PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO DE VERA, respondent.

DECISION

GARCIA, J.:

Before us is this appeal by way of a petition for review on certiorari from the 12 September 2002 Decision[1] and the 13 February
2003 Resolution[2] of the Court of Appeals in CA-G.R. SP No. 65178, upholding the finding of illegal dismissal by the National
Labor Relations Commission against petitioner.

As culled from the records, the pertinent facts are:

Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and
allied activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical
needs of its employees. At the crux of the controversy is Dr. De Veras status vis a vis petitioner when the latter terminated his
engagement.

It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981,[3] offered his services to the petitioner, therein proposing his
plan of works required of a practitioner in industrial medicine, to include the following:

1. Application of preventive medicine including periodic check-up of employees;

2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for consultation services to
employees;

3. Management and treatment of employees that may necessitate hospitalization including emergency cases and accidents;

4. Conduct pre-employment physical check-up of prospective employees with no additional medical fee;

5. Conduct home visits whenever necessary;

6. Attend to certain medical administrative function such as accomplishing medical forms, evaluating conditions of
employees applying for sick leave of absence and subsequently issuing proper certification, and all matters referred
which are medical in nature.

The parties agreed and formalized respondents proposal in a document denominated as RETAINERSHIP CONTRACT[4] which
will be for a period of one year subject to renewal, it being made clear therein that respondent will cover the retainership the
Company previously had with Dr. K. Eulau and that respondents retainer fee will be at P4,000.00 a month. Said contract was
renewed yearly.[5] The retainership arrangement went on from 1981 to 1994 with changes in the retainers fee. However, for the
years 1995 and 1996, renewal of the contract was only made verbally.

The turning point in the parties relationship surfaced in December 1996 when Philcom, thru a letter[6] bearing on the subject boldly
written as TERMINATION RETAINERSHIP CONTRACT, informed De Vera of its decision to discontinue the latters retainers
contract with the Company effective at the close of business hours of December 31, 1996 because management has decided that it
would be more practical to provide medical services to its employees through accredited hospitals near the company premises.

On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC),
alleging that that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due
process. He averred that he was designated as a company physician on retainer basis for reasons allegedly known only to Philcom.
He likewise professed that since he was not conversant with labor laws, he did not give much attention to the designation as anyway
he worked on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other regular employees of Philcom.

On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a decision[7] dismissing De Veras complaint for lack
of merit, on the rationale that as a retained physician under a valid contract mutually agreed upon by the parties, De Vera was an
independent contractor and that he was not dismissed but rather his contract with [PHILCOM] ended when said contract was not
renewed after December 31, 1996.
On De Veras appeal to the NLRC, the latter, in a decision[8] dated 23 October 2000, reversed (the word used is modified) that of
the Labor Arbiter, on a finding that De Vera is Philcoms regular employee and accordingly directed the company to reinstate him to
his former position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual
reinstatement. We quote the dispositive portion of the decision:

WHEREFORE, the assailed decision is modified in that respondent is ordered to reinstate complainant to his former position without
loss of seniority rights and privileges with full backwages from the date of his dismissal until his actual reinstatement computed as
follows:

Backwages:

a) Basic Salary
From Dec. 31, 1996 to Apr. 10, 2000 = 39.33 mos.
P44,400.00 x 39.33 mos. P1,750,185.00
b) 13th Month Pay:
1/12 of P1,750,185.00 145,848.75
c) Travelling allowance:
P1,000.00 x 39.33 mos. 39,330.00

GRAND TOTAL P1,935,363.75

The decision stands in other aspects.

SO ORDERED.

With its motion for reconsideration having been denied by the NLRC in its order of 27 February 2001,[9] Philcom then went to the
Court of Appeals on a petition for certiorari, thereat docketed as CA-G.R. SP No. 65178, imputing grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the NLRC when it reversed the findings of the labor arbiter and awarded
thirteenth month pay and traveling allowance to De Vera even as such award had no basis in fact and in law.

