G.R. No.
192084 September 14, 2011 Respondents aver, on the other hand, that complainants entered
JOSE MEL BERNARTE, Petitioner,
vs.
PHILIPPINE BASKETBALL ASSOCIATION (PBA), JOSE EMMANUEL M.
EALA, and PERRY MARTINEZ,Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review 1 of the 17 December 2009 Decision2 and
5 April 2010 Resolution3 of the Court of Appeals in CA-G.R. SP No.
105406. The Court of Appeals set aside the decision of the National
Labor Relations Commission (NLRC), which affirmed the decision of
the Labor Arbiter, and held that petitioner Jose Mel Bernarte is an
independent contractor, and not an employee of respondents
Philippine Basketball Association (PBA), Jose Emmanuel M. Eala,
and Perry Martinez. The Court of Appeals denied the motion for
reconsideration.
The Facts
The facts, as summarized by the NLRC and quoted by the Court of
Appeals, are as follows:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that
they were invited to join the PBA as referees. During the leadership
of Commissioner Emilio Bernardino, they were made to sign
contracts on a year-to-year basis. During the term of Commissioner
Eala, however, changes were made on the terms of their
employment.
Complainant Bernarte, for instance, was not made to sign a
contract during the first conference of the All-Filipino Cup which
was from February 23, 2003 to June 2003. It was only during the
second conference when he was made to sign a one and a half
month contract for the period July 1 to August 5, 2003.
On January 15, 2004, Bernarte received a letter from the Office of
the Commissioner advising him that his contract would not be
renewed citing his unsatisfactory performance on and off the court.
It was a total shock for Bernarte who was awarded Referee of the
year in 2003. He felt that the dismissal was caused by his refusal to fix
a game upon order of Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was
invited to join the PBA pool of referees in February 2001. On March
1, 2001, he signed a contract as trainee. Beginning 2002, he signed
a yearly contract as Regular Class C referee. On May 6, 2003,
respondent Martinez issued a memorandum to Guevarra expressing
dissatisfaction over his questioning on the assignment of referees
officiating out-of-town games. Beginning February 2004, he was no
longer made to sign a contract.
August 26, 2008 of the National Labor Relations Commission
into two contracts of retainer with the PBA in the year 2003. The first
contract was for the period January 1, 2003 to July 15, 2003; and the
second was for September 1 to December 2003. After the lapse of
the latter period, PBA decided not to renew their contracts.
Complainants were not illegally dismissed because they were not
employees of the PBA. Their respective contracts of retainer were
simply not renewed. PBA had the prerogative of whether or not to
renew their contracts, which they knew were fixed.4
In her 31 March 2005 Decision,5 the Labor Arbiter6 declared
petitioner an employee whose dismissal by respondents was illegal.
Accordingly, the Labor Arbiter ordered the reinstatement of
petitioner and the payment of backwages, moral and exemplary
damages and attorney’s fees, to wit:
WHEREFORE, premises considered all respondents who are here
found to have illegally dismissed complainants are hereby ordered
to (a) reinstate complainants within thirty (30) days from the date of
receipt of this decision and to solidarily pay complainants:
1. backwages from January 1, 2004 up to the finality of ₱536,250.00
this Decision, which to date is
2. moral damages
3. exemplary damages
4. 10% attorney's fees
TOTAL
or a total of ₱1,152,250.00
The rest of the claims are hereby dismissed for lack of merit or basis.
SO ORDERED.7
In its 28 January 2008 Decision,8 the NLRC affirmed the Labor
Arbiter’s judgment. The dispositive portion of the NLRC’s decision
reads:
WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor
Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is AFFIRMED.
SO ORDERED. 9
Respondents filed a petition for certiorari with the Court of Appeals,
which overturned the decisions of the NLRC and Labor Arbiter. The
dispositive portion of the Court of Appeals’ decision reads:
WHEREFORE, the petition is hereby GRANTED. The
assailed Decision dated January 28, 2008 and Resolutiondated
1
are ANNULLED and SET ASIDE. Private respondents’ complaint
before the Labor Arbiter is DISMISSED.
SO ORDERED.10
The Court of Appeals’ Ruling
The Court of Appeals found petitioner an independent contractor
since respondents did not exercise any form of control over the
means and methods by which petitioner performed his work as a
basketball referee. The Court of Appeals held:
While the NLRC agreed that the PBA has no control over the
referees’ acts of blowing the whistle and making calls during
basketball games, it, nevertheless, theorized that the said acts refer
to the means and methods employed by the referees in officiating
basketball games for the illogical reason that said acts refer only to
the referees’ skills. How could a skilled referee perform his job
without blowing a whistle and making calls? Worse, how can the
PBA control the performance of work of a referee without
controlling his acts of blowing the whistle and making calls?
Moreover, this Court disagrees with the Labor Arbiter’s finding (as
JOSE MEL RENATO
affirmed by the NLRC) that the Contracts of Retainer show that
BERNARTE GUEVARRA
petitioners have control over private respondents.
xxxx
₱211,250.00
Neither do We agree with the NLRC’s affirmance of the Labor
Arbiter’s conclusion that private respondents’ repeated hiring made
100,000.00them regular employees by operation of law.11
50,000.00
The Issues
100,000.00The main50,000.00
issue in this case is whether petitioner is an employee of
respondents, which in turn determines whether petitioner was
68,625.00 illegally dismissed.
36,125.00
Petitioner raises the procedural issue of whether the Labor Arbiter’s
decision has
₱754,875.00 become final and executory for failure of respondents
₱397,375.00
to appeal with the NLRC within the reglementary period.
The Ruling of the Court
The petition is bereft of merit.
The Court shall first resolve the procedural issue posed by petitioner.
Petitioner contends that the Labor Arbiter’s Decision of 31 March
2005 became final and executory for failure of respondents to
appeal with the NLRC within the prescribed period. Petitioner claims
that the Labor Arbiter’s decision was constructively served on
respondents as early as August 2005 while respondents appealed
the Arbiter’s decision only on 31 March 2006, way beyond the
reglementary period to appeal. Petitioner points out that service of
an unclaimed registered mail is deemed complete five days from
the date of first notice of the post master. In this case three notices
were issued by the post office, the last being on 1 August 2005. The
unclaimed registered mail was consequently returned to sender.
Petitioner presents the Postmaster’s Certification to prove
constructive service of the Labor Arbiter’s decision on respondents.
The Postmaster certified:
xxx
That upon receipt of said registered mail matter, our registry in
charge, Vicente Asis, Jr., immediately issued the first registry notice
to claim on July 12, 2005 by the addressee. The second and third
notices were issued on July 21 and August 1, 2005, respectively.
That the subject registered letter was returned to the sender (RTS)
because the addressee failed to claim it after our one month
retention period elapsed. Said registered letter was dispatched
from this office to Manila CPO (RTS) under bill #6, line 7, page1,
column 1, on September 8, 2005.12
Section 10, Rule 13 of the Rules of Court provides:
SEC. 10. Completeness of service. – Personal service is complete
upon actual delivery. Service by ordinary mail is complete upon the
expiration of ten (10) days after mailing, unless the court otherwise
provides. Service by registered mail is complete upon actual receipt
by the addressee, or after five (5) days from the date he received
the first notice of the postmaster, whichever date is earlier.
The rule on service by registered mail contemplates two situations:
(1) actual service the completeness of which is determined upon
receipt by the addressee of the registered mail; and (2)
constructive service the completeness of which is determined upon
expiration of five days from the date the addressee received the
first notice of the postmaster.13
Insofar as constructive service is concerned, there must be
conclusive proof that a first notice was duly sent by the postmaster
to the addressee.14 Not only is it required that notice of the
registered mail be issued but that it should also be delivered to and
received by the addressee.15 Notably, the presumption that official
duty has been regularly performed is not applicable in this situation.
It is incumbent upon a party who relies on constructive service to
prove that the notice was sent to, and received by, the
addressee.16
The best evidence to prove that notice was sent would be a
certification from the postmaster, who should certify not only that
the notice was issued or sent but also as to how, when and to
whom the delivery and receipt was made. The mailman may also
testify that the notice was actually delivered.17
In this case, petitioner failed to present any concrete proof as to
how, when and to whom the delivery and receipt of the three
notices issued by the post office was made. There is no conclusive
evidence showing that the post office notices were actually
received by respondents, negating petitioner’s claim of
constructive service of the Labor Arbiter’s decision on respondents.
The Postmaster’s Certification does not sufficiently prove that the
three notices were delivered to and received by respondents; it
only indicates that the post office issued the three notices. Simply
put, the issuance of the notices by the post office is not equivalent
to delivery to and receipt by the addressee of the registered mail.
Thus, there is no proof of completed constructive service of the
Labor Arbiter’s decision on respondents.
At any rate, the NLRC declared the issue on the finality of the Labor
Arbiter’s decision moot as respondents’ appeal was considered in
the interest of substantial justice. We agree with the NLRC. The ends
of justice will be better served if we resolve the instant case on the
merits rather than allowing the substantial issue of whether
petitioner is an independent contractor or an employee linger and
remain unsettled due to procedural technicalities.
The existence of an employer-employee relationship is ultimately a
question of fact. As a general rule, factual issues are beyond the
province of this Court. However, this rule admits of exceptions, one
of which is where there are conflicting findings of fact between the
Court of Appeals, on one hand, and the NLRC and Labor Arbiter,
on the other, such as in the present case.18
To determine the existence of an employer-employee relationship,
case law has consistently applied the four-fold test, to wit: (a) the
selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer’s power to
control the employee on the means and methods by which the
work is accomplished. The so-called "control test" is the most
important indicator of the presence or absence of an employer-
employee relationship.19
In this case, PBA admits repeatedly engaging petitioner’s services,
as shown in the retainer contracts. PBA pays petitioner a retainer
fee, exclusive of per diem or allowances, as stipulated in the
retainer contract. PBA can terminate the retainer contract for
petitioner’s violation of its terms and conditions.
However, respondents argue that the all-important element of
control is lacking in this case, making petitioner an independent
contractor and not an employee of respondents.
Petitioner contends otherwise. Petitioner asserts that he is an
employee of respondents since the latter exercise control over the
performance of his work. Petitioner cites the following stipulations in
the retainer contract which evidence control: (1) respondents
classify or rate a referee; (2) respondents require referees to attend
all basketball games organized or authorized by the PBA, at least
one hour before the start of the first game of each day; (3)
2
respondents assign petitioner to officiate ballgames, or to act as
alternate referee or substitute; (4) referee agrees to observe and
comply with all the requirements of the PBA governing the conduct
of the referees whether on or off the court; (5) referee agrees (a) to
keep himself in good physical, mental, and emotional condition
during the life of the contract; (b) to give always his best effort and
service, and loyalty to the PBA, and not to officiate as referee in any
basketball game outside of the PBA, without written prior consent of
the Commissioner; (c) always to conduct himself on and off the
court according to the highest standards of honesty or morality;
and (6) imposition of various sanctions for violation of the terms and
conditions of the contract.
The foregoing stipulations hardly demonstrate control over the
means and methods by which petitioner performs his work as a
referee officiating a PBA basketball game. The contractual
stipulations do not pertain to, much less dictate, how and when
petitioner will blow the whistle and make calls. On the contrary, they
merely serve as rules of conduct or guidelines in order to maintain
the integrity of the professional basketball league. As correctly
observed by the Court of Appeals, "how could a skilled referee
perform his job without blowing a whistle and making calls? x x x
[H]ow can the PBA control the performance of work of a referee
without controlling his acts of blowing the whistle and making
calls?"20
In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined
the relationship between a television and radio station and one of
its talents, the Court held that not all rules imposed by the hiring
party on the hired party indicate that the latter is an employee of
the former. The Court held:
We find that these general rules are merely guidelines towards the
achievement of the mutually desired result, which are top-rating
television and radio programs that comply with standards of the
industry. We have ruled that:
Further, not every form of control that a party reserves to himself
over the conduct of the other party in relation to the services being
rendered may be accorded the effect of establishing an employer-
employee relationship. The facts of this case fall squarely with the
case of Insular Life Assurance Co., Ltd. v. NLRC. In said case, we
held that:
Logically, the line should be drawn between rules that merely serve
as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which
aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and
the means used to achieve it.22
We agree with respondents that once in the playing court, the
referees exercise their own independent judgment, based on the
rules of the game, as to when and how a call or decision is to be
made. The referees decide whether an infraction was committed,
and the PBA cannot overrule them once the decision is made on
the playing court. The referees are the only, absolute, and final
authority on the playing court. Respondents or any of the PBA
officers cannot and do not determine which calls to make or not to
make and cannot control the referee when he blows the whistle
because such authority exclusively belongs to the referees. The very
nature of petitioner’s job of officiating a professional basketball
game undoubtedly calls for freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an
independent contractor: (1) the referees are required to report for
work only when PBA games are scheduled, which is three times a
week spread over an average of only 105 playing days a year, and
they officiate games at an average of two hours per game; and (2)
the only deductions from the fees received by the referees are
withholding taxes.
In other words, unlike regular employees who ordinarily report for
work eight hours per day for five days a week, petitioner is required
to report for work only when PBA games are scheduled or three
times a week at two hours per game. In addition, there are no
deductions for contributions to the Social Security System, Philhealth
or Pag-Ibig, which are the usual deductions from employees’
salaries. These undisputed circumstances buttress the fact that
petitioner is an independent contractor, and not an employee of
respondents.
Furthermore, the applicable foreign case law declares that a
referee is an independent contractor, whose special skills and
independent judgment are required specifically for such position
and cannot possibly be controlled by the hiring party.
In Yonan v. United States Soccer Federation, Inc.,23 the United States
District Court of Illinois held that plaintiff, a soccer referee, is an
independent contractor, and not an employee of defendant which
is the statutory body that governs soccer in the United States. As
such, plaintiff was not entitled to protection by the Age
Discrimination in Employment Act. The U.S. District Court ruled:
Generally, "if an employer has the right to control and direct the
work of an individual, not only as to the result to be achieved, but
also as to details by which the result is achieved, an
employer/employee relationship is likely to exist." The Court must be
careful to distinguish between "control[ling] the conduct of another
party contracting party by setting out in detail his obligations" the case law, control the means and method by which the umpires
consistent with the freedom of contract, on the one hand, and "the work.
discretionary control an employer daily exercises over its In addition, the fact that PBA repeatedly hired petitioner does not
employee’s conduct" on the other. by itself prove that petitioner is an employee of the former. For a
Yonan asserts that the Federation "closely supervised" his hired party to be considered an employee, the hiring party must
performance at each soccer game he officiated by giving him an have control over the means and methods by which the hired party
assessor, discussing his performance, and controlling what clothes is to perform his work, which is absent in this case. The continuous
he wore while on the field and traveling. Putting aside that the rehiring by PBA of petitioner simply signifies the renewal of the
Federation did not, for the most part, control what clothes he wore, contract between PBA and petitioner, and highlights the
the Federation did not supervise Yonan, but rather evaluated his satisfactory services rendered by petitioner warranting such
performance after matches. That the Federation evaluated Yonan contract renewal. Conversely, if PBA decides to discontinue
as a referee does not mean that he was an employee. There is no petitioner’s services at the end of the term fixed in the contract,
question that parties retaining independent contractors may judge whether for unsatisfactory services, or violation of the terms and
the performance of those contractors to determine if the conditions of the contract, or for whatever other reason, the same
contractual relationship should continue. x x x merely results in the non-renewal of the contract, as in the present
It is undisputed that the Federation did not control the way Yonan case. The non-renewal of the contract between the parties does
refereed his games.1âwphi1 He had full discretion and authority, not constitute illegal dismissal of petitioner by respondents.
under the Laws of the Game, to call the game as he saw fit. x x x In WHEREFORE, we DENY the petition and AFFIRM the assailed decision
a similar vein, subjecting Yonan to qualification standards and of the Court of Appeals.
procedures like the Federation’s registration and training SO ORDERED.
requirements does not create an employer/employee relationship.
xxx
A position that requires special skills and independent judgment
weights in favor of independent contractor status. x x x Unskilled
work, on the other hand, suggests an employment relationship. x x x
Here, it is undisputed that soccer refereeing, especially at the
professional and international level, requires "a great deal of skill
and natural ability." Yonan asserts that it was the Federation’s
training that made him a top referee, and that suggests he was an
employee. Though substantial training supports an employment
inference, that inference is dulled significantly or negated when the
putative employer’s activity is the result of a statutory requirement,
not the employer’s choice. x x x
In McInturff v. Battle Ground Academy of Franklin,24 it was held that
the umpire was not an agent of the Tennessee Secondary School
Athletic Association (TSSAA), so the player’s vicarious liability claim
against the association should be dismissed. In finding that the
umpire is an independent contractor, the Court of Appeals of
Tennesse ruled:
The TSSAA deals with umpires to achieve a result-uniform rules for all
baseball games played between TSSAA member schools. The
TSSAA does not supervise regular season games. It does not tell an
official how to conduct the game beyond the framework
established by the rules. The TSSAA does not, in the vernacular of
3

G.R. No. 169510 August 8, 2011
ATOK BIG WEDGE COMPANY, INC., Petitioner,
vs.
JESUS P. GISON, Respondent.
DECISION
PERALTA, J.:
This is a petition for review on certiorari seeking to reverse and set
aside the Decision1 dated May 31, 2005 of the Court of Appeals
(CA) in CA-G.R. SP No. 87846, and the Resolution2 dated August 23,
2005 denying petitioner’s motion for reconsideration.
The procedural and factual antecedents are as follows:
Sometime in February 1992, respondent Jesus P. Gison was
engaged as part-time consultant on retainer basis by petitioner
Atok Big Wedge Company, Inc. through its then Asst. Vice-President
and Acting Resident Manager, Rutillo A. Torres. As a consultant on
retainer basis, respondent assisted petitioner's retained legal
counsel with matters pertaining to the prosecution of cases against
illegal surface occupants within the area covered by the
company's mineral claims. Respondent was likewise tasked to
perform liaison work with several government agencies, which he
said was his expertise.
Petitioner did not require respondent to report to its office on a
regular basis, except when occasionally requested by the
management to discuss matters needing his expertise as a
consultant. As payment for his services, respondent received a
retainer fee of ₱3,000.00 a month,3 which was delivered to him
either at his residence or in a local restaurant. The parties executed
a retainer agreement, but such agreement was misplaced and can
no longer be found.
