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Petitioner: Carlos C. De Castro

Respondents: Liberty Broadcasting Network Inc, Edgardo
Citation: GR No. 165153
Date of Promulgation: September 23, 2008
Ponente: Brion

Petition for Review on Certitorari to annul, reverse

and/or set aside the Decision dated May 25, 2004, and the
Resolution dated August 30, 2004 of the Former Special
Third Division of CA

Carlos De Castro: Building Administrator of Liberty
Broadcasting. He started his employment on August 7,
May 16, 1996: Bernard Mandap (HRM Senior Manager)
sent a notice to Carlos requiring him to explain within 48
hours why he should not be made liable for violation of
the Company Code of Conduct for acts constituting
serious misconduct, fraud and willful breach of trust
reposed in him as a managerial employee
De Castros ANSWER: denied the allegations against
him in the Affidavits of Libertys witnesses: Vicente
Niguidula and Gil Balais. He says such accusations are
baseless and sham, designed to protect Niguidula and
Balais who were the favorite boys of Edgardo Quiogue
(EVP of Liberty Broadcasting)
At De Castros request, a formal hearing was scheduled
at 2pm of May 28, 1996, but he thereafter sent a notice
that he would not participate when he learned from his
wife that estafa and qualified theft had been filed
against him
He felt that the formal hearing would just be a moremore investigation
May 24, 1996: Liberty Broadcasting charged De Castro
with Violation of Company Code of Conduct based on
the Affidavits of Balais, Cristino Samarita and Jose
May 31, 1996: Notice of Dismissal
Grounds for De Castros Dismissal
1. Soliciting and/or receiving money for his own
benefit from suppliers/dealers/traders Aying
and Samarita, representing commissions for
job contracts involving the airconditioning units
at the company, and the installation of fire exits
at Technology Centre
2. Diversion of company funds by soliciting and
receiving commissions amounting to a 14k
from Aying for a job contract
3. Theft of company property involving the
unauthorized removal of 1 gallon of Delo Oil
from the storage room
4. Disrespect/discourtesy
coemployee, Niguidula
5. Disorderly behavior for challenging Niguidula
for a fight during working hours
6. Threat and coercion against Niguidula and for
coercing Balais to solicit money in his behalf
from suppliers/contractors
7. Abuse of authority for instructing Balais to
collect commissions from Aying and Samarita,
and for requiring Raul Pacaldo to exact 2-5%
of the price of contracts awarded to suppliers
8. Slander against Niguidula
De Castro then filed a Complaint for Illegal
Dismissat at NLRC. During the Arbitration, he denied
the offenses charged, stating that:
1. He was just new in the office and could not
encourage solicitation of commission from
2. The accusations are belated for the imputed
acts happened in 1995
3. The gallon of Delo Oul carted away was at the
room of Balais that, which circumstance he
relayed to Mandap
4. Affidavits of Niguidula and Balais are not
reliable because they had altercations for De
Castro reprimanded Balais for incurring
unnecessary OT work


Niguidula verbally assaulted and challenged

him to a fight which he reported to Quiogue
and Makati Police
Labor Arbiter Felipe Pati: rendered a decision on April 30,
1999, holding the respondent liable for illegal dismissal. He
disbelieved the affidavits of the respondents witnesses in
view of the circumstances prior to the execution.
NLRC: reversed the LAs decision and adopted the findings
of Labor Arbiter Tamayo who reviewed the Appeal on
NLRCs instructions. It ruled that Arbited Pati erred in
disregarding the Affidavits of the witnesses.
MR by De Castro: NLRC granted it in a Resolution dated
September 20, 2002. NLRC held the charges against De
Castro were never substantiated other than by bare
allegations of the companys employees whom he had
altercations with prior to the execution of Affidavits
MR by Liberty Broadcasting: denied
Certiorari at CA: granted the Petition in its Decision on May
25, 2004, confirming the validity of De Castos dismissal.
NLRC abused its discretion when it disregarded the
Affidavits of the witnesses

