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Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 73887 December 21, 1989
GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner,
vs.
HONORATO JUDICO and NATIONAL LABOR RELATIONS COMMISSION, respondents.
G.A. Fortun and Associates for petitioner.
Corsino B. Soco for private respondent.

PARAS J.:
Before us is a Petition for certiorari to review the decision of the National Labor Relations Commission (NLRC, for
brevity) dated September 9, 1985 reversing the decision of Labor Arbiter Vito J. Minoria, dated June 9, 1983, by 1)
ordering petitioner insurance company, Great Pacific Life Assurance Corporation (Grepalife, for brevity) to recognize
private respondent Honorato Judico, as its regular employee as defined under Art. 281 of the Labor Code and 2)
remanding the case to its origin for the determination of private respondent Judico's money claims.
The records of the case show that Honorato Judico filed a complaint for illegal dismissal against Grepalife, a duly
organized insurance firm, before the NLRC Regional Arbitration Branch No. VII, Cebu City on August 27, 1982. Said
complaint prayed for award of money claims consisting of separation pay, unpaid salary and 13th month pay, refund of
cash bond, moral and exemplary damages and attorney's fees.
Both parties appealed to the NLRC when a decision was rendered by the Labor Arbiter dismissing the complaint on the
ground that the employer-employee relations did not exist between the parties but ordered Grepalife to pay
complainant the sum of Pl,000.00 by reason of Christian Charity.
On appeal, said decision was reversed by the NLRC ruling that complainant is a regular employee as defined under Art.
281 of the Labor Code and declaring the appeal of Grepalife questioning the legality of the payment of Pl,000.00 to
complainant moot and academic. Nevertheless, for the purpose of revoking the supersedeas bond of said company it
ruled that the Labor Arbiter erred in awarding Pl,000.00 to complainant in the absence of any legal or factual basis to
support its payment.
Petitioner company moved to reconsider, which was denied, hence this petition for review raising four legal issues to
wit:
I. Whether the relationship between insurance agents and their principal, the insurance company, is that
of agent and principal to be governed by the Insurance Code and the Civil Code provisions on agency, or
one of employer-employee, to be governed by the Labor Code.
II. Whether insurance agents are entitled to the employee benefits prescribed by the Labor Code.
III. Whether the public respondent NLRC has jurisdiction to take cognizance of a controversy between
insurance agent and the insurance company, arising from their agency relations.
IV. Whether the public respondent acted correctly in setting aside the decision of Labor Arbiter Vito J.
Minoria and in ordering the case remanded to said Labor Arbiter for further proceedings.(p. 159, Rollo)
The crux of these issues boil down to the question of whether or not employer-employee relationship existed between
petitioner and private respondent.
Petitioner admits that on June 9, 1976, private respondent Judico entered into an agreement of agency with petitioner
Grepalife to become a debit agent attached to the industrial life agency in Cebu City. Petitioner defines a debit agent as
"an insurance agent selling/servicing industrial life plans and policy holders. Industrial life plans are those whose
premiums are payable either daily, weekly or monthly and which are collectible by the debit agents at the home or any
place designated by the policy holder" (p. 156, Rollo). Such admission is in line with the findings of public respondent
that as such debit agent, private respondent Judico had definite work assignments including but not limited to collection
of premiums from policy holders and selling insurance to prospective clients. Public respondent NLRC also found out
that complainant was initially paid P 200. 00 as allowance for thirteen (13) weeks regardless of production and later a
certain percentage denominated as sales reserve of his total collections but not lesser than P 200.00. Sometime in
September 1981, complainant was promoted to the position of Zone Supervisor and was given additional (supervisor's)
allowance fixed at P110.00 per week. During the third week of November 1981, he was reverted to his former position
as debit agent but, for unknown reasons, not paid so-called weekly sales reserve of at least P 200.00. Finally on June 28,
1982, complainant was dismissed by way of termination of his agency contract.
Petitioner assails the findings of the NLRC that private respondent is an employee of the former. Petitioner argues that
Judico's compensation was not based on any fixed number of hours he was required to devote to the service of
petitioner company but rather it was the production or result of his efforts or his work that was being compensated and
that the so-called allowance for the first thirteen weeks that Judico worked as debit agent, cannot be construed as salary
but as a subsidy or a way of assistance for transportation and meal expenses of a new debit agent during the initial
period of his training which was fixed for thirteen (13) weeks. Stated otherwise, petitioner contends that Judico's
compensation, in the form of commissions and bonuses, was based on actual production, (insurance plans sold and
premium collections).
Said contentions of petitioner are strongly rejected by private respondent. He maintains that he received a definite
amount as his Wage known as "sales reserve" the failure to maintain the same would bring him back to a beginner's
employment with a fixed weekly wage of P 200.00 regardless of production. He was assigned a definite place in the
office to work on when he is not in the field; and in addition to canvassing and making regular reports, he was burdened
with the job of collection and to make regular weekly report thereto for which an anemic performance would mean
dismissal. He earned out of his faithful and productive service, a promotion to Zone Supervisor with additional
supervisor's allowance, (a definite or fixed amount of P110.00) that he was dismissed primarily because of anemic
performance and not because of the termination of the contract of agency substantiate the fact that he was indeed an
employee of the petitioner and not an insurance agent in the ordinary meaning of the term.
That private respondent Judico was an agent of the petitioner is unquestionable. But, as We have held in Investment
Planning Corp. vs. SSS, 21 SCRA 294, an insurance company may have two classes of agents who sell its insurance
policies: (1) salaried employees who keep definite hours and work under the control and supervision of the company;
and (2) registered representatives who work on commission basis. The agents who belong to the second category are
not required to report for work at anytime, they do not have to devote their time exclusively to or work solely for the
company since the time and the effort they spend in their work depend entirely upon their own will and initiative; they
are not required to account for their time nor submit a report of their activities; they shoulder their own selling
expenses as well as transportation; and they are paid their commission based on a certain percentage of their sales. One
salient point in the determination of employer-employee relationship which cannot be easily ignored is the fact that the
compensation that these agents on commission received is not paid by the insurance company but by the investor (or
the person insured). After determining the commission earned by an agent on his sales the agent directly deducts it
from the amount he received from the investor or the person insured and turns over to the insurance company the
amount invested after such deduction is made. The test therefore 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.
Applying the aforementioned test to the case at bar, We can readily see that the element of control by the petitioner on
Judico was very much present. The record shows that petitioner Judico received a definite minimum amount per week
as his wage known as "sales reserve" wherein the failure to maintain the same would bring him back to a beginner's
employment with a fixed weekly wage of P 200.00 for thirteen weeks regardless of production. He was assigned a
definite place in the office to work on when he is not in the field; and in addition to his canvassing work he was
burdened with the job of collection. In both cases he was required to make regular report to the company regarding
these duties, and for which an anemic performance would mean a dismissal. Conversely faithful and productive service
earned him a promotion to Zone Supervisor with additional supervisor's allowance, a definite amount of P110.00 aside
from the regular P 200.00 weekly "allowance". Furthermore, his contract of services with petitioner is not for a piece of
work nor for a definite period.
On the other hand, an ordinary commission insurance agent works at his own volition or at his own leisure without fear
of dismissal from the company and short of committing acts detrimental to the business interest of the company or
against the latter, whether he produces or not is of no moment as his salary is based on his production, his anemic
performance or even dead result does not become a ground for dismissal. Whereas, in private respondent's case, the
undisputed facts show that he was controlled by petitioner insurance company not only as to the kind of work; the
amount of results, the kind of performance but also the power of dismissal. Undoubtedly, private respondent, by nature
of his position and work, had been a regular employee of petitioner and is therefore entitled to the protection of the law
and could not just be terminated without valid and justifiable cause.
Premises considered, the appealed decision is hereby AFFIRMED in toto.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ ., concur.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.
Tirol & Tirol for petitioner.
Enojas, Defensor & Teodosio Cabado Law Offices for private respondent.

NARVASA, J.:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered
into a contract
1
by which:
1. Basiao was "authorized to solicit within the Philippines applications for insurance policies and
annuities in accordance with the existing rules and regulations" of the Company;
2. he would receive "compensation, in the form of commissions ... as provided in the Schedule of
Commissions" of the contract to "constitute a part of the consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and
those which may from time to time be promulgated by it, ..." were made part of said contract.
The contract also contained, among others, provisions governing the relations of the parties, the duties of the Agent, the
acts prohibited to him, and the modes of termination of the agreement, viz.:
RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time, place
and means of soliciting insurance. Nothing herein contained shall therefore be construed to create the
relationship of employee and employer between the Agent and the Company. However, the Agent shall
observe and conform to all rules and regulations which the Company may from time to time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly or indirectly, rebates
in any form, or from making any misrepresentation or over-selling, and, in general, from doing or
committing acts prohibited in the Agent's Manual and in circulars of the Office of the Insurance
Commissioner.
TERMINATION. The Company may terminate the contract at will, without any previous notice to the
Agent, for or on account of ... (explicitly specified causes). ...
Either party may terminate this contract by giving to the other notice in writing to that effect. It shall
become ipso facto cancelled if the Insurance Commissioner should revoke a Certificate of Authority
previously issued or should the Agent fail to renew his existing Certificate of Authority upon its
expiration. The Agent shall not have any right to any commission on renewal of premiums that may be
paid after the termination of this agreement for any cause whatsoever, except when the termination is
due to disability or death in line of service. As to commission corresponding to any balance of the first
year's premiums remaining unpaid at the termination of this agreement, the Agent shall be entitled to it
if the balance of the first year premium is paid, less actual cost of collection, unless the termination is
due to a violation of this contract, involving criminal liability or breach of trust.
ASSIGNMENT. No Assignment of the Agency herein created or of commissions or other compensations
shall be valid without the prior consent in writing of the Company. ...
Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and
to implement his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates,
while concurrently fulfilling his commitments under the first contract with the Company.
2

In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao
sued the Company in a civil action and this, he was later to claim, prompted the latter to terminate also his engagement
under the first contract and to stop payment of his commissions starting April 1, 1980.
3

Basiao thereafter filed with the then Ministry of Labor a complaint
4
against the Company and its president. Without
contesting the termination of the first contract, the complaint sought to recover commissions allegedly unpaid
thereunder, plus attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that
he was not the Company's employee, but an independent contractor and that the Company had no obligation to him for
unpaid commissions under the terms and conditions of his contract.
5

The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting agreement had
established an employer-employee relationship between him and the Company, and this conferred jurisdiction on the
Ministry of Labor to adjudicate his claim. Said official's decision directed payment of his unpaid commissions "...
equivalent to the balance of the first year's premium remaining unpaid, at the time of his termination, of all the
insurance policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees.
6

This decision was, on appeal by the Company, affirmed by the National Labor Relations Commission.
7
Hence, the
present petition for certiorari and prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the Company's employee by virtue
of the contract invoked by him, thereby placing his claim for unpaid commissions within the original and exclusive
jurisdiction of the Labor Arbiter under the provisions of Section 217 of the Labor Code,
8
or, contrarily, as the Company
would have it, that under said contract Basiao's status was that of an independent contractor whose claim was thus
cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an ordinary civil action.
The Company's thesis, that no employer-employee relation in the legal and generally accepted sense existed between it
and Basiao, is drawn from the terms of the contract they had entered into, which, either expressly or by necessary
implication, made Basiao the master of his own time and selling methods, left to his judgment the time, place and
means of soliciting insurance, set no accomplishment quotas and compensated him on the basis of results obtained. He
was not bound to observe any schedule of working hours or report to any regular station; he could seek and work on his
prospects anywhere and at anytime he chose to, and was free to adopt the selling methods he deemed most effective.
Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company,
the respondents contend that they do not constitute the decisive determinant of the nature of his engagement, invoking
precedents to the effect that the critical feature distinguishing the status of an employee from that of an independent
contractor is control, that is, whether or not the party who engages the services of another has the power to control the
latter's conduct in rendering such services. Pursuing the argument, the respondents draw attention to the provisions of
Basiao's contract obliging him to "... observe and conform to all rules and regulations which the Company may from time
to time prescribe ...," as well as to the fact that the Company prescribed the qualifications of applicants for insurance,
processed their applications and determined the amounts of insurance cover to be issued as indicative of the control,
which made Basiao, in legal contemplation, an employee of the Company.
9

It is true that the "control test" expressed in the following pronouncement of the Court in the 1956 case of Viana vs.
Alejo Al-Lagadan
10

... In determining the existence of employer-employee relationship, the following elements are generally
considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the power to control the employees' conduct although the latter is
the most important element (35 Am. Jur. 445). ...
has been followed and applied in later cases, some fairly recent.
11
Indeed, it is without question a valid test of the
character of a contract or agreement to render service. It should, however, be obvious that not every form of control
that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be
accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of
the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual
contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled
freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement.
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or
fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote
the result, create no employer-employee relationship unlike the second, which address both the result and the means
used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest,
as is the business of insurance, and is on that account subject to regulation by the State with respect, not only to the
relations between insurer and insured but also to the internal affairs of the insurance company.
12
Rules and regulations
governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance
Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its
commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such
a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance
applications to processing and approval by the Company, and also reserve to the Company the determination of the
premiums to be paid and the schedules of payment. None of these really invades the agent's contractual prerogative to
adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to
establish an employer-employee relationship between him and the company.
There is no dearth of authority holding persons similarly placed as respondent Basiao to be independent contractors,
instead of employees of the parties for whom they worked. In Mafinco Trading Corporation vs. Ople,
13
the Court ruled
that a person engaged to sell soft drinks for another, using a truck supplied by the latter, but with the right to employ his
own workers, sell according to his own methods subject only to prearranged routes, observing no working hours fixed by
the other party and obliged to secure his own licenses and defray his own selling expenses, all in consideration of a
peddler's discount given by the other party for at least 250 cases of soft drinks sold daily, was not an employee but an
independent contractor.
In Investment Planning Corporation of the Philippines us. Social Security System
14
a case almost on all fours with the
present one, this Court held that there was no employer-employee relationship between a commission agent and an
investment company, but that the former was an independent contractor where said agent and others similarly placed
were: (a) paid compensation in the form of commissions based on percentages of their sales, any balance of
commissions earned being payable to their legal representatives in the event of death or registration; (b) required to put
up performance bonds; (c) subject to a set of rules and regulations governing the performance of their duties under the
agreement with the company and termination of their services for certain causes; (d) not required to report for work at
any time, nor to devote their time exclusively to working for the company nor to submit a record of their activities, and
who, finally, shouldered their own selling and transportation expenses.
More recently, in Sara vs. NLRC,
15
it was held that one who had been engaged by a rice miller to buy and sell rice and
palay without compensation except a certain percentage of what he was able to buy or sell, did work at his own
pleasure without any supervision or control on the part of his principal and relied on his own resources in the
performance of his work, was a plain commission agent, an independent contractor and not an employee.
The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and
conform to such rules and regulations as the latter might from time to time prescribe. No showing has been made that
any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively
controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such
showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the
contract leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-
five years. Whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao's status
under the contract of July 2, 1968, not the length of his relationship with the Company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a
commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an
ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without
jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it
unnecessary and premature to consider Basiao's claim for commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside, and that complaint of
private respondent Melecio T. Basiao in RAB Case No. VI-0010-83 is dismissed. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.

Footnotes
1 Rollo, pp. 14-15.
2 Rollo, p. 16.
3 Rollo, p. 17.
4 Docketed as RAB Case No. VI-0010-83.
5 Rollo, p. 17.
6 Id., pp. 18-22.
7 Rollo, pp., 23-27.
8 which at that time conferred upon the Labor Arbiters such jurisdiction over, among others, ... all
money claims of workers, including those based on non-payment or underpayment of wages, overtime
compensation, separation pay and other benefits provided by law or appropriate agreement, except
claims for employees compensation, social security, medicare and maternity benefits."
9 Respondents Comments; Rollo, pp. 47-52, 60-69.
10 99 Phil. 408. 411-412.
11 Feati University vs. Bautista, 18 SCRA., 119: Dy Keh Beng vs. International Labor and Marine Union of
the Phil., 90 SCRA 163: Rosario Bros. vs. Ople, 131 SCRA 72; National Mines and Allied Workers Union
(NAMAWU) vs. Valero, 132 SCRA 578.
12 43 Am. Jur. 2d, pp. 73-91.
13 70 SCRA 139.
14 21 SCRA 924 (1967).
15 G.R. No. 73199. October 26, 1988.


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-72654-61 January 22, 1990
ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICANOR FRANCISCO, PHILIP
CERVANTES and ELEUTERIO BARBIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO DE
GUZMAN, respondents.
J.C. Espinas & Associates for petitioners.
Tomas A. Reyes for private respondent.

