1

G.R. No. L-12582

January 28, 1961

LVN PICTURES, INC., petitioner-appellant,

vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL
RELATIONS, respondents-appellees.
x---------------------------------------------------------x
G.R. No. L-12598

January 28, 1961

SAMPAGUITA PICTURES, INC., petitioner-appellant,

vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL
RELATIONS, respondents-appellees.
Nicanor S. Sison for petitioner-appellant.
Jaime E. Ilagan for respondent-appellee Court of Agrarian
Relations.
Gerardo P. Cabo Chan for respondent-appellee Philippine
Musicians Guild.
CONCEPCION, J.:
Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures,
Inc. seek a review by certiorari of an order of the Court of
Industrial Relations in Case No. 306-MC thereof, certifying the
Philippine Musicians Guild (FFW), petitioner therein and
respondent herein, as the sole and exclusive bargaining agency of
all musicians working with said companies, as well as with the
Premiere Productions, Inc., which has not appealed. The appeal
of LVN Pictures, Inc., has been docketed as G.R. No. L-12582,

whereas G.R. No. L-12598 is the appeal of Sampaguita Pictures,

Inc. Involving as they do the same order, the two cases have been
jointly heard in this Court, and will similarly be disposed of.
In its petition in the lower court, the Philippine Musicians Guild
(FFW), hereafter referred to as the Guild, averred that it is a duly
registered legitimate labor organization; that LVN Pictures, Inc.,
Sampaguita Pictures, Inc., and Premiere Productions, Inc. are
corporations, duly organized under the Philippine laws, engaged
in the making of motion pictures and in the processing and
distribution thereof; that said companies employ musicians for
the purpose of making music recordings for title music,
background music, musical numbers, finale music and other
incidental music, without which a motion picture is incomplete;
that ninety-five (95%) percent of all the musicians playing for the
musical recordings of said companies are members of the Guild;
and that the same has no knowledge of the existence of any
other legitimate labor organization representing musicians in said
companies. Premised upon these allegations, the Guild prayed
that it be certified as the sole and exclusive bargaining agency for
all musicians working in the aforementioned companies. In their
respective answers, the latter denied that they have any
musicians as employees, and alleged that the musical numbers in
the filing of the companies are furnished by independent
contractors. The lower court, however, rejected this pretense and
sustained the theory of the Guild, with the result already
adverted to. A reconsideration of the order complained of having
been denied by the Court en banc, LVN Pictures, inc., and
Sampaguita Pictures, Inc., filed these petitions for review
forcertiorari.

2
Apart from impugning the conclusion of the lower court on the
status of the Guild members as alleged employees of the film
companies, the LVN Pictures, Inc., maintains that a petition for
certification cannot be entertained when the existence of
employer-employee relationship between the parties is
contested. However, this claim is neither borne out by any legal
provision nor supported by any authority. So long as, after due
hearing, the parties are found to bear said relationship, as in the
case at bar, it is proper to pass upon the merits of the petition for
certification.
It is next urged that a certification is improper in the present
case, because, "(a) the petition does not allege and no evidence
was presented that the alleged musicians-employees of the
respondents constitute a proper bargaining unit, and (b) said
alleged musicians-employees represent a majority of the other
numerous employees of the film companies constituting a proper
bargaining unit under section 12 (a) of Republic Act No. 875."
The absence of an express allegation that the members of the
Guild constitute a proper bargaining unit is fatal proceeding, for
the same is not a "litigation" in the sense in which this term is
commonly understood, but a mere investigation of a nonadversary, fact finding character, in which the investigating
agency plays the part of a disinterested investigator seeking
merely to ascertain the desires of employees as to the matter of
their representation. In connection therewith, the court enjoys a
wide discretion in determining the procedure necessary to insure
the fair and free choice of bargaining representatives by
employees.1 Moreover, it is alleged in the petition that the Guild
it a duly registered legitimate labor organization and that ninetyfive (95%) percent of the musicians playing for all the musical

recordings of the film companies involved in these cases are

members of the Guild. Although, in its answer, the LVN Pictures,
Inc. denied both allegations, it appears that, at the hearing in the
lower court it was merely the status of the musicians as its
employees that the film companies really contested. Besides, the
substantial difference between the work performed by said
musicians and that of other persons who participate in the
production of a film, and the peculiar circumstances under which
the services of that former are engaged and rendered, suffice to
show that they constitute a proper bargaining unit. At this
juncture, it should be noted that the action of the lower court in
deciding upon an appropriate unit for collective bargaining
purposes is discretionary (N.L.R.B. v. May Dept. Store Co., 66 Sup.
Ct. 468. 90 L. ed. 145) and that its judgment in this respect is
entitled to almost complete finality, unless its action is arbitrary
or capricious (Marshall Field & Co. v. N.L.R.B. [C.C.A. 19431, 135
F. 2d. 891), which is far from being so in the cases at bar.
Again, the Guild seeks to be, and was, certified as the sole and
exclusive bargaining agency for the musicians working in the
aforesaid film companies. It does not intend to represent the
other employees therein. Hence, it was not necessary for the
Guild to allege that its members constitute a majority of all the
employees of said film companies, including those who are not
musicians. The real issue in these cases, is whether or not the
musicians in question are employees of the film companies. In
this connection the lower court had the following to say:
As a normal and usual course of procedure employed by the
companies when a picture is to be made, the producer invariably
chooses, from the musical directors, one who will furnish the
musical background for a film. A price is agreed upon verbally

3
between the producer and musical director for the cost of
furnishing such musical background. Thus, the musical director
may compose his own music specially written for or adapted to
the picture. He engages his own men and pays the corresponding
compensation of the musicians under him.
When the music is ready for recording, the musicians are
summoned through 'call slips' in the name of the film company
(Exh 'D'), which show the name of the musician, his musical
instrument, and the date, time and place where he will be picked
up by the truck of the film company. The film company provides
the studio for the use of the musicians for that particular
recording. The musicians are also provided transportation to and
from the studio by the company. Similarly, the company furnishes
them meals at dinner time.
During the recording sessions, the motion picture director, who is
an employee of the company, supervises the recording of the
musicians and tells what to do in every detail. He solely directs
the performance of the musicians before the camera as director,
he supervises the performance of all the action, including the
musicians who appear in the scenes so that in the actual
performance to be shown on the screen, the musical director's
intervention has stopped.
And even in the recording sessions and during the actual shooting
of a scene, the technicians, soundmen and other employees of
the company assist in the operation. Hence, the work of the
musicians is an integral part of the entire motion picture since
they not only furnish the music but are also called upon to appear
in the finished picture.

