7.

ERNESTO G. YMBONG, G.R. No. 184885

Petitioner,

Present:

- versus - CORONA, C.J.,

Chairperson,

LEONARDO-DE CASTRO,

BERSAMIN,

VILLARAMA, JR., and

PERLAS-BERNABE, JJ.

ABS-CBN BROADCASTING CORPORATION, Promulgated:

VENERANDA SY AND DANTE LUZON,

Respondents.
March 7, 2012

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

Before us is a Rule 45 Petition seeking to set aside the August 22, 2007 Decision [1] and September 18, 2008 Resolution[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 86206 declaring petitioner to have resigned from work and not illegally dismissed.

The antecedent facts follow:

Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABS-CBN) in 1993 at its regional station
in Cebu as a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later extended to radio when
ABS-CBN Cebu launched its AM station DYAB in 1995 where he worked as drama and voice talent, spinner, scriptwriter and
public affairs program anchor.

Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as talent, director and scriptwriter
for various radio programs aired over DYAB.

On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the Policy on Employees Seeking Public
Office. The pertinent portions read:

1. Any employee who intends to run for any public office position, must file his/her letter of resignation,
at least thirty (30) days prior to the official filing of the certificate of candidacy either for national or
local election.

xxxx
 3. Further, any employee who intends to join a political group/party or even with no political affiliation but
who intends to openly and aggressively campaign for a candidate or group of candidates (e.g.
publicly speaking/endorsing candidate, recruiting campaign workers, etc.) must file a request for
leave of absence subject to managements approval. For this particular reason, the employee should
file the leave request at least thirty (30) days prior to the start of the planned leave period.

x x x x[3] [Emphasis and underscoring supplied.]

Because of the impending May 1998 elections and based on his immediate recollection of the policy at that time, Dante Luzon,
Assistant Station Manager of DYAB issued the following memorandum:

TO : ALL CONCERNED

FROM : DANTE LUZON

DATE : MARCH 25, 1998

SUBJECT : AS STATED

Please be informed that per company policy, any employee/talent who wants to run for any position in the
coming election will have to file a leave of absence the moment he/she files his/her certificate of candidacy.

The services rendered by the concerned employee/talent to this company will then be temporarily suspended
for the entire campaign/election period.

For strict compliance.[4] [Emphasis and underscoring supplied.]

Luzon, however, admitted that upon double-checking of the exact text of the policy and subsequent confirmation with the ABS-
CBN Head Office, he saw that the policy actually required suspension for those who intend to campaign for a political party or
candidate and resignation for those who will actually run in the elections.[5]

After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon. Luzon claims that Ymbong
approached him and told him that he would leave radio for a couple of months because he will campaign for the administration
ticket. It was only after the elections that they found out that Ymbong actually ran for public office himself at the eleventh
hour. Ymbong, on the other hand, claims that in accordance with the March 25, 1998 Memorandum, he informed Luzon through
a letter that he would take a few months leave of absence from March 8, 1998 to May 18, 1998 since he was running for
councilor of Lapu-Lapu City.

As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for Naga, Cebu. According
to Luzon, he clarified to Patalinghug that he will be considered resigned and not just on leave once he files a certificate of
candidacy. Thus, Patalinghug wrote Luzon the following letter on April 13, 1998:

Dear Mr. Luzon,

Im submitting to you my letter of resignation as your Drama Production Chief and Talent due to your
companys policy that every person connected to ABS-CBN that should seek an elected position in the
government will be forced to resigned (sic) from his position. So herewith Im submitting my resignation with a
hard heart. But Im still hoping to be connected again with your prestigious company after the election[s]
should you feel that Im still an asset to your drama production department. Im looking forward to that day and
Im very happy and proud that I have served for two and a half years the most stable and the most prestigious
Radio and TV Network in the Philippines.

As a friend[,] wish me luck and Pray for me. Thank you.

 Very Truly Yours,

(Sgd.)

Leandro Boy Patalinghug[6]

Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections.

Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he informed them that they
cannot work there anymore because of company policy. This was stressed even in subsequent meetings and they were told that
the company was not allowing any exceptions. ABS-CBN, however, agreed out of pure liberality to give them a chance to wind
up their participation in the radio drama, Nagbabagang Langit, since it was rating well and to avoid an abrupt ending. The
agreed winding-up, however, dragged on for so long prompting Luzon to issue to Ymbong the following memorandum
dated September 14, 1998:

TO : NESTOR YMBONG

FROM : DANTE LUZON

SUBJECT : AS STATED

DATE : 14 SEPT. 1998

Please be reminded that your services as drama talent had already been automatically terminated when you
ran for a local government position last election.

The Management however gave you more than enough time to end your drama participation and other
involvement with the drama department.

It has been decided therefore that all your drama participation shall be terminated effective immediately.
However, your involvement as drama spinner/narrator of the drama NAGBA[BA]GANG LANGIT continues until
its writer/director Mr. Leandro Patalinghug wraps it up one week upon receipt of a separate memo issued to
him.[7]

Ymbong in contrast contended that after the expiration of his leave of absence, he reported back to work as a regular talent and
in fact continued to receive his salary. On September 14, 1998, he received a memorandum stating that his services are being
terminated immediately, much to his surprise. Thus, he filed an illegal dismissal complaint[8] against ABS-CBN, Luzon and DYAB
Station Manager Veneranda Sy. He argued that the ground cited by ABS-CBN for his dismissal was not among those enumerated
in the Labor Code, as amended. And even granting without admitting the existence of the company policy supposed to have
been violated, Ymbong averred that it was necessary that the company policy meet certain requirements before willful
disobedience of the policy may constitute a just cause for termination. Ymbong further argued that the company policy violates
his constitutional right to suffrage.[9]

Patalinghug likewise filed an illegal dismissal complaint[10] against ABS-CBN.

ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-employee relationship between the
company and Ymbong and Patalinghug. ABS-CBN contended that they are not employees but talents as evidenced by their talent
contracts. However, notwithstanding their status, ABS-CBN has a standing policy on persons connected with the company
whenever they will run for public office.[11]

On July 14, 1999, the Labor Arbiter rendered a decision[12] finding the dismissal of Ymbong and Patalinghug illegal, thus:
 WHEREFORE, in the light of the foregoing, judgment is rendered finding the dismissal of the two complainants
illegal. An order is issued directing respondent ABS[-]CBN to immediately reinstate complainants to their
former positions without loss of seniority rights plus the payment of backwages in the amount of P200,000.00
to each complainant.

All other claims are dismissed.

SO ORDERED.[13]

The Labor Arbiter found that there exists an employer-employee relationship between ABS-CBN and Ymbong and Patalinghug
considering the stipulations in their appointment letters/talent contracts. The Labor Arbiter noted particularly that the
appointment letters/talent contracts imposed conditions in the performance of their work, specifically on attendance and
punctuality, which effectively placed them under the control of ABS-CBN. The Labor Arbiter likewise ruled that although the
subject company policy is reasonable and not contrary to law, the same was not made known to Ymbong and Patalinghug and in
fact was superseded by another one embodied in the March 25, 1998 Memorandum issued by Luzon. Thus, there is no valid or
authorized cause in terminating Ymbong and Patalinghug from their employment.

In its memorandum of appeal[14] before the National Labor Relations Commission (NLRC), ABS-CBN contended that the Labor
Arbiter has no jurisdiction over the case because there is no employer-employee relationship between the company
and Ymbong and Patalinghug, and that Sy and Luzon mistakenly assumed that Ymbong and Patalinghug could just file a leave of
absence since they are only talents and not employees. In its Supplemental Appeal,[15] ABS-CBN insisted that Ymbong and
Patalinghug were engaged as radio talents for DYAB dramas and personality programs and their contract is one between a self-
employed contractor and the hiring party which is a standard practice in the broadcasting industry. It also argued that the Labor
Arbiter should not have made much of the provisions on Ymbongs attendance and punctuality since such requirement is a
dictate of the programming of the station, the slating of shows at regular time slots, and availability of recording studios not an
attempt to exercise control over the manner of his performance of the contracted anchor work within his scheduled spot on
air. As for the pronouncement that the company policy has already been superseded by the March 25, 1998 Memorandum
issued by Luzon, the latter already clarified that it was the very policy he sought to enforce. This matter was relayed by Luzon to
Patalinghug when the latter disclosed his plans to join the 1998 elections while Ymbong only informed the company that he was
campaigning for the administration ticket and the company had no inkling that he will actually run until the issue was already
moot and academic. ABS-CBN further contended that Ymbong and Patalinghugs reinstatement is legally and physically
impossible as the talent positions they vacated no longer exist. Neither is there basis for the award of back wages since they
were not earning a monthly salary but paid talent fees on a per production/per script basis. Attached to the Supplemental
Appeal is a Sworn Statement[16] of Luzon.

On March 8, 2004, the NLRC rendered a decision[17] modifying the labor arbiters decision. The fallo of the NLRC decision reads:

WHEREFORE, premises considered, the decision of Labor Arbiter Nicasio C. Aninon dated 14 July
1999 is MODIFIED, to wit:

Ordering respondent ABS-CBN to reinstate complainant Ernesto G. Ymbong and to pay his full
backwages computed from 15 September 1998 up to the time of his actual reinstatement.

SO ORDERED.[18]

The NLRC dismissed ABS-CBNs Supplemental Appeal for being filed out of time. The NLRC ruled that to entertain the
same would be to allow the parties to submit their appeal on piecemeal basis, which is contrary to the agencys duty to facilitate
speedy disposition of cases. The NLRC also held that ABS-CBN wielded the power of control over Ymbong and Patalinghug,
thereby proving the existence of an employer-employee relationship between them.

As to the issue of whether they were illegally dismissed, the NLRC treated their cases differently. In the case of
Patalinghug, it found that he voluntarily resigned from employment on April 21, 1998 when he submitted his resignation
letter. The NLRC noted that although the tenor of the resignation letter is somewhat involuntary, he knew that it is the policy of
the company that every person connected therewith should resign from his employment if he seeks an elected position in the
government. As to Ymbong, however, the NLRC ruled otherwise. It ruled that the March 25, 1998 Memorandum merely states
that an employee who seeks any elected position in the government will only merit the temporary suspension of his services. It
held that under the principle of social justice, the March 25, 1998 Memorandum shall prevail and ABS-CBN is estopped from
enforcing the September 14, 1998 memorandum issued to Ymbong stating that his services had been automatically terminated
when he ran for an elective position.

ABS-CBN moved to reconsider the NLRC decision, but the same was denied in a Resolution dated June 21, 2004.[19]

Imputing grave abuse of discretion on the NLRC, ABS-CBN filed a petition for certiorari[20] before the CA alleging that:

I.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AND SERIOUSLY MISAPPRECIATED THE
FACTS IN NOT HOLDING THAT RESPONDENT YMBONG IS A FREELANCE RADIO TALENT AND MEDIA
PRACTITIONERNOT A REGULAR EMPLOYEE OF PETITIONERTO WHOM CERTAIN PRODUCTION WORK HAD BEEN
OUTSOURCED BY ABS-CBN CEBU UNDER AN INDEPENDENT CONTRACTORSHIP SITUATION, THUS RENDERING
THE LABOR COURTS WITHOUT JURISDICTION OVER THE CASE IN THE ABSENCE OF EMPLOYMENT RELATIONS
BETWEEN THE PARTIES.

II.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN DECLARING RESPONDENT YMBONG TO

BE A REGULAR EMPLOYEE OF PETITIONER AS TO CREATE A CONTRACTUAL EMPLOYMENT RELATION BETWEEN
THEM WHEN NONE EXISTS OR HAD BEEN AGREED UPON OR OTHERWISE INTENDED BY THE PARTIES.

III.

EVEN ASSUMING THE ALLEGED EMPLOYMENT RELATION TO EXIST FOR THE SAKE OF ARGUMENT,
RESPONDENT NLRC IN ANY CASE COMMITTED A GRAVE ABUSE OF DISCRETION IN NOT SIMILARLY UPHOLDING
AND APPLYING COMPANY POLICY NO. HR-ER-016 IN THE CASE OF RESPONDENT YMBONG AND DEEMING HIM
AS RESIGNED AND DISQUALIFIED FROM FURTHER ENGAGEMENT AS A RADIO TALENT IN ABS-CBN CEBU AS A
CONSEQUENCE OF HIS CANDIDACY IN THE 1998 ELECTIONS, AS RESPONDENT NLRC HAD DONE IN THE CASE OF
PATALINGHUG.

IV.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AND DENIED DUE PROCESS TO PETITIONER
IN REFUSING TO CONSIDER ITS SUPPLEMENTAL APPEAL, DATED OCTOBER 18, 1999, FOR BEING FILED OUT OF
TIME CONSIDERING THAT THE FILING OF SUCH A PLEADING IS NOT IN ANY CASE PROSCRIBED AND
RESPONDENT NLRC IS AUTHORIZED TO CONSIDER ADDITIONAL EVIDENCE ON APPEAL; MOREOVER, TECHNICAL
RULES OF EVIDENCE DO NOT APPLY IN LABOR CASES.

V.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN GRANTING THE RELIEF OF

REINSTATEMENT AND BACKWAGES TO RESPONDENT YMBONG SINCE HE NEVER OCCUPIED ANY REGULAR
POSITION IN PETITIONER FROM WHICH HE COULD HAVE BEEN ILLEGALLY DISMISSED, NOR ARE ANY OF THE
RADIO PRODUCTIONS IN WHICH HE HAD DONE TALENT WORK FOR PETITIONER STILL EXISTING. INDEED,
THERE IS NO BASIS WHATSOEVER FOR THE AWARD OF BACKWAGES TO RESPONDENT YMBONG IN THE
AMOUNT OF P200,000.00 CONSIDERING THAT, AS SHOWN BY THE UNCONTROVERTED EVIDENCE, HE WAS
NOT EARNING A MONTHLY SALARY OF P20,000.00, AS HE FALSELY CLAIMS, BUT WAS PAID TALENT FEES ON A
PER PRODUCTION/PER SCRIPT BASIS WHICH AVERAGED LESS THAN P10,000.00 PER MONTH IN TALENT FEES
ALL IN ALL.[21]
On August 22, 2007, the CA rendered the assailed decision reversing and setting aside the March 8, 2004 Decision and June 21,
2004 Resolution of the NLRC. The CA declared Ymbong resigned from employment and not to have been illegally dismissed. The
award of full back wages in his favor was deleted accordingly.

The CA ruled that ABS-CBN is estopped from claiming that Ymbong was not its employee after applying the provisions of Policy
No. HR-ER-016 to him. It noted that said policy is entitled Policy on Employees Seeking Public Office and the guidelines
contained therein specifically pertain to employees and did not even mention talents or independent contractors. It held that it
is a complete turnaround on ABS-CBNs part to later argue that Ymbong is only a radio talent or independent contractor and not
its employee. By applying the subject company policy on Ymbong, ABS-CBN had explicitly recognized him to be an employee and
not merely an independent contractor.

The CA likewise held that the subject company policy is the controlling guideline and therefore, Ymbong should be considered
resigned from ABS-CBN. While Luzon has policy-making power as assistant radio manager, he had no authority to issue a
memorandum that had the effect of repealing or superseding a subsisting policy. Contrary to the findings of the Labor Arbiter,
the subject company policy was effective at that time and continues to be valid and subsisting up to the present. The CA cited
Patalinghugs resignation letter to buttress this conclusion, noting that Patalinghug openly admitted in his letter that his
resignation was in line with the said company policy. Since ABS-CBN applied Policy No. HR-ER-016 to Patalinghug, there is no
reason not to apply the same regulation to Ymbong who was on a similar situation as the former. Thus, the CA found that the
NLRC overstepped its area of discretion to a point of grave abuse in declaring Ymbong to have been illegally terminated. The CA
concluded that there is no illegal dismissal to speak of in the instant case as Ymbong is considered resigned when he ran for an
elective post pursuant to the subject company policy.

Hence, this petition.

Petitioner argues that the CA gravely erred: (1) in upholding Policy No. HR-ER-016; (2) in upholding the validity of the
termination of Ymbongs services; and (3) when it reversed the decision of the NLRC 4 th Division of Cebu City which affirmed the
decision of Labor Arbiter Nicasio C. Anion.[22]

Ymbong argues that the subject company policy is a clear interference and a gross violation of an employees right to
suffrage. He is surprised why it was easy for the CA to rule that Luzons memorandum ran counter to an existing policy while on
the other end, it did not see that it was in conflict with the constitutional right to suffrage. He also points out that the issuance
of the March 25, 1998 Memorandum was precisely an exercise of the management power to which an employee like him must
respect; otherwise, he will be sanctioned for disobedience or worse, even terminated. He was not in a position to know which
between the two issuances was correct and as far as he is concerned, the March 25, 1998 Memorandum superseded the subject
company policy. Moreover, ABS-CBN cannot disown acts of its officers most especially since it prejudiced his property rights. [23]

As to the validity of his dismissal, Ymbong contends that the ground relied upon by ABS-CBN is not among the just and
authorized causes provided in the Labor Code, as amended. And even assuming the subject company policy passes the test of
validity under the pretext of the right of the management to discipline and terminate its employees, the exercise of such right is
not without bounds. Ymbong avers that his automatic termination was a blatant disregard of his right to due process. He was
never asked to explain why he did not tender his resignation before he ran for public office as mandated by the subject company
policy.[24]

Ymbong likewise asseverates that both the Labor Arbiter and the NLRC were consistent in their findings that he was illegally
dismissed. It is settled that factual findings of labor administrative officials, if supported by substantial evidence, are accorded
not only great respect but even finality.[25]

ABS-CBN, for its part, counters that the validity of policies such as Policy No. HR-ER-016 has long been upheld by this Court
which has ruled that a media company has a right to impose a policy providing that employees who file their certificates of
candidacy in any election shall be considered resigned. [26] Moreover, case law has upheld the validity of the exercise of
management prerogatives even if they appear to limit the rights of employees as long as there is no showing that management
prerogatives were exercised in a manner contrary to law.[27] ABS-CBN contends that being the largest media and entertainment
company in the country, its reputation stems not only from its ability to deliver quality entertainment programs but also
because of neutrality and impartiality in delivering news.[28]

ABS-CBN further argues that nothing in the company policy prohibits its employees from either accepting a public appointive
position or from running for public office. Thus, it cannot be considered as violative of the constitutional right of suffrage.
Moreover, the Supreme Court has recognized the employers right to enforce occupational qualifications as long as the employer
is able to show the existence of a reasonable business necessity in imposing the questioned policy. Here, Policy No. HR-ER-016
itself states that it was issued to protect the company from any public misconceptions and [t]o preserve its objectivity, neutrality
and credibility. Thus, it cannot be denied that it is reasonable under the circumstances. [29]

ABS-CBN likewise opposes Ymbongs claim that he was terminated. ABS-CBN argues that on the contrary, Ymbongs unilateral act
of filing his certificate of candidacy is an overt act tantamount to voluntary resignation on his part by virtue of the clear mandate
found in Policy No. HR-ER-016. Ymbong, however, failed to file his resignation and in fact misled his superiors by making them
believe that he was going on leave to campaign for the administration candidates but in fact, he actually ran for councilor. He
also claims to have fully apprised Luzon through a letter of his intention to run for public office, but he failed to adduce a copy of
the same.[30]

As to Ymbongs argument that the CA should not have reversed the findings of the Labor Arbiter and the NLRC, ABS-CBN
asseverates that the CA is not precluded from making its own findings most especially if upon its own review of the case, it has
been revealed that the NLRC, in affirming the findings of the Labor Arbiter, committed grave abuse of discretion amounting to
lack or excess of jurisdiction when it failed to apply the subject company policy in Ymbongs case when it readily applied the
same to Patalinghug.[31]

Essentially, the issues to be resolved in the instant petition are: (1) whether Policy No. HR-ER-016 is valid; (2) whether the March
25, 1998 Memorandum issued by Luzon superseded Policy No. HR-ER-016; and (3) whether Ymbong, by seeking an elective post,
is deemed to have resigned and not dismissed by ABS-CBN.

Policy No. HR-ER-016 is valid.

This is not the first time that this Court has dealt with a policy similar to Policy No. HR-ER-016. In the case of Manila
Broadcasting Company v. NLRC,[32] this Court ruled:

What is involved in this case is an unwritten company policy considering any employee who files a
certificate of candidacy for any elective or local office as resigned from the company. Although 11(b) of R.A.
No. 6646 does not require mass media commentators and announcers such as private respondent to resign from
their radio or TV stations but only to go on leave for the duration of the campaign period, we think that the
company may nevertheless validly require them to resign as a matter of policy. In this case, the policy is
justified on the following grounds:
Working for the government and the company at the same time is clearly disadvantageous and
prejudicial to the rights and interest not only of the company but the public as well. In the
event an employee wins in an election, he cannot fully serve, as he is expected to do, the
interest of his employer. The employee has to serve two (2) employers, obviously detrimental
to the interest of both the government and the private employer.
In the event the employee loses in the election, the impartiality and cold neutrality of
an employee as broadcast personality is suspect, thus readily eroding and adversely affecting
the confidence and trust of the listening public to employers station. [33]

ABS-CBN, like Manila Broadcasting Company, also had a valid justification for Policy No. HR-ER-016. Its rationale is embodied in
the policy itself, to wit:

Rationale:
 ABS-CBN BROADCASTING CORPORATION strongly believes that it is to the best interest of the company to
continuously remain apolitical. While it encourages and supports its employees to have greater political
awareness and for them to exercise their right to suffrage, the company, however, prefers to remain
politically independent and unattached to any political individual or entity.

Therefore, employees who [intend] to run for public office or accept political appointment should resign
from their positions, in order to protect the company from any public misconceptions. To preserve its
objectivity, neutrality and credibility, the company reiterates the following policy guidelines for strict
implementation.

x x x x[34] [Emphasis supplied.]