On 12 September 2002, the Court of Appeals rendered a decision,[10] modifying that of the NLRC by deleting the award of traveling
allowance, and ordering payment of separation pay to De Vera in lieu of reinstatement, thus:

WHEREFORE, premises considered, the assailed judgment of public respondent, dated 23 October 2000, is MODIFIED. The
award of traveling allowance is deleted as the same is hereby DELETED. Instead of reinstatement, private respondent shall be paid
separation pay computed at one (1) month salary for every year of service computed from the time private respondent commenced his
employment in 1981 up to the actual payment of the backwages and separation pay. The awards of backwages and 13th month pay
STAND.

SO ORDERED.

In time, Philcom filed a motion for reconsideration but was denied by the appellate court in its resolution of 13 February 2003.[11]

Hence, Philcoms present recourse on its main submission that -

THE COURT OF APPEALS ERRED IN SUSTAINING THE DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION AND RENDERING THE QUESTIONED DECISION AND RESOLUTION IN A WAY THAT IS NOT IN ACCORD
WITH THE FACTS AND APPLICABLE LAWS AND JURISPRUDENCE WHICH DISTINGUISH LEGITIMATE JOB
CONTRACTING AGREEMENTS FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.

We GRANT.

Under Rule 45 of the Rules of Court, only questions of law may be reviewed by this Court in decisions rendered by the Court of
Appeals. There are instances, however, where the Court departs from this rule and reviews findings of fact so that substantial justice
may be served. The exceptional instances are where:

xxx xxx xxx (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is
manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of
fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both
appellant and appellees; (7) the findings of fact of the Court of Appeals are contrary to those of the trial court; (8) said findings of facts
are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondents; and (10) the findings of fact of the Court of Appeals are
premised on the supposed absence of evidence and contradicted by the evidence on record.[12]

As we see it, the parties respective submissions revolve on the primordial issue of whether an employer-employee relationship exists
between petitioner and respondent, the existence of which is, in itself, a question of fact[13] well within the province of the NLRC.
Nonetheless, given the reality that the NLRCs findings are at odds with those of the labor arbiter, the Court, consistent with its ruling
in Jimenez vs. National Labor Relations Commission,[14] is constrained to look deeper into the attendant circumstances obtaining in
this case, as appearing on record.

In a long line of decisions,[15] the Court, in determining the existence of an employer-employee relationship, has invariably adhered
to the four-fold test, to wit: [1] the selection and engagement of the employee; [2] the payment of wages; [3] the power of dismissal;
and [4] the power to control the employees conduct, or the so-called control test, considered to be the most important element.

Applying the four-fold test to this case, we initially find that it was respondent himself who sets the parameters of what his duties
would be in offering his services to petitioner. This is borne by no less than his 15 May 1981 letter[16] which, in full, reads:

May 15, 1981

Mrs. Adela L. Vicente

Vice President, Industrial Relations
PhilCom, Paseo de Roxas
Makati, Metro Manila

Madam:

I shall have the time and effort for the position of Company physician with your corporation if you deemed it necessary. I have the
necessary qualifications, training and experience required by such position and I am confident that I can serve the best interests of
your employees, medically.

My plan of works and targets shall cover the duties and responsibilities required of a practitioner in industrial medicine which includes
the following:

1. Application of preventive medicine including periodic check-up of employees;

2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for consultation services to
employees;

3. Management and treatment of employees that may necessitate hospitalization including emergency cases and accidents;

4. Conduct pre-employment physical check-up of prospective employees with no additional medical fee;

5. Conduct home visits whenever necessary;

6. Attend to certain medical administrative functions such as accomplishing medical forms, evaluating conditions of
employees applying for sick leave of absence and subsequently issuing proper certification, and all matters referred
which are medical in nature.

On the subject of compensation for the services that I propose to render to the corporation, you may state an offer based on your belief
that I can very well qualify for the job having worked with your organization for sometime now.