The said arrangement continued for the next eleven years.
Sometime thereafter, since respondent was getting old, he
requested that petitioner cause his registration with the Social
Security System (SSS), but petitioner did not accede to his request.
He later reiterated his request but it was ignored by respondent
considering that he was only a retainer/consultant. On February 4,
2003, respondent filed a Complaint4 with the SSS against petitioner
for the latter's refusal to cause his registration with the SSS.
On the same date, Mario D. Cera, in his capacity as resident
manager of petitioner, issued a Memorandum5advising respondent
that within 30 days from receipt thereof, petitioner is terminating his
retainer contract with the company since his services are no longer
necessary.
On February 21, 2003, respondent filed a Complaint6 for illegal
dismissal, unfair labor practice, underpayment of wages, non-
payment of 13th month pay, vacation pay, and sick leave pay with
the National Labor Relations Commission (NLRC), Regional
Arbitration Branch (RAB), Cordillera Administrative Region, against
petitioner, Mario D. Cera, and Teofilo R. Asuncion, Jr. The case was
docketed as NLRC Case No. RAB-CAR-02-0098-03.
Respondent alleged that:
x x x [S]ometime in January 1992, Rutillo A. Torres, then the resident
manager of respondent Atok Big Wedge Co., Inc., or Atok for
brevity, approached him and asked him if he can help the
company’s problem involving the 700 million pesos crop damage
claims of the residents living at the minesite of Atok. He participated
in a series of dialogues conducted with the residents. Mr. Torres
offered to pay him ₱3,000.00 per month plus representation
expenses. It was also agreed upon by him and Torres that his
participation in resolving the problem was temporary and there will
be no employer-employee relationship between him and Atok. It
was also agreed upon that his compensation, allowances and
other expenses will be paid through disbursement vouchers.
On February 1, 1992 he joined Atok. One week thereafter, the
aggrieved crop damage claimants barricaded the only passage to
and from the minesite. In the early morning of February 1, 1992, a
dialogue was made by Atok and the crop damage claimants.
Unfortunately, Atok’s representatives, including him, were virtually
held hostage by the irate claimants who demanded on the spot
payment of their claims. He was able to convince the claimants to
release the company representatives pending referral of the issue
to higher management.
A case was filed in court for the lifting of the barricades and the
court ordered the lifting of the barricade. While Atok was
prosecuting its case with the claimants, another case erupted
involving its partner, Benguet Corporation. After Atok parted ways
with Benguet Corporation, some properties acquired by the
partnership and some receivables by Benguet Corporation was the
problem. He was again entangled with documentation,
conferences, meetings, planning, execution and clerical works.
After two years, the controversy was resolved and Atok received its
share of the properties of the partnership, which is about 5 million
pesos worth of equipment and condonation of Atok’s
accountabilities with Benguet Corporation in the amount of
₱900,000.00.
In the meantime, crop damage claimants lost interest in pursuing
their claims against Atok and Atok was relieved of the burden of
paying 700 million pesos. In between attending the problems of the
crop damage issue, he was also assigned to do liaison works with
4
the SEC, Bureau of Mines, municipal government of Itogon,
Benguet, the Courts and other government offices.
After the crop damage claims and the controversy were resolved,
he was permanently assigned by Atok to take charge of some
liaison matters and public relations in Baguio and Benguet Province,
and to report regularly to Atok’s office in Manila to attend meetings
and so he had to stay in Manila at least one week a month.
Because of his length of service, he invited the attention of the top
officers of the company that he is already entitled to the benefits
due an employee under the law, but management ignored his
requests. However, he continued to avail of his representation
expenses and reimbursement of company-related expenses. He
also enjoyed the privilege of securing interest free salary loans
payable in one year through salary deduction.
In the succeeding years of his employment, he was designated as
liaison officer, public relation officer and legal assistant, and to assist
in the ejection of illegal occupants in the mining claims of Atok.
Since he was getting older, being already 56 years old, he
reiterated his request to the company to cause his registration with
the SSS. His request was again ignored and so he filed a complaint
with the SSS. After filing his complaint with the SSS, respondents
terminated his services.7
On September 26, 2003, after the parties have submitted their
respective pleadings, Labor Arbiter Rolando D. Gambito rendered
a Decision8 ruling in favor of the petitioner. Finding no employer-
employee relationship between petitioner and respondent, the
Labor Arbiter dismissed the complaint for lack of merit.
Respondent then appealed the decision to the NLRC.
On July 30, 2004, the NLRC, Second Division, issued a
Resolution9 affirming the decision of the Labor Arbiter. Respondent
filed a Motion for Reconsideration, but it was denied in the
Resolution10 dated September 30, 2004.
Aggrieved, respondent filed a petition for review under Rule 65 of
the Rules of Court before the CA questioning the decision and
resolution of the NLRC, which was later docketed as CA-G.R. SP No.
87846. In support of his petition, respondent raised the following
issues:
a) Whether or not the Decision of the Honorable Labor
Arbiter and the subsequent Resolutions of the Honorable
Public Respondent affirming the same, are in harmony
with the law and the facts of the case;
b) Whether or not the Honorable Labor Arbiter Committed
a Grave Abuse of Discretion in Dismissing the Complaint of
Petitioner and whether or not the Honorable Public
 Respondent Committed a Grave Abuse of Discretion
when it affirmed the said Decision.11
On May 31, 2005, the CA rendered the assailed Decision annulling
and setting aside the decision of the NLRC, the decretal portion of
which reads:
WHEREFORE, the petition is GRANTED. The assailed Resolution of the
National Labor Relations Commission dismissing petitioner's
complaint for illegal dismissal is ANNULLED and SET ASIDE. Private
respondent Atok Big Wedge Company Incorporated is ORDERED to
reinstate petitioner Jesus P. Gison to his former or equivalent position
without loss of seniority rights and to pay him full backwages,
inclusive of allowances and other benefits or their monetary
equivalent computed from the time these were withheld from him
up to the time of his actual and effective reinstatement. This case is
ordered REMANDED to the Labor Arbiter for the proper computation
of backwages, allowances and other benefits due to petitioner.
Costs against private respondent Atok Big Wedge Company
Incorporated.
SO ORDERED.12
In ruling in favor of the respondent, the CA opined, among other
things, that both the Labor Arbiter and the NLRC may have
overlooked Article 280 of the Labor Code,13 or the provision which
distinguishes between two kinds of employees, i.e., regular and
casual employees. Applying the provision to the respondent's case,
he is deemed a regular employee of the petitioner after the lapse
of one year from his employment. Considering also that respondent
had been performing services for the petitioner for eleven years,
respondent is entitled to the rights and privileges of a regular
employee.
The CA added that although there was an agreement between the
parties that respondent's employment would only be temporary, it
clearly appears that petitioner disregarded the same by repeatedly
giving petitioner several tasks to perform. Moreover, although
respondent may have waived his right to attain a regular status of
employment when he agreed to perform these tasks on a
temporary employment status, still, it was the law that recognized
and considered him a regular employee after his first year of
rendering service to petitioner. As such, the waiver was ineffective.
Hence, the petition assigning the following errors:
I. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF
SUBSTANCE CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS
HONORABLE COURT WHEN IT GAVE DUE COURSE TO THE PETITION
FOR CERTIORARI DESPITE THE FACT THAT THERE WAS NO SHOWING
THAT THE NATIONAL LABOR RELATIONS COMMISSION COMMITTED
GRAVE ABUSE OF DISCRETION.
II. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF
SUBSTANCE CONTRARY TO THE LAW AND APPLICABLE RULINGS OF
THIS HONORABLE COURT WHEN IT BASED ITS FINDING THAT
RESPONDENT IS ENTITLED TO REGULAR EMPLOYMENT ON A
PROVISION OF LAW THAT THIS HONORABLE COURT HAS DECLARED
TO BE INAPPLICABLE IN CASE THE EXISTENCE OF AN EMPLOYER-
EMPLOYEE RELATIONSHIP IS IN DISPUTE OR IS THE FACT IN ISSUE.
III. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS
OF SUBSTANCE CONTRARY TO LAW AND APPLICABLE RULINGS OF
THIS HONORABLE COURT WHEN IT ERRONEOUSLY FOUND THAT
RESPONDENT IS A REGULAR EMPLOYEE OF THE COMPANY.
IV. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS
OF SUBSTANCE CONTRARY TO LAW AND APPLICABLE RULINGS OF
THIS HONORABLE COURT WHEN IT ERRONEOUSLY DIRECTED
RESPONDENT'S REINSTATEMENT DESPITE THE FACT THAT THE NATURE
OF THE SERVICES HE PROVIDED TO THE COMPANY WAS SENSITIVE
AND CONFIDENTIAL.14
Petitioner argues that since the petition filed by the respondent
before the CA was a petition for certiorari under Rule 65 of the Rules
of Court, the CA should have limited the issue on whether or not
there was grave abuse of discretion on the part of the NLRC in
rendering the resolution affirming the decision of the Labor Arbiter.
Petitioner also posits that the CA erred in applying Article 280 of the
Labor Code in determining whether there was an employer-
employee relationship between the petitioner and the respondent.
Petitioner contends that where the existence of an employer-
employee relationship is in dispute, Article 280 of the Labor Code is
inapplicable. The said article only set the distinction between a
casual employee from a regular employee for purposes of
determining the rights of an employee to be entitled to certain
benefits.
Petitioner insists that respondent is not a regular employee and not
entitled to reinstatement.
On his part, respondent maintains that he is an employee of the
petitioner and that the CA did not err in ruling in his favor.
The petition is meritorious.
At the outset, respondent's recourse to the CA was the proper
remedy to question the resolution of the NLRC. It bears stressing that
there is no appeal from the decision or resolution of the NLRC. As
this Court enunciated in the case of St. Martin Funeral Home v.
NLRC,15 the special civil action of certiorari under Rule 65 of the
Rules of Civil Procedure, which is filed before the CA, is the proper
vehicle for judicial review of decisions of the NLRC. The petition
should be initially filed before the Court of Appeals in strict
observance of the doctrine on hierarchy of courts as the
5
appropriate forum for the relief desired.16 This Court not being a trier
of facts, the resolution of unclear or ambiguous factual findings
should be left to the CA as it is procedurally equipped for that
purpose. From the decision of the Court of Appeals, an ordinary
appeal under Rule 45 of the Rules of Civil Procedure before the
Supreme Court may be resorted to by the parties. Hence,
respondent's resort to the CA was appropriate under the
circumstances.
Anent the primordial issue of whether or not an employer-employee
relationship exists between petitioner and respondent.
Well-entrenched is 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
substantial evidence.17 Being a question of fact, the determination
whether such a relationship exists between petitioner and
respondent was well within the province of the Labor Arbiter and
the NLRC. Being supported by substantial evidence, such
determination should have been accorded great weight by the CA
in resolving the issue.
To ascertain the existence of an employer-employee relationship
jurisprudence has invariably adhered to the four-fold test, to wit: (1)
the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the power to control
the employee's conduct, or the so-called "control test."18 Of these
four, the last one is the most important.19 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.20
Applying the aforementioned test, an employer-employee
relationship is apparently absent in the case at bar. Among other
things, respondent was not required to report everyday during
regular office hours of petitioner. Respondent's monthly retainer fees
were paid to him either at his residence or a local restaurant. More
importantly, petitioner did not prescribe the manner in which
respondent would accomplish any of the tasks in which his expertise
as a liaison officer was needed; respondent was left alone and
given the freedom to accomplish the tasks using his own means
and method. Respondent was assigned tasks to perform, but
petitioner did not control the manner and methods by which
respondent performed these tasks. Verily, the absence of the
element of control on the part of the petitioner engenders a
conclusion that he is not an employee of the petitioner.
Moreover, the absence of the parties' retainership agreement
notwithstanding, respondent clearly admitted that petitioner hired
him in a limited capacity only and that there will be no employer-
employee relationship between them. As averred in respondent's
Position Paper:21
2. For the participation of complainant regarding this particular
problem of Atok, Mr. Torres offered him a pay in the amount of
Php3,000.00 per month plus representation expenses. It was also
agreed by Mr. Torres and the complainant that his participation on
this particular problem of Atok will be temporary since the problem
was then contemplated to be limited in nature, hence, there will be
no employer-employee relationship between him and Atok.
Complainant agreed on this arrangement. It was also agreed that
complainant's compensations, allowances, representation
expenses and reimbursement of company- related expenses will be
processed and paid through disbursement vouchers;22
Respondent was well aware of the agreement that he was hired
merely as a liaison or consultant of the petitioner and he agreed to
perform tasks for the petitioner on a temporary employment status
only. However, respondent anchors his claim that he became a
regular employee of the petitioner based on his contention that the
"temporary" aspect of his job and its "limited" nature could not have
lasted for eleven years unless some time during that period, he
became a regular employee of the petitioner by continually
performing services for the company.
Contrary to the conclusion of the CA, respondent is not an
employee, much more a regular employee of petitioner. The
appellate court's premise that regular employees are those who
perform activities which are desirable and necessary for the
business of the employer is not determinative in this case. In fact,
any agreement may provide that one party shall render services for
and in behalf of another, no matter how necessary for the latter's
business, even without being hired as an employee.23 Hence,
respondent's length of service and petitioner's repeated act of
assigning respondent some tasks to be performed did not result to
respondent's entitlement to the rights and privileges of a regular
employee.
Furthermore, despite the fact that petitioner made use of the
services of respondent for eleven years, he still cannot be
considered as a regular employee of petitioner. Article 280 of the
Labor Code, in which the lower court used to buttress its findings
that respondent became a regular employee of the petitioner, is
not applicable in the case at bar. Indeed, the Court has ruled that
said provision is not the yardstick for determining the existence of an
employment relationship because it merely distinguishes between
two kinds of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to
certain benefits, to join or form a union, or to security of tenure; it
does not apply where the existence of an employment relationship
is in dispute.24 It is, therefore, erroneous on the part of the Court of
Appeals to rely on Article 280 in determining whether an employer-
employee relationship exists between respondent and the
petitioner
Considering that there is no employer-employee relationship
between the parties, the termination of respondent's services by the
petitioner after due notice did not constitute illegal dismissal
warranting his reinstatement and the payment of full backwages,
allowances and other benefits.
WHEREFORE, premises considered, the petition is GRANTED. The
Decision and the Resolution of the Court of Appeals in CA-G.R. SP
No. 87846, are REVERSED and SET ASIDE. The Resolutions dated July
30, 2004 and September 30, 2004 of the National Labor Relations
Commission are REINSTATED.
SO ORDERED.
6
G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of
Court seeks to annul and set aside the Decision and Resolution of
the Court of Appeals dated October 29, 2004 1 and October 7,
2005, 2 respectively, in CA-G.R. SP No. 78515 dismissing the
complaint for constructive dismissal filed by herein petitioner
Angelina Francisco. The appellate court reversed and set aside the
Decision of the National Labor Relations Commission (NLRC) dated
April 15, 2003, 3 in NLRC NCR CA No. 032766-02 which affirmed with
modification the decision of the Labor Arbiter dated July 31,
2002, 4 in NLRC-NCR Case No. 30-10-0-489-01, finding that private
respondents were liable for constructive dismissal.
In 1995, petitioner was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and
Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as
Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of
the company. 5
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. 6
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 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. 7
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 be connected 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 matters. 9
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.
Private respondents averred that petitioner is not an employee of
Kasei Corporation. They alleged that petitioner was hired in 1995 as
one of its technical consultants on accounting matters and act
concurrently as Corporate Secretary. As technical consultant,
petitioner performed her work at her own discretion without control
and supervision of Kasei Corporation. Petitioner had no daily time
record and she came to the office any time she wanted. 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. Petitioner did not go through the usual procedure of
selection of employees, but her services were engaged through a
Board Resolution designating her as technical consultant. 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 company’s employees. 12
Petitioner’s 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.
To prove that petitioner was not an employee of the corporation,
private respondents submitted a list of employees for the years 1999
and 2000 duly received by the BIR showing that petitioner was not
among the employees reported to the BIR, as well as a list of
payees subject to expanded withholding tax which included
petitioner. SSS records were also submitted showing that petitioner’s
latest employer was Seiji Corporation. 13
The Labor Arbiter found that petitioner was illegally dismissed, thus:
WHEREFORE, premises considered, judgment is hereby rendered as
follows:
1. finding complainant an employee of respondent corporation;
2. declaring complainant’s dismissal as illegal;
3. ordering respondents to reinstate complainant to her former
position without loss of seniority rights and jointly and severally pay
complainant her money claims in accordance with the following
computation:
a. Backwages 10/2001 – 07/2002 275,000.00
(27,500 x 10 mos.)
b. Salary Differentials (01/2001 – 09/2001) 22,500.00
c. Housing Allowance (01/2001 – 07/2002) 57,000.00
d. Midyear Bonus 2001 27,500.00
e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei
Corp. from 1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10% Attorney’s fees 87,076.50
P957,742.50
If reinstatement is no longer feasible, respondents are ordered to
pay complainant separation pay with additional backwages that
would accrue up to actual payment of separation pay.
SO ORDERED. 14
On April 15, 2003, the NLRC affirmed with modification the Decision
of the Labor Arbiter, the dispositive portion of which reads:
PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby
MODIFIED as follows:
1) Respondents are directed to pay complainant separation pay
computed at one month per year of service in addition to full
backwages from October 2001 to July 31, 2002;
2) The awards representing moral and exemplary damages and
10% share in profit in the respective accounts of P100,000.00 and
P361,175.00 are deleted;
3) The award of 10% attorney’s fees shall be based on salary
differential award only;
7
4) The awards representing salary differentials, housing allowance,
mid year bonus and 13th month pay are AFFIRMED.
SO ORDERED. 15
On appeal, the Court of Appeals reversed the NLRC decision, thus:
WHEREFORE, the instant petition is hereby GRANTED. The decision of
the National Labor Relations Commissions dated April 15, 2003 is
hereby REVERSED and SET ASIDE and a new one is hereby rendered
dismissing the complaint filed by private respondent against Kasei
Corporation, et al. for constructive dismissal.
