed to manage the latters farm.43 For this
reason, petitioner believes that a tenant is not beholden to the
landlord and is not under the latters control and supervision. So
if a worker is hired to work on the land of a tenant such as
petitioner the former cannot be the worker of the landlord, but
of the tenants.44
Anent the Compromise Agreement, petitioner clarifies that it was
executed to buy peace, because "respondent kept on pestering
them by asking for money."45 Petitioner allegedly received
threats that if the matter was not settled, private respondent
would refer the matter to the New Peoples Army.46 Allegedly,
the Compromise Agreement was "extortion camouflaged as an
agreement."47 Likewise, petitioner maintains that he shouldered
the hospitalization and burial expenses of the deceased to
express his "compassion and sympathy to a distressed person
and his family," and not to admit liability.48
Lastly, petitioner alleges that the deceased is a freelance worker.
Since he was engaged on a pakyaw basis and worked for a short
period of time, in the nature of a farm worker every season, he
was not precluded from working with other persons and in fact
worked for them. Under Article 280 of the Labor Code,49
seasonal employees are not covered by the definitions of regular
and casual employees.50 Petitioner cites Mercado, Sr. v.
NLRC,51 in which the Court held that seasonal workers do not
become regular employees by the mere fact that they have
rendered at least one year of service, whether continuous or
broken.52
We see no cogent reason to reverse the CA.
I
Findings of fact of the SSC are given weight and credence.
At the outset, it is settled that the Court is not a trier of facts and
will not weigh evidence all over again. Findings of fact of
administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect but
finality when affirmed by the CA.53 For as long as these findings
are supported by substantial evidence, they must be upheld.54

II
Farm workers may be considered regular seasonal employees.
Article 280 of the Labor Code states:
Article 280. Regular and Casual Employment. The provisions
of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.
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.
Jurisprudence has identified the three types of employees
mentioned in the provision: (1) regular employees or those who
have been engaged to perform activities that are usually
necessary or desirable in the usual business or trade of the
employer; (2) 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 their
engagement, or those whose work or service is seasonal in
nature and is performed for the duration of the season; and (3)
casual employees or those who are neither regular nor project
employees.55
Farm workers generally fall under the definition of seasonal
employees. We have consistently held that seasonal employees
may be considered as regular employees.56 Regular seasonal
employees are those called to work from time to time. The nature
of their relationship with the employer is such that during the off
season, they are temporarily laid off; but reemployed during the
summer season or when their services may be needed.57 They
are in regular employment because of the nature of their job,and
not because of the length of time they have worked.58
The rule, however, is not absolute. In Hacienda Fatima v.
National Federation of Sugarcane Workers-Food & General
Trade,59 the Court held that seasonal workers who have worked
for one season only may not be considered regular employees.
Similarly, in Mercado, Sr. v. NLRC,60 it was held that when
seasonal employees are free to contract their services with other
farm owners, then the former are not regular employees.
For regular employees to be considered as such, the primary
standard used is the reasonable connection between the
particular activity they perform and the usual trade or business of
the employer.61 This test has been explained thoroughly in De
Leon v. NLRC,62 viz:
The primary standard, therefore, of determining a regular
employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual
business or trade of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of
the employer. The connection can be determined by considering
the nature of the work performed and its relation to the scheme
of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least one year, even
if the performance is not continuous or merely intermittent, the
law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensability of
that activity to the business. Hence, the employment is also
considered regular, but only with respect to such activity and
while such activity exists.

A reading of the records reveals that the deceased was indeed a
farm worker who was in the regular employ of petitioner. From
year to year, starting January 1983 up until his death, the
deceased had been working on petitioners land by harvesting
abaca and coconut, processing copra, and clearing weeds. His
employment was continuous in the sense that it was done for
more than one harvesting season. Moreover, no amount of
reasoning could detract from the fact that these tasks were
necessary or desirable in the usual business of petitioner.
The other tasks allegedly done by the deceased outside his usual
farm work only bolster the existence of an employer-employee
relationship. As found by the SSC, the deceased was a
construction worker in the building and a helper in the bakery,
grocery, hardware, and piggery all owned by petitioner.63 This
fact only proves that even during the off season, the deceased
was still in the employ of petitioner.
The most telling indicia of this relationship is the Compromise
Agreement executed by petitioner and private respondent. It is a
valid agreement as long as the consideration is reasonable and
the employee signed the waiver voluntarily, with a full
understanding of what he or she was entering into.64 All that is
required for the compromise to be deemed voluntarily entered
into is personal and specific individual consent.65 Once executed
by the workers or employees and their employers to settle their
differences, and done in good faith, a Compromise Agreement is
deemed valid and binding among the parties.66
Petitioner entered into the agreement with full knowledge that he
was described as the employer of the deceased.67 This
knowledge cannot simply be denied by a statement that petitioner
was merely forced or threatened into such an agreement.1wphi1
His belated attempt to circumvent the agreement should not be
given any consideration or weight by this Court.
III
Pakyaw workers are regular employees,
provided they are subject to the control of petitioner.
Pakyaw workers are considered employees for as long as their
employers exercise control over them. In Legend Hotel Manila v.
Realuyo,68 the Court held that "the power of the employer to
control the work of the employee is considered the most
significant determinant of the existence of an employer-employee
relationship. This is the so-called control test and is premised on
whether the person for whom the services are performed
reserves the right to control both the end achieved and the
manner and means used to achieve that end." It should be
remembered that the control test merely calls for the existence of
the right to control, and not necessarily the exercise thereof.69 It
is not essential that the employer actually supervises the
performance of duties by the employee. It is enough that the
former has a right to wield the power.70
In this case, we agree with the CA that petitioner wielded control
over the deceased in the discharge of his functions. Being the
owner of the farm on which the latter worked, petitioner on his
own or through his overseer necessarily had the right to review
the quality of work produced by his laborers. It matters not
whether the deceased conducted his work inside petitioners farm
or not because petitioner retained the right to control him in his
work, and in fact exercised it through his farm manager Amado
Gacelo. The latter himself testified that petitioner had hired the
deceased as one of the pakyaw workers whose salaries were
derived from the gross proceeds of the harvest.71
We do not give credence to the allegation that the deceased was
an independent contractor hired by a certain Adolfo Gamba, the
contractor whom petitioner himself had hired to build a building.
The allegation was based on the self-serving testimony of Joyce
Gapay Demate,72 the daughter of petitioner. The latter has not
offered any other proof apart from her testimony to prove the
contention.
The right of an employee to be covered by the Social Security Act
is premised on the existence of an employer-employee
relationship.73 That having been established, the Court hereby
rules in h1vor of private respondent.

WHEREFORE, the Petition for Review on Certiorari is hereby

DENIED. The assailed Decision and resolution of the Court of
Appeals in CA-G.R. SP. No. 101688 dated 17 March 2010 and
13 August 2010, respectively, are hereby AFFIRMED.

SO ORDERED.
3. Pigcaulan v. Security and Credit Investigation
January 16, 2012
FIRST DIVISION x----------------------------------------------
---------------------x
ABDULJUAHID R. PIGCAULAN,
DECISION
G.R. No. 173648
Petitioner, DEL CASTILLO, J.:

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

which he is entitled by law. Rather, it is on the employer that the
burden of proving payment of these claims rests.

This Petition for Review on Certiorari[1] assails the February 24,

2006 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No.
Present: 85515, which granted the petition for certiorari filed therewith, set
aside the March 23, 2004[3] and June 14, 2004[4] Resolutions of
the National Labor Relations Commission (NLRC), and
dismissed the complaint filed by Oliver R. Canoy (Canoy) and
- versus - petitioner Abduljuahid R. Pigcaulan (Pigcaulan) against
respondent Security and Credit Investigation, Inc. (SCII) and its
CORONA, C.J., Chairperson, General Manager, respondent Rene Amby Reyes. Likewise
assailed is the June 28, 2006 Resolution[5] denying Canoys and
Pigcaulans Motion for Reconsideration.[6]
LEONARDO-DE CASTRO,
Factual Antecedents

DEL CASTILLO, Canoy and Pigcaulan were both employed by SCII as security
guards and were assigned to SCIIs different clients.
Subsequently, however, Canoy and Pigcaulan filed with the
ABAD, and Labor Arbiter separate complaints[7] for underpayment of
SECURITY and CREDIT salaries and non-payment of overtime, holiday, rest day, service
INVESTIGATION, INC. and/or incentive leave and 13th month pays. These complaints were
RENE AMBY REYES , later on consolidated as they involved the same causes of action.

VILLARAMA, JR., JJ. Canoy and Pigcaulan, in support of their claim, submitted their
respective daily time records reflecting the number of hours
Promulgated: served and their wages for the same. They likewise presented
Respondents. itemized lists of their claims for the corresponding periods served.

Respondents, however, maintained that Canoy and Pigcaulan
were paid their just salaries and other benefits under the law; that
the salaries they received were above the statutory minimum
wage and the rates provided by the Philippine Association of
Detective and Protective Agency Operators (PADPAO) for
security guards; that their holiday pay were already included in
the computation of their monthly salaries; that they were paid
additional premium of 30% in addition to their basic salary
whenever they were required to work on Sundays and 200% of
their salary for work done on holidays; and, that Canoy and
Pigcaulan were paid the corresponding 13th month pay for the
years 1998 and 1999. In support thereof, copies of payroll
listings[8] and lists of employees who received their 13th month
pay for the periods December 1997 to November 1998 and
December 1998 to November 1999[9] were presented. In
addition, respondents contended that Canoys and Pigcaulans
monetary claims should only be limited to the past three years of
employment pursuant to the rule on prescription of claims.
Ruling of the Labor Arbiter
Giving credence to the itemized computations and representative
daily time records submitted by Canoy and Pigcaulan, Labor
Arbiter Manuel P. Asuncion awarded them their monetary claims
in his Decision[10] dated June 6, 2002. The Labor Arbiter held
that the payroll listings presented by the respondents did not
prove that Canoy and Pigcaulan were duly paid as same were
not signed by the latter or by any SCII officer. The 13th month
payroll was, however, acknowledged as sufficient proof of
payment, for it bears Canoys and Pigcaulans signatures. Thus,
without indicating any detailed computation of the judgment
award, the Labor Arbiter ordered the payment of overtime pay,
holiday pay, service incentive leave pay and proportionate 13th
month pay for the year 2000 in favor of Canoy and Pigcaulan, viz:
WHEREFORE, the respondents are hereby ordered to pay the
complainants: 1) their salary differentials in the amount of
P166,849.60 for Oliver Canoy and P121,765.44 for Abduljuahid
Pigcaulan; 2) the sum of P3,075.20 for Canoy and P2,449.71 for
Pigcaulan for service incentive leave pay and; [3]) the sum of
P1,481.85 for Canoy and P1,065.35 for Pigcaulan as
proportionate 13th month pay for the year 2000. The rest of the
claims are dismissed for lack of sufficient basis to make an award.
SO ORDERED.[11]
Ruling of the National Labor Relations Commission
Respondents appealed to the NLRC. They alleged that there was
no basis
for the awards made because aside from the self-serving
itemized computations, no representative daily time record was
presented by Canoy and Pigcaulan. On the contrary, respondents
asserted that the payroll listings they submitted should have been
given more probative value. To strengthen their cause, they
attached to their Memorandum on Appeal payrolls[12] bearing the
individual signatures of Canoy and Pigcaulan to show that the
latter have received their salaries, as well as copies of transmittal
letters[13] to the bank to show that the salaries reflected in the
payrolls were directly deposited to the ATM accounts of SCIIs
employees.
The NLRC, however, in a Resolution[14] dated March 23, 2004,
dismissed the appeal and held that the evidence show
underpayment of salaries as well as non-payment of service
incentive leave benefit. Accordingly, the Labor Arbiters Decision
was sustained. The motion for reconsideration thereto was
likewise dismissed by the NLRC in a Resolution[15] dated June
14, 2004.
Ruling of the Court of Appeals
In respondents petition for certiorari with prayer for the issuance
of a temporary restraining order and preliminary injunction[16]
before the CA, they attributed grave abuse of discretion on the
part of the NLRC in finding that Canoy and Pigcaulan are entitled
to salary differentials, service incentive leave pay and
proportionate 13th month pay and in arriving at amounts without
providing sufficient bases therefor.
The CA, in its Decision[17] dated February 24, 2006, set aside
the rulings of
both the Labor Arbiter and the NLRC after noting that there were
no factual and legal bases mentioned in the questioned rulings to
support the conclusions made. Consequently, it dismissed all the
monetary claims of Canoy and Pigcaulan on the following
rationale:
First. The Labor Arbiter disregarded the NLRC rule that, in cases
involving money awards and at all events, as far as practicable,
the decision shall embody the detailed and full amount awarded.
Second. The Labor Arbiter found that the payrolls submitted by
SCII have no probative value for being unsigned by Canoy, when,
in fact, said payrolls, particularly the payrolls from 1998 to 1999
indicate the individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the
substance of the evidence adduced by Pigcaulan and Canoy as
well as the laws or jurisprudence that would show that the two are
indeed entitled to the salary differential and incentive leave pays.
Fourth. The Labor Arbiter held Reyes liable together with SCII for
the payment of the claimed salaries and benefits despite the
absence of proof that Reyes deliberately or maliciously designed
to evade SCIIs alleged financial obligation; hence the Labor
Arbiter ignored that SCII has a corporate personality separate
and distinct from Reyes. To justify solidary liability, there must be
an allegation and showing that the officers of the corporation
deliberately or maliciously designed to evade the financial
obligation of the corporation.[18]
Canoy and Pigcaulan filed a Motion for Reconsideration, but
same was denied by the CA in a Resolution[19] dated June 28,
2006.
Hence, the present Petition for Review on Certiorari.
Issues
The petition ascribes upon the CA the following errors:
I. The Honorable Court of Appeals erred when it dismissed the
complaint on mere alleged failure of the Labor Arbiter and the
NLRC to observe the prescribed form of decision, instead of
remanding the case for reformation of the decision to include the
desired detailed computation.
II. The Honorable Court of Appeals erred when it [made]
complainants suffer the consequences of the alleged non-
observance by the Labor Arbiter and NLRC of the prescribed
forms of decisions considering that they have complied with all
needful acts required to support their claims.
III. The Honorable Court of Appeals erred when it dismissed the
complaint allegedly due to absence of legal and factual [bases]
despite attendance of substantial evidence in the records.[20]
It is well to note that while the caption of the petition reflects both
the names of Canoy and Pigcaulan as petitioners, it appears from
its body that it is being filed solely by Pigcaulan. In fact, the
Verification and Certification of Non-Forum Shopping was
executed by Pigcaulan alone.
In his Petition, Pigcaulan submits that the Labor Arbiter and the
NLRC are not strictly bound by the rules. And even so, the rules
do not mandate that a detailed computation of how the amount
awarded was arrived at should be embodied in the decision.
Instead, a statement of the nature or a description of the amount
awarded and the specific figure of the same will suffice. Besides,
his and Canoys claims were supported by substantial evidence in
the form of the handwritten detailed computations which the
Labor Arbiter termed as representative daily time records,
showing that they were not properly compensated for work
rendered. Thus, the CA should have remanded the case instead
of outrightly dismissing it.
In their Comment,[21] respondents point out that since it was only
Pigcaulan who filed the petition, the CA Decision has already
become final and binding upon Canoy. As to Pigcaulans
arguments, respondents submit that they were able to present
sufficient evidence to prove payment of just salaries and benefits,
which bits of evidence were unfortunately ignored by the Labor
Arbiter and the NLRC. Fittingly, the CA reconsidered these pieces
of evidence and properly appreciated them. Hence, it was correct
in dismissing the claims for failure of Canoy and Pigcaulan to
discharge their burden to disprove payment.
Pigcaulan, this time joined by Canoy, asserts in his Reply[22] that
his filing of the present petition redounds likewise to Canoys
benefit since their complaints were consolidated below. As such,
they maintain that any kind of disposition made in favor or against
either of them would inevitably apply to the other. Hence, the
institution of the petition solely by Pigcaulan does not render the
assailed Decision final as to Canoy. Nonetheless, in said reply
they appended Canoys affidavit[23] where he verified under oath
the contents and allegations of the petition filed by Pigcaulan and
also attested to the authenticity of its annexes. Canoy, however,
failed to certify that he had not filed any action or claim in another
court or tribunal involving the same issues. He likewise explains
in said affidavit that his absence during the preparation and filing
of the petition was caused by severe financial distress and his
failure to inform anyone of his whereabouts.
Our Ruling
The assailed CA Decision is considered final as to Canoy.
We have examined the petition and find that same was filed by
Pigcaulan solely on his own behalf. This is very clear from the
petitions prefatory which is phrased as follows:
COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel,
unto this Honorable Court x x x. (Emphasis supplied.)
Also, under the heading Parties, only Pigcaulan is mentioned as
petitioner and consistent with this, the body of the petition refers
only to a petitioner and never in its plural form petitioners. Aside
from the fact that the Verification and Certification of Non-Forum
Shopping attached to the petition was executed by Pigcaulan
alone, it was plainly and particularly indicated under the name of
the lawyer who prepared the same, Atty. Josefel P. Grageda, that
he is the Counsel for Petitioner Adbuljuahid Pigcaulan only. In
view of these, there is therefore, no doubt, that the petition was
brought only on behalf of Pigcaulan. Since no appeal from the CA
Decision was brought by Canoy, same has already become final
and executory as to him.
Canoy cannot now simply incorporate in his affidavit a verification
of the contents and allegations of the petition as he is not one of
the petitioners therein. Suffice it to state that it would have been
different had the said petition been filed in behalf of both Canoy
and Pigcaulan. In such a case, subsequent submission of a
verification may be allowed as non-compliance therewith or a
defect therein does not necessarily render the pleading, or the
petition as in this case, fatally defective.[24] The court may order
its submission or correction, or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may
be dispensed with in order that the ends of justice may be served
thereby. Further, a verification is deemed substantially complied
with when one who has ample knowledge to swear to the truth of
the allegations in the complaint or petition signs the verification,
and when matters alleged in the petition have been made in good
faith or are true and correct.[25] However, even if it were so, we
note that Canoy still failed to submit or at least incorporate in his
affidavit a certificate of non-forum shopping.

The filing of a certificate of non-forum shopping is mandatory so
much so
that non-compliance could only be tolerated by special
circumstances and compelling reasons.[26] This Court has held
that when there are several petitioners, all of them must execute
and sign the certification against forum shopping; otherwise,
those who did not sign will be dropped as parties to the case.[27]
True, we held that in some cases, execution by only one of the
petitioners on behalf of the other petitioners constitutes
substantial compliance with the rule on the filing of a certificate of
non-forum shopping on the ground of common interest or
common cause of action or defense.[28] We, however, find that
common interest is not present in the instant petition. To recall,
Canoys and Pigcaulans complaints were consolidated because
they both sought the same reliefs against the same respondents.
This does not, however, mean that they share a common interest
or defense. The evidence required to substantiate their claims
may not be the same. A particular evidence which could sustain
Canoys action may not effectively serve as sufficient to support
Pigcaulans claim.
Besides, assuming that the petition is also filed on his behalf,
Canoy failed to show any reasonable cause for his failure to join
Pigcaulan to personally sign the Certification of Non-Forum
Shopping. It is his duty, as a litigant, to be prudent in pursuing his
claims against SCII, especially so, if he was indeed suffering from
financial distress. However, Canoy failed to advance any
justifiable reason why he did not inform anyone of his
whereabouts when he knows that he has a pending case against
his former employer. Sadly, his lack of prudence and diligence
cannot merit the courts consideration or sympathy. It must be
emphasized at this point that procedural rules should not be
ignored simply because their non-observance may result in
prejudice to a partys substantial rights. The Rules of Court should
be followed except only for the most persuasive of reasons.[29]
Having declared the present petition as solely filed by Pigcaulan,
this Court shall consider the subsequent pleadings, although
apparently filed under his and Canoys name, as solely filed by
the former.
There was no substantial evidence to support the grant of
overtime pay.
The Labor Arbiter ordered reimbursement of overtime pay,
holiday pay, service incentive leave pay and 13th month pay for
the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter
relied heavily on the itemized computations they submitted which
he considered as representative daily time records to
substantiate the award of salary differentials. The NLRC then
sustained the award on the ground that there was substantial
evidence of underpayment of salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this
regard. The handwritten itemized computations are self-serving,
unreliable and unsubstantial evidence to sustain the grant of
salary differentials, particularly overtime pay. Unsigned and
unauthenticated as they are, there is no way of verifying the truth
of the handwritten entries stated therein. Written only in pieces of
paper and solely prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by the Labor Arbiter,
can hardly be considered as competent evidence to be used as
basis to prove that the two were underpaid of their salaries. We
find nothing in the records which could substantially support
Pigcaulans contention that he had rendered service beyond eight
hours to entitle him to overtime pay and during Sundays to entitle
him to restday pay. Hence, in the absence of any concrete proof
that additional service beyond the normal working hours and days
had indeed been rendered, we cannot affirm the grant of overtime
pay to Pigcaulan.
Pigcaulan is entitled to holiday pay, service incentive leave pay
and proportionate 13th month pay for year 2000.
However, with respect to the award for holiday pay, service
incentive leave
pay and 13th month pay, we affirm and rule that Pigcaulan is
entitled to these benefits.
Article 94 of the Labor Code provides that:
ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be
paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than
ten (10) workers;
xxxx
While Article 95 of the Labor Code provides:
ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every
employee who has rendered at least one year of service shall be
entitled to a yearly service incentive of five days with pay.
xxxx
Under the Labor Code, Pigcaulan is entitled to his regular rate on
holidays even if he does not work.[30] Likewise, express
provision of the law entitles him to service incentive leave benefit
for he rendered service for more than a year already.
Furthermore, under Presidential Decree No. 851,[31] he should
be paid his 13th month pay. As employer, SCII has the burden of
proving that it has paid these benefits to its employees.[32]
SCII presented payroll listings and transmittal letters to the bank
to show that Canoy and Pigcaulan received their salaries as well
as benefits which it claimed are already integrated in the
employees monthly salaries. However, the documents presented
do not prove SCIIs allegation. SCII failed to show any other
concrete proof by means of records, pertinent files or similar
documents reflecting that the specific claims have been paid.
With respect to 13th month pay, SCII presented proof that this
benefit was paid but only for the years 1998 and 1999. To repeat,
the burden of proving payment of these monetary claims rests on
SCII, being the employer. It is a rule that one who pleads payment
has the burden of proving it. Even when the plaintiff alleges non-
payment, still the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove
non-payment.[33] Since SCII failed to provide convincing proof
that it has already settled the claims, Pigcaulan should be paid
his holiday pay, service incentive leave benefits and
proportionate 13th month pay for the year 2000.
The CA erred in dismissing the claims instead of remanding the
case to the Labor Arbiter for a detailed computation of the
judgment award.
Indeed, the Labor Arbiter failed to provide sufficient basis for the
monetary
awards granted. Such failure, however, should not result in
prejudice to the substantial rights of the party. While we disallow
the grant of overtime pay and restday pay in favor of Pigcaulan,
he is nevertheless entitled, as a matter of right, to his holiday pay,
service incentive leave pay and 13th month pay for year 2000.
Hence, the CA is not correct in dismissing Pigcaulans claims in
its entirety.
Consistent with the rule that all money claims arising from an
employer-employee relationship shall be filed within three years
from the time the cause of action accrued,[34] Pigcaulan can only
demand the amounts due him for the period within three years
preceding the filing of the complaint in 2000. Furthermore, since
the records are insufficient to use as bases to properly compute
Pigcaulans claims, the case should be remanded to the Labor
Arbiter for a detailed computation of the monetary benefits due to
him.
WHEREFORE, the petition is GRANTED. The Decision dated
February 24, 2006 and Resolution dated June 28, 2006 of the
Court of Appeals in CA-G.R. SP No. 85515 are REVERSED and
SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is hereby
declared ENTITLED to holiday pay and service incentive leave
pay for the years 1997-2000 and proportionate 13th month pay
for the year 2000.

The case is REMANDED to the Labor Arbiter for further

proceedings to determine the exact amount and to make a
detailed computation of the monetary benefits due Abduljuahid R.
Pigcaulan which Security and Credit Investigation Inc. should pay
without delay.

