G.R. No.

L-51353 June 27, 1988 The stabilization tax shall begin

to apply on January 1st following
SHELL PHILIPPINES, INC., plaintiff-appellee, the calendar year during which
vs. such export products shall have
CENTRAL BANK OF THE PHILIPPINES, defendant-appellant. reached the aggregate F.O.B.
value of more than US $5
million, and the applicable tax
Picazo, Agcaoile, Santayana, Reyes and Tayao for plaintiff-appellee. rates shall be the rates
prescribed in Schedule (b) of
F.E. Evangelista, A.L. Bautista & Juan P. Adcaura and Albamento Bisquera Section 1 of Republic Act No.
for defendant- appellant. 6125 for the fiscal year following
the reaching of the said
aggregate value.

GUTIERREZ, JR., J.: During 1971, appellee Shell, Philippines, Inc. exported
seria residues, a by-product of petroleum refining, to
an extent reaching $5 million. On January 7, 1972, the
This case comes to us on a Court of Appeals resolution certifying the Monetary Board issued its Resolution No. 47
controversy as one which involves a pure question of law. The resolution "subjecting petroleum pitch and other petroleum
states the factual background of the case. residues" to the stabilization tax effective January 1,
1972. Under the Central Bank Circular No. 309,
On May 1, 1970, Congress approved the Act imposing implemented by Resolution No. 47, appellee had to
a stabilization tax on consignments abroad (RA 6125). pay the stabilization tax beginning January 1, 1972,
Section 1 of the statute, in part, provided as follows: which it did under protest.

Section 1. There shall be On September 14, 1972, appellee filed suit against the
imposed, assessed and Central Bank before the Court of First Instance of
collected a stabilization tax on Manila, praying that Monetary Board Resolution No. 47
the gross F.O.B. peso proceeds, be declared null and void, and that Central Bank be
based on the rate of exchange ordered to refund the stabilization tax it paid during the
prevailing at the time of receipt first semester of 1972. Its position was that, pursuant
of such proceeds, whether to the provisions of RA 6125, it had to pay the
partial or total, of any exportation stabilization tax only from July 1, 1972.
of the following schedule:
The lower court sustained appellee, and it declared
a. In the case of logs, copra, Monetary Board Resolution No. 47 as void and it
centrifugal sugar, and copper ordered refund of the stabilization tax paid by appellee
ore and concentrates; during the period January 1 to June 30, 1972. Central
Bank has appealed from the judgment. (Rollo, pp. 47-
49)
Ten per centum of the F.O.B. peso proceeds of
exports received on or after the date of effectivity of
this Act to June thirty, nineteen hundred seventy-one; The trial court opined:

Eight per centum of the F.O.B. peso proceeds of Note that the law mentions both calendar year and
exports received from July first, nineteen hundred fiscal year. Calendar year refers to one year starting
seventy-one to June thirty, nineteen hundred seventy- from January to December. Fiscal year, as it is usually
two. and commonly used, refers to the period covered
between July 1 of a year to June 30 of the following
year. In using these two terms, it is the considered
xxx xxx xxx
opinion of this Court that they should be taken in the
meaning where they are commonly and usually
"Any export products the understood. So that when an export product reaches
aggregate annual F.O.B. value an aggregate F.O.B. value of more than $5,000,000.00
of which shall exceed five million in a calendar year it becomes subject to the rates of
United States dollars in any one tax in force during the fiscal year following its reaching
calendar year during the the said aggregate value.
effectivity of this Act shall
likewise be subject to the rates
The statute is clear and free from ambiguity so that an
of tax in force during the fiscal
interpretation even becomes unnecessary ... . (Brief for
years following its reaching the
Defendant-Appellant, pp. 34-35)
said aggregate value."

The Central Bank appeals from the above cited decision alleging that the trial
In August, 1970, the Central Bank, through its Circular
court erred in regarding the deliberations of the Senate on the stabilization
No. 309 provided that:
tax in favor of Shell Philippines, Inc. and in failing to consider the authority

1
granted to the appellant to promulgate rules and regulations in the xxx xxx xxx
implementation of the stabilization tax law.
... The rule or regulation should be within the scope of
It should be mentioned, however, that on July 1, 1973, Presidential Decree the statutory authority granted by the legislature to the
No. 230 took effect. This law entitled administrative agency. (Davis, Administrative Law, p.
194, 197, cited in Victorias Milling Co., Inc. v. Social
Amending the Tariff and Customs Code, creating Title III in Book — I Export Security Commission, 114 Phil. 555, 558).
Tariff," expressly repealed Section 1 of Republic Act No. 6125 and
transferred the assessment and collection of the export duty from the Central In case of discrepancy between the basic law and a
Bank to the Bureau of Customs by ordering the Commissioner of Customs to rule or regulation issued to implement said law, the
promulgate rules and regulations necessary for the implementation of the basic law prevails because said rule or regulation
decree, subject to the approval of the Secretary of Finance (Section 2 of the cannot go beyond the terms and provisions of the
Decree). basic law (People v. Lim, 108 Phil. 1091)

Notwithstanding this fact, the issue raised must be resolved on the merits as Considering the foregoing, we rule that the trial court was correct in declaring
an affirmative relief was granted to the appellee. that "Monetary Board Resolution No. 47 is void insofar as it imposes the tax
mentioned in Republic Act No. 6125 on the export seria residue of (plaintiff)
First, the petitioner's allegation that the trial court gave undue weight to the the aggregate annual F.O.B., value of which reached five million United
deliberations of the Senate on the stabilization tax law is not supported by States dollars in 1971 effective on January 1, 1972." The said resolution runs
either the records or the decision itself. It is clear in the decision that the trial counter to the provisions of R.A. 6125 which provides that "(A)ny export
court found no ambiguity in the provision of law governing the dispute and product the aggregate annual F.O.B. value of which shall exceed five million
accordingly applied it in its ordinary sense. The cited Senate deliberations United States dollars in any one calendar year during the effectivity of this
merely corroborated the fact that the tax commences on the following fiscal Act shall likewise be subject to the rates of tax in force during the fiscal year
year after the aggregate value is reached. However, even if the lower court following its reaching the said aggregate value."
was influenced by the Senate deliberations, we see nothing wrong in courts'
examining and following the intent of the legislature when an act of Congress We note that under the same provision of law the tax accrues when the
has to be interpreted. aggregate annual F.O.B. value of the export product has exceeded five
million United States dollars during any calendar year. The imposition of the
Second, while it is true that under the same law the Central Bank was given tax is only deferred until the "fiscal year following its reaching the said
the authority to promulgate rules and regulations to implement the statutory aggregate value." It is only then that the rates in force are ascertained.
provision in question, we reiterate the principle that this authority is limited
only to carrying into effect what the law being implemented provides. In this case, there is no question that in 1971, the appellee exported seria
residue with an F.O.B. value of more than five million US dollars. The
In People v. Maceren (79 SCRA 450, 458 and 460), this Court ruled that: appellee's objection lies in the collection of the tax thereon as of January
1972 rather than in July 1972.
Administrative regulations adopted under legislative
authority by a particular department must be in It is, therefore, undeniable that the respondent was liable to pay the tax and
harmony with the provisions of the law, and should be that the Central Bank merely collected the said tax prematurely. There is
for the sole purpose of carrying into effect its general likewise no controversy over the rate of tax in force when payment became
provisions. By such regulations, of course, the law due. Thus, the tax refund granted by the trial court was not proper because
itself cannot be extended. (U.S. v. Tupasi the tax paid was in fact, and in law due to the government at the correct time.
Molina, supra). An administrative agency cannot
amend an act of Congress (Santos v. Estenzo, 109 We decline to grant to the respondent an amount equivalent to the interest
Phil. 419, 422; Teoxon v. Members of the Board of on the prematurely collected tax because of the well entrenched rule that in
Administrators, L-25619, June 30, 1970, 33 SCRA the absence of a statutory provision clearly or expressly directing or
585; Manuel v. General Auditing Office, L-28952, authorizing payment of interest on the amount to be refunded to the
December 29, 1971,42 SCRA 660; Deluao v. Casteel, taxpayer, the Government cannot be required to pay interest. Likewise, it is
L-21906, August 29, 1969, 29 SCRA 350). the rule that interest may be awarded only when the collection of tax sought
to be refunded was attended with arbitrariness (Atlas Fertilizer Corp. v.
The rule-making power must be confined to details for Commission on Internal Revenue, 100 SCRA 556). There is no indication of
regulating the mode or proceeding to carry into effect arbitrariness in the questioned act of the appellant.
the law as it has been enacted. The power cannot be
extended to amending or expanding the statutory WHEREFORE, in view of the foregoing, the assailed decision is hereby
requirements or to embrace matters not covered by AFFIRMED but MODIFIED to the effect that the tax refund granted by the
the statute. Rules that subvert the statute cannot be trial court is ordered retained by or reverted to, as the case may be, the
sanctioned. (University of Santo Tomas v. Board of Central Bank.
Tax Appeals, 93 Phil. 376, 382, citing 12 C.J. 845-46.
As to invalid regulations, see Collector of Internal SO ORDERED.
Revenue v. Villamor, 69 Phil. 319; Wise & Co. v. Meer,
78 Phil. 665, 676; Del Mar v. Phil. Veterans
Administration, L-27299, June 27, 1973, 51 SCRA G.R. No. L-52415 October 23, 1984
340, 349).
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION
(IBAAEU), petitioner,
2
vs. (b) The term "holiday" as used in
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and this chapter, shall include: New
INSULAR BANK OF ASIA AND AMERICA, respondents. Year's Day, Maundy Thursday,
Good Friday, the ninth of April
Sisenando R. Villaluz, Jr. for petitioner. the first of May, the twelfth of
June, the fourth of July, the
thirtieth of November, the
Abdulmaid Kiram Muin colloborating counsel for petitioner. twenty-fifth and the thirtieth of
December and the day
The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law designated by law for holding a
Office and Sycip, Salazar, Feliciano & Hernandez Law Office for general election.
respondents.
xxx xxx xxx

This conclusion is deduced from the fact that the daily

MAKASIAR, J.:ñé+.£ªwph!1 rate of pay of the bank employees was computed in
the past with the unworked regular holidays as
This is a petition for certiorari to set aside the order dated November 10, excluded for purposes of determining the deductible
1979, of respondent Deputy Minister of Labor, Amado G. Inciong, in NLRC amount for absences incurred Thus, if the employer
case No. RB-IV-1561-76 entitled "Insular Bank of Asia and America uses the factor 303 days as a divisor in determining
Employees' Union (complainant-appellee), vs. Insular Bank of Asia and the daily rate of monthly paid employee, this gives rise
America" (respondent-appellant), the dispositive portion of which reads as to a presumption that the monthly rate does not
follows: têñ.£îhqw⣠include payments for unworked regular holidays. The
use of the factor 303 indicates the number of ordinary
working days in a year (which normally has 365
xxx xxx xxx calendar days), excluding the 52 Sundays and the 10
regular holidays. The use of 251 as a factor (365
ALL THE FOREGOING CONSIDERED, let the calendar days less 52 Saturdays, 52 Sundays, and 10
appealed Resolution en banc of the National Labor regular holidays) gives rise likewise to the same
Relations Commission dated 20 June 1978 be, as it is presumption that the unworked Saturdays, Sundays
hereby, set aside and a new judgment. promulgated and regular holidays are unpaid. This being the case, it
dismissing the instant case for lack of merit (p. 109 is not amiss to state with certainty that the instant
rec.). claim for wages on regular unworked holidays is found
to be tenable and meritorious.
The antecedent facts culled from the records are as follows:
WHEREFORE, judgment is hereby rendered:
On June 20, 1975, petitioner filed a complaint against the respondent bank
for the payment of holiday pay before the then Department of Labor, National (a) xxx xxxx xxx
Labor Relations Commission, Regional Office No. IV in Manila. Conciliation
having failed, and upon the request of both parties, the case was certified for (b) Ordering respondent to pay wages to all its
arbitration on July 7, 1975 (p. 18, NLRC rec. employees for all regular h(olidays since November 1,
1974 (pp. 97-99, rec., underscoring supplied).
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in
the above-entitled case, granting petitioner's complaint for payment of Respondent bank did not appeal from the said decision. Instead, it complied
holiday pay. Pertinent portions of the decision read: têñ.£îhqw⣠with the order of Arbiter Ricarte T. Soriano by paying their holiday pay up to
and including January, 1976.
xxx xxx xxx
On December 16, 1975, Presidential Decree No. 850 was promulgated
The records disclosed that employees of respondent amending, among others, the provisions of the Labor Code on the right to
bank were not paid their wages on unworked regular holiday pay to read as follows: têñ.£îhqwâ£
holidays as mandated by the Code, particularly Article
208, to wit: têñ.£îhqw⣠Art. 94. Right to holiday pay. — (a) Every worker shall
be paid his regular daily wages during regular
Art. 208. Right to holiday pay. holidays, except in retail and service establishments
regularly employing less than ten (10) workers;
(a) Every worker shall be paid
his regular daily wage during (b) The employer may require an employee to work on
regular holidays, except in retail any holiday but such employee shall be paid a
and service establishments compensation equivalent to twice his regular rate and
regularly employing less than 10
workers. (c) As used in this Article, "holiday" includes New
Year's Day, Maundy Thursday, Good Friday, the ninth
of April, the first of May, the twelfth of June, the fourth

3
 of July, the thirtieth of November, the twenty-fifth and December, and that no deductions are made from the monthly salaries of its
the thirtieth of December, and the day designated by employees on account of holidays in months where they occur (pp. 64-65,
law for holding a general election. NLRC rec.).

Accordingly, on February 16, 1976, by authority of Article 5 of the same On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a
Code, the Department of Labor (now Ministry of Labor) promulgated the writ of execution, issued an order enjoining the respondent bank to continue
rules and regulations for the implementation of holidays with pay. The paying its employees their regular holiday pay on the following grounds: (a)
controversial section thereof reads: têñ.£îhqw⣠that the judgment is already final and the findings which is found in the body
of the decision as well as the dispositive portion thereof is res judicata or is
Sec. 2. Status of employees paid by the month. the law of the case between the parties; and (b) that since the decision had
— Employees who are uniformly paid by the month, been partially implemented by the respondent bank, appeal from the said
irrespective of the number of working days therein, decision is no longer available (pp. 100-103, rec.).
with a salary of not less than the statutory or
established minimum wage shall be presumed to be On November 17, 1976, respondent bank appealed from the above-cited
paid for all days in the month whether worked or not. order of Labor Arbiter Soriano to the National Labor Relations Commission,
reiterating therein its contentions averred in its opposition to the motion for
For this purpose, the monthly minimum wage shall not writ of execution. Respondent bank further alleged for the first time that the
be less than the statutory minimum wage multiplied by questioned order is not supported by evidence insofar as it finds that
365 days divided by twelve" (italics supplied). respondent bank discontinued payment of holiday pay beginning January,
1976 (p. 84, NLRC rec.).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary
of Labor (now Minister) interpreting the above-quoted rule, pertinent portions On June 20, 1978, the National Labor Relations Commission promulgated its
of which read: têñ.£îhqw⣠resolution en banc dismissing respondent bank's appeal, the dispositive
portion of which reads as follows: têñ.£îhqwâ£
xxx xxx xxx
In view of the foregoing, we hereby resolve to dismiss,
as we hereby dismiss, respondent's appeal; to set
The ten (10) paid legal holidays law, to start with, is aside Labor Arbiter Ricarte T. Soriano's order of 18
intended to benefit principally daily employees. In the October 1976 and, as prayed for by complainant, to
case of monthly, only those whose monthly salary did order the issuance of the proper writ of execution (p.
not yet include payment for the ten (10) paid legal 244, NLRC rec.).
holidays are entitled to the benefit.
Copies of the above resolution were served on the petitioner only on
Under the rules implementing P.D. 850, this policy has February 9, 1979 or almost eight. (8) months after it was promulgated, while
been fully clarified to eliminate controversies on the copies were served on the respondent bank on February 13, 1979.
entitlement of monthly paid employees, The new
determining rule is this: If the monthly paid employee is
receiving not less than P240, the maximum monthly On February 21, 1979, respondent bank filed with the Office of the Minister
minimum wage, and his monthly pay is uniform from of Labor a motion for reconsideration/appeal with urgent prayer to stay
January to December, he is presumed to be already execution, alleging therein the following: (a) that there is prima
paid the ten (10) paid legal holidays. However, if facie evidence of grave abuse of discretion, amounting to lack of jurisdiction
deductions are made from his monthly salary on on the part of the National Labor Relations Commission, in dismissing the
account of holidays in months where they occur, then respondent's appeal on pure technicalities without passing upon the merits of
he is still entitled to the ten (10) paid legal holidays. ..." the appeal and (b) that the resolution appealed from is contrary to the law
(emphasis supplied). and jurisprudence (pp. 260-274, NLRC rec.).

Respondent bank, by reason of the ruling laid down by the aforecited rule On March 19, 1979, petitioner filed its opposition to the respondent bank's
implementing Article 94 of the Labor Code and by Policy Instruction No. 9, appeal and alleged the following grounds: (a) that the office of the Minister of
stopped the payment of holiday pay to an its employees. Labor has no jurisdiction to entertain the instant appeal pursuant to the
provisions of P. D. 1391; (b) that the labor arbiter's decision being final,
executory and unappealable, execution is a matter of right for the petitioner;
On August 30, 1976, petitioner filed a motion for a writ of execution to and (c) that the decision of the labor arbiter dated August 25, 1975 is
enforce the arbiter's decision of August 25, 1975, whereby the respondent supported by the law and the evidence in the case (p. 364, NLRC rec.).
bank was ordered to pay its employees their daily wage for the unworked
regular holidays.
On July 30, 1979, petitioner filed a second motion for execution pending
appeal, praying that a writ of execution be issued by the National Labor
On September 10, 1975, respondent bank filed an opposition to the motion Relations Commission pending appeal of the case with the Office of the
for a writ of execution alleging, among others, that: (a) its refusal to pay the Minister of Labor. Respondent bank filed its opposition thereto on August 8,
corresponding unworked holiday pay in accordance with the award of Labor 1979.
Arbiter Ricarte T. Soriano dated August 25, 1975, is based on and justified
by Policy Instruction No. 9 which interpreted the rules implementing P. D.
850; and (b) that the said award is already repealed by P.D. 850 which took On August 13, 1979, the National Labor Relations Commission issued an
effect on December 16, 1975, and by said Policy Instruction No. 9 of the order which states: têñ.£îhqwâ£
Department of Labor, considering that its monthly paid employees are not
receiving less than P240.00 and their monthly pay is uniform from January to

4
 The Chief, Research and Information Division of this From the above-cited provisions, it is clear that monthly paid employees are
Commission is hereby directed to designate a Socio- not excluded from the benefits of holiday pay. However, the implementing
Economic Analyst to compute the holiday pay of the rules on holiday pay promulgated by the then Secretary of Labor excludes
employees of the Insular Bank of Asia and America monthly paid employees from the said benefits by inserting, under Rule IV,
from April 1976 to the present, in accordance with the Book Ill of the implementing rules, Section 2, which provides that:
Decision of the Labor Arbiter dated August 25, 1975" "employees who are uniformly paid by the month, irrespective of the number
(p. 80, rec.). of working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in the
On November 10, 1979, the Office of the Minister of Labor, through Deputy month whether worked or not. "
Minister Amado G. Inciong, issued an order, the dispositive portion of which
states: têñ.£îhqw⣠Public respondent maintains that "(T)he rules implementing P. D. 850 and
Policy Instruction No. 9 were issued to clarify the policy in the implementation
ALL THE FOREGOING CONSIDERED, let the of the ten (10) paid legal holidays. As interpreted, 'unworked' legal holidays
appealed Resolution en banc of the National Labor are deemed paid insofar as monthly paid employees are concerned if (a)
Relations Commission dated 20 June 1978 be, as it is they are receiving not less than the statutory minimum wage, (b) their
hereby, set aside and a new judgment promulgated monthly pay is uniform from January to December, and (c) no deduction is
dismissing the instant case for lack of merit (p. 436, made from their monthly salary on account of holidays in months where they
NLRC rec.). occur. As explained in Policy Instruction No, 9, 'The ten (10) paid legal
holidays law, to start with, is intended to benefit principally daily paid
employees. In case of monthly, only those whose monthly salary did not yet
Hence, this petition for certiorari charging public respondent Amado G. include payment for the ten (10) paid legal holidays are entitled to the benefit'
Inciong with abuse of discretion amounting to lack or excess of jurisdiction. " (pp. 340-341, rec.). This contention is untenable.