SO ORDERED. 16
The appellate court denied petitioner’s motion for reconsideration,
hence, the present recourse.
The core issues to be resolved in this case are (1) whether there was
an employer-employee relationship between petitioner and private
respondent Kasei Corporation; and if in the affirmative, (2) whether
petitioner was illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and the
National Labor Relations Commission on one hand, and the Court
of Appeals on the other, there is a need to reexamine the records
to determine which of the propositions espoused by the contending
parties is supported by substantial evidence. 17
We held in Sevilla v. Court of Appeals 18 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.
However, in certain cases the control test is not sufficient to give a
complete picture of the relationship between the parties, owing to
the complexity of such a relationship where several positions have
been held by the worker. There are instances when, aside from the
employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished,
economic realities of the employment relations help provide a
comprehensive analysis of the true classification of the individual,
whether as employee, independent contractor, corporate officer
or some other capacity.
The better approach would therefore be to adopt a two-tiered test
involving: (1) the putative employer’s 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.
This two-tiered test would provide us with a framework of analysis,
which would take into consideration the totality of circumstances
surrounding the true nature of the relationship between the parties.
This is especially appropriate in this case where there is no written
agreement or terms of reference to base the relationship on; and
due to the complexity of the relationship based on the various
positions and responsibilities given to the worker over the period of
the latter’s employment.
The control test initially found application in the case of Viaña v. Al-
Lagadan and Piga, 19 and lately in Leonardo v. Court of
Appeals, 20 where we held that there is an employer-employee
relationship when the person for whom the services are performed
reserves the right to control not only the end achieved but also the
manner and means used to achieve that end.
In Sevilla v. Court of Appeals, 21 we 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, 22 such as: (1) the extent to which the services
performed are an integral part of the employer’s business; (2) the
extent of the worker’s investment in equipment and facilities; (3) the
nature and degree of control exercised by the employer; (4) the
worker’s 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. 23
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. 24 In the United States, the
touchstone of economic reality in analyzing possible employment
relationships for purposes of the Federal Labor Standards Act is
dependency. 25 By analogy, the benchmark of economic reality in
analyzing possible employment relationships for purposes of the
Labor Code ought to be the economic dependence of the worker
on his employer.
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 corporation’s Technical
Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant,
Acting Manager and Corporate Secretary, with substantially the
same job functions, that is, rendering accounting and tax services
to the company and performing functions necessary and desirable
for the proper operation of the corporation such as securing
business permits and other licenses over an indefinite period of
engagement.
Under the broader economic reality test, the petitioner can likewise
be said to be an employee of respondent corporation because she
had served the company for six years before her dismissal, receiving
check vouchers indicating her salaries/wages, benefits, 13th month
pay, bonuses and allowances, as well as deductions and Social
Security contributions from August 1, 1999 to December 18,
2000. 26 When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by Irene
Ballesteros. Petitioner’s membership in the SSS as manifested by a
copy of the SSS specimen signature card which was signed by the
President of Kasei Corporation and the inclusion of her name in the
on-line inquiry system of the SSS evinces the existence of an
employer-employee relationship between petitioner and
respondent corporation. 27
It is therefore apparent that petitioner is economically dependent
on respondent corporation for her continued employment in the
latter’s line of business.
In Domasig v. National Labor Relations Commission, 28 we held that
in a business establishment, an identification card is provided not
only as a security measure but mainly to identify the holder thereof
as a bona fide employee of the firm that issues it. Together with the
cash vouchers covering petitioner’s salaries for the months stated
therein, these matters constitute substantial evidence adequate to
support a conclusion that petitioner was an employee of private
respondent.
We likewise ruled in Flores v. Nuestro 29 that a corporation who
registers its workers with the SSS is proof that the latter were the
former’s employees. The coverage of Social Security Law is
predicated on the existence of an employer-employee relationship.
Furthermore, the affidavit of Seiji Kamura dated December 5, 2001
has clearly established that petitioner never acted as Corporate
Secretary and that her designation as such was only for
convenience. The actual nature of petitioner’s job was as Kamura’s
direct assistant with the duty of acting as Liaison Officer in
representing the company to secure construction permits, license to
operate and other requirements imposed by government agencies.
8
Petitioner was never entrusted with corporate documents of the
company, nor required to attend the meeting of the corporation.
She was never privy to the preparation of any document for the
corporation, although once in a while she was required to sign
prepared documentation for the company. 30
The second affidavit of Kamura dated March 7, 2002 which
repudiated the December 5, 2001 affidavit has been allegedly
withdrawn by Kamura himself from the records of the
case. 31 Regardless of this fact, we are convinced that the
allegations in the first affidavit are sufficient to establish that
petitioner is an employee of Kasei Corporation.
Granting arguendo, that the second affidavit validly repudiated the
first one, courts do not generally look with favor on any retraction or
recanted testimony, for it could have been secured by
considerations other than to tell the truth and would make solemn
trials a mockery and place the investigation of the truth at the
mercy of unscrupulous witnesses. 32 A recantation does not
necessarily cancel an earlier declaration, but like any other
testimony the same is subject to the test of credibility and should be
received with caution. 33
Based on the foregoing, 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.
The corporation constructively dismissed petitioner when it reduced
her salary by P2,500 a month from January to September 2001. This
amounts to an illegal termination of employment, where the
petitioner is entitled to full backwages. Since the position of
petitioner as accountant is one of trust and confidence, and under
the principle of strained relations, petitioner is further entitled to
separation pay, in lieu of reinstatement. 34
A diminution of pay is prejudicial to the employee and amounts to
constructive dismissal. Constructive dismissal is an involuntary
resignation resulting in cessation of work resorted to when
continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or
when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to an employee. 35 In Globe Telecom, Inc. v.
Florendo-Flores, 36 we ruled that where an employee ceases to work
due to a demotion of rank or a diminution of pay, an unreasonable
situation arises which creates an adverse working environment
rendering it impossible for such employee to continue working for
her employer. Hence, her severance from the company was not of
her own making and therefore amounted to an illegal termination
of employment.
In affording full protection to labor, this Court must ensure equal
work opportunities regardless of sex, race or creed. Even as we, in
every case, attempt to carefully balance the fragile relationship
between employees and employers, we are mindful of the fact that
the policy of the law is to apply the Labor Code to a greater
number of employees. This would enable employees to avail of the
benefits accorded to them by law, in line with the constitutional
mandate giving maximum aid and protection to labor, promoting
their welfare and reaffirming it as a primary social economic force
in furtherance of social justice and national development.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of
the Court of Appeals dated October 29, 2004 and October 7, 2005,
respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE.
The Decision of the National Labor Relations Commission dated
April 15, 2003 in NLRC NCR CA No. 032766-02, is REINSTATED. The
case is REMANDED to the Labor Arbiter for the recomputation of
petitioner Angelina Francisco’s full backwages from the time she
was illegally terminated until the date of finality of this decision, and
separation pay representing one-half month pay for every year of
service, where a fraction of at least six months shall be considered
as one whole year.
SO ORDERED.
G.R. No. 94951 April 22, 1991
APEX MINING COMPANY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA
CANDIDO, respondents.
Bernabe B. Alabastro for petitioner.
Angel Fernandez for private respondent.
GANCAYCO, J.:
Is the househelper in the staff houses of an industrial company a
domestic helper or a regular employee of the said firm? This is the
novel issue raised in this petition.
Private respondent Sinclita Candida was employed by petitioner
Apex Mining Company, Inc. on May 18, 1973 to perform laundry
services at its staff house located at Masara, Maco, Davao del
Norte. In the beginning, she was paid on a piece rate basis.
However, on January 17, 1982, she was paid on a monthly basis at
P250.00 a month which was ultimately increased to P575.00 a
month.
On December 18, 1987, while she was attending to her assigned
task and she was hanging her laundry, she accidentally slipped and
hit her back on a stone. She reported the accident to her
immediate supervisor Mila de la Rosa and to the personnel officer,
Florendo D. Asirit. As a result of the accident she was not able to
continue with her work. She was permitted to go on leave for
medication. De la Rosa offered her the amount of P 2,000.00 which
was eventually increased to P5,000.00 to persuade her to quit her
job, but she refused the offer and preferred to return to work.
Petitioner did not allow her to return to work and dismissed her on
February 4, 1988.
On March 11, 1988, private respondent filed a request for assistance
with the Department of Labor and Employment. After the parties
submitted their position papers as required by the labor arbiter
assigned to the case on August 24, 1988 the latter rendered a
decision, the dispositive part of which reads as follows:
WHEREFORE, Conformably With The Foregoing, judgment is
hereby rendered ordering the respondent, Apex Mining
Company, Inc., Masara, Davao del Norte, to pay the
complainant, to wit:
1 Salary
Differential –– P16,289.20
2. Emergency Living
Allowance –– 12,430.00
9
3. 13th Month Pay
Differential –– 1,322.32
4. Separation Pay
(One-month for
every year of
service [1973-19881) –– 25,119.30
or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY
ONE PESOS AND 42/100 (P55,161.42).
SO ORDERED.1
Not satisfied therewith, petitioner appealed to the public
respondent National Labor Relations Commission (NLRC), wherein in
due course a decision was rendered by the Fifth Division thereof on
July 20, 1989 dismissing the appeal for lack of merit and affirming
the appealed decision. A motion for reconsideration thereof was
denied in a resolution of the NLRC dated June 29, 1990.
Hence, the herein petition for review by certiorari, which
appopriately should be a special civil action for certiorari, and
which in the interest of justice, is hereby treated as such.2 The main
thrust of the petition is that private respondent should be treated as
a mere househelper or domestic servant and not as a regular
employee of petitioner.
The petition is devoid of merit.
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended,
the terms "househelper" or "domestic servant" are defined as follows:
The term "househelper" as used herein is synonymous to
the term "domestic servant" and shall refer to any person,
whether male or female, who renders services in and
about the employer's home and which services are usually
necessary or desirable for the maintenance and
enjoyment thereof, and ministers exclusively to the
personal comfort and enjoyment of the employer's family.3
The foregoing definition clearly contemplates such househelper or
domestic servant who is employed in the employer's home to
minister exclusively to the personal comfort and enjoyment of the
employer's family. Such definition covers family drivers, domestic
servants, laundry women, yayas, gardeners, houseboys and other
similar househelps.
The definition cannot be interpreted to include househelp or
laundrywomen working in staffhouses of a company, like petitioner
who attends to the needs of the company's guest and other
persons availing of said facilities. By the same token, it cannot be
considered to extend to then driver, houseboy, or gardener
exclusively working in the company, the staffhouses and its
premises. They may not be considered as within the meaning of a
"househelper" or "domestic servant" as above-defined by law.
The criteria is the personal comfort and enjoyment of the family of
the employer in the home of said employer. While it may be true
that the nature of the work of a househelper, domestic servant or
laundrywoman in a home or in a company staffhouse may be
similar in nature, the difference in their circumstances is that in the
former instance they are actually serving the family while in the
latter case, whether it is a corporation or a single proprietorship
engaged in business or industry or any other agricultural or similar
pursuit, service is being rendered in the staffhouses or within the
premises of the business of the employer. In such instance, they are
employees of the company or employer in the business concerned
entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic
servant is assigned to certain aspects of the business of the
employer that such househelper or domestic servant may be
considered as such as employee. The Court finds no merit in making
any such distinction. The mere fact that the househelper or
domestic servant is working within the premises of the business of
the employer and in relation to or in connection with its business, as
in its staffhouses for its guest or even for its officers and employees,
warrants the conclusion that such househelper or domestic servant
is and should be considered as a regular employee of the employer
and not as a mere family househelper or domestic servant as
contemplated in Rule XIII, Section l(b), Book 3 of the Labor Code, as
amended.
Petitioner denies having illegally dismissed private respondent and
maintains that respondent abandoned her work.1âwphi1This
argument notwithstanding, there is enough evidence to show that
because of an accident which took place while private respondent
was performing her laundry services, she was not able to work and
was ultimately separated from the service. She is, therefore, entitled
to appropriate relief as a regular employee of petitioner. Inasmuch
as private respondent appears not to be interested in returning to
her work for valid reasons, the payment of separation pay to her is
in order.
WHEREFORE, the petition is DISMISSED and the appealed decision
and resolution of public respondent NLRC are hereby AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.
G.R. No. 159577 May 3, 2006
CHARLITO PEÑARANDA, Petitioner,
vs.
BAGANGA PLYWOOD CORPORATION and HUDSON
CHUA, Respondents.
DECISION
PANGANIBAN, CJ:
Managerial employees and members of the managerial staff are
exempted from the provisions of the Labor Code on labor
standards. Since petitioner belongs to this class of employees, he is
not entitled to overtime pay and premium pay for working on rest
days.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court,
assailing the January 27, 20032 and July 4, 20033 Resolutions of the
Court of Appeals (CA) in CA-GR SP No. 74358. The earlier Resolution
disposed as follows:
"WHEREFORE, premises considered, the instant petition is
hereby DISMISSED."4
The latter Resolution denied reconsideration.
On the other hand, the Decision of the National Labor Relations
Commission (NLRC) challenged in the CA disposed as follows:
"WHEREFORE, premises considered, the decision of the Labor Arbiter
below awarding overtime pay and premium pay for rest day to
complainant is hereby REVERSED and SET ASIDE, and the complaint
in the above-entitled case dismissed for lack of merit.5
The Facts
Sometime in June 1999, Petitioner Charlito Peñaranda was hired as
an employee of Baganga Plywood Corporation (BPC) to take
charge of the operations and maintenance of its steam plant
boiler.6 In May 2001, Peñaranda filed a Complaint for illegal
dismissal with money claims against BPC and its general manager,
Hudson Chua, before the NLRC.7
After the parties failed to settle amicably, the labor arbiter8 directed
the parties to file their position papers and submit supporting
documents.9 Their respective allegations are summarized by the
labor arbiter as follows:
"[Peñaranda] through counsel in his position paper alleges that he
was employed by respondent [Baganga] on March 15, 1999 with a
monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer
until he was illegally terminated on December 19, 2000. Further, [he]
alleges that his services [were] terminated without the benefit of
due process and valid grounds in accordance with law.
Furthermore, he was not paid his overtime pay, premium pay for
working during holidays/rest days, night shift differentials and finally
10
claims for payment of damages and attorney’s fees having been
forced to litigate the present complaint.
"Upon the other hand, respondent [BPC] is a domestic corporation
duly organized and existing under Philippine laws and is represented
herein by its General Manager HUDSON CHUA, [the] individual
respondent. Respondents thru counsel allege that complainant’s
separation from service was done pursuant to Art. 283 of the Labor
Code. The respondent [BPC] was on temporary closure due to
repair and general maintenance and it applied for clearance with
the Department of Labor and Employment, Regional Office No. XI
to shut down and to dismiss employees (par. 2 position paper). And
due to the insistence of herein complainant he was paid his
separation benefits (Annexes C and D, ibid). Consequently, when
respondent [BPC] partially reopened in January 2001, [Peñaranda]
failed to reapply. Hence, he was not terminated from employment
much less illegally. He opted to severe employment when he
insisted payment of his separation benefits. Furthermore, being a
managerial employee he is not entitled to overtime pay and if ever
he rendered services beyond the normal hours of work, [there] was
no office order/or authorization for him to do so. Finally, respondents
allege that the claim for damages has no legal and factual basis
and that the instant complaint must necessarily fail for lack of
merit."10
The labor arbiter ruled that there was no illegal dismissal and that
petitioner’s Complaint was premature because he was still
employed by BPC.11 The temporary closure of BPC’s plant did not
terminate his employment, hence, he need not reapply when the
plant reopened.
According to the labor arbiter, petitioner’s money claims for illegal
dismissal was also weakened by his quitclaim and admission during
the clarificatory conference that he accepted separation benefits,
sick and vacation leave conversions and thirteenth month pay.12
Nevertheless, the labor arbiter found petitioner entitled to overtime
pay, premium pay for working on rest days, and attorney’s fees in
the total amount of P21,257.98.13
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which deleted the award
of overtime pay and premium pay for working on rest days.
According to the Commission, petitioner was not entitled to these
awards because he was a managerial employee.14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed
Peñaranda’s Petition for Certiorari. The appellate court held that he
failed to: 1) attach copies of the pleadings submitted before the
labor arbiter and NLRC; and 2) explain why the filing and service of
the Petition was not done by personal service.15
In its later Resolution dated July 4, 2003, the CA denied
reconsideration on the ground that petitioner still failed to submit
the pleadings filed before the NLRC.16
Hence this Petition.17
The Issues
Petitioner states the issues in this wise:
"The [NLRC] committed grave abuse of discretion amounting to
excess or lack of jurisdiction when it entertained the APPEAL of the
respondent[s] despite the lapse of the mandatory period of TEN
DAYS.1avvphil.net
"The [NLRC] committed grave abuse of discretion amounting to an
excess or lack of jurisdiction when it rendered the assailed
RESOLUTIONS dated May 8, 2002 and AUGUST 16, 2002 REVERSING
AND SETTING ASIDE the FACTUAL AND LEGAL FINDINGS of the [labor
arbiter] with respect to the following:
"I. The finding of the [labor arbiter] that [Peñaranda] is a
regular, common employee entitled to monetary benefits
under Art. 82 [of the Labor Code].
"II. The finding that [Peñaranda] is entitled to the payment
of OVERTIME PAY and OTHER MONETARY BENEFITS."18
The Court’s Ruling
The Petition is not meritorious.
Preliminary Issue:
Resolution on the Merits
The CA dismissed Peñaranda’s Petition on purely technical grounds,
particularly with regard to the failure to submit supporting
documents.
In Atillo v. Bombay,19 the Court held that the crucial issue is whether
the documents accompanying the petition before the CA
sufficiently supported the allegations therein. Citing this case, Piglas-
Kamao v. NLRC20 stayed the dismissal of an appeal in the exercise
of its equity jurisdiction to order the adjudication on the merits.
The Petition filed with the CA shows a prima facie case. Petitioner
attached his evidence to challenge the finding that he was a
managerial employee.21 In his Motion for Reconsideration, petitioner
also submitted the pleadings before the labor arbiter in an attempt
to comply with the CA rules.22 Evidently, the CA could have ruled on
the Petition on the basis of these attachments. Petitioner should be
deemed in substantial compliance with the procedural
requirements.
