G.R. No.

119268
February 23, 2000
ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES,
JOEL ORDENIZA and AMADO CENTENO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL,
INC.) respondents.
QUISUMBING, J.:
This special civil action for certiorari seeks to annul the decision 1 of public respondent promulgated on October 28,
1994, in NLRC NCR CA No. 003883-92, and its resolution 2 dated December 13, 1994 which denied petitioners
motion for reconsideration.
Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the
operation of "Goodman Taxi." Petitioners used to drive private respondent's taxicabs every other day on a 24-hour
work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00
daily. Nevertheless, private respondent admittedly regularly deducts from petitioners, daily earnings the amount of
P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to
form a labor union to protect their rights and interests.
Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when
they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled
out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the
labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction
of washing fees. In a decision3 dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit.
On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside the
judgment of the labor arbiter. The labor tribunal declared that petitioners are employees of private respondent, and,
as such, their dismissal must be for just cause and after due process. It disposed of the case as follows:
WHEREFORE, in view of all the foregoing considerations, the decision of the Labor Arbiter appealed from is hereby
SET ASIDE and another one entered:
1. Declaring the respondent company guilty of illegal dismissal and accordingly it is directed to reinstate the
complainants, namely, Alberto A. Gonzales, Joel T. Morato, Gavino Panahon, Demetrio L. Calagos, Sonny M.
Lustado, Romeo Q. Clariza, Luis de los Angeles, Amado Centino, Angel Jardin, Rosendo Marcos, Urbano Marcos,
Jr., and Joel Ordeniza, to their former positions without loss of seniority and other privileges appertaining thereto; to
pay the complainants full backwages and other benefits, less earnings elsewhere, and to reimburse the drivers the
amount paid as washing charges; and
2. Dismissing the charge of unfair [labor] practice for insufficiency of evidence.

abuse of discretion in rendering the assailed decision, arguing that:

I
THE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENT'S SECOND MOTION FOR
RECONSIDERATION WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER THE NLRC RULES, AND TO
GRANT THE SAME ON GROUNDS NOT EVEN INVOKED THEREIN.
II
THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES IS ALREADY A
SETTLED ISSUE CONSTITUTING RES JUDICATA, WHICH THE NLRC HAS NO MORE JURISDICTION TO
REVERSE, ALTER OR MODIFY.
III
IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER SUPPORTS THE VIEW THAT PETITIONERSTAXI DRIVERS ARE EMPLOYEES OF RESPONDENT TAXI COMPANY.7
The petition is impressed with merit.
The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the
jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by the tribunal exercising
judicial or quasi-judicial power as to amount to lack of power. 8 In labor cases, this Court has declared in several
instances that disregarding rules it is bound to observe constitutes grave abuse of discretion on the part of labor
tribunal.
In Garcia vs. NLRC,9 private respondent therein, after receiving a copy of the labor arbiter's decision, wrote the
labor arbiter who rendered the decision and expressed dismay over the judgment. Neither notice of appeal was
filed nor cash or surety bond was posted by private respondent. Nevertheless, the labor tribunal took cognizance of
the letter from private respondent and treated said letter as private respondent's appeal. In a certiorari action before
this Court, we ruled that the labor tribunal acted with grave abuse of discretion in treating a mere letter from private
respondent as private respondent's appeal in clear violation of the rules on appeal prescribed under Section 3(a),
Rule VI of the New Rules of Procedure of NLRC.
In Philippine Airlines Inc. vs. NLRC,10 we held that the labor arbiter committed grave abuse of discretion when he
failed to resolve immediately by written order a motion to dismiss on the ground of lack of jurisdiction and the
supplemental motion to dismiss as mandated by Section 15 of Rule V of the New Rules of Procedure of the NLRC.
In Unicane Workers Union-CLUP vs. NLRC,11 we held that the NLRC gravely abused its discretion by allowing and
deciding an appeal without an appeal bond having been filed as required under Article 223 of the Labor Code.
In Maebo vs. NLRC,12 we declared that the labor arbiter gravely abused its discretion in disregarding the rule
governing position papers. In this case, the parties have already filed their position papers and even agreed to
consider the case submitted for decision, yet the labor arbiter still admitted a supplemental position paper and
memorandum, and by taking into consideration, as basis for his decision, the alleged facts adduced therein and the
documents attached thereto.

SO ORDERED.4
Private respondent's first motion for reconsideration was denied. Remaining hopeful, private respondent filed
another motion for reconsideration. This time, public respondent, in its decision 5 dated October 28, 1994, granted
aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private
respondent have no employer-employee relationship. It held that the relationship of the parties is leasehold which is
covered by the Civil Code rather than the Labor Code, and disposed of the case as follows:
VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion under reconsideration is hereby given due course.
Accordingly, the Resolution of August 10, 1994, and the Decision of April 28, 1994 are hereby SET ASIDE. The
Decision of the Labor Arbiter subject of the appeal is likewise SET ASIDE and a NEW ONE ENTERED dismissing
the complaint for lack of jurisdiction.
No costs.
SO ORDERED.6
Expectedly, petitioners sought reconsideration of the labor tribunal's latest decision which was denied. Hence, the
instant petition.
In this recourse, petitioners allege that public respondent acted without or in excess of jurisdiction, or with grave

In Gesulgon vs. NLRC,13 we held that public respondent gravely abused its discretion in treating the motion to set
aside judgment and writ of execution as a petition for relief of judgment. In doing so, public respondent had, without
sufficient basis, extended the reglementary period for filing petition for relief from judgment contrary to prevailing
rule and case law.
In this case before us, private respondent exhausted administrative remedy available to it by seeking
reconsideration of public respondent's decision dated April 28, 1994, which public respondent denied. With this
motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it may have
committed before resort to courts of justice can be had. 14 Thus, when private respondent filed a second motion for
reconsideration, public respondent should have forthwith denied it in accordance with Rule 7, Section 14 of its New
Rules of Procedure which allows only one motion for reconsideration from the same party, thus:
Sec. 14. Motions for Reconsideration. Motions for reconsideration of any order, resolution or decision of the
Commission shall not be entertained except when based on palpable or patent errors, provided that the motion is
under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision with proof of
service that a copy of the same has been furnished within the reglementary period the adverse party and provided
further, that only one such motion from the same party shall be entertained. [Emphasis supplied]

The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in
obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be
countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an
employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and
education. It may as well involve the survival of a business or an industry.15
As correctly pointed out by petitioner, the second motion for reconsideration filed by private respondent is
indubitably a prohibited pleading16 which should have not been entertained at all. Public respondent cannot just
disregard its own rules on the pretext of "satisfying the ends of justice", 17 especially when its disposition of a legal
controversy ran afoul with a clear and long standing jurisprudence in this jurisdiction as elucidated in the
subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of
rectifying an error or mistake. In our view, public respondent gravely abused its discretion in taking cognizance and
granting private respondent's second motion for reconsideration as it wrecks the orderly procedure in seeking
reliefs in labor cases.
But, there is another compelling reason why we cannot leave untouched the flip-flopping decisions of the public
respondent. As mentioned earlier, its October 28, 1994 judgment is not in accord with the applicable decisions of
this Court. The labor tribunal reasoned out as follows:
On the issue of whether or not employer-employee relationship exists, admitted is the fact that complainants are
taxi drivers purely on the "boundary system". Under this system the driver takes out his unit and pays the
owner/operator a fee commonly called "boundary" for the use of the unit. Now, in the determination the existence of
employer-employee relationship, the Supreme Court in the case of Sara, et al., vs. Agarrado, et al. (G.R. No.
73199, 26 October 1988) has applied the following four-fold test: "(1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees
conduct."
"Among the four (4) requisites", the Supreme Court stresses that "control is deemed the most important that the
other requisites may even be disregarded". Under the control test, an employer-employee relationship exists if the
"employer" has reserved the right to control the "employee" not only as to the result of the work done but also as to
the means and methods by which the same is to be accomplished. Otherwise, no such relationship exists. (Ibid.)
Applying the foregoing parameters to the case herein obtaining, it is clear that the respondent does not pay the
drivers, the complainants herein, their wages. Instead, the drivers pay a certain fee for the use of the vehicle. On
the matter of control, the drivers, once they are out plying their trade, are free to choose whatever manner they
conduct their trade and are beyond the physical control of the owner/operator; they themselves determine the
amount of revenue they would want to earn in a day's driving; and, more significantly aside from the fact that they
pay for the gasoline they consume, they likewise shoulder the cost of repairs on damages sustained by the vehicles
they are driving.

As consistently held by this Court, termination of employment must be effected in accordance with law. The just and
authorized causes for termination of employment are enumerated under Articles 282, 283 and 284 of the Labor
Code. The requirement of notice and hearing is set-out in Article 277 (b) of the said Code. Hence, petitioners, being
employees of private respondent, can be dismissed only for just and authorized cause, and after affording them
notice and hearing prior to termination. In the instant case, private respondent had no valid cause to terminate the
employment of petitioners. Neither were there two (2) written notices sent by private respondent informing each of
the petitioners that they had been dismissed from work. These lack of valid cause and failure on the part of private
respondent to comply with the twin-notice requirement underscored the illegality surrounding petitioners' dismissal.
Under the law, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.23 It must be emphasized, though, that recent judicial pronouncements 24 distinguish between
employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989, and those whose
illegal dismissals were effected after such date. Thus, employees illegally dismissed prior to March 21, 1989, are
entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after
that date are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from
the time their actual compensation was withheld from them up to the time of their actual reinstatement. The
legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without
deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his
illegal dismissal. Considering that petitioners were terminated from work on August 1, 1991, they are entitled to full
backwages on the basis of their last daily earnings.
With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi units, we
view the same as not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the
driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of
duty is indeed a practice in the taxi industry and is in fact dictated by fair play.25 Hence, the drivers are not entitled to
reimbursement of washing charges.
WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public respondent dated October 28,
1994, is hereby SET ASIDE. The DECISION of public respondent dated April 28, 1994, and its RESOLUTION dated
December 13, 1994, are hereby REINSTATED subject to MODIFICATION. Private respondent is directed to
reinstate petitioners to their positions held at the time of the complained dismissal. Private respondent is likewise
ordered to pay petitioners their full backwages, to be computed from the date of dismissal until their actual
reinstatement. However, the order of public respondent that petitioners be reimbursed the amount paid as washing
charges is deleted. Costs against private respondents.
SO ORDERED.

Verily, all the foregoing attributes signify that the relationship of the parties is more of a leasehold or one that is
covered by a charter agreement under the Civil Code rather than the Labor Code.18
The foregoing ratiocination goes against prevailing jurisprudence.
In a number of cases decided by this Court, 19 we ruled that the relationship between jeepney owners/operators on
one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of
lessor-lessee. We explained that in the lease of chattels, the lessor loses complete control over the chattel leased
although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to
the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and
control over the latter. The management of the business is in the owner's hands. The owner as holder of the
certificate of public convenience must see to it that the driver follows the route prescribed by the franchising
authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed
wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and employee. We have applied by analogy the
abovestated doctrine to the relationships between bus owner/operator and bus conductor,20 auto-calesa
owner/operator and driver,21 and recently between taxi owners/operators and taxi drivers. 22 Hence, petitioners are
undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually
necessary or desirable in the usual business or trade of their employer.

G.R. Nos. 83380-81 November 15, 1989

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department of Labor
and Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP
and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ,
EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA,
GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET
SANGDANG, JOSEFINA ALCOCEBA and MARIA ANGELES, respondents.
Ledesma, Saludo & Associates for petitioners.
Pablo S. Bernardo for private respondents.
FERNAN, C.J.:
This petition for certiorari involving two separate cases filed by private respondents against herein petitioners
assails the decision of respondent National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled
"Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati Haberdashery and/or Toppers
Makati, et al." and NLRC CASE No. 2-428-85 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP
etc., et al. v. Toppers Makati, et al.", affirming the decision of the Labor Arbiter who jointly heard and decided
aforesaid cases, finding: (a) petitioners guilty of illegal dismissal and ordering them to reinstate the dismissed
workers and (b) the existence of employer-employee relationship and granting respondent workers by reason
thereof their various monetary claims.
The undisputed facts are as follows:
Individual complainants, private respondents herein, have been working for petitioner Makati Haberdashery, Inc. as
tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piece-rate basis except
Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given
a daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday.
Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday
and during peak periods even on Sundays and holidays.
On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a
complaint docketed as NLRC NCR Case No. 7-2603-84 for (a) underpayment of the basic wage; (b) underpayment
of living allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service
incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1
During the pendency of NLRC NCR Case No. 7-2603-84, private respondent Dioscoro Pelobello left with Salvador
Rivera, a salesman of petitioner Haberdashery, an open package which was discovered to contain a "jusi" barong
tagalog. When confronted, Pelobello replied that the same was ordered by respondent Casimiro Zapata for his
customer. Zapata allegedly admitted that he copied the design of petitioner Haberdashery. But in the afternoon,
when again questioned about said barong, Pelobello and Zapata denied ownership of the same. Consequently a
memorandum was issued to each of them to explain on or before February 4, 1985 why no action should be taken
against them for accepting a job order which is prejudicial and in direct competition with the business of the
company. 2 Both respondents allegedly did not submit their explanation and did not report for work. 3 Hence, they
were dismissed by petitioners on February 4, 1985. They countered by filing a complaint for illegal dismissal
docketed as NLRC NCR Case No. 2-428-85 on February 5, 1985. 4
On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85 finding respondents guilty of illegal
dismissal and ordering them to reinstate Dioscoro Pelobello and Casimiro Zapata to their respective or similar
positions without loss of seniority rights, with full backwages from July 4, 1985 up to actual reinstatement. The
charge of unfair labor practice is dismissed for lack of merit.
In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment re violation of the minimum wage
law is hereby ordered dismissed for lack of merit.
Respondents are hereby found to have violated the decrees on the cost of living allowance, service incentive leave
pay and the 13th Month Pay. In view thereof, the economic analyst of the Commission is directed to compute the

monetary awards due each complainant based on the available records of the respondents retroactive as of three
years prior to the filing of the instant case.
SO ORDERED. 5
From the foregoing decision, petitioners appealed to the NLRC. The latter on March 30, 1988 affirmed said decision
but limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one (1) year. 6
After their motion for reconsideration was denied, petitioners filed the instant petition raising the following issues:
I
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP
EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS WORKERS.
II
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS WORKERS ARE ENTITLED
TO MONETARY CLAIMS DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM WAGE.
III
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS PELOBELLO AND ZAPATA
WERE ILLEGALLY DISMISSED. 7
The first issue which is the pivotal issue in this case is resolved in favor of private respondents. We have repeatedly
held in countless decisions that the test of employer-employee relationship is four-fold: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control
the employee's conduct. It is the so called "control test" that is the most important element. 8 This simply means the
determination of whether the employer controls or has reserved the right to control the employee not only as to the
result of the work but also as to the means and method by which the same is to be accomplished. 9
The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from the
operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor, the latter
directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the customer's
measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is actively manifested
in all these aspects the manner and quality of cutting, sewing and ironing.
Furthermore, the presence of control is immediately evident in this memorandum issued by Assistant Manager
Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to Topper's Makati Tailors which reads in part:
4. Effective immediately, new procedures shall be followed:
A. To follow instruction and orders from the undersigned Roger Valderama, Ruben Delos Reyes and Ofel Bautista.
Other than this person (sic) must ask permission to the above mentioned before giving orders or instructions to the
tailors.
B. Before accepting the job orders tailors must check the materials, job orders, due dates and other things to
maximize the efficiency of our production. The materials should be checked (sic) if it is matched (sic) with the
sample, together with the number of the job order.
C. Effective immediately all job orders must be finished one day before the due date. This can be done by proper
scheduling of job order and if you will cooperate with your supervisors. If you have many due dates for certain day,
advise Ruben or Ofel at once so that they can make necessary adjustment on due dates.
D. Alteration-Before accepting alteration person attending on customs (sic) must ask first or must advise the tailors
regarding the due dates so that we can eliminate what we call 'Bitin'.
E. If there is any problem regarding supervisors or co-tailor inside our shop, consult with me at once settle the
problem. Fighting inside the shop is strictly prohibited. Any tailor violating this memorandum will be subject to
disciplinary action.
For strict compliance. 10
From this memorandum alone, it is evident that petitioner has reserved the right to control its employees not only as
to the result but also the means and methods by which the same are to be accomplished. That private respondents
are regular employees is further proven by the fact that they have to report for work regularly from 9:30 a.m. to 6:00
or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report for work before 9:30 a.m. and which
is forfeited when they arrive at or after 9:30 a.m. 11
Since private respondents are regular employees, necessarily the argument that they are independent contractors

must fail. As established in the preceding paragraphs, private respondents did not exercise independence in their
own methods, but on the contrary were subject to the control of petitioners from the beginning of their tasks to their
completion. Unlike independent contractors who generally rely on their own resources, the equipment, tools,
accessories, and paraphernalia used by private respondents are supplied and owned by petitioners. Private
respondents are totally dependent on petitioners in all these aspects.
Coming now to the second issue, there is no dispute that private respondents are entitled to the Minimum Wage as
mandated by Section 2(g) of Letter of Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and
reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which explicitly states that, "All employees
paid by the result shall receive not less than the applicable new minimum wage rates for eight (8) hours work a day,
except where a payment by result rate has been established by the Secretary of Labor. ..." 12 No such rate has been
established in this case.
But all these notwithstanding, the question as to whether or not there is in fact an underpayment of minimum wages
to private respondents has already been resolved in the decision of the Labor Arbiter where he stated: "Hence, for
lack of sufficient evidence to support the claims of the complainants for alleged violation of the minimum wage, their
claims for underpayment re violation of the Minimum Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must
perforce fall." 13
The records show that private respondents did not appeal the above ruling of the Labor Arbiter to the NLRC; neither
did they file any petition raising that issue in the Supreme Court. Accordingly, insofar as this case is concerned, that
issue has been laid to rest. As to private respondents, the judgment may be said to have attained finality. For it is a
well-settled rule in this jurisdiction that "an appellee who has not himself appealed cannot obtain from the appellate
court-, any affirmative relief other than the ones granted in the decision of the court below. " 14
As a consequence of their status as regular employees of the petitioners, they can claim cost of living allowance.
This is apparent from the provision defining the employees entitled to said allowance, thus: "... All workers in the
private sector, regardless of their position, designation or status, and irrespective of the method by which their
wages are paid. " 15
Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and Regulations
Implementing P.D. No. 851 which provides:
Section 3. Employers covered. The Decree shall apply to all employers except to:
xxx xxx xxx
(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where
the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as
such workers are concerned. (Emphasis supplied.)

In fact the Labor Arbiter himself to whom the explanation of private respondents was submitted gave no credence to
their version and found their excuses that said barong tagalog was the one they got from the embroiderer for the
Assistant Manager who was investigating them, unbelievable.
Under the circumstances, it is evident that there is no illegal dismissal of said employees. Thus, We have ruled that:
No employer may rationally be expected to continue in employment a person whose lack of morals, respect and
loyalty to his employer, regard for his employer's rules, and appreciation of the dignity and responsibility of his
office, has so plainly and completely been bared.
That there should be concern, sympathy, and solicitude for the rights and welfare of the working class, is meet and
proper. That in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in
the interpretation of agreements and writings should be resolved in the former's favor, is not an unreasonable or
unfair rule. But that disregard of the employer's own rights and interests can be justified by that concern and
solicitude is unjust and unacceptable. (Stanford Microsystems, Inc. v. NLRC, 157 SCRA 414-415 [1988] ).
The law is protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. 17
More importantly, while the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every labor dispute will automatically be decided in favor of labor. 18
Finally, it has been established that the right to dismiss or otherwise impose discriplinary sanctions upon an
employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine
the existence of said cause in accordance with the norms of due process. 19
There is no evidence that the employer violated said norms. On the contrary, private respondents who vigorously
insist on the existence of employer-employee relationship, because of the supervision and control of their employer
over them, were the very ones who exhibited their lack of respect and regard for their employer's rules.
Under the foregoing facts, it is evident that petitioner Haberdashery had valid grounds to terminate the services of
private respondents.
WHEREFORE, the decision of the National Labor Relations Commission dated March 30, 1988 and that of the
Labor Arbiter dated June 10, 1986 are hereby modified. The complaint filed by Pelobello and Zapata for illegal
dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and legal bases. Award of
service incentive leave pay to private respondents is deleted.
SO ORDERED.

On the other hand, while private respondents are entitled to Minimum Wage, COLA and 13th Month Pay, they are
not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for
performing work irrespective of time consumed in the performance thereof, they fall under one of the exceptions
stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. For the same reason private
respondents cannot also claim holiday pay (Section 1(e), Rule IV, Implementing Regulations, Book III, Labor Code).
With respect to the last issue, it is apparent that public respondents have misread the evidence, for it does show
that a violation of the employer's rules has been committed and the evidence of such transgression, the copied
barong tagalog, was in the possession of Pelobello who pointed to Zapata as the owner. When required by their
employer to explain in a memorandum issued to each of them, they not only failed to do so but instead went on
AWOL (absence without official leave), waited for the period to explain to expire and for petitioner to dismiss them.
They thereafter filed an action for illegal dismissal on the far-fetched ground that they were dismissed because of
union activities. Assuming that such acts do not constitute abandonment of their jobs as insisted by private
respondents, their blatant disregard of their employer's memorandum is undoubtedly an open defiance to the lawful
orders of the latter, a justifiable ground for termination of employment by the employer expressly provided for in
Article 283(a) of the Labor Code as well as a clear indication of guilt for the commission of acts inimical to the
interests of the employer, another justifiable ground for dismissal under the same Article of the Labor Code,
paragraph (c). Well established in our jurisprudence is the right of an employer to dismiss an employee whose
continuance in the service is inimical to the employer's interest. 16

[G.R. No. 113542. February 24, 1998]

CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR. in his capacity as

union president, petitioner, vs. UNDERSECRETARY BIENVENIDO E. LAGUESMA and

CORFARM GRAINS, INC., respondents.
[G.R. No. 114911. February 24, 1998]
CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by JUANITO P. COSTALES, JR.,
president, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CORFARM GRAINS,
INC. and/or TEODY C. RAPISORA and HERMINIO RABANG, respondents.
DECISION
PANGANIBAN, J.:
The Court reiterates some fundamental labor doctrines: (1) this Court may review factual determinations where the
findings of the med-arbiter conflict with those of the undersecretary of labor; (2) an employer-employee relationship
may be established by substantial evidence; (3) procedural due process is satisfied by the grant of an opportunity to
be heard and an actual adversarial-type trial is not required; (4) the NLRC commits grave abuse of discretion when
it remands a case to the labor arbiter in spite of ample pieces of evidence on record which are sufficient to decide
the case directly; and (5) where illegal dismissal is proven, the workers are entitled to back wages and other similar
benefits without deductions or conditions.