The question to be determined next is what legal relationship

exits between the musicians and the company in the light of the
foregoing facts.
We are thus called upon to apply R.A. Act 875. which is
substantially the same as and patterned after the Wagner Act
substantially the same as a Act and the Taft-Hartley Law of the
United States. Hence, reference to decisions of American Courts
on these laws on the point-at-issue is called for.
Statutes are to be construed in the light of purposes achieved and
the evils sought to be remedied. (U.S. vs. American Tracking
Association, 310 U.S. 534, 84 L. ed. 1345.) .
In the case of National Labor Relations Board vs. Hearts
Publication, 322 U.S. 111, the United States Supreme Court said
the Wagner Act was designed to avert the 'substantial
obstruction to the free flow of commerce which results from
strikes and other forms of industrial unrest by eliminating the
causes of the unrest. Strikes and industrial unrest result from the
refusal of employers' to bargain collectively and the inability of
workers to bargain successfully for improvement in their working
conditions. Hence, the purposes of the Act are to encourage
collective bargaining and to remedy the workers' inability to
bargaining power, by protecting the exercise of full freedom of
association and designation of representatives of their own
choosing, for the purpose of negotiating the terms and conditions
of their employment.'
The mischief at which the Act is aimed and the remedies it offers
are not confined exclusively to 'employees' within the traditional
legal distinctions, separating them from 'independent contractor'.

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Myriad forms of service relationship, with infinite and subtle
variations in the term of employment, blanket the nation's
economy. Some are within this Act, others beyond its coverage.
Large numbers will fall clearly on one side or on the other, by
whatever test may be applied. Inequality of bargaining power in
controversies of their wages, hours and working conditions may
characterize the status of one group as of the other. The former,
when acting alone may be as helpless in dealing with the
employer as dependent on his daily wage and as unable to resist
arbitrary and unfair treatment as the latter.'
To eliminate the causes of labor dispute and industrial strike,
Congress thought it necessary to create a balance of forces in
certain types of economic relationship. Congress recognized
those economic relationships cannot be fitted neatly into the
containers designated as 'employee' and 'employer'. Employers
and employees not in proximate relationship may be drawn into
common controversies by economic forces and that the very
dispute sought to be avoided might involve 'employees' who are
at times brought into an economic relationship with 'employers',
who are not their 'employers'. In this light, the language of the
Act's definition of 'employee' or 'employer' should be determined
broadly in doubtful situations, by underlying economic facts
rather than technically and exclusively established legal
classifications. (NLRB vs. Blount, 131 F [2d] 585.)
In other words, the scope of the term 'employee' must be
understood with reference to the purposes of the Act and the
facts involved in the economic relationship. Where all the
conditions of relation require protection, protection ought to be
given .

By declaring a worker an employee of the person for whom he

works and by recognizing and protecting his rights as such, we
eliminate the cause of industrial unrest and consequently we
promote industrial peace, because we enable him to negotiate an
agreement which will settle disputes regarding conditions of
employment, through the process of collective bargaining.
The statutory definition of the word 'employee' is of wide scope.
As used in the Act, the term embraces 'any employee' that is all
employees in the conventional as well in the legal sense expect
those excluded by express provision. (Connor Lumber Co., 11
NLRB 776.).
It is the purpose of the policy of Republic Act 875; (a) To eliminate
the causes of industrial unrest by protecting the exercise of their
right to self-organization for the purpose of collective bargaining.
(b) To promote sound stable industrial peace and the
advancement of the general welfare, and the best interests of
employers and employees by the settlement of issues respecting
terms and conditions of employment through the process of
collective bargaining between employers and representatives of
their employees.
The primary consideration is whether the declared policy and
purpose of the Act can be effectuated by securing for the
individual worker the rights and protection guaranteed by the
Act. The matter is not conclusively determined by a contract
which purports to establish the status of the worker, not as an
employee.

5
The work of the musical director and musicians is a functional and
integral part of the enterprise performed at the same studio
substantially under the direction and control of the company.
In other words, to determine whether a person who performs
work for another is the latter's employee or an independent
contractor, the National Labor Relations relies on 'the right to
control' test. Under this test an employer-employee relationship
exist where the person for whom the services are performed
reserves the right to control not only the end to be achieved, but
also the manner and means to be used in reaching the end.
(United Insurance Company, 108, NLRB No. 115.).
Thus, in said similar case of Connor Lumber Company, the
Supreme Court said:.
'We find that the independent contractors and persons working
under them are employees' within the meaning of Section 2 (3) of
its Act. However, we are of the opinion that the independent
contractors have sufficient authority over the persons working
under their immediate supervision to warrant their exclusion
from the unit. We shall include in the unit the employees working
under the supervision of the independent contractors, but exclude
the contractors.'
'Notwithstanding that the employees are called independent
contractors', the Board will hold them to be employees under the
Act where the extent of the employer's control over them
indicates that the relationship is in reality one of employment.
(John Hancock Insurance Co., 2375-D, 1940, Teller, Labor Dispute
Collective Bargaining, Vol.).