Under these extenuating circumstances, the Court does not
hesitate to grant liberality in favor of petitioner and to tackle his
substantive arguments in the present case. Rules of procedure must
be adopted to help promote, not frustrate, substantial justice.23 The
Court frowns upon the practice of dismissing cases purely on
procedural grounds.24 Considering that there was substantial
compliance,25 a liberal interpretation of procedural rules in this labor
case is more in keeping with the constitutional mandate to secure
social justice.26
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an appeal from the
decision of the labor arbiter should be filed within 10 days from
receipt thereof.27
Petitioner’s claim that respondents filed their appeal beyond the
required period is not substantiated. In the pleadings before us,
petitioner fails to indicate when respondents received the Decision
of the labor arbiter. Neither did the petitioner attach a copy of the
challenged appeal. Thus, this Court has no means to determine
from the records when the 10-day period commenced and
terminated. Since petitioner utterly failed to support his claim that
respondents’ appeal was filed out of time, we need not belabor
that point. The parties alleging have the burden of substantiating
their allegations.28
Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial employee, and
therefore, entitled to the award granted by the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from
the coverage of labor standards. Labor standards provide the
working conditions of employees, including entitlement to overtime
pay and premium pay for working on rest days.29 Under this
provision, managerial employees are "those whose primary duty
consists of the management of the establishment in which they are
employed or of a department or subdivision."30
The Implementing Rules of the Labor Code state that managerial
employees are those who meet the following conditions:
"(1) Their primary duty consists of the management of the
establishment in which they are employed or of a
department or subdivision thereof;
"(2) They customarily and regularly direct the work of two
or more employees therein;
"(3) They have the authority to hire or fire other employees
of lower rank; or their suggestions and recommendations
as to the hiring and firing and as to the promotion or any
other change of status of other employees are given
particular weight."31
11
The Court disagrees with the NLRC’s finding that petitioner was a
managerial employee. However, petitioner was a member of the
managerial staff, which also takes him out of the coverage of labor
standards. Like managerial employees, officers and members of the
managerial staff are not entitled to the provisions of law on labor
standards.32 The Implementing Rules of the Labor Code define
members of a managerial staff as those with the following duties
and responsibilities:
"(1) The primary duty consists of the performance of work
directly related to management policies of the employer;
"(2) Customarily and regularly exercise discretion and
independent judgment;
"(3) (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists of the
management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under
general supervision work along specialized or technical
lines requiring special training, experience, or knowledge;
or (iii) execute under general supervision special
assignments and tasks; and
"(4) who do not devote more than 20 percent of their
hours worked in a workweek to activities which are not
directly and closely related to the performance of the
work described in paragraphs (1), (2), and (3) above."33
As shift engineer, petitioner’s duties and responsibilities were as
follows:
"1. To supply the required and continuous steam to all
consuming units at minimum cost.
"2. To supervise, check and monitor manpower
workmanship as well as operation of boiler and
accessories.
"3. To evaluate performance of machinery and
manpower.
"4. To follow-up supply of waste and other materials for
fuel.
"5. To train new employees for effective and safety while
working.
"6. Recommend parts and supplies purchases.
"7. To recommend personnel actions such as: promotion,
or disciplinary action.
"8. To check water from the boiler, feedwater and
softener, regenerate softener if beyond hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from
time to time."34
The foregoing enumeration, particularly items 1, 2, 3, 5 and 7
illustrates that petitioner was a member of the managerial staff. His
duties and responsibilities conform to the definition of a member of
a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant
boiler. His work involved overseeing the operation of the machines
and the performance of the workers in the engineering section. This
work necessarily required the use of discretion and independent
judgment to ensure the proper functioning of the steam plant
boiler. As supervisor, petitioner is deemed a member of the
managerial staff.35
Noteworthy, even petitioner admitted that he was a supervisor. In
his Position Paper, he stated that he was the foreman responsible for
the operation of the boiler.36 The term foreman implies that he was
the representative of management over the workers and the
operation of the department.37 Petitioner’s evidence also showed
that he was the supervisor of the steam plant.38 His classification as
supervisor is further evident from the manner his salary was paid. He
belonged to the 10% of respondent’s 354 employees who were
paid on a monthly basis; the others were paid only on a daily
basis.39
On the basis of the foregoing, the Court finds no justification to
award overtime pay and premium pay for rest days to petitioner.
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.
G.R. No. 153511 July 18, 2012
LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION,
and/or, NELSON NAPUD, in his capacity as the President of Petitioner
Corporation, Petitioner,
vs.
HERNANI S. REALUYO, also known as JOEY ROA, Respondent.
DECISION
BERSAMIN, J.:
This labor case for illegal dismissal involves a pianist employed to
perform in the restaurant of a hotel. On August 9, 1999, respondent,
whose stage name was Joey R. Roa, filed a complaint for alleged
unfair labor practice, constructive illegal dismissal, and the
underpayment/nonpayment of his premium pay for holidays,
separation pay, service incentive leave pay, and 13111 month pay.
He prayed for attorney's fees, moral damages off P100,000.00 and
exemplary damages for P100,000.00.1
Respondent averred that he had worked as a pianist at the Legend
Hotel’s Tanglaw Restaurant from September 1992 with an initial rate
of P400.00/night that was given to him after each night’s
performance; that his rate had increased to P750.00/night; and that
during his employment, he could not choose the time of
performance, which had been fixed from 7:00 pm to 10:00 pm for
three to six times/week. He added that the Legend Hotel’s
restaurant manager had required him to conform with the venue’s
motif; that he had been subjected to the rules on employees’
representation checks and chits, a privilege granted to other
employees; that on July 9, 1999, the management had notified him
that as a cost-cutting measure his services as a pianist would no
longer be required effective July 30, 1999; that he disputed the
excuse, insisting that Legend Hotel had been lucratively operating
as of the filing of his complaint; and that the loss of his employment
made him bring his complaint.2
In its defense, petitioner denied the existence of an employer-
employee relationship with respondent, insisting that he had been
only a talent engaged to provide live music at Legend Hotel’s
Madison Coffee Shop for three hours/day on two days each week;
and stated that the economic crisis that had hit the country
constrained management to dispense with his services.
On December 29, 1999, the Labor Arbiter (LA) dismissed the
complaint for lack of merit upon finding that the parties had no
employer-employee relationship.3 The LA explained thusly:
xxx
On the pivotal issue of whether or not there existed an employer-
employee relationship between the parties, our finding is in the
12
negative. The finding finds support in the service contract dated
September 1, 1992 xxx.
xxx
Even if we grant the initial non-existence of the service contract, as
complainant suggests in his reply (third paragraph, page 4), the
picture would not change because of the admission by
complainant in his letter dated October 8, 1996 (Annex "C") that
what he was receiving was talent fee and not salary.
This is reinforced by the undisputed fact that complainant received
his talent fee nightly, unlike the regular employees of the hotel who
are paid by monthly xxx.
xxx
And thus, absent the power to control with respect to the means
and methods by which his work was to be accomplished, there is
no employer-employee relationship between the parties xxx.
xxx
WHEREFORE, this case must be, as it is hereby, DISMISSED for lack of
merit.
SO ORDERED.4
Respondent appealed, but the National Labor Relations
Commission (NLRC) affirmed the LA on May 31, 2001.5
Respondent assailed the decision of the NLRC in the Court of
Appeals (CA) on certiorari.
On February 11, 2002, the CA set aside the decision of the
NLRC,6 holding:
xxx
Applying the above-enumerated elements of the employee-
employer relationship in this case, the question to be asked is, are
those elements present in this case?
The answer to this question is in the affirmative.
xxx
Well settled is the rule that of the four (4) elements of employer-
employee relationship, it is the power of control that is more
decisive.
In this regard, public respondent failed to take into consideration
that in petitioner’s line of work, he was supervised and controlled by
respondent’s restaurant manager who at certain times would
require him to perform only tagalog songs or music, or wear barong
tagalog to conform with Filipiniana motif of the place and the time
of his performance is fixed by the respondents from 7:00 pm to 10:00
pm, three to six times a week. Petitioner could not choose the time
of his performance. xxx.
As to the status of petitioner, he is considered a regular employee
of private respondents since the job of the petitioner was in
furtherance of the restaurant business of respondent hotel. Granting
that petitioner was initially a contractual employee, by the sheer
length of service he had rendered for private respondents, he had
been converted into a regular employee xxx.
xxx
xxx In other words, the dismissal was due to retrenchment in order to
avoid or minimize business losses, which is recognized by law under
Article 283 of the Labor Code, xxx.
xxx
WHEREFORE, foregoing premises considered, this petition is
GRANTED. xxx.7
Issues
In this appeal, petitioner contends that the CA erred:
I. XXX WHEN IT RULED THAT THERE IS THE EXISTENCE OF
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE
PETITIONER HOTEL AND RESPONDENT ROA.
II. XXX IN FINDING THAT ROA IS A REGULAR EMPLOYEE AND
THAT THE TERMINATION OF HIS SERVICES WAS ILLEGAL. THE
CA LIKEWISE ERRED WHEN IT DECLARED THE REINSTATEMENT
OF ROA TO HIS FORMER POSITION OR BE GIVEN A
SEPARATION PAY EQUIVALENT TO ONE MONTH FOR EVERY
YEAR OF SERVICE FROM SEPTEMBER 1999 UNTIL JULY 30,
1999 CONSIDERING THE ABSENCE OF AN EMPLOYMENT
RELATIONSHIP BETWEEN THE PARTIES.
III. XXX WHEN IT DECLARED THAT ROA IS ENTITLED TO
BACKWAGES, SERVICE INCENTIVE LEAVE AND OTHER
BENEFITS CONSIDERING THAT THERE IS NO EMPLOYER
EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES.
IV. XXX WHEN IT NULLIFIED THE DECISION DATED MAY 31,
2001 IN NLRC NCR CA NO. 023404-2000 OF THE NLRC AS
WELL AS ITS RESOLUTION DATED JUNE 29, 2001 IN FAVOR OF
HEREIN PETITIONER HOTEL WHEN HEREIN RESPONDENT ROA
FAILED TO SHOW PROOF THAT THE NLRC AND THE LABOR
ARBITER HAVE COMMITTED GRAVE ABUSE OF DISCRETION
OR LACK OF JURISDICTION IN THEIR RESPECTIVE DECISIONS.
V. XXX WHEN IT OVERLOOKED THE FACT THAT THE PETITION
WHICH ROA FILED IS IMPROPER SINCE IT RAISED QUESTIONS
OF FACT.
VI. XXX WHEN IT GAVE DUE COURSE TO THE PETITION FILED
BY ROA WHEN IT IS CLEARLY IMPROPER AND SHOULD HAVE
BEEN DISMISSED OUTRIGHT CONSIDERING THAT A PETITION
FOR CERTIORARI UNDER RULE 65 IS LIMITED ONLY TO
QUESTIONS OR ISSUES OF GRAVE ABUSE OF DISCRETION OR
LACK OF JURISDICTION COMMITTED BY THE NLRC OR THE
LABOR ARBITER, WHICH ISSUES ARE NOT PRESENT IN THE
CASE AT BAR.
The assigned errors are divided into the procedural issue of whether
or not the petition for certiorari filed in the CA was the proper
recourse; and into two substantive issues, namely: (a) whether or
not respondent was an employee of petitioner; and (b) if
respondent was petitioner’s employee, whether he was validly
terminated.
Ruling
The appeal fails.
Procedural Issue:
Certiorari was a proper recourse
Petitioner contends that respondent’s petition for certiorari was
improper as a remedy against the NLRC due to its raising mainly
questions of fact and because it did not demonstrate that the NLRC
was guilty of grave abuse of discretion.
The contention is unwarranted. There is no longer any doubt that a
petition for certiorari brought to assail the decision of the NLRC may
raise factual issues, and the CA may then review the decision of the
NLRC and pass upon such factual issues in the process.8 The power
of the CA to review factual issues in the exercise of its original
jurisdiction to issue writs of certiorari is based on Section 9 of Batas
Pambansa Blg. 129, which pertinently provides that the CA "shall
have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or
further proceedings."
Substantive Issue No. 1:
Employer-employee relationship existed between the parties
We next ascertain if the CA correctly found that an employer-
employee relationship existed between the parties.
The issue of whether or not an employer-employee relationship
existed between petitioner and respondent is essentially a question
of fact.9 The factors that determine the issue include who has the
power to select the employee, who pays the employee’s wages,
who has the power to dismiss the employee, and who exercises
control of the methods and results by which the work of the
employee is accomplished.10 Although no particular form of
evidence is required to prove the existence of the relationship, and
any competent and relevant evidence to prove the relationship
may be admitted,11 a finding that the relationship exists must
nonetheless rest on substantial evidence, which is that amount of
relevant evidence that a reasonable mind might accept as
adequate to justify a conclusion.12
Generally, the Court does not review factual questions, primarily
because the Court is not a trier of facts. However, where, like here,
13
there is a conflict between the factual findings of the Labor Arbiter
and the NLRC, on the one hand, and those of the CA, on the other
hand, it becomes proper for the Court, in the exercise of its equity
jurisdiction, to review and re-evaluate the factual issues and to look
into the records of the case and re-examine the questioned
findings.13
A review of the circumstances reveals that respondent was, indeed,
petitioner’s employee. He was undeniably employed as a pianist in
petitioner’s Madison Coffee Shop/Tanglaw Restaurant from
September 1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the
time it entered into the service contract dated September 1, 1992
with respondent. This is true, notwithstanding petitioner’s insistence
that respondent had only offered his services to provide live music
at petitioner’s Tanglaw Restaurant, and despite petitioner’s position
that what had really transpired was a negotiation of his rate and
time of availability. The power of selection was firmly evidenced by,
among others, the express written recommendation dated January
12, 1998 by Christine Velazco, petitioner’s restaurant manager, for
the increase of his remuneration.14
Petitioner could not seek refuge behind the service contract
entered into with respondent. It is the law that defines and governs
an employment relationship, whose terms are not restricted to those
fixed in the written contract, for other factors, like the nature of the
work the employee has been called upon to perform, are also
considered. The law affords protection to an employee, and does
not countenance any attempt to subvert its spirit and intent. Any
stipulation in writing can be ignored when the employer utilizes the
stipulation to deprive the employee of his security of tenure. The
inequality that characterizes employer-employee relations
generally tips the scales in favor of the employer, such that the
employee is often scarcely provided real and better options.15
Secondly, petitioner argues that whatever remuneration was given
to respondent were only his talent fees that were not included in
the definition of wage under the Labor Code; and that such talent
fees were but the consideration for the service contract entered
into between them.
The argument is baseless.
Respondent was paid P400.00 per three hours of performance from
7:00 pm to 10:00 pm, three to six nights a week. Such rate of
remuneration was later increased to P750.00 upon restaurant
manager Velazco’s recommendation. There is no denying that the
remuneration denominated as talent fees was fixed on the basis of
his talent and skill and the quality of the music he played during the
hours of performance each night, taking into account the
prevailing rate for similar talents in the entertainment industry.16
Respondent’s remuneration, albeit denominated as talent fees, was
still considered as included in the term wage in the sense and
context of the Labor Code, regardless of how petitioner chose to
designate the remuneration. Anent this, Article 97(f) of the Labor
Code clearly states:
xxx 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 includes 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.
Clearly, respondent received compensation for the services he
rendered as a pianist in petitioner’s hotel. Petitioner cannot use the
service contract to rid itself of the consequences of its employment
of respondent. There is no denying that whatever amounts he
received for his performance, howsoever designated by petitioner,
were his wages.
It is notable that under the Rules Implementing the Labor Code and
as held in Tan v. Lagrama,17 every employer is required to pay his
employees by means of a payroll, which should show in each case,
among others, the employee’s rate of pay, deductions made from
such pay, and the amounts actually paid to the employee. Yet,
petitioner did not present the payroll of its employees to bolster its
insistence of respondent not being its employee.
That respondent worked for less than eight hours/day was of no
consequence and did not detract from the CA’s finding on the
existence of the employer-employee relationship. In providing that
the " normal hours of work of any employee shall not exceed eight
(8) hours a day," Article 83 of the Labor Code only set a maximum
of number of hours as "normal hours of work" but did not prohibit
work of less than eight hours.
Thirdly, the power of the employer to control the work of the
employee is considered the most significant determinant of the
existence of an employer-employee relationship.18 This is the so-
called control test, and is premised on whether the person for
whom the services are performed reserves the right to control both
the end achieved and the manner and means used to achieve
that end.19
Petitioner submits that it did not exercise the power of control over
respondent and cites the following to buttress its submission,
namely: (a) respondent could beg off from his nightly performances
in the restaurant for other engagements; (b) he had the sole
prerogative to play and perform any musical arrangements that he
wished; (c) although petitioner, through its manager, required him
to play at certain times a particular music or song, the music, songs,
or arrangements, including the beat or tempo, were under his
discretion, control and direction; (d) the requirement for him to
wear barong Tagalog to conform with the Filipiniana motif of the
venue whenever he performed was by no means evidence of
control; (e) petitioner could not require him to do any other work in
the restaurant or to play the piano in any other places, areas, or
establishments, whether or not owned or operated by petitioner,
during the three hour period from 7:00 pm to 10:00 pm, three to six
times a week; and (f) respondent could not be required to sing,
dance or play another musical instrument.
A review of the records shows, however, that respondent
performed his work as a pianist under petitioner’s supervision and
control. Specifically, petitioner’s control of both the end achieved
and the manner and means used to achieve that end was
demonstrated by the following, to wit:
a. He could not choose the time of his performance,
which petitioners had fixed from 7:00 pm to 10:00 pm,
three to six times a week;
b. He could not choose the place of his performance;
c. The restaurant’s manager required him at certain times
to perform only Tagalog songs or music, or to wear barong
Tagalog to conform to the Filipiniana motif; and
d. He was subjected to the rules on employees’
representation check and chits, a privilege granted to
other employees.
Relevantly, it is worth remembering that the employer need not
actually supervise the performance of duties by the employee, for it
sufficed that the employer has the right to wield that power.