1. W/N CA erred when it substituted its judgment for that
of LA and NLRC who were the triers of facts who had
the opportunity to review the evidence extensively
1. YES. CA erred in the appreciation of the evidence
employment. The cited grounds are at best doubtful
under the proven surrounding circumstances, and
should have been interpreted in the petitioners favor
pursuant to Article 4 of the Labor Code.
1.The petitioner had not stayed long in the
company and had not even passed his
probationary period when the acts charged
allegedly took place. This fact carries several
significant implications. First, being new, his
natural motivation was to make an early
positive impression on his employer. Thus, it is
believable that as building administrator, he
diligently, zealously, and faithfully performed
his tasks, working in excess of eight hours per
day to maintain the company buildings and
facilities in excellent shape; he even lent the
company his personal tools and equipment to
facilitate urgent repairs and maintenance work
on company properties. Second, because of
his natural motivation as a new employee and
his lack of awareness of the dynamics of
relationships within the company, he must
have been telling the truth when he said that
he objected to the way the contract for the
installation of fire escapes was awarded to
Samarita. Third, his being new somehow
rendered doubtful the charge that he had
already encouraged solicitation of commission
from suppliers, especially if considered with
the timing of the charges against him and the
turnaround of witness Ayings testimony.
2.The relationships within the company at
the time the charges were filed showed that he
was a stranger who might not have known the
dynamics of company inter-relationships and
might have stepped on the wrong toes in the
course of performing his duties. Respondent
Quiogue was the Executive Vice-President of
the company, a very powerful official with a lot
of say in company operations. Since Samarita
was doing the fabrication of steel balusters for
Quiogues home in New Manila, Quezon City,
there is a lot of hidden dynamics in their
relationship and it is not surprising that
Samarita testified against the petitioner. Both
Samarita and Quioque have motives to resent
the petitioners comments about the irregular
award of a contract to Samarita.
3. Mandap, as Personnel Manager, is a
subordinate of Quiogue. The proposal to
secure commissions from company suppliers
reportedly took place in a very public gathering

a drinking sessionin his house. Why

Mandap did not take immediate action when
he knew of the alleged plan as early as
December 1995 was never explained although
the petitioner raised the issue squarely. The
time gapfrom December 1995 to May 1996
is an incredibly long time under the evidence
available and can be accounted for only by the
fact that there was no intention to terminate
the services of the petitioner in December; the
motivation and the scheme to do this came
only sometime in April-May 1996.
3.The timing of the filing of charges was, as
the petitioner pointed out, unusual. Indeed, if
the proposal to solicit commissions had
transpired in December, the charges were
quite late when they came in May.
All these considerations render the cited causes for the
petitioners dismissal tenuous as the evidence supporting these
grounds from suspect sources: they come either from people
who harbor resentment; those whose positions have inherent
conflict points with that of De Castro, or from business dealings
with the company.
Under the circumstances, we join the NLRC in concluding that
the employer failed to prove a just cause for the termination of
the petitioners employmenta burden the company, as
employer, carries under the Labor Code31and the CA erred
when it saw grave abuse of discretion in the NLRCs ruling.
The evidentiary situation, at the very least, brings to the fore the
dictum we stated in Prangan v. NLRC32 and in Nicario v.
NLRC33 that if doubts exist between the evidence presented by
the employer and the employee, the scales of justice must be
tilted in favor of the latter. It is a time-honored rule in
controversies between a laborer and his master, doubts
reasonably arising from the evidence, or in the interpretation of
agreements and writing should be resolved in the formers favor


Petitioner: Gregorio V. Tongko
Respondents: The Manufacturers Life Insurance Co. Inc,
(Manulife) Renato Vergel De Dios
Citation: GR No. 167622
Date of Promulgation: November 7, 2008
Ponente: Velasco

Petition for Review on Certiorari: seeking the

reversal of March 29, 2005 decision of CA, which set
aside he Decision dated Sept. 27, 2004 and Resolution
dated Dec. 16, 2004 rendered by NLRC

Manulife: engaged in the life insurance business.