SO ORDERED.
4. PALEA v. PAL 70 SCRA 244
G.R. No. L-31341 March 31, 1976
PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA)
and PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION
(PALSA), petitioners,
vs.
PHILIPPINE AIR INES, INC., respondent.
G.R. No. L-31341-43 March 31, 1976
PHILIPPINE AIR LINES, INC., petitioner,
vs.
PHILIPPINE AIR LINES EMPLOYEES' ASSOCIATION,
PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION, and
the COURT OF INDUSTRIAL RELATIONS, respondents.
Siguion Reyna, Montecillo, Belo & Ongsiako for Philippines Air
lines, Inc.
Laquihon & Legayada for Philippine Air Lines Supervisors'
Association (PALEA).
MAKASIAR, J.:
Before US are consolidated petitions to review the Court of
industrial Relations en banc resolution dated October 9, 1969 in
CIR Case No. 43-IPA.
In G.R. No. L-31341 (PALEA vs. PAL), petitioners question the
date of effectivity of the adjudicated pay differentials due to the
monthly-salaried employees of Philippine Air Lines, Inc.
In G.R. No. L-31343 (PAL vs. PALEA), petitioner assails the
reversal by the Court of Industrial Relations of its earlier
resolution on the method employed by the Philippine Air Lines in
computing the basic daily and hourly rate of its monthly salaried
employees.
On February 14, 1963, the Philippine Air Lines Employees'
Association (PALEA) and the Philippine Air Lines Supervisors'
Association (PALSA) petitioners in G.R. No. L-31341 and
respondents in G.R. No. 31343 commenced an action against
the Philippine Air Lines (PAL) in the Court of Industrial Relations,
praying that PAL be ordered to revise its method of computing
the basic daily and hourly rate of its monthly salaried employees,
and necessarily, to pay them their accrued sala differentials.
Sought to be revised is PAL's formula in computing wages of its
employees:
Monthly salary x 12 365 (No. of calendar = x (Basic dailr rate)
days in a year)
x 8 = Basic hourly rate
The unions would like PAL to modify the above formula in this
wise:
Monthly salary x 12 No. of actual working = x (Basic daily rate)
days
x 8 = Basic hourly rate
On May 23, 1964, the Court of Industrial Relations, through
Presiding Judge Jose S. Bautista, issued an order denying the
unions' prayer for a modified wage formula. Pertinent portion of
the order reads:
On the issue of rate of pay, PALSA and PALEA seek to change
the long standing method in PAL of computing the basic daily and
hourly rate of monthly salaried employees for the purpose of
determining overtime pay, Sunday and legal holiday premium
pay, night differential pay, vacation and sick leave pay, to wit, the
monthly salary multiplied by 12 and dividing the product thereof
by 365 and then the quotient by 8. PALEA and PALSA claim that
the method of computing the basic daily and hourly rate of
monthly salaried employees of PAL prior to the implementation of
the 40-hour week schedule in PAL should be by dividing the
monthly salary by 26 working days, and after the 40-hour week
schedule, by dividing the monthly salary by 20 working days, and
then dividing the quotient thereof in each case by 8. From the
records, however, it appears that for may years since 1952, and
even previously, PAL has been consistently and regularly
determining the basic and hourly rates of monthly salaried
employees by multiplying the monthly salary by 12 momths and
dividing the product by 365 days to arive at the basic daily rate,
and dividing the quotient by 8 to compute the basic hourly rate.
There has been no attempt to revise this formula notwithstanding
the various negotiations PAL and with the unions ever since its
operations, and it was only on July 18, 1962, when PALSA, for
the first time, proposed that it be changed in accordance with
what is now alleged in the petition. This, however, was a mere
proposal by PALSA for the adoption of a new formula; it was not
a demand for the application of a formula claimed to be correct
under the law. Under this circumstance, PALSA and PALEA are
estopped from questioning the correctness and propriety of PAL's
method of determining the basic hourly and daily rate of pay of its
monthly salaried personnel, and considering the long period of
time that elapsed before they brought their petition, are barred
from insisting or demanding a different rate of pay formula.
xxx xxx xxx
Upon the foregoing, the Court, therefore, declares PAL's method
of computing the basic daily and hourly rate of its monthly salaried
employees as legal and proper, and denies the petition of PALSA
and PALEA.
xxx xxx xxx
(pp. 47-48, 49, rec. G.R. No. L-31343).
On May 30, 1964, complaining unions promptly moved for the
reconsideration of the above-sais order (p. 51, rec. G.R. No. L-
31343).
On June 9, 1964, the unions filed their memorandum in support
of their motion for reconsideration alleging that the questioned
order is (a) contrary to law, and (b) contrary to evidence adduced
during the trial (p. 53, ree G.R. No. L-31343).
The unions attributed error to PAL's wage formula, particularly in
the use of 365 days as divisor. The unions contended that the use
of 365 days as divisor would necessarily include off-days which,
under the terms of the collective bargaining agreements entered
into between the parties, were not paid days. This is so since for
work done on an off-day, an employee was paid 100% plus 25%,
or 100% plus 37- of his regular working hour rate.
On the issue of prescription, the unions pointed out:
With respect to the period of prescription, it is clear that since the
claim arises from the written contracts or collective bargaining
agreements between the petitioner unions and the PAL, the
action thereon prescribes in ten years from the time the right of
action accrues, in accordance with Article 1144 of the New Civil
Code. .... (p. 68, rec., G.R. No. L-31343).
On June 26, 1964, the Philippine Air Lines answered point by
point the unions' memorandum, in a prompt reply.
On October 9, 1969, the Court of Industrial Relations, through
Presiding Judge Arsenio I. Martinez, ordered the reversal of its
decision dated May 34, 1964 and sustained the unions' method
of age computation.
The industrial court, however, ordered the computation of pay
differentials in accordance with the sustained method of
computation effective only July 1, 1957.
Said the Court of Industrial Relations in this regard:

... In this connection, however, it will be noted as previously
stated, that this case was considered as an incident of Case No.
39-IPA, in which the issues involved were related to the
respondent PAL of the 40-Hour Week Law (Rep. Act 1880) from
the date of its effectivity July 1, 1957. ...
This Cout therefore belives that in justice and equity and
substantial merits of the case, the aforesaid pay differentials due
to the employees involved herein by the application of the correct
methods of computation of the rate of pay should be paid by the
respondent also beginning July 1, 1957 (p. 117, rec., G.R. No. L-
31343).
From the above resolution, both parties appealed to this COURT.
The Philippine Air Lines filed its appeal petition on December 13,
1969, while PALEA filed its petition for review on certiorari on
January 3, 1970.
I DETERMINING THE BASIC DAILY AND HOURLY RATE OF
For easy comprehension, WE start with the Philippine Air Lines,
Inc. versus Philippine Air Lines Employees Association,
Philippine Air Lines Supervisors Association, and the Court of
Industrial Relations, G.R. No. L-31343.
In this appeal PAL emphasizes three assignments of error, to wit:
1. RESPONDENT CIR ERRED AND COMMITTED GRAVE
ABUSE OF DISCRETION IN HOLDING THAT THE METHOD OF
COMPUTATION USED BY PAL IN DETERMINING TIIE BASIC
DAILY OR HOURLY RATE OF ITS MONTLY SALARIED
EMPLOYEES WHICH IS:
MONTHLY SALARY x 1 365 (NO. OF CALENDAR DAYS IN
YEAR) = x (BASIC DAILY RATE)
x 8 = BASIC HOURLY RATE 8
IS NOT CORRECT, CONSIDERING THAT PAL, A PUBLIC
UTILITY WHERE THERE IS WORK EVERYDAY OF THE WEEK
FOR MANY YEARS EVEN BEFORE REPUBLIC ACT 602 AND
WITH THE CONSENT AND APPROVAL OF THE EMPLOYEES,
CONSISTENT WITH SECTION 19 OF REPUBLIC ACT 602
PROHIBITING REDUCTION OF WAGES FOR OFF DAYS-
WHICH WAS SUSTAINED BY THIS HONORABLE COURT IN
AUTOMOTIVE PARTS & EQUIPMENT CO., INC. VS. JOSE B.
LINGAD, G.R. NO. L- 26406, OCTOBER 31, 1969 HAS BEEN
TREATING OFFSITE DAYS, 11 AS SATURDAYS, SUNDAYS,
COMPANY OBSERVED HOLIDAYS OR ANY OTHER
DESIGNATED HOLIDAYS AS PAID DAYS.
2. RESPONDENT CIR ERRED AND COMMITTED GRAVE
ABUSE OF DISCRETION IN NOT FINDING. THAT
RESPONDENT UNIONS, BY THEIR LONG PERIOD OF
CONSENT, ACQUIESCENCE, INACTION AND ACCEPTANCE
OF BENEFITS THEREUNDER, ARE ESTOPPED AND
BARRED FROM CLAIMING THAT PAL'S FORMULA FOR
PAY IS INCORRECT.
3. RESPONDENT CIR ERED AND ACTED IN EXCESS OF ITS
JURISDICTION IN SENTENCING PAL TO PAY
DIFFERENTIALS FOR OVERTIME WORK, NIGHTWORK,
HOLIDAY AND SUNDAY PAY FROM JULY 1, 1957
CONSIDERING THAT UNDER THE THREE-YEAR
PRESCRIPTIVE PERIOD PROVIDED IN SECTION 7-a OF
COMMONWEALTH ACT NO. 444, AS AMENDED, THE EIGHT-
HOUR LABOR LAW, RESPONDENT UNIONS, ASSUMING
THEY HAD ANY CAUSE OF ACTION, COULD RECOVER
ONLY FROM FEBRUARY 14, 1960 UP TO THE PRESENT,
SINCE RESPONDENT UNIONS FILED THEIR ACTION ONLY
ON FEBRUARY 14, 1963.
A
PAL's maiden argument has a strong tendency to mislead. In an
effort to emphasize that off-days are paid and therefore should be
reckoned with in determing the divisor for computing daily and
hourly rate, PAL leans heavily on what it considers as additional
payment of 125% or 137 %, as the case may be, of an
employee's basic hourly rate, given to a worker who worked on
his off-days. PAL would like us to believe that the word
"Additional" all but accentuates the existence of a regular basic
rate; otherwise, the 125% or 137% shall be in addition to what?
The industrial court, however, had this to say:
Moreover, it will be noted that before September 4, 1961, a
monthly salaried employee of PAL had to work 304 days only in
a year,a nd after said date, he had to work only 258 days in ayear,
to be entitled to his equivalent yearly salary. When he worked on
his off-day, he was paid accordingly (125% or 137%), indicating
that his off-days were not with pay. It seems illogical for said
employe to be paid 125% or 137 % of his basic daily rate, if
such off-days are already wtih pay, as indicated by the company
(p. 107, rec., G.R. No. L-31343, emphasis supplied).
WE agree.
There should hardly be any doubt that off-days are not paid days,
Precisely, off-days are rest days for the worker. He is not required
to work on such days. This finds support not only in the basic
principle in labor that the basis of remuneration or compensation
is actual service rendered, but in the ever pervading labor spirit
aimed at humanizing the conditions of hie working man.
Since during his off-days an employee is not compelled to work
he cannot, conversely, demand for his corresponding pay. If,
however, a worker works on his off-day, our welfare laws duly
reward him with a premium higher than what he would receive
when he works on his regular working day.
Such being the case, the divisor in computing an employee's
basic daily rate should be the actual working days in a yar The
number of off-days are not to be counted precisely because on
such off-days, an employee is not required to work.
Simple common sense dictates that should an employee opt not
to work which he can legally do on an off-day, and for such
he gets no pay, he would be unduly robbed of a portion of his
legitimate pay if and when in computing his basic daily and hourly
rate, such off-day is deemed subsumed by the divisor. For it is
elementary in the fundamental process of division that with a
constant dividend, the bigger your divisor is, the smaller our
quotient will be.
It bears emphasis that OUR view above constitutes the rationale
behind the landmark ruling, surprisingly, by the same trial Judge
Jose S. Bautista of the Court of Industrial Relations, in National
Waterworks and Sewerage Authority vs. NWSA Consolidated
Unions, et al., (G.R. No. L-18938, August 31, 1964, 11 SCRA
766, 793-794), to which decision WE gave OUR affirmance.
PAL maintains that the NAWASA doctrine should not apply to a
public utility like PAL which, from the nature of its operations,
requires a whole-year-round, uninterrupted work by personnel.
What PAL apparently forgets is that just like it, NAWASA is also
a public utility which likewise requires its workers to work the
whole year round. Moreover, the NAWASA is a government-
owned corporation to which PAL is akin, it being a government-
controlled corporation.
As will later be stated herein, PAL inked with the representative
unions of the employees collective bargaining agreements
wherein it bound itself to duly compensate employer working on
their off-days. The same situation obtained in the NAWASA case,
wherein WE held:
And in the collective bargaining agreement entered into between
the NAWASA and respondent unions it was agreed that all
existing benefits enjoyed by the employees and laborers prior to
its effectivity shall remain in force and shall form part of the
agreement, among which certainly is the 25% additional
compensation for work on Sundays and legal holidays theretofore
enjoyed by said laborers and employees. It may, therefore, be
said that while under Commonwealth Act No. 444 a public utility
is not required to pay additional compensation to its employees
and workers for work done on Sundays and legal holidays, there
is, however, no prohibition ofr it to pay such additional
compensation if it voluntarily agrees to do so. The NAWASA
committed itself to pay this additional compensation. It must pay
not because of compulsion of law but because of contractual
obligation (11 SCRA 766, 776).
The settled NAWASA doctrine should not be disturbed.
B of Tabaco (43 Phil. 610, 614). And this, in quintessence, was the
PAL also vigorously argues that the unions' longstanding silence
with respect, and acquiescence, to PAL's method of computation
has placed them in estoppel to impugn the correctness of the
questioned wage formula. PAL furthermore contends that laches
has likewise set in precisely because of stich long-standing
inaction.
Our jurisprudence on estoppel is, however, to the effect that:
... (I)t is meet to recall that "mere innocent silence will not work
estoppel. There must also be some element of turpitude or
neglignece connected with the silence by which another is misled
to his injury" (Civil Code of the philippines by Tolentino, Vol. IV,
p. 600) ... [Beronilla vs. GSISK, G.R. No. L-21723, Nov. 26, 1970,
36 SCRA 44, 46, 55, emphasis supplied].
In the case befor US, it is not denied that PAL's formula of
determining daily and hourly rate of pay has been decided and
adopted by it unilaterally without the knowedge and express
consent of the employees. It was only later on that the employees
came to know of the formula's irregularity and its being violative
of the collective bargaining agreements previously executed by
PAL and the unions. Precisely, PALSA immediately proposed
that PAL and the unions. Precisely, PALSA immediately
proposed that PAL use the correct method of computation, which
proposa PAL chose to ignore.
Clearly, therefore, the alleged long-standing silence by the PAL
employees is in truth and in fact innocent silence, which cannot
place a party in estoppel.
The rationale for this is not difficult to see. The doctrine of
estoppel had its origin in equity. As such, its applicability
depends, to a large extent, on the circumstances surrounding a
particular case. Where, therefore, the neglect or omission alleged
to haveplaced a party in estoppel cannot be invoked. This was
the essence of OUR ruling in the case of Mirasol vs. Municipality
compelling reason why in Lodovica vs. Court of Appeals (L-
29678, July 18, 1975, 65 SCRA 154, 158), WE held that a party
who had no knowledge of or gave no consent to a transaction
may not be estopped by it.
Furthermore, jurisprudence likewise fortifies the position that in
the interest of public policy, estoppel and laches cannot arrest
recover of evertime compensation. The case of Manila Terminal
Co. vs. CIR (G.R. NO. L-9265, April 29, 1957, 91 Phil. 625), is
squarely in point. In this case We intoned.
The principle of estoppel and laches cannot well be invoked
agains the Association. In the first place, it would be contrary to
the spirit of the Eight-Hour Labor Law, under which, as already
seen, the laborers cannot waive their right to extra compensation.
In the second place, the law principally obligates the employer to
observe it, as much so that it punishes the employer for its
employer for its violation and leaves the employee or laborer is in
such a disadvantageous position as to be naturally reluctant or
even apprehensive in asserting any claim which may cause the
employher to devise a way for exercising his right to terminate the
employment.
If the principle of estoppel and laches is to be applied, it may bring
about a situation, whereby the employee or laborer, who cannot
expressly renounce their right to extra compensation under the
Eight-Hour Labor Law, may be compelled to accomplish the
same thing by mere silence or lapse of time, thereby frustrating
the purpose of the law by indirection (91 Phil. 625, 633, emphasis
supplied).
In another count, the unilateral adoption by PAL of an irregular
wage formula being an act against public policy, the doctrine of
estoppel cannot give validity to the same (Auyong Hian vs. Court
of Tax Appeals, 59 SCRA 110, 112).
II
G.R. No. L-31341 is an appeal from that portion of the en banc
resolution of the Court of Industrial Relations dated October 9,
1969 in case 43-IPA making the payment of the adjudicated pay
differentials effective only from July 1, 1957.
In their lone assignment of error, February 14, 1953, or ten (10)
years from the date of the filing of their original complaint;
because the claim for pay differentials is based on written
contracts i.e., the collective bargaining agreements between
PAL and the employees' representative uniuons and under
Article 1144(1) of the Civil Code, actions based on written
contracts prescribe in ten (10) years.
PAL, on the other hand, maintains that the employees' claim for
pay differential is"an action to enforce a cause of action under the
Eight-Hour Labor Law (CA No. 444, as amended): (p. 592, rec.,
G.R. No. L-31341). As such, the applicable provision is Section
7-a of CA No. 4444, which reads:
Sec. 7-a. Any action to enforce any cause of action under this
Act shall be commenced within three years after the cause of
action accrued, otherwise such action shall be forever barred;
provided, however, that actions already commenced before the
effecitve date of this Act shall not be affected by the period herein
prescribed (As amended by Rep. Act No. 1993, approved June
22, 1957, emphasis supplied).
Moreover, PAL argues that even assuming that the issue calls for
the application of Article 1144(1) of the New Civil Code, a general
law, still in case of conflict, Commonwealth ACt No. 444, as
amended, should prevail because the latter is a special law.
WE believe that the present case calls for the application of the
Civil Code provisions on the prescriptive period in the filing of
actions based on written contracts. The rason should be fairly
obvious. Petitioners' claim fundamentally involves the strict
compliance by PAL of the pvosions on wage computation
embodied in the collective bargaining agreements inked between
it and the employees representative unions. These collective
bargaining agreements were: the PAS-PALEA collective
bargaining agreement of 1952-53; the PAL-PALEA collective
bargaining agreement of 1956-59; the PAL-PALEA collective
bargaining agreement of 1959-61 (with Article VI as supplement);
the PAL-PALEA agreement of September 4, 1961; the PAL-
ACAP collective bargaining agreement of 1952-54; the PAL-
ACAP collective bargaining agreement of September 6, 1955; the
PAL-ACAP collective bargaining agreement of 1959-61; the PAL-
PALSA collective bargaining agreement of 1959-62; and the
supplementary PAL-PALSA collective bargaining agreement (pp.
54-55, rec., G.R. No. L-31343).
The three-year prescribed period fixed in the Eight-Hour Labor
Law (CA No. 444, as amended) will apply, if the claim for
differentials for overtime work is solely based on said law, and not
on a collective bargaining agreement or any other contract. In the
instant cases, the claim for overtime compensation is not so much
because of Commonwealth Act No. 444, as amended, but
because the claim is a demandable right of the employees, by
reason of the above-mentioned collective bargaining
agreements. That is precisely why petitioners did not make any
reference as to the computation for overtime work under the
Eight-Hour Labor Law (Secs. 3 and 4, CA No. 444), and instead
inissited that work computation provided in the collective
bargaining agreements between the parties be observed. Since
the claim for pay differentials is principally anchored on the written
contracts between the litigants, the ten-year prescriptive period
between the litigants, the ten-year prescriptive period provided by
Art. 1144(1) of the New Civil Code should govern. (General
Insurance and Surety Corp. vs. Republic, L-13873, January 31,
1963, 7 SCRA 4; Heirs of the Deceased Juan Sindiong vs.
Committee on Burnt Areas and Improvements of Cebu, L-15975,
April 30, 1964, 10 SCRA 715; Conde vs. Cuenca and Malaga, L-
9405, July 31, 1956; Veluz vs. Veluz, L-23261, July 31, 1968, 24
SCRA 559).

Finally, granting arguendo that there is doubt as to what labor

legislation to apply to the grievances of the employees in the
cases at bar, it is OUR view that that legislation which would
enhance the plight of the workers should be followed, consonant
with the express pronouncement of the New Civil Code that:

In case of doubt, all labor legislation and labor contracts should

be construed in favor of the safety and decent living of the laborer
(Article 1702).

WHEREFORE, THE APPEALED RESOLUTION IS HEREBY

AFFIRMED, WITH THE MODIFICATION THAT PAY
DIFFERENTIALS BE PAID EFFECTIVE FEBRUARY 14, 1953.
WITH COSTS AGAINST PHILIPPINE AIR LINES, INC. IN BOTH
CASES.

Teehankee (Chairman), Esguerra, Muoz Palma and Martin, JJ.,

concur.
5. PALEA v. PAL 137 SCRA 467
SECOND DIVISION
[G.R. No. L-63578. July 11, 1985.]
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA),
CECILIO V. BAUTISTA, PANTALEON ARAYATA, CATALINO
BAEZ, LUCIO CANTILLO, ROBERTO ESPINELI, JASMIN A.
ILANO, ALFONSO JOSE, ROMULO NERY, ET AL., petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC),
PHILIPPINE AIRLINES, INC. (PAL), BENIGNO TODA JR. and
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS),
respondents.
Siguion Reyna, Montecillo & Ongsiako Law Office for respondent
B. Toda, Jr.
DECISION
MAKASIAR, J p:
This petition for certiorari with preliminary injunction seeks to
annul the resolution dated May 31, 1977 of respondent National
Labor Relations Commission, the dispositive portion of which
reads as follows:
"WHEREFORE, the Commission has resolved, as it hereby
resolves, to recall and declare inoperative the Partial Writ of
Execution dated December 6, 1976, and affirm the Order dated
March 4, 1977 with modification that only pay differentials
beginning February 14, 1953 up to September 8, 1963 be ordered
paid.
"SO ORDERED."
It appears that on March 31, 1976 this Court promulgated a
decision in L-31341 (Philippine Air Lines Employees Association
[PALEA], et al. vs. Philippine Air Lines, Inc.) and L-31343
(Philippine Air Lines Inc. vs. Philippine Air Lines Employees
Association, et al.) affirming the resolution of the defunct Court of
Industrial Relations sustaining PALEA's method of computing the
basic daily and hourly rate of PAL's monthly salaried employees,
to wit:
Monthly Salary x 12
No. of Actual Working Days = X (Basic daily rate)
x
= Basic hourly rate
8
with modification that the pay differentials be paid effective
February 14, 1953 instead of July 1, 1957.
Both parties filed their respective motions for reconsideration.
PAL insisted that the method of computation of the basic daily
rate of pay should be to divide the yearly salary by 365 days,
to wit:
Monthly Salary x 12
365 days (No. of calendar days in a year) = X (Basic daily wage)
x
= Basic hourly rate
8
PALEA, on the other hand, prayed that the pay differentials to be
paid to the employees involved should bear interest to be fixed
by the Court from the date of the filing of the complaint on
February 14, 1963. prcd
This Court denied both motions for lack of merit and declared the
denial as final in the resolution of August 20, 1976. Entry of
judgment was made on August 29, 1976.
On September 27, 1976 PALEA filed with the NLRC a "motion for
immediate execution and payments of benefits under the award
and motion for immediate verification, examination and
computation and payment of back differentials."
After hearing, Labor Arbiter Francisco delos Reyes issued a
partial writ of execution dated December 6, 1976 directing the
Deputy Sheriff of the NLRC to implement, beginning October 1,
1976, the CIR resolution as affirmed with modification by the
Supreme Court..
On March 4, 1977, Labor Arbiter delos Reyes granted the second
portion of the motion which was filed on September 27, 1976 "for
immediate verification, examination and computation and
payment of back differential," and ordered the computation of
differential from February 14, 1953 up to September 30, 1976.
On March 28, 1977 PAL filed with the NLRC an appeal with
prayer to quash the order of March 4, 1977, and a motion to stay
execution of the partial writ of execution and the aforesaid order
of March 4, 1977.
On May 31, 1977, the NLRC issued the questioned resolution.
The NLRC reasoned out that the application of the adjudged
correct method or formula as adopted in the Supreme Court's
decision was based on the specific provisions of the collective
bargaining agreement still existing from 1952 until its expiry on
September 8, 1963; and that beginning September 9, 1963 the
aforesaid formula ceased to be effective.
On March 29, 1983 or after a lapse of about six (6) years, the
present petition for certiorari was filed before this Court assailing
the said resolution. LibLex
Petitioners maintain that this Court in its decision of March 31,
1976 had already settled the correct method or formula of
computation of the basic daily rate of pay of PAL's monthly
salaried employees in determining their overtime pay, night
differential pay, holiday premium pay, vacation and sick leave pay
effective from February 14, 1953. Thus, when the NLRC declared
that the said method or formula ceased to be effective on
September 8, 1963, the consequence would be to revert to the
use of what had been adjudged by this Court as an erroneous
method of computation of the basic daily rate of pay, by dividing
the yearly salary by 365 days.
The petition should be dismissed.
Under the terms of the collective bargaining agreements entered
into between the parties from 1952 up to September 8, 1963,
which were the subject matter of L-31341 and L-31343, off-days
were not paid days. Hence, the unions contested the PAL's wage
formula of computing the basic daily rate of the latter's monthly-
salaried employees by using 365 days as divisor thus including
even the off-days. In Our decision of March 31, 1976 in said
cases, We categorically ruled that "off-days are not paid days.
Such being the case, the divisor in computing an employee's
basic daily rate should be the actual working days in a year. The
number of off-days are not to be counted precisely because on
such off-days, an employee is not required to work."
It should be made clear, however, that such pronouncement was
based on the provisions of the collective bargaining agreements
existing from 1952 until September 8, 1963. As alleged by the
respondents and found out by the respondent Commission and
which was not disputed by petitioners, after September 8, 1963,
there was a change of collective bargaining agreement. And the
parties incorporated in the subsequent collective bargaining
agreements provisions considering such "off-days" as already
"paid". Hence, the method of computing the basic and hourly rate
of respondent PAL's monthly-salaried employees which We
decreed in G.R. No. L-31341 and No. L-31343 is no longer
applicable after September 8, 1963.
WE agree with the respondent Commission in limiting the
application of Our decision of March 31, 1976 from February 14,
1953 to September 8, 1963. The respondent Commission ruled
in this wise:

"To our mind the change of the CBA provisions interpreted by the
Court can lead to no other conclusion than that the Decision is
co-terminous with the last CBA containing the interpreted
provision. This must be so. For, the set of facts which justified the
assumption that holidays and off days were not paid, no longer
obtains. The facts which form the basis of the CIR en banc's
disposition is clear in pages 9 and 10 of the Resolution itself.
29, 1983. The questioned resolution having long become final
and executory, this Court has no jurisdiction to entertain the
present petition. cdll
WHEREFORE, THE PETITION FOR CERTIORARI IS HEREBY
DISMISSED FOR LACK OF MERIT. NO COSTS.
SO ORDERED.

xxx xxx xxx Aquino, Concepcion Jr., Escolin and Cuevas, JJ., concur.

"What is more, the Supreme Court final decision in this Abad Santos, J., took no part.
proceeding, affirming the Resolution of the CIR sitting en banc, in
adopting the correct formula for determining the basic daily and ||| (Philippine Airlines Employees Association v. National Labor
hourly rate of monthly rate of monthly salaried PAL employees Relations Commission, G.R. No. L-63578, [July 11, 1985], 222
pursuant to specific provisions of the successive CBA's from 1952 PHIL 8-13)
up to that which expired on September 8, 1963, specifically
anchored on the assumption that `off days' are not yet paid, could
not possibly have intended to unreasonably extend the effects of
the same Decision to subsequent periods of time covered by
subsequent CBA's wherein the parties, obviously to prevent
repetition of the same troubles arising from their different
interpretations leading to the present dispute, precisely
incorporated provisions clearly considering such `off-days' as
already paid.

