[ G.R. No.

222416, June 17, 2020 ]

FIAMETTE A. RAMIL, PETITIONER, VS. STONELEAF INC. / JOEY DE GUZMAN /

MAC DONES / CRISELDA DONES, RESPONDENTS.

DECISION

REYES, J. JR., J.:

Fiduciary rank-and-file employees are entitled to labor standards benefits under the
Labor Code of the Philippines.

The Case

This petition for review on certiorari under Rule 45 questions the August 13, 2015
Decision1 and January 14, 2016 Resolution of the Court of Appeals (CA) in CA-G.R. SP.
No. 135062 which modified the December 26, 2013 National Labor Relations
Commission's (NLRC) Decision and February 25, 2014 NLRC Resolution by dismissing
the monetary claims except for indemnity. The NLRC affirmed the September 26, 2013
Labor Arbiter's (LA) Decision, which dismissed the complaint for illegal dismissal but
awarded monetary claims to petitioner Fiamette A. Ramil (Ramil).

The Facts

On June 7, 2009, Ramil was hired as a Spa Supervisor and Massage Therapist at
respondent's establishment, Stoneleaf Spa and Wellness Center. Respondent Stoneleaf,
Inc. (Stoneleaf) paid Ramil a monthly salary of P10,000.00 and P100.00 per massage
service rendered. Ramil was also an incorporator/director in Stoneleaf's Articles of
Incorporation.2

In January 2010, Ramil inquired about the payment of contributions for Social Security
System (SSS), Philippine Health Insurance Corporation (Philhealth), and Pag-Ibig Fund
[Pagtutulungan sa kinabukasan: Ikaw, Bangko, Industriya at Gobyerno Fund]3
(Pag-Ibig), which were necessary in processing the spa's permit. She also questioned
the deduction of 12% value-added tax from her commission. As a result, she got the ire
of Stoneleaf President, respondent Joseph Anthony P. De Guzman (De Guzman).4

On August 27, 2012, Stoneleaf's receptionist/cashier, Jingle Abarquez, (Abarquez), was

on official leave, and Ramil took over her duties. In the afternoon of that day, a regular
client came in for massage service. However, the service was not recorded in the
computer as required by company procedure. After closing of business day, Ramil
reported to De Guzman through a short messaging system (SMS) that there were only
three clients, when in fact there were four. The cash box contained P1,300.00 instead of
P1,650.00.5
When Abarquez reported for work the following day, she checked the previous day's
transactions.1awp++i1 Another spa employee, Rowena Beloy (Beloy), told Abarquez
about Ramil's anomalous transaction. Abarquez and Beloy reported the matter to De
Guzman. Julius Tabangcora (Tabangcora), another spa employee, confirmed that he
rendered a massage service to a client on August 27, 2012, but it was not reflected in
the computer and the billing was not on file.6

De Guzman investigated the matter and discovered Ramil's dishonest act. When Ramil
was confronted, she denied the allegation against her. On September 27, 2012,
Stoneleaf terminated Ramil's employment due to serious misconduct, betrayal of trust,
and loss of confidence.7

Ramil filed a complaint for illegal dismissal against Stoneleaf, De Guzman, and Maximo
M. Dones8 (Dones) before the labor tribunal. She alleged that she was not given a copy
of the charge against her, and she was fired on the same day that she was notified of
her dismissal. She averred that she was denied of substantial and procedural due
process. She claimed to be entitled to reinstatement with backwages, last salary for
September 16-30, 2012, proportionate 13th month pay, unpaid commission, labor
standard benefits, moral and exemplary damages of P100,000.00, and 10% attorney's
fees.9

Stoneleaf, De Guzman, and Dones contended that investigations and meetings were
conducted, and sworn statements of the spa's employees were submitted. Ramil also
offered her explanation in a lunch meeting with De Guzman sometime in September
2012.10

The Labor Arbiter's Decision

On September 26, 2013, LA Alberto B. Dolosa rendered a Decision11 dismissing the

complaint for lack of merit. The individual respondents, De Guzman and Dones, were
dropped for lack of factual basis. However, the LA ordered Stoneleaf to pay Ramil the
following labor standards benefits since Stoneleaf was unable to prove payment. All
other claims were dismissed for lack of merit.12

1. Indemnity for violation of right to due – P

process 5,000.00

2. Service Incentive Leave Pay (3 yrs.) – 5,759.00

3. Holiday Pay (3 yrs.) – 12,692.00

4. Prorated 13th Month Pay (2012) – 7,500.00

TOTAL P30,951.00
 5. 10% Attorney's Fees 3,095.10

GRAND TOTAL P34,046.1013

The LA ruled that Ramil was dismissed for a valid cause, that is, loss of trust and
confidence for her dishonest act. Stoneleaf was able to support the dismissal through
documentary evidence and found the following: (1) on August 27, 2012, a massage
service on a client was not recorded in the computer; (2) Ramil instructed Abarquez to
cover-up the shortage on August 27, 2012 with undeclared sales; (3) Ramil took the
credit for services rendered by Dia Camilon, another spa employee; (4) Ramil sold to
others the ointments that were used in the spa; (5) Ramil took home the towels in the
spa; and (6) Ramil did not reflect the sales in the computer and took the money
instead.14

However, Ramil was dismissed without due process, which entitled her to an indemnity
of P5,000.00. The LA resolved that the alleged meeting cannot take the place of the
required notice. Ramil was also entitled to attorney's fees since she was forced to
litigate her case.15

The NLRC Decision

Stoneleaf appealed to the NLRC, which affirmed the LA's Decision in its December 26,
2013 Decision.16 The NLRC held that Ramil was not a managerial employee/staff
because her duties and responsibilities do not fall under any of the categories of Section
2(b), Rule 1, Book III of the Implementing Rules of the Labor Code. Ramil's work does
not: (1) directly relate to management policies; (2) involve regular exercise of
discretion and judgment; and (3) pertain to policy formulation, hiring, or firing of
employees.17

The NLRC explained that the test of supervisory or managerial status depends on
whether a person possesses authority to act in the interest of his employer, and
whether such authority is not merely routinary or clerical in nature, but requires the use
of independent judgment. Here, there is no evidence that Ramil has authority
equivalent to managerial actions which uses independent judgment. It was apparent
that she executed approved and established policies.18

The NLRC determined that although Ramil looked for suppliers for the spa, she cannot
decide whether to get a particular supplier. Ramil evaluated applicants for the spa, but
her evaluation was subject to De Guzman's approval. She also reported to De Guzman
the number of clients served and how much sales were made for the day.19

Lastly, Stoneleaf failed to refute that Ramil received P100.00 as commission for every
massage service that she rendered. Furthermore, one of the employees stated in her
sworn statement that Ramil assigned to herself clients who give tips and claimed that
the client specifically requested her. This indicated that Ramil was a massage therapist
or a rank-and-file employee, and not a managerial employee/staff. Thus, she was
entitled to the labor standards benefits awarded by the LA.20

Stoneleaf moved for reconsideration, which the NLRC denied in its February 25, 2014
Resolution.21 Unconvinced, Stoneleaf filed a petition for certiorari in the CA.

The CA Decision

On August 13, 2015, the CA rendered a Decision22 partially granting the petition and
modifying the NLRC Decision and Resolution by retaining only the indemnity award of
P5,000.00 for violation of right to procedural due process.23

The CA resolved that Ramil was a supervisory/managerial employee based on her

admission and the scope of assignments she indicated in her position paper. She
exercised management prerogatives for Stoneleaf's interest.24 Consequently, she was
not entitled to 13th month pay, holiday pay, and service incentive leave pay. The CA
also ruled that there was no basis for the award of attorney's fees.25

However, the CA sustained that she was dismissed for a valid cause but without
observance of due process; thus, she was entitled to nominal damages of P5,000.00.26

Ramil moved for reconsideration, which the CA denied in its January 14, 2016
Resolution.27 Aggrieved, Ramil filed this petition before the Court.

The Issue Presented

Whether or not the CA erred in partially granting the petition and deleting the monetary
awards of service incentive leave pay, holiday pay, pro-rated 13th month pay, and
attorney's fees.

The Court's Ruling

The petition is granted.

The general rule in a petition for review on certiorari under Rule 45 of the Rules of
Court is that only questions of law should be raised. In Republic of the Philippines v.
Heirs of Eladio Santiago,28 the Court enumerated that one of the exceptions to the
general rule is when the CA's findings are contrary to those of the trial court.
Considering the different findings of fact and conclusions of law of the LA, the NLRC and
the CA, the Court shall entertain this petition, which involves a re-assessment of the
evidence presented.

Foremost, the Court clarifies that the Court shall no longer discuss the legality of the
dismissal and the propriety of the award of nominal damages of P5,000.00, because the
labor tribunals and the CA are consistent in its findings that Ramil was dismissed for a
valid cause but without due process. Thus, she is entitled to nominal damages. Factual
findings of administrative agencies are generally accorded respect and even finality by
the Court, especially when these findings are affirmed by the CA.29 Furthermore, Ramil
did not appeal the LA's ruling dismissing the complaint for illegal dismissal for lack of
merit. It was Stoneleaf who filed an appeal questioning the monetary awards.

The main issue to be resolved is whether or not petitioner Ramil is entitled to service
incentive leave pay, holiday pay, pro-rated 13th month pay, and attorney's fees. Under
the Labor Code of the Philippines (Labor Code), rank-and­-file employees are entitled to
these monetary awards, but not managerial employees. Stoneleaf claims that Ramil is a
managerial employee/staff, while the latter argues otherwise. The Court must
determine to which class of employees Ramil belongs.

Article 82 of the Labor Code enumerates the employees excluded from the coverage of
labor standards benefits.

ART. 82. Coverage. – The provisions of this Title 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.

As used herein, "managerial employees" refer to those whose primary duty

consists of the management of the establishment in which they are
employed or of a department or subdivision thereof, and to other officers or
members of the managerial staff. (Emphasis supplied)

The Omnibus Rules Implementing the Labor Code states that managerial
employees and members of the managerial staff are those who meet the
following conditions:

(b) Managerial employees, if they meet all of the following conditions:

(1) Their primary duty consists of the management of the establishment in

which they are employed or of a department or sub-division thereof.

(2) They customarily and regularly direct the work of two or more
employees therein.

(3) They have the authority to hire or fire employees of lower rank; or their
suggestions and recommendations as to hiring and firing and as to the
promotion or any other change of status of other employees, are given
particular weight.
 (c) Officers or members of a managerial staff if they perform the following
duties and responsibilities:

(1) The primary duty consists of the performance of work directly related to
management policies of their employer;

(2) Customarily and regularly exercise discretion and independent

judgment; and

(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
work week to activities which are not directly and closely related to the
performance of the work described in paragraphs (1), (2) and (3) above.

In determining whether Ramil is a managerial employee/staff, her actual work

performed, and not her job title, must be considered.

In her Petition, Ramil enumerated the scope of her assignment as Spa Supervisor and
Massage Therapist as follows:

• Ensure the spa is in tiptop condition

• Ensure that there are enough therapists to serve customer/s

• Ensure that the items needed in massage service is in full stock all the time in
coordination with the assigned inventory clerk, making the sourcing of supplier of
merchandise for the spa also part of the job

• In charge of delegating every responsibility of all the staff

• Entertains the guests and promotes the spa services

• Handles the complaints of customers

• Trains the staff on the spa services

• Evaluates the competency of applicants to petitioner De Guzman for his approval

• Enforces company policy and spa regulations30

The records show that Ramil does not have the prerogative to lay down management
policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions. The scope of her
assignment pertains to the daily operation of the spa by making sure that the business
runs smoothly. However, her tasks do not include the regular exercise of discretion. Her
authority is limited to the execution of company procedures and policies. She has plenty
of administrative work, but none of it involves the use of independent judgment. Her
duties are also subject to De Guzman's approval.

The Court agrees with the NLRC's observations as follows:

Applying the above criteria, complainant's duties and responsibilities do not x x x fall
under any of the categories enumerated above. Complainant's work was not directly
related to management policies. No circumstances were shown by respondents to
reveal that complainant regularly exercised discretion and independent judgment.
Neither did complainant participate in policy formulation nor in the hiring or firing of
employees.

It must be pointed out that the test of "supervisory" or "managerial status" depends on
whether a person possesses authority to act in the interest of his employer, and
whether such authority is not merely routinary or clerical in nature, but requires the use
of independent judgment. Simply put, the functions of the position are not managerial
in nature if they only execute approved and established policies leaving little or no
discretion at all whether to implement said policies or not.

In the instant case, the position held by complainant and its concomitant duties failed
to overcome the above mentioned test. Her assigned tasks do not at all indicate that
complainant can exercise the powers equivalent to managerial actions which require
independent judgment. At the least, there is no evidence that she was vested with
duties attributable to a managerial employee or to a member of the managerial staff.

What is more apparent, however, is that the functions of complainant seem to involve
the execution of approved and established policies. While she may be tasked to source
out suppliers of merchandise for the spa, there is no showing that she has the last say
on whether to get from the supplier or not. Truly, she may evaluate the competency of
applicants, but still this is subject to the approval of respondent De Guzman.
Noteworthy, complainant reports to respondent De Guzman at the end of business
hours to inform the latter how many clients were served by the spa and how much
sales was made for the day.

Moreover, the respondents' failure to controvert the complainant's claim that she gets a
commission of [P]100.00 for every massage service rendered is a clear manifestation
that complainant was one of the massage therapists of the spa. This finds support in
the sworn statement of Arcega, wherein the latter attested that complainant assigns to
herself clients who give tips and claim that the customer specifically asked for her.
Indeed, if it were true that she is a managerial employee or a member of the
managerial staff, complainant would not have been entitled to commissions for every
massage rendered.31

The Court concurs with the NLRC's conclusion that Ramil is not a managerial employee,
but a rank-and-file employee. Specifically, she is a fiduciary rank-and-file employee.
Wesleyan University Phils. v. Reyes32 defines a fiduciary rank-and-file employee as one
who in the normal and routine exercise of his/her functions regularly handle significant
amounts of money or property. Cashiers, auditors, and property custodians are some of
the employees in the second class.

Here, Ramil regularly handles significant amounts of money or property in the normal
and routine exercise of her functions. She was in charge of the facilities of the spa by
making sure it is in good condition and that the items needed are in full stock all the
time. She was also in charge of the sales of the spa when she took over the duties of
the receptionist/cashier. In fact, Stoneleaf admitted in its Comment that she was
entrusted with the finances of the spa, including the handling of cash receipts, billings
statements, and the care of the spa's property. Therefore, Ramil is a fiduciary
rank-and-file employee, and she is entitled to service incentive leave pay, holiday pay,
and pro-rated 13th month pay. She is also entitled to attorney's fees equivalent to 10%
of the monetary award, because she was compelled to file a complaint to protect her
interests.

The Court disagrees with Stoneleaf's argument that Ramil is a corporate officer. While
the Articles of Incorporation states that she is one of the incorporators, Stoneleaf was
unable to rebut Ramil's claim that she has no capital contribution to the corporation.
She is merely an incorporator on paper, but not in fact. There was no proof that she
participated in any corporate meeting or exercised functions related to a corporate
officer.

The Court observes that Stoneleaf was not able to demonstrate how Ramil recommends
managerial actions that would make her a managerial employee. What is clear was
Stoneleaf's admission that Ramil oversees the daily operation of the spa and supervises
the employees. Stoneleaf admitted the scope of assignment given to her.

In sum, Ramil was able to overcome the burden of proving that she is a fiduciary
rank-and-file employee, while Stoneleaf was unable to show evidence that she is a
corporate officer. Ramil is entitled to service incentive leave pay, holiday pay, pro-rated
13th month pay, and attorney's fees equivalent to 10% of the monetary award.
Pursuant to Nacar v. Gallery Frames,33 the monetary awards are subject to 6% interest
per annum from the finality of this decision until fully paid.