The issue in this case is: whether or not the decision of a Labor Arbiter It is elementary in the rules of statutory construction that when the language
awarding payment of regular holiday pay can still be set aside on appeal by of the law is clear and unequivocal the law must be taken to mean exactly
the Deputy Minister of Labor even though it has already become final and what it says. In the case at bar, the provisions of the Labor Code on the
had been partially executed, the finality of which was affirmed by the National entitlement to the benefits of holiday pay are clear and explicit - it provides
Labor Relations Commission sitting en banc, on the basis of an for both the coverage of and exclusion from the benefits. In Policy Instruction
Implementing Rule and Policy Instruction promulgated by the Ministry of No. 9, the then Secretary of Labor went as far as to categorically state that
Labor long after the said decision had become final and executory. the benefit is principally intended for daily paid employees, when the law
clearly states that every worker shall be paid their regular holiday pay. This is
WE find for the petitioner. a flagrant violation of the mandatory directive of Article 4 of the Labor Code,
which states that "All doubts in the implementation and interpretation of the
I provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." Moreover, it shall always be
presumed that the legislature intended to enact a valid and permanent
WE agree with the petitioner's contention that Section 2, Rule IV, Book III of statute which would have the most beneficial effect that its language permits
the implementing rules and Policy Instruction No. 9 issued by the then (Orlosky vs. Haskell, 155 A. 112.)
Secretary of Labor are null and void since in the guise of clarifying the Labor
Code's provisions on holiday pay, they in effect amended them by enlarging
the scope of their exclusion (p. 1 1, rec.). Obviously, the Secretary (Minister) of Labor had exceeded his statutory
authority granted by Article 5 of the Labor Code authorizing him to
promulgate the necessary implementing rules and regulations.
Article 94 of the Labor Code, as amended by P.D. 850,
provides: têñ.£îhqwâ£
Public respondent vehemently argues that the intent and spirit of the holiday
pay law, as expressed by the Secretary of Labor in the case of Chartered
Art. 94. Right to holiday pay. — (a) Every worker shall Bank Employees Association v. The Chartered Bank (NLRC Case No. RB-
be paid his regular daily wage during regular holidays, 1789-75, March 24, 1976), is to correct the disadvantages inherent in the
except in retail and service establishments regularly daily compensation system of employment — holiday pay is primarily
employing less than ten (10) workers. ... intended to benefit the daily paid workers whose employment and income
are circumscribed by the principle of "no work, no pay." This argument may
The coverage and scope of exclusion of the Labor Code's holiday pay sound meritorious; but, until the provisions of the Labor Code on holiday pay
provisions is spelled out under Article 82 thereof which reads: têñ.£îhqw⣠is amended by another law, monthly paid employees are definitely included
in the benefits of regular holiday pay. As earlier stated, the presumption is
always in favor of law, negatively put, the Labor Code is always strictly
Art. 82. Coverage. — The provision of this Title shall
construed against management.
apply to employees in all establishments and
undertakings, whether for profit or not, but not to
government employees, managerial employees, field While it is true that the contemporaneous construction placed upon a statute
personnel members of the family of the employer who by executive officers whose duty is to enforce it should be given great weight
are dependent on him for support domestic helpers, by the courts, still if such construction is so erroneous, as in the instant case,
persons in the personal service of another, and the same must be declared as null and void. It is the role of the Judiciary to
workers who are paid by results as determined by the refine and, when necessary, correct constitutional (and/or statutory)
Secretary of Labor in appropriate regulations. interpretation, in the context of the interactions of the three branches of the
government, almost always in situations where some agency of the State
has engaged in action that stems ultimately from some legitimate area of
... (emphasis supplied).

5
governmental power (The Supreme Court in Modern Role, C. B. Swisher "A rule is binding on the Courts
1958, p. 36). so long as the procedure fixed
for its promulgation is followed
Thus. in the case of Philippine Apparel Workers Union vs. National Labor and its scope is within the
Relations Commission (106 SCRA 444, July 31, 1981) where the Secretary statutory authority granted by the
of Labor enlarged the scope of exemption from the coverage of a legislature, even if the courts are
Presidential Decree granting increase in emergency allowance, this Court not in agreement with the policy
ruled that: têñ.£îhqw⣠stated therein or its innate
wisdom. ... On the other hand,
administrative interpretation of
... the Secretary of Labor has exceeded his authority the law is at best merely
when he included paragraph (k) in Section 1 of the advisory, for it is the courts that
Rules implementing P. D. 1 1 23. finally determine chat the law
means."
xxx xxx xxx
"It cannot be otherwise as the
Clearly, the inclusion of paragraph k contravenes the Constitution limits the authority
statutory authority granted to the Secretary of Labor, of the President, in whom all
and the same is therefore void, as ruled by this Court executive power resides, to take
in a long line of cases . . . .. têñ.£îhqw⣠care that the laws be faithfully
executed. No lesser
The recognition of the power of administrative executive office or
administrative officials to agency then can, contrary to the
promulgate rules in the express language of the
administration of the statute, Constitution assert for itself a
necessarily limited to what is more extensive prerogative.
provided for in the legislative Necessarily, it is bound to
enactment, may be found in the observe the constitutional
early case of United States vs. mandate. There must be strict
Barrios decided in 1908. Then compliance with the legislative
came in a 1914 decision, United enactment. Its terms must be
States vs. Tupasi Molina (29 followed the statute requires
Phil. 119) delineation of the adherence to, not departure from
scope of such competence. its provisions. No deviation is
Thus: "Of course the regulations allowable. In the terse language
adopted under legislative of the present Chief Justice, an
authority by a particular administrative agency "cannot
department must be in harmony amend an act of Congress."
with the provisions of the law, Respondents can be sustained,
and for the sole purpose of therefore, only if it could be
carrying into effect its general shown that the rules and
provisions. By such regulations, regulations promulgated by them
of course, the law itself cannot were in accordance with what
be extended. So long, however, the Veterans Bill of Rights
as the regulations relate solely to provides" (Phil. Apparel Workers
carrying into effect the provisions Union vs. National Labor
of the law, they are valid." In Relations
1936, in People vs. Santos, this Commission, supra, 463, 464,
Court expressed its disapproval citing Teozon vs. Members of
of an administrative order that the Board of Administrators,
would amount to an excess of PVA 33 SCRA 585; see also
the regulatory power vested in Santos vs. Hon. Estenzo, et al,
an administrative official We 109 Phil. 419; Hilado vs.
reaffirmed such a doctrine in a Collector of Internal Revenue,
1951 decision, where we again 100 Phil. 295; Sy Man vs.
made clear that where an Jacinto & Fabros, 93 Phil. 1093;
administrative order betrays Olsen & Co., Inc. vs. Aldanese
inconsistency or repugnancy to and Trinidad, 43 Phil. 259).
the provisions of the Act, 'the
mandate of the Act must prevail This ruling of the Court was recently reiterated in the case of American Wire
and must be followed. Justice & Cable Workers Union (TUPAS) vs. The National Labor Relations
Barrera, speaking for the Court Commission and American Wire & Cable Co., Inc., G.R. No. 53337,
in Victorias Milling inc. vs. Social promulgated on June 29, 1984.
Security Commission, citing
Parker as well as Davis did In view of the foregoing, Section 2, Rule IV, Book III of the Rules to
tersely sum up the matter thus: implement the Labor Code and Policy instruction No. 9 issued by the then
6
Secretary of Labor must be declared null and void. Accordingly, public Code) cannot be given retroactive effect as to modify final judgments. Not
respondent Deputy Minister of Labor Amado G. Inciong had no basis at all to even a law can validly annul final decisions (In re: Cunanan, et al., Ibid).
deny the members of petitioner union their regular holiday pay as directed by
the Labor Code. Furthermore, the facts of the case relied upon by the public respondent are
not analogous to that of the case at bar. The case of De Luna speaks of final
II and executory judgment, while iii the instant case, the final judgment is
partially executed. just as the court is ousted of its jurisdiction to annul or
It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated modify a judgment the moment it becomes final, the court also loses its
August 25, 1975, had already become final, and was, in fact, partially jurisdiction to annul or modify a writ of execution upon its service or
executed by the respondent bank. execution; for, otherwise, we will have a situation wherein a final and
executed judgment can still be annulled or modified by the court upon mere
motion of a panty This would certainly result in endless litigations thereby
However, public respondent maintains that on the authority of De Luna vs. rendering inutile the rule of law.
Kayanan, 61 SCRA 49, November 13, 1974, he can annul the final decision
of Labor Arbiter Soriano since the ensuing promulgation of the integrated
implementing rules of the Labor Code pursuant to P.D. 850 on February 16, Respondent bank counters with the argument that its partial compliance was
1976, and the issuance of Policy Instruction No. 9 on April 23, 1976 by the involuntary because it did so under pain of levy and execution of its assets
then Secretary of Labor are facts and circumstances that transpired (p. 138, rec.). WE find no merit in this argument. Respondent bank clearly
subsequent to the promulgation of the decision of the labor arbiter, which manifested its voluntariness in complying with the decision of the labor
renders the execution of the said decision impossible and unjust on the part arbiter by not appealing to the National Labor Relations Commission as
of herein respondent bank (pp. 342-343, rec.). provided for under the Labor Code under Article 223. A party who waives his
right to appeal is deemed to have accepted the judgment, adverse or not, as
correct, especially if such party readily acquiesced in the judgment by
This contention is untenable. starting to execute said judgment even before a writ of execution was issued,
as in this case. Under these circumstances, to permit a party to appeal from
To start with, unlike the instant case, the case of De Luna relied upon by the the said partially executed final judgment would make a mockery of the
public respondent is not a labor case wherein the express mandate of the doctrine of finality of judgments long enshrined in this jurisdiction.
Constitution on the protection to labor is applied. Thus Article 4 of the Labor
Code provides that, "All doubts in the implementation and interpretation of Section I of Rule 39 of the Revised Rules of Court provides that "... execution
the provisions of this Code, including its implementing rules and regulations, shall issue as a matter of right upon the expiration of the period to appeal ...
shall be resolved in favor of labor and Article 1702 of the Civil Code provides or if no appeal has been duly perfected." This rule applies to decisions or
that, " In case of doubt, all labor legislation and all labor contracts shall be orders of labor arbiters who are exercising quasi-judicial functions since "...
construed in favor of the safety and decent living for the laborer. the rule of execution of judgments under the rules should govern all kinds of
execution of judgment, unless it is otherwise provided in other laws" Sagucio
Consequently, contrary to public respondent's allegations, it is patently unjust vs. Bulos 5 SCRA 803) and Article 223 of the Labor Code provides that "...
to deprive the members of petitioner union of their vested right acquired by decisions, awards, or orders of the Labor Arbiter or compulsory arbitrators
virtue of a final judgment on the basis of a labor statute promulgated are final and executory unless appealed to the Commission by any or both of
following the acquisition of the "right". the parties within ten (10) days from receipt of such awards, orders, or
decisions. ..."
On the question of whether or not a law or statute can annul or modify a
judicial order issued prior to its promulgation, this Court, through Associate Thus, under the aforecited rule, the lapse of the appeal period deprives the
Justice Claro M. Recto, said: têñ.£îhqw⣠courts of jurisdiction to alter the final judgment and the judgment becomes
final ipso jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2
xxx xxx xxx PHILAJUR 436, 440, January 31, 1978; see also Soliven vs. WCC, 77 SCRA
621; Carrero vs. WCC and Regala vs. WCC, decided jointly, 77 SCRA 297;
Vitug vs. Republic, 75 SCRA 436; Ramos vs. Republic, 69 SCRA 576).
We are decidedly of the opinion that they did not. Said
order, being unappealable, became final on the date of
its issuance and the parties who acquired rights In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423,
thereunder cannot be deprived thereof by a October 31, 1961, where the lower court modified a final order, this Court
constitutional provision enacted or promulgated ruled thus: têñ.£îhqwâ£
subsequent thereto. Neither the Constitution nor the
statutes, except penal laws favorable to the accused, xxx xxx xxx
have retroactive effect in the sense of annulling or
modifying vested rights, or altering contractual The lower court was thus aware of the fact that it was
obligations" (China Ins. & Surety Co. vs. Judge of First thereby altering or modifying its order of January 8,
Instance of Manila, 63 Phil. 324, emphasis supplied). 1959. Regardless of the excellence of the motive for
acting as it did, we are constrained to hold however,
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court that the lower court had no authorities to make said
said: "... when a court renders a decision or promulgates a resolution or alteration or modification. ...
order on the basis of and in accordance with a certain law or rule then in
force, the subsequent amendment or even repeal of said law or rule may not xxx xxx xxx
affect the final decision, order, or resolution already promulgated, in the
sense of revoking or rendering it void and of no effect." Thus, the
amendatory rule (Rule IV, Book III of the Rules to Implement the Labor The equitable considerations that led the lower court to
take the action complained of cannot offset the dem

7
 ands of public policy and public interest — which are of a constitutional right divested the court of jurisdiction; and as a
also responsive to the tenets of equity — requiring that consequence its judgment is null and void and confers no rights" (Phil.
an issues passed upon in decisions or final orders that Blooming Mills Employees Organization vs. Phil. Blooming Mills Co., Inc., 51
have become executory, be deemed conclusively SCRA 211, June 5, 1973).
disposed of and definitely closed for, otherwise, there
would be no end to litigations, thus setting at naught Tested by and pitted against this broad concept of the constitutional
the main role of courts of justice, which is to assist in guarantee of due process, the action of public respondent Amado G. Inciong
the enforcement of the rule of law and the is a clear example of deprivation of property without due process of law and
maintenance of peace and order, by settling justiciable constituted grave abuse of discretion, amounting to lack or excess of
controversies with finality. jurisdiction in issuing the order dated November 10, 1979.

xxx xxx xxx WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF
PUBLIC RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY
1982, this Court said: têñ.£îhqw⣠REINSTATED.

xxx xxx xxx COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND
AMERICA
In Marasigan vs. Ronquillo (94 Phil. 237), it was
categorically stated that the rule is absolute that after a SO ORDERED.1äwphï1.ñët
judgment becomes final by the expiration of the period
provided by the rules within which it so becomes, no G.R. No. L-48645 January 7, 1987
further amendment or correction can be made by the
court except for clerical errors or mistakes. And such
final judgment is conclusive not only as to every matter "BROTHERHOOD" LABOR UNITY MOVEMENT OF THE PHILIPPINES,
which was offered and received to sustain or defeat ANTONIO CASBADILLO, PROSPERO TABLADA, ERNESTO BENGSON,
the claim or demand but as to any other admissible PATRICIO SERRANO, ANTONIO B. BOBIAS, VIRGILIO ECHAS,
matter which must have been offered for that purpose DOMINGO PARINAS, NORBERTO GALANG, JUANITO NAVARRO,
(L-7044, 96 Phil. 526). In the earlier case of Contreras NESTORIO MARCELLANA, TEOFILO B. CACATIAN, RUFO L. EGUIA,
and Ginco vs. Felix and China Banking Corp., Inc. (44 CARLOS SUMOYAN, LAMBERTO RONQUILLO, ANGELITO AMANCIO,
O.G. 4306), it was stated that the rule must be DANILO B. MATIAR, ET AL., petitioners,
adhered to regardless of any possible injustice in a vs.
particular case for (W)e have to subordinate the equity HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL
of a particular situation to the over-mastering need of AFFAIRS, OFFICE OF THE PRESIDENT, HON. AMADO G. INCIONG,
certainty and immutability of judicial pronouncements UNDERSECRETARY OF LABOR, SAN MIGUEL CORPORATION,
GENARO OLIVES, ENRIQUE CAMAHORT, FEDERICO OÑATE,
ERNESTO VILLANUEVA, ANTONIO BOCALING and GODOFREDO
xxx xxx xxx CUETO, respondents.

III Armando V. Ampil for petitioners.

The despotic manner by which public respondent Amado G. Inciong divested Siguion Reyna, Montecillo and Ongsiako Law Office for private respondents.
the members of the petitioner union of their rights acquired by virtue of a final
judgment is tantamount to a deprivation of property without due process of
law Public respondent completely ignored the rights of the petitioner union's
members in dismissing their complaint since he knew for a fact that the
judgment of the labor arbiter had long become final and was even partially GUTIERREZ, JR., J.:
executed by the respondent bank.
The elemental question in labor law of whether or not an employer-employee
A final judgment vests in the prevailing party a right recognized and relationship exists between petitioners-members of the "Brotherhood Labor
protected by law under the due process clause of the Constitution (China Ins. Unit Movement of the Philippines" (BLUM) and respondent San Miguel
& Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324). A final Corporation, is the main issue in this petition. The disputed decision of public
judgment is "a vested interest which it is right and equitable that the respondent Ronaldo Zamora, Presidential Assistant for legal Affairs, contains
government should recognize and protect, and of which the individual could a brief summary of the facts involved:
no. be deprived arbitrarily without injustice" (Rookledge v. Garwood, 65 N.W.
2d 785, 791).
1. The records disclose that on July 11, 1969, BLUM
filed a complaint with the now defunct Court of
lt is by this guiding principle that the due process clause is interpreted. Thus, Industrial Relations, charging San Miguel Corporation,
in the pithy language of then Justice, later Chief Justice, Concepcion "... acts and the following officers: Enrique Camahort, Federico
of Congress, as well as those of the Executive, can deny due process only Ofiate Feliciano Arceo, Melencio Eugenia Jr., Ernesto
under pain of nullity, and judicial proceedings suffering from the same flaw Villanueva, Antonio Bocaling and Godofredo Cueto of
are subject to the same sanction, any statutory provision to the contrary unfair labor practice as set forth in Section 4 (a), sub-
notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110 Phil. 118, sections (1) and (4) of Republic Act No. 875 and of
emphasis supplied), And "(I)t has been likewise established that a violation Legal dismissal. It was alleged that respondents

8
 ordered the individual complainants to disaffiliate from well as the business activity of the company. Work did not necessarily mean
the complainant union; and that management a full eight (8) hour day for the petitioners. However, work,at times, exceeded
dismissed the individual complainants when they the eight (8) hour day and necessitated work on Sundays and holidays. For
insisted on their union membership. this, they were neither paid overtime nor compensation for work on Sundays
and holidays.
On their part, respondents moved for the dismissal of
the complaint on the grounds that the complainants Petitioners were paid every ten (10) days on a piece rate basis, that is,
are not and have never been employees of respondent according to the number of cartons and wooden shells they were able to
company but employees of the independent load, unload, or pile. The group leader notes down the number or volume of
contractor; that respondent company has never had work that each individual worker has accomplished. This is then made the
control over the means and methods followed by the basis of a report or statement which is compared with the notes of the
independent contractor who enjoyed full authority to checker and warehousemen as to whether or not they tally. Final approval of
hire and control said employees; and that the report is by officer-in-charge Camahort. The pay check is given to the group
individual complainants are barred by estoppel from leaders for encashment, distribution, and payment to the petitioners in
asserting that they are employees of respondent accordance with payrolls prepared by said leaders. From the total earnings
company. of the group, the group leader gets a participation or share of ten (10%)
percent plus an additional amount from the earnings of each individual.
While pending with the Court of Industrial Relations
CIR pleadings and testimonial and documentary The petitioners worked exclusive at the SMC plant, never having been
evidences were duly presented, although the actual assigned to other companies or departments of SMC plant, even when the
hearing was delayed by several postponements. The volume of work was at its minimum. When any of the glass furnaces suffered
dispute was taken over by the National Labor a breakdown, making a shutdown necessary, the petitioners work was
Relations Commission (NLRC) with the decreed temporarily suspended. Thereafter, the petitioners would return to work at
abolition of the CIR and the hearing of the case the glass plant.
intransferably commenced on September 8, 1975.
Sometime in January, 1969, the petitioner workers — numbering one
On February 9, 1976, Labor Arbiter Nestor C. Lim hundred and forty (140) organized and affiliated themselves with the
found for complainants which was concurred in by the petitioner union and engaged in union activities. Believing themselves
NLRC in a decision dated June 28, 1976. The amount entitled to overtime and holiday pay, the petitioners pressed management,
of backwages awarded, however, was reduced by airing other grievances such as being paid below the minimum wage law,
NLRC to the equivalent of one (1) year salary. inhuman treatment, being forced to borrow at usurious rates of interest and
to buy raffle tickets, coerced by withholding their salaries, and salary
On appeal, the Secretary in a decision dated June 1, deductions made without their consent. However, their gripes and grievances
1977, set aside the NLRC ruling, stressing the were not heeded by the respondents.
absence of an employer-mployee relationship as borne
out by the records of the case. ... On February 6, 1969, the petitioner union filed a notice of strike with the
Bureau of Labor Relations in connection with the dismissal of some of its
The petitioners strongly argue that there exists an employer-employee members who were allegedly castigated for their union membership and
relationship between them and the respondent company and that they were warned that should they persist in continuing with their union activities they
dismissed for unionism, an act constituting unfair labor practice "for which would be dismissed from their jobs. Several conciliation conferences were
respondents must be made to answer." scheduled in order to thresh out their differences, On February 12, 1969,
union member Rogelio Dipad was dismissed from work. At the scheduled
conference on February 19, 1969, the complainant union through its officers
Unrebutted evidence and testimony on record establish that the petitioners headed by National President Artemio Portugal Sr., presented a letter to the
are workers who have been employed at the San Miguel Parola Glass respondent company containing proposals and/or labor demands together
Factory since 1961, averaging about seven (7) years of service at the time of with a request for recognition and collective bargaining.
their termination. They worked as "cargadores" or "pahinante" at the SMC
Plant loading, unloading, piling or palleting empty bottles and woosen shells
to and from company trucks and warehouses. At times, they accompanied San Miguel refused to bargain with the petitioner union alleging that the
the company trucks on their delivery routes. workers are not their employees.

The petitioners first reported for work to Superintendent-in-Charge On February 20, 1969, all the petitioners were dismissed from their jobs and,
Camahort. They were issued gate passes signed by Camahort and were thereafter, denied entrance to respondent company's glass factory despite
provided by the respondent company with the tools, equipment and their regularly reporting for work. A complaint for illegal dismissal and unfair
paraphernalia used in the loading, unloading, piling and hauling operation. labor practice was filed by the petitioners.