"In other words, by any stretch of valid argumentation, logic

communes with reason to support the conclusion that the
coverage of the CIR en banc resolution as affirmed by the
Supreme Court is limited to the period from February 14, 1953 to
September 8, 1963. Clearly then, beginning September 9, 1963,
the adjudged formula in computing the daily and hourly rate of
monthly salaried PAL employees ceased to be effective. A fortiori,
there exist no valid rationale for the questioned Partial Writ of
Execution" (italics supplied; pp. 123-127, rec.).

Finally, petitioners' cause of action questioning respondent

Commission's resolution of May 31, 1977 is almost six (6) years
late as the present petition for certiorari was filed only on March
6. Coca Cola Bottlers vs. Climaco
G.R. No. 146881 February 5, 2007
COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA,
Manager, Petitioners,
vs.
DR. DEAN N. CLIMACO, Respondent.
DECISION
AZCUNA, J.:
This is a petition for review on certiorari of the Decision of the
Court of Appeals1 promulgated on July 7, 2000, and its
Resolution promulgated on January 30, 2001, denying
petitioners motion for reconsideration. The Court of Appeals
ruled that an employer-employee relationship exists between
respondent Dr. Dean N. Climaco and petitioner Coca-Cola
Bottlers Phils., Inc. (Coca-Cola), and that respondent was illegally
dismissed.
Respondent Dr. Dean N. Climaco is a medical doctor who was
hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a
Retainer Agreement that stated:
WHEREAS, the COMPANY desires to engage on a retainer basis
the services of a physician and the said DOCTOR is accepting
such engagement upon terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the
mutual agreement hereinafter contained, the parties agree as
follows:
1. This Agreement shall only be for a period of one (1) year
beginning January 1, 1988 up to December 31, 1988. The said
term notwithstanding, either party may terminate the contract
upon giving a thirty (30)-day written notice to the other.
2. The compensation to be paid by the company for the services
of the DOCTOR is hereby fixed at PESOS: Three Thousand Eight
Hundred (P3,800.00) per month. The DOCTOR may charge
professional fee for hospital services rendered in line with his
specialization. All payments in connection with the Retainer
Agreement shall be subject to a withholding tax of ten percent
(10%) to be withheld by the COMPANY under the Expanded
Withholding Tax System. In the event the withholding tax rate
shall be increased or decreased by appropriate laws, then the
rate herein stipulated shall accordingly be increased or
decreased pursuant to such laws.
3. That in consideration of the above mentioned retainers fee,
the DOCTOR agrees to perform the duties and obligations
enumerated in the COMPREHENSIVE MEDICAL PLAN, hereto
attached as Annex "A" and made an integral part of this Retainer
Agreement.
4. That the applicable provisions in the Occupational Safety and
Health Standards, Ministry of Labor and Employment shall be
followed.
5. That the DOCTOR shall be directly responsible to the
employee concerned and their dependents for any injury inflicted
on, harm done against or damage caused upon the employee of
the COMPANY or their dependents during the course of his
examination, treatment or consultation, if such injury, harm or
damage was committed through professional negligence or
incompetence or due to the other valid causes for action.
6. That the DOCTOR shall observe clinic hours at the
COMPANYS premises from Monday to Saturday of a minimum
of two (2) hours each day or a maximum of TWO (2) hours each
day or treatment from 7:30 a.m. to 8:30 a.m. and 3:00 p.m. to 4:00
p.m., respectively unless such schedule is otherwise changed by
the COMPANY as [the] situation so warrants, subject to the Labor
Code provisions on Occupational Safety and Health Standards
as the COMPANY may determine. It is understood that the
DOCTOR shall stay at least two (2) hours a day in the COMPANY
clinic and that such two (2) hours be devoted to the workshift with
the most number of employees. It is further understood that the
DOCTOR shall be on call at all times during the other workshifts
to attend to emergency case[s];
7. That no employee-employer relationship shall exist between
the COMPANY and the DOCTOR whilst this contract is in effect,
and in case of its termination, the DOCTOR shall be entitled only
to such retainer fee as may be due him at the time of termination.2
The Comprehensive Medical Plan,3 which contains the duties
and responsibilities of respondent, adverted to in the Retainer
Agreement, provided:
A. OBJECTIVE
These objectives have been set to give full consideration to [the]
employees and dependents health:
1. Prompt and adequate treatment of occupational and non-
occupational injuries and diseases.
2. To protect employees from any occupational health hazard by
evaluating health factors related to working conditions.
3. To encourage employees [to] maintain good personal health
by setting up employee orientation and education on health,
hygiene and sanitation, nutrition, physical fitness, first aid training,
accident prevention and personnel safety.
4. To evaluate other matters relating to health such as
absenteeism, leaves and termination.
5. To give family planning motivations.
B. COVERAGE
1. All employees and their dependents are embraced by this
program.
2. The health program shall cover pre-employment and annual
p.e., hygiene and sanitation, immunizations, family planning,
physical fitness and athletic programs and other activities such
as group health education program, safety and first aid classes,
organization of health and safety committees.
3. Periodically, this program will be reviewed and adjusted based
on employees needs.
C. ACTIVITIES
1. Annual Physical Examination.
2. Consultations, diagnosis and treatment of occupational and
non-occupational illnesses and injuries.
3. Immunizations necessary for job conditions.
4. Periodic inspections for food services and rest rooms.
5. Conduct health education programs and present education
materials.
6. Coordinate with Safety Committee in developing specific
studies and program to minimize environmental health hazards.
7. Give family planning motivations.
8. Coordinate with Personnel Department regarding physical
fitness and athletic programs.
9. Visiting and follow-up treatment of Company employees and
their dependents confined in the hospital.
The Retainer Agreement, which began on January 1, 1988, was
renewed annually. The last one expired on December 31, 1993.
Despite the non-renewal of the Retainer Agreement, respondent
continued to perform his functions as company doctor to Coca-
Cola until he received a letter4 dated March 9, 1995 from
petitioner company concluding their retainership agreement
effective 30 days from receipt thereof.
It is noted that as early as September 1992, petitioner was
already making inquiries regarding his status with petitioner
company. First, he wrote a letter addressed to Dr. Willie Sy, the
Acting President and Chairperson of the Committee on
Membership, Philippine College of Occupational Medicine. In
response, Dr. Sy wrote a letter5 to the Personnel Officer of Coca-
Cola Bottlers Phils., Bacolod City, stating that respondent should
be considered as a regular part-time physician, having served the
company continuously for four (4) years. He likewise stated that
respondent must receive all the benefits and privileges of an
employee under Article 157 (b)6 of the Labor Code.
Petitioner company, however, did not take any action. Hence,
respondent made another inquiry directed to the Assistant
Regional Director, Bacolod City District Office of the Department
of Labor and Employment (DOLE), who referred the inquiry to the
Legal Service of the DOLE, Manila. In his letter7 dated May 18,
1993, Director Dennis P. Ancheta, Legal Service, DOLE, stated
that he believed that an employer-employee relationship existed
between petitioner and respondent based on the Retainer
Agreement and the Comprehensive Medical Plan, and the
application of the "four-fold" test. However, Director Ancheta
emphasized that the existence of employer-employee
relationship is a question of fact. Hence, termination disputes or
money claims arising from employer-employee relations
exceeding P5,000 may be filed with the National Labor Relations
Commission (NLRC). He stated that their opinion is strictly
advisory.
An inquiry was likewise addressed to the Social Security System
(SSS). Thereafter, Mr. Romeo R. Tupas, OIC-FID of SSS-
Bacolod City, wrote a letter8 to the Personnel Officer of Coca-
Cola Bottlers Phils., Inc. informing the latter that the legal staff of
his office was of the opinion that the services of respondent
partake of the nature of work of a regular company doctor and
that he was, therefore, subject to social security coverage.
Respondent inquired from the management of petitioner
company whether it was agreeable to recognizing him as a
regular employee. The management refused to do so.
On February 24, 1994, respondent filed a Complaint9 before the
NLRC, Bacolod City, seeking recognition as a regular employee
of petitioner company and prayed for the payment of all benefits
of a regular employee, including 13th Month Pay, Cost of Living
Allowance, Holiday Pay, Service Incentive Leave Pay, and
Christmas Bonus. The case was docketed as RAB Case No. 06-
02-10138-94.
While the complaint was pending before the Labor Arbiter,
respondent received a letter dated March 9, 1995 from petitioner
company concluding their retainership agreement effective thirty
(30) days from receipt thereof. This prompted respondent to file
a complaint for illegal dismissal against petitioner company with
the NLRC, Bacolod City. The case was docketed as RAB Case
No. 06-04-10177-95.
In a Decision10 dated November 28, 1996, Labor Arbiter Jesus
N. Rodriguez, Jr. found that petitioner company lacked the power
of control over respondents performance of his duties, and
recognized as valid the Retainer Agreement between the parties.
Thus, the Labor Arbiter dismissed respondents complaint in the
first case, RAB Case No. 06-02-10138-94. The dispositive portion
of the Decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered dismissing the instant complaint seeking recognition as
a regular employee.
SO ORDERED.11
In a Decision12 dated February 24, 1997, Labor Arbiter Benjamin
Pelaez dismissed the case for illegal dismissal (RAB Case No.
06-04-10177-95) in view of the previous finding of Labor Arbiter
Jesus N. Rodriguez, Jr. in RAB Case No. 06-02-10138-94 that
complainant therein, Dr. Dean Climaco, is not an employee of
Coca-Cola Bottlers Phils., Inc.
Respondent appealed both decisions to the NLRC, Fourth
Division, Cebu City.
In a Decision13 promulgated on November 28, 1997, the NLRC
dismissed the appeal in both cases for lack of merit. It declared
that no employer-employee relationship existed between
petitioner company and respondent based on the provisions of
the Retainer Agreement which contract governed respondents
employment.
Respondents motion for reconsideration was denied by the
NLRC in a Resolution14 promulgated on August 7, 1998.
Respondent filed a petition for review with the Court of Appeals.
In a Decision promulgated on July 7, 2000, the Court of Appeals
ruled that an employer-employee relationship existed between
petitioner company and respondent after applying the four-fold
test: (1) the power to hire the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the employers power
to control the employee with respect to the means and methods
by which the work is to be accomplished.
The Court of Appeals held:
The Retainer Agreement executed by and between the parties,
when read together with the Comprehensive Medical Plan which
was made an integral part of the retainer agreements, coupled
with the actual services rendered by the petitioner, would show
that all the elements of the above test are present.
First, the agreements provide that "the COMPANY desires to
engage on a retainer basis the services of a physician and the
said DOCTOR is accepting such engagement x x x" (Rollo, page
25). This clearly shows that Coca-Cola exercised its power to hire
the services of petitioner.
Secondly, paragraph (2) of the agreements showed that
petitioner would be entitled to a final compensation of Three
Thousand Eight Hundred Pesos per month, which amount was
later raised to Seven Thousand Five Hundred on the latest
contract. This would represent the element of payment of wages.
Thirdly, it was provided in paragraph (1) of the agreements that
the same shall be valid for a period of one year. "The said term
notwithstanding, either party may terminate the contract upon
giving a thirty (30) day written notice to the other." (Rollo, page
25). This would show that Coca-Cola had the power of dismissing
the petitioner, as it later on did, and this could be done for no
particular reason, the sole requirement being the formers
compliance with the 30-day notice requirement.
Lastly, paragraphs (3) and (6) of the agreements reveal that
Coca-Cola exercised the most important element of all, that is,
control, over the conduct of petitioner in the latters performance
of his duties as a doctor for the company.
It was stated in paragraph (3) that the doctor agrees to perform
the duties and obligations enumerated in the Comprehensive
Medical Plan referred to above. In paragraph (6), the fixed and
definite hours during which the petitioner must render service to
the company is laid down.
We say that there exists Coca-Colas power to control petitioner
because the particular objectives and activities to be observed
and accomplished by the latter are fixed and set under the
Comprehensive Medical Plan which was made an integral part of
the retainer agreement. Moreover, the times for accomplishing
these objectives and activities are likewise controlled and
determined by the company. Petitioner is subject to definite hours
of work, and due to this, he performs his duties to Coca-Cola not
at his own pleasure but according to the schedule dictated by the
company.
In addition, petitioner was designated by Coca-Cola to be a
member of its Bacolod Plants Safety Committee. The minutes of
the meeting of the said committee dated February 16, 1994
included the name of petitioner, as plant physician, as among
those comprising the committee.
It was averred by Coca-Cola in its comment that they exercised
no control over petitioner for the reason that the latter was not
directed as to the procedure and manner of performing his
assigned tasks. It went as far as saying that "petitioner was not
told how to immunize, inject, treat or diagnose the employees of
the respondent (Rollo, page 228). We believe that if the "control
test" would be interpreted this strictly, it would result in an absurd
and ridiculous situation wherein we could declare that an entity
exercises control over anothers activities only in instances where
the latter is directed by the former on each and every stage of
performance of the particular activity. Anything less than that
would be tantamount to no control at all.
To our minds, it is sufficient if the task or activity, as well as the
means of accomplishing it, is dictated, as in this case where the
objectives and activities were laid out, and the specific time for
performing them was fixed by the controlling party.15
Moreover, the Court of Appeals declared that respondent should
be classified as a regular employee having rendered six years of
service as plant physician by virtue of several renewed retainer
agreements. It underscored the provision in Article 28016 of the
Labor Code stating that "any employee who has rendered at least
one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to
the activity in which he is employed, and his employment shall
continue while such activity exists." Further, it held that the
termination of respondents services without any just or
authorized cause constituted illegal dismissal.
In addition, the Court of Appeals found that respondents
dismissal was an act oppressive to labor and was effected in a
wanton, oppressive or malevolent manner which entitled
respondent to moral and exemplary damages.
The dispositive portion of the Decision reads:
WHEREFORE, in view of the foregoing, the Decision of the
National Labor Relations Commission dated November 28, 1997
and its Resolution dated August 7, 1998 are found to have been
issued with grave abuse of discretion in applying the law to the
established facts, and are hereby REVERSED and SET ASIDE,
and private respondent Coca-Cola Bottlers, Phils.. Inc. is hereby
ordered to:
1. Reinstate the petitioner with full backwages without loss of
seniority rights from the time his compensation was withheld up
to the time he is actually reinstated; however, if reinstatement is
no longer possible, to pay the petitioner separation pay equivalent
to one (1) months salary for every year of service rendered,
computed at the rate of his salary at the time he was dismissed,
plus backwages.
2. Pay petitioner moral damages in the amount of P50,000.00.
3. Pay petitioner exemplary damages in the amount of
P50,000.00.
4. Give to petitioner all other benefits to which a regular employee
of Coca-Cola is entitled from the time petitioner became a regular
employee (one year from effectivity date of employment) until the
time of actual payment.
SO ORDERED.17
Petitioner company filed a motion for reconsideration of the
Decision of the Court of Appeals.
In a Resolution promulgated on January 30, 2001, the Court of
Appeals stated that petitioner company noted that its Decision
failed to mention whether respondent was a full-time or part-time
regular employee. It also questioned how the benefits under their
Collective Bargaining Agreement which the Court awarded to
respondent could be given to him considering that such benefits
were given only to regular employees who render a full days work
of not less that eight hours. It was admitted that respondent is
only required to work for two hours per day.
The Court of Appeals clarified that respondent was a "regular
part-time employee and should be accorded all the proportionate
benefits due to this category of employees of [petitioner]
Corporation under the CBA." It sustained its decision on all other
matters sought to be reconsidered.
Hence, this petition filed by Coca-Cola Bottlers Phils., Inc.
The issues are:
1. THAT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE
FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL
LABOR RELATIONS COMMISSION, CONTRARY TO THE
DECISIONS OF THE HONORABLE SUPREME COURT ON
THE MATTER.
2. THAT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE
FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL
LABOR RELATIONS COMMISSION, AND HOLDING INSTEAD
THAT THE WORK OF A PHYSICIAN IS NECESSARY AND
DESIRABLE TO THE BUSINESS OF SOFTDRINKS
MANUFACTURING, CONTRARY TO THE RULINGS OF THE
SUPREME COURT IN ANALOGOUS CASES.
3. THAT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE
FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL
LABOR RELATIONS COMMISSION, AND HOLDING INSTEAD
THAT THE PETITIONERS EXERCISED CONTROL OVER THE
WORK OF THE RESPONDENT.
4. THAT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE
FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL
LABOR RELATIONS COMMISSION, AND FINDING THAT
THERE IS EMPLOYER-EMPLOYEE RELATIONSHIP
PURSUANT TO ARTICLE 280 OF THE LABOR CODE.
5. THAT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE
FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL
LABOR RELATIONS COMMISSION, AND FINDING THAT
THERE EXISTED ILLEGAL DISMISSAL WHEN THE
EMPLOYENT OF THE RESPONDENT WAS TERMINATED
WITHOUT JUST CAUSE.
6. THAT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE
FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL
LABOR RELATIONS COMMISSION, AND FINDING THAT THE
RESPONDENT IS A REGULAR PART TIME EMPLOYEE WHO
IS ENTITLED TO PROPORTIONATE BENEFITS AS A
REGULAR PART TIME EMPLOYEE ACCORDING TO THE
PETITIONERS CBA.
7. THAT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR, BASED ON A
SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE
FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL
LABOR RELATIONS COMMISSION, AND FINDING THAT THE
RESPONDENT IS ENTITLED TO MORAL AND EXEMPLARY
DAMAGES.
The main issue in this case is whether or not there exists an
employer-employee relationship between the parties. The
resolution of the main issue will determine whether the
termination of respondents employment is illegal.
The Court, in determining the existence of an employer-employee
relationship, has invariably adhered to the four-fold test: (1) the
selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control
the employees conduct, or the so-called "control test,"
considered to be the most important element.18
The Court agrees with the finding of the Labor Arbiter and the
NLRC that the circumstances of this case show that no employer-
employee relationship exists between the parties. The Labor
Arbiter and the NLRC correctly found that petitioner company
lacked the power of control over the performance by respondent
of his duties. The Labor Arbiter reasoned that the Comprehensive
Medical Plan, which contains the respondents objectives, duties
and obligations, does not tell respondent "how to conduct his
physical examination, how to immunize, or how to diagnose and
treat his patients, employees of [petitioner] company, in each
case." He likened this case to that of Neri v. National Labor
Relations Commission,19 which held:
In the case of petitioner Neri, it is admitted that FEBTC issued a
job description which detailed her functions as a radio/telex
operator. However, a cursory reading of the job description shows
that what was sought to be controlled by FEBTC was actually the
end result of the task, e.g., that the daily incoming and outgoing
telegraphic transfer of funds received and relayed by her,
respectively, tallies with that of the register. The guidelines were
laid down merely to ensure that the desired end result was
achieved. It did not, however, tell Neri how the radio/telex
machine should be operated.
In effect, the Labor Arbiter held that petitioner company, through
the Comprehensive Medical Plan, provided guidelines merely to
ensure that the end result was achieved, but did not control the
means and methods by which respondent performed his
assigned tasks.
The NLRC affirmed the findings of the Labor Arbiter and stated
that it is precisely because the company lacks the power of
control that the contract provides that respondent shall be directly
responsible to the employee concerned and their dependents for
any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.
The Labor Arbiter also correctly found that the provision in the
Retainer Agreement that respondent was on call during
emergency cases did not make him a regular employee. He
explained, thus:
Likewise, the allegation of complainant that since he is on call at
anytime of the day and night makes him a regular employee is
off-tangent. Complainant does not dispute the fact that outside of
the two (2) hours that he is required to be at respondent
companys premises, he is not at all further required to just sit
around in the premises and wait for an emergency to occur so as
to enable him from using such hours for his own benefit and
advantage. In fact, complainant maintains his own private clinic
attending to his private practice in the city, where he services his
patients, bills them accordingly -- and if it is an employee of
respondent company who is attended to by him for special
treatment that needs hospitalization or operation, this is subject
to a special billing. More often than not, an employee is required
to stay in the employers workplace or proximately close thereto
that he cannot utilize his time effectively and gainfully for his own
purpose. Such is not the prevailing situation here.1awphi1.net
In addition, the Court finds that the schedule of work and the
requirement to be on call for emergency cases do not amount to
such control, but are necessary incidents to the Retainership
Agreement.

The Court also notes that the Retainership Agreement granted to

both parties the power to terminate their relationship upon giving
a 30-day notice. Hence, petitioner company did not wield the sole
power of dismissal or termination.

The Court agrees with the Labor Arbiter and the NLRC that there
is nothing wrong with the employment of respondent as a retained
physician of petitioner company and upholds the validity of the
Retainership Agreement which clearly stated that no employer-
employee relationship existed between the parties. The
Agreement also stated that it was only for a period of 1 year
beginning January 1, 1988 to December 31, 1998, but it was
renewed on a yearly basis.

Considering that there is no employer-employee relationship

between the parties, the termination of the Retainership
Agreement, which is in accordance with the provisions of the
Agreement, does not constitute illegal dismissal of respondent.
Consequently, there is no basis for the moral and exemplary
damages granted by the Court of Appeals to respondent due to
his alleged illegal dismissal.

WHEREFORE, the petition is GRANTED and the Decision and

Resolution of the Court of Appeals are REVERSED and SET
ASIDE. The Decision and Resolution dated November 28, 1997
and August 7, 1998, respectively, of the National Labor Relations
Commission are REINSTATED.

No costs.

SO ORDERED.
7. Consolidated Broadcasting System vs. Oberio also in the sister stations of DYWB in the Visayas and Mindanao
areas.[4]
CONSOLIDATED BROADCASTING G.R. No. 168424 Sometime in August 1998, petitioner reduced the number of its
SYSTEM, INC., drama productions from 14 to 11, but was opposed by
Petitioner, Present: respondents. After the negotiations failed, the latter sought the
Ynares-Santiago, J. (Chairperson), intervention of the Department of Labor and Employment
- versus - Austria-Martinez, (DOLE), which on November 12, 1998, conducted through its
Chico-Nazario, and Regional Office, an inspection of DWYB station. The results
Nachura, JJ. thereof revealed that petitioner is guilty of violation of labor
DANNY OBERIO, ELNA DE PEDRO, standard laws, such as underpayment of wages, 13th month pay,
LUISITO VILLAMOR, WILMA non-payment of service incentive leave pay, and non-coverage of
SUGATON, RUFO DEITA, JR., respondents under the Social Security System.
EMILY DE GUZMAN, CAROLINE
LADRILLO, JOSE ROBERTO Promulgated: Petitioner contended that respondents are not its employees and
REGALADO, ROSEBEL NARCISO refused to submit the payroll and daily time records despite the
& ANANITA TANGETE, subpoena duces tecum issued by the DOLE Regional Director.
Respondents. June 8, 2007 Petitioner further argued that the case should be referred to the
NLRC because the Regional Director has no jurisdiction over the
x ----------------------------------------------------------------------------------- determination of the existence of employer-employee relationship
----- x which involves evidentiary matters that are not verifiable in the
normal course of inspection.
DECISION
Vexed by the respondents complaint, petitioner allegedly
YNARES-SANTIAGO, J.: pressured and intimidated respondents. Respondents Oberio
and Delta were suspended for minor lapses and the payment of
their salaries were purportedly delayed. Eventually, on February
Assailed in this petition for review is the July 30, 2004 Decision[1] 3, 1999, pending the outcome of the inspection case with the
of the Court of Appeals in CA-G.R. SP No. 77098, which affirmed Regional Director, respondents were barred by petitioner from
the December 5, 2001 Decision[2] of the National Labor Relations reporting for work; thus, the former claimed constructive
Commission (NLRC) holding that respondents were regular dismissal.[5]
employees of petitioner and that they were illegally dismissed.
On April 8, 1999, the DOLE Regional Director issued an order
Respondents alleged that they were employed as drama talents directing petitioner to pay respondents a total of P318,986.74
by DYWB-Bombo Radyo, a radio station owned and operated by representing non-payment/underpayment of the salary and
petitioner Consolidated Broadcasting System, Inc. They reported benefits due them.[6] However, on July 8, 1999, the Regional
for work daily for six days in a week and were required to record Director reconsidered the April 8, 1999 order and certified the
their drama production in advance. Some of them were employed records of the case to the NLRC, Regional Arbitration Branch VI,
by petitioner since 1974, while the latest one was hired in 1997.[3] for determination of employer-employee relationship.[7]
Their drama programs were aired not only in Bacolod City but Respondents appealed said order to the Secretary of Labor.