FERNAN, C.J.:
The issue to be resolved in the instant case is whether or not the fishermen-crew members of the trawl fishing vessel
7/B Sandyman II are employees of its owner-operator, De Guzman Fishing Enterprises, and if so, whether or not they
were illegally dismissed from their employment.
Records show that the petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels
owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing
business with port and office at Camaligan, Camarines Sur. Petitioners rendered service aboard said fishing vessel in
various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu,
second engineer; Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio
Barbin, fishermen.
For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on
percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they
received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of
crude oil consumed during the fishing trip, otherwise, they received ten percent (10%) of the total proceeds of the sale.
The patron/pilot, chief engineer and master fisherman received a minimum income of P350.00 per week while the
assistant engineer, second fisherman, and fisherman-winchman received a minimum income of P260.00 per week.
1

On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private
respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report that they sold
some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that
the same was a countermove to their having formed a labor union and becoming members of Defender of Industrial
Agricultural Labor Organizations and General Workers Union (DIALOGWU) on September 3, 1983.
During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal charges
were formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return to the
fishing vessel to resume their work on the same day, September 11, 1983.
On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and non-payment of 13th
month pay, emergency cost of living allowance and service incentive pay, with the then Ministry (now Department) of
Labor and Employment, Regional Arbitration Branch No. V, Legaspi City, Albay, docketed as Cases Nos. 1449-83 to 1456-
83.
2
They uniformly contended that they were arbitrarily dismissed without being given ample time to look for a new
job.
On October 24, 1983, private respondent, thru its operations manager, Conrado S. de Guzman, submitted its position
paper denying the employer-employee relationship between private respondent and petitioners on the theory that
private respondent and petitioners were engaged in a joint venture.
3

After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the case for joint hearing furnishing
the parties with notice and summons. On December 27, 1983, after two (2) previously scheduled joint hearings were
postponed due to the absence of private respondent, one of the petitioners herein, Alipio Ruga, the pilot/captain of the
7/B Sandyman II, testified, among others, on the manner the fishing operations were conducted, mode of payment of
compensation for services rendered by the fishermen-crew members, and the circumstances leading to their dismissal.
4

On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S. Coralde rendered a joint
decision
5
dismissing all the complaints of petitioners on a finding that a "joint fishing venture" and not one of employer-
employee relationship existed between private respondent and petitioners.
From the adverse decision against them, petitioners appealed to the National Labor Relations Commission.
On May 30, 1985, the National Labor Relations Commission promulgated its resolution
6
affirming the decision of the
labor arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners.
Hence, the instant petition.
Petitioners assail the ruling of the public respondent NLRC that what exists between private respondent and petitioners
is a joint venture arrangement and not an employer-employee relationship. To stress that there is an employer-
employee relationship between them and private respondent, petitioners invite attention to the following: that they
were directly hired by private respondent through its general manager, Arsenio de Guzman, and its operations manager,
Conrado de Guzman; that, except for Laurente Bautu, they had been employed by private respondent from 8 to 15 years
in various capacities; that private respondent, through its operations manager, supervised and controlled the conduct of
their fishing operations as to the fixing of the schedule of the fishing trips, the direction of the fishing vessel, the volume
or number of tubes of the fish-catch the time to return to the fishing port, which were communicated to the
patron/pilot by radio (single side band); that they were not allowed to join other outfits even the other vessels owned by
private respondent without the permission of the operations manager; that they were compensated on percentage
commission basis of the gross sales of the fish-catch which were delivered to them in cash by private respondent's
cashier, Mrs. Pilar de Guzman; and that they have to follow company policies, rules and regulations imposed on them by
private respondent.
Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent and
petitioners, petitioners claim that public respondent exceeded its jurisdiction and/or abused its discretion when it added
facts not contained in the records when it stated that the pilot-crew members do not receive compensation from the
boat-owners except their share in the catch produced by their own efforts; that public respondent ignored the evidence
of petitioners that private respondent controlled the fishing operations; that public respondent did not take into
account established jurisprudence that the relationship between the fishing boat operators and their crew is one of
direct employer and employee.
Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is now final and
executory for failure of petitioners to file their appeal with the NLRC within 10 calendar days from receipt of said
decision pursuant to the doctrine laid down in Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, 115 SCRA 347 (1982),
the Solicitor General claims that the ruling of public respondent that a "joint fishing venture" exists between private
respondent and petitioners rests on the resolution of the Social Security System (SSS) in a 1968 case, Case No. 708 (De
Guzman Fishing Enterprises vs. SSS), exempting De Guzman Fishing Enterprises, private respondent herein, from
compulsory coverage of the SSS on the ground that there is no employer-employee relations between the boat-owner
and the fishermen-crew members following the doctrine laid down in Pajarillo vs. SSS, 17 SCRA 1014 (1966). In applying
to the case at bar the doctrine in Pajarillo vs. SSS, supra, that there is no employer-employee relationship between the
boat-owner and the pilot and crew members when the boat-owner supplies the boat and equipment while the pilot and
crew members contribute the corresponding labor and the parties get specific shares in the catch for their respective
contribution to the venture, the Solicitor General pointed out that the boat-owners in the Pajarillo case, as in the case at
bar, did not control the conduct of the fishing operations and the pilot and crew members shared in the catch.
We rule in favor of petitioners.
Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits rather than to
dismiss it on a mere technicality. In so doing, we exercise the prerogative accorded to this Court enunciated inFirestone
Filipinas Employees Association, et al. vs. Firestone Tire and Rubber Co. of the Philippines, Inc., 61 SCRA 340 (1974), thus
"the well-settled doctrine is that in labor cases before this Tribunal, no undue sympathy is to be accorded to any claim of
a procedural misstep, the idea being that its power be exercised according to justice and equity and substantial merits of
the controversy."
Circumstances peculiar to some extent to fishermen-crew members of a fishing vessel regularly engaged in trawl fishing,
as in the case of petitioners herein, who spend one (1) whole week or more
7
in the open sea performing their job to
earn a living to support their families, convince Us to adopt a more liberal attitude in applying to petitioners the 10-
calendar day rule in the filing of appeals with the NLRC from the decision of the labor arbiter.
Records reveal that petitioners were informed of the labor arbiter's decision of March 31, 1984 only on July 3,1984 by
their non-lawyer representative during the arbitration proceedings, Jose Dialogo who received the decision eight (8)
days earlier, or on June 25, 1984. As adverted to earlier, the circumstances peculiar to petitioners' occupation as
fishermen-crew members, who during the pendency of the case understandably have to earn a living by seeking
employment elsewhere, impress upon Us that in the ordinary course of events, the information as to the adverse
decision against them would not reach them within such time frame as would allow them to faithfully abide by the 10-
calendar day appeal period. This peculiar circumstance and the fact that their representative is a non-lawyer provide
equitable justification to conclude that there is substantial compliance with the ten-calendar day rule of filing of appeals
with the NLRC when petitioners filed on July 10, 1984, or seven (7) days after receipt of the decision, their appeal with
the NLRC through registered mail.
We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that
are generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and
methods by which the work is to be accomplished.
8
The employment relation arises from contract of hire, express or
implied.
9
In the absence of hiring, no actual employer-employee relation could exist.
From the four (4) elements mentioned, We have generally relied on the so-called right-of-control test
10
where the
person for whom the services are performed reserves a right to control not only the end to be achieved but also the
means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of
doing the work, not the actual exercise of the right.
11

The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for the ruling that a "joint fishing
venture" existed between private respondent and petitioners is not applicable in the instant case. There is neither light
of control nor actual exercise of such right on the part of the boat-owners in the Pajarillo case, where the Court found
that the pilots therein are not under the order of the boat-owners as regards their employment; that they go out to sea
not upon directions of the boat-owners, but upon their own volition as to when, how long and where to go fishing; that
the boat-owners do not in any way control the crew-members with whom the former have no relationship whatsoever;
that they simply join every trip for which the pilots allow them, without any reference to the owners of the vessel; and
that they only share in their own catch produced by their own efforts.
The aforementioned circumstances obtaining in Pajarillo case do not exist in the instant case. The conduct of the fishing
operations was undisputably shown by the testimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under
the control and supervision of private respondent's operations manager. Matters dealing on the fixing of the schedule of
the fishing trip and the time to return to the fishing port were shown to be the prerogative of private
respondent.
12
While performing the fishing operations, petitioners received instructions via a single-side band radio
from private respondent's operations manager who called the patron/pilot in the morning. They are told to report their
activities, their position, and the number of tubes of fish-catch in one day.
13
Clearly thus, the conduct of the fishing
operations was monitored by private respondent thru the patron/pilot of 7/B Sandyman II who is responsible for
disseminating the instructions to the crew members.
The conclusion of public respondent that there had been no change in the situation of the parties since 1968 when De
Guzman Fishing Enterprises, private respondent herein, obtained a favorable judgment in Case No. 708 exempting it
from compulsory coverage of the SSS law is not supported by evidence on record. It was erroneous for public
respondent to apply the factual situation of the parties in the 1968 case to the instant case in the light of the changes in
the conditions of employment agreed upon by the private respondent and petitioners as discussed earlier.
Records show that in the instant case, as distinguished from the Pajarillo case where the crew members are under no
obligation to remain in the outfit for any definite period as one can be the crew member of an outfit for one day and be
the member of the crew of another vessel the next day, the herein petitioners, on the other hand, were directly hired by
private respondent, through its general manager, Arsenio de Guzman, and its operations manager, Conrado de Guzman
and have been under the employ of private respondent for a period of 8-15 years in various capacities, except for
Laurente Bautu who was hired on August 3, 1983 as assistant engineer. Petitioner Alipio Ruga was hired on September
29, 1974 as patron/captain of the fishing vessel; Eladio Calderon started as a mechanic on April 16, 1968 until he was
promoted as chief engineer of the fishing vessel; Jose Parma was employed on September 29, 1974 as assistant
engineer; Jaime Barbin started as a pilot of the motor boat until he was transferred as a master fisherman to the fishing
vessel 7/B Sandyman II; Philip Cervantes was hired as winchman on August 1, 1972 while Eleuterio Barbin was hired as
winchman on April 15, 1976.
While tenure or length of employment is not considered as the test of employment, nevertheless the hiring of
petitioners to perform work which is necessary or desirable in the usual business or trade of private respondent for a
period of 8-15 years since 1968 qualify them as regular employees within the meaning of Article 281 of the Labor Code
as they were indeed engaged to perform activities usually necessary or desirable in the usual fishing business or
occupation of private respondent.
14

Aside from performing activities usually necessary and desirable in the business of private respondent, it must be noted
that petitioners received compensation on a percentage commission based on the gross sale of the fish-catchi.e. 13% of
the proceeds of the sale if the total proceeds exceeded the cost of the crude oil consumed during the fishing trip,
otherwise only 10% of the proceeds of the sale. Such compensation falls within the scope and meaning of the term
"wage" as defined under Article 97(f) of the Labor Code, thus:
(f) "Wage" paid to any employee shall mean 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, and included the fair and reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by the employer to the employee. . . .
The claim of private respondent, which was given credence by public respondent, that petitioners get paid in the form of
share in the fish-catch which the patron/pilot as head of the team distributes to his crew members in accordance with
their own understanding
15
is not supported by recorded evidence. Except that such claim appears as an allegation in
private respondent's position paper, there is nothing in the records showing such a sharing scheme as preferred by
private respondent.
Furthermore, the fact that on mere suspicion based on the reports that petitioners allegedly sold their fish-catch at
midsea without the knowledge and consent of private respondent, petitioners were unjustifiably not allowed to board
the fishing vessel on September 11, 1983 to resume their activities without giving them the opportunity to air their side
on the accusation against them unmistakably reveals the disciplinary power exercised by private respondent over them
and the corresponding sanction imposed in case of violation of any of its rules and regulations. The virtual dismissal of
petitioners from their employment was characterized by undue haste when less extreme measures consistent with the
requirements of due process should have been first exhausted. In that sense, the dismissal of petitioners was tainted
with illegality.
Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private respondent virtually
resulting in their dismissal evidently contradicts private respondent's theory of "joint fishing venture" between the
parties herein. A joint venture, including partnership, presupposes generally a parity of standing between the joint co-
venturers or partners, in which each party has an equal proprietary interest in the capital or property contributed
16
and
where each party exercises equal lights in the conduct of the business.
17
It would be inconsistent with the principle of
parity of standing between the joint co-venturers as regards the conduct of business, if private respondent would
outrightly exclude petitioners from the conduct of the business without first resorting to other measures consistent with
the nature of a joint venture undertaking, Instead of arbitrary unilateral action, private respondent should have
discussed with an open mind the advantages and disadvantages of petitioners' action with its joint co-venturers if
indeed there is a "joint fishing venture" between the parties. But this was not done in the instant case. Petitioners were
arbitrarily dismissed notwithstanding that no criminal complaints were filed against them. The lame excuse of private
respondent that the non-filing of the criminal complaints against petitioners was for humanitarian reasons will not help
its cause either.
We have examined the jurisprudence on the matter and find the same to be supportive of petitioners' stand. InNegre
vs. WCC 135 SCRA 653 (1985), we held that fishermen crew members who were recruited by one master fisherman
locally known as "maestro" in charge of recruiting others to complete the crew members are considered employees, not
industrial partners, of the boat-owners. In an earlier case of Abong vs. WCC, 54 SCRA 379 (1973) where petitioner
therein, Dr. Agustin Abong, owner of the fishing boat, claimed that he was not the employer of the fishermen crew
members because of an alleged partnership agreement between him, as financier, and Simplicio Panganiban, as his
team leader in charge of recruiting said fishermen to work for him, we affirmed the finding of the WCC that there
existed an employer-employee relationship between the boat-owner and the fishermen crew members not only
because they worked for and in the interest of the business of the boat-owner but also because they were subject to the
control, supervision and dismissal of the boat-owner, thru its agent, Simplicio Panganiban, the alleged "partner" of Dr.
Abong; that while these fishermen crew members were paid in kind, or by "pakiao basis" still that fact did not alter the
character of their relationship with Dr. Abong as employees of the latter.
In Philippine Fishing Boat Officers and Engineers Union vs. Court of Industrial Relations, 112 SCRA 159 (1982), we held
that the employer-employee relationship between the crew members and the owners of the fishing vessels engaged in
deep sea fishing is merely suspended during the time the vessels are drydocked or undergoing repairs or being loaded
with the necessary provisions for the next fishing trip. The said ruling is premised on the principle that all these
activities i.e., drydock, repairs, loading of necessary provisions, form part of the regular operation of the company fishing
business.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned resolution of the National Labor
Relations Commission dated May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to reinstate
petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary benefits
under the law. No pronouncement as to costs.
SO ORDERED.
Gutierrez, Jr., Bidin and Corts, JJ., concur.
Feliciano, J., concurs in the result.

Footnotes
1 p. 3, Joint Decision, Labor Arbiter, p. 40, Rollo.
2 pp. 1-8, Records.
3 pp. 28-30, Ibid.
4 pp. 54-101, Ibid.
5 Annex "D" Petition, pp. 40-46, Rollo.
6 pp. 61-65, Rollo.
7 p. 23, T.S.N., p. 78, Records.
8 Hydro-Resources Contractor Corporation vs. Labor Arbiter Pagalilauan G.R. No. 62909, April 18, 1989;
Tabas, et al. vs. California Mfg. Co. et. al., G.R. No. 80680, January 26, 1989; Continental Marble
Corporation vs. NLRC, 161 SCRA 151; Bautista vs. Inciong, 158 SCRA 665; Broadway Motors, Inc. vs. NLRC,
156 SCRA 522; Besa vs. Trajano, 146 SCRA 501; Rosario Brothers, Inc. vs. Ople, 131 SCRA 72; Shipside Inc.
vs. NLRC, 118 SCRA 99; Mafinco Trading Corporation vs. Ople, 70 SCRA 139.
9 Yu Chuck vs. Kong Li Po, 46 Phil. 608 (1924).
10 LVN Pictures, Inc. vs. Philippine Musicians Guild, l SCRA 132, 173 (1961), citing Alabama Highway
Express, Co. vs. Local, 612, 108 S. 2d. 350.
11 Dy Keh Beng vs. International Labor and Marine Union of the Philippines, 90 SCRA 161 (1979).
12 pp. 7-8, T.S.N., pp. 61-62, Records.
13 p. 7. T.S.N., p. 61, Records.
14 Ochoco vs. NLRC., 120 SCRA 774 (1983); Mansol vs. P.P. Gocheco Lumber Co., 96 Phil. 941 (1955).
15 p. 2, Private Respondent's Position Paper, p. 22, Records; p. 2, Memorandum for Private Respondent,
p. 131, Rollo.
16 Sevilla vs. Court of Appeals, 160 SCRA 171 (1988), citing Bautista Treatise on Philippine Partnership
Law, p. 34.
17 Ibid. p. 37.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 119500 August 28, 1998
PAGUIO TRANSPORT CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and WILFREDO MELCHOR, respondents.