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision dated August 13,
2015 and the Resolution dated January 14, 2016, docketed as CA-G.R. SP. No. 135062,
are REVERSED. The National Labor Relations Decision dated December 26, 2013 and
the NLRC Resolution dated February 25, 2014 are REINSTATED WITH MODIFICATION by
imposing an interest rate of 6% per annum on all monetary awards from the finality of
this decision until full payment.

SO ORDERED.
G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner

vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF
LABOR RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED
SERVICES (TUPAS) WFTU respondents.

G.R. No. 89331 September 28, 1990

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR

ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE, petitioner,
vs
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE
RESEARCH INSTITUTE, INC., respondents.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from
South Vietnam's communist rule confronted the international community.

In response to this crisis, on 23 February 1981, an Agreement was forged between the
Philippine Government and the United Nations High Commissioner for Refugees
whereby an operating center for processing Indo-Chinese refugees for eventual
resettlement to other countries was to be established in Bataan (Annex "A", Rollo, pp.
22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee
processing center in Morong, Bataan. It was incorporated in New York, USA, at the
request of the Holy See, as a non-profit agency involved in international humanitarian
and voluntary work. It is duly registered with the United Nations Economic and Social
Council (ECOSOC) and enjoys Consultative Status, Category II. As an international
organization rendering voluntary and humanitarian services in the Philippines, its
activities are parallel to those of the International Committee for Migration (ICM) and
the International Committee of the Red Cross (ICRC) [DOLE Records of BLR Case No.
A-2-62-87, ICMC v. Calleja, Vol. 1].

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with
the then Ministry of Labor and Employment a Petition for Certification Election among
the rank and file members employed by ICMC The latter opposed the petition on the
ground that it is an international organization registered with the United Nations and,
hence, enjoys diplomatic immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the
petition for lack of jurisdiction.
On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR),
reversed the Med-Arbiter's Decision and ordered the immediate conduct of a
certification election. At that time, ICMC's request for recognition as a specialized
agency was still pending with the Department of Foreign Affairs (DEFORAF).

Subsequently, however, on 15 July 1988, the Philippine Government, through the

DEFORAF, granted ICMC the status of a specialized agency with corresponding
diplomatic privileges and immunities, as evidenced by a Memorandum of Agreement
between the Government and ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification
Election invoking the immunity expressly granted but the same was denied by
respondent BLR Director who, again, ordered the immediate conduct of a pre-election
conference. ICMC's two Motions for Reconsideration were denied despite an opinion
rendered by DEFORAF on 17 October 1988 that said BLR Order violated ICMC's
diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with
Preliminary Injunction assailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the
holding of the certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C.
Coquia of the Court of Appeals, filed a Motion for Intervention alleging that, as the
highest executive department with the competence and authority to act on matters
involving diplomatic immunity and privileges, and tasked with the conduct of Philippine
diplomatic and consular relations with foreign governments and UN organizations, it has
a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.

On 12 July 1989, the Second Division gave due course to the ICMC Petition and
required the submittal of memoranda by the parties, which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and
immunites to ICMC extends to immunity from the application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of
Agreement with the Philippine Government giving it the status of a specialized agency,
(infra); (2) the Convention on the Privileges and Immunities of Specialized Agencies,
adopted by the UN General Assembly on 21 November 1947 and concurred in by the
Philippine Senate through Resolution No. 91 on 17 May 1949 (the Philippine Instrument
of Ratification was signed by the President on 30 August 1949 and deposited with the
UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution,
which declares that the Philippines adopts the generally accepted principles of
international law as part of the law of the land.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an

affirmance of the DEFORAF determination that the BLR Order for a certification election
among the ICMC employees is violative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees,
cites State policy and Philippine labor laws to justify its assailed Order, particularly,
Article II, Section 18 and Article III, Section 8 of the 1987 Constitution, infra; and
Articles 243 and 246 of the Labor Code, as amended, ibid. In addition, she contends
that a certification election is not a litigation but a mere investigation of a
non-adversary, fact-finding character. It is not a suit against ICMC its property, funds or
assets, but is the sole concern of the workers themselves.

B. G.R. No. 89331 — (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11
December 1989, resolved to consolidate G.R. No. 89331 pending before it with G.R. No.
85750, the lower-numbered case pending with the Second Division, upon manifestation
by the Solicitor General that both cases involve similar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford
and Rockefeller Foundations signed a Memorandum of Understanding establishing the
International Rice Research Institute (IRRI) at Los Baños, Laguna. It was intended to be
an autonomous, philanthropic, tax-free, non-profit, non-stock organization designed to
carry out the principal objective of conducting "basic research on the rice plant, on all
phases of rice production, management, distribution and utilization with a view to
attaining nutritive and economic advantage or benefit for the people of Asia and other
major rice-growing areas through improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange
Commission as a private corporation subject to all laws and regulations. However, by
virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the
status, prerogatives, privileges and immunities of an international organization.

The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a

legitimate labor organization with an existing local union, the Kapisanan ng
Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI.

On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with
Region IV, Regional Office of the Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status
of an international organization and granting it immunity from all civil, criminal and
administrative proceedings under Philippine laws.
On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of
Pres. Decree No. 1620 and dismissed the Petition for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside
the Med-Arbiter's Order and authorized the calling of a certification election among the
rank-and-file employees of IRRI. Said Director relied on Article 243 of the Labor Code,
as amended, infra and Article XIII, Section 3 of the 1987 Constitution, 1 and held that
"the immunities and privileges granted to IRRI do not include exemption from coverage
of our Labor Laws." Reconsideration sought by IRRI was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR
Director's Order, dismissed the Petition for Certification Election, and held that the grant
of specialized agency status by the Philippine Government to the IRRI bars DOLE from
assuming and exercising jurisdiction over IRRI Said Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives,
privileges and immunities of an international organization is clear and explicit. It
provides in categorical terms that:

Art. 3 — The Institute shall enjoy immunity from any penal, civil and administrative
proceedings, except insofar as immunity has been expressly waived by the
Director-General of the Institution or his authorized representative.

Verily, unless and until the Institute expressly waives its immunity, no summons,
subpoena, orders, decisions or proceedings ordered by any court or administrative or
quasi-judicial agency are enforceable as against the Institute. In the case at bar there
was no such waiver made by the Director-General of the Institute. Indeed, the
Institute, at the very first opportunity already vehemently questioned the jurisdiction of
this Department by filing an ex-parte motion to dismiss the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of
discretion by respondent Secretary of Labor in upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents
to comment on the petition. In a Manifestation filed on 4 August 1990, the Secretary of
Labor declared that it was "not adopting as his own" the decision of the BLR Director in
the ICMC Case as well as the Comment of the Solicitor General sustaining said Director.
The last pleading was filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying
that he be excused from filing a comment "it appearing that in the earlier case of
International Catholic Migration Commission v. Hon. Pura Calleja, G.R. No. 85750. the
Office of the Solicitor General had sustained the stand of Director Calleja on the very
same issue now before it, which position has been superseded by respondent Secretary
of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor
General's prayer.
The Court is now asked to rule upon whether or not the Secretary of Labor committed
grave abuse of discretion in dismissing the Petition for Certification Election filed by
Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status,
privileges, prerogatives and immunities of an international organization, invoked by the
Secretary of Labor, is unconstitutional in so far as it deprives the Filipino workers of
their fundamental and constitutional right to form trade unions for the purpose of
collective bargaining as enshrined in the 1987 Constitution.

A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for
entertaining IRRI'S appeal from the Order of the Director of the Bureau of Labor
Relations directing the holding of a certification election. Kapisanan contends that
pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of the Omnibus Rules Implementing the
Labor Code, the Order of the BLR Director had become final and unappeable and that,
therefore, the Secretary of Labor had no more jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section
25 of Rep. Act. No. 6715, which took effect on 21 March 1989, providing for the direct
filing of appeal from the Med-Arbiter to the Office of the Secretary of Labor and
Employment instead of to the Director of the Bureau of Labor Relations in cases
involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been granted ICMC and
IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and

ICMC provides that ICMC shall have a status "similar to that of a specialized agency."
Article III, Sections 4 and 5 of the Convention on the Privileges and Immunities of
Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and
concurred in by the Philippine Senate through Resolution No. 19 on 17 May 1949,
explicitly provides:

Art. III, Section 4. The specialized agencies, their property and assets, wherever
located and by whomsoever held, shall enjoy immunity from every form of legal
process except insofar as in any particular case they have expressly waived their
immunity. It is, however, understood that no waiver of immunity shall extend to any
measure of execution.

Sec. 5. — The premises of the specialized agencies shall be inviolable. The property and
assets of the specialized agencies, wherever located and by whomsoever held shall be
immune from search, requisition, confiscation, expropriation and any other form of
interference, whether by executive, administrative, judicial or legislative action.
(Emphasis supplied).

IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of
immunity, thus:

Art. 3. Immunity from Legal Process. — The Institute shall enjoy immunity from any
penal, civil and administrative proceedings, except insofar as that immunity has been
expressly waived by the Director-General of the Institute or his authorized
representatives.

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of
immunity when in a Memorandum, dated 17 October 1988, it expressed the view that
"the Order of the Director of the Bureau of Labor Relations dated 21 September 1988
for the conduct of Certification Election within ICMC violates the diplomatic immunity of
the organization." Similarly, in respect of IRRI, the DEFORAF speaking through The
Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to
the Secretary of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of
DOLE in this particular instance."

The foregoing opinions constitute a categorical recognition by the Executive Branch of

the Government that ICMC and IRRI enjoy immunities accorded to international
organizations, which determination has been held to be a political question conclusive
upon the Courts in order not to embarrass a political department of Government.

It is a recognized principle of international law and under our system of separation of

powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government, and
where the plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government as in the case at bar, it is then the duty of the courts to
accept the claim of immunity upon appropriate suggestion by the principal law officer of
the government . . . or other officer acting under his direction. Hence, in adherence to
the settled principle that courts may not so exercise their jurisdiction . . . as to
embarrass the executive arm of the government in conducting foreign relations, it is
accepted doctrine that in such cases the judicial department of (this) government
follows the action of the political branch and will not embarrass the latter by assuming
an antagonistic jurisdiction. 3

A brief look into the nature of international organizations and specialized agencies is in
order. The term "international organization" is generally used to describe an
organization set up by agreement between two or more states. 4 Under contemporary
international law, such organizations are endowed with some degree of international
legal personality 5 such that they are capable of exercising specific rights, duties and
powers. 6 They are organized mainly as a means for conducting general international
business in which the member states have an interest. 7 The United Nations, for
instance, is an international organization dedicated to the propagation of world peace.

"Specialized agencies" are international organizations having functions in particular

fields. The term appears in Articles 57 8 and 63 9 of the Charter of the United Nations:

The Charter, while it invests the United Nations with the general task of promoting
progress and international cooperation in economic, social, health, cultural, educational
and related matters, contemplates that these tasks will be mainly fulfilled not by organs
of the United Nations itself but by autonomous international organizations established
by inter-governmental agreements outside the United Nations. There are now many
such international agencies having functions in many different fields, e.g. in posts,
telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology,
atomic energy, finance, trade, education and culture, health and refugees. Some are
virtually world-wide in their membership, some are regional or otherwise limited in their
membership. The Charter provides that those agencies which have "wide international
responsibilities" are to be brought into relationship with the United Nations by
agreements entered into between them and the Economic and Social Council, are then
to be known as "specialized agencies." 10

The rapid growth of international organizations under contemporary international law

has paved the way for the development of the concept of international immunities.

It is now usual for the constitutions of international organizations to contain provisions

conferring certain immunities on the organizations themselves, representatives of their
member states and persons acting on behalf of the organizations. A series of
conventions, agreements and protocols defining the immunities of various international
organizations in relation to their members generally are now widely in force; . . . 11

There are basically three propositions underlying the grant of international immunities
to international organizations. These principles, contained in the ILO Memorandum are
stated thus: 1) international institutions should have a status which protects them
against control or interference by any one government in the performance of functions
for the effective discharge of which they are responsible to democratically constituted
international bodies in which all the nations concerned are represented; 2) no country
should derive any national financial advantage by levying fiscal charges on common
international funds; and 3) the international organization should, as a collectivity of
States members, be accorded the facilities for the conduct of its official business
customarily extended to each other by its individual member States. 12 The theory
behind all three propositions is said to be essentially institutional in character. "It is not
concerned with the status, dignity or privileges of individuals, but with the elements of
functional independence necessary to free international institutions from national
control and to enable them to discharge their responsibilities impartially on behalf of all
their members. 13 The raison d'etre for these immunities is the assurance of unimpeded
performance of their functions by the agencies concerned.
The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated
by their international character and respective purposes. The objective is to avoid the
danger of partiality and interference by the host country in their internal workings. The
exercise of jurisdiction by the Department of Labor in these instances would defeat the
very purpose of immunity, which is to shield the affairs of international organizations, in
accordance with international practice, from political pressure or control by the host
country to the prejudice of member States of the organization, and to ensure the
unhampered performance of their functions.

ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its
basic rights, which are guaranteed by Article II, Section 18, 14 Article III, Section 8, 15
and Article XIII, Section 3 (supra), of the 1987 Constitution; and implemented by
Articles 243 and 246 of the Labor Code, 16 relied on by the BLR Director and by
Kapisanan.

For, ICMC employees are not without recourse whenever there are disputes to be
settled. Section 31 of the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations 17 provides that "each specialized agency
shall make provision for appropriate modes of settlement of: (a) disputes arising out of
contracts or other disputes of private character to which the specialized agency is a
party." Moreover, pursuant to Article IV of the Memorandum of Agreement between
ICMC the the Philippine Government, whenever there is any abuse of privilege by ICMC,
the Government is free to withdraw the privileges and immunities accorded. Thus:

Art. IV. Cooperation with Government Authorities. — 1. The Commission shall cooperate
at all times with the appropriate authorities of the Government to ensure the
observance of Philippine laws, rules and regulations, facilitate the proper administration
of justice and prevent the occurrences of any abuse of the privileges and immunities
granted its officials and alien employees in Article III of this Agreement to the
Commission.

2. In the event that the Government determines that there has been an abuse of the
privileges and immunities granted under this Agreement, consultations shall be held
between the Government and the Commission to determine whether any such abuse
has occurred and, if so, the Government shall withdraw the privileges and immunities
granted the Commission and its officials.

Neither are the employees of IRRI without remedy in case of dispute with management
as, in fact, there had been organized a forum for better management-employee
relationship as evidenced by the formation of the Council of IRRI Employees and
Management (CIEM) wherein "both management and employees were and still are
represented for purposes of maintaining mutual and beneficial cooperation between
IRRI and its employees." The existence of this Union factually and tellingly belies the
argument that Pres. Decree No. 1620, which grants to IRRI the status, privileges and
immunities of an international organization, deprives its employees of the right to
self-organization.

The immunity granted being "from every form of legal process except in so far as in any
particular case they have expressly waived their immunity," it is inaccurate to state that
a certification election is beyond the scope of that immunity for the reason that it is not
a suit against ICMC. A certification election cannot be viewed as an independent or
isolated process. It could tugger off a series of events in the collective bargaining
process together with related incidents and/or concerted activities, which could
inevitably involve ICMC in the "legal process," which includes "any penal, civil and
administrative proceedings." The eventuality of Court litigation is neither remote and
from which international organizations are precisely shielded to safeguard them from
the disruption of their functions. Clauses on jurisdictional immunity are said to be
standard provisions in the constitutions of international Organizations. "The immunity
covers the organization concerned, its property and its assets. It is equally applicable to
proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161,
Rollo), wherein TUPAS calls attention to the case entitled "International Catholic
Migration Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA
606), and claims that, having taken cognizance of that dispute (on the issue of
payment of salary for the unexpired portion of a six-month probationary employment),
the Court is now estopped from passing upon the question of DOLE jurisdiction petition
over ICMC.