On October 12, 1999, respondents filed a case for illegal
dismissal, underpayment/non-payment of wages and benefits
plus damages against petitioner. On April 10, 2000, the Labor
Arbiter dismissed the case without prejudice while waiting for the
decision of the Secretary of Labor on the same issue of the
existence of an employer-employee relationship between
petitioner and respondents.
On appeal to the NLRC, respondents raised the issue of
employer-employee relationship and submitted the following to
prove the existence of such relationship, to wit: time cards,
identification cards, payroll, a show cause order of the station
manager to respondent Danny Oberio and memoranda either
noted or issued by said manager. Petitioner, on the other hand,
did not present any documentary evidence in its behalf and
merely denied the allegations of respondents. It claimed that the
radio station pays for the drama recorded by piece and that it has
no control over the conduct of respondents.
On December 5, 2001, the NLRC rendered a decision holding
that respondents were regular employees of petitioner who were
illegally dismissed by the latter. It further held that respondents
complied with the requirements of the rule on forum shopping.
The decretal portion thereof, provides:
WHEREFORE, premises considered, the decision of Labor
Arbiter Ray Alan T. Drilon dated 10 April 2000 is SET ASIDE and
VACATED and a new one entered.
Ordering respondent Consolidated Broadcasting System, Inc.
(Bombo Radyo Philippines), DYWB to reinstate the complainants
without loss of seniority rights wi[th] full back wages computed
from February 1999 up to the time of actual reinstatement.
SO ORDERED.[8]
Hence, petitioner filed the instant recourse.
The issues for resolution are as follows: (1) Did respondents
violate the rule on forum shopping; (2) whether the NLRC
correctly ruled on the merits of the case instead of remanding the
case to the Labor Arbiter; (3) whether respondents were
employees of petitioner; and (4) whether their dismissal was
illegal.
Respondents complaint in the inspection case before the DOLE
Regional Director alleged that they were under the employ of
petitioner at the time of the filing of said complaint. Pending the
resolution thereof, they claimed to have been dismissed; hence,
the filing of the present illegal dismissal case before the Labor
Arbiter. The causes of action in these two complaints are
different, i.e., one for violation of labor standard laws, and the
other, for illegal dismissal, but the entitlement of respondents to
the reliefs prayed for hinges on the same issue of the existence
of an employer-employee relationship. While the decision on the
said issue by one tribunal may operate as res judicata on the
other, dismissal of the present illegal dismissal case on the
ground of forum shopping, would work injustice to respondents
because it is the law itself which provides for two separate
remedies for their distinct causes of action.
Under Article 217[9] of the Labor Code, termination cases fall
under the jurisdiction of Labor Arbiters. Whereas, Article 128[10]
of the same Code vests the Secretary of Labor or his duly
authorized representatives with the power to inspect the
employers records to determine and compel compliance with
labor standard laws. The exercise of the said power by the
Secretary or his duly authorized representatives is exclusive to
cases where employer-employee relationship still exists. Thus, in
cases where the complaint for violation of labor standard laws
preceded the termination of the employee and the filing of the
illegal dismissal case, it would not be in consonance with justice
to charge the complainants with engaging in forum shopping
when the remedy available to them at the time their causes of
action arose was to file separate cases before different fora.
Besides, in the instant case, respondent Danny Oberio disclosed
in the verification the pendency of the case regarding wage
differential.[11] In addition, said case was discussed in detail in
the position paper,[12] evincing the absence of any intention on
the part of respondents to mislead the Labor Arbiter.
Similarly, in Benguet Management Corporation v. Court of
Appeals,[13] petitioner filed separate actions to enjoin the
foreclosure of real estate mortgages before the Regional Trial
Courts of San Pablo City and Zambales which has jurisdiction
over the place where the properties were located. In both cases,
petitioner contended, among others, that the loan secured by said
mortgages imposed unauthorized penalties, interest and
charges. The Court did not find the mortgagors guilty of forum
shopping considering that since injunction is enforceable only
within the territorial limits of the trial court, the mortgagor is left
without remedy as to the properties located outside the
jurisdiction of the issuing court, unless an application for
injunction is made with another court which has jurisdiction over
the latter properties.
By parity of reasoning, it would be unfair to hold respondents in
the instant case guilty of forum shopping because the recourse
available to them after their termination, but pending resolution of
the inspection case before the DOLE, was to file a case for illegal
dismissal before the Labor Arbiter who has jurisdiction over
termination disputes.
More importantly, substantial justice dictates that this case be
resolved on the merits considering that the NLRC and the Court
of Appeals correctly found that there existed an employer-
employee relationship between petitioner and respondents and
that the latters dismissal was illegal, as will be discussed
hereunder.
In the same vein, the NLRC correctly ruled on the merits instead
of remanding the case to the Labor Arbiter. Respondents
specifically raised the issue of the existence of employer-
employee relationship but petitioner refused to submit evidence
to disprove such relationship on the erroneous contention that to
do so would constitute a waiver of the right to question the
jurisdiction of the NLRC to resolve the case on the merits.[14]
This is rather odd because it was the stand of petitioner in the
inspection case before the DOLE that the case should be certified
to the NLRC for the resolution of the issue of employer-employee
relationship. But when the same issue was proffered before the
NLRC, it refused to present evidence and instead sought the
dismissal of the case invoking the pendency of the inspection
case before the DOLE. Petitioner refused to meet head on the
substantial aspect of this controversy and resorted to
technicalities to delay its disposition. It must be stressed that
labor tribunals are not bound by technical rules and the Court
would sustain the expedient disposition of cases so long as the
parties are not denied due process.[15] The rule is that, due
process is not violated where a person is given the opportunity to
be heard, but chooses not to give his or her side of the case.[16]
Significantly, petitioner never claimed that it was denied due
process. Indeed, no such denial exists because it had all the
opportunities to present evidence before the labor tribunals
below, the Court of Appeals, and even before this Court, but
chose not to do so for reasons which will not warrant the sacrifice
of substantial justice over technicalities.
On the third issue, respondents employment with petitioner
passed the four-fold test on employer-employee relations,
namely: (1) the selection and engagement of the employee, or
the power to hire; (2) the payment of wages; (3) the power to
dismiss; and (4) the power to control the employee.
Petitioner failed to controvert with substantial evidence the
allegation of respondents that they were hired by the former on
various dates from 1974 to 1997. If petitioner did not hire
respondents and if it was the director alone who chose the
talents, petitioner could have easily shown, being in possession
of the records, a contract to such effect. However, petitioner
merely relied on its contention that respondents were piece rate
contractors who were paid by results.[17] Note that under Policy
Instruction No. 40, petitioner is obliged to execute the necessary
contract specifying the nature of the work to be performed, rates
of pay, and the programs in which they will work. Moreover,
project or contractual employees are required to be apprised of
the project they will undertake under a written contract. This was
not complied with by the petitioner, justifying the reasonable
conclusion that no such contracts exist and that respondents
were in fact regular employees.
In ABS-CBN v. Marquez,[18] the Court held that the failure of the
employer to produce the contract mandated by Policy Instruction
No. 40 is indicative that the so called talents or project workers
are in reality, regular employees. Thus
Policy Instruction No. 40 pertinently provides:
Program employees are those whose skills, talents or services
are engaged by the station for a particular or specific program or
undertaking and who are not required to observe normal working
hours such that on some days they work for less than eight (8)
hours and on other days beyond the normal work hours observed
by station employees and are allowed to enter into employment
contracts with other persons, stations, advertising agencies or
sponsoring companies. The engagement of program employees,
including those hired by advertising or sponsoring companies,
shall be under a written contract specifying, among other things,
the nature of the work to be performed, rates of pay, and the
programs in which they will work. The contract shall be duly
registered by the station with the Broadcast Media Council within
three days from its consummation. (Emphasis supplied)
Ironically, however, petitioner failed to adduce an iota proof that
the requirements for program employment were even complied
with by it. It is basic that project or contractual employees are
appraised of the project they will work under a written contract,
specifying, inter alia, the nature of work to be performed and the
rates of pay and the program in which they will work. Sadly,
however, no such written contract was ever presented by the
petitioner. Petitioner is in the best of position to present these
documents. And because none was presented, we have every
reason to surmise that no such written contract was ever
accomplished by the parties, thereby belying petitioners posture.
Worse, there was no showing of compliance with the requirement
that after every engagement or production of a particular
television series, the required reports were filed with the proper
government agency, as provided no less under the very Policy
Instruction invoked by the petitioner, nor under the Omnibus
Implementing Rules of the Labor Code for project employees.
This alone bolsters respondents contention that they were indeed
petitioners regular employees since their employment was not
only for a particular program.
Moreover, the engagement of respondents for a period ranging
from 2 to 25 years and the fact that their drama programs were
aired not only in Bacolod City but also in the sister stations of
DYWB in the Visayas and Mindanao areas, undoubtedly show
that their work is necessary and indispensable to the usual
business or trade of petitioner. The test to determine whether
employment is regular or not is the reasonable connection
between the particular activity performed by the employee in
relation to the usual business or trade of the employer. Also, if
the employee has been performing the job for at least one year,
even if the performance is not continuous or merely intermittent,
the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business. Thus, even
assuming that respondents were initially hired as
project/contractual employees who were paid per drama or per
project/contract, the engagement of their services for 2 to 25
years justify their classification as regular employees, their
services being deemed indispensable to the business of
petitioner.[19]
As to the payment of wages, it was petitioner who paid the same
as shown by the payroll bearing the name of petitioner company
in the heading with the respective salaries of respondents
opposite their names. Anent the power of control, dismissal, and
imposition of disciplinary measures, which are indicative of an
employer-employee relationship,[20] the same were duly proven
by the following: (1) memorandum[21] duly noted by Wilfredo
Alejaga, petitioners station manager, calling the attention of the
Drama Department to the late submission of scripts by writers
and the tardiness and absences of directors and talents, as well
as the imposable fines of P100 to P200 for future infractions; (2)
the memorandum[22] of the station manager directing
respondent Oberio to explain why no disciplinary action should
be taken against him for punching the time card of a certain Mrs.
Fe Oberio who was not physically present in their office; and (3)
the station managers memorandum[23] suspending respondent
Oberio for six days for the said infraction which constituted
violation of petitioners network policy. All these, taken together,
unmistakably show the existence of an employer-employee
relationship. Not only did petitioner possess the power of control
over their work but also the power to discipline them through the
imposition of fines and suspension for violation of company rules
and policies.
Finally, we find that respondents were illegally dismissed. In labor
cases, the employer has the burden of proving that the dismissal
was for a just cause; failure to show this would necessarily mean
that the dismissal was unjustified and, therefore, illegal. To allow
an employer to dismiss an employee based on mere allegations
and generalities would place the employee at the mercy of his
employer; and the right to security of tenure, which this Court is
bound to protect, would be unduly emasculated.[24] In this case,
petitioner merely contended that it was respondents who ceased
to report to work, and never presented any substantial evidence
to support said allegation. Petitioner therefore failed to discharge
its burden, hence, respondents were correctly declared to have
been illegally dismissed.
Furthermore, if doubts exist between the evidence presented by
the employer and the employee, the scales of justice must be
tilted in favor of the latter the employer must affirmatively show
rationally adequate evidence that the dismissal was for a
justifiable cause. It is a time-honored rule that in controversies
between a laborer and his master, doubts reasonably arising from
the evidence should be resolved in the formers favor. The policy
is to extend the doctrine to a greater number of employees who
can avail of the benefits under the law, which is in consonance
with the avowed policy of the State to give maximum aid and
protection of labor.[25]
When a person is illegally dismissed, he is entitled to
reinstatement without loss of seniority rights and other privileges
and to his full backwages. In the event, however, that
reinstatement is no longer feasible, or if the employee decides
not to be reinstated, the employer shall pay him separation pay
in lieu of reinstatement. Such a rule is likewise observed in the
case of a strained employer-employee relationship or when the
work or position formerly held by the dismissed employee no
longer exists. In sum, an illegally dismissed employee is entitled
to: (1) either reinstatement if viable or separation pay if
reinstatement is no longer viable, and (2) backwages. In the
instant controversy, reinstatement is no longer viable considering
the strained relations between petitioner and respondents. As
admitted by the latter, the complaint filed before the DOLE
strained their relations with petitioner who eventually dismissed
them from service. Payment of separation pay instead of
reinstatement would thus better promote the interest of both
parties.
Respondents separation pay should be computed based on their
respective one (1) month pay, or one-half (1/2) month pay for
every year of service, whichever is higher, reckoned from their
first day of employment up to finality of this decision. Full
backwages, on the other hand, should be computed from the date
of their dismissal until the finality of this decision.[26]
WHEREFORE, the petition is DENIED. The July 30, 2004
Decision of the Court of Appeals in CA-G.R. SP No. 77098,
finding respondents to be regular employees of petitioner and
holding them to be illegally dismissed and directing petitioner to
pay full backwages, is AFFIRMED with the MODIFICATION that
petitioner is ordered to pay respondents their separation pay
instead of effecting their reinstatement.
SO ORDERED.
8. Lakas sa Industriya vs. Burlingame Corporation The facts are undisputed.

LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG On January 17, 2000, the petitioner Lakas sa Industriya ng
ALYANSA-PINAGBUKLOD NG MANGGAGAWANG PROMO Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang
NG BURLINGAME, Promo ng Burlingame (LIKHA-PMPB) filed a petition for
Petitioner, certification election before the Department of Labor and
Employment (DOLE). LIKHA-PMPB sought to represent all rank-
and-file promo employees of respondent numbering about 70 in
- versus - all. The petitioner claimed that there was no existing union in the
G.R. No. 162833 aforementioned establishment representing the regular rank-and-
file promo employees. It prayed that it be voluntarily recognized
Present: by the respondent to be the collective bargaining agent, or, in the
alternative, that a certification/consent election be held among
QUISUMBING, J., Chairperson, said regular rank-and-file promo employees.
CARPIO,
CARPIO MORALES,* The respondent filed a motion to dismiss the petition. It argued
TINGA, and that there exists no employer-employee relationship between it
VELASCO, JR., JJ. and the petitioners members. It further alleged that the petitioners
members are actually employees of F. Garil Manpower Services
(F. Garil), a duly licensed local employment agency. To prove
BURLINGAME CORPORATION, such contention, respondent presented a copy of its contract for
Respondent. manpower services with F. Garil.
Promulgated:
On June 29, 2000, Med-Arbiter Renato D. Parungo dismissed[4]
June 15, 2007 the petition for lack of employer-employee relationship, prompting
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - the petitioner to file an appeal[5] before the Secretary of Labor
- - - - -x and Employment.
DECISION
QUISUMBING, J.: On December 29, 2000, the Secretary of Labor and Employment
ordered the immediate conduct of a certification election.[6]
This is an appeal to reverse and set aside both the Decision[1] A motion for reconsideration of the said decision was filed by the
dated August 29, 2003 of the Court of Appeals and its respondent on January 19, 2001, but the same was denied in the
Resolution[2] dated March 15, 2004 in CA-G.R. SP No. 69639. Resolution[7] of February 19, 2002 of the Secretary of Labor and
The appellate court had reversed the decision[3] dated December Employment.
29, 2000 of the Secretary of Labor and Employment which
ordered the holding of a certification election among the rank- Respondent then filed a complaint with the Court of Appeals,
and-file promo employees of respondent Burlingame which then reversed[8] the decision of the Secretary. The
Corporation. petitioner then filed a motion for reconsideration,[9] which the
Court of Appeals denied[10] on March 15, 2004.
Hence the instant petition for review on certiorari.
The issue raised in the petition is:
WHETHER THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN DECLARING THAT THERE IS NO
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN
PETITIONERS MEMBERS AND BURLINGAME BECAUSE F.
GARIL MANPOWER SERVICES IS AN INDEPENDENT
CONTRACTOR.[11]
Respondent contends that there is no employer-employee
relationship between the parties.[12] Petitioner, on the other
hand, insists that there is.[13]
The resolution of this issue boils down to a determination of the
true status of F. Garil, i.e., whether it is an independent contractor
or a labor-only contractor.
The case of De Los Santos v. NLRC[14] succinctly enunciates
the statutory criteria:
Job contracting is permissible only if the following conditions are
met: 1) the contractor carries on an independent business and
undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the
results thereof; and 2) the contractor has substantial capital or
investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the conduct
of the business.[15]
According to Section 5 of DOLE Department Order No. 18-02,
Series of 2002:[16]
Section 5. Prohibition against labor-only contracting. Labor-only
contracting is hereby declared prohibited. For this purpose, labor-
only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal, and any
of the following elements are [is] present:
i) The contractor or sub-contractor does not have substantial
capital or investment which relates to the job, work or service to
be performed and the employees recruited, supplied or placed by
such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control over
the performance of the work of the contractual employee.
The foregoing provisions shall be without prejudice to the
application of Article 248(C) of the Labor Code, as amended.
Substantial capital or investment refers to capital stocks and
subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries and work premises, actually
and directly used by the contractor or subcontractor in the
performance or completion of the job, work or service contracted
out.
The right to control shall refer to the right reserved to the person
for whom the services of the contractual workers are performed,
to determine not only the end to be achieved, but also the manner
and means to be used in reaching that end.
Given the above criteria, we agree with the Secretary that F. Garil
is not an independent contractor.
First, F. Garil does not have substantial capitalization or
investment in the form of tools, equipment, machineries, work
premises, and other materials, to qualify as an independent
contractor. No proof was adduced to show F. Garils capitalization.
Second, the work of the promo-girls was directly related to the
principal business or operation of Burlingame. Marketing and
selling of products is an essential activity to the main business of
the principal.
Lastly, F. Garil did not carry on an independent business or
undertake the performance of its service contract according to its
own manner and method, free from the control and supervision
of its principal, Burlingame.
The four-fold test will show that respondent is the employer of
petitioners members. The elements to determine the existence of
an employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the
employees conduct. 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.[17]
A perusal of the contractual stipulations between Burlingame and
F. Garil shows the following:
1. The AGENCY shall provide Burlingame Corporation or the
CLIENT, with sufficient number of screened, tested and pre-
selected personnel (professionals, highly-skilled, skilled, semi-
skilled and unskilled) who will be deployed in establishment
selling products manufactured by the CLIENT.
2. The AGENCY shall be responsible in paying its workers under
this contract in accordance with the new minimum wage including
the daily living allowances and shall pay them overtime or
remuneration that which is authorized by law.
3. It is expressly understood and agreed that the worker(s)
supplied shall be considered or treated as employee(s) of the
AGENCY. Consequently, there shall be no employer-employee
relationship between the worker(s) and the CLIENT and as such,
the AGENCY shall be responsible to the benefits mandated by
law.
4. For and in consideration of the service to be rendered by the
AGENCY to the CLIENT, the latter shall during the terms of
agreement pay to the AGENCY the sum of Seven Thousand Five
Hundred Pesos Only (P7,500.00) per month per worker on the
basis of Eight (8) hours work payable up-to-date, semi-monthly,
every 15th and 30th of each calendar month. However, these
rates may be subject to change proportionately in the event that
there will be revisions in the Minimum Wage Law or any law
related to salaries and wages.
5. The CLIENT shall report to the AGENCY any of its personnel
assigned to it if those personnel are found to be inefficient,
troublesome, uncooperative and not observing the rules and
regulations set forth by the CLIENT. It is understood and agreed
that the CLIENT may request any time the immediate
replacement of any personnel(s) assigned to them.[18]
It is patent that the involvement of F. Garil in the hiring process
was only with respect to the recruitment aspect, i.e. the
screening, testing and pre-selection of the personnel it provided
to Burlingame. The actual hiring itself was done through the
deployment of personnel to establishments by Burlingame.
The contract states that Burlingame would pay the workers
through F. Garil, stipulating that Burlingame shall pay F. Garil a
certain sum per worker on the basis of eight-hour work every 15th
and 30th of each calendar month. This evinces the fact that F.
Garil merely served as conduit in the payment of wages to the
deployed personnel. The interpretation would have been different
if the payment was for the job, project, or services rendered
during the month and not on a per worker basis. In Vinoya v.
National Labor Relations Commission,[19] we held:
The Court takes judicial notice of the practice of employers who,
in order to evade the liabilities under the Labor Code, do not issue
payslips directly to their employees. Under the current practice, a
third person, usually the purported contractor (service or
manpower placement agency), assumes the act of paying the
wage. For this reason, the lowly worker is unable to show proof
that it was directly paid by the true employer. Nevertheless, for
the workers, it is enough that they actually receive their pay,
oblivious of the need for payslips, unaware of its legal
implications. Applying this principle to the case at bar, even
though the wages were coursed through PMCI, we note that the
funds actually came from the pockets of RFC. Thus, in the end,
RFC is still the one who paid the wages of petitioner albeit
indirectly.[20]
The contract also provides that any personnel found to be
inefficient, troublesome, uncooperative and not observing the
rules and regulations set forth by Burlingame shall be reported to
F. Garil and may be replaced upon request. Corollary to this
circumstance would be the exercise of control and supervision by
Burlingame over workers supplied by F. Garil in order to establish
the inefficient, troublesome, and uncooperative nature of
undesirable personnel. Also implied in the provision on
replacement of personnel carried upon request by Burlingame is
the power to fire personnel.
the employees of the labor-only contractor as if such employees
had been directly employed by the principal employer.[21] Since
F. Garil is a labor-only contractor, the workers it supplied should
be considered as employees of Burlingame in the eyes of the law.
WHEREFORE, the challenged Decision of the Court of Appeals
dated August 29, 2003 and the Resolution dated March 15, 2004
denying the motion for reconsideration are REVERSED and SET
ASIDE. The decision of the Secretary of Labor and Employment
ordering the holding of a certification election among the rank-
and-file promo employees of Burlingame is reinstated.
Costs against respondent.
SO ORDERED.

These are indications that F. Garil was not left alone in the
supervision and control of its alleged employees. Consequently,
it can be concluded that F. Garil was not an independent
contractor since it did not carry a distinct business free from the
control and supervision of Burlingame.

It goes without saying that the contractual stipulation on the

nonexistence of an employer-employee relationship between
Burlingame and the personnel provided by F. Garil has no legal
effect. While the parties may freely stipulate terms and conditions
of a contract, such contractual stipulations should not be contrary
to law, morals, good customs, public order or public policy. A
contractual stipulation to the contrary cannot override factual
circumstances firmly establishing the legal existence of an
employer-employee relationship.

Under this circumstance, there is no doubt that F. Garil was

engaged in labor-only contracting, and as such, is considered
merely an agent of Burlingame. In labor-only contracting, the law
creates an employer-employee relationship to prevent a
circumvention of labor laws. The contractor is considered merely
an agent of the principal employer and the latter is responsible to
9. Far East Agricultural Supply vs. Lebatique Petitioner Far East Agricultural Supply, Inc. (Far East) hired on
March 4, 1996 private respondent Jimmy Lebatique as truck
FAR EAST AGRICULTURAL SUPPLY, INC. and/or driver with a daily wage of P223.50. He delivered animal feeds to
ALEXANDER UY, the companys clients.
Petitioners, On January 24, 2000, Lebatique complained of nonpayment of
G.R. No. 162813 overtime work particularly on January 22, 2000, when he was
required to make a second delivery in Novaliches, Quezon City.
Present: That same day, Manuel Uy, brother of Far Easts General
Manager and petitioner Alexander Uy, suspended Lebatique
apparently for illegal use of company vehicle. Even so, Lebatique
reported for work the next day but he was prohibited from entering
the company premises.
- versus - On January 26, 2000, Lebatique sought the assistance of the
QUISUMBING, J., Chairperson, Department of Labor and Employment (DOLE) Public Assistance
CARPIO, and Complaints Unit concerning the nonpayment of his overtime
CARPIO MORALES, pay. According to Lebatique, two days later, he received a
TINGA, and telegram from petitioners requiring him to report for work. When
VELASCO, JR., JJ. he did the next day, January 29, 2000, Alexander asked him why
he was claiming overtime pay. Lebatique explained that he had
JIMMY LEBATIQUE and THE HONORABLE COURT OF never been paid for overtime work since he started working for
APPEALS, the company. He also told Alexander that Manuel had fired him.
Respondents. After talking to Manuel, Alexander terminated Lebatique and told
Promulgated: him to look for another job.
On March 20, 2000, Lebatique filed a complaint for illegal
February 12, 2007 dismissal and nonpayment of overtime pay. The Labor Arbiter
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - found that Lebatique was illegally dismissed, and ordered his
- - - - -x reinstatement and the payment of his full back wages, 13th month
pay, service incentive leave pay, and overtime pay. The
DECISION dispositive portion of the decision is quoted herein in full, as
follows:
QUISUMBING, J.: WHEREFORE, we find the termination of complainant illegal. He
should thus be ordered reinstated with full backwages. He is
Before us is a petition for review on certiorari assailing the likewise ordered paid his 13th month pay, service incentive leave
Decision[1] dated September 30, 2003 of the Court of Appeals in pay and overtime pay as computed by the Computation and
CA-G.R. SP No. 76196 and its Resolution[2] dated March 15, Examination Unit as follows:
2004 denying the motion for reconsideration. The appellate court
had reversed the Decision[3] dated October 15, 2002 of the a) Backwages:
National Labor Relations Commission (NLRC) setting aside the 01/25/00 - 10/31/00 = 9.23 mos.
Decision[4] dated June 27, 2001 of the Labor Arbiter. P 223.50 x 26 x 9.23 = P 53,635.53
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53
13th Month Pay: 1/12 of P 104,725.53 = 8,727.13
Service Incentive Leave Pay
01/25/00 10/31/00 = 9.23 mos.
P 223.50 x 5/12 x 9.23 = P 859.54
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95
b) Overtime Pay: (3 hours/day)
03/20/97 4/30/97 = 1.36 mos.
P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50
05/01/97 02/05/98 = 9.16 mos.
P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
02/06/98 10/30/99 = 20.83 mos.
P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39
10/31/99 01/24/00 = 2.80 mos.
P 223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77
TOTAL AWARD P 196,659.72
SO ORDERED.[5]
On appeal, the NLRC reversed the Labor Arbiter and dismissed
the complaint for lack of merit. The NLRC held that there was no
dismissal to speak of since Lebatique was merely suspended.
Further, it found that Lebatique was a field personnel, hence, not
entitled to overtime pay and service incentive leave pay.
Lebatique sought reconsideration but was denied.
Aggrieved, Lebatique filed a petition for certiorari with the Court
of Appeals.
The Court of Appeals, in reversing the NLRC decision, reasoned
that Lebatique was suspended on January 24, 2000 but was
illegally dismissed on January 29, 2000 when Alexander told him
to look for another job. It also found that Lebatique was not a field
personnel and therefore entitled to payment of overtime pay,
service incentive leave pay, and 13th month pay.
It reinstated the decision of the Labor Arbiter as follows:
WHEREFORE, premises considered, the decision of the NLRC
dated 27 December 2002 is hereby REVERSED and the Labor
Arbiters decision dated 27 June 2001 REINSTATED.
SO ORDERED.[6]
Petitioners moved for reconsideration but it was denied.
Hence, the instant petition wherein petitioners assign the
following errors:
THE COURT OF APPEALS ERRED IN REVERSING THE
DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION DATED 15 OCTOBER 2002 AND IN RULING
THAT THE PRIVATE RESPONDENT WAS ILLEGALLY
DISMISSED.
THE COURT OF APPEALS ERRED IN REVERSING THE
DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION DATED 15 OCTOBER 2002 AND IN RULING
THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL
AND THER[E]FORE ENTITLED TO OVERTIME PAY AND
SERVICE INCENTIVE LEAVE PAY.
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE
PETITION FOR CERTIORARI FOR FAILURE OF PRIVATE
RESPONDENT TO ATTACH CERTIFIED TRUE COPIES OF
THE QUESTIONED DECISION AND RESOLUTION OF THE
PUBLIC RESPONDENT.[7]
Simply stated, the principal issues in this case are: (1) whether
Lebatique was illegally dismissed; and (2) whether Lebatique was
a field personnel, not entitled to overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from
service but merely suspended for a day due to violation of
company rules; (2) Lebatique was not barred from entering the
company premises since he never reported back to work; and (3)
Lebatique is estopped from claiming that he was illegally
dismissed since his complaint before the DOLE was only on the
nonpayment of his overtime pay.
Also, petitioners maintain that Lebatique, as a driver, is not
entitled to overtime pay since he is a field personnel whose time
outside the company premises cannot be determined with
reasonable certainty. According to petitioners, the drivers do not
observe regular working hours unlike the other office employees.
The drivers may report early in the morning to make their
deliveries or in the afternoon, depending on the production of
animal feeds and the traffic conditions. Petitioners also aver that
Lebatique worked for less than eight hours a day.[8]
Lebatique for his part insists that he was illegally dismissed and
was not merely suspended. He argues that he neither refused to
work nor abandoned his job. He further contends that
abandonment of work is inconsistent with the filing of a complaint
for illegal dismissal. He also claims that he is not a field personnel,
thus, he is entitled to overtime pay and service incentive leave
pay.
After consideration of the submission of the parties, we find that
the petition lacks merit. We are in agreement with the decision of
the Court of Appeals sustaining that of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on
the employer to prove that the termination was for a valid
cause.[9] In this case, petitioners failed to discharge such burden.
Petitioners aver that Lebatique was merely suspended for one
day but he abandoned his work thereafter. To constitute
abandonment as a just cause for dismissal, there must be: (a)
absence without justifiable reason; and (b) a clear intention, as
manifested by some overt act, to sever the employer-employee
relationship.[10]
The records show that petitioners failed to prove that Lebatique
abandoned his job. Nor was there a showing of a clear intention
on the part of Lebatique to sever the employer-employee
relationship. When Lebatique was verbally told by Alexander Uy,
the companys General Manager, to look for another job,
Lebatique was in effect dismissed. Even assuming earlier he was
merely suspended for illegal use of company vehicle, the records
do not show that he was afforded the opportunity to explain his
side. It is clear also from the sequence of the events leading to
Lebatiques dismissal that it was Lebatiques complaint for
nonpayment of his overtime pay that provoked the management
to dismiss him, on the erroneous premise that a truck driver is a
field personnel not entitled to overtime pay.
An employee who takes steps to protest his layoff cannot by any
stretch of imagination be said to have abandoned his work and
the filing of the complaint is proof enough of his desire to return
to work, thus negating any suggestion of abandonment.[11] A
contrary notion would not only be illogical but also absurd.
It is immaterial that Lebatique had filed a complaint for
nonpayment of overtime pay the day he was suspended by
managements unilateral act. What matters is that he filed the
complaint for illegal dismissal on March 20, 2000, after he was
told not to report for work, and his filing was well within the
prescriptive period allowed under the law.
On the second issue, Article 82 of the Labor Code is decisive on
the question of who are referred to by the term field personnel. It
provides, as follows:
ART. 82. Coverage. - The provisions of this title [Working
Conditions and Rest Periods] shall apply to employees in all
establishments and undertakings whether for profit or not, but not
to government employees, managerial employees, field
personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in appropriate
regulations.
xxxx
Field personnel shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable
certainty.
In Auto Bus Transport Systems, Inc. v. Bautista,[12] this Court
emphasized that the definition of a field personnel is not merely
concerned with the location where the employee regularly
performs his duties but also with the fact that the employees
performance is unsupervised by the employer. We held that field
personnel are those who regularly perform their duties away from
the principal place of business of the employer and whose actual
hours of work in the field cannot be determined with reasonable
certainty. Thus, in order to determine whether an employee is a
field employee, it is also necessary to ascertain if actual hours of
work in the field can be determined with reasonable certainty by complaint on March 20, 2000. However, we find insufficient the
the employer. In so doing, an inquiry must be made as to whether selected time records presented by petitioners to compute
or not the employees time and performance are constantly properly his overtime pay. The Labor Arbiter should have required
supervised by the employer.[13] petitioners to present the daily time records, payroll, or other
documents in managements control to determine the correct
As correctly found by the Court of Appeals, Lebatique is not a overtime pay due Lebatique.
field personnel as defined above for the following reasons: (1)
company drivers, including Lebatique, are directed to deliver the WHEREFORE, the petition is DENIED for lack of merit. The
goods at a specified time and place; (2) they are not given the Decision dated September 30, 2003 of the Court of Appeals in
discretion to solicit, select and contact prospective clients; and (3) CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004
Far East issued a directive that company drivers should stay at are AFFIRMED with MODIFICATION to the effect that the case
the clients premises during truck-ban hours which is from 5:00 to is hereby REMANDED to the Labor Arbiter for further
9:00 a.m. and 5:00 to 9:00 p.m.[14] Even petitioners admit that proceedings to determine the exact amount of overtime pay and
the drivers can report early in the morning, to make their other monetary benefits due Jimmy Lebatique which herein
deliveries, or in the afternoon, depending on the production of petitioners should pay without further delay.
animal feeds.[15] Drivers, like Lebatique, are under the control
and supervision of management officers. Lebatique, therefore, is
a regular employee whose tasks are usually necessary and Costs against petitioners.
desirable to the usual trade and business of the company. Thus,
he is entitled to the benefits accorded to regular employees of Far SO ORDERED.
East, including overtime pay and service incentive leave pay.
Note that all money claims arising from an employer-employee
relationship shall be filed within three years from the time the
cause of action accrued; otherwise, they shall be forever
barred.[16] Further, if it is established that the benefits being
claimed have been withheld from the employee for a period
longer than three years, the amount pertaining to the period
beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the
aggrieved employee shall be limited to the amount of the benefits
withheld within three years before the filing of the complaint.[17]