We have consistently held that so long as a companys management prerogatives are exercised in good faith for the
advancement of the employers 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. [35] In the instant case, ABS-CBN validly justified the
implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and credibility and
freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any
way eroded. 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.[36]

It is worth noting that such exercise of management prerogative has earned a stamp of approval from no less than our Congress
itself when on February 12, 2001, it enacted Republic Act No. 9006, otherwise known as the Fair Election Act. Section 6.6 thereof
reads:

6.6. Any mass media columnist, commentator, announcer, reporter, on-air correspondent or personality
who is a candidate for any elective public office or is a campaign volunteer for or employed or retained in
any capacity by any candidate or political party shall be deemed resigned, if so required by their employer,
or shall take a leave of absence from his/her work as such during the campaign period: Provided, That any
media practitioner who is an official of a political party or a member of the campaign staff of a candidate or
political party shall not use his/her time or space to favor any candidate or political party. [Emphasis and
underscoring supplied.]

Policy No. HR-ER-016 was not superseded by the March 25, 1998
Memorandum

The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABS-CBN, has policy-making powers in
relation to his principal task of administering the networks radio station in the Cebu region, the exercise of such power should
be in accord with the general rules and regulations imposed by the ABS-CBN Head Office to its employees. Clearly, the March 25,
1998 Memorandum issued by Luzon which only requires employees to go on leave if they intend to run for any elective position
is in absolute contradiction with Policy No. HR-ER-016 issued by the ABS-CBN Head Office in Manila which requires the
resignation, not only the filing of a leave of absence, of any employee who intends to run for public office. Having been issued
beyond the scope of his authority, the March 25, 1998 Memorandum is therefore void and did not supersede Policy No. HR-ER-
016.

Also worth noting is that Luzon in his Sworn Statement admitted the inaccuracy of his recollection of the company
policy when he issued the March 25, 1998 Memorandum and stated therein that upon double-checking of the exact text of the
policy statement and subsequent confirmation with the ABS-CBN Head Office in Manila, he learned that the policy required
resignation for those who will actually run in elections because the company wanted to maintain its independence. Since the
officer who himself issued the subject memorandum acknowledged that it is not in harmony with the Policy issued by the upper
management, there is no reason for it to be a source of right for Ymbong.
Ymbong is deemed resigned when he ran for councilor.

As Policy No. HR-ER-016 is the subsisting company policy and not Luzons March 25, 1998 Memorandum, Ymbong is deemed
resigned when he ran for councilor.

We find no merit in Ymbongs argument that [his] automatic termination x x x was a blatant [disregard] of [his] right to due
process as he was never asked to explain why he did not tender his resignation before he ran for public office as mandated by
[the subject company policy].[37] Ymbongs overt act of running for councilor of Lapu-Lapu City is tantamount to resignation on
his part. He was separated from ABS-CBN not because he was dismissed but because he resigned. Since there was no
termination to speak of, the requirement of due process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not
duty-bound to ask him to explain why he did not tender his resignation before he ran for public office as mandated by the
subject company policy.

In addition, we do not subscribe to Ymbongs claim that he was not in a position to know which of the two issuances was
correct. Ymbong most likely than not, is fully aware that the subsisting policy is Policy No. HR-ER-016 and not the March 25,
1998 Memorandum and it was for this reason that, as stated by Luzon in his Sworn Statement, he only told the latter that he will
only campaign for the administration ticket and not actually run for an elective post. Ymbong claims he had fully
apprised Luzon by letter of his plan to run and even filed a leave of absence but records are bereft of any proof of said
claim. Ymbong claims that the letter stating his intention to go on leave to run in the election is attached to his Position Paper as
Annex A, a perusal of said pleading attached to his petition before this Court, however, show that Annex A was not his letter to
Luzon but the September 14, 1998 Memorandum informing Ymbong that his services had been automatically terminated when
he ran for a local government position.

Moreover, as pointed out by ABS-CBN, had Ymbong been truthful to his superiors, they would have been able to clarify to him
the prevailing company policy and inform him of the consequences of his decision in case he decides to run, as Luzon did in
Patalinghugs case.

WHEREFORE, the petition for review on certiorari is DENIED for lack of merit.

With costs against petitioner.

SO ORDERED.
8.

PROFESSIONAL SERVICES, INC., G.R. No. 126297

Petitioner,
- versus -

THE COURT OF APPEALS and NATIVIDAD and

ENRIQUE AGANA,
Respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
NATIVIDAD (Substituted by her children
MARCELINO AGANA III, ENRIQUE AGANA, JR., G.R. No. 126467
EMMA AGANA ANDAYA, JESUS AGANA, and
RAYMUND AGANA) and ENRIQUE AGANA,
Petitioners,
- versus -

THE COURT OF APPEALS and JUANFUENTES,

Respondents,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - x
MIGUEL AMPIL,
Petitioner,
- versus -

THE COURT OF APPEALS and G.R. No. 127590

NATIVIDAD AGANA and ENRIQUEAGANA,
Respondents. Present:

PUNO, C.J.,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.

Promulgated:
February 11, 2008
x---------------------------------------------------------x

RESOLUTION

SANDOVAL-GUTIERREZ, J.:

As the hospital industry changes, so must the laws and jurisprudence governing hospital liability. The immunity from
medical malpractice traditionally accorded to hospitals has to be eroded if we are to balance the interest of the
patients and hospitals under the present setting.
Before this Court is a motion for reconsideration filed by Professional Services, Inc. (PSI), petitioner in G.R. No.
126297, assailing the Courts First Division Decision dated January 31, 2007, finding PSI and Dr. Miguel Ampil,
petitioner in G.R. No. 127590, jointly and severally liable for medical negligence.
A brief revisit of the antecedent facts is imperative.
On April 4, 1984, Natividad Agana was admitted at the Medical City General Hospital (Medical City) because of
difficulty of bowel movement and bloody anal discharge. Dr. Ampil diagnosed her to be suffering from cancer of the
sigmoid. Thus, on April 11, 1984, Dr. Ampil, assisted by the medical staff [1] of Medical City, performed an anterior
resection surgery upon her. During the surgery, he found that the malignancy in her sigmoid area had spread to her
left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Atty. Enrique
Agana, Natividads husband, to permit Dr. Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy
upon Natividad.
Dr. Fuentes performed and completed the hysterectomy. Afterwards, Dr. Ampil took over, completed the operation
and closed the incision. However, the operation appeared to be flawed. In the corresponding Record of Operation
dated April 11, 1984, the attending nurses entered these remarks:
sponge count lacking 2
announced to surgeon searched done (sic) but to no avail continue for closure.

After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both Dr. Ampil and
Dr. Fuentes about it. They told her that the pain was the natural consequence of the surgical operation performed
upon her. Dr. Ampil recommended that Natividad consult an oncologist to treat the cancerous nodes which were not
removed during the operation.
On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further treatment. After
four (4) months of consultations and laboratory examinations, Natividad was told that she was free of cancer. Hence,
she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two (2) weeks thereafter, her
daughter found a piece of gauze protruding from her vagina. Dr. Ampil was immediately informed. He proceeded to
Natividads house where he managed to extract by hand a piece of gauze measuring 1.5 inches in width. Dr. Ampil
then assured Natividad that the pains would soon vanish.
Despite Dr. Ampils assurance, the pains intensified, prompting Natividad to seek treatment at the Polymedic
General Hospital. While confined thereat, Dr. Ramon Gutierrez detected the presence of a foreign object in her vagina
-- a foul-smelling gauze measuring 1.5 inches in width. The gauze had badly infected her vaginal vault. A recto-vaginal
fistula had formed in her reproductive organ which forced stool to excrete through the vagina. Another surgical
operation was needed to remedy the situation. Thus, in October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with the Regional Trial Court, Branch 96, Quezon City a
complaint for damages against PSI (owner of Medical City), Dr. Ampil and Dr. Fuentes.
On February 16, 1986, pending the outcome of the above case, Natividad died. She was duly substituted by
her above-named children (the Aganas).
On March 17, 1993, the trial court rendered judgment in favor of spouses Agana finding PSI, Dr. Ampil and
Dr. Fuentes jointly and severally liable. On appeal, the Court of Appeals, in its Decision dated September 6, 1996,
affirmed the assailed judgment with modification in the sense that the complaint against Dr. Fuentes was dismissed.
PSI, Dr. Ampil and the Aganas filed with this Court separate petitions for review on certiorari. On January 31, 2007,
the Court, through its First Division, rendered a Decision holding that PSI is jointly and severally liable with Dr. Ampil
for the following reasons: first, there is an employer-employee relationship between Medical City and Dr. Ampil. The
Court relied on Ramos v. Court of Appeals,[2] holding that for the purpose of apportioning responsibility in medical
negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and
visiting physicians; second, PSIs act of publicly displaying in the lobby of the Medical City the names and
specializations of its accredited physicians, including Dr. Ampil, estopped it from denying the existence of an
employer-employee relationship between them under the doctrine of ostensible agency or agency by
estoppel; and third, PSIs failure to supervise Dr. Ampil and its resident physicians and nurses and to take an active
step in order to remedy their negligence rendered it directly liable under the doctrine of corporate negligence.
In its motion for reconsideration, PSI contends that the Court erred in finding it liable under Article 2180 of the
Civil Code, there being no employer-employee relationship between it and its consultant, Dr. Ampil. PSI stressed that
the Courts Decision in Ramos holding that an employer-employee relationship in effect exists between hospitals and
their attending and visiting physicians for the purpose of apportioning responsibility had been reversed in a
subsequent Resolution.[3] Further, PSI argues that the doctrine of ostensible agency or agency by estoppel cannot
apply because spouses Agana failed to establish one requisite of the doctrine, i.e., that Natividad relied on the
representation of the hospital in engaging the services of Dr. Ampil. And lastly, PSI maintains that the doctrine of
corporate negligence is misplaced because the proximate cause of Natividads injury was Dr. Ampils negligence.
The motion lacks merit.
As earlier mentioned, the First Division, in its assailed Decision, ruled that an employer-employee
relationship in effect exists between the Medical City and Dr. Ampil. Consequently, both are jointly and severally
liable to the Aganas. This ruling proceeds from the following ratiocination in Ramos:
We now discuss the responsibility of the hospital in this particular incident. The unique
practice (among private hospitals) of filling up specialist staff with attending and visiting consultants,
who are allegedly not hospital employees, presents problems in apportioning responsibility for
negligence in medical malpractice cases. However, the difficulty is only more apparent than real.
In the first place, hospitals exercise significant control in the hiring and firing of
consultants and in the conduct of their work within the hospital premises. Doctors who apply
for consultant slots, visiting or attending, are required to submit proof of completion of residency,
their educational qualifications; generally, evidence of accreditation by the appropriate board
(diplomate), evidence of fellowship in most cases, and references. These requirements are carefully
scrutinized by members of the hospital administration or by a review committee set up by the
hospital who either accept or reject the application. This is particularly true with respondent hospital.
After a physician is accepted, either as a visiting or attending consultant, he is
normally required to attend clinico-pathological conferences, conduct bedside rounds for
clerks, interns and residents, moderate grand rounds and patient audits and perform other
tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital,
and/or for the privilege of admitting patients into the hospital. In addition to these, the
physicians performance as a specialist is generally evaluated by a peer review committee on
the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns
and residents. A consultant remiss in his duties, or a consultant who regularly falls short of
the minimum standards acceptable to the hospital or its peer review committee, is normally
politely terminated.
In other words, private hospitals hire, fire and exercise real control over their attending and
visiting consultant staff. While consultants are not, technically employees, a point which
 respondent hospital asserts in denying all responsibility for the patients condition, the
control exercised, the hiring, and the right to terminate consultants all fulfill the important
hallmarks of an employer-employee relationship, with the exception of the payment of
wages. In assessing whether such a relationship in fact exists, the control test is
determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of
allocating responsibility in medical negligence cases, an employer-employee relationship in
effect exists between hospitals and their attending and visiting physicians. This being the
case, the question now arises as to whether or not respondent hospital is solidarily liable with
respondent doctors for petitioners condition.
The basis for holding an employer solidarily responsible for the negligence of its employee is
found in Article 2180 of the Civil Code which considers a person accountable not only for his own
acts but also for those of others based on the formers responsibility under a relationship of partia
ptetas.

Clearly, in Ramos, the Court considered the peculiar relationship between a hospital and its consultants on
the bases of certain factors. One such factor is the control test wherein the hospital exercises control in the hiring and
firing of consultants, like Dr. Ampil, and in the conduct of their work.
Actually, contrary to PSIs contention, the Court did not reverse its ruling in Ramos. What it clarified was that
the De Los Santos Medical Clinic did not exercise control over its consultant, hence, there is no employer-employee
relationship between them. Thus, despite the granting of the said hospitals motion for reconsideration, the doctrine
in Ramos stays, i.e., for the purpose of allocating responsibility in medical negligence cases, an employer-employee
relationship exists between hospitals and their consultants.
In the instant cases, PSI merely offered a general denial of responsibility, maintaining that consultants, like
Dr. Ampil, are independent contractors, not employees of the hospital. Even assuming that Dr. Ampil is not an
employee of Medical City, but an independent contractor, still the said hospital is liable to the Aganas.
In Nograles, et al. v. Capitol Medical Center, et al.,[4] through Mr. Justice Antonio T. Carpio, the Court held:
The question now is whether CMC is automatically exempt from liability considering that Dr.
Estrada is an independent contractor-physician.
In general, a hospital is not liable for the negligence of an independent contractor-
physician. There is, however, an exception to this principle. The hospital may be liable if the physician
is the ostensible agent of the hospital. (Jones v. Philpott, 702 F. Supp. 1210 [1988])This exception is
also known as the doctrine of apparent authority. (Sometimes referred to as the apparent or
ostensible agency theory. [King v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 (2006)].
xxx
The doctrine of apparent authority essentially involves two factors to determine the liability of
an independent contractor-physician.
The first factor focuses on the hospitals manifestations and is sometimes described as an
inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude that
the individual who was alleged to be negligent was an employee or agent of the hospital. (Diggs v.
Novant Health, Inc., 628 S.E.2d 851 (2006) citing Hylton v. Koontz, 138 N.C. App. 629 (2000). In this
regard, the hospital need not make express representations to the patient that the treating
physician is an employee of the hospital; rather a representation may be general and
implied. (Id.)
The doctrine of apparent authority is a specie of the doctrine of estoppel. Article 1431 of the
Civil Code provides that [t]hrough estoppel, an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against the person relying
thereon. Estoppel rests on this rule: Whether a party has, by his own declaration, act, or omission,
intentionally and deliberately led another to believe a particular thing true, and to act upon such belief,
he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it.
(De Castro v. Ginete, 137 Phil. 453 [1969], citing Sec. 3, par. A, Rule 131 of the Rules of Court. See
also King v. Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).
xxx
The second factor focuses on the patients reliance. It is sometimes characterized as an
inquiry on whether the plaintiff acted in reliance upon the conduct of the hospital or its agent,
consistent with ordinary care and prudence. (Diggs v. Novant Health, Inc.)

PSI argues that the doctrine of apparent authority cannot apply to these cases because
spouses Agana failed to establish proof of their reliance on the representation of Medical City that Dr. Ampil is its
employee.
The argument lacks merit.
Atty. Agana categorically testified that one of the reasons why he chose Dr. Ampil was that he knew him to
be a staff member of Medical City, a prominent and known hospital.
Q Will you tell us what transpired in your visit to Dr. Ampil?

A Well, I saw Dr. Ampil at the Medical City, I know him to be a staff member there, and I told him
about the case of my wife and he asked me to bring my wife over so she could be
 examined. Prior to that, I have known Dr. Ampil, first, he was staying in front of our house,
he was a neighbor, second, my daughter was his student in the University of the East
School of Medicine at Ramon Magsaysay; and when my daughter opted to establish a
hospital or a clinic, Dr. Ampil was one of our consultants on how to establish that hospital.
And from there, I have known that he was a specialist when it comes to that illness.

Atty. Agcaoili

On that particular occasion, April 2, 1984, what was your reason for choosing to contact Dr. Ampil in
connection with your wifes illness?

A First, before that, I have known him to be a specialist on that part of the body as a
surgeon; second, I have known him to be a staff member of the Medical City which is a
prominent and known hospital. And third, because he is a neighbor, I expect more than
the usual medical service to be given to us, than his ordinary patients. [5]

Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of displaying his name and those
of the other physicians in the public directory at the lobby of the hospital amounts to holding out to the public that it
offers quality medical service through the listed physicians. This justifies Atty. Aganas belief that Dr. Ampil was a
member of the hospitals staff. It must be stressed that under the doctrine of apparent authority, the question in
every case is whether the principal has by his voluntary act placed the agent in such a situation that a person
of ordinary prudence, conversant with business usages and the nature of the particular business, is justified
in presuming that such agent has authority to perform the particular act in question.[6] In these cases, the
circumstances yield a positive answer to the question.
The challenged Decision also anchors its ruling on the doctrine of corporate responsibility.[7] The duty of
providing quality medical service is no longer the sole prerogative and responsibility of the physician. This is because
the modern hospital now tends to organize a highly-professional medical staff whose competence and performance
need also to be monitored by the hospital commensurate with its inherent responsibility to provide quality medical
care.[8] Such responsibility includes the proper supervision of the members of its medical staff. Accordingly,
the hospital has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and
administered by the physicians practicing in its premises.
Unfortunately, PSI had been remiss in its duty. It did not conduct an immediate investigation on the reported
missing gauzes to the great prejudice and agony of its patient. Dr. Jocson, a member of PSIs medical staff, who
testified on whether the hospital conducted an investigation, was evasive, thus:
Q We go back to the operative technique, this was signed by Dr. Puruganan, was this
submitted to the hospital?
A Yes, sir, this was submitted to the hospital with the record of the patient.

Q Was the hospital immediately informed about the missing sponges?

A That is the duty of the surgeon, sir.

Q As a witness to an untoward incident in the operating room, was it not your obligation, Dr.,
to also report to the hospital because you are under the control and direction of the
hospital?
A The hospital already had the record of the two OS missing, sir.

Q If you place yourself in the position of the hospital, how will you recover.
A You do not answer my question with another question.

Q Did the hospital do anything about the missing gauzes?

A The hospital left it up to the surgeon who was doing the operation, sir.

Q Did the hospital investigate the surgeon who did the operation?
A I am not in the position to answer that, sir.

Q You never did hear the hospital investigating the doctors involved in this case of those
missing sponges, or did you hear something?

xxxxxx

A I think we already made a report by just saying that two sponges were missing, it is up to
the hospital to make the move.

Atty. Agana

Precisely, I am asking you if the hospital did a move, if the hospital did a move.
 A I cannot answer that.
Court
By that answer, would you mean to tell the Court that you were aware if there was such a
move done by the hospital?
A I cannot answer that, your honor, because I did not have any more follow-up of the case
that happened until now.[9]

The above testimony obviously shows Dr. Jocsons lack of concern for the patients. Such conduct is
reflective of the hospitals manner of supervision. Not only did PSI breach its duty to oversee or supervise all
persons who practice medicine within its walls, it also failed to take an active step in fixing the negligence
committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil
Code, but also directly liable for its own negligence under Article 2176.
Moreover, there is merit in the trial courts finding that the failure of PSI to conduct an
investigation established PSIs part in the dark conspiracy of silence and concealment about the gauzes. The
following testimony of Atty. Agana supports such findings, thus:
Q You said you relied on the promise of Dr. Ampil and despite the promise you were not able to
obtain the said record. Did you go back to the record custodian?
A I did not because I was talking to Dr. Ampil. He promised me.
Q After your talk to Dr. Ampil, you went to the record custodian?
A I went to the record custodian to get the clinical record of my wife, and I was given a portion
of the records consisting of the findings, among them, the entries of the dates, but
not the operating procedure and operative report.[10]

In sum, we find no merit in the motion for reconsideration.

WHEREFORE, we DENY PSIs motion for reconsideration with finality.
SO ORDERED.
9.

G.R. No. 186621, March 12, 2014

SOUTH EAST INTERNATIONAL RATTAN, INC. AND/OR ESTANISLAO 1 AGBAY, Petitioners, v. JESUS J.
COMING, Respondent.

DECISION

VILLARAMA, JR., J.:

Before the Court is a petition for review on certiorari under Rule 45 to reverse and set aside the Decision2 dated
February 21, 2008 and Resolution3 dated February 9, 2009 of the Court of Appeals (CA) in CAG.R. CEBSP No.
02113.

Petitioner South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the business of
manufacturing and exporting furniture to various countries with principal place of business at Paknaan, Mandaue City,
while petitioner Estanislao Agbay, as per records, is the President and General Manager of SEIRI. 4

On November 3, 2003, respondent Jesus J. Coming filed a complaint5 for illegal dismissal, underpayment of wages,
nonpayment of holiday pay, 13th month pay and service incentive leave pay, with prayer for reinstatement, back
wages, damages and attorneys fees.

