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[G.R. No. 198783. April 15, 2013.

]
ROYAL PLANT WORKERS UNION, petitioner, vs. COCA-COLA
BOTTLERS PHILIPPINES, INC.-CEBU PLANT, respondent.

DECISION

MENDOZA, J :
p

Assailed in this petition is the May 24, 2011 Decision 1 and the September 2,
2011

Resolution 2 of

the

Court

of

Appeals (CA) in

CA-G.R.

SP

No.

05200, entitled Coca-Cola Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant


Workers Union, which nullified and set aside the June 11, 2010 Decision 3 of the
Voluntary Arbitration Panel (Arbitration Committee) in a case involving the
removal of chairs in the bottling plant of Coca-Cola Bottlers Philippines, Inc.
(CCBPI).
The

Factual

and

Procedural

Antecedents
The factual and procedural antecedents have been accurately recited in the May
24, 2011 CA decision as follows:
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic
corporation engaged in the manufacture, sale and distribution of
softdrink products. It has several bottling plants all over the country, one
of which is located in Cebu City. Under the employ of each bottling plant
are bottling operators. In the case of the plant in Cebu City, there are 20
bottling operators who work for its Bottling Line 1 while there are 12-14
bottling operators who man its Bottling Line 2. All of them are male and
they are members of herein respondent Royal Plant Workers Union
(ROPWU).

The bottling operators work in two shifts. The first shift is from 8 a.m. to 5
p.m. and the second shift is from 5 p.m. up to the time production
operations is finished. Thus, the second shift varies and may end beyond
eight (8) hours. However, the bottling operators are compensated with
overtime pay if the shift extends beyond eight (8) hours. For Bottling Line
1, 10 bottling operators work for each shift while 6 to 7 bottling operators
work for each shift for Bottling Line 2.
Each shift has rotations of work time and break time. Prior to September
2008, the rotation is this: after two and a half (2 1/2) hours of work, the
bottling operators are given a 30-minute break and this goes on until the
shift ends. In September 2008 and up to the present, the rotation has
changed and bottling operators are now given a 30-minute break after
one and one half (1 1/2) hours of work.
In 1974, the bottling operators of then Bottling Line 2 were provided with
chairs upon their request. In 1988, the bottling operators of then Bottling
Line 1 followed suit and asked to be provided also with chairs. Their
request was likewise granted. Sometime in September 2008, the chairs
provided for the operators were removed pursuant to a national directive
of petitioner. This directive is in line with the "I Operate, I Maintain, I
Clean" program of petitioner for bottling operators, wherein every bottling
operator is given the responsibility to keep the machinery and equipment
assigned to him clean and safe. The program reinforces the task of
bottling operators to constantly move about in the performance of their
duties and responsibilities.

AcSIDE

With this task of moving constantly to check on the machinery and


equipment assigned to him, a bottling operator does not need a chair
anymore, hence, petitioner's directive to remove them. Furthermore,
CCBPI rationalized that the removal of the chairs is implemented so that
the bottling operators will avoid sleeping, thus, prevent injuries to their
persons. As bottling operators are working with machines which consist
of moving parts, it is imperative that they should not fall asleep as to do

so would expose them to hazards and injuries. In addition, sleeping will


hamper the efficient flow of operations as the bottling operators would be
unable to perform their duties competently.
The bottling operators took issue with the removal of the chairs. Through
the representation of herein respondent, they initiated the grievance
machinery of the Collective Bargaining Agreement (CBA) in November
2008. Even after exhausting the remedies contained in the grievance
machinery, the parties were (still at a deadlock with petitioner still
insisting on the removal of the chairs and respondent still against such
measure. As such, respondent sent a Notice to Arbitrate, dated 16 July
2009, to petitioner stating its position to submit the issue on the removal
of the chairs for arbitration. Nevertheless, before submitting to arbitration
the issue, both parties availed of the conciliation/mediation proceedings
before the National Conciliation and Mediation Board (NCMB) Regional
Branch No. VII. They failed to arrive at an amicable settlement.
Thus, the process of arbitration continued and the parties appointed the
chairperson and members of the Arbitration Committee as outlined in the
CBA. Petitioner and respondent respectively appointed as members to
the Arbitration Committee Mr. Raul A. Kapuno, Jr. and Mr. Luis Ruiz
while they both chose Atty. Alice Morada as chairperson thereof. They
then executed a Submission Agreement which was accepted by the
Arbitration Committee on 01 October 2009. As contained in the
Submission Agreement, the sole issue for arbitration is whether the
removal

of

chairs

production/manufacturing

of
line

the

operators

while

assigned

performing

their

at

the

duties

and

responsibilities is valid or not.


Both parties submitted their position papers and other subsequent
pleadings in amplification of their respective stands. Petitioner argued
that the removal of the chairs is valid as it is a legitimate exercise of
management prerogative, it does not violate the Labor Code and it does
not violate the CBA it contracted with respondent. On the other hand,

respondent espoused the contrary view. It contended that the bottling


operators have been performing their assigned duties satisfactorily with
the presence of the chairs; the removal of the chairs constitutes a
violation of the Occupational Health and Safety Standards, the policy of
the State to assure the right of workers to just and humane conditions of
work as stated in Article 3 of the Labor Code and the Global Workplace
Rights Policy.

Ruling of the Arbitration Committee


On June 11, 2010, the Arbitration Committee rendered a decision in favor of the
Royal Plant Workers Union (the Union) and against CCBPI, the dispositive
portion of which reads, as follows:
Wherefore, the undersigned rules in favor of ROPWU declaring that the
removal of the operators chairs is not valid. CCBPI is hereby ordered to
restore the same for the use of the operators as before their removal in
2008. 4

The Arbitration Committee ruled, among others, that the use of chairs by the
operators had been a company practice for 34 years in Bottling Line 2, from 1974
to 2008, and 20 years in Bottling Line 1, from 1988 to 2008; that the use of the
chairs by the operators constituted a company practice favorable to the Union;
that it ripened into a benefit after it had been enjoyed by it; that any benefit being
enjoyed by the employees could not be reduced, diminished, discontinued, or
eliminated by the employer in accordance with Article 100 of the Labor Code,
which prohibited the diminution or elimination by the employer of the employees'
benefit; and that jurisprudence had not laid down any rule requiring a specific
minimum number of years before a benefit would constitute a voluntary company
practice which could not be unilaterally withdrawn by the employer.
The Arbitration Committee further stated that, although the removal of the chairs
was done in good faith, CCBPI failed to present evidence regarding instances of
sleeping while on duty. There were no specific details as to the number of
incidents of sleeping on duty, who were involved, when these incidents

happened, and what actions were taken. There was no evidence either of any
accident or injury in the many years that the bottling operators used chairs. To the
Arbitration Committee, it was puzzling why it took 34 and 20 years for CCBPI to
be so solicitous of the bottling operators' safety that it removed their chairs so that
they would not fall asleep and injure themselves.
Finally, the Arbitration Committee was of the view that, contrary to CCBPI's
position, line efficiency was the result of many factors and it could not be
attributed solely to one such as the removal of the chairs.

SHcDAI

Not contented with the Arbitration Committee's decision, CCBPI filed a petition for
review under Rule 43 before the CA.
Ruling of the CA
On May 24, 2011, the CA rendered a contrasting decision which nullified and set
aside the decision of the Arbitration Committee. The dispositive portion of the CA
decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED
and the Decision, dated 11 June 2010, of the Arbitration Committee in
AC389-VII-09-10-2009D is NULLIFIED and SET ASIDE. A new one is
entered in its stead SUSTAINING the removal of the chairs of the bottling
operators from the manufacturing/production line. 5

The CA held among others, that the removal of the chairs from the
manufacturing/production lines by CCBPI is within the province of management
prerogatives; that it was part of its inherent right to control and manage its
enterprise effectively; and that since it was the employer's discretion to constantly
develop measures or means to optimize the efficiency of its employees and to
keep its machineries and equipment in the best of conditions, it was only
appropriate that it should be given wide latitude in exercising it.
The CA stated that CCBPI complied with the conditions of a valid exercise of a
management prerogative when it decided to remove the chairs used by the
bottling operators in the manufacturing/production lines. The removal of the

chairs was solely motivated by the best intentions for both the Union and CCBPI,
in line with the "I Operate, I Maintain, I Clean" program for bottling operators,
wherein every bottling operator was given the responsibility to keep the
machinery and equipment assigned to him clean and safe. The program would
reinforce the task of bottling operators to constantly move about in the
performance of their duties and responsibilities. Without the chairs, the bottling
operators could efficiently supervise these machineries' operations and
maintenance. It would also be beneficial for them because the working time
before the break in each rotation for each shift was substantially reduced from
two and a half hours (2 1/2) to one and a half hours (1 1/2) before the 30-minute
break. This scheme was clearly advantageous to the bottling operators as the
number of resting periods was increased. CCBPI had the best intentions in
removing the chairs because some bottling operators had the propensity to fall
asleep while on the job and sleeping on the job ran the risk of injury exposure
and removing them reduced the risk.
The CA added that the decision of CCBPI to remove the chairs was not done for
the purpose of defeating or circumventing the rights of its employees under the
special laws, the Collective Bargaining Agreement (CBA) or the general principles
of justice and fair play. It opined that the principles of justice and fair play were
not violated because, when the chairs were removed, there was a commensurate
reduction of the working time for each rotation in each shift. The provision of
chairs for the bottling operators was never part of the CBAs contracted between
the Union and CCBPI. The chairs were not provided as a benefit because such
matter was dependent upon the exigencies of the work of the bottling operators.
As such, CCBPI could withdraw this provision if it was not necessary in the
exigencies of the work, if it was not contributing to the efficiency of the bottling
operators or if it would expose them to some hazards. Lastly, the CA explained
that the provision of chairs to the bottling operators cannot be covered by Article
100 of the Labor Code on elimination or diminution of benefits because the
employee's benefits referred to therein mainly involved monetary considerations
or privileges converted to their monetary equivalent.

Disgruntled with the adverse CA decision, the Union has come to this Court
praying for its reversal on the following:
GROUNDS
I
THAT

WITH

COMMITTED

DUE

RESPECT,

REVERSIBLE

THE

ERROR

COURT
IN

OF

HOLDING

APPEALS
THAT

PETITION FOR REVIEW UNDER RULE 43 OF THE RULES OF


COURT IS THE PROPER REMEDY OF CHALLENGING BEFORE
SAID COURT THE DECISION OF THE VOLUNTARY ARBITRATOR
OR PANEL OF VOLUNTARY ARBITRATORS UNDER THE LABOR
CODE.
II
THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY
ABUSED ITS DISCRETION IN NULLIFYING AND SETTING ASIDE
THE DECISION OF THE PANEL OF VOLUNTARY ARBITRATORS
WHICH DECLARED AS NOT VALID THE REMOVAL OF THE
CHAIRS OF THE OPERATORS IN THE MANUFACTURING AND/OR
PRODUCTION LINE.

ADCSEa

In advocacy of its positions, the Union argues that the proper remedy in
challenging the decision of the Arbitration Committee before the CA is a petition
for certiorari under Rule 65. The petition for review under Rule 43 resorted to by
CCBPI should have been dismissed for being an improper remedy. The Union
points out that the parties agreed to submit the unresolved grievance involving
the removal of chairs to voluntary arbitration pursuant to the provisions of Article
V of the existing CBA. Hence, the assailed decision of the Arbitration Committee
is a judgment or final order issued under the Labor Code of the Philippines.
Section 2, Rule 43 of the 1997 Rules of Civil Procedure, expressly states that the
said rule does not cover cases under the Labor Code of the Philippines. The
judgments or final orders of the Voluntary Arbitrator or Panel of Voluntary

Arbitrators are governed by the provisions of Articles 260, 261, 262, 262-A, and
262-B of the Labor Code of the Philippines.
On the substantive aspect, the Union argues that there is no connection between
CCBPI's "I Operate, I Maintain, I Clean" program and the removal of the chairs
because the implementation of the program was in 2006 and the removal of the
chairs was done in 2008. The 30-minute break is part of an operator's working
hours and does not make any difference. The frequency of the break period is not
advantageous to the operators because it cannot compensate for the time they
are made to stand throughout their working time. The bottling operators get tired
and exhausted after their tour of duty even with chairs around. How much more if
the chairs are removed?
The Union, further claims that management prerogatives are not absolute but
subject to certain limitations found in law, a collective bargaining agreement, or
general principles of fair play and justice. The operators have been performing
their assigned duties and responsibilities satisfactorily for thirty (30) years using
chairs. There is no record of poor performance because the operators are sitting
all the time. There is no single incident when the attention of an operator was
called for failure to carry out his assigned tasks. CCBPI has not submitted any
evidence to prove that the performance of the operators was poor before the
removal of the chairs and that it has improved after the chairs were removed. The
presence of chairs for more than 30 years made the operators awake and alert
as they could relax from time to time. There are sanctions for those caught
sleeping while on duty. Before the removal of the chairs, the efficiency of the
operators was much better and there was no recorded accident. After the
removal of the chairs, the efficiency of the operators diminished considerably,
resulting in the drastic decline of line efficiency.
Finally, the Union asserts that the removal of the chairs constitutes violation of
the Occupational Health and Safety Standards, which provide that every
company shall keep and maintain its workplace free from hazards that are likely
to cause physical harm to the workers or damage to property. The removal of the
chairs constitutes a violation of the State policy to assure the right of workers to a

just and humane condition of work pursuant to Article 3 of the Labor Code and of
CCBPI's Global Workplace Rights Policy. Hence, the unilateral withdrawal,
elimination or removal of the chairs, which have been in existence for more than
30 years, constitutes a violation of existing practice.
The respondent's position
CCBPI reiterates the ruling of the CA that a petition for review under Rule 43 of
the Rules of Court was the proper remedy to question the decision of the
Arbitration Committee. It likewise echoes the ruling of the CA that the removal of
the chairs was a legitimate exercise of management prerogative that it was done
not to harm the bottling operators but for the purpose of optimizing their efficiency
and CCBPI's machineries and equipment; and that the exercise of its
management prerogative, was done in good faith and not for the purpose of
circumventing the alights of the employees under the special laws, the CBA or
the general principles of justice and fair play.
The Court's Ruling
The decision in this case rests on the resolution of two basic questions. First, is
an appeal to the CA via a petition for review under Rule 43 of the 1997 Rules of
Civil Procedure a proper remedy to question the decision of the Arbitration
Committee? Second, was the removal of the bottling operators' chairs from
CCBPI's production/manufacturing lines a valid exercise of a management
prerogative?
The Court sustains the ruling of the CA on both issues.
Regarding the first issue, the Union insists that the CA erred in ruling that the
recourse taken by CCBPI in appealing the decision of the Arbitration Committee
was proper. It argues that the proper remedy in challenging the decision of the
Voluntary Arbitrator before the CA is by filing a petition for certiorari under Rule
65 of the Rules of Court, not a petition for review under Rule 43.

TAaEIc

CCBPI counters that the CA was correct in ruling that the recourse it took in
appealing the decision of the Arbitration Committee to the CA via a petition for

review under Rule 43 of the Rules of Court was proper and in conformity with the
rules and prevailing jurisprudence.
A

Petition

under

Rule

for
43

Review
is

the

proper remedy
CCBPI is correct. This procedural issue being debated upon is not novel. The
Court has already ruled in a number of cases that a decision or award of a
voluntary arbitrator is appealable to the CA via a petition for review under Rule
43. The recent case of Samahan ng mga Manggagawa sa Hyatt (SAMASAHNUWHRAIN) v. Hon. Voluntary Arbitrator Buenaventura C. Magsalin and Hotel
Enterprises of the Philippines 6 reiterated the well-settled doctrine on this issue, to
wit:
In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAINAPL v. Bacungan, 7 we repeated the well-settled rule that a decision or
award of a voluntary arbitrator is appealable to the CA via petition for
review under Rule 43. We held that:
"The question on the proper recourse to assail a decision of a
voluntary

arbitrator

has

already

been

settled

in Luzon

Development Bank v. Association of Luzon Development Bank


Employees, where the Court held that the decision or award of the
voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure
outlined in Revised Administrative Circular No. 1-95 (now
embodied in Rule 43 of the 1997 Rules of Civil Procedure), just
like those of the quasi-judicial agencies, boards and commissions
enumerated therein, and consistent with the original purpose to
provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities.
Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon
Paint Employees Union-Olalia v. Court of Appeals, the Court

reiterated the aforequoted ruling. In Alcantara, the Court held that


notwithstanding Section 2 of Rule 43, the ruling in Luzon
Development Bank still stands. The Court explained, thus:
'The provisions may be new to the Rules of Court but it is
far from being a new law. Section 2, Rules 42 of the 1997
Rules of Civil Procedure, as presently worded, is nothing
more but a reiteration of the exception to the exclusive
appellate jurisdiction of the Court of Appeals, as provided
for in Section 9, Batas Pambansa Blg. 129, as amended by
Republic Act No. 7902:
(3) Exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial
Courts

and

quasi-judicial

agencies,

instrumentalities,

boards or commissions, including the Securities and


Exchange Commission, the Employees' Compensation
Commission and the Civil Service Commission, except
those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code
of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act and of subparagraph
(1) of the third paragraph and subparagraph (4) of the
fourth paragraph of Section 17 of the Judiciary Act of
1948.'
The Court took into account this exception in Luzon Development
Bank but, nevertheless, held that the decisions of voluntary
arbitrators issued pursuant to the Labor Code do not come within
its ambit . . . ."

aTADcH

Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil


Procedure, as amended, provide:

"SECTION 1. Scope. This Rule shall apply to appeals from


judgments or final orders of the Court of Tax Appeals and from
awards, judgments, final orders or resolutions of or authorized by
any quasi-judicial agency in the exercise of its quasi-judicial
functions. Among these agencies are the . . ., and voluntary
arbitrators authorized by law.
xxx xxx xxx
SEC. 3. Where to appeal. An appeal under this Rule may be
taken to the Court of Appeals within the period and in the manner
therein provided, whether the appeal involves questions of fact, of
law, or mixed questions of fact and law.
SEC. 4. Period of appeal. The appeal shall be taken within
fifteen (15) days from notice of the award, judgment, final order or
resolution, or from the date of its last publication, if publication is
required by law for its effectivity, or of the denial of petitioner's
motion for new trial or reconsideration duly filed in accordance
with the governing law of the court or agency a quo. . . . .
(Emphasis supplied.)"
Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrator's
Resolution denying petitioner's motion for reconsideration, petitioner
should have filed with the CA, within the fifteen (15)-day reglementary
period, a petition for review, not a petition for certiorari.