WHEREFORE, the Decision of the Labor Arbiter dated 14 September 1993 is hereby SET ASIDE. Let the records
of the case be REMANDED to the Arbitration Branch of origin for immediate appropriate proceedings.
The labor arbiters decision that was reversed by Respondent NLRC disposed as follows:
WHEREFORE, judgment is hereby rendered as follows:
1. Declaring individual complainants dismissal illegal;
2. Declaring respondent guilty of unfair labor practice;
3. Ordering respondent to pay the 92 complainants the following:
a) 13th month pay limited to three years in the amount of P4,788.00 each;
b) service incentive leave pay in the amount of P855.00 each for three years;
c) underpaid wages covering the period June 1989 to June 1992 which amount to P47,040.00 each;
d) backwages reckoned from June 1992, the date of dismissal[,] to September 1993, the date of promulgation of
the decision or a period of 14 months, in the amount of P22,344.00 each;
e) refund of P12.00/day deduction limited to three years which amounts to P12,096 each; and
f) to pay the complainants P1,000.00 each as damages.
4. To reinstate the complainants to their former position[s] immediately.

Statement of the Case

These doctrines are used by the Court in resolving these consolidated petitions for certiorari under Rule 65,
challenging the resolutions of Undersecretary Bienvenido Laguesma and the National Labor Relations Commission.

All other claims are hereby dismissed for lack of merit.

First Case
In G.R. No. 113542, hereafter referred to as the First Case, Petitioner Caurdanetaan Piece Workers
Union/Association (CPWU) prays for the nullification and reversal of Undersecretary Laguesmas Order dated
January 4, 1994 in OS-MA-A-8-119-93 (RO100-9207-RU-001), which granted Respondent Corfarms motion for
reconsideration and dismissed petitioners prayer for certification election. The dispositive portion of the assailed
Order reads as follows:

The Facts
In his Consolidated Memorandum, the solicitor general recited the following pertinent facts, which we find amply
supported by the records:[

WHEREFORE, the questioned Order is hereby set aside and a new one issued dismissing the petition for
certification election for lack of merit.
In his earlier Order dated September 7, 1993, Laguesma affirmed Med-Arbiter Sinamar E. Limos order of March
18, 1993 which disposed as follows:
IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the above-entitled petition is hereby granted.
Consequently, the motion to dismiss filed by Corfarm Grains, Inc. is denied.
Let a certification election be conducted among the rank-and-file employees of Corfarm Grains, Inc., within ten (10)
days from receipt hereof, with the following choices:
1. Caurdanetaan Piece Workers Union;
2. No Union
A pre-election conference is hereby set on March 29, 1993 at 2:00 o clock in the afternoon at the DOLE, Dagupan
District Office, Mayombo District, Dagupan City to thresh out the mechanics of the Certification Election. Employer
Corfarm Grains, Inc. is hereby directed to present its employment records for the period covering January to June
1992 evidencing payment of salaries of its employees.

In a Resolution promulgated on March 28, 1994, Respondent NLRC denied petitioners motion for reconsideration.

Petitioner union has ninety-two (92) members who worked as cargador at the warehouse and ricemills of private
respondent [referring to Respondent Corfarm] at Umingan, Pangasinan since 1982. As cargadores, they loaded,
unloaded and piled sacks of palay from the warehouse to the cargo trucks and those brought by cargo trucks for
delivery to different places. They were paid by private respondent on a piece rate basis. When private respondent
denied some benefits to these cargadores, the latter organized petitioner union. Upon learning of its formation,
private respondent barred its members from working with them and replaced [them] with non-members of the union
sometime in the middle of 1992.
On July 9, 1992, petitioner filed [a petition] for certification election before the Regional Office No. I of the
Department of Labor and Employment, San Fernando, La Union docketed as RO100-9207-RU-001.
While this petition for certification election was pending, petitioner also filed on November 16, 1992, a complaint for
illegal dismissal, unfair labor practice, refund of illegal deductions, payment of wage differentials, various pecuniary
benefits provided by laws, damages, legal interest, reinstatement and attorneys fees, against private respondent
before the Regional Arbitration Branch No. 1 of Dagupan City, docketed as NLRC RAB Case No. 01-117-0184-92.
On November 24, 1992, Labor Arbiter Ricardo Olairez in NLRC Case No. Sub-Rab 01-117-0184-92, directed the
parties to submit position paper on or before December 14, 1992, and to appear for hearing on the said date. Only
the complainant petitioner submitted its position paper on December 3, 1992.
Likewise in the scheduled hearing on December 14, 1992, private respondent did not appear[;] thus Labor Arbiter
Olairez allowed the president of petitioner union Juanito Costales to testify and present its evidence ex-parte.

Let the parties be notified accordingly.

Aggrieved by Respondent Laguesmas subsequent Order dated January 27, 1994 denying its motion for
reconsideration, petitioner filed this recourse before this Court.
Second Case
In G.R. No. 114911, hereafter referred to as the Second Case, petitioner assails the Resolution promulgated on
February 16, 1994 in NLRC CA No. L-001109 by the National Labor Relations Commission (Respondent NLRC the
dispositive portion of which reads:

On December 16 1992, another notice was sent to the parties to appear on [the] January 7, 1993 hearing by Labor
Arbiter Emiliano de Asis.
Before the scheduled hearing on January 7, 1993, complainant petitioner filed a motion to amend complaint and to
admit amended complaint. It also filed the following:
1. Affidavit of Juanito Costales, Jr., dated November 24, 1992;
2. Joint affidavit of Ricardo Aban, Armando Casing, Benjamin Corpuz, Danny Margadejas, Fidel Fortunato, Henry
de los Reyes, Anthony de Luna, Warlito Arguilles, Dominador Aguda, Marcelino Cayuda, Jr., Jaime Costales and
Juanito Mendenilla dated December 30, 1992;

3. Joint affidavit of Juanito Costales and Armando Casing dated January 7, 1993;
4. Affidavit signed by individual union members.
On March 18, 1993, Med-Arbiter Sinamar E. Limos issued an Order granting the petition for certification election
earlier filed.
Meanwhile, Labor Arbiter Rolando D. Gambito in the illegal dismissal case issued the May 20, 1993 Order, the
dispositive portion [of] which reads:
WHEREFORE, respondents are hereby ordered to submit their position paper, together with their documentary
evidence, if any, within TEN (10) days from receipt of the order, otherwise we will be constrained to resolve this
case based on available evidence on record.
On September 7, 1993, public respondent Laguesma issued a Resolution denying the appeal filed by private
respondent against the order of Med-Arbiter Limos granting the petition for certification election.
Acting on said denial, private respondent filed a motion for reconsideration which was granted in an Order dated
January 4, 1994 by public respondent Laguesma dismissing the petition for certification election for lack of
employer-employee relationship.
Petitioner in turn filed a motion for reconsideration of the January 4, 1994, Order but it was denied by public
respondent Laguesma in his January 27, 1994 Order which reaffirmed the dismissal of petition for certification
election.
Thus, the union filed its first petition for certiorari assailing the Orders of January 4 and 27, 1994 of public
respondent Laguesma dismissing the petition for certification election. The said petition is captioned as
Caurdanetaan Piece Workers Union, petitioner, vs. Hon. Bienvenido Laguesma, et al., respondents, docketed as
G.R. No. 113542 and raffled to the Second Division of this Honorable Court.
On September 14, 1993, Labor Arbiter Rolando D. Gambito issued his decision finding the dismissal of petitioners
members illegal. On appeal by both parties, Respondent NLRC -- as earlier stated -- set aside the appealed
decision and remanded the case to the labor arbiter for further proceedings. Petitioners motion for reconsideration
was later denied.
The solicitor general, who was supposed to represent both public respondents, joined petitioner and filed a
Manifestation and Motion (In Lieu of Comment) dated July 25, 1994, praying that the petition in the First Case be
granted and that judgment be rendered annulling the assailed Orders of Respondent Laguesma. The Republics
counsel likewise filed another Manifestation and Motion (In Lieu of Comment) dated October 4, 1994 in the Second
Case, praying that judgment be rendered annulling the resolution of Public Respondent NLRC dated February 16,
1994 and March 28, 1994 and order[ing] public respondent to proceed with the case instead of remanding the
same to the labor arbiter of origin.
In a Resolution dated March 29, 1995, this Court ordered the consolidation of the two cases.
Public Respondents Rulings In the First Case
Public Respondent Laguesma premised the dismissal of the petition for certification election on the absence of an
employer-employee relationship between petitioners members and private respondent. Professing reliance on the
control test in determining employer-employee relationship, his Order dated January 4, 1994[ explained:
It is settled in this jurisdiction that the most important factor in determining the existence of employer-employee
relationship is the control test or the question of whether or not the supposed employer exercises control over the
means and methods by which the work is to be done. In the instant case, it is not disputed that movant does not
exercise any degree of control over how the loading or unloading of cavans of palays to or from the trucks, to or
from the rice mills. Movants only concern is that said cavans of palay are loaded/unloaded. Absent therefore, the
power to control not only the end to be achieved but also the means to be used in reaching such end, no employeremployee relationship could be said to have been established. We also noted that some of petitioners members
including its president, Juanito Costales, Jr., admitted in separate sworn statements that they offer and actually
perform loading and unloading work for various rice mills in Pangasinan and that the performance of said work
depends on the availability of work in said mills. They also categorically stated that there is no employer-employee

relationship between petitioner and movant. To our mind, said declarations being made against interest deserve
much evidentiary weight. Considering therefore, the foregoing, we have no alternative but to dismiss the petition for
lack of employer-employee relationship.
In the Second Case
On the other hand, Respondent NLRC ordered the remand of the case to the arbitration branch for further
proceedings because the issues at hand need further threshing out. Stressing the principle that allegations must be
proved by competent and credible evidence, it held:
There is no question that under the Rules of the Commission, complaints may be resolved on the basis of the
Position Papers submitted by the parties and that the parties may be deemed to have waived their right to present
evidence after they have been given an opportunity to do so. These procedural rules, however should be read in
conjunction with the time[-]honored principle that allegations must be proved and established by competent and
credible evidence. In other words, mere allegations would not suffice despite the absence of evidence to the
contrary.
In subject case, complainants-appellants allegations that they are laborers of respondents-appellants receiving
P45.00 per days work of eight hours (p. 2, Amended Position Paper dated December 14, 1992, p. 31 Records; p. 2
Amended Complaint dated 16 December 1992, p. 70, Records) appears to be in conflict with their earlier assertions
that they are paid on the basis of the number of cavans of palay moved, piled, hauled and unloaded from trucks or
haulers multiplied by P0.12 [per] sack or cavan. And for the days earning respondents used to be obliged to pay
P57.00 per days earning -- (p. 2, Position Paper dated 24 November 1992; p. 17, Records).
Similarly attached to the records is a narrative report of [the] DOLE inspector where it was mentioned that Juanito
Costales, Jr., is the owner of Carcado Contracting Services and is not an employee of Corefarm [sic] Grains
(Narrative Report dated August 4, 1992, p. 10 Records).
Another reason why subject case should be remanded to the Labor Arbiter below is the fact that the personality of
complainant union has been raised in issue before the proper forum and adverse decision on the matter will
definitely affect the whole proceedings.
Furthermore, records show that an Amended Complaint was filed on December 23, 1992. This amended complaint
made no mention of the affidavits of Juanito Costales, Jr. and the 92 other workers which documents were filed in
January 1993. Likewise, the amended complaint contains but a general statement that the 92 workers of Corefarm
[sic] Grains have been employed since 1982 which was adopted by the Labor Arbiter below in his decision
notwithstanding the fact that a number of these workers started working with respondent after 1982. Some of whom
worked with the company in 1990 (Joint Affidavit dated 7 January 1993, pp. 96-98, Records). Notwithstanding this
fact, the Labor Arbiter in the decision under consideration allowed refund of alleged deduction for a period of three
years. In the same manner, payment of salary differential was also granted.
Indeed the issues at hand need further threshing out. Under the Rules, the Labor Arbiter is authorized to thresh out
issues (sec. 4, Rule V). As it is, we are not convinced by the conclusions of the Labor Arbiter.
The ends of justice would better be served if all parties are granted further opportunity to ventilate their respective
positions.
The Issues
In its Consolidated Memorandum dated September 19, 1995 filed before us, petitioner raises the following grounds
in support of its petition:
1. Grave abuse of discretion or acting in excess of jurisdiction, which is equivalent to lack of jurisdiction on the
part of public respondent in setting aside the labor arbiters decision and in remanding this case to the office of
origin for further proceedings is not necessary when in fact the mandatory requirements of due process have
been observed by the labor arbiter in rendering decision on the case;
2. Remand of the case to office of origin for further proceedings on matters already passed upon properly by the
labor arbiter is contrary to the rule of speedy labor justice and the [sic] social justice and to afford protection to labor
policy of the Philippine Constitution, which is a command that should not be disregarded by the courts in resolving
labor cases;

3. Remand of the case to the labor arbiter would only prolong social unrest and the suffering of injurious effects of
illegal dismissal by the 92 illegally dismissed workers[;] hence, said remand of the case without justification
constitutes an oppressive act committed by public respondent.
Simply put, the issues are as follows:
1. Whether Respondent Laguesma acted with grave abuse of discretion in ordering the dismissal of the petition for
certification election
2 Whether Respondent NLRC acted with grave abuse of discretion in remanding the illegal dismissal case to the
labor arbiter for further proceedings.
The present controversy hinges on whether an employer-employee relationship between the CPWU members and
Respondent Corfarm has been established by substantial evidence.
The Courts Ruling
The two petitions are meritorious.
Main Issue: Employer-Employee Relationship
First Case: Certification Election
Petitioner contends that Respondent Laguesma committed grave abuse of discretion in dismissing the petition for
certification election by relying on private respondents bare allegation, in its motion for reconsideration, of lack of
employer-employee relationship. According to petitioner, Respondent Laguesma cannot reverse his Decision in the
absence of a concomitant change in his factual findings. Petitioner insists that all its members were employees of
private respondent, viz.:
The 92 workers, who are all union members of petitioner herein, have been rendering actual manual services as
cargadores in the warehouse and rice mills of private respondent, performing activities usually related to or
desirable by [sic] the business or trade of private respondent who is engaged in the buy and sell of palay as well as
warehousing of said commodity and milling the same for sale to customers in the form of milled rice. The 92
workers have performed their activities for the last ten (10) years prior to their having been illegally dismissed from
employment on June 18, 1992 or thereabouts.
Petitioner adds that many of its members received Christmas bonuses from private respondent.
On the other hand, Respondent Corfarm describes the contentions of petitioner as off-tangent, if not irrelevant.
First, the authority of the DOLE Secretary to decide appeals in representation cases is undeniable (see e.g.,
Sections 9 and 10 of Rule V, Book V, of the Implementing Rules and Regulations of the Labor Code; also Art. 259,
appeal from certification election orders, labor code). Second, petitioner completely misses the point that the
granting and denial of a motion for reconsideration involves the exercise of discretion . As submitted by the Public
Respondent in its Comment, among the ends to which a Motion for Reconsideration is addressed, one is precisely
to convince the court that its ruling is erroneous and improper, contrary to law or the evidence, x x x (Emphasis
found in the original.)
Corfarm insists that the challenged Order of Respondent Laguesma dated January 4, 1994 rests on solid findings
of fact which should be accorded respect and finality. It attacks the petitioners allegation -- that it has 92 workers
who worked as cargador at its warehouses -- as gratuitous and not supported by any evidence x x x [because] as
late as this time of day in the litigation of this case, who exactly are those 92 workers cannot be known from the
records. (Emphasis in original.)
Private respondent further argues that RJL Martinez Fishing Corp. vs. NLRC, cited by the solicitor general, has a
factual situation different from the case at bar. Waiting time, unlike that in RJL Martinez Fishing Corp., does not
obtain here. Likewise allegedly inapplicable are the rulings in Villavilla vs. Court of Appeals and in Brotherhood
Labor Unity Movement vs. Zamora.
Respondent Corfarm denies that it had the power of control, rationalizing that petitioners members were streethired workers engaged from time to time to do loading and unloading work x x x[;] [t]here [was] no superintendentin-charge x x x to give orders x x x[;] [and] there [were] no gate passes issued, nor tools, equipment and

paraphernalia issued by Corfarm for loading/unloading x x x It attributes error to the solicitor generals reliance on
Article 280 of the Labor Code. Citing Brent School, Inc. vs. Zamora, private respondent asserts that a literal
application of such article will result in absurdity, where petitioners members will be regular employees not only of
respondents but also of several other rice mills, where they were allegedly also under service. Finally, Corfarm
submits that the OSGs position is negated by the fact that petitioners members contracted for loading and
unloading services with respondent company when such work was available and when they felt like it x x x.
We rule for petitioners. Section 5, Rule 133 of the Rules of Court mandates that in cases filed before administrative
or quasi-judicial bodies, like the Department of Labor, a fact may be established by substantial evidence, i.e. that
amount of evidence which a reasonable mind might accept as adequate to justify a conclusion.
Also fundamental is the rule granting not only respect but even finality to factual findings of the Department of
Labor, if supported by substantial evidence. Such findings are binding upon this Court, unless petitioner is able to
show that the secretary of labor (or the undersecretary acting in his place) has arbitrarily disregarded or
misapprehended evidence before him to such an extent as to compel a contrary conclusion if such evidence were
properly appreciated. This is rooted in the principle that this Court is not a trier of facts, and that the determinations
made by administrative bodies on matters falling within their respective fields of specialization or expertise are
accorded respect. Also well-settled is the doctrine that the existence of an employer-employee relationship is
ultimately a question of fact and that the findings thereon by the labor authorities shall be accorded not only respect
but even finality when supported by substantial evidence. Finally, in certiorari proceedings under Rule 65, this Court
does not, as a rule, evaluate the sufficiency of evidence upon which the labor officials based their determinations.
The inquiry is essentially limited to whether they acted without or in excess of jurisdiction or with grave abuse of
discretion. However, this doctrine is not absolute. Where the labor officers findings are contrary to those of the medarbiter, the Court -- in the exercise of its equity jurisdiction -- may wade into and reevaluate such findings, which we
now embark on in this case.
To determine the existence of an employer-employee relation, this Court has consistently applied the four-fold test
which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4)
the power to control -- the last being the most important element.
Our examination of the case records indubitably shows the presence of an employer-employee relationship.
Relying on the evidence adduced by the petitioners, Respondent Laguesma himself affirmed the presence of such
connection. Thus, in his Order dated September 7, 1993, he astutely held:
Anent the first issue, we find the annexes submitted by the respondent company not enough to prove that herein
petitioner is indeed an independent contractor. The existence of an independent contractor relationship is generally
established by the following criteria. The contractor is carrying 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 over the workers; payment of the contractors workers; the
control and the supervision over the workers; the control of the premises; the duty to supply the premises, tools,
appliances, materials and laborers, and the mode, manner and terms of payment. [Brotherhood Labor Unity
Movement of the Philippines vs. Zamora, 147 SCRA 49 (198) [sic] ].
None of the above criteria exists in the case at bar. The absence of a written contract which specifies the
performance of a specified piece of work, the nature and extent of the work and the term and duration of the
relationship between herein petitioner and respondent company belies the latters [sic] allegation that the former is
indeed and [sic] independent contractor.
Also, respondent failed to show by clear and convincing proof that herein respondent has the substantial capital or
investment to qualify as an independent contractor under the law. The premises, tools, equipments [sic] and
paraphernalia are all supplied by respondent company. It is only the manpower or labor force which the alleged
contractor supplies, suggesting the existence of a labor only contracting scheme which is prohibited by law. Further,
if herein petitioner is indeed an independent contractor, it should have offered its services to other companies and
not to work [sic] exclusively for the respondent company. It is therefore, clear that the alleged J.P. Costales, Jr.
Cargador Services cannot be considered as an independent contractor as defined by law.
In his subsequent order, Respondent Laguesma inexplicably reversed his above ruling and held that there was no
employer-employee relationship on the ground that Respondent Corfarm exercised no power of control over the
alleged employees.
It may be asked, why the sudden change of mind on the part of Respondent Laguesma? No additional pieces of

evidence were adduced and no existing ones were identified by Laguesma to support such strange reversal. The
unblemished fact is that private respondent was the recruiter and employer of petitioners members.
Shoppers Gain Supermart vs. NLRC provides the standard to determine whether a worker is an independent
contractor:
The applicable law is not Article 280 of the Labor Code which is cited by petitioners, but Art. 106, which provides:
Art. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with another person for the
performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
xxxxxxxxx
xxxxxxxxx
There is labor-only contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are directly related to the principal business
of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same manner and extent as if the latter were directly
employed by him. (emphasis supplied)
In accordance with the above provision, petitioner corporation is deemed the direct employer of the private
respondents and thus liable for all benefits to which such workers are entitled, like wages, separation benefits and
so forth. There is no denying the fact that private respondents work as merchandisers, cashiers, baggers, checkout personnel, sales ladies, warehousemen and so forth were directly related, necessary and vital to the day-to-day
operations of the supermarket; their jobs involved normal and regular functions in the ordinary business of the
petitioner corporation. Given the nature of their functions and responsibilities, it is improbable that petitioner did not
exercise direct control over their work. Moreover, there is no evidence--as in fact, petitioners do not even allege-that aside from supplying the manpower, the labor agencies have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others.
It is undeniable that petitioners members worked as cargadores for private respondent. They loaded, unloaded and
piled sacks of palay from the warehouses to the cargo trucks and from the cargo trucks to the buyers. This work is
directly related, necessary and vital to the operations of Corfarm. Moreover, Corfarm did not even allege, much less
prove, that petitioners members have substantial capital or investment in the form of tools, equipment, machineries,
[and] work premises, among others. Furthermore, said respondent did not contradict petitioners allegation that it
paid wages directly to these workers without the intervention of any third-party independent contractor. It also
wielded the power of dismissal over petitioners; in fact, its exercise of this power was the progenitor of the Second
Case. Clearly, the workers are not independent contractors.
Applying Article 280 of the Labor Code, we hold that the CPWU members were regular employees of private
respondent. Their tasks were essential in the usual business of private respondent.
As we have ruled in an earlier case, the question of whether an employer-employee relationship exists in a certain
situation has bedevilled the courts. Businessmen, with the aid of lawyers, have tried to avoid or sidestep such
relationship, because that juridical vinculum engenders obligations connected with workmens compensation, social
security, medicare, minimum wage, termination pay and unionism. All too familiarly, Respondent Corfarm sought
refuge from these obligations. However, the records of this case clearly support the existence of the juridical
vinculum.
RJL Martinez Fishing Corporation cited by the solicitor general, is relevant because petitioners members were also
made to wait for loading and unloading of cavans of palay to and from the storage areas and to and from the milling
areas. This waiting time does not denigrate the regular employment of petitioners members. As ruled in that case ]
x x x Besides, the continuity of employment is not the determining factor, but rather whether the work of the laborer
is part of the regular business or occupation of the employer.(fn: Article 281, Labor Code, as amended; Philippine
Fishing Boat Officers and Engineer[s] Union vs. Court of Industrial Relations, 112 SCRA 159 (1982). We are thus in
accord with the findings of respondent NLRC in this regard.
Although it may be that private respondents alternated their employment on different vessels when they were not

assigned to petitioners boats, that did not affect their employee status. The evidence also establishes that
petitioners had a fleet of fishing vessels with about 65 ship captains, and as private respondents contended, when
they finished with one vessel they were instructed to wait for the next. As respondent NLRC had found:
We further find that the employer-employee relationship between the parties herein is not co-terminous with each
loading and unloading job. As earlier shown, respondents are engaged in the business of fishing. For this purpose,
they have a fleet of fishing vessels. Under this situation, respondents activity of catching fish is a continuous
process and could hardly be considered as seasonal in nature. So that the activities performed by herein
complainants, i.e. unloading the catch of tuna fish from respondents vessels and then loading the same to
refrigerated vans, are necessary or desirable in the business of respondents. This circumstance makes the
employment of complainants a regular one, in the sense that it does not depend on any specific project or seasonal
activity. (fn: NLRC Decision, p. 94, Rollo.)
Alleged Admission of Lack of Employer-Employee Relationship
Respondent Corfarm argues that some of petitioners members including its president, Juanito P. Costales, Jr.[,]
admitted that they work for various rice mills in Pangasinan and that there is no employer-employee relations
between them and private respondents. It adds that the solicitor general, by arguing that there was an employeremployee relationship, attempts to substitute [his] judgment [with] that of public respondent undersecretary x x x
who found such admissions against self-interest on the part of petitioners members x x x.
These arguments are negligible. The alleged admissions cannot be taken against petitioners cause. First, the
contents of the admissions are highly suspect. The records reveal that the admissions of Juanito Costales, Jr.,
Carlito Costales and Juanito Medenilla were in the form of affidavits of adhesion which were identical in content,
differentiated only by the typewritten names and the signatures of the workers. Second, only three of the workers
executed such affidavits. Clearly, the admissions in such affidavits cannot work against petitioner unions cause.
Such pro forma and identical affidavits do not prove lack of employer-employee relationship against all members of
petitioner. Third, the employer-employee relationship is clearly proven by substantial evidence. Corfarm sorely
failed to show that petitioners members were independent contractors. We rule that no particular form of proof is
required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may
show the relationship. If only documentary evidence would be required to demonstrate that relationship, no
scheming employer would ever be brought before the bar of justice. Fourth, and in any event, the alleged
admissions of the three workers that they worked with other rice mills do not work against them. Assuming
arguendo that they did work with other rice mills, this was required by the imperative of meeting their basic needs.
The employer-employee relationship having been duly established, the holding of a certification election
necessarily follows. It bears stressing that there should be no unnecessary obstacle to the holding of such election,
for it is a statutory policy that should not be circumvented. We have held that, in the absence of a legal impediment,
the holding of a certification election is the most democratic method of determining the employees choice of their
bargaining representative. It is the best means to settle controversies and disputes involving union representation.
Indeed, it is the keystone of industrial democracy.
Second Case: Illegal Dismissal
Petitioner assails the NLRC for setting aside the labor arbiters decision and remanding the case for further
proceedings. Petitioner argues that the order of remand will only prolong the agony of the 92 union members and
their families for living or existing without jobs and earnings to give them support. Further, petitioner contends:
The Labor Arbiter had rendered a decision (Annex D, Petition) on September 14, 1993 in favor of petitioner based
on the available records of the case after giving more than ample opportunities to private respondents herein to
submit their position paper and other pleadings alleging their evidences [sic] against the causes of action of
petitioner alleged in the complaint for illegal dismissal, unfair labor practice, non-payment of various benefits
granted by existing laws during their employment, illegal deductions or diminution of their underpaid daily wages,
non-payment of wage increases and other causes of action pleaded by the complainant or herein petitioner.
In short, Labor Arbiter Rolando Gambito rendered his decision based on the records of the case including evidence
available on record and after observing due process of law.
To support his opposition against the remand of the case, petitioner recites the chronological events of the case,
viz::

otherwise. As ruled in Manalo vs. Roldan-Confesor::

