G.R. No. 73887 December 21, 1989 GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner, vs.

HONORATO JUDICO and NATIONAL LABOR RELATIONS COMMISSION, respondents. G.A. Fortun and Associates for petitioner. Corsino B. Soco for private respondent. PARAS J.: Before us is a Petition for certiorari to review the decision of the National La bor Relations Commission (NLRC, for brevity) dated September 9, 1985 reversing t he decision of Labor Arbiter Vito J. Minoria, dated June 9, 1983, by 1) ordering petitioner insurance company, Great Pacific Life Assurance Corporation (Grepali fe, for brevity) to recognize private respondent Honorato Judico, as its regular employee as defined under Art. 281 of the Labor Code and 2) remanding the case to its origin for the determination of private respondent Judico's money claims. The records of the case show that Honorato Judico filed a complaint for illegal dismissal against Grepalife, a duly organized insurance firm, before the NLRC Re gional Arbitration Branch No. VII, Cebu City on August 27, 1982. Said complaint prayed for award of money claims consisting of separation pay, unpaid salary and 13th month pay, refund of cash bond, moral and exemplary damages and attorney's fees. Both parties appealed to the NLRC when a decision was rendered by the Labor Arbi ter dismissing the complaint on the ground that the employer-employee relations did not exist between the parties but ordered Grepalife to pay complainant the s um of Pl,000.00 by reason of Christian Charity. On appeal, said decision was reversed by the NLRC ruling that complainant is a r egular employee as defined under Art. 281 of the Labor Code and declaring the ap peal of Grepalife questioning the legality of the payment of Pl,000.00 to compla inant moot and academic. Nevertheless, for the purpose of revoking the supersede as bond of said company it ruled that the Labor Arbiter erred in awarding Pl,000 .00 to complainant in the absence of any legal or factual basis to support its p ayment. Petitioner company moved to reconsider, which was denied, hence this petition fo r review raising four legal issues to wit: I. Whether the relationship between insurance agents and their principal, the in surance company, is that of agent and principal to be governed by the Insurance Code and the Civil Code provisions on agency, or one of employer-employee, to be governed by the Labor Code. II. Whether insurance agents are entitled to the employee benefits prescribed by the Labor Code. III. Whether the public respondent NLRC has jurisdiction to take cognizance of a controversy between insurance agent and the insurance company, arising from the ir agency relations. IV. Whether the public respondent acted correctly in setting aside the decision of Labor Arbiter Vito J. Minoria and in ordering the case remanded to said Labor Arbiter for further proceedings.(p. 159, Rollo) The crux of these issues boil down to the question of whether or not employer-em ployee relationship existed between petitioner and private respondent. Petitioner admits that on June 9, 1976, private respondent Judico entered into a n agreement of agency with petitioner Grepalife to become a debit agent attached to the industrial life agency in Cebu City. Petitioner defines a debit agent as "an insurance agent selling/servicing industrial life plans and policy holders. Industrial life plans are those whose premiums are payable either daily, weekly or monthly and which are collectible by the debit agents at the home or any pla ce designated by the policy holder" (p. 156, Rollo). Such admission is in line w ith the findings of public respondent that as such debit agent, private responde nt Judico had definite work assignments including but not limited to collection of premiums from policy holders and selling insurance to prospective clients. Pu blic respondent NLRC also found out that complainant was initially paid P 200. 0 0 as allowance for thirteen (13) weeks regardless of production and later a cert ain percentage denominated as sales reserve of his total collections but not les

ser than P 200.00. Sometime in September 1981, complainant was promoted to the p osition of Zone Supervisor and was given additional (supervisor's) allowance fix ed at P110.00 per week. During the third week of November 1981, he was reverted to his former position as debit agent but, for unknown reasons, not paid so-call ed weekly sales reserve of at least P 200.00. Finally on June 28, 1982, complain ant was dismissed by way of termination of his agency contract. Petitioner assails the findings of the NLRC that private respondent is an employ ee of the former. Petitioner argues that Judico's compensation was not based on any fixed number of hours he was required to devote to the service of petitioner company but rather it was the production or result of his efforts or his work t hat was being compensated and that the so-called allowance for the first thirtee n weeks that Judico worked as debit agent, cannot be construed as salary but as a subsidy or a way of assistance for transportation and meal expenses of a new d ebit agent during the initial period of his training which was fixed for thirtee n (13) weeks. Stated otherwise, petitioner contends that Judico's compensation, in the form of commissions and bonuses, was based on actual production, (insuran ce plans sold and premium collections). Said contentions of petitioner are strongly rejected by private respondent. He m aintains that he received a definite amount as his Wage known as "sales reserve" the failure to maintain the same would bring him back to a beginner's employmen t with a fixed weekly wage of P 200.00 regardless of production. He was assigned a definite place in the office to work on when he is not in the field; and in a ddition to canvassing and making regular reports, he was burdened with the job o f collection and to make regular weekly report thereto for which an anemic perfo rmance would mean dismissal. He earned out of his faithful and productive servic e, a promotion to Zone Supervisor with additional supervisor's allowance, (a def inite or fixed amount of P110.00) that he was dismissed primarily because of ane mic performance and not because of the termination of the contract of agency sub stantiate the fact that he was indeed an employee of the petitioner and not an i nsurance agent in the ordinary meaning of the term. That private respondent Judico was an agent of the petitioner is unquestionable. But, as We have held in Investment Planning Corp. vs. SSS, 21 SCRA 294, an insu rance company may have two classes of agents who sell its insurance policies: (1 ) salaried employees who keep definite hours and work under the control and supe rvision of the company; and (2) registered representatives who work on commissio n basis. The agents who belong to the second category are not required to report for work at anytime, they do not have to devote their time exclusively to or wo rk solely for the company since the time and the effort they spend in their work depend entirely upon their own will and initiative; they are not required to ac count for their time nor submit a report of their activities; they shoulder thei r own selling expenses as well as transportation; and they are paid their commis sion based on a certain percentage of their sales. One salient point in the dete rmination of employer-employee relationship which cannot be easily ignored is th e fact that the compensation that these agents on commission received is not pai d by the insurance company but by the investor (or the person insured). After de termining the commission earned by an agent on his sales the agent directly dedu cts it from the amount he received from the investor or the person insured and t urns over to the insurance company the amount invested after such deduction is m ade. The test therefore is whether the "employer" controls or has reserved the r ight to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Applying the aforementioned test to the case at bar, We can readily see that the element of control by the petitioner on Judico was very much present. The recor d shows that petitioner Judico received a definite minimum amount per week as hi s wage known as "sales reserve" wherein the failure to maintain the same would b ring him back to a beginner's employment with a fixed weekly wage of P 200.00 fo r thirteen weeks regardless of production. He was assigned a definite place in t he office to work on when he is not in the field; and in addition to his canvass ing work he was burdened with the job of collection. In both cases he was requir ed to make regular report to the company regarding these duties, and for which a

n anemic performance would mean a dismissal. Conversely faithful and productive service earned him a promotion to Zone Supervisor with additional supervisor's a llowance, a definite amount of P110.00 aside from the regular P 200.00 weekly "a llowance". Furthermore, his contract of services with petitioner is not for a pi ece of work nor for a definite period. On the other hand, an ordinary commission insurance agent works at his own volit ion or at his own leisure without fear of dismissal from the company and short o f committing acts detrimental to the business interest of the company or against the latter, whether he produces or not is of no moment as his salary is based o n his production, his anemic performance or even dead result does not become a g round for dismissal. Whereas, in private respondent's case, the undisputed facts show that he was controlled by petitioner insurance company not only as to the kind of work; the amount of results, the kind of performance but also the power of dismissal. Undoubtedly, private respondent, by nature of his position and wor k, had been a regular employee of petitioner and is therefore entitled to the pr otection of the law and could not just be terminated without valid and justifiab le cause. Premises considered, the appealed decision is hereby AFFIRMED in toto. SO ORDERED. Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ ., concur.

G.R. No. 84484 November 15, 1989 INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents. Tirol & Tirol for petitioner. Enojas, Defensor & Teodosio Cabado Law Offices for private respondent. NARVASA, J.: On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered into a contract 1 by which: 1. Basiao was "authorized to solicit within the Philippines applications for ins urance policies and annuities in accordance with the existing rules and regulati ons" of the Company; 2. he would receive "compensation, in the form of commissions ... as provided in the Schedule of Commissions" of the contract to "constitute a part of the consi deration of ... (said) agreement;" and

3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well a s all its circulars ... and those which may from time to time be promulgated by it, ..." were made part of said contract. The contract also contained, among others, provisions governing the relations of the parties, the duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement, viz.: RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. Nothing herein contained sh all therefore be construed to create the relationship of employee and employer b etween the Agent and the Company. However, the Agent shall observe and conform t o all rules and regulations which the Company may from time to time prescribe. ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly o r indirectly, rebates in any form, or from making any misrepresentation or overselling, and, in general, from doing or committing acts prohibited in the Agent' s Manual and in circulars of the Office of the Insurance Commissioner. TERMINATION. The Company may terminate the contract at will, without any previou s notice to the Agent, for or on account of ... (explicitly specified causes). . .. Either party may terminate this contract by giving to the other notice in writin g to that effect. It shall become ipso facto cancelled if the Insurance Commissi oner should revoke a Certificate of Authority previously issued or should the Ag ent fail to renew his existing Certificate of Authority upon its expiration. The Agent shall not have any right to any commission on renewal of premiums that ma y be paid after the termination of this agreement for any cause whatsoever, exce pt when the termination is due to disability or death in line of service. As to commission corresponding to any balance of the first year's premiums remaining u npaid at the termination of this agreement, the Agent shall be entitled to it if the balance of the first year premium is paid, less actual cost of collection, unless the termination is due to a violation of this contract, involving crimina l liability or breach of trust. ASSIGNMENT. No Assignment of the Agency herein created or of commissions or othe r compensations shall be valid without the prior consent in writing of the Compa ny. ... Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and to implement his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates, while concu rrently fulfilling his commitments under the first contract with the Company. 2 In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil action and this, he was later to claim, prompted the latter to terminate also his engagement unde r the first contract and to stop payment of his commissions starting April 1, 19 80. 3 Basiao thereafter filed with the then Ministry of Labor a complaint 4 against th e Company and its president. Without contesting the termination of the first con tract, the complaint sought to recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's employee, but an indepen dent contractor and that the Company had no obligation to him for unpaid commiss ions under the terms and conditions of his contract. 5 The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting agreement had established an employer-employee relationship bet ween him and the Company, and this conferred jurisdiction on the Ministry of Lab or to adjudicate his claim. Said official's decision directed payment of his unp aid commissions "... equivalent to the balance of the first year's premium remai ning unpaid, at the time of his termination, of all the insurance policies solic ited by ... (him) in favor of the respondent company ..." plus 10% attorney's fe es. 6 This decision was, on appeal by the Company, affirmed by the National Labor Rela tions Commission. 7 Hence, the present petition for certiorari and prohibition. The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had

become the Company's employee by virtue of the contract invoked by him, thereby placing his claim for unpaid commissions within the original and exclusive juris diction of the Labor Arbiter under the provisions of Section 217 of the Labor Co de, 8 or, contrarily, as the Company would have it, that under said contract Bas iao's status was that of an independent contractor whose claim was thus cognizab le, not by the Labor Arbiter in a labor case, but by the regular courts in an or dinary civil action. The Company's thesis, that no employer-employee relation in the legal and genera lly accepted sense existed between it and Basiao, is drawn from the terms of the contract they had entered into, which, either expressly or by necessary implica tion, made Basiao the master of his own time and selling methods, left to his ju dgment the time, place and means of soliciting insurance, set no accomplishment quotas and compensated him on the basis of results obtained. He was not bound to observe any schedule of working hours or report to any regular station; he coul d seek and work on his prospects anywhere and at anytime he chose to, and was fr ee to adopt the selling methods he deemed most effective. Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company, the respondents contend that they do not con stitute the decisive determinant of the nature of his engagement, invoking prece dents to the effect that the critical feature distinguishing the status of an em ployee from that of an independent contractor is control, that is, whether or no t the party who engages the services of another has the power to control the lat ter's conduct in rendering such services. Pursuing the argument, the respondents draw attention to the provisions of Basiao's contract obliging him to "... obse rve and conform to all rules and regulations which the Company may from time to time prescribe ...," as well as to the fact that the Company prescribed the qual ifications of applicants for insurance, processed their applications and determi ned the amounts of insurance cover to be issued as indicative of the control, wh ich made Basiao, in legal contemplation, an employee of the Company. 9 It is true that the "control test" expressed in the following pronouncement of t he Court in the 1956 case of Viana vs. Alejo Al-Lagadan 10 ... In determining the existence of employer-employee relationship, the followin g elements are generally considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees' conduct although the latter is the most importa nt element (35 Am. Jur. 445). ... has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without question a valid test of the character of a contract or agreement to render service. It should, however, be obvious that not every form of control th at the hiring party reserves to himself over the conduct of the party hired in r elation to the services rendered may be accorded the effect of establishing an e mployer-employee relationship between them in the legal or technical sense of th e term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realisticall y, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the e ngagement. Logically, the line should be drawn between rules that merely serve as guideline s towards the achievement of the mutually desired result without dictating the m eans or methods to be employed in attaining it, and those that control or fix th e 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 relati onship unlike the second, which address both the result and the means used to ac hieve it. The distinction acquires particular relevance in the case of an enterp rise affected with public interest, as is the business of insurance, and is on t hat account subject to regulation by the State with respect, not only to the rel ations between insurer and insured but also to the internal affairs of the insur ance company. 12 Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a se

t of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance applications to processing and approval by the Company, and al so reserve to the Company the determination of the premiums to be paid and the s chedules of payment. None of these really invades the agent's contractual prerog ative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee relationship between him and the company. There is no dearth of authority holding persons similarly placed as respondent B asiao to be independent contractors, instead of employees of the parties for who m they worked. In Mafinco Trading Corporation vs. Ople,13 the Court ruled that a person engaged to sell soft drinks for another, using a truck supplied by the l atter, but with the right to employ his own workers, sell according to his own m ethods subject only to prearranged routes, observing no working hours fixed by t he other party and obliged to secure his own licenses and defray his own selling expenses, all in consideration of a peddler's discount given by the other party for at least 250 cases of soft drinks sold daily, was not an employee but an in dependent contractor. In Investment Planning Corporation of the Philippines us. Social Security System 14 a case almost on all fours with the present one, this Court held that there was no employer-employee relationship between a commission agent and an investme nt company, but that the former was an independent contractor where said agent a nd others similarly placed were: (a) paid compensation in the form of commission s based on percentages of their sales, any balance of commissions earned being p ayable to their legal representatives in the event of death or registration; (b) required to put up performance bonds; (c) subject to a set of rules and regulat ions governing the performance of their duties under the agreement with the comp any and termination of their services for certain causes; (d) not required to re port for work at any time, nor to devote their time exclusively to working for t he company nor to submit a record of their activities, and who, finally, shoulde red their own selling and transportation expenses. More recently, in Sara vs. NLRC, 15 it was held that one who had been engaged by a rice miller to buy and sell rice and palay without compensation except a cert ain percentage of what he was able to buy or sell, did work at his own pleasure without any supervision or control on the part of his principal and relied on hi s own resources in the performance of his work, was a plain commission agent, an independent contractor and not an employee. The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the l atter might from time to time prescribe. No showing has been made that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such showing, the Court w ill not speculate that any exceptions or qualifications were imposed on the expr ess provision of the contract leaving Basiao "... free to exercise his own judgm ent as to the time, place and means of soliciting insurance." The Labor Arbiter's decision makes reference to Basiao's claim of having been co nnected with the Company for twenty-five years. Whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao's status under t he contract of July 2, 1968, not the length of his relationship with the Company . The Court, therefore, rules that under the contract invoked by him, Basiao was n ot an employee of the petitioner, but a commission agent, an independent contrac tor whose claim for unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating , said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary and pr emature to consider Basiao's claim for commissions on its merits. WHEREFORE, the appealed Resolution of the National Labor Relations Commission is

set aside, and that complaint of private respondent Melecio T. Basiao in RAB Ca se No. VI-0010-83 is dismissed. No pronouncement as to costs. SO ORDERED. Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.