I shall be very grateful for whatever kind attention you may extend on this matter and hoping that it will merit acceptance, I remain

Very truly yours,

(signed)
RICARDO V. DE VERA, M.D.
Significantly, the foregoing letter was substantially the basis of the labor arbiters finding that there existed no employer-employee
relationship between petitioner and respondent, in addition to the following factual settings:

The fact that the complainant was not considered an employee was recognized by the complainant himself in a signed letter to the
respondent dated April 21, 1982 attached as Annex G to the respondents Reply and Rejoinder. Quoting the pertinent portion of said
letter:

To carry out your memo effectively and to provide a systematic and workable time schedule which will serve the best interests of
both the present and absent employee, may I propose an extended two-hour service (1:00-3:00 P.M.) during which period I can devote
ample time to both groups depending upon the urgency of the situation. I shall readjust my private schedule to be available for the
herein proposed extended hours, should you consider this proposal.

As regards compensation for the additional time and services that I shall render to the employees, it is dependent on your evaluation of
the merit of my proposal and your confidence on my ability to carry out efficiently said proposal.

The tenor of this letter indicates that the complainant was proposing to extend his time with the respondent and seeking additional
compensation for said extension. This shows that the respondent PHILCOM did not have control over the schedule of the
complainant as it [is] the complainant who is proposing his own schedule and asking to be paid for the same. This is proof that the
complainant understood that his relationship with the respondent PHILCOM was a retained physician and not as an employee. If he
were an employee he could not negotiate as to his hours of work.

The complainant is a Doctor of Medicine, and presumably, a well-educated person. Yet, the complainant, in his position paper, is
claiming that he is not conversant with the law and did not give much attention to his job title- on a retainer basis. But the same
complainant admits in his affidavit that his service for the respondent was covered by a retainership contract [which] was renewed
every year from 1982 to 1994. Upon reading the contract dated September 6, 1982, signed by the complainant himself (Annex C of
Respondents Position Paper), it clearly states that is a retainership contract. The retainer fee is indicated thereon and the duration of
the contract for one year is also clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot claim that he
was unaware that the contract was good only for one year, as he signed the same without any objections. The complainant also
accepted its renewal every year thereafter until 1994. As a literate person and educated person, the complainant cannot claim that he
does not know what contract he signed and that it was renewed on a year to year basis.[17]

The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with petitioner, he never was
included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact
subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal
Revenue Code, matters which are simply inconsistent with an employer-employee relationship. In the precise words of the labor
arbiter:

xxx xxx xxx After more than ten years of services to PHILCOM, the complainant would have noticed that no SSS deductions were
made on his remuneration or that the respondent was deducting the 10% tax for his fees and he surely would have complained about
them if he had considered himself an employee of PHILCOM. But he never raised those issues. An ordinary employee would
consider the SSS payments important and thus make sure they would be paid. The complainant never bothered to ask the respondent
to remit his SSS contributions. This clearly shows that the complainant never considered himself an employee of PHILCOM and thus,
respondent need not remit anything to the SSS in favor of the complainant.[18]

Clearly, the elements of an employer-employee relationship are wanting in this case. We may add that the records are replete with
evidence showing that respondent had to bill petitioner for his monthly professional fees.[19] It simply runs against the grain of
common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary.

We note, too, that the power to terminate the parties relationship was mutually vested on both. Either may terminate the arrangement
at will, with or without cause.[20]

Finally, remarkably absent from the parties arrangement is the element of control, whereby the employer has reserved the right to
control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be
accomplished.[21]

Here, petitioner had no control over the means and methods by which respondent went about performing his work at the company
premises. He could even embark in the private practice of his profession, not to mention the fact that respondents work hours and the
additional compensation therefor were negotiated upon by the parties.[22] In fine, the parties themselves practically agreed on every
terms and conditions of respondents engagement, which thereby negates the element of control in their relationship. For sure,
respondent has never cited even a single instance when petitioner interfered with his work.
Yet, despite the foregoing, all of which are extant on record, both the NLRC and the Court of Appeals ruled that respondent is
petitioners regular employee at the time of his separation.

Partly says the appellate court in its assailed decision:

Be that as it may, it is admitted that private respondents written retainer contract was renewed annually from 1981 to 1994 and the
alleged renewal for 1995 and 1996, when it was allegedly terminated, was verbal.

Article 280 of the Labor code (sic) provides:

The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the employee has been engaged to perform 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.

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 (1) year of service, whether such is continuous or broken, shall be considered a regular with
respect to the activity in which he is employed and his employment shall continue while such activity exists.