Job orders emanated from Camahort. The orders are then transmitted to an The case reaches us now with the same issues to be resolved as when it
assistant-officer-in-charge. In turn, the assistant informs the warehousemen had begun.
and checkers regarding the same. The latter, thereafter, relays said orders to
the capatazes or group leaders who then give orders to the workers as to The question of whether an employer-employee relationship exists in a
where, when and what to load, unload, pile, pallet or clean. certain situation continues to bedevil the courts. Some businessmen try to
avoid the bringing about of an employer-employee relationship in their
Work in the glass factory was neither regular nor continuous, depending enterprises because that judicial relation spawns obligations connected with
wholly on the volume of bottles manufactured to be loaded and unloaded, as workmen's compensation, social security, medicare, minimum wage,

9
termination pay, and unionism. (Mafinco Trading Corporation v. Ople, 70 engaged in the business of fishing. For this purpose,
SCRA 139). they have a fleet of fishing vessels. Under this
situation, respondents' activity of catching fish is a
In determining the existence of an employer-employee relationship, the continuous process and could hardly be considered as
elements that are generally considered are the following: (a) the selection seasonal in nature. So that the activities performed by
and engagement of the employee; (b) the payment of wages; (c) the power herein complainants, i.e. unloading the catch of tuna
of dismissal; and (d) the employer's power to control the employee with fish from respondents' vessels and then loading the
respect to the means and methods by which the work is to be accomplished. same to refrigerated vans, are necessary or desirable
It. is the called "control test" that is the most important element (Investment in the business of respondents. This circumstance
Planning Corp. of the Phils. v. The Social Security System, 21 SCRA 924; makes the employment of complainants a regular one,
Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, in the sense that it does not depend on any specific
131 SCRA 72). project or seasonable activity. (NLRC Decision, p. 94,
Rollo).lwphl@itç
Applying the above criteria, the evidence strongly indicates the existence of
an employer-employee relationship between petitioner workers and so as it with petitioners in the case at bar. In fact, despite past shutdowns of
respondent San Miguel Corporation. The respondent asserts that the the glass plant for repairs, the petitioners, thereafter, promptly returned to
petitioners are employees of the Guaranteed Labor Contractor, an their jobs, never having been replaced, or assigned elsewhere until the
independent labor contracting firm. present controversy arose. The term of the petitioners' employment appears
indefinite. The continuity and habituality of petitioners' work bolsters their
claim of employee status vis-a-vis respondent company,
The facts and evidence on record negate respondent SMC's claim.
Even under the assumption that a contract of employment had indeed been
The existence of an independent contractor relationship is generally executed between respondent SMC and the alleged labor contractor,
established by the following criteria: "whether or not the contractor is carrying respondent's case will, nevertheless, fail.
on an independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign the
performance of a specified piece of work; the control and supervision of the Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code
work to another; the employer's power with respect to the hiring, firing and provides:
payment of the contractor's workers; the control of the premises; the duty to
supply the premises tools, appliances, materials and labor; and the mode, Job contracting. — There is job contracting permissible
manner and terms of payment" (56 CJS Master and Servant, Sec. 3(2), 46; under the Code if the following conditions are met:
See also 27 AM. Jur. Independent Contractor, Sec. 5, 485 and Annex 75
ALR 7260727) (1) The contractor carries on an independent business
and undertakes the contract work on his own account
None of the above criteria exists in the case at bar. under his own responsibility according to his own
manner and method, free from the control and
Highly unusual and suspect is the absence of a written contract to specify the direction of his employer or principal in all matters
performance of a specified piece of work, the nature and extent of the work connected with the performance of the work except as
and the term and duration of the relationship. The records fail to show that a to the results thereof; and
large commercial outfit, such as the San Miguel Corporation, entered into
mere oral agreements of employment or labor contracting where the same (2) The contractor has substantial capital or investment
would involve considerable expenses and dealings with a large number of in the form of tools, equipment, machineries, work
workers over a long period of time. Despite respondent company's premises, and other materials which are necessary in
allegations not an iota of evidence was offered to prove the same or its the conduct of his business.
particulars. Such failure makes respondent SMC's stand subject to serious
doubts. We find that Guaranteed and Reliable Labor contractors have neither
substantial capital nor investment to qualify as an independent contractor
Uncontroverted is the fact that for an average of seven (7) years, each of the under the law. The premises, tools, equipment and paraphernalia used by
petitioners had worked continuously and exclusively for the respondent the petitioners in their jobs are admittedly all supplied by respondent
company's shipping and warehousing department. Considering the length of company. It is only the manpower or labor force which the alleged
time that the petitioners have worked with the respondent company, there is contractors supply, suggesting the existence of a "labor only" contracting
justification to conclude that they were engaged to perform activities scheme prohibited by law (Article 106, 109 of the Labor Code; Section 9(b),
necessary or desirable in the usual business or trade of the respondent, and Rule VIII, Book III, Implementing Rules and Regulations of the Labor Code).
the petitioners are, therefore regular employees (Phil. Fishing Boat Officers In fact, even the alleged contractor's office, which consists of a space at
and Engineers Union v. Court of Industrial Relations, 112 SCRA 159 and respondent company's warehouse, table, chair, typewriter and cabinet, are
RJL Martinez Fishing Corporation v. National Labor Relations Commission, provided for by respondent SMC. It is therefore clear that the alleged
127 SCRA 454). contractors have no capital outlay involved in the conduct of its business, in
the maintenance thereof or in the payment of its workers' salaries.
As we have found in RJL Martinez Fishing Corporation v. National Labor
Relations Commission (supra): The payment of the workers' wages is a critical factor in determining the
actuality of an employer-employee relationship whether between respondent
... [T]he employer-employee relationship between the company and petitioners or between the alleged independent contractor and
parties herein is not coterminous with each loading petitioners. It is important to emphasize that in a truly independent
and unloading job. As earlier shown, respondents are contractor-contractee relationship, the fees are paid directly to the manpower
agency in lump sum without indicating or implying that the basis of such lump
10
sum is the salary per worker multiplied by the number of workers assigned to representative of the alleged labor contractor, is the strongest indication of
the company. This is the rule in Social Security System v. Court of respondent company's right of control over the petitioners as direct
Appeals (39 SCRA 629, 635). employer. There is no evidence to show that the alleged labor contractor had
such right of control or much less had been there to supervise or deal with
The alleged independent contractors in the case at bar were paid a lump the petitioners.
sum representing only the salaries the workers were entitled to, arrived at by
adding the salaries of each worker which depend on the volume of work The petitioners were dismissed allegedly because of the shutdown of the
they. had accomplished individually. These are based on payrolls, reports or glass manufacturing plant. Respondent company would have us believe that
statements prepared by the workers' group leader, warehousemen and this was a case of retrenchment due to the closure or cessation of operations
checkers, where they note down the number of cartons, wooden shells and of the establishment or undertaking. But such is not the case here. The
bottles each worker was able to load, unload, pile or pallet and see whether respondent's shutdown was merely temporary, one of its furnaces needing
they tally. The amount paid by respondent company to the alleged repair. Operations continued after such repairs, but the petitioners had
independent contractor considers no business expenses or capital outlay of already been refused entry to the premises and dismissed from respondent's
the latter. Nor is the profit or gain of the alleged contractor in the conduct of service. New workers manned their positions. It is apparent that the closure
its business provided for as an amount over and above the workers' wages. of respondent's warehouse was merely a ploy to get rid of the petitioners,
Instead, the alleged contractor receives a percentage from the total earnings who were then agitating the respondent company for benefits, reforms and
of all the workers plus an additional amount corresponding to a percentage collective bargaining as a union. There is no showing that petitioners had
of the earnings of each individual worker, which, perhaps, accounts for the been remiss in their obligations and inefficient in their jobs to warrant their
petitioners' charge of unauthorized deductions from their salaries by the separation.
respondents.
As to the charge of unfair labor practice because of SMC's refusal to bargain
Anent the argument that the petitioners are not employees as they worked with the petitioners, it is clear that the respondent company had an existing
on piece basis, we merely have to cite our rulings in Dy Keh Beng v. collective bargaining agreement with the IBM union which is the recognized
International Labor and Marine Union of the Philippines (90 SCRA 161), as collective bargaining representative at the respondent's glass plant.
follows:
There being a recognized bargaining representative of all employees at the
"[C]ircumstances must be construed to determine company's glass plant, the petitioners cannot merely form a union and
indeed if payment by the piece is just a method of demand bargaining. The Labor Code provides the proper procedure for the
compensation and does not define the essence of the recognition of unions as sole bargaining representatives. This must be
relation. Units of time . . . and units of work are in followed.
establishments like respondent (sic) just yardsticks
whereby to determine rate of compensation, to be WHEREFORE, IN VIEW OF THE FOREGOING, the petition is GRANTED.
applied whenever agreed upon. We cannot construe The San Miguel Corporation is hereby ordered to REINSTATE petitioners,
payment by the piece where work is done in such an with three (3) years backwages. However, where reinstatement is no longer
establishment so as to put the worker completely at possible, the respondent SMC is ordered to pay the petitioners separation
liberty to turn him out and take in another at pleasure." pay equivalent to one (1) month pay for every year of service.

Article 106 of the Labor Code provides the legal effect of a labor only SO ORDERED.
contracting scheme, to wit:
G.R. No. 170087 August 31, 2006
... 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 ANGELINA FRANCISCO, Petitioner,
extent as if the latter were directly employed by him. vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE
Firmly establishing respondent SMC's role as employer is the control BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents.
exercised by it over the petitioners that is, control in the means and
methods/manner by which petitioners are to go about their work, as well as
in disciplinary measures imposed by it. DECISION

Because of the nature of the petitioners' work as cargadores or pahinantes, YNARES-SANTIAGO, J.:
supervision as to the means and manner of performing the same is
practically nil. For, how many ways are there to load and unload bottles and This petition for review on certiorari under Rule 45 of the Rules of Court
wooden shells? The mere concern of both respondent SMC and the alleged seeks to annul and set aside the Decision and Resolution of the Court of
contractor is that the job of having the bottles and wooden shells brought to Appeals dated October 29, 2004 1 and October 7, 2005, 2 respectively, in
and from the warehouse be done. More evident and pronounced is CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal
respondent company's right to control in the discipline of petitioners. filed by herein petitioner Angelina Francisco. The appellate court reversed
Documentary evidence presented by the petitioners establish respondent and set aside the Decision of the National Labor Relations Commission
SMC's right to impose disciplinary measures for violations or infractions of its (NLRC) dated April 15, 2003, 3 in NLRC NCR CA No. 032766-02 which
rules and regulations as well as its right to recommend transfers and affirmed with modification the decision of the Labor Arbiter dated July 31,
dismissals of the piece workers. The inter-office memoranda submitted in 2002, 4 in NLRC-NCR Case No. 30-10-0-489-01, finding that private
evidence prove the company's control over the petitioners. That respondent respondents were liable for constructive dismissal.
SMC has the power to recommend penalties or dismissal of the piece
workers, even as to Abner Bungay who is alleged by SMC to be a

11
In 1995, petitioner was hired by Kasei Corporation during its incorporation Petitioner’s designation as technical consultant depended solely upon the will
stage. She was designated as Accountant and Corporate Secretary and was of management. As such, her consultancy may be terminated any time
assigned to handle all the accounting needs of the company. She was also considering that her services were only temporary in nature and dependent
designated as Liaison Officer to the City of Makati to secure business on the needs of the corporation.
permits, construction permits and other licenses for the initial operation of the
company. 5 To prove that petitioner was not an employee of the corporation, private
respondents submitted a list of employees for the years 1999 and 2000 duly
Although she was designated as Corporate Secretary, she was not entrusted received by the BIR showing that petitioner was not among the employees
with the corporate documents; neither did she attend any board meeting nor reported to the BIR, as well as a list of payees subject to expanded
required to do so. She never prepared any legal document and never withholding tax which included petitioner. SSS records were also submitted
represented the company as its Corporate Secretary. However, on some showing that petitioner’s latest employer was Seiji Corporation. 13
occasions, she was prevailed upon to sign documentation for the company. 6
The Labor Arbiter found that petitioner was illegally dismissed, thus:
In 1996, petitioner was designated Acting Manager. The corporation also
hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, WHEREFORE, premises considered, judgment is hereby rendered as
petitioner was assigned to handle recruitment of all employees and perform follows:
management administration functions; represent the company in all dealings
with government agencies, especially with the Bureau of Internal Revenue
(BIR), Social Security System (SSS) and in the city government of Makati; 1. finding complainant an employee of respondent corporation;
and to administer all other matters pertaining to the operation of Kasei
Restaurant which is owned and operated by Kasei Corporation. 7 2. declaring complainant’s dismissal as illegal;

For five years, petitioner performed the duties of Acting Manager. As of 3. ordering respondents to reinstate complainant to her former position
December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing without loss of seniority rights and jointly and severally pay complainant her
allowance and a 10% share in the profit of Kasei Corporation. 8 money claims in accordance with the following computation:

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. a. Backwages 10/2001 – 07/2002 275,000.00
Petitioner alleged that she was required to sign a prepared resolution for her
replacement but she was assured that she would still be connected with (27,500 x 10 mos.)
Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a
meeting of all employees of Kasei Corporation and announced that nothing
had changed and that petitioner was still connected with Kasei Corporation b. Salary Differentials (01/2001 – 09/2001) 22,500.00
as Technical Assistant to Seiji Kamura and in charge of all BIR matters. 9
c. Housing Allowance (01/2001 – 07/2002) 57,000.00
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month
beginning January up to September 2001 for a total reduction of P22,500.00 d. Midyear Bonus 2001 27,500.00
as of September 2001. Petitioner was not paid her mid-year bonus allegedly
because the company was not earning well. On October 2001, petitioner did
e. 13th Month Pay 27,500.00
not receive her salary from the company. She made repeated follow-ups with
the company cashier but she was advised that the company was not earning
well. 10 f. 10% share in the profits of Kasei

On October 15, 2001, petitioner asked for her salary from Acedo and the rest Corp. from 1996-2001 361,175.00
of the officers but she was informed that she is no longer connected with the
company. 11 g. Moral and exemplary damages 100,000.00

Since she was no longer paid her salary, petitioner did not report for work h. 10% Attorney’s fees 87,076.50
and filed an action for constructive dismissal before the labor arbiter.
P957,742.50
Private respondents averred that petitioner is not an employee of Kasei
Corporation. They alleged that petitioner was hired in 1995 as one of its
If reinstatement is no longer feasible, respondents are ordered to pay
technical consultants on accounting matters and act concurrently as
complainant separation pay with additional backwages that would accrue up
Corporate Secretary. As technical consultant, petitioner performed her work
to actual payment of separation pay.
at her own discretion without control and supervision of Kasei Corporation.
Petitioner had no daily time record and she came to the office any time she
wanted. The company never interfered with her work except that from time to SO ORDERED. 14
time, the management would ask her opinion on matters relating to her
profession. Petitioner did not go through the usual procedure of selection of On April 15, 2003, the NLRC affirmed with modification the Decision of the
employees, but her services were engaged through a Board Resolution Labor Arbiter, the dispositive portion of which reads:
designating her as technical consultant. The money received by petitioner
from the corporation was her professional fee subject to the 10% expanded
withholding tax on professionals, and that she was not one of those reported PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby
to the BIR or SSS as one of the company’s employees. 12 MODIFIED as follows:

12
1) Respondents are directed to pay complainant separation pay computed at means and methods by which the work is to be accomplished; and (2) the
one month per year of service in addition to full backwages from October underlying economic realities of the activity or relationship.
2001 to July 31, 2002;
This two-tiered test would provide us with a framework of analysis, which
2) The awards representing moral and exemplary damages and 10% share would take into consideration the totality of circumstances surrounding the
in profit in the respective accounts of P100,000.00 and P361,175.00 are true nature of the relationship between the parties. This is especially
deleted; appropriate in this case where there is no written agreement or terms of
reference to base the relationship on; and due to the complexity of the
3) The award of 10% attorney’s fees shall be based on salary differential relationship based on the various positions and responsibilities given to the
award only; worker over the period of the latter’s employment.

4) The awards representing salary differentials, housing allowance, mid year The control test initially found application in the case of Viaña v. Al-Lagadan
bonus and 13th month pay are AFFIRMED. and Piga, 19 and lately in Leonardo v. Court of Appeals, 20 where we held that
there is an employer-employee relationship when the person for whom the
services are performed reserves the right to control not only the end
SO ORDERED. 15 achieved but also the manner and means used to achieve that end.

On appeal, the Court of Appeals reversed the NLRC decision, thus: In Sevilla v. Court of Appeals, 21 we observed the need to consider the
existing economic conditions prevailing between the parties, in addition to
WHEREFORE, the instant petition is hereby GRANTED. The decision of the the standard of right-of-control like the inclusion of the employee in the
National Labor Relations Commissions dated April 15, 2003 is hereby payrolls, to give a clearer picture in determining the existence of an
REVERSED and SET ASIDE and a new one is hereby rendered dismissing employer-employee relationship based on an analysis of the totality of
the complaint filed by private respondent against Kasei Corporation, et al. for economic circumstances of the worker.
constructive dismissal.
Thus, the determination of the relationship between employer and employee
SO ORDERED. 16 depends upon the circumstances of the whole economic activity, 22 such as:
(1) the extent to which the services performed are an integral part of the
The appellate court denied petitioner’s motion for reconsideration, hence, the employer’s business; (2) the extent of the worker’s investment in equipment
present recourse. and facilities; (3) the nature and degree of control exercised by the employer;
(4) the worker’s opportunity for profit and loss; (5) the amount of initiative,
skill, judgment or foresight required for the success of the claimed
The core issues to be resolved in this case are (1) whether there was an independent enterprise; (6) the permanency and duration of the relationship
employer-employee relationship between petitioner and private respondent between the worker and the employer; and (7) the degree of dependency of
Kasei Corporation; and if in the affirmative, (2) whether petitioner was the worker upon the employer for his continued employment in that line of
illegally dismissed. business. 23

Considering the conflicting findings by the Labor Arbiter and the National The proper standard of economic dependence is whether the worker is
Labor Relations Commission on one hand, and the Court of Appeals on the dependent on the alleged employer for his continued employment in that line
other, there is a need to reexamine the records to determine which of the of business. 24 In the United States, the touchstone of economic reality in
propositions espoused by the contending parties is supported by substantial analyzing possible employment relationships for purposes of the Federal
evidence. 17 Labor Standards Act is dependency. 25 By analogy, the benchmark of
economic reality in analyzing possible employment relationships for
We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there has purposes of the Labor Code ought to be the economic dependence of the
been no uniform test to determine the existence of an employer-employee worker on his employer.
relation. Generally, courts have relied on the so-called right of control test
where the person for whom the services are performed reserves a right to By applying the control test, there is no doubt that petitioner is an employee
control not only the end to be achieved but also the means to be used in of Kasei Corporation because she was under the direct control and
reaching such end. In addition to the standard of right-of-control, the existing supervision of Seiji Kamura, the corporation’s Technical Consultant. She
economic conditions prevailing between the parties, like the inclusion of the reported for work regularly and served in various capacities as Accountant,
employee in the payrolls, can help in determining the existence of an Liaison Officer, Technical Consultant, Acting Manager and Corporate
employer-employee relationship. Secretary, with substantially the same job functions, that is, rendering
accounting and tax services to the company and performing functions
However, in certain cases the control test is not sufficient to give a complete necessary and desirable for the proper operation of the corporation such as
picture of the relationship between the parties, owing to the complexity of securing business permits and other licenses over an indefinite period of
such a relationship where several positions have been held by the worker. engagement.
There are instances when, aside from the employer’s power to control the
employee with respect to the means and methods by which the work is to be Under the broader economic reality test, the petitioner can likewise be said to
accomplished, economic realities of the employment relations help provide a be an employee of respondent corporation because she had served the
comprehensive analysis of the true classification of the individual, whether as company for six years before her dismissal, receiving check vouchers
employee, independent contractor, corporate officer or some other capacity. indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from
The better approach would therefore be to adopt a two-tiered test involving: August 1, 1999 to December 18, 2000. 26 When petitioner was designated
(1) the putative employer’s power to control the employee with respect to the General Manager, respondent corporation made a report to the SSS signed
by Irene Ballesteros. Petitioner’s membership in the SSS as manifested by a

13
copy of the SSS specimen signature card which was signed by the President confidence, and under the principle of strained relations, petitioner is further
of Kasei Corporation and the inclusion of her name in the on-line inquiry entitled to separation pay, in lieu of reinstatement. 34
system of the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation. 27 A diminution of pay is prejudicial to the employee and amounts to
constructive dismissal. Constructive dismissal is an involuntary resignation
It is therefore apparent that petitioner is economically dependent on resulting in cessation of work resorted to when continued employment
respondent corporation for her continued employment in the latter’s line of becomes impossible, unreasonable or unlikely; when there is a demotion in
business. rank or a diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to an employee. 35 In Globe
In Domasig v. National Labor Relations Commission, 28 we held that in a Telecom, Inc. v. Florendo-Flores, 36 we ruled that where an employee
business establishment, an identification card is provided not only as a ceases to work due to a demotion of rank or a diminution of pay, an
security measure but mainly to identify the holder thereof as a bona fide unreasonable situation arises which creates an adverse working environment
employee of the firm that issues it. Together with the cash vouchers covering rendering it impossible for such employee to continue working for her
petitioner’s salaries for the months stated therein, these matters constitute employer. Hence, her severance from the company was not of her own
substantial evidence adequate to support a conclusion that petitioner was an making and therefore amounted to an illegal termination of employment.
employee of private respondent.
In affording full protection to labor, this Court must ensure equal work
We likewise ruled in Flores v. Nuestro 29 that a corporation who registers its opportunities regardless of sex, race or creed. Even as we, in every case,
workers with the SSS is proof that the latter were the former’s employees. attempt to carefully balance the fragile relationship between employees and
The coverage of Social Security Law is predicated on the existence of an employers, we are mindful of the fact that the policy of the law is to apply the
employer-employee relationship. Labor Code to a greater number of employees. This would enable
employees to avail of the benefits accorded to them by law, in line with the
constitutional mandate giving maximum aid and protection to labor,
Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has promoting their welfare and reaffirming it as a primary social economic force
clearly established that petitioner never acted as Corporate Secretary and in furtherance of social justice and national development.
that her designation as such was only for convenience. The actual nature of
petitioner’s job was as Kamura’s direct assistant with the duty of acting as
Liaison Officer in representing the company to secure construction permits, WHEREFORE, the petition is GRANTED. The Decision and Resolution of
license to operate and other requirements imposed by government agencies. the Court of Appeals dated October 29, 2004 and October 7, 2005,
Petitioner was never entrusted with corporate documents of the company, respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE.
nor required to attend the meeting of the corporation. She was never privy to The Decision of the National Labor Relations Commission dated April 15,
the preparation of any document for the corporation, although once in a while 2003 in NLRC NCR CA No. 032766-02, is REINSTATED. The case
she was required to sign prepared documentation for the company. 30 is REMANDED to the Labor Arbiter for the recomputation of petitioner
Angelina Francisco’s full backwages from the time she was illegally
terminated until the date of finality of this decision, and separation pay
The second affidavit of Kamura dated March 7, 2002 which repudiated the representing one-half month pay for every year of service, where a fraction of
December 5, 2001 affidavit has been allegedly withdrawn by Kamura himself at least six months shall be considered as one whole year.
from the records of the case. 31 Regardless of this fact, we are convinced
that the allegations in the first affidavit are sufficient to establish that
petitioner is an employee of Kasei Corporation. SO ORDERED.