G.R. No. L-72654-61 January 22, 1990 ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICAN OR FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARS ENIO DE GUZMAN, respondents. J.C. Espinas & Associates for petitioners. Tomas A. Reyes for private respondent. FERNAN, C.J.: The issue to be resolved in the instant case is whether or not the fishermen-cre w members of the trawl fishing vessel 7/B Sandyman II are employees of its owner -operator, De Guzman Fishing Enterprises, and if so, whether or not they were il legally dismissed from their employment. Records show that the petitioners were the fishermen-crew members of 7/B Sandyma n II, one of several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business w ith port and office at Camaligan, Camarines Sur. Petitioners rendered service ab oard said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second eng ineer; Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Phil ip Cervantes and Eleuterio Barbin, fishermen. For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on percentage commission basis in cash b y one Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the fishing t rip, otherwise, they received ten percent (10%) of the total proceeds of the sal e. The patron/pilot, chief engineer and master fisherman received a minimum inco me of P350.00 per week while the assistant engineer, second fisherman, and fishe rman-winchman received a minimum income of P260.00 per week. 1 On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private respondent, to proceed to the police stat ion at Camaligan, Camarines Sur, for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petit ioners denied the charge claiming that the same was a countermove to their havin

g formed a labor union and becoming members of Defender of Industrial Agricultur al Labor Organizations and General Workers Union (DIALOGWU) on September 3, 1983 . During the investigation, no witnesses were presented to prove the charge agains t petitioners, and no criminal charges were formally filed against them. Notwith standing, private respondent refused to allow petitioners to return to the fishi ng vessel to resume their work on the same day, September 11, 1983. On September 22, 1983, petitioners individually filed their complaints for illeg al dismissal and non-payment of 13th month pay, emergency cost of living allowan ce and service incentive pay, with the then Ministry (now Department) of Labor a nd Employment, Regional Arbitration Branch No. V, Legaspi City, Albay, docketed as Cases Nos. 1449-83 to 1456-83. 2 They uniformly contended that they were arbi trarily dismissed without being given ample time to look for a new job. On October 24, 1983, private respondent, thru its operations manager, Conrado S. de Guzman, submitted its position paper denying the employer-employee relations hip between private respondent and petitioners on the theory that private respon dent and petitioners were engaged in a joint venture. 3 After the parties failed to reach an amicable settlement, the Labor Arbiter sche duled the case for joint hearing furnishing the parties with notice and summons. On December 27, 1983, after two (2) previously scheduled joint hearings were po stponed due to the absence of private respondent, one of the petitioners herein, Alipio Ruga, the pilot/captain of the 7/B Sandyman II, testified, among others, on the manner the fishing operations were conducted, mode of payment of compens ation for services rendered by the fishermen-crew members, and the circumstances leading to their dismissal. 4 On March 31, 1984, after the case was submitted for resolution, Labor Arbiter As isclo S. Coralde rendered a joint decision 5 dismissing all the complaints of pe titioners on a finding that a "joint fishing venture" and not one of employer-em ployee relationship existed between private respondent and petitioners. From the adverse decision against them, petitioners appealed to the National Lab or Relations Commission. On May 30, 1985, the National Labor Relations Commission promulgated its resolut ion 6 affirming the decision of the labor arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners. Hence, the instant petition. Petitioners assail the ruling of the public respondent NLRC that what exists bet ween private respondent and petitioners is a joint venture arrangement and not a n employer-employee relationship. To stress that there is an employer-employee r elationship between them and private respondent, petitioners invite attention to the following: that they were directly hired by private respondent through its general manager, Arsenio de Guzman, and its operations manager, Conrado de Guzma n; that, except for Laurente Bautu, they had been employed by private respondent from 8 to 15 years in various capacities; that private respondent, through its operations manager, supervised and controlled the conduct of their fishing opera tions as to the fixing of the schedule of the fishing trips, the direction of th e fishing vessel, the volume or number of tubes of the fish-catch the time to re turn to the fishing port, which were communicated to the patron/pilot by radio ( single side band); that they were not allowed to join other outfits even the oth er vessels owned by private respondent without the permission of the operations manager; that they were compensated on percentage commission basis of the gross sales of the fish-catch which were delivered to them in cash by private responde nt's cashier, Mrs. Pilar de Guzman; and that they have to follow company policie s, rules and regulations imposed on them by private respondent. Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent and petitioners, petitioners claim that public respo ndent exceeded its jurisdiction and/or abused its discretion when it added facts not contained in the records when it stated that the pilot-crew members do not receive compensation from the boat-owners except their share in the catch produc ed by their own efforts; that public respondent ignored the evidence of petition ers that private respondent controlled the fishing operations; that public respo

ndent did not take into account established jurisprudence that the relationship between the fishing boat operators and their crew is one of direct employer and employee. Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is now final and executory for failure of petitioners to f ile their appeal with the NLRC within 10 calendar days from receipt of said deci sion pursuant to the doctrine laid down in Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, 115 SCRA 347 (1982), the Solicitor General claims that the rulin g of public respondent that a "joint fishing venture" exists between private res pondent and petitioners rests on the resolution of the Social Security System (S SS) in a 1968 case, Case No. 708 (De Guzman Fishing Enterprises vs. SSS), exempt ing De Guzman Fishing Enterprises, private respondent herein, from compulsory co verage of the SSS on the ground that there is no employer-employee relations bet ween the boat-owner and the fishermen-crew members following the doctrine laid d own in Pajarillo vs. SSS, 17 SCRA 1014 (1966). In applying to the case at bar th e doctrine in Pajarillo vs. SSS, supra, that there is no employer-employee relat ionship between the boat-owner and the pilot and crew members when the boat-owne r supplies the boat and equipment while the pilot and crew members contribute th e corresponding labor and the parties get specific shares in the catch for their respective contribution to the venture, the Solicitor General pointed out that the boat-owners in the Pajarillo case, as in the case at bar, did not control th e conduct of the fishing operations and the pilot and crew members shared in the catch. We rule in favor of petitioners. Fundamental considerations of substantial justice persuade Us to decide the inst ant case on the merits rather than to dismiss it on a mere technicality. In so d oing, we exercise the prerogative accorded to this Court enunciated in Firestone Filipinas Employees Association, et al. vs. Firestone Tire and Rubber Co. of th e Philippines, Inc., 61 SCRA 340 (1974), thus "the well-settled doctrine is that in labor cases before this Tribunal, no undue sympathy is to be accorded to any claim of a procedural misstep, the idea being that its power be exercised accor ding to justice and equity and substantial merits of the controversy." Circumstances peculiar to some extent to fishermen-crew members of a fishing ves sel regularly engaged in trawl fishing, as in the case of petitioners herein, wh o spend one (1) whole week or more 7 in the open sea performing their job to ear n a living to support their families, convince Us to adopt a more liberal attitu de in applying to petitioners the 10-calendar day rule in the filing of appeals with the NLRC from the decision of the labor arbiter. Records reveal that petitioners were informed of the labor arbiter's decision of March 31, 1984 only on July 3,1984 by their non-lawyer representative during th e arbitration proceedings, Jose Dialogo who received the decision eight (8) days earlier, or on June 25, 1984. As adverted to earlier, the circumstances peculia r to petitioners' occupation as fishermen-crew members, who during the pendency of the case understandably have to earn a living by seeking employment elsewhere , impress upon Us that in the ordinary course of events, the information as to t he adverse decision against them would not reach them within such time frame as would allow them to faithfully abide by the 10-calendar day appeal period. This peculiar circumstance and the fact that their representative is a non-lawyer pro vide equitable justification to conclude that there is substantial compliance wi th the ten-calendar day rule of filing of appeals with the NLRC when petitioners filed on July 10, 1984, or seven (7) days after receipt of the decision, their appeal with the NLRC through registered mail. We have consistently ruled that in determining the existence of an employer-empl oyee relationship, the elements that are generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee wit h respect to the means and methods by which the work is to be accomplished. 8 Th e employment relation arises from contract of hire, express or implied. 9 In the absence of hiring, no actual employer-employee relation could exist. From the four (4) elements mentioned, We have generally relied on the so-called

right-of-control test 10 where the person for whom the services are performed re serves a right to control not only the end to be achieved but also the means to be used in reaching such end. The test calls merely for the existence of the rig ht to control the manner of doing the work, not the actual exercise of the right . 11 The case of Pajarillo vs. SSS, supra, invoked by the public respondent as author ity for the ruling that a "joint fishing venture" existed between private respon dent and petitioners is not applicable in the instant case. There is neither lig ht of control nor actual exercise of such right on the part of the boat-owners i n the Pajarillo case, where the Court found that the pilots therein are not unde r the order of the boat-owners as regards their employment; that they go out to sea not upon directions of the boat-owners, but upon their own volition as to wh en, how long and where to go fishing; that the boat-owners do not in any way con trol the crew-members with whom the former have no relationship whatsoever; that they simply join every trip for which the pilots allow them, without any refere nce to the owners of the vessel; and that they only share in their own catch pro duced by their own efforts. The aforementioned circumstances obtaining in Pajarillo case do not exist in the instant case. The conduct of the fishing operations was undisputably shown by t he testimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under th e control and supervision of private respondent's operations manager. Matters de aling on the fixing of the schedule of the fishing trip and the time to return t o the fishing port were shown to be the prerogative of private respondent. 12 Wh ile performing the fishing operations, petitioners received instructions via a s ingle-side band radio from private respondent's operations manager who called th e patron/pilot in the morning. They are told to report their activities, their p osition, and the number of tubes of fish-catch in one day. 13 Clearly thus, the conduct of the fishing operations was monitored by private respondent thru the p atron/pilot of 7/B Sandyman II who is responsible for disseminating the instruct ions to the crew members. The conclusion of public respondent that there had been no change in the situati on of the parties since 1968 when De Guzman Fishing Enterprises, private respond ent herein, obtained a favorable judgment in Case No. 708 exempting it from comp ulsory coverage of the SSS law is not supported by evidence on record. It was er roneous for public respondent to apply the factual situation of the parties in t he 1968 case to the instant case in the light of the changes in the conditions o f employment agreed upon by the private respondent and petitioners as discussed earlier. Records show that in the instant case, as distinguished from the Pajarillo case where the crew members are under no obligation to remain in the outfit for any d efinite period as one can be the crew member of an outfit for one day and be the member of the crew of another vessel the next day, the herein petitioners, on t he other hand, were directly hired by private respondent, through its general ma nager, Arsenio de Guzman, and its operations manager, Conrado de Guzman and have been under the employ of private respondent for a period of 8-15 years in vario us capacities, except for Laurente Bautu who was hired on August 3, 1983 as assi stant engineer. Petitioner Alipio Ruga was hired on September 29, 1974 as patron /captain of the fishing vessel; Eladio Calderon started as a mechanic on April 1 6, 1968 until he was promoted as chief engineer of the fishing vessel; Jose Parm a was employed on September 29, 1974 as assistant engineer; Jaime Barbin started as a pilot of the motor boat until he was transferred as a master fisherman to the fishing vessel 7/B Sandyman II; Philip Cervantes was hired as winchman on Au gust 1, 1972 while Eleuterio Barbin was hired as winchman on April 15, 1976. While tenure or length of employment is not considered as the test of employment , nevertheless the hiring of petitioners to perform work which is necessary or d esirable in the usual business or trade of private respondent for a period of 815 years since 1968 qualify them as regular employees within the meaning of Arti cle 281 of the Labor Code as they were indeed engaged to perform activities usua lly necessary or desirable in the usual fishing business or occupation of privat e respondent. 14

Aside from performing activities usually necessary and desirable in the business of private respondent, it must be noted that petitioners received compensation on a percentage commission based on the gross sale of the fish-catch i.e. 13% of the proceeds of the sale if the total proceeds exceeded the cost of the crude o il consumed during the fishing trip, otherwise only 10% of the proceeds of the s ale. Such compensation falls within the scope and meaning of the term "wage" as defined under Article 97(f) of the Labor Code, thus: (f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or asce rtained on a time, task, piece or commission basis, or other method of calculati ng the same, which is payable by an employer to an employee under a written or u nwritten contract of employment for work done or to be done, or for services ren dered or to be rendered, and included the fair and reasonable value, as determin ed by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. . . . The claim of private respondent, which was given credence by public respondent, that petitioners get paid in the form of share in the fish-catch which the patro n/pilot as head of the team distributes to his crew members in accordance with t heir own understanding 15 is not supported by recorded evidence. Except that suc h claim appears as an allegation in private respondent's position paper, there i s nothing in the records showing such a sharing scheme as preferred by private r espondent. Furthermore, the fact that on mere suspicion based on the reports that petitione rs allegedly sold their fish-catch at midsea without the knowledge and consent o f private respondent, petitioners were unjustifiably not allowed to board the fi shing vessel on September 11, 1983 to resume their activities without giving the m the opportunity to air their side on the accusation against them unmistakably reveals the disciplinary power exercised by private respondent over them and the corresponding sanction imposed in case of violation of any of its rules and reg ulations. The virtual dismissal of petitioners from their employment was charact erized by undue haste when less extreme measures consistent with the requirement s of due process should have been first exhausted. In that sense, the dismissal of petitioners was tainted with illegality. Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private respondent virtually resulting in their dismissal evidently cont radicts private respondent's theory of "joint fishing venture" between the parti es herein. A joint venture, including partnership, presupposes generally a parit y of standing between the joint co-venturers or partners, in which each party ha s an equal proprietary interest in the capital or property contributed 16 and wh ere each party exercises equal lights in the conduct of the business. 17 It woul d be inconsistent with the principle of parity of standing between the joint coventurers as regards the conduct of business, if private respondent would outrig htly exclude petitioners from the conduct of the business without first resortin g to other measures consistent with the nature of a joint venture undertaking, I nstead of arbitrary unilateral action, private respondent should have discussed with an open mind the advantages and disadvantages of petitioners' action with i ts joint co-venturers if indeed there is a "joint fishing venture" between the p arties. But this was not done in the instant case. Petitioners were arbitrarily dismissed notwithstanding that no criminal complaints were filed against them. T he lame excuse of private respondent that the non-filing of the criminal complai nts against petitioners was for humanitarian reasons will not help its cause eit her. We have examined the jurisprudence on the matter and find the same to be support ive of petitioners' stand. InNegre vs. WCC 135 SCRA 653 (1985), we held that fis hermen crew members who were recruited by one master fisherman locally known as "maestro" in charge of recruiting others to complete the crew members are consid ered employees, not industrial partners, of the boat-owners. In an earlier case of Abong vs. WCC, 54 SCRA 379 (1973) where petitioner therein, Dr. Agustin Abong , owner of the fishing boat, claimed that he was not the employer of the fisherm en crew members because of an alleged partnership agreement between him, as fina

ncier, and Simplicio Panganiban, as his team leader in charge of recruiting said fishermen to work for him, we affirmed the finding of the WCC that there existe d an employer-employee relationship between the boat-owner and the fishermen cre w members not only because they worked for and in the interest of the business o f the boat-owner but also because they were subject to the control, supervision and dismissal of the boat-owner, thru its agent, Simplicio Panganiban, the alleg ed "partner" of Dr. Abong; that while these fishermen crew members were paid in kind, or by "pakiao basis" still that fact did not alter the character of their relationship with Dr. Abong as employees of the latter. In Philippine Fishing Boat Officers and Engineers Union vs. Court of Industrial Relations, 112 SCRA 159 (1982), we held that the employer-employee relationship between the crew members and the owners of the fishing vessels engaged in deep s ea fishing is merely suspended during the time the vessels are drydocked or unde rgoing repairs or being loaded with the necessary provisions for the next fishin g trip. The said ruling is premised on the principle that all these activities i .e., drydock, repairs, loading of necessary provisions, form part of the regular operation of the company fishing business. WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned res olution of the National Labor Relations Commission dated May 30,1985 is hereby R EVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and ot her monetary benefits under the law. No pronouncement as to costs. SO ORDERED. Gutierrez, Jr., Bidin and Corts, JJ., concur. Feliciano, J., concurs in the result.