The right of control of the film company over the musicians is

shown (1) by calling the musicians through 'call slips' in 'the name
of the company; (2) by arranging schedules in its studio for
recording sessions; (3) by furnishing transportation and meals to
musicians; and (4) by supervising and directing in detail, through
the motion picture director, the performance of the musicians
before the camera, in order to suit the music they are playing to
the picture which is being flashed on the screen.
Thus, in the application of Philippine statutes and pertinent
decisions of the United States Courts on the matter to the facts
established in this case, we cannot but conclude that to
effectuate the policies of the Act and by virtue of the 'right of
control' test, the members of the Philippine Musicians Guild are
employees of the three film companies and, therefore, entitled to
right of collective bargaining under Republic Act No. 875.
In view of the fact that the three (3) film companies did not
question the union's majority, the Philippine Musicians Guild is
hereby declared as the sole collective bargaining representative
for all the musicians employed by the film companies."
We are fully in agreement with the foregoing conclusion and the
reasons given in support thereof. Both are substantially in line
with the spirit of our decision in Maligaya Ship Watchmen Agency
vs. Associated Watchmen and Security Union, L-12214-17 (May
28, 1958). In fact, the contention of the employers in
the Maligaya cases, to the effect that they had dealt with
independent contractors, was stronger than that of the film
companies in these cases. The third parties with whom the
management and the workers contracted in the Maligaya cases
were agencies registered with the Bureau of Commerce and duly

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licensed by the City of Manila to engage in the business of
supplying watchmen to steamship companies, with permits to
engage in said business issued by theCity Mayor and the Collector
of Customs. In the cases at bar, the musical directors with whom
the film companies claim to have dealt with
had nothing comparable to the business standing of said
watchmen agencies. In this respect, the status of said musical
directors is analogous to that of the alleged independent
contractor in Caro vs. Rilloraza, L-9569 (September 30, 1957),
with the particularity that the Caro case involved the enforcement
of the liability of an employer under the Workmen's
Compensation Act, whereas the cases before us are merely
concerned with the right of the Guild to represent the musicians
as a collective bargaining unit. Hence, there is less reason to be
legalistic and technical in these cases, than in the Caro case.
Herein, petitioners-appellants cite, in support of their appeal, the
cases of Sunripe Coconut Product Co., Inc vs. CIR (46 Off. Gaz.,
5506, 5509), Philippine Manufacturing Co. vs. Santos Vda. de
Geronimo, L-6968 (November 29, 1954), Viana vs. Al-Lagadan, L8967 (May 31, 1956), and Josefa Vda. de Cruz vs. The Manila
Hotel Co. (53 Off. Gaz., 8540). Instead of favoring the theory of
said petitioners-appellants, the case of the Sunripe Coconut
Product Co., Inc. is authority for herein respondents-appellees. It
was held that, although engaged as piece-workers, under the
"pakiao" system, the "parers" and "shellers" in the case were, not
independent contractor, butemployees of said company, because
"the requirement imposed on the 'parers' to the effect that 'the
nuts are pared whole or that there is not much meat wasted,' in
effect limits or controls the means or details by which said
workers are to accomplish their services" as in the cases before
us.

The nature of the relation between the parties was not settled in
the Viana case, the same having been remanded to the
Workmen's Compensation Commission for further evidence.
The case of the Philippine Manufacturing Co. involved a contract
between said company and Eliano Garcia, who undertook to
paint a tank of the former. Garcia, in turn engaged the services of
Arcadio Geronimo, a laborer, who fell while painting the tank and
died in consequence of the injuries thus sustained by him.
Inasmuch as the company was engaged in the manufacture of
soap, vegetable lard, cooking oil and margarine, it was held that
the connection between its business and the painting
aforementioned was purely casual; that Eliano Garcia was an
independent contractor; that Geronimo was not an employee of
the company; and that the latter was not bound, therefore, to
pay the compensation provided in the Workmen's Compensation
Act. Unlike the Philippine Manufacturing case, the relation
between the business of herein petitioners-appellants and the
work of the musicians is not casual. As held in the order appealed
from which, in this respect, is not contested by herein
petitioners-appellants "the work of the musicians is an integral
part of the entire motion picture." Indeed, one can hardly find
modern films without music therein. Hence, in the Caro case
(supra), the owner and operator of buildings for rent was held
bound to pay the indemnity prescribed in the Workmen's
Compensation Act for the injury suffered by a carpenter while
working as such in one of said buildings even though his services
had been allegedly engaged by a third party who had directly
contracted with said owner. In other words, the repair work had
not merely a casual connection with the business of said owner. It
was a necessary incident thereof, just as music is in the
production of motion pictures.

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The case of Josefa Vda. de Cruz vs. The Manila Hotel Co., L-9110
(April 30, 1957) differs materially from the present cases. It
involved the interpretation of Republic Act No. 660, which
amends the law creating and establishing the Government
Service Insurance System. No labor law was sought to be
construed in that case. In act, the same was originally heard in
the Court of First Instance of Manila, the decision of which was,
on appeal, affirmed by the Supreme Court. The meaning or scope
if the term "employee," as used in the Industrial Peace Act
(Republic Act No. 875), was not touched therein. Moreover, the
subject matter of said case was a contract between the
management of the Manila Hotel, on the one hand, and Tirso
Cruz, on the other, whereby the latter greed to furnish the
former the services of his orchestra, consisting of 15 musicians,
including Tirso Cruz, "from 7:30 p.m. to closing time daily." In the
language of this court in that case, "what pieces the orchestra
shall play, and how the music shall be arranged or directed, the
intervals and other details such are left to
the leader'sdiscretion."
This is not situation obtaining in the case at bar. The musical
directors above referred to have no such control over the
musicians involved in the present case. Said musical directors
control neither the music to be played, nor the musicians playing
it. The film companies summon the musicians to work, through
the musical directors. The film companies, through the musical
directors, fix the date, the time and the place of work. The film
companies, not the musical directors, provide the transportation
to and from the studio. The film companies furnish meal at dinner
time.