In the case at bar, private respondents were notified earlier in the latter part of 1992 regarding the pendency of the
complaint for illegal dismissal, unfair labor practice, damages, etc., but said respondents did not appear during the
initial hearing of the case [before] Labor Arbiter Ricardo Olairez, then the Arbiter handling the case. The case was
re-set for hearing at some other dates. On April 22, 1993, Atty. Alfonso C. Bince, Jr. appeared as counsel for
respondents at Dagupan City. Atty. Bince committed to the Labor Arbiter that the former will file the position paper
for his clients (Corfarm Grains, Inc., et al.) within ten (10) days from April 22, 1993, but still private respondents
Position Paper was not filed.
On May 20, 1993, Labor Arbiter Rolando Gambito, who took over the case for illegal dismissal, etc. filed by
petitioner, issued an order to private respondents directing the latter (respondents) to submit their Position Paper
together with THEIR DOCUMENTARY EXHIBITS, if any, within 10 days from receipt of the order. Still, private
respondents counsel failed to submit private respondents Position Paper relative to the petitioners complaint for
illegal dismissal, unfair labor practice, etc. which is involved in G.R. No. 114911 pending action by this Honorable
Court.
Thus, the Labor Arbiter rendered his decision on the case in favor of petitioner and/or the 92 illegally dismissed
workers based on the position paper filed by the latter and available records of the case. (Emphasis in original.)
On the other hand, Respondent Corfarm submits that the labor arbiters decision should be set aside not only for
lack of competent and credible evidence but also for lack of procedural due process. Corfarm further contends that
in spite of the pendency of its motions to cross-examine petitioners witnesses and to suspend proceedings, the
labor arbiter ordered the submission of its position paper and documentary evidence within ten (10) days.
Respondent Corfarm insists:
Indeed, although proceedings before a Labor Arbiter are supposed to be non-litigious and the technicalities in the
courts of law need not be strictly applied, the proceedings should nevertheless be subject to the requirements of
due process as provided in Section 7, Rule 7 of the NLRC Rules of Procedure. (See also Phil. Telegraph and
Telephone Corp. vs. NLRC, 183 SCRA 451).
We agree with petitioner. Private respondent was not denied procedural due process, and the labor arbiters
decision was based on competent, credible and substantial evidence.
Procedural Due Process Observed
Private respondent had been duly informed of the pendency of the illegal dismissal case, but it chose not to
participate therein without any known justifiable cause. The labor arbiter sent notices of hearing or arbitration to the
parties, requiring them to submit position papers at 1:30 p.m. on November 14, 1992. Respondent Corfarm did not
attend the hearing. According to Respondent NLRC, there was no proof that Respondent Corfarm received such
notice. In any case, petitioner filed a Motion to Admit Amended Complaint on December 23, 1992. Again, another
notice for hearing or arbitration on January 7, 1993 was sent to the parties. This was received by petitioners
counsel as evidenced by the registry return receipt duly signed by private respondents counsel, Atty. Alfonso Bince,
Jr. It was only on January 28, 1993, however, that Atty. Bince entered his appearance as counsel for Respondent
Corfarm. On May 10, 1993, Corfarm was again given a new period of ten (10) days within which to submit its
position paper and documentary evidence; otherwise, [the labor arbiter] will be constrained to resolve this case
based on available evidence on record. As evidenced by a registry return receipt, a copy of said directive was
received by respondents counsel on May 25, 1993. Still and all, Corfarm failed to file its position paper. Clearly,
private respondent was given an opportunity to present its evidence, but it failed or refused to avail itself of this
opportunity without any legal reason. Due process is not violated where a person is given the opportunity to be
heard, but chooses not to give his side of the case.
Labor Arbiters Decision Based on Credible, Competent and Substantial Evidence
Contrary to the conclusions of the NLRC and the arguments of private respondent, the findings of the labor arbiter
on the question of illegal dismissal were based on credible, competent and substantial evidence.
It is to be borne in mind that proceedings before labor agencies merely require the parties to submit their respective
affidavits and position papers. Adversarial trial is addressed to the sound discretion of the labor arbiter. To establish
a cause of action, only substantial evidence is necessary, i.e., such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine

Clear and convincing proof is x x x more than mere preponderance, but not to extent of such certainty as is
required beyond reasonable doubt as in criminal cases x x x (fn: Blacks Law Dictionary, 5th Ed., p. 227, citing Fred
C. Walker Agency, Inc. v. Lucas, 215 Va. 535, 211 S.E. 2d 88, 92) while substantial evidence x x x consists of more
than a mere scintilla of evidence but may be somewhat less than a preponderance x x x x ( fn: Ibid., p. 1281, citing
Marker v. Finch, D.C. Del., 322 F. Supp. 905, 910) Consequently, in the hierarchy of evidentiary values, We find
proof beyond reasonable doubt at the highest level, followed by clear and convincing evidence, preponderance of
evidence, and substantial evidence, in that order.
Evidence to determine the validity of petitioners claims, which the labor arbiter relied upon, was available to
Respondent NLRC. These pieces of evidence are in the case records, as aptly pointed out by the solicitor general:
[Regarding] the quoted second sentence of public respondent NLRCs Resolution that allegations must be proved
and established by competent evidence, and that mere allegations would not suffice despite the absence of
evidence to the contrary, suffice it to say that there is ample evidence on record to support the Labor Arbiters
decision, to wit: 1) Narrative report of DOLE inspector Crisanto Rey Dingle noting some violation of underpayment
of minimum wage and underpayment of 13th month pay (page 10, record); 2) affidavit of union officers and
individual union members, stating their various claims (page 80-195, Record). Despite such evidence and an
opportunity afforded to private respondent to present its evidence and position paper as borne out by the notice of
hearing issued by Labor Arbiter Olairez dated November 14, 1992, with advice to the parties to submit their position
paper (p. 14 Record) and the Order issued by Labor Arbiter Gambito dated May 20, 1993; requiring private
respondents to submit their position paper, together with their documentary evidence (p. 247, record), private
respondent failed to submit its position paper and countervailing evidence which should have met squarely the
allegations and evidence adduced by the petitioner. Thus, in the absence of private respondents position paper and
countervailing evidence, the Labor Arbiter cannot be faulted in deciding the case based on the available evidence
on record.
It must be stressed that labor laws mandate the speedy administration of justice, with least attention to
technicalities but without sacrificing the fundamental requisites of due process. In this light, the NLRC, like the labor
arbiter, is authorized to decide cases based on the position papers and other documents submitted, without
resorting to the technical rules of evidence. Verily, Respondent NLRC noted several documentary evidence
sufficient to arrive at a just decision. Indeed, the evidence on record clearly supports the conclusion of the labor
arbiter that the petitioners were employees of respondent, and that they were illegally dismissed.
The NLRC points to conflicts and inconsistencies in the evidence on record. We are not convinced. These alleged
inconsistencies are too flimsy and too tenuous to preclude a just decision. The finding that Juanito Costales, Jr.
was an employee of respondent was allegedly inconsistent with his admission that he was the owner of Carcado
Contracting Services. As earlier observed, the inconsistency is irrelevant. Juan Costales, Jr. was an employee of
Corfarm. Owning this alleged outfit is not inconsistent with such employment. The NLRC also questioned the
amount of the employees compensation. In one instance, the workers stated that they were receiving P45.00 per
days work of eight hours. In another, they claimed that they were paid P0.12 per sack or cavan. These allegedly
differ from their allegation that Corfarm used to be obliged to pay P57.00 per days earning. The alleged
inconsistencies are more apparent than real. Records reveal that the P57 was the promised compensation;
however, there was an unauthorized deduction of P12; thus, the amount of P45 per day. The claim of P0.12 per
sack or cavan is the basic computation of how workers or haulers earn their wage for the day. In any event, the
alleged inconsistencies do not affect or diminish the established fact that petitioners members were regular
employees who were illegally dismissed.
Why Respondent NLRC refused to rule directly on the appeal escapes us. The remand of a case or an issue to the
labor arbiter for further proceedings is unnecessary, considering that the NLRC was in a position to resolve the
dispute based on the records before it and particularly where the ends of justice would be served thereby.
Remanding the case would needlessly delay the resolution of the case which has been pending since 1992. As
already observed, the evidence on record clearly supports the findings of the labor arbiter.
Pursuant to the doctrine that this Court has a duty to settle, whenever possible, the entire controversy in a single
proceeding, leaving no root or branch to bear the seeds of future litigation, we now resolve all issues.
It is axiomatic that in illegal dismissal cases, the employer always has the burden of proof and his failure to

discharge this duty results in a finding that the dismissal was unjustified. Having defaulted from filing its position
paper, Respondent Corfarm is deemed to have waived its right to present evidence and counter the allegations of
petitioners members.
In the same light, we sustain the labor arbiters holding in respect of unfair labor practice. As ruled by Labor Arbiter
Rolando D. Gambito:
The last issue: Instead of sitting down with the individual complainants or the union officers to discuss their
demands, respondents resorted to mass lay-off of all the members of the union and replaced them with outsiders.
This is clearly a case of union busting which Art. 248 of the Labor Code prohibits. Art. 248 provides that It shall be
unlawful for an employer to commit any of the following unfair labor practice (a) To interfere with, restrain or coerce
employees in the exercise of their right to self-organization; (b) x x x (c) To contract out service or functions being
performed by union members when such will interfere with, restrain or coerce employees in the exercise of their
rights to self-organization.
In view of recent jurisprudence, we are correcting some items in the labor arbiters decision. The thirteenth month
pay awarded should be computed for each year of service from the time each employee was hired up to the date of
his actual reinstatement. The same computation applies to the award of the service incentive leave and underpaid
wages. Each employee is to be paid the remaining underpaid wages from the date of his or her hiring in
accordance with the then prevailing wage legislations. Likewise, a refund of P12 shall be computed for each day of
service of each employee, to be reckoned from the date such employee was hired. The damages awarded should
be sustained because the employer acted in bad faith. Back wages are to be computed from the date of dismissal
up to the date of actual reinstatement without any deductions or conditions. This is in consonance with Fernandez,
et al. vs. National Labor Relations Commission:
x x x Accordingly, the award to petitioners of backwages for three years should be modified in accordance with
Article 279 of the Labor Code, as amended by R.A. 6715, by giving them full backwages without conditions and
limitations, the dismissals having occurred after the effectivity of the amendatory law on March 21, 1989. Thus, the
Court held in Bustamante:
The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was
previously given them under the Mercury Drug rule or the deduction of earnings elsewhere rule. Thus, a closer
adherence to the legislative policy behind Rep. Act No. 6715 points to full backwages as meaning exactly that, i.e.,
without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of
his illegal dismissal.
WHEREFORE, both petitions are GRANTED. In G.R. No. 113542, Respondent Laguesmas Orders dated January
4, 1994 and January 27, 1994 are REVERSED and SET ASIDE; whereas his Order dated September 7, 1993 is
REINSTATED. In G.R. No. 114911, Respondent NLRCs Resolutions promulgated on February 16, 1994 and March
28, 1994 are likewise REVERSED AND SET ASIDE. The Labor Arbiters decision dated September 14, 1993 is
reinstated with MODIFICATIONS as set out in this Decision. Respondent NLRC is ORDERED to COMPUTE the
monetary benefits awarded in accordance with this Decision and to submit its compliance thereon within thirty days
from notice of this Decision.
SO ORDERED.

G.R. No. L-72654-61 January 22, 1990

ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICANOR
FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO
DE GUZMAN, respondents.

J.C. Espinas & Associates for petitioners.

Tomas A. Reyes for private respondent.

the labor arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners.

FERNAN, C.J.:
The issue to be resolved in the instant case is whether or not the fishermen-crew members of the trawl fishing
vessel 7/B Sandyman II are employees of its owner-operator, De Guzman Fishing Enterprises, and if so, whether or
not they were illegally dismissed from their employment.
Records show that the petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing
vessels owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in
the fishing business with port and office at Camaligan, Camarines Sur. Petitioners rendered service aboard said
fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief
engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor Francisco, second
fisherman; Philip Cervantes and Eleuterio Barbin, fishermen.
For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were
paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. As
agreed upon, they received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds
exceeded the cost of crude oil consumed during the fishing trip, otherwise, they received ten percent (10%) of the
total proceeds of the sale. The patron/pilot, chief engineer and master fisherman received a minimum income of
P350.00 per week while the assistant engineer, second fisherman, and fisherman-winchman received a minimum
income of P260.00 per week. 1
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of
private respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report
that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the
charge claiming that the same was a countermove to their having formed a labor union and becoming members of
Defender of Industrial Agricultural Labor Organizations and General Workers Union (DIALOGWU) on September 3,
1983.
During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal
charges were formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return
to the fishing vessel to resume their work on the same day, September 11, 1983.
On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and non-payment of 13th
month pay, emergency cost of living allowance and service incentive pay, with the then Ministry (now Department)
of Labor and Employment, Regional Arbitration Branch No. V, Legaspi City, Albay, docketed as Cases Nos. 1449-83
to 1456-83. 2 They uniformly contended that they were arbitrarily dismissed without being given ample time to look
for a new job.
On October 24, 1983, private respondent, thru its operations manager, Conrado S. de Guzman, submitted its
position paper denying the employer-employee relationship between private respondent and petitioners on the
theory that private respondent and petitioners were engaged in a joint venture. 3
After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the case for joint hearing
furnishing the parties with notice and summons. On December 27, 1983, after two (2) previously scheduled joint
hearings were postponed due to the absence of private respondent, one of the petitioners herein, Alipio Ruga, the
pilot/captain of the 7/B Sandyman II, testified, among others, on the manner the fishing operations were conducted,
mode of payment of compensation for services rendered by the fishermen-crew members, and the circumstances
leading to their dismissal. 4
On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S. Coralde rendered a joint
decision 5 dismissing all the complaints of petitioners on a finding that a "joint fishing venture" and not one of
employer-employee relationship existed between private respondent and petitioners.
From the adverse decision against them, petitioners appealed to the National Labor Relations Commission.
On May 30, 1985, the National Labor Relations Commission promulgated its resolution

affirming the decision of

Hence, the instant petition.

Petitioners assail the ruling of the public respondent NLRC that what exists between private respondent and
petitioners is a joint venture arrangement and not an employer-employee relationship. To stress that there is an
employer-employee relationship between them and private respondent, petitioners invite attention to the following:
that they were directly hired by private respondent through its general manager, Arsenio de Guzman, and its
operations manager, Conrado de Guzman; that, except for Laurente Bautu, they had been employed by private
respondent from 8 to 15 years in various capacities; that private respondent, through its operations manager,
supervised and controlled the conduct of their fishing operations as to the fixing of the schedule of the fishing trips,
the direction of the fishing vessel, the volume or number of tubes of the fish-catch the time to return to the fishing
port, which were communicated to the patron/pilot by radio (single side band); that they were not allowed to join
other outfits even the other vessels owned by private respondent without the permission of the operations manager;
that they were compensated on percentage commission basis of the gross sales of the fish-catch which were
delivered to them in cash by private respondent's cashier, Mrs. Pilar de Guzman; and that they have to follow
company policies, rules and regulations imposed on them by private respondent.
Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent and
petitioners, petitioners claim that public respondent exceeded its jurisdiction and/or abused its discretion when it
added facts not contained in the records when it stated that the pilot-crew members do not receive compensation
from the boat-owners except their share in the catch produced by their own efforts; that public respondent ignored
the evidence of petitioners that private respondent controlled the fishing operations; that public respondent did not
take into account established jurisprudence that the relationship between the fishing boat operators and their crew
is one of direct employer and employee.
Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is now final and
executory for failure of petitioners to file their appeal with the NLRC within 10 calendar days from receipt of said
decision pursuant to the doctrine laid down in Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, 115 SCRA 347
(1982), the Solicitor General claims that the ruling of public respondent that a "joint fishing venture" exists between
private respondent and petitioners rests on the resolution of the Social Security System (SSS) in a 1968 case, Case
No. 708 (De Guzman Fishing Enterprises vs. SSS), exempting De Guzman Fishing Enterprises, private respondent
herein, from compulsory coverage of the SSS on the ground that there is no employer-employee relations between
the boat-owner and the fishermen-crew members following the doctrine laid down in Pajarillo vs. SSS, 17 SCRA
1014 (1966). In applying to the case at bar the doctrine in Pajarillo vs. SSS, supra, that there is no employeremployee relationship between the boat-owner and the pilot and crew members when the boat-owner supplies the
boat and equipment while the pilot and crew members contribute the corresponding labor and the parties get
specific shares in the catch for their respective contribution to the venture, the Solicitor General pointed out that the
boat-owners in the Pajarillo case, as in the case at bar, did not control the conduct of the fishing operations and the
pilot and crew members shared in the catch.
We rule in favor of petitioners.
Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits rather than
to dismiss it on a mere technicality. In so doing, we exercise the prerogative accorded to this Court enunciated in
Firestone Filipinas Employees Association, et al. vs. Firestone Tire and Rubber Co. of the Philippines, Inc., 61
SCRA 340 (1974), thus "the well-settled doctrine is that in labor cases before this Tribunal, no undue sympathy is to
be accorded to any claim of a procedural misstep, the idea being that its power be exercised according to justice
and equity and substantial merits of the controversy."
Circumstances peculiar to some extent to fishermen-crew members of a fishing vessel regularly engaged in trawl
fishing, as in the case of petitioners herein, who spend one (1) whole week or more 7 in the open sea performing
their job to earn a living to support their families, convince Us to adopt a more liberal attitude in applying to
petitioners the 10-calendar day rule in the filing of appeals with the NLRC from the decision of the labor arbiter.
Records reveal that petitioners were informed of the labor arbiter's decision of March 31, 1984 only on July 3,1984
by their non-lawyer representative during the arbitration proceedings, Jose Dialogo who received the decision eight
(8) days earlier, or on June 25, 1984. As adverted to earlier, the circumstances peculiar to petitioners' occupation as
fishermen-crew members, who during the pendency of the case understandably have to earn a living by seeking
employment elsewhere, impress upon Us that in the ordinary course of events, the information as to the adverse

decision against them would not reach them within such time frame as would allow them to faithfully abide by the
10-calendar day appeal period. This peculiar circumstance and the fact that their representative is a non-lawyer
provide equitable justification to conclude that there is substantial compliance with the ten-calendar day rule of filing
of appeals with the NLRC when petitioners filed on July 10, 1984, or seven (7) days after receipt of the decision,
their appeal with the NLRC through registered mail.
We have consistently ruled that in determining the existence of an employer-employee relationship, the elements
that are generally considered are the following (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished. 8 The employment relation arises from contract of
hire, express or implied. 9 In the absence of hiring, no actual employer-employee relation could exist.
From the four (4) elements mentioned, We have generally relied on the so-called right-of-control test 10 where the
person for whom the services are performed reserves a right to control not only the end to be achieved but also the
means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of
doing the work, not the actual exercise of the right. 11
The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for the ruling that a "joint fishing
venture" existed between private respondent and petitioners is not applicable in the instant case. There is neither
light of control nor actual exercise of such right on the part of the boat-owners in the Pajarillo case, where the Court
found that the pilots therein are not under the order of the boat-owners as regards their employment; that they go
out to sea not upon directions of the boat-owners, but upon their own volition as to when, how long and where to go
fishing; that the boat-owners do not in any way control the crew-members with whom the former have no
relationship whatsoever; that they simply join every trip for which the pilots allow them, without any reference to the
owners of the vessel; and that they only share in their own catch produced by their own efforts.
The aforementioned circumstances obtaining in Pajarillo case do not exist in the instant case. The conduct of the
fishing operations was undisputably shown by the testimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II, to
be under the control and supervision of private respondent's operations manager. Matters dealing on the fixing of
the schedule of the fishing trip and the time to return to the fishing port were shown to be the prerogative of private
respondent. 12 While performing the fishing operations, petitioners received instructions via a single-side band radio
from private respondent's operations manager who called the patron/pilot in the morning. They are told to report
their activities, their position, and the number of tubes of fish-catch in one day. 13 Clearly thus, the conduct of the
fishing operations was monitored by private respondent thru the patron/pilot of 7/B Sandyman II who is responsible
for disseminating the instructions to the crew members.
The conclusion of public respondent that there had been no change in the situation of the parties since 1968 when
De Guzman Fishing Enterprises, private respondent herein, obtained a favorable judgment in Case No. 708
exempting it from compulsory coverage of the SSS law is not supported by evidence on record. It was erroneous
for public respondent to apply the factual situation of the parties in the 1968 case to the instant case in the light of
the changes in the conditions of employment agreed upon by the private respondent and petitioners as discussed
earlier.
Records show that in the instant case, as distinguished from the Pajarillo case where the crew members are under
no obligation to remain in the outfit for any definite period as one can be the crew member of an outfit for one day
and be the member of the crew of another vessel the next day, the herein petitioners, on the other hand, were
directly hired by private respondent, through its general manager, Arsenio de Guzman, and its operations manager,
Conrado de Guzman and have been under the employ of private respondent for a period of 8-15 years in various
capacities, except for Laurente Bautu who was hired on August 3, 1983 as assistant engineer. Petitioner Alipio
Ruga was hired on September 29, 1974 as patron/captain of the fishing vessel; Eladio Calderon started as a
mechanic on April 16, 1968 until he was promoted as chief engineer of the fishing vessel; Jose Parma was
employed on September 29, 1974 as assistant engineer; Jaime Barbin started as a pilot of the motor boat until he
was transferred as a master fisherman to the fishing vessel 7/B Sandyman II; Philip Cervantes was hired as
winchman on August 1, 1972 while Eleuterio Barbin was hired as winchman on April 15, 1976.
While tenure or length of employment is not considered as the test of employment, nevertheless the hiring of
petitioners to perform work which is necessary or desirable in the usual business or trade of private respondent for
a period of 8-15 years since 1968 qualify them as regular employees within the meaning of Article 281 of the Labor