[G.R. No. 119500. August 28, 1998] PAGUIO TRANSPORT CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSIO N and WILFREDO MELCHOR, respondents. D E C I S I O N PANGANIBAN, J.: In dismissing the petition, this Court reiterates the following doctrines: (1) t he boundary system used in taxi (and jeepney) operations presupposes an employer-e mployee relation; (2) the employer must prove just (or authorized) cause and due process to justify dismissal of an employee; (3) strained relations must be dem onstrated as a fact; and (4) back wages and reinstatement are necessary conseque nces of illegal dismissal. The Case Before us is a petition for certiorari and prohibition with preliminary injuncti on, assailing the December 16, 1994 Decision of the National Labor Relations Com mission[1] in NLRC NCR Case No. 00-02-01564-94 entitled Wilfredo Melchor vs. Pagu io Transport Corporation/Serafin Paguio. The dispositive portion of the challenge d Decision reads: WHEREFORE, premises considered, the appeal insofar as it seeks reversal of the fi nding on illegal dismissal is denied for lack of merit. The decision declaring t hat complainant was illegally dismissed is affirmed. The decision is however pa rtially modified insofar as liability therefor is concerned. The liability shall inure against PAGUIO TRANSPORT CORPORATION, subject to the provision of the Cor poration Code and the Rules of Court on matters taken herein. The backwages as c omputed in the assailed decision is set aside, and a new one is hereby provided in the amount of P86,400.00 as computed in the immediately preceding paragraph. Petitioner also impugns the February 21, 1995 NLRC Resolution[2] denying the mot ion for reconsideration. The June 28, 1994 Decision of the labor arbiter,[3] which the NLRC modified as t o the amount of back wages, disposed as follows: WHEREFORE, the respondents are hereby ordered to reinstate the complainant with f

ull backwages from the time his salaries were withheld from him until his actual reinstatement. The respondents are further ordered to pay him his 13th month pay in the amount o f P5,600.00. Complainants backwages up to the date of this Decision as computed by LEILANI E. C ALALANG of the Commissions NLRC NCR Branch is: 11/28/93 - 6/28/94 = 7 mos. P800.00 x 3 days x 4 weeks = P9,600.00 P9,600.00 x 7 mos. = P67,200.00 The aspect of reinstatement either in the job or payroll at the option of the emp loyers being immediately executory pursuant to Article 223 of the Labor Code, th e respondents are hereby directed to so reinstate him when he reports for work b y virtue of this Decision. Other claims are hereby dismissed for lack of evidence. The Facts The facts, as summarized in the challenged Decision, are as follows: Complainant Wilfredo Melchor was hired by respondent company as a taxi driver on 25 December 1992 under the [b]oundary [s]ystem. He [was] engaged to drive the tax i unit assigned to him on a 24-hour schedule per trip every two (2) days, for wh ich he used to earn an average income from P500 to P700 per trip, exclusive of t he P650.00 boundary and other deductions imposed on him. On 24 [sic] November 19 93, complainant allegedly met a vehicular accident along Quirino Avenue near the PNR Station and Plaza Dilao when he accidentally bumped a car which stopped at the intersection even when the traffic light was green and go. After he submitte d the traffic accident report to the office of respondents, he was allegedly adv ised to stop working and have a rest. After several days[,] he allegedly report ed for work only to be told that his service was no longer needed. Hence, the co mplaint for illegal dismissal, among others. Respondent[s] for their part maintained that complainant was not illegally dismis sed, there being in the first place no employer-employee relationship between th em. In amplification, it was argued that the element of control which [was] a p aramount test to determine the existence of such a relationship [was] lacking. So too, it argued the element of the payment of compensation. Considering that in lieu of the latter, payment of boundary is instead made allegedly makes the r elationship between them of a wase-agreement [sic]. Respondents then argued that even if an employer-employee relationship were to be presumed as present, still complainants termination arose out of a valid cause and after he refused to artic ulate his stand on the investigation being conducted on him. Respondents then h arped on the supposed three occasions when complainant figured in a vehicular ac cident involving the taxi unit he was driving, viz: On August 3, which resulted in damages to the respondent in the amount of P150.00; On August 4 which again r esulted [in] the damages to the respondent in the amount of P615.00; and again o n 4 November 1993, the mishap costing the respondents this time P25,370.00 in da mages. As a result of the alleged compounded damages which the respondents had to shoulder on account of the supposed reckless driving of the complainant, the former was allegedly left with no alternative but to ask complainants explanation why he should still be allowed to drive. Complainant, despite several chances, allegedly failed to do so.[4] Ruling of the NLRC The NLRC held that private respondent was an illegally dismissed employee of pet itioner. Upholding the existence of an employer-employee relationship, it cited Doce v. WCC,[5] in which the Supreme Court ruled that the relationship created b etween the parties operating under a boundary system is one of an employer and emp loyee, and not of a lessor and a lessee.[6] The NLRC sustained the ruling of the labor arbiter that the private respondent w as illegally dismissed, for he was not afforded the twin requirements of due proc ess x x x.[7] It rejected petitioners claim that private respondent had figured in three vehicular incidents because of his reckless driving. It found that except for petitioners bare statements, no proof was presented to establish with partic ularity the circumstances being claimed. x x x The guilt and culpability of [pri

vate respondent] which would give [petitioner] valid ground to effect his dismis sal cannot be established by a mere allegation of his reckless driving.[8] Public Respondent NLRC found petitioner liable for back wages in the amount of P 86,400, and not P67,200 as computed by the labor arbiter. It found, however, th at this liability should be imposed on Petitioner Corporation only, and not on i ts president who was also impleaded by private respondent. Hence, this petition.[9] Issues Petitioner raises the following issues: a. Whether or not public respondent Commission acted in excess of jurisdiction an d/or with grave abuse of discretion amounting to lack of jurisdiction in orderin g the reinstatement of private respondent with full backwages, despite its strai ned relations with the petitioner and the reinstatement would, in effect, be ini mical to the interest of the latter in particular, and to the riding public in g eneral; b. Whether or not public respondent acted in excess of jurisdiction and/or with g rave abuse of discretion in refusing to reconsider its decision and resolution c omplained of despite the facts prevailing to support the reconsideration.[10] In resolving the petition, we shall address the following points: (1) employer-e mployee relation, (2) presence of just cause, (3) due process, (4) strained rela tionship, and (5) propriety of reinstatement and back wages. The Courts Ruling The petition is not meritorious. First Issue: Employer-Employee Relation Under the boundary system, private respondent was engaged to drive petitioners taxi unit on a 24-hour schedule every two days. On each such trip, private responde nt remitted to petitioner a boundary of P650. Whatever he earned in excess of tha t amount was considered his income. Petitioner argues that under said arrangement, he had no control over the number of hours private respondent had to work and the routes he had to take. Therefo re, he concludes that the employer-employee relationship cannot be deemed to exi st. Petitioners contention is not novel. In Martinez v. National Labor Relations Com mission,[11] this Court already ruled that the relationship of taxi owners and t axi drivers is the same as that between jeepney owners and jeepney drivers under the boundary system. In both cases, the employer-employee relationship was deeme d to exist, viz.: The relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. x x x In the lease of chattels[,] the lessor loses complete contr ol over the chattel leased x x x. In the case of jeepney owners/operators and je epney drivers, the former exercise supervision and control over the latter. The fact that the drivers do not receive fixed wages but get only the excess of that so-called boundary they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. The doctrine is applicable in the present case. Thus, private respondents were employees x x x because they had been engaged to perform activities which were usually necessa ry or desirable in the usual trade or business of the employer.[12] Second Issue: Just Cause Petitioner also asserts that private respondents involvement in three vehicular a ccidents within a span of several months constitutes just cause for his dismissa l. It alleges that, according to the police report concerning the most recent a nd serious vehicular mishap, it was private respondent who was at fault and that the city prosecutor of Quezon City recommended that an Information for reckless imprudence resulting in damage to property be filed against him.[13] Petitioner, however, did not submit any proof to support these allegations. Wel l-settled is the rule that the employer has the burden of proving that the dismi ssal of an employee is for a just cause. The failure of the employer to dischar

ge this burden means that the dismissal is not justified and that the employee i s entitled to reinstatement and back wages.[14] In this case, petitioner failed to prove any just or authorized cause for his dismissal. Private respondent, th erefore, must be deemed illegally dismissed.[15] Petitioner contends that he submitted and presented material and competent docume ntary evidence consisting of police reports of vehicular accidents of taxicab un its owned by petitioner and driven by private respondent, the repairs and expens es suffered by the petitioner as a result thereof and the resolution of the [c]i ty [p]rosecutor of Quezon City finding private respondent at fault for the Novem ber 4, 1993 vehicular accident caused by the latter.[16] Adding that the submissi on of these documents only on appeal does not diminish their probative value, pe titioner cites Article 221 of the Labor Code which reads: Article 221. Technical rules not binding and prior resort to amicable settlement. -- In any proceeding before the Commission or any of the Labor Arbiters, the ru les of procedure prevailing in courts of law and equity shall not be controlling and it is the spirit and intention of the Code that the Commission and its memb ers and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively without regard to technicalitie s of law and procedure, all in the interest of due process. In any proceeding be fore the Commission or any Labor Arbiter, the parties may be represented by lega l counsel but it shall be the duty of the Chairman, any Presiding Commissioner o r Commissioner or any Labor Arbiter to exercise complete control of the proceedi ngs at all stages. Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exe rt all efforts towards [t]he amicable settlement of a labor dispute within his j urisdiction on or before the first hearing. The same rule shall apply to the Com mission in the exercise of its original jurisdiction. However, a careful examination of both the original Complaint and the Petitioners Memorandum of Appeal from the labor arbiters Decision reveals that said pieces o f documentary evidence were not mentioned or included therein,[17] but were subm itted by petitioner only when he filed his present petition with this Court. Th ese pieces of evidence were attached and referred to as Annexes G, H, I, J, K and aid petition. Such factual issues cannot be resolved in a petition for certiora ri like the present case, because the Courts review of NLRC decisions is limited to questions of jurisdiction and grave abuse of discretion. In PMI Colleges v. NLRC,[18] the Court held: This Court is definitely not the proper venue to consider this matter for it is n ot a trier of facts. x x x Certiorari is a remedy narrow in its scope and inflex ible in character. It is not a general utility tool in the legal workshop. Fact ual issues are not a proper subject for certiorari, as the power of the Supreme Court to review labor cases is limited to the issue of jurisdiction and grave ab use of discretion. x x x. Of the same tenor was our disquisition in Ilocos Sur Electric Cooperative, Inc. v . NLRC where we made plain that: In certiorari proceedings under Rule 65 of the Rules of Court, judicial review by this Court does not go so far as to evaluate the sufficiency of evidence upon w hich the Labor Arbiter and the NLRC based their determinations, the inquiry bein g limited essentially to whether or not said public respondents had acted withou t or in excess of [their] jurisdiction or with grave abuse of discretion. x x x Our deference to the expertise acquired by quasi-judicial agencies and the limited scope granted us in the exercise of certiorari jurisdiction restrain us from going so far as to probe into the correctness of a tribunals evaluation of e vidence, unless there is a palpable mistake and complete disregard thereof in wh ich case certiorari would be proper. In plain terms, in certiorari proceedings, we are concerned with mere errors of jurisdiction and not errors of judgment. Equally devoid of correctness is petitioners claim that the documents should be c onsidered, pursuant to Article 221 of the Labor Code which states that technical rules are not binding in proceedings before the labor arbiters and the NLRC. T he Supreme Court is not a trier of facts; as earlier stated, its jurisdiction in a petition for certiorari, like the present case, is confined to questions of j

urisdiction and grave abuse of discretion. The unexplained failure of petitione r to present its evidence before the labor arbiter and the NLRC cannot compel th is Court to expand the scope of its review. Indeed, petitioner has not proffere d a sufficient reason for this Court to do so. Petitioners reliance on Canete v. National Labor Relations Commission[19] is misp laced. In that case, the documents were submitted to the NLRC before they were tackled by the Supreme Court. Private respondents admission that he was involved in the November 4, 1993 accide nt did not give petitioner a just cause to dismiss him. Mere involvement in an a ccident, absent any showing of fault or recklessness on the part of an employee, is not a valid ground for dismissal. Third Issue: No Due Process Petitioner insists that private respondent was accorded due process, because he was allowed to explain his side and to show cause why he should still be allowed to act as one of petitioners drivers. This does not persuade. The Court has consistently held that in the dismissal o f employees, the twin requirements of notice and hearing are essential elements of due process. The employer must furnish the worker two written notices: (1) o ne to apprise him of the particular acts or omissions for which his dismissal is sought; and (2) the other to inform him of his employers decision to dismiss him . As to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not always and indispensably in an actual heari ng.[20] In the present case, petitioner failed to present proof, other than its bare all egations, that it had complied with these requirements.[21] We reiterate: the burden of proof rests on the employer. Private respondent, in fact, was not gi ven notice that he was being dismissed. When ordered to explain the vehicular a ccident that happened on November 4, 1993, he was not informed that petitioner w as contemplating his dismissal and that his involvement in said vehicular accide nt was the cause thereof. Private respondent was merely asked to explain the ve hicular accident per se, not his defense against a charge of dismissal arising f rom the vehicular accident. He became aware of his employers intention to dismis s him only when he was actually told not to report for work anymore. Fourth Issue: Strained Relations Notwithstanding its failure to prove just cause and due process in the dismissal of private respondent, petitioner seeks to bar his reinstatement by invoking th e doctrine of strained relations. It contends that as a result of private respo ndents reckless and incompetent manner of driving x x x, compounded by the damages suffered by petitioner in terms of repairs, related expenses, and the instituti on of the instant case, the relationship between the parties are so strained as to preclude a harmonious working atmosphere to the prejudice of the petitioner a s well as private respondent.[22] We are not persuaded. Strained relations must be demonstrated as a fact. Petit ioner failed to do so. Its allegation that private respondent was incompetent a nd reckless in his manner of driving, which led to the his involvement in three vehicular accidents, is not supported by the records. As earlier noted, no evid ence was properly submitted by petitioner to prove or give credence to his asser tions. Thus, Respondent NLRC ruled: Despite allegation on the matter, not an iota of proof was presented to establish the claim. This observation equally applies to the allegation that complainants , in three (3) occasions had figured in [a] vehicular accident due to his reckle ss driving x x x.[23] Because the claim of petitioner has no factual basis, the doctrine on strained relations cannot be applied in this case. Moreover, the filing of the Compla int for illegal dismissal does not by itself justify the invocation of this doct rine. As the Court held in Capili vs. NLRC:[24] xxx [T]he doctrine on strained relations cannot be applied indiscriminately since e very labor dispute almost invariably results in strained relations; otherwise, rei

nstatement can never be possible simply because some hostility is engendered bet ween the parties as a result of their disagreement. That is human nature. Fifth Issue: Reinstatement and Back Wages Because he was illegally dismissed, private respondent is entitled to reinstatem ent and back wages pursuant to Section 279 of the Labor Code, which reads: Art. 279. Security of Tenure. -- In cases of regular employment, the employer sha ll not terminate the services of an employee except for a just cause or when aut horized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits o r their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Interpreting this provision, the Court held in Bustamante v. NLRC[25] that illeg ally dismissed employees are entitled to full back wages without conditions or l imitations, viz.: xxx [A] closer adherence to the legislative policy behind Rep. Act No. 6715 point s to full backwages as meaning exactly that, i.e., without deducting from backwage s the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for full backwages to illegally dismissed employees is clear, plain and free from ambiguity and, ther efore, must be applied without attempted or strained interpretation. The labor arbiter awarded back wages in the sum of P67,200 based on the followin g computation: 11/28/93 - 6/28/94 = 7 mos. P800.00 x 3 days x 4 weeks = P9,600.00 P9,600 x 7 mos. = P67,200.00[26] In modifying the foregoing award, the NLRC relied on this other formula: 11/28/93 - 11/28/94 = 12 months P600.00 x 3 days x 4 weeks = P 7,200.00 P7,200 x 12 months = P86,400.00.[27] Although the NLRC adjusted the amount of private respondents monthly income and t he period during which back wages may be awarded, neither the petitioner nor the private respondent questioned the new computation. Accordingly, we sustain the award but stress that the back wages ought to be computed from the time of the illegal dismissal to the time of reinstatement, either actual or in the payroll, without any deduction or qualification. WHEREFORE, the petition is hereby DISMISSED for utter lack of merit, and the ass ailed Decision and Resolution are hereby AFFIRMED. Costs against petitioners. SO ORDERED. Davide, Jr. (Chairman), Vitug and Quisumbing, JJ., concur. Bellosillo, J., took no part. He did not participate in the deliberation.

G.R. No. 72409 December 29, 1986 MAMERTO S. BESA, doing business under the name and style of BESA'S CUSTOMBUILT S HOES,petitioner, vs. THE HONORABLE CRESENCIANO B. TRAJANO, DIRECTOR OF THE BUREAU OF LABOR RELATIONS, MINISTRY OF LABOR AND EMPLOYMENT, AND KAISAHAN NG MANGGAGAWANG PILIPINO (KAMPIL -KATIPUNAN), respondents. De Asis and Hernando Law Office for petitioner. Estebal M. Mendoza for private respondent. PARAS, J.: This petition questions the decision of the Director of the Bureau of Labor Rela

tions in BLR Case No. A-8-165-85, which affirmed the appealed order of the Med-A rbiter, Labor Relations Division, NCR in NCR-LRD-M-1-044-85, a certification ele ction case. More specifically, petitioner seeks the resolution of the question a s to whether or not an employer-employee relationship exists between herein peti tioner and the seventeen (17) shoeshiners-members of the respondent union, who, if the relationship does exist, should be entitled to the rights, privileges and benefits of an employee as provided in the Labor Code. Sometime in January, 1985, private respondent Kaisahan ng Mangagawang Pilipino K AMPIL for short) a legitimate labor union duly registered with the Ministry of L abor and Employment (MOLE, for short), filed a Petition for Certification Electi on, docketed as NCR-LRD-M-1-044-85 in the National Labor Relations Division of t he National Capital Region. Petitioner opposed it alleging that 1. There is no employer-employee relationship between Besa's and the petitioners -signatories to the petition; 2. The subject of the present petition had previously been decided by the defunc t Court of Industrial Relations, and is therefore barred under the principle of res judicata; 3. The petition fails to comply with the mandatory formal requirements under Sec . 2, Book V, of the Omnibus Rules Implementing the Labor Code; and 4. This Hon. Commission has no jurisdiction over the subject matter and parties to the petition. Acting on the Petition, the Opposition thereto, and the Reply to the Opposition, the Med-Arbiter on June 27, 1985, issued an order declaring that there was an e mployer-employee relationship between the parties and directed that an election be conducted. Petitioner appealed the order to the Director of BLR citing among others the fol lowing reasons 1. That the subject of the present petition has previously been decided by the d efunct Court of Industrial Relations, and is therefore barred under the principl e of res judicata (CIR Case Nos. 2783, 2751 and 2949 ULP December 21, 1965); 2. That on May 28, 1985, Director Severo Pucan of the Ministry of Labor and Empl oyment, in dismissing the case for underpayment of commissions and non-payment o f ECOLA, filed by the shoeshiners against Besas Custombuilt Shoes, for lack of j urisdiction petition, declared that there was no employer-employee relationship between the shoeshiners and petitioner Besas (Order in NCR-LSED1-020-85); Director Pucan's findings were based on a letter-opinion of the Director of the Bureau of Working Conditions of the MOLE (Annex "B-2", Petition for Certiorari). The legal ground therein cited was res judicata. xxx xxx xxx Appeal was dismissed by the Director of BLR as contained in his decision dated S ept. 27, 1985 upholding the finding of the Med-Arbiter that supervisors were app ointed to oversee the bootblacks' performance. It declared that such is a findin g of fact that is entitled to respect and that res judicata does not he as the p arties and the causes of action in the certification election case are different from the parties and causes of action in CIR Cases Nos. 2783-ULP 2751-ULP and 2 949 ULP Thus the Petition of the Union (KAMPIL) before the Med-Arbiter for the holding o f the certification election was granted. While the pre-election conference was in progress, petitioner herein BESAS filed with Us with petition for certiorari with Prohibition and simultaneously filed with the Med-Arbiter a motion to suspe nd the pre-election conference. The petition filed before Us was dismissed for l ack of merit but was reconsidered upon Motion of petitioner. In its Motion for R econsideration, petitioner raised the following grounds: I THE INSTANT PETITION PRESENTS QUESTIONS OF LAW AND SUBSTANCE TO MERIT THE CONSID ERATION OF THIS HONORABLE COURT. II THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR WAS NOT SUPPORTED BY SUBSTANT IAL EVIDENCE AND THE SAME IS PURELY BASED ON SPECULATIONS, SURMISES AND CONJECTU RES.

III THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR IS CONTRARY TO LAW AND APPLIC ABLE DECI SIONS OF THE SUPREME COURT ON THE MATTER. IV THE PETITION FOR CERTIFICATION ELECTION FILED BY RESPONDENT UNION WITH THE MINIS TRY OF LABOR AND EMPLOYMENT FAILED TO COMPLY WITH THE MANDATORY REQUIREMENTS UND ER ARTICLE 258 OF THE LABOR CODE, AS AMENDED, AND ITS IMPLEMENTING RULES. V THE RESPONDENT DIRECTOR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK O F JURISDICTION IN DECIDING THAT THERE EXISTS AN EMPLOYER-EMPLOYEE RELATIONSHIP B ETWEEN THE PETITIONER AND THE SHOESHINER-MEMBERS OF THE RESPONDENT UNION, VI THE RESPONDENT DIRECTOR ACTED WITHOUT JURISDICTION IN TAKING COGNIZANCE OF THE B ASIC PETITION CONSIDERING THAT THE SUBJECT MATTER AND THE PARTIES THEREOF HAVE B EEN DECIDED BY THE DEFUNCT COURT OF INDUSTRIAL RELATIONS AND IS THEREFORE BABRED BY THE PRINCIPLE OF RES ADJUDICATA. The main thrust of the instant petition is the question of employer-employee rel ationship between petitioner BESAS and 17 of the members of the herein responden t Union who are designated as shoeshiners. During the certification election hel d on Nov. 26, 1985 at BESAS of the 53 eligible voters, 49 cast their votes. 33 v oted for the union while 16 voted for no union. Among the 33 voters who opted fo r a union 17 persons are shoeshiners while 16 persons are non-shoeshiners. The question of employer-employee relationship became a primodial consideration in resolving whether or not the subject shoeshiners have the juridical personali ty and standing to present a petition for certification election as well as to v ote i therein. It is the position of petitioner that if the shoeshiners are not considered as employees of Besa's the basic petition for certification election must necessarily be dismissed for failure to comply with the mandatory requireme nts of the Labor Code, as amended, that at least thirty (30%) percent of the emp loyees must support the petition for certification election and that in order to be certified as the sole and exclusive bargaining agent, the union must be obta ined a majority of the valid votes cast by eligible voters. In the instant case, if the 17 shoeshiners are declared ineligible and their votes are consequently nullified the result of the certification election would be 16 "Yes" votes (33 m inus 17) and 16 "No" votes, which is a tie. Since the respondent union did not o btain a clear majority for the "Yes" votes as required under Rule IV Sec. 8(f) o f the Omnibus Rules of the Labor Code, it necessarily follows that the responden t union cannot be certified as the sole and exclusive bargaining agent of the wo rkers of Besa's. The present petition merits Our consideration. The records of the case reveal th at an employer-employee relationship does not exist between the 17 shoeshiners a nd petitioner. Be it noted that the defunct CIR in dismissing the cases for unfair labor practi ce filed by the shoeshiners against herein petitioner BESA declared in its Decis ion dated December 21, 1965 that: The shoe shiner is distinct from a piece worker because while the latter is paid for work accomplished, he does not, however, contribute anything to the capital of the employer other than his service. It is the employer of the piece worker who pays his wages, while the shoe shiner in this instance is paid directly by h is customer. The piece worker is paid for work accomplished without regard or co ncern to the profit as derived by his employer, but in the case of the shoe shin ers, the proceeds derived from the trade are always divided share and share alik e with respondent BESA. The shoe shiner can take his share of the proceeds every day if he wanted to or weekly as is the practice of qqqBesas The employer of the piece worker supervises and controls his work, but in the case of the shoe shin er, respondent BESA does not exercise any degree of control or supervision over their person and their work. All these are not obtaining in the case of a piece worker as he is in fact an employee in contemplation of law, distinct from the s hoe shiner in this instance who, in relation to respondent MAMERTO B. BESA, is a partner in the trade. Consequently, employer-employee relationship between memb

ers of the Petitioning union and respondent MAMERTO B. BESA being absent the lat ter could not be held guilty of the unfair tabor practice acts imputed against h im. (p. 6, Annex "B1 " of said Decision).<re||an 1w> Then too on Dec. 27, 1983, then Director Augusto Sanchez of the Bureau of Workin g Conditions, MOLE, in response to a letter of petitioner relative to the implem entation of wage Order No. 2 which provided for an increase both in minimum wage and cost of living allowance, opined as follows: Entitlement of the minimum requirements of the law particularly on wages and all owances presupposes the existence of employer-employee relationship which is det ermined by the concurrence of the following conditions: 1. right to hire 2. payment of wages 3. right to fire; and 4. control and supervision The most important condition to be considered is the exercise of control and sup ervision over the employees, per our conversation, the persons concerned under y our query are the shoe shiners and based on the decision rendered by Associate J udge Emiliano Tabigne of the defunct Court of Industrial Relations, these shoe s hiners are not employees of the company, but are partners instead. This is due t o the fact that the owner/manager does not exercise control and supervision over the shoe shiners. That the shiners have their own customers from whom they char ge the fee and divide the proceeds equally with the owner, which make the owner categorized them as on purely commission basis. The attendant circumstances clea rly show that there is no employer-employee relationship existing, and such the owner/manager is not by law, under obligation to extend to those on purely commi ssion basis the benefit of Wage Order No. 2. However, the law does not preclude the employer in giving such benefit to all its employees including those which m ay not be covered by the mandate of the law. (Letter dated December 27, 1985 addressed to petitioner Annex B-2, Petition) The Office of the Solicitor General as counsel for public respondent agrees that in the present case, no employer-employee relationship exists. The Supreme Court in the Rosario Brothers case ruled that; A basic factor underlying the exercise of rights under the Labor Code is the sta tus of employment. It is important in the determination of who shall be included in a proposed bargaining unit because it is sine qua non. The fundamental and e ssential condition that a bargaining unit be composed of employees. Failure to e stablish this juridical relationship between the union members and the employer affects the legality of the union itself. It means the ineligibility of the unio n members to present a petition for certification election as well as to vote th erein. Existence of employer-employee relationship is determined by the following eleme nts, namely, a] selection and engagement of the employee; b] payment of wages; c ] powers of dismissal; and d] power to control the employee's conduct although t he latter is the most important element (Rosario Brothers Inc, vs. Ople, 131 SCR A 72, 1984) WHEREFORE, judgment is hereby rendered giving due course to the Petition and dec laring VOID the decision of the Director of the Bureau of Labor Relations dated September 27, 1985. The Petition in BLR Case No. A-8-165-85 (NCR-LRD-M1-044-85) is therefore hereby DISMISSED. SO ORDERED. Feria (Chairman), Fernan, Alampay, Gutierrez, Jr., JJ., concur.

[G.R. No. 121605. February 2, 2000] PAZ MARTIN JO and CESAR JO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and PETER MEJILA,respondents. D E C I S I O N QUISUMBING, J.: This petition for certiorari seeks to set aside the Decision[1] of National Labo r Relations Commission (Fifth Division) promulgated on November 21, 1994, and it s Resolution dated June 7, 1995, which denied petitioners motion for reconsiderat ion. Private respondent Peter Mejila worked as barber on a piece rate basis at Dinas B arber Shop. In 1970, the owner, Dina Tan, sold the barbershop to petitioners Paz Martin Jo and Cesar Jo. All the employees, including private respondent, were a bsorbed by the new owners. The name of the barbershop was changed to Windfield B arber Shop. The owners and the barbers shared in the earnings of the barber shop. The barber s got two-thirds (2/3) of the fee paid for every haircut or shaving job done, wh ile one-third (1/3) went to the owners of the shop. In 1977, petitioners designated private respondent as caretaker of the shop beca use the former caretaker became physically unfit. Private respondents duties as c aretaker, in addition to his being a barber, were: (1) to report to the owners o f the barbershop whenever the airconditioning units malfunctioned and/or wheneve r water or electric power supply was interrupted; (2) to call the laundry woman to wash dirty linen; (3) to recommend applicants for interview and hiring; (4) t o attend to other needs of the shop. For this additional job, he was given an ho norarium equivalent to one-third (1/3) of the net income of the shop. When the building occupied by the shop was demolished in 1986, the barbershop cl osed. But soon a place nearby was rented by petitioners and the barbershop resum ed operations as Cesars Palace Barbershop and Massage Clinic. In this new locatio n, private respondent continued to be a barber and caretaker, but with a fixed m onthly honorarium as caretaker, to wit: from February 1986 to 1990 - P700; from February 1990 to March 1991 - P800; and from July 1992 P1,300. In November 1992, private respondent had an altercation with his co-barber, Jorg e Tinoy. The bickerings, characterized by constant exchange of personal insults during working hours, became serious so that private respondent reported the mat ter to Atty. Allan Macaraya of the labor department. The labor official immediat ely summoned private respondent and petitioners to a conference. Upon investigat ion, it was found out that the dispute was not between private respondent and pe titioners; rather, it was between the former and his fellow barber. Accordingly, Atty. Macaraya directed petitioners counsel, Atty. Prudencio Abragan, to thresh out the problem. During the mediation meeting held at Atty. Abragans office a new twist was added. Despite the assurance that he was not being driven out as caretaker-barber, pri vate respondent demanded payment for several thousand pesos as his separation pa y and other monetary benefits. In order to give the parties enough time to cool off, Atty. Abragan set another conference but private respondent did not appear in such meeting anymore. Meanwhile, private respondent continued reporting for work at the barbershop. Bu t, on January 2, 1993, he turned over the duplicate keys of the shop to the cash ier and took away all his belongings therefrom. On January 8, 1993, he began wor king as a regular barber at the newly opened Goldilocks Barbershop also in Iliga n City.

On January 12, 1993, private respondent filed a complaint[2] for illegal dismiss al with prayer for payment of separation pay, other monetary benefits, attorneys fees and damages. Significantly, the complaint did not seek reinstatement as a p ositive relief. In a Decision dated June 15, 1993, the Labor Arbiter found that private responde nt was an employee of petitioners, and that private respondent was not dismissed but had left his job voluntarily because of his misunderstanding with his co-wo rker.[3] The Labor Arbiter dismissed the complaint, but ordered petitioners to p ay private respondent his 13th month pay and attorneys fees. Both parties appealed to the NLRC. In a Decision dated November 21, 1994, it set aside the labor arbiters judgment. The NLRC sustained the labor arbiters finding as to the existence of employer-employee relationship between petitioners and pr ivate respondent, but it ruled that private respondent was illegally dismissed. Hence, the petitioners were ordered to reinstate private respondent and pay the latters backwages, 13th month pay, separation pay and attorneys fees, thus: "For failure of respondents to observe due process before dismissing the complai nant, We rule and hold that he was illegally terminated. Consequently, he should be reinstated and paid his backwages starting from January 1, 1993 up to the ti me of his reinstatement and payment of separation pay, should reinstatement not be feasible on account of a strained employer-employee relationship. As complainants income was mixed, (commission and caretaker), he becomes entitled to 13th month pay only in his capacity as caretaker at the last rate of pay giv en to him. With respect to separation pay, even workers paid on commission are given separa tion pay as they are considered employees of the company. Complainant should be adjudged entitled to separation pay reckoned from 1970 up to the time he was dis missed on December 31, 1992 at one-half month pay of his earning as a barber; an d as a caretaker the same should be reckoned from 1977 up to December 31, 1992. As complainant has been assisted by counsel not only in the preparation of the c omplaint, position paper but in hearings before the Labor Arbiter a quo, attorne ys fees equivalent to 10% of the money awards should likewise be paid to complain ant. WHEREFORE, the decision appealed from is Vacated and Set Aside and a new one ent ered in accordance with the above-findings and awards. SO ORDERED."[4] Its motion for reconsideration having been denied in a Resolution dated June 7, 1995, petitioners filed the instant petition. The issues for resolution are as follows: 1. Whether or not there exists an employer-employee relationship between petitio ners and private respondent. 2. Whether or not private respondent was dismissed from or had abandoned his emp loyment. Petitioners contend that public respondent gravely erred in declaring that priva te respondent was their employee. They claim that private respondent was their " partner in trade" whose compensation was based on a sharing arrangement per hair cut or shaving job done. They argue that private respondents task as caretaker co uld be considered an employment because the chores are very minimal. At the outset, we reiterate the doctrine that the existence of an employer-emplo yee 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 fi nality when supported by ample evidence.[5] In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and engagement of the workers; (2) p ower of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the workers conduct, with the latter assuming primacy in the overall consideration. The power of control refers to the existence of the power and not necessarily to the actual exercise thereof. It is not essential for the employe r to actually supervise the performance of duties of the employee; it is enough that the employer has the right to wield that power.[6] Absent a clear showing that petitioners and private respondent had intended to p

ursue a relationship of industrial partnership, we entertain no doubt that priva te respondent was employed by petitioners as caretaker-barber. Initially, petiti oners, as new owners of the barbershop, hired private respondent as barber by ab sorbing the latter in their employ. Undoubtedly, the services performed by priva te respondent as barber is related to, and in the pursuit of the principal busin ess activity of petitioners. Later on, petitioners tapped private respondent to serve concurrently as caretaker of the shop. Certainly, petitioners had the powe r to dismiss private respondent being the ones who engaged the services of the l atter. In fact, private respondent sued petitioners for illegal dismissal, albei t contested by the latter. As a caretaker, private respondent was paid by petiti oners wages in the form of honorarium, originally, at the rate of one-third (1/3 ) of the shops net income but subsequently pegged at a fixed amount per month. As a barber, private respondent earned two-thirds (2/3) of the fee paid per haircu t or shaving job done. Furthermore, the following facts indubitably reveal that petitioners controlled private respondents work performance, in that: (1) private respondent had to inform petitioners of the things needed in the shop; (2) he c ould only recommend the hiring of barbers and masseuses, with petitioners having the final decision; (3) he had to be at the shop at 9:00 a.m. and could leave o nly at 9:00 p.m. because he was the one who opened and closed it, being the one entrusted with the key.[7] These duties were complied with by private respondent upon instructions of petitioners. Moreover, such task was far from being neglig ible as claimed by petitioners. On the contrary, it was crucial to the business operation of petitioners as shown in the preceding discussion. Hence, there was enough basis to declare private respondent an employee of petitioners. According ly, there is no cogent reason to disturb the findings of the labor arbiter and N LRC on the existence of employer-employee relationship between herein private pa rties. With regard to the second issue, jurisprudence has laid out the rules regarding abandonment as a just and valid ground for termination of employment. To constit ute abandonment, there must be concurrence of the intention to abandon and some overt acts from which it may be inferred that the employee concerned has no more interest in working.[8] In other words, there must be a clear, deliberate and u njustified refusal to resume employment and a clear intention to sever the emplo yer-employee relationship on the part of the employee.[9] In the case at bar, the labor arbiter was convinced that private respondent was not dismissed but left his work on his own volition because he could no longer b ear the incessant squabbles with his co-worker. Nevertheless, public respondent did not give credence to petitioners claim that private respondent abandoned his job. On this score, public respondent gravely erred as hereunder discussed. At the outset, we must stress that where the findings of the NLRC contradict tho se of the labor arbiter, the Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned findings.[10] In this case, the following circumstances clearly manifest private respondents in tention to sever his ties with petitioners. First, private respondent even bragg ed to his co-workers his plan to quit his job at Cesars Palace Barbershop and Mas sage Clinic as borne out by the affidavit executed by his former co-workers.[11] Second, he surrendered the shops keys and took away all his things from the shop . Third, he did not report anymore to the shop without giving any valid and just ifiable reason for his absence. Fourth, he immediately sought a regular employme nt in another barbershop, despite previous assurance that he could remain in pet itioners employ. Fifth, he filed a complaint for illegal dismissal without prayin g for reinstatement. Moreover, public respondents assertion that the institution of the complaint for illegal dismissal manifests private respondents lack of intention to abandon his job[12]is untenable. The rule that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal is not applicable in this case. Such rule applies where the complainant seeks reinstatement as a relief. Corollarily , it has no application where the complainant does not pray for reinstatement an d just asks for separation pay instead[13] as in the present case. It goes witho ut saying that the prayer for separation pay, being the alternative remedy to re

instatement,[14] contradicts private respondents stance. That he was illegally di smissed is belied by his own pleadings as well as contemporaneous conduct. We are, therefore, constrained to agree with the findings of the Labor Arbiter t hat private respondent left his job voluntarily for reasons not attributable to petitioners. It was error and grave abuse of discretion for the NLRC to hold pet itioners liable for illegal dismissal of private respondent. WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of publ ic respondent NLRC are reversed and set aside. The decision of the Labor Arbiter dated June 15, 1993, is hereby reinstated. No costs. SO ORDERED. Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