On the second issue, the Union basically claims that the CCBPI's decision to
unilaterally remove the operators' chairs from the production/manufacturing lines
of its bottling plants is not valid because it violates some fundamental labor
policies. According to the Union, such removal constitutes a violation of the 1)
Occupational Health and Safety Standards which provide that every worker is
entitled to be provided by the employer with appropriate seats, among others; 2)
policy of the State to assure the right of workers to a just and humane condition
of work as provided for in Article 3 of the Labor Code;

3) Global Workplace

Rights Policy of CCBPI which provides for a safe and healthy workplace by
maintaining a productive workplace and by minimizing the risk of accident, injury
and exposure to health risks; and 4) diminution of benefits provided in Article 100
of the Labor Code. 9
Opposing the Union's argument, CCBPI mainly contends that the removal of the
subject chairs is a valid exercise of management prerogative. The management
decision to remove the subject chairs was made in good faith and did not intend
to defeat or circumvent the rights of the Union under the special laws, the CBA
and the general principles of justice and fair play.
Again, the Court agrees with CCBPI on the matter.
A

Valid

Exercise

of

Management Prerogative
The Court has held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work, processes to
be followed, supervision of workers, working regulations, transfer of employees,
work supervision, lay-off of workers, and discipline, dismissal and recall of
workers. The exercise of management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the rights of labor. 10
In the present controversy, it cannot be denied that CCBPI removed the
operators' chairs pursuant to a national directive and in line with its "I Operate, I
Maintain, I Clean" program, launched to enable the Union to perform their duties
and

responsibilities

more

efficiently.

The

chairs

were

not

removed

indiscriminately. They were carefully studied with due regard to the welfare of the
members of the Union. The removal of the chairs was compensated
by: a) a reduction of the operating hours of the bottling operators from a twoand-one-half (2 1/2)-hour rotation period to a one-and-a-half (1 1/2) hour rotation
period; and b) an increase of the break period from 15 to 30 minutes between
rotations.

Apparently, the decision to remove the chairs was done with good intentions as
CCBPI wanted to avoid instances of operators sleeping on the job while in the
performance of their duties and responsibilities and because of the fact that the
chairs were not necessary considering that the operators constantly move about
while working. In short, the removal of the chairs was designed to increase work
efficiency. Hence, CCBPI's exercise of its management prerogative was made in
good faith without doing any harm to the workers' rights.

cTEICD

The fact that there is no proof of any operator sleeping on the job is of no
moment. There is no guarantee that such incident would never happen as sitting
on a chair is relaxing. Besides, the operators constantly move about while doing
their job. The ultimate purpose is to promote work efficiency.
No Violation of Labor Laws
The rights of the Union under any labor law were not violated. There is no law
that requires employers to provide chairs for bottling operators. The CA correctly
ruled that the Labor Code, specifically Article 132

11

thereof, only requires

employers to provide seats for women. No similar requirement is mandated for


men or male workers. It must be stressed that all concerned bottling operators in
this case are men.
There was no violation either of the Health, Safety and Social Welfare Benefit
provisions under Book IV of the Labor Code of the Philippines. As shown in the
foregoing, the removal of the chairs was compensated by the reduction of the
working hours and increase in the rest period. The directive did not expose the
bottling operators to safety and health hazards.
The Union should not complain too much about standing and moving about for
one and one-half (1 1/2) hours because studies show that sitting in workplaces
for a long time is hazardous to one's health. The report of VicHealth,
Australia, 12 disclosed that "prolonged workplace sitting is an emerging public
health and occupational health issue with serious implications for the health of
our working population. Importantly, prolonged sitting is a risk factor for poor

health

and

early

death,

even

among

those

who

meet,

or

exceed,

national 13 activity guidelines." In another report, 14 it was written:


Workers needing to spend long periods in a seated position on the job
such as taxi drivers, call centre and office workers, are at risk for injury
and a variety of adverse health effects.
The most common injuries occur in the muscles, bones, tendons and
ligaments, affecting the neck and lower back regions. Prolonged sitting:
reduces body movement making muscles more likely to pull,
cramp or strain when stretched suddenly,
causes fatigue in the back and neck muscles by slowing the
blood supply and puts high tension on the spine, especially
in the low back or neck, and
causes a steady compression on the spinal discs that hinders
their nutrition and can contribute to their premature
degeneration.
Sedentary employees may also face a gradual deterioration in health if
they do not exercise or do not lead an otherwise physically active life.
The most common health problems that these employees experience
are disorders in blood circulation and injuries affecting their ability to
move. Deep Vein Thrombosis (DVT), where a clot forms in a large vein
after prolonged sitting (e.g., after a long flight) has also been shown to
be a risk.
Workers who spend most of their working time seated may also
experience other, less specific adverse health effects. Common effects
include decreased fitness, reduced heart and lung efficiency, and
digestive problems. Recent research has identified too much sitting as
an important part of the physical activity and health equation, and
suggests we should focus on the harm caused by daily inactivity such
as prolonged sitting.

Associate professor David Dunstan leads a team at the Baker IDI in


Melbourne which is specifically researching sitting and physical activity.
He has found that people who spend long periods of time seated (more
than four hours per day) were at risk of:
higher blood levels of sugar and fats,
larger waistlines, and
higher risk of metabolic syndrome
regardless of how much moderate to vigorous exercise they had.
In addition, people who interrupted their sitting time more often just
by standing or with light activities such as housework, shopping,
and moving about the office had healthier blood sugar and fat levels,
and smaller waistlines than those whose sitting time was not broken
up.

HcACST

Of course, in this case, if the chairs would be returned, no risks would be involved
because of the shorter period of working time. The study was cited just to show
that there is a health risk in prolonged sitting.
No Violation of the CBA
The CBA 15 between the Union and CCBPI contains no provision whatsoever
requiring the management to provide chairs for the operators in the
production/manufacturing line while performing their duties and responsibilities.
On the contrary, Section 2 of Article 1 of the CBA expressly provides as follows:
Article I
SCOPE
SECTION 2. Scope of the Agreement. All the terms and conditions of
employment of employees and workers within the appropriate bargaining
unit (as defined in Section 1 hereof) are embodied in this Agreement and
the same shall govern the relationship between the COMPANY and such
employees and/or workers. On the other hand, all such benefits

and/or privileges as are not expressly provided for in this


Agreement but which are now being accorded, may in the future be
accorded, or might have previously been accorded, to the
employees and/or workers, shall be deemed as purely voluntary
acts on the part of the COMPANY in each case, and the
continuance and repetition thereof now or in the future, no matter
how long or how often, shall not be construed as establishing an
obligation on the part of the COMPANY. It is however understood that
any benefits that are agreed upon by and between the COMPANY and
the UNION in the Labor-Management Committee Meetings regarding the
terms and conditions of employment outside the CBA that have general
application to employees who are similarly situated in a Department or in
the Plant shall be implemented. [emphasis and underscoring supplied]

As can be gleaned from the aforecited provision, the CBA expressly provides that
benefits and/or privileges, not expressly given therein but which are presently
being granted by the company and enjoyed by the employees, shall be
considered as purely voluntary acts by the management and that the continuance
of such benefits and/or privileges, no matter how long or how often, shall not be
understood as establishing an obligation on the company's part. Since the matter
of the chairs is not expressly stated in the CBA, it is understood that it was a
purely voluntary act on the part of CCBPI and the long practice did not convert it
into an obligation or a vested right in favor of the Union.
No

Violation

of

the

general

principles

of justice and fair play


The Court completely agrees with the CA ruling that the removal of the chairs did
not violate the general principles of justice and fair play because the bottling
operators' working time was considerably reduced from two and a half (2
1/2) hours to just one and a half (1 1/2) hours and the break period, when they
could sit down, wasincreased to 30 minutes between rotations. The bottling
operators' new work schedule is certainly advantageous to them because it
greatly increases their rest period and significantly decreases their working time.

A break time of thirty (30) minutes after working for only one and a half (1 1/2)
hours is a just and fair work schedule.
No

Violation

of

Article

100

of the Labor Code


The operators' chairs cannot be considered as one of the employee benefits
covered in Article 100 16 of the Labor Code. In the Court's view, the term
"benefits" mentioned in the non-diminution rule refers to monetary benefits or
privileges given to the employee with monetary equivalents. Such benefits or
privileges form part of the employees' wage, salary or compensation making
them enforceable obligations.
This Court has already decided several cases regarding the non-diminution rule
where the benefits or privileges involved in those cases mainly concern monetary
considerations or privileges with monetary equivalents. Some of these cases
are: Eastern Telecommunication Phils., Inc. v. Eastern Telecoms Employees
Union, 17 where the case involves the payment of 14th, 15th and 16th month
bonuses; Central Azucarera De Tarlac v. Central Azucarera De Tarlac Labor
Union-NLU, 18 regarding the 13th month pay, legal/special holiday pay, night
premium pay and vacation and sick leaves; TSPIC Corp. v. TSPIC Employees
Union, 19 regarding salary wage increases; and American Wire and Cable Daily
Employees Union vs. American Wire and Cable Company, Inc., 20 involving
service awards with cash incentives, premium pay, Christmas party with
incidental benefits and promotional increase.

CIaASH

In this regard, the Court agrees with the CA when it resolved the matter and
wrote:
Let it be stressed that the aforequoted article speaks of non-diminution of
supplements and other employee benefits. Supplements are privileges
given to an employee which constitute as extra remuneration besides his
or her basic ordinary earnings and wages. From this definition, We can
only deduce that the other employee benefits spoken of by Article 100
pertain only to those which are susceptible of monetary considerations.

Indeed, this could only be the most plausible conclusion because the
cases tackling Article 100 involve mainly with monetary considerations or
privileges converted to their monetary equivalents.
xxx xxx xxx
Without a doubt, equating the provision of chairs to the bottling operators
as something within the ambit of "benefits" in the context of Article 100 of
the Labor Code is unduly stretching the coverage of the law. The
interpretations of Article 100 of the Labor Code do not show even with
the slightest hint that such provision of chairs for the bottling operators
may be sheltered under its mantle. 21

Jurisprudence recognizes the exercise of management prerogatives. Labor laws


also discourage interference with an employer's judgment in the conduct of its
business. For this reason, the Court often declines to interfere in legitimate
business decisions of employers. The law must protect not only the welfare of the
employees, but also the right of the employers. 22
WHEREFORE, the petition is DENIED.
SO ORDERED.
Velasco, Jr., Peralta, Abad and Leonen, JJ., concur.
|||

(Royal Plant Workers Union v. Coca-Cola Bottlers Phils., Inc., G.R. No. 198783,

[April 15, 2013])

[G.R. No. 145402. March 14, 2008.]


MERALCO INDUSTRIAL ENGINEERING SERVICES
CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, OFELIA P. LANDRITO GENERAL SERVICES
and/or OFELIA P. LANDRITO,respondents.

DECISION

CHICO-NAZARIO, J :
p

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure seeking to reverse and set aside (1) the
Decision 1 of the Court of Appeals in CA-G.R. SP No. 50806, dated 24 April
2000, which modified the Decision 2 of the National Labor Relations Commission
(NLRC), dated 30 January 1996 in NLRC NCR CA No. 001737-91 (NLRC NCR
Case No. 00-09-04432-89), and thereby held the petitioner solidarily liable with
the private respondents for the satisfaction of the separation pay of the latter's
employees; and (2) the Resolution 3 of the appellate court, dated 27 September
2000, in the same case which denied the petitioner's Motion for Reconsideration.
Petitioner Meralco Industrial Engineering Services Corporation (MIESCOR) is a
corporation duly organized and existing under the laws of the Republic of the
Philippines and a client of private respondents. Private respondent Ofelia P.
Landrito General Services (OPLGS) is a business firm engaged in providing and
rendering general services, such as janitorial and maintenance work to its clients,
while private respondent Ofelia P. Landrito is the Proprietor and General Manager
of OPLGS.
The factual milieu of the present case is as follows:
On 7 November 1984, petitioner and private respondents executed Contract
Order No. 166-84, 4 whereby the latter would supply the petitioner janitorial
services, which include labor, materials, tools and equipment, as well as
supervision of its assigned employees, at petitioner's Rockwell Thermal Plant in
Makati City. Pursuant thereto, private respondents assigned their 49 employees
as janitors to petitioner's Rockwell Thermal Plant with a daily wage of P51.50 per
employee.
On 20 September 1989, however, the aforesaid 49 employees (complainants)
lodged a Complaint for illegal deduction, underpayment, non-payment of overtime

pay, legal holiday pay, premium pay for holiday and rest day and night
differentials 5 against the private respondents before the Labor Arbiter. The case
was docketed as NLRC NCR Case No. 00-09-04432-89.
In view of the enactment of Republic Act No. 6727, 6 the contract between the
petitioner and the private respondents was amended 7 for the 10th time on 3
November 1989 to increase the minimum daily wage per employee from P63.55
to P89.00 or P2,670.00 per month. Two months thereafter, or on 2 January
1990, 8 petitioner sent a letter to private respondents informing them that effective
at the close of business hours on 31 January 1990, petitioner was terminating
Contract Order No. 166-84. Accordingly, at the end of the business hours on 31
January 1990, the complainants were pulled out from their work at the petitioner's
Rockwell Thermal Plant. Thus, on 27 February 1990, complainants amended
their Complaint to include the charge of illegal dismissal and to implead the
petitioner as a party respondent therein.
Since the parties failed to settle amicably before the Labor Arbiter, they submitted
their respective position papers and other pleadings together with their
documentary evidence. Thereafter, a Decision was rendered by the Labor Arbiter
on 26 March 1991, dismissing the Complaint against the petitioner for lack of
merit, but ordering the private respondents to pay the complainants the total
amount of P487,287.07 representing unpaid wages, separation pay and overtime
pay; as well as attorney's fees in an amount equivalent to 10% of the award or
P48,728.70. All other claims of the complainants against the private respondents
were dismissed. 9
Feeling aggrieved, private respondents appealed the aforesaid Decision to the
NLRC. Private respondents alleged, among other things, that: (1) 48 of the 49
complainants had executed affidavits of desistance and they had never attended
any hearing nor given any authority to anyone to file a case on their behalf; (2)
the Labor Arbiter erred in not conducting a full-blown hearing on the case; (3)
there is only one complainant in that case who submitted a position paper on his
own; (4) the complainants were not constructively dismissed when they were not
given assignments within a period of six months, but had abandoned their jobs

when they failed to report to another place of assignment; and (5) the petitioner,
being the principal, was solidarily liable with the private respondents for
failure to make an adjustment on the wages of the complainants.
May 1993, the NLRC issued a Resolution

11

10

On 28

affirming the Decision of the Labor

Arbiter dated 26 March 1991 with the modification that the petitioner was
solidarily liable with the private respondents, ratiocinating thus:
We, however, disagree with the dismissal of the case against
[herein petitioner]. Under Art. 107

12

of the Labor Code of the

Philippines, [herein petitioner] is considered an indirect employer


and can be held solidarily liable with [private respondents] as an
independent

contractor. Under

Art.

109, 13 for

purposes

of

determining the extent of its liability, [herein petitioner] is


considered a direct employer, hence, it is solidarily liable for
complainant's (sic) wage differentials and unpaid overtime. We find
this situation obtaining in this case in view of the failure of [private
respondents] to pay in full the labor standard benefits of complainants, in
which case liability is limited thereto and does not extend to the
establishment
supplied].

of

employer-employee

relations.

14

[Emphasis

aHcDEC

Both private respondents and petitioner separately moved for reconsideration of


the aforesaid Resolution of the NLRC. In their Motion for Reconsideration, private
respondents reiterated that the complainants abandoned their work, so that
private respondents should not be liable for separation pay; and that petitioner,
not private respondents, should be liable for complainants' other monetary
claims, i.e., for wage differentials and unpaid overtime. The petitioner, in its own
Motion for Reconsideration, asked that it be excluded from liability. It averred that
private respondents should be solely responsible for their acts as it sufficiently
paid private respondents all the benefits due the complainants.
On 30 July 1993, the NLRC issued an Order

15

noting that based on the records

of the case, the judgment award in the amount of P487,287.07 was secured
by a surety bond posted by the private respondents; 16 hence, there was no

longer any impediment to the satisfaction of the complainants' claims.


Resultantly,

the

NLRC

denied

the

private

respondents'

Motion

for

Reconsideration. The NLRC likewise directed the Labor Arbiter to enforce the
monetary award against the private respondents' surety bond and to determine
who should finally shoulder the liability therefor. 17
Alleging grave abuse of discretion of the NLRC in its issuance of the Resolution
and Order dated 28 May 1993 and 30 July 1993, respectively, private
respondents filed before this Court a Petition for Certiorari with prayer for the
issuance of a writ of preliminary injunction. The same was docketed as G.R. No.
111506 entitled Ofelia Landrito General Services v. National Labor Relations
Commission. The said Petition suspended the proceedings before the Labor
Arbiter.
On 23 May 1994, however, this Court issued a Resolution

18

dismissing G.R. No.

111506 for failure of private respondents to sufficiently show that the NLRC had
committed grave abuse of discretion in rendering its questioned judgment. This
Court's Resolution in G.R. No. 111506 became final and executory on 25 July
1994. 19
As a consequence thereof, the proceedings before the Labor Arbiter resumed
with respect to the determination of who should finally shoulder the liability for the
monetary awards granted to the complainants, in accordance with the NLRC
Order dated 30 July 1993.
On 5 October 1994, the Labor Arbiter issued an Order, 20 which reads:
As can be gleaned from the Resolution dated [28 May 1993], there is
that necessity of clarifying the respective liabilities of [herein petitioner]
and [herein private respondents] insofar as the judgment award in the
total sum of P487,287.07 is concerned.
The judgment award in the total sum of P487,287.07 as contained in
the Decision dated [26 March 1991]consists of three (3) parts, as
follows: First, the judgment award on the underpayment; Second, the

judgment award on separation pay; and Third, the judgment award on


the overtime pay.
The question now is: Which of these awards is [petitioner] solidarily
liable with [private respondents]?