Respondent alleged that he was hired by petitioners as Sizing Machine Operator on March 17, 1984. His work
schedule is from 8:00 a.m. to 5:00 p.m. Initially, his compensation was on pakiao basis but sometime in June 1984,
it was fixed at P150.00 per day which was paid weekly. In 1990, without any apparent reason, his employment was
interrupted as he was told by petitioners to resume work in two months time. Being an uneducated person,
respondent was persuaded by the management as well as his brother not to complain, as otherwise petitioners might
decide not to call him back for work. Fearing such consequence, respondent accepted his fate. Nonetheless, after
two months he reported back to work upon order of management.6

Despite being an employee for many years with his work performance never questioned by petitioners, respondent
was dismissed on January 1, 2002 without lawful cause. He was told that he will be terminated because the company
is not doing well financially and that he would be called back to work only if they need his services again. Respondent
waited for almost a year but petitioners did not call him back to work. When he finally filed the complaint before the
regional arbitration branch, his brother Vicente was used by management to persuade him to withdraw the case. 7

On their part, petitioners denied having hired respondent asserting that SEIRI was incorporated only in 1986, and that
respondent actually worked for SEIRIs furniture suppliers because when the company started in 1987 it was engaged
purely in buying and exporting furniture and its business operations were suspended from the last quarter of 1989 to
August 1992. They stressed that respondent was not included in the list of employees submitted to the Social
Security System (SSS). Moreover, respondents brother, Vicente Coming, executed an affidavit8 in support of
petitioners position while Allan Mayol and Faustino Apondar issued notarized certifications 9 that respondent worked
for them instead.10

With the denial of petitioners that respondent was their employee, the latter submitted an affidavit 11signed by five
former coworkers stating that respondent was one of the pioneer employees who worked in SEIRI for almost twenty
years.

In his Decision12 dated April 30, 2004, Labor Arbiter Ernesto F. Carreon ruled that respondent is a regular employee of
SEIRI and that the termination of his employment was illegal. The dispositive portion of the decision
reads:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent South East (Intl.) Rattan,
Inc. to pay complainant Jesus J. Coming the following:chanRoblesvirtualLawlibrary

1. Separation pay P114,400.00

2. Backwages P 30,400.00
3. Wage differential P 15,015.00
4. 13th month pay P 5,958.00
5. Holiday pay P 4,000.00
6. Service incentive leave pay P 2,000.00
Total award P171,773.00
The other claims and the case against respondent Estanislao Agbay are dismissed for lack of merit.

SO ORDERED.13

Petitioners appealed to the National Labor Relations Commission (NLRC)Cebu City where they submitted the
following additional evidence: (1) copies of SEIRIs payrolls and individual pay records of employees; 14 (2) affidavit15 of
SEIRIs Treasurer, Angelina Agbay; and (3) second affidavit16 of Vicente Coming.

On July 28, 2005, the NLRCs Fourth Division rendered its Decision,17 the dispositive portion of which
states:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a
new one entered DISMISSING the complaint.

SO ORDERED.18

The NLRC likewise denied respondents motion for reconsideration.19

Respondent elevated the case to the CA via a petition for certiorari under Rule 65.

By Decision dated February 21, 2008, the CA reversed the NLRC and ruled that there existed an employeremployee
relationship between petitioners and respondent who was dismissed without just and valid cause. The CA thus
decreed:chanRoblesvirtualLawlibrary

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The assailed Decision dated July 28, 2005
issued by the National Labor Relations Commission (NLRC), Fourth Division, Cebu City in NLRC Case No. V
0006252004 is REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated April 30, 2004 is
REINSTATED with MODIFICATION on the computation of backwages which should be computed from the time of
illegal termination until the finality of this decision.

Further, the Labor Arbiter is directed to make the proper adjustment in the computation of the award of separation pay
as well as the monetary awards of wage differential, 13thmonth pay, holiday pay and service incentive leave pay.

SO ORDERED.20

Petitioners filed a motion for reconsideration but the CA denied it under Resolution dated February 9, 2009.

Hence, this petition raising the following issues:chanRoblesvirtualLawlibrary

6.1

WHETHER UNDER THE FACTS AND EVIDENCE ON RECORD, THE FINDING OF THE HONORABLE COURT OF
APPEALS THAT THERE EXISTS EMPLOYEREMPLOYEE RELATIONSHIP BETWEEN PETITIONERS AND
RESPONDENT IS IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THIS HONORABLE COURT.

6.2

WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY APPRECIATED IN ACCORDANCE WITH

APPLICABLE LAW AND JURISPRUDENCE THE EVIDENCE PRESENTED BY BOTH PARTIES.

6.3

WHETHER UNDER THE FACTS AND EVIDENCE PRESENTED, THE FINDING OF THE HONORABLE COURT OF
APPEALS THAT PETITIONERS ARE LIABLE FOR ILLEGAL DISMISSAL OF RESPONDENT IS IN ACCORD WITH
APPLICABLE LAW AND JURISPRUDENCE.

6.4

WHETHER UNDER THE FACTS PRESENTED, THE RULING OF THE HONORABLE COURT OF APPEALS THAT
THE BACKWAGES DUE THE RESPONDENT SHOULD BE COMPUTED FROM THE TIME OF ILLEGAL
TERMINATION UNTIL THE FINALITY OF THE DECISION IS SUPPORTED BY PREVAILING JURISPRUDENCE.21

Resolution of the first issue is paramount in view of petitioners denial of the existence of employeremployee
relationship.
The issue of whether or not an employeremployee relationship exists in a given case is essentially a question of
fact. As a rule, this Court is not a trier of facts and this applies with greater force in labor cases. 22 Only errors of law
are generally reviewed by this Court.23 This rule is not absolute, however, and admits of exceptions. For one, the
Court may look into factual issues in labor cases when the factual findings of the Labor Arbiter, the NLRC, and the CA
are conflicting.24 Here, the findings of the NLRC differed from those of the Labor Arbiter and the CA, which compels
the Courts exercise of its authority to review and pass upon the evidence presented and to draw its own conclusions
therefrom.25

To ascertain the existence of an employeremployee relationship jurisprudence has invariably adhered to the four
fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct, or the socalled control test.26 In resolving the issue
of whether such relationship exists in a given case, substantial evidence that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion is sufficient. Although no particular form of
evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted, a finding that the relationship exists must nonetheless rest on substantial evidence. 27

In support of their claim that respondent was not their employee, petitioners presented Employment Reports to the
SSS from 1987 to 2002, the Certifications issued by Mayol and Apondar, two affidavits of Vicente Coming, payroll
sheets (19992000), individual pay envelopes and employee earnings records (19992000) and affidavit of Angelina
Agbay (Treasurer and Human Resources Officer). The payroll and pay records did not include the name of
respondent. The affidavit of Ms. Agbay stated that after SEIRI started its business in 1986 purely on export trading, it
ceased operations in 1989 as evidenced by Certification dated January 18, 1994 from the Securities and Exchange
Commission (SEC); that when business resumed in 1992, SEIRI undertook only a little of manufacturing; that the
company never hired any workers for varnishing and pole sizing because it bought the same from various suppliers,
including Faustino Apondar; respondent was never hired by SEIRI; and while it is true that Mr. Estanislao Agbay is
the company President, he never dispensed the salaries of workers. 28

In his first affidavit, Vicente Coming averred that:chanRoblesvirtualLawlibrary

6. [Jesus Coming] is a furniture factory worker. In 1982 to 1986, he was working with Ben Mayol as round core
maker/splitter.

7. Thereafter, we joined Okay Okay Yard owned by Amelito Montececillo. This is a rattan trader with business
address near Cebu Rattan Factory on a Pakiao basis.

8. However, Jesus and I did not stay long at Okay Okay Yard and instead we joined Eleuterio Agbay in Labogon,
Cebu in 1989. In 1991, we went back to Okay Okay located near the residence of Atty. Vicente de la Serna in
Mandaue City. We were on a pakiao basis. We stayed put until 1993 when we resigned and joined Dodoy Luna in
Labogon, Mandaue City as classifier until 1995. In 1996[,] Jesus rested. It was only in 1997 that he worked back. He
replaced me, as a classifier in Rattan Traders owned by Allan Mayol. But then, towards the end of the year, he left the
factory and relaxed in our place of birth, in Sogod, Cebu.

9. It was only towards the end of 1999 that Jesus was taken back by Allan Mayol as sizing machine operator.
However, the work was off and on basis. Not regular in nature, he was harping a side line job with me knowing that I
am now working with Faustino Apondar that supplies rattan furnitures [sic] to South East (Intl) Rattan, Inc. As a
brother, I allowed Jesus to work with me and collect the proceeds of his services as part of my collectibles from
Faustino Apondar since I was on a pakiao basis. He was working at his pleasure. Which means, he works if he
likes to? That will be until 10:00 oclock in the evening.

x x x x29

The Certification dated January 20, 2004 of Allan Mayol reads:chanRoblesvirtualLawlibrary

This is to certify that I personally know Jesus Coming, the brother of Vicente Coming. Jesus is a rattan factory worker
and he was working with me as rattan pole sizing/classifier of my business from 1997 up to part of 1998 when he left
my factory at will. I took him back towards the end of 1999, this time as a sizing machine operator. In all these years,
his services are not regular. He works only if he likes to.30

Faustino Apondar likewise issued a Certification which states:chanRoblesvirtualLawlibrary

This is to certify that I am a maker/supplier of finished Rattan Furniture. As such, I have several rattan furniture
workers under me, one of whom is Vicente Coming, the brother of Jesus Coming.

That sometime in 1999, Vicente pleaded to me for a side line job of his brother, Jesus who was already connected
with Allan Mayol. Having vouched for the integrity of his brother and knowing that the job is temporary in character, I
allowed Jesus to work with his brother Vicente. However, the proceeds will be collected together with his brother
Vicente since it was the latter who was working with me. He renders services to his brother work only after the regular
working hours but off and on basis.31

On the other hand, respondent submitted the affidavit executed by Eleoterio Brigoli, Pedro Brigoli, Napoleon Coming,
Efren Coming and Gil Coming who all attested that respondent was their coworker at SEIRI. Their affidavit
reads:chanRoblesvirtualLawlibrary

We, the undersigned, all of legal ages, Filipino, and resident[s] of Cebu, after having been duly sworn to in accordance
with law, depose and say:chanRoblesvirtualLawlibrary

That we are former employees of SOUTH EAST RATTAN which is owned by Estan Eslao Agbay;

That we personally know JESUS COMING considering that we worked together in one company SOUTH EAST
RATTANT [sic];

That we together with JESUS COMING are all under the employ of ESTAN ESLAO AGBAY considering that the latter
is the one directly paying us and holds the absolute control of all aspects of our employment;

That it is not true that JESUS COMING is under the employ of one person other than ESTAN ESLAO AGBAY OF
SOUTH EAST RATTAN;

That Jesus Coming is one of the pioneer employees of SOUTH EAST RATTAN and had been employed therein for
almost twenty years;

That we executed this affidavit to attest to the truth of the foregoing facts and to deny any contrary allegation made by
the company against his employment with SOUTH EAST RATTAN.32

In his decision, Labor Arbiter Carreon found that respondents work as sizing machine operator is usually necessary
and desirable to the rattan furniture business of petitioners and their failure to include respondent in the employment
report to SSS is not conclusive proof that respondent is not their employee. As to the affidavit of Vicente Coming,
Labor Arbiter Carreon did not give weight to his statement that respondent is not petitioners employee but that of one
Faustino Apondar. Labor Arbiter Carreon was not convinced that Faustino Apondar is an independent contractor who
has a contractual relationship with petitioners.

In reversing the Labor Arbiter, the NLRC reasoned as follows:chanRoblesvirtualLawlibrary

First complainant alleged that he worked continuously from March 17, 1984 up to January 21, 2002. Records reveal
however that South East (Intl.) Rattan, Inc. was incorporated only last July 18, 1986 (p. 55 records)[.] Moreover,
when they started to actually operate in 1987, the company was engaged purely on buying and exporting rattan
furniture hence no manufacturing employees were hired. Furthermore, from the last quarter of 1989 up to August of
1992, the company suspended operations due to economic reverses as per Certification issued by the Securities and
Exchange Commission (p. 56 records)[.]

Second, for all his insistence that he was a regular employee, complainant failed to present a single payslip, voucher
or a copy of a company payroll showing that he rendered service during the period indicated therein. x x x

From the above established facts we are inclined to give weight and credence to the Certifications of Allan Mayol and
Faustino Apondar, both suppliers of finished Rattan Furniture (pp. 44243, records). It appears that complainant first
worked with Allan Mayol and later with Faustino Apondar upon the proddings of his brother Vicente. Vicentes affidavit
as to complainants employment history was more detailed and forthright. x x x

xxxx

In the case at bar, there is likewise substantial evidence to support our findings that complainant was not an employee
of respondents. Thus:

1. Complainants name does not appear in the list of employees reported to the SSS.
2. is name does not also appear in the sample payrolls of respondents employees.
3. The certification of Allan Mayol and Fasutino Apondar[,] supplier of finished rattan products[,] that complainant
had at one time or another worked with them.
4. The Affidavit of Vicente Coming, complainants full brother[,] attesting that complainant had never been an
employee of respondent. The only connection was that their employer Faustino Apondar supplies finished
rattan products to respondents.33

On the other hand, the CA gave more credence to the declarations of the five former employees of petitioners that
respondent was their coworker in SEIRI. One of said affiants is Vicente Comings own son, Gil Coming. Vicente
averred in his second affidavit that when he confronted his son, the latter explained that he was merely told by their
Pastor to sign the affidavit as it will put an end to the controversy. Vicente insisted that his son did not know the
contents and implications of the document he signed. As to the absence of respondents name in the payroll and SSS
employment report, the CA observed that the payrolls submitted were only from January 1, 1999 to December 29,
2000 and not the entire period of eighteen years when respondent claimed he worked for SEIRI. It further noted that
the names of the five affiants, whom petitioners admitted to be their former employees, likewise do not appear in the
aforesaid documents. According to the CA, it is apparent that petitioners maintained a separate payroll for certain
employees or willfully retained a portion of the payroll.

x x x As to the control test, the following facts indubitably reveal that respondents wielded control over the work
performance of petitioner, to wit: (1) they required him to work within the company premises; (2) they obliged petitioner
to report every day of the week and tasked him to usually perform the same job; (3) they enforced the observance of
definite hours of work from 8 oclock in the morning to 5 oclock in the afternoon; (4) the mode of payment of
petitioners salary was under their discretion, at first paying him on pakiao basis and thereafter, on daily basis; (5) they
implemented company rules and regulations; (6) [Estanislao] Agbay directly paid petitioners salaries and controlled
all aspects of his employment and (7) petitioner rendered work necessary and desirable in the business of the
respondent company.34

We affirm the CA.

In Tan v. Lagrama,35 the Court held that the fact that a worker was not reported as an employee to the SSS is not
conclusive proof of the absence of employeremployee relationship. Otherwise, an employer would be rewarded for
his failure or even neglect to perform his obligation. 36

Nor does the fact that respondents name does not appear in the payrolls and pay envelope records submitted by
petitioners negate the existence of employeremployee relationship. For a payroll to be utilized to disprove the
employment of a person, it must contain a true and complete list of the employee. 37 In this case, the exhibits offered
by petitioners before the NLRC consisting of copies of payrolls and pay earnings records are only for the years 1999
and 2000; they do not cover the entire 18year period during which respondent supposedly worked for SEIRI.

In their comment to the petition filed by respondent in the CA, petitioners emphasized that in the certifications issued
by Mayol and Apondar, it was shown that respondent was employed and working for them in those years he claimed
to be working for SEIRI. However, a reading of the certification by Mayol would show that while the latter claims to
have respondent under his employ in 1997, 1998 and 1999, respondents services were not regular and that he works
only if he wants to. Apondars certification likewise stated that respondent worked for him since 1999 through his
brother Vicente as sideline but only after regular working hours and off and on basis. Even assuming the truth of
the foregoing statements, these do not foreclose respondents regular or fulltime employment with SEIRI. In effect,
petitioners suggest that respondent was employed by SEIRIs suppliers, Mayol and Apondar but no competent proof
was presented as to the latters status as independent contractors.

In the same comment, petitioners further admitted that the five affiants who attested to respondents employment with
SEIRI are its former workers whom they describe as disgruntled workers of SEIRI with an axe to grind against
petitioners, and that their execution of affidavit in support of respondents claim is their very way of hitting back the
management of SEIRI after disciplinary measures were meted against them. 38 This allegation though was not
substantiated by petitioners. Instead, after the CA rendered its decision reversing the NLRCs ruling, petitioners
subsequently changed their theory by denying the employment relationship with the five affiants in their motion for
reconsideration, thus:chanRoblesvirtualLawlibrary

x x x Since the five workers were occupying and working on a leased premises of the private respondent, they were
called workers of SEIRI (private respondent). Such admission however, does not connote employment. For the truth
of the matter, all of the five employees of the supplier assigned at the leased premises of the private respondent.
Because of the recommendation of the private respondent with regards to the disciplinary measures meted on the five
workers, they wanted to hit back against the private respondent. Their motive to implicate private respondent was to
vindicate. Definitely, they have an axe to grind against the private respondent. Mention has to be made that despite
the dismissal of these five (5) witnesses from their service, none of them ever went to the National Labor [Relations]
Commission and invoked their rights, if any, against their employer or at the very least against the respondent. The
reason is obvious, since they knew pretty well that they were not employees of SEIRI but rather under the employ of
Allan Mayol and Faustino Apondar, working on a leased premise of respondent. x x x 39

Petitioners admission that the five affiants were their former employees is binding upon them. While they claim that
respondent was the employee of their suppliers Mayol and Apondar, they did not submit proof that the latter were
indeed independent contractors; clearly, petitioners failed to discharge their burden of proving their own affirmative
allegation.40 There is thus no showing that the five former employees of SEIRI were motivated by malice, bad faith or
any illmotive in executing their affidavit supporting the claims of respondent.
In any controversy between a laborer and his master, doubts reasonably arising from the evidence are resolved in
favor of the laborer.41

As a regular employee, respondent enjoys the right to security of tenure under Article 279 42 of the Labor Code and
may only be dismissed for a just43 or authorized44 cause, otherwise the dismissal becomes illegal.

Respondent, whose employment was terminated without valid cause by petitioners, is entitled to reinstatement without
loss of seniority rights and other privileges and to his full back wages, inclusive of allowances and other benefits or
their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his
actual reinstatement. Where reinstatement is no longer viable as an option, back wages shall be computed from the
time of the illegal termination up to the finality of the decision. Separation pay equivalent to one month salary for
every year of service should likewise be awarded as an alternative in case reinstatement in not possible. 45

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated February 21, 2008 and Resolution
dated February 9, 2009 of the Court of Appeals in CAG.R. No. CEBSP No. 02113 are hereby AFFIRMED and
UPHELD.

Petitioners to pay the costs of suit.

SO ORDERED.
10.

BERNARD A. TENAZAS v. R. VILLEGAS TAXI TRANSPORT

REYES, J.:
This is a petition for review on certiorari[1] filed under Rule 45 of the Rules of Court, assailing the
Decision[2] dated March 11, 2010 and Resolution[3] dated June 28, 2010 of the Court of Appeals (CA) in CA-
G.R. SP No. 111150, which affirmed with modification the Decision[4] dated June 23, 2009 of the
National Labor Relations Commission (NLRC) in NLRC LAC Case No. 07-002648-08.

The Antecedent Facts

On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. Francisco (Francisco) filed a complaint for
illegal dismissal against R. Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and Andy
Villegas (Andy) (respondents). At that time, a similar case had already been filed by Isidro G. Endraca
(Endraca) against the same respondents. The two (2) cases were subsequently consolidated.[5]

In their position paper,[6] Tenazas, Francisco and Endraca (petitioners) alleged that they were hired and
dismissed by the respondents on the following dates:

Name Date of Hiring Date of Dismissal Salary

Bernard A. Tenazas 10/1997 07/03/07 Boundary System
Jaime M. Francisco 04/10/04 06/04/07 Boundary System
Isidro G. Endraca 04/2000 03/06/06 Boundary System[7]
Relaying the circumstances of his dismissal, Tenazas alleged that on July 1, 2007, the taxi unit assigned to
him was sideswiped by another vehicle, causing a dent on the left fender near the driver seat. The cost of
repair for the damage was estimated at P500.00. Upon reporting the incident to the company, he was
scolded by respondents Romualdo and Andy and was told to leave the garage for he is already fired. He was
even threatened with physical harm should he ever be seen in the company's premises again. Despite the
warning, Tenazas reported for work on the following day but was told that he can no longer drive any of the
company's units as he is already fired.[8]

Francisco, on the other hand, averred that his dismissal was brought about by the company's unfounded
suspicion that he was organizing a labor union. He was instantaneously terminated, without the benefit of
procedural due process, on June 4, 2007.[9]

Endraca, for his part, alleged that his dismissal was instigated by an occasion when he fell short of the
required boundary for his taxi unit. He related that before he was dismissed, he brought his taxi unit to an
auto shop for an urgent repair. He was charged the amount of ?700.00 for the repair services and the
replacement parts. As a result, he was not able to meet his boundary for the day. Upon returning to the
company garage and informing the management of the incident, his driver's license was confiscated and
was told to settle the deficiency in his boundary first before his license will be returned to him. He was no
longer allowed to drive a taxi unit despite his persistent pleas.[10]

For their part, the respondents admitted that Tenazas and Endraca were employees of the company, the
former being a regular driver and the latter a spare driver. The respondents, however, denied that
Francisco was an employee of the company or that he was able to drive one of the company's units at any
point in time.[11]

The respondents further alleged that Tenazas was never terminated by the company. They claimed that on
July 3, 2007, Tenazas went to the company garage to get his taxi unit but was informed that it is due for
overhaul because of some mechanical defects reported by the other driver who takes turns with him in
using the same. He was thus advised to wait for further notice from the company if his unit has
already been fixed. On July 8, 2007, however, upon being informed that his unit is ready for release,
Tenazas failed to report back to work for no apparent reason.[12]

As regards Endraca, the respondents alleged that they hired him as a spare driver in February 2001. They
allow him to drive a taxi unit whenever their regular driver will not be able to report for work. In July 2003,
however, Endraca stopped reporting for work without informing the company of his reason. Subsequently,
the respondents learned that a complaint for illegal dismissal was filed by Endraca against them. They
strongly maintained, however, that they could never have terminated Endraca in March 2006 since he
already stopped reporting for work as early as July 2003. Even then, they expressed willingness to
accommodate Endraca should he wish to work as a spare driver for the company again since he was never
really dismissed from employment anyway.[13]

On May 29, 2008, the petitioners, by registered mail, filed a Motion to Admit Additional Evidence.[14] They
alleged that after diligent efforts, they were able to discover new pieces of evidence that will substantiate the
allegations in their position paper. Attached with the motion are the following: (a) Joint Affidavit of the
petitioners;[15] (2) Affidavit of Good Faith of Aloney Rivera, a co-driver;[16] (3) pictures of the petitioners
wearing company shirts;[17] and (4) Tenazas' Certification/Record of Social Security System (SSS)
contributions.[18]

The Ruling of the Labor Arbiter

On May 30, 2008, the Labor Arbiter (LA) rendered a Decision,[19] which pertinently states, thus:

In the case of complainant Jaime Francisco, respondents categorically denied the

existence of an employer-employee relationship. In this situation, the burden of
proof shifts to the complainant to prove the existence of a regular employment.
Complainant Francisco failed to present evidence of regular employment available to
all regular employees, such as an employment contract, company ID, SSS,
withholding tax certificates, SSS membership and the like.