Lebatique timely filed his claim for service incentive leave pay,
considering that in this situation, the prescriptive period
commences at the time he was terminated.[18] On the other
hand, his claim regarding nonpayment of overtime pay since he
was hired in March 1996 is a different matter. In the case of
overtime pay, he can only demand for the overtime pay withheld
for the period within three years preceding the filing of the
10. Olongapo Maintenance Services, Inc. vs. Chantengco
OLONGAPO MAINTENANCE SERVICES, INC.,
Petitioner,
- versus -
EDGARDO B. CHANTENGCO, SALVACION S. ANIGAN,
POLICARPIO S. ANIGAN, NOEL C. MENDOZA, DANIEL
VALENTIN, MANUEL T. MARIANO, CARLOS PALABYAB,
BETTY B. OLA, SALICIO R. MAGNO, MICHAEL SALAZAR,
LOPE R. MAGNO, GERARDO G. AQUINO, EDWIN Q.
DAYANDANTE, JOSE P. PRIEL, ROMEO O. CLETE, ERNESTO
O. CLETE, SAMUEL P. MIRALPES, PATERNO R. BERZUELA,
ANTONIO C. VALDEZ, RICARDO L. LOPEZ, MANUEL C.
ABADIEZ, RUTH S. DOMENS, ALVIN P. MANGASIL, TIRSO T.
TISADO, EDMUNDO C. SANTOS, FRANCISCO M. ZAMORA,
EFREN E. ERGINA, DANIEL CASIMIRO, CHARLIE GALVEZ,
EDGARDO REYES, CELSO M. DEL MUNDO, EUGENIA
ILAGAN, RAFAEL CABAIS, DEODERICO GARCIA, VENANCIO
MAGHANOY, ZOSIMO DIMACULANGAN, DULLAS PACOMIO,
MARLON MAGDURULAN, GAUDIOSO BORREL, FORTUNATO
ANZANO, WILFREDO HERNANDEZ, ROLANDO MUCHILLAS,
NOMER MAGNO, NOEL MAGNO, JEREMIAH CONEL,
REMIGIO PAREO, CRISANTO LIVINA, ROGELIO CASIL,
VICENTE INOFINADA, RICKY BETONIO, ERNESTO
MARASIGAN, ELSA MARTINEZ, ROBERTO MERCANO,
ARNEL BAYRON, ALEXANDER REGANION, RODERICO
NEYRA, WILFRED BATACAN, SALVADOR CRISOL, JR.,
EDISON GEMALAYA, ARNOLD CAMERGA, RAMON
BELMONTE, ERNESTO IGNACIO, DOMINGO GUADEZ,
ROMEO TAADA, FAUSTO GARCIA, JUANITO DUMAGAT,
RODOLFO PIMENTE, ANDRES SAHURDA, CACAOJ
RAMILITO, ARCON MOLINA, ALEX LIBROJO,
Respondents.
G.R. No. 156146
Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.
Promulgated
June 21, 2007
x------------------------------------------------------------------------------------
------------x
DECISION
NACHURA, J.:
This Petition for Review on Certiorari assails the July 29, 2002
Decision[1] of the Court of Appeals and its Resolution[2] dated
November 14, 2002 in CA-G.R. SP No. 67474, which,
respectively, denied the petition for certiorari and the motion for
reconsideration filed by Olongapo Maintenance Services, Inc.
(OMSI).
OMSI is a corporation engaged in the business of providing
janitorial and maintenance services to various clients, including
government-owned and controlled corporations. On various
dates beginning 1986, OMSI hired the respondents as janitors,
grass cutters, and degreasers, and assigned them at the Ninoy
Aquino International Airport (NAIA). On January 14, 1999, OMSI
terminated respondents' employment.
Claiming termination without just cause and non-payment of labor
standard benefits, respondents filed a complaint for illegal
dismissal, underpayment of wages, and non-payment of holiday
and service incentive leave pays, with prayer for payment of
separation pay, against OMSI.
For its part, OMSI denied the allegations in the complaint. It
averred that when Manila International Airport Authority (MIAA)
awarded to OMSI the service contracts for the airport, OMSI hired
respondents as janitors, cleaners, and degreasers to do the
services under the contracts. OMSI informed the respondents
that they were hired for the MIAA project and their employments
were coterminous with the contracts. As project employees, they
were not dismissed from work but their employments ceased
when the MIAA contracts were not renewed upon their expiration.
The termination of respondents employment cannot, thus, be
considered illegal.
In a Decision[3] dated November 19, 1999, the Labor Arbiter
dismissed the complaint, viz.:
WHEREFORE, premises considered, judgment is hereby
rendered DISMISSING for lack of merit the claims for separation
pay, wage differentials and holiday pay except that respondent is
hereby ordered to pay the seventy one (71) complainants listed
in pages three and four of the latters position paper their service
incentive leave pay.
SO ORDERED.[4]
On appeal by the respondents, the NLRC modified the Labor
Arbiters ruling. It held that respondents were regular and not
project employees. Hence, they are entitled to separation pay:
WHEREFORE, the decision appealed from is hereby modified by
granting in addition to the grant of service incentive leave pay,
payment of separation pay equivalent to half-month pay per
[every] year of service or one month pay, whichever is higher.
SO ORDERED.[5]
OMSI sought reconsideration of the ruling, but the NLRC denied
the motion on July 30, 2001.
Petitioner went up to the Court of Appeals via a petition for
certiorari, imputing grave abuse of discretion to the NLRC for
reversing the factual findings and the decision of the Labor
Arbiter. However, the Court of Appeals dismissed the petition.
The appellate court agreed with the NLRC that the continuous
rehiring of respondents, who performed tasks necessary and
desirable in the usual business of OMSI, was a clear indication
that they were regular, not project employees. The court added
that OMSI failed to establish that respondents employment had
been fixed for a specific project or undertaking, the completion or
termination of which had been determined at the time of their
engagement or hiring. Neither had it shown that respondents
were informed of the duration and scope of their work when they
were hired. Furthermore, OMSI did not submit to the Department
of Labor and Employment (DOLE) reports of termination of the
respondents, thereby bolstering respondents claim of regular
employment. OMSI filed a motion for reconsideration, but the
Court of Appeals denied it on November 14, 2002.
Aggrieved by the resolutions of the Court of Appeals, OMSI
comes to this Court theorizing that:
THE COURT OF APPEALS COMMITTED GRAVE ERROR AND
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN SUSTAINING THE NLRC'S
RULING THAT RESPONDENTS ARE NOT PROJECT
EMPLOYEES. CONCOMITANT THERETO, THERE IS
NEITHER FACTUAL NOR LEGAL BASIS FOR THE AWARD OF
SEPARATION PAY.[6]
OMSI insists that respondents were project employees.
Respondents, on the other hand, maintain that they were OMSI's
regular employees.
Article 280 of the Labor Code provides:
ART. 280. Regular and Casual Employment. - The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at
the time of the engagement of the employee or where the work
or services to be performed is seasonal in nature and the
employment is for the duration of the season . . . (Italics supplied.)
Without question, respondents, as janitors, grass cutters, and
degreasers, performed work necessary or desirable in the
janitorial and maintenance service business of OMSI.
OMSI, however, argues that the respondents' performance of
activities necessary and desirable to its business does not
necessarily and conclusively mean that respondents were regular
employees. OMSI asserts that respondents were project
employees and their employment was coterminous with OMSIs
service contracts with the MIAA. Thus, when the service contracts
were terminated and the respondents were not re-assigned to
another project, OMSI cannot be held liable for illegal dismissal.
The argument does not persuade.
The principal test in determining whether an employee is a project
employee is whether he/she is assigned to carry out a specific
project or undertaking, the duration and scope of which are
specified at the time the employee is engaged in the project,[7] or
where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season.[8] A true
project employee should be assigned to a project which begins
and ends at determined or determinable times, and be informed
thereof at the time of hiring.[9]
In the instant case, the record is bereft of proof that the
respondents engagement as project employees has been
predetermined, as required by law. We agree with the Court of
Appeals that OMSI did not provide convincing evidence that
respondents were informed that they were to be assigned to a
specific project or undertaking when OMSI hired them. Notably,
the employment contracts for the specific project signed by the
respondents were never presented. All that OMSI submitted in
the proceedings a quo are the service contracts between OMSI
and the MIAA. Clearly, OMSI utterly failed to establish by
substantial evidence that, indeed, respondents were project
employees and their employment was coterminous with the MIAA
contract.
Evidently cognizant of such neglect, OMSI attempted to correct
the situation by attaching copies of the application forms[10] of
the respondents to its motion for reconsideration of the Court of
Appeals' Decision. Such practice cannot be tolerated. This
practice of submitting evidence late is properly rejected as it
defeats the speedy administration of justice involving poor
workers. It is also unfair.[11]
OMSI's reliance on Mamansag v. National Labor Relations
Commission,[12] Cartagenas v. Romago Electric Company,
Inc.,[13] and Sandoval Shipyards, Inc. v. National Labor
Relations Commission[14] is misplaced. Said cases are not on all
fours with the case at bench.
In Mamansag, Consumer Pulse Inc. duly presented the contract
of employment showing that Mamansag was hired for a specific
project and the completion or termination of said project was
determined at the start of the employment. In Cartagenas,
documentary exhibits were offered showing that the employee
had been issued appointments from project to project and was
issued a notice of temporary lay-off when the project was
suspended due to lack of funds. Finally, in the case of Sandoval
Shipyards, the termination of the project employees was duly
reported to the then Ministry of Labor and Employment. These
circumstances are not true in OMSI's case. As mentioned, no
convincing evidence was offered to prove that respondents were
informed that they were to be assigned to a specific project or
undertaking. Also, OMSI never reported respondents' termination
to the then Department of Labor and Employment (DOLE). In
Philippine Long Distance Telephone Co. v. Ylagan,[15] we held
that the failure of the employee to file termination reports was an
indication that an employee was not a project but a regular
employee.

In termination cases, the burden of proof rests on the employer

to show that the dismissal is for a just cause. Thus, employers
who hire project employees are mandated to state and, once its
veracity is challenged, to prove the actual basis for the latter's
dismissal.[16] Unfortunately for OMSI, it failed to discharge the
burden. All that we have is OMSIs self-serving assertion that the
respondents were hired as project employees.
Having been illegally dismissed, the NLRC cannot be considered
to have acted whimsically in granting respondents separation pay
in lieu of their reinstatement. Accordingly, the Court of Appeals
committed no reversible error nor grave abuse of discretion in
denying OMSIs petition for certiorari.

WHEREFORE, the petition for review is DENIED and the

assailed Decision and Resolution of the Court of Appeals are
AFFIRMED.

SO ORDERED.
11. Tongko vs. Manufacturers Life Insurance Co.
[G.R. NO. 167622 : November 7, 2008]
GREGORIO V. TONGKO, Petitioner v. THE MANUFACTURERS
LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL
DE DIOS, Respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the
reversal of the March 29, 2005 Decision1 of the Court of Appeals
(CA) in CA-G.R. SP No. 88253, entitled The Manufacturers Life
Insurance Co. (Phils.), Inc. v. National Labor Relations
Commission and Gregorio V. Tongko. The assailed decision set
aside the Decision dated September 27, 2004 and Resolution
dated December 16, 2004 rendered by the National Labor
Relations Commission (NLRC) in NLRC NCR CA No. 040220-04.
The Facts
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a
domestic corporation engaged in life insurance business. Renato
A. Vergel De Dios was, during the period material, its President
and Chief Executive Officer. Gregorio V. Tongko started his
professional relationship with Manulife on July 1, 1977 by virtue
of a Career Agent's Agreement2 (Agreement) he executed with
Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is an independent
contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship
between the Company and the Agent.
xxxx
a) The Agent shall canvass for applications for Life Insurance,
Annuities, Group policies and other products offered by the
Company, and collect, in exchange for provisional receipts issued
by the Agent, money due or to become due to the Company in
respect of applications or policies obtained by or through the
Agent or from policyholders allotted by the Company to the Agent
for servicing, subject to subsequent confirmation of receipt of
payment by the Company as evidenced by an Official Receipt
issued by the Company directly to the policyholder.
xxxx
The Company may terminate this Agreement for any breach or
violation of any of the provisions hereof by the Agent by giving
written notice to the Agent within fifteen (15) days from the time
of the discovery of the breach. No waiver, extinguishment,
abandonment, withdrawal or cancellation of the right to terminate
this Agreement by the Company shall be construed for any
previous failure to exercise its right under any provision of this
Agreement.
Either of the parties hereto may likewise terminate his Agreement
at any time without cause, by giving to the other party fifteen (15)
days notice in writing. x x x
In 1983, Tongko was named as a Unit Manager in Manulife's
Sales Agency Organization. In 1990, he became a Branch
Manager. As the CA found, Tongko's gross earnings from his
work at Manulife, consisting of commissions, persistency income,
and management overrides, may be summarized as follows:
January to December 10, 2002
-
P 865,096.07
2001
-
6,214,737.11
2000
-
8,003,180.38
1999
- in prior meetings (both in group and one-on-one), it was not clear
6,797,814.05
1998
- Kevin held subsequent series of meetings with you as a result,
4,805,166.34
1997
- subsequently found as having no basis.
2,822,620.003
The problem started sometime in 2001, when Manulife instituted
manpower development programs in the regional sales
management level. Relative thereto, De Dios addressed a letter
dated November 6, 20014 to Tongko regarding an October 18,
2001 Metro North Sales Managers Meeting. In the letter, De Dios
stated:
The first step to transforming Manulife into a big league player
has been very clear - to increase the number of agents to at least
1,000 strong for a start. This may seem diametrically opposed to
the way Manulife was run when you first joined the organization.
Since then, however, substantial changes have taken place in the
organization, as these have been influenced by developments
both from within and without the company.
xxxx
The issues around agent recruiting are central to the intended
objectives hence the need for a Senior Managers' meeting earlier
last month when Kevin O'Connor, SVP - Agency, took to the floor
to determine from our senior agency leaders what more could be
done to bolster manpower development. At earlier meetings,
Kevin had presented information where evidently, your Region
was the lowest performer (on a per Manager basis) in terms of
recruiting in 2000 and, as of today, continues to remain one of the
laggards in this area.
While discussions, in general, were positive other than for certain
comments from your end which were perceived to be uncalled
for, it became clear that a one-on-one meeting with you was
necessary to ensure that you and management, were on the
same plane. As gleaned from some of your previous comments
that we were proceeding in the same direction.
one of which I joined briefly. In those subsequent meetings you
reiterated certain views, the validity of which we challenged and
With such views coming from you, I was a bit concerned that the
rest of the Metro North Managers may be a bit confused as to the
directions the company was taking. For this reason, I sought a
meeting with everyone in your management team, including you,
to clear the air, so to speak.
This note is intended to confirm the items that were discussed at
the said Metro North Region's Sales Managers meeting held at
the 7/F Conference room last 18 October.
xxxx
Issue # 2: "Some Managers are unhappy with their earnings and
would want to revert to the position of agents."
This is an often repeated issue you have raised with me and with
Kevin. For this reason, I placed the issue on the table before the
rest of your Region's Sales Managers to verify its validity. As you
must have noted, no Sales Manager came forward on their own
to confirm your statement and it took you to name Malou Samson
as a source of the same, an allegation that Malou herself denied
at our meeting and in your very presence.
This only confirms, Greg, that those prior comments have no solid
basis at all. I now believe what I had thought all along, that these
allegations were simply meant to muddle the issues surrounding
the inability of your Region to meet its agency development
objectives!
Issue # 3: "Sales Managers are doing what the company asks
them to do but, in the process, they earn less."
xxxx
All the above notwithstanding, we had your own records checked
and we found that you made a lot more money in the Year 2000
versus 1999. In addition, you also volunteered the information to
Kevin when you said that you probably will make more money in
the Year 2001 compared to Year 2000. Obviously, your above
statement about making "less money" did not refer to you but the
way you argued this point had us almost believing that you were
spouting the gospel of truth when you were not. x x x
xxxx
All of a sudden, Greg, I have become much more worried about
your ability to lead this group towards the new direction that we
have been discussing these past few weeks, i.e., Manulife's goal
to become a major agency-led distribution company in the
Philippines. While as you claim, you have not stopped anyone
from recruiting, I have never heard you proactively push for
greater agency recruiting. You have not been proactive all these
years when it comes to agency growth.
xxxx
I cannot afford to see a major region fail to deliver on its
developmental goals next year and so, we are making the
following changes in the interim:
You will hire at your expense a competent assistant who can
unload you of much of the routine tasks which can be easily
delegated. This assistant should be so chosen as to complement
your skills and help you in the areas where you feel "may not be
your cup of tea".
You have stated, if not implied, that your work as Regional
Manager may be too taxing for you and for your health. The above
could solve this problem.
xxxx
Effective immediately, Kevin and the rest of the Agency
Operations will deal with the North Star Branch (NSB) in
autonomous fashion. x x x
I have decided to make this change so as to reduce your span of
control and allow you to concentrate more fully on overseeing the
remaining groups under Metro North, your Central Unit and the
rest of the Sales Managers in Metro North. I will hold you solely
responsible for meeting the objectives of these remaining groups.
xxxx
The above changes can end at this point and they need not go
any further. This, however, is entirely dependent upon you. But
you have to understand that meeting corporate objectives by
everyone is primary and will not be compromised. We are
meeting tough challenges next year and I would want everybody
on board. Any resistance or holding back by anyone will be dealt
with accordingly.
Subsequently, De Dios wrote Tongko another letter dated
December 18, 2001,5 terminating Tongko's services, thus:
It would appear, however, that despite the series of meetings and
communications, both one-on-one meetings between yourself
and SVP Kevin O'Connor, some of them with me, as well as
group meetings with your Sales Managers, all these efforts have
failed in helping you align your directions with Management's
avowed agency growth policy.
xxxx
On account thereof, Management is exercising its prerogative
under Section 14 of your Agents Contract as we are now issuing
this notice of termination of your Agency Agreement with us
effective fifteen days from the date of this letter.
Therefrom, Tongko filed a Complaint dated November 25, 2002
with the NLRC against Manulife for illegal dismissal. The case,
docketed as NLRC NCR Case No. 11-10330-02, was raffled to
Labor Arbiter Marita V. Padolina.
In the Complaint, Tongko, in a bid to establish an employer-
employee relationship, alleged that De Dios gave him specific
directives on how to manage his area of responsibility in the
latter's letter dated November 6, 2001. He further claimed that
Manulife exercised control over him as follows:
Such control was certainly exercised by respondents over the
herein complainant. It was Manulife who hired, promoted and
gave various assignments to him. It was the company who set
objectives as regards productions, recruitment, training programs
and all activities pertaining to its business. Manulife prescribed a
Code of Conduct which would govern in minute detail all aspects
of the work to be undertaken by employees, including the sales
process, the underwriting process, signatures, handling of
money, policyholder service, confidentiality, legal and regulatory
requirements and grounds for termination of employment. The
letter of Mr. De Dios dated 06 November 2001 left no doubt as to
who was in control. The subsequent termination letter dated 18
December 2001 again established in no uncertain terms the
authority of the herein respondents to control the employees of
Manulife. Plainly, the respondents wielded control not only as to
the ends to be achieved but the ways and means of attaining such
ends.6
Tongko bolstered his argument by citing Insular Life Assurance
Co., Ltd. v. NLRC (4th Division)7 and Great Pacific Life
Assurance Corporation v. NLRC,8 which Tongko claimed to be
similar to the instant case.
Tongko further claimed that his dismissal was without basis and
that he was not afforded due process. He also cited the Manulife
Code of Conduct by which his actions were controlled by the
company.
Manulife then filed a Position Paper with Motion to Dismiss dated
February 27, 2003,9 in which it alleged that Tongko is not its
employee, and that it did not exercise "control" over him. Thus,
Manulife claimed that the NLRC has no jurisdiction over the case.
In a Decision dated April 15, 2004, Labor Arbiter Marita V.
Padolina dismissed the complaint for lack of an employer-
employee relationship. Padolina found that applying the four-fold
test in determining the existence of an employer-employee
relationship, none was found in the instant case. The dispositive
portion thereof states:
WHEREFORE, premises considered, judgment is hereby
rendered DISMISSING the instant complaint for lack of
jurisdiction, there being no employer-employee relationship
between the parties.
SO ORDERED.
Tongko appealed the arbiter's Decision to the NLRC which
reversed the same and rendered a Decision dated September 27,
2004 finding Tongko to have been illegally dismissed.
The NLRC's First Division, while finding an employer-employee
relationship between Manulife and Tongko applying the four-fold
test, held Manulife liable for illegal dismissal. It further stated that
Manulife exercised control over Tongko as evidenced by the letter
dated November 6, 2001 of De Dios and wrote:
The above-mentioned letter shows the extent to which
respondents controlled complainant's manner and means of
doing his work and achieving the goals set by respondents. The
letter shows how respondents concerned themselves with the
manner complainant managed the Metro North Region as
Regional Sales Manager, to the point that respondents even had
a say on how complainant interacted with other individuals in the
Metro North Region. The letter is in fact replete with comments
and criticisms on how complainant carried out his functions as
Regional Sales Manager.
More importantly, the letter contains an abundance of directives
or orders that are intended to directly affect complainant's
authority and manner of carrying out his functions as Regional
Sales Manager.10 x x x
Additionally, the First Division also ruled that:
Further evidence of [respondents'] control over complainant can
be found in the records of the case. [These] are the different
codes of conduct such as the Agent Code of Conduct, the
Manulife Financial Code of Conduct, and the Manulife Financial
Code of Conduct Agreement, which serve as the foundations of
the power of control wielded by respondents over complainant
that is further manifested in the different administrative and other
tasks that he is required to perform. These codes of conduct
corroborate and reinforce the display of respondents' power of
control in their 06 November 2001 Letter to complainant.11
The fallo of the September 27, 2004 Decision reads:
WHEREFORE, premises considered, the appealed Decision is
hereby reversed and set aside. We find complainant to be a
regular employee of respondent Manulife and that he was illegally
dismissed from employment by respondents.
In lieu of reinstatement, respondent Manulife is hereby ordered to
pay complainant separation pay as above set forth. Respondent
Manulife is further ordered to pay complainant backwages from
the time he was dismissed on 02 January 2002 up to the finality
of this decision also as indicated above.
xxxx
All other claims are hereby dismissed for utter lack of merit.
From this Decision, Manulife filed a motion for reconsideration
which was denied by the NLRC First Division in a Resolution
dated December 16, 2004.12
Thus, Manulife filed an appeal with the CA docketed as CA-G.R.
SP No. 88253. Thereafter, the CA issued the assailed Decision
dated March 29, 2005, finding the absence of an employer-
employee relationship between the parties and deeming the
NLRC with no jurisdiction over the case. The CA arrived at this
conclusion while again applying the four-fold test. The CA found
that Manulife did not exercise control over Tongko that would
render the latter an employee of Manulife. The dispositive portion
reads:
WHEREFORE, premises considered, the present petition is
hereby GRANTED and the writ prayed for accordingly
GRANTED. The assailed Decision dated September 27, 2004
and Resolution dated December 16, 2004 of the National Labor
Relations Commission in NLRC NCR Case No. 00-11-10330-
2002 (NLRC NCR CA No. 040220-04) are hereby ANNULLED
and SET ASIDE. The Decision dated April 15, 2004 of Labor
Arbiter Marita V. Padolina is hereby REINSTATED.
Hence, Tongko filed this petition and presented the following
issues:
A
The Court of Appeals committed grave abuse of discretion in
granting respondents' petition for certiorari.
B
The Court of Appeals committed grave abuse of discretion in
annulling and setting aside the Decision dated September 27,
2004 and Resolution dated December 16, 2004 in finding that
there is no employer-employee relationship between petitioner
and respondent.
C
The Court of Appeals committed grave abuse of discretion in
annulling and setting aside the Decision dated September 27,
2004 and Resolution dated December 16, 2004 which found
petitioner to have been illegally dismissed and ordered his
reinstatement with payment of backwages.13
Restated, the issues are: (1) Was there an employer-employee
relationship between Manulife and Tongko? and (2) If yes, was
Manulife guilty of illegal dismissal?
The Court's Ruling
This petition is meritorious.
Tongko Was An Employee of Manulife