We find no merit to said submission. Not only did the facts of said controversy occur
between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a
specialized agency with corresponding immunities, but also because ICMC in that case
did not invoke its immunity and, therefore, may be deemed to have waived it, assuming
that during that period (1983-1985) it was tacitly recognized as enjoying such
immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision
of the BLR Director, dated 15 February 1989, had not become final because of a Motion
for Reconsideration filed by IRRI Said Motion was acted upon only on 30 March 1989
when Rep. Act No. 6715, which provides for direct appeals from the Orders of the
Med-Arbiter to the Secretary of Labor in certification election cases either from the
order or the results of the election itself, was already in effect, specifically since 21
March 1989. Hence, no grave abuse of discretion may be imputed to respondent
Secretary of Labor in his assumption of appellate jurisdiction, contrary to Kapisanan's
allegations. The pertinent portion of that law provides:

Art. 259. — Any party to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor and Employment on
the ground that the rules and regulations or parts thereof established by the Secretary
of Labor and Employment for the conduct of the election have been violated. Such
appeal shall be decided within 15 calendar days (Emphasis supplied).

En passant, the Court is gratified to note that the heretofore antagonistic positions
assumed by two departments of the executive branch of government have been
rectified and the resultant embarrassment to the Philippine Government in the eyes of
the international community now, hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of
the Bureau of Labor Relations for certification election is SET ASIDE, and the Temporary
Restraining Order earlier issued is made PERMANENT.

In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of
discretion having been committed by the Secretary of Labor and Employment in
dismissing the Petition for Certification Election.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 221241, September 14, 2016

MARIO N. FELICILDA, Petitioner, v. MANCHESTEVE H. UY, Respondent.

Assailed in this petition for review on certiorari1 are the Decision2 dated July 10, 2015
and the Resolution3 dated October 21, 2015 of the Court of Appeals (CA) in CA-G.R. SP
No. 129784, which set aside the Decision4 dated November 16, 2012 and the
Resolution5 dated February 28, 2013 of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 08-002277-12 / NLRC NCR Case No. 12-18409-11 and,
instead, dismissed Mario N. Felicilda's (petitioner) complaint for illegal dismissal with
money claims for lack of merit.

The Facts

Petitioner alleged that on October 29, 2010, respondent Manchesteve H. Uy

(respondent) hired him as a truck driver for the latter's trucking service under the
business name "Gold Pillars Trucking"6 (GPT). In connection, therewith, petitioner was
issued a company identification card (ID), assigned in one of GPT's branches in Manila,
and paid on a percentage basis.7 On December 9, 2011, petitioner took a nap at the
work station while waiting for his truck to be loaded with cargoes, all of which were
delivered to respondent's clients on schedule. The next day, or on December 10, 2011,
respondent's helper told petitioner that his employment was already terminated due to
his act of sleeping while on the job.8 Claiming that he was dismissed without just cause
and due process, and that his act of taking a nap did not prejudice respondent's
business, petitioner filed a complaint9 for illegal dismissal with money claims against
respondent, before the NLRC, docketed as NLRC NCR Case No.
12-18409-11.10chanrobleslaw

In his defense,11 respondent denied the existence of an employer�-employee

relationship between him and petitioner, considering that petitioner was: (a) paid
merely on a per trip "percentage" basis and was not required to regularly report for
work; (b) free to offer his services to other companies; and (c) not under respondent's
control with respect to the means and methods by which he performed his job as a
truck driver. Respondent added that petitioner's company ID did not indicate that the
latter was his employee, but only served the purpose of informing the GPT's clients that
petitioner was one of respondent's authorized drivers. Finally, respondent averred that
it no longer engaged petitioner's services due to the latter's "serious transgressions and
misconduct."12chanrobleslaw

The Labor Arbiter's Ruling

In a Decision13 dated June 29, 2012, the Labor Arbiter (LA) ruled in petitioner's favor
and, accordingly, ordered respondent to pay the aggregate sum of P80,145.52
representing his backwages and separation pay.14chanrobleslaw
Finding that petitioner's service as truck driver was indispensable to respondent's
business operations, the LA concluded that petitioner was respondent's regular
employee and, thus, may only be dismissed for just or authorized cause and with due
process. Absent any showing of a clear and valid cause to terminate petitioner's
employment, respondent was, therefore, guilty of illegal dismissal.15chanrobleslaw

Aggrieved, respondent appealed16 to the NLRC, docketed as NLRC LAC No.

08-002277-12.

The NLRC Ruling

In a Decision17 dated November 16, 2012, the NLRC affirmed the LA ruling. It ruled that
an employer-employee relationship existed between the parties, considering that: (a)
respondent engaged petitioner's services without the aid of a third party or a manpower
agency; (b) the payment of wages on a percentage basis did not negate such
existence; (c) respondent's power to dismiss petitioner was inherent in his selection
and engagement of the latter as truck driver; and (d) respondent exercised control and
supervision over petitioner's work as shown in the former's determination of the latter's
delivery areas and schedules.18 Considering that respondent failed to show a lawful
cause for petitioner's dismissal, the NLRC sustained the order of payment of monetary
awards in petitioner's favor.19chanrobleslaw

Respondent moved for reconsideration,20 but was denied in a Resolution21 dated

February 28, 2013. Undaunted, respondent filed a petition for certiorari22 before the CA.

The CA Ruling

In a Decision23 dated July 10, 2015, the CA set aside the NLRC ruling and, instead,
dismissed petitioner's complaint for illegal dismissal with money claims for lack of
merit.24 Contrary to the findings of the LA and the NLRC, the CA held that the elements
of payment of wages and control in determining an employer-employee relationship
were absent, considering that petitioner was not paid wages, but commissions only,
which amounts varied depending on the kind of cargo, length of trip, and fuel
consumption. The CA observed that there was no evidence to show that respondent
exercised control over the means and methods by which petitioner was to perform his
duties. Further, petitioner failed to refute the claims that: (a) the payment of his
commission was dependent on his efficiency, discipline, and industry, which factors
were beyond respondent's control; (b) he was not required to regularly report for work
and may make himself available to other companies; and (c) the company ID was
merely issued to him for the purpose of apprising respondent's clients that he was the
authorized driver.25cralawredchanrobleslaw
Petitioner moved for reconsideration,26 but was denied in a Resolution27 dated October
21, 2015; hence, this petition.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the CA correctly ascribed
grave abuse of discretion on the part of the NLRC in ruling that no employer-employee
relationship existed between petitioner and respondent and, thus, the latter could not
have illegally dismissed the former.

The Court's Ruling

The petition is impressed with merit.

At the outset, it should be mentioned that the jurisdiction of the Supreme Court in
cases brought before it from the CA via Rule 45 of the Rules of Court is generally
limited to reviewing errors of law and does not extend to a re-evaluation of the
sufficiency of evidence upon which the courts a quo had based its determination. This
rule, however, is not ironclad and a departure therefrom may be warranted where the
findings of fact of the LA and the NLRC, on the one hand, and the CA, on the other, are
contradictory, as in this case. There is therefore a need to review the records to
determine whether the CA, in the exercise of its certiorari jurisdiction, erred in finding
grave abuse of discretion on the part of the NLRC in ruling that respondent was not
illegally dismissed.28chanrobleslaw

To justify the grant of the extraordinary remedy of certiorari, petitioner must

satisfactorily show that the court or quasi-judicial authority gravely abused the
discretion conferred upon it. Grave abuse of discretion connotes a capricious and
whimsical exercise of judgment, done in a despotic manner by reason of passion or
personal hostility, the character of which being so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act
at all in contemplation of law.29chanrobleslaw

In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter
alia, its findings and conclusions are not supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion.30chanrobleslaw

Guided by the foregoing considerations, the Court finds that the CA committed
reversible error in granting respondent's certiorari petition since the NLRC did not
gravely abuse its discretion in ruling that petitioner was respondent's regular employee
and, hence, was illegally dismissed by the latter. In this case, respondent disclaims any
liability for illegal dismissal, considering that, in the first place, no employer-employee
relationship existed between him and petitioner.
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."31 Verily, the power of the
employer to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship. This is the
so-called "control test," and is premised on whether the person for whom the services
are performed reserves the right to control both the end achieved and the manner and
means used to achieve that end.32 It must, however, be stressed that the "control test"
merely calls for the existence of the right to control, and not necessarily the exercise
thereof. To be clear, the test does not require that the employer actually supervises the
performance of duties by the employee.33chanrobleslaw

Contrary to respondent's submission, which was upheld by the CA, the Court agrees
with the labor tribunals that all the four (4) elements are present in this case:

chanRoblesvirtualLawlibraryFirst. It is undisputed that respondent hired petitioner to

work as a truck driver for his private enterprise, GPT.

Second. Petitioner received compensation from respondent for the services he

rendered. Contrary to the findings of the CA, while the wages paid was determined on a
"per trip" or commission basis, it has been constantly ruled that such does not negate
employment relationship.34 Article 97 (f) of the Labor Code broadly defines the term
"wage" as "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 x x x."35 That petitioner
was paid on a "per trip" or commission basis is insignificant as this is merely a method
of computing compensation and not a basis for determining the existence or absence of
an employer�-employee relationship.36chanrobleslaw

Third. Respondent's power to dismiss was inherent in the selection and engagement of
petitioner as truck driver.

Fourth. The presence of the element of control, which is the most important element to
determine the existence or absence of employment relationship, can be safely deduced
from the fact that: (a) respondent owned the trucks that were assigned to petitioner;
(b) the cargoes loaded in the said trucks were exclusively for respondent's clients; and
(c) the schedule and route to be followed by petitioner were exclusively determined by
respondent. The latter's claim that petitioner was permitted to render service to other
companies was not substantiated and there was no showing that he indeed worked as
truck driver for other companies. Given all these considerations, while petitioner was
free to carry out his duties as truck driver, it cannot be pretended that respondent,
nonetheless, exercised control over the means and methods by which the former was to
accomplish his work. To reiterate, the power of control refers merely to the existence of
the power. It is not essential for the employer to actually supervise the performance of
duties of the employee, as it is sufficient that the former has a right to wield the
power,37 as in this case.

Having established that an employer-employee relationship exists between the parties,

it is now incumbent for the Court to determine whether or not respondent validly
terminated petitioner's employment.

For a dismissal to be valid, the rule is that the employer must comply with both the
substantive and procedural due process requirements. Substantive due process requires
that the dismissal must be pursuant to either a just or an authorized cause under
Articles 297, 298, and 299 (formerly Articles 282, 283 or 284)38 of the Labor Code, as
amended.39chanrobleslaw

Procedural due process, on the other hand, mandates that the employer must observe
the twin requirements of notice and hearing before a dismissal can be
effected.40chanrobleslaw

In this case, suffice it to say that aside from respondent's averment that petitioner
committed "serious transgressions and misconduct" resulting in the former's loss of
trust and confidence, no other evidence was shown to substantiate the same. Such
averment should be properly deemed as a self� serving assertion that deserves no
weight in law.41 Neither was petitioner accorded procedural due process as he was
merely informed by respondent's helper that he was already terminated from his job.
Clearly, respondent illegally dismissed petitioner, and as such, the latter is entitled to
backwages and separation pay in lieu of reinstatement, as correctly ruled by the labor
tribunals.

WHEREFORE, the petition is GRANTED. The Decision dated July 10, 2015 and the
Resolution dated October 21, 2015 of the Court of Appeals in CA-G.R. SP No. 129784
are hereby REVERSED and SET ASIDE. The Decision dated November 16, 2012 and the
Resolution dated February 28, 2013 of the National Labor Relations Commission in
NLRC LAC No. 08-002277-12 / NLRC NCR Case No. 12-18409-11 are REINSTATED.

SO ORDERED.cha
 G.R. No. 230576, October 05, 2020

ABS-CBN CORPORATION, Petitioner, v. JAIME C. CONCEPCION, Respondent.

An independent contractor enjoys independence and freedom from control and

supervision of his principal. In order to be considered an independent contractor and
not an employee of a television network, it must be shown that an OB van driver was
hired because of his unique skills and talents, and the television network did not
exercise control over the means and methods of his work.1

The Case

Before this Court is a Petition for Review2 which seeks to reverse and set aside the
Decision3 dated 20 October 2016 and Resolution4 dated 13 March 2017 of the Court of
Appeals (CA) in CA-G.R. SP No. 125867, which annulled and set aside the Decision5
dated 29 May 2012 of the Special Division of the National Labor Relations Commission
(NLRC) and reinstated the Decision6 dated 29 December 2011 of the Fifth Division of
the NLRC. The dispositive portion of the CA Decision reads:chanroblesvirtualawlibrary

"WHEREFORE, foregoing considered, the petition is GRANTED. The assailed Decision

dated May 29, 2012 of the National Labor Relations Commission-Special Division in LAC
No. 05-001370-11 granting the motion for reconsideration of the private respondent
and reversing and setting aside the earlier decision dated December 29, 2011 rendered
by the National Labor Relations Commission-Fifth Division is VACATED and SET ASIDE.

Accordingly, the Decision dated December 29, 2011 of the NLRC-­Fifth Division is
REINSTATED and AFFIRMED in toto.chanroblesvirtualawlibrary

SO ORDERED."7chanRoblesvirtualLawlibrary

Antecedents

ABS-CBN Corporation8 (ABS-CBN) is a domestic corporation principally engaged in the

business of broadcasting television and radio content in the Philippines. Under its
Amended Articles of Incorporation,9 its principal purpose is:chanroblesvirtualawlibrary

To carry on the business of television and radio network broadcasting of all kinds and
types; to carry on all other businesses incident thereto; and to establish, construct,
maintain and operate for commercial purposes and in the public interest, television and
radio broadcasting stations within or without the Philippines, using microwave, satellite
or whatever means including the use of any new technologies in television and radio
systems.10chanRoblesvirtualLawlibrary

Among its secondary purposes are:chanroblesvirtualawlibrary

1. To broadcast, disseminate, distribute, transmit, retransmit, receive, or collect by

satellite, microwave, electronic, electrical or other means, news, sports, entertainment,
educational and informative matter, advertisements or any other matter which may be
transmitted by television, radio or electronic signals, and to provide for the use of other
equipment or facilities for such purpose.

xxx

3. To engage in any manner, shape or form in the recording and reproduction of the
human voice, musical instruments, and sound of every nature, name and description;
to engage in any manner, shape or form in the recording and reproduction of moving
pictures, visuals and stills of every nature, name and description; and to acquire and
operate audio and video recording, magnetic recording, digital recording and electrical
transcription exchanges, and to purchase, acquire, sell, rent, lease, operate, exchange,
or otherwise dispose of any and all kinds of recordings, electrical transcription or other
devices by which sight and sound may be reproduced.

4. To carry on the business of providing graphic design, videographic, photographic and

cinematographic reproduction services and other creative production services; and to
engage in any manner, shape or form in post-production mixing, dubbing, overdubbing,
audio­video processing sequence alteration and modification of every nature of all kinds
of audio and video productions.

5. To carry on the business of promotion and sale of all kinds of advertising and
marketing services and generally to conduct all lines of business allied to and
interdependent with that of advertising and marketing
services.11chanRoblesvirtualLawlibrary

ABS-CBN claims that it is not its principal business nor its legal obligation to produce
television programs. It can operate its business without producing any of its own
television programs. Just like any other broadcasting companies, it has several options
in terms of where and how to obtain content to broadcast or air, and the means of
generating revenues. These options include the following schemes: (1) block-time;12
(2) line production;13 (3) Co-production;14 (4) Self-production;15 (5) Foreign canned
shows;16 (6) Live Coverages;17 (7) Licensed Programs;18 and (8) a combination of
the foregoing schemes.19

Respondent maintains that he was hired by ABS-CBN as OB (Outside Broadcast) van

driver in June 1999 under the Engineering Department and was given the task to
oversee the generator used during tapings/shooting of programs aired by ABS-CBN. He
was assigned to different TV Programs at the time of his employment,20 and acted as
property custodian over all equipment, especially the generator used in their
tapings/shootings. According to respondent, he was supervised by ABS-CBN personnel
with respect to his work schedules, the programs he was assigned to, and the time he
was supposed to report for work. He was made to comply with company rules, and for
infractions committed, he was subjected to penalties and sanctions. In one instance in
2003 he was issued a Memo from ABS-CBN TV Engineering Division for the alleged
overheating of a generator set.21

Respondent asserts that eventually, he was placed in the Internal Job Market work pool
devised by ABS-CBN and joined the workers' union. As a result of the union's constant
demands for regularization, ABS-CBN started coercing complainant and other union
members to sign contracts indicating they were waiving their rights to regularization
and giving them deadlines within which to do so. Thus, respondent filed an initial
complaint for regularization on 06 August 2010. A month later, or on 01 September
2010, respondent was dismissed from service after he refused to sign the employment
contract prepared by ABS-CBN. This prompted respondent to amend his labor complaint
to include illegal dismissal. At the time of his dismissal on 01 September 2010, he was
receiving a salary of Php558.16/day or Php69.77 per hour.