Renato Vergel de Dios was the President and CEO

Gregorio Tongko: started his professional relationship

with Manulife on July 1, 1977 by a Career Agents
Agreement (Please see yung naka-green sa next
case. Ayun yung content nung Agreement. Same
lang kasi)

1983: Tongko was named as Unit Manager in

Manulifes Sales Agency

1990: He became Branch Manager

Tongkos gross earnings from his work, consisted of

commission, persisteny income and management

2001: The problem started when Manulife instituted

development programs in the Regional Sales
Management Level. De Dios then sent Tongko a letter
dated Nov. 6, 2001 stating his concerns over the latters
ability to lead his group (Please see the whole case for
the letter. Medyo mahaba eh, di ko na sinama)

Dec. 18, 2001: De Dios terminated Tongkos

employment through a letter

Tongko then filed a Complaint for Illegal Dismissal

at NLRC. Such was raffled to LA Marita V. Padolina.

Allegations of Tongko
In a bid to establish an E-E relationship, he
alleged that De Dios gave him specific
directives on how to manage his area of
responsibility in the latters letter dated Nov. 6,
Manulife exercised control over him
He cited Insular Life Assurance Co Ltd v
NLRAC and Great Pacific Life Insurance which
he claimed to be similar to his case
His dismissal was without basis and he was
not afforded with due process
His actions were said to be controlled by
Manulife Code of Conduct

Manulife filed a Position Paper with Motion to

Dismiss. It alleged that Tongko is not its employee and
that it did not exercise control over him, and NLRC has
no jurisdiction

DECISION dated April 15, 2004 by LA Padolina: no

E-E relationship. The 4-fold test cant be applied

NLRC: reversed LAs decision. The NLRCs First

Division, while finding an E-E relationship applying the
4-fold test held Manulife liable for illegal dismissal.
Further, Manulife has control over Tongko as evidenced
by a letter dated Nov. 6, 2001

MR to NLRC by Manulife: denied

CA: no E-E relationship

1. W/N there exist E-E relationship between the parties
2. W/N Tongko was illegally dismissed
1. Yes. In the determination of whether an employer-employee
relationship exists between two parties, this Court applies the
four-fold test to determine the existence of the elements of such
relationship. In Pacific Consultants International Asia, Inc. v.
Schonfeld, the Court set out the elements of an employeremployee relationship, thus:
Jurisprudence is firmly settled that whenever the existence
of an employment relationship is in dispute, four elements

constitute the reliable yardstick: (a) the selection and

engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employer's power to
control the employee's conduct. It is the so-called "control
test" which constitutes the most important index of the
existence of the employer-employee relationship that is,
whether the employer controls or has reserved the right to
control the employee not only as to the result of the work
to be done but also as to the means and methods by
which the same is to be accomplished. Stated otherwise,
an employer-employee relationship exists where the
person for whom the services are performed reserves the
right to control not only the end to be achieved but also the
means to be used in reaching such end.
The NLRC, for its part, applied the four-fold test and found the
existence of all the elements and declared Tongko an employee
of Manulife. The CA, on the other hand, found that the element
of control as an indicator of the existence of an employeremployee relationship was lacking in this case. The NLRC and
the CA based their rulings on the same findings of fact but
differed in their interpretations.
The NLRC arrived at its conclusion, first, on the basis of the
letter dated November 6, 2001 addressed by De Dios to Tongko.
According to the NLRC, the letter contained "an abundance of
directives or orders that are intended to directly affect
complainant's authority and manner of carrying out his functions
as Regional Sales Manager
The NLRC further ruled that the different codes of conduct that
were applicable to Tongko served as the foundations of the
power of control wielded by Manulife over Tongko that is further
manifested in the different administrative and other tasks that he
was required to perform.
The NLRC also found that Tongko was required to render
exclusive service to Manulife, further bolstering the existence of
an employer-employee relationship.
Finally, the NLRC ruled that Tongko was integrated into a
management structure over which Manulife exercised control,
including the actions of its officers. The NLRC held that such
integration added to the fact that Tongko did not have his own
agency belied Manulife's claim that Tongko was an independent
The CA, however, considered the finding of the existence of an
employer-employee relationship by the NLRC as far too
sweeping having as its only basis the letter dated November 6,
2001 of De Dios. The CA did not concur with the NLRC's ruling
that the elements of control as pointed out by the NLRC are
"sufficient indicia of control that negates independent
contractorship and conclusively establish an employer-employee
relationship between"15 Tongko and Manulife. The CA ruled that
there is no employer-employee relationship between Tongko and
An impasse appears to have been reached between the CA and
the NLRC on the sole issue of control over an employee's
conduct. It bears clarifying that such control not only applies to
the work or goal to be done but also to the means and methods
to accomplish it.
In the instant case, Manulife had the power of control over
Tongko that would make him its employee. Several factors
contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko
and Manulife, it is provided that:
The Agent hereby agrees to comply with all regulations
and requirements of the Company as herein provided
as well as maintain a standard of knowledge and
competency in the sale of the Company's products
which satisfies those set by the Company and
sufficiently meets the volume of new business required
of Production Club membership.21
Under this provision, an agent of Manulife must comply with
three (3) requirements: (1) compliance with the regulations and
requirements of the company; (2) maintenance of a level of