In the case of complainant Isidro Endraca, respondents claim that he was only an
extra driver who stopped reporting to queue for available taxi units which he could
drive. In fact, respondents offered him in their Position Paper on record, immediate
reinstatement as extra taxi driver which offer he refused.

In case of Bernard Tenazas, he was told to wait while his taxi was under repair but
he did not report for work after the taxi was repaired. Respondents[,] in their
Position Paper, on record likewise, offered him immediate reinstatement, which
offer he refused.

We must bear in mind that the complaint herein is one of actual dismissal. But there
was no formal investigations, no show cause memos, suspension memos or
termination memos were never issued. Otherwise stated, there is no proof of overt
act of dismissal committed by herein respondents.

We are therefore constrained to rule that there was no illegal dismissal in the case at
bar.
The situations contemplated by law for entitlement to separation pay does [sic] not
apply.

WHEREFORE, premises considered, instant consolidated complaints are hereby

dismissed for lack of merit.

SO ORDERED.[20]

The Ruling of the NLRC

Unyielding, the petitioners appealed the decision of the LA to the NLRC. Subsequently, on June 23, 2009,
the NLRC rendered a Decision,[21] reversing the appealed decision of the LA, holding that the additional
pieces of evidence belatedly submitted by the petitioners sufficed to establish the existence of employer-
employee relationship and their illegal dismissal. It held, thus:

In the challenged decision, the Labor Arbiter found that it cannot be said that the
complainants were illegally dismissed, there being no showing, in the first place, that
the respondent [sic] terminated their services. A portion thereof reads:

"We must bear in mind that the complaint herein is one of actual dismissal. But
there were no formal investigations, no show cause memos, suspension memos or
termination memos were never issued. Otherwise stated, there is no proof of overt
act of dismissal committed by herein respondents.

We are therefore constrained to rule that there was no illegal dismissal in the case
at bar."
Issue: [W]hether or not the complainants were illegally dismissed from
employment.

It is possible that the complainants' Motion to Admit Additional Evidence did not
reach the Labor Arbiter's attention because he had drafted the challenged decision
even before they submitted it, and thereafter, his staff attended only to clerical
matters, and failed to bring the motion in question to his attention. It is now up to
this Commission to consider the complainants' additional evidence. Anyway, if this
Commission must consider evidence submitted for the first time on appeal (Andaya
vs. NLRC, G.R. No. 157371, July 15, 2005), much more so must it consider evidence
that was simply overlooked by the Labor Arbiter.

Among the additional pieces of evidence submitted by the complainants are the
following: (1) joint affidavit (records, p. 51-52) of the three (3) complainants; (2)
affidavit (records, p. 53) of Aloney Rivera y Aldo; and (3) three (3) pictures (records,
p. 54) referred to by the complainant in their joint affidavit showing them wearing t-
shirts bearing the name and logo of the respondent's company.

xxxx

WHEREFORE, the decision appealed from is hereby REVERSED. Respondent

Rom[u]aldo Villegas doing business under the name and style Villegas Taxi
Transport is hereby ordered to pay the complainants the following (1) full backwages
from the date of their dismissal (July 3, 2007 for Tena[z]as, June 4, 2004 for
Francisco, and March 6, 2006 for Endraca[)] up to the date of the finality of this
decision[;] (2) separation pay equivalent to one month for every year of service; and
(3) attorney's fees equivalent to ten percent (10%) of the total judgment awards.

SO ORDERED.[22]

On July 24, 2009, the respondents filed a motion for reconsideration but the NLRC denied the same in its
Resolution[23] dated September 23, 2009.

The Ruling of the CA

Unperturbed, the respondents filed a petition for certiorari with the CA. On March 11, 2010, the CA
rendered a Decision,[24] affirming with modification the Decision dated June 23, 2009 of the NLRC. The
CA agreed with the NLRC's finding that Tenazas and Endraca were employees of the company, but ruled
otherwise in the case of Francisco for failing to establish his relationship with the company. It also deleted
the award of separation pay and ordered for reinstatement of Tenazas and Endraca. The pertinent portions
of the decision read as follows:

At the outset, We declare that respondent Francisco failed to prove that an

employer-employee relationship exists between him and R. Transport. If there is no
employer-employee relationship in the first place, the duty of R. Transport to adhere
to the labor standards provisions of the Labor Code with respect to Francisco is
questionable.

xxxx

Although substantial evidence is not a function of quantity but rather of quality, the
peculiar environmental circumstances of the instant case demand that something
more should have been proffered. Had there been other proofs of employment, such
as Francisco's inclusion in R.R. Transport's payroll, this Court would have affirmed
the finding of employer-employee relationship. The NLRC, therefore, committed
grievous error in ordering R. Transport to answer for Francisco's claims.

We now tackle R. Transport's petition with respect to Tenazas and Endraca, who are
both admitted to be R. Transport's employees. In its petition, R. Transport puts forth
the theory that it did not terminate the services of respondents but that the latter
deliberately abandoned their work. We cannot subscribe to this theory.

xxxx

Considering that the complaints for illegal dismissal were filed soon after the alleged
dates of dismissal, it cannot be inferred that respondents Tenazas and Endraca
intended to abandon their employment. The complainants for dismissal are, in
themselves, pleas for the continuance of employment. They are incompatible with
the allegation of abandonment. x x x.
For R. Transport's failure to discharge the burden of proving that the dismissal of
respondents Tenazas and Endraca was for a just cause, We are constrained to
uphold the NLRC's conclusion that their dismissal was not justified and that they are
entitled to back wages. Because they were illegally dismissed, private respondents
Tenazas and Endraca are entitled to reinstatement and back wages x x x.

xxxx

However, R. Transport is correct in its contention that separation pay should not be
awarded because reinstatement is still possible and has been offered. It is well[-
]settled that separation pay is granted only in instances where reinstatement is no
longer feasible or appropriate, which is not the case here.

xxxx

WHEREFORE, the Decision of the National Labor Relations Commission dated 23

June 2009, in NLRC LAC Case No. 07-002648-08, and its Resolution dated 23
September 2009 denying reconsideration thereof
are AFFIRMED with MODIFICATION in that the award of Jaime Francisco's
claims is DELETED. The separation pay granted in favor of Bernard Tenazas and
Isidro Endraca is, likewise, DELETED and their reinstatement is ordered instead.

SO ORDERED.[25] (Citations omitted)

On March 19, 2010, the petitioners filed a motion for reconsideration but the same was denied by the CA in
its Resolution[26] dated June 28, 2010.

Undeterred, the petitioners filed the instant petition for review on certiorari before this Court on July 15,
2010.

The Ruling of this Court

The petition lacks merit.

Pivotal to the resolution of the instant case is the determination of the existence of employer-employee
relationship and whether there was an illegal dismissal. Remarkably, the LA, NLRC and the CA had varying
assessment on the matters at hand. The LA believed that, with the admission of the respondents, there is
no longer any question regarding the status of both Tenazas and Endraca being employees of the company.
However, he ruled that the same conclusion does not hold with respect to Francisco whom the respondents
denied to have ever employed or known. With the respondents' denial, the burden of proof shifts to
Francisco to establish his regular employment. Unfortunately, the LA found that Francisco failed to present
sufficient evidence to prove regular employment such as company ID, SSS membership, withholding tax
certificates or similar articles. Thus, he was not considered an employee of the company. Even then, the LA
held that Tenazas and Endraca could not have been illegally dismissed since there was no overt act of
dismissal committed by the respondents.[27]

On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners were all employees of the
company. The NLRC premised its conclusion on the additional pieces of evidence belatedly submitted by
the petitioners, which it supposed, have been overlooked by the LA owing to the time when it was received
by the said office. It opined that the said pieces of evidence are sufficient to establish the circumstances of
their illegal termination. In particular, it noted that in the affidavit of the petitioners, there were allegations
about the company's practice of not issuing employment records and this was not rebutted by the
respondents. It underscored that in a situation where doubt exists between evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the employee. It awarded the
petitioners with: (1) full backwages from the date of their dismissal up to the finality of the decision; (2)
separation pay equivalent to one month of salary for every year of service; and (3) attorney's fees.

On petition for certiorari, the CA affirmed with modification the decision of the NLRC, holding that
there was indeed an illegal dismissal on the part of Tenazas and Endraca but not with respect to Francisco
who failed to present substantial evidence, proving that he was an employee of the respondents. The CA
likewise dismissed the respondents' claim that Tenazas and Endraca abandoned their work, asseverating
that immediate filing of a complaint for illegal dismissal and persistent pleas for continuance of
employment are incompatible with abandonment. It also deleted the NLRC's award of separation pay and
instead ordered that Tenazas and Endraca be reinstated.[28]

"Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari under
Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual
findings complained of are completely devoid of support from the evidence on record, or the assailed
judgment is based on a gross misapprehension of facts."[29] The Court finds that none of the mentioned
circumstances is present in this case.

In reviewing the decision of the NLRC, the CA found that no substantial evidence was presented to support
the conclusion that Francisco was an employee of the respondents and accordingly modified the NLRC
decision. It stressed that with the respondents' denial of employer-employee relationship, it behooved
Francisco to present substantial evidence to prove that he is an employee before any question on the legality
of his supposed dismissal becomes appropriate for discussion. Francisco, however, did not offer evidence
to substantiate his claim of employment with the respondents. Short of the required quantum of proof, the
CA correctly ruled that the NLRC's finding of illegal dismissal and the monetary awards which necessarily
follow such ruling lacked factual and legal basis and must therefore be deleted.

The action of the CA finds support in Anonas Construction and Industrial Supply Corp., et
al. v. NLRC, et al.,[30] where the Court reiterated:

[J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65,
as a general rule, is confined only to issues of lack or excess of jurisdiction and grave
abuse of discretion on the part of the NLRC. The CA does not assess and weigh the
sufficiency of evidence upon which the LA and the NLRC based their conclusions.
The issue is limited to the determination of whether or not the NLRC acted without
or in excess of its jurisdiction, or with grave abuse of discretion in rendering the
resolution, except if the findings of the NLRC are not supported by
substantial evidence.[31] (Citation omitted and emphasis ours)

It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial proceedings, "the
quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion."[32] "[T]he burden of proof rests upon
the party who asserts the affirmative of an issue."[33] Corollarily, as Francisco was claiming to be an
employee of the respondents, it is incumbent upon him to proffer evidence to prove the existence of said
relationship.

"[I]n determining the presence or absence of an employer-employee relationship, the Court has consistently
looked for the following incidents, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee on the
means and methods by which the work is accomplished. The last element, the so-called control test, is the
most important element."[34]

There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant
evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security
registration, appointment letters or employment contracts, payrolls, organization charts, and personnel
lists, serve as evidence of employee status.[35]

In this case, however, Francisco failed to present any proof substantial enough to establish his relationship
with the respondents. He failed to present documentary evidence like attendance logbook, payroll, SSS
record or any personnel file that could somehow depict his status as an employee. Anent his claim that he
was not issued with employment records, he could have, at least, produced his social security records which
state his contributions, name and address of his employer, as his co-petitioner Tenazas did. He could have
also presented testimonial evidence showing the respondents' exercise of control over the means and
methods by which he undertakes his work. This is imperative in light of the respondents' denial of his
employment and the claim of another taxi operator, Emmanuel Villegas (Emmanuel), that he was his
employer. Specifically, in his Affidavit,[36] Emmanuel alleged that Francisco was employed as a spare
driver in his taxi garage from January 2006 to December 2006, a fact that the latter failed to deny or
question in any of the pleadings attached to the records of this case. The utter lack of evidence is fatal to
Francisco's case especially in cases like his present predicament when the law has been very lenient in not
requiring any particular form of evidence or manner of proving the presence of employer-employee
relationship.

In Opulencia Ice Plant and Storage v. NLRC,[37] this Court emphasized, thus:

No particular form of evidence is required to prove the existence of an employer-

employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted. For, if only documentary evidence would be required
to show that relationship, no scheming employer would ever be brought before the
bar of justice, as no employer would wish to come out with any trace of the illegality
he has authored considering that it should take much weightier proof to invalidate a
written instrument.[38]

Here, Francisco simply relied on his allegation that he was an employee of the company without any other
evidence supporting his claim. Unfortunately for him, a mere allegation in the position paper is not
tantamount to evidence.[39] Bereft of any evidence, the CA correctly ruled that Francisco could not be
considered an employee of the respondents.

The CA's order of reinstatement of Tenazas and Endraca, instead of the payment of separation pay, is also
well in accordance with prevailing jurisprudence. In Macasero v. Southern Industrial Gases
Philippines,[40] the Court reiterated, thus:

[A]n illegally dismissed employee is entitled to two reliefs: backwages

and reinstatement. The two reliefs provided are separate and distinct. In
instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay is granted. In effect, an
illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents' illegal dismissal, then, are

reinstatement without loss of seniority rights, and payment of
backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer
viable as an option, separation pay equivalent to one (1) month salary
for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages.[41]
(Emphasis supplied)

Clearly, it is only when reinstatement is no longer feasible that the payment of separation pay is ordered in
lieu thereof. For instance, if reinstatement would only exacerbate the tension and strained relations
between the parties, or where the relationship between the employer and the employee has been unduly
strained by reason of their irreconcilable differences, it would be more prudent to order payment of
separation pay instead of reinstatement.[42]

This doctrine of strained relations, however, should not be used recklessly or applied loosely[43] nor be
based on impression alone. "It bears to stress that reinstatement is the rule and, for the exception of
strained relations to apply, it should be proved that it is likely that if reinstated, an atmosphere of
antipathy and antagonism would be generated as to adversely affect the efficiency and productivity
of the employee concerned."[44]

Moreover, the existence of strained relations, it must be emphasized, is a question of fact. In Golden Ace
Builders v. Talde,[45] the Court underscored:

Strained relations must be demonstrated as a fact, however, to be

adequately supported by evidence substantial evidence to show that the relationship
between the employer and the employee is indeed strained as a necessary
consequence of the judicial controversy.[46] (Citations omitted and emphasis ours)

After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of separation
pay to the petitioners. The NLRC decision did not state the facts which demonstrate that reinstatement is
no longer a feasible option that could have justified the alternative relief of granting separation pay instead.

The petitioners themselves likewise overlooked to allege circumstances which may have rendered their
reinstatement unlikely or unwise and even prayed for reinstatement alongside the payment of separation
pay in their position paper.[47] A bare claim of strained relations by reason of termination is insufficient to
warrant the granting of separation pay. Likewise, the filing of the complaint by the petitioners does not
necessarily translate to strained relations between the parties. As a rule, no strained relations should arise
from a valid and legal act asserting one's right.[48] Although litigation may also engender a certain degree
of hostility, the understandable strain in the parties' relation would not necessarily rule out reinstatement
which would, otherwise, become the rule rather the exception in illegal dismissal cases.[49] Thus, it was a
prudent call for the CA to delete the award of separation pay and order for reinstatement instead, in
accordance with the general rule stated in Article 279[50] of the Labor Code.

Finally, the Court finds the computation of the petitioners' backwages at the rate of P800.00 daily
reasonable and just under the circumstances. The said rate is consistent with the ruling of this Court
in Hyatt Taxi Services, Inc. v. Catinoy,[51] which dealt with the same matter.

WHEREFORE, in view of the foregoing disquisition, the petition for review

on certiorari is DENIED. The Decision dated March 11, 2010 and Resolution dated June 28, 2010 of
the Court of Appeals in CA-G.R. SP No. 111150 are AFFIRMED.

SO ORDERED.
11.
GREGORIO V. TONGKO,

RESOLUTION

BRION, J.:

We resolve petitioner Gregorio V. Tongkos bid, through his Motion for Reconsideration,[1] to set
aside our June 29, 2010 Resolution that reversed our Decision of November 7, 2008.[2] With the reversal,
the assailed June 29, 2010 Resolution effectively affirmed the Court of Appeals ruling [3] in CA-G.R. SP No.
88253 that the petitioner was an insurance agent, not the employee, of the respondent The Manufacturers
Life Insurance Co. (Phils.), Inc. (Manulife).

In his Motion for Reconsideration, petitioner reiterates the arguments he had belabored in his
petition and various other submissions. He argues that for 19 years, he performed administrative functions
and exercised supervisory authority over employees and agents of Manulife, in addition to his insurance
agent functions.[4] In these 19 years, he was designated as a Unit Manager, a Branch Manager and a
Regional Sales Manager, and now posits that he was not only an insurance agent for Manulife but was its
employee as well.

We find no basis or any error to merit the reconsideration of our June 29, 2010 Resolution.

A. Labor Law Control = Employment Relationship

Control over the performance of the task of one providing service both with respect to the means
and manner, and the results of the service is the primary element in determining whether an employment
relationship exists. We resolve the petitioners Motion against his favor since he failed to show that the
control Manulife exercised over him was the control required to exist in an employer-employee
relationship; Manulifes control fell short of this norm and carried only the characteristic of the relationship
between an insurance company and its agents, as defined by the Insurance Code and by the law of agency
under the Civil Code.

The petitioner asserts in his Motion that Manulifes labor law control over him was
demonstrated (1) when it set the objectives and sales targets regarding production, recruitment and
training programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial
Code of Conduct to govern his activities.[5] We find no merit in these contentions.

In our June 29, 2010 Resolution, we noted that there are built-in elements of control specific to an
insurance agency, which do not amount to the elements of control that characterize an employment
relationship governed by the Labor Code. The Insurance Code provides definite parameters in the way an
agent negotiates for the sale of the companys insurance products, his collection activities and his delivery
of the insurance contract or policy.[6] In addition, the Civil Code defines an agent as a person who binds
himself to do something in behalf of another, with the consent or authority of the latter.[7] Article 1887 of
the Civil Code also provides that in the execution of the agency, the agent shall act in accordance with the
instructions of the principal.

All these, read without any clear understanding of fine legal distinctions, appear to speak of control
by the insurance company over its agents. They are, however, controls aimed only at specific results in
undertaking an insurance agency, and are, in fact, parameters set by law in defining an insurance agency
and the attendant duties and responsibilities an insurance agent must observe and undertake. They do not
reach the level of control into the means and manner of doing an assigned task that invariably
characterizes an employment relationship as defined by labor law. From this perspective, the petitioners
contentions cannot prevail.
 To reiterate, guidelines indicative of labor law control do not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature of dictating the means
and methods to be employed in attaining the result.[8] Tested by this norm, Manulifes instructions
regarding the objectives and sales targets, in connection with the training and engagement of other
agents, are among the directives that the principal may impose on the agent to achieve the assigned
tasks. They are targeted results that Manulife wishes to attain through its agents. Manulifes codes of
conduct, likewise, do not necessarily intrude into the insurance agents means and manner of conducting
their sales. Codes of conduct are norms or standards of behavior rather than employer directives into how
specific tasks are to be done. These codes, as well as insurance industry rules and regulations, are not per
se indicative of labor law control under our jurisprudence.[9]

The duties[10] that the petitioner enumerated in his Motion are not supported by evidence and, therefore,
deserve scant consideration. Even assuming their existence, however, they mostly pertain to the duties of
an insurance agent such as remitting insurance fees to Manulife, delivering policies to the insured, and
after-sale services. For agents leading other agents, these include the task of overseeing other insurance
agents, the recruitment of other insurance agents engaged by Manulife as principal, and ensuring that
these other agents comply with the paperwork necessary in selling insurance. That Manulife exercises the
power to assign and remove agents under the petitioners supervision is in keeping with its role as a
principal in an agency relationship; they are Manulife agents in the same manner that the petitioner had all
along been a Manulife agent.

The petitioner also questions Manulifes act of investing him with different titles and positions in the
course of their relationship, given the respondents position that he simply functioned as an insurance
agent.[11] He also considers it an unjust and inequitable situation that he would be unrewarded for the
years he spent as a unit manager, a branch manager, and a regional sales manager. [12]

Based on the evidence on record, the petitioners occupation was to sell Manulifes insurance
policies and products from 1977 until the termination of the Career Agents Agreement (Agreement). The
evidence also shows that through the years, Manulife permitted him to exercise guiding authority over
other agents who operate under their own agency agreements with Manulife and whose commissions he
shared.[13] Under this scheme an arrangement that pervades the insurance industrypetitioner in effect
became a lead agent and his own commissions increased as they included his share in the commissions of
the other agents;[14] he also received greater reimbursements for expenses and was allowed to use
Manulifes facilities. His designation also changed from unit manager to branch manager and then to
regional sales manager, to reflect the increase in the number of agents he recruited and guided, as well as
the increase in the area where these agents operated.