The Labor Arbiter (LA) dismissed respondent's complaint upon finding that there is no
employer-employee relationship between ABS-CBN and respondent. The dispositive
portion of the Decision22 dated 31 March 2011 reads:chanroblesvirtualawlibrary

"WHEREFORE, premises considered, the complaint for regularization, illegal dismissal

and damages is dismissed for lack of jurisdiction, there being no employer-employee
relationship between complainant and respondent company ABS-CBN Broadcasting
Corporation.

SO ORDERED."23chanRoblesvirtualLawlibrary

Respondent appealed to the NLRC. The Fifth Division, through Commissioner Mercedes
R. Posada-Lacap, reversed the Labor Arbiter's Decision, and held that respondent is a
regular employee of ABS-CBN. In its Decision24 dated 29 December 2011, the Fifth
Division disposed:chanroblesvirtualawlibrary
"WHEREFORE, the decision of the labor arbiter a quo is hereby VACATED and SET
ASIDE. A new one is entered finding that complainant is a regular employee of
respondents, and that his dismissal was without just cause nor due process, therefore
illegal. Respondents are therefore directed to reinstate complainant to the position of
OB Van Driver/Gen Set Operator immediately, and to pay him backwages from the time
of his illegal dismissal until the reinstatement and attorney's fees of ten (10%) percent
of total award.

SO ORDERED."25chanRoblesvirtualLawlibrary

ABS-CBN filed a Motion for Reconsideration26 and sought the inhibition of

Commissioner Lacap on the ground that she had previously ruled against ABS-CBN and
prayed that the case be re-assigned to another Division of the NLRC.27 Consequently,
Chairman Gerardo C. Nograles issued Administrative Order No. 03-19, series of 2012,
creating a Special Division28 to resolve the Motion for Reconsideration filed by
ABS-CBN.

In its Per Curiam Decision dated 29 May 2012,29 the Special Division reversed the
earlier Decision of Commissioner Lacap and reinstated the Decision of the Labor Arbiter.
Without filing a motion for reconsideration, respondent filed a Petition for Certiorari30
under Rule 65 of the Rules of Court before the CA.

On 20 October 2016, the CA annulled and set aside the Per Curiam Decision of the
NLRC Special Division and reinstated the Decision of Commissioner Lacap. ABS-CBN
filed a Motion for Reconsideration31 but the same was denied by the CA.

ABS-CBN thus filed the instant Petition for Review, on the ground that respondent failed
to file a Motion for Reconsideration before it filed the Petition for Certiorari before the
Court of Appeals and that the appellate court erred in holding that respondent is a
regular employee of ABS-CBN.

Ruling of the Court

This Court finds the Petition devoid of merit.

 The failure of
respondent to
file a motion for
reconsideration
is not fatal

ABS-CBN avers that the CA should have dismissed the case for failure of respondent to
file a motion for reconsideration before the Special Division of the NLRC. We are not
persuaded.

It is a settled rule that a special civil action for certiorari under Rule 65 will not lie
unless a motion for reconsideration is filed before the respondent court. However, there
are well-defined exceptions established by jurisprudence, such as: (a) where the order
is a patent nullity, as where the court a quo has no jurisdiction; (b) where the questions
raised in the certiorari proceedings have been duly raised and passed upon by the lower
court, or are the same as those raised and passed upon in the lower court; (c) where
there is an urgent necessity for the resolution of the question and any further delay
would prejudice the interests of the Government or of the petitioner or the subject
matter of the action is perishable; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where petitioner was deprived of due process and
there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of
arrest is urgent and the granting of such relief by the trial court is improbable; (g)
where the proceedings in the lower court are a nullity for lack of due process; (h) where
the proceedings were ex parte or in which the petitioner had no opportunity to object;
and (i) where the issue raised is one purely of law or where public interest is
involved.32

In this case, exceptions (b) and (d) are present. The issues raised before the NLRC,
which pertain to the existence of an employer-employee relationship between ABS-CBN
and herein respondent and the issue of illegal dismissal were the very same questions
raised before the CA. Moreover, respondent's failure to file a motion for reconsideration
is adequately explained in the Prefatory Statement33 of his Petition for Certiorari. This
is not to say, however, that respondent's suspicions are correct. Only that under the
circumstances, respondent could not be faulted for opting not to file a motion for
reconsideration anymore.

In any event, it must be emphasized that the rules of procedure, especially in labor
cases, ought not to be applied in a very rigid, technical sense for they have been
adopted to help secure, not override, substantial justice.34 Where a decision may be
made to rest on informed judgment rather than rigid rules, the equities of the case
must be accorded their due weight because labor determinations should not only be
secundum rationem but also secundum caritatem.35

Neither the
Court of Appeals
nor the
respondent is
bound by the
Jalog case

ABS-CBN points the CA disregarded its own ruling in the case of Jalog, et al. v.
ABS-CBN Broadcasting Corporation,36 wherein the appellate court declared that
complainants therein, i.e., cameramen, crane operators, VTR men and drivers, are
independent contractors. The Decision37 was eventually affirmed by this Court. It calls
this Court to "set straight"38 the departure made by the CA in accordance with the
doctrine of stare decisis.

While this Court affirmed the CA Decision in Jalog, it was not a signed decision or
resolution, but a Minute Resolution promulgated on 05 October 2011. In the said Minute
Resolution, this Court dismissed the petition filed by various workers who were
members of the Internal Job Market, for lack of verification and for failure of the
petition to show reversible error in the assailed judgment.

In the case of Read-Rite Philippines, Inc. v. Francisco,39 then Associate Justice (later
Chief Justice) Teresita Leonardo-De Castro discussed:chanroblesvirtualawlibrary

As to the final ruling in Zamora, the same is a minute resolution of the Court dated
November 12, 2007 in G.R. No. 179022 that affirmed the judgment of the Court of
Appeals. In Alonso v. Cebu Country Club, Inc.,we declared that a minute resolution may
amount to a final action on a case, but the same cannot bind non-parties to the action.
Further, in Philippine Health Care Providers, Inc. v. Commissioner of Internal Revenue,
we expounded on the consequence of issuing a minute resolution in this
wise:chanroblesvirtualawlibrary

It is true that, although contained in a minute resolution, our dismissal of the petition
was a disposition of the merits of the case. When we dismissed the petition, we
effectively affirmed the CA ruling being questioned. As a result, our ruling in that case
has already become final. When a minute resolution denies or dismisses a petition for
failure to comply with formal and substantive requirements, the challenged decision,
together with its findings of fact and legal conclusions, are deemed sustained. But what
is its effect on other cases?
With respect to the same subject matter and the same issues concerning the same
parties, it constitutes res judicata. However, if other parties or another subject matter
(even with the same parties and issues) is involved, the minute resolution is not binding
precedent. x x x (Emphasis supplied)

Even assuming that Jalog has a binding effect, this Court is not precluded from
revisiting doctrines and precedents. Abaria v. National Labor Relations Commission40
expounds on stare decisis in this wise:chanroblesvirtualawlibrary

Under the doctrine of stare decisis, once a court has laid down a principle of law as
applicable to a certain state of facts, it will adhere to that principle and apply it to all
future cases where the facts are substantially the same, even though the parties may
be different. It proceeds from the first principle of justice that, absent any powerful
countervailing considerations, like cases ought to be decided alike. Thus, where the
same questions relating to the same event have been put forward by parties similarly
situated as in a previous case litigated and decided by a competent court, the rule of
stare decisis is a bar to any attempt to relitigate the same issue.

The doctrine though is not cast in stone for upon a showing that circumstances
attendant in a particular case override the great benefits derived by our judicial system
from the doctrine of stare decisis, the Court is justified in setting it aside. For the Court,
as the highest court of the land, may be guided but is not controlled by precedent.
Thus, the Court, especially with a new membership, is not obliged to follow blindly a
particular decision that it determines, after re-examination, to call for a rectification.

Respondent
Concepcion is a
regular
employee of
ABS-CBN, not
an independent
contractor

ABS-CBN insists that respondent is a talent who works as OB van driver and not a
regular employee but an independent contractor. This Court however, is not convinced.

Preliminarily, it is settled that the employer has the burden to prove that a person
whose services it pays for is an independent contractor rather than a regular
employee.41 Jurisprudential law has recognized another kind of independent contractor
- those individuals with unique skills and talents that set them apart from ordinary
employees.42 In the recent case of Paragele v. GMA Network, Inc.,43 this Court's
Division emphasized that in order to be considered independent contractors and not
employees of GMA Network, it must be shown that those cameramen were hired
because of their unique skills and talents, and that GMA Network did not exercise
control over the means and methods of their work.

Jurisprudence has adhered to the four-fold test in determining the existence of an

employer-employee relationship. These are: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employee's conduct, or the so­-called control test.44

The records show that respondent was directly hired by ABS-CBN. He was receiving
salaries twice a month with payslips bearing the ABS­ CBN's corporate name.45 His
Certificates of Compensation Payment/Tax Withheld, indicate that his salary is being
deducted for SSS, Pag-Ibig, Philhealth, among others, which certificates indicate that
his employer is ABS-CBN.46

At the time of respondent's dismissal on 01 September 2010, he was receiving a salary

of Php558.16/day or Php69.77 per hour. Although wages are not a conclusive factor, it
may indicate whether one is an independent contractor.47

An independent contractor enjoys independence and freedom from the control and
supervision of his principal. This is opposed to an employee who is subject to the
employer's power to control the means and methods by which the employee's work is
to be performed and accomplished.48

Here, ABS-CBN has production and field supervisors to monitor respondent in his works
and to see to it that he follows the required standards set by ABS-CBN. The network
has the power to discipline respondent, and in fact, he was once subjected to a
disciplinary action. Respondent, just like any normal employee, was required to attend
seminars and workshops to ensure their optimal performance at work.

Undauted, ABS-CBN insists that respondent is a talent, thus, an independent contractor.

This argument, however, deserves scant consideration. Respondent cannot be
considered a talent of ABS-CBN as he is neither an actor nor a star.49 Independent
contractors often present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees which respondent does not have.50
Notwithstanding, ABS-CBN tries to project respondent as not an ordinary office driver,
but an OB van driver.51
Petitioner's asseveration rests on flimsy ground. Driving an OB van which is equipped
with specialized equipment does not make the driver a standout. Parenthetically,
ABS-CBN took pains in discussing what other workers do, such as audioman or sound
engineer, cameraman, gaffer, and lightman but failed to discuss the nature of the job of
an OB Van Driver, except that it includes the handling of the OB Van.

ABS-CBN has not disputed that at the time respondent was hired by the Human
Resource Department, his driving skills were limited and that he had no knowledge in
operating a generator set. It was the network which provided him the necessary
trainings and seminars to develop his skills.52 Moreover, the tools and instrumentalities
needed by respondent for his work is provided to him53 - the OB Van and the generator
set. ABS-CBN could also assign him to any show or programs where the production
group would need his services.

It does not escape our attention that respondent has no power to bargain and negotiate
for his fee. The power to bargain talent fees way above the salary scales of ordinary
employees is a circumstance indicative of an independent contractual relationship.54
That ABS-CBN classified him as a talent is of no moment and does not make him an
independent contractor. It is not the will or word of the employer which determines the
nature of employment of an employee but the nature of the activities performed by
such employee in relation to the particular business or trade of the employer.55 Hence,
not being an independent contractor, respondent is necessarily an employee of
ABS-CBN.

Article 294 (formerly Article 280) of the Labor Code reads:chanroblesvirtualawlibrary

REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the

contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists.
The law provides for two (2) types of regular employees, namely: (a) those who are
engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer (first category); and (b) those who have rendered at
least one year of service, whether continuous or broken, with respect to the activity in
which they are employed (second category).56

ABS-CBN insists that it is not legally obliged to produce programs as its main business
is broadcasting. It has emphasized the available options to it in airing shows and
generating revenues - block-time, line production, co-­production, self-production,
foreign canned shows, live coverages, licensed programs, and a combination of the
foregoing schemes. Simply stated, it tries to distance itself from self-production,
co-production, line production and live coverages, because it is in these schemes that
ABS-CBN would need the services of its talents, including herein respondent. However,
the nature of the work performed must be viewed from a perspective of the business or
trade in its entirety and not on a confirmed scope.57

A reading of Amended Articles of Incorporation of ABS-CBN, particularly paragraphs 1,

3, 4 and 5 of its Secondary Purposes, shows that the network is likewise engaged in the
business of production of shows. If it opts not to produce programs, it may rightfully do
so, but it does not remove its employees from being regular employees.

There is no doubt that as OB van driver and generator set operator, respondent
performed job which is necessary or desirable in the usual business or trade of
employer. It is equally true that he had been performing his job since 1999 until his
services was terminated in 2010. Thus, being a member of the Internal Job Market
System, respondent is deemed regular work pool employee under the second
category.58

Respondent was illegally dismissed

Security of tenure is a constitutionally guaranteed right. Employees may not be

terminated from their regular employment except for just or authorized causes under
the Labor Code.59 In this case, respondent was illegally dismissed, since his dismissal
does not fall under the just60 or authorized causes.61

An employee who is unjustly dismissed from work shall be entitled to reinstatement

without loss of seniority rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual
reinstatement.62
In computing for the backwages, this Court deems it wise to apply the case of
Maraguinot,63 where this Court aptly discussed:chanroblesvirtualawlibrary

In closing then, as petitioners had already gained the status of regular employees, their
dismissal was unwarranted, for the cause invoked by private respondents for
petitioners' dismissal, viz.: completion of project, was not, as to them, a valid cause for
dismissal under Article 282 of the Labor Code. As such, petitioners are now entitled to
back wages and reinstatement, without loss of seniority rights and other benefits that
may have accrued. Nevertheless, following the principles of "suspension of work" and
"no pay" between the end of one project and the start of a new one, in computing
petitioners' back wages, the amounts corresponding to what could have been earned
during the periods from the date petitioners were dismissed until their reinstatement
when petitioners' respective Shooting Units were not undertaking any movie projects,
should be deducted.

In addition to backwages, respondent is entitled to 13th month pay, and holiday pay,
computed by deducting the amounts corresponding to the periods that respondent's
production group was not engaged in the shooting of programs. Likewise, respondent is
entitled to attorney's fees equivalent to ten percent of the total monetary award.64 All
amounts due shall earn legal interest pursuant to Nacar v. Gallery Frames.65

There is, however, a need to remand the case to the Labor Arbiter for the computation
of the monetary awards. In this regard, ABS-CBN is directed to provide the necessary
data to enable the Labor Arbiter to compute such awards, in the light of this Decision.

WHEREFORE, the Petition is DENIED. The assailed Decision dated 20 October 2016 and
Resolution dated 13 March 2017 of the Court of Appeals in CA-G.R. SP No. 125867 are
AFFIRMED. The case is REMANDED to the Labor Arbiter, through the National Labor
Relations Commission, for the computation of backwages and other monetary benefits.
Petitioner ABS-CBN Corporation is DIRECTED to furnish the Labor Arbiter the necessary
and relevant data to fast track the computation.chanroblesvirtualawlibrary
G.R. No. 204944-45 December 3, 2014

FUJI TELEVISION NETWORK, INC., Petitioner,

vs.
ARLENE S. ESPIRITU, Respondent.