PANGANIBAN, J.:
In dismissing the petition, this Court reiterates the following doctrines: (1) the "boundary system" used in taxi (and
jeepney) operations presupposes an employer-employee relation; (2) the employer must prove just (or authorized)
cause and due process to justify dismissal of an employee; (3) strained relations must be demonstrated as a fact; and (4)
back wages and reinstatement are necessary consequences of illegal dismissal.
The Case
Before us is a petition for certiorari and prohibition with preliminary injunction, assailing the December 16, 1994
Decision of the National Labor Relations Commission
1
in NLRC NCR Case No. 00-02-01564-94 entitled "Wilfredo Melchor
vs. Paguio Transport Corporation/Serafin Paguio." The dispositive portion of the challenged Decision reads:
WHEREFORE, premises considered, the appeal insofar as it seeks reversal of the finding on illegal
dismissal is denied for lack of merit. The decision declaring that complainant was illegally dismissed is
affirmed. The decision is however partially modified insofar as liability therefor is concerned. The liability
shall inure against PAGUIO TRANSPORT CORPORATION, subject to the provision of the Corporation Code
and the Rules of Court on matters taken herein. The backwages as computed in the assailed decision is
set aside, and a new one is hereby provided in the amount of P86,400.00 as computed in the
immediately preceding paragraph.
Petitioner also impugns the February 21, 1995 NLRC Resolution
2
denying the motion for reconsideration.
The June 28, 1994 Decision of the labor arbiter,
3
which the NLRC modified as to the amount of back wages, disposed as
follows:
WHEREFORE, the respondents are hereby ordered to reinstate the complainant with full backwages
from the time his salaries were withheld from him until his actual reinstatement.
The respondents are further ordered to pay him his 13th month pay in the amount of P5,600.00.
Complainant's backwages up to the date of this Decision as computed by LEILANI E. CALALANG of the
Commission's NLRC NCR Branch is:
11/28/93 - 6/28/94 = 7 mos.
P800.00 x 3 days x 4 weeks = P9,600.00
P9,600.00 x 7 mos. = P67,200.00
The aspect of reinstatement either in the job or payroll at the option of the employers being
immediately executory pursuant to Article 223 of the Labor Code, the respondents are hereby directed
to so reinstate him when he reports for work by virtue of this Decision.
Other claims are hereby dismissed for lack of evidence.
The Facts
The facts, as summarized in the challenged Decision, are as follows:
Complainant Wilfredo Melchor was hired by respondent company as a taxi driver on 25 December 1992
under the "[b]oundary [s]ystem. He [was] engaged to drive the taxi unit assigned to him on a 24-hour
schedule per trip every two (2) days, for which he used to earn an average income from P500 to P700
per trip, exclusive of the P650.00 boundary and other deductions imposed on him. On 24 [sic] November
1993, complainant allegedly met a vehicular accident along Quirino Avenue near the PNR Station and
Plaza Dilao when he accidentally bumped a car which stopped at the intersection even when the traffic
light was green and go. After he submitted the traffic accident report to the office of respondents, he
was allegedly advised to stop working and have a rest. After several days[,] he allegedly reported for
work only to be told that his service was no longer needed. Hence, the complaint for illegal dismissal,
among others.
Respondent[s] for their part maintained that complainant was not illegally dismissed, there being in the
first place no employer-employee relationship between them. In amplification, it was argued that the
element of control which [was] a paramount test to determine the existence of such a relationship [was]
lacking. So too, it argued the element of the payment of compensation. Considering that in lieu of the
latter, payment of boundary is instead made allegedly makes the relationship between them of a "wase-
agreement" [sic]. Respondents then argued that even if an employer-employee relationship were to be
presumed as present, still complainant's termination arose out of a valid cause and after he refused to
articulate his stand on the investigation being conducted on him. Respondents then harped on the
supposed three occasions when complainant figured in a vehicular accident involving the taxi unit he
was driving, viz: On August 3, which resulted in damages to the respondent in the amount of P150.00;
On August 4 which again resulted [in] the damages to the respondent in the amount of P615.00; and,
again on 4 November 1993, the mishap costing the respondents this time P25,370.00 in damages. As a
result of the alleged compounded damages which the respondents had to shoulder on account of the
supposed reckless driving of the complainant, the former was allegedly left with no alternative but to
ask complainant's explanation why he should still be allowed to drive. Complainant, despite several
chances, allegedly failed to do so.
4

Ruling of the NLRC
The NLRC held that private respondent was an illegally dismissed employee of petitioner. Upholding the existence of an
employer-employee relationship, it cited Doce v. WCC,
5
in which the Supreme Court ruled that "the relationship created
between the parties operating under a 'boundary system' is one of an employer and employee, and not of a lessor and a
lessee."
6

The NLRC sustained the ruling of the labor arbiter that the private respondent was illegally dismissed, for he "was not
afforded the twin requirements of due process . . . ."
7
It rejected petitioner's claim that private respondent had figured
in three vehicular incidents because of his reckless driving. It found that "except for petitioner's bare statements, no
proof was presented to establish with particularity the circumstances being claimed. . . . The guilt and culpability of
[private respondent] which would give [petitioner] valid ground to effect his dismissal cannot be established by a mere
allegation of his reckless driving."
8

Public Respondent NLRC found petitioner liable for back wages in the amount of P86,400, and not P67,200 as computed
by the labor arbiter. It found, however, that this liability should be imposed on Petitioner Corporation only, and not on
its president who was also impleaded by private respondent.
Hence, this petition.
9

Issues
Petitioner raises the following issues:
a. Whether or not public respondent Commission acted in excess of jurisdiction and/or with grave abuse
of discretion amounting to lack of jurisdiction in ordering the reinstatement of private respondent with
full backwages, despite its strained relations with the petitioner and the reinstatement would, in effect,
be inimical to the interest of the latter in particular, and to the riding public in general;
b. Whether or not public respondent acted in excess of jurisdiction and/or with grave abuse of
discretion in refusing to reconsider its decision and resolution complained of despite the facts prevailing
to support the reconsideration.
10

In resolving the petition, we shall address the following points: (1) employer-employee relation, (2) presence of just
cause, (3) due process, (4) strained relationship, and (5) propriety of reinstatement and backwages.
The Court's Ruling
The petition is not meritorious.
First Issue:
Employer-Employee Relation
Under the "boundary system," private respondent was engaged to drive petitioner's taxi unit on a 24-hour schedule
every two days. On each such trip, private respondent remitted to petitioner a "boundary" of P650. Whatever he earned
in excess of that amount was considered his income.
Petitioner argues that under said arrangement, he had no control over the number of hours private respondent had to
work and the routes he had to take. Therefore, he concludes that the employer-employee relationship cannot be
deemed to exist.
Petitioner's contention is not novel. In Martinez v. National Labor Relations Commission,
11
this Court already ruled that
the relationship of taxi owners and taxi drivers is the same as that between jeepney owners and jeepney drivers under
the "boundary system." In both cases, the employer-employee relationship was deemed to exist, viz.:
The relationship between jeepney owners/operators on one hand and jeepney drivers on the other
under the boundary system is that of employer-employee and not of lessor-lessee. . . . In the lease of
chattels[,] the lessor loses complete control over the chattel leased . . . . In the case of jeepney
owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The
fact that the drivers do not receive fixed wages but get only the excess of that so-called boundary they
pay to the owner/operator is not sufficient to withdraw the relationship between them from that of
employer and employee. The doctrine is applicable in the present case. Thus, private respondents were
employees. . . because they had been engaged to perform activities which were usually necessary or
desirable in the usual trade or business of the employer.
12

Second Issue:
Just Cause
Petitioner also asserts that private respondent's involvement in three vehicular accidents within a span of several
months constitutes just cause for his dismissal. It alleges that, according to the police report concerning the most recent
and serious vehicular mishap, it was private respondent who was at fault and that the "city prosecutor of Quezon City
recommended that an Information for reckless imprudence resulting in damage to property be filed against him."
13

Petitioner, however, did not submit any proof to support these allegations. Well-settled is the rule that the employer
has the burden of proving that the dismissal of an employee is for a just cause. The failure of the employer to discharge
this burden means that the dismissal is not justified and that the employee is entitled to reinstatement and
backwages.
14
In this case, petitioner failed to prove any just or authorized cause for his dismissal. Private respondent,
therefore, must be deemed illegally dismissed.
15

Petitioner contends that he "submitted and presented material and competent documentary evidence consisting of
police reports of vehicular accidents of taxicab units owned by petitioner and driven by private respondent, the repairs
and expenses suffered by the petitioner as a result thereof and the resolution of the [c]ity [p]rosecutor of Quezon City
finding private respondent at fault for the November 4, 1993 vehicular accident caused by the latter."
16
Adding that the
submission of these documents only on appeal does not diminish their probative value, petitioner cites Article 221 of
the Labor Code which reads:
Art. 221. Technical rules not binding and prior resort to amicable settlement. In any proceeding before
the Commission or any of the Labor Arbiters, the rules of procedure prevailing in courts of law and
equity shall not be controlling and it is the spirit and intention of the Code that the Commission and its
members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each
case speedily and objectively without regard to technicalities of law and procedure, all in the interest of
due process. In any proceeding before the Commission or any Labor Arbiter, the parties may be
represented by legal counsel but it shall be the duty of the Chairman, any Presiding Commissioner or
Commissioner or any Labor Arbiter to exercise complete control of the proceedings at all stages.
Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts towards
[t]he amicable settlement of a labor dispute within his jurisdiction on or before the first hearing. The
same rule shall apply to the Commission in the exercise of its original jurisdiction.
However, a careful examination of both the original Complaint and the Petitioner's Memorandum of Appeal from the
labor arbiter's Decision reveals that said pieces of documentary evidence were not mentioned or included therein,
17
but
were submitted by petitioner only when he filed his present petition with this Court. These pieces of evidence were
attached and referred to as Annexes "G", "H", "I", "J", "K" and "L" of the said petition. Such factual issues cannot be
resolved in a petition for certiorari like the present case, because the Court's review of NLRC decisions is limited to
questions of jurisdiction and grave abuse of discretion. In PMI Colleges v. NLRC,
18
the Court held:
This Court is definitely not the proper venue to consider this matter for it is not a trier of
facts. . . .Certiorari is a remedy narrow in its scope and inflexible in character. It is not a general utility
tool in the legal workshop. Factual issues are not a proper subject for certiorari, as the power of the
Supreme Court to review labor cases is limited to the issue of jurisdiction and grave abuse of
discretion. . . . .
Of the same tenor was our disquisition in Ilocos Sur Electric Cooperative, Inc. v. NLRC where we made
plain that:
In certiorari proceedings under Rule 65 of the Rules of Court, judicial review by this
Court does not go so far as to evaluate the sufficiency of evidence upon which the Labor
Arbiter and the NLRC based their determinations, the inquiry being limited essentially to
whether or not said public respondents had acted without or in excess of [their]
jurisdiction or with grave abuse of discretion.
. . . Our deference to the expertise acquired by quasi-judicial agencies and the limited scope granted us
in the exercise of certiorari jurisdiction restrain us from going so far as to probe into the correctness of a
tribunal's evaluation of evidence, unless there is a palpable mistake and complete disregard thereof in
which case certiorari would be proper. In plain terms, in certiorari proceedings, we are concerned with
mere errors of jurisdiction and not errors of judgment.
Equally devoid of correctness is petitioner's claim that the documents should be considered, pursuant to Article 221 of
the Labor Code which stares that technical rules are not binding in proceedings before the labor arbiters and the NLRC.
The Supreme Court is not a trier of facts; as earlier stated, its jurisdiction in a petition for certiorari, like the present case,
is confined to questions of jurisdiction and grave abuse of discretion. The unexplained failure of petitioner to present its
evidence before the labor arbiter and the NLRC cannot compel this Court to expand the scope of its review. Indeed,
petitioner has not proffered a sufficient reason for this Court to do so.
Petitioner's reliance on Canete v. National Labor Relations Commission
19
is misplaced. In that case, the documents were
submitted to the NLRC before they were tackled by the Supreme Court.
Private respondent's admission that he was involved in the November 4, 1993 accident did not give petitioner a just
cause to dismiss him. Mere involvement in an accident, absent any showing of fault or recklessness on the part of an
employee, is not a valid ground for dismissal.
Third Issue:
No Due Process
Petitioner insists that private respondent was accorded due process, because he was allowed to explain his side and to
show cause why he should still be allowed to act as one of petitioner's drivers.
This does not persuade. The Court has consistently held that in the dismissal of employees, the twin requirements of
notice and hearing are essential elements of due process. The employer must furnish the worker two written notices: (1)
one to apprise him of the particular acts or omissions for which his dismissal is sought and (2) the other to inform him of
his employer's decision to dismiss him. As to the requirement of a hearing, the essence of due process lies simply in an
opportunity to be heard, and not always and indispensably in an actual hearing.
20

In the present case, petitioner failed to present proof, other than its bare allegations, that it had complied with these
requirements.
21
We reiterate: the burden of proof rests on the employer. Private respondent, in fact, was not given
notice that he was being dismissed. When ordered to explain the vehicular accident that happened on November 4,
1993, he was not informed that petitioner was contemplating his dismissal and that his involvement in said vehicular
accident was the cause thereof. Private respondent was merely asked to explain the vehicular accident per se, not his
defense against a charge of dismissal arising from the vehicular accident. He became aware of his employer's intention
to dismiss him only when he was actually told not to report for work anymore.
Fourth Issue:
Strained Relations
Notwithstanding its failure to prove just cause and due process in the dismissal of private respondent, petitioner seeks
to bar his reinstatement by invoking the doctrine of strained relations. It contends that as a result of private
respondent's "reckless and incompetent manner of driving . . ., compounded by the damages suffered by petitioner in
terms of repairs, related expenses, and the institution of the instant case, the relationship between the parties are so
strained as to preclude a harmonious working atmosphere to the prejudice of the petitioner as well as private
respondent."
22

We are not persuaded. Strained relations must be demonstrated as a fact. Petitioner failed to do so. Its allegation that
private respondent was incompetent and reckless in his manner of driving, which led to the his involvement in three
vehicular accidents, is not supported by the records. As earlier noted, no evidence was properly submitted by petitioner
to prove or give credence to his assertions. Thus, Respondent NLRC ruled:
Despite allegation on the matter, not an iota of proof was presented to establish the claim. This
observation equally applies to the allegation that complainants, in three (3) occasions had figured in [a]
vehicular accident due to his reckless driving . . . .
23

Because the claim of petitioner has no factual basis, the doctrine on strained relations cannot be applied in this case.
Moreover, the filing of the Complaint for illegal dismissal does not by itself justify the invocation of this doctrine. As the
Court held in Capili vs. NLRC:
24

. . . [T]he doctrine on "strained relations" cannot be applied indiscriminately since every labor dispute
almost invariably results in "strained relations"; otherwise, reinstatement can never be possible simply
because some hostility is engendered between the parties as a result of their disagreement. That is
human nature.
Fifth Issue:
Reinstatement and Back Wages
Because he was illegally dismissed, private respondent is entitled to reinstatement and back wages pursuant to Section
279 of the Labor Code, which reads:
Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
Interpreting this provision, the Court held in Bustamante v. NLRC
25
that illegally dismissed employees are entitled to full
back wages without conditions or limitations, viz.:
. . . [A] closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as
meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the
concerned employee during the period of his illegal dismissal. In other words, the provision calling for
"full backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore,
must be applied without attempted or strained interpretation.
The labor arbiter awarded back wages in the sum of P67,200 based on the following computation:
11/28/93 - 6/28/94 = 7 mos.
P800.00 x 3 days x 4 weeks = P6,600.00
P9,600 x 7 mos. = P67,200.00
26

In modifying the foregoing award, the NLRC relied on this other formula:
11/28/93 - 11/28/94 = 12 months
P600.00 x 3 days x 4 weeks = P 7,200.00
P7,200 x 12 months = P86,400.00.
27