The basic issue of whether or not the NLRC has jurisdiction over
the case resolves itself into the question of whether an employer-
employee relationship existed between Manulife and Tongko. If
no employer-employee relationship existed between the two
parties, then jurisdiction over the case properly lies with the
Regional Trial Court.
In the determination of whether an employer-employee
relationship exists between two parties, this Court applies the
four-fold test to determine the existence of the elements of such
relationship. In Pacific Consultants International Asia, Inc. v.
Schonfeld, the Court set out the elements of an employer-
employee relationship, thus:
Jurisprudence is firmly settled that whenever the existence of an
employment relationship is in dispute, four elements constitute
the reliable yardstick: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employer's power to control the employee's conduct.
It is the so-called "control test" which constitutes the most
important index of the existence of the employer-employee
relationship that is, whether the employer controls or has
reserved the right to control the employee not only as to the result
of the work to be done but also as to the means and methods by
which the same is to be accomplished. Stated otherwise, an
employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not
only the end to be achieved but also the means to be used in
reaching such end.14
The NLRC, for its part, applied the four-fold test and found the
existence of all the elements and declared Tongko an employee
of Manulife. The CA, on the other hand, found that the element of
control as an indicator of the existence of an employer-employee
relationship was lacking in this case. The NLRC and the CA
based their rulings on the same findings of fact but differed in their
interpretations.
The NLRC arrived at its conclusion, first, on the basis of the letter
dated November 6, 2001 addressed by De Dios to Tongko.
According to the NLRC, the letter contained "an abundance of
directives or orders that are intended to directly affect
complainant's authority and manner of carrying out his functions
as Regional Sales Manager." It enumerated these "directives" or
"orders" as follows:
You will hire at your expense a competent assistant who can
unload you of much of the routine tasks which can be easily
delegated. x x x
xxxx
This assistant should be hired immediately.
Effective immediately, Kevin and the rest of the Agency
Operations will deal with the North Star Branch (NSB) in
autonomous fashion x x x.
xxxx
I have decided to make this change so as to reduce your span of
control and allow you to concentrate more fully on overseeing the
remaining groups under Metro North, your Central Unit and the
rest of the Sales Managers in Metro North. x x x
Any resistance or holding back by anyone will be dealt with
accordingly.
I have been straightforward in this my letter and I know that we
can continue to work together... but it will have to be on my terms.
Anything else is unacceptable!
The NLRC further ruled that the different codes of conduct that
were applicable to Tongko served as the foundations of the power
of control wielded by Manulife over Tongko that is further
manifested in the different administrative and other tasks that he
was required to perform.
The NLRC also found that Tongko was required to render
exclusive service to Manulife, further bolstering the existence of
an employer-employee relationship.

Finally, the NLRC ruled that Tongko was integrated into a
management structure over which Manulife exercised control,
including the actions of its officers. The NLRC held that such
integration added to the fact that Tongko did not have his own
agency belied Manulife's claim that Tongko was an independent
contractor.
The CA, however, considered the finding of the existence of an
employer-employee relationship by the NLRC as far too
sweeping having as its only basis the letter dated November 6,
2001 of De Dios. The CA did not concur with the NLRC's ruling
that the elements of control as pointed out by the NLRC are
"sufficient indicia of control that negates independent
contractorship and conclusively establish an employer-employee
relationship between"15 Tongko and Manulife. The CA ruled that
there is no employer-employee relationship between Tongko and
Manulife.
An impasse appears to have been reached between the CA and
the NLRC on the sole issue of control over an employee's
conduct. It bears clarifying that such control not only applies to
the work or goal to be done but also to the means and methods
to accomplish it.16 In Sonza v. ABS-CBN Broadcasting
Corporation, we explained that not all forms of control would
establish an employer-employee relationship, to wit:
Further, not every form of control that a party reserves to himself
over the conduct of the other party in relation to the services being
rendered may be accorded the effect of establishing an employer-
employee relationship. The facts of this case fall squarely with
the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said
case, we held that:
Logically, the line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such
means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which
address both the result and the means used to achieve it.17
(Emphasis supplied.)
We ruled in Insular Life Assurance Co., Ltd. v. NLRC (Insular)
that:
It is, therefore, usual and expected for an insurance company to
promulgate a set of rules to guide its commission agents in selling
its policies that they may not run afoul of the law and what it
requires or prohibits. Of such a character are the rules which
prescribe the qualifications of persons who may be insured,
subject insurance applications to processing and approval by the
Company, and also reserve to the Company the determination of
the premiums to be paid and the schedules of payment. None of
these really invades the agent's contractual prerogative to adopt
his own selling methods or to sell insurance at his own time and
convenience, hence cannot justifiably be said to establish an
employer-employee relationship between him and the
company.18
Hence, we ruled in Insular that no employer-employee
relationship existed therein. However, such ruling was tempered
with the qualification that had there been evidence that the
company promulgated rules or regulations that effectively
controlled or restricted an insurance agent's choice of methods or
the methods themselves in selling insurance, an employer-
employee relationship would have existed. In other words, the
Court in Insular in no way definitively held that insurance agents
are not employees of insurance companies, but rather made the
same a case-to-case basis. We held:
The respondents limit themselves to pointing out that Basiao's
contract with the Company bound him to observe and conform to
such rules and regulations as the latter might from time to time
prescribe. No showing has been made that any such rules or
regulations were in fact promulgated, much less that any rules
existed or were issued which effectively controlled or restricted
his choice of methods or the methods themselves of selling
insurance. Absent such showing, the Court will not speculate that
any exceptions or qualifications were imposed on the express
provision of the contract leaving Basiao "... free to exercise his
own judgment as to the time, place and means of soliciting
insurance."19 (Emphasis supplied.)
There is no conflict between our rulings in Insular and in Great
Pacific Life Assurance Corporation. We said in the latter case:
[I]t cannot be gainsaid that Grepalife had control over private
respondents' performance as well as the result of their efforts. A
cursory reading of their respective functions as enumerated in
their contracts reveals that the company practically dictates the
manner by which their jobs are to be carried out. For instance,
the District Manager must properly account, record and document
the company's funds spot-check and audit the work of the zone
supervisors, conserve the company's business in the district
through `reinstatements', follow up the submission of weekly
remittance reports of the debit agents and zone supervisors,
preserve company property in good condition, train understudies
for the position of district manager, and maintain his quota of
sales (the failure of which is a ground for termination). On the
other hand, a zone supervisor must direct and supervise the sales
activities of the debit agents under him, conserve company
property through "reinstatements", undertake and discharge the
functions of absentee debit agents, spot-check the records of
debit agents, and insure proper documentation of sales and
collections by the debit agents.20 (Emphasis supplied.)
Based on the foregoing cases, if the specific rules and regulations
that are enforced against insurance agents or managers are such
that would directly affect the means and methods by which such
agents or managers would achieve the objectives set by the
insurance company, they are employees of the insurance
company.
In the instant case, Manulife had the power of control over
Tongko that would make him its employee. Several factors
contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko
and Manulife, it is provided that:
The Agent hereby agrees to comply with all regulations and
requirements of the Company as herein provided as well as
maintain a standard of knowledge and competency in the sale of
the Company's products which satisfies those set by the
Company and sufficiently meets the volume of new business
required of Production Club membership.21
Under this provision, an agent of Manulife must comply with three
(3) requirements: (1) compliance with the regulations and
requirements of the company; (2) maintenance of a level of
knowledge of the company's products that is satisfactory to the
company; and (3) compliance with a quota of new businesses.
Among the company regulations of Manulife are the different
codes of conduct such as the Agent Code of Conduct, Manulife
Financial Code of Conduct, and Manulife Financial Code of
Conduct Agreement, which demonstrate the power of control
exercised by the company over Tongko. The fact that Tongko
was obliged to obey and comply with the codes of conduct was
not disowned by respondents.
Thus, with the company regulations and requirements alone, the
fact that Tongko was an employee of Manulife may already be
established. Certainly, these requirements controlled the means
and methods by which Tongko was to achieve the company's
goals.
More importantly, Manulife's evidence establishes the fact that
Tongko was tasked to perform administrative duties that
establishes his employment with Manulife.
In its Comment (Re: Petition for Review dated 15 April 2005)
dated August 5, 2005, Manulife attached affidavits of its agents
purportedly to support its claim that Tongko, as a Regional Sales
Manager, did not perform any administrative functions. An
examination of these affidavits would, however, prove the
opposite.
In an Affidavit dated April 28, 2003,22 John D. Chua, a Regional
Sales Manager of Manulife, stated:
On September 1, 1996, my services were engaged by Manulife
as an Agency Regional Sales Manager ("RSM") for Metro South
Region pursuant to an Agency Contract. As such RSM, I have the
following functions:

Refer and recommend prospective agents to Manulife
Coach agents to become productive
Regularly meet with, and coordinate activities of agents affiliated
to my region.
While Amada Toledo, a Branch Manager of Manulife, stated in
her Affidavit dated April 29, 200323 that:
In January 1997, I was assigned as a Branch Manager ("BM") of
Manulife for the Metro North Sector;
As such BM, I render the following services:
Refer and recommend prospective agents to Manulife;
Train and coordinate activities of other commission agents;
Coordinate activities of Agency Managers who, in turn, train and
coordinate activites of other commission agents;
Achieve agreed production objectives in terms of Net Annualized
Commissions and Case Count and recruitment goals; and
Sell the various products of Manulife to my personal clients.
While Ma. Lourdes Samson, a Unit Manager of Manulife, stated
in her Affidavit dated April 28, 200324 that:
In 1977, I was assigned as a Unit Manager ("UM") of North Peaks
Unit, North Star Branch, Metro North Region;
As such UM, I render the following services:
To render or recommend prospective agents to be licensed,
trained and contracted to sell Manulife products and who will be
part of my Unit;
To coordinate activities of the agents under my Unit in their daily,
weekly and monthly selling activities, making sure that their
respective sales targets are met;
To conduct periodic training sessions for my agents to further
enhance their sales skills.
To assist my agents with their sales activities by way of joint
fieldwork, consultations and one-on-one evaluation and analysis
of particular accounts.
To provide opportunities to motivate my agents to succeed like
conducting promos to increase sales activities and encouraging
them to be involved in company and industry activities.
To provide opportunities for professional growth to my agents by
encouraging them to be a member of the LUCAP (Life
Underwriters Association of the Philippines).
A comparison of the above functions and those contained in the
Agreement with those cited in Great Pacific Life Assurance
Corporation25 reveals a striking similarity that would more than
support a similar finding as in that case. Thus, there was an
employer-employee relationship between the parties.
Additionally, it must be pointed out that the fact that Tongko was
tasked with recruiting a certain number of agents, in addition to
his other administrative functions, leads to no other conclusion
that he was an employee of Manulife.
In his letter dated November 6, 2001, De Dios harped on the
direction of Manulife of becoming a major agency-led distribution
company whereby greater agency recruitment is required of the
managers, including Tongko. De Dios made it clear that agent
recruitment has become the primary means by which Manulife
intends to sell more policies. More importantly, it is Tongko's
alleged failure to follow this principle of recruitment that led to the
termination of his employment with Manulife. With this, it is
inescapable that Tongko was an employee of Manulife.
Tongko Was Illegally Dismissed
In its Petition for Certiorari dated January 7, 200526 filed before
the CA, Manulife argued that even if Tongko is considered as its
employee, his employment was validly terminated on the ground
of gross and habitual neglect of duties, inefficiency, as well as
willful disobedience of the lawful orders of Manulife. Manulife
stated:
In the instant case, private respondent, despite the written
reminder from Mr. De Dios refused to shape up and altogether
disregarded the latter's advice resulting in his laggard
performance clearly indicative of his willful disobedience of the
lawful orders of his superior. x x x
xxxx
As private respondent has patently failed to perform a very
fundamental duty, and that is to yield obedience to all reasonable
rules, orders and instructions of the Company, as well as gross
failure to reach at least minimum quota, the termination of his
engagement from Manulife is highly warranted and therefore,
there is no illegal dismissal to speak of.
It is readily evident from the above-quoted portions of Manulife's
petition that it failed to cite a single iota of evidence to support its
claims. Manulife did not even point out which order or rule that
Tongko disobeyed. More importantly, Manulife did not point out
the specific acts that Tongko was guilty of that would constitute
gross and habitual neglect of duty or disobedience. Manulife
merely cited Tongko's alleged "laggard performance," without
substantiating such claim, and equated the same to disobedience
and neglect of duty.
We cannot, therefore, accept Manulife's position.
In Quebec, Sr. v. National Labor Relations Commission, we ruled
that:
When there is no showing of a clear, valid and legal cause for the
termination of employment, the law considers the matter a case
of illegal dismissal and the burden is on the employer to prove
that the termination was for a valid or authorized cause. This
burden of proof appropriately lies on the shoulders of the
employer and not on the employee because a worker's job has
some of the characteristics of property rights and is therefore
withinthe constitutional mantle of protection. No person shall be
deprived of life, liberty or property without due process of law, nor
shall any person be denied the equal protection of the laws.
Apropos thereto, Art. 277, par. (b), of the Labor Code mandates
in explicit terms that the burden of proving the validity of the
termination of employment rests on the employer. Failure to
discharge this evidentialburden would necessarily mean that the
dismissal was not justified, and, therefore, illegal.27
We again ruled in Times Transportation Co., Inc. v. National
Labor Relations Commission that:
The law mandates that the burden of proving the validity of the
termination of employment rests with the employer. Failure to
discharge this evidentiary burden would necessarily mean that
the dismissal was not justified, and, therefore, illegal.
Unsubstantiated suspicions, accusations and conclusions of
employers do not provide for legal justification for dismissing
employees. In case of doubt, such cases should be resolved in
favor of labor, pursuant to the social justice policy of our labor
laws and Constitution.28
This burden of proof was clarified in Community Rural Bank of
San Isidro (N.E.), Inc. v. Paez to mean substantial evidence, to
wit:
The Labor Code provides that an employer may terminate the
services of an employee for just cause and this must be
supported by substantial evidence. The settled rule in
administrative and quasi-judicial proceedings is that proof beyond
reasonable doubt is not required in determining the legality of an
employer's dismissal of an employee, and not even a
preponderance of evidence is necessary as substantial evidence
is considered sufficient. Substantial evidence is more than a mere
scintilla of evidence or relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other
minds, equally reasonable, might conceivably opine otherwise.29
Here, Manulife failed to overcome such burden of proof. It must
be reiterated that Manulife even failed to identify the specific acts
by which Tongko's employment was terminated much less
support the same with substantial evidence. To repeat, mere
conjectures cannot work to deprive employees of their means of
livelihood. Thus, it must be concluded that Tongko was illegally
dismissed.
Moreover, as to Manulife's failure to comply with the twin notice
rule, it reasons that Tongko not being its employee is not entitled
to such notices. Since we have ruled that Tongko is its employee,
however, Manulife clearly failed to afford Tongko said notices.
Thus, on this ground too, Manulife is guilty of illegal dismissal. In
Quebec, Sr., we also stated:
Furthermore, not only does our legal system dictate that the
reasons for dismissing a worker must be pertinently
substantiated, it also mandates that the manner of dismissal must
be properly done,otherwise, the termination itself is gravely
defective and may be declared unlawful.30
For breach of the due process requirements, Manulife is liable to
Tongko in the amount of PhP 30,000 as indemnity in the form of
nominal damages.31
Finally, Manulife raises the issue of the correctness of the
computation of the award to Tongko made by the NLRC by
claiming that Songco v. National Labor Relations Commission32
is inapplicable to the instant case, considering that Songco was
dismissed on the ground of retrenchment.
An examination of Songco reveals that it may be applied to the
present case. In that case, Jose Songco was a salesman of F.E.
Zuellig (M), Inc. which terminated the services of Songco on the
ground of retrenchment due to financial losses. The issue raised
to the Court, however, was whether commissions are considered
as part of wages in order to determine separation pay. Thus, the
fact that Songco was dismissed due to retrenchment does not
hamper the application thereof to the instant case. What is pivotal
is that we ruled in Songco that commissions are part of wages for
the determination of separation pay.
Article 279 of the Labor Code on security of tenure pertinently
provides that:
In cases of regular employment the employer shall not terminate
the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.
In Triad Security & Allied Services, Inc. v. Ortega, Jr. (Triad), we
thus stated that an illegally dismissed employee shall be entitled
to backwages and separation pay, if reinstatement is no longer
viable:
As the law now stands, an illegally dismissed employee is entitled
to two reliefs, namely: backwages and reinstatement. These are
separate and distinct from each other. However, separation pay
is granted where reinstatement is no longer feasible because of
strained relations between the employee and the employer. In
effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no
longer viable and backwages.33
Taking into consideration the cases of Songco and Triad, we find
correct the computation of the NLRC that the monthly gross wage
of Tongko in 2001 was PhP 518,144.76. For having been illegally
dismissed, Tongko is entitled to reinstatement with full
backwages under Art. 279 of the Labor Code. Due to the strained
relationship between Manulife and Tongko, reinstatement,
however, is no longer advisable. Thus, Tongko will be entitled to
backwages from January 2, 2002 (date of dismissal) up to the
finality of this decision. Moreover, Manulife will pay Tongko
separation pay of one (1) month salary for every year of service
that is from 1977 to 2001 amounting to PhP 12,435,474.24,
considering that reinstatement is not feasible. Tongko shall also
be entitled to an award of attorney's fees in the amount of ten
percent (10%) of the aggregate amount of the above awards.
WHEREFORE, the petition is hereby GRANTED. The assailed
March 29, 2005 Decision of the CA in CA-G.R. SP No. 88253 is
REVERSED and SET ASIDE. The Decision dated September
27, 2004 of the NLRC is REINSTATED with the following
modifications:
Manulife shall pay Tongko the following:
(1) Full backwages, inclusive of allowances and other benefits or
their monetary equivalent from January 2, 2002 up to the finality
of this Decision;
(2) Separation pay of one (1) month salary for every year of
service from 1977 up to 2001 amounting to PhP 12,435,474.24;

(3) Nominal damages of PhP 30,000 as indemnity for violation of

the due process requirements; and

(4) Attorney's fees equivalent to ten percent (10%) of the

aforementioned backwages and separation pay.

Costs against respondent Manulife.

SO ORDERED.
12. Tryco vs. NLRC This petition seeks a review of the Decision[1] of the Court of
Appeals (CA) dated July 24, 2001 and Resolution dated
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO December 20, 2001, which affirmed the finding of the National
SIQUIG, as Union President, JOSELITO LARIO, VIVENCIO B. Labor Relations Commission (NLRC) that the petitioners transfer
BARTE, SATURNINO EGERA and SIMPLICIO AYA-AY, to another workplace did not amount to a constructive dismissal
Petitioners, and an unfair labor practice.

- versus - The pertinent factual antecedents are as follows:

NATIONAL LABOR RELATIONS COMMISSION, TRYCO Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary
PHARMA CORPORATION, and/or WILFREDO C. RIVERA, medicines and its principal office is located in Caloocan City.
Respondents. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and
Simplicio Aya-ay are its regular employees, occupying the
G.R. No. 151309 positions of helper, shipment helper and factory workers,
respectively, assigned to the Production Department. They are
Present: members of Bisig Manggagawa sa Tryco (BMT), the exclusive
bargaining representative of the rank-and-file employees.
PUNO, C.J.,*
YNARES-SANTIAGO, J., Tryco and the petitioners signed separate Memorand[a] of
Chairperson, Agreement[2] (MOA), providing for a compressed workweek
CHICO-NAZARIO, schedule to be implemented in the company effective May 20,
NACHURA, and 1996. The MOA was entered into pursuant to Department of
REYES, JJ. Labor and Employment Department Order (D.O.) No. 21, Series
of 1990, Guidelines on the Implementation of Compressed
Promulgated: Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from
Monday to Friday, shall be considered as the regular working
October 15, 2008 hours, and no overtime pay shall be due and payable to the
employee for work rendered during those hours. The MOA
x------------------------------------------------------------------------------------ specifically stated that the employee waives the right to claim
x overtime pay for work rendered after 5:00 p.m. until 6:12 p.m.
from Monday to Friday considering that the compressed
workweek schedule is adopted in lieu of the regular workweek
DECISION schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m.,
NACHURA, J.: such employee shall be entitled to overtime pay.