LEONEN, J.:

It is the burden of the employer to prove that a person whose services it pays for is an
independent contractor rather than a regular employee with or without a fixed term.
That a person has a disease does not per se entitle the employer to terminate his or her
services. Termination is the last resort. At the very least, a competent public health
authority must certify that the disease cannot be cured within six ( 6) months, even
with appropriate treatment.

We decide this petition for review1 on certiorari filed by Fuji Television Network, Inc.,
seeking the reversal of the Court of Appeals’ Decision2 dated June 25, 2012, affirming
with modification the decision3 of the National Labor Relations Commission.

In 2005, Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc.
("Fuji") asa news correspondent/producer4 "tasked to report Philippine news to Fuji
through its Manila Bureau field office."5 Arlene’s employment contract initially provided
for a term of one (1) year but was successively renewed on a yearly basis with salary
adjustment upon every renewal.6 Sometime in January 2009, Arlenewas diagnosed with
lung cancer.7 She informed Fuji about her condition. In turn, the Chief of News Agency
of Fuji, Yoshiki Aoki, informed Arlene "that the company will have a problem renewing
her contract"8 since it would be difficult for her to perform her job.9 She "insisted that
she was still fit to work as certified by her attending physician."10

After several verbal and written communications,11 Arlene and Fuji signed a
non-renewal contract on May 5, 2009 where it was stipulated that her contract would
no longer be renewed after its expiration on May 31, 2009. The contract also provided
that the parties release each other from liabilities and responsibilities under the
employment contract.12

In consideration of the non-renewal contract, Arlene "acknowledged receipt of the total

amount of US$18,050.00 representing her monthly salary from March 2009 to May
2009, year-end bonus, mid-year bonus, and separation pay."13 However, Arlene affixed
her signature on the nonrenewal contract with the initials "U.P." for "under protest."14

On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a
complaint for illegal dismissal and attorney’s fees with the National Capital Region
Arbitration Branch of the National Labor Relations Commission. She alleged that she
was forced to sign the nonrenewal contract when Fuji came to know of her illness and
that Fuji withheld her salaries and other benefits for March and April 2009 when she
refused to sign.15

Arlene claimed that she was left with no other recourse but to sign the non-renewal
contract, and it was only upon signing that she was given her salaries and bonuses, in
addition to separation pay equivalent to four (4) years.16

In the decision17 dated September 10, 2009, Labor Arbiter Corazon C. Borbolla
dismissed Arlene’s complaint.18 Citing Sonza v. ABS-CBN19 and applying the four-fold
test, the Labor Arbiter held that Arlene was not Fuji’s employee but an independent
contractor.20

Arlene appealed before the National Labor Relations Commission. In its decision dated
March 5, 2010, the National Labor Relations Commission reversed the Labor Arbiter’s
decision.21 It held that Arlene was a regular employee with respect to the activities for
which she was employed since she continuously rendered services that were
deemednecessary and desirable to Fuji’s business.22 The National Labor Relations
Commission ordered Fuji to pay Arlene backwages, computed from the date of her
illegal dismissal.23 The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered GRANTING the instant

appeal. The Decision of the Labor Arbiter dated 19 September 2009 is hereby
REVERSED and SET ASIDE, and a new one is issued ordering respondents-appellees to
pay complainant-appellant backwages computed from the date of her illegal dismissal
until finality of this Decision.

SO ORDERED.24

Arlene and Fuji filed separat emotions for reconsideration.25 Both motions were denied
by the National Labor Relations Commission for lack of merit in the resolution dated
April 26, 2010.26 From the decision of the National Labor Relations Commission, both
parties filed separate petitions for certiorari27 before the Court of Appeals. The Court of
Appeals consolidated the petitions and considered the following issues for resolution:

1) Whether or not Espirituis a regular employee or a fixed-term contractual employee;

2) Whether or not Espiritu was illegally dismissed; and

3) Whether or not Espirituis entitled to damages and attorney’s fees.28

In the assailed decision, the Court of Appeals affirmed the National Labor Relations
Commission with the modification that Fuji immediately reinstate Arlene to her position
as News Producer without loss of seniority rights, and pay her backwages, 13th-month
pay, mid-year and year-end bonuses, sick leave and vacation leave with pay until
reinstated, moral damages, exemplary damages, attorney’sfees, and legal interest of
12% per annum of the total monetary awards.29 The Court of Appeals ruled that:
WHEREFORE, for lack of merit, the petition of Fuji Television Network, Inc. and Yoshiki
Aoki is DENIED and the petition of Arlene S. Espiritu is GRANTED. Accordingly, the
Decision dated March 5, 2010 of the National Labor Relations Commission, 6th Division
in NLRC NCR Case No. 05-06811-09 and its subsequent Resolution dated April 26, 2010
are hereby AFFIRMED with MODIFICATIONS, as follows:

Fuji Television, Inc. is hereby ORDERED to immediately REINSTATE Arlene S. Espiritu to

her position as News Producer without loss of seniority rights and privileges and to pay
her the following:

1. Backwages at the rate of $1,900.00 per month computed from May 5, 2009 (the
date of dismissal), until reinstated;

2. 13th Month Pay at the rate of $1,900.00 per annum from the date of dismissal, until
reinstated;

3. One and a half (1 1/2) months pay or $2,850.00 as midyear bonus per year from the
date of dismissal, until reinstated;

4. One and a half (1 1/2) months pay or $2,850.00 as year-end bonus per year from
the date of dismissal, until reinstated;

5. Sick leave of 30 days with pay or $1,900.00 per year from the date of dismissal, until
reinstated; and

6. Vacation leave with pay equivalent to 14 days or $1,425.00 per annum from date of
dismissal, until reinstated.

7. The amount of ₱100,000.00 as moral damages;

8. The amount of ₱50,000.00 as exemplary damages;

9. Attorney’s fees equivalent to 10% of the total monetary awards herein stated; and

10. Legal interest of twelve percent (12%) per annum of the total monetary awards
computed from May 5, 2009, until their full satisfaction.

The Labor Arbiter is hereby DIRECTED to make another recomputation of the above
monetary awards consistent with the above directives.

SO ORDERED.30

In arriving at the decision, the Court of Appeals held that Arlene was a regular
employee because she was engaged to perform work that was necessary or desirable in
the business of Fuji,31 and the successive renewals of her fixed-term contract resulted
in regular employment.32
According to the Court of Appeals, Sonzadoes not apply in order to establish that Arlene
was an independent contractor because she was not contracted on account of any
peculiar ability, special talent, or skill.33 The fact that everything used by Arlene in her
work was owned by Fuji negated the idea of job contracting.34

The Court of Appeals also held that Arlene was illegally dismissed because Fuji failed to
comply with the requirements of substantive and procedural due process necessary for
her dismissal since she was a regular employee.35

The Court of Appeals found that Arlene did not sign the non-renewal contract
voluntarily and that the contract was a mere subterfuge by Fuji to secure its position
that it was her choice not to renew her contract. She was left with no choice since Fuji
was decided on severing her employment.36

Fuji filed a motion for reconsideration that was denied in the resolution37 dated
December 7, 2012 for failure to raise new matters.38

Aggrieved, Fuji filed this petition for review and argued that the Court of Appeals erred
in affirming with modification the National Labor Relations Commission’s decision,
holding that Arlene was a regular employee and that she was illegally dismissed. Fuji
also questioned the award of monetary claims, benefits, and damages.39

Fuji points out that Arlene was hired as a stringer, and it informed her that she would
remain one.40 She was hired as an independent contractor as defined in Sonza.41 Fuji
had no control over her work.42 The employment contracts were executed and renewed
annually upon Arlene’s insistence to which Fuji relented because she had skills that
distinguished her from ordinary employees.43 Arlene and Fuji dealt on equal terms when
they negotiated and entered into the employment contracts.44 There was no illegal
dismissal because she freely agreed not to renew her fixed-term contract as evidenced
by her e-mail correspondences with Yoshiki Aoki.45 In fact, the signing of the
non-renewal contract was not necessary to terminate her employment since "such
employment terminated upon expiration of her contract."46 Finally, Fuji had dealt with
Arlene in good faith, thus, she should not have been awarded damages.47

Fuji alleges that it did not need a permanent reporter since the news reported by Arlene
could easily be secured from other entities or from the internet.48 Fuji "never controlled
the manner by which she performed her functions."49 It was Arlene who insisted that
Fuji execute yearly fixed-term contracts so that she could negotiate for annual
increases in her pay.50

Fuji points out that Arlene reported for work for only five (5) days in February 2009,
three (3) days in March 2009, and one (1) day in April 2009.51 Despite the provision in
her employment contract that sick leaves in excess of 30 days shall not be paid, Fuji
paid Arlene her entire salary for the months of March, April, and May; four(4) months
of separation pay; and a bonus for two and a half months for a total of US$18,050.00.52
Despite having received the amount of US$18,050.00, Arlene still filed a case for illegal
dismissal.53

Fuji further argues that the circumstances would show that Arlene was not illegally
dismissed. The decision tonot renew her contract was mutually agreed upon by the
parties as indicated in Arlene’s e-mail54 dated March 11, 2009 where she consented to
the non-renewal of her contract but refused to sign anything.55 Aoki informed Arlene in
an e-mail56 dated March 12, 2009 that she did not need to sign a resignation letter and
that Fuji would pay Arlene’s salary and bonus until May 2009 as well as separation
pay.57

Arlene sent an e-mail dated March 18, 2009 with her version of the non-renewal
agreement that she agreed to sign this time.58 This attached version contained a
provision that Fuji shall re-hire her if she was still interested to work for Fuji.59 For Fuji,
Arlene’s e-mail showed that she had the power to bargain.60

Fuji then posits that the Court of Appeals erred when it held that the elements of an
employer-employee relationship are present, particularly that of control;61 that Arlene’s
separation from employment upon the expiration of her contract constitutes illegal
dismissal;62 that Arlene is entitled to reinstatement;63 and that Fuji is liable to Arlene for
damages and attorney’s fees.64

This petition for review on certiorari under Rule 45 was filed on February 8, 2013.65 On
February 27, 2013, Arlene filed a manifestation66 stating that this court may not take
jurisdiction over the case since Fuji failed to authorize Corazon E. Acerden to sign the
verification.67 Fuji filed a comment on the manifestation68 on March 9, 2013.

Based on the arguments of the parties, there are procedural and substantive issues for
resolution:

I. Whether the petition for review should be dismissed as Corazon E. Acerden, the
signatory of the verification and certification of non forum shopping of the petition, had
no authority to sign the verification and certification on behalf of Fuji;

II. Whether the Court of Appeals correctly determined that no grave abuse of discretion
was committed by the National Labor Relations Commission when it ruled that Arlene
was a regular employee, not an independent contractor, and that she was illegally
dismissed; and

III. Whether the Court of Appeals properly modified the National Labor Relations
Commission’s decision by awarding reinstatement, damages, and attorney’s fees.

The petition should be dismissed.

Validity of the verification and certification against forum shopping

In its comment on Arlene’s manifestation, Fuji alleges that Corazon was authorized to
sign the verification and certification of non-forum shopping because Mr. Shuji Yano was
empowered under the secretary’s certificate to delegate his authority to sign the
necessary pleadings, including the verification and certification against forum
shopping.69

On the other hand, Arlene points outthat the authority given to Mr. Shuji Yano and Mr.
Jin Eto in the secretary’s certificate is only for the petition for certiorari before the Court
of Appeals.70 Fuji did not attach any board resolution authorizing Corazon orany other
person tofile a petition for review on certiorari with this court.71 Shuji Yano and Jin Eto
could not re-delegate the power thatwas delegated to them.72 In addition, the special
power of attorney executed by Shuji Yano in favor of Corazon indicated that she was
empowered to sign on behalf of Shuji Yano, and not on behalf of Fuji.73

The Rules of Court requires the

submission of verification and
certification against forum shopping

Rule 7, Section 4 of the 1997 Rules of Civil Procedure provides the requirement of
verification, while Section 5 of the same rule provides the requirement of certification
against forum shopping. These sections state:

SEC. 4. Ver if ica tio n. — Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his knowledge and belief.

A pleading required to be verifiedwhich containsa verification based on "information and

belief," or upon "knowledge, information and belief," or lacks a proper verification, shall
be treated as an unsigned pleading.

SEC. 5. Certification against forum shopping.— The plaintiff or principal party shall
certify under oath in the complaint orother initiatory pleading asserting a claim for relief
or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that
he has not theretofore commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge,
no such other action or claim is pending therein; (b) if there is such other pending
action or claim, a complete statement of the present status thereof; and (c) if he should
thereafter learn that the same or similar action or claim has been filed or is pending, he
shall report that fact within five (5) days therefrom to the court wherein his aforesaid
complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt ofcourt, without prejudice to the
corresponding administrative and criminalactions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as a
cause for administrative sanctions.

Section 4(e) of Rule 4574 requires that petitions for review should "contain a sworn
certification against forum shopping as provided in the last paragraph of section 2, Rule
42." Section 5 of the same rule provides that failure to comply with any requirement in
Section 4 is sufficient ground to dismiss the petition.

Effects of non-compliance

Uy v. Landbank75 discussed the effect of non-compliance with regard to verification and

stated that:

[t]he requirement regarding verification of a pleading is formal, not jurisdictional. Such

requirement is simply a condition affecting the form of pleading, the non-compliance of
which does not necessarily render the pleading fatally defective. Verification is simply
intended to secure an assurance that the allegations in the pleading are true and
correct and not the product of the imagination or a matter of speculation, and that the
pleading is filed in good faith. The court may order the correction of the pleading if the
verification is lacking or act on the pleading although it is not verified, if the attending
circumstances are such that strict compliance with the rules may be dispensed with
inorder that the ends of justice may thereby be served.76 (Citations omitted)

Shipside Incorporated v. Court of Appeals77 cited the discussion in Uy and differentiated

its effect from non-compliance with the requirement of certification against forum
shopping:

On the other hand, the lack of certification against forum shopping is generally not
curable by the submission thereof after the filing of the petition. Section 5, Rule 45 of
the 1997 Rules of Civil Procedure provides that the failure of the petitioner tosubmit the
required documents that should accompany the petition, including the certification
against forum shopping, shall be sufficient ground for the dismissal thereof. The same
rule applies to certifications against forum shopping signed by a person on behalf of a
corporation which are unaccompanied by proof that said signatory is authorized to file a
petition on behalf of the corporation.78 (Emphasis supplied) Effects of substantial
compliance with the requirement of verification and certification against forum shopping

Although the general rule is that failure to attach a verification and certification against
forum shopping isa ground for dismissal, there are cases where this court allowed
substantial compliance.
In Loyola v. Court of Appeals,79 petitioner Alan Loyola submitted the required
certification one day after filing his electoral protest.80 This court considered the
subsequent filing as substantial compliance since the purpose of filing the certification is
to curtail forum shopping.81

In LDP Marketing, Inc. v. Monter,82 Ma. Lourdes Dela Peña signed the verification and
certification against forum shopping but failed to attach the board resolution indicating
her authority to sign.83 In a motion for reconsideration, LDP Marketing attached the
secretary’s certificate quoting the board resolution that authorized Dela Peña.84 Citing
Shipside, this court deemed the belated submission as substantial compliance since LDP
Marketing complied with the requirement; what it failed to do was to attach proof of
Dela Peña’s authority to sign.85 Havtor Management Phils., Inc. v. National Labor
Relations Commission86 and General Milling Corporation v. National Labor Relations
Commission87 involved petitions that were dismissed for failure to attach any document
showing that the signatory on the verification and certification against forum-shopping
was authorized.88 In both cases, the secretary’s certificate was attached to the motion
for reconsideration.89 This court considered the subsequent submission of proof
indicating authority to sign as substantial compliance.90 Altres v. Empleo91 summarized
the rules on verification and certification against forum shopping in this manner:

For the guidance of the bench and bar, the Court restates in capsule form the
jurisprudential pronouncements . . . respecting non-compliance with the requirement
on, or submission of defective, verification and certification against forum shopping:

1) A distinction must be made between non-compliance with the requirement on or

submission of defective verification, and noncompliance with the requirement on or
submission of defective certification against forum shopping.