Granting arguendo, that the second affidavit validly repudiated the first one, G.R. No. 164156 September 26, 2006
courts do not generally look with favor on any retraction or recanted
testimony, for it could have been secured by considerations other than to tell ABS-CBN BROADCASTING CORPORATION, petitioner,
the truth and would make solemn trials a mockery and place the investigation vs.
of the truth at the mercy of unscrupulous witnesses. 32 A recantation does MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and
not necessarily cancel an earlier declaration, but like any other testimony the JOSEPHINE LERASAN, respondents.
same is subject to the test of credibility and should be received with
caution. 33 DECISION

Based on the foregoing, there can be no other conclusion that petitioner is an CALLEJO, SR., J.:
employee of respondent Kasei Corporation. She was selected and engaged
by the company for compensation, and is economically dependent upon
respondent for her continued employment in that line of business. Her main Before us is a petition for review on certiorari of the Decision1 of the Court of
job function involved accounting and tax services rendered to respondent Appeals (CA) in CA-G.R. SP No. 76582 and the Resolution denying the
corporation on a regular basis over an indefinite period of engagement. motion for reconsideration thereof. The CA affirmed the Decision2 and
Respondent corporation hired and engaged petitioner for compensation, with Resolution3 of the National Labor Relations Commission (NLRC) in NLRC
the power to dismiss her for cause. More importantly, respondent corporation Case No. V-000762-2001 (RAB Case No. VII-10-1661-2001) which likewise
had the power to control petitioner with the means and methods by which the affirmed, with modification, the decision of the Labor Arbiter declaring the
work is to be accomplished. respondents Marlyn Nazareno, Merlou Gerzon, Jennifer Deiparine and
Josephine Lerasan as regular employees.
The corporation constructively dismissed petitioner when it reduced her
salary by P2,500 a month from January to September 2001. This amounts to The Antecedents
an illegal termination of employment, where the petitioner is entitled to full
backwages. Since the position of petitioner as accountant is one of trust and Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the
broadcasting business and owns a network of television and radio stations,
14
whose operations revolve around the broadcast, transmission, and relay of Monday – Saturday
telecommunication signals. It sells and deals in or otherwise utilizes the
airtime it generates from its radio and television operations. It has a franchise 4:30 A.M. – 8:00 A.M. – Marlene Nazareno.
as a broadcasting company, and was likewise issued a license and authority
to operate by the National Telecommunications Commission.
Miss Nazareno will then be assigned at the Research Dept.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan
as production assistants (PAs) on different dates. They were assigned at the From 8:00 A.M. to 12:00
news and public affairs, for various radio programs in the Cebu Broadcasting
Station, with a monthly compensation of P4,000. They were issued ABS- 4:30 P.M. – 12:00 MN – Jennifer Deiparine
CBN employees’ identification cards and were required to work for a
minimum of eight hours a day, including Sundays and holidays. They were Sunday
made to perform the following tasks and duties:

5:00 A.M. – 1:00 P.M. – Jennifer Deiparine

a) Prepare, arrange airing of commercial broadcasting based on the daily
operations log and digicart of respondent ABS-CBN;
1:00 P.M. – 10:00 P.M. – Joy Sanchez
b) Coordinate, arrange personalities for air interviews;
Respondent Gerzon was assigned as the full-time PA of the TV News
Department reporting directly to Leo Lastimosa.
c) Coordinate, prepare schedule of reporters for scheduled news reporting
and lead-in or incoming reports;
On October 12, 2000, respondents filed a Complaint for Recognition of
Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay,
d) Facilitate, prepare and arrange airtime schedule for public service Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay
announcement and complaints;
with Damages against the petitioner before the NLRC. The Labor Arbiter
directed the parties to submit their respective position papers. Upon
e) Assist, anchor program interview, etc; and respondents’ failure to file their position papers within the reglementary
period, Labor Arbiter Jose G. Gutierrez issued an Order dated April 30, 2001,
f) Record, log clerical reports, man based control radio.4 dismissing the complaint without prejudice for lack of interest to pursue the
case. Respondents received a copy of the Order on May 16, 2001.7 Instead
of re-filing their complaint with the NLRC within 10 days from May 16, 2001,
Their respective working hours were as follows: they filed, on June 11, 2001, an Earnest Motion to Refile Complaint with
Motion to Admit Position Paper and Motion to Submit Case For
Name Time No. of Hours Resolution.8 The Labor Arbiter granted this motion in an Order dated June
18, 2001, and forthwith admitted the position paper of the complainants.
1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7 ½ Respondents made the following allegations:

8:00 A.M.-12:00 noon 1. Complainants were engaged by respondent ABS-CBN as regular and full-
time employees for a continuous period of more than five (5) years with a
monthly salary rate of Four Thousand (P4,000.00) pesos beginning 1995 up
2. Jennifer Deiparine 4:30 A.M.-12:00M.N. (sic) 7 ½ until the filing of this complaint on November 20, 2000.

3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs. Machine copies of complainants’ ABS-CBN Employee’s Identification Card
and salary vouchers are hereto attached as follows, thus:
9:00 A.M.-6:00 P.M. (WF) 9 hrs.
I. Jennifer Deiparine:
4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.5
Exhibit "A" - ABS-CBN Employee’s Identification Card
The PAs were under the control and supervision of Assistant Station
Manager Dante J. Luzon, and News Manager Leo Lastimosa. Exhibit "B", - ABS-CBN Salary Voucher from Nov.

On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Exhibit "B-1" & 1999 to July 2000 at P4,000.00
Employees executed a Collective Bargaining Agreement (CBA) to be
effective during the period from December 11, 1996 to December 11, 1999.
However, since petitioner refused to recognize PAs as part of the bargaining Exhibit "B-2"
unit, respondents were not included to the CBA.6
Date employed: September 15, 1995
On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum
informing the PAs that effective August 1, 2000, they would be assigned to Length of service: 5 years & nine (9) months
non-drama programs, and that the DYAB studio operations would be
handled by the studio technician. Thus, their revised schedule and other II. Merlou Gerzon - ABS-CBN Employee’s Identification Card
assignments would be as follows:
Exhibit "C"
15
Exhibit "D" WHEREFORE, premises considered, this Honorable Arbiter is most
respectfully prayed, to issue an order compelling defendants to pay
Exhibit "D-1" & complainants the following:

Exhibit "D-2" - ABS-CBN Salary Voucher from March 1. One Hundred Thousand Pesos (P100,000.00) each

1999 to January 2001 at P4,000.00 and by way of moral damages;

Date employed: September 1, 1995 2. Minimum wage differential;

Length of service: 5 years & 10 months 3. Thirteenth month pay differential;

III. Marlene Nazareno 4. Unpaid service incentive leave benefits;

Exhibit "E" - ABS-CBN Employee’s Identification Card 5. Sick leave;

Exhibit "E" - ABS-CBN Salary Voucher from Nov. 6. Holiday pay;

Exhibit "E-1" & 1999 to December 2000 7. Premium pay;

Exhibit :E-2" 8. Overtime pay;

Date employed: April 17, 1996 9. Night shift differential.

Length of service: 5 years and one (1) month Complainants further pray of this Arbiter to declare them regular and
permanent employees of respondent ABS-CBN as a condition precedent for
their admission into the existing union and collective bargaining unit of
IV. Joy Sanchez Lerasan respondent company where they may as such acquire or otherwise perform
their obligations thereto or enjoy the benefits due therefrom.
Exhibit "F" - ABS-CBN Employee’s Identification Card
Complainants pray for such other reliefs as are just and equitable under the
Exhibit "F-1" - ABS-CBN Salary Voucher from Aug. premises.10

Exhibit "F-2" & 2000 to Jan. 2001 For its part, petitioner alleged in its position paper that the respondents were
PAs who basically assist in the conduct of a particular program ran by an
Exhibit "F-3" anchor or talent. Among their duties include monitoring and receiving
incoming calls from listeners and field reporters and calls of news sources;
generally, they perform leg work for the anchors during a program or a
Exhibit "F-4" - Certification dated July 6, 2000 particular production. They are considered in the industry as "program
employees" in that, as distinguished from regular or station employees, they
Acknowledging regular status of are basically engaged by the station for a particular or specific program
broadcasted by the radio station. Petitioner asserted that as PAs, the
complainants were issued talent information sheets which are updated from
Complainant Joy Sanchez Lerasan
time to time, and are thus made the basis to determine the programs to
which they shall later be called on to assist. The program assignments of
Signed by ABS-CBN Administrative complainants were as follows:

Officer May Kima Hife a. Complainant Nazareno assists in the programs:

Date employed: April 15, 1998 1) Nagbagang Balita (early morning edition)

Length of service: 3 yrs. and one (1) month9 2) Infor Hayupan

Respondents insisted that they belonged to a "work pool" from which 3) Arangkada (morning edition)
petitioner chose persons to be given specific assignments at its discretion,
and were thus under its direct supervision and control regardless of
4) Nagbagang Balita (mid-day edition)
nomenclature. They prayed that judgment be rendered in their favor, thus:

b. Complainant Deiparine assists in the programs:

1) Unzanith
16
2) Serbisyo de Arevalo the cancellation of one program and the commencement of another. As such
program employees, their compensation is computed on a program basis, a
3) Arangkada (evening edition) fixed amount for performance services irrespective of the time consumed. At
any rate, petitioner claimed, as the payroll will show, respondents were paid
all salaries and benefits due them under the law.12
4) Balitang K (local version)
Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve the
5) Abante Subu CBA and interpret the same, especially since respondents were not covered
by the bargaining unit.
6) Pangutana Lang
On July 30, 2001, the Labor Arbiter rendered judgment in favor of the
c. Complainant Gerzon assists in the program: respondents, and declared that they were regular employees of petitioner; as
such, they were awarded monetary benefits. The fallo of the decision reads:
1) On Mondays and Tuesdays:
WHEREFORE, the foregoing premises considered, judgment is hereby
(a) Unzanith rendered declaring the complainants regular employees of the respondent
ABS-CBN Broadcasting Corporation and directing the same respondent to
pay complainants as follows:
(b) Serbisyo de Arevalo
I - Merlou A. Gerzon P12,025.00
(c) Arangkada (evening edition)
II - Marlyn Nazareno 12,025.00
(d) Balitang K (local version)
III - Jennifer Deiparine 12,025.00
(e) Abante Sugbu
IV - Josephine Sanchez Lerazan 12,025.00
(f) Pangutana Lang
_________
2) On Thursdays
P48,100.00
Nagbagang Balita
plus ten (10%) percent Attorney’s Fees or a TOTAL aggregate amount of
3) On Saturdays PESOS: FIFTY TWO THOUSAND NINE HUNDRED TEN (P52,910.00).

(a) Nagbagang Balita Respondent Veneranda C. Sy is absolved from any liability.

(b) Info Hayupan SO ORDERED.13

(c) Arangkada (morning edition) However, the Labor Arbiter did not award money benefits as provided in the
CBA on his belief that he had no jurisdiction to interpret and apply the
(d) Nagbagang Balita (mid-day edition) agreement, as the same was within the jurisdiction of the Voluntary Arbitrator
as provided in Article 261 of the Labor Code.
4) On Sundays:
Respondents’ counsel received a copy of the decision on August 29, 2001.
Respondent Nazareno received her copy on August 27, 2001, while the
(a) Siesta Serenata
other respondents received theirs on September 8, 2001. Respondents
signed and filed their Appeal Memorandum on September 18, 2001.
(b) Sunday Chismisan
For its part, petitioner filed a motion for reconsideration, which the Labor
(c) Timbangan sa Hustisya Arbiter denied and considered as an appeal, conformably with Section 5,
Rule V, of the NLRC Rules of Procedure. Petitioner forthwith appealed the
(d) Sayri ang Lungsod decision to the NLRC, while respondents filed a partial appeal.

(e) Haranahan11 In its appeal, petitioner alleged the following:

Petitioner maintained that PAs, reporters, anchors and talents occasionally 1. That the Labor Arbiter erred in reviving or re-opening this case which had
"sideline" for other programs they produce, such as drama talents in other long been dismissed without prejudice for more than thirty (30) calendar
productions. As program employees, a PA’s engagement is coterminous with days;
the completion of the program, and may be extended/renewed provided that
the program is on-going; a PA may also be assigned to new programs upon

17
2. That the Labor Arbiter erred in depriving the respondent of its The NLRC declared that the Labor Arbiter acted conformably with the Labor
Constitutional right to due process of law; Code when it granted respondents’ motion to refile the complaint and admit
their position paper. Although respondents were not parties to the CBA
3. That the Labor Arbiter erred in denying respondent’s Motion for between petitioner and the ABS-CBN Rank-and-File Employees Union, the
Reconsideration on an interlocutory order on the ground that the same is a NLRC nevertheless granted and computed respondents’ monetary benefits
prohibited pleading; based on the 1999 CBA, which was effective until September 2002. The
NLRC also ruled that the Labor Arbiter had jurisdiction over the complaint of
respondents because they acted in their individual capacities and not as
4. That the Labor Arbiter erred when he ruled that the complainants are members of the union. Their claim for monetary benefits was within the
regular employees of the respondent; context of Article 217(6) of the Labor Code. The validity of respondents’
claim does not depend upon the interpretation of the CBA.
5. That the Labor Arbiter erred when he ruled that the complainants are
entitled to 13th month pay, service incentive leave pay and salary differential; The NLRC ruled that respondents were entitled to the benefits under the
and CBA because they were regular employees who contributed to the profits of
petitioner through their labor. The NLRC cited the ruling of this Court in New
6. That the Labor Arbiter erred when he ruled that complainants are entitled Pacific Timber & Supply Company v. National Labor Relations
to attorney’s fees.14 Commission.16

On November 14, 2002, the NLRC rendered judgment modifying the Petitioner filed a motion for reconsideration, which the NLRC denied.
decision of the Labor Arbiter. The fallo of the decision reads:
Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of
WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Court before the CA, raising both procedural and substantive issues, as
Gutierrez dated 30 July 2001 is SET ASIDE and VACATED and a new one is follows: (a) whether the NLRC acted without jurisdiction in admitting the
entered ORDERING respondent ABS-CBN Broadcasting Corporation, as appeal of respondents; (b) whether the NLRC committed palpable error in
follows: scrutinizing the reopening and revival of the complaint of respondents with
the Labor Arbiter upon due notice despite the lapse of 10 days from their
1. To pay complainants of their wage differentials and other benefits arising receipt of the July 30, 2001 Order of the Labor Arbiter; (c) whether
from the CBA as of 30 September 2002 in the aggregate amount of Two respondents were regular employees; (d) whether the NLRC acted without
Million Five Hundred, Sixty-One Thousand Nine Hundred Forty-Eight Pesos jurisdiction in entertaining and resolving the claim of the respondents under
and 22/100 (P2,561,948.22), broken down as follows: the CBA instead of referring the same to the Voluntary Arbitrators as
provided in the CBA; and (e) whether the NLRC acted with grave abuse of
discretion when it awarded monetary benefits to respondents under the CBA
a. Deiparine, Jennifer - P 716,113.49 although they are not members of the appropriate bargaining unit.

b. Gerzon, Merlou - 716,113.49 On February 10, 2004, the CA rendered judgment dismissing the petition. It
held that the perfection of an appeal shall be upon the expiration of the last
c. Nazareno, Marlyn - 716,113.49 day to appeal by all parties, should there be several parties to a case. Since
respondents received their copies of the decision on September 8, 2001
(except respondent Nazareno who received her copy of the decision on
d. Lerazan, Josephine Sanchez - 413,607.75
August 27, 2001), they had until September 18, 2001 within which to file their
Appeal Memorandum. Moreover, the CA declared that respondents’ failure to
Total - P 2,561,948.22 submit their position paper on time is not a ground to strike out the paper
from the records, much less dismiss a complaint.
2. To deliver to the complainants Two Hundred Thirty-Three (233) sacks of
rice as of 30 September 2002 representing their rice subsidy in the CBA, Anent the substantive issues, the appellate court stated that respondents are
broken down as follows: not mere project employees, but regular employees who perform tasks
necessary and desirable in the usual trade and business of petitioner and not
a. Deiparine, Jennifer - 60 Sacks just its project employees. Moreover, the CA added, the award of benefits
accorded to rank-and-file employees under the 1996-1999 CBA is a
necessary consequence of the NLRC ruling that respondents, as PAs, are
b. Gerzon, Merlou - 60 Sacks
regular employees.

c. Nazareno, Marlyn - 60 Sacks

Finding no merit in petitioner’s motion for reconsideration, the CA denied the
same in a Resolution17 dated June 16, 2004.
d. Lerazan, Josephine Sanchez - 53 Sacks
Petitioner thus filed the instant petition for review on certiorari and raises the
Total 233 Sacks; and following assignments of error:

3. To grant to the complainants all the benefits of the CBA after 30 1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT
September 2002. JURISDICTION AND GRAVELY ERRED IN UPHOLDING THE NATIONAL
LABOR RELATIONS COMMISSION NOTWITHSTANDING THE PATENT
SO ORDERED.15 NULLITY OF THE LATTER’S DECISION AND RESOLUTION.

18
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN We find no merit in petitioner’s contention that the Labor Arbiter abused his
AFFIRMING THE RULING OF THE NLRC FINDING RESPONDENTS discretion when he admitted respondents’ position paper which had been
REGULAR EMPLOYEES. belatedly filed. It bears stressing that the Labor Arbiter is mandated by law to
use every reasonable means to ascertain the facts in each case speedily and
3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN objectively, without technicalities of law or procedure, all in the interest of due
AFFIRMING THE RULING OF THE NLRC AWARDING CBA BENEFITS TO process.25 Indeed, as stressed by the appellate court, respondents’ failure to
RESPONDENTS.18 submit a position paper on time is not a ground for striking out the paper from
the records, much less for dismissing a complaint.26 Likewise, there is simply
no truth to petitioner’s assertion that it was denied due process when the
Considering that the assignments of error are interrelated, the Court shall Labor Arbiter admitted respondents’ position paper without requiring it to file
resolve them simultaneously. a comment before admitting said position paper. The essence of due
process in administrative proceedings is simply an opportunity to explain
Petitioner asserts that the appellate court committed palpable and serious one’s side or an opportunity to seek reconsideration of the action or ruling
error of law when it affirmed the rulings of the NLRC, and entertained complained of. Obviously, there is nothing in the records that would suggest
respondents’ appeal from the decision of the Labor Arbiter despite the that petitioner had absolute lack of opportunity to be heard.27 Petitioner had
admitted lapse of the reglementary period within which to perfect the same. the right to file a motion for reconsideration of the Labor Arbiter’s admission
Petitioner likewise maintains that the 10-day period to appeal must be of respondents’ position paper, and even file a Reply thereto. In fact,
reckoned from receipt of a party’s counsel, not from the time the party learns petitioner filed its position paper on April 2, 2001. It must be stressed that
of the decision, that is, notice to counsel is notice to party and not the other Article 280 of the Labor Code was encoded in our statute books to hinder the
way around. Finally, petitioner argues that the reopening of a complaint circumvention by unscrupulous employers of the employees’ right to security
which the Labor Arbiter has dismissed without prejudice is a clear violation of of tenure by indiscriminately and absolutely ruling out all written and oral
Section 1, Rule V of the NLRC Rules; such order of dismissal had already agreements inharmonious with the concept of regular employment defined
attained finality and can no longer be set aside. therein.28