[G.R. No. 87098. November 4, 1996] ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., petitioner, vs. NATIONAL LABOR REL ATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L. DOGELIO and BENJAMIN LIMJOCO, respondents. D E C I S I O N 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 d ispositive portion of which reads: WHEREFORE, in view of all the foregoing, the decision dated December 7, 1982 of t hen Labor Arbiter Teodorico L. Dogelio is hereby AFFIRMED, and the instant appea l is hereby DISMISSED for lack of merit. SO ORDERED.[1] Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner E ncyclopaedia Britannica and was in charge of selling petitioners products through some sales representatives. As compensation, private respondent received commi ssions from the products sold by his agents. He was also allowed to use petitio ners name, goodwill and logo. It was, however, agreed upon that office expenses w ould be deducted from private respondents commissions. Petitioner would also be informed about appointments, promotions, and transfers of employees in private r espondents 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 petitio ner Encyclopaedia Britannica with the Department of Labor and Employment, claimi ng for non-payment of separation pay and other benefits, and also illegal deduct ion from his sales commissions. Petitioner Encyclopaedia Britannica alleged that complainant Benjamin Limjoco (L imjoco, for brevity) was not its employee but an independent dealer authorized t o promote and sell its products and in return, received commissions therefrom. L imjoco did not have any salary and his income from the petitioner company was de pendent on the volume of sales accomplished. He also had his own separate offic e, financed the business expenses, and maintained his own workforce. The salari

es of his secretary, utility man, and sales representatives were chargeable to h is commissions. Thus, petitioner argued that it had no control and supervision over the complainant as to the manner and means he conducted his business operat ions. The latter did not even report to the office of the petitioner and did no t observe fixed office hours. Consequently, there was no employer-employee relat ionship. 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 P 4,000.00 monthly as his sales commission. He was under the supervision of the p etitioners officials who issued to him and his other personnel, memoranda, guidel ines on company policies, instructions and other orders. He was, however, dismi ssed by the petitioner when the Laurel-Langley Agreement expired. As a result t hereof, Limjoco asserts that in accordance with the established company practice and the provisions of the collective bargaining agreement, he was entitled to t ermination pay equivalent to one month salary, the unpaid benefits (Christmas bo nus, midyear bonus, clothing allowance, vacation leave, and sick leave), and the amounts illegally deducted from his commissions which were then used for the pa yments of office supplies, office space, and overhead expenses. On December 7, 1982, Labor Arbiter Teodorico Dogelio, in a decision ruled that L imjoco was an employee of the petitioner company. Petitioner had control over Li mjoco since the latter was required to make periodic reports of his sales activi ties 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 necessa rily, 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 am ount of P12,000.00; 3. To pay complainant his unpaid mid-year bonus equivalent to one-half mon th 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 yea r of service or the total amount of P6,000.00.[2] On appeal, the Third Division of the National Labor Relations Commission affirme d the assailed decision. The Commission opined that there was no evidence suppo rting the allegation that Limjoco was an independent contractor or dealer. The petitioner still exercised control over Limjoco through its memoranda and guidel ines and even prohibitions on the sale of products other than those authorized b y it. In short, the petitioner company dictated how and where to sell its produ cts. Aside from that fact, Limjoco passed the costs to the petitioner chargeable against his future commissions. Such practice proved that he was not an indepe ndent dealer or contractor for it is required by law that an independent contrac tor should have substantial capital or investment. Dissatisfied with the outcome of the case, petitioner Encyclopaedia Britannica n ow comes to us in this petition for certiorari and injunction with prayer for pr eliminary injunction. On April 3, 1989, this Court issued a temporary restraini ng order enjoining the enforcement of the decision dated December 7, 1982. The following are the arguments raised by the petitioner: I The respondent NLRC gravely abused its discretion in holding that appellants conte ntion that appellee was an independent contractor is not supported by evidence o n record. II Respondent NLRC committed grave abuse of discretion in not passing upon the vali dity of the pronouncement of the respondent Labor Arbiter granting private respo ndents claim for payment of Christmas bonus, Mid-year bonus, clothing allowance a

nd the money equivalent of accrued and unused vacation and sick leave. The NLRC ruled that there existed an employer-employee relationship and petition er 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) paymen t of wages; 3) power of dismissal; and 4) the power to control the employees cond uct. 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-e mployee relationship.[3] Under the control test, an employer-employee relationsh ip exists where the person for whom the services are performed reserves the righ t to control not only the end to be achieved, but also the manner and means to b e used in reaching that end.[4] The fact that petitioner issued memoranda to private respondents and to other di vision 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 o f these products was done through dealership agreements. The sales operations w ere primarily conducted by independent authorized agents who did not receive reg ular compensations but only commissions based on the sales of the products. The se 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 responde nt Limjoco and the other agents were free to conduct and promote their sales ope rations. The periodic reports to the petitioner by the agents were but necessar y 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 unif ormity and private respondent could not alter them, the latter, nevertheless, ha d free rein in the means and methods for conducting the marketing operations. H e selected his own personnel and the only reason why he had to notify the petiti oner 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 di d 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 perso n 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. x x x Q. In this Exhibit 2 you were informing Encyclopaedia Britannica that you have h ired a certain person and you were telling Britannica how her salary was going t o 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 c hargeable to the Katipunan and Bayanihan Districts, signed by yourself. What is t he 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 yo

u 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 petitione r. He was free to conduct his work and he was free to engage in other means of l ivelihood. At the time he was connected with the petitioner company, private re spondent 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 h e would be required to devote full time for petitioner. If private respondent wa s 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. Significant ly, when Limjoco tendered his resignation to petitioner on June 14, 1974, he sta ted, 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 ha ve increasingly required my personal attention. I feel that in fairness to the c ompany and to the people under my supervision I should relinquish the position t o someone who can devote full-time to the Division. I wish to thank you for all the encouragement and assistance you have extended t o me and to my group during my long association with Britannica. Evidently, Limjoco was aware of conflict with other interests which xxx have incr easingly required my personal attention (p. 118, Records). At the very least, it would indicate that petitioner has no effective control over the personal activi ties of Limjoco, who as admitted by the latter had other conflict of interest requ iring 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 fe atures of the relationship are to be considered.[6] The records of the case at b ar 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 relation ship of employer and employee exists.[7] In fine, there is nothing in the record s to show or would indicate that complainant was under the control of the petitio ner 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 decis ion of the NLRC is hereby REVERSED AND SET ASIDE. SO ORDERED. Regalado (Chairman), Romero, Puno, and Mendoza, JJ., concur.

[G.R. No. 159890. May 28, 2004] EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS CORP. and JOS E LAMADRID, President, respondents. D E C I S I O N YNARES-SANTIAGO, J.: This is a petition for review under Rule 45 of the 1997 Revised Rules of Civil P rocedure assailing the Decision dated March 7, 2003 of the Court of Appeals in C A-G.R. SP No. 73102 which affirmed the Resolution dated April 2, 2002 of the Nat

ional Labor Relations Commission. Petitioner was employed by respondent company Lamadrid Bearing and Parts Corpora tion sometime in June 1985 as a salesman earning a commission of 3% of the total paid-up sales covering the whole area of Mindanao. His average monthly income was more or less P16,000.00, but later was increased to approximately P20,269.50 . Aside from selling the merchandise of respondent corporation, he was also tas ked to collect payments from his various customers. Respondent corporation had complete control over his work because its President, respondent Jose Lamadrid, frequently directed him to report to a particular area for his sales and collect ion activities, and occasionally required him to go toManila to attend conferenc es regarding product competition, prices, and other market strategies. Sometime in 1998, petitioner encountered five customers/clients with bad account s, namely: Customers/Clients Amount 1) A&B Engineering Services P 86,431.20 2) Emmanuel Engineering Services 126,858.50 3) Panabo Empire Marketing 226,458.76 4) Southern Fortune Marketing 191,208.00 5) Alreg Marketing 56, 901.18 Less Returns: 691.02 56, 210.16 Total Bad Accounts P 687,166.62 Petitioner was confronted by respondent Lamadrid over the bad accounts and warne d that if he does not issue his own checks to cover the said bad accounts, his c ommissions will not be released and he will lose his job. Despite serious misgi vings, he issued his personal checks in favor of respondent corporation on condi tion that the same shall not be deposited for clearing and that they shall be of fset against his periodic commissions.[1] Not contented with the issuance of the foregoing checks as security for the bad accounts, respondents tricked petitioner into signing two documents, which he late r discovered to be a Promissory Note[2] and a Deed of Real Estate Mortgage.[3] Pursuant to the parties agreement that the checks would not be deposited, as thei r corresponding values would be offset from petitioners sales commissions, respon dents returned the same to petitioner as evidenced by the undeposited checks and respondent Lamadrids computations of petitioners commissions.[4] Due to financial difficulties, petitioner inquired about his membership with the Social Security System in order to apply for a salary loan. To his dismay, he learned that he was not covered by the SSS and therefore was not entitled to any benefit. When he brought the matter of his SSS coverage to his employer, the l atter berated and hurled invectives at him and, contrary to their agreement, dep osited the remaining checks which were dishonored by the drawee bank due to Accou nt Closed. On March 22, 2001, counsel for respondent corporation sent a letter to petitione r demanding that he make good the dishonored checks or pay their cash equivalent . In response, petitioner sent a letter addressed to Atty. Meneses, counsel for respondent corporation, which reads:[5] This has reference to your demand letter dated March 22, 2001 which I received o n March 30, 2001, relative to the checks I issued to my employer LAMADRID BEARIN G PARTS CORPORATION. May I respectfully request for a consideration as to the payment of the amount c overed by the said checks, as follows: 1. I have an earned commission in the amount of P33,412.39 as shown in the hereto attached Summary of Sales as of February 28, 2001 (P22,748.60) and as of March 31, 2001 (P10,664.79), which I offer to be charged or deducted as partial payment thereof; 2. I hereby commit One Hundred Percent (100%) of all my commission to be d irectly charged or deducted as payment, from date onward, until such time that p ayment will be completed; Sir, kindly convey my good faith to your client and my employer, as is shown by my willingness to continue working as Commission Salesman, having served the Com pany for the last sixteen (16) years.

Im sincerely appealing to my employer, through you, Sir, to settle these accounta bilities which all resulted from the checks issued by my customers which bounced and later charged to my account, in the manner afore-cited. May this request merit your kindest consideration, Sirs. Thank you very much. On April 2, 2001, petitioner sent another letter to respondent Lamadrid, to wit: [6] Dear Mr. Lamadrid, This is to inform your good office that if you pursue the case against me, I may refer this problem to Mr. Paul Dominguez and Atty. Jesus Dureza to solicit prop er legal advice. I may also file counter charges against your company of (sic) unfair labor practice and unfair compensation of 3% commission to my sales and c ommissions of more or less 90,000,000.00 (all collected and covered with cleared check payments) for 16 years working with your company up to the present year 2 001. If I am not wrong your company did not exactly declare the correct amount of P90 ,000,000.00 more or less representing my sales and collections (all collected an d covered with cleared check payments to the Bureau of Internal Revenue [BIR] fo r tax declaration purposes). In short your company profited large amount of mon ey to (sic) the above-mentioned sales and collections of P90,000,000.00 more or less for 16 years working with your company. I remember that upon my employment with your company last 1985 up to the present year 2001 as commission basis salesman, I have not signed any contract with you r company stating that all uncollected accounts including bounced checks from La madrid Bearing & Parts Corp. will be charged to me. I wonder why your company f orcibly instructed me to secure checking account to pay and issue check payment of P15,000.00 per month to cover your companys bad accounts in which this amount is too heavy on my part paying a total bad accounts of more than P650,000.00 fo r my 16 years employment with your company as commission basis salesman. Recalling your visit here at my Davao City residence, located at Zone 1 2nd Aven ue, San Vicente Buhangin Davao City, way back 1998, you even forced me to sign m ortgage contract of my house and lot located at Zone 1 2nd Avenue, San Vicente, Buhangin, Davao City, according to Mr. Jose Lamadrid this mortgage contract of m y house and lot will serve as guarantee to the uncollected and bounced checks fr om Lamadrid Bearing and Parts Corp., customers. I have asked 1 copy of the mortg age contract I have signed but Mr. Jose C. Lamadrid never furnished me a copy. Very truly yours, (Sgd) Empermaco B. Abante, Jr. While doing his usual rounds as commission salesman, petitioner was handed by hi s customers a letter from the respondent company warning them not to deal with p etitioner since it no longer recognized him as a commission salesman. In the interim, petitioner received a subpoena from the Office of the City Prose cutor of Manila for violations of Batas Pambansa Blg. 22 filed by respondent Lam adrid. Petitioner thus filed a complaint for illegal dismissal with money claims agains t respondent company and its president, Jose Lamadrid, before the NLRC Regional Arbitration Branch No. XI, Davao City. By way of defense, respondents countered that petitioner was not its employee bu t a freelance salesman on commission basis, procuring and purchasing auto parts and supplies from the latter on credit, consignment and installment basis and se lling the same to his customers for profit and commission of 3% out of his total paid-up sales. Respondents cite the following as indicators of the absence of an employer-employee relationship between them: (1) petitioner constantly admitted in all his acts, letters, communications wi th the respondents that his relationship with the latter was strictly commission basis salesman; (2) he does not have a monthly salary nor has he received any benefits accruin g to regular employment; (3) he was not required to report for work on a daily basis but would occasion ally drop by the Manila office when he went to Manila for some other purpose;

(4) he was not given the usual pay-slip to show his monthly gross compensation ; (5) neither has the respondent withheld his taxes nor was he enrolled as an em ployee of the respondent under the Social Security System and Philhealth; (6) he was in fact working as commission salesman of five other companies, whi ch are engaged in the same line of business as that of respondent, as shown by c ertifications issued by the said companies;[7] (7) if respondent owed petitioner his alleged commissions, he should not have executed the Promissory Note and the Deed of Real Estate Mortgage.[8] Finding no necessity for further hearing the case after the parties submitted th eir respective position papers, the Labor Arbiter rendered a decision dated Nove mber 29, 2001, the decretal portion of which reads:[9] WHEREFORE, premises considered judgment is hereby rendered DECLARING respondents LAMADRID BEARING & PARTS CORPORATION AND JOSE LAMADRID to pay jointly and sever ally complainant EMPERMACO B. ABANTE, JR., the sum of PESOS ONE MILLION THREE HU NDRED THIRTY SIX THOUSAND SEVEN HUNDRED TWENTY NINE AND 62/100 ONLY (P1,336,729. 62) representing his awarded separation pay, back wages (partial) unpaid commiss ions, refund of deductions, damages and attorneys fees. SO ORDERED. On appeal, the National Labor Relations Commission reversed the decision of the Labor Arbiter in a Resolution dated April 5, 2002, the dispositive portion of wh ich reads:[10] WHEREFORE, the Appeal is GRANTED. Accordingly, the appealed decision is Set Asi de and Vacated. In lieu thereof, a new judgment is entered dismissing the instan t case for lack of cause of action. SO ORDERED. Petitioner challenged the decision of the NLRC before the Court of Appeals, whic h rendered the assailed judgment on March 7, 2003, the dispositive portion of wh ich reads:[11] WHEREFORE, premises considered, petition is hereby DENIED. Let the supersedeas bond dated 09 January 2002, issued the Philippine Charter Insurance Corporation be cancelled and released. SO ORDERED. Upon denial of his motion for reconsideration, petitioner filed the instant appe al based on the following grounds: I THE HONORABLE COURT OF APPEALS IN GRAVE ABUSE OF DISCRETION MODIFIED THE IMPORT OF THE RELEVANT ANTECEDENTS AS ITS PREMISE IN ITS QUESTIONED DECISION CAUSING IT TO ARRIVE AT ERRONEOUS CONCLUSIONS OF FACT AND LAW. II THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN APPRECIATING THE TRUE FACTS OF T HIS CASE THEREBY IT MADE A WRONG CONCLUSION BY STATING THAT THE FOURTH ELEMENT F OR DETERMINING EMPLOYER-EMPLOYEE RELATIONSHIP, WHICH IS THE CONTROL TEST, IS WANTI NG IN THIS CASE. III THE HONORABLE COURT OF APPEALS IS AT WAR WITH THE EVIDENCE PRESENTED IN THIS CAS E AS WELL AS WITH THE APPLICABLE LAW AND ESTABLISHED RULINGS OF THIS HONORABLE C OURT. Initially, petitioner challenged the statement by the appellate court that petiti oner, who was contracted a 3% of the total gross sales as his commission, was ta sked to sell private respondents merchandise in the Mindanao area and to collect payments of his sales from the customers. He argues that this statement, which s uggests contracting or subcontracting under Department Order No. 10-97 Amending the Rules Implementing Books III and VI of the Labor Code, is erroneous because the circumstances to warrant such conclusion do not exist. Not being an indepen dent contractor, he must be a regular employee pursuant to Article 280 of the La bor Code because 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. Petitioner likewise disputes the finding of the appellate court that no employer