Although the NLRC adjusted the amount of private respondent's monthly income and the period during which back
wages may be awarded, neither the petitioner nor the private respondent questioned the new computation.
Accordingly we sustain the award but stress that the back wages ought to be computed from the time of the illegal
dismissal to the time of reinstatement, either actual or in the payroll, without any deduction or qualification.
WHEREFORE, the petition is hereby DISMISSED for utter lack merit, and the assailed Decision and Resolution are hereby
AFFIRMED. Costs against petitioners.
SO ORDERED.
Davide, Jr. and Vitug, JJ., concur.
Bellosillo, J., took no part.
Quisumbing, J., concurs in the result.
Footnotes
1 Third Division composed of Comm. Joaquin A. Tanodra, ponente; Presiding Comm. Lourdes C. Javier
and Comm. Ireneo B. Bernardo, concurring.
2 Rollo, pp. 46-47.
3 Potenciano S. Canizares, Jr.
4 NLRC Decision, pp. 2-4; rollo, pp. 39-41.
5 104 Phil. 946, December 22, 1958.
6 NLRC Decision, p. 6; rollo, p. 43.
7 Ibid., p. 5; rollo, p. 42.
8 Ibid.
9 This case was deemed submitted for resolution on January 14, 1998, when the Court noted and
granted the solicitor general's Manifestation and Motion dated November 25, 1997.
10 Memorandum for Petitioner, p. 6; rollo, p. 144. It should be noted that private respondent did not
assail the NLRC Decision or any part thereof.
11 Martinez v. National Labor Relations Commission, 272 SCRA 793, May 29, 1997, per Bellosillo, J.
12 Ibid., pp. 799-800.
13 Memorandum for Petitioner, p. 8; rollo, p. 146.
14 Mabeza v. National Labor Relations Commission, 271 SCRA 670, 680, April 18, 1997, per Kapunan J.
15 See Art. 282 and 283 of the Labor Code.
16 Memorandum for Petitioner, p. 10; rollo, p. 148.
17 NLRC Decision, p. 5; rollo, p. 42.
18 GR No. 121466, August 15, 1997, per Romero, J.
19 250 SCRA 259, November 23, 1995.
20 Conti v. National Labor Relations Commission, 271 SCRA 114, 118, April 10, 1997.
21 NLRC Decision, p. 5; rollo, p. 42.
22 Memorandum for Petitioner, pp. 9-10; rollo, pp. 147-148.
23 NLRC Decision, p. 5; rollo, p. 42.
24 270 SCRA 488, 495, March 26, 1997, per Bellosillo J.
25 265 SCRA 61, November 28, 1996, per Padilla, J. See also Highway Copra Traders v. NLRC, GR No.
108889, July 30, 1998. Bustamante applies to illegal dismissals effected after March 21, 1989. In the
present case, private respondent was hired on December 25, 1992 and illegally dismissed on November
28, 1993.
26 Labor arbiter's Decision, p. 4; rollo, p. 32.
27 Assailed Decision, p. 7; rollo, p. 44.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 121605 February 2, 2000
PAZ MARTIN JO and CESAR JO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PETER MEJILA, respondents.
QUISUMBING, J.:
This petition for certiorari seeks to set aside the Decision
1
of National Labor Relations Commission (Fifth Division)
promulgated on November 21, 1994, and its Resolution dated June 7, 1995, which denied petitioners' motion for
reconsideration.
Private respondent Peter Mejila worked as barber on a piece rate basis at Dina's Barber Shop. In 1970, the owner, Dina
Tan, sold the barbershop to petitioners Paz Martin Jo and Cesar Jo. All the employees, including private respondent,
were absorbed by the new owners. The name of the barbershop was changed to Windfield Barber Shop.
The owners and the barbers shared in the earnings of the barber shop. The barbers got two-thirds (2/3) of the fee paid
for every haircut or shaving job done, while one-third (1/3) went to the owners of the shop.
In 1977, petitioners designated private respondent as caretaker of the shop because the former caretaker became
physically unfit. Private respondent's duties as caretaker, in addition to his being a barber, were: (1) to report to the
owners of the barbershop whenever the airconditioning units malfunctioned and/or whenever water or electric power
supply was interrupted, (2) to call the laundry woman to wash dirty linen; (3) to recommend applicants for interview and
hiring; (4) to attend to other needs of the shop. For this additional job, he was given an honorarium equivalent to one-
third (1/3) of the net income of the shop.1wphi1.nt
When the building occupied by the shop was demolished in 1986, the barbershop closed. But soon a place nearby was
rented by petitioners and the barbershop resumed operations as Cesar's Palace Barbershop and Massage Clinic. In this
new location, private respondent continued to be a barber and caretaker, but with a fixed monthly honorarium as
caretaker, to wit: from February 1986 to 1990 P700; from February 1990 to March 1991 P800; and from July 1992
P1,300.
In November 1992, private respondent had an altercation with his co-barber, Jorge Tinoy. The bickerings, characterized
by constant exchange of personal insults during working hours, became serious so that private respondent reported the
matter to Atty. Allan Macaraya of the labor department. The labor official immediately summoned private respondent
and petitioners to a conference. Upon investigation, it was found out that the dispute was not between private
respondent and petitioners; rather, it was between the former and his fellow barber. Accordingly, Atty. Macaraya
directed petitioners' counsel, Atty. Prudencio Abragan, to thresh out the problem.
During the mediation meeting held at Atty. Abragan's office a new twist was added. Despite the assurance that he was
not being driven out as caretaker-barber, private respondent demanded payment for several thousand pesos as his
separation pay and other monetary benefits. In order to give the parties enough time to cool off, Atty. Abragan set
another conference but private respondent did not appear in such meeting anymore.
Meanwhile, private respondent continued reporting for work at the barbershop. But, on January 2, 1993, he turned over
the duplicate keys of the shop to the cashier and took away all his belongings therefrom. On January 8, 1993, he began
working as a regular barber at the newly opened Goldilocks Barbershop also in Iligan City.
On January 12, 1993, private respondent filed a complaint
2
for illegal dismissal with prayer for payment of separation
pay, other monetary benefits, attorney's fees and damages. Significantly, the complaint did not seek reinstatement as a
positive relief.
In a Decision dated June 15, 1993, the Labor Arbiter found that private respondent was an employee of petitioners, and
that private respondent was not dismissed but had left his job voluntarily because of his misunderstanding with his co-
worker.
3
The Labor Arbiter dismissed the complaint, but ordered petitioners to pay private respondent his 13th month
pay and attorney's fees.
Both parties appealed to the NLRC. In a Decision dated November 21, 1994, it set aside the labor arbiter's judgment. The
NLRC sustained the labor arbiter's finding as to the existence of employer-employee relationship between petitioners
and private respondent, but it ruled that private respondent was illegally dismissed. Hence, the petitioners were ordered
to reinstate private respondent and pay the latter's backwages, 13th month pay, separation pay and attorney's fees,
thus:
For failure of respondents to observe due process before dismissing the complainant, We rule and hold that he
was illegally terminated. Consequently, he should be reinstated and paid his backwages starting from January 1,
1993 up , the time of his reinstatement and payment of separation pay, should reinstatement not be feasible on
account of a strained employer-employee relationship.
As complainant's income was mixed, (commission and caretaker), he becomes entitled to 13th month pay only
in his capacity as caretaker at the last rate pay given to him.
With respect to separation pay, even workers paid on commission are given separation pay as they are
considered employees of the company. Complainant should be adjudged entitled to separation pay reckoned
from 1970 up to the time he was dismissed on December 31, 1992 at one-half month pay of his earnings as a
barbers; and as a caretaker the same should be reckoned from 1977 up to December 31, 1992.
As complainant has been assisted by counsel not only in the preparation of the complaint, position paper but in
hearings before the Labor Arbiter a quo attorney's fees equivalent to 10% of the money awards should likewise
be paid to complainant.
WHEREFORE, the decision appealed from is Vacated and Set Aside and a new one entered in accordance with
the above-findings and awards.
SO ORDERED.
4

Its motion for reconsideration having been denied in a Resolution dated June 7, 1995, petitioners filed the instant
petition.
The issues for resolution are as follows:
1. Whether or not there exists an employee-employee relationship between petitioners and private respondent.
2. Whether or not private respondent was dismissed from or had abandoned his employment.
Petitioners contend that public respondent gravely erred in declaring that private respondent was their employee. They
claim that private respondent was their "partner in trade" whose compensation was based on a sharing arrangement
per haircut or shaving job done. They argue that private respondent's task as caretaker could be considered an
employment because the chores are very minimal.
At the outset, we reiterate the doctrine that the existence of an employer-employee relationship is ultimately a question
of fact and that the findings thereon by the labor arbiter and the NLRC shall be accorded not only respect but even
finality when supported by ample evidence.
5

In determining the existence of an employer-employee relationship, the following elements are considered: (1) the
selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4)
the power to control the worker's conduct, with the latter assuming primacy in the overall consideration. The power of
control refers to the existence of the power and not necessarily to the actual exercise thereof. It is not essential for the
employer to actually supervise the performance of duties of the employee; it is enough that the employer has the right
to wield that power.
6

Absent a clear showing that petitioners and private respondent had intended to pursue a relationship of industrial
partnership, we entertain no doubt that private respondent was employed by petitioners as caretaker-barber. Initially,
petitioners, as new owners of the barbershop, hired private respondent as barber by absorbing the latter in their
employ. Undoubtedly, the services performed by private respondent as barber is related to, and in the pursuit of the
principal business activity of petitioners. Later on, petitioners tapped private respondent to serve concurrently as
caretaker of the shop. Certainly, petitioners had the power to dismiss private respondent being the ones who engaged
the services of the latter. In fact, private respondent sued petitioners for illegal dismissal, albeit contested by the latter.
As a caretaker, private respondent was paid by petitioners wages in the form of honorarium, originally, at the rate of
one-third (1/3) of the shop's net income but subsequently pegged at a fixed amount per month. As a barber, private
respondent earned two-thirds (2/3) of the fee paid per haircut or shaving job done. Furthermore, the following facts
indubitably reveal that petitioners controlled private respondent's work performance, in that: (1) private respondent
had to inform petitioners of the things needed in the shop; (2) he could only recommend the hiring of barbers and
masseuses, with petitioners having the final decision; (3) he had to be at the shop at 9:00 a.m. and could leave only at
9:00 p.m. because he was the one who opened and closed it, being the one entrusted with the key.
7
These duties were
complied with by the private respondent upon instructions of petitioners. Moreover, such task was far from being
negligible as claimed by petitioners. On the contrary, it was crucial to the business operation of petitioners as shown in
the preceding discussion. Hence, there was enough basis to declare private respondent an employee of petitioners.
Accordingly, there is no cogent reason to disturb the findings of the labor arbiter and NLRC on the existence of
employer-employee relationship between herein private parties.
With regard to the second issue, jurisprudence has laid out the rules and valid ground for termination of employment.
To constitute abandonment, there must be concurrence of the intention to abandon and some overt acts from which it
may be inferred that the employee concerned has no more interest in working.
8
In other words, there must be a clear,
deliberate and unjustified refusal to resume employment and a clear intention to sever the employer-employee
relationship on the part of the employee.
9

In the case at bar, the labor arbiter was convinced that private respondent was not dismissed but left his work on his
own volition because he could no longer bear the incessant squabbles with his co-worker. Nevertheless, public
respondent did not give credence to petitioners' claim that private respondent abandoned his job. On this score, public
respondent gravely erred as hereunder discussed.
At the outset, we must stress that where the findings of the NLRC contradict those of the labor arbiter, the Court, in the
exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned findings.
10

In this case, the following circumstances clearly manifest private respondent's intention to sever his ties with
petitioners. First, private respondent even bragged to his co-workers his plan to quit his job at Cesar's Palace Barbershop
and Massage Clinic as borne out by the affidavit executed by his former co-workers.
11
Second, he surrendered the shop's
keys and took away all his things from the shop. Third, he did not report anymore to the shop without giving any valid
and justifiable reason for his absence. Fourth, he immediately sought a regular employment in another barbershop,
despite previous assurance that he could remain in petitioners' employ. Fifth, he filed a complaint for illegal dismissal
without praying for reinstatement.
Moreover, public respondent's assertion that the institution of the complaint for illegal dismissal manifests private
respondent's lack of intention to abandon his job
12
is untenable. The rule that abandonment of work is inconsistent with
the filing of a complainant for illegal dismissal is not applicable in this case. Such rule applies where the complainant
seeks reinstatement as a relief. Corollarily, it has no application where the complainant does not pray for reinstatement
and just asks for separation pay instead
13
as in the present case. It goes without saying that the prayer for separation
pay, being the alternative remedy to reinstatement,
14
contradicts private respondent's stance. That he was illegally
dismissed is belied by his own pleadings as well as contemporaneous conduct.
We are, therefore, constrained to agree with the findings of the Labor Arbiter that private respondent left his job
voluntarily for reasons not attributable to petitioners. It was error and grave abuse of discretion for the NLRC to hold
petitioners liable for illegal dismissal of private respondent.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of public respondent NLRC are reversed and
set aside. The decision of the Labor Arbiter dated June 15, 1993, is hereby reinstated. No costs.
SO ORDERED.1wphi1.nt
Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.


Footnotes
1
Penned by Commissioner Oscar M. Abella, and concurred by Presiding Commissioner Musib M. Buat and
Commissioner Leon G. Gonzaga Jr.
2
Rollo, pp. 34-37.
3
Id. at 60-61.
4
Id. at 84.
5
AFP Mutual Benefit Association Inc., NLRC, 267 SCRA 47, 56 (1997); North Davao Mining Corp. v. NLRC, 254
SCRA 721, 731 (1996); Inter-Orient Maritime Enterprises Inc. v. NLRC, 235 SCRA 268, 277 (1994); Loadstar
Shipping Co. Inc. v. Gallo, 229 SCRA 654, 660 (1994); Great Pacific Life Assurance Corp. v. NLRC, 187 SCRA 694,
699 (1990).
6
Equitable Banking Corporation v. NLRC, 273 SCRA 352, 371 (1997); MAM Realty Development Corporation v.
NLRC, 244 SCRA 797, 800-801 (1995); Zanotte Shoes v. NLRC, 241 SCRA 261, 265 (1995).
7
Id. at 56-38.
8
A Prime Security Services Inc. v. NLRC, 220 SCRA 142, 145 (1993); Dagupan Bus Co. Inc., v. NLRC, 191 SCRA 328,
331 (1990).
9
Tan v. NLRC, 271 SCRA 216, 221 (1997); Caete v. NLRC, 250 SCRA 259, 267 (1995); Reno Foods Inc. v. NLRC,
249 SCRA 379, 386 (1995); Labor v. NLRC, 248 SCRA 183, 198 (1995); International School of Speech v. NLRC. 242
SCRA 382, 389 (1995); Santos v. NLRC, 166 SCRA 759, 764 (1988); Velasco v. Inciong, 164 SCRA 67, 74 (1988).
10
Industrial Timber Corporation v. NLRC, 273 SCRA 200, 209 (1997); Magcalas v. NLRC, 269 SCRA 453, 463 (1997).
11
Rollo, p. 61.
12
Id. at 83.
13
A' Prime Security Services Inc. v. NLRC, supra, p. 145.
14
Bombase v. NLRC, 245 SCRA 496, 500 (1995).