Respondents, on the other hand, allege that their late appeal is a non-issue We quote with approval the following pronouncement of the NLRC:
because it was petitioner’s own timely appeal that empowered the NLRC to
reopen the case. They assert that although the appeal was filed 10 days late, The complainants, on the other hand, contend that respondents assailed the
it may still be given due course in the interest of substantial justice as an Labor Arbiter’s order dated 18 June 2001 as violative of the NLRC Rules of
exception to the general rule that the negligence of a counsel binds the Procedure and as such is violative of their right to procedural due process.
client. On the issue of the late filing of their position paper, they maintain that That while suggesting that an Order be instead issued by the Labor Arbiter
this is not a ground to strike it out from the records or dismiss the complaint. for complainants to refile this case, respondents impliedly submit that there is
not any substantial damage or prejudice upon the refiling, even so,
We find no merit in the petition. respondents’ suggestion acknowledges complainants right to prosecute this
case, albeit with the burden of repeating the same procedure, thus, entailing
We agree with petitioner’s contention that the perfection of an appeal within additional time, efforts, litigation cost and precious time for the Arbiter to
the statutory or reglementary period is not only mandatory, but also repeat the same process twice. Respondent’s suggestion, betrays its notion
of prolonging, rather than promoting the early resolution of the case.
jurisdictional; failure to do so renders the assailed decision final and
executory and deprives the appellate court or body of the legal authority to
alter the final judgment, much less entertain the appeal. However, this Court Although the Labor Arbiter in his Order dated 18 June 2001 which revived
has time and again ruled that in exceptional cases, a belated appeal may be and re-opened the dismissed case without prejudice beyond the ten (10) day
given due course if greater injustice may occur if an appeal is not given due reglementary period had inadvertently failed to follow Section 16, Rule V,
course than if the reglementary period to appeal were strictly followed.19 The Rules Procedure of the NLRC which states:
Court resorted to this extraordinary measure even at the expense of
sacrificing order and efficiency if only to serve the greater principles of "A party may file a motion to revive or re-open a case dismissed without
substantial justice and equity.20 prejudice within ten (10) calendar days from receipt of notice of the order
dismissing the same; otherwise, his only remedy shall be to re-file the case
In the case at bar, the NLRC did not commit a grave abuse of its discretion in in the arbitration branch of origin."
giving Article 22321 of the Labor Code a liberal application to prevent the
miscarriage of justice. Technicality should not be allowed to stand in the way the same is not a serious flaw that had prejudiced the respondents’ right to
of equitably and completely resolving the rights and obligations of the due process. The case can still be refiled because it has not yet prescribed.
parties.22 We have held in a catena of cases that technical rules are not Anyway, Article 221 of the Labor Code provides:
binding in labor cases and are not to be applied strictly if the result would be
detrimental to the workingman.23
"In any proceedings before the Commission or any of the Labor Arbiters, the
rules of evidence prevailing in courts of law or equity shall not be controlling
Admittedly, respondents failed to perfect their appeal from the decision of the and it is the spirit and intention of this Code that the Commission and its
Labor Arbiter within the reglementary period therefor. However, petitioner members and the Labor Arbiters shall use every and all reasonable means to
perfected its appeal within the period, and since petitioner had filed a timely ascertain the facts in each case speedily and objectively and without regard
appeal, the NLRC acquired jurisdiction over the case to give due course to to technicalities of law or procedure, all in the interest of due process."
its appeal and render the decision of November 14, 2002. Case law is that
the party who failed to appeal from the decision of the Labor Arbiter to the
NLRC can still participate in a separate appeal timely filed by the adverse The admission by the Labor Arbiter of the complainants’ Position Paper and
party as the situation is considered to be of greater benefit to both parties.24 Supplemental Manifestation which were belatedly filed just only shows that
he acted within his discretion as he is enjoined by law to use every
reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or procedure, all in the

19
interest of due process. Indeed, the failure to submit a position paper on time employee in relation to the usual trade or business of the employer. The test
is not a ground for striking out the paper from the records, much less for is whether the former is usually necessary or desirable in the usual business
dismissing a complaint in the case of the complainant. (University of or trade of the employer. The connection can be determined by considering
Immaculate Conception vs. UIC Teaching and Non-Teaching Personnel the nature of work performed and its relation to the scheme of the particular
Employees, G.R. No. 144702, July 31, 2001). business or trade in its entirety. Also, if the employee has been performing
the job for at least a year, even if the performance is not continuous and
"In admitting the respondents’ position paper albeit late, the Labor Arbiter merely intermittent, the law deems repeated and continuing need for its
acted within her discretion. In fact, she is enjoined by law to use every performance as sufficient evidence of the necessity if not indispensability of
reasonable means to ascertain the facts in each case speedily and that activity to the business. Hence, the employment is considered regular,
objectively, without technicalities of law or procedure, all in the interest of due but only with respect to such activity and while such activity exists.32
process". (Panlilio vs. NLRC, 281 SCRA 53).
As elaborated by this Court in Magsalin v. National Organization of Working
The respondents were given by the Labor Arbiter the opportunity to submit Men:33
position paper. In fact, the respondents had filed their position paper on 2
April 2001. What is material in the compliance of due process is the fact that Even while the language of law might have been more definitive, the clarity
the parties are given the opportunities to submit position papers. of its spirit and intent, i.e., to ensure a "regular" worker’s security of tenure,
however, can hardly be doubted. In determining whether an employment
"Due process requirements are satisfied where the parties are given the should be considered regular or non-regular, the applicable test is the
opportunities to submit position papers". (Laurence vs. NLRC, 205 SCRA reasonable connection between the particular activity performed by the
737). 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
Thus, the respondent was not deprived of its Constitutional right to due that can be assessed by looking into the nature of the services rendered and
process of law.29 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
We reject, as barren of factual basis, petitioner’s contention that respondents that is divorced from the normal activities required in carrying on the
are considered as its talents, hence, not regular employees of the particular business or trade. But, although the work to be performed is only
broadcasting company. Petitioner’s claim that the functions performed by the for a specific project or seasonal, where a person thus engaged has been
respondents are not at all necessary, desirable, or even vital to its trade or performing the job for at least one year, even if the performance is not
business is belied by the evidence on record. continuous or is merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient to indicate the
Case law is that this Court has always accorded respect and finality to the necessity or desirability of that activity to the business or trade of the
findings of fact of the CA, particularly if they coincide with those of the Labor employer. The employment of such person is also then deemed to be regular
with respect to such activity and while such activity exists.34
Arbiter and the National Labor Relations Commission, when supported by
substantial evidence.30 The question of whether respondents are regular or
project employees or independent contractors is essentially factual in nature; Not considered regular employees are "project employees," the completion
nonetheless, the Court is constrained to resolve it due to its tremendous or termination of which is more or less determinable at the time of
effects to the legions of production assistants working in the Philippine employment, such as those employed in connection with a particular
broadcasting industry. construction project, and "seasonal employees" whose employment by its
nature is only desirable for a limited period of time. Even then, any employee
We agree with respondents’ contention that where a person has rendered at who has rendered at least one year of service, whether continuous or
least one year of service, regardless of the nature of the activity performed, intermittent, is deemed regular with respect to the activity performed and
while such activity actually exists.
or where the work is continuous or intermittent, the employment is
considered regular as long as the activity exists, the reason being that a
customary appointment is not indispensable before one may be formally It is of no moment that petitioner hired respondents as "talents." The fact that
declared as having attained regular status. Article 280 of the Labor Code respondents received pre-agreed "talent fees" instead of salaries, that they
provides: did not observe the required office hours, and that they were permitted to join
other productions during their free time are not conclusive of the nature of
ART. 280. REGULAR AND CASUAL EMPLOYMENT.—The provisions of their employment. Respondents cannot be considered "talents" because they
written agreement to the contrary notwithstanding and regardless of the oral are not actors or actresses or radio specialists or mere clerks or utility
agreement of the parties, an employment shall be deemed to be regular employees. They are regular employees who perform several different duties
under the control and direction of ABS-CBN executives and supervisors.
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 Thus, there are two kinds of regular employees under the law: (1) those
undertaking the completion or termination of which has been determined at engaged to perform activities which are necessary or desirable in the usual
the time of the engagement of the employee or where the work or services to business or trade of the employer; and (2) those casual employees who have
be performed is seasonal in nature and the employment is for the duration of rendered at least one year of service, whether continuous or broken, with
the season. respect to the activities in which they are employed.35

In Universal Robina Corporation v. Catapang,31 the Court reiterated the test The law overrides such conditions which are prejudicial to the interest of the
in determining whether one is a regular employee: worker whose weak bargaining situation necessitates the succor of the State.
What determines whether a certain employment is regular or otherwise is not
The primary standard, therefore, of determining regular employment is the the will or word of the employer, to which the worker oftentimes acquiesces,
reasonable connection between the particular activity performed by the much less the procedure of hiring the employee or the manner of paying the

20
salary or the actual time spent at work. It is the character of the activities Independent contractors often present themselves to possess unique skills,
performed in relation to the particular trade or business taking into account expertise or talent to distinguish them from ordinary employees. The specific
all the circumstances, and in some cases the length of time of its selection and hiring of SONZA, because of his unique skills, talent and
performance and its continued existence.36 It is obvious that one year after celebrity status not possessed by ordinary employees, is a circumstance
they were employed by petitioner, respondents became regular employees indicative, but not conclusive, of an independent contractual relationship. If
by operation of law.37 SONZA did not possess such unique skills, talent and celebrity status, ABS-
CBN would not have entered into the Agreement with SONZA but would
Additionally, respondents cannot be considered as project or program have hired him through its personnel department just like any other
employees because no evidence was presented to show that the duration employee.
and scope of the project were determined or specified at the time of their
engagement. Under existing jurisprudence, project could refer to two In any event, the method of selecting and engaging SONZA does not
distinguishable types of activities. First, a project may refer to a particular job conclusively determine his status. We must consider all the circumstances of
or undertaking that is within the regular or usual business of the employer, the relationship, with the control test being the most important element.
but which is distinct and separate, and identifiable as such, from the other
undertakings of the company. Such job or undertaking begins and ends at B. Payment of Wages
determined or determinable times. Second, the term project may also refer to
a particular job or undertaking that is not within the regular business of the
employer. Such a job or undertaking must also be identifiably separate and ABS-CBN directly paid SONZA his monthly talent fees with no part of his
distinct from the ordinary or regular business operations of the employer. The fees going to MJMDC. SONZA asserts that this mode of fee payment shows
job or undertaking also begins and ends at determined or determinable that he was an employee of ABS-CBN. SONZA also points out that ABS-
times.38 CBN granted him benefits and privileges "which he would not have enjoyed if
he were truly the subject of a valid job contract."
The principal test is whether or not the project employees were assigned to
carry out a specific project or undertaking, the duration and scope of which All the talent fees and benefits paid to SONZA were the result of negotiations
were specified at the time the employees were engaged for that project.39 that led to the Agreement. If SONZA were ABS-CBN’s employee, there
would be no need for the parties to stipulate on benefits such as "SSS,
Medicare, x x x and 13th month pay which the law automatically incorporates
In this case, it is undisputed that respondents had continuously performed into every employer-employee contract. Whatever benefits SONZA enjoyed
the same activities for an average of five years. Their assigned tasks are arose from contract and not because of an employer-employee relationship.
necessary or desirable in the usual business or trade of the petitioner. The
persisting need for their services is sufficient evidence of the necessity and
indispensability of such services to petitioner’s business or trade.40 While SONZA’s talent fees, amounting to P317,000 monthly in the second and third
length of time may not be a sole controlling test for project employment, it year, are so huge and out of the ordinary that they indicate more an
can be a strong factor to determine whether the employee was hired for a independent contractual relationship rather than an employer-employee
specific undertaking or in fact tasked to perform functions which are vital, relationship. ABS-CBN agreed to pay SONZA such huge talent fees
necessary and indispensable to the usual trade or business of the precisely because of SONZA’S unique skills, talent and celebrity status not
employer.41 We note further that petitioner did not report the termination of possessed by ordinary employees. Obviously, SONZA acting alone
respondents’ employment in the particular "project" to the Department of possessed enough bargaining power to demand and receive such huge
Labor and Employment Regional Office having jurisdiction over the talent fees for his services. The power to bargain talent fees way above the
workplace within 30 days following the date of their separation from work, salary scales of ordinary employees is a circumstance indicative, but not
using the prescribed form on employees’ termination/ conclusive, of an independent contractual relationship.
dismissals/suspensions.42
The payment of talent fees directly to SONZA and not to MJMDC does not
As gleaned from the records of this case, petitioner itself is not certain how to negate the status of SONZA as an independent contractor. The parties
categorize respondents. In its earlier pleadings, petitioner classified expressly agreed on such mode of payment. Under the Agreement, MJMDC
respondents as program employees, and in later pleadings, independent is the AGENT of SONZA, to whom MJMDC would have to turn over any
contractors. Program employees, or project employees, are different from talent fee accruing under the Agreement.44
independent contractors because in the case of the latter, no employer-
employee relationship exists. In the case at bar, however, the employer-employee relationship between
petitioner and respondents has been proven.
Petitioner’s reliance on the ruling of this Court in Sonza v. ABS-CBN
Broadcasting Corporation43 is misplaced. In that case, the Court explained First. In the selection and engagement of respondents, no peculiar or unique
why Jose Sonza, a well-known television and radio personality, was an skill, talent or celebrity status was required from them because they were
independent contractor and not a regular employee: merely hired through petitioner’s personnel department just like any ordinary
employee.
A. Selection and Engagement of Employee
Second. The so-called "talent fees" of respondents correspond to wages
ABS-CBN engaged SONZA’S services to co-host its television and radio given as a result of an employer-employee relationship. Respondents did not
programs because of SONZA’S peculiar skills, talent and celebrity status. have the power to bargain for huge talent fees, a circumstance negating
SONZA contends that the "discretion used by respondent in specifically independent contractual relationship.
selecting and hiring complainant over other broadcasters of possibly similar
experience and qualification as complainant belies respondent’s claim of Third. Petitioner could always discharge respondents should it find their work
independent contractorship." unsatisfactory, and respondents are highly dependent on the petitioner for
continued work.

21
Fourth. The degree of control and supervision exercised by petitioner over DANILO B. TABAS, EDUARDO BONDOC, RAMON M. BRIONES,
respondents through its supervisors negates the allegation that respondents EDUARDO R. ERISPE, JOEL MADRIAGA, ARTHUR M. ESPINO, AMARO
are independent contractors. BONA, FERDINAND CRUZ, FEDERICO A. BELITA, ROBERTO P. ISLES,
ELMER ARMADA, EDUARDO UDOG, PETER TIANSING, MIGUELITA
The presumption is that when the work done is an integral part of the regular QUIAMBOA, NOMER MATAGA, VIOLY ESTEBAN and LYDIA
business of the employer and when the worker, relative to the employer, ORTEGA, petitioners,
does not furnish an independent business or professional service, such work vs.
is a regular employment of such employee and not an independent CALIFORNIA MANUFACTURING COMPANY, INC., LILY-VICTORIA A.
contractor.45 The Court will peruse beyond any such agreement to examine AZARCON, NATIONAL LABOR RELATIONS COMMISSION, and HON.
the facts that typify the parties’ actual relationship.46 EMERSON C. TUMANON, respondents.

It follows then that respondents are entitled to the benefits provided for in the V.E. Del Rosario & Associates for respondent CMC.
existing CBA between petitioner and its rank-and-file employees. As regular
employees, respondents are entitled to the benefits granted to all other The Solicitor General for public respondent.
regular employees of petitioner under the CBA.47 We quote with approval the
ruling of the appellate court, that the reason why production assistants were Banzuela, Flores, Miralles, Raneses, Sy, Taquio and Associates for
excluded from the CBA is precisely because they were erroneously classified petitioners.
and treated as project employees by petitioner:
Mildred A. Ramos for respondent Lily Victoria A. Azarcon.
x x x The award in favor of private respondents of the benefits accorded to
rank-and-file employees of ABS-CBN under the 1996-1999 CBA is a
necessary consequence of public respondent’s ruling that private
respondents as production assistants of petitioner are regular employees.
The monetary award is not considered as claims involving the interpretation SARMIENTO, J.:
or implementation of the collective bargaining agreement. The reason why
production assistants were excluded from the said agreement is precisely On July 21, 1986, July 23, 1986, and July 28, 1986, the petitioners petitioned
because they were classified and treated as project employees by petitioner.
the National Labor Relations Commission for reinstatement and payment of
various benefits, including minimum wage, overtime pay, holiday pay,
As earlier stated, it is not the will or word of the employer which determines thirteen-month pay, and emergency cost of living allowance pay, against the
the nature of employment of an employee but the nature of the activities respondent, the California Manufacturing Company. 1
performed by such employee in relation to the particular business or trade of
the employer. Considering that We have clearly found that private On October 7, 1986, after the cases had been consolidated, the California
respondents are regular employees of petitioner, their exclusion from the Manufacturing Company (California) filed a motion to dismiss as well as a
said CBA on the misplaced belief of the parties to the said agreement that position paper denying the existence of an employer-employee relation
they are project employees, is therefore not proper. Finding said private between the petitioners and the company and, consequently, any liability for
respondents as regular employees and not as mere project employees, they payment of money claims. 2 On motion of the petitioners, Livi Manpower
must be accorded the benefits due under the said Collective Bargaining Services, Inc. was impleaded as a party-respondent.
Agreement.

It appears that the petitioners were, prior to their stint with California,
A collective bargaining agreement is a contract entered into by the union employees of Livi Manpower Services, Inc. (Livi), which subsequently
representing the employees and the employer. However, even the non- assigned them to work as "promotional merchandisers" 3 for the former firm
member employees are entitled to the benefits of the contract. To accord its pursuant to a manpower supply agreement. Among other things, the
benefits only to members of the union without any valid reason would agreement provided that California "has no control or supervisions
constitute undue discrimination against non-members. A collective whatsoever over [Livi's] workers with respect to how they accomplish their
bargaining agreement is binding on all employees of the company. work or perform [Californias] obligation"; 4 the Livi "is an independent
Therefore, whatever benefits are given to the other employees of ABS-CBN contractor and nothing herein contained shall be construed as creating
must likewise be accorded to private respondents who were regular between [California] and [Livi] . . . the relationship of principal[-]agent or
employees of petitioner.48 employer[-]employee'; 5 that "it is hereby agreed that it is the sole
responsibility of [Livi] to comply with all existing as well as future laws, rules
Besides, only talent-artists were excluded from the CBA and not production and regulations pertinent to employment of labor" 6 and that "[California] is
assistants who are regular employees of the respondents. Moreover, under free and harmless from any liability arising from such laws or from any
Article 1702 of the New Civil Code: "In case of doubt, all labor legislation and accident that may befall workers and employees of [Livi] while in the
all labor contracts shall be construed in favor of the safety and decent living performance of their duties for [California].7
of the laborer."
It was further expressly stipulated that the assignment of workers to
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of California shall be on a "seasonal and contractual basis"; that "[c]ost of living
merit. The assailed Decision and Resolution of the Court of Appeals in CA- allowance and the 10 legal holidays will be charged directly to [California] at
G.R. SP No. 76582 are AFFIRMED. Costs against petitioner. cost "; and that "[p]ayroll for the preceeding [sic] week [shall] be delivered by
[Livi] at [California's] premises." 8
SO ORDERED.
The petitioners were then made to sign employment contracts with durations
G.R. No. L-80680 January 26, 1989 of six months, upon the expiration of which they signed new agreements with
the same period, and so on. Unlike regular California employees, who

22
received not less than P2,823.00 a month in addition to a host of fringe the contract, in the same manner and extent that he is
benefits and bonuses, they received P38.56 plus P15.00 in allowance daily. liable to employees directly employed by him.