2) As to verification, non-compliance therewith or a defect therein does not necessarily

render the pleading fatally defective. The court may order its submission or correction
or act on the pleading if the attending circumstances are such that strict compliance
with the Rule may be dispensed with in order that the ends of justice may be served
thereby.

3) Verification is deemed substantially complied with when one who has ample
knowledge to swear to the truth of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been made in good faith or
are true and correct.

4) As to certification against forum shopping, non-compliance therewith or a defect

therein, unlike in verification, is generally not curable by its subsequent submission or
correction thereof, unless there is a need to relax the Rule on the ground of "substantial
compliance" or presence of "special circumstances or compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties to the
case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs
or petitioners share a common interest and invoke a common cause of action or
defense, the signature of only one of them inthe certification against forum shopping
substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the

party-pleader, not by his counsel. If, however, for reasonable or justifiable reasons, the
party-pleader is unable to sign, he must execute a Special Power of Attorney
designating his counsel of record to sign on his behalf.92

There was substantial compliance

by Fuji Television Network, Inc.

Being a corporation, Fuji exercises its power to sue and be sued through its board of
directors or duly authorized officers and agents. Thus, the physical act of signing the
verification and certification against forum shopping can only be done by natural
persons duly authorized either by the corporate by-laws or a board resolution.93

In its petition for review on certiorari, Fuji attached Hideaki Ota’s secretary’s
certificate,94 authorizing Shuji Yano and Jin Eto to represent and sign for and on behalf
of Fuji.95 The secretary’s certificate was duly authenticated96 by Sulpicio Confiado,
Consul-General of the Philippines in Japan. Likewise attached to the petition is the
special power of attorney executed by Shuji Yano, authorizing Corazon to sign on his
behalf.97 The verification and certification against forum shopping was signed by
Corazon.98

Arlene filed the manifestation dated February 27, 2013, arguing that the petition for
review should be dismissed because Corazon was not duly authorized to sign the
verification and certification against forum shopping.

Fuji filed a comment on Arlene’s manifestation, stating that Corazon was properly
authorized to sign. On the basis of the secretary’s certificate, Shuji Yano was
empowered to delegate his authority.

Quoting the board resolution dated May 13, 2010, the secretary's certificate states:

(a) The Corporation shall file a Petition for Certiorari with the Court of Appeals, against
Philippines’ National Labor Relations Commission ("NLRC") and Arlene S. Espiritu,
pertaining to NLRC-NCR Case No. LAC 00-002697-09, RAB No. 05-06811-00 and
entitled "Arlene S. Espiritu v. Fuji Television Network, Inc./Yoshiki Aoki", and participate
in any other subsequent proceeding that may necessarily arise therefrom, including but
not limited to the filing of appeals in the appropriate venue;

(b) Mr. Shuji Yano and Mr. Jin Etobe authorized, as they are hereby authorized, to verify
and execute the certification against nonforum shopping which may be necessary or
required to be attached to any pleading to [sic] submitted to the Court of Appeals; and
the authority to so verify and certify for the Corporation in favor of the said persons
shall subsist and remain effective until the termination of the said case;

....

(d) Mr. Shuji Yano and Mr. Jin Etobe authorized, as they are hereby authorized, to
represent and appear on behalf the [sic] Corporation in all stages of the [sic] this case
and in any other proceeding that may necessarily arise thereform [sic], and to act in
the Corporation’s name, place and stead to determine, propose, agree, decide, do, and
perform any and all of the following:

1. The possibility of amicable settlement or of submission to alternative mode of dispute

resolution;

2. The simplification of the issue;

3. The necessity or desirability of amendments to the pleadings;

4. The possibility of obtaining stipulation or admission of facts and documents; and

5. Such other matters as may aid in the prompt disposition of the action.99 (Emphasis in
the original; Italics omitted)

Shuji Yano executed a special power of attorney appointing Ms. Ma. Corazon E. Acerden
and Mr. Moises A. Rollera as his attorneys-in-fact.100 The special power of attorney
states:

That I, SHUJI YANO, of legal age, Japanese national, with office address at 2-4-8 Daiba,
Minato-Ku, Tokyo, 137-8088 Japan, and being the representative of Fuji TV, INc., [sic]
(evidenced by the attached Secretary’s Certificate) one of the respondents in NLRC-NCR
Case No. 05-06811-00 entitled "Arlene S. Espiritu v. Fuji Television Network,
Inc./Yoshiki Aoki", and subsequently docketed before the Court of Appeals asC.A. G.R.
S.P. No. 114867 (Consolidated with SP No. 114889) do hereby make, constitute and
appoint Ms. Ma. Corazon E. Acerden and Mr. Moises A. Rolleraas my true and lawful
attorneys-infact for me and my name, place and stead to act and represent me in the
above-mentioned case, with special power to make admission/s and stipulations and/or
to make and submit as well as to accept and approve compromise proposals upon such
terms and conditions and under such covenants as my attorney-in-fact may deem fit,
and to engage the services of Villa Judan and Cruz Law Officesas the legal counsel to
represent the Company in the Supreme Court;

The said Attorneys-in-Fact are hereby further authorized to make, sign, execute and
deliver such papers ordocuments as may be necessary in furtherance of the power thus
granted, particularly to sign and execute the verification and certification of non-forum
shopping needed to be filed.101 (Emphasis in the original)
In its comment102 on Arlene’s manifestation, Fuji argues that Shuji Yano could further
delegate his authority because the board resolution empowered him to "act in the
Corporation’s name, place and stead to determine, propose, agree, decided [sic], do
and perform any and all of the following: . . . such other matters as may aid in the
prompt disposition of the action."103 To clarify, Fuji attached a verification and
certification against forum shopping, but Arlene questions Corazon’s authority to sign.
Arlene argues that the secretary’s certificate empowered Shuji Yano to file a petition for
certiorari before the Court of Appeals, and not a petition for review before this court,
and that since Shuji Yano’s authority was delegated to him, he could not further
delegate such power. Moreover, Corazon was representing Shuji Yano in his personal
capacity, and not in his capacity as representative of Fuji.

A review of the board resolution quoted in the secretary’s certificate shows that Fuji
shall "file a Petition for Certiorari with the Court of Appeals"104 and "participate in any
other subsequent proceeding that may necessarily arise therefrom, including but not
limited to the filing of appeals in the appropriate venue,"105 and that Shuji Yano and Jin
Eto are authorized to represent Fuji "in any other proceeding that may necessarily arise
thereform [sic]."106 As pointed out by Fuji, Shuji Yano and Jin Eto were also authorized
to "act in the Corporation’s name, place and stead to determine, propose, agree,
decide, do, and perform anyand all of the following: . . . 5. Such other matters as may
aid in the prompt disposition of the action."107

Considering that the subsequent proceeding that may arise from the petition for
certiorari with the Court of Appeals is the filing of a petition for review with this court,
Fuji substantially complied with the procedural requirement.

On the issue of whether Shuji Yano validly delegated his authority to Corazon, Article
1892 of the Civil Code of the Philippines states:

ART. 1892. The agent may appoint a substitute if the principal has not prohibited him
from doing so; but he shall be responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

(2) When he was given such power, but without designating the person, and the person
appointed was notoriously incompetent or insolvent. All acts of the substitute appointed
against the prohibition of the principal shall be void.

The secretary’s certificate does not state that Shuji Yano is prohibited from appointing a
substitute. In fact, heis empowered to do acts that will aid in the resolution of this case.

This court has recognized that there are instances when officials or employees of a
corporation can sign the verification and certification against forum shopping without a
board resolution. In Cagayan Valley Drug Corporation v. CIR,108 it was held that:
In sum, we have held that the following officials or employees of the company can sign
the verification and certification without need of a board resolution: (1) the Chairperson
of the Board of Directors, (2) the President of a corporation, (3) the General Manager or
Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a
labor case.

While the above cases109 do not provide a complete listing of authorized signatories to
the verification and certification required by the rules, the determination of the
sufficiency of the authority was done on a case to case basis. The rationale applied in
the foregoing cases is to justify the authority of corporate officers or representatives of
the corporation to sign the verification or certificate against forum shopping, being ‘in a
position to verify the truthfulness and correctness of the allegations in the petition.’110

Corazon’s affidavit111 states that she is the "office manager and resident interpreter of
the Manila Bureau of Fuji Television Network, Inc."112 and that she has "held the
position for the last twenty-three years."113

As the office manager for 23 years,Corazon can be considered as having knowledge of

all matters in Fuji’s Manila Bureau Office and is in a position to verify "the truthfulness
and the correctness of the allegations in the Petition."114

Thus, Fuji substantially complied with the requirements of verification and certification
against forum shopping.

Before resolving the substantive issues in this case, this court will discuss the
procedural parameters of a Rule 45 petition for review in labor cases.

II

Procedural parameters of petitions for review in labor cases

Article 223 of the Labor Code115 does not provide any mode of appeal for decisions of
the National Labor Relations Commission. It merely states that "[t]he decision of the
Commission shall be final and executory after ten (10) calendar days from receipt
thereof by the parties." Being final, it is no longer appealable. However, the finality of
the National Labor Relations Commission’s decisions does not mean that there is no
more recourse for the parties.

In St. Martin Funeral Home v. National Labor Relations Commission,116 this court cited
several cases117 and rejected the notion that this court had no jurisdiction to review
decisions of the National Labor Relations Commission. It stated that this court had the
power to review the acts of the National Labor Relations Commission to see if it kept
within its jurisdiction in deciding cases and alsoas a form of check and balance.118 This
court then clarified that judicial review of National Labor Relations Commission
decisions shall be by way of a petition for certiorari under Rule 65. Citing the doctrine of
hierarchy of courts, it further ruled that such petitions shall be filed before the Court of
Appeals. From the Court of Appeals, an aggrieved party may file a petition for review on
certiorari under Rule 45.

A petition for certiorari under Rule 65 is an original action where the issue is limited to
grave abuse of discretion. As an original action, it cannot be considered as a
continuation of the proceedings of the labor tribunals.

On the other hand, a petition for review on certiorari under Rule 45 is a mode of appeal
where the issue is limited to questions of law. In labor cases, a Rule 45 petition is
limited toreviewing whether the Court of Appeals correctly determined the presence or
absence of grave abuse of discretion and deciding other jurisdictional errors of the
National Labor Relations Commission.119

In Odango v. National Labor Relations Commission,120 this court explained that a

petition for certiorari is an extraordinary remedy that is "available only and restrictively
in truly exceptional cases"121 and that its sole office "is the correction of errors of
jurisdiction including commission of grave abuse of discretion amounting to lack or
excess of jurisdiction."122 A petition for certiorari does not include a review of findings of
fact since the findings of the National Labor Relations Commission are accorded
finality.123 In cases where the aggrieved party assails the National Labor Relations
Commission’s findings, he or she must be able to show that the Commission "acted
capriciously and whimsically or in total disregard of evidence material to the
controversy."124

When a decision of the Court of Appeals under a Rule 65 petition is brought to this
court by way of a petition for review under Rule 45, only questions of law may be
decided upon. As held in Meralco Industrial v. National Labor Relations Commission:125

This Court is not a trier of facts. Well-settled is the rule that the jurisdiction of this
Court ina petition for review on certiorari under Rule 45 of the Revised Rules of Court is
limited to reviewing only errors of law, not of fact, unless the factual findings
complained of are completely devoid of support from the evidence on record, or the
assailed judgment is based on a gross misapprehension of facts. Besides, factual
findings of quasi-judicial agencies like the NLRC, when affirmed by the Court of
Appeals, are conclusive upon the parties and binding on this Court.126

Career Philippines v. Serna,127 citing Montoya v. Transmed,128 is instructive on the

parameters of judicial review under Rule 45:

As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we
discussed the particular parameters of a Rule 45 appeal from the CA’s Rule 65 decision
on a labor case, as follows:

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast

with the review for jurisdictional error that we undertake under Rule 65. Furthermore,
Rule 45 limits us to the review of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view the CA decision in the same
context that the petition for certiorari it ruled upon was presented to it; we have to
examine the CA decision from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in the NLRC decision before it, not on
the basis of whether the NLRC decision on the merits of the case was correct. 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.129 (Emphasis in the
original)

Justice Brion’s dissenting opinion in Abott Laboratories, PhiIippines v. Aicaraz130

discussed that in petitions for review under Rule 45, "the Court simply determines
whether the legal correctness of the CA’s finding that the NLRC ruling . . . had basis in
fact and in Iaw."131 In this kind of petition, the proper question to be raised is, "Did the
CA correctly determine whether the NLRC committed grave abuse of discretion in ruling
on the case?"132

Justice Brion’s dissenting opinion also laid down the following guidelines:

If the NLRC ruling has basis in the evidence and the applicable law and jurisprudence,
then no grave abuse of discretion exists and the CA should so declare and, accordingly,
dismiss the petition. If grave abuse of discretion exists, then the CA must grant the
petition and nullify the NLRC ruling, entering at the same time the ruling that isjustified
under the evidence and the governing law, rules and jurisprudence. In our Rule 45
review, this Court must denythe petition if it finds that the CA correctly acted.133
(Emphasis in the original)

These parameters shall be used in resolving the substantive issues in this petition.

III

Determination of employment status; burden of proof

In this case, there is no question thatArlene rendered services to Fuji. However, Fuji
alleges that Arlene was an independent contractor, while Arlene alleges that she was a
regular employee. To resolve this issue, we ascertain whether an employer-employee
relationship existed between Fuji and Arlene.

This court has often used the four-fold test to determine the existence of an
employer-employee relationship. Under the four-fold test, the "control test" is the most
important.134 As to how the elements in the four-fold test are proven, this court has
discussed that:

[t]here is no hard and fast rule designed to establish the aforesaid elements. Any
competent and relevant evidence to prove the relationship may be admitted.
Identification cards, cash vouchers, social security registration, appointment letters or
employment contracts, payrolls, organization charts, and personnel lists, serve as
evidence of employee status.135

If the facts of this case vis-à-vis the four-fold test show that an employer-employee
relationship existed, we then determine the status of Arlene’s employment, i.e.,
whether she was a regular employee. Relative to this, we shall analyze Arlene’s
fixed-term contract and determine whether it supports her argument that she was a
regular employee, or the argument of Fuji that she was an independent contractor. We
shall scrutinize whether the nature of Arlene’s work was necessary and desirable to
Fuji’s business or whether Fuji only needed the output of her work. If the circumstances
show that Arlene’s work was necessary and desirable to Fuji, then she is presumed to
be a regular employee. The burden of proving that she was an independent contractor
lies with Fuji.

In labor cases, the quantum of proof required is substantial evidence.136 "Substantial

evidence" has been defined as "such amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion."137

If Arlene was a regular employee, we then determine whether she was illegally
dismissed. In complaints for illegal dismissal, the burden of proof is on the employee to
prove the fact of dismissal.138 Once the employee establishes the fact of dismissal,
supported by substantial evidence, the burden of proof shifts tothe employer to show
that there was a just or authorized cause for the dismissal and that due process was
observed.139

IV

Whether the Court of Appeals correctly affirmed the National Labor

Relations Commission’s finding that Arlene was a regular employee

Fuji alleges that Arlene was anindependent contractor, citing Sonza v. ABS-CBN and
relying on the following facts: (1) she was hired because of her skills; (2) her salary
was US$1,900.00, which is higher than the normal rate; (3) she had the power to
bargain with her employer; and (4) her contract was for a fixed term. According to Fuji,
the Court of Appeals erred when it ruled that Arlene was forcedto sign the non-renewal
agreement, considering that she sent an email with another version of the non-renewal
agreement.140 Further, she is not entitled tomoral damages and attorney’s fees because
she acted in bad faith when she filed a labor complaint against Fuji after receiving
US$18,050.00 representing her salary and other benefits.141 Arlene argues that she was
a regular employee because Fuji had control and supervision over her work. The news
events that she covered were all based on the instructions of Fuji.142 She maintains that
the successive renewal of her employment contracts for four (4) years indicates that
her work was necessary and desirable.143 In addition, Fuji’s payment of separation pay
equivalent to one (1) month’s pay per year of service indicates that she was a regular
employee.144 To further support her argument that she was not an independent
contractor, she states that Fuji owns the laptop computer and mini-camera that she
used for work.145 Arlene also argues that Sonza is not applicable because she was a
plain reporter for Fuji, unlike Jay Sonza who was a news anchor, talk show host, and
who enjoyed a celebrity status.146 On her illness, Arlene points outthat it was not a
ground for her dismissal because her attending physician certified that she was fit to
work.147

Arlene admits that she signed the non-renewal agreement with quitclaim, not because
she agreed to itsterms, but because she was not in a position to reject the non-renewal
agreement. Further, she badly needed the salary withheld for her sustenance and
medication.148 She posits that her acceptance of separation pay does not bar filing of a
complaint for illegal dismissal.149

Article 280 of the Labor Code provides that:

Art. 280. Regular and casual employment.The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph; Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which heis employed and his employment shall
continue while such activity exist.