Code as they were indeed engaged to perform activities usually necessary or desirable in the usual fishing
business or occupation of private respondent. 14
Aside from performing activities usually necessary and desirable in the business of private respondent, it must be
noted that petitioners received compensation on a percentage commission based on the gross sale of the fishcatch i.e. 13% of the proceeds of the sale if the total proceeds exceeded the cost of the crude oil consumed during
the fishing trip, otherwise only 10% of the proceeds of the sale. Such compensation falls within the scope and
meaning of the term "wage" as defined under Article 97(f) of the Labor Code, thus:
(f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done, or for services rendered or to be rendered, and included the
fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee. . . .
The claim of private respondent, which was given credence by public respondent, that petitioners get paid in the
form of share in the fish-catch which the patron/pilot as head of the team distributes to his crew members in
accordance with their own understanding 15 is not supported by recorded evidence. Except that such claim appears
as an allegation in private respondent's position paper, there is nothing in the records showing such a sharing
scheme as preferred by private respondent.
Furthermore, the fact that on mere suspicion based on the reports that petitioners allegedly sold their fish-catch at
midsea without the knowledge and consent of private respondent, petitioners were unjustifiably not allowed to
board the fishing vessel on September 11, 1983 to resume their activities without giving them the opportunity to air
their side on the accusation against them unmistakably reveals the disciplinary power exercised by private
respondent over them and the corresponding sanction imposed in case of violation of any of its rules and
regulations. The virtual dismissal of petitioners from their employment was characterized by undue haste when less
extreme measures consistent with the requirements of due process should have been first exhausted. In that
sense, the dismissal of petitioners was tainted with illegality.
Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private respondent virtually
resulting in their dismissal evidently contradicts private respondent's theory of "joint fishing venture" between the
parties herein. A joint venture, including partnership, presupposes generally a parity of standing between the joint
co-venturers or partners, in which each party has an equal proprietary interest in the capital or property contributed
16
and where each party exercises equal lights in the conduct of the business. 17 It would be inconsistent with the
principle of parity of standing between the joint co-venturers as regards the conduct of business, if private
respondent would outrightly exclude petitioners from the conduct of the business without first resorting to other
measures consistent with the nature of a joint venture undertaking, Instead of arbitrary unilateral action, private
respondent should have discussed with an open mind the advantages and disadvantages of petitioners' action with
its joint co-venturers if indeed there is a "joint fishing venture" between the parties. But this was not done in the
instant case. Petitioners were arbitrarily dismissed notwithstanding that no criminal complaints were filed against
them. The lame excuse of private respondent that the non-filing of the criminal complaints against petitioners was
for humanitarian reasons will not help its cause either.
We have examined the jurisprudence on the matter and find the same to be supportive of petitioners' stand. In
Negre vs. WCC 135 SCRA 653 (1985), we held that fishermen crew members who were recruited by one master
fisherman locally known as "maestro" in charge of recruiting others to complete the crew members are considered
employees, not industrial partners, of the boat-owners. In an earlier case of Abong vs. WCC, 54 SCRA 379 (1973)
where petitioner therein, Dr. Agustin Abong, owner of the fishing boat, claimed that he was not the employer of the
fishermen crew members because of an alleged partnership agreement between him, as financier, and Simplicio
Panganiban, as his team leader in charge of recruiting said fishermen to work for him, we affirmed the finding of the
WCC that there existed an employer-employee relationship between the boat-owner and the fishermen crew
members not only because they worked for and in the interest of the business of the boat-owner but also because
they were subject to the control, supervision and dismissal of the boat-owner, thru its agent, Simplicio Panganiban,
the alleged "partner" of Dr. Abong; that while these fishermen crew members were paid in kind, or by "pakiao basis"
still that fact did not alter the character of their relationship with Dr. Abong as employees of the latter.

In Philippine Fishing Boat Officers and Engineers Union vs. Court of Industrial Relations, 112 SCRA 159 (1982), we
held that the employer-employee relationship between the crew members and the owners of the fishing vessels
engaged in deep sea fishing is merely suspended during the time the vessels are drydocked or undergoing repairs
or being loaded with the necessary provisions for the next fishing trip. The said ruling is premised on the principle
that all these activities i.e., drydock, repairs, loading of necessary provisions, form part of the regular operation of
the company fishing business.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned resolution of the National Labor
Relations Commission dated May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to
reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary
benefits under the law. No pronouncement as to costs.
SO ORDERED.

G.R. Nos. 82823-24 July 31, 1989

AGRO COMMERCIAL SECURITY SERVICES AGENCY, INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER BIENVENIDO V. HERMOGENES
and MANUEL JIMENEZ. ET AL., respondents.
San Juan, Gonzalez, San Agustin & Sinense for petitioner.

Mauricio Law Office for private respondents.

GANCAYCO, J.:
Is there an employer-employee relationship between a security agency and its security guards? Is the so-called
"floating status" of a security guard lawful and could such prolonged status amount to illegal dismissal? These are
the issues raised in this petition for certiorari and prohibition with preliminary injunction questioning the resolution
dated January 20, 1988 of public respondent National Labor Relations Commission (NLRC) affirming the decision
of public respondent labor arbiter Bienvenido V. Hermogenes dated March 19, 1987 finding private respondents to
have been illegally dismissed and ordering petitioner to pay them separation pay of one-half (1/2) month salary for
every year of service, 13th month pay for the year 1986 and the money value of their respective service incentive
leave amounting to fifteen (15) days salary each with allowances. The petition also assails the resolution of the
respondent NLRC dated April 18, 1988 denying the motion for reconsideration filed by petitioner.
Private respondents, numbering forty-six (46) in all, worked as security guards and/or janitors under individual
contracts with petitioner. They were assigned to firms and offices where petitioner had contracts providing security
and janitorial services. Their service period and last rates of salary are stated in the decision of the labor arbiter. 1
Their individual contracts of employment provide, among others, as follows:
3.d. That the security guard, agrees to temporary suspension of his employment completely to include such
changes in his employment status with the Agency, in case of termination of contract between the Agency and its
Client, or reduction in force of same;
In the early part of 1986, petitioner's service contracts with various corporations and government agencies to which
private respondents were previously assigned had been terminated generally due to the sequestration of the said
offices by the Presidential Commission on Good Government. Accordingly, many of the private respondents were
placed on "floating status" on September 16, 1986. A number of them had been put on that status even earlier.
"Floating status" means an indefinite period of time when private respondents do not receive any salary or financial
benefit provided by law. A number of them later obtained employment in other security agencies.
On account of the uncertainty of their employment with the petitioner, on July 25, 1986, private respondents filed a
complaint for illegal dismissal in the Arbitration Branch of the Department of Labor and Employment against
petitioner. They sought the payment of their respective separation pay, 13th month pay for 1986 and service
incentive leave pay. After due' proceedings where the parties were required to submit their position papers and
stipulation of facts, the respondent labor arbiter ruled in favor of the private respondents whose decision as aboverelated was affirmed by the NLRC.
Hence, the herein petition alleging that the petitioner was denied due process of law by the NLRC and it committed
a grave abuse of discretion in considering private respondents as employees of petitioner, in ruling that the "floating
status" of private respondents amounted to an illegal dismissal, and in causing the execution of the judgment
pending a complete and full adjudication of the issues.
Forthwith, the allegation of denial of due process is without basis. Petitioner was afforded the opportunity to file its
position paper. It even entered into a stipulation of facts with private respondent.
As to the issue of employer-employee relationship, an examination of the records shows that private respondents
are regular employees of petitioner. Their individual length of service ranges from four (4) to more than ten (10)
years. In accordance with the stipulation of facts, it appears that private respondents worked with petitioner as
security guards/janitors Their employment contracts provide, among others:
1. That the AGENCY hereby undertakes to look for, procure, and/or furnish the services of the SECURITY GUARD,
with any individual, business establishment, residential houses or any entity whatsoever, and the SECURITY
GUARD agrees to supply his services, assignments, position and undertaking, subject to the following conditions:
a) That the SECURITY GUARD upon acceptance of his position or undertaking for employment, shall observe,
follow and obey all rules, regulations, code of conduct required by the AGENCY and any of its contracted client, in
accordance with the provisions of RA 5487 and its implement Rules and Regulations;
b) That the AGENCY shall pay the SECURITY GUARD a monthly salary of P _______/day payable on the 5th and
20th of the month;
c) That the AGENCY shall have the exclusive right to withdraw or re-assign the SECURITY GUARD;
d) That the SECURITY GUARD, agrees to temporary suspension of his employment completely to include such

changes; in bis employment status with the AGENCY, in case of termination of contract between the AGENCY and
its client, or reduction in force of same;
e) That the AGENCY may terminate or dismiss the SECURITY GUARD, if, after proper and due investigation it is
shown that the SECURITY GUARD has violated any rule, regulation, code of conduct and discipline, imposed by
the AGENCY;
f) That the terms and conditions pertinent to service and discipline embodied in the Agreement executed between
the AGENCY and any person, establishment, or entity with whom the SECURITY GUARD is going to serve or is
assigned shall be considered part of this Agreement and therefore binding on SECURITY GUARD. 2
It was petitioner who determined how much private respondents received as their monthly salary, overtime/night
differential pay, mid-year and Christmas bonus and 13th month pay, uniforms and meal allowances and other
benefits mandated by law. Private respondents were reported by the petitioner as its employees for purposes of
social security coverage. Petitioner remitted their withholding taxes to the Bureau of Internal Revenue and made
monthly contributions to the Pag-ibig fund for their benefit. It was petitioner who determined and decided on the
assignments, promotions and salary increases of private respondents, their working hours, the firearms to be
issued to them and janitorial devices and tools to be used. Likewise, it was petitioner who imposed the appropriate
disciplinary measures on private respondents by way of reprimand, suspension and dismissal.
In determining the existence of an employee-employer relationship, the following elements are generally
considered:
1) the selection and engagement of the employees;
2) payment of wages;
3) the power of dismissal and
4) the power to control the employees' conduct . 3
It is clear, therefore, that private respondents are petitioner's regular employees who enjoy security of tenure and
who cannot be dismissed except for cause . 4
As to the alleged illegal dismissal of private respondents, the records show that they filed their complaint against
petitioner on July 25, 1986. At the time they filed their complaint, most of them were still on the job or on
assignments and it was only in September 1986 when most of them were placed on "floating status."
Obviously, the filing of the complaint was premature. Apparently, this issue was not raised at all and so it is deemed
waived. Thus, when the labor arbiter rendered his decision, he considered those who have been out of work or
"floating status" for a period exceeding six (6) months to have been terminated from the service without just cause
thus entitling them to the corresponding benefits for such separation. We agree.
Under Article 286 of the Labor Code it is provided as follows:
ART. 286. When employment not deemed terminated. The bonafide suspension of the operation of a business or
undertaking for a period not exceeding six months, or the fulfillment by the employee of a military or civic duty shall
not terminate employment. In all such cases, the employer shall reinstate the employee to his former position
without loss of seniority rights if he indicates his desire to resume his work not later than one month from the
resumption of operations of his employer or from his relief from the military or civic duty.
From the foregoing it is clear that when the bonafide suspension of the operation of a business or undertaking
exceeds six (6) months then the employment of the employee shall be deemed terminated. By the same token and
applying the said rule by analogy to security guards, if they remained without work or assignment that is in "floating
status" for a period exceeding six (6) months, then they are in effect constructively dismissed.
The labor arbiter disagreed with the representations of petitioner that the private respondents who accepted
assignments in other security agencies without previously resigning should be considered to have been dismissed
with just cause. In the stipulation of facts, the parties admitted that the disciplinary rules promulgated by petitioner
for its employees provide that acceptance by an employee of other employment without first resigning from the
agency is a cause for dismissal.
In this case, it appears that twenty-seven (27) of the private respondents violated this rule by accepting employment
in other security agencies without previously resigning from employment with petitioner. No doubt, this is a just
cause for termination of their services and as such they are not entitled to any separation pay. 5

As regards the other seventeen (17) private respondents, they admittedly remained in "floating status" for more
than six (6) months. Such a 'floating status" is not unusual for security guards employed in security agencies as
their assignments primarily depend on the contracts entered into by the agency with third parties. Such a stipulated
status is, therefore, lawful.
The "floating status" of such an employee should last only for a reasonable time. In this case, respondent labor
arbiter correctly held that when the "floating status" of said employees lasts for more than six (6) months, they may
be considered to have been illegally dismissed from the service. Thus, they are entitled to the corresponding
benefits for their separation.
WHEREFORE, the petition is GRANTED insofar as the twenty- seven (27) private respondents are concerned who
have accepted employment elsewhere. The questioned resolutions of the NLRC dated January 29, 1988 and April
18, 1988 are hereby modified as to said twenty-seven (27) private respondents in that their complaint is hereby
dismissed for lack of merit. The questioned resolutions are hereby affirmed in all other respects as to the other
private respondents. No pronouncement as to costs.
SO ORDERED.

G.R. No. 120969 January 22, 1998

ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding Commissioner
RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner VICTORIANO R. CALAYCAY
(Ponente), VIC DEL ROSARIO and VIVA FIMS, respondents.

DAVIDE, JR., J.:

By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners seek to annul the 10
February 1995 Decision 1 of the National Labor Relations Commission (hereafter NLRC), and its 6 April 1995
Resolution 2 denying the motion to reconsider the former in NLRC-NCR-CA No. 006195-94. The decision reversed
that of the Labor Arbiter in NLRC-NCR-Case No. 00-07-03994-92.
The parties present conflicting sets of facts.
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18 July 1989 as
part of the filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant
Electrician with a weekly salary of P400.00, which was increased to P450.00 in May 1990. In June 1991, he was
promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P539.00 in September
1991.
Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as a member of
the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May 1991, then to P475.00
on 21 December 1991. 3
Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed
by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting
system, and performing other tasks that the cameraman and/or director may assign. 4
Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs. Alejandria Cesario, to facilitate
their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992,
Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a
blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in June
1992, then refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot was
dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked
to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20
July 1992. 5 Petitioners thus sued for illegal dismissal 6 before the Labor Arbiter.
On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of Viva
Productions, Inc., and that it is primarily engaged in the distribution and exhibition of movies but not in the
business of making movies; in the same vein, private respondent Vic del Rosario is merely an executive producer,
i.e., the financier who invests a certain sum of money for the production of movies distributed and exhibited by
VIVA. 7
Private respondents assert that they contract persons called "producers" also referred to as "associate
producers" 8 to "produce" or make movies for private respondents; and contend that petitioners are project
employees of the association producers who, in turn, act as independent contractors. As such, there is no
employer-employee relationship between petitioners and private respondents.
Private respondents further contend that it was the associate producer of the film "Mahirap Maging Pogi," who hired
petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only then that Maraguinot was
released upon payment of his last salary, as his services were no longer needed. Anent petitioner Enero, he was
hired for the movie entitled "Sigaw ng Puso," later re-tired "Narito and Puso." He went on vacation on 8 June 1992,
and by the time he reported for work on 20 July 1992, shooting for the movie had already been completed. 9
After considering both versions of the facts, the Labor Arbiter found as follows:
On the first issue, this Office rules that complainants are the employees of the respondents. The producer cannot
be considered as an independent contractor but should be considered only as a labor-only contractor and as such,
acts as a mere agent of the real employer, the herein respondent. Respondents even failed to name and specify
who are the producers. Also, it is an admitted fact that the complainants received their salaries from the
respondents. The case cited by the respondents, Rosario Brothers, Inc. vs. Ople, 131 SCRA 72 does not apply in
this case.
It is very clear also that complainants are doing activities which are necessary and essential to the business of the
respondents, that of movie-making. Complainant Maraguinot worked as an electrician while complainant Enero
worked as a crew [member]. 10

Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:
WHEREFORE, judgment is hereby rendered declaring that complainants were illegally dismissed.
Respondents are hereby ordered to reinstate complainant to their former positions without loss [of] seniority rights
and pay their backwages starting July 21, 1992 to December 31, 1993 temporarily computed in the amount of
P38,000.00 for complainant Paulino Enero and P46,000.00 for complainant Alejandro Maraguinot, Jr. and thereafter
until actually reinstated.
Respondents are ordered to pay also attorney's fees equivalent to ten (10%) and/or P8,400.00 on top of the award.
11

Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its decision
February 1995, the NLRC found the following circumstances of petitioners' work "clearly established:"

12

of 10

1. Complainants [petitioners herein] were hired for specific movie projects and their employment was co-terminus
with each movie project the completion/termination of which are pre-determined, such fact being made known to
complainants at the time of their engagement.
xxx xxx xxx
2 Each shooting unit works on one movie project at a time. And the work of the shooting units, which work
independently from each other, are not continuous in nature but depends on the availability of movie projects.
3. As a consequence of the non-continuous work of the shooting units, the total working hours logged by
complainants in a month show extreme variations. . . For instance, complainant Maraguinot worked for only 1.45
hours in June 1991 but logged a total of 183.25 hours in January 1992. Complainant Enero logged a total of only
31.57 hours in September 1991 but worked for 183.35 hours the next month, October 1991.
4. Further shown by respondents is the irregular work schedule of complainants on a daily basis. Complainant
Maraguinot was supposed to report on 05 August 1991 but reported only on 30 August 1991, or a gap of 25 days.
Complainant Enero worked on 10 September 1991 and his next scheduled working day was 28 September 1991, a
gap of 18 days.
5. The extremely irregular working days and hours of complainants' work explain the lump sum payment for
complainants' services for each movie project. Hence, complainants were paid a standard weekly salary regardless
of the number of working days and hours they logged in. Otherwise, if the principle of "no work no pay" was strictly
applied, complainants' earnings for certain weeks would be very negligible.
6. Respondents also alleged that complainants were not prohibited from working with such movie companies like
Regal, Seiko and FPJ Productions whenever they are not working for the independent movie producers engaged
by respondents . . . This allegation was never rebutted by complainants and should be deemed admitted.
The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken together, indicated that
complainants (herein petitioners) were "project employees."
After their motion for reconsideration was denied by the NLRC in its Resolution 13 of 6 April 1995, petitioners filed
the instant petition, claiming that the NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in: (1) finding that petitioners were project employees; (2) ruling that petitioners were not illegally
dismissed; and (3) reversing the decision of the Labor Arbiter.
To support their claim that they were regular (and not project) employees of private respondents, petitioners cited
their performance of activities that were necessary or desirable in the usual trade or business of private
respondents and added that their work was continuous, i.e., after one project was completed they were assigned to
another project. Petitioners thus considered themselves part of a work pool from which private respondents drew
workers for assignment to different projects. Petitioners lamented that there was no basis for the NLRC's conclusion
that they were project employees, while the associate producers were independent contractors; and thus reasoned
that as regular employees, their dismissal was illegal since the same was premised on a "false cause," namely, the
completion of a project, which was not among the causes for dismissal allowed by the Labor Code.
Private respondents reiterate their version of the facts and stress that their evidence supports the view that
petitioners are project employees; point to petitioners' irregular work load and work schedule; emphasize the
NLRC's finding that petitioners never controverted the allegation that they were not prohibited from working with
other movie companies; and ask that the facts be viewed in the context of the peculiar characteristics of the movie

industry.

first. 22

The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitioners raise questions
of fact, particularly, the NLRC's finding that petitioners were project employees, a finding supported by substantial
evidence; and submits that petitioners' reliance on Article 280 of the Labor Code to support their contention that
they should be deemed regular employees is misplaced, as said section "merely distinguishes between two types
of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee
to certain benefits."

Private respondent further narrated that VIVA's generators broke down during petitioners' last movie project, which
forced the associate producer concerned to rent generators, equipment and crew from another company. 23 This
only shows that the associate producer did not have substantial capital nor investment in the form of tools,
equipment and other materials necessary for making a movie. Private respondents in effect admit that their
producers, especially petitioners' last producer, are not engaged in permissible job contracting.