The petitioners now allege that they had become regular California The Secretary of Labor may, by appropriate
employees and demand, as a consequence whereof, similar benefits. They regulations, restrict or prohibit the contracting out of
likewise claim that pending further proceedings below, they were notified by labor to protect the rights of workers established under
California that they would not be rehired. As a result, they filed an amended this Code. In so prohibiting or restricting, he may make
complaint charging California with illegal dismissal. appropriate distinctions between labor-only contracting
and job contracting as well as differentiations within
California admits having refused to accept the petitioners back to work but these types of contracting and determine who among
deny liability therefor for the reason that it is not, to begin with, the the parties involved shall be considered the employer
petitioners' employer and that the "retrenchment" had been forced by for purposes of this Code, to prevent any violation or
business losses as well as expiration of contracts.9 It appears that thereafter, circumvention of any provisions of this Code.
Livi re-absorbed them into its labor pool on a "wait-in or standby" status. 10
There is 'labor-only' contracting where the person
Amid these factual antecedents, the Court finds the single most important supplying workers to an employer does not have
issue to be: Whether the petitioners are California's or Livi's employees. substantial capital or investment in the form of tools,
equipment, machineries, work premises, among
others, and the workers recruited and placed by such
The labor arbiter's decision, 11 a decision affirmed on appeal, 12 ruled against person are performing activities which are directly
the existence of any employer-employee relation between the petitioners and related to the principal business of such employer. In
California ostensibly in the light of the manpower supply contract, supra, and such cases, the person or intermediary shall be
consequently, against the latter's liability as and for the money claims considered merely as an agent of the employer who
demanded. In the same breath, however, the labor arbiter absolved Livi from shall be responsible to the workers in the same
any obligation because the "retrenchment" in question was allegedly "beyond manner and extent as if the latter were directly
its control ." 13 He assessed against the firm, nevertheless, separation pay employed by him.
and attorney's fees.
that notwithstanding the absence of a direct employer-employee relationship
We reverse. between the employer in whose favor work had been contracted out by a
"labor-only" contractor, and the employees, the former has the responsibility,
The existence of an employer-employees relation is a question of law and together with the "labor-only" contractor, for any valid labor claims, 16 by
being such, it cannot be made the subject of agreement. Hence, the fact that operation of law. The reason, so we held, is that the "labor-only" contractor is
the manpower supply agreement between Livi and California had specifically considered "merely an agent of the employer,"17 and liability must be
designated the former as the petitioners' employer and had absolved the shouldered by either one or shared by both. 18
latter from any liability as an employer, will not erase either party's
obligations as an employer, if an employer-employee relation otherwise There is no doubt that in the case at bar, Livi performs "manpower
exists between the workers and either firm. At any rate, since the agreement services", 19 meaning to say, it contracts out labor in favor of clients. We hold
was between Livi and California, they alone are bound by it, and the that it is one notwithstanding its vehement claims to the contrary, and
petitioners cannot be made to suffer from its adverse consequences. notwithstanding the provision of the contract that it is "an independent
contractor." 20 The nature of one's business is not determined by self-serving
This Court has consistently ruled that the determination of whether or not appellations one attaches thereto but by the tests provided by statute and
there is an employer-employee relation depends upon four standards: (1) the prevailing case law. 21 The bare fact that Livi maintains a separate line of
manner of selection and engagement of the putative employee; (2) the mode business does not extinguish the equal fact that it has provided California
of payment of wages; (3) the presence or absence of a power of dismissal; with workers to pursue the latter's own business. In this connection, we do
and (4) the presence or absence of a power to control the putative not agree that the petitioners had been made to perform activities 'which are
employee's conduct. 14 Of the four, the right-of-control test has been held to not directly related to the general business of manufacturing," 22California's
be the decisive factor. 15 purported "principal operation activity. " 23 The petitioner's had been charged
with "merchandizing [sic] promotion or sale of the products of [California] in
On the other hand, we have likewise held, based on Article 106 of the Labor the different sales outlets in Metro Manila including task and occational [sic]
Code, hereinbelow reproduced: price tagging," 24 an activity that is doubtless, an integral part of the
manufacturing business. It is not, then, as if Livi had served as its
(California's) promotions or sales arm or agent, or otherwise, rendered a
ART. 106. Contractor or sub-contractor. — Whenever piece of work it (California) could not have itself done; Livi, as a placement
an employee enters into a contract with another agency, had simply supplied it with the manpower necessary to carry out its
person for the performance of the former's work, the (California's) merchandising activities, using its (California's) premises and
employees of the contractor and of the latter's sub- equipment. 25
contractor, if any, shall be paid in accordance with the
provisions of this Code.
Neither Livi nor California can therefore escape liability, that is, assuming
one exists.
In the event that the contractor or sub-contractor fails
to pay wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable The fact that the petitioners have allegedly admitted being Livi's "direct
with his contractor or sub-contractor to such employees" 26 in their complaints is nothing conclusive. For one thing, the
employees to the extent of the work performed under fact that the petitioners were (are), will not absolve California since liability
has been imposed by legal operation. For another, and as we indicated, the

23
relations of parties must be judged from case to case and the decree of law, contracts. But, as we held in Philippine Bank of Communications, supra,
and not by declarations of parties. when such arrangements are resorted to "in anticipation of, and for the very
purpose of making possible, the secondment" 30 of the employees from the
The fact that the petitioners have been hired on a "temporary or seasonal" true employer, the Court will be justified in expressing its concern. For then
basis merely is no argument either. As we held in Philippine Bank of that would compromise the rights of the workers, especially their right to
Communications v. NLRC, 27 a temporary or casual employee, under Article security of tenure.
218 of the Labor Code, becomes regular after service of one year, unless he
has been contracted for a specific project. And we cannot say that This brings us to the question: What is the liability of either Livi or California?
merchandising is a specific project for the obvious reason that it is an activity
related to the day-to-day operations of California. The records show that the petitioners bad been given an initial six-month
contract, renewed for another six months. Accordingly, under Article 281 of
It would have been different, we believe, had Livi been discretely a the Code, they had become regular employees-of-California-and had
promotions firm, and that California had hired it to perform the latter's acquired a secure tenure. Hence, they cannot be separated without due
merchandising activities. For then, Livi would have been truly the employer of process of law.
its employees, and California, its client. The client, in that case, would have
been a mere patron, and not an employer. The employees would not in that California resists reinstatement on the ground, first, and as we Id, that the
event be unlike waiters, who, although at the service of customers, are not petitioners are not its employees, and second, by reason of financial distress
the latter's employees, but of the restaurant. As we pointed out in brought about by "unfavorable political and economic
the Philippine Bank of Communications case: atmosphere" 31"coupled by the February Revolution." 32 As to the first
objection, we reiterate that the petitioners are its employees and who, by
xxx xxx xxx virtue of the required one-year length-of-service, have acquired a regular
status. As to the second, we are not convinced that California has shown
... The undertaking given by CESI in favor of the bank enough evidence, other than its bare say so, that it had in fact suffered
was not the performance of a specific job for instance, serious business reverses as a result alone of the prevailing political and
the carriage and delivery of documents and parcels to economic climate. We further find the attribution to the February Revolution
the addresses thereof. There appear to be many as a cause for its alleged losses to be gratuitous and without basis in fact.
companies today which perform this discrete service,
companies with their own personnel who pick up California should be warned that retrenchment of workers, unless clearly
documents and packages from the offices of a client or warranted, has serious consequences not only on the State's initiatives to
customer, and who deliver such materials utilizing their maintain a stable employment record for the country, but more so, on the
own delivery vans or motorcycles to the addressees. In workingman himself, amid an environment that is desperately scarce in jobs.
the present case, the undertaking of CESI was to And, the National Labor Relations Commission should have known better
provide its client the bank with a certain number of than to fall for such unwarranted excuses and nebulous claims.
persons able to carry out the work of messengers.
Such undertaking of CESI was complied with when the WHEREFORE, the petition is GRANTED. Judgment is hereby RENDERED:
requisite number of persons were assigned or (1): SETTING ASIDE the decision, dated March 20, 1987, and the resolution,
seconded to the petitioner bank. Orpiada utilized the dated August 19, 1987; (2) ORDERING the respondent, the California
premises and office equipment of the bank and not Manufacturing Company, to REINSTATE the petitioners with full status and
those of CESI. Messengerial work the delivery of rights of regular employees; and (3) ORDERING the respondent, the
documents to designated persons whether within or California Manufacturing Company, and the respondents, Livi Manpower
without the bank premises-is of course directly related Service, Inc. and/or Lily-Victoria Azarcon, to PAY, jointly and severally, unto
to the day-to-day operations of the bank. Section 9(2) the petitioners: (a) backwages and differential pays effective as and from the
quoted above does not require for its applicability that time they had acquired a regular status under the second paragraph, of
the petitioner must be engaged in the delivery of items Section 281, of the Labor Code, but not to exceed three (3) years, and (b) all
as a distinct and separate line of business. such other and further benefits as may be provided by existing collective
bargaining agreement(s) or other relations, or by law, beginning such time;
Succinctly put, CESI is not a parcel delivery company: and (4) ORDERING the private respondents to PAY unto the petitioners
as its name indicates, it is a recruitment and placement attorney's fees equivalent to ten (10%) percent of all money claims hereby
corporation placing bodies, as it were, in different client awarded, in addition to those money claims. The private respondents are
companies for longer or shorter periods of time, ... 28 likewise ORDERED to PAY the costs of this suit.

In the case at bar, Livi is admittedly an "independent contractor providing IT IS SO ORDERED.

temporary services of manpower to its client. " 29 When it thus provided
California with manpower, it supplied California with personnel, as if such G.R. No. 155731 September 3, 2007
personnel had been directly hired by California. Hence, Article 106 of the
Code applies.
LOLITA LOPEZ, petitioner,
vs.
The Court need not therefore consider whether it is Livi or California which BODEGA CITY (Video-Disco Kitchen of the Philippines) and/or ANDRES
exercises control over the petitioner vis-a-vis the four barometers referred to C. TORRES-YAP, respondents.
earlier, since by fiction of law, either or both shoulder responsibility.
DECISION
It is not that by dismissing the terms and conditions of the manpower supply
agreement, we have, hence, considered it illegal. Under the Labor Code,
genuine job contracts are permissible, provided they are genuine job AUSTRIA-MARTINEZ, J.:

24
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Hence, herein petition based on the following grounds:
Rules of Court assailing the July 18, 2002 Decision1 of the Court of Appeals
(CA) in CA-G.R. SP No. 66861, dismissing the petition for certiorari filed 1. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF
before it and affirming the Decision of the National Labor Relations APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
Commission (NLRC) in NLRC-NCR Case No. 00-03-01729-95; and its AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN
Resolution dated October 16, 2002,2 denying petitioner's Motion for RULING THAT THE NATIONAL LABOR RELATIONS
Reconsideration. The NLRC Decision set aside the Decision of the Labor COMMISSION DID NOT COMMIT GRAVE ABUSE OF
Arbiter finding that Lolita Lopez (petitioner) was illegally dismissed by DISCRETION IN REVERSING THE DECISION OF THE LABOR
Bodega City and/or Andres C. Torres-Yap (respondents). ARBITER FINDING PETITIONER TO HAVE BEEN ILLEGALLY
DISMISSED BY PRIVATE RESPONDENTS.
Respondent Bodega City (Bodega City) is a corporation duly registered and
existing under and by virtue of the laws of the Republic of the Philippines, 2. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF
while respondent Andres C. Torres-Yap (Yap) is its owner/ manager. APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
Petitioner was the "lady keeper" of Bodega City tasked with manning its AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN
ladies' comfort room. RULING THAT PETITIONER WAS NOT AN EMPLOYEE OF
PRIVATE RESPONDENTS.5
In a letter signed by Yap dated February 10, 1995, petitioner was made to
explain why the concessionaire agreement between her and respondents Petitioner contends that it was wrong for the CA to conclude that even if she
should not be terminated or suspended in view of an incident that happened did not sign the document evidencing the concessionaire agreement, she
on February 3, 1995, wherein petitioner was seen to have acted in a hostile impliedly accepted and thus bound herself to the terms and conditions
manner against a lady customer of Bodega City who informed the contained in the said agreement when she continued to perform the task
management that she saw petitioner sleeping while on duty. which was allegedly specified therein for a considerable length of time.
Petitioner claims that the concessionaire agreement was only offered to her
In a subsequent letter dated February 25, 1995, Yap informed petitioner that during her tenth year of service and after she organized a union and filed a
because of the incident that happened on February 3, 1995, respondents complaint against respondents. Prior to all these, petitioner asserts that her
had decided to terminate the concessionaire agreement between them. job as a "lady keeper" was a task assigned to her as an employee of
respondents.
On March 1, 1995, petitioner filed with the Arbitration Branch of the NLRC,
National Capital Region, Quezon City, a complaint for illegal dismissal Petitioner further argues that her receipt of a special allowance from
against respondents contending that she was dismissed from her respondents is a clear evidence that she was an employee of the latter, as
employment without cause and due process. the amount she received was equivalent to the minimum wage at that time.

In their answer, respondents contended that no employer-employee Petitioner also contends that her identification card clearly shows that she
relationship ever existed between them and petitioner; that the latter's was not a concessionaire but an employee of respondents; that if
services rendered within the premises of Bodega City was by virtue of a respondents really intended the ID card issued to her to be used simply for
concessionaire agreement she entered into with respondents. having access to the premises of Bodega City, then respondents could have
clearly indicated such intent on the said ID card.
The complaint was dismissed by the Labor Arbiter for lack of merit. However,
on appeal, the NLRC set aside the order of dismissal and remanded the Moreover, petitioner submits that the fact that she was required to follow
case for further proceedings. Upon remand, the case was assigned to a rules and regulations prescribing appropriate conduct while she was in the
different Labor Arbiter. Thereafter, hearings were conducted and the parties premises of Bodega City is clear evidence of the existence of an employer-
were required to submit memoranda and other supporting documents. employee relationship between her and petitioners.

On December 28, 1999, the Labor Arbiter rendered judgment finding that On the other hand, respondents contend that the present petition was filed
petitioner was an employee of respondents and that the latter illegally for the sole purpose of delaying the proceedings of the case; the grounds
dismissed her.3 relied upon in the instant petition are matters that have been exhaustively
discussed by the NLRC and the CA; the present petition raises questions of
Respondents filed an appeal with the NLRC. On March 22, 2001, the NLRC fact which are not proper in a petition for review on certiorari under Rule 45
issued a Resolution, the dispositive portion of which reads as follows: of the Rules of Court; the respective decisions of the NLRC and the CA are
based on evidence presented by both parties; petitioner's compliance with
the terms and conditions of the proposed concessionaire contract for a
WHEREFORE, premises duly considered, the Decision appealed period of three years is evidence of her implied acceptance of such proposal;
from is hereby ordered SET ASIDE and VACATED, and in its petitioner failed to present evidence to prove her allegation that the subject
stead, a new one entered DISMISSING the above-entitled case concessionaire agreement was only proposed to her in her 10th year of
for lack of merit.4 employment with respondent company and after she organized a union and
filed a labor complaint against respondents; petitioner failed to present
Petitioner filed a motion for reconsideration of the above-quoted NLRC competent documentary and testimonial evidence to prove her contention
Resolution, but the NLRC denied the same. that she was an employee of respondents since 1985.

Aggrieved, petitioner filed a Petition for Certiorari with the CA. On July 18, The main issue to be resolved in the present case is whether or not petitioner
2002, the CA promulgated the presently assailed Decision dismissing her is an employee of respondents.
special civil action for certiorari. Petitioner moved for reconsideration but her
motion was denied.

25
The issue of whether or not an employer-employee relationship exists in a witnesses to prove her contention that she was an employee of respondents.
given case is essentially a question of fact.6 Petitioner failed to do so.

While it is a settled rule that only errors of law are generally reviewed by this Anent the element of control, petitioner's contention that she was an
Court in petitions for review on certiorari of CA decisions,7 there are well- employee of respondents because she was subject to their control does not
recognized exceptions to this rule, as in this case, when the factual findings hold water.
of the NLRC as affirmed by the CA contradict those of the Labor Arbiter.8 In
that event, it is this Court's task, in the exercise of its equity jurisdiction, to re- Petitioner failed to cite a single instance to prove that she was subject to the
evaluate and review the factual issues by looking into the records of the case control of respondents insofar as the manner in which she should perform
and re-examining the questioned findings.9 her job as a "lady keeper" was concerned.

It is a basic rule of evidence that each party must prove his affirmative It is true that petitioner was required to follow rules and regulations
allegation.10 If he claims a right granted by law, he must prove his claim by prescribing appropriate conduct while within the premises of Bodega City.
competent evidence, relying on the strength of his own evidence and not However, this was imposed upon petitioner as part of the terms and
upon the weakness of that of his opponent.11 conditions in the concessionaire agreement embodied in a 1992 letter of Yap
addressed to petitioner, to wit:
The test for determining on whom the burden of proof lies is found in the
result of an inquiry as to which party would be successful if no evidence of
such matters were given.12 January 6, 1992

In an illegal dismissal case, the onus probandi rests on the employer to Dear Ms. Lolita Lopez,
prove that its dismissal of an employee was for a valid cause.13 However,
before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established.14 The new owners of Bodega City, 1121 Food Service Corporation
offers to your goodself the concessionaire/contract to provide
independently, customer comfort services to assist users of the
In filing a complaint before the Labor Arbiter for illegal dismissal based on the ladies comfort room of the Club to further enhance its business,
premise that she was an employee of respondent, it is incumbent upon under the following terms and conditions:
petitioner to prove the employee-employer relationship by substantial
evidence.15
1. You will provide at your own expense, all toilet
supplies, useful for the purpose, such as toilet papers,
The NLRC and the CA found that petitioner failed to discharge this burden, soap, hair pins, safety pins and other related items or
and the Court finds no cogent reason to depart from their findings. things which in your opinion is beneficial to the
services you will undertake;
The Court applies the four-fold test expounded in Abante v. Lamadrid
Bearing and Parts Corp.,16 to wit: 2. For the entire duration of this concessionaire
contract, and during the Club's operating hours, you
To ascertain the existence of an employer-employee relationship, shall maintain the cleanliness of the ladies comfort
jurisprudence has invariably applied the four-fold test, namely: (1) room. Provided, that general cleanliness, sanitation
the manner of selection and engagement; (2) the payment of and physical maintenance of said comfort rooms shall
wages; (3) the presence or absence of the power of dismissal; be undertaken by the owners of Bodega City;
and (4) the presence or absence of the power of control. Of these
four, the last one is the most important. The so-called "control 3. You shall at all times ensure satisfaction and good
test" is commonly regarded as the most crucial and determinative services in the discharge of your undertaking. More
indicator of the presence or absence of an employer-employee importantly, you shall always observe utmost courtesy
relationship. Under the control test, an employer-employee in dealing with the persons/individuals using said
relationship exists where the person for whom the services comfort room and shall refrain from doing acts that
areperformed reserves the right to control not only the end may adversely affect the goodwill and business
achieved, but also the manner and means to be used in reaching standing of Bodega City;
that end.17

4. All remunerations, tips, donations given to you by

To prove the element of payment of wages, petitioner presented a petty cash individuals/persons utilizing said comfort rooms and/or
voucher showing that she received an allowance for five (5) days.18 The CA guests of Bodega City shall be waived by the latter to
did not err when it held that a solitary petty cash voucher did not prove that your benefit provided however, that if concessionaire
petitioner had been receiving salary from respondents or that she had been receives tips or donations per day in an amount
respondents' employee for 10 years. exceeding 200% the prevailing minimum wage, then,
she shall remit fifty percent (50%) of said amount to
Indeed, if petitioner was really an employee of respondents for that length of Bodega City by way of royalty or concession fees;
time, she should have been able to present salary vouchers or pay slips and
not just a single petty cash voucher. The Court agrees with respondents that 5. This contract shall be for a period of one year and
petitioner could have easily shown other pieces of evidence such as a shall be automatically renewed on a yearly basis
contract of employment, SSS or Medicare forms, or certificates of unless notice of termination is given thirty (30) days
withholding tax on compensation income; or she could have presented prior to expiration. Any violation of the terms and

26
 conditions of this contract shall be a ground for its men's comfort room of Bodega City, that he had personal knowledge of the
immediate revocation and/or termination. fact that petitioner was the concessionaire of the ladies' comfort room of
Bodega City.
6. It is hereby understood that no employer-employee
relationship exists between Bodega City and/or 1121 Petitioner also claims that the concessionaire agreement was offered to her
FoodService Corporation and your goodself, as you only in her 10th year of service, after she organized a union and filed a
are an independent contractor who has represented to complaint against respondents. However, petitioner's claim remains to be an
us that you possess the necessary qualification as allegation which is not supported by any evidence. It is a basic rule in
such including manpower compliment, equipment, evidence that each party must prove his affirmative allegation,27 that mere
facilities, etc. and that any person you may engage or allegation is not evidence.28
employ to work with or assist you in the discharge of
your undertaking shall be solely your own employees The Court is not persuaded by petitioner's contention that the Labor Arbiter
and/or agents. was correct in concluding that there existed an employer-employee
relationship between respondents and petitioner. A perusal of the
Decision29 of the Labor Arbiter shows that his only basis for arriving at such a
1121 FoodService Corporation Bodega City
conclusion are the bare assertions of petitioner and the fact that the latter did
not sign the letter of Yap containing the proposed concessionaire agreement.
By: However, as earlier discussed, this Court finds no error in the findings of the
(Sgd.) ANDRES C. TORRES-YAP NLRC and the CA that petitioner is deemed as having given her consent to
the said proposal when she continuously performed the tasks indicated
therein for a considerable length of time. For all intents and purposes, the
Conforme: concessionaire agreement had been perfected.