Tryco informed the Bureau of Working Conditions of the

Department of Labor and Employment of the implementation of a
compressed workweek in the company.[3]

In January 1997, BMT and Tryco negotiated for the renewal of
their collective bargaining agreement (CBA) but failed to arrive at
a new agreement.
Meantime, Tryco received the Letter dated March 26, 1997 from
the Bureau of Animal Industry of the Department of Agriculture
reminding it that its production should be conducted in San
Rafael, Bulacan, not in Caloocan City:
MR. WILFREDO C. RIVERA
President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
Dear Mr. Rivera:
This is to remind you that your License to Operate as Veterinary
Drug and Product Manufacturer is addressed at San Rafael,
Bulacan, and so, therefore, your production should be done at the
above mentioned address only. Further, production of a drug
includes propagation, processing, compounding, finishing, filling,
repacking, labeling, advertising, storage, distribution or sale of the
veterinary drug product. In no instance, therefore, should any of
the above be done at your business office at 117 M. Ponce St.,
EDSA, Caloocan City.
Please be guided accordingly.
Thank you.
Very truly yours,
(sgd.)
EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division[4]
Accordingly, Tryco issued a Memorandum[5] dated April 7, 1997
which directed petitioner Aya-ay to report to the companys plant
site in Bulacan. When petitioner Aya-ay refused to obey, Tryco
reiterated the order on April 18, 1997.[6] Subsequently, through
a Memorandum[7] dated May 9, 1997, Tryco also directed
petitioners Egera, Lario and Barte to report to the companys plant
site in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan,
contending that it constitutes unfair labor practice. In protest, BMT
declared a strike on May 26, 1997.
In August 1997, petitioners filed their separate complaints[8] for
illegal dismissal, underpayment of wages, nonpayment of
overtime pay and service incentive leave, and refusal to bargain
against Tryco and its President, Wilfredo C. Rivera. In their
Position Paper,[9] petitioners alleged that the company acted in
bad faith during the CBA negotiations because it sent
representatives without authority to bind the company, and this
was the reason why the negotiations failed. They added that the
management transferred petitioners Lario, Barte, Egera and Aya-
ay from Caloocan to San Rafael, Bulacan to paralyze the union.
They prayed for the company to pay them their salaries from May
26 to 31, 1997, service incentive leave, and overtime pay, and to
implement Wage Order No. 4.
In their defense, respondents averred that the petitioners were
not dismissed but they refused to comply with the managements
directive for them to report to the companys plant in San Rafael,
Bulacan. They denied the allegation that they negotiated in bad
faith, stating that, in fact, they sent the Executive Vice-President
and Legal Counsel as the companys representatives to the CBA
negotiations. They claim that the failure to arrive at an agreement
was due to the stubbornness of the union panel.
Respondents further averred that, long before the start of the
negotiations, the company had already been planning to
decongest the Caloocan office to comply with the government
policy to shift the concentration of manufacturing activities from
the metropolis to the countryside. The decision to transfer the
companys production activities to San Rafael, Bulacan was
precipitated by the letter-reminder of the Bureau of Animal
Industry.
On February 27, 1998, the Labor Arbiter dismissed the case for
lack of merit.[10] The Labor Arbiter held that the transfer of the
petitioners would not paralyze or render the union ineffective for
the following reasons: (1) complainants are not members of the
negotiating panel; and (2) the transfer was made pursuant to the
directive of the Department of Agriculture.
The Labor Arbiter also denied the money claims, ratiocinating that
the nonpayment of wages was justified because the petitioners
did not render work from May 26 to 31, 1997; overtime pay is not
due because of the compressed workweek agreement between
the union and management; and service incentive leave pay
cannot be claimed by the complainants because they are already
enjoying vacation leave with pay for at least five days. As for the
claim of noncompliance with Wage Order No. 4, the Labor Arbiter
held that the issue should be left to the grievance machinery or
voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the Labor Arbiters
Decision, dismissing the case, thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is
hereby AFFIRMED and complainants appeal therefrom
DISMISSED for lack of merit. Complainants Joselito Lario,
Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are
directed to report to work at respondents San Rafael Plant,
Bulacan but without backwages. Respondents are directed to
accept the complainants back to work.
SO ORDERED.[11]
On December 22, 1999, the NLRC denied the petitioners motion
for reconsideration for lack of merit.[12]
Left with no recourse, petitioners filed a petition for certiorari with
the CA.
On July 24, 2001, the CA dismissed the petition for certiorari and
ruled that the transfer order was a management prerogative not
amounting to a constructive dismissal or an unfair labor practice.
The CA further sustained the enforceability of the MOA,
particularly the waiver of overtime pay in light of this Courts
rulings upholding a waiver of benefits in exchange of other
valuable privileges. The dispositive portion of the said CA
decision reads:
WHEREFORE, the instant petition is DISMISSED. The Decision
of the Labor Arbiter dated February 27, 1998 and the Decision
and Resolution of the NLRC promulgated on October 29, 1999
and December 22, 1999, respectively, in NLRC-NCR Case Nos.
08-05715-97, 08-06115-97 and 08-05920-97, are AFFIRMED.
SO ORDERED.[13]
The CA denied the petitioners motion for reconsideration on
December 20, 2001.[14]
Dissatisfied, petitioners filed this petition for review raising the
following issues:
-A-
THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE PATENTLY ERRONEOUS RULING OF THE
LABOR ARBITER AND THE COMMISSION THAT THERE WAS
NO DISMISSAL, MUCH LESS ILLEGAL DISMISSAL, OF THE
INDIVIDUAL PETITIONERS.
-B-
THE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING AND CONCLUDING THAT PRIVATE RESPONDENTS
COMMITTED ACTS OF UNFAIR LABOR PRACTICE.
-C-
THE COURT OF APPEALS ERRED IN NOT FINDING AND
CONCLUDING THAT PETITIONERS ARE ENTITLED TO
THEIR MONEY CLAIMS AND TO DAMAGES, AS WELL AS
LITIGATION COSTS AND ATTORNEYS FEES.[15]
The petition has no merit.
We have no reason to deviate from the well-entrenched rule that
findings of fact of labor officials, who are deemed to have
acquired expertise in matters within their respective jurisdiction,
are generally accorded not only respect but even finality, and bind
us when supported by substantial evidence.[16] This is
particularly true when the findings of the Labor Arbiter, the NLRC
and the CA are in absolute agreement.[17] In this case, the Labor
Arbiter, the NLRC, and the CA uniformly agreed that the
petitioners were not constructively dismissed and that the transfer
orders did not amount to an unfair labor practice. But if only to
disabuse the minds of the petitioners who have persistently
pursued this case on the mistaken belief that the labor tribunals
and the appellate court committed grievous errors, this Court will
go over the issues raised in this petition.
Petitioners mainly contend that the transfer orders amount to a
constructive dismissal. They maintain that the letter of the Bureau
of Animal Industry is not credible because it is not authenticated;
it is only a ploy, solicited by respondents to give them an excuse
to effect a massive transfer of employees. They point out that the
Caloocan City office is still engaged in production activities until
now and respondents even hired new employees to replace
them.
We do not agree.
We refuse to accept the petitioners wild and reckless imputation
that the Bureau of Animal Industry conspired with the
respondents just to effect the transfer of the petitioners. There is
not an iota of proof to support this outlandish claim. Absent any
evidence, the allegation is not only highly irresponsible but is
grossly unfair to the government agency concerned. Even as this
Court has given litigants and counsel a relatively wide latitude to
present arguments in support of their cause, we will not tolerate
outright misrepresentation or baseless accusation. Let this be fair
warning to counsel for the petitioners.
Furthermore, Trycos decision to transfer its production activities
to San Rafael, Bulacan, regardless of whether it was made
pursuant to the letter of the Bureau of Animal Industry, was within
the scope of its inherent right to control and manage its enterprise
effectively. While the law is solicitous of the welfare of employees,
it must also protect the right of an employer to exercise what are
clearly management prerogatives. The free will of management
to conduct its own business affairs to achieve its purpose cannot
be denied.[18]
This prerogative extends to the managements right to regulate,
according to its own discretion and judgment, all aspects of
employment, including the freedom to transfer and reassign
employees according to the requirements of its business.[19]
Managements prerogative of transferring and reassigning
employees from one area of operation to another in order to meet
the requirements of the business is, therefore, generally not
constitutive of constructive dismissal.[20] Thus, the consequent
transfer of Trycos personnel, assigned to the Production
Department was well within the scope of its management
prerogative.
When the transfer is not unreasonable, or inconvenient, or
prejudicial to the employee, and it does not involve a demotion in
rank or diminution of salaries, benefits, and other privileges, the
employee may not complain that it amounts to a constructive
dismissal.[21] However, the employer has the burden of proving
that the transfer of an employee is for valid and legitimate
grounds. The employer must show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits.[22]
Indisputably, in the instant case, the transfer orders do not entail
a demotion in rank or diminution of salaries, benefits and other
privileges of the petitioners. Petitioners, therefore, anchor their
objection solely on the ground that it would cause them great
inconvenience since they are all residents of Metro Manila and
they would incur additional expenses to travel daily from Manila
to Bulacan.
The Court has previously declared that mere incidental
inconvenience is not sufficient to warrant a claim of constructive
dismissal.[23] Objection to a transfer that is grounded solely upon
the personal inconvenience or hardship that will be caused to the
employee by reason of the transfer is not a valid reason to
disobey an order of transfer.[24]
Incidentally, petitioners cite Escobin v. NLRC[25] where the Court
held that the transfer of the employees therein was unreasonable.
However, the distance of the workplace to which the employees
were being transferred can hardly compare to that of the present
case. In that case, the employees were being transferred from
Basilan to Manila; hence, the Court noted that the transfer would
have entailed the separation of the employees from their families
who were residing in Basilan and accrual of additional expenses
for living accommodations in Manila. In contrast, the distance
from Caloocan to San Rafael, Bulacan is not considerably great
so as to compel petitioners to seek living accommodations in the
area and prevent them from commuting to Metro Manila daily to
be with their families.
Petitioners, however, went further and argued that the transfer
orders amounted to unfair labor practice because it would
paralyze and render the union ineffective.
To begin with, we cannot see how the mere transfer of its
members can paralyze the union. The union was not deprived of
the membership of the petitioners whose work assignments were
only transferred to another location.
More importantly, there was no showing or any indication that the
transfer orders were motivated by an intention to interfere with
the petitioners right to organize. Unfair labor practice refers to
acts that violate the workers right to organize. With the exception
of Article 248(f) of the Labor Code of the Philippines, the
prohibited acts are related to the workers right to self-organization
and to the observance of a CBA. Without that element, the acts,
no matter how unfair, are not unfair labor practices.[26]
Finally, we do not agree with the petitioners assertion that the
MOA is not enforceable as it is contrary to law. The MOA is
enforceable and binding against the petitioners. Where it is
shown that the person making the waiver did so voluntarily, with
full understanding of what he was doing, and the consideration
for the quitclaim is credible and reasonable, the transaction must
be recognized as a valid and binding undertaking.[27]
D.O. No. 21 sanctions the waiver of overtime pay in consideration
of the benefits that the employees will derive from the adoption of
a compressed workweek scheme, thus:
The compressed workweek scheme was originally conceived for
establishments wishing to save on energy costs, promote greater
work efficiency and lower the rate of employee absenteeism,
among others. Workers favor the scheme considering that it
would mean savings on the increasing cost of transportation fares
for at least one (1) day a week; savings on meal and snack
expenses; longer weekends, or an additional 52 off-days a year,
that can be devoted to rest, leisure, family responsibilities, studies
and other personal matters, and that it will spare them for at least
another day in a week from certain inconveniences that are the
normal incidents of employment, such as commuting to and from
the workplace, travel time spent, exposure to dust and motor
vehicle fumes, dressing up for work, etc. Thus, under this
scheme, the generally observed workweek of six (6) days is
shortened to five (5) days but prolonging the working hours from
Monday to Friday without the employer being obliged for pay
overtime premium compensation for work performed in excess of
eight (8) hours on weekdays, in exchange for the benefits
abovecited that will accrue to the employees.
Moreover, the adoption of a compressed workweek scheme in
the company will help temper any inconvenience that will be
caused the petitioners by their transfer to a farther workplace.
Notably, the MOA complied with the following conditions set by
the DOLE, under D.O. No. 21, to protect the interest of the
employees in the implementation of a compressed workweek
scheme:
1. The employees voluntarily agree to work more than
eight (8) hours a day the total in a week of which shall not exceed
their normal weekly hours of work prior to adoption of the
compressed workweek arrangement;
2. There will not be any diminution whatsoever in the
weekly or monthly take-home pay and fringe benefits of the
employees;
3. If an employee is permitted or required to work in
excess of his normal weekly hours of work prior to the adoption
of the compressed workweek scheme, all such excess hours
shall be considered overtime work and shall be compensated in
accordance with the provisions of the Labor Code or applicable
Collective Bargaining Agreement (CBA);
4. Appropriate waivers with respect to overtime premium
pay for work performed in excess of eight (8) hours a day may be
devised by the parties to the agreement.
5. The effectivity and implementation of the new working
time arrangement shall be by agreement of the parties.
PESALA v. NLRC,[28] cited by the petitioners, is not applicable
to the present case. In that case, an employment contract
provided that the workday consists of 12 hours and the employee
will be paid a fixed monthly salary rate that was above the legal
minimum wage. However, unlike the present MOA which
specifically states that the employee waives his right to claim
overtime pay for work rendered beyond eight hours, the
employment contract in that case was silent on whether overtime
pay was included in the payment of the fixed monthly salary. This
necessitated the interpretation by the Court as to whether the
fixed monthly rate provided under the employment contract
included overtime pay. The Court noted that if the employee is
paid only the minimum wage but with overtime pay, the amount
is still greater than the fixed monthly rate as provided in the
employment contract. It, therefore, held that overtime pay was not
included in the agreed fixed monthly rate.
Considering that the MOA clearly states that the employee
waives the payment of overtime pay in exchange of a five-day
workweek, there is no room for interpretation and its terms should
be implemented as they are written.
WHEREFORE, the petition is DENIED. The Court of Appeals
Decision dated July 24, 2001 and Resolution dated December
20, 2001 are AFFIRMED.
SO ORDERED.
13. Equipment Technical Services vs. CA Petitioner Equipment Technical Services (ETS) is primarily
engaged in the business of sub-contracting plumbing works of on-
EQUIPMENT TECHNICAL G.R. No. 157680 going building construction. Among its clients was Uniwide Sales,
SERVICES or JOSEPH JAMES Inc. (Uniwide). Petitioner Joseph James Dequito was, during the
DEQUITO, Present: period material, occupying the position of manager of ETS,[1]
Petitioners, albeit the CA referred to him as ETS president. On various
QUISUMBING, J., Chairperson, occasions involving different projects, ETS hired the services of
CARPIO MORALES, private respondents as pipe fitters, plumbers, or threaders.
- versus - TINGA,
VELASCO, JR., and In December 1998, ETS experienced financial difficulties when
BRION, JJ. Uniwide, its client at the time, failed to pay for the plumbing work
COURT OF APPEALS, ALEX being done at its Coastal Mall. As a result, ETS was only able to
ALBINO, REY ALBINO, JULIUS pay its employees 13th month pay equivalent to two weeks
ABANES, MIGUEL ALINAB, salary.
CHRISTOPHER BIOL, NELSON
CATONG, RENATO DULOT, Unhappy over what they thought was ETS failure to release the
FLORO PACUNDO, MARCELITO balance of their 13th month pay, private respondents brought
GAMAS, REYNALDO LIMA, their case before the Arbitration Branch of the NLRC, docketed
SAMMY MESAGAL, ERNESTO as NLRC NCR Case No. 00-01-00571-99 and entitled as Alex
PADILLA, and CONRADO Promulgated: Albino, Renato Dulot, Miguel Alinab, Marcelito Gamas, Julius
SULIBAGA, Abanes, Christopher Biol, Sammy Mesagal, Conrado Sulibaga,
Respondents. October 8, 2008 Floro Pacundo v. Equipment Technical Services or Joseph
x------------------------------------------------------------------------------------ James Dequito.
-----x
Later, two other cases were filed against ETS for illegal dismissal
DECISION and payment of money claims when the complainants thereat
were refused work in another ETS project, i.e., Richville project,
VELASCO, JR., J.: allegedly because they refused to sign individual employment
contracts with ETS. These two other cases were Nelson Catong,
This petition for review under Rule 45 assails and seeks the Roger Lamayon, Christopher Lamayon v. Equipment Technical
reversal of the Amended Decision and Resolution dated March 3, Services or Joseph James Dequito, docketed as NLRC NCR
2003 and March 24, 2003, respectively, of the Court of Appeals Case No. 00-02-01429-99; and Rey Albino, Ernesto Padilla,
(CA) in CA-G.R. SP No. 67568. The assailed amended decision Reynaldo Lima v. Equipment Technical Services or Joseph
and resolution effectively set aside and reversed the consolidated James Dequito, docketed as NLRC NCR Case No. 00-02-01615-
resolutions dated July 30, 2001 and September 24, 2001 99.
rendered by the National Labor Relations Commission (NLRC)
and reinstated the July 24, 2000 Decision of Labor Arbiter Ermita The three cases were consolidated before the labor arbiter.
T. Abrasaldo-Cuyuca in NLRC NCR Case Nos. 00-01-00571-99, Following failed conciliation efforts, all concerned, except Roger
00-02-01429-99, and 00-02-01615-99.
and Christopher Lamayon, submitted, as the labor arbiter
directed, their respective position papers.
Private respondents position[2] is summed up as follows: (1) they
are regular employees of ETS; (2) ETS dismissed them without
cause and without due process after they filed cases for money
claims against ETS in the arbitration branch of the NLRC; (3) ETS
has not paid them their salaries, 13th month pay, service
incentive leave pay, overtime pay, and premium pay for holidays
and rest days; and (4) they are entitled to reinstatement to their
former positions with paid backwages in addition to their money
claims and payment of attorneys fees.
ETS position[3] may be summed up as follows: (1) private
respondents were its contractual/project employees engaged for
different projects of the company; (2) they were not illegally
dismissed, having been hired on a per project basis; (3) ETS was
unable to fully release private respondents 13th month pay
because Uniwide failed to pay for its contracted plumbing project;
(4) ETS was forced to abandon the Uniwide project and
undertake another project, the Richville project, because the
chances of being paid by Uniwide were dim; (5) ETS asked
private respondents to sign employment contracts to formalize
their previous agreement but said private respondents refused;
and (6) as a result, ETS was constrained to deny employment to
private respondents as it considered the execution of
employment contracts part of management prerogative before
employment commences.
On July 24, 2000, Labor Arbiter Abrasaldo-Cuyuca issued a
Decision, holding that private respondents were ETS regular, not
merely project, employees. Accordingly, ETS was adjudged liable
for illegal dismissal and directed to pay private respondents their
money claims plus 10% of the total award as attorneys fees. The
fallo of the subject decision reads as follows:
WHEREFORE, judgment is hereby rendered declaring the
dismissal of the complainants illegal.
Further, respondents are further ordered to pay the complainants
their backwages, proportionate 13th month pay, [holiday] and
service incentive leave pay.
Ten percent of the total award as attorneys fees.
Other claims are dismissed for lack of merit.
The complaints of Roger and Christopher all surnamed Lamayon
are dismissed without prejudice.
The computation prepared by the Computation Unit, NCR, this
Commission is attached [sic] forming part of this decision.
SO ORDERED.[4]
ETS appealed from the above labor arbiters decision. On July 30,
2001, the NLRC rendered a resolution which, while reversing the
labor arbiters holding with respect to the nature of private
respondents employment and the illegality of their dismissal,
nevertheless upheld the validity of the monetary award extended
by the labor arbiter, part of which included the award of
backwages. The pertinent portion of the modificatory resolution
reads as follows:
ACCORDINGLY, premises considered, the decision appealed
from is hereby MODIFIED in that the findings of regularity of
employment and illegal dismissal are hereby VACATED.
However, respondents are ordered to give complainants priority
in hiring for present and future projects. All other dispositions are
hereby AFFIRMED in toto.
SO ORDERED.
Following the denial on September 24, 2001 of ETS motion for
reconsideration, ETS elevated its case to the CA via a petition for
certiorari under Rule 65, the recourse docketed as CA-G.R. SP
No. 67568. As its principal contention, ETS ascribed on the NLRC
the commission of grave abuse of discretion in affirming the
monetary award in favor of private respondents, despite its
finding that there was no illegal dismissal in this case.
On January 23, 2002, the CA rendered judgment disposing as
follows:
WHEREFORE, premises considered, the assailed resolutions of
the National Labor Relations Commission dated July 30, 2001
and September 24, 2001 are hereby ANNULLED and SET ASIDE
and a new one rendered ORDERING petitioner Equipment
Technical Services to pay private respondents their holiday pay
and service incentive leave pay for the year 1998 and the balance
of their 13th month pay for the year 1999.
The case is hereby REMANDED to Labor Arbiter Ermita T.
Abrasaldo-Cuyuca for the computation of the same.
The complaint against petitioner Joseph James Dequito is hereby
DISMISSED, for lack of merit.
No pronouncement as to costs.
SO ORDERED.
Upon motion of private respondents for reconsideration, the CA
issued an Amended Decision[5] dated March 3, 2003 vacating its
earlier January 23, 2002 decision. The CA, in main support of its
present disposition, stated that the NLRCs determination that
private respondents are project workers is utterly unsupported by
the evidence on record and is patently erroneous and, therefore,
is tainted with grave abuse of discretion.[6] The fallo of the
Amended Decision reads:
WHEREFORE, premises considered, the present motion for
reconsideration is hereby GRANTED. The petition is hereby
DENIED DUE COURSE and accordingly DISMISSED, for lack of
merit. Our Decision dated January 23, 2002 is hereby
RECONSIDERED and SET ASIDE and a new one is hereby
entered REVERSING and SETTING ASIDE the assailed
Resolutions dated July 30, 2001 and September 24, 2001 of
public respondent NLRC in NLRC NCR case No. 00-01-00571-
99 (NLRC CA No. 027203-2001), NLRC NCR Case No. 00-02-
01429-99 and NLRC NCR Case No. 00-02-01615-99. The
Decision dated July 24, 2000 rendered by Labor Arbiter Ermita T.
Abrasaldo-Cuyuca is hereby REINSTATED and AFFIRMED in all
respects, including the computation of the monetary awards in
favor of private respondents forming part of and attached to the
same.
With costs against the petitioners.
SO ORDERED.
Hence, this petition on the submission that, contrary to the
findings of the CA, but conformably with the determination of the
NLRC, private respondents are seasonal or project workers; the
duration of their employment is not permanent but coterminus
with the project to which they are assigned and from whose
payroll they are paid. As project employees, private respondents
cannot, according to petitioners, validly maintain an action for
illegal dismissal with prayer for reinstatement and payment of
backwages, both reliefs being usually accorded following a
finding of illegal dismissal.
The petition is without merit. As we see it, as did the CA and the
NLRC, the primary question to be resolved and to which all others
must yield is whether or not private respondents are project
employees. The CA, siding with the labor arbiter, as indicated
earlier, answered the poser in the affirmative, while the NLRC
resolved it in the negative.
As the Court has consistently held, the service of project
employees are coterminus with the project and may be
terminated upon the end or completion of that project or project
phase for which they were hired. Regular employees, in contrast,
enjoy security of tenure and are entitled to hold on to their work
or position until their services are terminated by any of the modes
recognized under the Labor Code.[7]
The principal test for determining whether an employee is
properly characterized as project employee, as distinguished
from regular employee, is whether or not the project employee
was assigned to carry out a specific project or undertaking, the
duration and scope of which were specified at the time the
employees were engaged for that project.[8] And as Article 280
of the Labor Code, defining a regular employee vis--vis a project
employee, would have it:
Art. 280. Regular and casual employment. The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at
the time of the engagement of the employee x x x.
It bears to stress at the outset that ETS admits hiring or employing
private respondents to perform plumbing works for various
projects. Given this postulate, regular employment may
reasonably be presumed and it behooves ETS to prove
otherwise, that is, that the employment in question was
contractual in nature ending upon the expiration of the term fixed
in the contract or for a specific project or undertaking. But the
categorical finding of the CA, confirmatory for the most part of that
of the labor arbiter, is that not a single written contract of
employment fixing the terms of employment for the duration of
the Uniwide project, or any other project, was submitted by ETS
despite the latters allegations that private respondents were
merely contractual employees. Records of payroll and other
pertinent documents, such as job contracts secured by ETS
showing that private respondents were hired for specific projects,
were also not submitted by ETS.[9]
Moreover, if private respondents were indeed employed as
project employees, petitioners should have had submitted a
report of termination every time their employment was terminated
owing to the completion of each plumbing project. As correctly
held by the CA in its Amended Decision, citing Tomas Lao
Construction v. NLRC,[10] ETS failure to report the employment
termination and file the necessary papers after every project
completion tends to support the claim of private respondents
about their not being project employees.[11] Under Policy
Instruction No. 20, Series of 1977,[12] the report must be made
to the nearest public office employment.[13] The decision in
Violeta v. NLRC is also apropos, particularly when it held:
[The employer] should have filed as many reports of termination
as there were construction projects actually finished if petitioners
[employees] were indeed project employees, considering that
petitioners were hired and again [hired] for various projects or
phases of work therein. Its failure to submit reports of termination
cannot but sufficiently convince us further that petitioners are truly
regular employees. Just as important, the fact that petitioners had
rendered more than one year of service at the time of their
dismissal overturns private respondents allegations that
petitioners were hired for a specific or fixed undertaking for a
limited period of time.[14]
The Court can allow that, in the instant case, private respondents
may have initially been hired for specific projects or undertaking
of petitioner ETS and, hence, may be classified as project
employees. Their repeated rehiring to perform tasks necessary to
the usual trade or business of ETS changed the legal situation
altogether, for in the later instance, their continuous rehiring took
them out from the scope of workers coterminus with specific
projects and had made them regular employees. We said as
much in Phesco, Inc. v. NLRC that where the employment of
project employees is extended long after the supposed project
had been finished, the employees are removed from the scope of
project employees and they shall be considered regular
employees.[15]
Parenthetically, petitioners assertion that there can be no illegal
dismissal of project employees inasmuch as they are not entitled
to security of tenure is inaccurate. The constitutionally-protected
right of labor to security of tenure covers both regular and project
workers.[16] Their termination must be for lawful cause and must
be done in a way which affords them proper notice and
hearing.[17]
In termination disputes, the burden of proving that an employee
had been dismissed for a lawful cause or that the exacting
procedural requirements under the Labor Code had been
complied with lies with the employer.[18] Where there is no
showing of a clear, valid, and legal cause for termination of
employment, the law considers the case a matter of illegal
dismissal.[19]
Based on the foregoing criteria, the factual findings of the labor
arbiter on the regular nature of private respondents employment,
juxtaposed with ETS failure to support its project-workers theory,
impel us to dismiss the instant petition. This is as it should be for,
to paraphrase Asuncion v. NLRC, if doubt exists between the
evidence of the employers and the employees, the scales of
justice must be tilted in favor of the latterthe employers must
adequately show rationally adequate evidence that their case is
preponderantly superior.[20]
As did the CA, the Court holds that private respondents are
regular employees whose services were terminated without
lawful cause and effected without the requisite notice and
hearing.
In view of the illegality of the dismissal, the fallo of the Decision
of Labor Arbiter Abrasaldo-Cuyuca, as reinstated by the CA in its
assailed Amended Decision, has to be modified in the sense that
private respondents are entitled to reinstatement to their previous
positions as pipe fitters or threaders, as the case may be, without
loss of rank and seniority rights and with full backwages.
At this juncture, the Court wishes to state that it is taking judicial
notice of the fact that no corporation is registered with the
Securities and Exchange Commission under the name
Equipment Technical Services. It is thus but fair that both
petitioners liability under this Decision be joint and several.
WHEREFORE, the Amended Decision dated March 3, 2003 of
the CA in CA-G.R. SP No. 67568, reinstating the July 24, 2000
Decision of Labor Arbiter Abrasaldo-Cuyuca, is AFFIRMED with
the MODIFICATION that petitioners are jointly and severally
ordered to reinstate private respondents to their former positions,
without loss of rank and seniority rights, with backwages from the
date of dismissal until reinstated. As modified, the fallo of the
labor arbiters Decision shall read:
WHEREFORE, judgment is hereby rendered declaring the