Lastly, petitioner claims that it had no power to dismiss respondent
due to his not being even subject to its Code of Discipline, and that
the power to terminate the working relationship was mutually
vested in the parties, in that either party might terminate at will, with
or without cause.
The claim is contrary to the records. Indeed, the memorandum
informing respondent of the discontinuance of his service because
of the present business or financial condition of petitioner20 showed
that the latter had the power to dismiss him from employment.21
Substantive Issue No. 2:
14
Validity of the Termination
Having established that respondent was an employee whom
petitioner terminated to prevent losses, the conclusion that his
termination was by reason of retrenchment due to an authorized
cause under the Labor Code is inevitable.
Retrenchment is one of the authorized causes for the dismissal of
employees recognized by the Labor Code. It is a management
prerogative resorted to by employers to avoid or to minimize
business losses. On this matter, Article 283 of the Labor Code states:
Article 283. Closure of establishment and reduction of personnel. –
The employer may also terminate the employment of any
employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of this
Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended
date thereof. xxx. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever
is higher. A fraction of at least six (6) months shall be considered one
(1) whole year.
The Court has laid down the following standards that an employer
should meet to justify retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not
merely de minimis in extent;
(b) The substantial losses apprehended must be
reasonably imminent;
(c) The retrenchment must be reasonably necessary and
likely to effectively prevent the expected losses; and
(d) The alleged losses, if already incurred, and the
expected imminent losses sought to be forestalled must be
proved by sufficient and convincing evidence.22
Anent the last standard of sufficient and convincing evidence, it
ought to be pointed out that a less exacting standard of proof
would render too easy the abuse of retrenchment as a ground for
termination of services of employees.23
Was the retrenchment of respondent valid?
In termination cases, the burden of proving that the dismissal was
for a valid or authorized cause rests upon the employer. Here,
petitioner did not submit evidence of the losses to its business
operations and the economic havoc it would thereby imminently
sustain. It only claimed that respondent’s termination was due to its
"present business/financial condition." This bare statement fell short
of the norm to show a valid retrenchment. Hence, we hold that
there was no valid cause for the retrenchment of respondent.
Indeed, not every loss incurred or expected to be incurred by an
employer can justify retrenchment.1âwphi1 The employer must
prove, among others, that the losses are substantial and that the
retrenchment is reasonably necessary to avert such losses. Thus, by
its failure to present sufficient and convincing evidence to prove
that retrenchment was necessary, respondent’s termination due to
retrenchment is not allowed.
The Court realizes that the lapse of time since the retrenchment
might have rendered respondent's reinstatement to his former job
no longer feasible. If that should be true, then petitioner should
instead pay to him separation pay at the rate of one. month pay for
every year of service computed from September 1992 (when he
commenced to work for the petitioners) until the finality of this
decision, and full backwages from the time his compensation was
withheld until the finality of this decision.
WHEREFORE, we DENY the petition for review on certiorari, and
AFFIRM the decision of the Court of Appeals promulgated on
February 11, 2002, subject to the modification that should
reinstatement be no longer feasible, petitioner shall pay to
respondent separation pay of one month for every year of service
computed from September 1992 until the finality of this decision,
and full backwages from the time his compensation was withheld
until the finality of this decision.
Costs of suit to be paid by the petitioners.
SO ORDERED.
G.R. No. 195190 July 28, 2014
ROYALE HOMES MARKETING CORPORATION, Petitioner,
vs.
FIDEL P. ALCANTARA [deceased], substituted by his
heirs, Respondent.
DECISION
DEL CASTILLO, J.:
Not every form of control that a hiring party imposes on the hired
party is indicative of employee-employer relationship. Rules and
regulations that merely serve as guidelines towards the
achievement of a mutually desired result without dictating the
means and methods of accomplishing it do not establish employer-
employee relationship.1
This Petition for Review on Certiorari2 assails the June 23, 2010
Decision3 of the Court of Appeals (CA) in CA-G.R. SP No. 109998
which (i) reversed and set aside the February 23, 2009 Decision 4 of
the National Labor Relations Commission (NLRC), (ii) ordered
petitioner Royale Homes Marketing Corporation (Royale Homes) to
pay respondent Fidel P. Alcantara (Alcantara) backwages and
separation pay, and (iii) remanded the case to the Labor Arbiter for
the proper determination and computation of said monetary
awards.
Also assailed in this Petition isthe January 18, 2011 Resolution5 of the
CA denying Royale Homes’ Motion for Reconsideration,6 as well as
its Supplemental7 thereto.
Factual Antecedents
In 1994, Royale Homes, a corporation engaged in marketing real
estates, appointed Alcantara asits Marketing Director for a fixed
period of one year. His work consisted mainly of marketing Royale
Homes’ realestate inventories on an exclusive basis. Royale Homes
reappointed him for several consecutive years, the last of which
covered the period January 1 to December 31, 2003 where he held
the position of Division 5 Vice-President-Sales.8
Proceedings before the Labor Arbiter
On December 17, 2003, Alcantara filed a Complaint for Illegal
Dismissal9 against Royale Homes and its President Matilde Robles,
Executive Vice-President for Administration and Finance Ma.
Melinda Bernardino, and Executive Vice- President for Sales
Carmina Sotto. Alcantara alleged that he is a regular employee of
Royale Homes since he is performing tasks that are necessary and
desirable to its business; that in 2003 the company gave him ₱1.2
million for the services he rendered to it; that in the first week of
November 2003, however, the executive officers of Royale Homes
told him that they were wondering why he still had the gall to come
to office and sit at his table;10 and that the actsof the executive
15
officers of Royale Homes amounted to his dismissal from work
without any valid or just cause and in gross disregard of the proper
procedure for dismissing employees. Thus, he alsoimpleaded the
corporate officers who, he averred, effected his dismissal in bad
faith and in an oppressive manner.
Alcantara prayed to be reinstated tohis former position without loss
of seniority rights and other privileges, as well as to be paid
backwages, moral and exemplary damages, and attorney’s fees.
He further sought that the ownership of the Mitsubishi Adventure
with Plate No. WHD-945 be transferred to his name.
Royale Homes, on the other hand, vehemently denied that
Alcantara is its employee. It argued that the appointment paper of
Alcantara isclear that it engaged his services as an independent
sales contractorfor a fixed term of one year only. He never received
any salary, 13th month pay, overtime pay or holiday pay from
Royale Homes as hewas paid purely on commission basis. In
addition, Royale Homes had no control on how Alcantara would
accomplish his tasks and responsibilities as he was free to solicit sales
at any time and by any manner which he may deem
appropriateand necessary. He is even free to recruit his own sales
personnel to assist him in pursuance of his sales target.
According to Royale Homes, Alcantara decided to leave the
company after his wife, who was once connectedwith it as a sales
agent, had formed a brokerage company that directly competed
with its business, and even recruited some of its sales agents.
Although this was against the exclusivity clause of the contract,
Royale Homes still offered to accept Alcantara’s wife back so she
could continue to engage in real estate brokerage, albeit
exclusively for Royale Homes. In a special management committee
meeting on October 8,2003, however, Alcantara announced
publicly and openly that he would leave the company by the end
of October 2003 and that he would no longer finish the unexpired
term of his contract. He has decided to join his wifeand pursue their
own brokerage business. Royale Homes accepted Alcantara’s
decision. It then threw a despedidaparty in his honor and,
subsequently, appointed a new independent contractor. Two
months after herelinquished his post, however, Alcantara appeared
in Royale Homes and submitted a letter claiming that he was
illegally dismissed.
Ruling of the Labor Arbiter
On September 7, 2005,the Labor Arbiter rendered a
Decision11 holding that Alcantara is an employee of Royale Homes
with a fixed-term employment period from January 1 to December
31, 2003 and that the pre-termination of his contract was against
the law.Hence, Alcantara is entitled to an amount which he may
have earned on the average for the unexpired portion of the
contract. With regard to the impleaded corporate officers, the
Labor Arbiter absolved them from any liability.
The dispositive portion of the Labor Arbiter’s Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
ordering the respondent Royale Homes Marketing Corp. to pay the
complainant the total amount of TWO HUNDRED SEVENTY SEVEN
THOUSAND PESOS (₱277,000.00) representing his
compensation/commission for the unexpired term of his contract.
All other claims are dismissed for lack of merit.
SO ORDERED.12
Both parties appealed the Labor Arbiter’s Decision to the NLRC.
Royale Homes claimed that the Labor Arbiter grievously erred
inruling that there exists an employer-employee relationship
between the parties. It insisted that the contract between them
expressly statesthat Alcantara is an independent contractor and
not an ordinary employee. Ithad no control over the means and
methods by which he performed his work. RoyaleHomes likewise
assailed the award of ₱277,000.00 for lack of basis as it did not pre-
terminate the contract. It was Alcantara who chose not to finish the
contract.
Alcantara, for his part, argued that the Labor Arbiter erred in ruling
that his employment was for a fixed-term and that he is not entitled
to backwages, reinstatement, unpaid commissions, and damages.
Ruling of the National LaborRelations Commission
On February 23, 2009, the NLRC rendered its Decision,13 ruling that
Alcantara is not an employee but a mere independent contractor
of Royale Homes. It based its ruling mainly on the contract which
does not require Alcantara to observe regular working hours. He
was also free to adopt the selling methods he deemed most
effective and can even recruit sales agents to assist him in
marketing the inventories of Royale Homes. The NLRC also
considered the fact that Alcantara was not receiving monthly
salary, but was being paid on commission basis as stipulated in the
contract. Being an independent contractor, the NLRC concluded
that Alcantara’s Complaint iscognizable by the regular courts.
The falloof the NLRC Decision reads:
WHEREFORE, premises considered, the Decision of Labor Arbiter
Dolores Peralta-Beley dated September 5, 2005 is REVERSED and SET
ASIDE and a NEW ONE rendered dismissing the complaint for lack of
jurisdiction.
SO ORDERED.14
Alcantara moved for reconsideration.15 In a Resolution16 dated May
29, 2009, however, the NLRC denied his motion.
Alcantara thus filed a Petition for Certiorari 17 with the CA imputing
grave abuse of discretion on the partof the NLRC in ruling that he is
not an employee of Royale Homes and that it is the regular courts
which have jurisdiction over the issue of whether the pre-termination
of the contract is valid.
Ruling of the Court of Appeals
On June 23, 2010, the CA promulgated its Decision18 granting
Alcantara’s Petition and reversing the NLRC’s Decision. Applying the
four-fold and economic reality tests, it held thatAlcantara is an
employee of Royale Homes. Royale Homes exercised some degree
of control over Alcantara since his job, as observed by the CA, is
subject to company rules, regulations, and periodic evaluations. He
was also bound by the company code of ethics. Moreover, the
exclusivity clause of the contract has made Alcantara
economically dependent on Royale Homes, supporting the theory
that he is anemployee of said company.
The CA further held that Alcantara’s termination from employment
was without any valid or just cause, and it was carried out in
violation of his right to procedural due process. Thus, the CA ruled
that he isentitled to backwages and separation pay, in lieu of
reinstatement. Considering,however, that the CA was not satisfied
with the proofadduced to establish the amount of Alcantara’s
annual salary, it remanded the caseto the Labor Arbiter to
determine the same and the monetary award he is entitled to. With
regard to the corporate officers, the CA absolved them from any
liability for want of clear proof that they assented to the patently
unlawful acts or that they are guilty of bad faith orgross negligence.
Thus:
WHEREFORE, in view of the foregoing, the instant PETITION is
GRANTED. The assailed decision of the National Labor Relations
Commission in NLRC NCR CASE NO. 00-12-14311-03 NLRC CA NO.
046104-05 dated February 23, 2009 as well as the Resolution dated
May 29, 2009 are hereby SET ASIDE and a new one is entered
ordering the respondent company to pay petitioner backwages
which shall be computed from the time of his illegal termination in
October 2003 up to the finality of this decision, plus separation pay
equivalent to one month salary for every year of service. This case is
REMANDED to the Labor Arbiter for the proper determination and
computation of back wages, separation pay and other monetary
benefits that petitioner is entitled to.
SO ORDERED.19
Royale Homes filed a Motion for Reconsideration20 and a
Supplemental Motion for Reconsideration.21 In a Resolution22 dated
January 18, 2011, however, the CA denied said motions.
Issues
16
Hence, this Petition where Royale Homes submits before this Court
the following issues for resolution:
A.
WHETHER THE COURT OF APPEALS HAS DECIDED THE
INSTANT CASE NOT IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
REVERSED THE RULING OF THE NLRC DISMISSING THE
COMPLAINT OF RESPONDENT FOR LACK OF JURISDICTION
AND CONSEQUENTLY, IN FINDING THAT RESPONDENT WAS
ILLEGALLY DISMISSED[.]
B.
WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS
ERROR OF LAW IN DISREGARDING THE EN BANCRULING OF
THIS HONORABLE COURT IN THE CASEOF TONGKO VS.
MANULIFE, AND IN BRUSHING ASIDE THE APPLICABLE
RULINGS OF SONZA VS. ABS CBN AND CONSULTA V. CA[.]
C.
WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS
ERROR OF LAW IN DENYING THE MOTION FOR
RECONSIDERATION OF PETITIONER AND IN REFUSING TO
CORRECT ITSELF[.] 23
Royale Homes contends that its contract with Alcantara is clear
and unambiguous −it engaged his services as an independent
contractor. This can be readily seen from the contract stating that
no employer-employee relationship exists between the parties; that
Alcantara was free to solicit sales at any time and by any manner
he may deem appropriate; that he may recruit sales personnel to
assist him in marketing Royale Homes’ inventories; and, thathis
remunerations are dependent on his sales performance.
Royale Homes likewise argues that the CA grievously erred in ruling
that it exercised control over Alcantara based on a shallow ground
that his performance is subject to company rules and regulations,
code of ethics, periodic evaluation, and exclusivity clause of
contract. RoyaleHomes maintains that it is expected to exercise
some degree of control over its independent contractors,but that
does not automatically result in the existence ofemployer-
employee relationship. For control to be consideredas a proof
tending to establish employer-employee relationship, the same
mustpertain to the means and method of performing the work; not
on the relationship of the independent contractors among
themselves or their persons or their source of living.
Royale Homes further asserts that it neither hired nor wielded the
power to dismiss Alcantara. It was Alcantara who openly and
publicly declared that he was pre-terminating his fixed-term
contract.
The pivotal issue to be resolved in this case is whether Alcantara
was an independent contractor or anemployee of Royale Homes.
Our Ruling
The Petition is impressed with merit.
The determination of whether a party who renders services to
another is an employee or an independent contractor involves an
evaluation of factual matters which, ordinarily, is not within the
province of this Court. In view of the conflicting findings of the
tribunals below, however, this Court is constrained to go over the
factual matters involved in this case.24
The juridical relationship of the parties based on their written
contract
The primary evidence of the nature of the parties’ relationship in this
case is the written contract that they signed and executed in
pursuanceof their mutual agreement. While the existence of
employer-employee relationship is a matter of law, the
characterization made by the parties in their contract as to the
nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties’ written
contractunequivocally states their intention at the time they
entered into it. In Tongko v. The Manufacturers LifeInsurance Co.
(Phils.), Inc.,25 it was held that:
To be sure, the Agreement’s legal characterization of the nature of
the relationship cannot be conclusive and binding on the courts; x x
x the characterization of the juridical relationship the Agreement
embodied is a matter of law that is for the courts to determine. At
the same time, though, the characterization the parties gave to
their relationship in the Agreement cannot simply be brushed aside
because it embodiestheir intent at the time they entered the
Agreement, and they were governed by this understanding
throughout their relationship. At the very least, the provision on the
absence of employer- employee relationship between the parties
can be an aid in considering the Agreement and its
implementation, and in appreciating the other evidence on
record.26
In this case, the contract,27 duly signed and not disputed by the
parties, conspicuously provides that "no employer-employee
relationship exists between" Royale Homes and Alcantara, as well as
his sales agents. It is clear that they did not want to be bound by
employer-employee relationship atthe time ofthe signing of the
contract. Thus:
January 24, 2003
MR. FIDEL P. ALCANTARA
13 Rancho I
Marikina City
Dear Mr. Alcantara,
This will confirm yourappointment as Division 5 VICE[-
]PRESIDENTSALES of ROYALE HOMES MARKETING CORPORATION
effective January 1, 2003 to December 31, 2003.
Your appointment entails marketing our real estate inventories on
an EXCLUSIVE BASIS under such price, terms and condition to be
provided to you from time to time.
As such, you can solicit sales at any time and by any manner which
you deem appropriate and necessary to market our real estate
inventories subject to rules, regulations and code of ethics
promulgated by the company. Further, you are free to recruit sales
personnel/agents to assist you in marketing of our inventories
provided that your personnel/agents shall first attend the required
seminars and briefing to be conducted by us from time to time for
the purpose of familiarizing them of terms and conditionsof sale, the
natureof property sold, etc., attendance of which shall be a
condition precedent for their accreditation by us.
That as such Division 5 VICE[-]PRESIDENT-SALES you shall be entitled
to:
1. Commission override of 0.5% for all option sales
beginning January 1, 2003 booked by your sales agents.
2. Budget allocation depending on your division’s sale
performance as per our budget guidelines.
3. Sales incentive and other forms of company support
which may be granted from time to time. It is understood,
however, that no employer-employee relationship exists
between us, that of your sales personnel/agents, and that
you shall hold our company x x x, its officers and directors,
free and harmless from any and all claims of liability and
damages arising from and/or incident to the marketing of
our real estate inventories.
We reserve, however, our right to terminate this agreement in case
of violation of any company rules and regulations, policies and
code of ethics upon notice for justifiable reason.
Your performance shall be subject toperiodic evaluation based on
factors which shall be determined by the management.
If you are amenable to the foregoing terms and conditions, please
indicate your conformity by signing on the space provided below
and return [to] us a duplicate copy of this letter, duly accomplished,
to constitute as our agreement on the matter.(Emphasis ours)
Since "the terms of the contract are clear and leave no doubt upon
the intention of the contracting parties, the literal meaning of
itsstipulations should control."28 No construction is even needed
asthey already expressly state their intention. Also, this Court adopts
the observation of the NLRC that it is rather strange on the part of
17
Alcantara, an educated man and a veteran sales broker who
claimed to be receiving ₱1.2 million as his annual salary, not to
have contested the portion of the contract expressly indicating that
he is not an employee of Royale Homes if their true intention were
otherwise.