_______________ Petitioner insists that her ID card is sufficient proof of her employment.
LOLITA LOPEZ19 In Domasig v. National Labor Relations Commission,30 this Court held that
the complainant's ID card and the cash vouchers covering his salaries for the
Petitioner does not dispute the existence of the letter; neither does she deny months indicated therein were substantial evidence that he was an employee
that respondents offered her the subject concessionaire agreement. of respondents, especially in light of the fact that the latter failed to deny said
However, she contends that she could not have entered into the said evidence. This is not the situation in the present case. The only evidence
agreement with respondents because she did not sign the document presented by petitioner as proof of her alleged employment are her ID card
evidencing the same. and one petty cash voucher for a five-day allowance which were disputed by
respondents.
Settled is the rule that contracts are perfected by mere consent, upon the
acceptance by the offeree of the offer made by the offeror.20 For a contract, As to the ID card, it is true that the words "EMPLOYEE'S NAME" appear
to arise, the acceptance must be made known to the offeror.21 Moreover, the printed below petitioner's name.31However, she failed to dispute
acceptance of the thing and the cause, which are to constitute a contract, respondents' evidence consisting of Habitan's testimony,32 that he and the
may be express or implied as can be inferred from the contemporaneous and other "contractors" of Bodega City such as the singers and band performers,
subsequent acts of the contracting parties.22 A contract will be upheld as were also issued the same ID cards for the purpose of enabling them to
long as there is proof of consent, subject matter and cause; it is generally enter the premises of Bodega City.
obligatory in whatever form it may have been entered into.23
The Court quotes, with approval, the ruling of the CA on this matter, to wit:
In the present case, the Court finds no cogent reason to disregard the
findings of both the CA and the NLRC that while petitioner did not affix her Nor can petitioners identification card improve her cause any
signature to the document evidencing the subject concessionaire agreement, better. It is undisputed that non-employees, such as Felimon
the fact that she performed the tasks indicated in the said agreement for a Habitan, an admitted concessionaire, musicians, singers and the
period of three years without any complaint or question only goes to show like at Bodega City are also issued identification cards. Given this
that she has given her implied acceptance of or consent to the said premise, it appears clear to Us that petitioner's I.D. Card is
agreement. incompetent proof of an alleged employer-employee relationship
between the herein parties. Viewed in the context of this case, the
Petitioner is likewise estopped from denying the existence of the subject card is at best a "passport" from management assuring the holder
concessionaire agreement. She should not, after enjoying the benefits of the thereof of his unmolested access to the premises of Bodega
concessionaire agreement with respondents, be allowed to later disown the City.33
same through her allegation that she was an employee of the respondents
when the said agreement was terminated by reason of her violation of the With respect to the petty cash voucher, petitioner failed to refute
terms and conditions thereof. respondent's claim that it was not given to her for services rendered or on a
regular basis, but simply granted as financial assistance to help her
The principle of estoppel in pais applies wherein -- by one's acts, temporarily meet her family's needs.
representations or admissions, or silence when one ought to speak out --
intentionally or through culpable negligence, induces another to believe Hence, going back to the element of control, the concessionaire agreement
certain facts to exist and to rightfully rely and act on such belief, so as to be merely stated that petitioner shall maintain the cleanliness of the ladies'
prejudiced if the former is permitted to deny the existence of those facts.24 comfort room and observe courtesy guidelines that would help her obtain the
results they wanted to achieve. There is nothing in the agreement which
Moreover, petitioner failed to dispute the contents of the affidavit25 as well as specifies the methods by which petitioner should achieve these results.
the testimony26 of Felimon Habitan (Habitan), the concessionaire of the Respondents did not indicate the manner in which she should go about in
27
maintaining the cleanliness of the ladies' comfort room. Neither did VICTORY LINER, INC., Petitioner,
respondents determine the means and methods by which petitioner could vs.
ensure the satisfaction of respondent company's customers. In other words, PABLO M. RACE, Respondent.
petitioner was given a free hand as to how she would perform her job as a
"lady keeper." In fact, the last paragraph of the concessionaire agreement DECISION
even allowed petitioner to engage persons to work with or assist her in the
discharge of her functions.34
CHICO-NAZARIO, J.:
Moreover, petitioner was not subjected to definite hours or conditions of
work. The fact that she was expected to maintain the cleanliness of In this Petition for Review on Certiorari under Rule 45 of the Rules of
respondent company's ladies' comfort room during Bodega City's operating Court,1 petitioner Victory Liner Inc. seeks to set aside the Decision of the
hours does not indicate that her performance of her job was subject to the Court of Appeals dated 26 April 2004 in CA-G.R. SP No. 74010,2 affirming
control of respondents as to make her an employee of the latter. Instead, the the Decision and Resolution of the National Labor Relations Commission
requirement that she had to render her services while Bodega City was open (NLRC) dated 30 July 2002 and 30 August 2002, respectively, in NLRC-CA-
for business was dictated simply by the very nature of her undertaking, which 029327-01.3 In its Decision and Resolution, the NLRC vacated the
was to give assistance to the users of the ladies' comfort room. Decision4 of Labor Arbiter Salimathar V. Nambi (Labor Arbiter Nambi) dated
31 July 2001 in NLRC-NCR-00-09-08922-99 and ordered the petitioner to
reinstate respondent Pablo M. Race to his former position as a bus driver
In Consulta v. Court of Appeals,35 this Court held: without loss of seniority rights and other privileges and benefits with full
backwages computed from the time of his illegal dismissal in January 1998
It should, however, be obvious that not every form of control that up to his actual reinstatement.
the hiring party reserves to himself over the conduct of the party
hired in relation to the services rendered may be accorded the Culled from the records are the following facts:
effect of establishing an employer-employee relationship between
them in the legal or technical sense of the term. A line must be
drawn somewhere, if the recognized distinction between an In June 1993, respondent was employed by the petitioner as a bus driver. As
employee and an individual contractor is not to vanish altogether. a requisite for his hiring, the respondent deposited a cash bond in the
Realistically, it would be a rare contract of service that gives amount of ₱10,000.00 to the petitioner. Respondent was assigned to the
untrammeled freedom to the party hired and eschews any Alaminos, Pangasinan - Cubao, Quezon City, route on the evening
intervention whatsoever in his performance of the engagement. schedule.5

Logically, the line should be drawn between rules that merely On the night of 24 August 1994, respondent drove his assigned bus from
serve as guidelines towards the achievement of the mutually Alaminos, Pangasinan, destined to Cubao, Quezon City. While traversing
desired result without dictating the means or methods to be Moncada, Tarlac, the bus he was driving was bumped by a Dagupan-bound
employed in attaining it, and those that control or fix the bus. As a consequence thereof, respondent suffered a fractured left leg and
methodology and bind or restrict the party hired to the use of such was rushed to the Country Medical and Trauma Center in Tarlac City where
means. The first, which aim only to promote the result, create no he was operated on and confined from 24 August 1994 up to 10 October
employer-employee relationship unlike the second, which address 1994. One month after his release from the said hospital, the respondent
both the result and the means used to achieve it.36 was confined again for further treatment of his fractured left leg at the
Specialist Group Hospital in Dagupan City. His confinement therein lasted a
month. Petitioner shouldered the doctor’s professional fee and the operation,
Lastly, the Court finds that the elements of selection and engagement as well medication and hospital expenses of the respondent in the aforestated
as the power of dismissal are not present in the instant case. hospitals.6

It has been established that there has been no employer-employee In January 1998, the respondent, still limping heavily, went to the petitioner’s
relationship between respondents and petitioner. Their contractual office to report for work. He was, however, informed by the petitioner that he
relationship was governed by the concessionaire agreement embodied in the was considered resigned from his job. Respondent refused to accede and
1992 letter. Thus, petitioner was not dismissed by respondents. Instead, as insisted on having a dialogue with the petitioner’s officer named Yolanda
shown by the letter of Yap to her dated February 15, 1995,37 their contractual Montes (Montes). During their meeting, Montes told him that he was deemed
relationship was terminated by reason of respondents' termination of the to have resigned from his work and to accept a consideration of ₱50,000.00.
subject concessionaire agreement, which was in accordance with the Respondent rejected the explanation and offer. Thereafter, before Christmas
provisions of the agreement in case of violation of its terms and conditions. of 1998, he again conversed with Montes who reiterated to him that he was
regarded as resigned but raised the consideration therein to ₱100,000.00.
In fine, the CA did not err in dismissing the petition for certiorari filed before it Respondent rebuffed the increased offer.7
by petitioner.
On 30 June 1999, respondent, through his counsel, sent a letter to the
WHEREFORE, the instant petition is DENIED. The assailed Decision and petitioner demanding employment-related money claims. There being no
Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner. response from the petitioner, the respondent filed before the Labor Arbiter on
1 September 1999 a complaint for (1) unfair labor practice; (2) illegal
SO ORDERED. dismissal; (3) underpayment of wages; (4) nonpayment of overtime and
holiday premium, service incentive leave pay, vacation and sick leave
benefits, 13th month pay; (5) excessive deduction of withholding tax and
G.R. No. 164820 March 28, 2007 SSS premium; and (6) moral and exemplary damages and attorney’s fees.
This was docketed as NLRC-NCR-00-09-08922-99.8

28
In its Position Paper dated 27 March 2000, petitioner claimed that as the latter failed to accord him due process. It found that the petitioner did
respondent was paid strictly on commission basis; that respondent was a not give the respondent a written notice apprising him of acts or omissions
mere field personnel who performed his duties and functions outside the being complained of and a written notice informing him of the termination of
petitioner’s premises and whose time of work cannot be determined with his employment. In conclusion, the NLRC stated:
reasonable certainty; that petitioner, therefore, was exempted from paying
the respondent overtime compensation, night shift differential, holiday pay WHEREFORE, in view of all the foregoing, respondent-appellee’s company
and service incentive leave; that notwithstanding the specific exemptions is hereby ordered to reinstate complainant-appellant to his former position
provided for in the Labor Code, the petitioner gave the respondent benefits without loss of seniority rights and other privileges and benefits with full
better than those received by the other bus drivers of the petitioner; that backwages computed from the time of his illegal dismissal on (sic) January
during his employment, respondent was charged with and found guilty of 1988 up to his actual reinstatement. Except for this modification, the
numerous offenses which were sufficient bases for his dismissal; that the appealed decision is hereby AFFIRMED.12
prescriptive period for the filing of an action or claim for reinstatement and
payment of labor standard benefits is four years from the time the cause of
action accrued; and that the respondent’s cause of action against petitioner Petitioner filed a Motion for Reconsideration of the NLRC Decision alleging,
had already prescribed because when the former instituted the aforesaid among other things, that the award of backwages to the respondent
complaint on 1 September 1999, more than five years had already lapsed computed from January 1988 up to the promulgation of the NLRC Decision
from the accrual of his cause of action on 24 August 1994.9 on 30 July 2002 was unlawful and unjust considering that respondent was
employed only in June 1993. The NLRC, however, denied the same for lack
of merit in its Resolution dated 30 August 2002.
In his Reply dated 30 June 2000, respondent explained that when he stated
in his complaint that he was illegally dismissed on 24 August 1994, what he
meant and referred to was the date when he was no longer in a position to Petitioner assailed the NLRC Decision and Resolution, dated 30 July 2002
drive since he was hospitalized from 24 August 1994 up to 10 October 1994. and 30 August 2002, respectively, via a Petition for Certiorari to the Court of
Respondent also admitted that it was only in January 1998 that he informed Appeals. On 26 April 2004, the Court of Appeals dismissed the Petition, and
the petitioner of his intent to report back for work.10 found no grave abuse of discretion on the part of the NLRC. It ruled that the
NLRC committed a simple typographical error when it stated in the fallo that
the backwages of respondent shall be computed from January 1988 instead
On 31 July 2001, Labor Arbiter Nambi rendered his Decision dismissing the of January 1998 because in the paragraph prior to the dispositive portion, the
complaint of respondent for lack of merit. He stated that the prescriptive NLRC categorically declared that the full backwages of the respondent was
period for filing an illegal dismissal case is four years from the dismissal of to be computed from January1998. In addition, the NLRC has indicated in its
the employee concerned. Since the respondent stated in his complaint that Statement of Facts that respondent was hired by the petitioner sometime in
he was dismissed from work on 24 August 1994 and he filed the complaint June 1993. It also held that the respondent’s filing of complaint on 1
only on 1 September 1999, Labor Arbiter Nambi concluded that respondent’s September 1999 was within the four-year prescriptive period since the cause
cause of action against petitioner had already prescribed. He also noted that of action accrued when the respondent reported for work in January 1998
respondent committed several labor-related offenses against the petitioner and was informed that he was considered resigned. It ratiocinated that
which may be considered as just causes for the termination of his respondent did not abandon his work and, instead, continued to be an
employment under Article 282 of the Labor Code. employee of petitioner after he was discharged from the hospital, viz:

Further, Labor Arbiter Nambi opined that respondent was not a regular Race did not abandon his work and continued to be an employee of Victory
employee but a mere field personnel and, therefore, not entitled to service Liner, and their contemporaneous conduct show this. He has his pay slip
incentive leave, holiday pay, overtime pay and 13th month pay. He also ruled covering the period of August 1-15, 1998 (p. 114, record), he was consulting
that respondent failed to present evidence showing that the latter was the company physician who issued him receipts dated October 28, 1996 and
entitled to the abovestated money claims. The fallo of the said decision July 21 1997 (p. 115, record), and he wrote a letter dated March 18, 1996
reads: addressed to Gerarda Villa, Vice-President for Victory Liner, signifying his
intention to be a dispatcher or conductor due to his injured leg (p. 116,
WHEREFORE, considering that the causes of action in this case rooted from Record). Further, annexed to Victory Liner’s Consolidated Supplemental
the purported illegal dismissal of Pablo M. Race on August 24, 1994 when he Position Paper and Formal Offer of Evidence with Erratum is Exhibit "6-A-
figured in a vehicular accident, or on October 10, 1994 when he was Race" (p. 56, record) submitted before the Labor Arbiter, where Race stated
released from the hospital, and he filed his complaint only on September 1, before the investigator that after his release from the hospital he reported to
1999 after a lapse of more than five (5) years, the action has long prescribed, Victory Liner twice a month. He also said that he filed for a sick leave which
aside from the fact that there is absolutely no evidence that respondent was approved for the maximum of 120 days. After his sick leave, he filed for
Victory Liner, Inc. is guilty of unfair labor practice and unjust dismissal, in disability leave, and this was also approved and ran until sometime in May
addition to its specific exemptions from the letters of Article 82 of the Labor 1997.13
Code, as amended, the complaint and money claims are hereby DISMISSED
by reason of prescription and for utter lack of merit and total absence of legal It also found that the petitioner failed to comply with the requirements of due
and factual basis in support thereof.11 process in terminating the employment of respondent. The decretal portion of
the said decision reads:
Respondent appealed to the NLRC. On 30 July 2002, the NLRC
promulgated its Decision reversing the decision of Labor Arbiter Nambi. It WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED.14
ordered the reinstatement of the respondent to his former position without
loss of seniority rights and other privileges and benefits with full back-wages
computed from the time of his illegal dismissal in January 1998 up to his Petitioner filed the instant petition on the following grounds:
actual reinstatement. It held that the respondent’s cause of action accrued,
not on 24 August 1994, but in January 1998, when the respondent reported THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
for work but was rejected by the petitioner. Thus, the respondent’s filing of CONTRARY TO LAW AND JURISPRUDENCE WHEN IT HELD IN THE
complaint on 1 September 1999 was well-within the four-year prescriptive ASSAILED DECISION THAT:
period. It also ruled that respondent was illegally dismissed by the petitioner
29
A. It should be emphasized at the outset that as a rule, this Court is not a trier of
facts and this applies with greater force in labor cases. Hence, factual
THE CAUSE OF ACTION OF RESPONDENT FOR ILLEGAL DISMISSAL findings of quasi-judicial bodies like the NLRC, particularly when they
HAS NOT YET PRESCRIBED DESPITE HAVING BEEN FILED AFTER coincide with those of the Labor Arbiter and if supported by substantial
FOUR (4) YEARS AND NINE (9) MONTHS FROM THE ACCRUAL OF THE evidence, are accorded respect and even finality by this Court. But where the
ALLEGED ACTIONABLE WRONG; findings of the NLRC and the Labor Arbiter are contradictory, as in the
present case, this Court may delve into the records and examine for itself the
questioned findings.20
B.
In illegal dismissal cases, the employee concerned is given a period of four
RESPONDENT IS ENTITLED TO REINSTATEMENT WITH FULL years from the time of his dismissal within which to institute a complaint. This
BACKWAGES AND OTHER BENEFITS CONSIDERING THAT THE is based on Article 1146 of the New Civil Code which states that actions
TERMINATION OF HIS EMPLOYMENT BY PETITIONER WAS LEGAL AND based upon an injury to the rights of the plaintiff must be brought within four
JUSTIFIED.15 years. We explained the rationale in the case of Callanta v. Carnation
Philippines, Inc.,21 thus:
Anent the first issue, petitioner insisted that respondent had already
abandoned his work and ceased to be its employee since November 1994; [O]ne’s employment, profession, trade or calling is a "property right," and the
that the alleged "pay slip" for the period August 1-15, 1998 was not actually a wrongful interference therewith is an actionable wrong. The right is
pay slip but a mere cash advance/monetary aid extended to the respondent considered to be property within the protection of a constitutional guaranty of
as the large amount of ₱65,000.00 stated therein was clearly inconsistent due process of law. Clearly then, when one is arbitrarily and unjustly
and disproportionate to the respondent’s low salary of ₱192.00 a day; that deprived of his job or means of livelihood, the action instituted to contest the
the petitioner merely accommodated the respondent as its former employee legality of one’s dismissal from employment constitutes, in essence, an
when the latter consulted the petitioner’s physician on 28 October 1996 and action predicated "upon an injury to the rights of the plaintiff," as
21 July 1997; that the respondent’s letter dated 18 March 1996 to the contemplated under Art. 1146 of the New Civil Code, which must be brought
petitioner’s Vice-President Gerarda Villa was only an application for the within four years.
position of dispatcher or conductor and that such application was not
granted; and that the foregoing circumstances cannot be considered as an
indication of employer-employee relationship between the petitioner and The four-year prescriptive period shall commence to run only upon the
respondent.16 accrual of a cause of action of the worker. It is settled that in illegal dismissal
cases, the cause of action accrues from the time the employment of the
worker was unjustly terminated.22 Thus, the four-year prescriptive period
Moreover, petitioner asserted that although the respondent reported for work shall be counted and computed from the date of the employee’s dismissal up
twice a month after he was discharged from the hospital, it does not imply to the date of the filing of complaint for unlawful termination of employment.23
that the respondent was still considered as an employee at that time by the
petitioner; that it allowed the respondent to have a 120-day sick leave
because the latter was a former employee; and that it granted disability leave Proceeding therefrom, we shall now discuss and determine when the
to the respondent since the latter was a former employee and that respondent’s cause of action accrued in order to ascertain whether the same
respondent’s application for disability leave implied an admission on the part had already prescribed.
of the respondent that he was no longer fit to work as a bus driver.17
It is error to conclude that the employment of the respondent was unjustly
Petitioner also asseverated that, based on the four-fold tests in determining terminated on 10 November 1994 because he was, at that time, still confined
the employer-employee relationship which includes the payment of wages at the Specialist Group Hospital, Dagupan City, for further treatment of his
and power to control the conduct of the employees, the respondent was no fractured left leg. He must be considered as merely on sick leave at such
longer its employee upon the latter’s discharge from the hospital in time. Likewise, the respondent cannot also be deemed as illegally dismissed
November 1994 because at such time, the respondent was no longer fit to from work upon his release from the said hospital in December 1994 up to
work as a bus driver and respondent did not render services to the petitioner. December 1997 since the records show that the respondent still reported for
Thus, petitioner reasoned that it had no more power to control the conduct work to the petitioner and was granted sick and disability leave by the
of, and it no longer paid any wages to, the respondent.18 petitioner during the same period.24

Petitioner also argued that the cause of action of respondent had accrued on The respondent must be considered as unjustly terminated from work in
10 November 1994; that from 10 November 1994 up to November 1998, the January 1998 since this was the first time he was informed by the petitioner
respondent did not render any services to nor filed a case or action against that he was deemed resigned from his work. During that same occasion, the
the petitioner; that the respondent’s filing of a complaint against petitioner on petitioner, in fact, tried to convince the respondent to accept an amount of
1 September 1999 was clearly beyond the four-year prescriptive period ₱50,000.00 as a consolation for his dismissal but the latter rejected
allowed by law; that if the reckoning period of the accrual of a cause of action it.25 Thus, it was only at this time that the respondent’s cause of action
would be the time when the written demand was made by the respondent on accrued. Consequently, the respondent’s filing of complaint for illegal
the petitioner, then the four-year prescriptive period would be interminable as dismissal on 1 September 1999 was well within the four-year prescriptive
it could be extended to one or more years; that this is not the spirit or intent period.
of the law; that otherwise there is no more need to provide the four-year
prescriptive period as any complainant may simply allow the lapse of four It is also significant to note that from 10 November 1994 up to December
years and file the action thereafter and that it would be considered as a 1997, the petitioner never formally informed the respondent of the fact of his
compliance by simply making a purported demand for reinstatement after dismissal either through a written notice or hearing. Indeed, it cannot be
more than four years.19 gainfully said that respondent was unlawfully dismissed on 10 November
1994 and that the cause of action accrued on that date.
These contentions are devoid of merit.

30
As to the alleged abandonment of work by the respondent on 10 November conductor; and that to reinstate the respondent as bus driver despite the fact
1994, it should be emphasized that two factors must be present in order to that it is against his will is involuntary servitude.32
constitute an abandonment: (a) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever employer- Petitioner also argued that the order for the reinstatement was contrary to
employee relationship. The second factor is the more determinative factor law; that as a common carrier, it is obliged under the law to observe extra-
and is manifested by overt acts from which it may be deduced that the ordinary diligence in the conduct of its business; that it will violate such
employee has no more intention to work. The intent to discontinue the obligation if it will reinstate the respondent as bus driver; that to allow the
employment must be shown by clear proof that it was deliberate and respondent to drive a bus, despite the fact that the latter sustained a
unjustified. Mere absence from work does not imply abandonment.26 fractured left leg and was still limping, would imperil the lives of the
passengers and the property of the petitioner; and that the award of
It is apparent that respondent did not abandon his work. His absence from backwages to the respondent was unjustified.33
work for a long period of time was obviously due to the fact that he was still
recuperating from two operations on his fractured leg. Petitioner knew this The Labor Code mandates that before an employer may legally dismiss an
very well. In fact, petitioner shouldered the respondent’s medication and employee from the service, the requirement of substantial and procedural
hospital expenses during the latter’s confinement and operation in two due process must be complied with. Under the requirement of substantial
hospitals.27 Moreover, when the respondent was able to walk, although due process, the grounds for termination of employment must be based on
limping heavily, he still reported for work to the petitioner and was granted just or authorized causes. The following are just causes for the termination of
sick and disability leave.28 Clearly then, respondent did not abandon his job employment under Article 282 of the Labor Code:
on 10 November 1994.
(a) Serious misconduct or willful disobedience by the employee of
In the same vein, the employer-employee relationship between the petitioner the lawful orders of his employer or representative in connection
and respondent cannot be deemed to have been extinguished on 10 with his work;
November 1994. It should be borne in mind that there are four tests in
determining the existence of employer-employee relationship: (1) the manner
of selection and engagement; (2) the payment of wages; (3) the presence or (b) Gross and habitual neglect by the employee of his duties;
absence of the power of dismissal; and (4) the presence or absence of the
power of control. The so-called "control test" is commonly regarded as the (c) Fraud or willful breach by the employee of the trust reposed in
most crucial and determinative indicator of the presence or absence of an him by his employer or duly authorized representative;
employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services are (d) Commission of a crime or offense by the employee against the
performed reserves the right to control not only the end achieved, but also person of his employer or any immediate member of his family or
the manner and means to be used in reaching that end.29 his duly authorized representative; and

Applying the aforecited tests, the employer-employee relationship between (e) Other causes analogous to the foregoing.
petitioner and respondent continued even after the latter’s discharge from the
hospital in December 1994 up to 1997. Respondent had reported for work to
the petitioner after his release from the hospital in December 1994. Abandonment of work, or the deliberate and unjustified refusal of an
Subsequently, respondent was also granted a 120-day sick leave and employee to resume his employment, may be a just cause for the termination
disability leave by the petitioner.30 Respondent also availed himself of the of employment under paragraph (b) of Article 282 of the Labor Code since it
services of the petitioner’s physician on two occasions after his release from is a form of neglect of duty.
the hospital in December 1994.31
As earlier discussed, the petitioner insisted that respondent had already
On the other hand, the petitioner failed to establish the fact that the abandoned his work on 10 November 1994 and, thus, the latter’s
respondent ceased to be its employee on 10 November 1994. Except for its employment was deemed terminated as of such date. We, however, found
flimsy reason that the sick leave, disability leave and physician consultations that there was no abandonment of work on the part of the respondent.
were given to the respondent as mere accommodations for a former Petitioner also alleged that respondent was guilty of insubordination as well
employee, the petitioner did not present any evidence showing that its as gross and habitual neglect in the performance of his duties for reckless
employer-employee relationship with the respondent was extinguished on 10 driving and for being involved in several vehicular accidents.34 The records,
November 1994. nonetheless, failed to show that the said charges were proven and that
respondent was duly informed and heard with regard to the accusations.
Since the petitioner, as an employer, is burdened to prove just cause for
Evidently, these circumstances clearly manifest that petitioner exercised terminating the employment of respondent with clear and convincing
control over the respondent and that the latter was still under the evidence, and that petitioner failed to discharge this burden, we hold that
employment of the petitioner even after December 1994. respondent was dismissed without just cause by the petitioner.