What is more in the language of the order appealed from

"during the recording sessions, the motion picture director who is
an employee of the company" not the musical director
"supervises the recording of the musicians and tells them what to
do in every detail". The motion picture director not the musical
director "solely directs and performance of the musicians
before the camera". The motion picture director "supervises the
performance of all the actors, including the musicians who appear
in the scenes, so that in the actual performance to be shown in
the screen, the musical director's intervention has stopped." Or,
as testified to in the lower court, "the movie director tells the
musical director what to do; tells the music to be cut or tells
additional music in this part or he eliminates the entire music he
does not (want) or he may want more drums or move violin or
piano, as the case may be". The movie director "directly
controls the activities of the musicians." He "says he wants more
drums and the drummer plays more" or "if he wants more violin
or he does not like that.".
It is well settled that "an employer-employee relationship exists .
. .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 . . . ." (Alabama
Highway Express Co., Express Co., v. Local 612, 108S. 2d. 350.)
The decisive nature of said control over the "means to be used",
is illustrated in the case of Gilchrist Timber Co., et al., Local No.
2530 (73 NLRB No. 210, pp. 1197, 1199-1201), in which, by
reason of said control, the employer-employee relationship was
held to exist between the management and the workers,
notwithstanding the intervention of an alleged independent
contractor, who had, and exercise, the power to hire and fire said
workers. The aforementioned control over the means to be used"

8
in reading the desired end is possessed and exercised by the film
companies over the musicians in the cases before us.
WHEREFORE, the order appealed from is hereby affirmed, with
costs against petitioners herein. It is so ordered.
Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Reyes,
J.B.L., Barrera, Paredes and Dizon, JJ., concur.
Gutierrez David, J., took no part.

[G.R. NO. 153511 - July 18, 2012]

LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or,
NELSON NAPUD, in his capacity as the President of Petitioner
Corporation, Petitioner, v. HERNANI S. REALUYO, also known as JOEY
ROA, Respondent.
DECISION
BERSAMIN, J.:
This labor case for illegal dismissal involves a pianist employed to perform in the
restaurant of a hotel. On August 9, 1999, respondent, whose stage name was
Joey R. Roa, filed a complaint for alleged unfair labor practice, constructive illegal
dismissal, and the underpayment/nonpayment of his premium pay for holidays,
separation pay, service incentive leave pay, and 13111 month pay. He prayed for
attorney's fees, moral damages off P100,000.00 and exemplary damages for
P100,000.00.1rll
Respondent averred that he had worked as a pianist at the Legend Hotel s
Tanglaw Restaurant from September 1992 with an initial rate of P400.00/night

that was given to him after each night s performance; that his rate had increased
to P750.00/night; and that during his employment, he could not choose the time
of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six
times/week. He added that the Legend Hotel s restaurant manager had required
him to conform with the venue s motif; that he had been subjected to the rules
on employees representation checks and chits, a privilege granted to other
employees; that on July 9, 1999, the management had notified him that as a costcutting measure his services as a pianist would no longer be required effective
July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been
lucratively operating as of the filing of his complaint; and that the loss of his
employment made him bring his complaint.2rll
In its defense, petitioner denied the existence of an employer-employee
relationship with respondent, insisting that he had been only a talent engaged to
provide live music at Legend Hotel s Madison Coffee Shop for three hours/day on
two days each week; and stated that the economic crisis that had hit the country
constrained management to dispense with his services.
On December 29, 1999, the Labor Arbiter (LA) dismissed the complaint for lack of
merit upon finding that the parties had no employer-employee relationship.3 The
LA explained thusly:rl
xxx
On the pivotal issue of whether or not there existed an employer-employee
relationship between the parties, our finding is in the negative. The finding finds
support in the service contract dated September 1, 1992 xxx. crvll
xxx
Even if we grant the initial non-existence of the service contract, as complainant
suggests in his reply (third paragraph, page 4), the picture would not change

9
because of the admission by complainant in his letter dated October 8, 1996
(Annex "C") that what he was receiving was talent fee and not salary.

The answer to this question is in the affirmative.

xxx

This is reinforced by the undisputed fact that complainant received his talent fee
nightly, unlike the regular employees of the hotel who are paid by monthly xxx.
crvll
xxx
And thus, absent the power to control with respect to the means and methods by
which his work was to be accomplished, there is no employer-employee
relationship between the parties xxx.
xxx
WHEREFORE, this case must be, as it is hereby, DISMISSED for lack of merit.
SO ORDERED.4rll
Respondent appealed, but the National Labor Relations Commission (NLRC)
affirmed the LA on May 31, 2001.5rll

Well settled is the rule that of the four (4) elements of employer-employee
relationship, it is the power of control that is more decisive.
In this regard, public respondent failed to take into consideration that in
petitioner s line of work, he was supervised and controlled by respondent s
restaurant manager who at certain times would require him to perform only
tagalog songs or music, or wear barong tagalog to conform with Filipiniana motif
of the place and the time of his performance is fixed by the respondents from
7:00 pm to 10:00 pm, three to six times a week. Petitioner could not choose the
time of his performance. xxx. crvll
As to the status of petitioner, he is considered a regular employee of private
respondents since the job of the petitioner was in furtherance of the restaurant
business of respondent hotel. Granting that petitioner was initially a contractual
employee, by the sheer length of service he had rendered for private
respondents, he had been converted into a regular employee xxx. crvll
xxx

Respondent assailed the decision of the NLRC in the Court of Appeals (CA)
on certiorari .
On February 11, 2002, the CA set aside the decision of the NLRC,6 holding:

xxx In other words, the dismissal was due to retrenchment in order to avoid or
minimize business losses, which is recognized by law under Article 283 of the
Labor Code, xxx. crvll

xxx

xxx

Applying the above-enumerated elements of the employee-employer relationship

in this case, the question to be asked is, are those elements present in this
case?chanroblesvirtualawlibrary

WHEREFORE, foregoing premises considered, this petition is GRANTED. xxx.7rll

Issues

10
In this appeal, petitioner contends that the CA erred:rbl r l
l lbrr

JURISDICTION COMMITTED BY THE NLRC OR THE LABOR ARBITER, WHICH ISSUES

ARE NOT PRESENT IN THE CASE AT BAR.