Parenthetically, the position of company physician, in the case of petitioner, is usually necessary and desirable because the need for
medical attention of employees cannot be foreseen, hence, it is necessary to have a physician at hand. In fact, the importance and
desirability of a physician in a company premises is recognized by Art. 157 of the Labor Code, which requires the presence of a
physician depending on the number of employees and in the case at bench, in petitioners case, as found by public respondent,
petitioner employs more than 500 employees.

Going back to Art. 280 of the Labor Code, it was made therein clear that the provisions of a written agreement to the contrary
notwithstanding or the existence of a mere oral agreement, if the employee is engaged in the usual business or trade of the employer,
more so, that he rendered service for at least one year, such employee shall be considered as a regular employee. Private respondent
herein has been with petitioner since 1981 and his employment was not for a specific project or undertaking, the period of which was
pre-determined and neither the work or service of private respondent seasonal. (Emphasis by the CA itself).

We disagree to the foregoing ratiocination.

The appellate courts premise that regular employees are those who perform activities which are desirable and necessary for the
business of the employer is not determinative in this case. For, we take it that any agreement may provide that one party shall render
services for and in behalf of another, no matter how necessary for the latters business, even without being hired as an employee.
This set-up is precisely true in the case of an independent contractorship as well as in an agency agreement. Indeed, Article 280 of the
Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an employment relationship. As it is,
the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual. It does not apply where, as here, the
very existence of an employment relationship is in dispute.[23]

Buttressing his contention that he is a regular employee of petitioner, respondent invokes Article 157 of the Labor Code, and argues
that he satisfies all the requirements thereunder. The provision relied upon reads:

ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his employees in any locality
with free medical and dental attendance and facilities consisting of:

(a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two
hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a
graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The
Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of
employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of
this Article;

(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the
number of employees exceeds two hundred (200) but not more than three hundred (300); and
 (c) The services of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary
or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees
exceeds three hundred (300).

In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the premises of
the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less than eight (8) hours in the
case of those employed on full-time basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be
engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate availability of
medical and dental treatment and attendance in case of emergency.

Had only respondent read carefully the very statutory provision invoked by him, he would have noticed that in non-hazardous
workplaces, the employer may engage the services of a physician on retained basis. As correctly observed by the petitioner, while it
is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the
number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as
employees,[24] adding that the law, as written, only requires the employer to retain, not employ, a part-time physician who needed
to stay in the premises of the non-hazardous workplace for two (2) hours.[25]

Respondent takes no issue on the fact that petitioners business of telecommunications is not hazardous in nature. As such, what
applies here is the last paragraph of Article 157 which, to stress, provides that the employer may engage the services of a physician
and dentist on retained basis, subject to such regulations as the Secretary of Labor may prescribe. The successive retainership
agreements of the parties definitely hue to the very statutory provision relied upon by respondent.

Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that is free from doubt. Where the law is clear
and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed.
[26] As it is, Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous establishments to engage
on retained basis the service of a dentist or physician. Nowhere does the law provide that the physician or dentist so engaged
thereby becomes a regular employee. The very phrase that they may be engaged on retained basis, revolts against the idea that this
engagement gives rise to an employer-employee relationship.

With the recognition of the fact that petitioner consistently engaged the services of respondent on a retainer basis, as shown by their
various retainership contracts, so can petitioner put an end, with or without cause, to their retainership agreement as therein
provided.[27]

We note, however, that even as the contracts entered into by the parties invariably provide for a 60-day notice requirement prior to
termination, the same was not complied with by petitioner when it terminated on 17 December 1996 the verbally-renewed retainership
agreement, effective at the close of business hours of 31 December 1996.

Be that as it may, the record shows, and this is admitted by both parties,[28] that execution of the NLRC decision had already been
made at the NLRC despite the pendency of the present recourse. For sure, accounts of petitioner had already been garnished and
released to respondent despite the previous Status Quo Order[29] issued by this Court. To all intents and purposes, therefore, the 60-
day notice requirement has become moot and academic if not waived by the respondent himself.