DaIAcC

An examination of the record elicits the finding that [petitioner] is


solidarily liable with [private respondents] on the judgment awards
on the underpayment and on the non-payment of the overtime pay. .
. . . This joint and several liability of the contractor [private
respondents] and the principal [petitioner] is mandated by the
Labor Code to assure compliance of the provisions therein, including
the statutory minimum wage (Art. 99,

21

Labor Code). The contractor-

agency is made liable by virtue of his status as direct employer. The


principal, on the other hand, is made the indirect employer of the
contractor-agency's

employees

for

purposes

of

paying

the

employees their wages should the contractor-agency be unable to


pay them. This joint and several liability facilitates, if not
guarantees, payment of the workers performance of any work, task,
job or project, thus giving the workers ample protection as
mandated by the 1987 Constitution.
In sum, the complainants may enforce the judgment award on
underpayment and the non-payment of overtime pay against either
[private respondents] and/or [petitioner].

However, in view of the finding in the Decision that [petitioner] had


adjusted its contract price for the janitorial services it contracted with
[private respondents] conforming to the provisions of Republic Act No.
6727,

should

the

complainants

enforce

the

judgment

on

the

underpayment and on the non-payment of the overtime pay aginst (sic)


[petitioner], the latter can seek reimbursement from the former [meaning
(private respondents)], but should the judgment award on the

underpayment and on the non-payment of the overtime pay be enforced


against [private respondents], the latter cannot seek reimbursement
against [petitioner].
The judgment award on separation pay is the sole liability of [private
respondents].
WHEREFORE, [petitioner] is jointly and severally liable with [private
respondents] in the judgment award on underpayment and on the
non-payment of overtime pay. Should the complainants enforce the
above judgment award against [petitioner], the latter can seek
reimbursement against [private respondents], but should the
aforementioned judgment award be enforced against [private
respondents], the latter cannot seek reimbursement from the
[petitioner].
The judgment award on the payment of separation pay is the sole
liability of [private respondents].
Let an alias writ of execution be issued. [Emphasis supplied].

Again, both the private respondents and the petitioner appealed the afore-quoted
Order of the Labor Arbiter to the NLRC. On 25 April 1995, the NLRC issued a
Resolution 22 affirming the Order dated 5 October 1994 of the Labor Arbiter and
dismissing both appeals for non-posting of the appeal or surety bond and/or for
utter lack of merit. 23When the private respondents and the petitioner moved for
reconsideration, however, it was granted by the NLRC in its Order

24

dated 27

July 1995. The NLRC thus set aside its Resolution dated 25 April 1995, and
directed the private respondents and the petitioner to each post an appeal bond
in the amount of P487,287.62 to perfect their respective appeals.

25

Both parties

complied. 26
On 30 January 1996, the NLRC rendered a Decision modifying the Order of the
Labor Arbiter dated 5 October 1994, the dispositive portion of which reads:

WHEREFORE, the [21 November 1994] appeal of [herein petitioner] is


hereby granted. The [5 October 1994] Order of Labor Arbiter Donato G.
Quinto, Jr., is modified to the extent that it still held [petitioner] as
"jointly and severally liable with [herein private respondents] in the
judgment award on underpayment and on the non-payment of
overtime pay," our directive being that the Arbiter should now
satisfy said labor-standards award, as well as that of the separation
pay, exclusively through the surety bond posted by [private
respondents]. 27 [Emphasis supplied].

Dissatisfied, private respondents moved for the reconsideration of the foregoing


Decision, but it was denied by the NLRC in an Order

28

dated 30 October 1996.

This NLRC Order dated 30 October 1996 became final and executory on 29
November 1996.
On 4 December 1996, private respondents filed a Petition for Certiorari 29 before
this Court assailing the Decision and the Order of the NLRC dated 30 January
1996 and 30 October 1996, respectively. On 9 December 1998, this Court issued
a Resolution 30 referring the case to the Court of Appeals conformably with its
ruling in St. Martin Funeral Home v. National Labor Relations Commission. 31 The
case was docketed before the appellate court as CA-G.R. SP No. 50806.
The Petition made a sole assignment of error, to wit:
THE HONORABLE COMMISSION GRAVELY ERRED AND GRAVELY
ABUSED ITS DISCRETION IN FINDING THAT THE ULTIMATE
LIABILITY

SHOULD

FALL

ON

THE

[HEREIN

PRIVATE

RESPONDENTS] ALONE, WITHOUT REIMBURSEMENT FROM THE


[HEREIN PETITIONER], IN ORDER TO SATISFY THE MONETARY
AWARDS OF THE [THEREIN COMPLAINANTS]. 32

After due proceedings, the Court of Appeals rendered the assailed Decision on
24 April 2000, modifying the Decision of the NLRC dated 30 January 1996
and holding the petitioner solidarily liable with the private respondents for

the satisfaction of the laborers' separation pay. According to the Court of


Appeals:
The [NLRC] adjudged the payment of separation pay to be the sole
responsibility of [herein private respondents] because (1) there is no
employer-employee relationship between [herein petitioner] and the fortynine (49) [therein complainants]; (2) the payment of separation pay is not
a labor standard benefit. We disagree.
Again, We quote Article 109 of the Labor Code,as amended, viz:
"The provisions of existing laws to the contrary notwithstanding,
every employer or indirect employer shall be held responsible with
his contractor or subcontractor for any violation of any provision of
this Code. . ."
The abovementioned statute speaks of "any violation of any
provision of this Code." Thus, the existence or non-existence of
employer-employee relationship and whether or not the violation is
one of labor standards is immaterial because said provision of law
does not make any distinction at all and, therefore, this Court
should also refrain from making any distinction. Concomitantly,
[herein petitioner] should be jointly and severally liable with
[private respondents] for the payment of wage differentials,
overtime pay and separation pay of the [therein complainants]. The
joint and several liability imposed to [petitioner] is, again, without
prejudice to a claim for reimbursement by [petitioner] against
[private respondents] for reasons already discusses (sic).
WHEREFORE, premises studiedly considered, the assailed 30 January
1996 decision of [the NLRC] is herebymodified insofar as [petitioner]
should be held solidarily liable with [the private respondents] for
the satisfaction of the laborers' separation pay. No pronouncement
as to costs. 33 [Emphasis supplied].

The petitioner filed a Motion for Reconsideration of the aforesaid Decision but it
was denied by the Court of Appeals in a Resolution dated 27 September 2000.
Petitioner

now

comes

before

this

Court via a

Petition

for

Review

on Certiorari, docketed as G.R. No. 145402, raising the sole issue of "whether or
not the Honorable Court of Appeals palpably erred when it went beyond the
issues of the case as it modified the factual findings of the Labor Arbiter which
attained finality after it was affirmed by Public Respondent NLRC and by the
Supreme Court which can no longer be disturbed as it became the law of the
case." 34
Petitioner argues that in the assailed Decision dated 24 April 2000, the Court of
Appeals found that the sole issue for its resolution was whether the ultimate
liability to pay the monetary awards in favor of the 49 employees falls on the
private respondents without reimbursement from the petitioner. Hence, the
appellate court should have limited itself to determining the right of private
respondents to still seek reimbursement from petitioner for the monetary awards
on the unpaid wages and overtime pay of the complainants.
According to petitioner, the NLRC, in its Resolution dated 28 May 1993, already
found that petitioner had fully complied with its salary obligations to the
complainants. Petitioner invokes the same NLRC Resolution to support its claim
that it was not liable to share with the private respondents in the payment of
separation pay to complainants. When private respondents questioned the said
NLRC Resolution in a Petition for Certiorari with this Court, docketed as G.R. No.
111506, this Court found that the NLRC did not commit grave abuse of discretion
in the issuance thereof and accordingly dismissed private respondents' Petition.
Said NLRC Resolution, therefore, has since become final and executory and can
no longer be disturbed for it now constitutes the law of the case.
Assuming for the sake of argument that the Court of Appeals can still take
cognizance of the issue of petitioner's liability for complainants' separation pay,
petitioner asserts that the appellate court seriously erred in concluding that it is
jointly and solidarily liable with private respondents for the payment thereof. The

payment of separation pay should be the sole responsibility of the private


respondents because there was no employer-employee relationship between the
petitioner and the complainants, and the payment of separation pay is not a labor
standards benefit.

IDSaTE

Law of the case has been defined as the opinion delivered on a former appeal. It
is a term applied to an established rule that when an appellate court passes on a
question and remands the case to the lower court for further proceedings,
the question there settled becomes the law of the case upon subsequent
appeal. It means that whatever is once irrevocably established as the controlling
legal rule or decision between the same parties in the same case continues to be
the law of the case, whether correct on general principles or not, so long as the
facts on which such decision was predicated continue to be the facts of the case
before the court. 35 Indeed, courts must adhere thereto, whether the legal
principles laid down were "correct on general principles or not" or "whether the
question is right or wrong" because public policy, judicial orderliness and
economy require such stability in the final judgments of courts or tribunals of
competent jurisdiction. 36
Petitioner's application of the law of the case principle to the case at bar as
regards its liability for payment of separation pay is misplaced.
The only matters settled in the 23 May 1994 Resolution of this Court in G.R. No.
111506, which can be regarded as the law of the case, were (1) both the
petitioner and the private respondents were jointly and solidarily liable for the
judgment awards due the complainants; and (2) the said judgment awards shall
be enforced against the surety bond posted by the private respondents. However,
the issue as regards the liability of the petitioner for payment of separation pay
was yet to be resolved because precisely, the NLRC, in its Order dated 30 July
1993, still directed the Labor Arbiter to make a determination on who should
finally shoulder the monetary awards granted to the complainants. And it was
only after G.R. No. 111506 was dismissed by this Court that the Labor Arbiter
promulgated his Decision dated 5 October 1994, wherein he clarified the
respective liabilities of the petitioner and the private respondents for the judgment

awards. In his 5 October 1994 Decision, the Labor Arbiter explained that the
solidary liability of the petitioner was limited to the monetary awards for wage
underpayment and non-payment of overtime pay due the complainants, and it did
not, in any way, extend to the payment of separation pay as the same was the
sole liability of the private respondents.

Nonetheless, this Court finds the present Petition meritorious.


The Court of Appeals indeed erred when it ruled that the petitioner was jointly
and solidarily liable with the private respondents as regards the payment of
separation pay.
The appellate court used as basis Article 109 of the Labor Code,as amended, in
holding the petitioner solidarily liable with the private respondents for the payment
of separation pay:
ART. 109. Solidary Liability. The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer shall be
held responsible with his contractor or subcontractor for any violation
of any provision of this Code. For purposes of determining the extent
of their civil liability under this Chapter, they shall be considered as direct
employers. [Emphasis supplied].

However, the afore-quoted provision must be read in conjunction with Articles 106
and 107 of the Labor Code,as amended.
Article 107 of the Labor Code,as amended, defines an indirect employer as "any
person, partnership, association or corporation which, not being an employer,
contracts with an independent contractor for the performance of any work, task,
job or project." To ensure that the contractor's employees are paid their
appropriate wages, Article 106 of the Labor Code,as amended, provides:
ART. 106. CONTRACTOR OR SUBCONTRACTOR. . . . .
In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be

jointly and severally liable with his contractor or subcontractor to such


employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed
by him. [Emphasis supplied].

Taken together, an indirect employer (as defined by Article 107) can only be held
solidarily liable with the independent contractor or subcontractor (as provided
under Article 109) in the event that the latter fails to pay the wages of its
employees (as described in Article 106).
Hence, while it is true that the petitioner was the indirect employer of the
complainants, it cannot be held liable in the same way as the employer in every
respect. The petitioner may be considered an indirect employer only for
purposes of unpaid wages. As this Court succinctly explained in Philippine
Airlines, Inc. v. National Labor Relations Commission: 37
While USSI is an independent contractor under the security service
agreement and PAL may be considered an indirect employer, that status
did not make PAL the employer of the security guards in every respect.
As correctly posited by the Office of the Solicitor General, PAL may be
considered an indirect employer only for purposes of unpaid wages since
Article 106, which is applicable to the situation contemplated in Section
107, speaks of wages. The concept of indirect employer only relates or
refers to the liability for unpaid wages. Read together, Articles 106 and
109 simply mean that the party with whom an independent contractor
deals is solidarily liable with the latter for unpaid wages, and only to that
extent and for that purpose that the latter is considered a direct
employer. The term "wage" is defined in Article 97(f) of the Labor
Code as "the remuneration of earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of calculating the
unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, of board,

lodging, or other facilities customarily furnished by the employer to the


employee."

aHATDI

Further, there is no question that private respondents are operating as an


independent contractor and that the complainants were their employees. There
was no employer-employee relationship that existed between the petitioner and
the complainants and, thus, the former could not have dismissed the latter from
employment. Only private respondents, as the complainants' employer, can
terminate their services, and should it be done illegally, be held liable therefor.
The only instance when the principal can also be held liable with the independent
contractor or subcontractor for the backwages and separation pay of the latter's
employees is when there is proof that the principal conspired with the
independent contractor or subcontractor in the illegal dismissal of the employees,
thus:
The liability arising from an illegal dismissal is unlike an order to pay the
statutory minimum wage, because the workers' right to such wage is
derived from law. The proposition that payment of back wages and
separation pay should be covered by Article 109, which holds an indirect
employer solidarily responsible with his contractor or subcontractor for
"any violation of any provision of this Code," would have been tenable if
there were proof there was none in this case that the
principal/employer had conspired with the contractor in the acts giving
rise to the illegal dismissal. 38

It is the established fact of conspiracy that will tie the principal or indirect
employer to the illegal dismissal of the contractor or subcontractor's
employees. In the present case, there is no allegation, much less proof
presented, that the petitioner conspired with private respondents in the illegal
dismissal of the latter's employees; hence, it cannot be held liable for the
same.
Neither can the liability for the separation pay of the complainants be extended to
the petitioner based on contract. Contract Order No. 166-84 executed between
the petitioner and the private respondents contains no provision for separation

pay in the event that the petitioner terminates the same. It is basic that a contract
is the law between the parties and the stipulations therein, provided that they are
not contrary to law, morals, good customs, public order or public policy, shall be
binding as between the parties. 39 Hence, if the contract does not provide for
such a liability, this Court cannot just read the same into the contract without
possibly violating the intention of the parties.
It is also worth noting that although the issue in CA-G.R. SP No. 50806 pertains
to private respondents' right to reimbursement from petitioner for the "monetary
awards" in favor of the complainants, they limited their arguments to the
monetary awards for underpayment of wages and non-payment of overtime pay,
and were conspicuously silent on the monetary award for separation pay. Thus,
private respondents' sole liability for the separation pay of their employees should
have been deemed settled and already beyond the power of the Court of Appeals
to resolve, since it was an issue never raised before it. 40
Although petitioner is not liable for complainants' separation pay, the Court
conforms to the consistent findings in the proceedings below that the petitioner is
solidarily liable with the private respondents for the judgment awards for
underpayment of wages and non-payment of overtime pay.
In this case, however, private respondents had already posted a surety bond in
an amount sufficient to cover all the judgment awards due the complainants,
including those for underpayment of wages and non-payment of overtime pay.
The joint and several liability of the principal with the contractor and subcontractor
were enacted to ensure compliance with the provisions of the Labor
Code,principally those on statutory minimum wage. This liability facilitates, if not
guarantees, payment of the workers' compensation, thus, giving the workers
ample protection as mandated by the 1987 Constitution. 41 With private
respondents' surety bond, it can therefore be said that the purpose of the Labor
Code provision on the solidary liability of the indirect employer is already
accomplished since the interest of the complainants are already adequately
protected. Consequently, it will be futile to continuously hold the petitioner jointly

and solidarily liable with the private respondents for the judgment awards for
underpayment of wages and non-payment of overtime pay.
But while this Court had previously ruled that the indirect employer can recover
whatever amount it had paid to the employees in accordance with the terms of
the service contract between itself and the contractor,

42

the said ruling cannot be

applied in reverse to this case as to allow the private respondents (the


independent contractor), who paid for the judgment awards in full, to recover from
the petitioner (the indirect employer).
Private respondents have nothing more to recover from petitioner.
Petitioner had already handed over to private respondent the wages and other
benefits of the complainants. Records reveal that it had complied with
complainants' salary increases in accordance with the minimum wage set
by Republic Act No. 6727 by faithfully adjusting the contract price for the janitorial
services it contracted with private respondents.

43

This is a finding of fact made

by the Labor Arbiter, 44 untouched by the NLRC 45 and explicitly affirmed by the
Court of Appeals, 46 and which should already bind this Court.
This Court is not a trier of facts. Well-settled is the rule that the jurisdiction of this
Court in a petition for review oncertiorari under Rule 45 of the Revised Rules of
Court is limited to reviewing only errors of law, not of fact, unless the factual
findings complained of are completely devoid of support from the evidence on
record, or the assailed judgment is based on a gross misapprehension of facts.
Besides, factual findings of quasi-judicial agencies like the NLRC, when affirmed
by the Court of Appeals, are conclusive upon the parties and binding on this
Court. 47
Having already received from petitioner the correct amount of wages and
benefits, but having failed to turn them over to the complainants, private
respondents should now solely bear the liability for the underpayment of wages
and non-payment of the overtime pay.

WHEREFORE, premises considered, the instant Petition is hereby GRANTED.