As our assailed Resolution concluded and as we now similarly conclude, these arrangements, and
the titles and positions the petitioner was invested with, did not change his status from the insurance
agent that he had always been (as evidenced by the Agreement that governed his relationship with
Manulife from the start to its disagreeable end). The petitioner simply progressed from his individual
agency to being a lead agent who could use other agents in selling insurance and share in the earnings of
these other agents.

In sum, we find absolutely no evidence of labor law control, as extensively discussed in our
Resolution of June 29, 2010, granting Manulifes motion for reconsideration. The Dissent, unfortunately,
misses this point.

B. No Resulting Inequity

We also do not agree that our assailed Resolution has the effect of fostering an inequitable or
unjust situation. The records show that the petitioner was very amply paid for his services as an insurance
agent, who also shared in the commissions of the other agents under his guidance. In 1997, his income
was P2,822,620; in 1998, P4,805,166.34; in 1999, P6,797,814.05; in 2001, P6,214,737.11; and in
2002, P8,003,180.38. All these he earned as an insurance agent, as he failed to ever prove that he earned
these sums as an employee. In technical terms, he could not have earned all these as an employee because
he failed to provide the substantial evidence required in administrative cases to support the finding that he
was a Manulife employee. No inequity results under this legal situation; what would be unjust is an award
of backwages and separation pay amounts that are not due him because he was never an employee.

The Dissents discussion on this aspect of the case begins with the wide disparity in the status of the
parties that Manulife is a big Canadian insurance company while Tongko is but a single agent of
Manulife. The Dissent then went on to say that [i]f is but just, it is but right, that the Court interprets the
relationship between Tongko and Manulife as one of employment under labor laws and to uphold his
constitutionally protected right, as an employee, to security of tenure and entitlement to monetary award
should such right be infringed.[15] We cannot simply invoke the magical formula by creating an employment
relationship even when there is none because of the unavoidable and inherently weak position of an
individual over a giant corporation.

The Dissent likewise alluded to an ambiguity in the true relationship of the parties after Tongkos
successive appointments. We already pointed out that the legal significance of these appointments had
not been sufficiently explained and that it did not help that Tongko never bothered to present evidence on
this point. The Dissent recognized this but tried to excuse Tongko from this failure in the subsequent
discussion, as follows:

[o]ther evidence was adduced to show such duties and responsibilities. For one, in his letter
of November 6, 2001, respondent De Dios addressed petitioner as sales manager. And as I
wrote in my Dissent to the June 29, 2010 Resolution, it is difficult to imagine that Manulife
did not issue promotional appointments to petitioner as unit manager, branch manager,
and, eventually, regional sales manager. Sound management practice simply requires an
appointment for any upward personnel movement, particularly when additional functions
and the corresponding increase in compensation are involved. Then, too, the adverted
affidavits of the managers of Manulife as to the duties and responsibilities of a unit
manager, such as petitioner, point to the conclusion that these managers were employees
of Manulife, applying the four-fold test.[16]

This Court (and all adjudicators for that matter) cannot and should not fill in the evidentiary gaps in
a partys case that the party failed to support; we cannot and should not take the cudgels for any
party. Tongko failed to support his cause and we should simply view him and his case as they are; our duty
is to sit as a judge in the case that he and the respondent presented.

To support its arguments on equity, the Dissent uses the Constitution and the Civil Code, using
provisions and principles that are all motherhood statements. The mandate of the Court, of course, is to
decide cases based on the facts and the law, and not to base its conclusions on fundamental precepts that
are far removed from the particular case presented before it. When there is no room for their application,
of capacity of principles, reliance on the application of these fundamental principles is misplaced.

C. Earnings were Commissions

That his earnings were agents commissions arising from his work as an insurance agent is a matter
that the petitioner cannot deny, as these are the declarations and representations he stated in his income
tax returns through the years. It would be doubly unjust, particularly to the government, if he would be
allowed at this late point to turn around and successfully claim that he was merely an employee after he
declared himself, through the years, as an independent self-employed insurance agent with the privilege of
deducting business expenses. This aspect of the case alone considered together with the probative value of
income tax declarations and returns filed prior to the present controversy should be enough to clinch the
present case against the petitioners favor.

D. The Dissents Solution:

Unwieldy and Legally Infirm

The Dissent proposes that Tongko should be considered as part employee (as manager) and part
insurance agent; hence, the original decision should be modified to pertain only to the termination of his
employment as a manager and not as an insurance agent. Accordingly, the backwages component of the
original award to him should not include the insurance sales commissions. This solution, according to the
line taken by the Dissent then, was justified on the view that this was made on a case-to-case basis.

Decisions of the Supreme Court, as the Civil Code provides, form part of the law of the land. When
the Court states that the determination of the existence of an employment relationship should be on a
case-to-case basis, this does not mean that there will be as many laws on the issue as there are cases. In
the context of this case, the four-fold test is the established standard for determining employer-employee
relationship and the existence of these elements, most notably control, is the basis upon which a
conclusion on the absence of employment relationship was anchored. This simply means that a conclusion
on whether employment relationship exists in a particular case largely depends on the facts and, in no
small measure, on the parties evidence vis--vis the clearly defined jurisprudential standards. Given that the
parties control what and how the facts will be established in a particular case and/or how a particular suit
is to be litigated, deciding the issues on a case-to-case basis becomes an imperative.

Another legal reality, a more important one, is that the duty of a court is to say what the law
is.[17] This is the same duty of the Supreme Court that underlies the stare decisis principle. This is how the
public, in general and the insurance industry in particular, views the role of this Court and courts in general
in deciding cases. The lower courts and the bar, most specially, look up to the rulings of this Court for
guidance. Unless extremely unavoidable, the Court must, as a matter of sound judicial policy, resist the
temptation of branding its ruling pro hac vice.

The compromise solution of declaring Tongko both an employee and an agent is legally unrealistic,
unwieldy and is, in fact, legally infirm, as it goes against the above basic principles of judicial
operation. Likewise, it does not and cannot realistically solve the problem/issue in this case; it actually
leaves more questions than answers.

As already pointed out, there is no legal basis (be it statutory or jurisprudential) for the part-
employee/part-insurance agent status under an essentially principal-agent contractual relation which the
Dissent proposes to accord to Tongko. If the Dissent intends to establish one, this is highly objectionable
for this would amount to judicial legislation. A legal relationship, be it one of employment or one based on
a contract other than employment, exists as a matter of law pursuant to the facts, incidents and legal
consequences of the relationship; it cannot exist devoid of these legally defined underlying facts and legal
consequences unless the law itself creates the relationship an act that is beyond the authority of this Court
to do.

Additionally, the Dissents conclusion completely ignores an unavoidable legal reality that the
parties are bound by a contract of agency that clearly subsists notwithstanding the successive designation
of Tongko as a unit manager, a branch manager and a regional sales manager. (As already explained in our
Resolution granting Manulifes motion for reconsideration, no evidence on record exists to provide the
Court with clues as to the precise impact of all these designations on the contractual agency relationship.)
The Dissent, it must be pointed out, concludes that Tongkos employment as manager was illegally
terminated; thus, he should be accordingly afforded relief therefor. But, can Tongko be given the remedies
incidental to his dismissal as manager separately from his status as an insurance agent? In other words,
since the respondents terminated all relationships with Tongko through the termination letter, can we
simply rule that his role as a manager was illegally terminated without touching on the consequences of
this ruling on his status as an insurance agent? Expressed in these terms, the inseparability of his contract
as agent with any other relationship that springs therefrom can thus be seen as an insurmountable legal
obstacle.

The Dissents compromise approach would also sanction split jurisdiction. The labor tribunals shall
have jurisdiction over Tongkos employment as manager while another entity shall decide the issues/cases
arising from the agency relationship. If the managerial employment is anchored on the agency, how will
the labor tribunals decide an issue that is inextricably linked with a relationship that is outside the loop of
their jurisdiction? As already mentioned in the Resolution granting Manulifes reconsideration,
the DOMINANT relationship in this case is agency and no other.

E. The Dissents Cited Cases

The Dissent cites the cases of Great Pacific Life Assurance Corporation v. National Labor Relations
Commission[18] and Insular Life Assurance Co., Ltd. v. National Labor Relations Commission[19] to support
the allegation that Manulife exercised control over the petitioner as an employer.

In considering these rulings, a reality that cannot but be recognized is that cases turn and are
decided on the basis of their own unique facts; the ruling in one case cannot simply be bodily lifted and
applied to another, particularly when notable differences exist between the cited cases and the case under
consideration; their respective facts must be strictly examined to ensure that the ruling in one applies to
another. This is particularly true in a comparison of the cited cases with the present case.Specifically, care
should be taken in reading the cited cases and applying their rulings to the present case as the cited cases
all dealt with the proper legal characterization of subsequent management contracts that superseded the
original agency contract between the insurance company and the agent.

In Great Pacific Life, the Ruiz brothers were appointed to positions different from their original
positions as insurance agents, whose duties were clearly defined in a subsequent contract. Similarly,
in Insular, de los Reyes, a former insurance agent, was appointed as acting unit manager based on a
subsequent contract. In both cases, the Court anchored its findings of labor control on the stipulations of
these subsequent contracts.

In contrast, the present case is remarkable for the absence of evidence of any change in the nature
of the petitioners employment with Manulife. As previously stated above and in our assailed Resolution,
the petitioner had always been governed by the Agreement from the start until the end of his relationship
with Manulife. His agency status never changed except to the extent of being a lead agent. Thus, the cited
cases where changes in company-agent relationship expressly changed and where the subsequent
contracts were the ones passed upon by the Court cannot be totally relied upon as authoritative.

We cannot give credit as well to the petitioners claim of employment based on the affidavits
executed by other Manulife agents describing their duties, because these same affidavits only affirm their
status as independent agents, not as employees.To quote these various claims: [20]

1.a. I have no fixed wages or salary since my services are compensated by way of
commissions based on the computed premiums paid in full on the policies obtained thereat;

1.b. I have no fixed working hours and employ my own method in soliciting insurance at a
time and place I see fit;

1.c. I have my own assistant and messenger who handle my daily work load;

1.d. I use my own facilities, tools, materials and supplies in carrying out my business of
selling insurance;
 xxxx

6. I have my own staff that handles day to day operations of my office;

7. My staff are my own employees and received salaries from me.

xxxx

9. My commission and incentives are all reported to the Bureau of Internal Revenue (BIR) as
income by a self-employed individual or professional with a ten (10) percent creditable
withholding tax. I also remit monthly for professionals.

The petitioner cannot also rely on the letter written by respondent Renato Vergel de Dios to prove
that Manulife exercised control over him. As we already explained in the assailed Resolution:

Even de Dios letter is not determinative of control as it indicates the least amount of
intrusion into Tongkos exercise of his role as manager in guiding the sales agents. Strictly
viewed, de Dios directives are merely operational guidelines on how Tongko could align his
operations with Manulifes re-directed goal of being a big league player. The method is to
expand coverage through the use of more agents. This requirement for the recruitment of
more agents is not a means-and-method control as it relates, more than anything else, and
is directly relevant, to Manulifes objective of expanded business operations through the use
of a bigger sales force whose members are all on a principal-agent relationship. An
important point to note here is that Tongko was not supervising regular full-time employees
of Manulife engaged in the running of the insurance business; Tongko was effectively
guiding his corps of sales agents, who are bound to Manulife through the same agreement
that he had with manulife, all the while sharing in these agents commissions through his
overrides.[21]

Lastly, in assailing the Agreement between him and Manulife, the petitioner cites Paguio v.
National Labor Relations Commission[22] on the claim that the agreement that the parties signed did not
conclusively indicate the legal relationship between them.

The evidentiary situation in the present case, however, shows that despite the petitioners
insistence that the Agreement was no longer binding between him and Manulife, no evidence was ever
adduced to show that their relationship changed so that Manulife at some point controlled the means and
method of the petitioners work. In fact, his evidence only further supports the conclusion that he remained
an independent insurance agent a status he admits, subject only to the qualification that he is at the same
time an employee. Thus, we can only conclude that the Agreement governed his relations with Manulife.

Additionally, it is not lost on us that Paguio is a ruling based on a different factual setting; it involves
a publishing firm and an account executive, whose repeated engagement was considered as an indication
of employment. Our ruling in the present case is specific to the insurance industry, where the law permits
an insurance company to exercise control over its agents within the limits prescribed by law, and to engage
independent agents for several transactions and within an unlimited period of time without the
relationship amounting to employment. In light of these realities, the petitioners arguments on his last
argument must also fail.

The dissent also erroneously cites eight other cases Social Security System v. Court of
Appeals,[23] Cosmopolitan Funeral Homes, Inc. v. Maalat,[24] Algon Engineering Construction Corporation v.
National Labor Relations Commission,[25] Equitable Banking Corporation v. National Labor Relations
Commission,[26] Lazaro v. Social Security Commission,[27] Dealco Farms, Inc. v. National Labor Relations
Commission,[28] South Davao Development Company, Inc. v. Gamo,[29] and Abante, Jr. v. Lamadrid Bearing
& Parts Corporation.[30] The dissent cited these cases to support its allegation that labor laws and
jurisprudence should be applied in cases, to the exclusion of other laws such as the Civil Code or the
Insurance Code, even when the latter are also applicable.

In Social Security System, Cosmopolitan Funeral Homes, Dealco Farms, and South Davao
Development, the issue that repeats itself is whether complainants were employees or independent
contractors; the legal relationships involved are both labor law concepts and make no reference to the Civil
Code (or even the Insurance Code). The provisions cited in the Dissent Articles 1458-1637 of the Civil
Code[31] and Articles 1713-1720 of the Civil Code [32] do not even appear in the decisions cited.

In Algon, the issue was whether the lease contract should dictate the legal relationship between
the parties, when there was proof of an employer-employee relationship. In the cited case, the lease
provisions on termination were thus considered irrelevant because of a substantial evidence of an
employment relationship. The cited case lacks the complexity of the present case; Civil Code provisions on
lease do not prescribe that lessees exercise control over their lessors in the way that the Insurance Code
and the Civil provide that insurance companies and principals exercised control over their agents.

The issue in Equitable, on the other hand, is whether a lawyer-client relationship or an employment
relationship governs the legal relation between parties. Again, this case is inapplicable as it does not
illustrate the predominance of labor laws and jurisprudence over other laws, in general, and the Insurance
Code and Civil Code, in particular. It merely weighed the evidence in favor of an employment relationship
over that of a lawyer-client relationship. Similarly in Lazaro, the Court found ample proof of control
determinative of an employer-employee relationship. Both cases are not applicable to the present case,
which is attended by totally different factual considerations as the petitioner had not offered any evidence
of the companys control in the means and manner of the performance of his work.

On the other hand, we find it strange that the dissent cites Abante as a precedent, since the Court,
in this case, held that an employee-employer relationship is notably absent in this case as the complainant
was a sales agent. This case better supports the majoritys position that a sales agent, who fails to show
control in the concept of labor law, cannot be considered an employee, even if the company exercised
control in the concept of a sales agent.[33]

It bears stressing that our ruling in this case is not about which law has primacy over the other, but
that we should be able to reconcile these laws. We are merely saying that where the law makes it
mandatory for a company to exercise control over its agents, the complainant in an illegal dismissal case
cannot rely on these legally prescribed control devices as indicators of an employer-employee relationship.
As shown in our discussion, our consideration of the Insurance Code and Civil Code provisions does not
negate the application of labor laws and jurisprudence; ultimately, we dismissed the petition because of its
failure to comply with the control test.

WHEREFORE, premises considered, we hereby DENY the Motion for Reconsideration WITH
FINALITY for lack of merit. No further pleadings shall be entertained. Let entry of judgment proceed in due
course.

SO ORDERED.
12.
TELEVISION AND PRODUCTION G.R. No. 167648
EXPONENTS, INC. and/or ANTONIO
P. TUVIERA, Present:
Petitioners,
QUISUMBING, J.,
Chairperson,
CARPIO,
- versus - CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
ROBERTO C. SERVAA,
Respondent. Promulgated:
January 28, 2008

x----------------------------------------------------------------------------x

DECISION

TINGA, J.:

This petition for review under Rule 45 assails the 21 December 2004 Decision[1] and 8
April 2005 Resolution[2] of the Court of Appeals declaring Roberto Servaa (respondent) a
regular employee of petitioner Television and Production Exponents, Inc. (TAPE). The
appellate court likewise ordered TAPE to pay nominal damages for its failure to observe
statutory due process in the termination of respondents employment for authorized cause.

TAPE is a domestic corporation engaged in the production of television programs,

such as the long-running variety program, Eat Bulaga!. Its president is Antonio P. Tuviera
(Tuviera). Respondent Roberto C. Servaa had served as a security guard for TAPE from
March 1987 until he was terminated on 3 March 2000.

Respondent filed a complaint for illegal dismissal and nonpayment of benefits against
TAPE. He alleged that he was first connected with Agro-Commercial Security Agency but
was later on absorbed by TAPE as a regular company guard. He was detailed at Broadway
Centrum in Quezon City where Eat Bulaga! regularly staged its productions. On 2 March
2000, respondent received a memorandum informing him of his impending dismissal on
account of TAPEs decision to contract the services of a professional security agency. At the
time of his termination, respondent was receiving a monthly salary of P6,000.00. He claimed
that the holiday pay, unpaid vacation and sick leave benefits and other monetary
considerations were withheld from him. He further contended that his dismissal was
undertaken without due process and violative of existing labor laws, aggravated by
nonpayment of separation pay.[3]
In a motion to dismiss which was treated as its position paper, TAPE countered that the labor
arbiter had no jurisdiction over the case in the absence of an employer-employee relationship
between the parties. TAPE made the following assertions: (1) that respondent was initially
employed as a security guard for Radio Philippines Network (RPN-9); (2) that he was tasked
to assist TAPE during its live productions, specifically, to control the crowd; (3) that when
RPN-9 severed its relationship with the security agency, TAPE engaged respondents
services, as part of the support group and thus a talent, to provide security service to
production staff, stars and guests of Eat Bulaga! as well as to control the audience during the
one-and-a-half hour noontime program; (4) that it was agreed that complainant would render
his services until such time that respondent company shall have engaged the services of a
professional security agency; (5) that in 1995, when his contract with RPN-9 expired,
respondent was retained as a talent and a member of the support group, until such time that
TAPE shall have engaged the services of a professional security agency; (6) that respondent
was not prevented from seeking other employment, whether or not related to security
services, before or after attending to his Eat Bulaga! functions; (7) that sometime in late
1999, TAPE started negotiations for the engagement of a professional security agency, the
Sun Shield Security Agency; and (8) that on 2 March 2000, TAPE issued memoranda to all
talents, whose functions would be rendered redundant by the engagement of the security
agency, informing them of the managements decision to terminate their services.[4]

TAPE averred that respondent was an independent contractor falling under the talent
group category and was working under a special arrangement which is recognized in the
industry.[5]

Respondent for his part insisted that he was a regular employee having been engaged to
perform an activity that is necessary and desirable to TAPEs business for thirteen (13)
years.[6]

On 29 June 2001, Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a

regular employee of TAPE. The Labor Arbiter relied on the nature of the work of
respondent, which is securing and maintaining order in the studio, as necessary and desirable
in the usual business activity of TAPE. The Labor Arbiter also ruled that the termination was
valid on the ground of redundancy, and ordered the payment of respondents separation pay
equivalent to one (1)-month pay for every year of service. The dispositive portion of the
decision reads:

WHEREFORE, complainants position is hereby declared

redundant. Accordingly, respondents are hereby ordered to pay complainant his
separation pay computed at the rate of one (1) month pay for every year of service
or in the total amount of P78,000.00.[7]

On appeal, the National Labor Relations Commission (NLRC) in a

Decision[8] dated 22 April 2002 reversed the Labor Arbiter and considered respondent a mere
program employee, thus:
 We have scoured the records of this case and we find nothing to support the Labor
Arbiters conclusion that complainant was a regular employee.

xxxx

The primary standard to determine regularity of employment is the reasonable

connection between the particular activity performed by the employee in relation
to the usual business or trade of the employer. This connection can be determined
by considering the nature and work performed and its relation to the scheme of the
particular business or trade in its entirety. x x x Respondent company is engaged in
the business of production of television shows. The records of this case also show
that complainant was employed by respondent company beginning 1995 after
respondent company transferred from RPN-9 to GMA-7, a fact which complainant
does not dispute. His last salary was P5,444.44 per month. In such industry,
security services may not be deemed necessary and desirable in the usual business
of the employer. Even without the performance of such services on a regular basis,
respondents companys business will not grind to a halt.

xxxx

Complainant was indubitably a program employee of respondent company. Unlike

[a] regular employee, he did not observe working hours x x x. He worked for other
companies, such as M-Zet TV Production, Inc. at the same time that he was
working for respondent company.The foregoing indubitably shows that
complainant-appellee was a program employee. Otherwise, he would have two (2)
employers at the same time.[9]

Respondent filed a motion for reconsideration but it was denied in a Resolution [10] dated 28
June 2002.

Respondent filed a petition for certiorari with the Court of Appeals contending that the
NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when
it reversed the decision of the Labor Arbiter. Respondent asserted that he was a regular
employee considering the nature and length of service rendered.[11]

Reversing the decision of the NLRC, the Court of Appeals found respondent to be a regular
employee. We quote the dispositive portion of the decision:

IN LIGHT OF THE FOREGOING, the petition is hereby GRANTED. The

Decision dated 22 April 2002 of the public respondent NLRC reversing the
Decision of the Labor Arbiter and its Resolution dated 28 June 2002 denying
petitioners motion for reconsideration are REVERSED and SET ASIDE. The
Decision dated 29 June 2001 of the Labor Arbiter
is REINSTATED with MODIFICATION in that private respondents are ordered
to pay jointly and severally petitioner the amount of P10,000.00 as nominal
damages for non-compliance with the statutory due process.