I. XXX WHEN IT RULED THAT THERE IS THE EXISTENCE OF EMPLOYER-EMPLOYEE

RELATIONSHIP BETWEEN THE PETITIONER HOTEL AND RESPONDENT ROA.

chanrobles virtual law library

II. XXX IN FINDING THAT ROA IS A REGULAR EMPLOYEE AND THAT THE
TERMINATION OF HIS SERVICES WAS ILLEGAL. THE CA LIKEWISE ERRED WHEN IT
DECLARED THE REINSTATEMENT OF ROA TO HIS FORMER POSITION OR BE GIVEN
A SEPARATION PAY EQUIVALENT TO ONE MONTH FOR EVERY YEAR OF SERVICE
FROM SEPTEMBER 1999 UNTIL JULY 30, 1999 CONSIDERING THE ABSENCE OF AN
EMPLOYMENT RELATIONSHIP BETWEEN THE PARTIES.

The assigned errors are divided into the procedural issue of whether or not the
petition for certiorarifiled in the CA was the proper recourse; and into two
substantive issues, namely: (a) whether or not respondent was an employee of
petitioner; and (b) if respondent was petitioner s employee, whether he was
validly terminated.
Ruling

III. XXX WHEN IT DECLARED THAT ROA IS ENTITLED TO BACKWAGES, SERVICE

INCENTIVE LEAVE AND OTHER BENEFITS CONSIDERING THAT THERE IS NO
EMPLOYER EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES.

The appeal fails.

IV. XXX WHEN IT NULLIFIED THE DECISION DATED MAY 31, 2001 IN NLRC NCR CA
NO. 023404-2000 OF THE NLRC AS WELL AS ITS RESOLUTION DATED JUNE 29,
2001 IN FAVOR OF HEREIN PETITIONER HOTEL WHEN HEREIN RESPONDENT ROA
FAILED TO SHOW PROOF THAT THE NLRC AND THE LABOR ARBITER HAVE
COMMITTED GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION IN THEIR
RESPECTIVE DECISIONS.

Certiorari was a proper recourse

V. XXX WHEN IT OVERLOOKED THE FACT THAT THE PETITION WHICH ROA FILED IS
IMPROPER SINCE IT RAISED QUESTIONS OF FACT.
VI. XXX WHEN IT GAVE DUE COURSE TO THE PETITION FILED BY ROA WHEN IT IS
CLEARLY IMPROPER AND SHOULD HAVE BEEN DISMISSED OUTRIGHT
CONSIDERING THAT A PETITION FOR CERTIORARI UNDER RULE 65 IS LIMITED
ONLY TO QUESTIONS OR ISSUES OF GRAVE ABUSE OF DISCRETION OR LACK OF

Procedural Issue:

Petitioner contends that respondent s petition for certiorari was improper as a

remedy against the NLRC due to its raising mainly questions of fact and because it
did not demonstrate that the NLRC was guilty of grave abuse of discretion.
The contention is unwarranted. There is no longer any doubt that a petition
for certiorari brought to assail the decision of the NLRC may raise factual issues,
and the CA may then review the decision of the NLRC and pass upon such factual
issues in the process.8 The power of the CA to review factual issues in the exercise
of its original jurisdiction to issue writs of certiorari is based on Section 9 of Batas
Pambansa Blg. 129, which pertinently provides that the CA "shall have the power
to try cases and conduct hearings, receive evidence and perform any and all acts
necessary to resolve factual issues raised in cases falling within its original and
appellate jurisdiction, including the power to grant and conduct new trials or
further proceedings."

11
Substantive Issue No. 1:
Employer-employee relationship existed between the parties
We next ascertain if the CA correctly found that an employer-employee
relationship existed between the parties.
The issue of whether or not an employer-employee relationship existed between
petitioner and respondent is essentially a question of fact.9 The factors that
determine the issue include who has the power to select the employee, who pays
the employee s wages, who has the power to dismiss the employee, and who
exercises control of the methods and results by which the work of the employee
is accomplished.10 Although no particular form of evidence is required to prove
the existence of the relationship, and any competent and relevant evidence to
prove the relationship may be admitted,11a finding that the relationship exists
must nonetheless rest on substantial evidence, which is that amount of relevant
evidence that a reasonable mind might accept as adequate to justify a
conclusion.12rll
Generally, the Court does not review factual questions, primarily because the
Court is not a trier of facts. However, where, like here, there is a conflict between
the factual findings of the Labor Arbiter and the NLRC, on the one hand, and
those of the CA, on the other hand, it becomes proper for the Court, in the
exercise of its equity jurisdiction, to review and re-evaluate the factual issues and
to look into the records of the case and re-examine the questioned
findings.13rll