The Decision and Resolution of the Court of Appeals dated 24 April 2000 and 27
September 2000, respectively, in CA-G.R. SP No. 50806, are hereby
REVERSED AND SET ASIDE. The Decision dated 30 January 1996 of the
National Labor Relations Commission in NLRC NCR CA No. 001737-91 (NLRC
NCR Case No. 00-09-04432-89) is hereby REINSTATED. No costs.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Nachura and Reyes, JJ., concur.
|||

(Meralco Industrial Engineering Services Corp. v. National Labor Relations

Commission, G.R. No. 145402, [March 14, 2008], 572 PHIL 94-118)

[G.R. No. 146408. February 29, 2008.]


PHILIPPINE AIRLINES, INC., petitioner, vs. ENRIQUE LIGAN,
EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS,
RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ,
BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS,
JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO
BUTANAS, BENSON CARESUSA, JEFFREY LLENOS, ROQUE
PILAPIL, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO,
NELSON TAMPUS, ROLANDO TUNACAO, CHERRIE
ALEGRES, BENEDICTO AUXTERO, EDUARDO
MAGDADARAUG, NELSON M. DULCE, and ALLAN
BENTUZAL, respondents.

DECISION

CARPIO MORALES, J :
p

Petitioner Philippine Airlines as Owner, and Synergy Services Corporation


(Synergy) as Contractor, entered into an Agreement 1 on July 15, 1991 whereby
Synergy undertook to "provide loading, unloading, delivery of baggage and cargo
and other related services to and from [petitioner]'s aircraft at the Mactan
Station." 2
The Agreement specified the following "Scope of Services" of Contractor
Synergy:
1.2 CONTRACTOR shall furnish all the necessary capital, workers,
loading, unloading and
delivery materials,facilities, supplies, equipment and tools for the
satisfactory performance and execution of the following services (the
Work):
a. Loading and unloading of baggage and cargo to and from the aircraft;
b. Delivering of baggage from the ramp to the baggage claim area;
c. Picking up of baggage from the baggage sorting area to the
designated parked aircraft;
d. Delivering of cargo unloaded from the flight to cargo terminal;
e. Other related jobs (but not janitorial functions) as may be required and
necessary;
CONTRACTOR shall perform and execute the aforementioned Work at
the following areas located at Mactan Station, to wit:
a. Ramp Area
b. Baggage Claim Area
c. Cargo Terminal Area, and
d. Baggage Sorting Area 3 (Underscoring supplied)

And it expressly provided that Synergy was "an independent contractor and . . .
that there w[ould] be no employer-employee relationship between
CONTRACTOR and/or its employees on the one hand, and OWNER, on the
other." 4
On the duration of the Agreement, Section 10 thereof provided:
10.1 Should at any time OWNER find the services herein undertaken by
CONTRACTOR to be unsatisfactory, it shall notify CONTRACTOR
who shall have fifteen (15) days from such notice within which to
improve the services. If CONTRACTOR fails to improve the
services under this Agreement according to OWNER'S
specifications and standards, OWNER shall have the right to
terminate this Agreement immediately and without advance
notice.
10.2 Should CONTRACTOR fail to improve the services within the period
stated above or should CONTRACTOR breach the terms of this
Agreement and fail or refuse to perform the Work in such a
manner as will be consistent with the achievement of the result
therein contracted for or in any other way fail to comply strictly
with any terms of this
Agreement, OWNER at its option, shall have the right toterminate
this Agreement and to make other arrangements for having said
Work performed and pursuant thereto shall retain so much of the
money held on the Agreement as is necessary to cover the
OWNER's costs and damages, without prejudice to the right of
OWNER to seek resort to the bond furnished by CONTRACTOR
should the money in OWNER's possession be insufficient.

aIDHET

xxx xxx xxx (Underscoring supplied)

Except for respondent Benedicto Auxtero (Auxtero), the rest of the respondents,
who appear to have been assigned by Synergy to petitioner following the
execution of the July 15, 1991 Agreement, filed on March 3, 1992 complaints

before the NLRC Regional Office VII at Cebu City against petitioner, Synergy and
their respective officials forunderpayment, non-payment of premium pay for
holidays, premium pay for rest days, service incentive leave
pay,13th month pay and allowances, and for regularization of
employment status with petitioner, they claiming to be "performing duties for the
benefit of [petitioner] since their job is directly connected with [its]
business . . . ." 5
Respondent Auxtero had initially filed a complaint against petitioner and Synergy
and their respective officials for regularization of his employment status. Later
alleging that he was, without valid ground, verbally dismissed, he filed a
complaint against petitioner and Synergy and their respective
officials for illegal dismissal and reinstatementwith full backwages. 6
The complaints of respondents were consolidated.
By Decision 7 of August 29, 1994, Labor Arbiter Dominador Almirante found
Synergy an independent contractor and dismissed respondents' complaint for
regularization against petitioner, but granted their money claims. The fallo of the
decision reads:
WHEREFORE, foregoing premises considered, judgment is hereby
rendered as follows:
(1) Ordering respondents PAL and Synergy jointly and severally to
pay all the complainants herein their 13th month pay and service
incentive leave benefits;
xxx xxx xxx
(3) Ordering respondent Synergy to pay complainant Benedicto
Auxtero a financial assistance in the amount of P5,000.00.
The awards hereinabove enumerated in the aggregate total amount of
THREE HUNDRED TWENTY-TWO THOUSAND THREE HUNDRED
FIFTY NINE PESOS AND EIGHTY SEVEN CENTAVOS (P322,359.87)

are computed in detail by our Fiscal Examiner which computation is


hereto attached to form part of this decision.
The rest of the claims are hereby ordered dismissed for lack of
merit. 8 (Underscoring supplied)

On appeal by respondents, the NLRC, Fourth Division, Cebu City, vacated and
set aside the decision of the Labor Arbiter by Decision 9 of January 5, 1996,
the fallo of which reads:
WHEREFORE, the Decision of the Labor Arbiter Dominador A.
Almirante, dated August 29, 1994, is hereby VACATED and SET ASIDE
and judgment is hereby rendered:
1. Declaring respondent Synergy Services Corporation to be a 'laboronly' contractor;
2. Ordering respondent Philippine Airlines to accept, as its regular
employees, all the complainants, . . . and
to give each of them the salaries, allowances and other employme
nt benefits and privileges of aregular employee under the
Collective Bargaining Agreement subsisting during the period of
their employment;

xxx xxx xxx


4. Declaring the dismissal of complainant Benedicto Auxtero to be
illegal and ordering his reinstatement as helper or utility man
with respondent Philippine Airlines, with full backwages,
allowances and other benefits and privileges from the time of his
dismissal up to his actual reinstatement; and
5. Dismissing the appeal of respondent Synergy Services Corporation,
for lack of merit. 10 (Emphasis and underscoring supplied)

Only petitioner assailed the NLRC decision via petition for certiorari before this
Court.

By Resolution 11 of January 25, 1999, this Court referred the case to the Court of
Appeals for appropriate action and disposition, conformably with St. Martin
Funeral Homes v. National Labor Relations Commission which was promulgated
on September 16, 1998.
The appellate court, by Decision of September 29, 2000, affirmed the Decision of
the NLRC. 12 Petitioner's motion for reconsideration having been denied by
Resolution of December 21, 2000, 13 the present petition was filed, faulting the
appellate court

ScaEIT

I.
. . . IN UPHOLDING THE NATIONAL LABOR RELATIONS
COMMISSION DECISION
WHICH IMPOSED THERELATIONSHIP OF EMPLOYER-EMPLOYEE B
ETWEEN PETITIONER AND THE RESPONDENTS HEREIN.
II.
. . . IN AFFIRMING THE RULING OF THE NATIONAL LABOR
RELATIONS
COMMISSION ORDERING THEREINSTATEMENT OF RESPONDENT
AUXTERO DESPITE THE ABSENCE [OF] ANY FACTUAL FINDING IN
THE
DECISION THAT PETITIONER ILLEGALLY TERMINATED HIS EMPLO
YMENT.
III.
. . . [IN ANY EVENT IN] COMMITT[ING] A PATENT AND GRAVE
ERROR IN UPHOLDING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION WHICH COMPELLED
THE PETITIONER TO EMPLOY THE
RESPONDENTS AS REGULAR EMPLOYEES DESPITE THE
FACT THAT THEIR SERVICES ARE IN EXCESS OF

PETITIONER COMPANY'S OPERATIONAL REQUIREMENTS. 14 (Unde


rscoring supplied)

Petitioner argues that the law does not prohibit an employer from engaging an
independent contractor, like Synergy, which has substantial capital in carrying on
an independent business of contracting, to perform specific jobs.
Petitioner further argues that its contracting out to Synergy various services like
janitorial, aircraft cleaning, baggage-handling, etc., which are directly related to its
business, does not make respondents its employees.
Petitioner furthermore argues that none of the four (4) elements of an employeremployee relationship between petitioner and respondents, viz.: selection and
engagement of an employee, payment of wages, power of dismissal, and the
power to control employee's conduct, is present in the case. 15
Finally, petitioner avers that reinstatement of respondents had been rendered
impossible because it had reduced its personnel due to heavy losses as it had in
fact terminated its service agreement with Synergy effective June 30, 1998 16 as
a cost-saving measure.
The decision of the case hinges on a determination of whether Synergy is a mere
job-only contractor or a legitimate contractor. If Synergy is found to be a mere
job-only contractor, respondents could be considered as regular employees of
petitioner as Synergy would then be a mere agent of petitioner in which case
respondents would be entitled to all the benefits granted to petitioner's regular
employees; otherwise, if Synergy is found to be a legitimate contractor,
respondents' claims against petitioner must fail as they would then be considered
employees of Synergy.
The statutory basis of legitimate contracting or subcontracting is provided in
Article 106 of the Labor Code which reads:
ART. 106. CONTRACTOR OR SUBCONTRACTOR. Whenever an
employer enters into a contract with another person for the performance
of the former's work, the employees of the contractor and of the latter's

subcontractor, if any, shall be paid in accordance with the provisions of


this Code.
In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be
jointly and severally liable with his contractor or subcontractor to such
employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed
by him.
The Secretary of Labor may, by appropriate regulations, restrict or
prohibit the contracting out of labor to protect the rights of workers
established under the Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job
contracting as well as differentiations within these types of contracting
and determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.
There is "labor-only" contracting where the person supplying workers to
an employer does not havesubstantial capital or investment in the
form of tools, equipment, machineries, work premises, among
others, AND the workers recruited and placed by such person
are performing activities which aredirectly related to
the principal business of such employer. In such cases, the person
or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
(Emphasis, capitalization and underscoring supplied)

HEISca

Legitimate contracting and labor-only contracting are defined in Department


Order (D.O.) No. 18-02, Series of 2002 (Rules Implementing Articles 106 to
109 of the Labor Code, as amended) as follows:

Section 3. Trilateral relationship in contracting arrangements.


In legitimate contracting, there exists a trilateral relationship under
which there is a contract for a specific job, work or service between the
principal and the contractor or subcontractor, and a contract of
employment between the contractor or subcontractor and its workers.
Hence, there are three parties involved in these
arrangements, the principal which decides to farm out a job or service to
a contractor or subcontractor, the contractor or subcontractor which has
the capacity to independently undertake the performance of the job,
work or service, and the contractual workersengaged by the contractor
or subcontractor to accomplish the job, work or service. (Emphasis and
underscoring supplied)
Section 5. Prohibition against labor-only contracting. Labor-only
contracting is hereby declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a
job, work or service for a
principal, andany of the following elements are [sic] present:
(i) The contractor or subcontractor does not have substantial capital
or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by
such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; OR
(ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
(Emphasis, underscoring and capitalization supplied)

"Substantial capital or investment" and the "right to control" are defined in the
same Section 5 of the Department Order as follows:
"Substantial capital or investment" refers to capital stocks and
subscribed capitalization in the case of

corporations, tools, equipment, implements, machineries and work premi


ses, actually and directly used by the contractor or subcontractor in the
performance or completion of the job, work or service contracted out.
The "right to control" shall refer to the right reserved to the
person for whom the services of the contractualworkers are performed,
to determine not only the end to be achieved, but also the
manner and means to beused in reaching that end. (Emphasis and
underscoring supplied)

From the records of the case, it is gathered that the work performed by almost all
of the respondents loading and unloading of baggage and cargo of
passengers is directly related to the main business of petitioner. And the
equipment used by respondents as station loaders, such as trailers and
conveyors, are owned by petitioner. 17
Petitioner asserts, however, that mere compliance with substantial capital
requirement suffices for Synergy to be considered a legitimate contractor,
citing Neri v. National Labor Relations Commission. 18 Petitioner's reliance on
said case is misplaced.
In Neri, the Labor Arbiter and the NLRC both determined that Building Care
Corporation had a capital stock of P1 million fully subscribed and paid for. 19 The
corporation's status as independent contractor had in fact been previously
confirmed in an earlier case 20 by this Court which found it to be serving, among
others, a university, an international bank, a big local bank, a hospital center,
government agencies, etc."
In stark contrast to the case at bar, while petitioner steadfastly asserted before
the Labor Arbiter and the NLRC that Synergy has a substantial capital to engage
in legitimate contracting, it failed to present evidence thereon. As the NLRC held:
The decision of the Labor Arbiter merely mentioned on page 5 of his
decision that respondent SYNERGY has substantial capital, but there
is no showing in the records as to how much is that capital. Neither hadr

espondents shown that SYNERGY has such substantial


capital. . . . 21 (Underscoring supplied)

It was only after the appellate court rendered its challenged Decision of
September 29, 2002 when petitioner, in its Motion for Reconsideration of the
decision, sought to prove, for the first time, Synergy's substantial capitalization by
attaching photocopies of Synergy's financial statements, e.g., balance sheets,
statements of income and retained earnings, marked as "Annexes 'A' 'A-4.'" 22
More significantly, however, is that respondents worked alongside petitioner's
regular employees who were performing identical work. 23 As San Miguel
Corporation v. Aballa 24 and Dole Philippines, Inc. v. Esteva, et al. 25teach, such is
an indicium of labor-only contracting.

CTEDSI

For labor-only contracting to exist, Section 5 of D.O. No. 18-02 which


requires any of two elements to be present is, for convenience, re-quoted:
(i) The contractor or subcontractor does not have substantial capital or
investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by
such contractor or subcontractor are performing activities which
are directly related to the main business of the principal, OR
(ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee. (Emphasis
and CAPITALIZATION supplied)

Even if only one of the two elements is present then, there is labor-only
contracting.
The control test element under the immediately-quoted paragraph (ii), which was
not present in the old Implementing Rules (Department Order No. 10, Series of
1997), 26 echoes the prevailing jurisprudential trend 27elevating such element as
a primary determinant of employer-employee relationship in job contracting
agreements.

One who claims to be an independent contractor has to prove that he contracted


to do the work according to his own methods and without being subject to the
employer's control except only as to the results. 28
While petitioner claimed that it was Synergy's supervisors who actually
supervised respondents, it failed to present evidence thereon. It did not even
identify who were the Synergy supervisors assigned at the workplace.
Even the parties' Agreement does not lend support to petitioner's claim, thus:
Section 6. Qualified and Experienced Worker: Owner's Right
to Dismiss Workers.
CONTRACTOR shall employ capable and experienced workers and
foremen to carry out the loading, unloading and delivery Work as well
as provide all equipment, loading, unloading and delivery equipment, ma
terials, supplies and tools necessary for the performance of the Work.
CONTRACTOR shall upon OWNER'S request furnish the latter with
information regarding the qualifications of the former's workers, to prove
their capability and experience. Contractor shall require all its
workers, employees, suppliers and
visitors tocomply with OWNER'S rules, regulations, procedures and
directives relative to the safety and securityof OWNER'S premises,
properties, and operations. For this purpose, CONTRACTOR shall
furnish its employees and
workers identification cards to be countersigned by OWNER and un
iforms to beapproved by OWNER. OWNER
may require CONTRACTOR to dismissimmediately and prohibit entr
y intoOWNER'S premises of any person employed therein by
CONTRACTOR who in OWNER'S opinion is incompetent or
misconducts himself
or does not comply with OWNER'S reasonable instructions and
requests regarding security, safety and other matters and such person
shall not again be employed to perform the services hereunder without

OWNER'S permission. 29 (Underscoring partly in the original and partly


supplied; emphasis supplied)

Petitioner in fact admitted that it fixes the work schedule of respondents as their
work was dependent on the frequency of plane arrivals. 30 And as the NLRC
found, petitioner's managers and supervisors approved respondents' weekly work
assignments and respondents and other regular PAL employees were all referred
to as "station attendants" of the cargo operation and airfreight services of
petitioner. 31
Respondents having performed tasks which are usually necessary and desirable
in the air transportation business of petitioner, they should be deemed its regular
employees and Synergy as a labor-only contractor. 32
The express provision in the Agreement that Synergy was an independent
contractor and there would be "no employer-employee relationship between
[Synergy] and/or its employees on one hand, and [petitioner] on the other hand"
is not legally binding and conclusive as contractual provisions are not valid
determinants of the existence of such relationship. For it is the totality of the
facts and surrounding circumstances of the case 33which is determinative of
the parties' relationship.
Respecting the dismissal on November 15, 1992 34 of Auxtero, a regular
employee of petitioner who had been working as utility man/helper since
November 1988, it is not legally justified for want of just or authorized cause
therefor and for non-compliance with procedural due process. Petitioner's claim
that he abandoned his work does not persuade. 35 The elements of abandonment
being (1) the failure to report for work or absence without valid or justifiable
reason, and (2) a clear intention to sever the employer-employee relationship
manifested by some overt acts, 36 the onus probandi lies with petitioner which,
however, failed to discharge the same.
Auxtero, having been declared to be a regular employee of petitioner, and found
to be illegally dismissed from employment, should be entitled to salary
differential 37 from the time he rendered one year of service until his dismissal,

reinstatement plus backwages until the finality of this decision. 38 In view,


however, of the long period of time 39 that had elapsed since his dismissal on
November 15, 1992, it would be appropriate to award separation pay of one (1)
month salary for each year of service, in lieu of reinstatement. 40
As regards the remaining respondents, the Court affirms the ruling of both the
NLRC and the appellate court, ordering petitioner to accept them as its regular
employees and to give each of them the salaries, allowances and other
employment benefits and privileges of a regular employee under the pertinent
Collective Bargaining Agreement.