SO ORDERED.[12]
Finding TAPEs motion for reconsideration without merit, the Court of Appeals issued a
Resolution[13] dated 8 April 2005 denying said motion.

TAPE filed the instant petition for review raising substantially the same grounds as those in
its petition for certiorari before the Court of Appeals. These matters may be summed up into
one main issue: whether an employer-employee relationship exists between TAPE and
respondent.

On 27 September 2006, the Court gave due course to the petition and considered the
case submitted for decision.[14]

At the outset, it bears emphasis that the existence of employer-employee relationship is

ultimately a question of fact. Generally, only questions of law are entertained in appeals by
certiorari to the Supreme Court. This rule, however, is not absolute.Among the several
recognized exceptions is when the findings of the Court of Appeals and Labor Arbiters, on
one hand, and that of the NLRC, on the other, are conflicting,[15] as obtaining in the case at
bar.

Jurisprudence is abound with cases that recite the factors to be considered in determining the
existence of employer-employee 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 the employee with respect to the means and method by which the work is to
be accomplished.[16] The most important factor involves the control test. Under the control
test, there is an employer-employee relationship when the person for whom the services are
performed reserves the right to control not only the end achieved but also the manner and
means used to achieve that end.[17]

In concluding that respondent was an employee of TAPE, the Court of Appeals

applied the four-fold test in this wise:

First. The selection and hiring of petitioner was done by private

respondents. In fact, private respondents themselves admitted having engaged the
services of petitioner only in 1995 after TAPE severed its relations with RPN
Channel 9.

By informing petitioner through the Memorandum dated 2 March 2000, that

his services will be terminated as soon as the services of the newly hired security
agency begins, private respondents in effect acknowledged petitioner to be their
employee. For the right to hire and fire is another important element of the
employer-employee relationship.

Second. Payment of wages is one of the four factors to be considered in

determining the existence of employer-employee relation. . . Payment as admitted
by private respondents was given by them on a monthly basis at a rate
of P5,444.44.
 Third. Of the four elements of the employer-employee relationship, the
control test is the most important. x x x

The bundy cards representing the time petitioner had reported for work are
evident proofs of private respondents control over petitioner more particularly with
the time he is required to report for work during the noontime program of Eat
Bulaga! If it were not so, petitioner would be free to report for work anytime even
not during the noontime program of Eat Bulaga! from 11:30 a.m. to 1:00 p.m. and
still gets his compensation for being a talent. Precisely, he is being paid for being
the security of Eat Bulaga! during the above-mentioned period. The daily time
cards of petitioner are not just for mere record purposes as claimed by private
respondents. It is a form of control by the management of private respondent
TAPE.[18]

TAPE asseverates that the Court of Appeals erred in applying the four-fold test in
determining the existence of employer-employee relationship between it and
respondent. With respect to the elements of selection, wages and dismissal, TAPE proffers
the following arguments: that it never hired respondent, instead it was the latter who offered
his services as a talent to TAPE; that the Memorandum dated 2 March 2000 served on
respondent was for the discontinuance of the contract for security services and not a
termination letter; and that the talent fees given to respondent were the pre-agreed
consideration for the services rendered and should not be construed as wages. Anent the
element of control, TAPE insists that it had no control over respondent in that he was free to
employ means and methods by which he is to control and manage the live audiences, as well
as the safety of TAPEs stars and guests.[19]

The position of TAPE is untenable. Respondent was first connected with Agro-Commercial
Security Agency, which assigned him to assist TAPE in its live productions. When the
security agencys contract with RPN-9 expired in 1995, respondent was absorbed by TAPE
or, in the latters language, retained as talent.[20] Clearly, respondent was hired by TAPE.
Respondent presented his identification card[21] to prove that he is indeed an employee of
TAPE. It has been in held that in a business establishment, an identification card is usually
provided not just as a security measure but to mainly identify the holder thereof as a bona
fide employee of the firm who issues it.[22]

Respondent claims to have been receiving P5,444.44 as his monthly salary while TAPE
prefers to designate such amount as talent fees. Wages, as defined in the Labor Code, are
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 service
rendered or to be rendered. It is beyond dispute that respondent received a fixed amount as
monthly compensation for the services he rendered to TAPE.

The Memorandum informing respondent of the discontinuance of his service proves that
TAPE had the power to dismiss respondent.
Control is manifested in the bundy cards submitted by respondent in evidence. He was
required to report daily and observe definite work hours. To negate the element of control,
TAPE presented a certification from M-Zet Productions to prove that respondent also
worked as a studio security guard for said company. Notably, the said certificate
categorically stated that respondent reported for work on Thursdays from 1992 to 1995. It
can be recalled that during said period, respondent was still working for RPN-9. As admitted
by TAPE, it absorbed respondent in late 1995.[23]

TAPE further denies exercising control over respondent and maintains that the latter is
an independent contractor.[24] Aside from possessing substantial capital or investment, a
legitimate job contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own
responsibility according to its own manner and method, and free from the control and
direction of the principal in all matters connected with the performance of the work except as
to the results thereof.[25] TAPE failed to establish that respondent is an independent
contractor. As found by the Court of Appeals:

We find the annexes submitted by the private respondents insufficient to

prove that herein petitioner is indeed an independent contractor. None of the above
conditions exist in the case at bar. Private respondents failed to show that
petitioner has substantial capital or investment to be qualified as an independent
contractor. They likewise failed to present 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 private
respondent TAPE.[26]

TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in
classifying respondent as a program employee and equating him to be an independent
contractor.

Policy Instruction No. 40 defines program employees as

x x x those whose skills, talents or services are engaged by the station for a
particular or specific program or undertaking and who are not required to observe
normal working hours such that on some days they work for less than eight (8)
hours and on other days beyond the normal work hours observed by station
employees and are allowed to enter into employment contracts with other persons,
stations, advertising agencies or sponsoring companies. The engagement of
program employees, including those hired by advertising or sponsoring companies,
shall be under a written contract specifying, among other things, the nature of the
work to be performed, rates of pay and the programs in which they will work. The
contract shall be duly registered by the station with the Broadcast Media Council
within three (3) days from its consummation.[27]

TAPE failed to adduce any evidence to prove that it complied with the requirements
laid down in the policy instruction. It did not even present its contract with
respondent. Neither did it comply with the contract-registration requirement.
 Even granting arguendo that respondent is a program employee, stills, classifying him
as an independent contractor is misplaced. The Court of Appeals had this to say:

We cannot subscribe to private respondents conflicting theories. The theory

of private respondents that petitioner is an independent contractor runs counter to
their very own allegation that petitioner is a talent or a program employee. An
independent contractor is not an employee of the employer, while a talent or
program employee is an employee. The only difference between a talent or
program employee and a regular employee is the fact that a regular employee is
entitled to all the benefits that are being prayed for. This is the reason why private
respondents try to seek refuge under the concept of an independent contractor
theory. For if petitioner were indeed an independent contractor, private
respondents will not be liable to pay the benefits prayed for in petitioners
complaint.[28]

More importantly, respondent had been continuously under the employ of TAPE from
1995 until his termination in March 2000, or for a span of 5 years. Regardless of whether or
not respondent had been performing work that is necessary or desirable to the usual business
of TAPE, respondent is still considered a regular employee under Article 280 of the Labor
Code which 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 engagement of the employee or where the work
or service to be performed is seasonal in nature and employment is for the duration
of the season.

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

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

As a regular employee, respondent cannot be terminated except for just cause or when
authorized by law.[29] It is clear from the tenor of the 2 March 2000 Memorandum that
respondents termination was due to redundancy. Thus, the Court of Appeals correctly
disposed of this issue, viz:

Article 283 of the Labor Code provides that 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. In case of termination due to the installation of labor
 saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year or service, whichever is higher.

xxxx

We uphold the finding of the Labor Arbiter that complainant [herein

petitioner] was terminated upon [the] managements option to professionalize the
security services in its operations. x x x However, [we] find that although
petitioners services [sic] was for an authorized cause, i.e., redundancy, private
respondents failed to prove that it complied with service of written notice to the
Department of Labor and Employment at least one month prior to the intended
date of retrenchment. It bears stressing that although notice was served upon
petitioner through a Memorandum dated 2 March 2000, the effectivity of his
dismissal is fifteen days from the start of the agencys take over which was on 3
March 2000. Petitioners services with private respondents were severed less than
the month requirement by the law.

Under prevailing jurisprudence the termination for an authorized cause

requires payment of separation pay. Procedurally, if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the
employee and the Deparment of Labor and Employment written notice 30 days
prior to the effectivity of his separation. Where the dismissal is for an authorized
cause but due process was not observed, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not invalidate the
dismissal.However, the employer should be liable for non-compliance with
procedural requirements of due process.
xxxx

Under recent jurisprudence, the Supreme Court fixed the amount

of P30,000.00 as nominal damages. The basis of the violation of petitioners right to
statutory due process by the private respondents warrants the payment of
indemnity in the form of nominal damages. The amount of such damages is
addressed to the sound discretion of the court, taking into account the relevant
circumstances. We believe this form of damages would serve to deter employer
from future violations of the statutory due process rights of the employees. At the
very least, it provides a vindication or recognition of this fundamental right granted
to the latter under the Labor Code and its Implementing Rules. Considering the
circumstances in the case at bench, we deem it proper to fix it at P10,000.00.[30]

In sum, we find no reversible error committed by the Court of Appeals in its assailed
decision.

However, with respect to the liability of petitioner Tuviera, president of TAPE, absent
any showing that he acted with malice or bad faith in terminating respondent, he cannot be
held solidarily liable with TAPE.[31] Thus, the Court of Appeals ruling on this point has to be
modified.
 WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are
AFFIRMED with MODIFICATION in that only petitioner Television and Production
Exponents, Inc. is liable to pay respondent the amount of P10,000.00 as nominal damages
for non-compliance with the statutory due process and petitioner Antonio P. Tuviera is
accordingly absolved from liability.

SO ORDERED.
13.

ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L. DOGELIO and
BENJAMIN LIMJOCO, respondents.
DECISION
TORRES, JR., J.:

Encyclopaedia Britannica (Philippines), Inc. filed this petition for certiorari to annul and set aside
the resolution of the National Labor Relations Commission, Third Division, in NLRC Case No. RB
IV-5158-76, dated December 28, 1988, the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing, the decision dated December 7, 1982 of then Labor
Arbiter Teodorico L. Dogelio is hereby AFFIRMED, and the instant appeal is hereby DISMISSED
for lack of merit.

SO ORDERED.[1]

Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia
Britannica and was in charge of selling petitioners products through some sales representatives.
As compensation, private respondent received commissions from the products sold by his agents.
He was also allowed to use petitioners name, goodwill and logo. It was, however, agreed upon
that office expenses would be deducted from private respondents commissions. Petitioner would
also be informed about appointments, promotions, and transfers of employees in private
respondents district.

On June 14, 1974, private respondent Limjoco resigned from office to pursue his private business.
Then on October 30, 1975, he filed a complaint against petitioner Encyclopaedia Britannica with
the Department of Labor and Employment, claiming for non-payment of separation pay and other
benefits, and also illegal deduction from his sales commissions.

Petitioner Encyclopaedia Britannica alleged that complainant Benjamin Limjoco (Limjoco, for
brevity) was not its employee but an independent dealer authorized to promote and sell its
products and in return, received commissions therefrom. Limjoco did not have any salary and his
income from the petitioner company was dependent on the volume of sales accomplished. He also
had his own separate office, financed the business expenses, and maintained his own workforce.
The salaries of his secretary, utility man, and sales representatives were chargeable to his
commissions. Thus, petitioner argued that it had no control and supervision over the complainant
as to the manner and means he conducted his business operations. The latter did not even report
to the office of the petitioner and did not observe fixed office hours. Consequently, there was no
employer-employee relationship.

Limjoco maintained otherwise. He alleged that he was hired by the petitioner in July 1970, was
assigned in the sales department, and was earning an average of P4,000.00 monthly as his sales
commission. He was under the supervision of the petitioners officials who issued to him and his
other personnel, memoranda, guidelines on company policies, instructions and other orders. He
was, however, dismissed by the petitioner when the Laurel-Langley Agreement expired. As a
result thereof, Limjoco asserts that in accordance with the established company practice and the
provisions of the collective bargaining agreement, he was entitled to termination pay equivalent to
one month salary, the unpaid benefits (Christmas bonus, midyear bonus, clothing allowance,
vacation leave, and sick leave), and the amounts illegally deducted from his commissions which
were then used for the payments of office supplies, office space, and overhead expenses.

On December 7, 1982, Labor Arbiter Teodorico Dogelio, in a decision ruled that Limjoco was an
employee of the petitioner company. Petitioner had control over Limjoco since the latter was
required to make periodic reports of his sales activities to the company. All transactions were
subject to the final approval of the petitioner, an evidence that petitioner company had active
control on the sales activities. There was therefore, an employer-employee relationship and
necessarily, Limjoco was entitled to his claims. The decision also ordered petitioner company to
pay the following:

1. To pay complainant his separation pay in the total amount of P16,000.00;

2. To pay complainant his unpaid Christmas bonus for three years or the amount of P12,000.00;

3. To pay complainant his unpaid mid-year bonus equivalent to one-half month pay or the total
amount of P6,000.00;

4. To pay complainant his accrued vacation leave equivalent to 15 days per year of service, or the
total amount of P6,000.00;

5. To pay complainant his unpaid clothing allowance in the total amount of P600.00; and

6. To pay complainant his accrued sick leave equivalent to 15 days per year of service or the total
amount of P6,000.00.[2]

On appeal, the Third Division of the National Labor Relations Commission affirmed the assailed
decision. The Commission opined that there was no evidence supporting the allegation that
Limjoco was an independent contractor or dealer. The petitioner still exercised control over
Limjoco through its memoranda and guidelines and even prohibitions on the sale of products other
than those authorized by it. In short, the petitioner company dictated how and where to sell its
products. Aside from that fact, Limjoco passed the costs to the petitioner chargeable against his
future commissions. Such practice proved that he was not an independent dealer or contractor for
it is required by law that an independent contractor should have substantial capital or investment.

Dissatisfied with the outcome of the case, petitioner Encyclopaedia Britannica now comes to us in
this petition for certiorari and injunction with prayer for preliminary injunction. On April 3, 1989, this
Court issued a temporary restraining order enjoining the enforcement of the decision dated
December 7, 1982.

The following are the arguments raised by the petitioner:

The respondent NLRC gravely abused its discretion in holding that appellants contention that
appellee was an independent contractor is not supported by evidence on record.

II

Respondent NLRC committed grave abuse of discretion in not passing upon the validity of the
pronouncement of the respondent Labor Arbiter granting private respondents claim for payment of
Christmas bonus, Mid-year bonus, clothing allowance and the money equivalent of accrued and
unused vacation and sick leave.

The NLRC ruled that there existed an employer-employee relationship and petitioner failed to
disprove this finding. We do not agree.

In determining the existence of an employer-employee relationship the following elements must be

present: 1) selection and engagement of the employee; 2) payment of wages; 3) power of
dismissal; and 4) the power to control the employees conduct. Of the above, control of employees
conduct is commonly regarded as the most crucial and determinative indicator of the presence or
absence of an employer-employee relationship.[3] Under the control test, an employer-employee
relationship exists where the person for whom the services are performed reserves the right to
control not only the end to be achieved, but also the manner and means to be used in reaching
that end.[4]

The fact that petitioner issued memoranda to private respondents and to other division sales
managers did not prove that petitioner had actual control over them. The different memoranda
were merely guidelines on company policies which the sales managers follow and impose on their
respective agents. It should be noted that in petitioners business of selling encyclopedias and
books, the marketing of these products was done through dealership agreements. The sales
operations were primarily conducted by independent authorized agents who did not receive
regular compensations but only commissions based on the sales of the products. These
independent agents hired their own sales representatives, financed their own office expenses, and
maintained their own staff. Thus, there was a need for the petitioner to issue memoranda to
private respondent so that the latter would be apprised of the company policies and procedures.
Nevertheless, private respondent Limjoco and the other agents were free to conduct and promote
their sales operations. The periodic reports to the petitioner by the agents were but necessary to
update the company of the latters performance and business income.

Private respondent was not an employee of the petitioner company. While it was true that the
petitioner had fixed the prices of the products for reason of uniformity and private respondent
could not alter them, the latter, nevertheless, had free rein in the means and methods for
conducting the marketing operations. He selected his own personnel and the only reason why he
had to notify the petitioner about such appointments was for purpose of deducting the employees
salaries from his commissions. This he admitted in his testimonies, thus:

Q. Yes, in other words you were on what is known as P&L basis or profit and loss basis?

A. That is right.

Q. If for an instance, just example your sales representative in any period did not produce any
sales, you would not get any money from Britannica, would you?

A. No, sir.

Q. In fact, Britannica by doing the accounting for you as division manager was merely making it
easy for you to concentrate all your effort in selling and you dont worry about accounting, isnt that
so?

A. Yes, sir.

Q. In fact whenever you hire a secretary or trainer you merely hire that person and notify
Britannica so that Encyclopaedia Britannica will give the salaries and deduct it from your earnings,
isnt that so?

A. In certain cases I just hired people previously employed by Encyclopaedia Britannica.

xxx

Q. In this Exhibit 2 you were informing Encyclopaedia Britannica that you have hired a certain
person and you were telling Britannica how her salary was going to be taken cared of, is it not?

A. Yes, sir.
Q. You said here, please be informed that we have appointed Miss Luz Villan as division trainer
effective May 1, 1971 at P550.00 per month her salary will be chargeable to the Katipunan and
Bayanihan Districts, signed by yourself. What is the Katipunan and Bayanihan District?

A. Those were districts under my division.

Q. In effect you were telling Britannica that you have hired this person and you should charge her
salary to me, is that right?

A. Yes, sir.[5]

Private respondent was merely an agent or an independent dealer of the petitioner. He was free to
conduct his work and he was free to engage in other means of livelihood. At the time he was
connected with the petitioner company, private respondent was also a director and later the
president of the Farmers Rural Bank. Had he been an employee of the company, he could not be
employed elsewhere and he would be required to devote full time for petitioner. If private
respondent was indeed an employee, it was rather unusual for him to wait for more than a year
from his separation from work before he decided to file his claims. Significantly, when Limjoco
tendered his resignation to petitioner on June 14, 1974, he stated, thus:

"Re: Resignation

I am resigning as manager of the EB Capitol Division effective 16 June 1974.

This decision was brought about by conflict with other interests which lately have increasingly
required my personal attention. I feel that in fairness to the company and to the people under my
supervision I should relinquish the position to someone who can devote full-time to the Division.

I wish to thank you for all the encouragement and assistance you have extended to me and to my
group during my long association with Britannica.

Evidently, Limjoco was aware of conflict with other interests which xxx have increasingly required
my personal attention (p. 118, Records). At the very least, it would indicate that petitioner has no
effective control over the personal activities of Limjoco, who as admitted by the latter had other
conflict of interest requiring his personal attention.

In ascertaining whether the relationship is that of employer-employee or one of independent

contractor, each case must be determined by its own facts and all features of the relationship are
to be considered.[6] The records of the case at bar showed that there was no such employer-
employee relationship.

As stated earlier, the element of control is absent; where a person who works for another does so
more or less at his own pleasure and is not subject to definite hours or conditions of work, and in
turn is compensated according to the result of his efforts and not the amount thereof, we should
not find that the relationship of employer and employee exists.[7] In fine, there is nothing in the
records to show or would indicate that complainant was under the control of the petitioner in
respect of the means and methods[8] in the performance of complainants work.

Consequently, private respondent is not entitled to the benefits prayed for.

In view of the foregoing premises, the petition is hereby GRANTED, and the decision of the NLRC
is hereby REVERSED AND SET ASIDE.

SO ORDERED.
14.
ATOK BIG WEDGE COMPANY, INC., G.R. No. 169510
Petitioner,
Present:

CARPIO,* J.,
- versus - VELASCO, JR., J., Chairperson,
BRION,**
PERALTA, and
SERENO,*** JJ.
Promulgated:
JESUS P. GISON,
Respondent. August 8, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

PERALTA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the Decision[1] dated May 31,
2005 of the Court of Appeals (CA) in CA-G.R. SP No. 87846, and the Resolution[2] dated August 23, 2005 denying
petitioners motion for reconsideration.

The procedural and factual antecedents are as follows:

Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time consultant on retainer basis
by petitioner Atok Big Wedge Company, Inc. through its then Asst. Vice-President and Acting Resident Manager,
Rutillo A. Torres. As a consultant on retainer basis, respondent assisted petitioner's retained legal counsel with matters
pertaining to the prosecution of cases against illegal surface occupants within the area covered by the company's
mineral claims. Respondent was likewise tasked to perform liaison work with several government agencies, which he
said was his expertise.

Petitioner did not require respondent to report to its office on a regular basis, except when occasionally
requested by the management to discuss matters needing his expertise as a consultant. As payment for his services,
respondent received a retainer fee of P3,000.00 a month,[3] which was delivered to him either at his residence or in a
local restaurant. The parties executed a retainer agreement, but such agreement was misplaced and can no longer be
found.

The said arrangement continued for the next eleven years.

Sometime thereafter, since respondent was getting old, he requested that petitioner cause his registration with
the Social Security System (SSS), but petitioner did not accede to his request. He later reiterated his request but it was
ignored by respondent considering that he was only a retainer/consultant. On February 4, 2003, respondent filed a
Complaint[4] with the SSS against petitioner for the latter's refusal to cause his registration with the SSS.
 On the same date, Mario D. Cera, in his capacity as resident manager of petitioner, issued a
Memorandum[5] advising respondent that within 30 days from receipt thereof, petitioner is terminating his retainer
contract with the company since his services are no longer necessary.