knowledge of the company's products that is satisfactory to the

company; and (3) compliance with a quota of new businesses.
Among the company regulations of Manulife are the different
codes of conduct such as the Agent Code of Conduct, Manulife
Financial Code of Conduct, and Manulife Financial Code of
Conduct Agreement, which demonstrate the power of control
exercised by the company over Tongko. The fact that Tongko
was obliged to obey and comply with the codes of conduct was
not disowned by respondents.
Thus, with the company regulations and requirements alone, the
fact that Tongko was an employee of Manulife may already be
established. Certainly, these requirements controlled the means
and methods by which Tongko was to achieve the company's
More importantly, Manulife's evidence establishes the fact that
Tongko was tasked to perform administrative duties that
establishes his employment with Manulife.
2. Yes. In its Petition for Certiorari dated January 7, 2005 filed
before the CA, Manulife argued that even if Tongko is considered
as its employee, his employment was validly terminated on the
ground of gross and habitual neglect of duties, inefficiency, as
well as willful disobedience of the lawful orders of Manulife.
Manulife stated:
In the instant case, private respondent, despite the written
reminder from Mr. De Dios refused to shape up and altogether
disregarded the latter's advice resulting in his laggard
performance clearly indicative of his willful disobedience of the
lawful orders of his superior. x x x
As private respondent has patently failed to perform a very
fundamental duty, and that is to yield obedience to all reasonable
rules, orders and instructions of the Company, as well as gross
failure to reach at least minimum quota, the termination of his
engagement from Manulife is highly warranted and therefore,
there is no illegal dismissal to speak of.
It is readily evident from the above-quoted portions of Manulife's
petition that it failed to cite a single iota of evidence to support its
claims. Manulife did not even point out which order or rule that
Tongko disobeyed. More importantly, Manulife did not point out
the specific acts that Tongko was guilty of that would constitute
gross and habitual neglect of duty or disobedience. Manulife
merely cited Tongko's alleged "laggard performance," without
substantiating such claim, and equated the same to
disobedience and neglect of duty.
WHEREFORE, the petition is hereby GRANTED. The assailed
March 29, 2005 Decision of the CA in CA-G.R. SP No. 88253
is REVERSED and SET ASIDE. The Decision dated September
27, 2004 of the NLRC is REINSTATED with the following
Manulife shall pay Tongko the following:
(1) Full backwages, inclusive of allowances and other benefits or
their monetary equivalent from January 2, 2002 up to the finality
of this Decision;
(2) Separation pay of one (1) month salary for every year of
service from 1977 up to 2001 amounting to PhP 12,435,474.24;
(3) Nominal damages of PhP 30,000 as indemnity for violation of
the due process requirements; and

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

aforementioned backwages and separation pay.


Petitioner: Gregorio V. Tongko
Respondents: The Manufacturers Life Insurance Co. Inc,
(Manulife) Renato Vergel De Dios
Citation: GR No. 167622
Date of Promulgation: June 29, 2010
Ponente: Brion

Motion for Reconsideration dated Dec. 3, 2008: filed by

the Respondent to set aside the DECISION of Nov. 7, 2008,
finding that an employer-employee relationship existed
between Tongko and Manulife, and ordered the latter to pay
Tongko backwages and separation pay to pay for illegal