cdasia

Petitioner claims, however, that it has become impossible for it to comply with the
orders of the NLRC and the Court of Appeals, for during the pendency of this
case, it was forced to reduce its personnel due to heavy losses caused by
economic crisis and the pilots' strike of June 5, 1998. 41 Hence, there are no
available positions where respondents could be placed.
And petitioner informs that "the employment contracts of all if not most of the
respondents . . . were terminated by Synergy effective 30 June 1998 when
petitioner terminated its contract with Synergy." 42
Other than its bare allegations, petitioner presented nothing to substantiate its
impossibility of compliance. In fact, petitioner waived this defense by failing to
raise it in its Memorandum filed on June 14, 1999 before the Court of
Appeals. 43 Further, the notice of termination in 1998 was in disregard of a
subsisting temporary restraining order 44to preserve the status quo, issued by this
Court in 1996 before it referred the case to the Court of Appeals in January 1999.
So as to thwart the attempt to subvert the implementation of the assailed
decision, respondents are deemed to be continuously employed by petitioner, for
purposes of computing the wages and benefits due respondents.
Finally, it must be stressed that respondents, having been declared to be regular
employees of petitioner, Synergy being a mere agent of the latter, had acquired
security of tenure. As such, they could only be dismissed by petitioner, the real

employer, on the basis of just or authorized cause, and with observance of


procedural due process.
WHEREFORE, the Court of Appeals Decision of September 29, 2000
is AFFIRMED with MODIFICATION.
Petitioner PHILIPPINE AIRLINES, INC. is ORDERED to:
(a) accept respondents ENRIQUE LIGAN, EMELITO SOCO,
ALLAN PANQUE, JOLITO OLIVEROS, RICHARD
GONCER, NONILON PILAPIL, AQUILINO YBANEZ,
BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P.
CAMPOS, JR., ARTHUR M. CAPIN, RAMEL BERNARDES,
LORENZO BUTANAS, BENSON CARESUSA, JEFFREY
LLENOS, ROQUE PILAPIL, ANTONIO M. PAREJA,
CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO
TUNACAO, CHERRIE ALEGRES, EDUARDO
MAGDADARAUG, NELSON M. DULCE and ALLAN
BENTUZAL as its regular
employees in their same or substantiallyequivalent positions,
and pay the wages and benefits due them as regular
employees plussalary differential corresponding to the
difference between the wages and benefits given them and
those granted to petitioner's other regular employees of the
same rank; and
(b) pay respondent BENEDICTO AUXTERO salary
differential; backwages from the time of his dismissal until
the finality of this decision; and separation pay, in lieu of
reinstatement, equivalent to one (1) month pay for every year
of service until the finality of this decision.
There being no data from which this Court may determine the monetary liabilities
of petitioner, the case is REMANDED to the Labor Arbiter solely for that purpose.
SO ORDERED.

Carpio, ** Azcuna, *** Tinga and Velasco, Jr., JJ., concur.


Quisumbing, J., * is on official leave.
|||

(Philippine Airlines Inc. v. Ligan, G.R. No. 146408, [February 29, 2008], 570

PHIL 497-515)

[G.R. No. 177785. September 3, 2008.]


RANDY ALMEDA, EDWIN M. AUDENCIAL, NOLIE D. RAMIREZ,
ERNESTO M. CALICAGAN and REYNALDO M.
CALICAGAN, petitioners, vs. ASAHI GLASS PHILIPPINES,
INC., respondent.

DECISION

CHICO-NAZARIO, J :
p

Before this Court is a Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court, filed by petitioners Randy Almeda, Edwin Audencial,
Nolie Ramirez, Ernesto Calicagan and Reynaldo Calicagan, seeking to reverse
and set aside the Decision 1 dated 10 November 2006 and the Resolution 2 dated
27 April 2007 of the Court of Appeals in CA-G.R. SP No. 93291. The appellate
court reversed and set aside the Decision dated 29 June 2005 and Resolution
dated 24 November 2005 of the National Labor Relations Commission (NLRC) in
NLRC NCR CA No. 039768-04 finding respondent Asahi Glass Philippines, Inc.
jointly and severally liable with San Sebastian Allied Services, Inc. (SSASI) for
illegal dismissal, and ordering both respondent and SSASI to reinstate petitioners

to their former positions and to pay their backwages from 2 December 2002 up to
the date of their actual reinstatement. Instead, the Court of Appeals reinstated the
Decision dated 18 February 2004 of the Labor Arbiter dismissing petitioners'
complaint for illegal dismissal against respondent and SSASI, but ordering the
payment of separation benefits to petitioners.

THIcCA

The present Petition arose from a complaint for illegal dismissal with claims for
moral and exemplary damages and attorney's fees filed by petitioners against
respondent and SSASI.
In their Complaint 3 filed before the Labor Arbiter, petitioners alleged that
respondent (a domestic corporation engaged in the business
of glass manufacturing) and SSASI (a labor-only contractor) entered into a
service contract on 5 March 2002 whereby the latter undertook to provide the
former with the necessary manpower for its operations. Pursuant to such a
contract, SSASI employed petitioners Randy Almeda, Edwin Audencial, Nolie
Ramirez and Ernesto Calicagan as glass cutters, and petitioner Reynaldo
Calicagan as Quality Controller, 4 all assigned to work for respondent. Petitioners
worked for respondent for periods ranging from three to 11 years. 5 On 1
December 2002, respondent terminated its service contract with SSASI, which in
turn, terminated the employment of petitioners on the same date. Believing that
SSASI was a labor-only contractor, and having continuously worked
as glass cutters and quality controllers for the respondent functions which are
directly related to its main line of business as glass manufacturer for three to
11 years, petitioners asserted that they should be considered regular employees
of the respondent; and that their dismissal from employment without the benefit of
due process of law was unlawful. In support of their complaint, petitioners
submitted a copy of their work schedule to show that they were under the direct
control of the respondent which dictated the time and manner of performing their
jobs.

STaAcC

Respondent, on the other hand, refuted petitioners' allegations that they were its
regular employees. Instead, respondent claimed that petitioners were employees
of SSASI and were merely assigned by SSASI to work for respondent to perform

intermittent services pursuant to an Accreditation Agreement, dated 5 March


2002, the validity of which was never assailed by the petitioners. Respondent
contested petitioners' contention that they were performing functions that were
directly related to respondent's main business since petitioners were simply
tasked to do mirror cutting, an activity occasionally performed upon a customer's
order. Respondent likewise denied exercising control over petitioners and
asserted that such was wielded by SSASI. Finally, respondent maintained that
SSASI was engaged in legitimate job contracting and was licensed by the
Department of Labor and Employment (DOLE) to engage in such activity as
shown in its Certificate of Registration. 6 Respondent presented before the Labor
Arbiter copies of the Opinion dated 18 February 2003 of DOLE Secretary Patricia
Sto. Tomas authorizing respondent to contract out certain activities not necessary
or desirable to the business of the company; and the Opinion dated 10 July 2003
of DOLE Bureau of Labor Relations (DOLE-BLR) Director Hans Leo Cacdac
allowing respondent to contract out even services that were not directly related to
its main line of business.
SSASI, for its part, claimed that it was a duly registered independent contractor
as evidenced by the Certificate of Registration issued by the DOLE on 3 January
2003. SSASI averred that it was the one who hired petitioners and assigned them
to work for respondent on occasions that the latter's work force could not meet
the demands of its customers. Eventually, however, respondent ceased to give
job orders to SSASI, constraining the latter to terminate petitioners'
employment.

aSHAIC

On 18 February 2004, the Labor Arbiter promulgated his Decision 7 finding that
respondent submitted overwhelming documentary evidence to refute the bare
allegations of the petitioners and accordingly dismissing the complaint for lack of
merit. However, he also ordered the payment of separation benefits to petitioners.
The Labor Arbiter thus decreed:
WHEREFORE, premises considered, judgment is hereby rendered
declaring that the instant case should be, as it is hereby DISMISSED for
lack of merit. However, the respondent San Sebastian Allied Services,

Inc. is hereby ordered to pay the [herein petitioners] Edwin M. Audencial,


Reynaldo Calicagan, Randy Almeda, Nolie D. Ramirez and Ernesto
Calicagan their respective separation benefits in the following specified
amounts:
(1) Edwin Audencial P41,327.00
(2) Reynaldo M. Calicagan 15,860.00
(3) Randy V. Almeda 45,084.00
(4) Nolie Ramirez 15,028.00
(5) Ernesto Calicagan 22,542.00
All other claims are dismissed.

On appeal, the NLRC reversed the afore-quoted Decision of the Labor Arbiter,
giving more evidentiary weight to petitioners' testimonies. It appeared to the
NLRC that SSASI was engaged in labor-only contracting since it did not have
substantial capital and investment in the form of tools, equipment and
machineries. The petitioners were recruited and assigned by SSASI to
respondent as glass cutters, positions which were directly related to respondent's
principal business of glass manufacturing. In light of the factual circumstances of
the case, the NLRC declared that petitioners were employees of respondent and
not of SSASI. Hence, the NLRC ruled in its Decision 8dated 29 June 2005:

cSTDIC

WHEREFORE, the decision appealed from is hereby VACATED and


SET ASIDE. [Herein respondent] and [SSASI] are hereby ordered to: (1)
reinstate the [herein petitioners] to their former position as glass cutters;
and (2) pay [petitioners'] full backwages from December 2, 2002 up to
the date of their actual reinstatement. The liability of [respondent] and
[SSASI] for [petitioners'] backwages is further declared to be joint and
several.

Only respondent moved for the reconsideration of the foregoing NLRC Decision.
Respondent prayed that the NLRC vacate its previous finding that SSASI was
a labor-only contractor and that it was guilty of the illegal dismissal of petitioners.

In a Resolution 9 dated 24 November 2005, the NLRC denied the Motion for
Reconsideration of respondent for lack of compelling justification to modify, alter
or reverse its earlier Decision.

TaSEHC

This prompted respondent to elevate its case to the Court of Appeals by the filing
of a Petition for Certiorari with Application for the Issuance of Temporary
Restraining Order (TRO), 10 alleging that the NLRC abused its discretion in
ignoring the established facts and legal principles fully substantiated by the
documentary evidence on record and legal opinions of labor officials, and in
giving more credence to the empty allegations advanced by petitioners.
To prevent the execution of the Decision dated 25 June 2005 and Resolution
dated 24 November 2005 of the NLRC, respondent included in its Petition a
prayer for the issuance of a TRO, which it reiterated in a motion filed on 29
August 2006. Acting on respondent's motion, the Court of Appeals issued a TRO
on 11 September 2006 enjoining the NLRC from enforcing its 25 June 2005
Decision and 24 November 2005 Resolution. 11
On 10 November 2006, the Court of Appeals rendered a Decision granting
respondent's Petition for Certiorari and reversing the NLRC Decision dated 25
June 2005. The appellate court found merit in respondent's argument that the
NLRC gravely abused its discretion in not finding that there was a legitimate job
contracting between respondent and SSASI. SSASI is a legitimate job contractor
as proven by its Certificate of Registration issued by the DOLE. Respondent
entered into a valid service contract with SSASI, by virtue of which petitioners
were assigned by SSASI to work for respondent. The service contract itself,
which was duly approved by the DOLE, defined the relationship between SSASI
and petitioners as one of employer-employees. It was SSASI which exercised the
power of control over petitioners. Petitioners were merely allowed to work at
respondent's premises for reasons of efficiency. Moreover, it was SSASI, not
respondent, who terminated petitioners' services. The fallo of the Decision of the
Court of Appeals state:

WHEREFORE, premises considered, the petition is GRANTED and


[NLRC's] assailed 29 June 2005 Decision is, accordingly, REVERSED
and SET ASIDE. In lieu thereof, the 18 February 2004 Decision
rendered in the case by Labor Arbiter Francisco A. Robles is
REINSTATED. 12

The Court of Appeals denied petitioners' Motion for Reconsideration in a


Resolution dated 27 April 2007.
Hence, petitioners come before this Court via the instant Petition for Review
on Certiorari assailing the 10 November 2006 Decision and 27 April 2007
Resolution of the Court of Appeals based on the following assignment of
errors:

EACTSH

I.
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN
REVERSING THE FINDING OF THE NLRC THAT RESPONDENT
COMPANY IS ENGAGED IN LABOR-ONLY CONTRACTING.
II.
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN
REVERSING THE RULING OF THE NLRC THAT SAN SEBASTIAN
ALLIED SERVICES, INC. IS MERELY RESPONDENT'S AGENT AND
RESPONDENT IS PETITIONERS' REAL EMPLOYER.

TcSaHC

III.
THE COURT OF APPEALS COMMITTED AN ERROR IN DISMISSING
PETITIONERS' COMPLAINT FOR ILLEGAL DISMISSAL.

It is apparent to this Court that the judicious resolution of the Petition at bar
hinges on two elemental issues: (1) whether petitioners were employees of
respondent; and (2) if they were, whether they were illegally dismissed.

aETASc

Respondent adamantly insists that petitioners were not its employees but those
of SSASI, a legitimate job contractor duly licensed by the DOLE to undertake job
contracting activities. The job performed by petitioners were not directly related to
respondent's primary venture as flat glass manufacturer, for they were assigned
to the mirroring line to perform glass cutting on occasions when the employees of
respondent could not comply with the market's intermittent increased demand.
And even if petitioners were working at respondent's premises, it was SSASI
which effectively supervised the manner and method petitioners performed their
jobs, except as to the result thereof.
The Court would only be able to deem petitioners as employees of respondent if
it is established that SSASI was a labor-only contractor, and not a legitimate job
contractor or subcontractor.

ISADET

Permissible job contracting or subcontracting refers to an arrangement whereby a


principal agrees to put out or farm out to a contractor or subcontractor the
performance or completion of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or service is to be
performed or completed within or outside the premises of the principal. 13 A
person is considered engaged in legitimate job contracting or subcontracting if
the following conditions concur:
(a) The contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job, work or service on its own
account and under its own responsibility according to its own manner
and method, and free from the control and direction of the principal in all
matters connected with the performance of the work except as to the
results thereof;
(b) The contractor or subcontractor has substantial capital or investment;
and
(c) The agreement between the principal and contractor or subcontractor
assures the contractual employees entitlement to all labor and

occupational safety and health standards, free exercise of the right to


self-organization, security of tenure, and social and welfare benefits.

14

On the other hand, labor-only contracting, a prohibited act, is an arrangement in


which the contractor or subcontractor merely recruits, supplies or places workers
to perform a job, work or service for a principal. 15 In labor-only contracting, the
following elements are present:
(a) The contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work or service under its own
account and responsibility;

cDTHIE

(b) The employees recruited, supplied or placed by such contractor or


subcontractor are performing activities which are directly related to the
main business of the principal.

16

In labor-only contracting, the statutes create an employer-employee relationship


for a comprehensive purpose: to prevent circumvention of labor laws. The
contractor is considered as merely the agent of the principal employer and the
latter is responsible to the employees of the labor-only contractor as if such
employees are directly employed by the principal employer. 17 Therefore, if SSASI
was a labor-only contractor, then respondent shall be considered as the employer
of petitioners who must bear the liability for the dismissal of the latter, if any.
An important element of legitimate job contracting is that the contractor has
substantial capital or investment, which respondent failed to prove. There is a
dearth of evidence to prove that SSASI possessed substantial capital or
investment when respondent began contractual relations with it more than a
decade before 2003. Respondent's bare allegations, without supporting proof
that SSASI had substantial capital or investment, do not sway this Court. The
Court did not find a single financial statement or record to attest to the economic
status and financial capacity of SSASI to venture into and sustain its own
business independent from petitioner.

DSacAE

Furthermore, the Court is unconvinced by respondent's argument that petitioners


were performing jobs that were not directly related to respondent's main line of

business. Respondent is engaged in glass manufacturing. One of the petitioners


served as a quality controller, while the rest were glass cutters. The only excuse
offered by respondent that petitioners' services were required only when there
was an increase in the market's demand with which respondent could not cope
only prove even more that the services rendered by petitioners were indeed
part of the main business of respondent. It would mean that petitioners
supplemented the regular workforce when the latter could not comply with the
market's demand; necessarily, therefore, petitioners performed the same
functions as the regular workforce. Even respondent's claim that petitioners'
services were required only intermittently, depending on the market, deserves
scant credit. The indispensability of petitioners' services was fortified by the
length and continuity of their performance, lasting for periods ranging from three
to 11 years.
More importantly, the Court finds that the crucial element of control over
petitioners rested in respondent. The power of control refers to the authority of
the employer to control the employee not only with regard to the result of work to
be done, but also to the means and methods by which the work is to be
accomplished. It should be borne in mind that the power of control refers merely
to the existence of the power and not to the actual exercise thereof. It is not
essential for the employer to actually supervise the performance of duties of the
employee; it is enough that the former has a right to wield the power. 18
In the instant case, petitioners worked at the respondent's premises, and
nowhere else. Petitioners followed the work schedule prepared by respondent.
They were required to observe all rules and regulations of the respondent
pertaining to, among other things, the quality of job performance, regularity of job
output, and the manner and method of accomplishing the jobs. Obscurity hounds
respondent's argument that even if petitioners were working under its roof, it was
still SSASI which exercised control over the manner in which they accomplished
their work. There was no showing that it was SSASI who established petitioners'
working procedure and methods, or who supervised petitioners in their work, or
who evaluated the same. Other than being the one who hired petitioners, there

was absolute lack of evidence that SSASI exercised control over them or their
work.