The OSG likewise rejects petitioners' contention that since they were hired not for one project, but for a series of
projects, they should be deemed regular employees. Citing Mamansag v. NLRC, 14 the OSG asserts that what
matters is that there was a time-frame for each movie project made known to petitioners at the time of their hiring.
In closing, the OSG disagrees with petitioners' claim that the NLRC's classification of the movie producers as
independent contractors had no basis in fact and in law, since, on the contrary, the NLRC "took pains in explaining
its basis" for its decision.
As regards the propriety of this action, which the Office of the Solicitor General takes issue with, we rule that a
special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains
that the NLRC acted in total disregard of evidence material to or decisive of the controversy. 15 In the instant case,
petitioners allege that the NLRC's conclusions have no basis in fact and in law, hence the petition may not be
dismissed on procedural or jurisdictional grounds.
The judicious resolution of this case hinges upon, first, the determination of whether an employer-employee
relationship existed between petitioners and private respondents or any one of private respondents. If there was
none, then this petition has no merit; conversely, if the relationship existed, then petitioners could have been
unjustly dismissed.
A related question is whether private respondents are engaged in the business of making motion pictures. Del
Rosario is necessarily engaged in such business as he finances the production of movies. VIVA, on the other hand,
alleges that it does not "make" movies, but merely distributes and exhibits motion pictures. There being no further
proof to this effect, we cannot rely on this self-serving denial. At any rate, and as will be discussed below, private
respondents' evidence even supports the view that VIVA is engaged in the business of making movies.
We now turn to the critical issues. Private respondents insist that petitioners are project employees of associate
producers who, in turn, act as independent contractors. It is settled that the contracting out of labor is allowed only
in case of job contracting. Section 8, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code
describes permissible job contracting in this wise:
Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work on his own account under
his own responsibility according to his own manner and method, free from the control and direction of his employer
or principal in all matters connected with the performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the conduct of his business.
Assuming that the associate producers are job contractors, they must then be engaged in the business of making
motion pictures. As such, and to be a job contractor under the preceding description, associate producers must
have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures.
However, the associate producers here have none of these. Private respondents' evidence reveals that the moviemaking equipment are supplied to the producers and owned by VIVA. These include generators, 16 cables and
wooden platforms, 17 cameras and "shooting equipment;" 18 in fact, VIVA likewise owns the trucks used to transport
the equipment. 19 It is thus clear that the associate producer merely leases the equipment from VIVA. 20 Indeed,
private respondents' Formal Offer of Documentary Evidence stated one of the purposes of Exhibit "148" as:
To prove further that the independent Producers rented Shooting Unit No. 2 from Viva to finish their films. 21
While the purpose of Exhibits "149," "149-A" and "149-B" was:
[T]o prove that the movies of Viva Films were contracted out to the different independent Producers who rented
Shooting Unit No. 3 with a fixed budget and time-frame of at least 30 shooting days or 45 days whichever comes

If private respondents insist that the associate producers are labor contractors, then these producers can only be
"labor-only" contractors, defined by the Labor Code as follows:
Art. 106. Contractor or subcontractor. . . .
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are directly related to the principal business of
such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by
him.
A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the
Labor Code:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be
deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and
other materials; and
(2) The workers recruited and placed by such person are performing activities which are directly related to the
principal business or operations of the employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be
considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders
whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after
considering the operating needs of the employer and the rights of the workers involved. In such case, he may
prescribe conditions and restrictions to insure the protection and welfare of the workers.
As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or
intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot
be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was
Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an
"available group of free-lance workers which includes the complainants Maraguinot and Enero." 24 And in their
Memorandum, private respondents declared that the associate producer "hires the services of . . . 6) camera crew
which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d) generator man and electrician; (e)
clapper; etc. . . . ." 25 This clearly showed that the associate producers did not supply the workers required by the
movie project.
The relationship between VIVA and its producers or associate producers seems to be that of agency, 26 as the latter
make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship
between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct
employer.
The employer-employee relationship between petitioners and VIVA can further be established by the "control test."
While four elements are usually considered in determining the existence of an employment relationship, namely: (a)
the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control of the employee's conduct, the most important element is the employer's control of the
employee's conduct, not only as to the result of the work to be done but also as to the means and methods to
accomplish the same. 27 These four elements are present here. In their position paper submitted to the Labor
Arbiter, private respondents narrated the following circumstances:
[T]he PRODUCER has to work within the limits of the budget he is given by the company, for as long as the
ultimate finish[ed] product is acceptable to the company . . .

The ensure that qualify films are produced by the PRODUCER who is an independent contractor, the company
likewise employs a Supervising PRODUCER, a Project accountant and a Shooting unit supervisor. The Company's
Supervising PRODUCER is Mr. Eric Cuatico, the Project accountant varies from time to time, and the Shooting Unit
Supervisor is Ms. Alejandria Cesario.
The Supervising PRODUCER acts as the eyes and ears of the company and of the Executive Producer to monitor
the progress of the PRODUCER's work accomplishment. He is there usually in the field doing the rounds of
inspection to see if there is any problem that the PRODUCER is encountering and to assist in threshing out the
same so that the film project will be finished on schedule. He supervises about 3 to 7 movie projects simultaneously
[at] any given time by coordinating with each film "PRODUCER". The Project Accountant on the other hand assists
the PRODUCER in monitoring the actual expenses incurred because the company wants to insure that any
additional budget requested by the PRODUCER is really justified and warranted especially when there is a change
of original plans to suit the tast[e] of the company on how a certain scene must be presented to make the film more
interesting and more commercially viable. (emphasis supplied).
VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to the company." The
means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be
finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes
are subject to change to suit the taste of the company; and the Supervising Producer, the "eyes and ears" of VIVA
and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems
encountered in making the film.
It may not be validly argued then that petitioners are actually subject to the movie director's control, and not VIVA's
direction. The director merely instructs petitioners on how to better comply with VIVA's requirements to ensure that
a quality film is completed within schedule and without exceeding the budget. At bottom, the director is akin to a
supervisor who merely oversees the activities of rank-and-file employees with control ultimately resting on the
employer.
Moreover, appointment slips 28 issued to all crew members state:
During the term of this appointment you shall comply with the duties and responsibilities of your position as well as
observe the rules and regulations promulgated by your superiors and by Top Management.
The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top Management" of
VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the appointment
slips only emphasize VIVA's control over petitioners.

Name of appointee
Signed in the presence of:
___________________
Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired
the crew members; moreover, it is VIVA's corporate name which appears on the heading of the appointment slip.
What likewise tells against VIVA is that it paid petitioners' salaries as evidenced by vouchers, containing VIVA's
letterhead, for that purpose. 30
All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable
conclusion is that petitioners are employees only of VIVA.
The next issue is whether petitioners were illegally dismissed. Private respondents contend that petitioners were
project employees whose employment was automatically terminated with the completion of their respective
projects. Petitioners assert that they were regular employees who were illegally dismissed.
It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work
pool; 31 and, while petitioners were initially hired possibly as project employees, they had attained the status of
regular employees in view if VIVA's conduct.
A project employee or a member of a work pool may acquire the status of a regular employee when the following
concur:
1) There is a continuous rehiring of project employees even after cessation of a project; 32 and
2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual
business or trade of the employer. 33
However, the length of time during which the employee was continuously re-hired is not controlling, but merely
serves as a badge of regular employment. 34
In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years
and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years
and worked on at least twenty-three (23) projects. 35 Moreover, as petitioners' tasks involved, among other chores,
the loading, unloading and
FILM

DATE
STARTED

DATE
COMPLETED

ASSOCIATE PRODUCER

LOVE AT FIRST SIGHT

1/3/90

2/16/90

MARIVIC ONG

VIVA PRODUCTIONS, INC.

16 Sct. Albano St.
Diliman, Quezon City
PEDRO NICOLAS Date: June 15, 1992

PAIKOT-IKOT

1/26/90

3/11/90

EDITH MANUEL

ROCKY & ROLLY

2/13/90

3/29/90

M. ONG

APPOINTMENT SLIP
You are hereby appointed as SOUNDMAN for the film project entitled "MANAMBIT". This appointment shall be
effective upon the commencement of the said project and shall continue to be effective until the completion of the
same.
For your services you shall receive the daily/weekly/monthly compensation of P812.50.
During the term of this appointment you shall comply with the duties and responsibilities of your position as well as
observe the rules and regulations promulgated by your superiors and by Top Management.

PAIKOT-IKOT (addl. 1/2)

3/12/90

4/3/90

E. MANUEL

ROCKY & ROLLY (2nd contract)

4/6/90

5/20/90

M. ONG

NARDONG TOOTHPICK

4/4/90

5/18/90

JUN CHING

BAKIT KAY TAGAL NG SANDALI

6/26/90

10/20/90

E. MANUEL

BAKIT KAY TAGAL (2nd contract)

8/10/90

9/23/90

E. MANUEL

Aside from control, the element of selection and engagement is likewise present in the instant case and exercised
by VIVA. A sample appointment slip offered by private respondents "to prove that members of the shooting crew
except the driver are project employees of the Independent Producers" 29 reads as follows:

Very truly yours,

(an illegible signature)
CONFORME:
_________________

HINUKAY KO NA ANG LIBINGAN MO

9/6/90

10/20/90

JUN CHING

MAGING SINO KA MAN

10/25/90

12/8/90

SANDY STA. MARIA

M. SINO KA MAN (2nd contract)

12/9/90

1/22/91

SANDY S

NOEL JUICO

1/29/91

3/14/90

JUN CHING

NOEL JUICO (2nd contract)

3/15/91

4/6/91

JUN CHING

ROBIN GOOD

5/7/91

6/20/91

M. ONG

UTOL KONG HOODLUM # 1

KAPUTOL NG ISANG AWIT

6/23/91
8/18/91

8/6/91
10/2/91

JUN CHING
SANDY S.

DARNA

10/4/91

11/18/91

E. MANUEL

DARNA (addl. 1/2)

11/20/91

12/12/91

E. MANUEL

P. KABAYO (Addl 1/2 contract)

4/21/90

5/13/90

RUTH GRUTA

BADBOY

6/15/90

7/29/90

EDITH MANUEL

BADBOY (2nd contract)

7/30/90

8/21/90

E. MANUEL

ANAK NI BABY AMA

9/2/90

10/16/90

RUTH GRUTA

A.B. AMA (addl 1/2)

10/17/90

11/8/90

RUTH GRUTA

A.B. AMA (addl 2nd 1/2)

11/9/90

12/1/90

R. GRUTA

BOYONG MANALAC

11/30/90

1/14/91

MARIVIC ONG

HUMANAP KA NG PANGET

1/20/91

3/5/91

EDITH MANUEL

H. PANGET(2nd contract)

3/10/91

4/23/91

E. MANUEL

B. MANALAC (2nd contract)

5/22/91

7/5/91

M. ONG

ROBIN GOOD (2nd contract)

7/7/91

8/20/91

M. ONG

PITONG GAMOL

8/30/91

10/13/91

M. ONG

P. GAMOL (2nd contract)

10/14/91

11/27/91

M. ONG

GREASE GUN GANG

12/28/91

2/10/92

E. MANUEL

ALABANG GIRLS (1/2 contract)

3/4/92

3/26/92

M. ONG

BATANG RILES

3/9/92

3/30/92

BOBBY GRIMALT

UTOL KONG HOODLUM (part 2)

3/22/92

5/6/92

B. GRIMALT

UTOL (addl. 1/2 contract)

5/7/92

5/29/92

B. GRIMALT

MANDURUGAS (2nd contract)

5/25/92

7/8/92

JERRY OHARA

MAHIRAP MAGING POGI

7/2/92

8/15/92

M. ONG

MAGNONG REHAS

12/13/91

1/27/92

BOBBY GRIMALT

M. REHAS (2nd contract)

1/28/92

3/12/92

B. GRIMALT

HIRAM NA MUKHA

3/15/92

4/29/92

M. ONG

HIRAM (2nd contract)

5/1/92

6/14/92

M. ONG

KAHIT AKO'Y BUSABOS

5/28/92

7/7/92

JERRY OHARA

A recent pronouncement of this Court anent project or work pool employees who had attained the status of regular
employees proves most instructive:

SIGAW NG PUSO

7/1/92

8/4/92

M. ONG

SIGAW (addl. 1/2)

8/15/92

9/5/92

M. ONG

NGAYON AT KAILANMAN

9/6/92

10/20/92

SANDY STA. MARIA

The denial by petitioners of the existence of a work pool in the company because their projects were not continuous
is amply belied by petitioners themselves who admit that: . . .
A work pool may exist although the workers in the pool do not receive salaries and are free to seek other
employment during temporary breaks in the business, provided that the worker shall be available when called to
report of a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to
project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the
employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the
same time enables the workers to attain the status of regular employees. Clearly, the continuous rehiring of the
same set of employees within the framework of the Lao Group of Companies is strongly indicative that private
respondents were an integral part of a work pool from which petitioners drew its workers for its various projects.

While Maraguinot was a member of Shooting Unit III, which made the following movies (Annex "4-A" of
Respondents' Position Paper; OR, 29):

FILM

DATE STARTED

DATE COMPLETED

ASSOCIATE PRODUCER

GUMAPANG KA SA LUSAK

1/27/90

3/12/90

JUN CHING

PETRANG KABAYO

2/19/90

4/4/90

RUTH GRUTA

LUSAK (2nd contract)

3/14/90

4/27/90

JUN CHING

arranging of movie equipment in the shooting area as instructed by the cameramen, returning the equipment to the
Viva Films' warehouse, and assisting in the "fixing" of the lighting system, it may not be gainsaid that these tasks
were vital, necessary and indispensable to the usual business or trade of the employer. As regards the underscored
phrase, it has been held that this is ascertained by considering the nature of the work performed and its relation to
the scheme of the particular business or trade in its entirety. 36

In a final attempt to convince the Court that private respondents were indeed project employees, petitioners point
out that the workers were not regularly maintained in the payroll and were free to offer their services to other
companies when there were no on-going projects. This argument however cannot defeat the workers' status of
regularity. We apply by analogy the vase of Industrial-Commercial-Agricultural Workers Organization v. CIR [16
SCRA 526, 567-568 (1966)] which deals with regular seasonal employees. There we held: . . .
Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of work . Of
course, no compensation can be demanded from the employer because the stoppage of operations at the end of a
project and before the start of a new one is regular and expected by both parties to the labor relations . Similar to

the case of regular seasonal employees, the employment relation is not severed by merely being suspended .
[citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The employees are, strictly speaking, not separated from
services but merely on leave of absence without pay until they are reemployed . Thus we cannot affirm the
argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek other employment
denote project employment. 37 (emphasis supplied)
While Lao admittedly involved the construction industry, to which Policy Instruction No. 20/Department Order No. 19
38
regarding work pools specifically applies, there seems to be no impediment to applying the underlying principles
to industries other than the construction industry. 39 Neither may it be argued that a substantial distinction exists
between the projects undertaken in the construction industry and the motion picture industry. On the contrary, the
raison d' etre of both industries concern projects with a foreseeable suspension of work.
At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire
a project employee even after completion of the project for which he was hired. The import of this decision is not to
impose a positive and sweeping obligation upon the employer to re-hire project employees. What this decision
merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in
accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool
employees who perform tasks necessary or desirable to the employer's usual business or trade. Let it not be said
that this decision "coddles" labor, for as Lao has ruled, project or work pool employees who have gained the status
of regular employees are subject to the "no work-no pay" principle, to repeat:
A work pool may exist although the workers in the pool do not receive salaries and are free to seek other
employment during temporary breaks in the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to
project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the
employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the
same time enables the workers to attain the status of regular employees.
The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector, 40
but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not mean that simply
because an employee is a project or work pool employee even outside the construction industry, he is deemed,
ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and
(2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence. To
rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction
No. 20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work
pool employees who have already gained the status of regular employees by the employer's conduct.
In closing then, as petitioners had already gained the status of regular employees, their dismissal was unwarranted,
for the cause invoked by private respondents for petitioners' dismissal, viz.: completion of project, was not, as to
them, a valid cause for dismissal under Article 282 of the Labor Code. As such, petitioners are now entitled to back
wages and reinstatement, without loss of seniority rights and other benefits that may have accrued. 41 Nevertheless,
following the principles of "suspension of work" and "no pay" between the end of one project and the start of a new
one, in computing petitioners' back wages, the amounts corresponding to what could have been earned during the
periods from the date petitioners were dismissed until their reinstatement when petitioners' respective Shooting
Units were not undertaking any movie projects, should be deducted.
Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in effect. Pursuant
to Section 34 thereof which amended Section 279 of the Labor Code of the Philippines and Bustamante v. NLRC, 42
petitioners are entitled to receive full back wages from the date of their dismissal up to the time of their
reinstatement, without deducting whatever earnings derived elsewhere during the period of illegal dismissal, subject
however, to the above observations.
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations
Commission in NLRC NCR CA No. 006195-94 dated 01 February 1995, as well as its Resolution dated 6 April
1995, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of discretion, and the
decision of the Labor Arbiter in NLRC NCR Case No. 00-07-03994-92 is REINSTATED, subject, however, to the

modification above mentioned in the computation of back wages.

No pronouncement as to costs.
SO ORDERED.

Philippines, as he was not the organizer assigned in said company. On March 16, 1979, he went on sick leave for
ten (10) days. His SSS sickness benefit application form signed by ALU's physician was given to ALU for
submission to the SSS. On March 16, 1979, complainant reported back for work upon expiration of his leave but
was informed by ALU's Area Vice-President for Luzon of his termination effective March 15, 1979. Hence, this
complaint filed on March 28, 1979. On April 18, 1979, however, ALU filed a clearance application to terminate
complainant's services effective March 16, 1979 on the ground of abandonment of work. (p. 48, Rollo)
Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union to reinstate
the petitioner to his former position with full backwages and to pay him emergency allowance, 13th month pay and
to refund his Mutual Aid Fund Deposit in the amount of P 370.00.
Respondent ALU appealed to the Ministry of Labor. On October 23,1979, the respondent Deputy Minister set aside
the order of the Director and dismissed the petitioner's complaint for lack of merit. In his order, the Deputy Minister
found that the petitioner was merely accomodated by the respondent union after he was dismissed by his former
employer sometime in 1972 and that his membership coverage with the SSS which shows that respondent ALU is
the one paying the employer's share in the premiums is not conclusive proof that respondent is the petitioner's
employer because such payments were performed by the respondent as a favor for all those who were performing
full time union activities with it to entitle them to SSS benefits. The Deputy Minister further ruled that the nonexistence of an employer-employee relationship between the parties is bolstered by the fact that respondent ALU is
not an entity for profit but a duly registered labor union whose sole purpose is the representation of its bona fide
organization units where it is certified as such.
In this petition, the petitioner contends that the respondent Deputy minister committed grave abuse of discretion in
holding that there was no employer-employee relationship between him and the respondent union so much so that
he is not entitled to the benefits that he is praying for.
We agree with the petitioner.
There is nothing in the records which support the Deputy minister's conclusion that the petitioner is not an
employee of respondent ALU. The mere fact that the respondent is a labor union does not mean that it cannot be
considered an employer of the persons who work for it. Much less should it be exempted from the very labor laws
which it espouses as labor organization. In case of es v. Brotherhood Labor Unity Movement in the Phillipines
Zamora, , (147 SCRA 49, 54), we outlined the factors in ascertaining an employer-employee realtionship:
In determining the existence of an employer-employee relationship, the elements that are generally considered are
the following : (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which
the work is to be accomplished. It is the so-called 'control test' that is the most important element (Investment
Planning Corp. of the Phils. v. The Social Security System, 21 SCRA 492; Mafinco Trading Corp. v. Ople, supra,
and Rosario Brothers, Inc. v. Ople, 131 SCRA 72)
G.R. No. L-52824 March 16, 88
REYNALDO BAUTISTA, petitioner,
vs.
HON. AMADO C. INCIONG, in his capacity as Deputy Minister of Labor and ASSOCIATED LABOR UNIONS
(ALU), respondents.
GUTIERREZ, JR., J.:
This is an illegal dismissal case. The respondent Deputy Minister dismissed the complaint of herein petitioner
principally on the ground that no employer-employee relationship existed between the petitioner and respondent
Associated Labor Unions (ALU).
The facts as found by the National Capital Region Director of the then ministry of Labor (MOL) Region IV are as
follows:
Complainant (petitioner) was employed by ALU as 'Organizer' in 1972 with a starting salary of P250.00 a month. As
such he paid his monthly SSS contributions, with the respondent as his employer. On March 15, 1979, He was left
in the office of ALU while his other co-organizers were in Cainta, Rizal attending a certification election at Chrysler

In the case at bar, the Regional director correctly found that the petitioner was an employee of the respondent union
as reflected in the latter's individual payroll sheets and shown by the petitioner's membership with the Social
Security System (SSS) and the respondent union's share of remittances in the petitioner's favor. Even more
significant, is the respondent union's act of filing a clearance application with the MOL to terminate the petitioner's
services. Bautista was selected and hired by the Union. He was paid wages by the Union. ALU had the power to
dismiss him as indeed it dismissed him. And definitely, the Union tightly controlled the work of Bautista as one of its
organizers. There is absolutely no factual or legal basis got deputy Minister Inciong's decision.
We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the records show
that antipathy and antagonism between the petitioner and the respondent union militate against the former's
reinstatement. ALU would not want to have a union organizer whom it does not trust and who could sabotage its
efforts to unionize commercial and industrial establishments. Severance pay, therefore, is more proper in order. As
we have ruled in the case of Asiaworld Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398, July 23,
1987) quoting the cast of Balaquezon EWTU v. Zamora, (97 SCRA 5,8):
It should be underscored that the backwages are being awarded on the basis of equity or in the nature of
severance pay. This means that a monetary award is to be paid to the employees as an alternative to reinstatement

which can no longer be effected in view of the long passage of time or because of the realities of the situation.
(Emphasis supplied)
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Deputy Minister is ANNULLED
and SET ASIDE. The Order of Regional Director Francisco L. Estrella is REINSTATED and ordered executed but
instead of returning the petitioner to his former position, the private respondent is ordered to pay him an amount
equal to his backwages for only three years and the separation pay to which he may be entitled as of the end of the
three year period under the applicable law or collective bargaining agreement.
SO ORDERED.

the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday pay and 13th month pay. He also
claimed payment for moral and exemplary damages and attorneys fees. Macasio also claimed payment for service
incentive leave (SIL).8
Macasio alleged9 before the LA that he had been working as a butcher for David since January 6, 1995. Macasio
claimed that David exercised effective control and supervision over his work, pointing out that David: (1) set the
work day, reporting time and hogs to be chopped, as well as the manner by which he was to perform his work; (2)
daily paid his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005;
and (3) approved and disapproved his leaves. Macasio added that David owned the hogs delivered for chopping,
as well as the work tools and implements; the latter also rented the workplace. Macasio further claimed that David
employs about twenty-five (25) butchers and delivery drivers.
In his defense,10 David claimed that he started his hog dealer business in 2005 and that he only has ten employees.
He alleged that he hired Macasio as a butcher or chopper on "pakyaw" or task basis who is, therefore, not entitled
to overtime pay, holiday pay and 13th month pay pursuant to the provisions of the Implementing Rules and
Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1) usually starts his work at 10:00 p.m. and
ends at 2:00 a.m. of the following day or earlier, depending on the volume of the delivered hogs; (2) received the
fixed amount of P700.00 per engagement, regardless of the actual number of hours that he spent chopping the
delivered hogs; and (3) was not engaged to report for work and, accordingly, did not receive any fee when no hogs
were delivered.
Macasio disputed Davids allegations.11 He argued that, first, David did not start his business only in 2005. He
pointed to the Certificate of Employment12 that David issued in his favor which placed the date of his employment,
albeit erroneously, in January 2000. Second, he reported for work every day which the payroll or time record could
have easily proved had David submitted them in evidence.
Refuting Macasios submissions,13 David claims that Macasio was not his employee as he hired the latter on
"pakyaw" or task basis. He also claimed that he issued the Certificate of Employment, upon Macasios request, only
for overseas employment purposes. He pointed to the "Pinagsamang Sinumpaang Salaysay," 14 executed by
Presbitero Solano and Christopher (Antonio Macasios co-butchers), to corroborate his claims.
In the April 30, 2009 decision, 15 the LA dismissed Macasios complaint for lack of merit. The LA gave credence to
Davids claim that he engaged Macasio on "pakyaw" or task basis. The LA noted the following facts to support this
finding: (1) Macasio received the fixed amount of P700.00 for every work done, regardless of the number of hours
that he spent in completing the task and of the volume or number of hogs that he had to chop per engagement; (2)
Macasio usually worked for only four hours, beginning from 10:00 p.m. up to 2:00 a.m. of the following day; and (3)
the P700.00 fixed wage far exceeds the then prevailing daily minimum wage of P382.00. The LA added that the
nature of Davids business as hog dealer supports this "pakyaw" or task basis arrangement.
The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime, holiday,
SIL and 13th month pay.