The contractual relationship between Tongko and
Manulife had two basic phases. The first or initial
phase began on July 1, 1977 under a Career Agents
Agreement, that provided:
- It is understood and agreed that the Agent is an
independent contractor and nothing contained
herein shall be construed or interpreted as
creating an employer-employee relationship
between the Company and the Agent.
a) The Agent shall canvass for applications for Life
Insurance, Annuities, Group policies and other
products offered by the Company, and collect, in
exchange for provisional receipts issued by the
Agent, money due to or become due to the
Company in respect of applications or policies
obtained by or through the Agent or from
policyholders allotted by the Company to the Agent
for servicing, subject to subsequent confirmation of
receipt of payment by the Company as evidenced
by an Official Receipt issued by the Company
directly to the policyholder.
The Company may terminate this Agreement for
any breach or violation of any of the provisions
hereof by the Agent by giving written notice to the
Agent within fifteen (15) days from the time of the
extinguishment, abandonment, withdrawal or
cancellation of the right to terminate this
Agreement by the Company shall be construed for
any previous failure to exercise its right under any
provision of this Agreement
Either of the parties hereto may likewise terminate
his Agreement at any time without cause, by giving
to the other party fifteen (15) days notice in writing.

The second phase started in 1983 when Tongko

was named Unit Manager in Manulifes Sales
Agency Organization. In 1990, he became a Branch
Manager. Six years later (or in 1996), Tongko
became a Regional Sales Manager
Tongkos gross earnings consisted of
management overrides
He declared himself self-employed in his
income tax returns
Under oath, he de declared his gross business
income and deducted his business expenses
to arrive at his taxable business income.
Manulife withheld the corresponding 10% tax
on Tongkos earnings

2001: Manulife instituted manpower development programs

at the Regional Sales Management. RENATOR VERGEL
DE DIOS wrote Tongko
The first step to transforming Manulife into a big
league player has been very clear to increase the
number of agents to at least 1,000 strong for a
start. This may seem diametrically opposed to the
way Manulife was run when you first joined the
organization. Since then, however, substantial
changes have taken place in the organization, as
these have been influenced by developments both
from within and without the company.
Issue #2: "Some Managers are unhappy with their
earnings and would want to revert to the position of
Issue # 3: "Sales Managers are doing what the
company asks them to do but, in the process, they
earn less."
December 18, 2001: De Dios wrote Tongko another letter
terminating the latters services
Tongko: Complaint for Illegal Dismissal at NLRC
LA: no E-E relationship
NLRC: reversed the LAs decision
CA: NLRC gravely abused its discretion in its ruling and
reverted to LAs decision that no E-E relationship existed. It
applied the four-fold test for determining control and found
the elements in this case to be lacking, basing its decision
on the same facts used by the NLRC. It found that Manulife
did not exert control over Tongko, there was no employeremployee relationship and thus the NLRC did not have
jurisdiction over the case.
SC (Nov. 7, 2008 decision): there is an E-E relationship
SC (June 29, 2010 Resolution): reversed the Nov 7, 2008
Manulife then filed a Motion for Recon

ISSUE: W/N there exist an employer-employee relationshiop

between Tongko and Manulife?
The Supreme Court finds no reason to reverse the June 29,
2010 decision. Control over the performance of the task of one
providing service both with respect to the means and manner,
and the results of the service is the primary element in
determining whether an employment relationship exists. The
Supreme Court ruled petitioners Motion against his favor since
he failed to show that the control Manulife exercised over him
was the control required to exist in an employer-employee
relationship; Manulifes control fell short of this norm and carried
only the characteristic of the relationship between an insurance
company and its agents, as defined by the Insurance Code and
In the Supreme Courts June 29, 2010 Resolution, they noted
that there are built-in elements of control specific to an insurance
agency, which do not amount to the elements of control that
characterize an employment relationship governed by the Labor
Code.The Insurance Code provides definite parameters in the
way an agent negotiates for the sale of the companys insurance
products, his collection activities and his delivery of the
insurance contract or policy. They do not reach the level of
control into the means and manner of doing an assigned task
that invariably characterizes an employment relationship as
To reiterate, guidelines indicative of labor law "control" do not
merely relate to the mutually desirable result intended by the
contractual relationship; they must have the nature of dictating
the means and methods to be employed in attaining the result.
Tested by this norm, Manulifes instructions regarding the
objectives and sales targets, in connection with the training and
engagement of other agents, are among the directives that the
principal may impose on the agent to achieve the assigned
tasks.They are targeted results that Manulife wishes to attain
through its agents. Manulifes codes of conduct, likewise, do not

necessarily intrude into the insurance agents means and manner

of conducting their sales. Codes of conduct are norms or
standards of behavior rather than employer directives into how
In sum, the Supreme Court found absolutely no evidence of
labor law control.