Given the foregoing considerations, petitioner’s assertion that the It has been established that petitioners failed to comply with the requirement
respondent’s cause of action accrued on 10 November 1994 must fail. of substantial due process in terminating the employment of respondent. We
will now determine whether the petitioner had complied with the procedural
Apropos the second issue, petitioner contended that the order for the aspect of a lawful dismissal.
reinstatement of the respondent as bus driver was unconstitutional for being
tantamount to involuntary servitude; that when the respondent filed his In the termination of employment, the employer must (a) give the employee a
complaint for illegal dismissal, the latter no longer desired to be reinstated to written notice specifying the ground or grounds of termination, giving to said
his former position as bus driver; that the respondent’s unwillingness to be employee reasonable opportunity within which to explain his side; (b)
reinstated as bus driver was also evident from his letter to the petitioner conduct a hearing or conference during which the employee concerned, with
where the respondent manifested his intention to be hired as a dispatcher or the assistance of counsel if the employee so desires, is given the opportunity
31
to respond to the charge, present his evidence or rebut the evidence may not be compelled to continue to employ such persons whose
presented against him; and (c) give the employee a written notice of continuance in the service will patently be inimical to his interests.41
termination indicating that upon due consideration of all circumstances,
grounds have been established to justify his termination.35 Based on the foregoing facts and circumstances, the reinstatement of the
respondent is no longer feasible. Thus, in lieu of reinstatement, payment to
Petitioner miserably failed to comply with the foregoing requirements. There respondent of separation pay equivalent to one month pay for every year of
was nothing in the records which evinces that petitioner had sent a written service is in order.42
notice to the respondent informing him of the ground or grounds of his
termination or the reason why he was deemed resigned. It does not also WHEREFORE, the petition is PARTLY GRANTED insofar as it prays for the
appear that the petitioner held a hearing or conference where the respondent non-reinstatement of respondent. The Decision of the Court of Appeals dated
was given the opportunity to answer the charges of abandonment, 26 April 2004 in CA-G.R. SP No. 74010, is hereby AFFIRMED with the
insubordination and habitual neglect of duty against him. Neither did the following MODIFICATIONS: Petitioner is ordered to pay the respondent, in
petitioner send a written notice to the respondent informing the latter that his lieu of reinstatement, separation pay of ONE (1) MONTH PAY for every year
service is terminated after considering all the circumstances. of service, and full backwages inclusive of allowances and other benefits or
their monetary equivalent from 1 January 1998 up to the finality of this
In view of the fact that the petitioner neglected to observe the substantial and Decision. No costs.
procedural due process in terminating the employment of respondent, we
rule that the latter was illegally dismissed from work by the petitioner. SO ORDERED.

Consequently, the respondent is entitled to reinstatement without loss of G.R. No. 160905 July 4, 2008
seniority rights, full backwages, inclusive of allowances, and other benefits or
their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement as provided for BIENVENIDO D. GOMA, petitioner,
under Article 279 of the Labor Code. vs.
PAMPLONA PLANTATION INCORPORATED, respondent.
It appears, however, that respondent was not seeking reinstatement. In his
complaint for illegal dismissal against petitioner, respondent stated: DECISION

RELIEF NACHURA, J.:

Complainant/s pray/s for the following: For review is the Decision1 of the Court of Appeals (CA) dated August 27,
2003 granting respondent Pamplona Plantation, Inc.’s petition
for certiorari and its Resolution2 dated November 11, 2003 denying petitioner
Reinstatement: No More.36 Bienvenido Goma’s motion for reconsideration, in CA-G.R. SP No. 74892.

Respondent also sent to the petitioner a letter applying for the position of a Petitioner commenced3 the instant suit by filing a complaint for illegal
dispatcher or conductor.37 In the said letter, the respondent explained that dismissal, underpayment of wages, non-payment of premium pay for holiday
since he cannot drive anymore due to his leg injury, he was willing to be and rest day, five (5) days incentive leave pay, damages and attorney’s fees,
hired as a dispatcher or conductor. The abovestated facts obviously show against the respondent. The case was filed with the Sub-Regional Arbitration
that respondent was unwilling to be reinstated as a bus driver. Branch No. VII of Dumaguete City. Petitioner claimed that he worked as a
carpenter at the Hacienda Pamplona since 1995; that he worked from 7:30
Even assuming that respondent is willing to be reinstated as petitioner’s bus a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. daily with a salary rate
driver, the reinstatement is still unwarranted. There is a serious doubt as to of P90.00 a day paid weekly; and that he worked continuously until 1997
whether the respondent is physically capable of driving a bus based on the when he was not given any work assignment.4 On a claim that he was a
following undisputed facts: (1) respondent was operated on and confined regular employee, petitioner alleged to have been illegally dismissed when
twice in two different hospitals for a fractured left leg; (2) steel plates were the respondent refused without just cause to give him work assignment.
attached to his fractured leg;38 (3) each confinement lasted for a month; (4) Thus, he prayed for backwages, salary differential, service incentive leave
after his discharge from the second confinement, respondent was still limping pay, damages and attorney’s fees.5
heavily; (5) when respondent had reported for work to the petitioner in
January 1998, he was also limping;39 and (6) respondent does not have a On the other hand, respondent denied having hired the petitioner as its
medical certificate which guarantees that his leg injury has already healed regular employee. It instead argued that petitioner was hired by a certain
and that he is now physically capable of driving a bus. Antoy Cañaveral, the manager of the hacienda at the time it was owned by
Mr. Bower and leased by Manuel Gonzales, a jai-alai pelotari known as
It should be stressed that petitioner is a common carrier and, as such, is "Ybarra."6 Respondent added that it was not obliged to absorb the
obliged to exercise extra-ordinary diligence in transporting its passengers employees of the former owner.
safely.40 To allow the respondent to drive the petitioner’s bus under such
uncertain condition would, undoubtedly, expose to danger the lives of the In 1995, Pamplona Plantation Leisure Corporation (PPLC) was created for
passengers and the property of the petitioner. This would place the petitioner the operation of tourist resorts, hotels and bars. Petitioner, thus, rendered
in jeopardy of violating its extra-ordinary diligence obligation and, thus, may service in the construction of the facilities of PPLC. If at all, petitioner was a
be subjected to numerous complaints and court suits. It is clear therefore that project but not a regular employee.7
the reinstatement of respondent not only would be deleterious to the riding
public but would also put unreasonable burden on the business and interest
of the petitioner. In this regard, it should be remembered that an employer On June 28, 1999, Labor Arbiter Geoffrey P. Villahermosa dismissed the
case for lack of merit.8 The Labor Arbiter concluded that petitioner was hired

32
by the former owner, hence, was not an employee of the respondent. hereby ANNULLED and SET ASIDE. The complaint is
Consequently, his money claims were denied.9 ordered DISMISSED.

On appeal to the National Labor Relations Commission (NLRC), the SO ORDERED.16

petitioner obtained favorable judgment when the tribunal reversed and set
aside the Labor Arbiter’s decision. The dispositive portion of the NLRC Contrary to the NLRC’s finding, the CA concluded that there was no
decision reads: employer-employee relationship. The CA stressed that petitioner having
raised a positive averment, had the burden of proving the existence of an
WHEREFORE, the Decision of the Labor Arbiter is hereby SET employer-employee relationship. Respondent, therefore, had no obligation to
ASIDE and a new one is hereby issued ORDERING the prove its negative averment.17 The appellate court further held that while the
respondent, Pamplona Plantation Incorporated, the following: respondent’s business required the performance of occasional repairs and
carpentry work, the retention of a carpenter in its payroll was not necessary
1) to reinstate the complainant, BIENVENIDO D. GOMA to his or desirable in the conduct of its usual business.18Lastly, although the
former position immediately without loss of seniority rights and petitioner was an employee of the former owner of the hacienda, the
other privileges; respondent was not required to absorb such employees because
employment contracts are in personam and binding only between the
parties.19
2) to pay the same complainant TWELVE THOUSAND THREE
HUNDRED FIFTY-NINE PESOS (P12,359.00) in salary
differentials; Petitioner now comes before this Court raising the sole issue:

3) to pay to the same complainant ONE HUNDRED ONE WHETHER OR NOT THE DECISION OF [THE] COURT OF
THOUSAND SIX HUNDRED SIXTY PESOS (P101,660.00) in APPEALS DATED AUGUST 27, 2003, REVERSING AND
backwages to be updated until actual reinstatement; and SETTING ASIDE THE NLRC (Fourth Division, Cebu City)
RULING THAT THE "PETITIONER WAS NOT ILLEGALLY
DISMISSED AS HE WAS NOT AN EMPLOYEE OF
4) to pay attorney’s fee in the amount of ELEVEN THOUSAND RESPONDENT", IS CONTRARY TO LAW AND
FOUR HUNDRED TWO PESOS (P11,402.00) which is equivalent JURISPRUDENCE ON WHICH IT WAS BASED, AND NOT IN
to ten percent (10%) of the total judgment award.1avvphi1 CONSONANCE WITH THE EVIDENCE ON RECORD.20

The respondent is further ordered to pay the aggregate amount of The disposition of this petition rests on the resolution of the following
ONE HUNDRED FOURTEEN THOUSAND AND NINETEEN questions: 1) Is the petitioner a regular employee of the respondent? 2) If so,
PESOS (P114,019.00) to the complainant through the cashier of was he illegally dismissed from employment? and 3) Is he entitled to his
this Commission within ten (10) days from receipt hereof. monetary claims?

SO ORDERED.10 Petitioner insists that he was a regular employee of the respondent

corporation. The respondent, on the other hand, counters that it did not hire
Respondent’s motion for reconsideration was denied by the NLRC on the petitioner, hence, he was never an employee, much less a regular one.
September 9, 2002.11
Both the Labor Arbiter and the CA concluded that there was no employer-
The NLRC upheld the existence of an employer-employee relationship, employee relationship between the petitioner and respondent. They based
ratiocinating that it was difficult to believe that a simple carpenter from far their conclusion on the alleged admission of the petitioner that he was
away Pamplona would go to Dumaguete City to hire a competent lawyer to previously hired by the former owner of the hacienda. Thus, they rationalized
help him secure justice if he did not believe that his right as a laborer had that since the respondent was not obliged to absorb all the employees of the
been violated.12 It added that the creation of the PPLC required the former owner, petitioner’s claim of employment could not be sustained. The
tremendous task of constructing hotels, inns, restaurants, bars, boutiques NLRC, on the other hand, upheld petitioner’s claim of regular employment
and service shops, thus involving extensive carpentry work. As an old because of the respondent’s failure to present its employment records.
carpentry hand in the old corporation, the possibility of petitioner’s
employment was great.13 The NLRC likewise held that the respondent The existence of an employer-employee relationship involves a question of
should have presented its employment records if only to show that petitioner fact which is well within the province of the CA to determine. Nonetheless,
was not included in its list of employees; its failure to do so was given the reality that the CA’s findings are at odds with those of the NLRC,
fatal.14 Considering that petitioner worked for the respondent for a period of the Court is constrained to probe into the attendant circumstances as
two years, he was a regular employee.15 appearing on record.21

Aggrieved, respondent instituted a special civil action for certiorari under A thorough examination of the records compels this Court to reach a
Rule 65 before the Court of Appeals which granted the same; and conclusion different from that of the CA. It is true that petitioner admitted
consequently annulled and set aside the NLRC decision. The CA disposed, having been employed by the former owner prior to 1993 or before the
as follows: respondent took over the ownership and management of the plantation,
however, he likewise alleged having been hired by the respondent as a
WHEREFORE, premises considered, the instant petition carpenter in 1995 and having worked as such for two years until 1997.
is GRANTED. The assailed decision of the NLRC dated October Notably, at the outset, respondent categorically denied that it hired the
24, 2000, as well as the Resolution dated September 9, 2002 in petitioner. Yet, in its petition filed before the CA, respondent made this
NLRC Case No. V-000882-99, RAB VII-0088-98-D are admission:

33
 Private respondent [petitioner herein] cannot be considered a with respect to the activity in which he is employed and his
regular employee since the nature of his work is merely project in employment shall continue while such activity exists.
character in relation to the construction of the facilities of the
Pamplona Plantation LeisureCorporation. As can be gleaned from this provision, there are two kinds of regular
employees, namely: (1) those who are engaged to perform activities which
He is a project employee as he was hired – 1) for a specific are usually necessary or desirable in the usual business or trade of the
project or undertaking, and 2) the completion or termination of employer; and (2) those who have rendered at least one year of service,
such project or undertaking has been determined at the time of whether continuous or broken, with respect to the activity in which they are
engagement of the employee. x x x. employed.27 Simply stated, regular employees are classified into: regular
employees by nature of work; and regular employees by years of service.
xxxx The former refers to those employees who perform a particular activity which
is necessary or desirable in the usual business or trade of the employer,
regardless of their length of service; while the latter refers to those
In other words, as regards those workers who worked in employees who have been performing the job, regardless of the nature
1995 specifically in connection with the construction of the thereof, for at least a year.28 If the employee has been performing the job for
facilities of Pamplona Plantation Leisure Corporation, their at least one year, even if the performance is not continuous or merely
employment was definitely "temporary" in character and not intermittent, the law deems the repeated and continuing need for its
regular employment. Their employment was deemed terminated performance as sufficient evidence of the necessity, if not indispensability, of
by operation of law the moment they had finished the job or that activity to the business.29
activity under which they were employed.22
Respondent is engaged in the management of the Pamplona Plantation as
Thus, departing from its initial stand that it never hired petitioner, the well as in the operation of tourist resorts, hotels, inns, restaurants, etc.
respondent eventually admitted the existence of employer-employee Petitioner, on the other hand, was engaged to perform carpentry work. His
relationship before the CA. It, however, qualified such admission by claiming services were needed for a period of two years until such time that the
that it was PPLC that hired the petitioner and that the nature of his respondent decided not to give him work assignment anymore. Owing to his
employment therein was that of a "project" and not "regular" employee. length of service, petitioner became a regular employee, by operation of law.

Parenthetically, this Court in Pamplona Plantation Company, Inc. v. Respondent argues that, even assuming that petitioner can be considered an
Tinghil23 and Pamplona Plantation Company v. Acosta24 had pierced the veil employee, he cannot be classified as a regular employee, but merely as a
of corporate fiction and declared that the two corporations,25 PPLC and the project employee whose services were hired only with respect to a specific
herein respondent, are one and the same. job and only while that specific job existed.

By setting forth these defenses, respondent, in effect, admitted that petitioner A project employee is assigned to carry out a specific project or undertaking
worked for it, albeit in a different capacity. Such an allegation is in the nature the duration and scope of which are specified at the time the employee is
of a negative pregnant, a denial pregnant with the admission of the engaged in the project. A project is a job or undertaking which is distinct,
substantial facts in the pleadings responded to which are not squarely separate and identifiable from the usual or regular undertakings of the
denied, and amounts to an acknowledgment that petitioner was indeed company. A project employee is assigned to a project which begins and ends
employed by respondent.26 at determined or determinable times.30

The employment relationship having been established, the next question we The principal test used to determine whether employees are project
must answer is: Is the petitioner a regular or project employee? employees as distinguished from regular employees, is whether or not the
employees were assigned to carry out a specific project or undertaking, the
We find the petitioner to be a regular employee. duration or scope of which was specified at the time the employees were
engaged for that project.31 In this case, apart from respondent’s bare
Article 280 of the Labor Code, as amended, provides: allegation that petitioner was a project employee, it had not shown that
petitioner was informed that he would be assigned to a specific project or
undertaking. Neither was it established that he was informed of the duration
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The and scope of such project or undertaking at the time of his engagement.
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 Most important of all, based on the records, respondent did not report the
has been engaged to perform activities which are usually termination of petitioner’s supposed project employment to the Department
necessary or desirable in the usual business or trade of the of Labor and Employment (DOLE). Department Order No. 19 (as well as the
employer, except where the employment has been fixed for a old Policy Instructions No. 20) requires employers to submit a report of an
specific project or undertaking, the completion or termination of employee’s termination to the nearest public employment office every time
which has been determined at the time of the engagement of the the employment is terminated due to a completion of a project. Respondent’s
employee or where the work or service to be performed is failure to file termination reports, particularly on the cessation of petitioner’s
seasonal in nature and the employment is for the duration of the employment, was an indication that the petitioner was not a project but a
season. regular employee.32

An employment shall be deemed to be casual if it is not covered We stress herein that the law overrides such conditions which are prejudicial
by the preceding paragraph: Provided, That, any employee who to the interest of the worker whose weak bargaining position necessitates the
has rendered at least one year of service, whether such service is succor of the State. What determines whether a certain employment is
continuous or broken, shall be considered a regular employee regular or otherwise is not the will or word of the employer, to which the
worker oftentimes acquiesces. Neither is it the procedure of hiring the

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employee nor the manner of paying the salary or the actual time spent at Lastly, we affirm the NLRC’s award of salary differential. In light of our
work. It is the character of the activities performed by the employer in relation foregoing disquisition on the illegality of petitioner’s dismissal, and our
to the particular trade or business of the employer, taking into account all the adoption of the NLRC’s findings, suffice it to state that such issue is a
circumstances, including the length of time of its performance and its question of fact, and we find no cogent reason to disturb the findings of the
continued existence. Given the attendant circumstances in the case at bar, it labor tribunal.
is obvious that one year after he was employed by the respondent, petitioner
became a regular employee by operation of law.33 WHEREFORE, premises considered, the petition is GRANTED. The
Decision of the Court of Appeals dated August 27, 2003 and its Resolution
As to the question of whether petitioner was illegally dismissed, we answer in dated November 11, 2003 in CA-G.R. SP No. 74892
the affirmative. are REVERSED and SET ASIDE. Petitioner is found to have been illegally
dismissed from employment and thus, is ENTITLED to: 1) Salary Differential
Well-established is the rule that regular employees enjoy security of tenure embodied in the NLRC decision dated October 24, 2000 in NLRC Case No.
and they can only be dismissed for just cause and with due process, i.e., V-000882-99; 2) Separation Pay; 3) Backwages; and 4) Attorney’s fees
after notice and hearing. In cases involving an employee’s dismissal, the equivalent to ten percent (10%) of the monetary awards. Upon finality of this
burden is on the employer to prove that the dismissal was legal. This burden judgment, let the records of the case be remanded to the NLRC for the
was not amply discharged by the respondent in this case. computation of the exact amounts due the petitioner.

Obviously, petitioner’s dismissal was not based on any of the just or SO ORDERED.
authorized causes enumerated under Articles 282,34 28335 and 28436 of the
Labor Code, as amended. After working for the respondent for a period of
two years, petitioner was shocked to find out that he was not given any work
assignment anymore. Hence, the requirement of substantive due process
was not complied with.

Apart from the requirement that the dismissal of an employee be based on

any of the just or authorized causes, the procedure laid down in Book VI,
Rule I, Section 2 (d) of the Omnibus Rules Implementing the Labor Code,
must be followed.37 Failure to observe the rules is a violation of the
employee’s right to procedural due process.

In view of the non-observance of both substantive and procedural due

process, in accordance with the guidelines outlined by this Court in Agabon
v. National Labor Relations Commission,38 we declare that petitioner’s
dismissal from employment is illegal.39

Having shown that petitioner is a regular employee and that his dismissal
was illegal, we now discuss the propriety of the monetary claims of the
petitioner. An illegally dismissed employee is entitled to: (1) either
reinstatement, if viable, or separation pay if reinstatement is no longer viable,
and (2) backwages.40

In the instant case, we are prepared to concede the impossibility of the

reinstatement of petitioner considering that his position or any equivalent
position may no longer be available in view of the length of time that this
case has been pending. Moreover, the protracted litigation may have
seriously abraded the relationship of the parties so as to render
reinstatement impractical. Accordingly, petitioner may be awarded separation
pay in lieu of reinstatement.41

Petitioner’s separation pay is pegged at the amount equivalent to petitioner’s

one (1) month pay, or one-half (1/2) month pay for every year of service,
whichever is higher, reckoned from his first day of employment up to finality
of this decision. Full backwages, on the other hand, should be computed
from the date of his illegal dismissal until the finality of this decision.

On petitioner’s entitlement to attorney’s fees, we must take into account the

fact that petitioner was illegally dismissed from his employment and that his
wages and other benefits were withheld from him without any valid and legal
basis. As a consequence, he was compelled to file an action for the recovery
of his lawful wages and other benefits and, in the process, incurred
expenses. On these bases, the Court finds that he is entitled to attorney’s
fees equivalent to ten percent (10%) of the monetary award.42

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