First of all, petitioner actually wielded the power of selection at the time it
entered into the service contract dated September 1, 1992 with respondent. This
is true, notwithstanding petitioner s insistence that respondent had only offered
his services to provide live music at petitioner s Tanglaw Restaurant, and despite
petitioner s position that what had really transpired was a negotiation of his rate
and time of availability. The power of selection was firmly evidenced by, among
others, the express written recommendation dated January 12, 1998 by Christine
Velazco, petitioner s restaurant manager, for the increase of his
remuneration.14rll
Petitioner could not seek refuge behind the service contract entered into with
respondent. It is the law that defines and governs an employment relationship,
whose terms are not restricted to those fixed in the written contract, for other
factors, like the nature of the work the employee has been called upon to
perform, are also considered. The law affords protection to an employee, and
does not countenance any attempt to subvert its spirit and intent. Any stipulation
in writing can be ignored when the employer utilizes the stipulation to deprive
the employee of his security of tenure. The inequality that characterizes
employer-employee relations generally tips the scales in favor of the employer,
such that the employee is often scarcely provided real and better options.15rll
Secondly, petitioner argues that whatever remuneration was given to respondent
were only his talent fees that were not included in the definition of wage under
the Labor Code; and that such talent fees were but the consideration for the
service contract entered into between them.
The argument is baseless.

A review of the circumstances reveals that respondent was, indeed, petitioner s

employee. He was undeniably employed as a pianist in petitioner s Madison
Coffee Shop/Tanglaw Restaurant from September 1992 until his services were
terminated on July 9, 1999.

Respondent was paid P400.00 per three hours of performance from 7:00 pm to
10:00 pm, three to six nights a week. Such rate of remuneration was later
increased to P750.00 upon restaurant manager Velazco s recommendation. There
is no denying that the remuneration denominated as talent fees was fixed on the

12
basis of his talent and skill and the quality of the music he played during the hours
of performance each night, taking into account the prevailing rate for similar
talents in the entertainment industry.16rll
Respondent s remuneration, albeit denominated as talent fees, was still
considered as included in the term wage in the sense and context of the Labor
Code, regardless of how petitioner chose to designate the remuneration. Anent
this, Article 97(f) of the Labor Code clearly states:rl
xxx wage paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other method
of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee.
Clearly, respondent received compensation for the services he rendered as a
pianist in petitioner s hotel. Petitioner cannot use the service contract to rid itself
of the consequences of its employment of respondent. There is no denying that
whatever amounts he received for his performance, howsoever designated by
petitioner, were his wages.
It is notable that under the Rules Implementing the Labor Code and as held in Tan
v. Lagrama,17every employer is required to pay his employees by means of a
payroll, which should show in each case, among others, the employee s rate of
pay, deductions made from such pay, and the amounts actually paid to the
employee. Yet, petitioner did not present the payroll of its employees to bolster
its insistence of respondent not being its employee.

That respondent worked for less than eight hours/day was of no consequence
and did not detract from the CA s finding on the existence of the employeremployee relationship. In providing that the " normal hours of work of any
employee shall not exceed eight (8) hours a day," Article 83 of the Labor Code
only set a maximum of number of hours as "normal hours of work" but did not
prohibit work of less than eight hours.
Thirdly, the power of the employer to control the work of the employee is
considered the most significant determinant of the existence of an employeremployee relationship.18 This is the so-called control test, and is premised on
whether the person for whom the services are performed reserves the right to
control both the end achieved and the manner and means used to achieve that
end.19rll
Petitioner submits that it did not exercise the power of control over respondent
and cites the following to buttress its submission, namely: (a) respondent could
beg off from his nightly performances in the restaurant for other engagements;
(b) he had the sole prerogative to play and perform any musical arrangements
that he wished; (c) although petitioner, through its manager, required him to play
at certain times a particular music or song, the music, songs, or arrangements,
including the beat or tempo, were under his discretion, control and direction; (d)
the requirement for him to wear barong Tagalog to conform with the Filipiniana
motif of the venue whenever he performed was by no means evidence of control;
(e) petitioner could not require him to do any other work in the restaurant or to
play the piano in any other places, areas, or establishments, whether or not
owned or operated by petitioner, during the three hour period from 7:00 pm to
10:00 pm, three to six times a week; and (f) respondent could not be required to
sing, dance or play another musical instrument.
A review of the records shows, however, that respondent performed his work as
a pianist under petitioner s supervision and control. Specifically, petitioner s
control of both the end achieved and the manner and means used to achieve that

13
end was demonstrated by the following, to wit:rbl r l
l lbrr
A. He could not choose the time of his performance, which petitioners had fixed
from 7:00 pm to 10:00 pm, three to six times a week;
b. He could not choose the place of his performance;
c. The restaurant s manager required him at certain times to perform only
Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana
motif; andcralawlibrary
d. He was subjected to the rules on employees representation check and chits, a
privilege granted to other employees.
chanrobles virtual law library
Relevantly, it is worth remembering that the employer need not actually
supervise the performance of duties by the employee, for it sufficed that the
employer has the right to wield that power.
Lastly, petitioner claims that it had no power to dismiss respondent due to his not
being even subject to its Code of Discipline, and that the power to terminate the
working relationship was mutually vested in the parties, in that either party might
terminate at will, with or without cause.
The claim is contrary to the records. Indeed, the memorandum informing
respondent of the discontinuance of his service because of the present business
or financial condition of petitioner20showed that the latter had the power to
dismiss him from employment.21rll
Substantive Issue No. 2:

Validity of the Termination

Having established that respondent was an employee whom petitioner
terminated to prevent losses, the conclusion that his termination was by reason
of retrenchment due to an authorized cause under the Labor Code is inevitable.
Retrenchment is one of the authorized causes for the dismissal of employees
recognized by the Labor Code. It is a management prerogative resorted to by
employers to avoid or to minimize business losses. On this matter, Article 283 of
the Labor Code states:rl
Article 283. Closure of establishment and reduction of personnel. The employer
may also terminate the employment of any employee due to the installation of
labor-saving devices, redundancy, retrenchment to prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing is
for the purpose of circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. xxx. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six
(6) months shall be considered one (1) whole year.
The Court has laid down the following standards that an employer should meet to
justify retrenchment and to foil abuse, namely:rbl r l
l lbrr
(a) The expected losses should be substantial and not merely de minimis in
extent;
(b) The substantial losses apprehended must be reasonably imminent;