WHEREFORE, the petition is GRANTED and the challenged decision of the Court of Appeals REVERSED and SET ASIDE. The
21 December 1998 decision of the labor arbiter is REINSTATED.

No pronouncement as to costs.

SO ORDERED.

Panganiban, (Chairman), Corona, and Carpio-Morales, JJ., concur.

Sandoval-Gutierrez, J., on official leave.

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

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

vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department of Labor and
Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its
members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO L.
ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA ESTRABO,
LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA
ALCOCEBA and MARIA ANGELES, respondents.

Ledesma, Saludo & Associates for petitioners.

Pablo S. Bernardo for private respondents.

FERNAN, C.J.:

This petition for certiorari involving two separate cases filed by private respondents against herein petitioners assails the
decision of respondent National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled "Sandigan Ng
Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati Haberdashery and/or Toppers Makati, et al." and NLRC
CASE No. 2-428-85 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Toppers Makati, et
al.", affirming the decision of the Labor Arbiter who jointly heard and decided aforesaid cases, finding: (a) petitioners guilty
of illegal dismissal and ordering them to reinstate the dismissed workers and (b) the existence of employer-employee
relationship and granting respondent workers by reason thereof their various monetary claims.

The undisputed facts are as follows:

Individual complainants, private respondents herein, have been working for petitioner Makati Haberdashery, Inc. as tailors,
seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piece-rate basis except Maria Angeles
and Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given a daily allowance of
three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday.

Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday and
during peak periods even on Sundays and holidays.

On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a
complaint docketed as NLRC NCR Case No. 7-2603-84 for (a) underpayment of the basic wage; (b) underpayment of
living allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service incentive
pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1

During the pendency of NLRC NCR Case No. 7-2603-84, private respondent Dioscoro Pelobello left with Salvador Rivera,
a salesman of petitioner Haberdashery, an open package which was discovered to contain a "jusi" barong tagalog. When
confronted, Pelobello replied that the same was ordered by respondent Casimiro Zapata for his customer. Zapata
allegedly admitted that he copied the design of petitioner Haberdashery. But in the afternoon, when again questioned
about said barong, Pelobello and Zapata denied ownership of the same. Consequently a memorandum was issued to
each of them to explain on or before February 4, 1985 why no action should be taken against them for accepting a job
order which is prejudicial and in direct competition with the business of the company. 2 Both respondents allegedly did not
submit their explanation and did not report for work. 3 Hence, they were dismissed by petitioners on February 4, 1985.
They countered by filing a complaint for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 on February 5,
1985. 4

On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85 finding respondents guilty
of illegal dismissal and ordering them to reinstate Dioscoro Pelobello and Casimiro Zapata to their
respective or similar positions without loss of seniority rights, with full backwages from July 4, 1985 up to
actual reinstatement. The charge of unfair labor practice is dismissed for lack of merit.
 In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment re violation of the
minimum wage law is hereby ordered dismissed for lack of merit.

Respondents are hereby found to have violated the decrees on the cost of living allowance, service
incentive leave pay and the 13th Month Pay. In view thereof, the economic analyst of the Commission is
directed to compute the monetary awards due each complainant based on the available records of the
respondents retroactive as of three years prior to the filing of the instant case.

SO ORDERED. 5

From the foregoing decision, petitioners appealed to the NLRC. The latter on March 30, 1988 affirmed said decision but
limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one (1) year. 6

After their motion for reconsideration was denied, petitioners filed the instant petition raising the following issues:

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP

EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS WORKERS.

II

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS WORKERS ARE ENTITLED TO
MONETARY CLAIMS DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM WAGE.

III

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS PELOBELLO AND ZAPATA WERE
ILLEGALLY DISMISSED. 7

The first issue which is the pivotal issue in this case is resolved in favor of private respondents. We have repeatedly held
in countless decisions that the test of employer-employee relationship is four-fold: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. It is
the so called "control test" that is the most important element. 8 This simply means the determination of whether the
employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the
means and method by which the same is to be accomplished. 9

The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from the operations
of petitioner, when a customer enters into a contract with the haberdashery or its proprietor, the latter directs an employee
who may be a tailor, pattern maker, sewer or "plantsadora" to take the customer's measurements, and to sew the pants,
coat or shirt as specified by the customer. Supervision is actively manifested in all these aspects the manner and
quality of cutting, sewing and ironing.