G.R. No. 195466

July 2, 2014
ARIEL L. DAVID, doing business under the name and style "YIELS HOG DEALER," Petitioner,
vs.
JOHN G. MACASIO, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari 1 the challenge to the November 22, 2010 decision 2 and the
January 31, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 116003. The CA decision annulled
and set aside the May 26, 2010 decision 4 of the National Labor Relations Commission (NLRC) 5 which, in turn,
affirmed the April 30, 2009 Decision6 of the Labor Arbiter (LA). The LA's decision dismissed respondent John G.
Macasio's monetary claims.
The Factual Antecedents
In January 2009, Macasio filed before the LA a complaint 7 against petitioner Ariel L. David, doing business under

The NLRCs Ruling

In its May 26, 2010 decision,16 the NLRC affirmed the LA ruling. 17 The NLRC observed that David did not require
Macasio to observe an eight hour work schedule to earn the fixed P700.00 wage; and that Macasio had been
performing a non-time work, pointing out that Macasio was paid a fixed amount for the completion of the assigned
task, irrespective of the time consumed in its performance. Since Macasio was paid by result and not in terms of the
time that he spent in the workplace, Macasio is not covered by the Labor Standards laws on overtime, SIL and
holiday pay, and 13th month pay under the Rules and Regulations Implementing the 13th month pay law.18
Macasio moved for reconsideration 19 but the NLRC denied his motion in its August 11, 2010 resolution, 20 prompting
Macasio to elevate his case to the CA via a petition for certiorari.21
The CAs Ruling
In its November 22, 2010 decision,22 the CA partly granted Macasios certiorari petition and reversed the NLRCs
ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LAand the NLRC that Macasio was a task basis employee, it nevertheless found

Macasio entitled to his monetary claims following the doctrine laid down in Serrano v. Severino Santos Transit. 23
The CA explained that as a task basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th
month pay only if he is likewise a "field personnel." As defined by the Labor Code, a "field personnel" is one who
performs the work away from the office or place of work and whose regular work hours cannot be determined with
reasonable certainty. In Macasios case, the elements that characterize a "field personnel" are evidently lacking as
he had been working as a butcher at Davids "Yiels Hog Dealer" business in Sta. Mesa, Manila under Davids
supervision and control, and for a fixed working schedule that starts at 10:00 p.m.
Accordingly, the CA awarded Macasios claim for holiday, SIL and 13th month pay for three years, with 10%
attorneys fees on the total monetary award. The CA, however, denied Macasios claim for moral and exemplary
damages for lack of basis.
David filed the present petition after the CA denied his motion for reconsideration 24 in the CAs January 31, 2011
resolution.25
The Petition
In this petition,26 David maintains that Macasios engagement was on a "pakyaw" or task basis. Hence, the latter is
excluded from the coverage of holiday, SIL and 13th month pay. David reiterates his submissions before the lower
tribunals27 and adds that he never had any control over the manner by which Macasio performed his work and he
simply looked on to the "end-result." He also contends that he never compelled Macasio to report for work and that
under their arrangement, Macasio was at liberty to choose whether to report for work or not as other butchers could
carry out his tasks. He points out that Solano and Antonio had, in fact, attested to their (David and Macasios)
established "pakyawan" arrangement that rendered a written contract unnecessary. In as much as Macasio is a
task basis employee who is paid the fixed amount of P700.00 per engagement regardless of the time consumed
in the performance David argues that Macasio is not entitled to the benefits he claims. Also, he posits that
because he engaged Macasio on "pakyaw" or task basis then no employer-employee relationship exists between
them.
Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain finality especially when, as
in this case, they are supported by substantial evidence. Hence, David posits that the CA erred in reversing the
labor tribunals findings and granting the prayed monetary claims.
The Case for the Respondent
Macasio counters that he was not a task basis employee or a "field personnel" as David would have this Court
believe.28 He reiterates his arguments before the lower tribunals and adds that, contrary to Davids position, the
P700.00 fee that he was paid for each day that he reported for work does not indicate a "pakyaw" or task basis
employment as this amount was paid daily, regardless of the number or pieces of hogs that he had to chop. Rather,
it indicates a daily-wage method of payment and affirms his regular employment status. He points out that David did
not allege or present any evidence as regards the quota or number of hogs that he had to chop as basis for the
"pakyaw" or task basis payment; neither did David present the time record or payroll to prove that he worked for
less than eight hours each day. Moreover, David did not present any contract to prove that his employment was on
task basis. As David failed to prove the alleged task basis or "pakyawan" agreement, Macasio concludes that he
was Davids employee. Procedurally, Macasio points out that Davids submissions in the present petition raise
purely factual issues that are not proper for a petition for review on certiorari. These issues whether he (Macasio)
was paid by result or on "pakyaw" basis; whether he was a "field personnel"; whether an employer-employee
relationship existed between him and David; and whether David exercised control and supervision over his work
are all factual in nature and are, therefore, proscribed in a Rule 45 petition. He argues that the CAs factual findings
bind this Court, absent a showing that such findings are not supported by the evidence or the CAs judgment was
based on a misapprehension of facts. He adds that the issue of whether an employer-employee relationship existed
between him and David had already been settled by the LA29 and the NLRC30 (as well as by the CA per Macasios
manifestation before this Court dated November 15, 2012), 31 in his favor, in the separate illegal case that he filed
against David.
The Issue
The issue revolves around the proper application and interpretation of the labor law provisions on holiday, SIL and
13th month pay to a worker engaged on "pakyaw" or task basis. In the context of the Rule 65 petition before the
CA, the issue is whether the CA correctly found the NLRC in grave abuse of discretion in ruling that Macasio is
entitled to these labor standards benefits.

The Courts Ruling

We partially grant the petition.
Preliminary considerations: the Montoya ruling and the factual-issue-bar rule
In this Rule 45 petition for review on certiorari of the CAs decision rendered under a Rule 65 proceeding, this
Courts power of review is limited to resolving matters pertaining to any perceived legal errors that the CA may have
committed in issuing the assailed decision. This is in contrast with the review for jurisdictional errors, which we
undertake in an original certiorari action. In reviewing the legal correctness of the CA decision, we examine the CA
decision based on how it determined the presence or absence of grave abuse of discretion in the NLRC decision
before it and not on the basis of whether the NLRC decision on the merits of the case was correct. 32 In other words,
we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it.33
Moreover, the Courts power in a Rule 45 petition limits us to a review of questions of law raised against the
assailed CA decision.34
In this petition, David essentially asks the question whether Macasio is entitled to holiday, SIL and 13th month
pay. This one is a question of law. The determination of this question of law however is intertwined with the largely
factual issue of whether Macasio falls within the rule on entitlement to these claims or within the exception. In either
case, the resolution of this factual issue presupposes another factual matter, that is, the presence of an employeremployee relationship between David and Macasio.
In insisting before this Court that Macasio was not his employee, David argues that he engaged the latter on
"pakyaw" or task basis. Very noticeably, David confuses engagement on "pakyaw" or task basis with the lack of
employment relationship. Impliedly, David asserts that their "pakyawan" or task basis arrangement negates the
existence of employment relationship.
At the outset, we reject this assertion of the petitioner. Engagement on "pakyaw" or task basis does not
characterize the relationship that may exist between the parties, i.e., whether one of employment or independent
contractorship. Article 97(6) of the Labor Code defines wages as "xxx the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an employee under
a written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered[.]"35 In relation to Article 97(6), Article 10136 of the Labor Code speaks of workers paid by results or those
whose pay is calculated in terms of the quantity or quality of their work output which includes "pakyaw" work and
other non-time work.
More importantly, by implicitly arguing that his engagement of Macasio on "pakyaw" or task basis negates
employer-employee relationship, David would want the Court to engage on a factual appellate review of the entire
case to determine the presence or existence of that relationship. This approach however is not authorized under a
Rule 45 petition for review of the CA decision rendered under a Rule 65 proceeding.
First, the LA and the NLRC denied Macasios claim not because of the absence of an employer-employee but
because of its finding that since Macasio is paid on pakyaw or task basis, then he is not entitled to SIL, holiday and
13th month pay. Second, we consider it crucial, that in the separate illegal dismissal case Macasio filed with the LA,
the LA, the NLRC and the CA uniformly found the existence of an employer-employee relationship. 37
In other words, aside from being factual in nature, the existence of an employer-employee relationship is in fact a
non-issue in this case. To reiterate, in deciding a Rule 45 petition for review of a labor decision rendered by the CA
under 65, the narrow scope of inquiry is whether the CA correctly determined the presence or absence of grave
abuse of discretion on the part of the NLRC. In concrete question form, "did the NLRC gravely abuse its discretion
in denying Macasios claims simply because he is paid on a non-time basis?"
At any rate, even if we indulge the petitioner, we find his claim that no employer-employee relationship exists
baseless. Employing the control test,38 we find that such a relationship exist in the present case.
Even a factual review shows that Macasio is Davids employee.
To determine the existence of an employer-employee relationship, four elements generally need to be considered,

namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employees conduct. These elements or indicators comprise the so-called "fourfold" test of employment relationship. Macasios relationship with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element of "selection and engagement of the
employee." David categorically confirmed this fact when, in his "Sinumpaang Salaysay," he stated that "nag apply
po siya sa akin at kinuha ko siya na chopper[.]" 39 Also, Solano and Antonio stated in their "Pinagsamang
Sinumpaang Salaysay"40 that "[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang butcher"
and "kilalanamin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama namin siya sa aming trabaho."
Second, David paid Macasios wages.Both David and Macasio categorically stated in their respective pleadings
before the lower tribunals and even before this Court that the former had been paying the latter P700.00 each day
after the latter had finished the days task. Solano and Antonio also confirmed this fact of wage payment in their
"Pinagsamang Sinumpaang Salaysay."41 This satisfies the element of "payment of wages."
Third, David had been setting the day and time when Macasio should report for work. This power to determine the
work schedule obviously implies power of control. By having the power to control Macasios work schedule, David
could regulate Macasios work and could even refuse to give him any assignment, thereby effectively dismissing
him.

to holiday, 13th month, and SIL pay.

On the issue of Macasios entitlement to holiday, SIL and 13th month pay
The LA dismissed Macasios claims pursuant to Article 94 of the Labor Code in relation to Section 1, Rule IV of the
IRR of the Labor Code, and Article 95 of the Labor Code, as well as Presidential Decree (PD) No. 851. The NLRC,
on the other hand, relied on Article 82 of the Labor Code and the Rules and Regulations Implementing PD No. 851.
Uniformly, these provisions exempt workers paid on "pakyaw" or task basis from the coverage of holiday, SIL and
13th month pay.
In reversing the labor tribunals rulings, the CA similarly relied on these provisions, as well as on Section 1, Rule V
of the IRR of the Labor Code and the Courts ruling in Serrano v. Severino Santos Transit. 46 These labor law
provisions, when read together with the Serrano ruling, exempt those engaged on "pakyaw" or task basis only if
they qualify as "field personnel."
In other words, what we have before us is largely a question of law regarding the correct interpretation of these
labor code provisions and the implementing rules; although, to conclude that the worker is exempted or covered
depends on the facts and in this sense, is a question of fact: first, whether Macasio is a "field personnel"; and
second, whether those engaged on "pakyaw" or task basis, but who are not "field personnel," are exempted from
the coverage of holiday, SIL and 13th month pay.

And fourth, David had the right and power to control and supervise Macasios work as to the means and methods of
performing it. In addition to setting the day and time when Macasio should report for work, the established facts
show that David rents the place where Macasio had been performing his tasks. Moreover, Macasio would leave the
workplace only after he had finished chopping all of the hog meats given to him for the days task. Also, David
would still engage Macasios services and have him report for work even during the days when only few hogs were
delivered for butchering.

To put our discussion within the perspective of a Rule 45 petition for review of a CA decision rendered under Rule
65 and framed in question form, the legal question is whether the CA correctly ruled that it was grave abuse of
discretion on the part of the NLRC to deny Macasios monetary claims simply because he is paid on a non-time
basis without determining whether he is a field personnel or not.

Under this overall setup, all those working for David, including Macasio, could naturally be expected to observe
certain rules and requirements and David would necessarily exercise some degree of control as the chopping of the
hog meats would be subject to his specifications. Also, since Macasio performed his tasks at Davids workplace,
David could easily exercise control and supervision over the former. Accordingly, whether or not David actually
exercised this right or power to control is beside the point as the law simply requires the existence of this power to
control 4243 or, as in this case, the existence of the right and opportunity to control and supervise Macasio.44

Provisions governing SIL and holiday pay

Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor Code provisions governing working conditions and rest periods.

In sum, the totality of the surrounding circumstances of the present case sufficiently points to an employeremployee relationship existing between David and Macasio.
Macasio is engaged on "pakyaw" or task basis.
At this point, we note that all three tribunals the LA, the NLRC and the CA found that Macasio was engaged or
paid on "pakyaw" or task basis. This factual finding binds the Court under the rule that factual findings of labor
tribunals when supported by the established facts and in accord with the laws, especially when affirmed by the CA,
is binding on this Court.
A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage payment, is
the non-consideration of the time spent in working. In a task-basis work, the emphasis is on the task itself, in the
sense that payment is reckoned in terms of completion of the work, not in terms of the number of time spent in the
completion of work.45 Once the work or task is completed, the worker receives a fixed amount as wage, without
regard to the standard measurements of time generally used in pay computation.
In Macasios case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter,
regardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to him for
chopping, Macasio would receive the fixed amount of P700.00 once he had completed his task. Clearly, these
circumstances show a "pakyaw" or task basis engagement that all three tribunals uniformly found.
In sum, the existence of employment relationship between the parties is determined by applying the "four-fold" test;
engagement on "pakyaw" or task basis does not determine the parties relationship as it is simply a method of pay
computation. Accordingly, Macasio is Davids employee, albeit engaged on "pakyaw" or task basis.
As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether Macasio is entitled

To resolve these issues, we need tore-visit the provisions involved.

Art. 82. Coverage. The provisions of [Title I] shall apply to employees in all establishments and undertakings
whether for profit or not, but not to government employees, managerial employees, field personnel, members of the
family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and SIL pay
(under Article 95 of the Labor Code). Under Article 82,"field personnel" on one hand and "workers who are paid by
results" on the other hand, are not covered by the Title I provisions. The wordings of Article82 of the Labor Code
additionally categorize workers "paid by results" and "field personnel" as separate and distinct types of employees
who are exempted from the Title I provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR 47 reads:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than (10) workers[.] [emphasis ours]
xxxx
SECTION 1. Coverage. This Rule shall apply to all employees except:
xxxx
(e)Field personnel and other employees whose time and performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in the performance thereof. [emphases ours]
On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR48 pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of service shall be

entitled to a yearly service incentive leave of five days with pay.

(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying
vacation leave with pay of at least five days and those employed in establishments regularly employing less than
ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment
after considering the viability or financial condition of such establishment. [emphases ours]
xxxx
Section 1. Coverage. This rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose performance is unsupervised by the employer including those who
are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance thereof. [emphasis ours]
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To be excluded
from their coverage, an employee must be one of those that these provisions expressly exempt, strictly in
accordance with the exemption. Under the IRR, exemption from the coverage of holiday and SIL pay refer to "field
personnel and other employees whose time and performance is unsupervised by the employer including those who
are engaged on task or contract basis[.]" Note that unlike Article 82 of the Labor Code, the IRR on holiday and SIL
pay do not exclude employees "engaged on task basis" as a separate and distinct category from employees
classified as "field personnel." Rather, these employees are altogether merged into one classification of exempted
employees.
Because of this difference, it may be argued that the Labor Code may be interpreted to mean that those who are
engaged on task basis, per se, are excluded from the SIL and holiday payment since this is what the Labor Code
provisions, in contrast with the IRR, strongly suggest. The arguable interpretation of this rule may be conceded to
be within the discretion granted to the LA and NLRC as the quasi-judicial bodies with expertise on labor matters.
However, as early as 1987 in the case of Cebu Institute of Technology v. Ople 49 the phrase "those who are engaged
on task or contract basis" in the rule has already been interpreted to mean as follows:
[the phrase] should however, be related with "field personnel" applying the rule on ejusdem generis that general
and unlimited terms are restrained and limited by the particular terms that they follow xxx Clearly, petitioner's
teaching personnel cannot be deemed field personnel which refers "to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor Code of the
Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive leave benefit cannot
therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the
coverage of SIL and holiday pay. They are exempted from the coverage of Title I (including the holiday and SIL pay)
only if they qualify as "field personnel." The IRR therefore validly qualifies and limits the general exclusion of
"workers paid by results" found in Article 82 from the coverage of holiday and SIL pay. This is the only reasonable
interpretation since the determination of excluded workers who are paid by results from the coverage of Title I is
"determined by the Secretary of Labor in appropriate regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc., v. Bautista:
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has
been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not
explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not
apply to employees classified as "field personnel." The phrase "other employees whose performance is
unsupervised by the employer" must not be understood as a separate classification of employees to which service
incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of
field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with
reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission
basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and
unlimited terms are restrained and limited by the particular terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support of granting
Macasios petition.

In Serrano, the Court, applying the rule on ejusdem generis 50 declared that "employees engaged on task or contract
basis xxx are not automatically exempted from the grant of service incentive leave, unless, they fall under the
classification of field personnel."51 The Court explained that the phrase "including those who are engaged on task or
contract basis, purely commission basis" found in Section 1(d), Rule V of Book III of the IRR should not be
understood as a separate classification of employees to which SIL shall not be granted. Rather, as with its
preceding phrase - "other employees whose performance is unsupervised by the employer" - the phrase "including
those who are engaged on task or contract basis" serves to amplify the interpretation of the Labor Code definition
of "field personnel" as those "whose actual hours of work in the field cannot be determined with reasonable
certainty."
In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the Labor Code
provisions and the IRR as exempting an employee from the coverage of Title I of the Labor Code based simply and
solely on the mode of payment of an employee. The NLRCs utter disregard of this consistent jurisprudential ruling
is a clear act of grave abuse of discretion. 52 In other words, by dismissing Macasios complaint without considering
whether Macasio was a "field personnel" or not, the NLRC proceeded based on a significantly incomplete
consideration of the case. This action clearly smacks of grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had only taken counsel from
Serrano and earlier cases, they would have correctly reached a similar conclusion regarding the payment of holiday
pay since the rule exempting "field personnel" from the grant of holiday pay is identically worded with the rule
exempting "field personnel" from the grant of SIL pay. To be clear, the phrase "employees engaged on task or
contract basis "found in the IRR on both SIL pay and holiday pay should be read together with the exemption of
"field personnel."
In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the
presence (or absence) of employer supervision as regards the workers time and performance is the key: if the
worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and
SIL pay unless exempted from the exceptions specifically provided under Article 94 (holiday pay) and Article95 (SIL
pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the meaning of
"field personnel" under the law, then he is not entitled to these monetary benefits.
Macasio does not fall under the classification of "field personnel"
Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not fall under
the definition of "field personnel." The CAs finding in this regard is supported by the established facts of this case:
first, Macasio regularly performed his duties at Davids principal place of business; second, his actual hours of work
could be determined with reasonable certainty; and, third, David supervised his time and performance of duties.
Since Macasio cannot be considered a "field personnel," then he is not exempted from the grant of holiday, SIL pay
even as he was engaged on "pakyaw" or task basis.
Not being a "field personnel," we find the CA to be legally correct when it reversed the NLRCs ruling dismissing
Macasios complaint for holiday and SIL pay for having been rendered with grave abuse of discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month pay however, we find that the CA legally erred in finding that the NLRC
gravely abused its discretion in denying this benefit to Macasio.
The governing law on 13th month pay is PD No. 851.53
As with holiday and SIL pay, 13th month pay benefits generally cover all employees; an employee must be one of
those expressly enumerated to be exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 851 54
enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3(e), "employers of those
who are paid on xxx task basis, and those who are paid a fixed amount for performing a specific work, irrespective
of the time consumed in the performance thereof"55 are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations
Implementing PD No. 851 exempts employees "paid on task basis" without any reference to "field personnel." This
could only mean that insofar as payment of the 13th month pay is concerned, the law did not intend to qualify the

exemption from its coverage with the requirement that the task worker be a "field personnel" at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition insofar as the payment
of 13th month pay to respondent is concerned. In all other aspects, we AFFIRM the decision dated November 22,
2010 and the resolution dated January 31, 2011 of the Court of Appeals in CA-G.R. SP No. 116003.
SO ORDERED.

Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic monthly
compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113, Rollo.)
In September 1979, the company introduced a marketing scheme known as the "Complementary Distribution
System" (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's sales
offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a notice of
strike on the ground that the CDS was contrary to the existing marketing scheme whereby the Route Salesmen
were assigned specific territories within which to sell their stocks of beer, and wholesalers had to buy beer products
from them, not from the company. It was alleged that the new marketing scheme violates Section 1, Article IV of the
collective bargaining agreement because the introduction of the CDS would reduce the take-home pay of the
salesmen and their truck helpers for the company would be unfairly competing with them.
The complaint filed by the petitioner against the respondent company raised two issues: (1) whether the CDS
violates the collective bargaining agreement, and (2) whether it is an indirect way of busting the union.
In its order of February 28, 1980, the Minister of Labor found:
... We see nothing in the record as to suggest that the unilateral action of the employer in inaugurating the new
sales scheme was designed to discourage union organization or diminish its influence, but rather it is undisputable
that the establishment of such scheme was part of its overall plan to improve efficiency and economy and at the
same time gain profit to the highest. While it may be admitted that the introduction of new sales plan somewhat
disturbed the present set-up, the change however was too insignificant as to convince this Office to interpret that
the innovation interferred with the worker's right to self-organization.
Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a prejudgment of the plan's
viability and effectiveness. It is like saying that the plan will not work out to the workers' [benefit] and therefore
management must adopt a new system of marketing. But what the petitioner failed to consider is the fact that
corollary to the adoption of the assailed marketing technique is the effort of the company to compensate whatever
loss the workers may suffer because of the new plan over and above than what has been provided in the collective
bargaining agreement. To us, this is one indication that the action of the management is devoid of any anti-union
hues. (pp. 24-25, Rollo.)
The dispositive part of the Minister's Order reads:
WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel Brewery Sales Force
Union-PTGWO is hereby dismissed. Management however is hereby ordered to pay an additional three (3) months
back adjustment commissions over and above the adjusted commission under the complementary distribution
system. (p. 26, Rollo.)
The petition has no merit.

G.R. No. L-53515 February 8, 1989

SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents.
Lorenzo F. Miravite for petitioner.
Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

Public respondent was correct in holding that the CDS is a valid exercise of management prerogatives:
Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place and manner of work,
tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2
SCRA 924; Republic Savings Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations Law,
1985 Ed., p. 44.) (Emphasis ours.)

GRIO-AQUINO, J.:
This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor Case No. AJML069-79, approving the private respondent's marketing scheme, known as the "Complementary Distribution System"
(CDS) and dismissing the petitioner labor union's complaint for unfair labor practice.

Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed
towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:
... Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.