The juridical relationship of the parties based on Control Test
In determining the existence of an employer-employee relationship,
this Court has generally relied on the four-fold test, to wit: (1) the
selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the employer’s power to
control the employee with respect to the means and methods by
which the work is to be accomplished.29 Among the four, the most
determinative factor in ascertaining the existence of
employeremployee relationship is the "right of control test".30 "It is
deemed to be such an important factor that the other requisites
may even be disregarded."31 This holds true where the issues to be
resolved iswhether a person who performs work for another is the
latter’s employee or is an independent contractor,32 as in this case.
For where the person for whom the services are performed reserves
the right to control not only the end to beachieved, but also the
means by which such end is reached, employer-employee
relationship is deemed to exist.33
In concluding that Alcantara is an employee of RoyaleHomes, the
CA ratiocinated that since the performance of his tasks is subject to
company rules, regulations, code of ethics, and periodic
evaluation, the element of control is present.
The Court disagrees.
Not every form of control is indicative of employer-employee
relationship.1âwphi1 A person who performs work for another and is
subjected to its rules, regulations, and code of ethics does not
necessarily become an employee.34 As long as the level of control
does not interfere with the means and methods of accomplishing
the assigned tasks, the rules imposed by the hiring party on the hired
party do not amount to the labor law concept of control that is
indicative of employer-employee relationship. In Insular Life
Assurance Co., Ltd. v. National Labor Relations Commission35 it was
pronounced that:
Logically, the line should be drawn between rules that merely serve
as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which
aim only to promote the result, create no employeremployee
relationship unlike the second, which address both the result and
the means used to achieve it. x x x36
In this case, the Court agrees with Royale Homes that the rules,
regulations, code of ethics, and periodic evaluation alluded to
byAlcantara do not involve control over the means and methods
by which he was to performhis job. Understandably, Royale Homes
has to fix the price, impose requirements on prospective buyers,
and lay down the terms and conditionsof the sale, including the
mode of payment, which the independent contractors must follow.
It is also necessary for Royale Homes to allocateits inventories
among its independent contractors, determine who has priority in
selling the same, grant commission or allowance based on
predetermined criteria, and regularly monitor the result of their
marketing and sales efforts. But tothe mind of this Court, these do
not pertain to the means and methods of how Alcantara was to
perform and accomplish his task of soliciting sales. They do not
dictate upon him the details of how he would solicit sales or the
manner as to how he would transact business with prospective
clients. In Tongko, this Court held that guidelines or rules and
regulations that do notpertain to the means or methodsto be
employed in attaining the result are not indicative of control as
understood inlabor law. Thus:
From jurisprudence, an important lesson that the first Insular Lifecase
teaches us is that a commitment to abide by the rules and
regulations of an insurance company does not ipso factomake the
insurance agent an employee. Neither do guidelines somehow
restrictive of the insurance agent’s conduct necessarily indicate
"control" as this term is defined in jurisprudence. Guidelines
indicative of labor law "control," as the first Insular Lifecase tells us,
should not merely relate to the mutually desirable result intended by
the contractual relationship; they must have the nature of dictating
the means or methods to beemployed in attaining the result, or of
fixing the methodology and of binding or restricting the party hired
to the use of these means.In fact, results-wise, the principal can
impose production quotas and can determine how many agents,
with specific territories, ought to be employed to achieve the
company’s objectives. These are management policy decisions
that the labor law element of control cannot reach. Our ruling in
these respects in the first Insular Lifecase was practically reiterated
in Carungcong. Thus, as will be shown more fully below, Manulife’s
codes of conduct, all of which do not intrude into the insurance
agents’ means and manner of conducting their sales and only
control them as to the desired results and Insurance Code norms,
cannot be used as basis for a finding that the labor law concept of
control existed between Manulife and Tongko.37 (Emphases in the
original)
As the party claiming the existence of employer-employee other forms of company support. There is no proof that he received
relationship, it behoved upon Alcantara to prove the elements fixed monthly salary. No payslip or payroll was ever presented and
thereof, particularly Royale Homes’ power of control over the there is no proof that Royale Homes deducted from his supposed
means and methods of accomplishing the work.38 He, however, salary withholding tax or that it registered him with the Social
failed to cite specificrules, regulations or codes of ethics that Security System, Philippine Health Insurance Corporation, or Pag-
supposedly imposed control on his means and methods of soliciting Ibig Fund. In fact, his Complaint merely states a ballpark figure of his
sales and dealing with prospective clients. On the other hand, this alleged salary of ₱100,000.00, more or less. All of these indicate an
case is replete with instances that negate the element of control independent contractual relationship.44 Besides, if Alcantara indeed
and the existence of employer-employee relationship. Notably, consideredhimself an employee of Royale Homes, then he, an
Alcantara was not required to observe definite working experienced and professional broker, would have complained that
hours.39 Except for soliciting sales, RoyaleHomes did not assign other he was being denied statutorily mandated benefits. But for nine
tasks to him. He had full control over the means and methods of consecutive years, he kept mum about it, signifying that he has
accomplishing his tasks as he can "solicit sales at any time and by agreed, consented, and accepted the fact that he is not entitled
any manner which [he may] deem appropriate and necessary." He tothose employee benefits because he is an independent
performed his tasks on his own account free from the control and contractor.
direction of Royale Homes in all matters connected therewith, This Court is, therefore,convinced that Alcantara is not an
except as to the results thereof.40 employee of Royale Homes, but a mere independent contractor.
Neither does the repeated hiring of Alcantara prove the existence The NLRC is, therefore, correct in concluding that the Labor Arbiter
of employer-employee relationship.41 As discussed above, the has no jurisdiction over the case and that the same is cognizable by
absence of control over the means and methodsdisproves the regular courts.
employer-employee relationship. The continuous rehiring of WHEREFORE, the instant Petition is hereby GRANTED. The June 23,
Alcantara simply signifies the renewal of his contract with Royale 2010 Decision of the Court of Appeals in CA-G.R. SP No. 109998 is
Homes, and highlights his satisfactory services warranting the REVERSED and SET ASIDE. The February 23, 2009 Decision of the
renewal of such contract. Nor does the exclusivity clause of National Labor Relations Commission is REINSTATED and AFFIRMED.
contract establish the existence of the labor law concept of SO ORDERED.
control. In Consulta v. Court of Appeals,42 it was held that exclusivity
of contract does not necessarily result in employer-employee
relationship, viz:
x x x However, the fact that the appointment required Consulta to
solicit business exclusively for Pamana did not mean that Pamana
exercised control over the means and methods of Consulta’s work
as the term control is understood in labor jurisprudence. Neither did
it make Consulta an employee of Pamana. Pamana did not
prohibit Consulta from engaging in any other business, or from
being connected with any other company, for aslong as the
business [of the] company did not compete with Pamana’s
business.43
The same scenario obtains in this case. Alcantara was not
prohibited from engaging in any other business as long as he does
not sell projects of Royale Homes’ competitors. He can engage in
selling various other products or engage in unrelated businesses.
Payment of Wages
The element of payment of wages is also absent in thiscase. As
provided in the contract, Alcantara’s remunerations consist only of
commission override of 0.5%, budget allocation, sales incentive and
18
 G.R. No. 186621 March 12, 2014
SOUTH EAST INTERNATIONAL RATTAN, INC. and/or
ESTANISLAO1 AGBAY, Petitioners,
vs.
JESUS J. COMING, Respondent.
DECISION
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari under Rule 45
to reverse and set aside the Decision2 dated February 21, 2008 and
Resolution3 dated February 9, 2009 of the Court of Appeals (CA) in
CA-GR. CEB-SP No. 02113.
Petitioner South East International Rattan, Inc. (SEIRI) is a domestic
corporation engaged in the business of manufacturing and
exporting furniture to various countries with principal place of
business at Paknaan, Mandaue City, while petitioner Estanislao
Agbay, as per records, is the President and General Manager of
SEIRI.4
On November 3, 2003, respondent Jesus J. Coming filed a
complaint5 for illegal dismissal, underpayment of wages, non-
payment of holiday pay, 13th month pay and service incentive
leave pay, with prayer for reinstatement, back wages, damages
and attorney’s fees.
Respondent alleged that he was hired by petitioners as Sizing
Machine Operator on March 17, 1984. His work schedule is from 8:00
a.m. to 5:00 p.m. Initially, his compensation was on "pakiao" basis
but sometime in June 1984, it was fixed at ₱150.00 per day which
was paid weekly. In 1990, without any apparent reason, his
employment was interrupted as he was told by petitioners to
resume work in two months time. Being an uneducated person,
respondent was persuaded by the management as well as his
brother not to complain, as otherwise petitioners might decide not
to call him back for work. Fearing such consequence, respondent
accepted his fate. Nonetheless, after two months he reported back
to work upon order of management.6
Despite being an employee for many years with his work
performance never questioned by petitioners, respondent was
dismissed on January 1, 2002 without lawful cause. He was told that
he will be terminated because the company is not doing well
financially and that he would be called back to work only if they
need his services again. Respondent waited for almost a year but
petitioners did not call him back to work. When he finally filed the
complaint before the regional arbitration branch, his brother
Vicente was used by management to persuade him to withdraw
the case.7
On their part, petitioners denied having hired respondent asserting
that SEIRI was incorporated only in 1986, and that respondent
actually worked for SEIRI’s furniture suppliers because when the
company started in 1987 it was engaged purely in buying and
exporting furniture and its business operations were suspended from
the last quarter of 1989 to August 1992. They stressed that
respondent was not included in the list of employees submitted to
the Social Security System (SSS). Moreover, respondent’s brother,
Vicente Coming, executed an affidavit8 in support of petitioners’
position while Allan Mayol and Faustino Apondar issued notarized
certifications9 that respondent worked for them instead.10
With the denial of petitioners that respondent was their employee,
the latter submitted an affidavit11 signed by five former co-workers
stating that respondent was one of the pioneer employees who
worked in SEIRI for almost twenty years.
In his Decision12 dated April 30, 2004, Labor Arbiter Ernesto F.
Carreon ruled that respondent is a regular employee of SEIRI and
that the termination of his employment was illegal. The dispositive
portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
ordering the respondent South East (Int’l.) Rattan, Inc. to pay
complainant Jesus J. Coming the following:
1. Separation pay ₱114,400.00
2. Backwages P 30,400.00
3. Wage differential P 15,015.00
4. 13th month pay P 5,958.00
5. Holiday pay P 4,000.00
6. Service incentive leave pay P 2,000.00
Total award ₱171,773.00
The other claims and the case against respondent Estanislao Agbay
are dismissed for lack of merit.
SO ORDERED.13
Petitioners appealed to the National Labor Relations Commission
(NLRC)-Cebu City where they submitted the following additional
evidence: (1) copies of SEIRI’s payrolls and individual pay records of
employees;14 (2) affidavit15of SEIRI’s Treasurer, Angelina Agbay; and
(3) second affidavit16 of Vicente Coming.
19
On July 28, 2005, the NLRC’s Fourth Division rendered its
Decision,17 the dispositive portion of which states:
WHEREFORE, premises considered, the decision of the Labor Arbiter
is hereby SET ASIDE and VACATED and a new one entered
DISMISSING the complaint.
SO ORDERED.18
The NLRC likewise denied respondent’s motion for reconsideration.19
Respondent elevated the case to the CA via a petition for certiorari
under Rule 65.
By Decision dated February 21, 2008, the CA reversed the NLRC and
ruled that there existed an employer-employee relationship
between petitioners and respondent who was dismissed without just
and valid cause.
The CA thus decreed:
WHEREFORE, in view of the foregoing, the petition is hereby
GRANTED. The assailed Decision dated July 28, 2005 issued by the
National Labor Relations Commission (NLRC), Fourth Division, Cebu
City in NLRC Case No. V-000625-2004 is REVERSED and SET ASIDE. The
Decision of the Labor Arbiter dated April 30, 2004 is REINSTATED with
MODIFICATION on the computation of backwages which should be
computed from the time of illegal termination until the finality of this
decision.
Further, the Labor Arbiter is directed to make the proper adjustment
in the computation of the award of separation pay as well as the
monetary awards of wage differential, 13th month pay, holiday pay
and service incentive leave pay.
SO ORDERED.20
Petitioners filed a motion for reconsideration but the CA denied it
under Resolution dated February 9, 2009.
Hence, this petition raising the following issues:
6.1
WHETHER UNDER THE FACTS AND EVIDENCE ON RECORD, THE
FINDING OF THE HONORABLE COURT OF APPEALS THAT THERE EXISTS
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PETITIONERS AND
RESPONDENT IS IN ACCORD WITH LAW AND APPLICABLE DECISIONS
OF THIS HONORABLE COURT.
6.2
WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY
APPRECIATED IN ACCORDANCE WITH APPLICABLE LAW AND
JURISPRUDENCE THE EVIDENCE PRESENTED BY BOTH PARTIES.
6.3
WHETHER UNDER THE FACTS AND EVIDENCE PRESENTED, THE FINDING
OF THE HONORABLE COURT OF APPEALS THAT PETITIONERS ARE
LIABLE FOR ILLEGAL DISMISSAL OF RESPONDENT IS IN ACCORD WITH
APPLICABLE LAW AND JURISPRUDENCE.
6.4
WHETHER UNDER THE FACTS PRESENTED, THE RULING OF THE
HONORABLE COURT OF APPEALS THAT THE BACKWAGES DUE THE
RESPONDENT SHOULD BE COMPUTED FROM THE TIME OF ILLEGAL
TERMINATION UNTIL THE FINALITY OF THE DECISION IS SUPPORTED BY
PREVAILING JURISPRUDENCE.21
Resolution of the first issue is paramount in view of petitioners’ denial
of the existence of employer-employee relationship.
The issue of whether or not an employer-employee relationship
exists in a given case is essentially a question of fact. As a rule, this
Court is not a trier of facts and this applies with greater force in
labor cases.22 Only errors of law are generally reviewed by this
Court.23 This rule is not absolute, however, and admits of exceptions.
For one, the Court may look into factual issues in labor cases when
the factual findings of the Labor Arbiter, the NLRC, and the CA are
conflicting.24 Here, the findings of the NLRC differed from those of
the Labor Arbiter and the CA, which compels the Court’s exercise
of its authority to review and pass upon the evidence presented
and to draw its own conclusions therefrom.25
To ascertain the existence of an employer-employee relationship
jurisprudence has invariably adhered to the four-fold test, to wit: (1)
the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the power to control
the employee’s conduct, or the so-called "control test."26 In
resolving the issue of whether such relationship exists in a given
case, substantial evidence – that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a
conclusion – is sufficient. Although no particular form of evidence is
required to prove the existence of the relationship, and any
competent and relevant evidence to prove the relationship may
be admitted, a finding that the relationship exists must nonetheless
rest on substantial evidence.27
In support of their claim that respondent was not their employee,
petitioners presented Employment Reports to the SSS from 1987 to
2002, the Certifications issued by Mayol and Apondar, two affidavits
of Vicente Coming, payroll sheets (1999-2000), individual pay
envelopes and employee earnings records (1999-2000) and
affidavit of Angelina Agbay (Treasurer and Human Resources
Officer). The payroll and pay records did not include the name of
respondent. The affidavit of Ms. Agbay stated that after SEIRI started
its business in 1986 purely on export trading, it ceased operations in
1989 as evidenced by Certification dated January 18, 1994 from the
Securities and Exchange Commission (SEC); that when business
resumed in 1992, SEIRI undertook only a little of manufacturing; that
the company never hired any workers for varnishing and pole sizing
because it bought the same from various suppliers, including
Faustino Apondar; respondent was never hired by SEIRI; and while it
is true that Mr. Estanislao Agbay is the company President, he never
dispensed the salaries of workers.28
In his first affidavit, Vicente Coming averred that:
6. [Jesus Coming] is a furniture factory worker. In 1982 to
1986, he was working with Ben Mayol as round core
maker/splitter.
7. Thereafter, we joined Okay Okay Yard owned by
Amelito Montececillo. This is a rattan trader with business
address near Cebu Rattan Factory on a "Pakiao" basis.
8. However, Jesus and I did not stay long at Okay Okay
Yard and instead we joined Eleuterio Agbay in Labogon,
Cebu in 1989. In 1991, we went back to Okay Okay
located near the residence of Atty. Vicente de la Serna in
Mandaue City. We were on a "pakiao" basis. We stayed
put until 1993 when we resigned and joined Dodoy Luna in
Labogon, Mandaue City as classifier until 1995. In 1996[,]
Jesus rested. It was only in 1997 that he worked back. He
replaced me, as a classifier in Rattan Traders owned by
Allan Mayol. But then, towards the end of the year, he left
the factory and relaxed in our place of birth, in Sogod,
Cebu.
9. It was only towards the end of 1999 that Jesus was taken
back by Allan Mayol as sizing machine operator. However,
the work was off and on basis. Not regular in nature, he
was harping a side line job with me knowing that I am now
working with Faustino Apondar that supplies rattan
furniture’s [sic] to South East (Int’l) Rattan, Inc. As a brother,
I allowed Jesus to work with me and collect the proceeds
of his services as part of my collectibles from Faustino
Apondar since I was on a "pakiao" basis. He was working
at his pleasure. Which means, he works if he likes to? That
will be until 10:00 o’clock in the evening.
x x x x29
The Certification dated January 20, 2004 of Allan Mayol reads:
This is to certify that I personally know Jesus Coming, the brother of
Vicente Coming. Jesus is a rattan factory worker and he was
working with me as rattan pole sizing/classifier of my business from
1997 up to part of 1998 when he left my factory at will. I took him
back towards the end of 1999, this time as a sizing machine
operator. In all these years, his services are not regular. He works
only if he likes to.30
Faustino Apondar likewise issued a Certification which states:
20
This is to certify that I am a maker/supplier of finished Rattan
Furniture. As such, I have several rattan furniture workers under me,
one of whom is Vicente Coming, the brother of Jesus Coming.
That sometime in 1999, Vicente pleaded to me for a side line job of
his brother, Jesus who was already connected with Allan Mayol.