Furthermore, the presence of control is immediately evident in this memorandum issued by Assistant Manager Cecilio B.
Inocencio, Jr. dated May 30, 1981 addressed to Topper's Makati Tailors which reads in part:

4. Effective immediately, new procedures shall be followed:

A. To follow instruction and orders from the undersigned Roger Valderama, Ruben Delos Reyes and Ofel
Bautista. Other than this person (sic) must ask permission to the above mentioned before giving orders or
instructions to the tailors.

B. Before accepting the job orders tailors must check the materials, job orders, due dates and other
things to maximize the efficiency of our production. The materials should be checked (sic) if it is matched
(sic) with the sample, together with the number of the job order.
 C. Effective immediately all job orders must be finished one day before the due date. This can be done by
proper scheduling of job order and if you will cooperate with your supervisors. If you have many due dates
for certain day, advise Ruben or Ofel at once so that they can make necessary adjustment on due dates.

D. Alteration-Before accepting alteration person attending on customs (sic) must ask first or must advise
the tailors regarding the due dates so that we can eliminate what we call 'Bitin'.

E. If there is any problem regarding supervisors or co-tailor inside our shop, consult with me at once settle
the problem. Fighting inside the shop is strictly prohibited. Any tailor violating this memorandum will be
subject to disciplinary action.

For strict compliance. 10

From this memorandum alone, it is evident that petitioner has reserved the right to control its employees not only as to the
result but also the means and methods by which the same are to be accomplished. That private respondents are regular
employees is further proven by the fact that they have to report for work regularly from 9:30 a.m. to 6:00 or 7:00 p.m. and
are paid an additional allowance of P 3.00 daily if they report for work before 9:30 a.m. and which is forfeited when they
arrive at or after 9:30 a.m. 11

Since private respondents are regular employees, necessarily the argument that they are independent contractors must
fail. As established in the preceding paragraphs, private respondents did not exercise independence in their own methods,
but on the contrary were subject to the control of petitioners from the beginning of their tasks to their completion. Unlike
independent contractors who generally rely on their own resources, the equipment, tools, accessories, and paraphernalia
used by private respondents are supplied and owned by petitioners. Private respondents are totally dependent on
petitioners in all these aspects.

Coming now to the second issue, there is no dispute that private respondents are entitled to the Minimum Wage as
mandated by Section 2(g) of Letter of Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and
reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which explicitly states that, "All employees paid by
the result shall receive not less than the applicable new minimum wage rates for eight (8) hours work a day, except where
a payment by result rate has been established by the Secretary of Labor. ..." 12 No such rate has been established in this
case.

But all these notwithstanding, the question as to whether or not there is in fact an underpayment of minimum wages to
private respondents has already been resolved in the decision of the Labor Arbiter where he stated: "Hence, for lack of
sufficient evidence to support the claims of the complainants for alleged violation of the minimum wage, their claims for
underpayment re violation of the Minimum Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must perforce fall." 13

The records show that private respondents did not appeal the above ruling of the Labor Arbiter to the NLRC; neither did
they file any petition raising that issue in the Supreme Court. Accordingly, insofar as this case is concerned, that issue has
been laid to rest. As to private respondents, the judgment may be said to have attained finality. For it is a well-settled rule
in this jurisdiction that "an appellee who has not himself appealed cannot obtain from the appellate court-, any affirmative
relief other than the ones granted in the decision of the court below. " 14

As a consequence of their status as regular employees of the petitioners, they can claim cost of living allowance. This is
apparent from the provision defining the employees entitled to said allowance, thus: "... All workers in the private sector,
regardless of their position, designation or status, and irrespective of the method by which their wages are paid. " 15

Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and Regulations
Implementing P.D. No. 851 which provides:

Section 3. Employers covered. The Decree shall apply to all employers except to:

xxx xxx xxx

(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are
paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis in which case the employer shall be
covered by this issuance insofar as such workers are concerned. (Emphasis supplied.)
On the other hand, while private respondents are entitled to Minimum Wage, COLA and 13th Month Pay, they are not
entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for performing work
irrespective of time consumed in the performance thereof, they fall under one of the exceptions stated in Section 1(d),
Rule V, Implementing Regulations, Book III, Labor Code. For the same reason private respondents cannot also claim
holiday pay (Section 1(e), Rule IV, Implementing Regulations, Book III, Labor Code).