On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31, 1981) was entered
into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the private respondent, San Miguel
Corporation, Section 1, of Article IV of which provided as follows:

So long as a company's management prerogatives are exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special

laws or under valid agreements, this Court will uphold them (LVN Pictures Workers vs. LVN, 35 SCRA 147; Phil.
American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18
SCRA 110). San Miguel Corporation's offer to compensate the members of its sales force who will be adversely
affected by the implementation of the CDS by paying them a so-called "back adjustment commission" to make up
for the commissions they might lose as a result of the CDS proves the company's good faith and lack of intention to
bust their union.
WHEREFORE, the petition for certiorari is dismissed for lack of merit.
SO ORDERED.

with the Mel and Jay Management and Development Corporation ("MJMDC"). ABS-CBN was represented by its
corporate officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela
Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to in the Agreement as "AGENT," MJMDC agreed to
provide SONZAs services exclusively to ABS-CBN as talent for radio and television. The Agreement listed the
services SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.3
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and P317,000 for
the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the
month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May 1994 entered into by your goodself on behalf of
ABS-CBN with our company relative to our talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his programs and
career. We consider these acts of the station violative of the Agreement and the station as in breach thereof. In this
connection, we hereby serve notice of rescission of said Agreement at our instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount stipulated in paragraph
7 of the Agreement but reserves the right to seek recovery of the other benefits under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y. SONZA
President and Gen. Manager4
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment,
National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay,
service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the
Employees Stock Option Plan ("ESOP").
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed
between the parties. SONZA filed an Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank, Quezon
Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same bank where ABS-CBN
deposited SONZAs talent fees and other payments due him under the Agreement.

G.R. No. 138051

June 10, 2004
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari 1 assailing the 26 March 1999 Decision 2 of the Court of Appeals
in CA-G.R. SP No. 49190 dismissing the petition filed by Jose Y. Sonza ("SONZA"). The Court of Appeals affirmed
the findings of the National Labor Relations Commission ("NLRC"), which affirmed the Labor Arbiters dismissal of
the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("Agreement")

In his Order dated 2 December 1996, the Labor Arbiter 5 denied the motion to dismiss and directed the parties to file
their respective position papers. The Labor Arbiter ruled:
In this instant case, complainant for having invoked a claim that he was an employee of respondent company until
April 15, 1996 and that he was not paid certain claims, it is sufficient enough as to confer jurisdiction over the
instant case in this Office. And as to whether or not such claim would entitle complainant to recover upon the
causes of action asserted is a matter to be resolved only after and as a result of a hearing. Thus, the respondents
plea of lack of employer-employee relationship may be pleaded only as a matter of defense. It behooves upon it the
duty to prove that there really is no employer-employee relationship between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution. The parties submitted their position papers on
24 February 1997.
On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with Motion to Expunge Respondents
Annex 4 and Annex 5 from the Records. Annexes 4 and 5 are affidavits of ABS-CBNs witnesses Soccoro Vidanes
and Rolando V. Cruz. These witnesses stated in their affidavits that the prevailing practice in the television and
broadcast industry is to treat talents like SONZA as independent contractors.

The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction. 6 The
pertinent parts of the decision read as follows:
xxx
While Philippine jurisprudence has not yet, with certainty, touched on the "true nature of the contract of a talent," it
stands to reason that a "talent" as above-described cannot be considered as an employee by reason of the peculiar
circumstances surrounding the engagement of his services.

Mr. Sonza.

It must be noted that complainant was engaged by respondent by reason of his peculiar skills and talent as a
TV host and a radio broadcaster. Unlike an ordinary employee, he was free to perform the services he
undertook to render in accordance with his own style. The benefits conferred to complainant under the May
1994 Agreement are certainly very much higher than those generally given to employees. For one, complainant
Sonzas monthly talent fees amount to a staggering P317,000. Moreover, his engagement as a talent was covered
by a specific contract. Likewise, he was not bound to render eight (8) hours of work per day as he worked only for
such number of hours as may be necessary.

It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to the regular courts, the
same being in the nature of an action for alleged breach of contractual obligation on the part of respondentappellee. As squarely apparent from complainant-appellants Position Paper, his claims for compensation for
services, 13th month pay, signing bonus and travel allowance against respondent-appellee are not based on the
Labor Code but rather on the provisions of the May 1994 Agreement, while his claims for proceeds under Stock
Purchase Agreement are based on the latter. A portion of the Position Paper of complainant-appellant bears
perusal:

The fact that per the May 1994 Agreement complainant was accorded some benefits normally given to an
employee is inconsequential. Whatever benefits complainant enjoyed arose from specific agreement by the
parties and not by reason of employer-employee relationship. As correctly put by the respondent, "All these
benefits are merely talent fees and other contractual benefits and should not be deemed as salaries, wages and/or
other remuneration accorded to an employee, notwithstanding the nomenclature appended to these benefits.
Apropos to this is the rule that the term or nomenclature given to a stipulated benefit is not controlling, but the intent
of the parties to the Agreement conferring such benefit."

Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bound itself to pay
complainant a signing bonus consisting of shares of stockswith FIVE HUNDRED THOUSAND PESOS
(P500,000.00).

The fact that complainant was made subject to respondents Rules and Regulations, likewise, does not
detract from the absence of employer-employee relationship. As held by the Supreme Court, "The line should
be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology
and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create
no employer-employee relationship unlike the second, which address both the result and the means to achieve it."
(Insular Life Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November 15, 1989).
x x x (Emphasis supplied)7
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the Labor Arbiters
decision. SONZA filed a motion for reconsideration, which the NLRC denied in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals assailing the
decision and resolution of the NLRC. On 26 March 1999, the Court of Appeals rendered a Decision dismissing the
case.8
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRCs finding that no employer-employee relationship existed between SONZA
and ABS-CBN. Adopting the NLRCs decision, the appellate court quoted the following findings of the NLRC:
x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as an agent of
complainant Sonza, the principal. By all indication and as the law puts it, the act of the agent is the act of the
principal itself. This fact is made particularly true in this case, as admittedly MJMDC is a management company
devoted exclusively to managing the careers of Mr. Sonza and his broadcast partner, Mrs. Carmela C. Tiangco.
(Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC, and not
between ABS-CBN and MJMDC. This is clear from the provisions of the May 1994 Agreement which specifically
referred to MJMDC as the AGENT. As a matter of fact, when complainant herein unilaterally rescinded said May
1994 Agreement, it was MJMDC which issued the notice of rescission in behalf of Mr. Sonza, who himself signed
the same in his capacity as President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically, the parties to the
said agreements are ABS-CBN and Mr. Sonza. And it is only in the May 1994 Agreement, which is the latest
Agreement executed between ABS-CBN and Mr. Sonza, that MJMDC figured in the said Agreement as the agent of

We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN such that there exist[s]
employer-employee relationship between the latter and Mr. Sonza. On the contrary, We find it indubitable, that
MJMDC is an agent, not of ABS-CBN, but of the talent/contractor Mr. Sonza, as expressly admitted by the latter and
MJMDC in the May 1994 Agreement.

Similarly, complainant is also entitled to be paid 13th month pay based on an amount not lower than the amount he
was receiving prior to effectivity of (the) Agreement.
Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel benefit amounting
to at least One Hundred Fifty Thousand Pesos (P150,000.00) per year.
Thus, it is precisely because of complainant-appellants own recognition of the fact that his contractual relations
with ABS-CBN are founded on the New Civil Code, rather than the Labor Code, that instead of merely resigning
from ABS-CBN, complainant-appellant served upon the latter a notice of rescission of Agreement with the station,
per his letter dated April 1, 1996, which asserted that instead of referring to unpaid employee benefits, he is
waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but reserves
the right to such recovery of the other benefits under said Agreement. (Annex 3 of the respondent ABS-CBNs
Motion to Dismiss dated July 10, 1996).
Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the Stock Purchase
Agreement by respondent-appellee that complainant-appellant filed his complaint. Complainant-appellants claims
being anchored on the alleged breach of contract on the part of respondent-appellee, the same can be resolved by
reference to civil law and not to labor law. Consequently, they are within the realm of civil law and, thus, lie with the
regular courts. As held in the case of Dai-Chi Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21
November 1994, an action for breach of contractual obligation is intrinsically a civil dispute.9 (Emphasis
supplied)
The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA and ABSCBN is a factual question that is within the jurisdiction of the NLRC to resolve. 10 A special civil action for certiorari
extends only to issues of want or excess of jurisdiction of the NLRC. 11 Such action cannot cover an inquiry into the
correctness of the evaluation of the evidence which served as basis of the NLRCs conclusion. 12 The Court of
Appeals added that it could not re-examine the parties evidence and substitute the factual findings of the NLRC
with its own.13
The Issue
In assailing the decision of the Court of Appeals, SONZA contends that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISION AND REFUSING TO FIND
THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE THE
WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING. 14
The Courts Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the NLRC ruling
which upheld the Labor Arbiters dismissal of the case for lack of jurisdiction.

The present controversy is one of first impression. Although Philippine labor laws and jurisprudence define clearly
the elements of an employer-employee relationship, this is the first time that the Court will resolve the nature of the
relationship between a television and radio station and one of its "talents." There is no case law stating that a radio
and television program host is an employee of the broadcast station.
The instant case involves big names in the broadcast industry, namely Jose "Jay" Sonza, a known television and
radio personality, and ABS-CBN, one of the biggest television and radio networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of ABS-CBN.
On the other hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction because SONZA was an independent
contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual
findings of the Labor Arbiter and the NLRC not only respect but also finality when supported by substantial
evidence.15 Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.16 A party cannot prove the absence of substantial evidence by simply pointing out that there is
contrary evidence on record, direct or circumstantial. The Court does not substitute its own judgment for that of the
tribunal in determining where the weight of evidence lies or what evidence is credible.17
SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case
law has consistently held that the elements of an employer-employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power
to control the employee on the means and methods by which the work is accomplished. 18 The last element, the socalled "control test", is the most important element.19
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAs services to co-host its television and radio programs because of SONZAs peculiar
skills, talent and celebrity status. SONZA contends that the "discretion used by respondent in specifically selecting
and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant
belies respondents claim of independent contractorship."

enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain
talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of
an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an
independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is
the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show
that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to
prevent losses as provided under labor laws.23
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as "AGENT and Jay Sonza
shall faithfully and completely perform each condition of this Agreement." 24 Even if it suffered severe business
losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent fees
during the life of the Agreement. This circumstance indicates an independent contractual relationship between
SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees.
Plainly, ABS-CBN adhered to its undertaking in the Agreement to continue paying SONZAs talent fees during the
remaining life of the Agreement even if ABS-CBN cancelled SONZAs programs through no fault of SONZA. 25
SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement as an admission that he is not
an employee of ABS-CBN. The Labor Arbiter stated that "if it were true that complainant was really an employee, he
would merely resign, instead." SONZA did actually resign from ABS-CBN but he also, as president of MJMDC,
rescinded the Agreement. SONZAs letter clearly bears this out. 26 However, the manner by which SONZA
terminated his relationship with ABS-CBN is immaterial. Whether SONZA rescinded the Agreement or resigned
from work does not determine his status as employee or independent contractor.

B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts
that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN
granted him benefits and privileges "which he would not have enjoyed if he were truly the subject of a valid job
contract."

D. Power of Control
Since there is no local precedent on whether a radio and television program host is an employee or an independent
contractor, we refer to foreign case law in analyzing the present case. The United States Court of Appeals, First
Circuit, recently held in Alberty-Vlez v. Corporacin De Puerto Rico Para La Difusin Pblica ("WIPR") 27 that
a television program host is an independent contractor. We quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent contractor. First, a television actress is a skilled
position requiring talent and training not available on-the-job. x x x In this regard, Alberty possesses a
masters degree in public communications and journalism; is trained in dance, singing, and modeling; taught with
the drama department at the University of Puerto Rico; and acted in several theater and television productions prior
to her affiliation with "Desde Mi Pueblo." Second, Alberty provided the "tools and instrumentalities" necessary
for her to perform. Specifically, she provided, or obtained sponsors to provide, the costumes, jewelry, and other
image-related supplies and services necessary for her appearance. Alberty disputes that this factor favors
independent contractor status because WIPR provided the "equipment necessary to tape the show." Albertys
argument is misplaced. The equipment necessary for Alberty to conduct her job as host of "Desde Mi Pueblo"
related to her appearance on the show. Others provided equipment for filming and producing the show, but these
were not the primary tools that Alberty used to perform her particular function. If we accepted this argument,
independent contractors could never work on collaborative projects because other individuals often provide the
equipment required for different aspects of the collaboration. x x x

All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA
were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as "SSS, Medicare,
x x x and 13th month pay" 20 which the law automatically incorporates into every employer-employee contract. 21
Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship. 22

Third, WIPR could not assign Alberty work in addition to filming "Desde Mi Pueblo." Albertys contracts with
WIPR specifically provided that WIPR hired her "professional services as Hostess for the Program Desde Mi
Pueblo." There is no evidence that WIPR assigned Alberty tasks in addition to work related to these tapings. x x x 28
(Emphasis supplied)

SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the
ordinary that they indicate more an independent contractual relationship rather than an employer-employee
relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAs unique skills,
talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone possessed

Applying the control test to the present case, we find that SONZA is not an employee but an independent
contractor. The control test is the most important test our courts apply in distinguishing an employee from an
independent contractor.29 This test is based on the extent of control the hirer exercises over a worker. The greater
the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse

Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them
from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABSCBN would not have entered into the Agreement with SONZA but would have hired him through its personnel
department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must
consider all the circumstances of the relationship, with the control test being the most important element.

holds true as well the less control the hirer exercises, the more likely the worker is considered an independent
contractor.30
First, SONZA contends that ABS-CBN exercised control over the means and methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the "Mel & Jay"
programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his skills
and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs
control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend only
rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. 31 ABS-CBN could not
dictate the contents of SONZAs script. However, the Agreement prohibited SONZA from criticizing in his shows
ABS-CBN or its interests.32 The clear implication is that SONZA had a free hand on what to say or discuss in his
shows provided he did not attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs
work.33 ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the
program format and airtime schedule "for more effective programming." 34 ABS-CBNs sole concern was the quality
of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and
methods of performance of SONZAs work.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means and
methods of the performance of his work. Although ABS-CBN did have the option not to broadcast SONZAs show,
ABS-CBN was still obligated to pay SONZAs talent fees... Thus, even if ABS-CBN was completely dissatisfied with
the means and methods of SONZAs performance of his work, or even with the quality or product of his work, ABSCBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but
ABS-CBN must still pay his talent fees in full.35
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue paying
in full SONZAs talent fees, did not amount to control over the means and methods of the performance of SONZAs
work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance of his
work - how he delivered his lines and appeared on television - did not meet ABS-CBNs approval. This proves that
ABS-CBNs control was limited only to the result of SONZAs work, whether to broadcast the final product or not. In
either case, ABS-CBN must still pay SONZAs talent fees in full until the expiry of the Agreement.
In Vaughan, et al. v. Warner, et al.,36 the United States Circuit Court of Appeals ruled that vaudeville performers
were independent contractors although the management reserved the right to delete objectionable features in their
shows. Since the management did not have control over the manner of performance of the skills of the artists, it
could only control the result of the work by deleting objectionable features. 37
SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No
doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel & Jay" programs.
However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA needed to perform his
job. What SONZA principally needed were his talent or skills and the costumes necessary for his appearance. 38
Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA was still an
independent contractor since ABS-CBN did not supervise and control his work. ABS-CBNs sole concern was for
SONZA to display his talent during the airing of the programs.39
40

A radio broadcast specialist who works under minimal supervision is an independent contractor. SONZAs work as
television and radio program host required special skills and talent, which SONZA admittedly possesses. The
records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and
talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules
and standards of performance. SONZA claims that this indicates ABS-CBNs control "not only [over] his manner of
work but also the quality of his work."
The Agreement stipulates that SONZA shall abide with the rules and standards of performance "covering talents"41
of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performance
prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreement refers to the

"Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by
the COMPANY (ABS-CBN) as its Code of Ethics." 42 The KBP code applies to broadcasters, not to employees of
radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Clearly,
the rules and standards of performance referred to in the Agreement are those applicable to talents and not to
employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the
former.43 In this case, SONZA failed to show that these rules controlled his performance. We find that these general
rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television
and radio programs that comply with standards of the industry. We have ruled that:
Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to
the services being rendered may be accorded the effect of establishing an employer-employee relationship. The
facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and those that control
or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike the second, which address both the result and
the means used to achieve it.44
The Vaughan case also held that one could still be an independent contractor although the hirer reserved certain
supervision to insure the attainment of the desired result. The hirer, however, must not deprive the one hired from
performing his services according to his own initiative.45
Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of control which ABSCBN exercised over him.
This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN.
Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry.46 This practice is
not designed to control the means and methods of work of the talent, but simply to protect the investment of the
broadcast station. The broadcast station normally spends substantial amounts of money, time and effort "in building
up its talents as well as the programs they appear in and thus expects that said talents remain exclusive with the
station for a commensurate period of time."47 Normally, a much higher fee is paid to talents who agree to work
exclusively for a particular radio or television station. In short, the huge talent fees partially compensates for
exclusivity, as in the present case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his services to ABSCBN. The Labor Arbiter ruled that as a talent of MJMDC, SONZA is not an employee of ABS-CBN. SONZA insists
that MJMDC is a "labor-only" contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the "labor-only" contractor; (2) the employee who is
ostensibly under the employ of the "labor-only" contractor; and (3) the principal who is deemed the real employer.
Under this scheme, the "labor-only" contractor is the agent of the principal. The law makes the principal
responsible to the employees of the "labor-only contractor" as if the principal itself directly hired or employed the
employees.48 These circumstances are not present in this case.
There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-CBN. MJMDC
merely acted as SONZAs agent. The Agreement expressly states that MJMDC acted as the "AGENT" of SONZA.
The records do not show that MJMDC acted as ABS-CBNs agent. MJMDC, which stands for Mel and Jay
Management and Development Corporation, is a corporation organized and owned by SONZA and TIANGCO. The
President and General Manager of MJMDC is SONZA himself. It is absurd to hold that MJMDC, which is owned,
controlled, headed and managed by SONZA, acted as agent of ABS-CBN in entering into the Agreement with
SONZA, who himself is represented by MJMDC. That would make MJMDC the agent of both ABS-CBN and
SONZA.

As SONZA admits, MJMDC is a management company devoted exclusively to managing the careers of SONZA
and his broadcast partner, TIANGCO. MJMDC is not engaged in any other business, not even job contracting.
MJMDC does not have any other function apart from acting as agent of SONZA or TIANGCO to promote their
careers in the broadcast and television industry.49
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979 finally
settled the status of workers in the broadcast industry. Under this policy, the types of employees in the broadcast
industry are the station and program employees.
Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law. There is no
legal presumption that Policy Instruction No. 40 determines SONZAs status. A mere executive issuance cannot
exclude independent contractors from the class of service providers to the broadcast industry. The classification of
workers in the broadcast industry into only two groups under Policy Instruction No. 40 is not binding on this Court,
especially when the classification has no basis either in law or in fact.
Affidavits of ABS-CBNs Witnesses
SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanes and Rolando Cruz without giving
his counsel the opportunity to cross-examine these witnesses. SONZA brands these witnesses as incompetent to
attest on the prevailing practice in the radio and television industry. SONZA views the affidavits of these witnesses
as misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBNs witnesses, he was never prevented from denying or refuting the
allegations in the affidavits. The Labor Arbiter has the discretion whether to conduct a formal (trial-type) hearing
after the submission of the position papers of the parties, thus:
Section 3. Submission of Position Papers/Memorandum
xxx
These verified position papers shall cover only those claims and causes of action raised in the complaint excluding
those that may have been amicably settled, and shall be accompanied by all supporting documents including the
affidavits of their respective witnesses which shall take the place of the latters direct testimony. x x x
Section 4. Determination of Necessity of Hearing. Immediately after the submission of the parties of their position
papers/memorandum, the Labor Arbiter shall motu propio determine whether there is need for a formal trial or
hearing. At this stage, he may, at his discretion and for the purpose of making such determination, ask clarificatory
questions to further elicit facts or information, including but not limited to the subpoena of relevant documentary
evidence, if any from any party or witness.50
The Labor Arbiter can decide a case based solely on the position papers and the supporting documents without a
formal trial.51 The holding of a formal hearing or trial is something that the parties cannot demand as a matter of
right.52 If the Labor Arbiter is confident that he can rely on the documents before him, he cannot be faulted for not
conducting a formal trial, unless under the particular circumstances of the case, the documents alone are
insufficient. The proceedings before a Labor Arbiter are non-litigious in nature. Subject to the requirements of due
process, the technicalities of law and the rules obtaining in the courts of law do not strictly apply in proceedings
before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents
like SONZA as independent contractors. SONZA argues that if such practice exists, it is void for violating the right of
labor to security of tenure.
The right of labor to security of tenure as guaranteed in the Constitution 53 arises only if there is an employeremployee relationship under labor laws. Not every performance of services for a fee creates an employer-employee
relationship. To hold that every person who renders services to another for a fee is an employee - to give meaning
to the security of tenure clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent
contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The
right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise

and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to
render his services without any one controlling the means and methods by which he performs his art or craft. This
Court will not interpret the right of labor to security of tenure to compel artists and talents to render their services
only as employees. If radio and television program hosts can render their services only as employees, the station
owners and managers can dictate to the radio and television hosts what they say in their shows. This is not
conducive to freedom of the press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code ("NIRC")54 in relation to Republic Act No. 7716,55 as amended by Republic Act
No. 8241,56 treats talents, television and radio broadcasters differently. Under the NIRC, these professionals are
subject to the 10% value-added tax ("VAT") on services they render. Exempted from the VAT are those under an
employer-employee relationship.57 This different tax treatment accorded to talents and broadcasters bolters our
conclusion that they are independent contractors, provided all the basic elements of a contractual relationship are
present as in this case.
Nature of SONZAs Claims
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive leave,
signing bonus, travel allowance, and amounts due under the Employee Stock Option Plan. We agree with the
findings of the Labor Arbiter and the Court of Appeals that SONZAs claims are all based on the May 1994
Agreement and stock option plan, and not on the Labor Code. Clearly, the present case does not call for an
application of the Labor Code provisions but an interpretation and implementation of the May 1994 Agreement. In
effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the
regular courts.58
WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals dated 26 March 1999 in CAG.R. SP No. 49190 is AFFIRMED. Costs against petitioner.
SO ORDERED.

television operations. It has a franchise as a broadcasting company, and was likewise issued a license and
authority to operate by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on
different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu
Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees
identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays.
They were made to perform the following tasks and duties:
a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent
ABS-CBN;
b) Coordinate, arrange personalities for air interviews;
c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports;
d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints;
e) Assist, anchor program interview, etc; and
f) Record, log clerical reports, man based control radio.4
Their respective working hours were as follows:
Name Time No. of Hours
1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7
8:00 A.M.-12:00 noon
2. Jennifer Deiparine 4:30 A.M.-12:00M.N. (sic) 7
3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs.
9:00 A.M.-6:00 P.M. (WF) 9 hrs.
4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.5
The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and News Manager
Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File 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 unit, respondents were not included to the CBA. 6

G.R. No. 164156

September 26, 2006
ABS-CBN BROADCASTING CORPORATION, petitioner,
vs.
MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN, respondents.