ScTCIE

The fact that it was SSASI which dismissed petitioners from employment is
irrelevant. It is hardly proof of control, since it was demonstrated only at the end
of petitioners' employment. What is more, the dismissal of petitioners by SSASI
was a mere result of the termination by respondent of its contractual relations
with SSASI.
Despite respondent's disavowal of the existence of an employer-employee
relationship between it and petitioners and its unyielding insistence that
petitioners were employees of SSASI, the totality of the facts and the surrounding
circumstances of the case convey otherwise. SSASI is a labor-only contractor;
hence, it is considered as the agent of respondent. Respondent is deemed by
law as the employer of petitioners. Surely, respondent cannot expect this Court to
sustain its stance and accord full evidentiary weight to the documentary evidence
belatedly procured in its vain attempt to evade liability as petitioners' employer.
The Certificate of Registration presented by respondent to buttress its position
that SSASI is a duly registered job contractor is of little significance, considering
that it were issued only on 3 January 2003. There is no further proof that prior to
said date, SSASI had already registered with and had been recognized by the
DOLE as a job contractor.

cIECaS

Verily, the Certificate of Registration of SSASI, instead of supporting respondent's


case, only served to raise more doubts. The timing of the registration of SSASI is
highly suspicious. It is important to note that SSASI was already providing
respondent with workers, including petitioners, long before SSASI was registered
with the DOLE as a job contractor. Some of the petitioners were hired by SSASI
and made to work for respondent for 11 years. Petitioners were also dismissed
from service only a month prior to the issuance of the Certificate of Registration
of SSASI. Neither respondent nor SSASI exerted any effort to explain the reason
for the belated registration with the DOLE by SSASI as a purported job
contractor. It may be safely discerned from the surrounding circumstances that

the Certificate of Registration of SSASI was merely secured in order to blanket


the previous relations between SSASI and respondent with legality.
Moreover, the Certificate of Registration issued by the DOLE recognized that
SSASI was a legitimate job contractor only as of the date of its issuance, 3
January 2003. There is no basis whatsoever to give the said Certificate any
retroactive effect. The Certificate can only be used as reference by persons who
would consider the services offered by SSASI subsequent to its issuance.
Respondent, who entered into contractual relations with SSASI way before the
said Certificate, cannot claim that it relied thereon.

SDECAI

Hence, the status of SSASI as a job contractor previous to its registration with the
DOLE on 3 January 2003 is still refutable. It can only be determined upon an
evaluation of its activities as contractor prior to the issuance of its Certificate of
Registration.
For the same reasons, this Court cannot give much weight to the Opinions dated
18 February 2003 and 10 July 2003 of DOLE Secretary Sto. Tomas and DOLEBLR Director Cacdac, respectively, allowing respondent to contract out certain
services. The said Opinions were noticeably issued only after the hiring and
termination of petitioners. And, although the Opinions allow respondent to
contract out certain services, they do not necessarily prove that the services
respondent contracted to SSASI were actually among those it was allowed to
contract out; or that SSASI was a legitimate job contractor, thus, relieving
respondent of any liability for the dismissal of petitioners by SSASI.
Equally unavailing is respondent's stance that its relationship with petitioners
should be governed by the Accreditation Agreement stipulating that petitioners
were to remain employees of SSASI and shall not become regular employees of
the respondent. To permit respondent to disguise the true nature of its
transactions with SSASI by the terms of its contract, for the purpose of evading
its liabilities under the law, would seriously impair the administration of justice. A
party cannot dictate, by the mere expedient of a unilateral declaration in a

contract, the character of its business, i.e., whether as labor-only contractor or as


job contractor, it being crucial that its character be measured in terms of and
determined by the criteria set by statute. 19
Having established that respondent was petitioners' employer, the Court now
proceeds to determining whether petitioners were dismissed in accordance with
law.
Article 280 of the Labor Code, as amended, reads
ART. 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.

DaEATc

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


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

This Court expounded on the afore-quoted provision, thus


The primary standard, therefore, of determining a regular employment is
the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the
employer. . . . The connection can be determined by considering the
nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also, if the employee has been

performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence,
the employment is also considered regular, but only with respect to such
activity and while such activity exists.

20

In the instant Petition, the Court has already declared that petitioners'
employment as quality controllers and glasscutters are directly related to the
usual business or trade of respondent as a glass manufacturer. Respondent
would have wanted this Court to believe that petitioners' employment was
dependent on the increased market demand. However, bearing in mind that
petitioners have worked for respondent for not less than three years and as much
as 11 years, which respondent did not refute, then petitioners' continued
employment clearly demonstrates its continuing necessity and indispensability to
the business of respondent, raising their employment to regular status. Thus,
having gained regular status, petitioners were entitled to security of tenure and
could only be dismissed on just or authorized causes and after they had been
accorded due process. 21
As petitioners' employer, respondent has the burden of proving that the dismissal
was for a cause allowed under the law, and that they were afforded procedural
due process. 22 However, respondent failed to discharge this burden with
substantial evidence as it noticeably narrowed its defense to the denial of any
employer-employee relationship between it and petitioners.

DaScCH

The sole reason given for the dismissal of petitioners by SSASI was the
termination of its service contract with respondent. But since SSASI was a laboronly contractor, and petitioners were to be deemed the employees of respondent,
then the said reason would not constitute a just or authorized cause 23 for
petitioners' dismissal. It would then appear that petitioners were summarily
dismissed based on the afore-cited reason, without compliance with the
procedural due process for notice and hearing.

Herein petitioners, having been unjustly dismissed from work, are entitled to
reinstatement without loss of seniority rights and other privileges and to full back
wages, inclusive of allowances, and to other benefits or their monetary
equivalents computed from the time compensation was withheld up to the time of
actual reinstatement.24 Their earnings elsewhere during the periods of their illegal
dismissal shall not be deducted therefrom. 25
WHEREFORE, premises considered, the instant Petition is GRANTED. The
Decision dated 10 November 2006 and Resolution dated 27 April 2007 of the
Court of Appeals in CA-G.R. SP No. 93291 are REVERSED and SET ASIDE.
The Decision dated 29 June 2005 of the National Labor Relations Commission in
NLRC-NCR CA No. 039768-04 is thereby REINSTATED. Let the records of this
case be remanded to the Computation and Examination Unit of the NLRC for the
proper computation of subject money claims as above-discussed. No costs.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Nachura and Reyes, JJ., concur.
Footnotes
(Almeda v. Asahi Glass Philippines, Inc., G.R. No. 177785, [September 3,
|||

2008], 586 PHIL 103-119)

[G.R. No. 168537. December 11, 2008.]


DAMIAN AKLAN,

JUANITO

AMIDO,

REYNALDO

BATICA,

RAMIL BAUTISTA, WELARD BAUTISTA, MAMERTO BRIGOLI,


ELMER CABOTEJA, JOEL CAMMAYO, WELFREDO CARIO,
RODOLFO CINCO, ARWEN DABLO, RUBEN DE CASTRO,
ROMEO DEL ROSARIO, RODERICK DELA CRUZ, ALEX DELA
VEGA,

JOAN

JOSELITO

ERICO

DUYANEN,

DUMALAGAN,
REX

JULITO

FARNACIO,

DURIAN,
ROLANDO

STcEaI

FELIZARDO, EFREN FERNANDEZ, BERNARDO GALLOGO,


EDUARDO GARCIA, REX IGNACIO, DANIEL JAMISOLA, NOEL
JANER, RAQUEL JANER, ROWAN JANER, CONSORCIO
LIAN, BERNARD MACARAEG, DARIO MACARAEG, JESUS
MACARAEG, EDGARDO MAHAGUAY, IRENEO ODIAMAR,
ALEXIS OLIVAR, ARNEL OLIVAR, EDUARDO PEREMNE, ALAN
QUILES, JOSEPH QUILES, RHONNEL RODIL, RONALDO
SALVADOR, RAMIL SANTIAGO, FRANCIS SUPRINO, REXES
SUPRINO,
EDUARDO

RODRIGO

SUPRINO,

RONALD

TIONGSON, petitioners, vs.

CORPORATION,

BMA

PHILASIA,

INC.,

SAN
and

SUPRINO,
MIGUEL
ARLENE

EUSEBIO, respondents.

DECISION

REYES, R.T., J :
p

WE tackle in this labor case the dichotomy between impermissible labor-only


contracting and legitimate job contracting.
This is a review on certiorari of the Decision 1 of the Court of Appeals (CA)
upholding that of the National Labor Relations Commission (NLRC), finding the
dismissal of petitioners justified.

HcISTE

The Facts
Respondent BMA Philasia, Inc. (BMA) is a domestic corporation engaged in the
business of transporting and hauling of cargoes, goods, and commodities of all
kinds. Respondent Arlene Eusebio is the president of BMA.
Petitioners, numbering forty-seven (47) in all, are the former employees of
respondent BMA at respondent San Miguel Corporation's (SMC) warehouse in
Pasig City. They were hired under fixed-term contracts beginning October 1999.

On July 31, 2001, a number of petitioners went to the Department of Labor and
Employment (DOLE) District Office to file a complaint against BMA and Eusebio
for underpayment of wages and non-payment of premium pay for rest day, 13th
month pay, and service incentive leave pay. 2
On August 14, 2001, petitioner Elmer Caboteja was charged with insubordination
and disrespect to superior, failure to properly perform his job assignment, and
unauthorized change of schedule. He was directed to submit his written
explanation within forty-eight (48) hours. On August 17, 2001, Caboteja was
terminated for the offenses of disregard of company rules and regulations and
rude attitude to supervisors. On August 27, 2001, he filed a complaint for illegal
dismissal against BMA. 3
On various dates thereafter, BMA agreed to a settlement with some of the
complainants in the case 4 for underpayment of wages. 5 Eleven of the present
petitioners executed quitclaims and releases in favor of BMA and Eusebio in the
presence of DOLE district officers. BMA refused to settle the claim of other
complainants.
On September 13, 2001, petitioners Joan Erico Dumalagan and Ronaldo
Salvador were also terminated for failure to perform their job responsibilities. On
September 17, 2001, Dumalagan and Salvador filed complaints for illegal
dismissal against BMA. 6

DIEACH

On October 18, 2001, petitioners held a picket at the warehouse premises to


protest BMA's refusal to pay the claim for underpayment of the rest of the
workers. This picket disrupted the business operations of private respondents,
prompting BMA to terminate their services. Subsequently, petitioners filed
separate complaints against BMA, Eusebio, and SMC for illegal dismissal. 7 All
the complaints for illegal dismissal were consolidated.
Petitioners alleged that they were illegally dismissed after filing a complaint for
underpayment of wages and non-payment of benefits before the DOLE; they
were terminated after staging a peaceful picket to protest the non-payment of
their claims. According to them, BMA is a labor-only contractor. SMC was not

only the owner of the warehouse and equipment used by BMA, it was their true
employer. The manner and means by which they performed their work were
controlled by SMC through its Sales Logistic Coordinator who was overseeing
their performance everyday.
Private respondents BMA and Eusebio countered that petitioners Caboteja,
Dumalagan, and Salvador were validly and justly dismissed. They were among
the eleven who already signed quitclaims and releases before the DOLE district
office after receiving an amount in settlement of their claims. As for the rest of
petitioners (36 complainants), there was no illegal dismissal to speak of. Said
employees simultaneously did not go back to work for no apparent reason on
October 18, 2001.
Private respondent SMC maintained that it had no employer-employee
relationship with petitioners who were hired and supervised exclusively by BMA
pursuant to a warehousing and delivery agreement in consideration of a fixed
monthly fee. SMC argued that BMA is a legitimate and independent contractor,
duly registered with the Securities and Exchange Commission (SEC) as a
separate and distinct corporation with substantial capitalization, investment,
equipment, and tools. It submitted documentary evidence proving that BMA
engaged the services of petitioners, paid for their wages and benefits, and
exercised exclusive control and supervision over them.
SMC showed that under their contract, BMA provided delivery trucks, drivers, and
helpers in the storage and distribution of SMC products. On a day-to-day basis,
after the routes were made by SMC salesmen, they would book the orders they
obtained. In turn, BMA's Schedular Planner, detailed at the Pasig Warehouse,
downloaded these booked orders from the computer and processed the
necessary documents to be forwarded to the Warehouse Checker, also an
employee of BMA. SMC contended that petitioners were dismissed by BMA for
staging a two-hour strike without complying with the mandatory requirements for
a valid strike. As a result, BMA had to come up with ways and means in order to
avoid the disruption of delivery operations.

SECHIA

Labor Arbiter and NLRC Dispositions


After due hearings, Labor Arbiter Veneranda C. Guerrero found respondent BMA
liable for illegal dismissal and ordered the reinstatement of petitioners. She ruled
that the evidence presented duly established that BMA was a legitimate
independent contractor and the actual employer of petitioners. Its failure,
however, to comply with the registration and reportorial requirements of the DOLE
rendered SMC, its principal, directly liable to the claims of petitioners. 8 Thus,
BMA and SMC were found jointly and severally liable for the payment of
petitioners' backwages and money claims. The dispositive part of the Arbiter
ruling runs in this wise:
WHEREFORE, all the foregoing considered, judgment is hereby
rendered finding respondent BMA Philasia, Inc., liable for illegal
dismissal. Accordingly, is it hereby ordered to reinstate all of the
complainants to their previous positions, and to pay jointly and severally
with respondent San Miguel the complainants' backwages reckoned
from the time of their illegal dismissal up to their actual/payroll
reinstatement, the aggregate amount of which as of this date amounts to
SEVEN MILLION FIVE HUNDRED EIGHTEEN THOUSAND TWO
HUNDRED FIFTY-TWO AND 89/100 PESOS (P7,518,252.89). In
addition respondents

are

solidarily

held

liable

to

pay

the

complainants'Daniel Jamisola, Rodolfo Cinco, Eduardo Garcia, Dario


Macaraeg, Romeo Del Rosario, Alan Quiles, Joseph Quiles, Ronald
Suprino, Rolando Felizardo, Efren Fernandez, Damian Aklan, Welard
Bautista, Rodrigo Suprino, Noel Janer, Jesus Macaraeg, Reynaldo
Batica, Rhonnel Rodil, Eduardo Peremne, Mamerto Brigoli, Ireneo
Odiamar, Rex Ignacio, Edgardo Mahaguay, Reyes Suprino, Rodrigo Dela
Cruz, Ramil Bautista, Francis Suprino, Eduardo Tiongson, Joel
Cammayo, Arwen Dablo, Alex Dela Vega, Bernard Gallogo, Rex
Farnacio, Ruben de Castro, Rowan Janer, Raquel Janer, and Bernardo
Macaraeg their salary differentials, service incentive leave pay and 13th
month pay in the aggregate amount of ONE MILLION TWO HUNDRED

FIFTY-SIX THOUSAND THREE HUNDRED SIXTY-SIX and 80/100


PESOS (P1,256,366.80).
Respondents are further assessed the amount equivalent to ten percent
(10%) of the total award, as and for attorney's fees.
The computation of the complainants' individually adjudged benefits
shall form part of this Decision as Annex "A" hereof.
All other claims are DISMISSED for lack of merit.
SO ORDERED. 9 (Emphasis supplied)

Respondents appealed the decision of the Labor Arbiter to the NLRC. On


December 19, 2003, the NLRC reversed the Labor Arbiter disposition and ruled
that there was no illegal dismissal. The fallo of the NLRC decision reads:

TEIHDa

WHEREFORE, in view of all the foregoing, the appealed decision of the


Labor Arbiter is hereby REVERSED and SET ASIDE and a new decision
is hereby rendered finding that there was no illegal dismissal committed
by

respondents,

hence,

no

liability

for

backwages.

However,

complainants are awarded their salary differentials, service incentive


leave pay and 13th month pay except for the year 2000 in the aggregate
amount of ONE MILLION TWO HUNDRED FIFTY-SIX THOUSAND
THREE HUNDRED SIXTY-SIX AND 80/100 (P1,256,366.80) and 10%
ATTORNEY's FEES based on the salary differentials, SILP and 13th
month pay.
SO ORDERED. 10

The NLRC found that petitioners Caboteja, Dumalagan, and Salvador were
separated from their jobs for just and valid causes. They were given the
opportunity to explain their sides. As for the quitclaims previously executed by the
other petitioners, the NLRC ruled that these were sufficient basis to release
respondent BMA from liability.
With respect to the first and second assigned errors, the records show
that complainants Elmer Caboteja, Erico "Jojo" Dumalagan and Ronaldo

Salvador were separated from their jobs for just and valid causes and
after they were given the chance to explain their sides. Copies of
memoranda were served upon them advising their violation of company
rules and regulations and rude attitude and disrespect to superiors and
disrespect to superiors in the case of Caboteja and failure to perform
duties and responsibilities in the case of Dumalagan and Salvador. They
were asked to explain and finding their explanations unacceptable,
respondents dismissed them. Hence, they are not entitled to separation
pay.

TCSEcI

As regards the other complainants, there is no showing that they were


illegally dismissed from their jobs by BMA. They have not given details
on to whom they reported for work, who barred them from entering the
respondents' premises and from working, in so many words how they
were told that they were already dismissed. The only evident fact is that
they just stopped reporting for work beginning October 18, 2001 without
informing BMA why there were doing so. Their claim that they were not
allowed by the respondents to return to their work is hard to believe. Why
should the respondents terminate simultaneously the services of the
complainants and completely paralyze respondents' business operation,
particularly their service contract with SMC? Complainants have not
shown any reason which would compel the respondents to resort to
mass dismissal. On the other hand, complainants have strong reason to
paralyze respondents' operation in order to force compliance to their
demands.
xxx xxx xxx
In fact, the records of this case also disclose that during the mandatory
conciliation proceedings, BMA urged these complainants to go back to
work, but may refused to do so. Obviously, their refusal to go back to
their work was a deliberate move to force respondents to give in to their

demands. Considering this refusal, it is not hard to believe that


complainants were not dismissed but rather they refused to work in order
to paralyze respondents' operations and force them to give in to
complainants' demands. 11 (Emphasis supplied)

CA Disposition
Aggrieved, petitioners filed a Rule 65 petition with the CA. The following grounds
were interposed: (1) that the NLRC gravely abused its discretion in holding that
Caboteja, Dumalagan, and Salvador were validly dismissed; (2) that the other
petitioners were not dismissed but were guilty of abandonment; and (3) that the
quitclaims executed by eleven of the petitioners barred the complaint for illegal
dismissal. 12
On April, 15, 2005, the CA denied the petition, affirming in full the NLRC
disposition, thus:
WHEREFORE, premises considered, the present petition is hereby
DENIED DUE COURSE and accordingly DISMISSED, for lack of merit.
The assailed Decision dated December 19, 2003 and Resolution dated
July 20, 2004 of the National Labor Relations Commission in the
consolidated cases, NLRC Case No. CN 08-04522-01-CA No. 03685603 (NLRC NCR North Sector Case Nos. 08-04522-2001, 09-049412001, 00-11-05023-2001, 00-11-05969-2001, 11-01-00450-2002, 0200934-2002,

12-06288-2001,

and

12-06320-2001),

are

hereby

AFFIRMED and UPHELD.