This provision classifies employees into regular, project, seasonal, and casual. It further
classifies regular employees into two kinds: (1) those "engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the
employer"; and (2) casual employees who have "rendered at least one year of service,
whether such service is continuous or broken."

Another classification of employees, i.e., employees with fixed-term contracts, was

recognized in Brent School, Inc. v. Zamora150 where this court discussed that:

Logically, the decisive determinant in the term employment should not be the activities
that the employee is called upon to perform, but the day certain agreed upon by the
parties for the commencement and termination of their employment relationship, a day
certainbeing understood to be "that which must necessarily come, although it may not
be known when."151 (Emphasis in the original)
This court further discussed that there are employment contracts where "a fixed term is
an essential and natural appurtenance"152 such as overseas employment contracts and
officers in educational institutions.153

Distinctions among fixed-term

employees, independent contractors,
and regular employees

GMA Network, Inc. v. Pabriga154 expounded the doctrine on fixed term contracts laid
down in Brentin the following manner:

Cognizant of the possibility of abuse in the utilization of fixed term employment

contracts, we emphasized in Brentthat where from the circumstances it is apparent that
the periods have been imposed to preclude acquisition of tenurial security by the
employee, they should be struck down as contrary to public policy or morals. We thus
laid down indications or criteria under which "term employment" cannot be said to be in
circumvention of the law on security of tenure, namely:

1) The fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent; or

2) It satisfactorily appears that the employer and the employee dealt with each other
on more or less equal terms with no moral dominance exercised by the former or the
latter.

These indications, which must be read together, make the Brent doctrine applicable only
in a few special cases wherein the employer and employee are on more or less in equal
footing in entering into the contract. The reason for this is evident: whena prospective
employee, on account of special skills or market forces, is in a position to make
demands upon the prospective employer, such prospective employee needs less
protection than the ordinary worker. Lesser limitations on the parties’ freedom of
contract are thus required for the protection of the employee.155 (Citations omitted)

For as long as the guidelines laid down in Brentare satisfied, this court will recognize
the validity of the fixed-term contract.

In Labayog v. M.Y. San Biscuits, Inc.,156 this court upheld the fixedterm employment of
petitioners because from the time they were hired, they were informed that their
engagement was for a specific period. This court stated that:

[s]imply put, petitioners were notregular employees. While their employment as

mixers, packers and machine operators was necessary and desirable in the usual
business ofrespondent company, they were employed temporarily only, during periods
when there was heightened demand for production. Consequently, there could have
been no illegal dismissal when their services were terminated on expiration of their
contracts. There was even no need for notice of termination because they knew exactly
when their contracts would end. Contracts of employment for a fixed period terminate
on their own at the end of such period.

Contracts of employment for a fixed period are not unlawful. What is objectionable is
the practice of some scrupulous employers who try to circumvent the law protecting
workers from the capricious termination of employment.157 (Citation omitted)

Caparoso v. Court of Appeals158 upheld the validity of the fixed-term contract of

employment. Caparoso and Quindipan were hired as delivery men for three (3) months.
At the end of the third month, they were hired on a monthly basis. In total, they were
hired for five (5) months. They filed a complaint for illegal dismissal.159 This court ruled
that there was no evidence indicating that they were pressured into signing the
fixed-term contracts. There was likewise no proof that their employer was engaged in
hiring workers for five (5) months onlyto prevent regularization. In the absence of
these facts, the fixed-term contracts were upheld as valid.160 On the other hand, an
independent contractor is defined as:

. . . one who carries on a distinct and independent business and undertakes to perform
the job, work, or service on its own account and under one’s own responsibility
according to one’s own manner and method, free from the control and direction of the
principal in all matters connected with the performance of the work except as to the
results thereof.161

In view of the "distinct and independent business" of independent contractors, no

employer-employee relationship exists between independent contractors and their
principals. Independent contractors are recognized under Article 106 of the Labor Code:

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract

with another person for the performance of the former’s work, the employees of the
contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the
provisions of this Code.

....

The Secretary of Labor and Employment may, by appropriate regulations, restrict or

prohibit the contracting-out of labor to protect the rights of workers established under
this Code. In so prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as well as differentiations within
these types of contracting and determine who among the parties involved shall be
considered the employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an employer

does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal business
of such employer. In such cases, the person or intermediary shall be considered merely
as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latterwere directly employed by him.

In Department Order No. 18-A, Seriesof 2011, of the Department of Labor and
Employment, a contractor is defined as having:

Section 3. . . .

....

(c) . . . an arrangement whereby a principal agrees to put out or farm out with a
contractor the performance or completion of a specific job, work or service within a
definite or predetermined period, regardless of whether such job, work or service is to
be performed or completed within oroutside the premises of the principal.

This department order also states that there is a trilateral relationship in legitimate job
contracting and subcontracting arrangements among the principal, contractor, and
employees of the contractor. There is no employer-employee relationship between the
contractor and principal who engages the contractor’s services, but there is an
employer-employee relationship between the contractor and workers hired to
accomplish the work for the principal.162

Jurisprudence has recognized another kind of independent contractor: individuals with

unique skills and talents that set them apart from ordinary employees. There is no
trilateral relationship in this case because the independent contractor himself or herself
performs the work for the principal. In other words, the relationship is bilateral.

In Orozco v. Court of Appeals,163 Wilhelmina Orozco was a columnist for the Philippine
Daily Inquirer. This court ruled that she was an independent contractor because of her
"talent, skill, experience, and her unique viewpoint as a feminist advocate."164 In
addition, the Philippine Daily Inquirer did not have the power of control over Orozco,
and she worked at her own pleasure.165

Semblante v. Court of Appeals166 involved a masiador167 and a sentenciador.168 This

court ruled that "petitioners performed their functions as masiadorand sentenciador free
from the direction and control of respondents"169 and that the masiador and
sentenciador "relied mainly on their ‘expertise that is characteristic of the cockfight
gambling.’"170 Hence, no employer-employee relationship existed.

Bernarte v. Philippine Basketball Association171 involved a basketball referee. This court

ruled 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."172
In these cases, the workers were found to be independent contractors because of their
unique skills and talents and the lack of control over the means and methods in the
performance of their work.

In other words, there are different kinds of independent contractors: those engaged in
legitimate job contracting and those who have unique skills and talents that set them
apart from ordinary employees.

Since no employer-employee relationship exists between independent contractors and

their principals, their contracts are governed by the Civil Code provisions on contracts
and other applicable laws.173

A contract is defined as "a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service."174
Parties are free to stipulate on terms and conditions in contracts as long as these "are
not contrary to law, morals, good customs, public order, or public policy."175 This
presupposes that the parties to a contract are on equal footing. Theycan bargain on
terms and conditions until they are able to reach an agreement.

On the other hand, contracts of employment are different and have a higher level of
regulation because they are impressed with public interest. Article XIII, Section 3 of the
1987 Constitution provides full protection to labor:

ARTICLE XIII. SOCIAL JUSTICE AND HUMAN RIGHTS

....

LABOR

Section 3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.

The State shall regulate the relations between workers and employers, recognizing the
right of labor to its just share in the fruits of production and the right of enterprises to
reasonable returns on investments, and to expansion and growth.
Apart from the constitutional guarantee of protection to labor, Article 1700 of the Civil
Code states:

ART. 1700. The relations between capital and labor are not merely contractual. They are
so impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor
and similar subjects.

In contracts of employment, the employer and the employee are not on equal footing.
Thus, it is subject to regulatory review by the labor tribunals and courts of law. The law
serves to equalize the unequal. The labor force is a special class that is constitutionally
protected because of the inequality between capital and labor.176 This presupposes that
the labor force is weak. However, the level of protection to labor should vary from case
to case; otherwise, the state might appear to be too paternalistic in affording protection
to labor. As stated in GMA Network, Inc. v. Pabriga, the ruling in Brent applies in cases
where it appears that the employer and employee are on equal footing.177 This
recognizes the fact that not all workers are weak. To reiterate the discussion in GMA
Network v. Pabriga:

The reason for this is evident: when a prospective employee, on account of special skills
or market forces, is in a position to make demands upon the prospective employer, such
prospective employee needs less protection than the ordinary worker. Lesser limitations
on the parties’ freedom of contract are thus required for the protection of the
employee.178

The level of protection to labor mustbe determined on the basis of the nature of the
work, qualifications of the employee, and other relevant circumstances.

For example, a prospective employee with a bachelor’s degree cannot be said to be on

equal footing witha grocery bagger with a high school diploma. Employees who qualify
for jobs requiring special qualifications such as "[having] a Master’s degree" or
"[having] passed the licensure exam" are different from employees who qualify for jobs
that require "[being a] high school graduate; withpleasing personality." In these
situations, it is clear that those with special qualifications can bargain with the employer
on equal footing. Thus, the level of protection afforded to these employees should be
different.

Fuji’s argument that Arlene was an independent contractor under a fixed-term contract
is contradictory. Employees under fixed-term contracts cannot be independent
contractors because in fixed-term contracts, an employer-employee relationship exists.
The test in this kind of contract is not the necessity and desirability of the employee’s
activities, "but the day certain agreed upon by the parties for the commencement and
termination of the employment relationship."179 For regular employees, the necessity
and desirability of their work in the usual course of the employer’s business are the
determining factors. On the other hand, independent contractors do not have
employer-employee relationships with their principals. Hence, before the status of
employment can be determined, the existence of an employer-employee relationship
must be established.

The four-fold test180 can be used in determining whether an employeremployee

relationship exists. The elements of the four-fold test are the following: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power of control, which is the most important element.181

The "power of control" was explained by this court in Corporal, Sr. v. National Labor
Relations Commission:182

The power to control refers to the existence of the power and not necessarily to the
actual exercise thereof, nor is it essential for the employer to actually supervise the
performance of duties of the employee. It is enough that the employer has the right to
wield that power.183 (Citation omitted)

Orozco v. Court of Appeals further elucidated the meaning of "power of control" and
stated the following:

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. . . .184 (Citation
omitted)

In Locsin, et al. v. Philippine Long Distance Telephone Company,185 the "power of

control" was defined as "[the] right to control not only the end to be achieved but also
the means to be used in reaching such end."186

Here, the Court of Appeals applied Sonza v. ABS-CBN and Dumpit Murillo v. Court of
Appeals187 in determining whether Arlene was an independent contractor or a regular
employee.

In deciding Sonza and Dumpit-Murillo, this court used the four-fold test. Both cases
involved newscasters and anchors. However, Sonza was held to be an independent
contractor, while Dumpit-Murillo was held to be a regular employee.

Comparison of the Sonza and

Dumpit-Murillo cases using
the four-fold test
Sonza was engaged by ABS-CBN in view of his "unique skills, talent and celebrity status
not possessed by ordinary employees."188 His work was for radio and television
programs.189 On the other hand, Dumpit-Murillo was hired by ABC as a newscaster and
co-anchor.190 Sonza’s talent fee amounted to ₱317,000.00 per month, which this court
found to be a substantial amount that indicatedhe was an independent contractor rather
than a regular employee.191 Meanwhile, Dumpit-Murillo’s monthly salary was
₱28,000.00, a very low amount compared to what Sonza received.192

Sonza was unable to prove that ABS-CBN could terminate his services apart from
breach of contract. There was no indication that he could be terminated based on just
or authorized causes under the Labor Code. In addition, ABS-CBN continued to pay his
talent fee under their agreement, even though his programs were no longer
broadcasted.193 Dumpit-Murillo was found to have beenillegally dismissed by her
employer when they did not renew her contract on her fourth year with ABC.194

In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered his lines,
how he appeared on television, or how he sounded on radio.195 All that Sonza needed
was his talent.196 Further, "ABS-CBN could not terminate or discipline SONZA even if the
means and methods of performance of his work . . . did not meet ABS-CBN’s
approval."197 In Dumpit-Murillo, the duties and responsibilities enumerated in her
contract was a clear indication that ABC had control over her work.198

Application of the four-fold test

The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and
affirmed the ruling of the National Labor Relations Commission finding that Arlene was
a regular employee. Arlene was hired by Fuji as a news producer, but there was no
showing that she was hired because of unique skills that would distinguish her from
ordinary employees. Neither was there any showing that she had a celebrity status. Her
monthly salary amounting to US$1,900.00 appears tobe a substantial sum, especially if
compared to her salary whenshe was still connected with GMA.199 Indeed, wages may
indicate whether oneis an independent contractor. Wages may also indicate that an
employee is able to bargain with the employer for better pay. However, wages should
not be the conclusive factor in determining whether one is an employee or an
independent contractor.

Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional
employment contract.200 Her contract also indicated that Fuji had control over her work
because she was required to work for eight (8) hours from Monday to Friday, although
on flexible time.201 Sonza was not required to work for eight (8) hours, while
Dumpit-Murillo had to be in ABC to do both on-air and off-air tasks.

On the power to control, Arlene alleged that Fuji gave her instructions on what to
report.202 Even the mode of transportation in carrying out her functions was controlled
by Fuji. Paragraph 6 of her contract states:
6. During the travel to carry out work, if there is change of place or change of place of
work, the train, bus, or public transport shall be used for the trip. If the Employee uses
the private car during the work and there is an accident the Employer shall not be
responsible for the damage, which may be caused to the Employee.203

Thus, the Court of Appeals did not err when it upheld the findings of the National Labor
Relations Commission that Arlene was not an independent contractor.

Having established that an employer-employee relationship existed between Fuji and

Arlene, the next questions for resolution are the following: Did the Court of Appeals
correctly affirm the National Labor Relations Commission that Arlene had become a
regular employee? Was the nature of Arlene’s work necessary and desirable for Fuji’s
usual course of business?

Arlene was a regular employee

with a fixed-term contract

The test for determining regular employment is whether there is a reasonable

connection between the employee’s activities and the usual business of the employer.
Article 280 provides that the nature of work must be "necessary or desirable in the
usual business or trade of the employer" as the test for determining regular
employment. As stated in ABS-CBN Broadcasting Corporation v. Nazareno:204

In determining whether an employment should be considered regular or non-regular,

the applicable test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer.
The standard, supplied by the law itself, is whether the work undertaken is necessary or
desirable in the usual business or trade of the employer, a fact that can be assessed by
looking into the nature of the services rendered and its relation to the general scheme
under which the business or trade is pursued in the usual course. It is distinguished
from a specific undertaking that is divorced from the normal activities required
incarrying on the particular business or trade.205

However, there may be a situation where an employee’s work is necessary but is not
always desirable inthe usual course of business of the employer. In this situation, there
is no regular employment.