Having vouched for the integrity of his brother and knowing that the
job is temporary in character, I allowed Jesus to work with his
brother Vicente. However, the proceeds will be collected together
with his brother Vicente since it was the latter who was working with
me. He renders services to his brother work only after the regular
working hours but off and on basis.31
On the other hand, respondent submitted the affidavit executed by
Eleoterio Brigoli, Pedro Brigoli, Napoleon Coming, Efren Coming and
Gil Coming who all attested that respondent was their co-worker at
SEIRI.
Their affidavit reads:
We, the undersigned, all of legal ages, Filipino, and resident[s] of
Cebu, after having been duly sworn to in accordance with law,
depose and say:
That we are former employees of SOUTH EAST RATTAN which is
owned by Estan Eslao Agbay;
That we personally know JESUS COMING considering that we
worked together in one company SOUTH EAST RATTANT [sic];
That we together with JESUS COMING are all under the employ of
ESTAN ESLAO AGBAY considering that the latter is the one directly
paying us and holds the absolute control of all aspects of our
employment;
That it is not true that JESUS COMING is under the employ of one
person other than ESTAN ESLAO AGBAY OF SOUTH EAST RATTAN;
That Jesus Coming is one of the pioneer employees of SOUTH EAST
RATTAN and had been employed therein for almost twenty years;
That we executed this affidavit to attest to the truth of the foregoing
facts and to deny any contrary allegation made by the company
against his employment with SOUTH EAST RATTAN.32
In his decision, Labor Arbiter Carreon found that respondent’s work
as sizing machine operator is usually necessary and desirable to the
rattan furniture business of petitioners and their failure to include
respondent in the employment report to SSS is not conclusive proof
that respondent is not their employee. As to the affidavit of Vicente
Coming, Labor Arbiter Carreon did not give weight to his statement
that respondent is not petitioners’ employee but that of one
Faustino Apondar. Labor Arbiter Carreon was not convinced that
Faustino Apondar is an independent contractor who has a
contractual relationship with petitioners.
In reversing the Labor Arbiter, the NLRC reasoned as follows:
First complainant alleged that he worked continuously from March
17, 1984 up to January 21, 2002.1âwphi1 Records reveal however
that South East (Int’l.) Rattan, Inc. was incorporated only last July 18,
1986 (p. 55 records)[.] Moreover, when they started to actually
operate in 1987, the company was engaged purely on "buying and
exporting rattan furniture" hence no manufacturing employees
were hired. Furthermore, from the last quarter of 1989 up to August
of 1992, the company suspended operations due to economic
reverses as per Certification issued by the Securities and Exchange
Commission (p. 56 records)[.]
Second, for all his insistence that he was a regular employee,
complainant failed to present a single payslip, voucher or a copy of
a company payroll showing that he rendered service during the
period indicated therein. x x x
From the above established facts we are inclined to give weight
and credence to the Certifications of Allan Mayol and Faustino
Apondar, both suppliers of finished Rattan Furniture (pp. 442-43,
records). It appears that complainant first worked with Allan Mayol
and later with Faustino Apondar upon the proddings of his brother
Vicente. Vicente’s affidavit as to complainant’s employment history
was more detailed and forthright. x x x
xxxx
In the case at bar, there is likewise substantial evidence to support
our findings that complainant was not an employee of respondents.
Thus:
1. Complainant’s name does not appear in the list of
employees reported to the SSS.
2. His name does not also appear in the sample payrolls of
respondents’ employees.
3. The certification of Allan Mayol and Fasutino Apondar[,]
supplier of finished rattan products[,] that complainant
had at one time or another worked with them.
4. The Affidavit of Vicente Coming, complainant’s full
brother[,] attesting that complainant had never been an
employee of respondent. The only connection was that
their employer Faustino Apondar supplies finished rattan
products to respondents.33
On the other hand, the CA gave more credence to the
declarations of the five former employees of petitioners that
respondent was their co-worker in SEIRI. One of said affiants is
Vicente Coming’s own son, Gil Coming. Vicente averred in his
second affidavit that when he confronted his son, the latter
explained that he was merely told by their Pastor to sign the
affidavit as it will put an end to the controversy. Vicente insisted that
his son did not know the contents and implications of the document
he signed. As to the absence of respondent’s name in the payroll
and SSS employment report, the CA observed that the payrolls
submitted were only from January 1, 1999 to December 29, 2000
and not the entire period of eighteen years when respondent
claimed he worked for SEIRI. It further noted that the names of the
five affiants, whom petitioners admitted to be their former
employees, likewise do not appear in the aforesaid documents.
According to the CA, it is apparent that petitioners maintained a
separate payroll for certain employees or willfully retained a portion
of the payroll.
x x x As to the "control test", the following facts indubitably reveal
that respondents wielded control over the work performance of
petitioner, to wit: (1) they required him to work within the company
premises; (2) they obliged petitioner to report every day of the
week and tasked him to usually perform the same job; (3) they
enforced the observance of definite hours of work from 8 o’clock in
the morning to 5 o’clock in the afternoon; (4) the mode of payment
of petitioner’s salary was under their discretion, at first paying him on
pakiao basis and thereafter, on daily basis; (5) they implemented
company rules and regulations; (6) [Estanislao] Agbay directly paid
petitioner’s salaries and controlled all aspects of his employment
and (7) petitioner rendered work necessary and desirable in the
business of the respondent company.34
We affirm the CA.
In Tan v. Lagrama,35 the Court held that the fact that a worker was
not reported as an employee to the SSS is not conclusive proof of
the absence of employer-employee relationship. Otherwise, an
employer would be rewarded for his failure or even neglect to
perform his obligation.36
Nor does the fact that respondent’s name does not appear in the
payrolls and pay envelope records submitted by petitioners negate
the existence of employer-employee relationship. For a payroll to
be utilized to disprove the employment of a person, it must contain
a true and complete list of the employee.37 In this case, the exhibits
offered by petitioners before the NLRC consisting of copies of
payrolls and pay earnings records are only for the years 1999 and
2000; they do not cover the entire 18-year period during which
respondent supposedly worked for SEIRI.
In their comment to the petition filed by respondent in the CA,
petitioners emphasized that in the certifications issued by Mayol
and Apondar, it was shown that respondent was employed and
working for them in those years he claimed to be working for SEIRI.
However, a reading of the certification by Mayol would show that
while the latter claims to have respondent under his employ in 1997,
1998 and 1999, respondent’s services were not regular and that he
21
works only if he wants to. Apondar’s certification likewise stated that
respondent worked for him since 1999 through his brother Vicente
as "sideline" but only after regular working hours and "off and on"
basis. Even assuming the truth of the foregoing statements, these do
not foreclose respondent’s regular or full-time employment with
SEIRI. In effect, petitioners suggest that respondent was employed
by SEIRI’s suppliers, Mayol and Apondar but no competent proof
was presented as to the latter’s status as independent contractors.
In the same comment, petitioners further admitted that the five
affiants who attested to respondent’s employment with SEIRI are its
former workers whom they describe as "disgruntled workers of SEIRI"
with an axe to grind against petitioners, and that their execution of
affidavit in support of respondent’s claim is "their very way of hitting
back the management of SEIRI after disciplinary measures were
meted against them."38 This allegation though was not substantiated
by petitioners. Instead, after the CA rendered its decision reversing
the NLRC’s ruling, petitioners subsequently changed their theory by
denying the employment relationship with the five affiants in their
motion for reconsideration, thus:
x x x Since the five workers were occupying and working on a
leased premises of the private respondent, they were called
workers of SEIRI (private respondent). Such admission however, does
not connote employment. For the truth of the matter, all of the five
employees of the supplier assigned at the leased premises of the
private respondent. Because of the recommendation of the private
respondent with regards to the disciplinary measures meted on the
five workers, they wanted to hit back against the private
respondent. Their motive to implicate private respondent was to
vindicate. Definitely, they have an axe to grind against the private
respondent. Mention has to be made that despite the dismissal of
these five (5) witnesses from their service, none of them ever went to
the National Labor [Relations] Commission and invoked their rights,
if any, against their employer or at the very least against the
respondent. The reason is obvious, since they knew pretty well that
they were not employees of SEIRI but rather under the employ of
Allan Mayol and Faustino Apondar, working on a leased premise of
respondent. x x x39
Petitioners’ admission that the five affiants were their former
employees is binding upon them. While they claim that respondent
was the employee of their suppliers Mayol and Apondar, they did
not submit proof that the latter were indeed independent
contractors; clearly, petitioners failed to discharge their burden of
proving their own affirmative allegation.40 There is thus no showing
that the five former employees of SEIRI were motivated by malice,
bad faith or any ill-motive in executing their affidavit supporting the
claims of respondent.
In any controversy between a laborer and his master, doubts
reasonably arising from the evidence are resolved in favor of the
laborer.41
As a regular employee, respondent enjoys the right to security of
tenure under Article 27942 of the Labor Code and may only be
dismissed for a just43 or authorized44 cause, otherwise the dismissal
becomes illegal.
Respondent, whose employment was terminated without valid
cause by petitioners, is entitled to reinstatement without loss of
seniority rights and other privileges and to his full back wages,
inclusive of allowances and other benefits or their monetary
equivalent, computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Where
reinstatement is no longer viable as an option, back wages shall be
computed from the time of the illegal termination up to the finality
of the decision. Separation pay equivalent to one month salary for
every year of service should likewise be awarded as an alternative
in case reinstatement in not possible.45
WHEREFORE, the petition for review on certiorari is DENIED. The
Decision dated February 21, 2008 and Resolution dated February 9,
2009 of the Court of Appeals in CA-G.R. No. CEB-SP No. 02113 are
hereby AFFIRMED and UPHELD.
Petitioners to pay the costs of suit.
SO ORDERED.
G.R. No. 195466 July 2, 2014
ARIEL L. DAVID, doing business under the name and style "YIELS
HOG DEALER," Petitioner,
vs.
JOHN G. MACASIO, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari 1 the challenge to
the November 22, 2010 decision2 and the January 31, 2011
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 116003.
The CA decision annulled and set aside the May 26, 2010
decision4 of the National Labor Relations Commission
(NLRC)5 which, in turn, affirmed the April 30, 2009 Decision6 of the
Labor Arbiter (LA). The LA's decision dismissed respondent John G.
Macasio's monetary claims.
The Factual Antecedents
In January 2009, Macasio filed before the LA a complaint7 against
petitioner Ariel L. David, doing business under the name and style
"Yiels Hog Dealer," for non-payment of overtime pay, holiday pay
and 13th month pay. He also claimed payment for moral and
exemplary damages and attorney’s fees. Macasio also claimed
payment for service incentive leave (SIL).8
Macasio alleged9 before the LA that he had been working as a
butcher for David since January 6, 1995. Macasio claimed that
David exercised effective control and supervision over his work,
pointing out that David: (1) set the work day, reporting time and
hogs to be chopped, as well as the manner by which he was to
perform his work; (2) daily paid his salary of ₱700.00, which was
increased from ₱600.00 in 2007, ₱500.00 in 2006 and ₱400.00 in 2005;
and (3) approved and disapproved his leaves. Macasio added that
David owned the hogs delivered for chopping, as well as the work
tools and implements; the latter also rented the workplace.
Macasio further claimed that David employs about twenty-five (25)
butchers and delivery drivers.
In his defense,10 David claimed that he started his hog dealer
business in 2005 and that he only has ten employees. He alleged
that he hired Macasio as a butcher or chopper on "pakyaw" or task
basis who is, therefore, not entitled to overtime pay, holiday pay
and 13th month pay pursuant to the provisions of the Implementing
Rules and Regulations (IRR) of the Labor Code. David pointed out
that Macasio: (1) usually starts his work at 10:00 p.m. and ends at
2:00 a.m. of the following day or earlier, depending on the volume
of the delivered hogs; (2) received the fixed amount of ₱700.00 per
engagement, regardless of the actual number of hours that he
spent chopping the delivered hogs; and (3) was not engaged to
22
report for work and, accordingly, did not receive any fee when no
hogs were delivered.
Macasio disputed David’s allegations.11 He argued that, first, David
did not start his business only in 2005. He pointed to the Certificate
of Employment12 that David issued in his favor which placed the
date of his employment, albeit erroneously, in January 2000.
Second, he reported for work every day which the payroll or time
record could have easily proved had David submitted them in
evidence.
Refuting Macasio’s submissions,13 David claims that Macasio was
not his employee as he hired the latter on "pakyaw" or task basis. He
also claimed that he issued the Certificate of Employment, upon
Macasio’s request, only for overseas employment purposes. He
pointed to the "Pinagsamang Sinumpaang Salaysay,"14 executed by
Presbitero Solano and Christopher (Antonio Macasio’s co-butchers),
to corroborate his claims.
In the April 30, 2009 decision,15 the LA dismissed Macasio’s
complaint for lack of merit. The LA gave credence to David’s claim
that he engaged Macasio on "pakyaw" or task basis. The LA noted
the following facts to support this finding: (1) Macasio received the
fixed amount of ₱700.00 for every work done, regardless of the
number of hours that he spent in completing the task and of the
volume or number of hogs that he had to chop per engagement;
(2) Macasio usually worked for only four hours, beginning from 10:00
p.m. up to 2:00 a.m. of the following day; and (3) the ₱700.00 fixed
wage far exceeds the then prevailing daily minimum wage of
₱382.00. The LA added that the nature of David’s business as hog
dealer supports this "pakyaw" or task basis arrangement.
The LA concluded that as Macasio was engaged on "pakyaw" or
task basis, he is not entitled to overtime, holiday, SIL and 13th month
pay.
The NLRC’s Ruling
In its May 26, 2010 decision,16 the NLRC affirmed the LA ruling.17 The
NLRC observed that David did not require Macasio to observe an
eight hour work schedule to earn the fixed ₱700.00 wage; and that
Macasio had been performing a non-time work, pointing out that
Macasio was paid a fixed amount for the completion of the
assigned task, irrespective of the time consumed in its performance.
Since Macasio was paid by result and not in terms of the time that
he spent in the workplace, Macasio is not covered by the Labor
Standards laws on overtime, SIL and holiday pay, and 13th month
pay under the Rules and Regulations Implementing the 13th month
pay law.18
Macasio moved for reconsideration19 but the NLRC denied his
motion in its August 11, 2010 resolution,20 prompting Macasio to
elevate his case to the CA via a petition for certiorari.21
The CA’s Ruling
In its November 22, 2010 decision,22 the CA partly granted
Macasio’s certiorari petition and reversed the NLRC’s ruling for
having been rendered with grave abuse of discretion.
While the CA agreed with the LAand the NLRC that Macasio was a
task basis employee, it nevertheless found Macasio entitled to his
monetary claims following the doctrine laid down in Serrano v.
Severino Santos Transit.23 The CA explained that as a task basis
employee, Macasio is excluded from the coverage of holiday, SIL
and 13th month pay only if he is likewise a "field personnel." As
defined by the Labor Code, a "field personnel" is one who performs
the work away from the office or place of work and whose regular
work hours cannot be determined with reasonable certainty. In
Macasio’s case, the elements that characterize a "field personnel"
are evidently lacking as he had been working as a butcher at
David’s "Yiels Hog Dealer" business in Sta. Mesa, Manila under
David’s supervision and control, and for a fixed working schedule
that starts at 10:00 p.m.
Accordingly, the CA awarded Macasio’s claim for holiday, SIL and
13th month pay for three years, with 10% attorney’s fees on the total
monetary award. The CA, however, denied Macasio’s claim for
moral and exemplary damages for lack of basis.
David filed the present petition after the CA denied his motion for
reconsideration24 in the CA’s January 31, 2011 resolution.25
The Petition
In this petition,26 David maintains that Macasio’s engagement was
on a "pakyaw" or task basis. Hence, the latter is excluded from the
coverage of holiday, SIL and 13th month pay. David reiterates his
submissions before the lower tribunals27 and adds that he never had
any control over the manner by which Macasio performed his work
and he simply looked on to the "end-result." He also contends that
he never compelled Macasio to report for work and that under their
arrangement, Macasio was at liberty to choose whether to report
for work or not as other butchers could carry out his tasks. He points
out that Solano and Antonio had, in fact, attested to their (David
and Macasio’s) established "pakyawan" arrangement that
rendered a written contract unnecessary. In as much as Macasio is
a task basis employee – who is paid the fixed amount of ₱700.00
per engagement regardless of the time consumed in the
performance – David argues that Macasio is not entitled to the
benefits he claims. Also, he posits that because he engaged
Macasio on "pakyaw" or task basis then no employer-employee
relationship exists between them.
Finally, David argues that factual findings of the LA, when affirmed
by the NLRC, attain finality especially when, as in this case, they are
supported by substantial evidence. Hence, David posits that the CA
erred in reversing the labor tribunals’ findings and granting the
prayed monetary claims.
The Case for the Respondent
Macasio counters that he was not a task basis employee or a "field
personnel" as David would have this Court believe.28 He reiterates
his arguments before the lower tribunals and adds that, contrary to
David’s position, the ₱700.00 fee that he was paid for each day that
he reported for work does not indicate a "pakyaw" or task basis
employment as this amount was paid daily, regardless of the
number or pieces of hogs that he had to chop. Rather, it indicates
a daily-wage method of payment and affirms his regular
employment status. He points out that David did not allege or
present any evidence as regards the quota or number of hogs that
he had to chop as basis for the "pakyaw" or task basis payment;
neither did David present the time record or payroll to prove that he
worked for less than eight hours each day. Moreover, David did not
present any contract to prove that his employment was on task
basis. As David failed to prove the alleged task basis or "pakyawan"
agreement, Macasio concludes that he was David’s employee.
Procedurally, Macasio points out that David’s submissions in the
present petition raise purely factual issues that are not proper for a
petition for review on certiorari. These issues – whether he (Macasio)
was paid by result or on "pakyaw" basis; whether he was a "field
personnel"; whether an employer-employee relationship existed
between him and David; and whether David exercised control and
supervision over his work – are all factual in nature and are,
therefore, proscribed in a Rule 45 petition. He argues that the CA’s
factual findings bind this Court, absent a showing that such findings
are not supported by the evidence or the CA’s judgment was
based on a misapprehension of facts. He adds that the issue of
whether an employer-employee relationship existed between him
and David had already been settled by the LA29 and the NLRC30 (as
well as by the CA per Macasio’s manifestation before this Court
dated November 15, 2012),31 in his favor, in the separate illegal case
that he filed against David.