-employee relationship exists between him and respondent corporation since the p ower of control, which is the most decisive element to determine such relationsh ip, is wanting. He argues that the following circumstances show that he was in truth an employee of the respondent corporation: (1) As salesman of the private respondents, petitioner was also the one coll ecting payment of his sales from various customers. Thus, he was bringing with him Provisional Receipts, samples of which are attached to his Position Paper fi led with the Labor Arbiter. (2) Private respondents had complete control over the work of the petitioner . From time to time, respondent JOSE LAMADRID was directing him to report to a p articular area in Mindanao for his sales and collection activities, and sometime s he was required to go to Manila for a conference regarding competitions, new p rices (if any), special offer (if competitors gave special offer or discounts), and other selling/marketing strategy. In other words, respondent JOSE LAMADRID w as closely monitoring the sales and collection activities of the petitioner. Petitioner further contends that it was illogical for the appellate court to con clude that since he was not required to report for work on a daily basis, the po wer of control is absent. He reasons that being a field personnel, as defined u nder Article 82 of the Labor Code, who is covering the Mindanao area, it would b e impractical for him to report to the respondents office in Manila in order to k eep tab of his actual working hours. Well-entrenched is the doctrine that the existence of an employer-employee relat ionship is ultimately a question of fact and that the findings thereon by the La bor Arbiter and the National Labor Relations Commission shall be accorded not on ly respect but even finality when supported by substantial evidence. The decisi ve factor in such finality is the presence of substantial evidence to support sa id finding, otherwise, such factual findings cannot be accorded finality by this Court.[12] Considering the conflicting findings of fact by the Labor Arbiter an d the NLRC as well as the Court of Appeals, there is a need to reexamine the rec ords to determine with certainty which of the propositions espoused by the conte nding parties is supported by substantial evidence. We are called upon to resolve the issue of whether or not petitioner, as a commi ssion salesman, is an employee of respondent corporation. To ascertain the exist ence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the last one i s the most important.[13] The so-called control test is commonly regarded as the m ost crucial and determinative indicator of the presence or absence of an employe r-employee relationship. Under the control test, an employer-employee relations hip exists where the person for whom the services are performed reserves the rig ht to control not only the end achieved, but also the manner and means to be use d in reaching that end. Applying the aforementioned test, an employer-employee relationship is notably a bsent in this case. It is undisputed that petitioner Abante was a commission sa lesman who received 3% commission of his gross sales. Yet no quota was imposed on him by the respondent; such that a dismal performance or even a dead result w ill not result in any sanction or provide a ground for dismissal. He was not re quired to report to the office at any time or submit any periodic written report on his sales performance and activities. Although he had the whole of Mindanao as his base of operation, he was not designated by respondent to conduct his sa les activities at any particular or specific place. He pursued his selling acti vities without interference or supervision from respondent company and relied on his own resources to perform his functions. Respondent company did not prescri be the manner of selling the merchandise; he was left alone to adopt any style o r strategy to entice his customers. While it is true that he occasionally repor ted to the Manila office to attend conferences on marketing strategies, it was i ntended not to control the manner and means to be used in reaching the desired e nd, but to serve as a guide and to upgrade his skills for a more efficient marke ting performance. As correctly observed by the appellate court, reports on sale

s, collection, competitors, market strategies, price listings and new offers rel ayed by petitioner during his conferences to Manila do not indicate that he was under the control of respondent.[14] Moreover, petitioner was free to offer his services to other companies engaged in similar or related marketing activities a s evidenced by the certifications issued by various customers.[15] In Encyclopedia Britannica (Philippines), Inc. v. NLRC,[16] we reiterated the ru le that there could be no employer-employee relationship where the element of co ntrol is absent. Where a person who works for another does so more or less at h is 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, no relationship of employer-employee exists. We do not agree with petitioners contention that Article 280[17] is a crucial fac tor in determining the existence of an employment relationship. It merely disti nguishes between two kinds of employees, i.e., regular employees and casual empl oyees, for purposes of determining their rights to certain benefits, such as to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute.[18] Neither can we subscribe to petitioners misplaced reliance on the case of Songco v. NLRC.[19] While in that case the term commission under Article 96 of the Labor Code was construed as being included in the definition of the term wage available to employees, there is no categorical pronouncement that the payment of compensa tion on commission basis is conclusive proof of the existence of an employer-emp loyee relationship. After all, commission, as a form of remuneration, may be av ailed of by both an employee or a non-employee. Petitioner decried the alleged intimidation and trickery employed by respondents to obtain from him a Promissory Note and to issue forty-seven checks as securit y for the bad accounts incurred by five customers. While petitioner may have been coerced into executing force to issue the said do cuments, it may equally be true that petitioner did so in recognition of a valid financial obligation. He who claims that force or intimidation was employed up on him lies the onus probandi. He who asserts must prove. It is therefore incum bent upon petitioner to overcome the disputable presumption that private transac tions have been prosecuted fairly and regularly, and that there is sufficient co nsideration for every contract.[20] A fortiori, it is difficult to imagine that petitioner, a salesman of long standing, would accede without raising a protest to the patently capricious and oppressive demand by respondent of requiring him to assume bad accounts which, as he contended, he had not incurred. This lends credence to the respondents assertion that petitioner procured the goods from the said company on credit, consignment or installment basis and then sold the same to various customers. In the scheme of things, petitioner, having directly cont racted with the respondent company, becomes responsible for the amount of mercha ndise he took from the respondent, and in turn, the customer/s would be liable f or their respective accounts to the seller, i.e., the petitioner, with whom they contracted the sale. All told, we sustain the factual and legal findings of the appellate court and a ccordingly, find no cogent reason to overturn the same. WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated March 7, 2003 in CA-G.R. SP No. 73102, which denied the petition of Empermaco B. Abante, is AFFIRMED in toto. SO ORDERED. Panganiban, (Working Chairman), Carpio, and Azcuna, JJ., concur. Davide, Jr., C.J., (Chairman), on official leave.

[G.R. No. 118892. March 11, 1998] FILIPINAS BROADCASTING NETWORK, INC., petitioner vs. NATIONAL LABOR RELATIONS CO MMISION and SIMEON MAPA JR., respondents. D E C I S I O N PANGANIBAN, J.: As a rule, factual findings of the NLRC are binding on his Court. However, when the findings of the NLRC and the labor arbiter are contradictory, this Court ma y review questions of facts. Where the evidence clearly shows the absence of an employer-employee relationship, a claim for unpaid wages, thirteenth month pay, holiday and rest pay and other employment benefits must necessarily fail. The Case Before us is a petition for certiorari assailing the April 29, 1994 Decision of the National Labor Relations Commission,[1] in Case No. 05-08-00348-92, entitled Simeon M. Mapa Jr., v. DZRC Radio Station. The dispositive portion of the challen ged Decision reads: WHEREFORE, premises considered, the appealed decision is set aside, and a new jud gment is entered, declaring that complainant is an employee of the respondent an d is entitled to his claims for the payment of his services from March 11, 1990 to January 16, 1992.[2] Petitioner also impugns the November 9, 1994 Resolution[3] f the NLRC denying th e motion for reconsideration. The October 13, 1993 decision of the labor arbiter,[4] which the NLRC reversed a nd set aside, disposed as follows: This Arbitration Branch, based on the facts and circumstances established by the parties in this case is inclined to believe that complaint Simeon M. Mapa, Jr., had not been an employee of the respondent DZRC Radio Station before February 16 , 1992.[5] He was but a volunteer reporter when accommodated to air his report o n the respondent radio station as his application for employment with the respon dent radio station as his application for employment with the respondent as fiel ed reporter had not been accepted yet or approved before February, 1992. There w as no employer-employee relations that existed between the complainant and the respondent since March 11, 1990 until February 16, 1992. The complainant is not entitled to his claim for any salaries, premium pay for holiday and rest day, ho liday pay and the 13th month pay against the respondent DZRC Radio Station/Salvo Fortuno. WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered d ismissing the complaint in his case for lack of merit.[6] The Facts Version of Private Respondent Petitioner and private respondent submitted different versions of the facts. The facts as viewed by private respondent are as follows:[7] The complainant (herein private respondent) began to work for the respondent as a radio reporter starting March 11, 1990. On May 14, 1990, upon being informed by then respondents Station Manager, Mr. Plaridel Brocales, that complainants employ ment with respondent is being blocked by Ms. Brenda Bayona of DZGB, complainants previous employer, the said complainant took a leave of absence. In the first we ek of June, 1990, the respondent thru Mr. Antonio Llarena, then an employee of t he respondent, asked the complainant to return to work even as he was assured th at his salaries will be paid to him already. Thus, the complainant continued to work for the respondent since then. On September 5, 1991, again the complainant took a leave of absence because of his desperation over the failure of responden t to make good its promise of payment of salaries. He was reinstated on January

16, 1992 and resigned on February 27, 1992 when he decided to run for an electiv e office in the town of Daraga, albay. Unfortunately, the respondent paid salary to the complainant only for the period from January 16, 1992 up to February 27, 1992. Respondent did not pay the complainant for all the services rendered by t he latter from March 11, 1990 up to January 16, 1992. As may be glened from its memorandum,[8] petitioners version of the facts is as f ollows: 1. On or before April 1990, Mapa was dismissed from his employment with PBN-DZG B Legaspi. At the time, Mapa filed a case for illegal dismissal against PBN-DZGB Legaspi docketed as RAV V. Case No. 05-04-00120-90 entitled Simeon Mapa, Jr. v. Peoples Broadcasting Network-DZGB Legaspi, Jorge Bayona and Arturo Osia. 2. On or about May 1990, Mapa sought employment from DZRC as a radio reporter. H owever, DZRC required of private respondent the submission of a clearance from h is former employer. Otherwise, his apllication would not be acted upon; 3.On May 14, 1990, Mapa was informed by DZRC's then station manager, Mr. Plarid el Larry Brocales, that his application for employment was being blocked by Ms. Bre nda Bayona of DZGB, Mapas former employer. This fact is supported by Mapas position paper before the Honorable Labor Arbiter xxx; 4. Taking pity on Mapa and pending the issuance of the clearance from PBN-DZGB Legaspi, Mr. Larry Brocales granted the request of Mapa to be accomodated only a s a volunteer reporter of DZRC on a part-time basis. As a volunteer reporter, Ma pa was not to be paid wages as an employee of DZRC but he was permitted to find sponsors whose business establishments will be advertised every time he goes on the air. Most importantly, Mapas only work consisted of occasional newsbits or on -the spot reporting of consisted of occasional newsbits or on-the spot reporting of incidents or newsworthy occurances, which was very seldom. 5. Mapas friends who were also in the same situation as he was, declared in an af fidavit dated June 10, 1993 that: WE, ALLAN ALMARIO and ELMER ANONUEVO, of legal age, single, with postal address a t Washington Drive, Legaspi City, under oath, depose and state: 1. We personally know Simeon Jun Mapa, a former volunteer reporter at DZRC ju st like us; 2. As volunteer reporters we know that we will not receive any salary or al lowance from DZRC because our work was purely voluntary; 3. As incentive for us, the management of DZRC allowed us to get our own sp onsors whose business establishment we mention[ed] every after field report was made by us; 4. The management did not require or oblige us to render a report. We were on our own. We ma[d]e or render[ed] a report as we [saw]fit; 5. During our stint as volunteer reporters we had several sponsors each who paid us P300.00 per month (each). xxx xxx xxx 6. Having no radio gadgets to begin with, DZRC loaned Mapa the necessary equipme nt such as handheld radios and reporting gadgets. Mapa was to do occasional repo rting only, i.e., a few minutes each day at an irregular time period at Mapas own convinience. Mapa advertised his sponsors and pocketed the payment of these spo nsors for his advertising services. In addition, DZRC had no control over the ma nner by [sic] which he was to make his reports. Nor were the said reports subjec t to editing by DZRC; 7. In an Affidavit dated June 10, 1993 executed by one of Mapas sponsors, the sam e reads as follows: I, CARLITO V. BAYLON, of legal age, married, resident of Dona Maria Subdivision, Daraga, Albay, under oath, despose and state: 1. I am a lawyer by profession. At the same time, I am owner of Kusina ni Manoy a restaurant situated in Daraga, Albay; 2. I personally know Simeon Jun Mapa. Sometime in May, 1990 he went to make and a sked if I could be one of his sponsors because he was accomodated by DZRC as vol unteer reporter. He explained to me that, he will not be receiving any salary fr om DZRC[;] hence, he was soliciting any support; 3. Taking pity on him, I agreed to be one of his sponsors. The condition was,

I will have to pay him P300.00/month. In exchange thereto, he will have to menti on the name of the name of my restaurant every time he renders a report on the a ir; 4. My sponsorship lasted for about (5) months after which I discontinued it whe n I rarely heard Jun Mapa in DZRC program. xxx xxx xxx 8. On November 7, 1990, in his testimony against his former employer, Mapa decl ared under oath. To wit: ATTY. LOBRIGO: On paragraph 14 of the same affidavit it states and I quote: 13. Having been le ft with an empty stomach, I was compelled to apply for employment with another r adio station. On March 11, 1990, I applied for employment with DZRC. Unfortuna tely, my application would not yet be acted [upon] favorably because of the mali cious and oppressive imputations to me by my former employer. My question is what is now the status of your employment with DZRC? WITNESS: I am at present on a volunteer status because my former employer at DZGB did not give me clearance and I am required to submit that clearance to DZRC. (Underlin ing supplied). See p. 2 of Position Paper of DZRC before the Labor Arbiter and pp. 4-5 of the T ranscript of Stenographer Notes dated November 7, 1990, attached and marked as A nnex F and Annex F-1, Petition for Certiorari; 9. It cannot be overstressed that Mapas application for employment could not hav e been acted upon because of the lack of the pre-requisite clearance. 10. Lacking in sponsors, Mapa soon failed to provide petitioner with newsbits, finding it unprofitable to continue since he had no available sources of funding . Sometime in September 1991, Mapa quit his part-time endeavor with DZRC, as at tested to by the Office of Supervisor/Traffic Manager Ignacio Casi in an Affidav it dated June 10, 1992, to wit: 1. I am the Office Supervisor/Traffic Manager of DZRC-AM; 2. Sometime in May, 1990 Simeon Jun Mapa went to my office inside our radio statio n. He asked me if he could be accomodated as Radio Reporter of DZRC, as he was dismissed from DZGB. I referred him to Larry Brocales, our Station Manager then ; 3. Larry Brocales told Jun Mapa that he cannot be accomodated because he has no clearance from DZGB. Jun Mapa, almost teary eyed, pleaded to Larry Brocales tha t he be accomodated as volunteer reporter, that is, he will not receive any sala ry but that he intimated that he be allowed to look for sponsors whose business establishment, for a fee, will have to be mentioned after every report is made. Larry Brocales took pity on Jun Mapa and accomodated him; 4. Jun Mapa, just like the other volunteer reporters, was not obliged to render field reports, at a particular time and in a particular program. They render re port as they wish or see fit; 5. The management (DZRC) does not collect anything from the sponsors of Jun Mapa . They (sponsors) pay directly to him; 6. Being the Office Supervisor, I know for a fact that Jun Mapa seldom renders r eport on the air. He has no assigned program either. He was on and off the air , so to speak; 7. Finally, some time in September, 1991, Jun Mapa told me that he is quitting a lready because his sponsors were no longer paying him of his monthly contract wi th them. (Underscoring supplied)(See Annex G, Petition for Certiorari); 11. Subsequently, Mapa sent a letter dated October 7, 1991 to Ms. Diana C. Gozum, General Manager of petitioner FBN. In the said letter, Mapa wrote an d admitted that: I am [sic] Mr. Simeon Mapa, Jr. respectfully request your good office to reconsid er my previous application submitted last March 1990 as a reporter of DZRC AM. May I inform you that since the submission of such application I worked until Se ptember 6, 1991 for free services [sic]. Hoping that Ill be given the chance to be recognized as a regular reporter. With this, I respectfully wish to follow up my application for recognition.