January 16, 1996, the Labor Arbiter issued an order to the

effect that the case is now deemed submitted for resolution.

April 30, 1998: the Labor Arbiter a quo issued the assailed
decision dismissing the complaint for lack of merit.

June 26, 1998: Appeal anchored on the ground that THE


NLRC: respondents attained the status of seasonal workers

of Had Maasin II having worked from 1964-1985. Petitioner
failed to discharge the burden of proving that the termination
was a just or authorized cause. Hence, respondents were
illegally dismissed and should be awarded with money
CA: affirmed NLRCs decision with the modification that the
backwages and other monetary benefits shall be computed
from the time compensation was withheld in accordance
with Article 279 of the Labor Code, as amended by Republic
Act No. 6715.

Petitioner: Josefina Benares
Respondents: Jaime Pancho, Rodolfo Pancho, Jr., Joselito
Medalla, Paquito Magallanes, Alicia Magallanes, Evelyn
Magallanes, Violeta Villacampa, Maritess Pancho, Rogelio
Pancho And Arnolfo Pancho
Citation: GR No. 151827
Date of Promulgation: April 29, 2005
Ponente: Tinga

Petition for Review on Certiorari: Decision of CA which

affirmed the NLRCs decision holding that respondents were
illegally dismissed and ordering petitioner to pay
respondents separation pay, backwages, 13th month pay,
cost of living allowances, emergency relief allowance, salary
differentials and attorneys fee

Respondents alleged to have started working as sugar farm

workers on various occasions in a sugar cane plantation
(Had Maasin II) in Murcia, Negros Occidental owned and
managed by Josefina Benares

July 24, 1991: Respondents thru counsel wrote the

Regional Director of the Department of Labor and
Employment, Bacolod City for intercession particularly in the
matter of wages and other benefits mandated by law.

September 24, 1991: a routine inspection was conducted

by personnel of the Bacolod District Office of the
Department of Labor and Employment. Accordingly, a report
and recommendation was made, hence, the endorsement
by the Regional Director of the instant case to the Regional
Arbitration Branch, NLRC, Bacolod City for proper hearing
and disposition

October 15, 1991: Respondents alleged to have been

terminated without being paid termination benefits by
respondent in retaliation to what they have done in reporting
to the Department of Labor and Employment their working
conditions viz-a-viz (sic) wages and other mandatory

July 14, 1992: notification and summons were served to the

parties wherein complainants were directed to file a formal

July 28, 1992: a formal complaint was filed for illegal

dismissal with money claims.

From the records, summons and notices of hearing were

served to the parties and apparently no amicable settlement
was arrived, hence, the parties were directed to file their
respective position papers.

January 22, 1993: complainant submitted their position

paper, while respondent filed its position paper on June 21,

March 17, 1994: complainants filed their reply position

paper and affidavit. Correspondingly, a rejoinder was filed by
respondent on May 16, 1994.

August 17, 1994: from the Minutes of the scheduled

hearing, respondent failed to appear, and that the Office will
evaluate the records of the case whether to conduct a
formal trial on the merits or not, and that the corresponding
order will be issued.

1. W/N respondents are regular employees of Hacienda Maasin
and thus entitled to their money claims?
2. W/N respondents were illegally terminated
1. This case presents a good opportunity to reiterate the Courts
rulings on the subject of seasonal employment. The Labor Code
defines regular and casual employment, viz:
provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the
employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph: Provided, That, any employee who
has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
The law provides for three kinds of employees: (1) regular
employees or those who have been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer; (2) project employees or
those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season; and (3)
casual employees or those who are neither regular nor project