No pronouncement as to costs.
SO ORDERED. 13

In ruling against petitioners, the CA found that the NLRC committed no reversible
error or grave abuse of discretion in ruling that petitioners were not illegally
dismissed but actually refused to report back to work after staging a surprise
stoppage that paralyzed respondent BMA's business operations at the Pasig
warehouse on October 18, 2001.

Issues
Undaunted, petitioners resorted to this review on certiorari, anchored on the
following grounds:
The CA committed a serious legal error in not ruling that respondent San
Miguel

Corporation (principal

of

respondent

BMA

Philasia), and

respondent Arlene Eusebio, (president and owner of respondent BMA


Philasia)are all solidarily liable for petitioners' money claims.
The CA committed a serious legal error in ruling that the quitclaims
executed by eleven (11) of the petitioners, in relation to their claims for
underpayment of wages before the DOLE, also barred their subsequent
complaint for illegal dismissal, despite the fact that the said complaint
was not yet in existence at the time the quitclaims were executed.
The CA committed a serious legal error in refusing to hold that
respondent

San

Miguel

Corporation

was

petitioners'

real

employer despite the fact that respondent BMA Philasia was not duly
registered with the DOLE and caused the workers to perform tasks
directly related to the business of respondent San Miguel Corporation
and under the latter's supervision.
The CA committed a legal error and acted with grave abuse of
discretion in holding that petitioners Elmer Caboteja, Joan Erico
Dumalagan, and Ronaldo Salvador were not illegally dismissed from
their jobs, despite a previous ruling of the Labor Arbiter to the contrary.
The CA committed a serious legal error in not awarding damages, at the
very least, to petitioners Joan Erico Dumalagan, and Ronaldo Salvador
for violation of their right to due process.

EHaASD

The CA seriously committed an error of law in holding that the rest of the
petitioners abandoned their jobs and were not dismissed therefrom,
contrary to the findings of the Labor Arbiter who heard the
case. 14(Underscoring supplied)

Our Ruling
Petitioners argue mainly that their employer is, in fact, respondent SMC, not
respondent BMA. They contend that BMA is a labor-only contractor and SMC, as
their true employer, should be held directly liable for their money claims.
A finding that a contractor is a "labor-only" contractor, as opposed to
permissible job contracting, is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees
of the supposed contractor, and the "labor-only" contractor is considered
as a mere agent of the principal, the real employer. 15
Both the Labor Arbiter and the NLRC found that the employment contracts of
petitioners duly prove that an employer-employee relationship existed between
petitioners and BMA. We hasten to add that the existence of an employeremployee relationship is ultimately a question of fact and the findings by the
Labor Arbiter and the NLRC on that score shall be accorded not only respect but
even finality when supported by ample evidence. 16
In its ruling, the NLRC considered the following elements to determine the
existence of an employer-employee relationship: (1) the selection and
engagement of the workers; (2) power of dismissal; (3) the payment of wages by
whatever means; and (4) the power to control the worker's conduct.

17

All four

elements were found by the NLRC to be vested in BMA. This NLRC finding was
affirmed by the CA:

HCITDc

. . . It is the BMA which actually conducts the hauling, storage, handling,


transporting, and delivery operations of SMC's products pursuant to their
warehousing and Delivery Agreement. BMA itself hires and supervises
its own workers to carry out the aforesaid business activities. Apart from
the fact that it was BMA which paid for the wages and benefits, as well
as SSS contributions of petitioners, it was also the management of BMA
which directly supervised and imposed disciplinary actions on the basis
of established rules and regulations of the company. The documentary
evidence consisting of numerous memos throughout the period of

petitioners' employment leaves no doubt in the mind of this Court that


petitioners are only too aware of who is their true employer. Petitioners
received daily instructions on their tasks form BMA management,
particularly, private respondent Arlene C. Eusebio, and whenever they
committed lapses or offenses in connection with their work, it was to said
officer that they submitted compliance such as written explanations, and
brought matters connected with their specific responsibilities.

18

The employer-employee relationship between BMA and petitioners is not


tarnished by the absence of registration with DOLE as an independent job
contractor on the part of BMA. The absence of registration only gives rise to the
presumption that the contractor is engaged in labor-only contracting, a
presumption that respondent BMA ably refuted.
Thus, We find no grave abuse of discretion in the CA observation that respondent
BMA is the true employer of petitioners who should be held directly liable for their
claims. Likewise, no grave abuse of discretion can be ascribed to the CA when it
ruled that illegal dismissal was absent.
The records fully disclose that petitioners Caboteja, Dumalagan, and Salvador
were separated from their jobs for just and valid causes. Caboteja was cited for
violation of company rules and regulations and disrespectful conduct. Dumalagan
and Salvador were investigated for failure to perform duties and responsibilities.
After their explanations were found unacceptable, they were accordingly
dismissed.
As for the other petitioners, they contend that they were illegally dismissed when
respondent BMA barred them from entering the work premises and from
performing their work. Both the NLRC and the CA found that petitioners failed to
substantiate this contention. Rather, what was shown in the records was that they
simply stopped reporting for work starting October 18, 2001 when they staged a
picket. The CA observation along this line is worth restating:

HaAIES

. . . petitioners failed to substantiate their claim that they had been


prevented from entering the work premises after staging a "picket" on

October 18, 2001 to further press their demands for payment of their
money claims. At this time, the labor standards case was already
pending with the DOLE District Office and petitioners could have availed
of said proceedings with the intervention of DOLE officials. Instead,
however, they resorted to an illegal stoppage of work that paralyzed the
business operations of BMA. As aptly noted by the NLRC, there is simply
no probable or logical reason for private respondent BMA to
simultaneously dismiss its workers that will disrupt business operations
at the warehouse. Under the factual circumstances, it clearly appears
that petitioners refused to report back to their work in order to force their
employer BMA to give in to their immediate demand for the salary
differentials and unpaid benefits subject of their complaint with the
DOLE. Hence, BMA cannot be held liable for illegal dismissal.
While it is true that the defense of abandonment may not be given
credence or is negated by the immediate filing of illegal dismissal cases
by the affected employees, records clearly reveal that as of October 18,
2001, petitioners without justifiable cause failed and refused to report
back to their work. Their claim of having been prevented from entering
the work premises was not given due weight for no particulars was even
alleged by them in their report back to their jobs, who prevented their
entry to the company premises and details as to what steps they took to
bring the matter to the attention of DOLE District Office wherein their
complaint

for

labor

standards

violation

was

already

pending. 19 (Emphasis supplied)

Moreover, eleven of petitioners contend that their quitclaims should not be


considered as a bar to their complaint for illegal dismissal because that complaint
was not yet in existence at the time the quitclaims were executed. That the
quitclaims were executed voluntarily is not denied by petitioners. They, however,
contend that the quitclaims should be construed as limited to the money claims in

connection with the first labor standards complaint

20

they had filed before the

DOLE district office.


Unless there is a showing that the employee signed involuntarily or under
duress, quitclaims and releases are upheld by this Court as the law
between the parties. 21 If the agreement was voluntarily entered into by the
employee, with full understanding of what he was doing, and represents a
reasonable settlement of the claims of the employee, it is binding on the parties
and may not be later disowned simply because of a change of mind.

22

In the

case under review, the quitclaims and releases signed by petitioners stated:

HIAEcT

That for and in consideration of the sum of FIFTY-THREE THOUSAND


PESOS (P53,000.00) 23 in settlement of my/our claim/s as financial
assistance and/or gratuitously given by my/our employer receipt of which
is hereby acknowledge to my/our complete and full satisfaction, I/we
hereby release and discharge the above respondent and/or its officers
from any and all claims by way of wages, overtime pay, differential pay,
or otherwise as may be due me/us incident to my/our past employment
with said establishment. I/we hereby state further that I/we have no more
claim, right or action of whatsoever nature whether past, present or
contingent against the said respondent and/or its officers. 24 (Emphasis
supplied)

As correctly observed by the NLRC, the language employed by the above


quitclaims and releases indicates in no uncertain terms that petitioners voluntarily
and freely acknowledged receipt of full satisfaction of all claims against
respondents. Thus, the quitclaims effectively barred petitioners from questioning
their dismissal.
Social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our
social and economic life. 25 While labor should be protected at all times, this
protection must not be at the expense of capital.

WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals AFFIRMED.

EaIcAS

SO ORDERED.
Puno, C.J., * Ynares-Santiago, Austria-Martinez and Chico-Nazario, JJ., concur.
|||

(Aklan v. San Miguel Corp. , G.R. No. 168537, [December 11, 2008], 594 PHIL

344-361)

SECOND DIVISION
[G.R. No. 195466. July 2, 2014.]
ARIEL L. DAVID, doing business under the name and style
"YIELS HOG DEALER", petitioner, vs. JOHN G.
MACASIO, respondent.

DECISION

BRION, J :
p

We resolve in this petition for review on certiorari 1 the challenge to the November
22, 2010 decision 2 and the January 31, 2011 resolution 3 of the Court of
Appeals (CA) in CA-G.R. SP No. 116003. The CA decision annulled and set
aside

the

May

26,

2010

decision 4 of

the

National

Labor

Relations

Commission (NLRC) 5 which, in turn, affirmed the April 30, 2009 decision 6 of the
Labor Arbiter (LA). The LA's decision dismissed respondent John G. Macasio's
monetary claims.
The Factual Antecedents

In January 2009, Macasio filed before the LA a complaint 7 against petitioner


Ariel L. David, doing business under the name and style "Yiels Hog Dealer," for
non-payment of overtime pay, holiday pay and 13th month pay. He also
claimed payment for moral and exemplary damages and attorney's fees.
Macasio also claimed payment forservice incentive leave (SIL). 8
Macasio alleged 9 before the LA that he had been working as a butcher for David
since January 6, 1995. Macasio claimed that David exercised effective control
and supervision over his work, pointing out that David: (1) set the work day,
reporting time and hogs to be chopped, as well as the manner by which he was
to perform his work; (2) daily paid his salary of P700.00, which was increased
from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved
and disapproved his leaves. Macasio added that David owned the hogs delivered
for chopping, as well as the work tools and implements; the latter also rented the
workplace. Macasio further claimed that David employs about twenty-five (25)
butchers and delivery drivers.
In his defense, 10 David claimed that he started his hog dealer business in 2005
and that he only has ten employees. He alleged that he hired Macasio as a
butcher or chopper on "pakyaw" or task basis who is, therefore, not entitled to
overtime pay, holiday pay and 13th month pay pursuant to the provisions of
the Implementing Rules and Regulations (IRR) of the Labor Code.David pointed
out that Macasio: (1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m.
of the following day or earlier, depending on the volume of the delivered hogs; (2)
received the fixed amount of P700.00 per engagement, regardless of the actual
number of hours that he spent chopping the delivered hogs; and (3) was not
engaged to report for work and, accordingly, did not receive any fee when no
hogs were delivered.

TDAcCa

Macasio disputed David's allegations. 11 He argued that, first, David did not start
his business only in 2005. He pointed to the Certificate of Employment

12

that

David issued in his favor which placed the date of his employment, albeit
erroneously, in January 2000. Second, he reported for work every day which the

payroll or time record could have easily proved had David submitted them in
evidence.
Refuting Macasio's submissions, 13 David claims that Macasio was not his
employee as he hired the latter on"pakyaw" or task basis. He also claimed that he
issued the Certificate of Employment, upon Macasio's request, only for overseas
employment

purposes.

He

pointed

to

the "Pinagsamang

Sinumpaang

Salaysay," 14 executed by Presbitero Solano and Christopher (Antonio Macasio's


co-butchers), to corroborate his claims.
In the April 30, 2009 decision, 15 the LA dismissed Macasio's complaint for lack of
merit. The LA gave credence to David's claim that he engaged Macasio
on "pakyaw" or task basis. The LA noted the following facts to support this
finding: (1) Macasio received the fixed amount of P700.00 for every work done,
regardless of the number of hours that he spent in completing the task and of the
volume or number of hogs that he had to chop per engagement; (2) Macasio
usually worked for only four hours, beginning from 10:00 p.m. up to 2:00 a.m. of
the following day; and (3) the P700.00 fixed wage far exceeds the then prevailing
daily minimum wage of P382.00. The LA added that the nature of David's
business as hog dealer supports this "pakyaw" or task basis arrangement.
The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is
not entitled to overtime, holiday, SIL and 13th month pay.
The NLRC's Ruling
In its May 26, 2010 decision,

16

the NLRC affirmed the LA ruling. 17 The NLRC

observed that David did not require Macasio to observe an eight-hour work
schedule to earn the fixed P700.00 wage; and that Macasio had been performing
a non-time work, pointing out that Macasio was paid a fixed amount for the
completion of the assigned task, irrespective of the time consumed in its
performance. Since Macasio was paid by result and not in terms of the time that
he spent in the workplace, Macasio is not covered by the Labor Standards laws
on overtime, SIL and holiday pay, and 13th month pay under the Rules and
Regulations Implementing the 13th month pay law. 18

Macasio moved for reconsideration

19

but the NLRC denied his motion in its

August 11, 2010 resolution, 20prompting Macasio to elevate his case to the
CA via a petition for certiorari. 21
The CA's Ruling
In

its

November

22,

2010

decision, 22 the

CA

partly

granted

Macasio's certiorari petition and reversed the NLRC's ruling for having been
rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task basis
employee, it nevertheless found Macasio entitled to his monetary claims following
the doctrine laid down in Serrano v. Severino Santos Transit. 23The CA explained
that as a task basis employee, Macasio is excluded from the coverage of holiday,
SIL and 13th month pay only if he is likewise a "field personnel." As defined
by the Labor Code, a "field personnel" is one who performs the work away from
the office or place of work and whose regular work hours cannot be determined
with reasonable certainty. In Macasio's case, the elements that characterize a
"field personnel" are evidently lacking as he had been working as a butcher at
David's "Yiels Hog Dealer" business in Sta. Mesa, Manila under David's
supervision and control, and for a fixed working schedule that starts at 10:00
p.m.

aTICAc

Accordingly, the CA awarded Macasio's claim for holiday, SIL and 13th month pay
for three years, with 10% attorney's fees on the total monetary award. The CA,
however, denied Macasio's claim for moral and exemplary damages for lack of
basis.
David filed the present petition after the CA denied his motion for
reconsideration 24 in the CA's January 31, 2011 resolution. 25
The Petition
In this petition, 26 David maintains that Macasio's engagement was on
a "pakyaw" or task basis. Hence, the latter is excluded from the coverage of
holiday, SIL and 13th month pay.

David reiterates his submissions before the lower tribunals

27

and adds that he

never had any control over the manner by which Macasio performed his work and
he simply looked on to the "end-result." He also contends that he never
compelled Macasio to report for work and that under their arrangement, Macasio
was at liberty to choose whether to report for work or not as other butchers could
carry out his tasks. He points out that Solano and Antonio had, in fact, attested to
their (David and Macasio's) established "pakyawan" arrangement that rendered a
written contract unnecessary. In as much as Macasio is a task basis employee
who is paid the fixed amount of P700.00 per engagement regardless of the time
consumed in the performance David argues that Macasio is not entitled to the
benefits he claims. Also, he posits that because he engaged Macasio
on "pakyaw" or task basis then no employer-employee relationship exists
between them.
Finally, David argues that factual findings of the LA, when affirmed by the NLRC,
attain finality especially when, as in this case, they are supported by substantial
evidence. Hence, David posits that the CA erred in reversing the labor tribunals'
findings and granting the prayed monetary claims.
The Case for the Respondent
Macasio counters that he was not a task basis employee or a "field personnel" as
David would have this Court believe. 28 He reiterates his arguments before the
lower tribunals and adds that, contrary to David's position, the P700.00 fee that
he was paid for each day that he reported for work does not indicate
a "pakyaw" or task basis employment as this amount was paid daily, regardless
of the number or pieces of hogs that he had to chop. Rather, it indicates a dailywage method of payment and affirms his regular employment status. He points
out that David did not allege or present any evidence as regards the quota or
number of hogs that he had to chop as basis for the"pakyaw" or task basis
payment; neither did David present the time record or payroll to prove that he
worked for less than eight hours each day. Moreover, David did not present any
contract to prove that his employment was on task basis. As David failed to prove

the alleged task basis or "pakyawan" agreement, Macasio concludes that he was
David's employee.
Procedurally, Macasio points out that David's submissions in the present petition
raise purely factual issues that are not proper for a petition for review
on certiorari. These issues whether he (Macasio) was paid by result or
on"pakyaw" basis; whether he was a "field personnel"; whether an employeremployee relationship existed between him and David; and whether David
exercised control and supervision over his work are all factual in nature and
are, therefore, proscribed in a Rule 45 petition. He argues that the CA's factual
findings bind this Court, absent a showing that such findings are not supported by
the evidence or the CA's judgment was based on a misapprehension of facts. He
adds that the issue of whether an employer-employee relationship existed
between him and David had already been settled by the LA

29

and the

NLRC 30 (as well as by the CA per Macasio's manifestation before this Court
dated November 15, 2012), 31 in his favor, in the separate illegal case that he filed
against David.