May I also inform you that the case I have with my previous job with the other c ompany has commenced. Attached herewith is my resume. I am once again submitting myself for an interview with your office at a time co nvenient to you. Thank you. (See Annex H, Petition for Certiorari); 12. Reacting to the letter mentioned in the immediately preceding parag raph, DZRC favorably acted upn the application of Mapa and accepted him as a rad io reporter on January 16, 1992; 13. On February 27, 1992, Mapa resigned as a radio reporter in order to run for an elective office in the May 1992 elections and was paid all his salar ies and benefits for the period of his employment commencing from January 16, 19 92 until February 27, 1992; 14. Having no work to do and no employment in sight, Mapa filed a compl aint against FBN-DZRC on August 1992, claiming the payment of salaries, premium pay, holiday pay as well as 13th month pay for the period 28 February 1990 until January 16, 1992; On October 13, 1993, Labor Arbiter Emeterio Ranola dismissed the complaint for l ack of merit, finding that no employer-employee relationship existed between Map a and DZRC during the period March 11, 1990 to February 16, 1992.[9] Findings of the NLRC In holding that there was an employer-employee relationship, the NLRC set aside the labor arbiters findings: In his appeal, complainant insists that there was an employer-employee relationsh ip between him and the respondent. In support of his contention, he cites the p ayroll for February 16 to 29, 1992, the ID card issued to him as employee and re gular reporter by the respondent: [sic] the program schedules of DZRC showing t he regular program of the station indicating his name: [sic] the affidavit of A ntonio Llarena, program supervisor of DZRCM, stating that he [was] a regular rep orter underhis supervision and the list of reporting gadgets issued to regular r eporter. The existence of employer employee relationship is determined by the following e lements, namely: 1) selection and engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and 4) the power to control employees conduct although the latter is the most important element. (Rosario Brothers, Inc. vs. Ople, 131 SCRA 72) Considering the totality of the evidence adduced by the parties, we are of the o pinion that the complainant is a regular reporter of the respondent. Firstly, t he work of the complainant is being supervised by the program supervisor of the respondent; secondly, the complainant uses the reporting gadgets of the responde nt. Thirdly, he has no reporting gadgets of his own; Fourthly, the program sche dule is prepared by the respondent; and Lastly, he was paid salary for the perio d for the period from February 16 to 29, 1992 and covered under the Social Secur ity System. There is no showing in the record that his work from February 16, 1 992 was different from his work before the said period.[10] The NLRC subsequently denied petitioners motion for reconsideration[11] on Novemb er 9, 1994.[12] Hence this petition.[13] Issue Petitioner alleges that Public Respondent NLRC committed grave abuse of discreti on as follows:[14] I xxx in declaring Mapa as an employee of petitioner before January 16, 1992. The test of an employer-employee relationship was erroneously applied to the facts of this case. II xxx in disregarding significant facts which clearly and convincingly show that t he private respondent was not an employee of the petitioner before 16 January 19 92. In the main, the issue in this case is whether private respondent was an employe

e of petitioner for the period March 11, 1990 to January 15, 1992. The Courts Ruling The petition is meritorious. Main Issue: Private Respondent Was Not an Employee During the Period in Controversy As a rule, the NLRCs findings are accorded great respect, even finality, by this Court. This rule, however, is not without qualification. This Court held in Ji menez v. NLRC:[15] The review of labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave abuse of discretion.[16] As a rule, this Court does not review supposed errors in the decision of the NLRC which raise factual issues, because factual finding of agencies exercising quasi-judicial functions are acco rded not only respect but even finality, aside from the consideration that the C ourt is essentially not a trier of facts. However, in the case at bar, a review of the records thereof with an assessment of the facts is necessary since the fa ctual findings of the NLRC and the labor arbiter are at odds with each other.[17 ] In the present case, a review of the factual findings of the public respondent i s in order, for said findings differ from those of the labor arbiter.[18] Worse the facts alleged by the private respondent and relied upon by the public respon dent do not prove an employer-employee relationship.[19] In this light, we will review and overrule the findings of the NLRC. The following are generally considered in the determination of the existence of an employer-employee relationship: (1) the manner of selection and engagement, ( 2) the payment of wages, (3) the presence or absence of the power of dismissal, and (4) the presence or absence of the power of control; of these four, the last one is the most important.[20] Engagement and Payment of Wages Let us consider the circumstances of the private respondents engagement in DZRC b efore January 16, 1992. Petitioner did not act on his application for employment as a radio reporter because private respondent admittedly failed to present a c learance from his former employer. Nevertheless, private respondent volunteered hi s services, knowing that he would not be paid wages, and that he had to rely on financial sponsorships of business establishments that would be advertised in hi s reports. In other words, private respondent willingly acted as a volunteer rep orter, fully cognizant that he was not an employee and that he would not receive any compensation directly from the petitioner, but only from his own advertisin g sponsors. The nature of private respondents engagement is evident from the affidavit of All an Almario and Elmer Anonuevo who served under identical circumstances. The two affirmed the following: 1. We personally know Simeon Jun Mapa, a volunteer reporter at DZRC just like us; 2. As a volunteer reporters we know [sic] that we will not receive any salary or allowance from DZRC because our work was purely voluntary; 3. As incentive for us, the management of DZRC allowed us to get our own sponsor s whose business establishments we mention every after [sic] field report was ma de by us; xxx xxx xxx 4. During our stint as volunteer reporters we had several sponsors each who paid us P300.00 per month.[21] The above statement is corroborated by Carlito Baylon, one of private respondents advertising sponsors. In his affidavit dated June 10, 1993, he averred: 2. I personally know Simeon Jun Mapa. Sometime in May, 1990, he went to me and asked if I could be one of his sponsors because he was accomodated by DZRC as volunteer reporter. He explained to me th at, he will not be receiving any salary from DZRC[,] hence, he was soliciting my support; 3. Taking pity on him, I agreed to be one of his sponsors. The condition was, I will have to pay him P300.00/month. In exchange thereto, he will have to mentio n the name of my restaurant everytime he renders a report on the air;

4. My sponsorship lasted for about five (5) months after which I discontinued it when I rarely heard Jun Mapa in DZRC program.[22] Indeed, private respondent himself admitted tat he worked under the said circums tances. The bio-data sheet signed by Mapa himself, in which he acknowledged that he was not an employee, states in part: Work experiences: DWGW . Reporter/Newscaster 1970-1980 DZGB . Reporter 1983-19 90 DZRC . Reporter 1990-19 91 for free not recognized due to no appointment.[23] (Underscoring supplied.) In his letter dated October 7, 1991, which he sent to the general manager of Fil ipinas Broadcasting Network (owner of DZRC), Mapa again acknowledged in the foll owing words that he was not an employee: I am [sic] Mr. Simeon Mapa, Jr. respectfully request your good office to reconsid er my previous application submitted last March 1990 as a reporter of DZRC AM. May I inform you that since the submission of such application I worked until Se ptember 6, 1991 for free of services [sic]. Hoping that Ill be given the chance t o be recognized as a regular reporter. With this, I respectfully wish to follow up my application for recognition. (Ital ics supplied.) There is no indication that these two circumstances were made under duress. Inde ed, private respondent himself did not dispute their voluntariness or veracity. It is clear that he rendered services knowing that he was not an employee. Aware that he would not be paid wages, he described himself as a volunteer reporter who was, as evident from his letter, hoping for the chance to be recognized as a reg ular reporter. In fact, petitioner acted favorably on this letter and accepted hi s application as an employee effective on January 16, 1992. Power of Dismissal Likewise, the evidence on record shows that petitioner did not exercise the powe r to dismiss private respondent during the period in question. in September 1991 , Private Respondent Mapa ceased acting as a volunteer reporter, not because he was fired , but because he stopped sending his reports. Ignacio Casi, Office Sup ervisor of DZRC, declared in his affidavit that Mapa told him that he [was] quitt ing already because his sponsors were no longer paying him of [sic] his monthly contract with them. Mapa did not controvert this statement. In fact, his aforesai d letter of October 17, 1991 expressed his hope of being given the chance to be r ecognized as a regular reporter. Private respondents attitude in said letter is in consistent with the notion that he had been dismissed. Mapa Was Not Subject to Control of Petitioner The most crucial test the control test demonstrates all too clearly the absence of an employee-employee relationship. No one at the DZRC had the power to regula te or control private respondents activities or inputs. Unlike the regular report ers, he was not subject to any supervision by petitioner or its officials. Regul ar reporters are required by the petitioner to adhere to a program schedule which delineates the time when they are to render their reports, as well as the topi c to be reported upon. The substance of their reports are [sic] oftentimes scree ned by the station prior to [their] actual airing. In contrast, volunteer report ers are never given such a program schedule but are merely advised to inform the station of the reports they would make from time to time.[24] Indeed, DZRC, the petitioners radio station , exercised no editorial rights over his reports. He had no fixed day or time for making his reports; in fact, he was not required to report anything at all. Whether he would air anything depended entirely on him and his convenience. The absence of petitioners control over private respondent is manifest from the s worn statement of the traffic manager of petitioner, Ignacio Casi, who deposed i n part: xxx xxx xxx

4. Jun Mapa, just like the other volunteer reporters, was not obliged to render field reports, at a particular time and in a particular program. They render rep ort as they wish or see fit; 5. The management (DZRC) does not collect anything from the sponsors of Jun Mapa . They (sponsors) pay directly to him; 6. Being the Office Supervisor, I know for a fact that Jun Mapa seldom renders r eport on the air. He has no assigned program either. He was on and off the air, so to speak; 7. Finally, some time in September, 1991, Jun Mapa told me that he is quitting a lready because his sponsors were no longer paying him of his monthly contract wi th them. In Encyclopedia Britannica (Philippines) Inc., v. NLRC,[25] we reiterated that t here could be no employer-employee relationship where the element of control is a bsent; where a person who works for another does so more or less at his own plea sure and is not subject to definite hours or conditions of work[;] and in turn i s compensated according to the result of his efforts and not the amount thereof, we should not find that the relationship of employer-employee exists. In the pre sent case, private respondent worked at his own pleasure and [was] not subject to definite hours or conditions of work. Evidence Found by NLRC Not Applicable In its two-page[26] holding that there was an employer-employee relationship, th e NLRC relied on the following: (1) the payroll for February 16 to 29, 1992, (2) the ID card issued to him as employee and regular reporter by the responde nt, (3) the program schedules of DZRC showing the regular program of the station i ndicating his name: (4) the affidavit of Antonio Llarena, program supervisor of DZRC, stating that he [was] under his supervision, and (5) the list of reporting gadgets issued to a regular reporter. Other than the items enumerated above, no other document was considered by the N LRC. In other words, its conclusion was based solely on these alleged pieces of evidence. It clearly committed grave abuse of discretion in its factual findings , because all the above documents relate to the period January 16, 1992 to Febru ary 28, 1992 and not to the period March 11, 1990 to January 15, 1992 which are inclusive dates in controversy. The payroll[27] from February 16, 1992 to February 27, 1992 does not demonstrate that private respondent was an employee prior to said period. Lest it be forgot ten, the question in this case pertains to the status of private respondent from March 11, 1990 to January 15, 1992. The said payroll may prove that private res pondent was an employee during said days in February 1992, but not for the perio d which is the subject of the present controversy. Furthermore, neither the identification cards nor the SSS number printed at the back thereof indicate the date of issuance. Likewise, the SSS number does not sh ow that he was a member during the period in controversy; much less, that he bec ame so by reason of his employment with petitioner. Similarly inapplicable is the program schedule[28] which allegedly showed the re gular program of the station and indicated the name of private respondent as an employee. The document is a mere photocopy of a typewritten schedule. There is a bsolutely no indicium of its authenticity. Moreover, it is undated; hence, it do es not indicate whether such schedule pertained to the period in disupte, that i s, March 11, 1990 to January 15, 1992. Worse, the heading thereof was entitled Ra dio DZRC Programming Proposal. [italics supplied] A proposal is put forth merely f or consideration and acceptance.[29] It cannot, by itself, prove that such progra m was implemented and that private respondent acted as an employee of petitioner . Neither does the list of returned gadgets support the conclusion of the NLRC. It must be stressed that such gadgets were essential to enable the private respond ent to access the specific radio frequency and fcailities of the radio station. Being exclusive properties of the radio station, such gadgets could not have bee

n purchased, as they were not commercially available. In any event, the list of returned gadgets was dated February 27, 1997 -- again, a date not in controvers y. Such document, by itself, does not prove that private respondent was an emplo yee from March 20, 1990 to January 15, 1992. The affidavit of Antonio Llarena[30], an employee of DZRC, stating that the priv ate respondent was under his supervision, is vague, even misleading; it declarin g merely that Llarena was in charge of said respondent. Such language could not be construed to mean that he exercised supervision and control over private respon dent. Indubitably, the NLRC based its findings of employer-employee relationship from the circumstances attendant when private respondent was already a regular employ ee. Uncontroverted is the statement that the private respondent was a regular em ployee from January 16, 1992 to February 28, 1992, for which period he received all employee benefits. But such period, it must be stressed again, is not covere d by private respondents complaint. In sum, the evidence, which Public Respondent NLRC relies upon, does not justify the reversal of the labor arbiters ruling which, in turn, we find amply supporte d by the records. Clearly, private respondent was not an employee during the per iod in question. WHEREFORE, the petition is hereby GRANTED and the assailed Decision and Resoluti on are hereby SET ASIDE. The Order of the Labor Arbiter dated October 13, 1993 d ismissing the case for lack of merit is hereby REINSTATED. No costs. SO ORDERED. Davide,Jr., (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.

[G.R. No. 124551. August 28, 1998] USHIO MARKETING, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and SEVERIN O ANTONIO,respondents. D E C I S I O N DAVIDE, JR., J.: Petitioner urges us to annul the decision of 31 May 1995 of the National Labor R elations Commission (NLRC) in NLRC NCR CA No. 008495-95[1] which reversed the La bor Arbiter's 13 January 1995 decision in NLRC NCR Case No. 08-06147-94 and the NLRCs Order[2] of 29 February 1996 which denied petitioners motion for reconsidera tion. The factual and procedural antecedents are summarized by the public respondent N LRC in its Comment as follows: Private respondent Severino Antonio was an electrician who worked within the pre mises of petitioner Ushios car accessory shop in Banawe, Quezon City. On August 22, 1994, private respondent filed a complaint for illegal dismissal, non-paymen t of overtime pay, holiday pay, and other benefits against petitioner Ushio Mark eting which was docketed as NLRC NCR Case No. 08-06147-94 and assigned to Labor Arbiter Facundo L. Leda. On October 13, 1994, Labor Arbiter Leda directed the parties to file their respe ctive papers within a non-extendible period of twenty-five (25) days. On Novemb er 4, 1994, petitioner filed a motion to dismiss, while private respondent faile d to file his position paper.

In Petitioners Motion to Dismiss, she alleged that it was a single proprietorship engaged in the business of selling automobile spare parts and accessories. Pe titioner claimed that private respondent was not among her employees but a free lance operator who wait[ed] on the shops customers should the latter require his services. Petitioner further alleges in her Motion to Dismiss the following: 5.0 In pursuit of its trading business, the company employs a handful of regular employees such as sales persons, clerks, account officers and the like. These employees are on the Company payroll and are provided with all the privileges a nd benefits accorded by law to regular employees. These employees were selected and engaged by the management of the company and are paid their respective sala ries regularly. They also have fixed working days and hours and are subject to d isciplinary measures (such as reprimand, suspension or dismissal) should they vi olate company policies on tardiness, absences and general employment conduct. S imply put, the Company has full control over the manner by which the said employ ees perform their jobs. 6.0 In stark contrast to the Companys regular employees, there are independent, free lance operators who are permitted by the Company to position themselves pro ximate to the Company premises. These independent operators are allowed by the C ompany to wait on Company customers who would be requiring their services. In e xchange for the privileges of favorable recommendation by the Company and immedi ate access to customers in need of their services, these independent operators a llow the Company to collect their service fee from the customer and this fee is given back to the independent operator at the end of the week. In effect, they do not earn fixed wages from the Company as their variable fees are earned by th em from the customers of the Company. The Company has no control over and does not restrict the methodology or the means and manner by which these operators pe rform their work. These operators are not supervised by any employee of the Comp any since the results of their work is controlled by the customers who hire them . Likewise, the Company has no control as an employer over these operators. Th ey are not subject to regular hours and days of work and may come and go as they wish. They are not subject to any disciplinary measures from the Company, save merely for the inherent rules of general behavior and good conduct. 7.0 Complainant was one such independent, free lance operator. He was allowed b y the Company to provide his services to the customers of the Company who were i n need of such services. He received his fees indirectly from the Company out o f the fees paid by the customers during a given week. In doing his job, he was under the direct supervision and control of the customer. He was under no compul sion whatsoever to report to the Company on a regular basis. He was not subject to any disciplinary measures for his work conduct. Furthermore, he was free to position himself near other car accessory shops to offer his services to custom ers of said shops, as he is [sic] in fact had done on various occasions prior to the filing of this complaint. Attached to the motion of the petitioner is an affidavit executed by Ms. Carolin e Tan To, Assistant Manager of Share Motor Sales, also engaged in the business o f selling car spare parts and accessories along Banawe Street, attesting to the following : that in the pursuit of the said business, it allows independent and free lance operators, such as electricians, to wait on customers who would want them to perform their services; and that she knows one independent operator by t he name of Severino Antonio, as the latter had performed jobs [for] its custome rs. On January 13, 1995, Labor Arbiter Facundo L. Leda premising on the allegations contained in the Motion to Dismiss submitted by the petitioner Company, issued a n order dismissing the complaint of private respondent Severino Antonio against petitioner Ushio Marketing Corp. On February 28, 1995, private respondent assisted by the Public Attorneys Office, appealed the order of the Honorable Labor Arbiter to the Commission. In his me morandum, private respondent alleged that Ushio Marketing hired his services on 15 November 1981 until July 3, 1994 as an electrician with a daily salary of one hundred thirty two pesos (P132.00) per day. He further alleged that: During the employ of herein complainant with the respondents, he performed his j