dismissal of private respondents illegal.
Petitioners ETS and Joseph James Dequito are ordered jointly
and severally to reinstate private respondents ALEX ALBINO,
REY ALBINO, JULIUS ABANES, MIGUEL ALINAB,
CHRISTOPHER BIOL, NELSON CATONG, RENATO DULOT,
FLORO PACUNDO, MARCELITO GAMAS, REYNALDO LIMA,
SAMMY MESAGAL, ERNESTO PADILLA, and CONRADO
SULIBAGA to their respective positions without loss of rank and
seniority rights with full backwages from the date of dismissal up
to the date of actual reinstatement. Petitioners are likewise jointly
and severally liable to private respondents for proportionate 13th
month pay, holiday pay, and service incentive leave pay.
Ten percent of the total award shall be paid to the counsel of
private respondents as attorneys fees.
Other claims are dismissed for lack of merit.
The complaints of Roger and Christopher, both surnamed
Lamayon, are dismissed without prejudice.
Costs against petitioners.
SO ORDERED.
14. Ariel David vs. Macasio
G.R. No. 195466 July 2, 2014
ARIEL L. DAVID, doing business under the name and style
"YIELS HOG DEALER," Petitioner,
vs.
JOHN G. MACASIO, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge
to the November 22, 2010 decision2 and the January 31, 2011
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No.
116003. The CA decision annulled and set aside the May 26,
2010 decision4 of the National Labor Relations Commission
(NLRC)5 which, in turn, affirmed the April 30, 2009 Decision6 of
the Labor Arbiter (LA). The LA's decision dismissed respondent
John G. Macasio's monetary claims.
The Factual Antecedents
In January 2009, Macasio filed before the LA a complaint7
against petitioner Ariel L. David, doing business under the name
and style "Yiels Hog Dealer," for non-payment of overtime pay,
holiday pay and 13th month pay. He also claimed payment for
moral and exemplary damages and attorneys fees. Macasio also
claimed payment for service incentive leave (SIL).8
Macasio alleged9 before the LA that he had been working as a
butcher for David since January 6, 1995. Macasio claimed that
David exercised effective control and supervision over his work,
pointing out that David: (1) set the work day, reporting time and
hogs to be chopped, as well as the manner by which he was to
perform his work; (2) daily paid his salary of P700.00, which was
increased from P600.00 in 2007, P500.00 in 2006 and P400.00
in 2005; and (3) approved and disapproved his leaves. Macasio
added that David owned the hogs delivered for chopping, as well
as the work tools and implements; the latter also rented the
workplace. Macasio further claimed that David employs about
twenty-five (25) butchers and delivery drivers.
In his defense,10 David claimed that he started his hog dealer
business in 2005 and that he only has ten employees. He alleged
that he hired Macasio as a butcher or chopper on "pakyaw" or
task basis who is, therefore, not entitled to overtime pay, holiday
pay and 13th month pay pursuant to the provisions of the
Implementing Rules and Regulations (IRR) of the Labor Code.
David pointed out that Macasio: (1) usually starts his work at
10:00 p.m. and ends at 2:00 a.m. of the following day or earlier,
depending on the volume of the delivered hogs; (2) received the
fixed amount of P700.00 per engagement, regardless of the
actual number of hours that he spent chopping the delivered
hogs; and (3) was not engaged to report for work and,
accordingly, did not receive any fee when no hogs were
delivered.
Macasio disputed Davids allegations.11 He argued that, first,
David did not start his business only in 2005. He pointed to the
Certificate of Employment12 that David issued in his favor which
placed the date of his employment, albeit erroneously, in January
2000. Second, he reported for work every day which the payroll
or time record could have easily proved had David submitted
them in evidence.
Refuting Macasios submissions,13 David claims that Macasio
was not his employee as he hired the latter on "pakyaw" or task
basis. He also claimed that he issued the Certificate of
Employment, upon Macasios request, only for overseas
employment purposes. He pointed to the "Pinagsamang
Sinumpaang Salaysay,"14 executed by Presbitero Solano and
Christopher (Antonio Macasios co-butchers), to corroborate his
claims.
In the April 30, 2009 decision,15 the LA dismissed Macasios
complaint for lack of merit. The LA gave credence to Davids
claim that he engaged Macasio on "pakyaw" or task basis. The
LA noted the following facts to support this finding: (1) Macasio
received the fixed amount of P700.00 for every work done,
regardless of the number of hours that he spent in completing the
task and of the volume or number of hogs that he had to chop per
engagement; (2) Macasio usually worked for only four hours,
beginning from 10:00 p.m. up to 2:00 a.m. of the following day;
and (3) the P700.00 fixed wage far exceeds the then prevailing
daily minimum wage of P382.00. The LA added that the nature of
Davids business as hog dealer supports this "pakyaw" or task
basis arrangement.
The LA concluded that as Macasio was engaged on "pakyaw" or
task basis, he is not entitled to overtime, holiday, SIL and 13th
month pay.
The NLRCs Ruling
In its May 26, 2010 decision,16 the NLRC affirmed the LA
ruling.17 The NLRC observed that David did not require Macasio
to observe an eight hour work schedule to earn the fixed P700.00
wage; and that Macasio had been performing a non-time work,
pointing out that Macasio was paid a fixed amount for the
completion of the assigned task, irrespective of the time
consumed in its performance. Since Macasio was paid by result
and not in terms of the time that he spent in the workplace,
Macasio is not covered by the Labor Standards laws on overtime,
SIL and holiday pay, and 13th month pay under the Rules and
Regulations Implementing the 13th month pay law.18
Macasio moved for reconsideration19 but the NLRC denied his
motion in its August 11, 2010 resolution,20 prompting Macasio to
elevate his case to the CA via a petition for certiorari.21
The CAs Ruling
In its November 22, 2010 decision,22 the CA partly granted
Macasios certiorari petition and reversed the NLRCs ruling for
having been rendered with grave abuse of discretion.
While the CA agreed with the LAand the NLRC that Macasio was
a task basis employee, it nevertheless found Macasio entitled to
his monetary claims following the doctrine laid down in Serrano
v. Severino Santos Transit.23 The CA explained that as a task
basis employee, Macasio is excluded from the coverage of
holiday, SIL and 13th month pay only if he is likewise a "field
personnel." As defined by the Labor Code, a "field personnel" is
one who performs the work away from the office or place of work
and whose regular work hours cannot be determined with
reasonable certainty. In Macasios case, the elements that
characterize a "field personnel" are evidently lacking as he had
been working as a butcher at Davids "Yiels Hog Dealer" business
in Sta. Mesa, Manila under Davids supervision and control, and
for a fixed working schedule that starts at 10:00 p.m.
Accordingly, the CA awarded Macasios claim for holiday, SIL and
13th month pay for three years, with 10% attorneys fees on the
total monetary award. The CA, however, denied Macasios claim
for moral and exemplary damages for lack of basis.
David filed the present petition after the CA denied his motion for
reconsideration24 in the CAs January 31, 2011 resolution.25
The Petition
In this petition,26 David maintains that Macasios engagement
was on a "pakyaw" or task basis. Hence, the latter is excluded
from the coverage of holiday, SIL and 13th month pay. David
reiterates his submissions before the lower tribunals27 and adds
that he never had any control over the manner by which Macasio
performed his work and he simply looked on to the "end-result."
He also contends that he never compelled Macasio to report for
work and that under their arrangement, Macasio was at liberty to
choose whether to report for work or not as other butchers could
carry out his tasks. He points out that Solano and Antonio had, in
fact, attested to their (David and Macasios) established
"pakyawan" arrangement that rendered a written contract
unnecessary. In as much as Macasio is a task basis employee
who is paid the fixed amount of P700.00 per engagement
regardless of the time consumed in the performance David
argues that Macasio is not entitled to the benefits he claims. Also,
he posits that because he engaged Macasio on "pakyaw" or task
basis then no employer-employee relationship exists between
them.
Finally, David argues that factual findings of the LA, when
affirmed by the NLRC, attain finality especially when, as in this
case, they are supported by substantial evidence. Hence, David
posits that the CA erred in reversing the labor tribunals findings
and granting the prayed monetary claims.
The Case for the Respondent
Macasio counters that he was not a task basis employee or a
"field personnel" as David would have this Court believe.28 He
reiterates his arguments before the lower tribunals and adds that,
contrary to Davids position, the P700.00 fee that he was paid for
each day that he reported for work does not indicate a "pakyaw"
or task basis employment as this amount was paid daily,
regardless of the number or pieces of hogs that he had to chop.
Rather, it indicates a daily-wage method of payment and affirms
his regular employment status. He points out that David did not
allege or present any evidence as regards the quota or number
of hogs that he had to chop as basis for the "pakyaw" or task
basis payment; neither did David present the time record or
payroll to prove that he worked for less than eight hours each day.
Moreover, David did not present any contract to prove that his
employment was on task basis. As David failed to prove the
alleged task basis or "pakyawan" agreement, Macasio concludes
that he was Davids employee. Procedurally, Macasio points out
that Davids submissions in the present petition raise purely
factual issues that are not proper for a petition for review on
certiorari. These issues whether he (Macasio) was paid by
result or on "pakyaw" basis; whether he was a "field personnel";
whether an employer-employee relationship existed between him
and David; and whether David exercised control and supervision
over his work are all factual in nature and are, therefore,
proscribed in a Rule 45 petition. He argues that the CAs factual
findings bind this Court, absent a showing that such findings are
not supported by the evidence or the CAs judgment was based
on a misapprehension of facts. He adds that the issue of whether
an employer-employee relationship existed between him and
David had already been settled by the LA29 and the NLRC30 (as
well as by the CA per Macasios manifestation before this Court
dated November 15, 2012),31 in his favor, in the separate illegal
case that he filed against David.
The Issue
The issue revolves around the proper application and
interpretation of the labor law provisions on holiday, SIL and 13th
month pay to a worker engaged on "pakyaw" or task basis. In the
context of the Rule 65 petition before the CA, the issue is whether
the CA correctly found the NLRC in grave abuse of discretion in
ruling that Macasio is entitled to these labor standards benefits.
The Courts Ruling
We partially grant the petition.
Preliminary considerations: the Montoya ruling and the factual-
issue-bar rule
In this Rule 45 petition for review on certiorari of the CAs decision
rendered under a Rule 65 proceeding, this Courts power of
review is limited to resolving matters pertaining to any perceived
legal errors that the CA may have committed in issuing the
assailed decision. This is in contrast with the review for
jurisdictional errors, which we undertake in an original certiorari
action. In reviewing the legal correctness of the CA decision, we
examine the CA decision based on how it determined the
presence or absence of grave abuse of discretion in the NLRC
decision before it and not on the basis of whether the NLRC
decision on the merits of the case was correct.32 In other words,
we have to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision challenged
before it.33
Moreover, the Courts power in a Rule 45 petition limits us to a
review of questions of law raised against the assailed CA
decision.34
In this petition, David essentially asks the question whether
Macasio is entitled to holiday, SIL and 13th month pay. This one
is a question of law. The determination of this question of law
however is intertwined with the largely factual issue of whether
Macasio falls within the rule on entitlement to these claims or
within the exception. In either case, the resolution of this factual
issue presupposes another factual matter, that is, the presence
of an employer-employee relationship between David and
Macasio.
In insisting before this Court that Macasio was not his employee,
David argues that he engaged the latter on "pakyaw" or task
basis. Very noticeably, David confuses engagement on "pakyaw"
or task basis with the lack of employment relationship. Impliedly,
David asserts that their "pakyawan" or task basis arrangement
negates the existence of employment relationship.
At the outset, we reject this assertion of the petitioner.
Engagement on "pakyaw" or task basis does not characterize the
relationship that may exist between the parties, i.e., whether one
of employment or independent contractorship. Article 97(6) of the
Labor Code defines wages as "xxx the remuneration or earnings,
however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which
is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or
for services rendered or to be rendered[.]"35 In relation to Article
97(6), Article 10136 of the Labor Code speaks of workers paid by
results or those whose pay is calculated in terms of the quantity
or quality of their work output which includes "pakyaw" work and
other non-time work.
More importantly, by implicitly arguing that his engagement of
Macasio on "pakyaw" or task basis negates employer-employee
relationship, David would want the Court to engage on a factual
appellate review of the entire case to determine the presence or
existence of that relationship. This approach however is not
authorized under a Rule 45 petition for review of the CA decision
rendered under a Rule 65 proceeding.
First, the LA and the NLRC denied Macasios claim not because
of the absence of an employer-employee but because of its
finding that since Macasio is paid on pakyaw or task basis, then
he is not entitled to SIL, holiday and 13th month pay. Second, we
consider it crucial, that in the separate illegal dismissal case
Macasio filed with the LA, the LA, the NLRC and the CA uniformly
found the existence of an employer-employee relationship.37
In other words, aside from being factual in nature, the existence
of an employer-employee relationship is in fact a non-issue in this
case. To reiterate, in deciding a Rule 45 petition for review of a
labor decision rendered by the CA under 65, the narrow scope of
inquiry is whether the CA correctly determined the presence or
absence of grave abuse of discretion on the part of the NLRC. In
concrete question form, "did the NLRC gravely abuse its
discretion in denying Macasios claims simply because he is paid
on a non-time basis?"
At any rate, even if we indulge the petitioner, we find his claim
that no employer-employee relationship exists baseless.
Employing the control test,38 we find that such a relationship
exist in the present case.
Even a factual review shows that Macasio is Davids employee
To determine the existence of an employer-employee
relationship, four elements generally need to be considered,
namely: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the
power to control the employees conduct. These elements or
indicators comprise the so-called "four-fold" test of employment
relationship. Macasios relationship with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the
element of "selection and engagement of the employee." David
categorically confirmed this fact when, in his "Sinumpaang
Salaysay," he stated that "nag apply po siya sa akin at kinuha ko
siya na chopper[.]"39 Also, Solano and Antonio stated in their
"Pinagsamang Sinumpaang Salaysay"40 that "[k]ami po ay
nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang
butcher" and "kilalanamin si xxx Macasio na isa ring butcher xxx
ni xxx David at kasama namin siya sa aming trabaho."
Second, David paid Macasios wages.Both David and Macasio
categorically stated in their respective pleadings before the lower
tribunals and even before this Court that the former had been
paying the latter P700.00 each day after the latter had finished
the days task. Solano and Antonio also confirmed this fact of
wage payment in their "Pinagsamang Sinumpaang Salaysay."41
This satisfies the element of "payment of wages."
Third, David had been setting the day and time when Macasio
should report for work. This power to determine the work
schedule obviously implies power of control. By having the power
to control Macasios work schedule, David could regulate
Macasios work and could even refuse to give him any
assignment, thereby effectively dismissing him.
And fourth, David had the right and power to control and
supervise Macasios work as to the means and methods of
performing it. In addition to setting the day and time when
Macasio should report for work, the established facts show that
David rents the place where Macasio had been performing his
tasks. Moreover, Macasio would leave the workplace only after
he had finished chopping all of the hog meats given to him for the
days task. Also, David would still engage Macasios services and
have him report for work even during the days when only few
hogs were delivered for butchering.
Under this overall setup, all those working for David, including
Macasio, could naturally be expected to observe certain rules and
requirements and David would necessarily exercise some degree
of control as the chopping of the hog meats would be subject to
his specifications. Also, since Macasio performed his tasks at
Davids workplace, David could easily exercise control and
supervision over the former. Accordingly, whether or not David
actually exercised this right or power to control is beside the point
as the law simply requires the existence of this power to control
4243 or, as in this case, the existence of the right and opportunity
to control and supervise Macasio.44
In sum, the totality of the surrounding circumstances of the
present case sufficiently points to an employer-employee
relationship existing between David and Macasio.
Macasio is engaged on "pakyaw" or task basis
At this point, we note that all three tribunals the LA, the NLRC
and the CA found that Macasio was engaged or paid on
"pakyaw" or task basis. This factual finding binds the Court under
the rule that factual findings of labor tribunals when supported by
the established facts and in accord with the laws, especially when
affirmed by the CA, is binding on this Court.
A distinguishing characteristic of "pakyaw" or task basis
engagement, as opposed to straight-hour wage payment, is the
non-consideration of the time spent in working. In a task-basis
work, the emphasis is on the task itself, in the sense that payment
is reckoned in terms of completion of the work, not in terms of the
number of time spent in the completion of work.45 Once the work
or task is completed, the worker receives a fixed amount as wage,
without regard to the standard measurements of time generally
used in pay computation.
In Macasios case, the established facts show that he would
usually start his work at 10:00 p.m. Thereafter, regardless of the
total hours that he spent at the workplace or of the total number
of the hogs assigned to him for chopping, Macasio would receive
the fixed amount of P700.00 once he had completed his task.
Clearly, these circumstances show a "pakyaw" or task basis
engagement that all three tribunals uniformly found.
In sum, the existence of employment relationship between the
parties is determined by applying the "four-fold" test; engagement
on "pakyaw" or task basis does not determine the parties
relationship as it is simply a method of pay computation.
Accordingly, Macasio is Davids employee, albeit engaged on
"pakyaw" or task basis.
As an employee of David paid on pakyaw or task basis, we now
go to the core issue of whether Macasio is entitled to holiday, 13th
month, and SIL pay.
On the issue of Macasios entitlement to holiday, SIL and 13th
month pay
The LA dismissed Macasios claims pursuant to Article 94 of the
Labor Code in relation to Section 1, Rule IV of the IRR of the
Labor Code, and Article 95 of the Labor Code, as well as
Presidential Decree (PD) No. 851. The NLRC, on the other hand,
relied on Article 82 of the Labor Code and the Rules and
Regulations Implementing PD No. 851. Uniformly, these
provisions exempt workers paid on "pakyaw" or task basis from
the coverage of holiday, SIL and 13th month pay.
In reversing the labor tribunals rulings, the CA similarly relied on
these provisions, as well as on Section 1, Rule V of the IRR of
the Labor Code and the Courts ruling in Serrano v. Severino
Santos Transit.46 These labor law provisions, when read
together with the Serrano ruling, exempt those engaged on
"pakyaw" or task basis only if they qualify as "field personnel."
In other words, what we have before us is largely a question of
law regarding the correct interpretation of these labor code
provisions and the implementing rules; although, to conclude that
the worker is exempted or covered depends on the facts and in
this sense, is a question of fact: first, whether Macasio is a "field
personnel"; and second, whether those engaged on "pakyaw" or
task basis, but who are not "field personnel," are exempted from
the coverage of holiday, SIL and 13th month pay.
To put our discussion within the perspective of a Rule 45 petition
for review of a CA decision rendered under Rule 65 and framed
in question form, the legal question is whether the CA correctly
ruled that it was grave abuse of discretion on the part of the NLRC
to deny Macasios monetary claims simply because he is paid on
a non-time basis without determining whether he is a field
personnel or not.
To resolve these issues, we need tore-visit the provisions
involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the
coverage of Title I, Book III of the Labor Code - provisions
governing working conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall apply to
employees in all establishments and undertakings whether for
profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers
who are paid by results as determined by the Secretary of Labor
in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable
certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay
(under Article 94 of the Labor Code) and SIL pay (under Article
95 of the Labor Code). Under Article 82,"field personnel" on one
hand and "workers who are paid by results" on the other hand,
are not covered by the Title I provisions. The wordings of
Article82 of the Labor Code additionally categorize workers "paid
by results" and "field personnel" as separate and distinct types of
employees who are exempted from the Title I provisions of the
Labor Code.
The pertinent portion of Article 94 of the Labor Code and its
corresponding provision in the IRR47 reads:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his
regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than (10)
workers[.] [emphasis ours]
xxxx
SECTION 1. Coverage. This Rule shall apply to all employees
except:
xxxx
(e)Field personnel and other employees whose time and
performance is unsupervised by the employer including those
who are engaged on task or contract basis, purely commission
basis, or those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof.
[emphases ours]
On the other hand, Article 95 of the Labor Code and its
corresponding provision in the IRR48 pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has
rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already
enjoying the benefit herein provided, those enjoying vacation
leave with pay of at least five days and those employed in
establishments regularly employing less than ten employees or in
establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability
or financial condition of such establishment. [emphases ours]
xxxx
Section 1. Coverage. This rule shall apply to all employees
except:
xxxx
(e) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged
on task or contract basis, purely commission basis, or those who
are paid a fixed amount for performing work irrespective of the
time consumed in the performance thereof. [emphasis ours]
Under these provisions, the general rule is that holiday and SIL
pay provisions cover all employees. To be excluded from their
coverage, an employee must be one of those that these
provisions expressly exempt, strictly in accordance with the
exemption. Under the IRR, exemption from the coverage of
holiday and SIL pay refer to "field personnel and other employees
whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis[.]"
Note that unlike Article 82 of the Labor Code, the IRR on holiday
and SIL pay do not exclude employees "engaged on task basis"
as a separate and distinct category from employees classified as
"field personnel." Rather, these employees are altogether merged
into one classification of exempted employees.
Because of this difference, it may be argued that the Labor Code
may be interpreted to mean that those who are engaged on task
basis, per se, are excluded from the SIL and holiday payment
since this is what the Labor Code provisions, in contrast with the
IRR, strongly suggest. The arguable interpretation of this rule
may be conceded to be within the discretion granted to the LA
and NLRC as the quasi-judicial bodies with expertise on labor
matters.
However, as early as 1987 in the case of Cebu Institute of
Technology v. Ople49 the phrase "those who are engaged on
task or contract basis" in the rule has already been interpreted to
mean as follows:
[the phrase] should however, 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 xxx Clearly, petitioner's teaching personnel cannot be
deemed field personnel which refers "to non-agricultural
employees who regularly perform their duties away from the
principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with
reasonable certainty. [Par. 3, Article 82, Labor Code of the
Philippines]. Petitioner's claim that private respondents are not
entitled to the service incentive leave benefit cannot therefore be
sustained.
In short, the payment of an employee on task or pakyaw basis
alone is insufficient to exclude one from the coverage of SIL and
holiday pay. They are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they qualify as "field
personnel." The IRR therefore validly qualifies and limits the
general exclusion of "workers paid by results" found in Article 82
from the coverage of holiday and SIL pay. This is the only
reasonable interpretation since the determination of excluded
workers who are paid by results from the coverage of Title I is
"determined by the Secretary of Labor in appropriate regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in
Auto Bus Transport Systems, Inc., v. Bautista:
A careful perusal of said provisions of law will result in the
conclusion that the grant of service incentive leave has been
delimited by the Implementing Rules and Regulations of the
Labor Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the Implementing
Rules, Service Incentive Leave shall not apply to employees
classified as "field personnel." The phrase "other employees
whose performance is unsupervised by the employer" must not
be understood as a separate classification of employees to which
service incentive leave shall not be granted. Rather, it serves as
an amplification of the interpretation of the definition of field
personnel under the Labor Code as those "whose actual hours of
work in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are
engaged on task or contract basis, purely commission basis."
Said phrase should be related with "field personnel," applying the
rule on ejusdem generis that general and unlimited terms are
restrained and limited by the particular terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos
Transit which the CA cited in support of granting Macasios
petition.
In Serrano, the Court, applying the rule on ejusdem generis50
declared that "employees engaged on task or contract basis xxx
are not automatically exempted from the grant of service
incentive leave, unless, they fall under the classification of field
personnel."51 The Court explained that the phrase "including
those who are engaged on task or contract basis, purely
commission basis" found in Section 1(d), Rule V of Book III of the
IRR should not be understood as a separate classification of
employees to which SIL shall not be granted. Rather, as with its
preceding phrase - "other employees whose performance is
unsupervised by the employer" - the phrase "including those who
are engaged on task or contract basis" serves to amplify the
interpretation of the Labor Code definition of "field personnel" as
those "whose actual hours of work in the field cannot be
determined with reasonable certainty."
In contrast and in clear departure from settled case law, the LA
and the NLRC still interpreted the Labor Code provisions and the
IRR as exempting an employee from the coverage of Title I of the
Labor Code based simply and solely on the mode of payment of
an employee. The NLRCs utter disregard of this consistent
jurisprudential ruling is a clear act of grave abuse of discretion.52
In other words, by dismissing Macasios complaint without
considering whether Macasio was a "field personnel" or not, the
NLRC proceeded based on a significantly incomplete
consideration of the case. This action clearly smacks of grave
abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if
the LA and the NLRC had only taken counsel from Serrano and
earlier cases, they would have correctly reached a similar
conclusion regarding the payment of holiday pay since the rule
exempting "field personnel" from the grant of holiday pay is
identically worded with the rule exempting "field personnel" from
the grant of SIL pay. To be clear, the phrase "employees engaged
on task or contract basis "found in the IRR on both SIL pay and
holiday pay should be read together with the exemption of "field
personnel."
In short, in determining whether workers engaged on "pakyaw" or
task basis" is entitled to holiday and SIL pay, the presence (or
absence) of employer supervision as regards the workers time
and performance is the key: if the worker is simply engaged on
pakyaw or task basis, then the general rule is that he is entitled
to a holiday pay and SIL pay unless exempted from the
exceptions specifically provided under Article 94 (holiday pay)
and Article95 (SIL pay) of the Labor Code. However, if the worker
engaged on pakyaw or task basis also falls within the meaning of
"field personnel" under the law, then he is not entitled to these
monetary benefits.
Macasio does not fall under the classification of "field personnel"
Based on the definition of field personnel under Article 82, we
agree with the CA that Macasio does not fall under the definition
of "field personnel." The CAs finding in this regard is supported
by the established facts of this case: first, Macasio regularly
performed his duties at Davids principal place of business;
second, his actual hours of work could be determined with
reasonable certainty; and, third, David supervised his time and
performance of duties. Since Macasio cannot be considered a
"field personnel," then he is not exempted from the grant of
holiday, SIL pay even as he was engaged on "pakyaw" or task
basis.
Not being a "field personnel," we find the CA to be legally correct
when it reversed the NLRCs ruling dismissing Macasios
complaint for holiday and SIL pay for having been rendered with
grave abuse of discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month pay however, we find
that the CA legally erred in finding that the NLRC gravely abused
its discretion in denying this benefit to Macasio.1wphi1
The governing law on 13th month pay is PD No. 851.53
As with holiday and SIL pay, 13th month pay benefits generally
cover all employees; an employee must be one of those
expressly enumerated to be exempted. Section 3 of the Rules
and Regulations Implementing P.D. No. 85154 enumerates the
exemptions from the coverage of 13th month pay benefits. Under
Section 3(e), "employers of those who are paid on xxx task basis,
and those who are paid a fixed amount for performing a specific
work, irrespective of the time consumed in the performance
thereof"55 are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL
pay, Section 3(e) of the Rules and Regulations Implementing PD
No. 851 exempts employees "paid on task basis" without any
reference to "field personnel." This could only mean that insofar
as payment of the 13th month pay is concerned, the law did not
intend to qualify the exemption from its coverage with the
requirement that the task worker be a "field personnel" at the
same time.

WHEREFORE, in light of these considerations, we hereby

PARTIALLY GRANT the petition insofar as the payment of 13th
month pay to respondent is concerned. In all other aspects, we
AFFIRM the decision dated November 22, 2010 and the
resolution dated January 31, 2011 of the Court of Appeals in CA-
G.R. SP No. 116003.

SO ORDERED.