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

PARAS, J.:
This petition questions the decision of the Director of the Bureau of Labor Relations in BLR Case No. A-8-165-85, which
affirmed the appealed order of the Med-Arbiter, Labor Relations Division, NCR in NCR-LRD-M-1-044-85, a certification
election case. More specifically, petitioner seeks the resolution of the question as to whether or not an employer-
employee relationship exists between herein petitioner and the seventeen (17) shoeshiners-members of the respondent
union, who, if the relationship does exist, should be entitled to the rights, privileges and benefits of an employee as
provided in the Labor Code.
Sometime in January, 1985, private respondent Kaisahan ng Mangagawang Pilipino KAMPIL for short) a legitimate labor
union duly registered with the Ministry of Labor and Employment (MOLE, for short), filed a Petition for Certification
Election, docketed as NCR-LRD-M-1-044-85 in the National Labor Relations Division of the National Capital Region.
Petitioner opposed it alleging that
1. There is no employer-employee relationship between Besa's and the petitioners-signatories to the petition;
2. The subject of the present petition had previously been decided by the defunct Court of Industrial Relations,
and is therefore barred under the principle of res judicata;
3. The petition fails to comply with the mandatory formal requirements under Sec. 2, Book V, of the Omnibus
Rules Implementing the Labor Code; and
4. This Hon. Commission has no jurisdiction over the subject matter and parties to the petition.
Acting on the Petition, the Opposition thereto, and the Reply to the Opposition, the Med-Arbiter on June 27, 1985,
issued an order declaring that there was an employer-employee relationship between the parties and directed that an
election be conducted.
Petitioner appealed the order to the Director of BLR citing among others the following reasons
1. That the subject of the present petition has previously been decided by the defunct Court of Industrial
Relations, and is therefore barred under the principle of res judicata (CIR Case Nos. 2783, 2751 and 2949 ULP
December 21, 1965);
2. That on May 28, 1985, Director Severo Pucan of the Ministry of Labor and Employment, in dismissing the case
for underpayment of commissions and non-payment of ECOLA, filed by the shoeshiners against Besas
Custombuilt Shoes, for lack of jurisdiction petition, declared that there was no employer-employee relationship
between the shoeshiners and petitioner Besas (Order in NCR-LSED1-020-85);
Director Pucan's findings were based on a letter-opinion of the Director of the Bureau of Working Conditions of
the MOLE (Annex "B-2", Petition for Certiorari). The legal ground therein cited was res judicata.
xxx xxx xxx
Appeal was dismissed by the Director of BLR as contained in his decision dated Sept. 27, 1985 upholding the finding of
the Med-Arbiter that supervisors were appointed to oversee the bootblacks' performance. It declared that such is a
finding of fact that is entitled to respect and that res judicata does not he as the parties and the causes of action in the
certification election case are different from the parties and causes of action in CIR Cases Nos. 2783-ULP 2751-ULP and
2949 ULP
Thus the Petition of the Union (KAMPIL) before the Med-Arbiter for the holding of the certification election was granted.
While the pre-election conference was in progress, petitioner herein BESAS filed with Us with petition for certiorari with
Prohibition and simultaneously filed with the Med-Arbiter a motion to suspend the pre-election conference. The petition
filed before Us was dismissed for lack of merit but was reconsidered upon Motion of petitioner. In its Motion for
Reconsideration, petitioner raised the following grounds:
I
THE INSTANT PETITION PRESENTS QUESTIONS OF LAW AND SUBSTANCE TO MERIT THE CONSIDERATION OF THIS
HONORABLE COURT.
II
THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE
AND THE SAME IS PURELY BASED ON SPECULATIONS, SURMISES AND CONJECTURES.
III
THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR IS CONTRARY TO LAW AND APPLICABLE DECI SIONS
OF THE SUPREME COURT ON THE MATTER.
IV
THE PETITION FOR CERTIFICATION ELECTION FILED BY RESPONDENT UNION WITH THE MINISTRY OF LABOR AND
EMPLOYMENT FAILED TO COMPLY WITH THE MANDATORY REQUIREMENTS UNDER ARTICLE 258 OF THE LABOR
CODE, AS AMENDED, AND ITS IMPLEMENTING RULES.
V
THE RESPONDENT DIRECTOR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN DECIDING THAT THERE EXISTS AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE
PETITIONER AND THE SHOESHINER-MEMBERS OF THE RESPONDENT UNION,
VI
THE RESPONDENT DIRECTOR ACTED WITHOUT JURISDICTION IN TAKING COGNIZANCE OF THE BASIC PETITION
CONSIDERING THAT THE SUBJECT MATTER AND THE PARTIES THEREOF HAVE BEEN DECIDED BY THE DEFUNCT
COURT OF INDUSTRIAL RELATIONS AND IS THEREFORE BABRED BY THE PRINCIPLE OF RES ADJUDICATA.
The main thrust of the instant petition is the question of employer-employee relationship between petitioner BESAS and
17 of the members of the herein respondent Union who are designated as shoeshiners. During the certification election
held on Nov. 26, 1985 at BESAS of the 53 eligible voters, 49 cast their votes. 33 voted for the union while 16 voted for no
union. Among the 33 voters who opted for a union 17 persons are shoeshiners while 16 persons are non-shoeshiners.
The question of employer-employee relationship became a primodial consideration in resolving whether or not the
subject shoeshiners have the juridical personality and standing to present a petition for certification election as well as
to vote i therein. It is the position of petitioner that if the shoeshiners are not considered as employees of Besa's the
basic petition for certification election must necessarily be dismissed for failure to comply with the mandatory
requirements of the Labor Code, as amended, that at least thirty (30%) percent of the employees must support the
petition for certification election and that in order to be certified as the sole and exclusive bargaining agent, the union
must be obtained a majority of the valid votes cast by eligible voters. In the instant case, if the 17 shoeshiners are
declared ineligible and their votes are consequently nullified the result of the certification election would be 16 "Yes"
votes (33 minus 17) and 16 "No" votes, which is a tie. Since the respondent union did not obtain a clear majority for the
"Yes" votes as required under Rule IV Sec. 8(f) of the Omnibus Rules of the Labor Code, it necessarily follows that the
respondent union cannot be certified as the sole and exclusive bargaining agent of the workers of Besa's.
The present petition merits Our consideration. The records of the case reveal that an employer-employee relationship
does not exist between the 17 shoeshiners and petitioner.
Be it noted that the defunct CIR in dismissing the cases for unfair labor practice filed by the shoeshiners against herein
petitioner BESA declared in its Decision dated December 21, 1965 that:
The shoe shiner is distinct from a piece worker because while the latter is paid for work accomplished, he does
not, however, contribute anything to the capital of the employer other than his service. It is the employer of the
piece worker who pays his wages, while the shoe shiner in this instance is paid directly by his customer. The
piece worker is paid for work accomplished without regard or concern to the profit as derived by his employer,
but in the case of the shoe shiners, the proceeds derived from the trade are always divided share and share alike
with respondent BESA. The shoe shiner can take his share of the proceeds everyday if he wanted to or weekly as
is the practice of qqqBesas The employer of the piece worker supervises and controls his work, but in the case of
the shoe shiner, respondent BESA does not exercise any degree of control or supervision over their person and
their work. All these are not obtaining in the case of a piece worker as he is in fact an employee in contemplation
of law, distinct from the shoe shiner in this instance who, in relation to respondent MAMERTO B. BESA, is a
partner in the trade. Consequently, employer-employee relationship between members of the Petitioning union
and respondent MAMERTO B. BESA being absent the latter could not be held guilty of the unfair tabor practice
acts imputed against him. (p. 6, Annex "B1 " of said Decision).<re||an1w>
Then too on Dec. 27, 1983, then Director Augusto Sanchez of the Bureau of Working Conditions, MOLE, in response to a
letter of petitioner relative to the implementation of wage Order No. 2 which provided for an increase both in minimum
wage and cost of living allowance, opined as follows:
Entitlement of the minimum requirements of the law particularly on wages and allowances presupposes the
existence of employer-employee relationship which is determined by the concurrence of the following
conditions:
1. right to hire
2. payment of wages
3. right to fire; and
4. control and supervision
The most important condition to be considered is the exercise of control and supervision over the employees,
per our conversation, the persons concerned under your query are the shoe shiners and based on the decision
rendered by Associate Judge Emiliano Tabigne of the defunct Court of Industrial Relations, these shoe shiners
are not employees of the company, but are partners instead. This is due to the fact that the owner/manager
does not exercise control and supervision over the shoe shiners. That the shiners have their own customers
from whom they charge the fee and divide the proceeds equally with the owner, which make the owner
categorized them as on purely commission basis. The attendant circumstances clearly show that there is no
employer-employee relationship existing, and such the owner/manager is not by law, under obligation to extend
to those on purely commission basis the benefit of Wage Order No. 2. However, the law does not preclude the
employer in giving such benefit to all its employees including those which may not be covered by the mandate
of the law.
(Letter dated December 27, 1985 addressed to petitioner Annex B-2, Petition)
The Office of the Solicitor General as counsel for public respondent agrees that in the present case, no employer-
employee relationship exists.
The Supreme Court in the Rosario Brothers case ruled that;
A basic factor underlying the exercise of rights under the Labor Code is the status of employment. It is important
in the determination of who shall be included in a proposed bargaining unit because it is sine qua non. The
fundamental and essential condition that a bargaining unit be composed of employees. Failure to establish this
juridical relationship between the union members and the employer affects the legality of the union itself. It
means the ineligibility of the union members to present a petition for certification election as well as to vote
therein.
Existence of employer-employee relationship is determined by the following elements, namely, a] selection and
engagement of the employee; b] payment of wages; c] powers of dismissal; and d] power to control the
employee's conduct although the latter is the most important element (Rosario Brothers Inc, vs. Ople, 131 SCRA
72, 1984)
WHEREFORE, judgment is hereby rendered giving due course to the Petition and declaring VOID the decision of the
Director of the Bureau of Labor Relations dated September 27, 1985. The Petition in BLR Case No. A-8-165-85 (NCR-LRD-
M1-044-85) is therefore hereby DISMISSED.
SO ORDERED.
Feria (Chairman), Fernan, Alampay, Gutierrez, Jr., JJ., concur.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 124551 August 28, 1998
USHIO MARKETING, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SEVERINO ANTONIO, respondents.

DAVIDE, JR., J.:
Petitioner urges us to annul the decision of 31 May 1995 of the National Labor Relations Commission (NLRC) in NLRC
NCR CA No. 008495-95
1
which reversed the Labor Arbiter's 13 January 1995 decision in NLRC NCR Case No. 08-06147-94
and the NLRC's Order
2
of 29 February 1996 which denied petitioner's motion for reconsideration.
The factual and procedural antecedents are summarized by the public respondent NLRC in its Comment as follows:
Private respondent Severino Antonio was an electrician who worked within the premises of petitioner
Ushio's car accessory shop in Banawe, Quezon City. On August 22, 1994, private respondent filed a
complaint for illegal dismissal, non-payment of overtime pay, holiday pay, and other benefits against
petitioner Ushio Marketing which was docketed as NLRC NCR Case No. 08-06147-94 and assigned to
Labor Arbiter Facundo L. Leda.
On October 13, 1994, Labor Arbiter Leda directed the parties to file their respective papers within a non-
extendible period of twenty-five (25) days. On November 4, 1994, petitioner filed a motion to dismiss,
while private respondent failed to file his position paper.
In Petitioner's Motion to Dismiss, she alleged that it was a single proprietorship engaged in the business
of selling automobile spare parts and accessories. Petitioner claimed that private respondent was not
among her employees but a free lance operator who wait[ed] on the shop's customers should the latter
require his services. Petitioner further alleges in her Motion to Dismiss the following:
5.0 In pursuit of its trading business, the company employs a handful of regular
employees such as sales persons, clerks, account officers and the like. These employees
are on the Company payroll and provided with all the privileges and benefits accorded
by law to regular employees. These employees were selected and engaged by the
management of the company and are paid their respective salaries regularly. They also
have fixed working days and hours and are subject to disciplinary measures (such as
reprimand, suspension or dismissal) should they violate company policies on tardiness,
absences and general employment conduct. Simply put, the Company has full control
over the manner by which the said employees perform their jobs.
6.0 In stark contrast to the Company's regular employees, there are independent, free
lance operators who are permitted by the Company to position themselves proximate
to the Company premises. These independent operators are allowed by the Company to
wait on Company customer who would be requiring their services. In exchange for the
privileges of favorable recommendation by the Company and immediate access to
customers in need of their services, these independent operators allow the Company to
collect their service fee from the customer and this fee is given back to the independent
operator at the end of the week. In effect, they do not earn fixed wages from the
Company as their variable fees are earned by them from the customers of the Company.
The Company has no control over and does not restrict the methodology or the means
and manner by which these operators perform their work. These operators are not
supervised by any employee of the Company since the results of their work is controlled
by the customers who hire them. Likewise, the Company has no control as an employer
over these operators. They are not subject to regular hours and days of work and may
come and go as they wish. They are not subject to any disciplinary measures from the
Company, save merely for the inherent rules of general behavior and good conduct.
7.0 Complainant was one such independent, free lance operator. He was allowed by the
Company to provide his services to the customers of the Company who were in need of
such services. He received his fees indirectly from the Company out of the fees paid by
the customers during a given week. In doing his job, he was under the direct supervision
and control of the customer. He was under no compulsion whatsoever to report to the
Company on a regular basis. He was not subject to any disciplinary measures for his
work conduct. Furthermore, he was free to position himself near other car accessory
shops to offer his services to customers of said shops, as he is [sic] in fact had done on
various occasions prior to the filing of this complaint.
Attached to the motion of the petitioner is an affidavit executed by Ms. Caroline Tan To, Assistant
Manager of Share Motor Sales, also engaged in the business of selling car spare parts and accessories
along Banawe Street, attesting to the following : that in the pursuit of the said business, it allows
independent and free lance operators, such as electricians, to wait on customers who would want them
to perform their services; and that she knows one independent operator by the name of Severino
Antonio, as the latter had performed jobs [for] its customers.
On January 13, 1995, Labor Arbiter Facundo L. Leda premising on the allegations contained in the
Motion to Dismiss submitted by the petitioner Company, issued an order dismissing the complaint of
private respondent Severino Antonio against petitioner Ushio Marketing Corp.
On February 28, 1995, private respondent assisted by the Public Attorney's Office, appealed the order of
the Honorable Labor Arbiter to the Commission. In his memorandum, private respondent alleged that
Ushio Marketing hired his services on 15 November 1981 until July 3, 1994 as an electrician with a daily
salary of one hundred thirty two pesos (P132.00) per day. He further alleged that:
During the employ of herein complainant with the respondents, he performed his job
religiously and faithfully, in fact he was the most trusted employee in the company. For
instance, Mrs. Tan, the employer, would ask him to go to the bank and withdraw money
and deliver the purchased spare parts/accessories to the customer. If there was no
driver, or they needed [a] handyman in the office and even in their household, Mrs. Tan
would call for the complainant. He could be called, the employer's "personal assistant."
However, despite his devotion and loyalty to his work as well as to his employer, his
services were terminated by the respondents without legal grounds. When he reported
for work on 3 July 1994, his employer would not let him inside the office because he was
already dismissed from his job. He came [sic] back to the office for a number of times
but his efforts proved futile. Hence, he instituted a complaint with this Honorable Office.
Attached to the private respondent's Memorandum of Appeal were affidavits of his co-electricians who
worked with Ushio Marketing namely: Roberto Lopez and Narcing Pascua, corroborating the allegation
that Mr. Severino Antonio worked with the petitioner Company as an electrician for the past four years
when they have been working with the same Company; they were receiving One Hundred Thirty Two
(P132.00) per day from Mrs. Tan, that they cannot be absent from work without the permission of Mrs.
Tan; and that it was Mrs. Tan who gave them work when a client comes in. To quote:
4. Na ang suweldo ko at ni Severino na P132.00 isang araw ay kay Gng.
Tan nanggagaling at hindi direktang ibinibigay ng kliyente;
5. Na hindi kami maaring lumiban sa aming trabaho nang hindi
nagpapa[a]lam kay Gng. Tan;
6. Na si Gng. Tan ang nagbibigay sa amin ng trabaho kung mayroong
dumarating na kliyente.
On May 31, 1995, the National Labor Relations Commission issued its decision holding that complainant
is respondent's employee and that he was illegally dismissed. The dispositive portion of the decision
reads as follows:
WHEREFORE, the appealed Order dated January 13, 1995 is hereby set aside. The
respondent is directed to reinstate complainant with full backwages computed from
August 3, 1994 until he is actually reinstated. Complainant's monetary claims presented
as third issue on appeal is however remanded for further arbitration there being no
substantial basis to grant or deny the same. (p. 6 NLRC's Decision)
3

The NLRC reversed the Labor Arbiter. It adopted private respondent's allegations in his complaint that he had "worked
for respondent since '1988' as [an] 'electrician' [and] paid 'weekly every Sunday' at the rate of '132' pesos per clay;" and
concluded that petitioner's arrangement as regards the mode of payment of private respondent's wages was "nothing
but an evasive attempt to hide the real employment status of [private respondent]," considering that it could not
understand why private respondent could not directly collect his earnings from a customer, immediately after private
respondent accomplished a job for which he was hired; and why private respondent's proceeds from jobs rendered on a
daily basis could only be paid to him on a weekly basis.
Petitioner's motion for reconsideration having been denied by the NLRC in its resolution of 29 February 1996 for "lack of
palpable and patent errors," petitioner filed the instant petition, ascribing to the NLRC the commission of grave abuse of
discretion in: (1) declaring private respondent as a regular employee; and (2) ignoring the accepted industry practices of
car spare parts shop owners which are not contrary to law, public order and public policy.
Petitioner maintains that as it was private respondent who alleged the existence of an employer-employee relationship,
the burden to prove the same by credible and relevant evidence thus lay with private respondent, especially since
petitioner staunchly and consistently denied the same. Petitioner insists that the nature of its operations, as
collaborated by the sworn statement of the assistant manager of a rival establishment, sufficiently established the real
status of private respondent as a free lance operator performing assorted services like electrical jobs, installation of
accessories and spare parts, and some minor repairs for petitioner's customers. Petitioner then concludes that the basic
issue of whether private respondent was an employee should be resolved in the negative, considering that: (1)
petitioner had no part in the selection and engagement of private respondent, its role merely limited to recommending
private respondent's services to the former's customers; (2) private respondent was not paid a fixed regular wage, but
only a service fee collected by petitioner from its customers and paid to private respondent at the end of the week; (3)
private respondent was not included in petitioner's payroll and neither was the former reported as petitioner's
employee to the Social Security System or the Bureau of Internal Revenue, citing Continental Marble Corporation v.
NLRC (161 SCRA 151, 157 [1988]); (4) petitioner had no occasion to exercise its power to dismiss since petitioner never
hired private respondent; and (5) petitioner did not exercise control and supervision over the means and methods by
which private respondent performed his job, as private respondent practiced independent judgment as to the time and
place of work and was not required to report on a regular basis and even allowed to service the customers of other auto
supply shops. Additionally, petitioner had no liability, on account of private respondent's poor workmanship, to
customers who chose to avail of private respondent's services and regulated his performance.
Petitioner further argues that it was a recognized and accepted trade practice peculiar to the auto spare parts shop
industry operating along the stretch of Banawe Street, Quezon City, that shop owners would collect the service fees
from its customers and disburse the same to the independent contractor at the end of a week. In fine, the shop owner
and the independent contractor were partners in trade, "both benefiting from the proceeds of their joint efforts." This
mutual cooperation between petitioner and private respondent could then be likened to that of a shoe shiner and a
shoe shop owner in Besa v. Trajano,
4
or that of a caddy and the golf club in Manila Golf Club, Inc. v. Intermediate
Appellate Court.
5