On February 21, 2003, respondent filed a Complaint[6] for illegal dismissal, unfair labor practice,
underpayment of wages, non-payment of 13th month pay, vacation pay, and sick leave pay with the National Labor
Relations Commission (NLRC), Regional Arbitration Branch (RAB), Cordillera Administrative Region, against
petitioner, Mario D. Cera, and Teofilo R. Asuncion, Jr. The case was docketed as NLRC Case No. RAB-CAR-02-
0098-03.
Respondent alleged that:

x x x [S]ometime in January 1992, Rutillo A. Torres, then the resident manager of respondent Atok
Big Wedge Co., Inc., or Atok for brevity, approached him and asked him if he can help the companys
problem involving the 700 million pesos crop damage claims of the residents living at the minesite of
Atok. He participated in a series of dialogues conducted with the residents. Mr. Torres offered to pay
him P3,000.00 per month plus representation expenses. It was also agreed upon by him and Torres
that his participation in resolving the problem was temporary and there will be no employer-employee
relationship between him and Atok. It was also agreed upon that his compensation, allowances and
other expenses will be paid through disbursement vouchers.

On February 1, 1992 he joined Atok. One week thereafter, the aggrieved crop damage
claimants barricaded the only passage to and from the minesite. In the early morning of February 1,
1992, a dialogue was made by Atok and the crop damage claimants. Unfortunately, Atoks
representatives, including him, were virtually held hostage by the irate claimants who demanded on
the spot payment of their claims. He was able to convince the claimants to release the company
representatives pending referral of the issue to higher management.

A case was filed in court for the lifting of the barricades and the court ordered the lifting of
the barricade. While Atok was prosecuting its case with the claimants, another case erupted involving
its partner, Benguet Corporation. After Atok parted ways with Benguet Corporation, some properties
acquired by the partnership and some receivables by Benguet Corporation was the problem. He was
again entangled with documentation, conferences, meetings, planning, execution and clerical works.
After two years, the controversy was resolved and Atok received its share of the properties of the
partnership, which is about 5 million pesos worth of equipment and condonation of Atoks
accountabilities with Benguet Corporation in the amount of P900,000.00.

In the meantime, crop damage claimants lost interest in pursuing their claims against Atok
and Atok was relieved of the burden of paying 700 million pesos. In between attending the problems
of the crop damage issue, he was also assigned to do liaison works with the SEC, Bureau of Mines,
municipal government of Itogon, Benguet, the Courts and other government offices.

After the crop damage claims and the controversy were resolved, he was permanently
assigned by Atok to take charge of some liaison matters and public relations
in Baguio and Benguet Province, and to report regularly to Atoks office in Manila to attend meetings
and so he had to stay in Manila at least one week a month.

Because of his length of service, he invited the attention of the top officers of the company
that he is already entitled to the benefits due an employee under the law, but management ignored his
requests. However, he continued to avail of his representation expenses and reimbursement of
company-related expenses. He also enjoyed the privilege of securing interest free salary loans payable
in one year through salary deduction.

In the succeeding years of his employment, he was designated as liaison officer, public
relation officer and legal assistant, and to assist in the ejection of illegal occupants in the mining
claims of Atok.
Since he was getting older, being already 56 years old, he reiterated his request to the
company to cause his registration with the SSS. His request was again ignored and so he filed a
 complaint with the SSS. After filing his complaint with the SSS, respondents terminated his
services.[7]
On September 26, 2003, after the parties have submitted their respective pleadings, Labor Arbiter Rolando D.
Gambito rendered a Decision[8] ruling in favor of the petitioner. Finding no employer-employee relationship between
petitioner and respondent, the Labor Arbiter dismissed the complaint for lack of merit.

Respondent then appealed the decision to the NLRC.

On July 30, 2004, the NLRC, Second Division, issued a Resolution[9] affirming the decision of the Labor
Arbiter. Respondent filed a Motion for Reconsideration, but it was denied in the Resolution[10] dated September 30,
2004.
Aggrieved, respondent filed a petition for review under Rule 65 of the Rules of Court before the CA questioning the
decision and resolution of the NLRC, which was later docketed as CA-G.R. SP No. 87846. In support of his petition,
respondent raised the following issues:

a) Whether or not the Decision of the Honorable Labor Arbiter and the subsequent Resolutions of the
Honorable Public Respondent affirming the same, are in harmony with the law and the facts of
the case;

b) Whether or not the Honorable Labor Arbiter Committed a Grave Abuse of Discretion in
Dismissing the Complaint of Petitioner and whether or not the Honorable Public Respondent
Committed a Grave Abuse of Discretion when it affirmed the said Decision.[11]

On May 31, 2005, the CA rendered the assailed Decision annulling and setting aside the decision of the
NLRC, the decretal portion of which reads:

WHEREFORE, the petition is GRANTED. The assailed Resolution of the National Labor
Relations Commission dismissing petitioner's complaint for illegal dismissal
is ANNULLED and SET ASIDE. Private respondent Atok Big Wedge Company Incorporated
is ORDERED to reinstate petitioner Jesus P. Gison to his former or equivalent position without loss
of seniority rights and to pay him full backwages, inclusive of allowances and other benefits or their
monetary equivalent computed from the time these were withheld from him up to the time of his
actual and effective reinstatement. This case is ordered REMANDED to the Labor Arbiter for the
proper computation of backwages, allowances and other benefits due to petitioner. Costs against
private respondent Atok Big Wedge Company Incorporated.

SO ORDERED.[12]

In ruling in favor of the respondent, the CA opined, among other things, that both the Labor Arbiter and the
NLRC may have overlooked Article 280 of the Labor Code,[13] or the provision which distinguishes between two
kinds of employees, i.e., regular and casual employees. Applying the provision to the respondent's case, he is deemed
a regular employee of the petitioner after the lapse of one year from his employment. Considering also that respondent
had been performing services for the petitioner for eleven years, respondent is entitled to the rights and privileges of a
regular employee.

The CA added that although there was an agreement between the parties that respondent's employment would
only be temporary, it clearly appears that petitioner disregarded the same by repeatedly giving petitioner several tasks
to perform.Moreover, although respondent may have waived his right to attain a regular status of employment when
he agreed to perform these tasks on a temporary employment status, still, it was the law that recognized and
considered him a regular employee after his first year of rendering service to petitioner. As such, the waiver was
ineffective.
 Hence, the petition assigning the following errors:

I. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF

SUBSTANCE CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE
COURT WHEN IT GAVE DUE COURSE TO THE PETITION FOR CERTIORARI DESPITE THE
FACT THAT THERE WAS NO SHOWING THAT THE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION.

II. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF

SUBSTANCE CONTRARY TO THE LAW AND APPLICABLE RULINGS OF THIS
HONORABLE COURT WHEN IT BASED ITS FINDING THAT RESPONDENT IS ENTITLED
TO REGULAR EMPLOYMENT ON A PROVISION OF LAW THAT THIS HONORABLE
COURT HAS DECLARED TO BE INAPPLICABLE IN CASE THE EXISTENCE OF AN
EMPLOYER-EMPLOYEE RELATIONSHIP IS IN DISPUTE OR IS THE FACT IN ISSUE.

III. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF

SUBSTANCE CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE
COURT WHEN IT ERRONEOUSLY FOUND THAT RESPONDENT IS A REGULAR
EMPLOYEE OF THE COMPANY.

IV. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE

CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN
IT ERRONEOUSLY DIRECTED RESPONDENT'S REINSTATEMENT DESPITE THE FACT
THAT THE NATURE OF THE SERVICES HE PROVIDED TO THE COMPANY WAS
SENSITIVE AND CONFIDENTIAL.[14]

Petitioner argues that since the petition filed by the respondent before the CA was a petition
for certiorari under Rule 65 of the Rules of Court, the CA should have limited the issue on whether or not there was
grave abuse of discretion on the part of the NLRC in rendering the resolution affirming the decision of the Labor
Arbiter.

Petitioner also posits that the CA erred in applying Article 280 of the Labor Code in determining whether
there was an employer-employee relationship between the petitioner and the respondent. Petitioner contends that
where the existence of an employer-employee relationship is in dispute, Article 280 of the Labor Code is
inapplicable. The said article only set the distinction between a casual employee from a regular employee for purposes
of determining the rights of an employee to be entitled to certain benefits.

Petitioner insists that respondent is not a regular employee and not entitled to reinstatement.

On his part, respondent maintains that he is an employee of the petitioner and that the CA did not err in ruling
in his favor.

The petition is meritorious.

At the outset, respondent's recourse to the CA was the proper remedy to question the resolution of the
NLRC. It bears stressing that there is no appeal from the decision or resolution of the NLRC. As this Court enunciated
in the case of St. Martin Funeral Home v. NLRC,[15] the special civil action of certiorari under Rule 65 of the Rules of
Civil Procedure, which is filed before the CA, is the proper vehicle for judicial review of decisions of the NLRC. The
petition should be initially filed before the Court of Appeals in strict observance of the doctrine on hierarchy of courts
as the appropriate forum for the relief desired.[16] This Court not being a trier of facts, the resolution of unclear or
ambiguous factual findings should be left to the CA as it is procedurally equipped for that purpose. From the decision
of the Court of Appeals, an ordinary appeal under Rule 45 of the Rules of Civil Procedure before the Supreme Court
may be resorted to by the parties. Hence, respondent's resort to the CA was appropriate under the circumstances.

Anent the primordial issue of whether or not an employer-employee relationship exists between petitioner and
respondent.

Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a

question of fact and that the findings thereon by the Labor Arbiter and the NLRC shall be accorded not only respect
but even finality when supported by substantial evidence.[17] Being a question of fact, the determination whether such a
relationship exists between petitioner and respondent was well within the province of the Labor Arbiter and the
NLRC. Being supported by substantial evidence, such determination should have been accorded great weight by the
CA in resolving the issue.

To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the
four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct, or the so-called "control test."[18] Of these four, the last
one is the most important.[19] The so-called control test is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services are performed reserves the right to control not
only the end achieved, but also the manner and means to be used in reaching that end.[20]

Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at
bar. Among other things, respondent was not required to report everyday during regular office hours of
petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a local restaurant. More
importantly, petitioner did not prescribe the manner in which respondent would accomplish any of the tasks in which
his expertise as a liaison officer was needed; respondent was left alone and given the freedom to accomplish the tasks
using his own means and method. Respondent was assigned tasks to perform, but petitioner did not control the manner
and methods by which respondent performed these tasks.Verily, the absence of the element of control on the part of
the petitioner engenders a conclusion that he is not an employee of the petitioner.

Moreover, the absence of the parties' retainership agreement notwithstanding, respondent clearly admitted that
petitioner hired him in a limited capacity only and that there will be no employer-employee relationship between
them. As averred in respondent's Position Paper:[21]

2. For the participation of complainant regarding this particular problem of Atok, Mr. Torres offered
him a pay in the amount of Php3,000.00 per month plus representation expenses. It was also
agreed by Mr. Torres and the complainant that his participation on this particular problem of Atok
will be temporary since the problem was then contemplated to be limited in nature, hence, there
will be no employer-employee relationship between him and Atok. Complainant agreed on this
arrangement. It was also agreed that complainant's compensations, allowances, representation
expenses and reimbursement of company- related expenses will be processed and paid through
disbursement vouchers;[22]

Respondent was well aware of the agreement that he was hired merely as a liaison or consultant of the
petitioner and he agreed to perform tasks for the petitioner on a temporary employment status only. However,
respondent anchors his claim that he became a regular employee of the petitioner based on his contention that the
temporary aspect of his job and its limited nature could not have lasted for eleven years unless some time during that
period, he became a regular employee of the petitioner by continually performing services for the company.

Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee of
petitioner. The appellate court's premise that regular employees are those who perform activities which are desirable
and necessary for the business of the employer is not determinative in this case. In fact, any agreement may provide
that one party shall render services for and in behalf of another, no matter how necessary for the latter's business, even
without being hired as an employee.[23] Hence, respondent's length of service and petitioner's repeated act of assigning
respondent some tasks to be performed did not result to respondent's entitlement to the rights and privileges of a
regular employee.

Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years, he still
cannot be considered as a regular employee of petitioner. Article 280 of the Labor Code, in which the lower court used
to buttress its findings that respondent became a regular employee of the petitioner, is not applicable in the case at
bar. Indeed, the Court has ruled that said provision is not the yardstick for determining the existence of an employment
relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to
security of tenure; it does not apply where the existence of an employment relationship is in dispute. [24] It is, therefore,
erroneous on the part of the Court of Appeals to rely on Article 280 in determining whether an employer-employee
relationship exists between respondent and the petitioner

Considering that there is no employer-employee relationship between the parties, the termination of
respondent's services by the petitioner after due notice did not constitute illegal dismissal warranting his reinstatement
and the payment of full backwages, allowances and other benefits.

WHEREFORE, premises considered, the petition is GRANTED. The Decision and the Resolution of the
Court of Appeals in CA-G.R. SP No. 87846, are REVERSED and SET ASIDE. The Resolutions dated July 30,
2004 and September 30, 2004 of the National Labor Relations Commission are REINSTATED.

SO ORDERED.
15.
THELMA DUMPIT-MURILLO, G.R. No. 164652
Petitioner,
Present:

QUISUMBING, J., Chairperson,

- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

COURT OF APPEALS, Promulgated:

ASSOCIATED BROADCASTING
COMPANY, JOSE JAVIER AND
EDWARD TAN, June 8, 2007
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
QUISUMBING, J.:

This petition seeks to reverse and set aside both the Decision [1] dated January 30,
2004 of the Court of Appeals in CA-G.R. SP No. 63125 and its Resolution[2] dated June 23,
2004 denying the motion for reconsideration. The Court of Appeals had overturned the
Resolution[3] dated August 30, 2000 of the National Labor Relations Commission (NLRC)
ruling that petitioner was illegally dismissed.

The facts of the case are as follows:

On October 2, 1995, under Talent Contract No. NT95-1805,[4] private respondent

Associated Broadcasting Company (ABC) hired petitioner Thelma Dumpit-Murillo as a
newscaster and co-anchor for Balitang-Balita, an early evening news program. The contract
was for a period of three months. It was renewed under Talent Contracts Nos. NT95-1915,
NT96-3002, NT98-4984 and NT99-5649.[5] In addition, petitioners services were engaged
for the program Live on Five. On September 30, 1999, after four years of repeated renewals,
petitioners talent contract expired. Two weeks after the expiration of the last contract,
petitioner sent a letter to Mr. Jose Javier, Vice President for News and Public Affairs of
ABC, informing the latter that she was still interested in renewing her contract subject to a
salary increase. Thereafter, petitioner stopped reporting for work. On November 5, 1999, she
wrote Mr. Javier another letter,[6] which we quote verbatim:
xxxx
Dear Mr. Javier:
On October 20, 1999, I wrote you a letter in answer to your query by way of a
marginal note what terms and conditions in response to my first letter
 dated October 13, 1999. To date, or for more than fifteen (15) days since then, I
have not received any formal written reply. xxx
In view hereof, should I not receive any formal response from you until Monday,
November 8, 1999, I will deem it as a constructive dismissal of my services.
xxxx

A month later, petitioner sent a demand letter[7] to ABC, demanding: (a) reinstatement
to her former position; (b) payment of unpaid wages for services rendered from September 1
to October 20, 1999 and full backwages; (c) payment of 13thmonth pay, vacation/sick/service
incentive leaves and other monetary benefits due to a regular employee starting March 31,
1996. ABC replied that a check covering petitioners talent fees for September 16 to October
20, 1999 had been processed and prepared, but that the other claims of petitioner had no
basis in fact or in law.

On December 20, 1999, petitioner filed a complaint[8] against ABC, Mr. Javier and Mr.
Edward Tan, for illegal constructive dismissal, nonpayment of salaries, overtime pay,
premium pay, separation pay, holiday pay, service incentive leave pay, vacation/sick leaves
and 13th month pay in NLRC-NCR Case No. 30-12-00985-99. She likewise demanded
payment for moral, exemplary and actual damages, as well as for attorneys fees.

The parties agreed to submit the case for resolution after settlement failed during the
mandatory conference/conciliation. On March 29, 2000, the Labor Arbiter dismissed the
complaint.[9]

On appeal, the NLRC reversed the Labor Arbiter in a Resolution dated August 30,
2000. The NLRC held that an employer-employee relationship existed between petitioner and
ABC; that the subject talent contract was void; that the petitioner was a regular employee
illegally dismissed; and that she was entitled to reinstatement and backwages or separation pay,
aside from 13th month pay and service incentive leave pay, moral and exemplary damages and
attorneys fees. It held as follows:
WHEREFORE, the Decision of the Arbiter dated 29 March 2000 is
hereby REVERSED/SET ASIDE and a NEW ONE promulgated:
1) declaring respondents to have illegally dismissed complainant from her
regular work therein and thus, ordering them to reinstate her in her former position
without loss of seniority right[s] and other privileges and to pay her full
backwages, inclusive of allowances and other benefits, including 13th month pay
based on her said latest rate of P28,000.00/mo. from the date of her illegal
dismissal on 21 October 1999 up to finality hereof, or at complainants option, to
pay her separation pay of one (1) month pay per year of service based on said latest
monthly rate, reckoned from date of hire on 30 September 1995 until finality
hereof;
2) to pay complainants accrued SILP [Service Incentive Leave Pay] of 5
days pay per year and 13th month pay for the years 1999, 1998 and 1997
of P19,236.00 and P84,000.00, respectively and her accrued salary from 16
 September 1999 to 20 October 1999 of P32,760.00 plus legal interest at 12% from
date of judicial demand on 20 December 1999 until finality hereof;
3) to pay complainant moral damages of P500,000.00, exemplary damages
of P350,000.00 and 10% of the total of the adjudged monetary awards as attorneys
fees.
Other monetary claims of complainant are dismissed for lack of merit.
SO ORDERED.[10]

After its motion for reconsideration was denied, ABC elevated the case to the Court of
Appeals in a petition for certiorari under Rule 65. The petition was first dismissed for failure
to attach particular documents,[11] but was reinstated on grounds of the higher interest of
justice.[12]

Thereafter, the appellate court ruled that the NLRC committed grave abuse of
discretion, and reversed the decision of the NLRC.[13] The appellate court reasoned that
petitioner should not be allowed to renege from the stipulations she had voluntarily and
knowingly executed by invoking the security of tenure under the Labor Code. According to
the appellate court, petitioner was a fixed-term employee and not a regular employee within
the ambit of Article 280[14] of the Labor Code because her job, as anticipated and agreed
upon, was only for a specified time.[15]

Aggrieved, petitioner now comes to this Court on a petition for review, raising issues
as follows:
I.
THIS HONORABLE COURT CAN REVIEW THE FINDINGS OF THE
HONORABLE COURT OF APPEALS, THE DECISION OF WHICH IS NOT IN
ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE
SUPREME COURT[;]

II.
THE PRO-FORMA TALENT CONTRACTS, AS CORRECTLY FOUND BY
THE NLRC FIRST DIVISION, ARE ANTI-REGULARIZATION
DEVICES WHICH MUST BE STRUCK DOWN FOR REASONS OF PUBLIC
POLICY[;]

III.
BY REASON OF THE CONTINUOUS AND SUCCESSIVE RENEWALS OF
THE THREE-MONTH TALENT CONTRACTS, AN EMPLOYER-EMPLOYEE
RELATIONSHIP WAS CREATED AS PROVIDED FOR UNDER ARTICLE
280 OF THE LABOR CODE[;]

IV.
BY THE CONSTRUCTIVE DISMISSAL OF HEREIN PETITIONER, AS A
REGULAR EMPLOYEE, THERE WAS A DENIAL OF PETITIONERS RIGHT
 TO DUE PROCESS THUS ENTITLING HER TO THE MONEY CLAIMS AS
STATED IN THE COMPLAINT[.][16]

The issues for our disposition are: (1) whether or not this Court can review the
findings of the Court of Appeals; and (2) whether or not under Rule 45 of the Rules of Court
the Court of Appeals committed a reversible error in its Decision.

On the first issue, private respondents contend that the issues raised in the instant
petition are mainly factual and that there is no showing that the said issues have been
resolved arbitrarily and without basis. They add that the findings of the Court of Appeals are
supported by overwhelming wealth of evidence on record as well as prevailing jurisprudence
on the matter.[17]

Petitioner however contends that this Court can review the findings of the Court of
Appeals, since the appellate court erred in deciding a question of substance in a way which is
not in accord with law or with applicable decisions of this Court.[18]

We agree with petitioner. Decisions, final orders or resolutions of the Court of

Appeals in any case regardless of the nature of the action or proceeding involved may be
appealed to this Court through a petition for review. This remedy is a continuation of the
appellate process over the original case,[19] and considering there is no congruence in the
findings of the NLRC and the Court of Appeals regarding the status of employment of
petitioner, an exception to the general rule that this Court is bound by the findings of facts of
the appellate court,[20] we can review such findings.

On the second issue, private respondents contend that the Court of Appeals did not err
when it upheld the validity of the talent contracts voluntarily entered into by petitioner. It
further stated that prevailing jurisprudence has recognized and sustained the absence of
employer-employee relationship between a talent and the media entity which engaged the
talents services on a per talent contract basis, citing the case of Sonza v. ABS-CBN
Broadcasting Corporation.[21]

Petitioner avers however that an employer-employee relationship was created when

the private respondents started to merely renew the contracts repeatedly fifteen times or for
four consecutive years.[22]

Again, we agree with petitioner. The Court of Appeals committed reversible error when
it held that petitioner was a fixed-term employee. Petitioner was a regular employee under
contemplation of law. The practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law. The assertion that a
talent contract exists does not necessarily prevent a regular employment status.[23]

Further, the Sonza case is not applicable. In Sonza, the television station did not
instruct Sonza how to perform his job. How Sonza delivered his lines, appeared on
television, and sounded on radio were outside the television stations control. Sonza had a
free hand on what to say or discuss in his shows provided he did not attack the television
station or its interests. Clearly, the television station did not exercise control over the means
and methods of the performance of Sonzas work. [24] In the case at bar, ABC had control over
the performance of petitioners work. Noteworthy too, is the comparatively low P28,000
monthly pay of petitioner[25] vis the P300,000 a month salary of Sonza,[26] that all the more
bolsters the conclusion that petitioner was not in the same situation as Sonza.