With respect to the last issue, it is apparent that public respondents have misread the evidence, for it does show that a
violation of the employer's rules has been committed and the evidence of such transgression, the copied barong tagalog,
was in the possession of Pelobello who pointed to Zapata as the owner. When required by their employer to explain in a
memorandum issued to each of them, they not only failed to do so but instead went on AWOL (absence without official
leave), waited for the period to explain to expire and for petitioner to dismiss them. They thereafter filed an action for
illegal dismissal on the far-fetched ground that they were dismissed because of union activities. Assuming that such acts
do not constitute abandonment of their jobs as insisted by private respondents, their blatant disregard of their employer's
memorandum is undoubtedly an open defiance to the lawful orders of the latter, a justifiable ground for termination of
employment by the employer expressly provided for in Article 283(a) of the Labor Code as well as a clear indication of
guilt for the commission of acts inimical to the interests of the employer, another justifiable ground for dismissal under the
same Article of the Labor Code, paragraph (c). Well established in our jurisprudence is the right of an employer to dismiss
an employee whose continuance in the service is inimical to the employer's interest. 16

In fact the Labor Arbiter himself to whom the explanation of private respondents was submitted gave no credence to their
version and found their excuses that said barong tagalog was the one they got from the embroiderer for the Assistant
Manager who was investigating them, unbelievable.

Under the circumstances, it is evident that there is no illegal dismissal of said employees. Thus, We have ruled that:

No employer may rationally be expected to continue in employment a person whose lack of morals,
respect and loyalty to his employer, regard for his employer's rules, and appreciation of the dignity and
responsibility of his office, has so plainly and completely been bared.

That there should be concern, sympathy, and solicitude for the rights and welfare of the working class, is
meet and proper. That in controversies between a laborer and his master, doubts reasonably arising from
the evidence, or in the interpretation of agreements and writings should be resolved in the former's favor,
is not an unreasonable or unfair rule. But that disregard of the employer's own rights and interests can be
justified by that concern and solicitude is unjust and unacceptable. (Stanford Microsystems, Inc. v. NLRC,
157 SCRA 414-415 [1988] ).

The law is protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. 17 More
importantly, while the Constitution is committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will automatically be decided in favor of labor. 18

Finally, it has been established that the right to dismiss or otherwise impose discriplinary sanctions upon an employee for
just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said
cause in accordance with the norms of due process. 19

There is no evidence that the employer violated said norms. On the contrary, private respondents who vigorously insist on
the existence of employer-employee relationship, because of the supervision and control of their employer over them,
were the very ones who exhibited their lack of respect and regard for their employer's rules.

Under the foregoing facts, it is evident that petitioner Haberdashery had valid grounds to terminate the services of private
respondents.

WHEREFORE, the decision of the National Labor Relations Commission dated March 30, 1988 and that of the Labor
Arbiter dated June 10, 1986 are hereby modified. The complaint filed by Pelobello and Zapata for illegal dismissal
docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and legal bases. Award of service incentive
leave pay to private respondents is deleted.

SO ORDERED.
G.R. No. L-48926 December 14, 1987

MANUEL SOSITO, petitioner,

vs.
AGUINALDO DEVELOPMENT CORPORATION, respondent.

CRUZ, J.:

We gave due course to this petition and required the parties to file simultaneous memoranda on the sole question of
whether or not the petitioner is entitled to separation pay under the retrenchment program of the private respondent.