In his comment, private respondent reiterates his arguments that he was an employee of petitioner, having worked for
petitioner as an electrician from 15 November 1991 until 3 July 1994 with the following salary, to wit: 1981 -P20.00/day;
1983 - P21.00/day; 1989 - P75.00/day; 1990 - P100.00/day; 1991 -1994 - P132/day. Likewise, during private
respondent's employ, he carried out various tasks as a driver, handyman, and "personal assistant" of petitioner. Private
respondent could not be regarded an independent contractor since there was no written proof to support such a
conclusion; his services as a handyman and an electrician for 13 years, more or less, were necessary in the operation of
petitioner's business; he received a fixed salary instead of a commission; and he was dismissed and subjected to control
by petitioner. Moreover, private respondent claims that the factual settings of Bess and Manila Golf and Country
Club preclude their application to the instant case.
In its Manifestation in Lieu of Comment, the Office of the Solicitor General (OSG) supports the stand of petitioner and
recommends the reversal of the challenged decision. The OSG asserts that there was no employer-employee
relationship between the parties because the control test, being the most important element of an employer-employee
relationship, was absent. The OSG then points out that there was no showing that petitioner supplied private
respondent with equipment and tools; apart from private respondent's bare allegation that he could not leave the
premises without petitioner's permission, it was not established that private respondent was under the control and
supervision of petitioner or of its personnel; private respondent's admission that Mrs. Caroline Tan To referred jobs
directly to him supports the notion that private respondent was not an employee, otherwise, Mrs. Tan To would have
coursed the job orders for private respondent through petitioner; and the arrangement that petitioner would receive
the service fees of private respondent from customers was not adequate to establish an employer-employee
relationship.
In view of the stand of the OSG, we required the NLRC to file its Comment, if it so desired.
In its Comment filed on 1 August 1997, the NLRC argues, through its Legal and Enforcement Division, that it did not err in
finding that there existed an employee-employer relationship between petitioner and private respondent for
"[u]ndisputed are the facts that private respondent worked as an electrician within the premises of the petitioner's shop
and would serve its customers when the latter so requires [and] [h]e was the one who closed and opened the shop of
the petitioner and sometimes even asked to withdraw money and deliver purchased spare parts to petitioner's clients;
[and] [h]e could be practically described as the 'personal assistant' of the manager, Mrs. Lilybeth Tan." Moreover, the
NLRC derides petitioner's reliance on Besa v. Trajano, as the shoe shiners there collected their fees directly from the
customers, which could not be said of private respondent here. Finally, the NLRC takes petitioner to task for attempting
to capitalize on its failure to submit its payroll or Social Security remittances to refute private respondent's claims.
There is merit in the petition.
It is not disputed that on 13 October 1994, Labor Arbiter Leda directed the parties to file their respective position papers
within a non-extendible period of 25 days. Private respondent, however, failed to comply with this order. As to him then,
there was no evidence extant on record to substantiate his allegations. On the other hand, on 4 November 1994, private
respondent filed its motion to dismiss, duly verified by its sole proprietor, Lilybeth Tan. Said motion contained a
statement of the case, a statement of facts, a statement of the issues involved, coupled with petitioner's position
thereon and the arguments in support thereof. Moreover, attached to the motion and forming an integral part thereof
was the affidavit of petitioner's business competitor, Mrs. Carolina Tan To, who corroborated private respondent's
allegations as regards the nature of the automobile spare parts business and that private respondent was indeed an
"independent operator." For all legal intents and purposes, the motion to dismiss sufficiently served as petitioner's
position paper.
Under Section 3, Rule V of the New Rules of Procedure of the NLRC, should the parties fail to reach an amicable
settlement, either in whole or in part, during the conference mandated by Section 2 thereof, the Labor Arbiter shall,inter
alia, direct the parties to simultaneously file their respective verified position papers covering only those claims and
causes of action raised in the complaint, but excluding those which may have been amicably settled, and shall be
accompanied by all supporting documents including the affidavits of their respective witnesses to take the place of the
affiants' direct testimony. Thereafter, the parties shall not be allowed to allege facts, or present evidence to prove facts
not referred to and any cause or causes of action not raised in the complaint or position papers, affidavits and other
documents.
For failure then of private respondent to file his position paper, the Labor Arbiter acted correctly in taking into account
only petitioner's motion to dismiss and thereafter dismissing private respondent's complaint.
It follows that in the exercise of its appellate jurisdiction, the NLRC cannot go beyond the pleadings and evidence
submitted by the parties before the Labor Arbiter. However, we have sustained the action of the NLRC in allowing the
parties to submit additional evidence even during the pendency of an appeal,
6
in light of Article 221 of the Labor Code
which provides that rules of evidence prevailing in courts of law or equity do not control the proceedings before Labor
Arbiters and NLRC and that the Labor Arbiters and the NLRC should use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard for the technicalities of law or procedure.
Here, on appeal to the NLRC, private respondent alleged that his failure to submit his position paper before the Labor
Arbiter was due to private respondent's having fallen victim to petitioner's misrepresentations as to the possibility of
arriving at an amicable settlement. To this end, private respondent submitted the affidavits
7
of Roberto Lopez and
Narcing Pascua which, pursuant to Article 221 of the Labor Code discussed above, were properly admitted by the NLRC.
A perusal of these affidavits, however, plainly shows that the avowals therein had no connection whatsoever with
private respondent's claim of denial of procedural due process before the Labor Arbiter. Moreover, said affidavits,
having been admitted by the NLRC on appeal, any defect in procedural due process must be deemed cured. Finally as to
these affidavits, in the same vein as the rest of private respondent's cause, the declarations of the affiants were but
mere sweeping statements, unsubstantiated and unsupportive of private respondent's allegations.
If only to underscore the paucity, if not absence, of evidence of private respondent, certainly falling short of the
standard of substantial evidence governing proceedings before quasi-judicial bodies, we note that private respondent
himself did not execute any affidavit, despite submitting the affidavits of Lopez and Pascua on appeal to the NLRC.
Notably, neither did private respondent verify his Memorandum on Appeal filed with the NLRC, as only his counsel
signed the Memorandum. All told, private respondent's dereliction of his duty to furnish some measure of probative
value to his allegations mandates the grant of this petition.
Turning to the challenged decision and resolution of the NLRC, we note that in stark contrast to private respondent's
perfunctory advocacy, petitioner submitted a verified opposition
8
to private respondent's Memorandum, which
reiterated petitioner's arguments in its Motion to Dismiss. To this, private respondent filed a reply
9
to the opposition, to
which private respondent filed a rejoinder.
10

The foregoing pleadings notwithstanding, the NLRC, in passing upon the merits of the case, failed to refer to any of the
arguments raised therein, opting, instead, to confine its discussion solely to the assertions in the complaint and the
motion to dismiss. Initially, as adverted to earlier, it would seem that the NLRC, in ruling for private respondent, merely
took at face value and indiscriminately adopted private respondent's allegations that he had "worked for respondent
since '1981' as [an] 'electrician' [and] paid 'weekly every Sunday' at the rate of '132' pesos per day," despite private
respondent not having substantiated his allegations in the least.
What is most telling, however, is the NLRC's observation that "there [were] so many unexplained kinks in [petitioner's]
theory of denial on [the existence of an] employer-employee relationship that we have no recourse but to rule that
[private respondent] is [petitioner's employee]." Clearly, this observation cannot but be characterized as having been
attended by grave abuse of discretion. Under the fact pattern of the instant petition, more so, the dearth of evidence in
private respondent's favor, the NLRC should not have so readily afforded private respondent a presumption of the
existence of an employer-employee relationship. The bare allegations in the complaint, the absence of an affidavit from
private respondent, and the barren affidavits of Lopez and Pascua, could not, by any stretch, have furnished the
particulars to justify the NLRC's conclusion. That private respondent's espousal failed to meet the standard of substantial
evidence becomes all the more too painfully evident when considered in light of petitioner's arguments in its verified
motion to dismiss and the supporting affidavit of petitioner's business competitor, akin to an admission against interest.
We hasten to add, however, that even if the NLRC had taken into account the various pleadings filed before it, as the
same malady characterized those filed by private respondent, the conclusion would still be inevitable that the existence
of an employer-employee relationship between the parties here was not proven by substantial evidence.
The factors to be considered in determining the existence of an employer-employee relationship are: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control
the employee's conduct. The so-called "control test" is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services are performed reserves the right to control not
only the end achieved, but also the manner and means to be used in reaching that end.
11

We agree with the Office of the Solicitor General that here, the power to control the employee's conduct, i.e., the
conduct of private respondent, is absent, thus:
First, private respondent contends that he worked as an electrician and personal assistant at petitioner's
store. As [an] electrician, private respondent may be presumed to have used equipment or tools in
rendering electrical services. If it is true that private respondent was an employee of petitioner, he
would have used equipment or tools supplied and owned by his employer. However, private respondent
failed to allege and present proof that petitioner supplied him equipment and tools.
Second, the conduct of private respondent was not subject to the control and supervision of petitioner
or any of its personnel. There was no allegation of this, nor was evidence presented to prove it other
than the bare allegation of private respondent that he could not leave the work premises without
permission from petitioner. Private respondent himself decided how he would render electrical services
to customers. If it is true that private respondent was hired as [an] electrician, petitioner would have
exercised supervision and control over the, means and manner he performed his electrical services for,
otherwise, if private respondent's work was unsatisfactory, it would reflect on the business of petitioner.
Third, private respondent was free to offer his services to other stores along Banaue, Quezon City, as
evidenced by the affidavit of Caroline Tan To, Assistant Manager of Share Motor Sales (Annex B, Reply to
Private Respondent's Comment dated August 5, 1996) and private respondent's own admission. But
although private respondent admits that he rendered electrical services to the customers of other stores,
he claims that petitioner allowed him to do so. If private respondent was an employee of petitioner, it
was unthinkable for petitioner to allow private respondent to render electrical services to three other
stores selling automobile spare parts and accessories who were its competitors.
Fourth, private respondent admits that "[i]t was Mrs. Tan who refers electrical and other jobs to private
respondent" (p. 6, Private Respondent's Comment dated August 5, 1996). If private respondent was an
employee of petitioner, Tan could not have referred electrical work directly to him. She would have to
course job orders to petitioner. The fact that she dealt directly with private respondent means that she
did not consider private respondent an employee of petitioner.
It is clear that petitioner did not have the power to control private respondent "[w]ith respect to the
means and methods by which his work was to be accomplished" (Continental Marble Corporation. et al.
vs. National Labor Relations Commission, 161 SCRA 151, 158 [1988]).
Lastly, private respondent allowed petitioner to collect service fees from his customers. He received said
fees on a weekly basis. This arrangement, albeit peculiar, does not prove the existence of an employer-
employee relationship. In Besa vs. Trajano, 146 SCRA 501, 506 [1986], the shoe shiner rendering services
in the premises of Besa, received from Besa the payments for his services on a weekly basis. Yet the
shoe shiner was not considered an employee of Besa. This is the same arrangement between petitioner
and private respondent.
12

WHEREFORE, judgment is hereby rendered GRANTING the petition, REVERSING the challenged decision and resolution
of the National Labor Relations Commission in NLRC-NCR CA No. 008495-95 and REINSTATING the Order of 13 January
1995 of the Labor Arbiter in NLRC-NCR Case No. 08-06147-94.
No pronouncement as to costs.
SO ORDERED.
Bellosillo, Vitug, Panganiban and Quisumbing, JJ., concur.
Footnotes
1 Annex "A" of Petition; Rollo, 20-26, Per Commissioner Vicente S.E. Veloso, with the concurrence of
Presiding Commissioner Bartolome S. Carale and Commissioner Alberto R. Quimpo.
2 Annex "B," Id., 28-31.
3 Rollo, 110-114.
4 146 SCRA 501 [1986].
5 237 SCRA 207 [1994].
6 Haverton Shipping Ltd. v. NLRC, 135 SCRA 685, 691 [1985]; Bristol Laboratories Employees' Association
v. NLRC, 187 SCRA 118, 121 [1990]; Lopez v. NLRC, 245 SCRA 644, 648-649 [1995]; Nagkakaisang
Manggagawa sa SONY v. NLRC, 272 SCRA 209, 218-219 [1997].
7 Rollo, 63-64.
8 Original Record, 76-83.
9 Id., 99-102.
10 Id., 90-95.
11 Encyclopedia Britannica (Phils.), Inc. v. NLRC, 264 SCRA 1, 6-7 [1996]; Progress Homes v. NLRC, 269
SCRA 274, 279 [1997].
12 Rollo, 96-99.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 87098 November 4, 1996
ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L. ROGELIO and BENJAMIN
LIMJOCO, respondents.

TORRES, JR., J.:
Encyclopaedia Britannica (Philippines), Inc. filed this petition for certiorari to annul and set aside the resolution of the
National Labor Relations Commission, Third Division, in NLRC Case No. RB IV-5158-76, dated December 28, 1988, the
dispositive portion of which reads:
WHEREFORE, in view of all the foregoing, the decision dated December 7, 1982 of then Labor Arbiter
Teodorico L. Dogelio is hereby AFFIRMED, and the instant appeal is hereby DISMISSED for lack of merit.
SO ORDERED.
1

Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannica and was in
charge of selling petitioner's products through some sales representatives. As compensation, private respondent
received commissions from the products sold by his agents. He was also allowed to use petitioner's name, goodwill and
logo. It was, however, agreed upon that office expenses would be deducted from private respondent's commissions.
Petitioner would also be informed about appointments, promotions, and transfers of employees in private respondent's
district.
On June 14, 1974, private respondent Limjoco resigned from office to pursue his private business. Then on October 30,
1975, he filed a complaint against petitioner Encyclopaedia Britannica with the Department of Labor and Employment,
claiming for non-payment of separation pay and other benefits, and also illegal deduction from his sales commissions.
Petitioner Encyclopaedia Britannica alleged that complainant Benjamin Limjoco (Limjoco, for brevity) was not its
employee but an independent dealer authorized to promote and sell its products and in return, received commissions
therefrom. Limjoco did not have any salary and his income from the petitioner company was dependent on the volume
of sales accomplished. He also had his own separate office, financed the business expenses, and maintained his own
workforce. The salaries of his secretary, utility man, and sales representatives were chargeable to his commissions. Thus,
petitioner argued that it had no control and supervision over the complainant as to the manner and means he
conducted his business operations. The latter did not even report to the office of the petitioner and did not observe
fixed office hours. Consequently, there was no employer-employee relationship.
Limjoco maintained otherwise. He alleged that he was hired by the petitioner in July 1970, was assigned in the sales
department, and was earning an average of P4,000.00 monthly as his sales commission. He was under the supervision of
the petitioner's officials who issued to him and his other personnel, memoranda, guidelines on company policies,
instructions and other orders. He was, however, dismissed by the petitioner when the Laurel-Langley Agreement expired.
As a result thereof, Limjoco asserts that in accordance with the established company practice and the provisions of the
collective bargaining agreement, he was entitled to termination pay equivalent to one month salary, the unpaid benefits
(Christmas bonus, midyear bonus, clothing allowance, vacation leave, and sick leave), and the amounts illegally
deducted from his commissions which were then used for the payments of office supplies, office space, and overhead
expenses.
On December 7, 1982, Labor Arbiter Teodorico Dogelio, in a decision ruled that Limjoco was an employee of the
petitioner company. Petitioner had control over Limjoco since the latter was required to make periodic reports of his
sales activities to the company. All transactions were subject to the final approval of the petitioner, an evidence that
petitioner company had active control on the sales activities. There was therefore, an employer-employee relationship
and necessarily, Limjoco was entitled to his claims. The decision also ordered petitioner company to pay the following:
1. To pay complainant his separation pay in the total amount of P16,000.00;
2. To pay complainant his unpaid Christmas bonus for three years or the amount of 12,000.00;
3. To pay complainant his unpaid mid-year bonus equivalent to one-half month pay or the total amount
of P6,000.00;
4. To pay complainant his accrued vacation leave equivalent to 15 days per year of service, or the total
amount of P6,000.00;
5. To pay complainant his unpaid clothing allowance in the total amount of P600.00; and
6. To pay complainant his accrued sick leave equivalent to 15 days per year of service or the total
amount of P6,000.00.
2