The contract of employment of petitioner with ABC had the following stipulations:
xxxx
1. SCOPE OF SERVICES TALENT agrees to devote his/her talent, time,
attention and best efforts in the performance of his/her duties and responsibilities as
Anchor/Program Host/Newscaster of the Program, in accordance with the direction
of ABC and/or its authorized representatives.
1.1. DUTIES AND RESPONSIBILITIES TALENT shall:
a. Render his/her services as a newscaster on the Program;
b. Be involved in news-gathering operations by conducting interviews on-
and off-the-air;
c. Participate in live remote coverages when called upon;
d. Be available for any other news assignment, such as writing, research or
camera work;
e. Attend production meetings;
f. On assigned days, be at the studios at least one (1) hour before the live
telecasts;
g. Be present promptly at the studios and/or other place of assignment at
the time designated by ABC;
h. Keep abreast of the news;
i. Give his/her full cooperation to ABC and its duly authorized
representatives in the production and promotion of the Program; and
j. Perform such other functions as may be assigned to him/her from time
to time.
xxxx
1.3 COMPLIANCE WITH STANDARDS, INSTRUCTIONS AND
OTHER RULES AND REGULATIONS TALENT agrees that he/she will
promptly and faithfully comply with the requests and instructions, as well as
the program standards, policies, rules and regulations of ABC, the KBP and
the government or any of its agencies and instrumentalities.[27]
xxxx

In Manila Water Company, Inc. v. Pena,[28] we said that the elements to determine the existence
of an employment 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 most
important element is the employers control of the employees conduct, not only as to the result of
the work to be done, but also as to the means and methods to accomplish it.[29]

The duties of petitioner as enumerated in her employment contract indicate that ABC
had control over the work of petitioner. Aside from control, ABC also dictated the work
assignments and payment of petitioners wages. ABC also had power to dismiss her. All these
being present, clearly, there existed an employment relationship between petitioner and
ABC.

Concerning regular employment, the law provides for two kinds of employees,
namely: (1) those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and (2) those who have rendered at
least one year of service, whether continuous or broken, with respect to the activity in which
they are employed.[30] In other words, regular status arises from either the nature of work of
the employee or the duration of his employment. [31] In Benares v. Pancho,[32] we very
succinctly said:
[T]he primary standard for determining regular employment is the reasonable
connection between the particular activity performed by the employee vis--vis the
usual trade or business of the employer. This connection can be determined by
considering the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. 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.[33]

In our view, the requisites for regularity of employment have been met in the instant
case. Gleaned from the description of the scope of services aforementioned, petitioners work
was necessary or desirable in the usual business or trade of the employer which includes, as a
pre-condition for its enfranchisement, its participation in the governments news and public
information dissemination. In addition, her work was continuous for a period of four
years. This repeated engagement under contract of hire is indicative of the necessity and
desirability of the petitioners work in private respondent ABCs business. [34]

The contention of the appellate court that the contract was characterized by a valid fixed-
period employment is untenable. For such contract to be valid, it should be shown that the fixed
period was knowingly and voluntarily agreed upon by the parties. There should have been no
force, duress or improper pressure brought to bear upon the employee; neither should there be
any other circumstance that vitiates the employees consent.[35] It should satisfactorily appear that
the employer and the employee dealt with each other on more or less equal terms with no moral
dominance being exercised by the employer over the employee.[36] Moreover, fixed-term
employment will not be considered valid where, from the circumstances, it is apparent that
periods have been imposed to preclude acquisition of tenurial security by the employee.[37]
In the case at bar, it does not appear that the employer and employee dealt with each other
on equal terms. Understandably, the petitioner could not object to the terms of her employment
contract because she did not want to lose the job that she loved and the workplace that she had
grown accustomed to,[38] which is exactly what happened when she finally manifested her
intention to negotiate. Being one of the numerous newscasters/broadcasters of ABC and desiring
to keep her job as a broadcasting practitioner, petitioner was left with no choice but to affix her
signature of conformity on each renewal of her contract as already prepared by private
respondents; otherwise, private respondents would have simply refused to renew her
contract. Patently, the petitioner occupied a position of weakness vis--vis the employer. Moreover,
private respondents practice of repeatedly extending petitioners 3-month contract for four years is
a circumvention of the acquisition of regular status. Hence, there was no valid fixed-term
employment between petitioner and private respondents.

While this Court has recognized the validity of fixed-term employment contracts in a
number of cases, it has consistently emphasized that when the circumstances of a case show
that the periods were imposed to block the acquisition of security of tenure, they should be
struck down for being contrary to law, morals, good customs, public order or public
policy.[39]

As a regular employee, petitioner is entitled to security of tenure and can be dismissed only
for just cause and after due compliance with procedural due process. Since private respondents did
not observe due process in constructively dismissing the petitioner, we hold that there was an
illegal dismissal.

WHEREFORE, the challenged Decision dated January 30, 2004 and Resolution
dated June 23, 2004 of the Court of Appeals in CA-G.R. SP No. 63125, which held that the
petitioner was a fixed-term employee, are REVERSED and SET ASIDE. The NLRC
decision is AFFIRMED.

Costs against private respondents.

SO ORDERED.
16. JOSE MEL BERNARTE, G.R. No. 192084

Petitioner,

Present:

- versus - CARPIO, J., Chairperson,

BRION,

DEL CASTILLO,*

PEREZ, and

SERENO, JJ.

PHILIPPINE BASKETBALL

ASSOCIATION (PBA), JOSE

EMMANUEL M. EALA, and Promulgated:

PERRY MARTINEZ,

Respondents. September 14, 2011

x-----------------------------------------------------------------------------------------x

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 17 December 2009 Decision2 and 5 April 2010
Resolution3 of the Court of Appeals in CA-G.R. SP No. 105406. The Court of Appeals set aside
the decision of the National Labor Relations Commission (NLRC), which affirmed the decision
of the Labor Arbiter, and held that petitioner Jose Mel Bernarte is an independent contractor,
and not an employee of respondents Philippine Basketball Association (PBA), Jose Emmanuel
M. Eala, and Perry Martinez. The Court of Appeals denied the motion for reconsideration.

The Facts
The facts, as summarized by the NLRC and quoted by the Court of Appeals, are as follows:

Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to
join the PBA as referees. During the leadership of Commissioner Emilio Bernardino, they
were made to sign contracts on a year-to-year basis. During the term of
Commissioner Eala, however, changes were made on the terms of their employment.

Complainant Bernarte, for instance, was not made to sign a contract during the first
conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It
was only during the second conference when he was made to sign a one and a half month
contract for the period July 1 to August 5, 2003.

On January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory performance
on and off the court. It was a total shock for Bernarte who was awarded Referee of the
year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order
of Ernie De Leon.

On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool
of referees in February 2001. On March 1, 2001, he signed a contract as trainee.
Beginning 2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003,
respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over
his questioning on the assignment of referees officiating out-of-town games. Beginning
February 2004, he was no longer made to sign a contract.

Respondents aver, on the other hand, that complainants entered into two contracts of
retainer with the PBA in the year 2003. The first contract was for the period January 1,
2003 to July 15, 2003; and the second was for September 1 to December 2003. After the
lapse of the latter period, PBA decided not to renew their contracts.

Complainants were not illegally dismissed because they were not employees of the PBA.
Their respective contracts of retainer were simply not renewed. PBA had the prerogative
of whether or not to renew their contracts, which they knew were fixed.4

In her 31 March 2005 Decision,5 the Labor Arbiter6 declared petitioner an employee whose
dismissal by respondents was illegal. Accordingly, the Labor Arbiter ordered the reinstatement
of petitioner and the payment of backwages, moral and exemplary damages and attorneys fees,
to wit:

WHEREFORE, premises considered all respondents who are here found to have illegally
dismissed complainants are hereby ordered to (a) reinstate complainants within thirty (30)
days from the date of receipt of this decision and to solidarily pay complainants:

JOSE MEL RENATO

BERNARTE GUEVARRA

1. backwages from January 1,

2004 up to the finality of this
 Decision, which to date is

P536,250.00 P211,250.00

2. moral damages 100,000.00

50,000.00 100,000.00

3. exemplary damages

50,000.00
4. 10% attorneys fees 68,625.00 36,125.00

TOTAL P754,875.00 P397,375.00

or a total of P1,152,250.00

The rest of the claims are hereby dismissed for lack of merit or basis.

SO ORDERED.7

In its 28 January 2008 Decision,8 the NLRC affirmed the Labor Arbiters judgment. The
dispositive portion of the NLRCs decision reads:

WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor

Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is AFFIRMED.

SO ORDERED.9

Respondents filed a petition for certiorari with the Court of Appeals, which overturned the
decisions of the NLRC and Labor Arbiter. The dispositive portion of the Court of Appeals
decision reads:

WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated January 28, 2008
and Resolution dated August 26, 2008 of the National Labor Relations Commission
are ANNULLED and SET ASIDE. Private respondents complaint before the Labor Arbiter
is DISMISSED.

SO ORDERED.10
 The Court of Appeals Ruling

The Court of Appeals found petitioner an independent contractor since respondents did not
exercise any form of control over the means and methods by which petitioner performed his
work as a basketball referee. The Court of Appeals held:

While the NLRC agreed that the PBA has no control over the referees acts of blowing the
whistle and making calls during basketball games, it, nevertheless, theorized that the said
acts refer to the means and methods employed by the referees in officiating basketball
games for the illogical reason that said acts refer only to the referees skills. How could a
skilled referee perform his job without blowing a whistle and making calls? Worse, how
can the PBA control the performance of work of a referee without controlling his acts of
blowing the whistle and making calls?

Moreover, this Court disagrees with the Labor Arbiters finding (as affirmed by the
NLRC) that the Contracts of Retainer show that petitioners have control over private
respondents.

xxxx

Neither do We agree with the NLRCs affirmance of the Labor Arbiters conclusion that
private respondents repeated hiring made them regular employees by operation of law. 11

The Issues

The main issue in this case is whether petitioner is an employee of respondents, which in turn
determines whether petitioner was illegally dismissed.

Petitioner raises the procedural issue of whether the Labor Arbiters decision has become final
and executory for failure of respondents to appeal with the NLRC within
the reglementary period.

The Ruling of the Court

The petition is bereft of merit.

The Court shall first resolve the procedural issue posed by petitioner.

Petitioner contends that the Labor Arbiters Decision of 31 March 2005 became final
and executory for failure of respondents to appeal with the NLRC within the prescribed period.
Petitioner claims that the Labor Arbiters decision was constructively served on respondents as
early as August 2005 while respondents appealed the Arbiters decision only on 31 March 2006,
way beyond the reglementary period to appeal. Petitioner points out that service of an unclaimed
registered mail is deemed complete five days from the date of first notice of the post master. In
this case three notices were issued by the post office, the last being on 1 August 2005. The
unclaimed registered mail was consequently returned to sender. Petitioner presents the
Postmasters Certification to prove constructive service of the Labor Arbiters decision on
respondents. The Postmaster certified:
xxx

That upon receipt of said registered mail matter, our registry in charge, Vicente Asis, Jr.,
immediately issued the first registry notice to claim on July 12, 2005 by the addressee.
The second and third notices were issued on July 21 and August 1, 2005, respectively

That the subject registered letter was returned to the sender (RTS) because the addressee
failed to claim it after our one month retention period elapsed. Said registered letter was
dispatched from this office to Manila CPO (RTS) under bill #6, line 7, page1, column 1,
on September 8, 2005.12

Section 10, Rule 13 of the Rules of Court provides:

SEC. 10. Completeness of service. Personal service is complete upon actual delivery.
Service by ordinary mail is complete upon the expiration of ten (10) days after mailing,
unless the court otherwise provides. Service by registered mail is complete upon actual
receipt by the addressee, or after five (5) days from the date he received the first notice of
the postmaster, whichever date is earlier.

The rule on service by registered mail contemplates two situations: (1) actual service the
completeness of which is determined upon receipt by the addressee of the registered mail; and
(2) constructive service the completeness of which is determined upon expiration of five days
from the date the addressee received the first notice of the postmaster.13

Insofar as constructive service is concerned, there must be conclusive proof that a first notice
was duly sent by the postmaster to the addressee.14 Not only is it required that notice of the
registered mail be issued but that it should also be delivered to and received by the
addressee.15 Notably, the presumption that official duty has been regularly performed is not
applicable in this situation. It is incumbent upon a party who relies on constructive service to
prove that the notice was sent to, and received by, the addressee.16

The best evidence to prove that notice was sent would be a certification from the postmaster,
who should certify not only that the notice was issued or sent but also as to how, when and to
whom the delivery and receipt was made. The mailman may also testify that the notice was
actually delivered.17

In this case, petitioner failed to present any concrete proof as to how, when and to whom the
delivery and receipt of the three notices issued by the post office was made. There is no
conclusive evidence showing that the post office notices were actually received by respondents,
negating petitioners claim of constructive service of the Labor Arbiters decision on respondents.
The Postmasters Certification does not sufficiently prove that the three notices were delivered to
and received by respondents; it only indicates that the post office issued the three notices.
Simply put, the issuance of the notices by the post office is not equivalent to delivery to and
receipt by the addressee of the registered mail. Thus, there is no proof of completed constructive
service of the Labor Arbiters decision on respondents.

At any rate, the NLRC declared the issue on the finality of the Labor Arbiters decision moot as
respondents appeal was considered in the interest of substantial justice. We agree with the
NLRC. The ends of justice will be better served if we resolve the instant case on the merits
rather than allowing the substantial issue of whether petitioner is an independent contractor or an
employee linger and remain unsettled due to procedural technicalities.

The existence of an employer-employee relationship is ultimately a question of fact. As a

general rule, factual issues are beyond the province of this Court. However, this rule admits of
exceptions, one of which is where there are conflicting findings of fact between the Court of
Appeals, on one hand, and the NLRC and Labor Arbiter, on the other, such as in the present
case.18

To determine the existence of an employer-employee relationship, case law has consistently

applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The so-called control
test is the most important indicator of the presence or absence of an employer-employee
relationship.19

In this case, PBA admits repeatedly engaging petitioners services, as shown in the retainer
contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as stipulated
in the retainer contract. PBA can terminate the retainer contract for petitioners violation of its
terms and conditions.

However, respondents argue that the all-important element of control is lacking in this case,
making petitioner an independent contractor and not an employee of respondents.

Petitioner contends otherwise. Petitioner asserts that he is an employee of respondents since the
latter exercise control over the performance of his work. Petitioner cites the following
stipulations in the retainer contract which evidence control: (1) respondents classify or rate a
referee; (2) respondents require referees to attend all basketball games organized or authorized
by the PBA, at least one hour before the start of the first game of each day; (3) respondents
assign petitioner to officiate ballgames, or to act as alternate referee or substitute; (4) referee
agrees to observe and comply with all the requirements of the PBA governing the conduct of the
referees whether on or off the court; (5) referee agrees (a) to keep himself in good physical,
mental, and emotional condition during the life of the contract; (b) to give always his best effort
and service, and loyalty to the PBA, and not to officiate as referee in any basketball game
outside of the PBA, without written prior consent of the Commissioner; (c) always to conduct
himself on and off the court according to the highest standards of honesty or morality; and (6)
imposition of various sanctions for violation of the terms and conditions of the contract.

The foregoing stipulations hardly demonstrate control over the means and methods by which
petitioner performs his work as a referee officiating a PBA basketball game. The contractual
stipulations do not pertain to, much less dictate, how and when petitioner will blow the whistle
and make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to
maintain the integrity of the professional basketball league. As correctly observed by the Court
of Appeals, how could a skilled referee perform his job without blowing a whistle and making
calls? x x x [H]ow can the PBA control the performance of work of a referee without controlling
his acts of blowing the whistle and making calls? 20

In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined the relationship between a

television and radio station and one of its talents, the Court held that not all rules imposed by the
hiring party on the hired party indicate that the latter is an employee of the former. The Court
held:

We find that these general rules are merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and radio programs that comply
with standards of the industry. We have ruled that:

Further, not every form of control that a party reserves to himself over the conduct of the
other party in relation to the services being rendered may be accorded the effect of
establishing an employer-employee relationship. The facts of this case fall squarely with
the case of Insular Life Assurance Co., Ltd. v. NLRC. In said case, we held that:

Logically, the line should be drawn between rules that merely serve as guidelines towards
the achievement of the mutually desired result without dictating the means or methods to
be employed in attaining it, and those that control or fix the methodology and bind or
restrict the party hired to the use of such means. The first, which aim only to promote the
result, create no employer-employee relationship unlike the second, which address both
the result and the means used to achieve it.22

We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or decision is
to be made. The referees decide whether an infraction was committed, and the PBA cannot
overrule them once the decision is made on the playing court. The referees are the only,
absolute, and final authority on the playing court. Respondents or any of the PBA officers
cannot and do not determine which calls to make or not to make and cannot control the referee
when he blows the whistle because such authority exclusively belongs to the referees. The very
nature of petitioners job of officiating a professional basketball game undoubtedly calls for
freedom of control by respondents.

Moreover, the following circumstances indicate that petitioner is an independent contractor: (1)
the referees are required to report for work only when PBA games are scheduled, which is three
times a week spread over an average of only 105 playing days a year, and they officiate games
at an average of two hours per game; and (2) the only deductions from the fees received by the
referees are withholding taxes.

In other words, unlike regular employees who ordinarily report for work eight hours per day for
five days a week, petitioner is required to report for work only when PBA games are scheduled
or three times a week at two hours per game. In addition, there are no deductions for
contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual
deductions from employees salaries. These undisputed circumstances buttress the fact that
petitioner is an independent contractor, and not an employee of respondents.

Furthermore, the applicable foreign case law declares that a referee is an independent contractor,
whose special skills and independent judgment are required specifically for such position and
cannot possibly be controlled by the hiring party.

In Yonan v. United States Soccer Federation, Inc.,23 the United States District Court of Illinois
held that plaintiff, a soccer referee, is an independent contractor, and not an employee of
defendant which is the statutory body that governs soccer in the United States. As such, plaintiff
was not entitled to protection by the Age Discrimination in Employment Act. The U.S. District
Court ruled:

Generally, if an employer has the right to control and direct the work of an individual, not
only as to the result to be achieved, but also as to details by which the result is achieved,
an employer/employee relationship is likely to exist. The Court must be careful to
distinguish between control[ling] the conduct of another party contracting party by setting
out in detail his obligations consistent with the freedom of contract, on the one hand, and
the discretionary control an employer daily exercises over its employees conduct on the
other.

Yonan asserts that the Federation closely supervised his performance at each soccer game
he officiated by giving him an assessor, discussing his performance, and controlling what
clothes he wore while on the field and traveling. Putting aside that the Federation did not,
for the most part, control what clothes he wore, the Federation did not supervise Yonan,
but rather evaluated his performance after matches. That the Federation
evaluated Yonan as a referee does not mean that he was an employee. There is no
question that parties retaining independent contractors may judge the performance of
those contractors to determine if the contractual relationship should continue. x x x

It is undisputed that the Federation did not control the way Yonan refereed his games. He
had full discretion and authority, under the Laws of the Game, to call the game as he saw
fit. x x x In a similar vein, subjecting Yonan to qualification standards and procedures
like the Federations registration and training requirements does not create an
employer/employee relationship. x x x

A position that requires special skills and independent judgment weights in favor of
independent contractor status. x x x Unskilled work, on the other hand, suggests an
employment relationship. x x x Here, it is undisputed that soccer refereeing, especially at
the professional and international level, requires a great deal of skill and natural
ability. Yonan asserts that it was the Federations training that made him a top referee, and
that suggests he was an employee. Though substantial training supports an employment
inference, that inference is dulled significantly or negated when the putative employers
activity is the result of a statutory requirement, not the employers choice. x x x

In McInturff v. Battle Ground Academy of Franklin,24 it was held that the umpire was
not an agent of the Tennessee Secondary School Athletic Association (TSSAA), so the
players vicarious liability claim against the association should be dismissed. In finding
that the umpire is an independent contractor, the Court of Appeals of Tennesse ruled:

The TSSAA deals with umpires to achieve a result-uniform rules for all baseball games
played between TSSAA member schools. The TSSAA does not supervise regular season
games. It does not tell an official how to conduct the game beyond the framework
established by the rules. The TSSAA does not, in the vernacular of the case law, control
the means and method by which the umpires work.

In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner
is an employee of the former. For a hired party to be considered an employee, the hiring party
must have control over the means and methods by which the hired party is to perform his work,
which is absent in this case. The continuous rehiring by PBA of petitioner simply signifies the
renewal of the contract between PBA and petitioner, and highlights the satisfactory services
rendered by petitioner warranting such contract renewal. Conversely, if PBA decides to
discontinue petitioners services at the end of the term fixed in the contract, whether for
unsatisfactory services, or violation of the terms and conditions of the contract, or for whatever
other reason, the same merely results in the non-renewal of the contract, as in the present case.
The non-renewal of the contract between the parties does not constitute illegal dismissal of
petitioner by respondents.

WHEREFORE, we DENY the petition and AFFIRM the assailed decision of the Court of
Appeals.

SO ORDERED.