On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum informing the PAs that effective August
1, 2000, they would be assigned to non-drama programs, and that the DYAB studio operations would be handled
by the studio technician. Thus, their revised schedule and other assignments would be as follows:
Monday Saturday
4:30 A.M. 8:00 A.M. Marlene Nazareno.
Miss Nazareno will then be assigned at the Research Dept.
From 8:00 A.M. to 12:00
4:30 P.M. 12:00 MN Jennifer Deiparine
Sunday
5:00 A.M. 1:00 P.M. Jennifer Deiparine
1:00 P.M. 10:00 P.M. Joy Sanchez

DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No.
76582 and the Resolution denying the motion for reconsideration thereof. The CA affirmed the Decision 2 and
Resolution3 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000762-2001 (RAB Case
No. VII-10-1661-2001) which likewise affirmed, with modification, the decision of the Labor Arbiter declaring the
respondents Marlyn Nazareno, Merlou Gerzon, Jennifer Deiparine and Josephine Lerasan as regular employees.
The Antecedents
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a
network of television and radio stations, whose operations revolve around the broadcast, transmission, and relay of
telecommunication signals. It sells and deals in or otherwise utilizes the airtime it generates from its radio and

Respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo
Lastimosa.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment
of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with
Damages against the petitioner before the NLRC. The Labor Arbiter directed the parties to submit their respective
position papers. Upon respondents failure to file their position papers within the reglementary period, Labor Arbiter
Jose G. Gutierrez issued an Order dated April 30, 2001, 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, they filed, on June 11, 2001, an Earnest Motion to
Refile Complaint with Motion to Admit Position Paper and Motion to Submit Case For Resolution. 8 The Labor Arbiter
granted this motion in an Order dated June 18, 2001, and forthwith admitted the position paper of the complainants.
Respondents made the following allegations:

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 until
the filing of this complaint on November 20, 2000.
Machine copies of complainants ABS-CBN Employees Identification Card and salary vouchers are hereto attached
as follows, thus:
I. Jennifer Deiparine:
Exhibit "A" - ABS-CBN Employees Identification Card
Exhibit "B", - ABS-CBN Salary Voucher from Nov.
Exhibit "B-1" & 1999 to July 2000 at P4,000.00
Exhibit "B-2"
Date employed: September 15, 1995
Length of service: 5 years & nine (9) months
II. Merlou Gerzon - ABS-CBN Employees Identification Card
Exhibit "C"
Exhibit "D"
Exhibit "D-1" &
Exhibit "D-2" - ABS-CBN Salary Voucher from March
1999 to January 2001 at P4,000.00
Date employed: September 1, 1995
Length of service: 5 years & 10 months
III. Marlene Nazareno
Exhibit "E" - ABS-CBN Employees Identification Card
Exhibit "E" - ABS-CBN Salary Voucher from Nov.
Exhibit "E-1" & 1999 to December 2000
Exhibit :E-2"
Date employed: April 17, 1996
Length of service: 5 years and one (1) month
IV. Joy Sanchez Lerasan
Exhibit "F" - ABS-CBN Employees Identification Card
Exhibit "F-1" - ABS-CBN Salary Voucher from Aug.
Exhibit "F-2" & 2000 to Jan. 2001
Exhibit "F-3"
Exhibit "F-4" - Certification dated July 6, 2000
Acknowledging regular status of
Complainant Joy Sanchez Lerasan
Signed by ABS-CBN Administrative
Officer May Kima Hife
Date employed: April 15, 1998
Length of service: 3 yrs. and one (1) month9
Respondents insisted that they belonged to a "work pool" from which petitioner chose persons to be given specific
assignments at its discretion, and were thus under its direct supervision and control regardless of nomenclature.
They prayed that judgment be rendered in their favor, thus:
WHEREFORE, premises considered, this Honorable Arbiter is most respectfully prayed, to issue an order
compelling defendants to pay complainants the following:
1. One Hundred Thousand Pesos (P100,000.00) each
and by way of moral damages;
2. Minimum wage differential;
3. Thirteenth month pay differential;
4. Unpaid service incentive leave benefits;
5. Sick leave;
6. Holiday pay;
7. Premium pay;
8. Overtime pay;
9. Night shift differential.

Complainants further pray of this Arbiter to declare them regular and permanent employees of respondent ABSCBN as a condition precedent for their admission into the existing union and collective bargaining unit of
respondent company where they may as such acquire or otherwise perform their obligations thereto or enjoy the
benefits due therefrom.
Complainants pray for such other reliefs as are just and equitable under the premises.10
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 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 particular production. They are considered in the industry as "program employees"
in that, as distinguished from regular or station employees, they 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 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 complainants were as
follows:
a. Complainant Nazareno assists in the programs:
1) Nagbagang Balita (early morning edition)
2) Infor Hayupan
3) Arangkada (morning edition)
4) Nagbagang Balita (mid-day edition)
b. Complainant Deiparine assists in the programs:
1) Unzanith
2) Serbisyo de Arevalo
3) Arangkada (evening edition)
4) Balitang K (local version)
5) Abante Subu
6) Pangutana Lang
c. Complainant Gerzon assists in the program:
1) On Mondays and Tuesdays:
(a) Unzanith
(b) Serbisyo de Arevalo
(c) Arangkada (evening edition)
(d) Balitang K (local version)
(e) Abante Sugbu
(f) Pangutana Lang
2) On Thursdays
Nagbagang Balita
3) On Saturdays
(a) Nagbagang Balita
(b) Info Hayupan
(c) Arangkada (morning edition)
(d) Nagbagang Balita (mid-day edition)
4) On Sundays:
(a) Siesta Serenata
(b) Sunday Chismisan
(c) Timbangan sa Hustisya
(d) Sayri ang Lungsod
(e) Haranahan11
Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other programs they
produce, such as drama talents in other productions. As program employees, a PAs engagement is coterminous
with 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 the cancellation of one program and the commencement of another.
As such program employees, their compensation is computed on a program basis, a 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

Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve the CBA and interpret the same,
especially since respondents were not covered by the bargaining unit.
On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were
regular employees of petitioner; as such, they were awarded monetary benefits. The fallo of the decision reads:
WHEREFORE, the foregoing premises considered, judgment is hereby rendered declaring the complainants
regular employees of the respondent ABS-CBN Broadcasting Corporation and directing the same respondent to
pay complainants as follows:
I - Merlou A. Gerzon P12,025.00
II - Marlyn Nazareno 12,025.00
III - Jennifer Deiparine 12,025.00
IV - Josephine Sanchez Lerazan 12,025.00
_________
P48,100.00
plus ten (10%) percent Attorneys Fees or a TOTAL aggregate amount of PESOS: FIFTY TWO THOUSAND NINE
HUNDRED TEN (P52,910.00).
Respondent Veneranda C. Sy is absolved from any liability.
SO ORDERED.13
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 agreement, as the same was within the jurisdiction of the Voluntary Arbitrator
as provided in Article 261 of the Labor Code.

representing their rice subsidy in the CBA, broken down as follows:

a. Deiparine, Jennifer - 60 Sacks
b. Gerzon, Merlou - 60 Sacks
c. Nazareno, Marlyn - 60 Sacks
d. Lerazan, Josephine Sanchez - 53 Sacks
Total 233 Sacks; and
3. To grant to the complainants all the benefits of the CBA after 30 September 2002.
SO ORDERED.15
The NLRC declared that the Labor Arbiter acted conformably with the Labor Code when it granted respondents
motion to refile the complaint and admit their position paper. Although respondents were not parties to the CBA
between petitioner and the ABS-CBN Rank-and-File Employees Union, the NLRC nevertheless granted and
computed respondents monetary benefits 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 members of the union. Their claim for monetary benefits was within the
context of Article 217(6) of the Labor Code. The validity of respondents claim does not depend upon the
interpretation of the CBA.
The NLRC ruled that respondents were entitled to the benefits under the 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 Pacific Timber & Supply Company v. National Labor Relations Commission.16
Petitioner filed a motion for reconsideration, which the NLRC denied.

Respondents counsel received a copy of the decision on August 29, 2001. Respondent Nazareno received her
copy on August 27, 2001, while the other respondents received theirs on September 8, 2001. Respondents signed
and filed their Appeal Memorandum on September 18, 2001.
For its part, petitioner filed a motion for reconsideration, which the Labor Arbiter denied and considered as an
appeal, conformably with Section 5, Rule V, of the NLRC Rules of Procedure. Petitioner forthwith appealed the
decision to the NLRC, while respondents filed a partial appeal.
In its appeal, petitioner alleged the following:
1. That the Labor Arbiter erred in reviving or re-opening this case which had long been dismissed without prejudice
for more than thirty (30) calendar days;
2. That the Labor Arbiter erred in depriving the respondent of its Constitutional right to due process of law;
3. That the Labor Arbiter erred in denying respondents Motion for Reconsideration on an interlocutory order on the
ground that the same is a prohibited pleading;
4. That the Labor Arbiter erred when he ruled that the complainants are regular employees of the respondent;
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; and
6. That the Labor Arbiter erred when he ruled that complainants are entitled to attorneys fees.14
On November 14, 2002, the NLRC rendered judgment modifying the decision of the Labor Arbiter. The fallo of the
decision reads:
WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Gutierrez dated 30 July 2001 is SET
ASIDE and VACATED and a new one is entered ORDERING respondent ABS-CBN Broadcasting Corporation, as
follows:
1. To pay complainants of their wage differentials and other benefits arising from the CBA as of 30 September 2002
in the aggregate amount of Two Million Five Hundred, Sixty-One Thousand Nine Hundred Forty-Eight Pesos and
22/100 (P2,561,948.22), broken down as follows:
a. Deiparine, Jennifer - P 716,113.49
b. Gerzon, Merlou - 716,113.49
c. Nazareno, Marlyn - 716,113.49
d. Lerazan, Josephine Sanchez - 413,607.75
Total - P 2,561,948.22
2. To deliver to the complainants Two Hundred Thirty-Three (233) sacks of rice as of 30 September 2002

Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, raising both
procedural and substantive issues, as follows: (a) whether the NLRC acted without jurisdiction in admitting the
appeal of respondents; (b) whether the NLRC committed palpable error in 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 receipt
of the July 30, 2001 Order of the Labor Arbiter; (c) whether respondents were regular employees; (d) whether the
NLRC acted without jurisdiction in entertaining and resolving the claim of the respondents under 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 although they are not
members of the appropriate bargaining unit.
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 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 August 27, 2001), they had until September 18, 2001 within which to file their
Appeal Memorandum. Moreover, the CA declared that respondents failure to submit their position paper on time is
not a ground to strike out the paper from the records, much less dismiss a complaint.
Anent the substantive issues, the appellate court stated that respondents are not mere project employees, but
regular employees who perform tasks necessary and desirable in the usual trade and business of petitioner and not
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 regular
employees.
Finding no merit in petitioners motion for reconsideration, the CA denied the same in a Resolution 17 dated June 16,
2004.
Petitioner thus filed the instant petition for review on certiorari and raises the following assignments of error:
1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT JURISDICTION AND GRAVELY ERRED IN
UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION NOTWITHSTANDING THE PATENT NULLITY
OF THE LATTERS DECISION AND RESOLUTION.
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC
FINDING RESPONDENTS REGULAR EMPLOYEES.
3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC
AWARDING CBA BENEFITS TO RESPONDENTS.18

Considering that the assignments of error are interrelated, the Court shall resolve them simultaneously.
Petitioner asserts that the appellate court committed palpable and serious error of law when it affirmed the rulings
of the NLRC, and entertained respondents appeal from the decision of the Labor Arbiter despite the admitted lapse
of the reglementary period within which to perfect the same. Petitioner likewise maintains that the 10-day period to
appeal must be reckoned from receipt of a partys counsel, not from the time the party learns of the decision, that is,
notice to counsel is notice to party and not the other way around. Finally, petitioner argues that the reopening of a
complaint which the Labor Arbiter has dismissed without prejudice is a clear violation of Section 1, Rule V of the
NLRC Rules; such order of dismissal had already attained finality and can no longer be set aside.
Respondents, on the other hand, allege that their late appeal is a non-issue because it was petitioners own timely
appeal that empowered the NLRC to reopen the case. They assert that although the appeal was filed 10 days late,
it may still be given due course in the interest of substantial justice as an exception to the general rule that the
negligence of a counsel binds the client. On the issue of the late filing of their position paper, they maintain that this
is not a ground to strike it out from the records or dismiss the complaint.
We find no merit in the petition.
We agree with petitioners contention that the perfection of an appeal within the statutory or reglementary period is
not only mandatory, but also 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 has time and again ruled that in exceptional cases, a belated appeal may be given due course
if greater injustice may occur if an appeal is not given due course than if the reglementary period to appeal were
strictly followed.19 The Court resorted to this extraordinary measure even at the expense of sacrificing order and
efficiency if only to serve the greater principles of substantial justice and equity.20
In the case at bar, the NLRC did not commit a grave abuse of its discretion in giving Article 223 21 of the Labor Code
a liberal application to prevent the miscarriage of justice. Technicality should not be allowed to stand in the way of
equitably and completely resolving the rights and obligations of the parties. 22 We have held in a catena of cases that
technical rules are not binding in labor cases and are not to be applied strictly if the result would be detrimental to
the workingman.23
Admittedly, respondents failed to perfect their appeal from the decision of the Labor Arbiter within the reglementary
period therefor. However, petitioner perfected its appeal within the period, and since petitioner had filed a timely
appeal, the NLRC acquired jurisdiction over the case to give due course to 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 party as the situation is considered to be
of greater benefit to both parties.24
We find no merit in petitioners contention that the Labor Arbiter abused his discretion when he admitted
respondents position paper which had been 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 objectively, without
technicalities of law or procedure, all in the interest of due process. 25 Indeed, as stressed by the appellate court,
respondents failure to 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 petitioners assertion that it was denied
due process when the Labor Arbiter admitted respondents position paper without requiring it to file a comment
before admitting said position paper. The essence of due process in administrative proceedings is simply an
opportunity to explain ones side or an opportunity to seek reconsideration of the action or ruling complained of.
Obviously, there is nothing in the records that would suggest that petitioner had absolute lack of opportunity to be
heard.27 Petitioner had the right to file a motion for reconsideration of the Labor Arbiters admission of respondents
position paper, and even file a Reply thereto. In fact, petitioner filed its position paper on April 2, 2001. It must be
stressed that Article 280 of the Labor Code was encoded in our statute books to hinder the circumvention by
unscrupulous employers of the employees right to security of tenure by indiscriminately and absolutely ruling out all
written and oral agreements inharmonious with the concept of regular employment defined therein.28
We quote with approval the following pronouncement of the NLRC:
The complainants, on the other hand, contend that respondents assailed the Labor Arbiters order dated 18 June
2001 as violative of the NLRC Rules of Procedure and as such is violative of their right to procedural due process.

That while suggesting that an Order be instead issued by the Labor Arbiter for complainants to refile this case,
respondents impliedly submit that there is not any substantial damage or prejudice upon the refiling, even so,
respondents suggestion acknowledges complainants right to prosecute this case, albeit with the burden of
repeating the same procedure, thus, entailing additional time, efforts, litigation cost and precious time for the Arbiter
to repeat the same process twice. Respondents suggestion, betrays its notion of prolonging, rather than promoting
the early resolution of the case.
Although the Labor Arbiter in his Order dated 18 June 2001 which revived and re-opened the dismissed case
without prejudice beyond the ten (10) day reglementary period had inadvertently failed to follow Section 16, Rule V,
Rules Procedure of the NLRC which states:
"A party may file a motion to revive or re-open a case dismissed without 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
arbitration branch of origin."
the same is not a serious flaw that had prejudiced the respondents right to due process. The case can still be
refiled because it has not yet prescribed. Anyway, Article 221 of the Labor Code provides:
"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 and it is the spirit and intention of this Code that the Commission and its
members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process."
The admission by the Labor Arbiter of the complainants Position Paper and 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 interest of due process. Indeed, the failure to submit a position paper on time is not a
ground for striking out the paper from the records, much less for dismissing a complaint in the case of the
complainant. (University of Immaculate Conception vs. UIC Teaching and Non-Teaching Personnel Employees,
G.R. No. 144702, July 31, 2001).
"In admitting the respondents position paper albeit late, the Labor Arbiter acted within her discretion. In fact, she is
enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without
technicalities of law or procedure, all in the interest of due process". (Panlilio vs. NLRC, 281 SCRA 53).
The respondents were given by the Labor Arbiter the opportunity to submit 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 the
parties are given the opportunities to submit position papers.
"Due process requirements are satisfied where the parties are given the opportunities to submit position papers".
(Laurence vs. NLRC, 205 SCRA 737).
Thus, the respondent was not deprived of its Constitutional right to due process of law.29
We reject, as barren of factual basis, petitioners contention that respondents are considered as its talents, hence,
not regular employees of the broadcasting company. Petitioners claim that the functions performed by the
respondents are not at all necessary, desirable, or even vital to its trade or business is belied by the evidence on
record.
Case law is that this Court has always accorded respect and finality to the findings of fact of the CA, particularly if
they coincide with those of the Labor 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; nonetheless, the Court is constrained to resolve it due to its tremendous
effects to the legions of production assistants working in the Philippine broadcasting industry.
We agree with respondents contention that where a person has rendered at least one year of service, regardless of
the nature of the activity performed, 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 declared as having attained regular status. Article 280 of the Labor Code provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular

where the employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the duration of the
season.
In Universal Robina Corporation v. Catapang, 31 the Court reiterated the test in determining whether one is a regular
employee:
The primary standard, therefore, of determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection
can be determined by considering the nature of work performed and its relation to the scheme of the particular
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 merely intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such activity and while such activity exists. 32
As elaborated by this Court in Magsalin v. National Organization of Working Men:33
Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a
"regular" workers security of tenure, however, can hardly be doubted. In determining whether an employment
should be considered regular or non-regular, the applicable test is the reasonable connection between the particular
activity performed by the employee in relation to the usual business or trade of the employer. The standard,
supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of
the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the
general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific
undertaking that is divorced from the normal activities required in carrying on the particular business or trade. But,
although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been
performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law
deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or
desirability of that activity to the business or trade of the employer. The employment of such person is also then
deemed to be regular with respect to such activity and while such activity exists.34
Not considered regular employees are "project employees," the completion or termination of which is more or less
determinable at the time of employment, such as those employed in connection with a particular construction
project, and "seasonal employees" whose employment by its nature is only desirable for a limited period of time.
Even then, any employee who has rendered at least one year of service, whether continuous or intermittent, is
deemed regular with respect to the activity performed and while such activity actually exists.
It is of no moment that petitioner hired respondents as "talents." The fact that respondents received pre-agreed
"talent fees" instead of salaries, that they 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 their employment. Respondents
cannot be considered "talents" because they are not actors or actresses or radio specialists or mere clerks or utility
employees. They are regular employees who perform several different duties under the control and direction of
ABS-CBN executives and supervisors.
Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have
rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are
employed.35
The law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining
situation necessitates the succor of the State. What determines whether a certain employment is regular or
otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces, much less the
procedure of hiring the employee or the manner of paying the salary or the actual time spent at work. It is the
character of the activities performed in relation to the particular trade or business taking into account all the
circumstances, and in some cases the length of time of its performance and its continued existence. 36 It is obvious
that one year after they were employed by petitioner, respondents became regular employees by operation of law.37
Additionally, respondents cannot be considered as project or program employees because no evidence was

presented to show that the duration and scope of the project were determined or specified at the time of their
engagement. Under existing jurisprudence, project could refer to two distinguishable types of activities. First, a
project may refer to a particular job or undertaking that is within the regular or usual business of the employer, 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 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 distinct from the ordinary or regular business operations of the employer. The job
or undertaking also begins and ends at determined or determinable times. 38
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 were specified at the time the employees were engaged for that
project.39
In this case, it is undisputed that respondents had continuously performed the same activities for an average of five
years. Their assigned tasks are 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
petitioners business or trade. 40 While length of time may not be a sole controlling test for project employment, it can
be a strong factor to determine whether the employee was hired for a specific undertaking or in fact tasked to
perform functions which are vital, necessary and indispensable to the usual trade or business of the employer. 41 We
note further that petitioner did not report the termination of respondents employment in the particular "project" to
the Department of Labor and Employment Regional Office having jurisdiction over the workplace within 30 days
following the date of their separation from work, using the prescribed form on employees termination/
dismissals/suspensions.42
As gleaned from the records of this case, petitioner itself is not certain how to categorize respondents. In its earlier
pleadings, petitioner classified respondents as program employees, and in later pleadings, independent
contractors. Program employees, or project employees, are different from independent contractors because in the
case of the latter, no employer-employee relationship exists.
Petitioners reliance on the ruling of this Court in Sonza v. ABS-CBN Broadcasting Corporation 43 is misplaced. In
that case, the Court explained why Jose Sonza, a well-known television and radio personality, was an independent
contractor and not a regular employee:
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAS services to co-host its television and radio programs because of SONZAS peculiar
skills, talent and celebrity status. SONZA contends that the "discretion used by respondent in specifically selecting
and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant
belies respondents claim of independent contractorship."
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them
from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABSCBN would not have entered into the Agreement with SONZA but would have hired him through its personnel
department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must
consider all the circumstances of the relationship, with the control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts
that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN
granted him benefits and privileges "which he would not have enjoyed if he were truly the subject of a valid job
contract."
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA
were ABS-CBNs 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 into every employer-employee contract.
Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.

SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the
ordinary that they indicate more an independent contractual relationship rather than an employer-employee
relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAS unique skills,
talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone possessed
enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain
talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of
an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an
independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is
the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement. 44
In the case at bar, however, the employer-employee relationship between petitioner and respondents has been
proven.
First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was
required from them because they were merely hired through petitioners personnel department just like any ordinary
employee.
Second. The so-called "talent fees" of respondents correspond to wages given as a result of an employer-employee
relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating
independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are
highly dependent on the petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors
negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer and when
the worker, relative to the employer, does not furnish an independent business or professional service, such work is
a regular employment of such employee and not an independent contractor.45 The Court will peruse beyond any
such agreement to examine the facts that typify the parties actual relationship.46

It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner and
its rank-and-file employees. As regular employees, respondents are entitled to the benefits granted to all other
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 excluded from the CBA is precisely because they were erroneously
classified and treated as project employees by petitioner:
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 respondents ruling that private respondents as
production assistants of petitioner are regular employees. The monetary award is not considered as claims
involving the interpretation or implementation of the collective bargaining agreement. The reason why production
assistants were excluded from the said agreement is precisely because they were classified and treated as project
employees by petitioner.
As earlier stated, it is not the will or word of the employer which determines the nature of employment of an
employee but the nature of the activities performed by such employee in relation to the particular business or trade
of the employer. Considering that We have clearly found that private respondents are regular employees of
petitioner, their exclusion from the said CBA on the misplaced belief of the parties to the said agreement that they
are project employees, is therefore not proper. Finding said private respondents as regular employees and not as
mere project employees, they must be accorded the benefits due under the said Collective Bargaining Agreement.
A collective bargaining agreement is a contract entered into by the union representing the employees and the
employer. However, even the non-member employees are entitled to the benefits of the contract. To accord its
benefits only to members of the union without any valid reason would constitute undue discrimination against nonmembers. A collective bargaining agreement is binding on all employees of the company. Therefore, whatever
benefits are given to the other employees of ABS-CBN must likewise be accorded to private respondents who were
regular employees of petitioner.48
Besides, only talent-artists were excluded from the CBA and not production assistants who are regular employees
of the respondents. Moreover, under Article 1702 of the New Civil Code: "In case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and decent living of the laborer."
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 76582 are AFFIRMED. Costs against petitioner.
SO ORDERED.