On appeal, the Third Division of the National Labor Relations Commission affirmed the assailed decision. The
Commission opined that there was no evidence supporting the allegation that Limjoco was an independent contractor
or dealer. The petitioner still exercised control over Limjoco through its memoranda and guidelines and even
prohibitions on the sale of products other than those authorized by it. In short, the petitioner company dictated how
and where to sell its products. Aside from that fact, Limjoco passed the costs to the petitioner chargeable against his
future commissions. Such practice proved that he was not an independent dealer or contractor for it is required by law
that an independent contractor should have substantial capital or investment.
Dissatisfied with the outcome of the case, petitioner Encyclopaedia Britannica now comes to us in this petition
forcertiorari and injunction with prayer for preliminary injunction. On April 3, 1989, this Court issued a temporary
restraining order enjoining the enforcement of the decision dated December 7, 1982.
The following are the arguments raised by the petitioner:
I
The respondent NLRC gravely abused its discretion in holding that "appellant's contention that appellee
was an independent contractor is not supported by evidence on record".
II
Respondent NLRC committed grave abuse of discretion in not passing upon the validity of the
pronouncement of the respondent Labor Arbiter granting private respondent's claim for payment of
Christmas bonus, Mid-year bonus, clothing allowance and the money equivalent of accrued and unused
vacation and sick leave.
The NLRC ruled that there existed an employer-employee relationship and petitioner failed to disprove this finding. We
do not agree.
In determining the existence of an employer-employee relationship the following elements must be present: 1) selection
and engagement of the employee; 2) payment of wages; 3) power of dismissal; and 4) the power to control the
employee's conduct. Of the above, control of employee's conduct is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship.
3
Under the control test, an
employer-employee relationship exists where the person for whom the services are performed reserves the right to
control not only the end to be achieved, but also the manner and means to used in reaching that end.
4

The fact that petitioner issued memoranda to private respondents and to other division sales managers did not prove
that petitioner had actual control over them. The different memoranda were merely guidelines on company policies
which the sales managers follow and impose on their respective agents. It should be noted that in petitioner's business
of selling encyclopedias and books, the marketing of these products was done through dealership agreements. The sales
operations were primarily conducted by independent authorized agents who did not receive regular compensations but
only commissions based on the sales of the products. These independent agents hired their own sales representatives,
financed their own office expenses, and maintained their own staff. Thus, there was a need for the petitioner to issue
memoranda to private respondent so that the latter would be apprised of the company policies and procedures.
Nevertheless, private respondent Limjoco and the other agents were free to conduct and promote their sales operations.
The periodic reports to the petitioner by the agents were but necessary to update the company of the latter's
performance and business income.
Private respondent was not an employee of the petitioner company. While it was true that the petitioner had fixed the
prices of the products for reason of uniformity and private respondent could not alter them, the latter, nevertheless,
had free rein in the means and methods for conducting the marketing operations. He selected his own personnel and
the only reason why he had to notify the petitioner about such appointments was for purpose of deducting the
employees' salaries from his commissions. This he admitted in his testimonies, thus:
Q. Yes, in other words you were on what is known as P&L basis or profit and loss basis?
A. That is right.
Q. If for an instance, just example your sales representative in any period did not
produce any sales, you would not get any money from Britannica, would you?
A. No, sir.
Q. In fact, Britannica by doing the accounting for you as division manager was merely
making it easy for you to concentrate all your effort in selling and you don't worry about
accounting, isn't that so?
A. Yes, sir.
Q. In fact whenever you hire a secretary or trainer you merely hire that person and
notify Britannica so that Encyclopaedia Britannica will give the salaries and deduct it
from your earnings, isn't that so?
A. In certain cases I just hired people previously employed by Encyclopaedia Britannica.
xxx xxx xxx
Q. In this Exhibit "2" you were informing Encyclopaedia Britannica that you have hired a
certain person and you were telling Britannica how her salary was going to be taken
cared of, is it not?
A. Yes, sir.
Q. You said here, "please be informed that we have appointed Miss Luz Villan as division
trainer effective May 1, 1971 at P550.00 per month her salary will be chargeable to the
Katipunan and Bayanihan Districts", signed by yourself. What is the Katipunan and
Bayanihan District?
A. Those were districts under my division.
Q. In effect you were telling Britannica that you have hired this person and "you should
charge her salary to me," is that right?
A. Yes, sir.
5

Private respondent was merely an agent or an independent dealer of the petitioner. He was free to conduct his work
and he was free to engage in other means of livelihood. At the time he was connected with the petitioner company,
private respondent was also a director and later the president of the Farmers' Rural Bank. Had he been an employee of
the company, he could not be employed elsewhere and he would be required to devote full time for petitioner. If
private respondent was indeed an employee, it was rather unusual for him to wait for more than a year from his
separation from work before he decided to file his claims. Significantly, when Limjoco tendered his resignation to
petitioner on June 14, 1974, he stated, thus:
Re: Resignation
I am resigning as manager of the EB Capitol Division effective 16 June 1974.
This decision was brought about by conflict with other interests which lately have increasingly required
my personal attention. I feel that in fairness to the company and to the people under my supervision I
should relinquish the position to someone who can devote full-time to the Division.
I wish to thank you for all the encouragement and assistance you have extended to me and to my group
during my long association with Britannica.
Evidently, Limjoco was aware of "conflict with other interests which . . . have increasingly required my personal
attention" (p. 118, Records). At the very least, it would indicate that petitioner has no effective control over the personal
activities of Limjoco, who as admitted by the latter had other "conflict of interest" requiring his personal attention.
In ascertaining whether the relationship is that of employer-employee or one of independent contractor, each case must
be determined by its own facts and all features of the relationship are to be considered.
6
The records of the case at bar
showed that there was no such employer-employee relationship.
As stated earlier, "the element of control is absent; where a person who works for another does so more or less at his
own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the
result of his efforts and not the amount thereof, we should not find that the relationship of employer and employee
exists.
7
In fine, there is nothing in the records to show or would "indicate that complainant was under the control of the
petitioner" in respect of the means and methods
8
in the performance of complainant's work.
Consequently, private respondent is not entitled to the benefits prayed for.
In view of the foregoing premises, the petition is hereby GRANTED, and the decision of the NLRC is hereby REVERSED
AND SET ASIDE.
SO ORDERED.
Regalado, Romero, Puno and Mendoza, JJ., concur.
Footnotes
1 Rollo, p. 27
2 Rollo, pp. 36-37.
3 Vallum Security Services vs. NLRC, G.R. Nos. 97320-27, July 30, 1993.
4 Cosmopolitan Funeral Homes, Inc. vs. Maalat, G.R. No. 86693, July 2, 1990.
5 TSN, October 14, 1981, Rollo, pp. 64-67.
6 Opulencia Ice Plant and Storage vs. NLRC, G.R. 98368, December 15, 1993.
7 Investment Planning Corporation of the Philippines vs. Social Security System, No.
L-19124, November 18, 1967, 21 SCRA 924.
8 Idem.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 118892 March 11, 1998
FILIPINAS BROADCASTING NETWORK, INC.,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SIMEON MAPA JR., respondents.

PANGANIBAN, J.:
As a rule, factual findings of the NLRC are binding on this Court. However, when the findings of the NLRC and the
labor arbiter are contradictory, this Court may review questions of fact. Where the evidence clearly shows the
absence of an employer-employee relationship, a claim for unpaid wages, thirteenth month pay, holiday and rest pay
and other employment benefits must necessarily fail.
The Case
Before us is a petition for certiorari assailing the April 29, 1994 Decision of the National Labor Relations
Commission,
1
in Case No. 05-08-00348-92, entitled "Simeon M. Mapa Jr., v. DZRC Radio Station." The dispositive
portion of the challenged Decision reads:
WHEREFORE, premises considered, the appealed decision is set aside, and a new judgement is entered,
declaring that complainant is an employee of respondent and is entitled to his claims for the payment
of his services from March 11, 1990 to January 16, 1992.
2

Petitioner also impugns the November 9, 1994 Resolution
3
of the NLRC denying the motion for reconsideration.
The October 13, 1993 decision of the labor arbiter,
4
which the NLRC reversed and set aside, disposed as follows:
This Arbitration Branch, based on the facts and circumstances established by the parties in this case is
inclined to believe that complainant Simeon M. Mapa, Jr., had not been an employee of the
respondent DZRC Radio Station before February 16, 1992.
5
He was but a volunteer reporter when
accommodated to air his report on the respondent radio station as his application for employment
with the respondent as field reporter had not been accepted yet or approved before February, 1992.
There was no employer-employee relations that existed between the complainant and the
respondent since March 11, 1990 until February 16, 1992. The complainant is not entitled to his claim
for any salaries, premium pay for holiday and rest day, holiday pay and 13th month pay against the
respondent DZRC Radio Station/Salvio Fortuno.
WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered dismissing the
complaint in this case for lack of merit.
6

The Facts
Version of Private Respondent
Petitioner and private respondent submitted different versions of the facts. The facts as viewed by private
respondent are as follows:
7

The complainant (herein private respondent) began to work for the respondent as a radio reporter
starting March 11, 1990. On May 14, 1990, upon being informed by then respondent's Station
Manager, Mr. Plaridel Brocales, that complainant's employment with respondent is being blocked by
Ms. Brenda Bayona of DZGB, complainant's previous employer, the said complainant took a leave of
absence. In the first week of June, 1990, the respondent thru Mr. Antonio Llarena, then an employee
of the respondent, asked the complainant to return to work even as he was assured that his salaries
will be paid to him already. Thus, the complainant continued to work for the respondent since then.
On September 5, 1991, again the complainant took a leave of absence because of his desperation over
the failure of respondent to make good its promise of payment of salaries. He was reinstated on
January 16, 1992 and resigned on February 27, 1992 when he decided to run for an elective office in
the town of Daraga, Albay. Unfortunately, the respondent paid salary to the complainant only for the
period from January 16, 1992 up to February 27, 1992. Respondent did not pay the complainant for all
the services rendered by the latter from March 11, 1990 up to January 16, 1992.
As may be gleaned from its memorandum,
8
petitioner's version of the facts is as follows:
1. On or before April 1990, Mapa was dismissed from his employment with PBN-DZGB Legaspi. At this
time, Mapa filed a case for illegal dismissal against PBN-DZGB Legaspi docketed as RAV V Case No. 05-
04-00120-90 entitled "Simeon Mapa, Jr. v. People's Broadcasting Network-DZGB Legaspi, Jorge
Bayona and Arturo Osia";
2. On or about May 1990, Mapa sought employment from DZRC as a radio reporter. However, DZRC
required of private respondent the submission of a clearance from his former employer. Otherwise,
his application would not be acted upon;
3. On May 14, 1990, Mapa was informed by DZRC's then station manager, Mr. Plaridel "Larry"
Brocales, that his application for employment was "being blocked by Ms. Brenda Bayona of DZGB,
Mapa's former employer." This fact is supported by Mapa's position paper before the Honorable
Labor Arbiter . . . ;
4. Taking pity on Mapa and pending the issuance of the clearance from PBN-DZGB Legaspi, Mr. Larry
Brocales granted the request of Mapa to be accommodated only as a volunteer reporter of DZRC on a
part-time basis. As a volunteer reporter, Mapa was not to be paid wages as an employee of DZRC but
he was permitted to find sponsors whose business establishments will be advertised every time he
goes on the air. Most importantly, Mapa's only work consisted of occasional newsbits or on-the-spot
reporting of incidents or newsworthy occurrences, which was very seldom.
5. Mapa's friends, who were also in the same situation as he was, declared in an affidavit dated June
10, 1993 that:
WE, ALLAN ALMARIO and ELMER ANONUEVO, of legal age, single, with postal address at Washington
Drive, Legaspi City, under oath, depose and state:
1. We personally know Simeon "Jun" Mapa, a former volunteer reporter at DZRC just like us;
2. As volunteer reporters we know that we will not receive any salary or allowance from DZRC
because our work was purely voluntary;
3. As incentive for us, the management of DZRC allowed us to get our own sponsors whose business
establishment we mention[ed] every after field report was made by us;
4. The management did not require or oblige us to render a report. We were on our own. We ma[d]e
or render[ed] a report as we [saw] fit;
5. During our stint as volunteer reporters we had several sponsors each who paid us P300.00 per
month (each).
xxx xxx xxx
6. Having no radio gadgets to begin with, DZRC loaned Mapa the necessary equipment such as
handheld radios and reporting gadgets. Mapa was to do occasional reporting only, i.e., a few minutes
each day at an irregular time period at Mapa's own convenience. Mapa advertised his sponsors and
pocketed the payment of these sponsors for his advertising services. In addition, DZRC had no control
over the manner by [sic] which he was to make his reports. Nor were the said reports subject to
editing by DZRC;
7. In an Affidavit dated June 10, 1993 executed by one of Mapa's sponsors, the same reads as follows:
I, CARLITO V. BAYLON, of legal age, married, resident of Dona Maria Subdivision, Daraga, Albay, under
oath, depose and state:
1. I am a lawyer by profession. At the same time, I am owner of "Kusina ni Manoy" a restaurant
situated in Daraga, Albay;
2. I personally know Simeon "Jun" Mapa. Sometime in May, 1990 he went to me and asked if I could
be one of his sponsors because he was accommodated by DZRC as volunteer reporter. He explained to
me that, he will not be receiving any salary from DZRC[;] hence, he was soliciting my support;
3. Taking pity on him, I agreed to be one of his sponsors. The condition was, I will have to pay him
P300.00/month. In exchange thereto, he will have to mention the name of my restaurant every time
he renders a report on the air;
4. My sponsorship lasted for about (5) months after which I discontinued it when I rarely heard Jun
Mapa in DZRC program.
xxx xxx xxx
8. On November 7, 1990, in his testimony against his former employer, Mapa declared under oath, to
wit:
ATTY. LOBRIGO:
On paragraph 14 of the same affidavit it states and I quote: 13. Having been left with an empty
stomach, I was compelled to apply for employment with another radio station. On March 11, 1990, I
applied for employment with DZRC. Unfortunately, my application would not yet be acted [upon]
favorably because of the malicious and oppressive imputations to me by my former employer.
My question is what is now the status of your employment with DZRC?
WITNESS:
I am at present on a volunteer status because my former employer at DZGB did not give me clearance
and I am required to submit that clearance to DZRC. (Emphasis supplied).
See p. 2 of Position Paper of DZRC before the Labor Arbiter and pp. 4-5 of the Transcript of
Stenographer Notes dated November 7, 1990, attached and marked as Annex "F" and Annex "F-1 ",
Petition for Certiorari;
9. It cannot be overstressed that Mapa's application for employment could not have been acted upon
because of the lack of the pre-requisite clearance.
10. Lacking in sponsors, Mapa soon failed to provide petitioner with newsbits, finding it unprofitable
to continue since he had no available sources of funding. Sometime in September 1991, Mapa quit his
part-time endeavor with DZRC, as attested to by the Office of Supervisor/Traffic Manager Ignacio Casi
in an Affidavit dated June 10, 1992, to wit:
1. I am the Office Supervisor/Traffic Manager of DZRC-AM;
2. Sometime in May, 1990 Simeon "Jun" Mapa went to my office inside our radio station. He asked me
if he could be accommodated as Radio Reporter of DZRC, as he was dismissed from DZGB. I referred
him to Larry Brocales, our Station Manager then;
3. Larry Brocales told Jun Mapa that he cannot be accommodated because he has no clearance from
DZGB. Jun Mapa, almost teary eyed, pleaded to Larry Brocales that he be accommodated as volunteer
reporter, that is, he will not receive any salary but that he intimated that he be allowed to look for
sponsors whose business establishment, for a fee, will have to be mentioned after every report is
made. Larry Brocales took pity on Jun Mapa and accommodated him;
4. Jun Mapa, just like the other volunteer reporters, was not obliged to render field reports, at a
particular time and in a particular program. They render report as they wish or see fit;
5. The management (DZRC) does not collect anything from the sponsors of Jun Mapa. They (sponsors)
pay directly to him;.
6. Being the Office Supervisor, I know for a fact that Jun Mapa seldom renders report on the air. He
has no assigned program either. He was on and off the air, so to speak;
7. Finally, some time in September, 1991, Jun Mapa told me that he is quitting already because his
sponsors were no longer paying him of his monthly contract with them. (Emphasis supplied).
(See Annex "G", Petition for Certiorari);
11. Subsequently, Mapa sent a letter dated October 7, 1991 to Ms. Diana C. Gozum, General Manager of petitioner
FBN. In the said letter, Mapa wrote and admitted that:
I am [sic] Mr. Simeon Mapa, Jr. respectfully request your good office to reconsider my previous
application submitted last March 1990 as a reporter of DZRC AM.
May I inform you that since the submission of such application I worked until September 6, 1991 for
free of services [sic]. Hoping that I'll be given the chance to be recognized as a regular reporter.
With this, I respectfully wish to follow up my application for recognition.
May I also inform you that the case I have with my previous job with the other company has
commenced.
Attached herewith is my resume.
I am once again submitting myself for an interview with your office at a time convenient to you.
Thank you.
(See Annex "H", Petition for Certiorari);
12. Reacting to the letter mentioned in the immediately preceding paragraph, DZRC favorably acted
upon the application of Mapa and accepted him as a radio reporter on January 16, 1992;
13. On February 27, 1992, Mapa resigned as a radio reporter in order to run for an elective office in
the May 1992 elections and was paid all his salaries and benefits for the period of his employment
commencing from January 16, 1992 until February 27, 1992;
14. Having no work to do and no employment in sight, Mapa filed a complaint against FBN-DZRC on
August 1992, claiming the payment of salaries, premium pay, holiday pay as well as 13th month pay
for the period 28 February 1990 until January 16, 1992;
On October 13, 1993, Labor Arbiter Emeterio Ranola dismissed the complaint for lack of merit, finding that no
employer-employee relationship existed between Mapa and DZRC during the period March 11, 1990 to February 16,
1992.
9