In this case, petitioner argues that respondents were not her

regular employees as they were merely "pakiao" workers who
did not work continuously in the sugar plantation. They
performed such tasks as weeding, cutting and loading canes,
planting cane points, fertilizing, cleaning the drainage, etc. These
functions allegedly do not require respondents daily presence in
the sugarcane field as it is not everyday that one weeds, cuts
canes or applies fertilizer. In support of her allegations, petitioner
submitted "cultivo" and milling payrolls.
The probative value of petitioners evidence, however, has been
passed upon by the labor arbiter, the NLRC and the Court of
Appeals. Although the labor arbiter dismissed respondents
complaint because their "position paper is completely devoid of
any discussion about their alleged dismissal, much less of the
probative facts thereof,"20 the ground for the dismissal of the
complaint implies a finding that respondents are regular
The NLRC was more unequivocal when it pronounced that
respondents have acquired the status of regular seasonal
employees having worked for more than one year, whether
continuous or broken in petitioners hacienda.
According to petitioner, however, the NLRCs conclusion is highly
suspect considering its own admission that there are "gray areas
which requires (sic) clarification." She alleges that despite these
gray areas, the NLRC "chose not to remand the case to the
Labor this would unduly prolong the agony of the
complainants in particular." 21
Petitioner perhaps wittingly omitted mention that the NLRC
"opted to appreciate the merits of the instant case based on
available documents/pleadings."22 That the NLRC chose not to
remand the case to the labor arbiter for clarificatory proceedings
and instead decided the case on the basis of the evidence then
available to it is a judgment call this Court shall not interfere with
in the absence of any showing that the NLRC abused its
discretion in so doing.
The Court of Appeals, in fact, found no such grave abuse of
discretion on the part of the NLRC. Accordingly, it dismissed the
petition for certiorari and affirmed with modification the findings
of the NLRC. It is well to note at this point that in quasi-judicial
proceedings, the quantum of evidence required to support the
findings of the NLRC is only substantial evidence or that amount
of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion The issue, therefore, of whether
respondents were regular employees of petitioner has been
adequately dealt with. The labor arbiter, the NLRC and the Court
of Appeals have similarly held that respondents were regular
employees of petitioner. Since it is a settled rule that the factual
findings of quasi-judicial agencies which have acquired expertise
in the matters entrusted to their jurisdiction are accorded by this
Court not only respect but even finality,24 we shall no longer
disturb this finding.
Petitioner next underscores the NLRC decisions mention of the
"payroll" she presented despite the fact that she allegedly
presented 235 sets of payroll, not just one payroll. This
circumstance does not in itself evince any grave abuse of
discretion on the part of the NLRC as it could well have been just
an innocuous typographical error.
Verily, the NLRCs decision, affirmed as it was by the Court of
Appeals, appears to have been arrived at after due consideration
of the evidence presented by both parties.
2. YES. We also find no reason to disturb the finding that
respondents were illegally terminated. When there is no showing
of clear, valid and legal cause for the termination of employment,
the law considers the matter a case of illegal dismissal and the

burden is on the employer to prove that the termination was for a

just or authorized cause.25 In this case, as found both by the
NLRC and the Court of Appeals, petitioner failed to prove any
such cause for the dismissal of respondents.

Security System (SSS) and in the city government of Makati;

and to administer all other matters pertaining to the
operation of Kasei Restaurant which is owned and operated
by Kasei Corporation.


For five years, petitioner performed the duties of Acting

Manager. As of December 31, 2000 her salary was
P27,500.00 plus P3,000.00 housing allowance and a 10%
share in the profit of Kasei Corporation. 8

In January 2001, petitioner was replaced by Liza R.

Fuentes as Manager. Petitioner alleged that she was
required to sign a prepared resolution for her replacement
but she was assured that she would still beconnected with
Kasei Corporation. Timoteo Acedo, the designated
Treasurer, convened a meeting of all employees of Kasei
Corporation and announced that nothing had changed and
that petitioner was still connected with Kasei Corporation as
Technical Assistant to Seiji Kamura and in charge of all BIR

Thereafter, Kasei Corporation reduced her salary by

P2,500.00 a month beginning January up to September
2001 for a total reduction of P22,500.00 as of September
2001. Petitioner was not paid her mid-year bonus allegedly
because the company was not earning well. On October
2001, petitioner did not receive her salary from the
company. She made repeated follow-ups with the company
cashier but she was advised that the company was not
earning well. 10

On October 15, 2001, petitioner asked for her salary from

Acedo and the rest of the officers but she was informed that
she is no longer connected with the company. 11

Since she was no longer paid her salary, petitioner did not
report for work and filed an action for constructive
dismissal before the labor arbiter.