In San Miguel Corporation v. National Labor Relations Commission,206 Francisco de

Guzman was hired to repair furnaces at San Miguel Corporation’s Manila glass plant. He
had a separate contract for every furnace that he repaired. He filed a complaint for
illegal dismissal three (3) years after the end of his last contract.207 In ruling that de
Guzman did not attain the status of a regular employee, this court explained:

Note that the plant where private respondent was employed for only seven months is
engaged in the manufacture of glass, an integral component of the packaging and
manufacturing business of petitioner. The process of manufacturing glass requires a
furnace, which has a limited operating life. Petitioner resorted to hiring project or fixed
term employees in having said furnaces repaired since said activity is not regularly
performed. Said furnaces are to be repaired or overhauled only in case of need and
after being used continuously for a varying period of five (5) to ten (10) years. In 1990,
one of the furnaces of petitioner required repair and upgrading. This was an
undertaking distinct and separate from petitioner's business of manufacturing glass. For
this purpose, petitioner must hire workers to undertake the said repair and upgrading. .
..

....

Clearly, private respondent was hired for a specific project that was not within the
regular business of the corporation. For petitioner is not engaged in the business of
repairing furnaces. Although the activity was necessary to enable petitioner to continue
manufacturing glass, the necessity therefor arose only when a particular furnace
reached the end of its life or operating cycle. Or, as in the second undertaking, when a
particular furnace required an emergency repair. In other words, the undertakings
where private respondent was hired primarily as helper/bricklayer have specified goals
and purposes which are fulfilled once the designated work was completed. Moreover,
such undertakings were also identifiably separate and distinct from the usual, ordinary
or regular business operations of petitioner, which is glass manufacturing. These
undertakings, the duration and scope of which had been determined and made known
to private respondent at the time of his employment, clearly indicated the nature of his
employment as a project employee.208

Fuji is engaged in the business of broadcasting,209 including news programming.210 It is

based in Japan211 and has overseas offices to cover international news.212

Based on the record, Fuji’s Manila Bureau Office is a small unit213 and has a few
employees.214 As such, Arlene had to do all activities related to news gathering.
Although Fuji insists that Arlene was a stringer, it alleges that her designation was
"News Talent/Reporter/Producer."215

A news producer "plans and supervises newscast . . . [and] work[s] with reporters in
the field planning and gathering information. . . ."216 Arlene’s tasks included
"[m]onitoring and [g]etting [n]ews [s]tories, [r]eporting interviewing subjects in front
of a video camera,"217 "the timely submission of news and current events reports
pertaining to the Philippines[,] and traveling [sic] to [Fuji’s] regional office in
Thailand."218 She also had to report for work in Fuji’s office in Manila from Mondays to
Fridays, eight (8) hours per day.219 She had no equipment and had to use the facilities
of Fuji to accomplish her tasks.

The Court of Appeals affirmed the finding of the National Labor Relations Commission
that the successive renewals of Arlene’s contract indicated the necessity and desirability
of her work in the usual course of Fuji’s business. Because of this, Arlene had become a
regular employee with the right to security of tenure.220 The Court of Appeals ruled
that:

Here, Espiritu was engaged by Fuji as a stinger [sic] or news producer for its Manila
Bureau. She was hired for the primary purpose of news gathering and reporting to the
television network’s headquarters. Espiritu was not contracted on account of any
peculiar ability or special talent and skill that she may possess which the network
desires to make use of. Parenthetically, ifit were true that Espiritu is an independent
contractor, as claimed by Fuji, the factthat everything that she uses to perform her job
is owned by the company including the laptop computer and mini camera discounts the
idea of job contracting.221

Moreover, the Court of Appeals explained that Fuji’s argument that no

employer-employee relationship existed in view of the fixed-term contract does not
persuade because fixed-term contracts of employment are strictly construed.222 Further,
the pieces of equipment Arlene used were all owned by Fuji, showing that she was a
regular employee and not an independent contractor.223

The Court of Appeals likewise cited Dumpit-Murillo, which involved fixed-term contracts
that were successively renewed for four (4) years.224 This court held that "[t]his
repeated engagement under contract of hire is indicative of the necessity and
desirability of the petitioner’s work in private respondent ABC’s business."225

With regard to Fuji’s argument that Arlene’s contract was for a fixed term, the Court of
Appeals cited Philips Semiconductors, Inc. v. Fadriquela226 and held that where an
employee’s contract "had been continuously extended or renewed to the same position,
with the same duties and remained in the employ without any interruption,"227 then
such employee is a regular employee. The continuous renewal is a scheme to prevent
regularization. On this basis, the Court of Appeals ruled in favor of Arlene.

As stated in Price, et al. v. Innodata Corp., et al.:228

The employment status of a person is defined and prescribed by law and not by what
the parties say it should be. Equally important to consider is that a contract of
employment is impressed with public interest such that labor contracts must yield to
the common good. Thus, provisions of applicable statutes are deemed written into the
contract, and the parties are not at liberty to insulate themselves and their relationships
from the impact of labor laws and regulations by simply contracting with each other.229
(Citations omitted)

Arlene’s contract indicating a fixed term did not automatically mean that she could
never be a regular employee. This is precisely what Article 280 seeks to avoid. The
ruling in Brent remains as the exception rather than the general rule.

Further, an employee can be a regular employee with a fixed-term contract. The law
does not preclude the possibility that a regular employee may opt to have a fixed-term
contract for valid reasons. This was recognized in Brent: For as long as it was the
employee who requested, or bargained, that the contract have a "definite date of
termination," or that the fixed-term contract be freely entered into by the employer and
the employee, then the validity of the fixed-term contract will be upheld.230

Whether the Court of Appeals correctly affirmed

the National Labor Relations Commission’s finding of illegal dismissal

Fuji argues that the Court of Appeals erred when it held that Arlene was illegally
dismissed, in view of the non-renewal contract voluntarily executed by the parties. Fuji
also argues that Arlene’s contract merely expired; hence, she was not illegally
dismissed.231

Arlene alleges that she had no choice but to sign the non-renewal contract because Fuji
withheldher salary and benefits.

With regard to this issue, the Court of Appeals held:

We cannot subscribe to Fuji’s assertion that Espiritu’s contract merely expired and that
she voluntarily agreed not to renew the same. Even a cursory perusal of the subject
Non-Renewal Contract readily shows that the same was signed by Espiritu under
protest. What is apparent is that the Non-Renewal Contract was crafted merely as a
subterfuge to secure Fuji’s position that it was Espiritu’s choice not to renew her
contract.232

As a regular employee, Arlene was entitled to security of tenure and could be dismissed
only for just or authorized causes and after the observance of due process.

The right to security of tenureis guaranteed under Article XIII, Section 3 of the 1987
Constitution: ARTICLE XIII. SOCIAL JUSTICE AND HUMAN RIGHTS

....

LABOR

....

It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.
Article 279 of the Labor Code also provides for the right to security of tenure and states
the following:

Art. 279. Security of tenure.In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause of when authorized by
this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.

Thus, on the right to security of tenure, no employee shall be dismissed, unless there
are just orauthorized causes and only after compliance with procedural and substantive
due process is conducted.

Even probationary employees are entitled to the right to security of tenure. This was
explained in Philippine Daily Inquirer, Inc. v. Magtibay, Jr.:233

Within the limited legal six-month probationary period, probationary employees are still
entitled to security of tenure. It is expressly provided in the afore-quoted Article 281
that a probationary employee may be terminated only on two grounds: (a) for just
cause, or (b) when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his
engagement.234 (Citation omitted)

The expiration of Arlene’s contract does not negate the finding of illegal dismissal by
Fuji. The manner by which Fuji informed Arlene that her contract would no longer be
renewed is tantamount to constructive dismissal. To make matters worse, Arlene was
asked to sign a letter of resignation prepared by Fuji.235 The existence of a fixed-term
contract should not mean that there can be no illegal dismissal. Due process must still
be observed in the pre-termination of fixed-term contracts of employment.

In addition, the Court of Appeals and the National Labor Relations Commission found
that Arlene was dismissed because of her health condition. In the non-renewal
agreement executed by Fuji and Arlene, it is stated that:

WHEREAS, the SECOND PARTY is undergoing chemotherapy which prevents her from
continuing to effectively perform her functions under the said Contract such as the
timely submission of news and current events reports pertaining to the Philippines and
travelling [sic] to the FIRST PARTY’s regional office in Thailand.236 (Emphasis supplied)

Disease as a ground for termination is recognized under Article 284 of the Labor Code:

Art. 284. Disease as ground for termination. An employer may terminate the services of
an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as to
the health of his co-employees: Provided, That he is paid separation pay equivalent to
at least one (1) month salary or to one-half (1/2) month salary for every year of
service, whichever is greater, a fraction of at least six (6) months being considered as
one (1) whole year.

Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code
provides:

Sec. 8. Disease as a ground for dismissal.– Where the employee suffers from a disease
and his continued employment is prohibited by law or prejudicial to his healthor to the
health of his coemployees, the employer shall not terminate his employment unless
there is a certification by a competent public health authority that the disease is of such
nature or at such a stage that it cannot be cured within a period of six (6) months even
with proper medical treatment. If the disease or ailment can be cured within the period,
the employer shall not terminate the employee but shall ask the employee to take a
leave. The employer shall reinstate such employee to his former position immediately
upon the restoration of his normal health.

For dismissal under Article 284 to bevalid, two requirements must be complied with: (1)
the employee’s disease cannot be cured within six (6) months and his "continued
employment is prohibited by law or prejudicial to his health as well as to the health of
his co-employees"; and (2) certification issued by a competent public health authority
that even with proper medical treatment, the disease cannot be cured within six (6)
months.237 The burden of proving compliance with these requisites is on the
employer.238 Noncompliance leads to the conclusion that the dismissal was illegal.239

There is no evidence showing that Arlene was accorded due process. After informing
her employer of her lung cancer, she was not given the chance to present medical
certificates. Fuji immediately concluded that Arlene could no longer perform her duties
because of chemotherapy. It did not ask her how her condition would affect her work.
Neither did it suggest for her to take a leave, even though she was entitled to sick
leaves. Worse, it did not present any certificate from a competent public health
authority. What Fuji did was to inform her thather contract would no longer be renewed,
and when she did not agree, her salary was withheld. Thus, the Court of Appeals
correctly upheld the finding of the National Labor Relations Commission that for failure
of Fuji to comply with due process, Arlene was illegally dismissed.240

VI

Whether the Court of Appeals properly modified

the National Labor Relations Commission’s decision
when it awarded reinstatement, damages, and attorney’s fees

The National Labor Relations Commission awarded separation pay in lieu of

reinstatement, on the ground that the filing of the complaint for illegal dismissal may
have seriously strained relations between the parties. Backwages were also awarded, to
be computed from date of dismissal until the finality of the National Labor Relations
Commission’s decision. However, only backwages were included in the dispositive
portion because the National Labor Relations Commission recognized that Arlene had
received separation pay in the amount of US$7,600.00. The Court of Appeals affirmed
the National Labor Relations Commission’s decision but modified it by awarding moral
and exemplary damages and attorney’s fees, and all other benefits Arlene was entitled
to under her contract with Fuji. The Court of Appeals also ordered reinstatement,
reasoning that the grounds when separation pay was awarded in lieu of reinstatement
were not proven.241

Article 279 of the Labor Code provides:

Art. 279. Security of tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. (Emphasis supplied)

The Court of Appeals’ modification of the National Labor Relations Commission’s

decision was proper because the law itself provides that illegally dismissed employees
are entitled to reinstatement, backwages including allowances, and all other benefits.

On reinstatement, the National Labor Relations Commission ordered payment of

separation pay in lieu of reinstatement, reasoning "that the filing of the instant suit may
have seriously abraded the relationship of the parties so as to render reinstatement
impractical."242 The Court of Appeals reversed this and ordered reinstatement on the
ground that separation pay in lieu of reinstatement is allowed only in several instances
such as (1) when the employer has ceased operations; (2) when the employee’s
position is no longer available; (3) strained relations; and (4) a substantial period has
lapsed from date of filing to date of finality.243

On this matter, Quijano v. Mercury Drug Corp.244 is instructive:

Well-entrenched is the rule that an illegally dismissed employee is entitled to

reinstatement as a matter of right. . . .

To protect labor’s security of tenure, we emphasize that the doctrine of "strained

relations" should be strictly applied so as not to deprive an illegally dismissed employee
of his right to reinstatement. Every labor dispute almost always results in "strained
relations" and the phrase cannot be given an overarching interpretation, otherwise, an
unjustly dismissed employee can never be reinstated.245 (Citations omitted)

The Court of Appeals reasoned that strained relations are a question of fact that must
be supported by evidence.246 No evidence was presented by Fuji to prove that
reinstatement was no longer feasible. Fuji did not allege that it ceased operations or
that Arlene’s position was no longer available. Nothing in the records shows that
Arlene’s reinstatement would cause an atmosphere of antagonism in the workplace.
Arlene filed her complaint in 2009. Five (5) years are not yet a substantial period247 to
bar reinstatement.

On the award of damages, Fuji argues that Arlene is notentitled to the award of
damages and attorney’s fees because the non-renewal agreement contained a
quitclaim, which Arlene signed. Quitclaims in labor cases do not bar illegally dismissed
employees from filing labor complaints and money claim. As explained by Arlene, she
signed the non-renewal agreement out of necessity. In Land and Housing Development
Corporation v. Esquillo,248 this court explained: We have heretofore explained that the
reason why quitclaims are commonly frowned upon as contrary to public policy, and
why they are held to be ineffective to bar claims for the full measure of the workers’
legal rights, is the fact that the employer and the employee obviously do not stand on
the same footing. The employer drove the employee to the wall. The latter must have
to get holdof money. Because, out of a job, he had to face the harsh necessities of life.
He thus found himself in no position to resist money proffered. His, then, is a case of
adherence, not of choice.249

With regard to the Court of Appeals’ award of moral and exemplary damages and
attorney’s fees, this court has recognized in several cases that moral damages are
awarded "when the dismissal is attended by bad faith or fraud or constitutes an act
oppressive to labor, or is done in a manner contrary to good morals, good customs or
public policy."250 On the other hand, exemplary damages may be awarded when the
dismissal was effected "in a wanton, oppressive or malevolent manner."251

The Court of Appeals and National Labor Relations Commission found that after Arlene
had informed Fuji of her cancer, she was informed that there would be problems in
renewing her contract on account of her condition. This information caused Arlene
mental anguish, serious anxiety, and wounded feelings that can be gleaned from the
tenor of her email dated March 11, 2009. A portion of her email reads:

I WAS SO SURPRISED . . . that at a time when I am at my lowest, being sick and very
weak, you suddenly came to deliver to me the NEWS that you will no longer renew my
contract.1awp++i1 I knew this will come but I never thought that you will be so
‘heartless’ and insensitive to deliver that news just a month after I informed you that I
am sick. I was asking for patience and understanding and your response was not to
RENEW my contract.252

Apart from Arlene’s illegal dismissal, the manner of her dismissal was effected in an
oppressive approach withher salary and other benefits being withheld until May 5,
2009, when she had no other choice but to sign the non-renewal contract. Thus, there
was legal basis for the Court of Appeals to modify the National Labor Relations
Commission’s decision.
However, Arlene receivedher salary for May 2009.253 Considering that the date of her
illegal dismissal was May 5, 2009,254 this amount may be subtracted from the total
monetary award. With regard to the award of attorney’s fees, Article 111 of the Labor
Code states that "[i]n cases of unlawful withholding of wages, the culpable party may
be assessed attorney’s fees equivalent to ten percent of the amount of wages
recovered." Likewise, this court has recognized that "in actions for recovery of wages or
where an employee was forced to litigate and, thus, incur expenses to protect his rights
and interest, the award of attorney’s fees is legallyand morally justifiable."255 Due to her
illegal dismissal, Arlene was forced to litigate.

In the dispositive portion of its decision, the Court of Appeals awarded legal interest at
the rate of 12% per annum.256 In view of this court’s ruling in Nacar v. Gallery
Frames,257 the legal interest shall be reducd to a rate of 6% per annum from July 1,
2013 until full satisfaction.

WHEREFORE, the petition is DENIED. The assailed Court of Appeals decision dated June
25, 2012 is AFFIRMED with the modification that backwages shall be computed from
June 2009. Legal interest shall be computed at the rate of 6% per annum of the total
monetary award from date of finality of this decision until full satisfaction.

SO ORDERED.