Findings of the NLRC
In holding that there was an employer-employee relationship, the NLRC set aside the labor arbiter's findings:
In his appeal, complainant insists that there was an employer-employee relationship between him
and the respondent. In support of his contention, he cites the payroll for February 16 to 29, 1992, the
ID card issued to him as employee and regular reporter by the respondent: [sic] the program
schedules of DZRC showing the regular program of the station indicating his name: [sic] the affidavit
of Antonio Llarena, program supervisor of DZRC, stating that he [was] a regular reporter under his
supervision and the list of reporting gadgets issued to regular reporter.
The existence of employer employee relationship is determined by the following elements, namely: 1)
selection and engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and
4) the power to control employees' conduct although the latter is the most important element.
(Rosario Brothers, Inc. vs. Ople, 131 SCRA 72)
Considering the totality of the evidence adduced by the parties, we are of the opinion that the
complainant is a regular reporter of the respondent. Firstly, the work of the complainant is being
supervised by the program supervisor of the respondent; secondly, the complainant uses the
reporting gadgets of the respondent. Thirdly, he has no reporting gadgets of his own; Fourthly, the
program schedule is prepared by the respondent; and Lastly, he was paid salary for the period from
February 16 to 29, 1992 and covered under the Social Security System. There is no showing in the
record that his work from February 16, 1992 was different from his work before said period.
10

The NLRC subsequently denied petitioner's motion for reconsideration
11
on November 9, 1994.
12
Hence, this
petition.
13

Issue
Petitioner alleges that Public Respondent NLRC committed grave abuse of discretion as follows:
14

I
. . . in declaring Mapa as an employee of petitioner before January 16, 1992. The test of an employer-
employee relationship was erroneously applied to the facts of this case.
II
. . . in disregarding significant facts which clearly and convincingly show that the private respondent
was not an employee of the petitioner before 16 January 1992.
In the main, the issue in this case is whether private respondent was an employee of petitioner for the period March
11, 1990 to January 15, 1992.
The Court's Ruling
The petition is meritorious.
Main Issue:
Private Respondent Was Not an Employee
During the Period in Controversy
As a rule, the NLRC's findings are accorded great respect, even finality, by this Court. This rule, however, is not
without qualification. This Court heldJimenez v. NLRC
15
:
The review of labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave
abuse of discretion.
16
As a rule, this Court does not review supposed errors in the decision of the
NLRC which raise factual issues, because factual findings of agencies exercising quasi-judicial functions
are accorded not only respect but even finality, aside from the consideration that the Court is
essentially not a trier of facts. However, in the case at bar, a review of the records thereof with an
assessment of the facts is necessary since the factual findings of the NLRC and the labor arbiter are at
odds with each other.
17

In the present case, a review of the factual findings of the public respondent is in order, for said findings differ from
those of the labor arbiter.
18
Worse, the facts alleged by the private respondent and relied upon by the public
respondent do not prove an employer-employee relationship.
19
In this light, we will review and overrule the
findings of the NLRC.
The following are generally considered in the determination of the existence of an employer-employee relationship:
(1) the manner of selection and engagement, (2) the payment of wages, (3) the presence or absence of the power of
dismissal, and (4) the presence or absence of the power of control; of these four, the last one is the most important.
20

Engagement and Payment of Wages
Let us consider the circumstances of the private respondent's engagement in DZRC before January 16, 1992.
Petitioner did not act on his application for employment as a radio reporter because private respondent admittedly
failed to present a clearance from his former employer. Nevertheless, private respondent "volunteered" his services,
knowing that he would not be paid wages, and that he had to rely on financial sponsorships of business
establishments that would be advertised in his reports. In other words, private respondent willingly acted as a
volunteer reporter, fully cognizant that he was not an employee and that he would not receive any compensation
directly from the petitioner, but only from his own advertising sponsors.
The nature of private respondent's engagement is evident from the affidavit of Allan Almario and Elmer Anonuevo
who served under identical circumstances. The two affirmed the following:
1. We personally know Simeon "Jun" Mapa, a volunteer reporter at DZRC just like us;
2. As volunteer reporters we know [sic] that we will not receive any salary or allowance from DZRC
because our work was purely voluntary;
3. As incentive for us, the management of DZRC allowed us to get our own sponsors whose business
establishments we mention every after [sic] field report was made by us;
xxx xxx xxx
4. During our stint as volunteer reporters we had several sponsors each who paid us P300.00 per
month.
21

The above statement is corroborated by Carlito Baylon, one of private respondent's advertising sponsors. In his
affidavit dated June 10, 1993, he averred:
2. I personally know Simeon "Jun" Mapa.
Sometime in May, 1990 he went to me and asked if I could be one of his sponsors because he was
accommodated by DZRC as volunteer reporter. He explained to me that, he will not be receiving any
salary from DZRC[,] hence, he was soliciting my support;
3. Taking pity on him, I agreed to be one of his sponsors. The condition was, I will have to pay him
P300.00/month. In exchange thereto, he will have to mention the name of my restaurant everytime
he renders a report on the air;
4. My sponsorship lasted for about five (5) months after which I discontinued it when I rarely heard
Jun Mapa in DZRC program.
22

Indeed, private respondent himself admitted that he worked under the said circumstances. The bio-data sheet signed
by Mapa himself, in which he acknowledged that he was not an employee, states in part:
Work experiences:
DWGW Reporter/Newscaster 1970-1980
DZGB Reporter 1983-1990
DZRC Reporter 1990-1991
for free not recognized due to no appointment.
23
(Emphasis supplied.)
In his letter dated October 7, 1991, which he sent to the general manager of Filipinas Broadcasting Network (owner of
DZRC), Mapa again acknowledged in the following words that he was not an employee:
I am [sic] Mr. Simeon Mapa, Jr. respectfully request your good office to reconsider my previous
application submitted last March 1990 as a reporter of DZRC AM.
May I inform you that since the submission of such application I worked until September 6, 1991 for
free of services [sic]. Hoping that I'll be given the chance to be recognized as a regular reporter.
With this, I respectfully wish to follow up my application for recognition. [Emphasis supplied.]
There is no indication that these two admissions were made under duress. Indeed, private respondent himself did not
dispute their voluntariness or veracity. It is clear that he rendered services knowing that he was not an employee.
Aware that he would not be paid wages, he described himself as a "volunteer reporter" who was, as evident from his
letter, hoping for "the chance to be recognized as a regular reporter." In fact, petitioner acted favorably on this letter
and accepted his application as an employee effective on January 16, 1992.
Power of Dismissal
Likewise, the evidence on record shows that petitioner did not exercise the power to dismiss private respondent
during the period in question. In September 1991, Private Respondent Mapa ceased acting as a volunteer reporter,
not because he was fired, but because he stopped sending his reports. Ignacio Casi, Office Supervisor of DZRC,
declared in his affidavit that Mapa told him that "he [was] quitting already because his sponsors were no longer
paying him of [sic] his monthly contract with them." Mapa did not controvert this statement. In fact, his aforesaid
letter of October 17, 1991 expressed his hope of being "given the chance to be recognized as a regular reporter."
Private respondent's attitude in said letter is inconsistent with the notion that he had been dismissed.
Mapa Was Not Subject
to Control of Petitioner
The most crucial test the control test demonstrates all too clearly the absence of an employer-employee
relationship. No one at the DZRC had the power to regulate or control private respondents' activities or inputs. Unlike
the regular reporters, he was not subject to any supervision by petitioner or its officials. Regular reporters "are
required by the petitioner to adhere to a program schedule which delineates the time when they are to render their
reports, as well as the topic to be reported upon. The substance of their reports are [sic] oftentimes screened by the
station prior to [their] actual airing. In contrast, volunteer reporters are never given such a program schedule but are
merely advised to inform the station of the reports they would make from time to time."
24

Indeed, DZRC, the petitioner's radio station, exercised no editorial rights over his reports. He had no fixed day or time
for making his reports; in fact, he was not required to report anything at all. Whether he would air anything depended
entirely on him and his convenience.
The absence of petitioner's control over private respondent is manifest from the sworn statement of the traffic
manager of petitioner, Ignacio Casi, who deposed in part:
xxx xxx xxx
4. Jun Mapa, just like the other volunteer reporters, was not obliged to render field reports, at a
particular time and in a particular program.They render report as they wish or see fit;
5. The management (DZRC) does not collect anything from the sponsors of Jun Mapa. They (sponsors)
pay directly to him;
6. Being the Office Supervisor, I Know for a fact that Jun Mapa seldom renders report on the air. He
has no assigned program either. He was on and off the air, so to speak;
7. Finally, some time in September, 1991, Jun Mapa told me that he is quitting already because his
sponsors were no longer paying him of his monthly contract with them.
In Encyclopedia Britannica (Philippines) Inc., v. NLRC,
25
we reiterated that there could be no employer-employee
relationship where "the element of control is absent; where a person who works for another does so more or less at
his own pleasure and is not subject to definite hours or conditions of work[;] and in turn is compensated according to
the result of his efforts and not the, amount thereof, we should not find that the relationship of employer-employee
exists." In the present case, private respondent worked at his "own pleasure and [was] not subject to definite hours
or conditions of work."
"Evidence" Found by NLRC Not Applicable
In its two-page
26
holding that there was an employer-employee relationship, the NLRC relied on the following:
(1) the payroll for February 16 to 29, 1992,
(2) the ID card issued to him as employee and regular reporter by the respondent,
(3) the program schedules of DZRC showing the regular program of the station indicating his name:
(4) the affidavit of Antonio Llarena, program supervisor of DZRC, stating that he [was] under his
supervision, and
(5) the list of reporting gadgets issued to regular reporter.
Other than the items enumerated above, no other document was considered by the NLRC. In other words, its
conclusion was based solely on these alleged pieces of evidence. It dearly committed grave abuse of discretion in its
factual findings, because all the above documents relate to the period January 16, 1992 to February 28, 1992 and not
to the period March 11, 1990 to January 15, 1992 which are the inclusive dates in controversy.
The payroll
27
from February 16, 1992 to February 27, 1992 does not demonstrate that private respondent was an
employee prior to said period. Lest it be forgotten, the question in this case pertains to the status of private
respondent from March 11, 1990 to January 15, 1992. The said payroll may prove that private respondent was an
employee during said days in February 1992, but not for the period which is the subject of the present controversy.
Furthermore, neither the identification cards nor the SSS number printed at the back thereof indicate the date of
issuance. Likewise, the SSS number does not show that he was a member during the period in controversy; much less,
that he became so by reason of his employment with petitioner.
Similarly inapplicable is the program schedule
28
which allegedly showed the regular program of the station and
indicated the name of private respondent as an employee. The document is a mere photocopy of a typewritten
schedule. There is absolutely no indicium of its authenticity. Moreover, it is undated; hence, it does not indicate
whether such schedule pertained to the period in dispute, that is, March 11, 1990 to January 15, 1992. Worse, the
heading thereof was entitled "Radio DZRC Programming Proposal. [emphasis supplied]" A proposal is "put forth
merely for consideration and acceptance."
29
It cannot, by itself, prove that such program was implemented and that
private respondent acted as an employee of petitioner.
Neither does the list of returned gadgets support the conclusion of the NLRC. It must be stressed that such gadgets
were essential to enable the private respondent to access the specific radio frequency and facilities of the radio
station. Being exclusive properties of the radio station, such, gadgets could not have been purchased, as they were
not commercially available. In any event, the list of returned gadgets was dated February 27, 1992 again, a date not
in controversy. Such document, by itself, does not prove that private respondent was an employee from March 20,
1990 to January 15, 1992.
The affidavit of Antonio Llarena
30
, an employee of DZRC, stating that the private respondent was under his
supervision, is vague, even misleading; it declared merely that Llarena was "in charge" of said respondent. Such
language could not be construed to mean that he exercised supervision and control over private respondent.
Indubitably the NLRC based its findings of employer-employee relationship from the circumstances attendant when
the private respondent was already a regular employee. Uncontroverted is the statement that the private respondent
was a regular employee from January 16, 1992 to February 28, 1992, for which period he received all employee
benefits. But such period, it must be stressed again, is not covered by private respondent's complaint.
In sum, the evidence, which Public Respondent NLRC, relies upon, does not justify the reversal of the labor arbiter's
ruling which, in turn, we find amply supported by the records. Clearly, private respondent was not an employee
during the period in question.
WHEREFORE, the petition is hereby GRANTED and the assailed Decision and Resolution are hereby SET ASIDE. The
Order of the Labor Arbiter dated October 13, 1993 dismissing the case for lack of merit is hereby REINSTATED. No
costs.
SO ORDERED.
David, Jr., Bellosillo, Vitug and Quisumbing, JJ., concur.
Footnotes
1 The Division, composed of Comm. Joaquin A. Tanodra, ponente; Pres. Comm. Lourdes C. Javier and
Comm. Ireneo B. Bernardo, concurring.
2 Rollo, p. 41.
3 Ibid, pp. 42-43.
4 Emeterio C. Ranola.
5 It should be noted, however, that private respondent was claiming unpaid benefits only for the
period from March 11, 1990 to January 16, 1992.
6 Rollo, pp. 108-109.
7 Ibid., pp. 44-46; taken from the Position Statement, dated December 28, 1992, filed by Atty. Vicente
G. Judar, counsel for private respondent, before the NLRC, Regional Arbitration Branch No. V, Legaspi
City (Annex C, petition).
8 Rollo, pp. 319-324.
9 Should be March 11, 1990 to January 15, 1992.
10 Rollo, pp., 39-41; assailed Decision, pp. 3-5.
11 Ibid., pp. 110-123.
12 Rollo, pp. 42-43.
13 The case was deemed submitted for resolution on November 18, 1997 upon receipt by this Court of
private respondent's manifestation adopting his comment and opposition as his memorandum.
14 Rollo, p. 13.
15 256 SCRA 84, April 2, 1996, per Regalado, J.
16 Loadstar Shipping Co., Inc. vs. Gallo 229 SCRA 654, February 4, 1994; Philippines Overseas Drilling
and Oil Development Corporation vs. Ministry of Labor, et al., 146 SCRA 79, November 27, 1986.
17 Prieto vs. NLRC, 226 SCRA 232, September 10, 1993; Rapiz vs. NLRC, 207 SCRA 243, March 16, 1992;
Llobrera vs. NLRC, 162 SCRA 788, June 28, 1988.
18 Tanala vs. National Labor Relations Commission, 252 SCRA 314, 319, January 24, 1996; Pantranco
North Express, Inc. vs. NLRC, 239 SCRA 272, December 16, 1994; Prieto, et al. vs. NLRC, et al., 226 SCRA
232, September 10, 1993.
19 Bontia vs. NLRC, 255 SCRA 167, 173, March 18, 1996; Orcino vs. Civil Service Commission, 190 SCRA
811, October 18, 1990; Chong Guan Trading vs. NLRC, et al., 172 SCRA 831, April 26, 1989.
20 Singer Sewing Machine Company vs. Drilon, Chaguile, Jr., and Singer Machine Collectors Union-
Bagui (SIMA CUB), 193 SCRA 270, January 24, 1991; Mafinco Trading Corporation vs. Ople, 70 SCRA
139, March 25, 1976; Development Bank of the Philippines vs. NLRC, 175 SCRA 537, July 21, 1989;
Rosario Brothers, Inc. vs. Ople, 131 SCRA 72, July 31, 1984.
21 Rollo, p. 6.
22 Rollo, p. 7.
23 Rollo, p. 24.
24 Rollo, pp. 195-196; Reply to Comment, dated July 25, 1995, pp. 3-4.
25 264 SCRA 1, November 4, 1996, per Torres, J.
26 See pp. 4-5 of the 5-page assailed Decision.
27 Records, Vol. 2, p.19.
28 Records, Vol. 2, p. 21.
29 New World Dictionary, 2nd ed., p. 1140.
30 Records, p, 22.