The facts are as follows:

Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and was in charge of
logging importation, with a monthly salary of P675.00, 1 when he went on indefinite leave with the consent of the company
on January 16, 1976. 2 On July 20, 1976, the private respondent, through its president, announced a retrenchment
program and offered separation pay to employees in the active service as of June 30, 1976, who would tender their
resignations not later than July 31, 1976. The petitioner decided to accept this offer and so submitted his resignation on
July 29, 1976, "to avail himself of the gratuity benefits" promised. 3 However, his resignation was not acted upon and he
was never given the separation pay he expected. The petitioner complained to the Department of Labor, where he was
sustained by the labor arbiter. 4 The company was ordered to pay Sosito the sum of P 4,387.50, representing his salary for
six and a half months. On appeal to the National Labor Relations Commission, this decision was reversed and it was held
that the petitioner was not covered by the retrenchment program. 5 The petitioner then came to us.

For a better understanding of this case, the memorandum of the private respondent on its retrenchment program is
reproduced in full as follows:

Memorandum To: ALL EMPLOYEES

Re: RETRENCHMENT PROGRAM

As you are all aware, the operations of wood-based industries in the Philippines for the last two (2) years
were adversely affected by the worldwide decline in the demand for and prices of logs and wood
products. Our company was no exception to this general decline in the market, and has suffered
tremendous losses. In 1975 alone, such losses amounted to nearly P20,000,000.00.

The company has made a general review of its operations and has come to the unhappy decision of the
need to make adjustments in its manpower strength if it is to survive. This is indeed an unfortunate and
painful decision to make, but it leaves the company no alternative but to reduce its tremendous and
excessive overhead expense in order to prevent an ultimate closure.

Although the law allows the Company, in a situation such as this, to drastically reduce it manpower
strength without any obligation to pay separation benefits, we recognize the need to provide our
employees some financial assistance while they are looking for other jobs.

The Company therefore is adopting a retrenchment program whereby employees who are in the active
service as of June 30, 1976 will be paid separation benefits in an amount equivalent to the employee's
one-half (1/2) month's basic salary multiplied by his/her years of service with the Company. Employees
interested in availing of the separation benefits offered by the Company must manifest such intention by
submitting written letters of resignation to the Management not later than July 31, 1976. Those whose
resignations are accepted shall be informed accordingly and shall be paid their separation benefits.
 After July 31, 1976, this offer of payment of separation benefits will no longer be available. Thereafter, the
Company shall apply for a clearance to terminate the services of such number of employees as may be
necessary in order to reduce the manpower strength to such desired level as to prevent further losses.

(SGD.) JOSE G.
RICAFORT

Preside
nt

N.B.

For additional information

and/or resignation forms,

please see Mr. Vic Maceda

or Atty. Ben Aritao. 6

It is clear from the memorandum that the offer of separation pay was extended only to those who were in the active
service of the company as of June 30, 1976. It is equally clear that the petitioner was not eligible for the promised gratuity
as he was not actually working with the company as of the said date. Being on indefinite leave, he was not in the active
service of the private respondent although, if one were to be technical, he was still in its employ. Even so, during the
period of indefinite leave, he was not entitled to receive any salary or to enjoy any other benefits available to those in the
active service.

It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the private respondent. He has
insulated himself from the insecurities of the floundering firm but at the same time would demand the benefits it offers.
Being on indefinite leave from the company, he could seek and try other employment and remain there if he should find it
acceptable; but if not, he could go back to his former work and argue that he still had the right to return as he was only on
leave.

There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary, the record shows
that he voluntarily sought the indefinite leave which the private respondent granted. It is strange that the company should
agree to such an open-ended arrangement, which is obviously one-sided. The company would not be free to replace the
petitioner but the petitioner would have a right to resume his work as and when he saw fit.

We note that under the law then in force the private respondent could have validly reduced its work force because of its
financial reverses without the obligation to grant separation pay. This was permitted under the original Article 272(a), of
the Labor Code, 7 which was in force at the time. To its credit, however, the company voluntarily offered gratuities to those
who would agree to be phased out pursuant to the terms and conditions of its retrenchment program, in recognition of
their loyalty and to tide them over their own financial difficulties. The Court feels that such compassionate measure
deserves commendation and support but at the same time rules that it should be available only to those who are qualified
therefore. We hold that the petitioner is not one of them.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be
supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights
which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with
less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving,
to be dispensed in the light of the established facts and the applicable law and doctrine.

WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs against the petitioner.

SO ORDERED.