TaDAHE

The Issue
The issue revolves around the proper application and interpretation of the labor
law provisions on holiday, SIL and 13th month pay to a worker engaged
on "pakyaw" or task basis. In the context of the Rule 65 petition before the CA,
the issue is whether the CA correctly found the NLRC in grave abuse of
discretion in ruling that Macasio is entitled to these labor standards benefits.
The Court's Ruling
We partially grant the petition.
Preliminary considerations: the
Montoya ruling and the factualissue-bar rule
In this Rule 45 petition for review on certiorari of the CA's decision rendered
under a Rule 65 proceeding, this Court's power of review is limited to resolving
matters pertaining to any perceived legal errors that the CA may have committed

in issuing the assailed decision. This is in contrast with the review for
jurisdictional errors, which we undertake in an original certiorari action. In
reviewing the legal correctness of the CA decision, we examine the CA decision
based on how it determined the presence or absence of grave abuse of
discretion in the NLRC decision before it and not on the basis of whether the
NLRC decision on the merits of the case was correct.

32

In other words, we have

to be keenly aware that the CA undertook a Rule 65 review, not a review on


appeal, of the NLRC decision challenged before it. 33
Moreover, the Court's power in a Rule 45 petition limits us to a review of
questions of law raised against the assailed CA decision. 34
In this petition, David essentially asks the question whether Macasio is entitled
to holiday, SIL and 13th month pay. This one is a question of law. The
determination of this question of law however is intertwined with the largely
factual issue of whether Macasio falls within the rule on entitlement to these
claims or within the exception. In either case, the resolution of this factual issue
presupposes another factual matter, that is, the presence of an employeremployee relationship between David and Macasio.
In insisting before this Court that Macasio was not his employee, David argues
that he engaged the latter on"pakyaw" or task basis. Very noticeably, David
confuses engagement on "pakyaw" or task basis with the lack of employment
relationship. Impliedly, David asserts that their "pakyawan" or task basis
arrangement negates the existence of employment relationship.
At the outset, we reject this assertion of the petitioner. Engagement
on "pakyaw" or task basis does not characterize the relationship that may exist
between the parties, i.e., whether one of employment or independent
contractorship. Article 97 (6) of the Labor Code defines wages as ". . .
the remuneration or earnings, however designated, capable of being expressed
in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which
is payable by an employer to an employee under a written or unwritten contract

of employment for work done or to be done, or for services rendered or to be


rendered[.]" 35 In

relation

to

Article

97

(6),

Article

101

36

of the

Labor

Code speaks of workers paid by results or those whose pay is calculated in terms
of the quantity or quality of their work output which includes"pakyaw" work and
other non-time work.
More importantly, by implicitly arguing that his engagement of Macasio
on "pakyaw" or task basis negates employer-employee relationship, David would
want the Court to engage on a factual appellate review of the entire case to
determine the presence or existence of that relationship. This approach however
is not authorized under a Rule 45 petition for review of the CA decision rendered
under a Rule 65 proceeding.

EcDATH

First, the LA and the NLRC denied Macasio's claim not because of the absence
of an employer-employee but because of its finding that since Macasio is paid
on pakyaw or task basis, then he is not entitled to SIL, holiday and 13th month
pay. Second, we consider it crucial, that in the separate illegal dismissal case
Macasio filed with the LA, the LA, the NLRC and the CA uniformly found the
existence of an employer-employee relationship. 37
In other words, aside from being factual in nature, the existence of an employeremployee relationship is in fact a non-issue in this case. To reiterate, in deciding
a Rule 45 petition for review of a labor decision rendered by the CA under 65, the
narrow scope of inquiry is whether the CA correctly determined the presence or
absence of grave abuse of discretion on the part of the NLRC. In concrete
question form, "did the NLRC gravely abuse its discretion in denying Macasio's
claims simply because he is paid on a non-time basis?"
At any rate, even if we indulge the petitioner, we find his claim that no employeremployee relationship exists baseless. Employing the control test, 38 we find that
such a relationship exist in the present case.
Even

factual

Macasio is David's employee

review

shows

that

To determine the existence of an employer-employee relationship, four elements


generally need to be considered, namely: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employee's conduct. These elements or indicators comprise
the so-called "four-fold" test of employment relationship. Macasio's relationship
with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element of
"selection and engagement of the employee." David categorically confirmed this
fact when, in his "Sinumpaang Salaysay," he stated that "nag apply po siya sa
akin at kinuha ko siya na chopper[.]" 39 Also, Solano and Antonio stated in
their "Pinagsamang Sinumpaang Salaysay" 40 that "[k]ami po ay nagtratrabaho sa
Yiels . . . na pag-aari ni Ariel David bilang butcher" and "kilala namin si . . .
Macasio na isa ring butcher . . . ni . . . David at kasama namin siya sa aming
trabaho."
Second, David paid Macasio's wages. Both David and Macasio categorically
stated in their respective pleadings before the lower tribunals and even before
this Court that the former had been paying the latter P700.00 each day after the
latter had finished the day's task. Solano and Antonio also confirmed this fact of
wage payment in their"Pinagsamang Sinumpaang Salaysay." 41 This satisfies the
element of "payment of wages."
Third, David had been setting the day and time when Macasio should report for
work. This power to determine the work schedule obviously implies power of
control. By having the power to control Macasio's work schedule, David could
regulate Macasio's work and could even refuse to give him any assignment,
thereby effectively dismissing him.
And fourth, David had the right and power to control and supervise Macasio's
work as to the means and methods of performing it. In addition to setting the day
and time when Macasio should report for work, the established facts show that
David rents the place where Macasio had been performing his tasks. Moreover,
Macasio would leave the workplace only after he had finished chopping all of the

hog meats given to him for the day's task. Also, David would still engage
Macasio's services and have him report for work even during the days when only
few hogs were delivered for butchering.

CDHAcI

Under this overall setup, all those working for David, including Macasio, could
naturally be expected to observe certain rules and requirements and David would
necessarily exercise some degree of control as the chopping of the hog meats
would be subject to his specifications. Also, since Macasio performed his tasks at
David's workplace, David could easily exercise control and supervision over the
former. Accordingly, whether or not David actually exercised this right or power to
control is beside the point as the law simply requires the existence of this power
to control 42

43

or, as in this case, the existence of the right and opportunity to

control and supervise Macasio. 44


In sum, the totality of the surrounding circumstances of the present case
sufficiently points to an employer-employee relationship existing between David
and Macasio.
Macasio is engaged on "pakyaw" or task
basis
At this point, we note that all three tribunals the LA, the NLRC and the CA
found that Macasio was engaged or paid on "pakyaw" or task basis. This factual
finding binds the Court under the rule that factual findings of labor tribunals when
supported by the established facts and in accord with the laws, especially when
affirmed by the CA, is binding on this Court.
A distinguishing characteristic of "pakyaw" or task basis engagement, as
opposed to straight-hour wage payment, is the non-consideration of the time
spent in working. In a task-basis work, the emphasis is on the task itself, in the
sense that payment is reckoned in terms of completion of the work, not in terms
of the number of time spent in the completion of work.

45

Once the work or task is

completed, the worker receives a fixed amount as wage, without regard to the
standard measurements of time generally used in pay computation.

In Macasio's case, the established facts show that he would usually start his work
at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the
workplace or of the total number of the hogs assigned to him for chopping,
Macasio would receive the fixed amount of P700.00 once he had completed his
task. Clearly, these circumstances show a "pakyaw" or task basis engagement
that all three tribunals uniformly found.
In sum, the existence of employment relationship between the parties is
determined by applying the "four-fold" test; engagement on "pakyaw" or task
basis does not determine the parties' relationship as it is simply a method of pay
computation. Accordingly, Macasio is David's employee, albeit engaged
on "pakyaw" or task basis.
As an employee of David paid on pakyaw or task basis, we now go to the core
issue of whether Macasio is entitled to holiday, 13th month, and SIL pay.
On the issue of Macasio's
entitlement to holiday, SIL and 13th
month pay
The LA dismissed Macasio's claims pursuant to Article 94 of the Labor Code in
relation to Section 1, Rule IV of theIRR of the Labor Code, and Article 95 of
the Labor Code,as well as Presidential Decree (PD) No. 851. The NLRC, on the
other hand, relied on Article 82 of the Labor Code and the Rules and Regulations
Implementing PD No. 851. Uniformly, these provisions exempt workers paid
on "pakyaw" or task basis from the coverage of holiday, SIL and 13th month pay.
In reversing the labor tribunals' rulings, the CA similarly relied on these
provisions, as well as on Section 1, Rule V of the IRR of the Labor Code and the
Court's ruling in Serrano v. Severino Santos Transit. 46 These labor law
provisions, when read together with the Serrano ruling, exempt those engaged
on "pakyaw" or task basis only if they qualify as "field personnel."

ICTacD

In other words, what we have before us is largely a question of law regarding the
correct interpretation of theselabor code provisions and the implementing rules;
although, to conclude that the worker is exempted or covered depends on the

facts and in this sense, is a question of fact: first, whether Macasio is a "field
personnel"; andsecond, whether those engaged on "pakyaw" or task basis, but
who are not "field personnel," are exempted from the coverage of holiday, SIL
and 13th month pay.
To put our discussion within the perspective of a Rule 45 petition for review of a
CA decision rendered under Rule 65 and framed in question form, the legal
question is whether the CA correctly ruled that it was grave abuse of discretion on
the part of the NLRC to deny Macasio's monetary claims simply because he is
paid on a non-time basis without determining whether he is a field personnel or
not.
To resolve these issues, we need to re-visit the provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the coverage of Title I,
Book III of the Labor Code provisions governing working conditions and rest
periods.
Art.

82. Coverage. The provisions

of [Title

I] shall

apply to

employees in all establishments and undertakings whether for profit or


not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
xxx xxx xxx
"Field personnel" shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty. [emphases and underscores
ours]

Among the Title I provisions are the provisions on holiday pay (under Article 94
of the Labor Code) and SIL pay (under Article 95 of the Labor Code). Under
Article 82, "field personnel" on one hand and "workers who are paid by results"
on the other hand, are not covered by the Title I provisions. The wordings of
Article 82 of the Labor Codeadditionally categorize workers "paid by results" and
"field personnel" as separate and distinct types of employees who are exempted
from the Title I provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding
provision in the IRR 47 reads:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service
establishments regularly employing less than (10) workers[.] [emphasis
ours]
xxx xxx xxx
SECTION 1. Coverage. This Rule shall apply to all employees except:
xxx xxx xxx
(e) Field

personnel and other

employees

whose

time

and

performance is unsupervised by the employer including those who


are engaged on task or contract basis, purely commission basis, or
those who are paid a fixed amount for performing work irrespective of
the time consumed in the performance thereof. [emphases ours]

On the other hand, Article 95 of the Labor Code and its corresponding
provision in the IRR 48 pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has
rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the
benefit herein provided, those enjoying vacation leave with pay of at
least five days and those employed in establishments regularly

employing less than ten employees or in establishments exempted from


granting this benefit by the Secretary of Labor and Employment after
considering the viability or financial condition of such establishment.
[emphases ours]

DaCEIc

xxx xxx xxx


Section 1. Coverage. This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose performance is
unsupervised by the employerincluding those who are engaged on
task or contract basis, purely commission basis, or those who are paid
a fixed amount for performing work irrespective of the time consumed in
the performance thereof. [emphasis ours]

Under these provisions, the general rule is that holiday and SIL pay provisions
cover all employees. To be excluded from their coverage, an employee must be
one of those that these provisions expressly exempt, strictly in accordance with
the exemption.
Under the IRR, exemption from the coverage of holiday and SIL pay refer to "field
personnel and other employees whose time and performance is unsupervised by
the employer including those who are engaged on task or contract basis[.]" Note
that unlike Article 82 of the Labor Code, the IRR on holiday and SIL pay do not
exclude employees "engaged on task basis" as a separate and distinct category
from employees classified as "field personnel." Rather, these employees are
altogether merged into one classification of exempted employees.
Because of this difference, it may be argued that the Labor Code may be
interpreted to mean that those who are engaged on task basis, per se, are
excluded from the SIL and holiday payment since this is what the Labor
Codeprovisions, in contrast with the IRR, strongly suggest. The arguable
interpretation of this rule may be conceded to be within the discretion granted to
the LA and NLRC as the quasi-judicial bodies with expertise on labor matters.

However, as early as 1987 in the case of Cebu Institute of Technology v.


Ople 49 the phrase "those who are engaged on task or contract basis" in the rule
has already been interpreted to mean as follows:
[the phrase] should however, be related with "field personnel" applying
the rule on ejusdem generis that general and unlimited terms are
restrained and limited by the particular terms that they follow . . .
Clearly, petitioner's teaching personnel cannot be deemed field
personnel which refers "to non-agricultural employees who regularly
perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty. [Par. 3, Article
82, Labor Code of the Philippines]. Petitioner's claim that private
respondents are not entitled to the service incentive leave benefit
cannot therefore be sustained.

In short, the payment of an employee on task or pakyaw basis alone is


insufficient to exclude one from the coverage of SIL and holiday pay. They are
exempted from the coverage of Title I (including the holiday and SIL pay) only if
they qualify as "field personnel." The IRR therefore validly qualifies and limits the
general exclusion of "workers paid by results" found in Article 82 from the
coverage of holiday and SIL pay. This is the only reasonable interpretation since
the determination of excluded workers who are paid by results from the coverage
of Title I is "determined by the Secretary of Labor in appropriate regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus
Transport Systems, Inc. v. Bautista:

HDTSCc

A careful perusal of said provisions of law will result in the conclusion


that the grant of service incentive leave has been delimited by
the Implementing Rules and Regulations of the Labor Code to apply only
to those employees not explicitly excluded by Section 1 of Rule V.
According to the Implementing Rules, Service Incentive Leave shall not
apply to employees classified as "field personnel." The phrase "other

employees whose performance is unsupervised by the employer" must


not be understood as a separate classification of employees to which
service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel
under the Labor Code as those "whose actual hours of work in the field
cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on
task or contract basis, purely commission basis." Said phrase should be
related with "field personnel," applying the rule on ejusdem generisthat
general and unlimited terms are restrained and limited by the particular
terms that they follow.

The Autobus ruling was in turn the basis of Serrano v. Santos Transit which
the CA cited in support of granting Macasio's petition.
In Serrano, the Court, applying the rule on ejusdem generis 50 declared
that "employees

engaged

on

task

or

contract

basis .

. are

not

automatically exempted from the grant of service incentive leave, unless,


they fall under the classification of field personnel." 51 The Court explained
that the phrase "including those who are engaged on task or contract basis,
purely commission basis" found in Section 1 (d), Rule V of Book III of
the IRRshould not be understood as a separate classification of employees to
which SIL shall not be granted. Rather, as with its preceding phrase "other
employees whose performance is unsupervised by the employer" the
phrase"including those who are engaged on task or contract basis" serves to
amplify the interpretation of the Labor Codedefinition of "field personnel" as those
"whose actual hours of work in the field cannot be determined with reasonable
certainty."
In contrast and in clear departure from settled case law, the LA and the NLRC
still interpreted the Labor Codeprovisions and the IRR as exempting an employee
from the coverage of Title I of the Labor Code based simply and solely on the
mode of payment of an employee. The NLRC's utter disregard of this
consistent jurisprudential ruling is a clear act of Grave abuse of

discretion. 52 In other words, by dismissing Macasio's complaint without


considering whether Macasio was a "field personnel" or not, the NLRC
proceeded based on a significantly incomplete consideration of the case.
This action clearly smacks of grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the
NLRC had only taken counsel fromSerrano and earlier cases, they would have
correctly reached a similar conclusion regarding the payment of holiday pay since
the rule exempting "field personnel" from the grant of holiday pay is identically
worded with the rule exempting "field personnel" from the grant of SIL pay. To be
clear, the phrase "employees engaged on task or contract basis" found in
the IRR on both SIL pay and holiday pay should be read together with the
exemption of "field personnel."
In short, in determining whether workers engaged on "pakyaw" or task basis" is
entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker's time and performance is the key: if the
worker is simply engaged on pakyaw or task basis, then the general rule is that
he is entitled to a holiday pay and SIL pay unless exempted from the exceptions
specifically provided under Article 94 (holiday pay) and Article 95 (SIL pay) of
the Labor Code.However, if the worker engaged on pakyaw or task basis also
falls within the meaning of "field personnel" under the law, then he is not entitled
to these monetary benefits.
Macasio

does

not

fall

under

the

classification of "field personnel"


Based on the definition of field personnel under Article 82, we agree with the CA
that Macasio does not fall under the definition of "field personnel." The CA's
finding in this regard is supported by the established facts of this case:first,
Macasio regularly performed his duties at David's principal place of
business; second, his actual hours of work could be determined with reasonable
certainty; and, third, David supervised his time and performance of duties. Since

Macasio cannot be considered a "field personnel," then he is not exempted from


the grant of holiday, SIL pay even as he was engaged on "pakyaw" or task basis.
Not being a "field personnel," we find the CA to be legally correct when it
reversed the NLRC's ruling dismissing Macasio's complaint for holiday and SIL
pay for having been rendered with grave abuse of discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month pay however, we find that the CA
legally erred in finding that the NLRC gravely abused its discretion in denying this
benefit to Macasio.
The governing law on 13th month pay is PD No. 851. 53 As with holiday and SIL
pay, 13th month pay benefits generally cover all employees; an employee must
be one of those expressly enumerated to be exempted. Section 3 of the Rules
and Regulations Implementing P.D. No. 851 54 enumerates the exemptions from
the coverage of 13th month pay benefits. Under Section 3 (e), "employers of
those who are paid on . . . task basis, and those who are paid a fixed amount
for performing a specific work, irrespective of the time consumed in the
performancethereof" 55 are exempted.

DSAICa

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3 (e)
of the Rules and Regulations Implementing PD No. 851 exempts employees
"paid on task basis" without any reference to "field personnel." This could only
mean that insofar as payment of the 13th month pay is concerned, the law did not
intend to qualify the exemption from its coverage with the requirement that the
task worker be a "field personnel" at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY
GRANT the petition insofar as the payment of 13th month pay to respondent is
concerned. In all other aspects, we AFFIRM the decision dated November 22,
2010 and the resolution dated January 31, 2011 of the Court of Appeals in CAG.R. SP No. 116003.
SO ORDERED.

|||

(David v. Macasio, G.R. No. 195466, [July 2, 2014])