14
(c) The retrenchment must be reasonably necessary and likely to effectively
prevent the expected losses; andcralawlibrary
(d) The alleged losses, if already incurred, and the expected imminent losses
sought to be forestalled must be proved by sufficient and convincing
evidence.22rll

The Court realizes that the lapse of time since the retrenchment might have
rendered respondent's reinstatement to his former job no longer feasible. If that
should be true, then petitioner should instead pay to him separation pay at the
rate of one. month pay for every year of service computed from September 1992
(when he commenced to work for the petitioners) until the finality of this
decision, and full backwages from the time his compensation was withheld until
the finality of this decision.

chanrobles virtual law library

Anent the last standard of sufficient and convincing evidence, it ought to be
pointed out that a less exacting standard of proof would render too easy the
abuse of retrenchment as a ground for termination of services of
employees.23rll
Was the retrenchment of respondent valid?chanroblesvirtualawlibrary
In termination cases, the burden of proving that the dismissal was for a valid or
authorized cause rests upon the employer. Here, petitioner did not submit
evidence of the losses to its business operations and the economic havoc it would
thereby imminently sustain. It only claimed that respondent s termination was
due to its "present business/financial condition." This bare statement fell short of
the norm to show a valid retrenchment. Hence, we hold that there was no valid
cause for the retrenchment of respondent.
Indeed, not every loss incurred or expected to be incurred by an employer can
justify retrenchment. The employer must prove, among others, that the losses
are substantial and that the retrenchment is reasonably necessary to avert such
losses. Thus, by its failure to present sufficient and convincing evidence to prove
that retrenchment was necessary, respondent s termination due to retrenchment
is not allowed.

WHEREFORE, we DENY the Petition for Review on Certiorari, and AFFIRM the
decision of the Court of Appeals promulgated on February 11, 2002, subject to
the modification that should reinstatement be no longer feasible, petitioner shall
pay to respondent separation pay of one month for every year of service
computed from September 1992 until the finality of this decision, and full
backwages from the time his compensation was withheld until the finality of this
decision.
Costs of suit to be paid by the petitioners.
SO ORDERED.

15

PSPCA vs Commission
on Audit

On December 1, 2003, an audit team from the Commission on Audit visited

petitioners office to conduct a survey. PSPCA demurred on the ground that it
was a private entity and not under the CoAs jurisdiction, citing Sec .2(1), Art.
IX of the Constitution.

Posted on October 19, 2012

Philippine Society for the Prevention of Cruelty to Animals vs Commission

on Audit
G.R. No. 169752
September 25, 2007

Issues:
WON the PSPCA is subject to CoAs Audit Authority.

Facts:
PSPCA was incorporated as a juridical entity by virtue of Act No. 1285 by the
Philippine Commission in order to enforce laws relating to the cruelty inflicted
upon animals and for the protection of and to perform all things which may

Held:
No.

tend to alleviate the suffering of animals and promote their welfare.

The charter test cannot be applied. It is predicated on the legal regime
In order to enhance its powers, PSPCA was initially imbued with (1) power to
apprehend violators of animal welfare laws and (2) share 50% of the fines
imposed and collected through its efforts pursuant to the violations of related
laws.

established by the 1935 Constitution, Sec.7, Art. XIII. Since the underpinnings
of the charter test had been introduced by the 1935 Constitution and not earlier,
the test cannot be applied to PSPCA which was incorporated on January 19,
1905. Laws, generally, have no retroactive effect unless the contrary is
provided. There are a few exceptions: (1) when expressly provided; (2)
remedial statutes; (3) curative statutes; and (4) laws interpreting others.

However, Commonwealth Act No. 148 recalled the said powers. President

None of the exceptions apply in the instant case.

Quezon then issued Executive Order No. 63 directing the Commission of

Public Safety, Provost Marshal General as head of the Constabulary Division
of the Philippine Army, Mayors of chartered cities and every municipal
president to detail and organize special officers to watch, capture, and
prosecute offenders of criminal-cruelty laws.

The mere fact that a corporation has been created by a special law doesnt
necessarily qualify it as a public corporation. At the time PSPCA was formed,
the Philippine Bill of 1902 was the applicable law and no proscription similar
to the charter test can be found therein. There was no restriction on the
legislature to create private corporations in 1903. The amendments introduced

16

by CA 148 made it clear that PSPCA was a private corporation, not a

January 14, 1963: the President of Feati University Faculty Club

(PAFLU) wrote a letter to Mrs. Victoria L. Araneta, President of Feati

government agency.

University informing her that it registered as a labor union.

PSPCAs charter shows that it is not subject to control or supervision by any

their employment and requesting an answer within 10 days from

agency of the State. Like all private corporations, the successors of its members
are determined voluntarily and solely by the petitioner, and may exercise

January 22, 1963: PAFLU sent a letter with 26 demands in relation to

receipt thereof.

powers generally accorded to private corporations.

Araneta answered the letters, requesting that she be given at least 30

days to study thoroughly the different phases of the demands.
Meanwhile counsel for Feati, wrote a letter to the President of PAFLU

PSPCAs employees are registered and covered by the SSS at the latters

demanding proof of its majority status and designation as a bargaining

initiative and not through the GSIS.

representative

time and filed a notice of strike with the Bureau of Labor due to Featis

The fact that a private corporation is impressed with public interest does not
make the entity a public corporation. They may be considered quasi-public
corporations which are private corporations that render public service, supply
public wants and pursue other exemplary objectives. The true criterion to

February 1, 1963: the President of PAFLU rejected the extension of

refusal to bargain collectively.