Respondents contends that: 1) petitioner is not their

employee; 2) As technical consultant, petitioner performed
her work at her own discretion without control and
supervision of Kasei Corporation; 3) Petitioner had no daily
time record and she came to the office any time she wanted;
4) The company never interfered with her work except that
from time to time, the management would ask her opinion
on matters relating to her profession; 5) The money received
by petitioner from the corporation was her professional fee
subject to the 10% expanded withholding tax on
professionals, and that she was not one of those reported to
the BIR or SSS as one of the companys employees; 6)
Petitioners designation as technical consultant depended
solely upon the will of management. As such, her
consultancy may be terminated any time considering that
her services were only temporary in nature and dependent
on the needs of the corporation

LA: illegally dismissed

NLRC: affirmed LAs decision with Modifications
CA: reversed NLRCs decision

Petitioner: Angelina Francisco

Citation: GR No. 170087
Date of Promulgation: August 31, 2006
Ponente: Ynares-Santiago

Angelina Francisco: hired by Kaeri Corporation during its

incorporation stage as an Accountant and Corporate
Secretary. She was assigned to handle all the accounting
needs of the company, and was also designated as Liaison
Officer in its office in Makati, to secure business permits,
construction benefits and other licenses for the initial
operation of the company

Although she was designated as Corporate Secretary, she

was not entrusted with the corporate documents; neither did
she attend any board meeting nor required to do so. She
never prepared any legal document and never represented
the company as its Corporate Secretary. However, on some
occasions, she was prevailed upon to sign documentation
for the company.

In 1996, petitioner was designated Acting Manager. The

corporation also hired Gerry Nino as accountant in lieu of
petitioner. As Acting Manager, petitioner was assigned to
handle recruitment of all employees and perform
management administration functions; represent the
company in all dealings with government agencies,
especially with the Bureau of Internal Revenue (BIR), Social

ISSUES: W/N there was an employer-employee relationship

between petitioner and private respondent Kasei Corporation
Yes. The court held that in this jurisdiction, there has been no
uniform test to determine the existence of an employer-employee
relation. Generally, courts have relied on the so-called right of
control test 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. In
addition to the standard of right-of-control, the existing economic

conditions prevailing between the parties, like the inclusion of the

employee in the payrolls, can help in determining the existence of
an employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test
involving: (1) the putative employers power to control the
employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic
realities of the activity or relationship.
In Sevilla v. Court of Appeals, the court observed the need to
consider the existing economic conditions prevailing between the
parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture
in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer and
employee depends upon the circumstances of the whole
economic activity, such as: (1) the extent to which the services
performed are an integral part of the employers business; (2) the
extent of the workers investment in equipment and facilities; (3)
the nature and degree of control exercised by the employer; (4)
the workers opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for the success of
the claimed independent enterprise; (6) the permanency and
duration of the relationship between the worker and the employer;

and (7) the degree of dependency of the worker upon the

employer for his continued employment in that line of business.
The proper standard of economic dependence is whether the
worker is dependent on the alleged employer for his continued
employment in that line of business.
By applying the control test, there is no doubt that petitioner is an
employee of Kasei Corporation because she was under the direct
control and supervision of Seiji Kamura, the corporations
Technical Consultant. It is therefore apparent that petitioner is
economically dependent on respondent corporation for her
continued employment in the latters line of business.
There can be no other conclusion that petitioner is an employee
of respondent Kasei Corporation. She was selected and engaged
by the company for compensation, and is economically
dependent upon respondent for her continued employment in that
line of business. Her main job function involved accounting and
tax services rendered to Respondent Corporation on a regular
basis over an indefinite period of engagement. Respondent
Corporation hired and engaged petitioner for compensation, with
the power to dismiss her for cause. More importantly, Respondent
Corporation had the power to control petitioner with the means
and methods by which the work is to be accomplished.