ob religiously and faithfully, in fact he was the most trusted employee in the c ompany. For instance, Mrs. Tan, the employer, would ask him to go to the bank a nd withdraw money and deliver the purchased spare parts/accessories to the custo mer. If there was no driver, or they needed [a] handyman in the office and even in their household, Mrs. Tan would call for the complainant. He could be calle d, the employers personal assistant. However, despite his devotion and loyalty to his work as well as to his employer, his services were terminated by the respond ents without legal grounds. When he reported for work on 3 July 1994, his emplo yer would not let him inside the office because he was already dismissed from hi s job. He came [sic] back to the office for a number of times but his efforts p roved futile. Hence, he instituted a complaint with this Honorable Office. Attached to the private respondents Memorandum of Appeal were affidavits of his c o-electricians who worked with Ushio Marketing namely: Roberto Lopez and Narcing Pascua, corroborating the allegation that Mr. Severino Antonio worked with the petitioner Company as an electrician for the past four years when they have been working with the same Company; they were receiving One Hundred Thirty Two (P132 .00) per day from Mrs. Tan, that they cannot be absent from work without the per mission of Mrs. Tan; and that it was Mrs. Tan who gave them work when a client c omes in. To quote: 4. Na ang suweldo ko at ni Severino na P132.00 isang araw ay kay Gng. Tan nangga galing at hindi direktang ibinibigay ng kliyente; 5. Na hindi kami maaring lumiban sa aming trabaho nang hindi nagpapa[a]lam kay Gng. Tan; 6. Na si Gng. Tan ang nagbibigay sa amin ng trabaho kung mayroong dumarating na kliyente. On May 31, 1995, the National Labor Relations Commission issued its decision hol ding that complainant is respondents employee and that he was illegally dismissed . The dispositive portion of the decision reads as follows: WHEREFORE, the appealed Order dated January 13, 1995 is hereby set aside. The re spondent is directed to reinstate complainant with full backwages computed from August 3, 1994 until he is actually reinstated. Complainants monetary claims pre sented as third issue on appeal is however remanded for further arbitration ther e being no substantial basis to grant or deny the same. (p. 6 NLRCs Decision)[3] The NLRC reversed the Labor Arbiter. It adopted private respondent's allegation s in his complaint that he had "worked for respondent since '1981' as [an] 'elec trician' [and] paid 'weekly every Sunday' at the rate of '132' pesos per day;" a nd concluded that petitioner's arrangement as regards the mode of payment of pri vate respondent's wages was "nothing but an evasive attempt to hide the real emp loyment status of [private respondent]," considering that it could not understan d why private respondent could not directly collect his earnings from a customer , immediately after private respondent accomplished a job for which he was hired ; and why private respondent's proceeds from jobs rendered on a daily basis coul d only be paid to him on a weekly basis. Petitioners motion for reconsideration having been denied by the NLRC in its reso lution of 29 February 1996 for lack of palpable and patent errors, petitioner fil ed the instant petition, ascribing to the NLRC the commission of grave abuse of discretion in: (1) declaring private respondent as a regular employee; and (2) ignoring the accepted industry practices of car spare parts shop owners which ar e not contrary to law, public order and public policy. Petitioner maintains that as it was private respondent who alleged the existence of an employer-employee relationship, the burden to prove the same by credible and relevant evidence thus lay with private respondent, especially since petitio ner staunchly and consistently denied the same. Petitioner insists that the nat ure of its operations, as collaborated by the sworn statement of the assistant m anager of a rival establishment, sufficiently established the real status of pri vate respondent as a free lance operator performing assorted services like elect rical jobs, installation of accessories and spare parts, and some minor repairs for petitioner's customers. Petitioner then concludes that the basic issue of w hether private respondent was an employee should be resolved in the negative, co nsidering that: (1) petitioner had no part in the selection and engagement of pr

ivate respondent, its role merely limited to recommending private respondent's s ervices to the formers customers; (2) private respondent was not paid a fixed reg ular wage, but only a service fee collected by petitioner from its customers and paid to private respondent at the end of the week; (3) private respondent was not included in petitioners payroll and neither was the former reported as petiti oners employee to the Social Security System or the Bureau of Internal Revenue, c iting Continental Marble Corporation v. NLRC (161 SCRA 151, 157 [1988]); (4) pet itioner had no occasion to exercise its power to dismiss since petitioner never hired private respondent; and (5) petitioner did not exercise control and superv ision over the means and methods by which private respondent performed his job, as private respondent practiced independent judgment as to the time and place of work and was not required to report on a regular basis and even allowed to serv ice the customers of other auto supply shops. Additionally, petitioner had no li ability, on account of private respondent's poor workmanship, to customers who c hose to avail of private respondent's services and regulated his performance. Petitioner further argues that it was a recognized and accepted trade practice peculiar to the auto spare parts shop industry operating along the stretch of B anawe Street, Quezon City, that shop owners would collect the service fees fro m its customers and disburse the same to the independent contractor at the end o f a week. In fine, the shop owner and the independent contractor were partners in trade, both benefiting from the proceeds of their joint efforts. This mutual c ooperation between petitioner and private respondent could then be likened to t hat of a shoe shiner and a shoe shop owner in Besa v. Trajano,[4] or that of a caddy and the golf club in Manila Golf Club, Inc. v. Intermediate Appellate Cour t.[5] In his comment, private respondent reiterates his arguments that he was an empl oyee of petitioner, having worked for petitioner as an electrician from 15 Novem ber 1991 until 3 July 1994 with the following salary, to wit: 1981- P20.00/day; 1983- P21.00/day; 1989- P75.00/day; 1990- P100.00/day; 1991-1994- P132/day. Lik ewise, during private respondent's employ, he carried out various tasks as a dri ver, handyman, and personal assistant of petitioner. Private respondent could not be regarded an independent contractor since there was no written proof to su pport such a conclusion; his services as a handyman and an electrician for 13 ye ars, more or less, were necessary in the operation of petitioners business; he received a fixed salary instead of a commission; and he was dismissed and subjec ted to control by petitioner. Moreover, private respondent claims that the factu al settings of Besa and Manila Golf and Country Club preclude their application to the instant case. In its Manifestation in Lieu of Comment, the Office of the Solicitor General (OS G) supports the stand of petitioner and recommends the reversal of the challenge d decision. The OSG asserts that there was no employer-employee relationship be tween the parties because the control test, being the most important element of an employer-employee relationship, was absent. The OSG then points out that th ere was no showing that petitioner supplied private respondent with equipment an d tools; apart from private respondents bare allegation that he could not leave t he premises without petitioners permission, it was not established that private r espondent was under the control and supervision of petitioner or of its personne l; private respondent's admission that Mrs. Caroline Tan To referred jobs direct ly to him supports the notion that private respondent was not an employee, other wise, Mrs. Tan To would have coursed the job orders for private respondent thro ugh petitioner; and the arrangement that petitioner would receive the service fe es of private respondent from customers was not adequate to establish an employe r-employee relationship. In view of the stand of the OSG, we required the NLRC to file its Comment, if it so desired. In its Comment filed on 1 August 1997, the NLRC argues, through its Legal and En forcement Division, that it did not err in finding that there existed an employe e-employer relationship between petitioner and private respondent for [u]ndispute d are the facts that private respondent worked as an electrician within the prem ises of the petitioners shop and would serve its customers when the latter so req

uires [and] [h]e was the one who closed and opened the shop of the petitioner an d sometimes even asked to withdraw money and deliver purchased spare parts to pe titioners clients; [and] [h]e could be practically described as the personal assis tant of the manager, Mrs. Lilybeth Tan. Moreover, the NLRC derides petitioners reli ance on Besa v. Trajano, as the shoe shiners there collected their fees directly from the customers, which could not be said of private respondent here. Finall y, the NLRC takes petitioner to task for attempting to capitalize on its failure to submit its payroll or Social Security remittances to refute private responde nts claims. There is merit in the petition. It is not disputed that on 13 October 1994, Labor Arbiter Leda directed the part ies to file their respective position papers within a non-extendible period of 2 5 days. Private respondent, however, failed to comply with this order. As to h im then, there was no evidence extant on record to substantiate his allegations. On the other hand, on 4 November 1994, private respondent filed its motion to dismiss, duly verified by its sole proprietor, Lilybeth Tan. Said motion contai ned a statement of the case, a statement of facts, a statement of the issues inv olved, coupled with petitioners position thereon and the arguments in support the reof. Moreover, attached to the motion and forming an integral part thereof was the affidavit of petitioners business competitor, Mrs. Carolina Tan To, who corr oborated private respondents allegations as regards the nature of the automobile spare parts business and that private respondent was indeed an independent operat or. For all legal intents and purposes, the motion to dismiss sufficiently serve d as petitioner's position paper. Under Section 3, Rule V of the New Rules of Procedure of the NLRC, should the pa rties fail to reach an amicable settlement, either in whole or in part, during t he conference mandated by Section 2 thereof, the Labor Arbiter shall, inter alia , direct the parties to simultaneously file their respective verified position p apers covering only those claims and causes of action raised in the complaint, b ut excluding those which may have been amicably settled, and shall be accompanie d by all supporting documents including the affidavits of their respective witne sses to take the place of the affiants direct testimony. Thereafter, the parties shall not be allowed to allege facts, or present evidence to prove facts not re ferred to and any cause or causes of action not raised in the complaint or posit ion papers, affidavits and other documents. For failure then of private respondent to file his position paper, the Labor Arb iter acted correctly in taking into account only petitioners motion to dismiss an d thereafter dismissing private respondent's complaint. It follows that in the exercise of its appellate jurisdiction, the NLRC cannot g o beyond the pleadings and evidence submitted by the parties before the Labor Ar biter. However, we have sustained the action of the NLRC in allowing the partie s to submit additional evidence even during the pendency of an appeal,[6] in lig ht of Article 221 of the Labor Code which provides that rules of evidence prevai ling in courts of law or equity do not control the proceedings before Labor Arbi ters and NLRC and that the Labor Arbiters and the NLRC should use every and all reasonable means to ascertain the facts in each case speedily and objectively an d without regard for the technicalities of law or procedure. Here, on appeal to the NLRC, private respondent alleged that his failure to subm it his position paper before the Labor Arbiter was due to private respondents hav ing fallen victim to petitioners misrepresentations as to the possibility of arri ving at an amicable settlement. To this end, private respondent submitted the a ffidavits[7] of Roberto Lopez and Narcing Pascua which, pursuant to Article 221 of the Labor Code discussed above, were properly admitted by the NLRC. A perusa l of these affidavits, however, plainly shows that the avowals therein had no co nnection whatsoever with private respondents claim of denial of procedural due pr ocess before the Labor Arbiter. Moreover, said affidavits, having been admitted by the NLRC on appeal, any defect in procedural due process must be deemed cure d. Finally as to these affidavits, in the same vein as the rest of private resp ondents cause, the declarations of the affiants were but mere sweeping statements , unsubstantiated and unsupportive of private respondents allegations.

If only to underscore the paucity, if not absence, of evidence of private respon dent, certainly falling short of the standard of substantial evidence governing proceedings before quasi-judicial bodies, we note that private respondent himsel f did not execute any affidavit, despite submitting the affidavits of Lopez and Pascua on appeal to the NLRC. Notably, neither did private respondent verify hi s Memorandum on Appeal filed with the NLRC, as only his counsel signed the Memor andum. All told, private respondents dereliction of his duty to furnish some mea sure of probative value to his allegations mandates the grant of this petition. Turning to the challenged decision and resolution of the NLRC, we note that in s tark contrast to private respondents perfunctory advocacy, petitioner submitted a verified opposition[8]to private respondents Memorandum, which reiterated petiti oners arguments in its Motion to Dismiss. To this, private respondent filed a re ply[9]to the opposition, to which private respondent filed a rejoinder.[10] The foregoing pleadings notwithstanding, the NLRC, in passing upon the merits of the case, failed to refer to any of the arguments raised therein, opting, inste ad, to confine its discussion solely to the assertions in the complaint and the motion to dismiss. Initially, as adverted to earlier, it would seem that the NL RC, in ruling for private respondent, merely took at face value and indiscrimina tely adopted private respondents allegations that he had worked for respondent sin ce 1981 as [an] electrician [and] paid weekly every Sunday at the rate of 132 pesos p day, despite private respondent not having substantiated his allegations in the l east. What is most telling, however, is the NLRCs observation that there [were] so many unexplained kinks in [petitioners] theory of denial on [the existence of an] empl oyer-employee relationship that we have no recourse but to rule that [private re spondent] is [petitioners employee]. Clearly, this observation cannot but be chara cterized as having been attended by grave abuse of discretion. Under the fact p attern of the instant petition, more so, the dearth of evidence in private respo ndents favor, the NLRC should not have so readily afforded private respondent a p resumption of the existence of an employer-employee relationship. The bare alle gations in the complaint, the absence of an affidavit from private respondent, a nd the barren affidavits of Lopez and Pascua, could not, by any stretch, have fu rnished the particulars to justify the NLRCs conclusion. That private respondents espousal failed to meet the standard of substantial evidence becomes all the mo re too painfully evident when considered in light of petitioners arguments in its verified motion to dismiss and the supporting affidavit of petitioners business competitor, akin to an admission against interest. We hasten to add, however, that even if the NLRC had taken into account the vari ous pleadings filed before it, as the same malady characterized those filed by p rivate respondent, the conclusion would still be inevitable that the existence o f an employer-employee relationship between the parties here was not proven by s ubstantial evidence. The factors to be considered in determining the existence of an employer-employe e relationship are: (1) the selection and engagement of the employee; (2) the pa yment of wages; (3) the power of dismissal; and (4) the power to control the emp loyees conduct. The so-called "control test" is commonly regarded as the most cru cial and determinative indicator of the presence or absence of an employer-emplo yee relationship. Under the control test, an employer-employee relationship exis ts where the person for whom the services are performed reserves the right to c ontrol not only the end achieved, but also the manner and means to be used in re aching that end.[11] We agree with the Office of the Solicitor General that here, the power to contro l the employees conduct, i.e., the conduct of private respondent, is absent, thus : First, private respondent contends that he worked as an electrician and personal assistant at petitioners store. As [an] electrician, private respondent may be presumed to have used equipment or tools in rendering electrical services. If i t is true that private respondent was an employee of petitioner, he would have u sed equipment or tools supplied and owned by his employer. However, private res pondent failed to allege and present proof that petitioner supplied him equipmen

t and tools. Second, the conduct of private respondent was not subject to the control and sup ervision of petitioner or any of its personnel. There was no allegation of this , nor was evidence presented to prove it other than the bare allegation of priva te respondent that he could not leave the work premises without permission from petitioner. Private respondent himself decided how he would render electrical s ervices to customers. If it is true that private respondent was hired as [an] e lectrician, petitioner would have exercised supervision and control over the mea ns and manner he performed his electrical services for, otherwise, if private re spondents work was unsatisfactory, it would reflect on the business of petitioner . Third, private respondent was free to offer his services to other stores along B anaue, Quezon City, as evidenced by the affidavit of Caroline Tan To, Assistant Manager of Share Motor Sales (Annex B, Reply to Private Respondents Comment dated August 5, 1996) and private respondents own admission. But although private res pondent admits that he rendered electrical services to the customers of other st ores, he claims that petitioner allowed him to do so. If private respondent was an employee of petitioner, it was unthinkable for petitioner to allow private r espondent to render electrical services to three other stores selling automobile spare parts and accessories who were its competitors. Fourth, private respondent admits that [i]t was Mrs. Tan who refers electrical a nd other jobs to private respondent (p. 6, Private Respondents Comment dated Augus t 5, 1996). If private respondent was an employee of petitioner, Tan could not have referred electrical work directly to him. She would have to course job ord ers to petitioner. The fact that she dealt directly with private respondent mea ns that she did not consider private respondent an employee of petitioner. It is clear that petitioner did not have the power to control private respondent [w]ith respect to the means and methods by which his work was to be accomplishe d (Continental Marble Corporation, et al. vs. National Labor Relations Commission , 161 SCRA 151, 158 [1988]). Lastly, private respondent allowed petitioner to collect service fees from his c ustomers. He received said fees on a weekly basis. This arrangement, albeit pe culiar, does not prove the existence of an employer-employee relationship. In B esa vs. Trajano, 146 SCRA 501, 506 [1986], the shoe shiner rendering services in the premises of Besa, received from Besa the payments for his services on a wee kly basis. Yet the shoe shiner was not considered an employee of Besa. This is the same arrangement between petitioner and private respondent.[12] WHEREFORE, judgment is hereby rendered GRANTING the petition, REVERSING the chal lenged decision and resolution of the National Labor Relations Commission in NLR C-NCR CA No. 008495-95 and REINSTATING the Order of 13 January 1995 of the Labor Arbiter in NLRC-NCR Case No. 08-06147-94. No pronouncement as to costs. SO ORDERED. Bellosillo, Vitug, Panganiban and Quisumbing, JJ., concur.