The Issue
The issue revolves around the proper application and interpretation
of the labor law provisions on holiday, SIL and 13th month pay to a
worker engaged on "pakyaw" or task basis. In the context of the
Rule 65 petition before the CA, the issue is whether the CA correctly
23
found the NLRC in grave abuse of discretion in ruling that Macasio is
entitled to these labor standards benefits.
The Court’s Ruling
We partially grant the petition.
Preliminary considerations: the Montoya ruling and the factual-issue-
bar rule
In this Rule 45 petition for review on certiorari of the CA’s decision
rendered under a Rule 65 proceeding, this Court’s power of review
is limited to resolving matters pertaining to any perceived legal
errors that the CA may have committed in issuing the assailed
decision. This is in contrast with the review for jurisdictional errors,
which we undertake in an original certiorari action. In reviewing the
legal correctness of the CA decision, we examine the CA decision
based on how it determined the presence or absence of grave
abuse of discretion in the NLRC decision before it and not on the
basis of whether the NLRC decision on the merits of the case was
correct.32 In other words, we have to be keenly aware that the CA
undertook a Rule 65 review, not a review on appeal, of the NLRC
decision challenged before it.33
Moreover, the Court’s power in a Rule 45 petition limits us to a
review of questions of law raised against the assailed CA decision.34
In this petition, David essentially asks the question – whether
Macasio is entitled to holiday, SIL and 13th month pay. This one is a
question of law. The determination of this question of law however is
intertwined with the largely factual issue of whether Macasio falls
within the rule on entitlement to these claims or within the
exception. In either case, the resolution of this factual issue
presupposes another factual matter, that is, the presence of an
employer-employee relationship between David and Macasio.
In insisting before this Court that Macasio was not his employee,
David argues that he engaged the latter on "pakyaw" or task basis.
Very noticeably, David confuses engagement on "pakyaw" or task
basis with the lack of employment relationship. Impliedly, David
asserts that their "pakyawan" or task basis arrangement negates the
existence of employment relationship.
At the outset, we reject this assertion of the petitioner. Engagement
on "pakyaw" or task basis does not characterize the relationship that
may exist between the parties, i.e., whether one of employment or
independent contractorship. Article 97(6) of the Labor Code
defines wages as "xxx the remuneration or earnings, however
designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by
an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services
rendered or to be rendered[.]"35 In relation to Article 97(6), Article
10136 of the Labor Code speaks of workers paid by results or those
whose pay is calculated in terms of the quantity or quality of their
work output which includes "pakyaw" work and other non-time
work.
More importantly, by implicitly arguing that his engagement of
Macasio on "pakyaw" or task basis negates employer-employee
relationship, David would want the Court to engage on a factual
appellate review of the entire case to determine the presence or
existence of that relationship. This approach however is not
authorized under a Rule 45 petition for review of the CA decision
rendered under a Rule 65 proceeding.
First, the LA and the NLRC denied Macasio’s claim not because of
the absence of an employer-employee but because of its finding
that since Macasio is paid on pakyaw or task basis, then he is not
entitled to SIL, holiday and 13th month pay. Second, we consider it
crucial, that in the separate illegal dismissal case Macasio filed with
the LA, the LA, the NLRC and the CA uniformly found the existence
of an employer-employee relationship.37
In other words, aside from being factual in nature, the existence of
an employer-employee relationship is in fact a non-issue in this case.
To reiterate, in deciding a Rule 45 petition for review of a labor
decision rendered by the CA under 65, the narrow scope of inquiry
is whether the CA correctly determined the presence or absence of
grave abuse of discretion on the part of the NLRC. In concrete
question form, "did the NLRC gravely abuse its discretion in denying
Macasio’s claims simply because he is paid on a non-time basis?"
At any rate, even if we indulge the petitioner, we find his claim that
no employer-employee relationship exists baseless. Employing the
control test,38 we find that such a relationship exist in the present
case.
Even a factual review shows that Macasio is David’s employee
To determine the existence of an employer-employee relationship,
four elements generally need to be considered, namely: (1) the
selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the
employee’s conduct. These elements or indicators comprise the so-
called "four-fold" test of employment relationship. Macasio’s
relationship with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the
element of "selection and engagement of the employee." David
categorically confirmed this fact when, in his "Sinumpaang
Salaysay," he stated that "nag apply po siya sa akin at kinuha ko
siya na chopper[.]"39 Also, Solano and Antonio stated in their
"Pinagsamang Sinumpaang Salaysay"40 that "[k]ami po ay
nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang
butcher" and "kilalanamin si xxx Macasio na isa ring butcher xxx ni
xxx David at kasama namin siya sa aming trabaho."
Second, David paid Macasio’s wages.Both David and Macasio
categorically stated in their respective pleadings before the lower
tribunals and even before this Court that the former had been
paying the latter ₱700.00 each day after the latter had finished the
day’s task. Solano and Antonio also confirmed this fact of wage
payment in their "Pinagsamang Sinumpaang Salaysay."41 This
satisfies the element of "payment of wages."
Third, David had been setting the day and time when Macasio
should report for work. This power to determine the work schedule
obviously implies power of control. By having the power to control
Macasio’s work schedule, David could regulate Macasio’s work
and could even refuse to give him any assignment, thereby
effectively dismissing him.
And fourth, David had the right and power to control and supervise
Macasio’s work as to the means and methods of performing it. In
addition to setting the day and time when Macasio should report
for work, the established facts show that David rents the place
where Macasio had been performing his tasks. Moreover, Macasio
would leave the workplace only after he had finished chopping all
of the hog meats given to him for the day’s task. Also, David would
still engage Macasio’s services and have him report for work even
during the days when only few hogs were delivered for butchering.
Under this overall setup, all those working for David, including
Macasio, could naturally be expected to observe certain rules and
requirements and David would necessarily exercise some degree of
control as the chopping of the hog meats would be subject to his
specifications. Also, since Macasio performed his tasks at David’s
workplace, David could easily exercise control and supervision over
the former. Accordingly, whether or not David actually exercised
this right or power to control is beside the point as the law simply
requires the existence of this power to control 4243 or, as in this case,
the existence of the right and opportunity to control and supervise
Macasio.44
In sum, the totality of the surrounding circumstances of the present
case sufficiently points to an employer-employee relationship
existing between David and Macasio.
Macasio is engaged on "pakyaw" or task basis
At this point, we note that all three tribunals – the LA, the NLRC and
the CA – found that Macasio was engaged or paid on "pakyaw" or
task basis. This factual finding binds the Court under the rule that
factual findings of labor tribunals when supported by the
24
established facts and in accord with the laws, especially when
affirmed by the CA, is binding on this Court.
A distinguishing characteristic of "pakyaw" or task basis
engagement, as opposed to straight-hour wage payment, is the
non-consideration of the time spent in working. In a task-basis work,
the emphasis is on the task itself, in the sense that payment is
reckoned in terms of completion of the work, not in terms of the
number of time spent in the completion of work.45 Once the work or
task is completed, the worker receives a fixed amount as wage,
without regard to the standard measurements of time generally
used in pay computation.
In Macasio’s case, the established facts show that he would usually
start his work at 10:00 p.m. Thereafter, regardless of the total hours
that he spent at the workplace or of the total number of the hogs
assigned to him for chopping, Macasio would receive the fixed
amount of ₱700.00 once he had completed his task. Clearly, these
circumstances show a "pakyaw" or task basis engagement that all
three tribunals uniformly found.
In sum, the existence of employment relationship between the
parties is determined by applying the "four-fold" test; engagement
on "pakyaw" or task basis does not determine the parties’
relationship as it is simply a method of pay computation.
Accordingly, Macasio is David’s employee, albeit engaged on
"pakyaw" or task basis.
As an employee of David paid on pakyaw or task basis, we now go
to the core issue of whether Macasio is entitled to holiday, 13th
month, and SIL pay.
On the issue of Macasio’s entitlement to holiday, SIL and 13th month
pay
The LA dismissed Macasio’s claims pursuant to Article 94 of the
Labor Code in relation to Section 1, Rule IV of the IRR of the Labor
Code, and Article 95 of the Labor Code, as well as Presidential
Decree (PD) No. 851. The NLRC, on the other hand, relied on Article
82 of the Labor Code and the Rules and Regulations Implementing
PD No. 851. Uniformly, these provisions exempt workers paid on
"pakyaw" or task basis from the coverage of holiday, SIL and 13th
month pay.
In reversing the labor tribunals’ rulings, the CA similarly relied on
these provisions, as well as on Section 1, Rule V of the IRR of the
Labor Code and the Court’s ruling in Serrano v. Severino Santos
Transit.46 These labor law provisions, when read together with the
Serrano ruling, exempt those engaged on "pakyaw" or task basis
only if they qualify as "field personnel."
In other words, what we have before us is largely a question of law
regarding the correct interpretation of these labor code provisions
and the implementing rules; although, to conclude that the worker
is exempted or covered depends on the facts and in this sense, is a
question of fact: first, whether Macasio is a "field personnel"; and
second, whether those engaged on "pakyaw" or task basis, but who
are not "field personnel," are exempted from the coverage of
holiday, SIL and 13th month pay.
To put our discussion within the perspective of a Rule 45 petition for
review of a CA decision rendered under Rule 65 and framed in
question form, the legal question is whether the CA correctly ruled
that it was grave abuse of discretion on the part of the NLRC to
deny Macasio’s monetary claims simply because he is paid on a
non-time basis without determining whether he is a field personnel
or not.
To resolve these issues, we need tore-visit the provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the
coverage of Title I, Book III of the Labor Code - provisions governing
working conditions and rest periods.
Art. 82. Coverage.— The provisions of [Title I] shall apply to
employees in all establishments and undertakings whether for profit
or not, but not to government employees, managerial employees,
field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable
certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay (under
Article 94 of the Labor Code) and SIL pay (under Article 95 of the
Labor Code). Under Article 82,"field personnel" on one hand and
"workers who are paid by results" on the other hand, are not
covered by the Title I provisions. The wordings of Article82 of the
Labor Code additionally categorize workers "paid by results" and
"field personnel" as separate and distinct types of employees who
are exempted from the Title I provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its
corresponding provision in the IRR47 reads:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his
regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than (10) workers[.]
[emphasis ours]
xxxx
SECTION 1. Coverage. – This Rule shall apply to all employees
except:
xxxx
(e)Field personnel and other employees whose time and
performance is unsupervised by the employer including those who
are engaged on task or contract basis, purely commission basis, or
those who are paid a fixed amount for performing work irrespective
of the time consumed in the performance thereof. [emphases ours]
On the other hand, Article 95 of the Labor Code and its
corresponding provision in the IRR48 pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has
rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying
the benefit herein provided, those enjoying vacation leave with
pay of at least five days and those employed in establishments
regularly employing less than ten employees or in establishments
exempted from granting this benefit by the Secretary of Labor and
Employment after considering the viability or financial condition of
such establishment. [emphases ours]
xxxx
Section 1. Coverage. – This rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on
task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof. [emphasis ours]
Under these provisions, the general rule is that holiday and SIL pay
provisions cover all employees. To be excluded from their
coverage, an employee must be one of those that these provisions
expressly exempt, strictly in accordance with the exemption. Under
the IRR, exemption from the coverage of holiday and SIL pay refer
to "field personnel and other employees whose time and
performance is unsupervised by the employer including those who
are engaged on task or contract basis[.]" Note that unlike Article 82
of the Labor Code, the IRR on holiday and SIL pay do not exclude
employees "engaged on task basis" as a separate and distinct
category from employees classified as "field personnel." Rather,
these employees are altogether merged into one classification of
exempted employees.
Because of this difference, it may be argued that the Labor Code
may be interpreted to mean that those who are engaged on task
basis, per se, are excluded from the SIL and holiday payment since
25
this is what the Labor Code provisions, in contrast with the IRR,
strongly suggest. The arguable interpretation of this rule may be
conceded to be within the discretion granted to the LA and NLRC
as the quasi-judicial bodies with expertise on labor matters.
However, as early as 1987 in the case of Cebu Institute of
Technology v. Ople49 the phrase "those who are engaged on task or
contract basis" in the rule has already been interpreted to mean as
follows:
[the phrase] should however, be related with "field personnel"
applying the rule on ejusdem generis that general and unlimited
terms are restrained and limited by the particular terms that they
follow xxx Clearly, petitioner's teaching personnel cannot be
deemed field personnel which refers "to non-agricultural employees
who regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable
certainty. [Par. 3, Article 82, Labor Code of the Philippines].
Petitioner's claim that private respondents are not entitled to the
service incentive leave benefit cannot therefore be sustained.
In short, the payment of an employee on task or pakyaw basis
alone is insufficient to exclude one from the coverage of SIL and
holiday pay. They are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they qualify as "field
personnel." The IRR therefore validly qualifies and limits the general
exclusion of "workers paid by results" found in Article 82 from the
coverage of holiday and SIL pay. This is the only reasonable
interpretation since the determination of excluded workers who are
paid by results from the coverage of Title I is "determined by the
Secretary of Labor in appropriate regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in Auto
Bus Transport Systems, Inc., v. Bautista:
A careful perusal of said provisions of law will result in the conclusion
that the grant of service incentive leave has been delimited by the
Implementing Rules and Regulations of the Labor Code to apply
only to those employees not explicitly excluded by Section 1 of Rule
V. According to the Implementing Rules, Service Incentive Leave
shall not apply to employees classified as "field personnel." The
phrase "other employees whose performance is unsupervised by
the employer" must not be understood as a separate classification
of employees to which service incentive leave shall not be granted.
Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those "whose
actual hours of work in the field cannot be determined with
reasonable certainty."
The same is true with respect to the phrase "those who are engaged
on task or contract basis, purely commission basis." Said phrase
should be related with "field personnel," applying the rule on
ejusdem generis that general and unlimited terms are restrained
and limited by the particular terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit
which the CA cited in support of granting Macasio’s petition.
In Serrano, the Court, applying the rule on ejusdem
generis50 declared that "employees engaged on task or contract
basis xxx are not automatically exempted from the grant of service
incentive leave, unless, they fall under the classification of field
personnel."51 The Court explained that the phrase "including those
who are engaged on task or contract basis, purely commission
basis" found in Section 1(d), Rule V of Book III of the IRR should not
be understood as a separate classification of employees to which
SIL shall not be granted. Rather, as with its preceding phrase - "other
employees whose performance is unsupervised by the employer" -
the phrase "including those who are engaged on task or contract
basis" serves to amplify the interpretation of the Labor Code
definition of "field personnel" as those "whose actual hours of work in
the field cannot be determined with reasonable certainty."
In contrast and in clear departure from settled case law, the LA and
the NLRC still interpreted the Labor Code provisions and the IRR as
exempting an employee from the coverage of Title I of the Labor
Code based simply and solely on the mode of payment of an
employee. The NLRC’s utter disregard of this consistent
jurisprudential ruling is a clear act of grave abuse of discretion.52 In
other words, by dismissing Macasio’s complaint without considering
whether Macasio was a "field personnel" or not, the NLRC
proceeded based on a significantly incomplete consideration of
the case. This action clearly smacks of grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the
LA and the NLRC had only taken counsel from Serrano and earlier
cases, they would have correctly reached a similar conclusion
regarding the payment of holiday pay since the rule exempting
"field personnel" from the grant of holiday pay is identically worded
with the rule exempting "field personnel" from the grant of SIL pay.
To be clear, the phrase "employees engaged on task or contract
basis "found in the IRR on both SIL pay and holiday pay should be
read together with the exemption of "field personnel."
In short, in determining whether workers engaged on "pakyaw" or
task basis" is entitled to holiday and SIL pay, the presence (or
absence) of employer supervision as regards the worker’s time and
performance is the key: if the worker is simply engaged on pakyaw
or task basis, then the general rule is that he is entitled to a holiday decision dated November 22, 2010 and the resolution dated
pay and SIL pay unless exempted from the exceptions specifically January 31, 2011 of the Court of Appeals in CA-G.R. SP No. 116003.
provided under Article 94 (holiday pay) and Article95 (SIL pay) of SO ORDERED.
the Labor Code. However, if the worker engaged on pakyaw or
task basis also falls within the meaning of "field personnel" under the
law, then he is not entitled to these monetary benefits.
Macasio does not fall under the classification of "field personnel"
Based on the definition of field personnel under Article 82, we agree
with the CA that Macasio does not fall under the definition of "field
personnel." The CA’s finding in this regard is supported by the
established facts of this case: first, Macasio regularly performed his
duties at David’s principal place of business; second, his actual
hours of work could be determined with reasonable certainty; and,
third, David supervised his time and performance of duties. Since
Macasio cannot be considered a "field personnel," then he is not
exempted from the grant of holiday, SIL pay even as he was
engaged on "pakyaw" or task basis.
Not being a "field personnel," we find the CA to be legally correct
when it reversed the NLRC’s ruling dismissing Macasio’s complaint
for holiday and SIL pay for having been rendered with grave abuse
of discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month pay however, we find
that the CA legally erred in finding that the NLRC gravely abused its
discretion in denying this benefit to Macasio.1âwphi1
The governing law on 13th month pay is PD No. 851.53
As with holiday and SIL pay, 13th month pay benefits generally
cover all employees; an employee must be one of those expressly
enumerated to be exempted. Section 3 of the Rules and
Regulations Implementing P.D. No. 85154enumerates the exemptions
from the coverage of 13th month pay benefits. Under Section 3(e),
"employers of those who are paid on xxx task basis, and those who
are paid a fixed amount for performing a specific work, irrespective
of the time consumed in the performance thereof"55 are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay,
Section 3(e) of the Rules and Regulations Implementing PD No. 851
exempts employees "paid on task basis" without any reference to
"field personnel." This could only mean that insofar as payment of
the 13th month pay is concerned, the law did not intend to qualify
the exemption from its coverage with the requirement that the task
worker be a "field personnel" at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY
GRANT the petition insofar as the payment of 13th month pay to
respondent is concerned. In all other aspects, we AFFIRM the
26