Conciliation Division of the Bureau of Labor made efforts to conciliate

them but failed.

February 18, 1963: PAFLU declared a strike and established picket

determine whether a corporation is public or private is found in the totality of

lines in the premises of Feati resulting in the disruption of classes

the relation of the corporate to the State. It is public if it is created by the

in the University.

latters own agency or instrumentality, otherwise, it is private.

Feati University v. Bautista

March 21, 1963: the President of the Philippines certified to the Court
of Industrial Relations (CIR) the dispute between Feati and PAFLU
pursuant to the provisions of Section 10 of Republic Act No. 875.

G.R. No.L-21278

December 27, 1966

3 cases were filed with the CIR

41-IPA PAFLUs petition to declare in contempt of court since Feati

Lessons Applicable: Applicability to certain specific persons Professors in

refused to accept them back to work in violation of the return-to-work

national interest

order of March 30, 1963 and has employed professors and/or

instructors to take their places

Laws Applicable:

1183-MC PAFLUs petition for certification election praying that it be

certified as the sole and exclusive bargaining representative

FACTS:

17

Later withdrawn since the Case 41-IPA had already been certified by

Feati also claims that it is only a lessee of the services of its professors

the President to the CIR and has absorbed the issues herein

and/or instructors pursuant to a contract of services entered into

V-30 PAFLUs complaint for indirect contempt of court filed against

between them because the University does not exercise control over

the administrative officials of the Feati reiterating Case 41-IPA

their work

May 10, 1963: Feati filed before the SC a petition for certiorari and
prohibition with writ of preliminary injunction which was issued upon the

ISSUES: W/N Feati can be considered an employer and PAFLU as an

Feati's filing a bond of P50,000 (increased from P1,000), ordering CIR

employee to be covered by R.A. 875 and have right to unionize

Judge Jose S. Bautista to desist and refrain from further proceeding

March 23, 1963: On the strength of the presidential certification, Judge

HELD: YES. petition for certiorari and prohibition with preliminary injunction in

Bautista set the case for hearing

Case G.R. No. L-21278 is dismissed

Feati, thru counsel filed a motion to dismiss the case upon the ground
that the CIR has no jurisdiction over the case, because:

1. the Industrial Peace Act is NOT applicable to the University, it being an

Section 2(c) of R.A. 875:

o The term employer include any person acting in the interest of an employer,
directly or indirectly, but shall not include any labor organization (otherwise

educational institution, nor to the members of the Faculty Club, they being

than when acting as an employer) or any one acting in the capacity or agent of

independent contractors

such labor organization.

2. the presidential certification is violative of Section 10 of the Industrial Peace

Congress did not intend to give a complete definition of "employer", but rather

Act, as the University is not an industrial establishment and there was no

that such definition should be complementary to what is commonly understood

industrial dispute which could be certified to the CIR

as employer

Judge Bautista denied the motion to dismiss and ordered the strikers to
return immediately to work and the University to take them back under

"employer" and educational institutions are not included; hence, they can be

the last terms and conditions existing before the dispute arose

included in the term "employer". However, those educational institutions that

Without the motion for reconsideration having been acted upon by the

are not operated for profit are not within the purview of Republic Act No. 875.

CIR en banc, Judge Bautista set the case for hearing on the merits for
May 8, 1963 but was cancelled upon Featis petition for certiorari
alleging that Judge Jose S. Bautista acted without, or in excess of,

Feati realizes profits and parts of such earning is distributed as dividends to

private stockholders or individuals
It embraces not only those who are usually and ordinarily considered employees,

jurisdiction, or with grave abuse of discretion, in taking cognizance of,

but also those who have ceased as employees as a consequence of a labor

and in issuing the questioned orders in, CIR Cases Nos. 41-IPA 1183-

dispute.

MC and V-30

Act itself specifically enumerated those who are not included in the term

Feati claims that it is not an employer within the contemplation of R.A.

875, because it is not an industrial establishment

employee must be one who is engaged in the service of another; who

performs services for another; who works for salary or wages

"workers" limited to those performing physical labor

18
o embrace stenographers and bookkeepers

o Teachers are not included

Relations to issue an order "fixing the terms of employment." This

Feati controls the work of the members of its faculty

clause is broad enough to authorize the Court to order the strikers to

o prescribes the courses or subjects that professors teach, and when and where
to teach

Section 10 of Republic Act No. 875 empowers the Court of Industrial

return to work and the employer to readmit them

The return-to-work order cannot be considered as an impairment of the

o professors' work is characterized by regularity and continuity for a fixed duration

contract entered into with the replacements. Besides, labor contracts

o professors are compensated for their services by wages and salaries, rather

must yield to the common good and such contracts are subject to the

than by profits
o professors and/or instructors cannot substitute others to do their work without
the consent of the university
o professors can be laid off if their work is found not satisfactory

Moreover, even if university professors are considered independent

contractors, still they would be covered by Rep. Act No. 875

professors, instructors or teachers of private educational institutions

who teach to earn a living are entitled to the protection of our labor
laws and one such law is Republic Act No. 875.

The term "labor dispute" includes any controversy concerning terms,

tenure or conditions of employment, or concerning the association or
representation of persons in negotiating, fixing, maintaining, changing,
or seeking to arrange terms or conditions of employment regardless of
whether the disputants stand in proximate relation of employer and
employees.

To certify a labor dispute to the CIR is the prerogative of the President

under the law (Because the strike declared by the members of the
minority union threatens a major industry of 18,000 students which
affects the national interest), and this Court will not interfere in, much
less curtail, the exercise of that prerogative. The jurisdiction of the CIR
in a certified case is exclusive. The parties involved in the case may
appeal to the Supreme Court from the order or orders thus issued by
the CIR.

special laws on labor unions, collective bargaining, strikes and

similar subjects